20111028Compliance Filing.pdf

GIVE SLE~EEE1'Vtn
20i i OCT 28 AM 8: 44
lAW OFFICES
601 W. Bannock Street
PO Box 2720, Boise, Idaho
TELEPHONE: [phone]
FACSIMilE: 208 388-1300
WEBSITE: ww.givenspursley.com
Gary G. Allen
Peter G. Barton
l' ,.ç:hristopher J. Beeson¡ i.) : 'Clint R. Bolinder
Erik J. Bolinder
Preston N. Carter
Jeremy C. Chou
William C. Cole
Michael C. Creamer
Amber N. Dina
Elizabeth M. Donick
Thomas E. Dvorak
Jeffrey C. Feraday
Justin M. Fredin
Martin Hendrickson
Steven J. Hippler
Donald E. Knickrehm
Debora K. Kristensen
Anne C. Kunkel
Michael P. lawrence
Franklin G. lee
David R. Lombardi
Emily L. McClure
Kenneth R. McClure
Kelly Greene McConnell
Alex P. Mclaughlin .'
Cynthia A. Melilo
Christopher H. Meyer
L. Edward Miller
Patrick J. Miler
Cynthia A. Melillo
Direct Dial: [phone]
E-Mail: cam1?givenspursiey.com
October 27,2011
Terri Carlock
Idaho Public Utilities Commission
472 W. Washington
P.O. Box 83720
Boise, 1083720-0074
Judson B. Montgomery
Deborah E. Nelson
Kelsey J. Nunez
W. Hugh O'Riordan, ll.M.
Angela M. Reed
Justin A. Steiner
Kenton H. Walker'
Robert B. White
Retired
Kenneth L. Pursley
James A. McClure (1924-2011)
Raymond D. Givens (1917-2008)
'Admitted only in IL
M \ 1)- T-l D-Di
Re:Midvale Telephone Exchange, Incorporated, Rural Utilities Service
Loans and Grants
1614-92Our File:
Dear Terri:
Pursuant to Idaho Public Utilities Commission ("IPUC") Order No. 32108, which
authorized Midvale Telephone Exchange, Incorporated ("Midvaie") to obtain three
loans/grants from the Rural Utilities Service ("RUS"), Midvale was required to file with the
IPUC copies of all final executed RUS loan approvals and collateral documentation.
Enclosed herewith are copies of the following final RUS loan documents:
1. Broadband Initiatives Program Loan/Grant and Security Agreement, dated as
of September 20, 2010- Idaho 11 05-A40;
2. Promissory Note, made by Midvale Telephone Exchange, Incorporated,
dated as of September 20, 2010- Idaho 11 05-A40;
3. Broadband Initiatives Program Loan/Grant and Security Agreement, dated as
of September 20, 2010- Idaho 11 05-B40;
4. Promissory Note, made by Midvale Telephone Exchange, Incorporated,
dated as of September 20, 2010 - Idaho 11 05-B40;
5. Broadband Initiatives Program Loan/Grant and Security Agreement, dated as
of September 20, 2010 - Idaho 11 05-C40;
Terri Carlock
October 27,2011
Page 2
6. Promissory Note, made by Midvale Telephone Exchange, Incorporated,
dated as of September 20, 2010- Idaho 11 05-C40;
7. Deposit Account Control Agreement, dated August 25, 2011, by and among
Midvale Telephone Exchange, Incorporated, Wells Fargo Bank and the
United States of America;
8. UCC 1 financing statement filed with the Idaho Secretary of State; and
9. UCC1 financing statement filed with the Arizona Secretary of State.
If you have any questions or comments regarding the enclosed, or if you need any
additional information, please do not hesitate to contact me.
Sincerely,C~(1~
Cynthia A. Melillo
CAM!
Enclosures
cc: Steve Child (via electronic mail, wlo enclosures)
1304037_1
RUS Project Designation:
IDAHO 1105-A40
BROADBAND lNITIATNES PROGRAM
LOAN/GRANT AND SECURITY AGREEMENT
dated as of September 20,2010
between
MIDVALE TELEPHONE EXCHANGE, lNCORPORA TED
and
TH UNITED STATES OF AMERICA
UNITED STATES DEPARTMENT OF AGRICULTU
RUR UTILITIS SERVICE
Page 1
BROADBAND INITIATIVES PROGRAM
LOAN/GRAT AND SECURITY AGREEMENT
THIS LOAN/GRANT AND SECURITY AGREEMENT (this "Agreement"), dated as of
September 20, 2010 is between MIDVALE TELEPHONE EXCHANGEJ INCORPORATED
("Awardee"), a corpration existing under the laws of IDAHO, and the UNITED STATES OF
AMERICA, acting through the Administrator of the Rural Utilties Service ("RUS").
The Awardee has applied for financial assistce ("Application") from RUS to fiance the
constrction of a broadband infrastructue project to serve aras that are at least 75% rual.
RUS is willng to extend fmancial assistance, in the form of a loan and grant to the Awardee,
pursuant to the American Recovery and Reinvestment Act of 2009, Pub. L. iil-5, 123 Stat. ii5 (2009)
(the "Recovery Act"), the Notice of Funds Availabilty published at 75 Fed. Reg. 3820 and Title VI of the
Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), and all applicable federal regulatons, on the terms
and conditions stated herein.
The Awardee is willng to secur the loan and grant and its other obligations to RUS on the
terms 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 terms 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" shall mea the system of accounting prescribed by RUS in RUS
Regulations.
"Advance" or "Advances" shall mean the disbursement of Loan and/or Grant funds in
accordance with this Agreement.
"Affiliate" or "Affliated Company" of any specified person or entity meas any other person
or entity directly or indirectly controlling of, controlled by, under direct or indirect common control with,
or related to, such specifed person or entity, or which exists for the sole purpose of providing any service
to one company or exclusively to companies which otherwise meet the definition of affliate. This
definition includes Variable Interest Entities as described in Financial Accounting Stadards Board
Interpretation (FIN) No. 46(R), Consolidation of Variable Interest Entities. For the purpose of this
definition, "control" means the possession directly or indirectly, of the power to direct or cause the
direction of the management and policies of a company, whether such power is exercised though one or
more intermediar companies, or alone, or in conjunction with, or puruant to an agreement with, one or
more other companies, and whether such power is established though a majority or minority ownership
voting of securities, common directors, officers, or stockholders, voting trst, holding trsts (other than
money exchanged) for propert or services.
"Application" shall have the meaning as defined in the second paragraph hereof.
"Award" shall mea the Loan or Loan/Grant Combination described in Article II.
"Awardee" shall mean the Loan or Loan/Grant Combination recipient named in the first
paragrph hereof.
Page 2
"BIP" shall mean the Broadband Initiatives Program, administered by RUS and created
puruant to the Recovery Act.
"BIP Contracting, Work Order and Advance Procedures Guide" shall mean the procedures for
constrction and Advances, attached hereto as Attchment 1.
"Business Day" shall mean any day that RUS and the Deparment of Treasur are both open
for business.
"Collateral" shall mean any and all propert pledged as security for the Obligations,
including, without limitation, securty for the Loan, and other amounts owing to RUS under the Loan-Grant
Documents, including, without limitation, the propert described in Article iX and on Schedule 2.
"Composite Economic Life" means the weighted (by dollar amount of each class of facilty in
the Award) average economic life of all classes of facilties in the Award, as deterined by RUS.
"Distribution" shall have the meaning as defined in Section 7.9.
"Eligible Puroses" shall mean purposes and expenses which are specified in the NOFA as
being eligible for funding.
"Event of Default" shall have the meaning as defined in Article X.
"Expiration Date" shall have the meaning as defined in Pargrph (d) of Section 3.1.
"Form 481" shall have the meaning as defined in Section4.3(d).
"Grant" shall mean the grnt described in Section 3.1.
l'Interest Expense" shall mean the accrual of interest on all classes of indebtedness, including
capital leases and securties issued by the Awardee and shall also include the amortization of debt issuance
expenses, premiums, and discounts.
"Laws" shall have the meaning as defined in paragrph (e) of Aricle II.
"Loan" shall mean the loan described in Section 3.1.
"LoanGrant Combination" shall mean, collectively, the loan and grant described in Section
3.1.
"Loan-Grant Documents" shall mean collectively, this Agreement, Security Documents and
the Note(s).
"Material Adverse Effect" shall mean a material adverse effect on, or change in, the condition,
financial or otherwise, operations, properties, business or prospects of the Awardee or on the ability of the
Awardee to perform its obligations under the Loan-Grant Documents as determined by RUS.
ilNet Income" or "Net Margins" shall mean the amount equal to the income that the Awardee
has after subtracting costs and expenses from the total revenue. Costs and expenses include but are not
limited to all operations and mantenance expenses, corporate operations, taxes, interest dividends,
depreciation, and gains and losses on the disposition of propert.
"Net Worth" (equity) shall mean total assets less total liabilties of the Awardee. Net wort
includes the recorded value of capital stock, additional paid-in capital, treasur stock, retained earnings and
other comprehensive income.
Page 3
"NOFA" shall mean the Notice of Funds Availabilty, published in the Federal Register at 75
Fed. Reg. 3820.
"Note(s)" shall have the meaning as defined in Paragrh (a) of Section 3.2.
"Obligations" shall mean any and all indebtedness, obligations and liabilties of the Awardee
to RUS, of every kind and description, direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now existing or hereafer arising,
howsoever evidenced or created, including, without limitation, all loans (including any loan by renewal or
extension); all indebtedness, all Notes, all undertings to tae or refrain from taking any action; and all
interest, taxes, fees, charges, expenses, and attorney's fees chargeable to Awardee or incured by RUS
under this Agreement or in any other document or instrent delivered hereunder or as a supplement
hereto.
"Permitted Encumbrances" shall mean the liens and encumbrances permitted by the RUS
Mortgage.
"Pledged Deposit Account" shall have the meaning as defined in Section 5.4.
"Prior RUS Loan Contract" shall mean the contract identified on Schedule 1 as it may have
been amended or supplemented from time to time.
"Project" shall have the meaning as defined in Paragraph (a) of Section 3.4.
"Project Completion" shall mean that all Award funds have been advanced to the Awardee by
RUS.
"RE Act" shall mean the Rural Electrfication Act of 1936 (7 U.S.C. 901 et seq.).
"RUS Mortgage" shall mean the mortgage identified on Schedule 1 as it may be amended,
supplemented and restated from time to time.
"RUS Regulations" shall mean the rules, regulations and bulletins of general applicabilty
published by RUS from time to time, as such rules, regulations and bulletins exist at the date of
applicabilty thereof, and shall also include 7 C.F.R. 3015 (and, by adoption, 48 C.F.R. 31.2 of the Federa
Acquisition Regulations), 3016 and 3019 and applicable OMB Circulars, as well as 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 applicabilty
thereof.
"Security Documents" shall mea, collectively, any mortgage, security agreement, financing
statement, deposit account control agreement or other document providing collateral for the Obligations,
including without limitation, repayment of the Loan.
"Service Rates" shall mean the rates charged for data, video, voice or any other service
proposed in the RUS approved Application.
"Subsidiaries" shall mean the subsidiaries listed in Schedule 1.
"Substantially Complete" shall mean that 67% of Award funds have been advanced to the
Awardee by RUS.
"System Design" shall mean the system as described in the RUS approved Application.
Page 4
"TIER" shall mean the Awardee's total Net Income or Net Margins plus Interest Expense
payable for any year divided by Interest Expense payable for such year, as set fort in Section 5.8 hereof.
"Time line" shall mean the detailed schedule describing the Project build out, submitted with
the RUS approved Application, as may be amended from time to time with prior writtn RUS consent.
"Total Assets" shall mean all propert owned by the Awardee. Total assets include curent
and noncurent assets such as cash, receivables, material and supplies, prepayments, deferred charges, and
investments; fixed assets (plant) such as buildings and equipment, both in service and under constction;
as well as capital leases and intangibles.
ARTICLE 11- REPRESENTATIONS AND WARRNTIES
Recognizing that RUS is relying hereon, the Awardee represents and warnts, as of the date
of this Agreement, as follows:
(a) Organization; Power, Etc. The Awardee: (i) is the tye of organization specified in
the first paragaph hereof, duly organized, validly existing, and in good standing
under the laws of the State identified in the first paragraph hereof; (ii) is duly
qualified to do business and is in good standing in each jurisdiction in which the
transaction of its business make such quaification necessar; (ii) has legal power to
own and operate its assets and to carr on its business and to enter into and perform
its obligations under the Loan-Grant Documents; (iv) has duly and lawflly obtained
and maintained all material licenses, certificates, perits, authoriations and
approvals necessary to conduct its business or required by applicable Laws; and (v)
is eligible to obtain the financial assistace from RUS contemplated by this
Agreement.
(b) Authority. The execution, delivery and performance by the Awardee of this
Agreement and the other Loan-Grant Documents and the performce of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary actions and do not violate any provision of law or any charr, aricles of
incorporation, organization documents or bylaws of the Awardee or result in a
breach of, or constitute a default under, any agreement, securty agreement, note or
other instrment to which the Awardee is a par or by which it may be bound. The
Awardee has not received any notice from any other part to any of the foregoing
that a default has occurred or that any event or condition exists that with the giving
of notice or lapse of time or both would constitute such a default.
(c) Consents. No consent, approval, authorization, order, fiing, qualification, license, or
permit of any governmental authority is necessar in connection with the execution,
delivery, performance or enforcement of the Loan-Grant Documents, except such as
have been obtained and ar in full force and effect.
(d) Binding Agreement. Each of the Loan-Grant Documents is, or when executed and
delivered wil be, the legal, valid, and bindig obligation of the Awardee,
enforceable in accordace with its terms, subject only to limitations on enforceabilty
imposed in equity or by applicable banptcy, insolvency, reorganiztion,
moratorium or similar laws affectng creditors' rights generaly.
(e) Compliance with Laws. The Awardee is in compliance in all materal respects with
all federal, state and local laws, rules, regulations, ordinances, codes and orders
(collectively, "Laws.")
PageS
(t) Litigation. There are no pending or theatened legal, arbitration or governmental
actions or proceedings to which the Awardee is a par or to which any of its
propert is subject which, if adversely determined, could have a Material Adverse
Effect.
(g) Information Submitted with Application. All information, reports, and other
documents and data submitt to RUS in connection with the Application were, at
the time the same were fuished, complete, and correct in all material respects. Any
financial statements or data submitted to RUS in connection with the Application
present fairly, in all material respects, the financial position ofthe Awardee and the
results of its operations in confonuity with Accounting Requirements. Since the date
thereof, there has been no material adverse change in the financial condition or
operations of the Awardee.
(h) Principal Place of Business. The principal place of business and chief executive
offce of the Awardee is at the addrss of the Awardee specified in Schedule 1
hereto.
(i) Organization Number. The Awardee's organization number is correctly identified in
Schedule 1 hereto.
(j Subsidiaries and Parent. Any subsidiaries or parent of the Awardee are disclosed on
the attached Schedule 1.
(k) Defaults Under Other Agreements. No default by the Awardee has occurred under
any agreement or instrent to which the Awardee is a part or to which any of its
propert is subject that could have a Material Adverse Effect.
(i) Title to Property. Except as disclosed in writing in the opinion of counsel, the
Awardee holds good and maretable title to all of the Collateral, free and clear of
any liens, security interests or other encumbrances except for Penuitted
Encumbraces.
(m) RUS Mortgage. The RUS Mortgage is in full force and effect, wil secure the
Obligations, including the Note, and creates a valid first lien on the propert pledged
thereunder and hereunder.
(n) Additional Representations and Warranties. The Awardee fuher represents and
warrants as set forth on Schedulel.
ARTICLE II - THE LOAN AND GRANT
Section 3.1 Lon and GraDt AmouDts.IDterestRate,.and Expiati!ln .pate.
(a) Loan AmOUnts. RUS agrees to make and the Awardee agrees to accept, on the terms
and conditions stated in this Agreement and subject to 31 U.S.C. 1551 and 1552, a
loan, in the amount specified in Schedule 1 hereto (the "Loan").
(b) Grant Amount. RUS agrees to make and the Awardee agrees to accept, on the tenus
and conditions stated in this Agreement and subject to 31 U.S.C. 1551 and 1552, a
. grant, in the amount specified in Schedule 1 hereto (the "Grat').
(c) Interest Rate. The amount of the Loan specified in Schedule 1 hereto wil be
interest on each Advance at the Treasur rate for comparble loans with comparable
maturities.
Page 6
(d) Expiration Date. The obligation ofRUS to advance the Award, or any portion
thereof; shall expire on a date ("Expiration Date") the (3) years from the date of
this Agreement.
Section 3.2 Loan.GrantDocuments
(a) The debt created by the Loan wil be evidenced by a note(s) ("Note(s)") executed by
the Awardee and payable to the United States of America. The Awardee shall
repay the Loan in accordance with the Note(s) which shall be payable and bear
interest in accordance with its (their) terms.
(b) The Awardee shall execute the Security Documents, in form and substance
satisfactory to RUS, and such other security instrents as required by RUS.
Section 3.3 Payment
Except as otherwise prescribed by RUS, the Awardee shall make all payments on the Note(s)
utilzing electronic fund transfer procedures as specified by RUS.
Section 3.4 Project
(a) Loan and Grant Purpose. The Loan and Grant have been made solely to finance the
broadband infrastrctue project specifically described in the RUS approved
Application ("Project. ")
(b) Changes to Project. The Awardee shall obtain the prior written approval of RUS for
any material change to the system design, constrction, Timeline, delivery of
services, and/or objective(s) of the Project.
Section 3.5 ACH Payments
The Awardee consents to the use of the Automated Clearing House (ACH) Payment System
and to the deposit of award fuds directly into the Pledged Deposit Account.
ARTICLE iv - CONDITIONS OF FINANCIAL ASSISTANCE
Section 4.1 Conditions Precedent to Closing
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 Matters. All legal matters incident to the consummation of the transactions
hereby contemplated shall be satisfactory to counsel for RUS;
(b) Loan.Grant Documents. RUS shall receive duly executed origials of the Loan.
Grant Documents;
(c) Filed and Recorded Security Documents. RUS shall have received executed, fied
and indexed financing statements covering all of the personal propert and fixtures
of the Awardee;
(d) Articles of Incorporation, Charter, Bylaws and Organizational Documents. With
respect to corporate and cooperative A wardees, RUS shall have received certfied
Page?
copies of the Awardee's most recent aricles of incorporation or charter and bylaws.
With respect to limited liabilty companies or similar organiztions, RUS shall have
received certfied copies of the Awardee's most recent organization documents
containing provisions reflecting the obligations of the Awardee in pararaphs (c) and
(d) of Section 7.3;
(e) Authorizations. RUS shall have received satisfactory evidence that all Loan-Grant
Documents and proceedings of the Awardee necessar for duly authorizing the
execution, delivery and performce of the Loan-Grant Documents have been
obtained and are in full force and effect;
(t) Approvals. RUS shall have received satisfactory evidence that the Awardee has duly
registered when and where required by law with all state, Federal and other public
authorities and regulatory bodies and obtained all authorizations, certificates, and
approvals necessar for, or required as a condition of, the validity and enforceabilty
of each of the Loan-Grant Documents;
(g) Title Evidence. RUS shall have received satisfactory evidence that the Awardee hasgood and marketable title to its propert, including the Project, and holds such
franchises, permits, leases, easements, rights, privileges, licenses, or right-of-way
instruments, reasonably adequate in form and substace, as may be requird by law
for the continued maintenance and operation of the existing facilties and Project;
(h) Management, Service, and Operating Agreements. Except as otherwise provided in
Sections 4.2 and/or 4.3 herein, RUS shall have received all management, service, and
operating agreements, in form and substance acceptable to RUS, which shall be in
accordance with fees or rates presented in the pro forma financial statements
submitted to RUS in the RUS approved Application;
(i) Opinion of Counsel. RUS shall have received an opinion of counsel for the Awardee
(who shall be acceptale to RUS) in form and substance acceptable to RUS for each
state in which the Awardee operates; and
(j) Additonal Conditions. The Awardee has met all additional conditions specified in
Schedule i hereto.
Section 4.2 General Conditons Pmedut to RUSt OblitloßS to ßtse FundS for Advanci
The obligations of RUS hereunder are subject to the satisfaction of each of the following
conditions precedent (all documents, certificates and other evidence of such conditions are to be
satisfactory to RUS in its discretion):
(a) Service Rate Evidence. RUS shall have received satisfactory evidence that the
Awardee has duly adopted Service Rates for all proposed services which are
designed with a view to (i) paying and discharging all taxes, maintenance expenses,
and operating expenses of the Awardee, (ii) making all 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 Awardee, and (iv)
producing and maintaining the TIER specified in Section 5.8 hereof;
(b) Fidelity Bond or Theft Insurance Coverage. RUS has received copies of the fidelity
bond or theft insurance policy from the Awardee, identifying RUS as a loss payee,
frm a surety doing business with the United States listed in 3 i CFR Part 223, in the
amount specified in Schedule i, coverg all offcers, employees, or agents of the
Awardee authorized to receive, disburse, or receive and disburse the Loan and Grant.
Notwithstanding, for curent RUS borrowers, RUS may waive this fidelity bond
Page 8
coverage reuirement, if, after evaluation, RUS has determined that adequate fidelity
bond coverage is already maintained by the Awardee as a RUS borrower under
existing loan or guarantee agreements between the Awardee and RUS;
(c) Current Financial Information and Certifcate of Authority. RUS has received from
the Awardee: (i) its updated balance sheet, statement of cash flow, and income
statement and (ii) a duly authorized and executed certification, Form 675,
"Certification of Authority," designating an offcer, employee, or agent of the
Awardee as the person or persons authorized to execute and submit, on behalf of the
Awardee, RUS Form 481, "Financial Requirement Statement;"
(d) Deposited Funds. RUS has received from the Awardee evidence, satisfactory to
RUS, verifying that the Awardee has maintained on deposit in an account, funds
suffcient to complete the Project as specified on Schedule 1; and
(e) Additional Conditons. The Awardee has met all additional conditions specified in
Schedule i hereto.
Section 4.3 Conditions to Individual Advances
The obligations of RUS to approve any Advance are subject to the satisfaction of each of the
following conditions precedent on or before the date ofsuch Advance (all documents, certificates and other
evidence of such conditions precedent are to be satisfatory to RUS in its discretion):
(a) Continuing Representations and Warranties. That the representations and waranties
of the Awardee contained in this Agreement be tre and correct on and as of the date
of such Advance as though made on and as of such date;
(b) Material Adverse Effect. That no event has occured 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
occured and be continuing, or shall have occured after giving effect to any
Advances on the books of the Awardee;
(d) Requisitions and Supporting Documentation. That RUS shall have received not
more frequently than once a month, unless otherwise agreed to by RUS, a completed
RUS Form 481, "Financial Requirement Statement" (hereinafter" Form 481,")
bearing the original signatue of the officer, employee, or agent of the Awardee
authorized to receive, disburse, or receive and disburse the Award, with supporting
documentation from the Awardee in accordance with the BIP Contracting, Work
Order and Advance Procedures Guide. Advances shall be limited to the minimum
amounts required for the Awardee's immediate disbursement needs and shall be
requested by the Awardee only for actual immediate cash requirements of the
Awardee. Such loan/grant advances shall be provided on a reimburement basis, or
based on unpaid third par invoices for Eligible Purposes, or contracts approved by
RUS, in accordance with the BIP Contracting, Work Order and Advance Procedures
Guide. Grant funds must be advanced concurrntly with Loan fuds in the same
proportion as the Grant is to the total Award;
(e) Flood Insurance. That for any Advance used in whole or in par to finace the
constrction or acquisition of any building in any area identified by the Secretar of
Housing and Urban Development pursuant to the Flood Disaster Protection Act of
1973 (the "Flood Insurance Act") or any rules, regulations or orders issued to
implement the Flood Insuance Act as any ara having special flood hads, or to
Page 9
finance any facilties or materials to be located in any such building, or in any
building owned or occupied by the Awardee and located in such a flood hazard area,
the Awardee 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 paricipating in the national flood insurce progrm, as requird by
the Flood Insurance Act and any related regulations, and (ii) the Awardee 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;
(t) Current Financial Information. That RUS has received from the Awardee: its
curent, updated balance sheets, income statements and statements of cash flow;
(g) Compliance with Timeline. That RUS has received from the Awardee evidence,
satisfactory to RUS, that the Project is being constrcted in accordace with the
Timeline;
(h) Compliance with Loan-Grant Documents. Tht the Awadee is in material
compliance with the Loan-Grant Documents and the RUS Mortgage;
(i) Permits, Licenses and Franchises. That RUS shall have received satisfactory
evidence that the Awardee has obtained the permits, licenses, franchises and other
approvals identified on Schedule 1;
(j) Additional Documents. That the Awardee agrees to provide RUS with such
additional documents as RUS may request; and
(k) Additional Conditions. That the Awardee has met all additional conditions specified
in Schedule 1 hereto.
Section 4.4 First Adv8ncè to Pay Off JlAppUeatfon Eme~s áØd loteri Finaning Resriètons
on Subsequent Advances
Funds to payoff certain pre-application expenses, as defined in the NOF A, and expenditures
for Eligible Puroses incured after submission of the Application to RUS, if any, wil be included in the
first Advance. Thereafter no fuher Advances wil be made unless and unti the Awardee has fuished
evidence, in form and content satisfactory to RUS, that such interim finacing has been paid in full and any
associated liens have been duly discharged of record.
ARTICLE V -AFFIRATIVE COVENANTS
Section 5.1 Generally
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, the Awardee
shall duly observe each of the affirmative covenants contaied in this Aricle V.
Section 5.2 Use of Advances
The Awardee shall expend A ward funds only for Eligible Puroses in accordance with the
RUS approved line item Project budget and Form(s) 481 submitted to RUS prior to the advance of fuds.
Section 5.3 Unusedl!ngDi§llJO)Yed Agvances
(a) The Awardee shall retur to RUS fortwith all or any advanced portion of the Loan
and Grant not disbursed by the Awardee for the Project or not needed to complete
Page 10
the Project with any interest eared thereon when deposited in the Pledged Deposit
Account.
(b) The Awardee shall reimbure RUS for any advanced fuds whose original
expenditue has been disallowed by an RUS loan and grant audit. Disallowances
shall be satisfied, as directed by RUS, by either administrative offset against other
approved purposes on Fonn(s) 481 or repaying the disallowed amount directly to the
United States Treasur. Such disallowed amounts shall accrue interest payable to
RUS fròm the date RUS delivers to the Awardee a written demand for payment.
Interest shall accrue on disallowed Loan Advances at the lesser of the following: the
interest rate of the disallowed Advance or the then curent United States Treasury
rate as prescribed by the Secretar of the Treaur in the Federal Register and the
Treasury Fiscal Requirements Manual Bulletin. Interest shall accrue on disallowed
Grant Advances at the then current United States Treasur rate as prescribed by the
Secretar of the Treasury in the Federal Register and the Treasur Fiscal
Requirements Manual Bulletin. Closeout of the Loan and Grant wil not affect the
right of RUS to disallow expenditures and recover, in full, any amount on the basis
of a subsequent audit or other review or the Awardee's obligation to retur any
disallowed expenditurs.
Section 5.4 Deposit of Advances into Pledged Deposit Account
(a) The Awardee shall open and maintain a deposit account pledged to RUS ("Pledged
Deposit Account,") in a ban or depository whose deposits are insured by the Federal
Deposit Insurance Corporation or other federal agency acceptable to RUS and shall
be identified by the RUS' designation of the Awardee followed by the words
"Pledged Deposit Account." The Awardee shall promptly deposit proceeds from all
Advances, including previously advanced fuds whose original expenditure has been
disallowed by an RUS audit into the Pledged Deposit Account. Moneys in .the
Pledged Deposit Account shall be used solely for the puroses for which Advances
were made, or for such other puroses as may be approved in writig by RUS.
Deposits and disburements from the Pledged Deposit Account shall be made and
recorded in accordance with the BIP Contracting, Work Order and Advance
Procedures Guide.
(b) First Lien on Pledged Deposit Account. The Awardee shall perfect and maintain a
first and prior lien in the Pledged Deposit Account (pursuat to a deposit account
agreement or similar agreement or mechanism for perfecting as provided by
applicable law) in form acceptable to RUS.
Section 5.5 Additional Project Funding
The Awardee shall ensure that adequate funding is in place tò complete the Project and wil,
after obtaining the prior written approval of RUS, obtain additional loans or funds or receive binding
commitments for supplemental funding in an amount needed to ensure completion of the Project.
Section 5.6Miscellaneous Notices
The Awardee shall furnish to RUS:
(a) Notice of Default. Promptly after becoming aware thereof, notice of the occurence
of any default under the Loan-Grant Documents or the RUS Mortgage or the receipt
of any notice given pursuant to the Loan-Grat Documents or RUS Mortgage 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, the other Loan-Grat
Documents or under the RUS Mortgage.
Page 11
(b) Notice of Litigation. Promptly afer the commencement thereot: notice of the
commencement of all actions, suits or proceedings before any court arbitrator, or
governmental deparment, commission, board, bureau, agency, or instrentality
afecting the Awardee or any Affliate which, if adversely determined, could have a
Material Adverse Effect.
(c) Regulatory and Other Notices. Promptly after receipt thereof, copies of any notices
or other communications received from any governental authority with respect to
any matter or proceeding which could have a Material Adverse Effect.
(d) Material Adverse Effect. Promptly after becoming aware thereof, notice of any
matter which has resulted or may result in a Material Adverse Effect.
(e) Corporate Document Changes. Thirt (30) days prior to their effectiveness, any
amendments, supplements or modifications to the Awardee's Articles of
Incorporation, Charter, Bylaws, Operating Agreement, Members Agreements or
other Organizational Documents.
(f) Other lriormation. Such other information regarding the condition, financial or
otherwise, or operations of the Awardee as RUS may, from time to time, reasonably
request.
Section 5.7 Rates and Financial Performance Criteria
The Awardee shall design, charge and maintain rates in effect which (i) pay and discharge all
taxes, maintenance expenses and operating expenses of its system (ii) make all payments in respect of
pricipal of and interest on the Note(s) when and as the same shall become due, (ii) provide and matain
reasonable working capital for the Awardee, and (iv) maintain the TIER specified in Section 5.8 hereof.
Section 5.ll 1.
The Awardee wil maintain the TIER required in the Prior RUS Loan Contract and, upon the
termination of the obligation to maintain such TIER, wil maintain a TIER of 1.0 until the Loan is repaid in
full.
Section 5.9 Corrective Action
Within thir (30) days of (i) sending the finacial report required by Section 6.3 hereof that
shows the TIER specified in Section 5.8 was not achieved for the reported fiscal period or (ii) being
notified by RUS that the TIER specified in Section 5.8 was not achieved for the reported fiscal period,
whichever is earlier, the Awardee, in consultation with RUS, shall provide a written plan satisfactory to
RUS settig forth the actions that shall be taen to achieve the specified TIER on a timely basis and shall
promptly implement said plan.
Section 5.10 Service Obligation
The Awardee shall provide the broadband service described in the RUS approved Application
commencing from the date the Project is Substantially Complete for at least as long as the Composite
Economic Life of the facilties financed by the Award as specified on Schedule 1.
Section 5.11 ObUgatlnswitb Respect to the Constuc:on, Qpratin and Maitepanc of the Ptleç
(a) Project Management and Operation. The Awardee shall be responsible for the
management of the Project and wil operate the Project in an effcient and economic
manner as well as maintaining the Project in good repair.
Page 12
(b) Construction in Accordance with System Design and Timeline. The Awardee shall
cause the Project to be constructed and/or built out, and completed in accordance
with the system design submittd with the RUS approved Application, as such
design may be amended with prior RUS consent, and the Timeline.
(c) General Insurance Requirements. The Awardee shall take out and maintain
insurnce on the Project and any other propert acquired with the Loan and Grant in
accordance with 7 CFR Section 1788 as well as maintaining the fidelity bond or theft
insurance coverage required in Section 4.2(b) hereof.
(d) Contracting. The Awardee may, in accordance with the BIP Contracting, Work
Order and Advance Procedues Guide, contract for goods and services to be funded
by the Award, using RUS form contracts or private contracts; provided that private
contracts must comply with equal employment opportity and civil nghts
requirements, as well as the Davis Bacon Act.
(e) Commencement and Completion of Constrction and/or Installation.
(1) Awardees are required to commence construction and/or installation of the
Project within 180 days from the date hereof, and
(2) The Project shall be Substantially Complete within two year of the date
hereof, and Project Completion shall occur within thee years of the date
hereof.
Section 5.12 Preservation of Existence and Rights
The Awardee shall take or cause to be taen all such actions as from time to time may be
necessar to preserve its existence and to preserve and renew all franchises, contracts, nghts of way,
easements, permits, and licenses now or hereafter to be granted or conferred upon it, with respect to the
Project, the loss of which would have a Material Adverse Effect.
Settion 5.13 Compliance with Laws
Awardees shall comply with all applicable federal and state laws, including but not limited to:
(i) The nondiscrimination and equal employment opportunity requirements of Title VI of the Civil Rights
Act of 1964, as amended (42 U.S.C. § 2000e et seq., 7 CFR pt. 15); (ii) Section 504 of the Rehabiltation
Act (29 U.S.C. § 794 et seq.; 7 CFR pt. 15b); (ii) The Age Discrimination Act of 1975, as amended (42
U.S.C. § 6101 et seq.; 45 CFR pt. 90); (iv) Executive Order 11375, amending Executive Order 11246,
Relating to Equal Employment Opportity (3 CFR pt. 102). See 7 CFR pts. 15 and 15b and 45 CFR pt.
90, RUS Bulletin 1790-1 ("Nondiscrimination among Beneficiaries of RUS Programs"), and RUS Bulletin
20-15:320-15 ("Equal Employment Opportnity in Construction Financed with RUS Loan"). The RUS
Bulletins are available at htt://www.broadbandusa.gov.;(v)TheArchitectualBarriersActof1968.as
amended (42 U.S.C. .§4151 et seq.); (vi) The Uniform Federal AccessibiHty Standads (UFAS) (Appendix
A to 41 CFR subpar 101-19.6); (vii) The Council on Environmental Quality Regulations for Implementing
the Procedural Provisions of NEP A and certin related federal environmental laws, statutes, regulations,
and Executive Orders found in 7 CFR1794; and (vii) The Communications Act of 1934, as amended, (47
U.S.C. § isi et seq.), the Telecommunications Act of 1996, as amended (Pub. L. 104-104, 110 Stat. 56
(1996), and the Communications Assistance for Law Enforcement Act (47 U.S.C. § 1001 et seq.)
(CALEA).
Section 5.14 Equal Opportunity Requirements
(a) Equal Opportunity Provisions in Construction Contracts. The Awardee shallincorporate or cause to be incorporated into any constrcton contract, as defined in
Page 13
Executive Order 11246 of September 24, 1965 and implementing regulations, which
is paid for in whole or in part with funds obtained from RUS or borrowed on the
credit of the United States pursuant to a grant, contract, loan, insurance or guaratee,
or undertaken pursuant to any RUS program involving such grant, contrac, loan
insurance or guartee, the equal opportnity provisions set fort in Attchment 2
hereto, entitled Equal Opportnity Contrct Provisions.
(b) Equal Opportunity Contract Provisions Also Bind the Awardee. The Awardee
further agrees that it shall be bound by such equal opportnity clause in any federally
assisted constrction work which it performs itself other than though the permanent
work force directly employed by an agency of government.
(c) Sanctions an Penaltes. The Awardee agrees that it shall cooperate actively with
RUS and the Secretary of Labor in obtaining the compliance of contrctors and
subcontractors with the equal opportunity clause and the rules, regulations and
relevant orders of the Secretar of Labor, that it shall furnish RUS and the Secetary
of Labor such information as they may require for the supervision of such
compliance, and that it shall otherwise assist the administering agency in the
discharge of RUS' primar responsibilty for securing compliance. The Awardee
further agrees that it shall refrain from enterng into any contract or contrct
modification subject to Executive Order 11246 with a contractor debared from, or
who has not demonstrated eligibilty for, Government contracts and federally
assisted constrction contracts pursuant to Par II, Subpar D of Executive Order
11246 and shall car out such sanctions and penalties for violation of the equa
opportity clause as may be imposed upon contractors and subcontrctors by RUS
or the Secreta of Labor pursuant to Par II, Subpar D of Executive Order 11246.
In addition, the Awardee agrees that if it fails or refuses to comply with these
undertakings RUS may cancel, terminate or suspend in whole or in par this
Agreement, may refrain from extending any fuher assistace under any of its
programs subject to Executive Order 11246 until satisfactory assurance of futu
compliance has been received from the Awardee, or may refer the case to the
Deparent of Justice for appropriate legal proceedings.
Section 5.15 Purchases with Award Funds
Except as specifcally authorized in writing in advance by RUS, all facilties, materials,
equipment, supplies, replacements and all other items purchased with A ward funds shall be purchad
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 5.16 Awardee to Defend Title and Remove Liens
Except for Permitted Encumbrances, the Awardee wil maintain and preserve the lien of this
Agreement superior to all other liens affecting the Collateral, and wil forever warrant and defend the title
to the Collateral against any and all claims and demands whatsoever. The Awardee shall make, execute,
acknowledge, deliver, file and record all such mortgages, financing statements, continuation statements,
security agreements, instruments and conveyances as is necessa to preserve the lien of this Agrement
against the Collateral superior to all other liens. The Awardee shall maintain the Collateral free of all liens
except for Permitted Encumbraces, and wil promptly payor discharge any and all obligations for or Oil
account of which any such lien or charge might exist or could be created and any and all lawfu taxes, rates,
levies, assessments, liens, claims or other charges imposed upon or accruing upon any of the Collateral, as
and when the same shall become due and payable; and whenever called upon so to do by RUS wil fuish
to RUS adequate proof of such payment or discharge; provided, however that this provision shall not be
deemed to require the payment or discharge of any tax, rate, levy, assessment or other govenmental charge
while the Awardee is contesting the validity thereof by appropriate proceedings in good faith and so long as
it shall have set aside on its books adequate reserves with respect thereto.
Page 14
Section S.17 .Further Assuranççs
(a) The Awardee shall from time to time upon written demand of RUS make, execute,
acknowledge and deliver or cause to be made, executed, acknowledged and delivered
all such fuer and supplemental mortgages, financing statements, continuation
statements, security agrements, instrments and conveyances as may be requested
by RUS and take or cause to be taken all such fuer action as may reasonably be
requested by RUS to provide for the securing and payment of the principal of,
interest on, and any and all other amounts payable hereunder and under the Note(s)
according to the terms thereof and for the purose of fully conveying, trsfering
and confiring the propert hereby conveyed, mortgaged and pledged or intended so
to be, whether now owned by the Awardee or hereafter acquired by it.
(b) The Awardee shall cause this Agreement, financing sttement, continuation
statement and every additional instrent which shall be executed pursuant to
subsection (a) immediately above, to forthwith upon execution to be fied and
recorded and refied and rerecorded as conveyances and security interests in real and
personal propert in such manner and in such places as may be required by law or
requested by RUS in order to fully preserve the security for the Obligations,
including the Loan, and to perfect and maintain the superior lien of this Agreement
and all supplemental security instrents.
Section 5.1S Buy American - General Prohibition and \yiiinr
For Awardees that are States, local governments, or any agency, subdivision, instrmentality,
or political subdivision thereof, pursuant to § 1605 of the Recovery Act, no Loan or Grant fuds may be
used for the construction, alteration, maintenance, or repair of a public building or public work (as such
terms are defined in 2 CFR § 176.140) unless all of the iron, steel, and manufactuing goods used in the
project are produced in the United States, except as provided in OMB regulations at 75 Fed. Reg. 14323
(Mar. 25, 2010). Notwithtanding, such Awardees have been grated a general waiver by the Secretary of
Agricultue with respect to certain broadband equipment, as outlined in the Federal Register at 74 Fed. Reg.
31402 (July 1,2009). All other waivers must be requested ofRUS pursuant to 2 CFR § 176.60
Section 5.19 Nondiscrimination and Interconnection Obligations
The Awardee agrees to (i) adere to the principles contaned in the FCC's Internet Policy
Statement (FCC 05-151, adopted August 5, 2005); (ii) not favor any lawful Internet applications and
content over others; (ii) display any network management policies in a prominent location on the service
provider's webpage, provide notice to customers of changes to these policies, such policies include any
business practices or technical mechanisms they employ, other than standard best efforts Internet delivery,
to allocate capacity; differentiate among applications, providers, or sources, limit usage and manage ilegal
or harfu content; (iv) connect to the public Internet directly or indirectly, such that the project is not an
entirely private closed network; and (v) offer interconnection, where technically feasible without exceeding
curent or reasonably anticipated capacity limitations, on reasonable rates and terms to be negotiated with
requesting paries. This includes both the abilty to connect to the public Interet and physical
interconnection for the exchange of traffc.
(a) Notwithstanding the above, the Awardee may not offer interconnection to anyonethat wil provide services that duplicate services provided by projects fuded by
outstanding telecommunications loans made under the RE Act. Furer,
interconnection may not be used for an ineligible purpose under the Recovery Act.
(b) These obligations are subject to the needs of law enforcement and reasonable
network management. As such, the Awardee may employ generally accepted
technical measures to provide acceptable service levels to all customers, such as
Page 15
caching and application-neutral bandwidth allocation, as well as measures to address
spam, denial of service attcks, ilegal content, and other harful activities.
(c) In the event the Awardee contrcts with another entity to operate the Project, the
Awardee shall require such entity to comply with the terms of this Section, expressly
including this Section in their contractual arangement.
(d) These obligations do not apply to the Awardee's existing network.
Section 5.20 Davis-Bacon Wal!e Requirements
The Awardee shall comply with the Davis-Bacon Act, and the guidance found at 29 C.F.R.
pts. i, 3, and 5, such that any covered contract with a contractor or subcontractor in excess of $2,000 for
constrction, alteration or repair (including painting and decorating) shall contain the contract clauses
found in 29 C.F.R. 5.5(a), to ensure that all laborers and mechanics employed on the Project receive
payment of not less than the prevailng wage.
Section 5.21 Additional Affrmative Covenants
The Awardee shall comply with the additional affirative covenants set fort in Schedule i
hereto.
ARTICLE VI - ACCOUNTING AND REPORTING
Section 6.1 Financial Reords
(a) Awardees must establish an accounting system satisfactory to RUS in compliance
with Accounting Requirements. Such a system of accounts must account for all
funds advanced under this Agreement separately from all other fuds for the Project,
as required by the Recovery Act.
(b) The Awardee shall maintain, at its premises, such books, documents papers, or other
records and supporting documents, including, but not limited to, invoices, receipts,
payroll records and bils of sale, adequate to identify the puroses for which, and the
manner in which Loan, Grant, and other fuds were expended on the Project. The
Awardee shall at all times keep, and safely preserve, proper books, records and
accounts in which full and tre entries shall be made of all dealings, business, and
affirs of the Awardee and its Subsidiares, in accordance with its system of accounts
complying with Pargraph (a) immediately above. The Awardee shall maintain
copies of all documents submitted to RUS in connection with the Award until the
longer of (i) the Loan being paid in full and all audits have been completed, (ii) the
term of this Agreement or (iii) three years subsequent to close-out of the Award.
Section 6.2 Ril!hts of Inspection
The Awardee shall afford RUS, the Offce of the Inspector General of USDA, and the
Government Accountabilty Offce, through their representatives, reasonable opportunity, at all times
during business hours and upon prior notice, to have access to and right to inspect the Project, any other
propert encumbered by the Securty Documents, and any and all books, records, accounts, includig
electronic books, records, accounts and electronic mail messages, regardless of the physical form or
characteristics, invoices, contracts, leases, payroll records, canceled checks, statements, and other
documents, and papers of every kind belonging to or in any way pertining to its propert or business,
including its Subsidiares, if any, and to make copies or extracts therefrom.
Page 16
Section 6.3 Annual Augit
Effective after an Advance has been made, one hundred twenty (120) days from the end of
the Awardee's current fiscal year and, thereafter, one hundred twenty (120) days from the close of each
subsequent fiscal year, the Awardee must submit anual audited ficial statements along with a report on
compliance and on internal control over financial reporting, and a management letter in accordance with
the requirements of 7 CFR 1773. The CPA conducting the anual audit must meet the requirements for a
qualifed CPA as set forth in 7 CFR § 1773.5. However, if the Awardee is a state, local government, or
non-profit organization that expends $500,000 or more of federal fuds during its fiscal year, an audit must
be perfomied in accordance with OMB Circular A-l33, Audits of States, Local Governents, and Non-
Profit Organizations, located at http://www.wbitehouse.gov/omb/circularsla133/a133.html. Awardees are
also responsible for ensurig that sub-recipient audit report are received and for resolving any audit
findings.
Section 6.4 BIP Reporting
(a) Quarterly Report. No later than thirt (30) calendar days after the end of each
calendar year quarer the Awardee must submit to RUS utilizing RUS's online
Broadband Collecion and Analysis System (BCAS), the following infomiation:
balance sheets, income statements, statements of cash flow, summaries of its rate
packages, the number of customers taking broadband service on a per community
basis, the completion status of the build-out and whether the project is Substantially
Complete. In addition the Awardee must provide RUS with such other reports
concerning the financial condition or operation of the Awardee, including its
Subsidiaries, as RUS may request.
(b) Annual Report. For the lesser of five years or as long as the Awardee is required to
provide service hereunder, on each Januar 31 st, staing the firs January 31 st after
Project Completion, the Awardee must submit the following information to RUS
utilizig BCAS:
(i) Number of households and businesses subscribing to broadbad service;
(ii) Number of households and businesses subscribing to broadband service that
receive improved access; and
(iii) Number of educational, librar, healthcare, and public safety providers
receiving either new or improved access to broadband service.
(c) Annual Compliance Certifcate. Within fort-five (45) days after the close of each
calendar year, or more oftn if requested in writing by RUS, the Awardee shall
deliver to RUS a written statement signed by its general manager, managing
member, or equivalent corporate offcial satisfactory to RUS, stating that, durig
such year the Awardee has fulfilled its obligations under the Loan-Grant Documents
throughout such year 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
offcial and the nature and statu thereof
(d) Close Out Report. The Awardee shall deliver a close out report to RUS no later than
ninety (90) days after the expiration or termination of the Award, or the completion
of the Project and expenditure of all Award funds. The close out report shall
address: (i) a comparson of actual accomplishments to the objectives set fort in the
Application; (ii) a descripdon of problems, delays, or adverse conditions that
occured, or which affected the attnment of overall Project objectives, prevented
the meeting of time schedules or objectives, or precluded the attaient of particular
Project work elements during established time periods; and (ii) a comparison of
Page 17
how funds were spent against the original general budget submitted with the RUS
approved Application.
Section 6.5 Recovery Act Reporting
No later than ten (10) calenda days aftr each calendar quarr in which the Awardee receives
the assistance award funded in whole or par with Award funds, the Awardee shall submit though
http://www.federalreporting.gov the information required by 2 C.F.R. 176. The final report should
summarize the Awardee's quarrly filings and stte whether the project's goals have been satisfied.
ARTICLE VII - NEGATIVE COVENANTS
Section 7.1 General
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, the Awardee
shall duly observe each of the negative covenants set fort in this Article VII.
Section 7.2 Merger, Consolidation, Transfer of Property, or Change in Control
The Awardee shall not, without the prior written consent of RUS, tae or suffer to be taen
any steps to reorganize consolidate with or merge into any other corporation, or to sell, leae or trnsfer (or
make any agreement therefor) all or any substantial par of its propert, including, without limitation, the
Project.
Section 7.3 çoyenants for Limited Liability Companies and Similar Awardees
A wardees which ate limited liabilty or similar organiztions agree th;
(a) The death, retirement, resignation, expulsion, termination, bankuptcy or dissolution
of any member or the occurence of any other event that terminates the continued
membership of any member shall not cause the Awardee to be dissolved or its afairs
to be wound up;
(b) Prior to the date on which any and all obligations owed to RUS, including the Note
evidencing the Loan, ar discharged in full, the Awardee shall not be dissolved Or
terminated;
(c) The organizational documents of the Awardee shall contain provisions reflecting the
obligations of the Awardee in paragraphs (a) and (b) immediately above and such
provisions shall not be amended without the prior written consent ofRUS; and
(d) No direct or indirect addition or issuance of any membership units (or any other
ownership interest) in the Awaree may be made by the Awardee or its members
without the prior written consent of RUS and no trnsfer, whether individually or in
the aggegate, of any membership units (or any other ownership interest) in the
Awardee which wil result in the transfer of more th 49% of the equity interests (of
whatever nature, including voting and non-voting) in the Awardee may be made by
the Awardee or its members without the prior written consent of RUS.
Section 7.4 Additional Indebtedness
The Awardee shall not, without the prior written consent of RUS, incur additional secured or
unsecured indebtedness other than (i) purchase money security interests, (ii) unsecured trade inebtedness
and (ii) other debt arising in the ordinary course of business. Indebtedness under items (i), (ii), and (ii) in
the aggregate shall not exceed five percent (5%) of the Awardee's consolidated total assets.
Page 18
Section 7.5 Negative Pledge
The Awardee shall not create, incur or suffer any lien, mortgage, pledge, assignment, or other
encumbrance on, or securty interest on its propert, other than Permitted Encumbrances.
Section 7.6 Contracts
The Awardee shall not, without the prior written consent of RUg, enter into any contract or
contracts for the operation or management of all or any substantial par of the Awardee's system, including,
without limitation, the Project, and shall not enter into any contract for the use by others of all or any
substantial par of its system, including, without limitation, the Project.
Section 7.7 Salaries
Salaries, wages, and other compensation paid by the Awardee for services, and directors',
members', managers' or trstees' fees, shall be reasonable and in conformity with the usual practice of
entities of the size and nature of the Awardee.
Section 7.8 Extension oCCredit
Except as specifically authorized in writing in advance by RUS, the Awardee wil make no
advance payments or loans, or in any maner extend its credit, either directly or indirectly, with or without
interest, to any of its directors, trstees, offcers, employees, stockholders, members, managers, Affliates
or Affliated companies; provided, however, that the Awardee may make an investment for any purose
described in section 607(cX2) of the Rurl Development Act of 1972 (including any investment in, or
extension of credit, guarantee, or advance made to an Affliated Company that is used by such Affiliate for
such purpose) to the extent that, immediately after such investment (1) the aggregate of such investments
does not exceed one-third ofthe Net Worth and (2) the Awardee's Net Wort is at least twenty (20) percent
úf its Total Assets.
Section 7 .9l)istributions or Withdrawals
(a) Except for payments made for tax lìabilties, the Awardee shall not, without the prior
written approval of RUS, make any membership withdrawal, unit redemptions, or
other type of profit allocation to its members, if it is a limited liabilty company, nor
make any dividend, stock, capital, capital credit or other distrbution in the natue of
an investment, guarantee, extension of credit, loa or advance payment on
obligations, if it is a corporation or cooperative (all such distributions being
hereinafter collectively called "Distributions") which would violate the distribution
restriction(s) of the Prior RUS Loan Contrct or RUg Mortgage described in
Schedule I hereto.
(b) Additional Negative Restrictions. The Awardee shall comply with the additional
negative restictions on Distributions and Withdrawals set fort in Schedule 1 hereto.
Section 7.10 Cbanging.PrinciplPllAAofBtilnes.Jmce ofê9nductlgBøSlnes orrtio£Organiztion .
The Awardee shall not change its principal place of business, place of conducting business, or
tye of organization without the prior written consent of RUg.
Section 7.11 Changing Name or Place oflncorporation or Organization
The Awardee shall not change its legal name or place of incorporation or organization without
giving RUS sixty (60) days prior wrtten notice.
Page 19
Section 7.12 Hlstoric Preservation
The Awardee shall not, without the prior written consent of RUS, use any Advance to
constrct any facilty which shall involve any district, site, building, strcture or object which is included
in, or eligible for inclusion in, the National Register of Historic Places maintained by the Secretar of the
Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act of 1966.
Section 7.13 Affliated Transactions
With regard to the Project, the Awardee shall not enter into any trsaction, contract, or dealing
with an Affliate of the Awardee or with the Awardee's or Affliate's directors, trtees, offcers, managers,
members (if the Awardee is a limited liabilty company), or other corporate offcials, without the prior
written consent ofRUS. RUS' consent to advance loan funds for affliated transactions wil be limited to an
amount which is the lower of cost or market rate and whîch is subject to verification by RUS and its
representatives having access to the books and records of the Affiiate.
Section 7.14 Preferred Stock
The Awardee shall not issue any new or additional preferred stock without the prior written
approval of RUS, which approval shall not be unreasonably withheld if such stock issuance, in RUS' sole
opinion, would not be considered a debt instrment under GAAP.
Section 7.15 Restrictions on Transfers of Property
(a) Except as provided in Paragraph (b), and excluding any propert which the Awardee
must sell to customers in the ordinar course of business, the Awardee shall not sell,
lease or transfer any Collateral to any other person or entity (includig any
subsidiary or affliate of the Awardee) without the prior written consent of the RUS.
(b) So long as the Awardee is not in default hereunder, the Awardee may, without
obtaining the consent of RUS, sell or otherwise dispose of, free frm the lien hereof,
any of its propert which is neither necessar to, nor useful for, the operation of the
Awardee's business, or which has become obsolete, worn out, damaged, or otherwise
unsuitable for the puroses of the Awardee; provided, however, that the Awardee
shall to the extent necessar: (1) replace the same with other propert of the same
kind and natue, 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 propert, which are not needed for the replacement thereof, to the
prepayment of the indebtedness on the outstading Notes; (2) imediately upon the
receipt of the proceeds of any sale or disposition of said propert, apply the entir
amount of such proceeds to the prepayment of the indebtedness evidenced by the
Notes; or (3) deposit all or such part of the proceeds derived from. the sale or
disposition of said propert into the Pledged Deposit Account , and shall use the
same only for such additions to, or improvements in, the Collateral, on such terms
and conditions as RUS shall specify.
Section 7.16 Restrictions on Changes to Line Item Budget
The Awardee agrees that the budget for the Project is a line item budget and agrees not to
make any revisions to the RUS approved line item Project budget, including, without limitation, the par of
the budget for construction, without the prior writtn approval ofRUS.
Page 20
Section 7.17 Additional Negative Cgvenants
The Awardee shall comply with the additional negative covenants set fort in Schedule i
hereto.
ARTICLE VII - LENDERJS RIGHTS
Section 8.1 Termination of Award Offer
RUS, in its sole discretion, may terminate the offer to make the Loan or Loan/Grant
Combination if it does not receive the Loan-Grant Documents, duly executed on behalf of the Awardee and
all conditions in Section 4.1 hereof are not satisfied within sixty (60) days from the date hereof.
Section 8.2 Audits and Compliance Reviews
After giving prior notification to the Awardee, RUS has the right to conduct compliance
reviews and audits of the Awardee to assure compliance with the Loan-Grant Documents, NOF A and the
Accounting Requirements.
Section 8.3 Disallowed Expenditures
Upon a determination by RUS that the Awardee did not expend Award fuds on Eligible
Purposes in accordance with the RUS approved line item Prject budget and the Form(s) 481 approved by
RUS prior to the advance of funds, RUS may, in its sole discretion:
(a) Disallow all or a par of the expenditues and disburments of the Award and
require the Awardee to deposit such fuds in the Pledged Deposit Account to be
applied toward other approved Project purposes on Form(s) 481 or to reimburse the
Government, as provided in Section 5.3 hereof;
(b) Suspend making Advances;
(c) Take any other action RUS determines to be necessa including, without limitation,
exercising any right or remedy available under the Loan-Grant Documents or law.
Section 8.4 Suspension of Advances
RUS may, in its absolute discretion, suspend making Advances on the Award upon its
making a determination that an event has occured that is likely to have a Material Adverse Effect. RUS
may also suspend making advances of the Award upon the occurrence of an Event of Default.
Section 8.5 Payment Extensions
RUS may, at any time or times in succession without notice to or the consent of the Awardee
and upon such terms as RUS may prescribe, grant to any person, firm or entity who shall have become
obligated to pay all or any part of the principal of or interest on any note held by or indebtedness owed to
RUS or who may be affected by the lien created by the Loan-Grant Documents, an extension of the time
for the payment of such principal or interest, and after any such extension the Awardee wil remain liable
for the payment of such note or indebtedness to the same extent as though it had at the time of such
extnsion consented thereto in wrting.
Section 8.6 Right to Expend Money
RUS shall have the right (without prejudice to any of its rights with respect to any Event of
Default) to advance or expend moneys for the purpose of procurg insurce, or for the payment of
Page 21
insurance premiums as required hereunder, or to advance or expend moneys for the payment of taxes,
assessments or other charges, or to save the Collateral from sale or forfeiture for any unpaid tax or
assessment, or otherwise, or to redeem the same from any tax or other sale, or to purchase any tax title
thereon, or to remove or purchase any mechanics' liens or other encumbrance thereon, or to make repairs
thereon or to comply with any covenant herein contained or to prosecute and defend any suit in relation to
the Collateral or in any manner to protect the Collateral and the title thereto, and all sums so advanced for
any of the aforesaid puroses with interest thereon at the highest legal rate, but not in excess of twelve per
centum (12%) per anum shall be deemed a charge upon the Collateral and shall be fortwith paid to RUS
upon demand. It shall not be obligatory for RUS in makng any such advances or expenditues to inquire
into the validity of any such tax title, or of any such taxes or assessments or sales therefor, or of any such
mechanics' liens or other encumbrance.
Section 8.7 Right to File Financing Statements
RUS shall have the right to fie such financing statements and continuation statements on its
behalf, as secured part, and on behalf of the Awardee, as debtor, as RUS deems necessar to perfect a first
lien on the Collatera and to maintan and preserve such perfected first lien as long as the Loan remains
outstanding. The Awardee shall reimburse RUS for any expenses incurred in the exercise of this right.
ARTICLE IX - GRANT OF SECURITY INTEREST
To secure the payment and performance of the Obligations, including, without limitation, the
Note(s), the Awardee hereby pledges, assigns, and transfers to RUS, and grants to RUS a continuing
security interest in and to all propert, tangible and intangible, of every kind, nature or description, now
owned, leased, or hereafter acquired by the Awardee, wherever located, including but not limited to,
accounts, chattel paper, documents, instruments, general intangibles, licenses, (including, without
limitation, those granted by the Federal Communications Commission ("FCC"), subject to the FCC's prior
approval of any assignment or transfer of de jure or de facto control of such licenses), permits, equipment,
goods, proceeds, products, and accessions, as well as its right, title and interests in fixtes and real
propert, now owned, leased or hereaer acquired and wherever located, and the propert described in
Schedule 2 hereto.
ARTICLE X - EVENTS OF DEFAULT
Section 10.1 .Events of Default
The following shall be events of default (each an "Event of Default") under this Agreement:
(a) Representations and Waranties. Any representation or warranty made by the
Awardee in Loan-Grant Documents, Form(s) 481 or any certificate furnished to RUS
under the Loan-Grant Documents, or in the Application shall prove to have been
incorrect in any material respect at the time made;
(b) 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) Business Days, as such term is herein defined;
(c) Corrective Actions. Default by the Awardee in the observance or performance of
Section 5.9;
(d) Limited Liabilty Companies. Default by the Awardee or its members in the
observance or performance of Section 7.3;
Page 22
(e) Improper Expenditues. The Awardee expends Award fuds on costs which are not
for Eligible Puroses in accordance with the RUS approved line item Project budget
and the Form(s) 481 approved by RUS prior to the advance offuds;
(f) Failure to Keep Adequate Records. The Awardee fails to keep adequate records,
including the failure to document Award fud expenditures for Eligible Puroses as
required herein;
(g) Eailnre to ßuild inAcc()rqançe wit. Timeline. The Awardee fails to commence
build out of the Project within 180 days from the date hereof or otherwse fails to
meet or exceed milestones established in the Timeline, as it may be amended with
prior written RUS consent;
(h) Failure to Comply with Accounting and Reporting Requirements. The Awardee fails
to comply with the accounting and reportng requirements in Artcle VI;
(i) Other Covenants. Default by the Awardee in the observance or performance of any
other covenant or agreement contained in any of the Loan-Grant Documents, which
shall remain unemedied for thir (30) calendar days after written notice thereof
shall have been given to the Awardee by RUS;
(j) Adverse Effects. The Awardee shall fodeit or otherwise be deprived of its charter,
arcles of organization, franchises, permits, easements, consents or licenses required
to car on any material portion of its business or the Awardee fies for or an event
occurs which can reasonably be expected to result in its dissolution or termination;
(k) Other Obligations. Default by the Awardee 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 pedormance or observance of the terms of any instrent
pursuant to which such obligation was created or securng 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;
(1) Banptcy. A court having jurisdiction in the premises shall enter a decree or order
for relief with respect to the Awardee in an involuntar case under any applicable
banptcy, insolvency, or other similar law now or hereafter in effect: (I)
appointing a receiver, liquidator, assigiee, custodian, trstee, sequestator, or similar
offcial, or (2) ordering the winding up or liquidation of its affair; or the Awardee
shall commence a voluntary case under any applicable bánkptcy, 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
trutee, of a substantial par of its propert, or make any general assignent for the
benefit of creditors;
(m) Dissolution or Liquidation. Other than as provided in the immediately preceding
subsection, the dissolution or liquidation of the Awardee, or the fiing of such by the
Awardee;
(n) Impaired Business. The failure by the Awardee to promptly forestall or remove any
execution, garishment or attchment of such consequence as shall impair its abilty
to continue its business or fulfill its obligations and such execution, garishment or
attachment shall not be vacated within thir (30) days;
(0) Payment of Final Judgment. A final judgment in an amount of ten thousand dollars
($10,000.00) or more shall be entered against the Awardee and shall remai
unsatisfied or without a stay in respect thereof for a period of thir (30) days; and/or
Page 23
(p) Default under RUS Mortgage. An event of default occurs under the RUS Mortgage
and is continuing for thir (30) days.
ARTICLE XI - REMEDIES
Section 11.1 Generally
(a) Upon the occurrence of an Event of Default, RUS may pursue all rights and remedies
available to RUS that are contemplated by the Loan-Grant Documents and/or the RUS
Mortgage in the maner, upon the conditions, and with the effect provided in such
documents, and may pursue such other remedies that are generally avaîlable at law or in
equity including, without limitation, a suit for specifc performance, injunctive relief or
daages. Nothing herein shall limit the right of RUS to pursue all rights and remedies
available to a creditor following the occurrence of an Event of Default listed in Arcle X
hereof. Each right, power and remedy of RUS shall be cumulative and concuent, and
recourse to one or more rights or remedies shall not constitute a waiver of any other right,
power or remedy.
(b) RUS and the Awardee acknowledge they are, respectively, mortgaee and mortgagor,
under the RUS Mortgage and agree that the RUS Mortgage secures the Obligations,
including the Note, and that the RUS Mortgage creates or wil create a firt lien on the
CollateraL. RUS and the Awardee fuer agree than an Event of Default hereunder shall
constitute an event of default under the RUS Mortgage permitting RUS to exercise rights
and remedies thereunder.
Section 11.2 Remedies
In addition to the remedies referred to in Section 11, 1 hereof, upon the occurrence of an Event
of Default, RUS may:
(a) Refue to make any advance or fuher advance on account of the Award, but any
advance thereaftr made by RUS shall not constitute a waiver of such default;
(b) Declare all unpaid principal of and all interest accrued on the Note(s) to be
immediately due and payable and upon such declaration all such principal and
interest shall become due and payable immediately;
(c) Terminate the obligation to furter advance on account of the Award;
(d) Take immediate possession of the Collateral, collect and receive all credits,
outstanding accounts and bils receivable of the Awardee and all rents, income,
revenues and profits pertaining to or arsing frm the Collateral, or any par thereof,
and issue binding receipts therefor; manage and control and operate the Collateral as
fully as the Awardee might do if in possession thereof; RUS, any employee or agent
ofRUS is hereby constituted and appointed as tre and lawful attorney-in-fact of the
Awardee with full power to (i) notif' or require the Awardee to notif' any and all
Customers that the Collateral has been assigned to RUS and/or th RUS has a
security interest in the Collateral; (ii) endorse the name of the Awardee upon any
notes, checks, acceptances, drafts, money orders, or other instrments or payment
(including payments made under any policy of insurance) that may corne into
possession of RUS in full or par payment of any amount owing to RUS; (ii) sign
and endorse the name of the Awardee upon any invoice, freight, or express bil, bil
of lading, storage or warehouse receipt, assignment verification or notice in
connection with receivables; (iv) send requests for verifications of Collateral to
Page 24
customers or account debtors; (v) sell, assign, sue for, collec, or compromise
payment of all any part of the Collateral in the name of the Awardee or in its own
name, or make any other disposition of Collateral, or any par thereof, which
disposition may be for cash, credit, or any combination thereof, and RUS may
purchase all or any part of the Collateral at public or, if permitted by law, private
sale, and in lieu of actual payment of such purchase price may set off the amount of
such price against the Obligations; granting to RUS, as the attorney-in-fact of the
Awardee, full power of substitution and full power to do any and all things necessar
to be done in and about the premises fuly and effectually as the Awardee might or
could do but for this appointment, hereby ratitying all that said attorney-in-fact shall
lawfully do or cause to be done by virte hereof. Neither RUS, its employees, nor its
agents shall be liable for any act or omissions or for any error of judgment or mistake
of fact or law in its capacity as such attorney-in-fact. This power of attrney is
coupled with an interest and shall be irrvocable durng the térm of this Agreement
and so long as any Obligations shall remain outstading;
(e) RUS shall have the right to enter and/or remain upon the premises of the Awardee
without any obligation to pay rent to the Awardee or others, or any other place or
places where any of the Collateral is located and kept and: (i) remove the Collateral
therefrom in order to maintain, collect, sell, and/or liquidate the Collateral or, (ii) use
such premises, together with materials, supplies, books, and records of the Awardee,
to maintain possession and/or the condition of the Collateral, and to prepar the
Collateral for sale, liquidation, or collection. RUS may require the Awardee to
assemble the Collateral and make it available to RUS at a place to be designated by
RUS;
(t) RUS shall have the right, without prior notice to the Awardee, to exercise rights of
setoff or recoupment and apply any and all amounts held or hereafter held, by RUS
or owed to the Awardee or for the credit of the Awardee against any and all of the
Obligations. RUS agrees to notity the Awardee promptly after any such setoff or
recoupment and the application thereof, provided that the failur to give such notice
shall not afect the validity of such setoff recoupment or application. Awardee
waives all rights of setoff, deduction, recoupment or counterclaim; and/or
(g) RUS shall have, in addition to any other rights and remedies contained in this
Agreement, and in any other agreements, guarantees, notes, mortgages, instrments,
and documents heretofore, now, or at any time or times hereafter executed by the
Awardee and delivered to RUS, all of the rights and remedies of a secured part
under the Uniform Commercial Code in force in the state identified in the first
paragraph hereof, as well as the state where the Collateral is located, as of the date
hereof, all of which rights and remedies shall be cumulative, and nonexclusive.
ARTICLE XII - MISCELLANEOUS
Section 12.1 Notices
All notices, requests and other communications provided for herein including, without
limitation, any modifications of, or waivers, requests or consents under, this Agreement shall be given or
made in writing (including, without limitation, by telecopy) and delivered to the intended recipient at the
"Address for Notices" specified below; or, as to any par, at such other address as shall be designated by
such part in a notice to each other par. Except as otherwise provided in this Agreement, 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, upon receipt, in each case given or addressed as provided for
herein. The Addresses for Notices of the respective paries are as follows:
Page 25
R!
Rural Utiities Serice
United States Deparent of Agriculture
1400 Independence Avenue, S.W.
Washington, D.C.20250-1510
Attention: Administrtor
Fax: [phone]
Awardee
See Schedule i
With a copy to:
Rurl Utilties Service
United States Deparment of Agricultue
1400 Independence Avenue, S.W.
Stop 1599, Room No. 2868
Washington, D.C. 20250-1599
Attention: Kenneth Kuchno
Fax: [phone]
With a copy to:
See Schedule i
Section 12.2 Notices of Actions Against Collateral
Any notice required to be given by RUS of a sale or other disposition or other intended action
by RUS with respect to any of the Collateral, or otherwise, made in accordance with this Agreement at least
five (5) days prior to such proposed action, shall constitute fair and reasonable notice to the Awardee of any
such action.
Section 12.3 Application of Proceeds
Any proceeds or fuds arsing from the exercise of any rights or the enforcement of any
remedies herein provided afer the payment or provision for the payment of any and all costs and expenses
in connection with the exercise of such rights or the enforcement of such remedies shall be applied first, to
the payment of indebtedness hereby secured other than the principal of or interest on the Notes; second, to
the ratable payment of interest which shall have accrued on the Notes and which shall be unpaid; third, to
the ratable payment of or on account of the unpaid principal of the Notes, and the balance, if any, shall be
paid to whosoever shall be entitled thereto.
Section 12.4 Expenses
To the extent allowed by law, the Awardee shall pay all costs and expenses ofRUS, including
reasonable fees of counsel, incurred in connection with the enforcement of the Loan-Grant Documents or
with the preparation for such enforcement if RUS has reaonable grounds to believe that such enforcement
may be necessary.
Section 12.5 Late Payments
If payment of any amount due hereunder is not received at the United States Treasur in
Washington, DC, or such other location as RUS may designate to the Awardee 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 begining afer such due date until payment of the
delinquent amount being herein called the "late-payment period"), the Awardee shall pay to RUS, in
addition to all other amounts due under the terms of the Notes, the Mortgage and this Agreement, any late
payment charge as may be fixed from time to time on the delinquent amount for the late-payment period
by regulations adopted by RUS.
Page 26
Section 12.6 Filng Fees
To the extent permitted by law, the Awardee agrees to pay all expenses ofRUS (including the
fees and expenses of its counsel) in connection with the filing or recordation of all fmancing statements and
instrments as may be required by RUS in connection with this Agreement, includig, without limitation,
all documenta stamps, recordation and trsfer taxes and other costs and taxes incident to recordation of
any document or instrent in connection herewith. Awardee agrees to save hamless and indemnify RUS
from and against any liabilty resulting from the failure to pay any required documenta stamps,
recordation and transfer taes, recording costs, or any other expenses incured by RUS in connection with
this Agreement. The provisions of this section shall survive the execution and delivery ofthis Agreement
and the payment of all other amounts due hereunder or due on the Notes.
Section 12.7 No Waiver
No failure on the par ofRUS to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or parial exercise by RUS of any right hereunder preclude
any other or fuer exercise thereof or the exercise of any other right.
Section 12.8 Governing Law
This Agreement shall be governed by and constred in accordance with applicable federal law
and, in the absence of controlling federal law, by the laws of the State identifed in the first paragraph
herein, except those that would render such choice of law ineffective.
Section 12.9 Consent to Jurisdiçtion
The Awardee hereby irrevocably submits to the jurisdiction of the U.S. District Court for the
District of Columbia and the US Cour of Appeals for the Federal Circuit (both the "DC Federal Court")
for any action or proceeding arising out of or relating to this Agreement, and hereby irrevocably agrees that
all claims in respect of such action or proceeding shall be heard and determined in such federal court. The
Awardee irrevocably consents to the service of process out of any of the aforementioned cour in any such
action or proceeding by the mailng of copies thereof by registered or certified mail, postage prepaid, to the
Awardee's address set forth in Schedule 1. The Awardee hereby irevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement brought in the DC Federal Cour and hereby furter irevocably
waives and agrees not to plead or claim in such cour that any such action or proceeding brought in any
such court has been brought in a forum non conveniens. Nothing herein shall affect the right of the
Government to serve process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Awardee in its own jurisdiction.
Section 12.10 Waiver of Jury Trial
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIL BY JUY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHTHER BASED ON
CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, SECURED PARTY, OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
TH EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
Page 27
Section 12.11 Holiday Payments
If any payment to be made by the Awardee hereunder shall become due on a day that 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 12.12 Rescission
The Awardee may elect to rescind the Award, in which event RUS shall release the Awardee
from its obligations hereunder, provided the Awardee complies with such terms and conditions as RUS
may impose for such release.
Section 12.13 Succesors and Assigns
(a) This Agreement shall be binding upon and inure to the benefi of the Awardee and
RUS and their respective successors and assigns, except that the Awardee may not
assign or trnsfer its rights or obligations hereunder without the prior wrtten
consent ofRUS.
(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 grnted or conferred on RUS shall pass to
and inure to the benefit of any such successor agency.
Section 12.14 Complete Agreement; Waivers and Amendments
Subject to RUS Regulations, this Agreement and the other Loan-Grant Documents are
intended by the paries to be a complete and final expression of their agreement. However, RUS reserves
the right to waive its rights to compliance with any provision of this Agreement and the other Loan-Grat
Documents. No amendment, modification, or waiver of any provision hereof or thereof, and no consent to
any departre of the Awardee herefrom or therefrom, shall be effective unless approved in wrting by RUS
in the form of either a RUS Regulation or other writing signed by or on behalf of RUS, and then such
waiver or consent shall be effective only in the specific instace and for the specific purose for which
given.
Section 12.15 Headings
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 12.16 Severabilty
If any term, provision, condition, or any part thereof, of this Agreement, Note(s) or the
Security Documents shall for any reason be found or held invalid or unenforceable by any governental
agency or court of competent jurisdiction, such invalidity or unenforceabilty shall not affect the remainder
of such term, provision, or condition nor any other term, provision, or condition, and this Agreement, the
Note(s), and the Securty Documents shall surive and be constred as if such invalid or unenforceable
term, provision or condition had not been contained therein.
Section 12.17 Right of Setoff
Upon the occurence and during the continuance of any Event of Default, RUS is hereby
authorized at any time and from time to time, without prior notice to the Awardee, to exercise rights of
setoff or recoupment and apply any and all amounts held or hereafter held, by RUS or owed to the Awardee
or for the credit or account of the Awardee against any and all of the obligations of the Awardee now or
hereafter existing hereunder or under the Note(s). RUS agrees to notifY the Awardee promptly afer any
Page 28
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 applicaton. The rights of RUS under this section are in
addition to any other fights and remedies (including other rights of setoff or recoupment) which RUS may
have. Awardee waives all rights of setoff deduction, reoupment or counterclaim.
Section 12.18 Schedules and Attachments
Each Schedule and Attchment atached hereto and referred to herein is each an integral par
of this Agreement.
Section 12.19 Authority of Representatives ofRUS
In the case of any consent, approval or waiver from RUS that is required under this
Agreement or any other Loan-Grant Document, such consent, approval or waiver must be in wrting and
signed by an authorized RUS representative to be effective. As used in this section, "authorize RUS
representative" means the Administrator of RUS, and also means a person to whom the Administator has
offcially delegated specific or general authority to take the action in question.
Section 12.20Prepayment of Loan
In the event the Awardee prepays the entir Loan portion of the Loan within thee (3) years
from the date hereof, the Awardee shall, within thirt (30) days of making such prepayment, execut a
standard grant agreement with the RUS.
Section 12.21 I£
This Agreement shall remain in effect until one of the following two events has occurrd:
(a) The Awardee and RUS replace this Agreement with another written agreement;
(b) All of the Awardee's obligations under this Agreement have been discharged and
paid.
Page 29
IN WISS WHEOF, the paes he have ca th Agen to be du ex as of th
da an yea fi abve wr.
(Sea)
Attes to by: ~ rL,;¿,. Se
MIVAL TEHONE EXCHGE,~TB I .-.~....T4neRW~.
Title: President
Pa 30
SCHEDULElArticle I Defiitions
1, Prior RUS Loan Contract: Loan Agreement dated as of September 4, 2007.
2, RUS Mortgage: Restated Mortgage, Security Agreement and Financing Statement
dated as of September 4, 2007.
Aricle II Representations and Waranties
1. Paragraph (h) Awardee's principal place of business: 2205 Keithley Creek Road
Midvale, Idaho 83645
2. Pargraph (i) Awardee's Organization Number: C 30686
3. Paragraph (j) Awardee's Subsidiaries: None
4. Pargraph G) Awardee's Parent: None
5. Paragraph (n) Additional Representations and Warties:
The Awardee represents and warrants that it is primarily engaged in the business of
transmitting communications electrically, electromagnetically, or by light.
Article II TheLoan
1. Section 3.1 (a) Loan amount: $334J924
2. Section 3.1 (b) Grant amount: $78lJ488
Article iv Conditions Precedent to Loan Closing
1, The additional conditions referred to in Secton 4.1(j) are as follows: None
Conditions Precedent to Release of Funds
2.Section 4.2(b) amount of fidelity bond coverage: $167J462
3.Section 4.2(d) funds deposited for Project completion: $0
4.The additional conditions referred to in Section 4.2(e) are as follows:
The obligations of RUS hereunder are subject to the satisfaction of the following
additional conditions precedent:
a. The Awardee has provided RUS with documentation of its consultation with its
local U.S. Fish and Wildlife Services (USFWS) Ecological Services offce
(http://www.fws.gov/offces) with respect to the affect of the Project ooaoy listed
threatened or endangered species, candidate species or their critical habitat; and
b. The consultation process referred to immediately above in paragraph (a) has
concluded.
Page 31
5.
6.
Aricle V
1.
2.
Conditions Precedent to Individual Advances
Section 4.3(i) Required permits, licenses, frchise, and other approvals: None
The additional conditions to advance referrd to in Section 4.3(k) ar as follow:
No funds wil be advanced for construction that disturbs ground or involves land
clearingJ until the Awardee has received written confirmation from RUS that the
requirements of Section 106 ofthe National Historic Preservation Act (16 U.S.C.
470£) have been met in accordance with implementing regulationsJ "Protection of
Historic Properties" (36 C.F.R. Part 800).
Affimatiye Covenants
Section SJO Composite Economic Life ofRUS financed facilties: 25 years
The additíonal affrmative covenants referred to in Section 5.2 i are as follows:
a. Within sixty (60) days from the date hereof, the Grantee shall provide Project
construction plans to their local U.S. Fish and Wildlife Service (USFWS) Ecological
Services offce (bttp:llww.fws.gov/offcesD to Initiate the consultation process as to
whether Project construction wil affect any listed threatened or endangered species,
candidate species or their critical habitat.
b. Within sixty (60) days from the date hereof the Awardee shall provide all
information necessary to the applicable organizations to complete the review and
approval processes required by Section 106 ofthe National Historic Preservation
Act (16 U.S.c. 470£), in accordance with implementing regulations, "Protection of
Historic Properties'J (36 C.F.R. 800)J relating to construction that disturbs ground
or involves land clearing.
c. The Awardee shall insert the following language in all construction cont.racts:
If previously unidentified historic propertes (that is, properties listed on or eligible
for listing on the National Register of Historic Places) or unanticipate effects to
historic properties are discovered during Project constructionJ the construction
contractor shall Immediately halt all activity within a one hundred (100) foot radius
of the discovery, notify Midvale Telephone Exchange, Incorporated and law
enforcement of the discovery and implement interim measures to protect the
discovery from further impact, especially looting and vandalism. Construction shall
not resume within a 100 foot radius ofthe discovery unti the construction
contractor has received written instructions to proceed from Midvale Telephone
Exchange, Incorporated.
d. Immediately upon receipt of notification from the construction contractor that a
discovery of unidentifed historic properties (properties listed or eligible for listing
on the National Register of Historic Places) or unanticipated effects to historic
properties are discovered during Project constructionJ the Awardee shall :
(i) Inspect the construction site to determine the scope of the discovery
and to ensure that construction activities have halted;
(ii) Clearly mark the area of the discovery;
(ii) Implement additional measuresJ as appropriate, to protect the
discovery from further impact, especially looting and vandalism;
Page 32
(iv) Notify USDA Rural Utilties Service (RUS)J Engineering and
Environmental Staff, Federal Preservation Offcer at 202-720-
9583; and
(iv) If the discovery contains human remainsJ comply with all
applicable state laws, notify the State Historic Preservation
Office(s) and any Indian Tribes or Hawaiian organizations which
might be interested in the discovery.
Article VII Negative Covenants
1.The additional negative restrictions on Distributions and Withdrawals referrd to in Section
7.9(b) are as follows: None
2.The additional negative covenants referred to in Section 7. I 7 are as follows:
a. The Awardee agrees not to start or proceed with any ground breaking construction
activities relating to the Project prior to completing the consultation process
required by the Endangered Species Act and referred to on tbis Schedule under
Article IV, Paragraphs 5(a) and (b).
b. The Awardee agrees not to engage in construction activities which disturb ground
or involves land clearing until tbe Awardee has received written confirmation from
RUS tbat the requirements of Section 106 of the National Hitoric Preservation Act
(16 U.S.C. 4701) have been met in accordance with implementing regulationsJ
"Protection of Historic PropertiesU (36 C.F.R. Part 800).
c. The Awardee agrees not to reume construction or authorize a construction
contractor to resume construction within a 100 foot radius of a discovery of
unidentified historic properties (properties listed or eligible for listing on the
National Register of Historic Places) or unanticipated effects to historic properties
until receipt of written notifcation from RUS that the requirements of the National
Historic Preservation Act (16 U.S.C. 4701) have been met.
Article XII MiscçllançQJ.s
1.Section 12.1 Awardee's address for purposes of notification:
Mr. Lane Wiliams
President
Midvale Telephone Exchange, Incorporated
2205 Keithley Creek Road
MidvaleJ Idaho 83645
Phone: [phone]
Fax: [phone]
2.Section 12.1 Address for Awardee's notification copy: same as above
Page 33
SCHEDULE 2
COLLATERAL
I. Collateral shall include the following:
All propert, assets, rights, privileges, licenses and frnchises of the Awaree of every
kind and description, real, personal or mixed, tagible and intangible, of the kind or nature specifcally
mentioned herein, or any other kind or natue now owned or hereafter acquird or arising by the Awardee
(by purchase, consolidation, merger, donation, constrction, erection or in any other way) wherever
located, including without limitation all or in part the following (hereinafter the "Collatera:")
r
All right, title, and interest of the Awardee in and to the Existing Facilties, buildings,
plants, works, improvements, structures, estates, grants, franchises, easements, rights, privileges and
properties, whether real, personal, or mixed, tangible or intagible, of every kind or description, now or
hereafter owned, leased, constructed, or acquired by the Awardee, wherever located, and in and to all
extensions, improvements, and additions thereto, including but not limited to all buildings, plants, works,
strctures, 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 centrl offce equipment, pay stations, protectors,
instruments, connections and appliances, offce fuitue, equipment, and any and all other propert of
every kind, nature, and description, used, useful, or acquied for use by the Awaree in connection
therewith;
II
All right, title, and interest of the Awardee in, to, and under any and all grts, privileges,
rights of way and easements now owned, held, leased, enjoyed or exercised, or which may hereafer be
owned, held, leased., acquired, enjoyed or exercised, by the Awardee for the purposes of, or in connection
with, the constrction or operation by, or on behalf of, the Awardee of its properties, facilties, systems, or
businesses, whether underground, overhead, or otherwise, wherever located;
II
All right, title, and interest of the Awardee in, to, and under any and all licenses and
permits (including without limitation those granted by the Federal Communications Commission ("FCC"),
subject to the FCC's prior approval of any assignment or transfer of de jure or de facto contrl of such
licenses), franchises, ordinances, and privileges, whether heretofore or hereaftr granted, issued, or
executed, to it or to its assignors by the Governent, or by any state, county, township, municipality,
vilage, or other political subdivision thereof, or by any agency, board, commission, or departent of any
of the foregoing, authorizing the construction, acquisition, or operation of the Awardee's properties,
facilties, systems, or businesses, insofar as the same may by law be assigned, granted, bargained, sold,
conveyed, transferred, mortgaged, or pledged;
iv
All right, tite, and interest of the Awardee in, to, and under all personal propert and
fixtures of every kind and nature, including without limitation all goods (such as inventory, equipment and
any accessions thereto), instrments (such as promissory notes or chattel paper, electrnic or otherwise),
documents, accounts (such as deposit accounts or trst accounts pursuant hereto or to a loan agreement),
letter-of-credit rights, investment propert (such as certificated and uncertificated securities or security
entitlements and accounts,) software, general intangibles (such as payment intangibles), supportng
Page 34
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 of the VCC rather than Arcle 3);
v
All right, title, and interest of the Awaree in, to, and under any and all agreements,
leases or contracts heretofore or hereafter executed by and between the Awardee and any person, firm,
corporation, or other corprate entity relating to the Collateral (including contracts for the lease, occupancy,
or sale of the Collateral, or any portion thereof);
VI
All right, title, and interest of the Awardee in, to, and under any and all books, records
and corrspondence relating to the Collateral, including, but not limited to, all records, ledgers, leases,
computer and automatic machinery, software, programs, databases, disc or tape fies, prit-outs, batches,
runs, and other electronically-prepared information indicating, summarizing, evidencing, or otherwise
necessary or helpful in the collection or realization on the Collateral;
VII
Also, all right, title, and interest of the Awardee in, to, and under all other propert, real
or personal, tagible or intangible, of every kind, natue, and description, and wherever situated, now or
hereafter owned or leased by the Awardee, it being the intention hereof that all such propert now owned or
leased but not specifically described herein, or acquired or held by the Awardee 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
Awardee and were specifically described herein to the extent only, however, that the subjection of such
propert 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, or had from any and all of the above-described propert of the Awaree;
Provided, however, no autmobiles, trcks, trailers, tractors or other vehicles (including
without limitation aircraft or ships, if any) owned or usd by the Awardee shall be included in the
CollateraL.
2; Additionally, propert pledged as Collateral shall also include the following specifcaly described
propert, if any: None
Page 35
ATTACHMENT 1
BIP CONTCTIG, WORK ORDER AND ADVANCE PROCEDURS GUIQE
l~
'Rural Development
United States Department of Agriculture
RURAL UTILITIES SERVICE
..
Broadband Initiatives Program
, Contracting, WorK Order ~iidd Adva.nce Procedures. Guide .
GENERA
This guide implements and explains the provisions of the loan and grant dOcents contaning the
requirements and procedures to be followe. by an Awardee penormirig work to be financed with RUS
Recver funqs.' The Awardee shall maintain accounting and plant records šuffcient to document the cost
. and location of all constrction and to support fund advance and-disbursemetts. Thèstadard Loan and
Grat Documents also contan provisions regaring adance and disbursem,ent of broadband funds. This
document also itplements certin provisions by settg fort reqirements and proceures to be followed
by the A wardees in obtaining advances ançi making disbursents of fuds.
ABBREVIATIONS
For purppse of this guide:
C.F.R. Stds for Code of Federal Regulations.
FRS stads for RUSForm 4&1, Financial Reauirement Statement.- .
GFR stds for RUS genera field reresetative.
Pub. L. stads for Public Law.
US.c. stads for United Staes Code.
DEFITIONS
For purposes of this guide:
Advance means trferng funds frm RUS to the AwardCe's deposit acount
Architect means a person registered as an aritect in the stat where constcton' is perored.
Award means any.broadbaìd award made by RUS.
Award documents mean the documents covering an awar made by RUS, including the loan or grt
agreement. nòte. and mortgage or other secty docments between the Awaree and RUS. .
Awardjùnds means funds provided by RUS through an award.
Awardee means any organization that has receiVed fiancing from RUS.
Bid guarantee means a bid bond or certed check require of contracors bidding on constction work to
ensure thai the bidder, if successful, wil fuish a performance bond.
Buy American Requirement means the requirements as stated in the Recover Act and any asciatedwaiver. . ,
Broadband "Srvice means the minimum trsmission rate as defined in the applicable NOF A for the
Broadband Initiatives Program, u.nder which the awar was made. ;
Closout documents mean the documents reqred to cer satisfacory completion of all'obligations under
a contract. .
Contract mean the agreement between the A waee and 'an independent contrctor covering the purchlle
and/or instalation of equipment or the constrcton of facilties to deliver broadband serice for an
Awardee's.system.
Contract work meàns any work performed pursuant to àn RUS form contract, or â Non-Stadard Contrct.
Disbursement meanS payment by the Awardee out of the deposit acunt for approved awar puross.
; Engineer mea a person registered as an engieer in the stae where constrcton is peTormed, or a person
on the Awardee's staff autorzed by RUS to perorm engieerng serice.
In-house engineering meas any pre-loan or post-loan engineeing services peormed by the Awardee'sst .
Interim work meas any war that commence afer an application has ~en su~mittd to RUS, but prior to
releae 'of award' fuds.
Non-Standad Contract means a nonRUS form contr for specifc work th is submitt by the
Awaree, wroch must be approvedby.RUS beforllexection, if it is to be fued.
Outside plant meas the par of the telecommunications network that is physieally locat outsidè of
. telemiunication buildings. This includes cable, conduits, poles an other supportng strctues and
cert other associated' equipment items.
PeTforane bond means à suet bond in form satisfactry to RUS guaranteeing the tontraco(s faithl
performance ofa contract. (See 7 CFR Par 1788.) '. .. .
.., Plan ari specifcatírms means a copy of the appropriate contrct, the specifièations, and such additional
informaton and doCuments neeed to provide a clear, aCte, and complete undersding of the wor tobe perormed. .
Pletlged Deposit account meas an acunt rêquired Dy the award agreeent into which all RUS fuds are
advanced.
RUS meas the Rl!ral Unlities sericer an agi:cy of the Unite States Deparent 'of Agrcultue and.
successor to the Rur Eleçficaton Administrtion.
RUS form contract means contrct identified as a RUS'form.
Subcontract means ii secondar contrt underting some oflle obligatiòns ora primar contract
System design.rneans the syste descrbed in the approved Application.
Work means 'any purchase of equipment, softare and/or instalation, if applicable; constrction of
facilties; or professional serices.
Work o;der means any work perfonned by the A wa~ee's employees, pursuit to its work orderprocedtire,
with the Awardee furnishing all ma~erials, equipment, tools, and transporttion.
CONTRACTING PROCEDURS
GENERAL
All work must conform to the Application. as approved by RUS,and shall be covered by' an Environmental
Report prepared in accordance with 7 CFRPar i 794 and approved by RUS. No constrcton and/or
instalation activities shall commence until all necessar loca, state and federa reirements have be~~ .
All work perormed prior' to the submission of an applicaton to RUS wil not be eligible for fiancing. In
addition, only new materials and equipment may be fmance with aw!Ud fu, unl.css othere approved
in writing by RUS.
A. Interim Work
Once RUS has received an application, the applicant may proced with interm work. However,
this should not be consed as a commitment that RUS wil approve the aPplicaton. To ensur
that interim work is eligible for reimburseent with awar funds, the Awardee must comply with
all the proe,ures in this Guide, including the fonowing r~quirements:
(1) Equal employment opPortity re9uireents'in RUS Bulletin 320-15; and
(2) Environmental requireents contaned in 7 CPR 1794;
B.. Non-SlandardCo
The Awaree may choose to use a Non-Stadad contract to peorm work. The 'Non.Stand~d
Contract must include' a provision that it wil not be binding on the paes, until administative
approval by RUS has been granted; RUS will not aprove use of the Non-Stadad Contrac if, in
RUS' judgment: .
(1) The contract. is forwolk notcovered in the approved Application, or is not for an EligiblePurpose; ,
(2) The contrcfters and conditions, are vague, inadequate, or unreaon~bie; or
(3) The contr prests unacceptale loa secuty risk to RUS.
C. çwitrctAmendJ!'
The Awardee shall obtain RUS approval before exection of any amendment to an approved
contrct if;
(1) The amendment alter the te and conditions of the contrt or chages the scope of
the projec covered -by the contrt. regadles of the amount of the contract beforeamendm~ .
(2) The amendment by itself (or together with preceding amendments) increaes the original
contr~ct price l& 20% or more. In this case, a bond extension will be required to ~ing
the penal sum of the bond to the tota amended contract price; or,
(3) The amendment causes an unoonded contrct to require a contrctts pedormance bond.This would ócc when an amèndment 'inçrèes the contract price to an amount
requiring a performance bOnd per 7 CPR Par i 188, Subpar C.
Once RUS approval to amend the contract ha been grte. or for any other contrt amendments
not requiring apPT?val, the Awardee must submit an original executed amendment to RUS.
D. Insyrwiçe
A performance bond is required for constrction of. facilties exceeing $250,000, as indicated in
7 CPR Par 1788, Subpar C, or certin significant instalation, as outlin~ in. the Agency's
memorandum found at htt://ww.usda.gov/ruSitelecom/publicatons/pdf.:.lesContraetors-Bond-
Requirement? - 28-Q9.pdf.
The Awardee is responsible for ensung that its contrtOr and enginee comply with ~ii the
insurance and bond reqirements of 7 CFR Par 17&&. Subpar C. '
E. ¡itIe Clearance
ror any building constrcton over $250.000, the Awardee shall provide titl~ evidence satisfacory
to RUS. 'prior to releaing the intations to bid.
r- . Softare License
As par of an equipment purchas the original equipment maufacer may require that the
Awardee enter into a softare license agreeent for the use of the equipment. The Awardee may
use RUS .Form 390, Softare License AgremenÌ -Special Eqipment Contrct. or a Non-
Stadard Contrct.
G. Buý American
All iron. steel, or manufct 'goods that ar purchased witI Recver Act fuds by state or local
govemirents. or an instentality therf, which are not included in the Agency's waver
covering Broadband Switching Equipment, Broadand Routing Equipment, Brodbad Transpor ,
Equipment, Broband Access Equipment, Broadbad Cutomer Prmises Equipment and End-
Use Devices, or Biling/Opeations Systms, shall be 'subject to the Bu American provision of
the Re.0ver Act, unless a waiver is reuesed from the RUS. For fu detals see 74 Fed.. Reg.
31402.
H. Dayis-Bacon Act
The Awaee shall comply with The Davis-Bacon Act and'the gudanCe fond at 29oÇ.F.R pts. i,
3, and S, such that any covered contract with a contractor or subcn~ in exces of $2,000 for
constrction, alteation or repair (iIlcluding pantig and decratg) shal contan the contrac
clauss found in t9 C.P.R. S.S(a), t~ ensure that all laborer and mecanics employed on the
Projec recive payment afnot less tha, the preailing wage; . ,
1. Affliate Tranacons
With regard to the Prjec, the Awardee shall not enter into. any tranaction, contrac or deaing
with an Affliate of the Awardee or wit the Awardee's or Affliate's dirors, trtees, offcers
manager,' members (if the Awardee is a limited liabilty company), or other corprat offcials,
without the priòr wrtt consent of RUS. RUS' c,onset to advance' award fuds for afliated
trsations will be limited to an amount which is the lower of cost or market rae and which is
subject to verification by RUS and its representatives having acces to the books'aid rerds of
the Affliate.
As ,defined in the appropriate aWard document, "Affliate" òr "Affliat Compay" of my
specified person or entity mean any other person or entity directly or indÜ'ect controllng of,
controlled by, under direc Qr indirec common control with, or related to, such speified persn or
entity, or ~hich exists for the sole purpse of proiding any service to oné company or exclusively
to companies which othèrise mee the defiition of afliate. Ths definition includes Varable
Interes Entities as descrbed in Financial AccOuntig Stadards Boa Interretaton (FIN No.
, 46(R), Consolidation of Variable Interest Entities. porthe purpose of this defiition, "control"
meas the possession directly or indirecy, of the power to dÍrect or cause the ~tioii of'~
management and policies of a company. whether such power is exercised' thugh' one or more
intennediar companies, or alone, or in conjunction with, or pursuant to an agreement with, one' or
more'other .companies, and whether such power' is established thugh a majority or minority
ownership voting of si:UIities, common direcrs, offcers or stockolders, votig trst holding
trsts (other th money ~chaned) for propert or services. . .
J. ~
Recrds supportng all asets financed 'by RUS shall be retained until audited and approved by
RUS.
Records must be suffcient to docent the cost and location of an expeditues and to support
advances and disburement of award :fnds. Th support records mus include, but not be limited
to, contracts, third par invoices, timeshee payroll rerds, matenal record, and overhead
allocatiofÌ recrds and summar schedules
Recrds relate to plant hi sece must be reed until the facilties are pemanentl removed
from utility seice all remova and retoraon actvities ar completed, and all cost are reired
from the accounting recrds unles acting adjustments resulting from reclassification and
original costs stdies have been approved by RUS or other regulatory bo having jursdiction.
"
Life and mortity study data for depreciaton purse must be rened for. 25 year or for 10
years aft plant is retir~d,. whiahever is longer;
II PROFESSIONAL SERVICES
Qm'
A wadees shall only obta professional services frm persons or firms not afliated wi, or that do not
represent a contractor, vendor or manufacre presentl providing labor, matrials, or equipment to the
Awardee. This does not include inhous services. '
A. Engineeg Servces
All engieering serice require by an Awardee, including inspe.ction and ceficaton, shall be
rendered by an enginee selecte by the Awaee and liceed in the Stae where the facilties will
. be located, or by qualfied employee on the Awaee's staf, who ~. submission of
qualifi~tions to RUS, have bee approved to perorm such services.
(I) Outside Conltant. Engineeng serce pedored by an o6tside con~ltat may be
covered Ulder RUS Form 217, Postloan Engineering Services Contract .
Telecommunications, RUS, Form 245, Engiering Servce Conact - Special Services,
or a Non-Stada Contr .
(2) In-H()e Engine.ering. When the. propose ~ork is stich that the engieeng invòiv~d is
within the capabilties of the employees on the Awardee'~ staf; Awardee may reqest
RUS approval: to provide such serices. The request shall include:
(i) A description otservices to be pedormed;
(ii) The names and qualificátons of each employee that will be perotm~g the
specific servces. In addition, the Awardee shall identify an employee who will
be in charge of the services. Such employee must meet the Stae exprience
requirements for a registeed enginee in the State where facilties will be
located., In the absence of speific State experience requirements, this employee
should have at leat eight yeas experience in the design and constrcton of
telecommunication facilties, wjth at lea two yea of the work experence at a
supervisory leveL. RUS does not require professional' registrtin. of this
employee but thsdoés no.t relieve the Awardee itom compliance wit
applicable sta registion requirements, which may require a' licensed
individui to pedon such services; an
(ii)A Jetter signed by an authorized representave of the Awardee reuesing in-
house engineering approval and certfying the supporting informtion.
RUS shall notify the Awardee by let of approval or disapproval to perfomiin-house
.engieering. The letter shall set fort any conditions associ.ated with an approval' or the
reasns for disapproval. RUS approval of in-house engineerng seriêes shall be only for
the specific Serices covere by the approval. .
B. Architectl Services
The Awardee shall select an arhitec licesed in the stte where the facilty wil be locat. The
borrwer may us either RUS Ponn 220 or RUS Fonn 217 when cotrctng for arhitecl
senices, or,a Non-Stadard Contrac.
C. Contrct and Closeout Docments
The Awardee must submit thee exected copies of the RUS fonn contrac or the approved Non-
Stadar Contrct, coverg the professional. seces to be provided, for fial administratve
approval. Once all serice and oblígations required undettheprof~sional services Contr have
been completed, Awardees shall submit. two copies òf RUS Fonn 288, Flna Statement oj
Architect's Fees and/or RUS Fonn 506, Final Statement of Engineering Fees, to close out the
specific RU S F onn cóntrct. A wardees using Non-Stadard' Contracts should provide a similar
cerfication for Non-Stadard Contr.
II _ PURCHASE AND INSTALLATION OF EQUIMET
General
When purhasing any etpment, 'inclJling instalation, tht cots more than Sloo,OOO, the Awaree mus
use a contrct for the purchase. Any equipment purchaes for less than SlOO,OOO, includig instalation,
ca be purchased under a purchase order and reimbursed afer submission of the invoice along with an
RUS Form 771 a, following the inspection and reimbursement pradur under Work Order procedes.
A. Equipment pured with Contrct
Awardee ma us RUS Fonn 397, Special Equipment Contract (Including Inst~llation).. RUS
Fonn 398, Special Equipment Contract (Not Including Installation), or a Non-Stadard Contract
The enginee shall prepare th~ perfonnance reuirements including an instalation requirements,
if applicable, prior to releaing them along with the i:espeive contr to prospective vendors.
The Awardee may purase equipment using a negotiated purchas, although RUS recmmends
that the Awaree obtan quotes from at lèast thee different vendors. "
Equipment 'purchii under RUS Form 398 or a'Non-Stadard Contrac that doe not include,instalation, may be installc:d by the Awardee using the Work Order method or RUS Form 773, as
outljned.in the Work Order procedures below.
B. Contract and Closeout Documents
Once a veiidor has ben selected, the Awardee mus submit th executed copies of the RUS fonncontract or the approved Non-Stadad Contract, iDcluding the non-stadard peorman
requirements coverng the equipment to be provided, for fina adiiiistrative approval. Once all
equipment purhased under the contrac has bee instaled, and tested an mee the perormance
reuirements, the Awardee shall prce' witn the closeout of the contrt and submit a fial
contrct closeout cerficaton on RUS Form 756 or a similar certficaton for Non-StadardContract. ,. , .
IV CONSTRUCTON OF FACILITI~
Constrction for outside plant facilties, building, and tower may be performed usg the work order
method or by an outside contractor. When using an outside contrctor, either RUS Contr Forms 773,
257, or 5 rs, or a Non-Stadard cotrct may be used.
A. Outside Contrtor
If using à standanfRUS Contr For the Awadee shall use the form without modificàtons,
and attch any diagrs, sketches and taulations necessar to specify clealy the work to be
peronned and who shall provide which inatrial.
The engineer shall prepar the constrcton speficatons prior to releasing them along with the
respecive contrt tò prospecive' contracrs.' RUS recoends that Awardee obtn quotes
from severa contracrs before enterig into a contr to ensre obtainig the lowest cos. The
f\ wardee shall ensue that the contracr selected meets all federal, state, and local liceng
requirement, as well as bonding requiments; and that the cöntror maitain the insurce
coverae .rt:quired by the contract for the duration of the work. (See 7 C.F.R. Par î788.)
OnC? a contractor has bee selec the Awardee must submit thee executed copies of the RUS
fonn contract (except RUS Form 773, Which shall.follow the procees below) or the approved
Non-Stadaid Contrii including the constcton spec~fiCaons for the work to be perform, for
fial . administtive approva. On conston has been completed per the conscton
speifications and all acptace test have bee made, the Awaee shaii proee ..wi. the
closeut of the contr and submit a: fial contrt closeout cerficaon on RUS Fonn 756 or a
similar cefication for Non-Stadard Contr. .
B. Work order Proceuies
Wor order constcton shall be perfonÎ to aU local, state, and Federal requirements. As work
order constrction is performed, the Awårdee shåii kee daily timesheetsand mateial rert,
referenced by the work projec number, to rerd labor and materials used. Cost .acuntjg
system must be in place to meet the requirents of7 CFR 3015 (including 48 CFR 31.2),3016,
3019 asappUcable, to show the source and summar recrds to support requested and expen~edfunds. . . '. .
(l) fnspeeton and Certification. Upon completion and priór"to closeot, the Awaree .shall
obtain the engiees cerification on RUS Form 771a for all constrcton complete
using RUS Fonn 773 or the work order method. An authorize offcial oftl Awardee
shall execute the. Awardee's cefication.
(2) Reimbursement. To reques funds for consruction complete undCi the work orqer
constrcton proçeures or RUS Fonn 773 contrac constrcton proceures, the Awaree
shall wbmit RUS Fonn nia, initialed by the GFR, along with a descnption of. each
project, as well RUS Form 481, Finncial Requirement Statemént (FRS). . RUS Form
771 a shoul be submitted only with the FRS that it support.. unles otherse approved
by RUS,. the Awardee shall finace all work order and RUS Fonn 773 contrct
constrction with non-loan fuds and obtan reimbursement wit RUS fuds when
constrction is completed' and properly executed. closeout doents have been
. sùbmitted to RUS.
V .ADV ~NCE AND DISBUREMT OF FUS
General
The award docuient contas tle provisions regarding advance and disbuen af fuds to the
Awardee. This sect?n implements certai provisions by setting fort requirents and produres to be
followed by the' Awaree in obtaining advances and makng withdrwals/disbursements of fud~.
RUS is. under. no obligation to make or approve advances of fuds unless the Awardee complies with all
terms and conditions of the awar docents.
A. Broadbad Budget
The Awardee will be provided a broadband budget 'based on the approved Application. This
budget divides the award into budget caegones that ar assoiat with 'the proposed projec,
such as equipment, outside pian~ land and buildings, professional serce, etc. Funds from one
budget catgory may not be used, for a differet budget category 'without .pror wrtten approval
frm RUS. .
B. Budget Adjustments
Ifmore fuds ar reuired than ar avalable in a budget catgory, the Awaree may reqest RUS'
approval of a budget adjustent to use fuds from another budget cagory. Th reues shall
.inlude an explanation as to why. the adjust, is ~eded and the afecd budget cagones.
RUS wil not aprove a budget adjustmnt unless the Awardee can demonstre that all purses
'can 'still be completed with the requesd adjustènt. RUS, at its discreton, m.ay make a budget
adjustment without á formal request to encuber fuds for a contrac when fus within the
budget category are insffcient, and when it deterines that the budget 'adjusent isinignficat.' .
C. 'P,ledge Deposit Account
The Awardee shall estalish ånd mainìan a, pledged deposìt acunt to hold all Advances
depoited by the Agenc. The pledged deposit 'acunt shall onlY be estalished in a ban or
depsitory whose depoits ar insUr by the FDIC or other federal agency actable to RUS.
Fu~ds in the pledged deposit acunt shal be used solely for the purpse approve. in the
Applicatin and shall be withrawdisbur (or thè approyed purposed for which they were
,reques in the ficial reuirement stment. All Advce will be deposit into the pledgoo
deposit account by electonic transfer.
RUS may require tht other funds bê.deposited into the pledged deposit accunt. These may
inlude equity or genera fund contributions to conscton, proceeds from the sale of propert,
interest recived on award funds and .similar ty of reeipts. Deposit slips for any depits to
the pledged deposit account shall show the soure and amount of funds depsite and be executed
by an .autIpnzed representative of the bank. The disbuement of non-award funds deposited into
the pledged deposit account requires the same RUS approvàl as Advanes onthe award.
For acounting puroses, all withdrawals/disbursements from thë Pledged Deosit Accunt must
be evidenced by canceled chks or support fot other form of payment. Disbursements to
reimburse the Awardee's general'fund account shall be docmented by a reimbursemen schedule
to be rened in the Awardee's records that list the pledged deposit acunt check number, date,
and an explanation of amounts reimburéd for the Projec. '
D. Financial Requireent Statement (FS)
To req~est Advances the Awardee must submit RUS Fonn 481, Financial Requirement Statement
C"FRS"), a descnption of the Advanes desred, and other related information to the trsacons
as required by RUS.
The Awardee must request fuds in the first Advance to repay any interim fiancing indebtedness,
as wen as other approved pre-applicåton expenses. RUS may not make furter Advance untithe Awardee has submitted evidence in fonn and substace satisfacory to RUS, that: (1) any
indebtedness created by the interim financing and an lien associat therewith have been fully
discharged of reord; and (2) th Awardee ha satisfied all other cònditions on the advace of
additional loan funds. .. .
If.the soUre of fus for interim ImaniIig is the Awardee's interally genera funds, the,
Awaree may request reimbuement of those ftmds along with Advces for other purses onthe first FRS submitted to RUS. '.
The Awardee shall request advance as neeed to meet its obligations promptly. 'Generly, RUS
doe not approve an adance re\led more thån '30 days beore tic obligaton is payable.
Funcls must be disbured for' the item for Which they were advanced except in the following
circuItace. If the Awaee nees to pay an invoice which h¡i bee approved' on an FR forwhich funds have not bee advance and disburent of adance funds for another item bas
bee delayed, the la fuds may be disburs to pay the due and owing invoice up to the amountapproved for such item on the FRS. The Awáree shall make entres on the next FR~ showing the
chan~es under "Total Advance to Date" ánd shal explain th changes in writing before RUS willprocess the next FRS.' .
The ceification on eac of the thee copies oftbe FRS~.~RT.~li~$l~~l¡~eoffce or manger auilorize to sign such statements...'RlJ$~()~'1S~~ji~t)J;~~,
shall be submittd to RUS indicating the naes of all pell~tøB.ti~¡.R.tiS;Yt
not process a ,FRS signed by an individua Whse name is not inchuÍed..on the most recent Form615.' '. ..
Funds oiler than award fuds that ar deposited in the pledged deposit account are reort as a
credit Under tøta disbursements. Disburen of thèse funds are subjec to the same RUS
approvals 8$ RUS fuds. '
The documentaon reired for audit of ras tracons. include but are not limited to deposit
slips for the pledged deposit account, all ca~lled pledged depoit accunt checks and the
supportng third pa invoices, timesheets, payroll records, accounts payablc rerds, gener
ledger, etc., and/or reimburèment schedules.' These shall be kept in the Awardee's fies forperiodic audits by RUS. '
The FR shall be the primar method use by ihe Awardee to record and control tractions in
the deposit account. Approved contr 'and oter itcms are shown on the FRS under "Approved
Purpses." Funds ar approved for adance as follows:
(1) Contrork Orders
Ca) ,~tf:ønIts'N~ percent of the approved.' contr amount,
inçtti:im~~,,,iththefinal 10 percerlt available when RUS approvesthçontrtlos~t~Øâon. '
(b) GO~~~lfCo/QCtl: ~~..five perct of the approved contrac amount,
in~lûdi~.wilJ.~ final 5 perct available when RUS aprovestbceoclo~tC(fi.QJ. .
(c) Work orders: Th amount shown on tht RUS fonn 771a that RUS detes tobe eligible ror reimbursement.'
(2) Pre-Application Expenses imd Engineering
(à) Pre-Application expenses: Bas on the final itemize invoice froin the
person(s) or finn(s) that provide service. to complete the Applicaton,
engineerig, and accunting, as aproved by RUS.
(b) Post-loa engineering contracts: Ninety-five percent of the amount of the RUS
approved engieering contr with the final 5 pent available when RUS
approves. the final statement of engineerig/architectral rées.
(c) In-house engineering: One hundred per~t of the amount approved by RUS.
(3) Operating Eguipment
Offce equipment, vehicles, and work equipment wil be,reimbured ,bas on copies of
mvoices.
E. Tempora Excess COnstrction Funds
. When unanticipated eventsdo~ tb.~~'S'~~:g:f~~thlU,~iibe used for other approved~asd~'b~Qr~.'~ ja.lh~i~i~'acoU1t. If the pledged deit~isanin~be~~~l~~mustremain in the pledged deposl~atc.øtbòdî~Wiut;R~~Vt
F. Metod of Advancing Funds'
The first or subsequent adances maÝ be conditioned on the satisfacon of ceain reuireentsstated in the Awardee's agrement with RUS. .,
All adances' shall be made elecnically usipg the Automatc Cleag House (ACH. Normally,
for advance of fuds ACH only makes one payment per FRS. .. .The following infonnaton shall be included with eah advance:
(1)Name iid address of Awaree's ban. If the Awardee's bank is not a member of theFederal Reserve System; the niue and. addrs Qf its correspondent baÌ that is a ,
member of the Federal Reserve System; .
(2)
(3)
(4)
ACH routing infor!ßion;
Awardee's bank acount title and number; and
Any other necessar identifYing informti.on.
ATTACHMENT 2
EQUAL OPPORTITY CONTRCT PRQVISIONS
Dung the perfomiance of this contract the contractor agees as follows:
(a) 1'e contractor shal not discriminate against any employee or appli~t for employment because
of race, color, religion, sex, or natiònal origi. The contrctor shall tae afimtive action to
ensure that applicants are employed, and that employees ar trted dug employment without
regard to their race, color, religion, sex, or naonal origin. Such acton shall inclue, but not, be
limited to . the following: employment, upgrading, demotion, or trsfer, recritment,. or
recruitment adversing. layoff or temiintion, rates of payor. other form of compensation, and
selection for traiing. including appreticeship. The contractor agrees to post in conspicuous
places, available to employees and applicants for employment, notices to be provided setting fort
the. provisions of this non-discrnation clause. .
(b) The contrt~r, shall, in all solicitations or advertsements for employees placed by or on behalf of
the' contracor, stte that alÌ quaified applicants shall receive consideration for employmènt
without regar to race, color~ religion, sex, or national origin.
(c) Tbe contrctor shall sed to each labor unon or representative of workers with which he has a
collective bargaining agreeent or other contrct or understading, a notice to be provided
advising the said labor union or worker's representative of the contrctor's commitments under
this section, and shll post copies of the notice in conspicuous place avalable to employee ~d
applicats for ~mplo~t.
(d) 1'e contractor shall c9inply with,all provisions of Executive Order Ili46 of September 24,
1965and of the rues, regulations, and relevlmt orders of the Secta of Labor.
(e) The, contractor shll fuish all inormon and report requied by Executive Orer'1l246 of
September .24, 1965 and by the rules, reguations, and order of the Secreta of Labor, or pur
thereto, and shall pet acces to his books, records, and' accounts by the atinisterg agency
and the Secreta of Laor for puses of invegation to asrt compliance with such rules
reguation, and orders. .
(t) In the even.t of the con.tra~tor's non-compliance with the non-discrinaton clauses of ths
contract or with any of the said rues, reguations, or orders, ths contract may be cacelled,
temiinated, or suspended in whole or par by the Goverent. and the contrctor maybe declar
ineligible for fuer. GOvernent 'contract . or federally assisted'. constrction. cotráct in
accardi,ce with the. procedure authori in Executive OrderJ.l246 of September 14, 1965, and
such other sanctions may be imposed and remedies invoked as proVided in said Executive Order
or by iile, regulation, or order of the Secretar of Labor, or as otherwise provided by law.
(g) The contractor shall include the'provisions of paragrphs (a) though (g) in ever subcontract or
purchase orde unless exempted by rules, regulations, or orders of the Secrta of Labor issued
pursuant to Section 204 of Executive Order 11246, dated September 24, 1965, so tht such
pròvisions shall be binding upon each subcontrctor or vendor. The contractor shall tae such
acton wlth respect to any subtontr or purchase order as the adinisterig ågency ~ay_ diect as
a meas of enforcing such provisions, including sanctions for non-compliance; prvided, however,
that in the event a' contractor becmes involved in, or is thatened with, ,litigation wit a
subcontractar or Vendor as a reslt of su¡;h direction by the agency, the contractr may request the
United States to enter into such litigaton tô protect the interests of the United States.
PROMISSORY NOTE
Idaho 11 05-A40
MidvaleJ Idaho
THIS PROMISSORY NOTE (hereinafer the "Note"), dated as of September 20, 2010J is
made by MIDVALE TELEPHONE EXCHANGE, INCORPORATED (hereinafer the
"Borrower"), a corporation du1y organzed and existing under the laws of the State of Idaho, to
the UNITED STATES OF AMERICAJ (hereinafer the "Governent")J acting though the
Administrator ofthe Rural Utilties Service ("RUS"). For value received, the Borrower promises
to pay to the order of the Governent, at the United States Treasury, Washington, D.C., Tlee
Hundred Thirty Four Thousand, Nine Hundred Twenty Four Dollars ($334,924), with interest
payable, from the date of each advanceJ on the amount advanced by the Governent (hereinafter
the "Advance"), pursuant to a certain LoanGrat and Security Agreement, dated the same date
as this Note (hereinafter the "LoanGrant Agreement"), made by and between the Borrower and
the Governent, and remaining unpaid from time to time, in the time and maner herein
provided:
L Interest Rate. Interest on each Advance shall be at rate(s) per anum, published by the
Secretary of the Treasury, which shall be equal to the cost of borrowing of the
Deparent of Treasur for obligations, as determined by the Governent, of
comparable maturity (hereinafer the "Cost-of-Money Interest Rate").
2. Maturity Date. On a date twenty five (25) years after the date hereof, the principal hereof
advanced pursuant to the LoanGrant Agreement and remaining unpaid, if any, and
interest thereonJ shall be due and payable (hereinafter the "Maturity Date").
3. Fund Advance Period. Funds will be advanced pursuant to the LoanGrant Agreement.
The fud advance period for this Note begins on the date hereof and terminates thee (3)
years from the date of this Note (hereinaftr the "Termination Date"). No funds will be
advanced subsequent to the Termination Date.
4. Payments on Advances.
(a) Made Within One (1) Year. Interest on Advances made during the first year from
the date of the first Advance hereunder, and remaining unpaid, shall be payable
on the last day of each month (hereinafter the "Monthy Payment Date"),
beginning on the last day of the month following the month of each Advance for
the period ending one (1) year from the date of the first Advance hereunder.
Thereafer, to and including the Maturity Date, the Borrower shall make a
payment every Monthly Payment Date on each Advance made durng such period
which shall be: (i) substantially equal to all subsequent monthly payments and (ii)
in an amount that wil pay all principal and interest due on each Advance no later
than the Maturty Date.
Page i
(b) Made After One (1) Year. Interest and principal payments on Advances made
more than one (1) year afer the date of the first Advance hereunder shall be
repaid in installments beginning with the Monthly Payment Date of the month
following each Advance and ending on the Matuty 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. ThereafterJ to and
including the Matuity Date, the Borrower shall make a payment every Monthy
Payment Date on each Advance (i) substantially equa to every other monthy
payment on such AdvanceJ and (ii) in an amount that will pay all principal and
interest of such Advance no later th the Maturty Date. This payment shall be
in addition to the payment on the Advances made within one (1) year 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 on principal; and Fourt, to principaL.
6. Prepament. 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 advanced pursuant to the LoanGrant 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, unless the Borrower and the Governent shall
otherwise agree, in wrting.
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 shal be computed on the
payment from the due date at a rate equal to the rate of the cost of fuds to the United
States Treasur as prescribed and published by the Secretar of the Treasur. In addition,
the Borrower shall pay administrative costs and penalty charges assessed in accordace
with applicable Governent regulations. Acceptance by the Governent of a late
payment shall not be deemed to be a waiver of any right or remedy of the Governent.
8. Security. This Note is secured by a securty interest in collateral described in the
LoanGrant Agreement as such agreement may be amendedJ supplemented, consolidated
or restated from time to time. Rights and obligations with respect to the collateral are
stated therein.
9. Noteholder. This Note evidences indebtedness created by a loan made pursuat to the
American Recovery and Reinvestment Act of 2009, Pub. L. 111-5, 123 Stat. 115 (2009),
the Notice of Funds Availabilty published at 74 Fed. Reg. 33104 and Title VI of the
Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.). The Government shall be and
shall have all rights as holder of this Note.
10. Default. In an event of default, as provided in the LoanGrant Agreement, all principal
advanced pursuant to the LoanGrant Agreement and remaining unpaid on this Note, and
Page 2
al in thn may be declar or may beme du an pale in th ma and
with the efec prvide in th LoanGrt Agrme
11. Costs. 1ñ Bower sha pay any an al cost an ex in in coon
with th exerise of rights or the enorcment of reedes as se fo in th LoGrtAgen
12. Waiers. The Borrower waves demd. pretmt for payi notce of non-
paen, notice of dishonor, prote and notice of non-payment of ths Note.
13. Obligations. The obligations herunde of the Borwe on th Note ar ablut and
unditiona irve of any defen or any righ to se off, reupmen or
countela it might otherse have agai the Goverent.
IN WISS WHREOF, the Borrwer ha caus th Not to be signed in its
corpra or legal na and its corpra se, if any, to be heto afed and at by its
offcers ther duly auori all as of the day and yea fu abve wrtt.
(SEAL)At to by~S reta
MIVALE TEHONE EXCHGE,INCO~TE .~~~-~
Title: President
-~
Pa 3
RUS Project Designation:
IDAHO 1l05-B40
BROADBAND INTIATIVS PROGRA
LOAN/GRAT AN SECURTY AGREEMENT
dated as of September 20, 2010
between
MIVALE TELEPHONE EXCHANGE, INCORPORATED
and
THE UNTED STATES OF AMRICA
UNTED STATES DEPARTM OF AGRICULTU
RURA UTIITIES SERVICE
Page 1
BROADBAND INITIATIES PROGRAM
LOAN/GRANT AND SECURITY AGREEMENT
THIS LOAN/GRANT AND SECURITY AGREMENT (this "Agreement"), dated as of
September 20, 2010 is between MIDVALE TELEPHONE EXCHANGEJ INCORPORATED
("Awardee"), a corporation existig under the laws of IDAHO, and the UNITED STATES OF
AMERICA, acting though the Administrator of the Rurl Utilities Service ("RUS").
The Awardee ha applied for financial assistance ("Application") frm RUS to finance the
constrction of a broadband infrastrctue project to serve areas that are at least 75% rul.
RUS is wiling to extend fincial assistance, in the form of a loan and grt to the Awardee,
pursuant to the Amencan Recovery and Reinvestment Act of 2009, Pub. L. 111-5, 123 Stat. 115 (2009)
(the "Recovery Act"), the Notice of Funds Availabilty published at 75 Fed. Reg. 3820 and Title VI of the
Rural Electrfication Act of 1936 (7 U.S.C. 901 et seq.), and all applicable federal regulations, on the terms
and conditions stated herein.
The Awardee is willng to secure the loan and grant and its other obligations to RUS on the
term stated herein.
THEREFORE, in consideration of the promises and mutual covenants herein contaned, the
paries agree and bind themselves as follows:
ARTICLE I - DEFIITIONS
The term defined herein include both the plurl and the singular. Unless otherwise
specifically provided, all accounting terms not otherwise defined herein shall have the meanings assigned
to them, and all determinations and computations herein provided for shall be mae in accordance with
Accounting Requirements.
"Accounting Requirements" shall mean the system of accounting prescnbed by RUS in RUS
Regulations.
"Advance" or "Advances" shall mean the disbursement of Loan and/or Grant fidsin
accordance with this Agreement.
"Affliate" or "Affliated Compay" of any specified person or entity means any other person
or entity directly or indirectly controlling of, controlled by, under dirct or indiect common control with,
or related to, such specified person or entity, or which exists for the sole purose of providing any servce
to one company or exclusively to companies which otherwise meet the definition of affliate. This
defmition includes Variable Interest Entities as described in FiIiancial Accounting Stadads Board
Interpretation (FIN No. 46(R), Consolidation of Variable Interest Entities. For the purose of this
defiition, "control" means the possession directly or indirectly, of the power to direct. or cause the
diection of the management and policies of a company, whether such power is exercised though one or
more intermediar companies, or alone, or in conjunction with, or pursuant to an agreement with one or
more other companies, and whether such power is estblished though a majority or minority ownership
voting of securities, common directors, offcers, or stockholders, votig trst, holding trsts (other than
money exchaged) for propert or services.
"Application" shall have the meaning as defined in the second paragraph hereof.
"Award" shall mean the Loan or LoanGrantCombination descnbed in Aricle II.
"Awardee" shall mean the Loan or LoanGrant Combination recipient named in the firt
paragaph hereof.
Page 2
"BIP" shall mean the Broadband Initiatives Program, administered by RUS and created
pursuant to the Recovery Act.
"mp Contracting, Work Order and Advance Procedures Guide" shall mean the procedures,for
constrction and Advances, attched hereto as Atthment 1.
"Business Day" shall mean any day that RUS and the Deparment of Treasur are both open
for business.
"Collateral" shall mean any and all propert pledged as security for the Ob)gations,
including, without limitation, securty for the Loan, and other amounts owing to RUS under tleIfoan--rant
Documents, including, without limitation, the propert described in Aricle ix and on Schedule 2.
"Composite Economic Life" means the weighted (by dollar amount of each class of facilty in
the Award) average economic life of all classes offacilties in the Award, as detennined by RUS.
"Distrbution" shall have the meaning as defined in Section 7.9.
"Eligible Purposes" shall mean puroses and expenses which are specified in the NOF A as
being eligible for fudig.
"Event of Default" shall have the meaning as defined in Arcle X.
"Expiration Date" shall have the meaning as defined in Paragraph (d) of Section 3.1.
"Fonn 481" shall have the meaning as defmed in Section 4.3(d).
"Grant" shall mea the grant described in Section 3.1.
"Interest Expense" shall mean the accrual of interest on all classes of indebtedness, including
capital leases and securities issued by the Awardee and shall also include the amortization of debt issuance
expenses, premiums, and discounts.
"Laws" shall have the meaning as defined in paragraph (e) of Article II.
"Loan" shall mean the loan described in Section 3. L
"LoanGrant Combintion" shall mean, collectively, the loan and grant described in Section
3.1.
"Loan-Grant Documents" shall mean, collectively, this Agreement, Security Documents and
the Note(s).
"Material Adverse Effect" shall mean a material advere effect on, or change in, the condition,
financial or otherise, operations, propertes, business or prospects of the Awardee or on the abilty of the
Awardee to perfonn its obligations under the Loan-Grant Documents as detennined by RUS.
"Net Income" or "Net Margin" shall mean the amount equal to the income that the Awardee
has after subtrcting costs and expenses from the total revenue. Costs and expenses include but ar not
limited to all operations and maintenance expenses, corporate operations, taes, interest dividends,
depreciation, and gains and losses on the disposition of propert.
"Net Worth" (equity) shall mean total assets less total liabilties of the Awardee. Net worth
includes the recorded value of capital stock, additional paid-in capital, treasur stock, retained earings and
other comprehensive income.
Page 3
"NOFA" shall mean the Notice of Funds Availabilty, published in the Federa Register at 75
Fed. Reg. 3820.
''Note(s)'' shall have the meaning as defined in Pargrph (a) of Section 3.2.
"Obligations" shall mean any and all indebtedness, obligations and liabilties of the Awardee
to RUS, of every kind and description, direct or indirect, secured or unsecured, joint or several, absolute or
contigent, due or to become due, whether for payment or performance, now existing or hereafr arsing,
howsoever evidenced or created, including, without limitation, all loans (includig any loan by renewal or
extension); all indebtedness, all Notes, all undertings to tae or refrain from taking any action; and all
interest, taxes, fees, charges, expenses, and attorney's fees chargeable to Awardee or incurred by RUS
under this Agreement or in any other document or instrent delivered hereunder or as a supplement
hereto.
"Permitted Encumbrances" shall mean the liens and encumbraces peritted by the RUS
Mortgage.
"Pledged Deposit Account" shall have the meaning as defined in Section 5.4.
"Pror RUS Loan Contract" shall mean the contract identified on Schedule 1 as it may have
been amended or supplemented from time to time.
"Project" shall have the meaning as defined in Pargrph (a) of Section 3.4.
"Project Completion" shall mean th all Award fuds have been advanced to the Awardee by
RUS.
"RE Act" shall mean the Rural Electrfication Act of 1936 (7 U.S.C. 901 et seq.).
"RUS Mortgage" shll mean the mortgage identified on Schedule 1 as it may be amended,
supplemented and restaed from time to tie.
"RUS Regulations" shall mean the rules, regulations and bulletis of general applicabilty
published by RUS from time to time, as such rules, regulations and bulletins exist at the dae of
applicabilty thereof, and shall also include 7 C.F.R 3015 (and, by adoption, 48 C.F.R. 31.2 of the Federal
Acquisition Regulations), 3016 and 3019 and applicable OMB Cirulars, as well as any rue 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 applicabilty
thereof.
"Secuty Documents" shall mean, collectively, any mortgage, security agrement, financing
statement, deposit account control agreement or other document providing collateral for the Obligations,
including without limitation, repayment of the Loan.
"Service Rates" shall mean the rates charged for data, video, voice or any other service
proposed in the RUS approved Application.
"Subsidiares" shall mean the subsidiaries listed in Schedule L
"Substantially Complete" shall mean that 67% of Award fuds have been advanced to the
Awardee by RUS.
"System Design" shall mean the system as described in the RUSapproved Application.
Page 4
"TIER" shall mean the Awardee's total Net Income or Net Margis plus Interest Expese
payable for any year divided by Interest Expense payable for such year, as set fort in Section 5.8 hereof.
"Timeline" shall mean the detailed schedule describing the Project build out, submitted with
the RUS approved Application, as may be amended from time to time with prior written RUS consent.
"Total Assets" shall mean all propert owned by the Awardee. Total assets include cunt
and noncurent assets such as cash, receivables, material and supplies, prepayments, deferred charges, and
investments; fixed assets (plant) such as buildings and equipment, both in service and under constrction;
as well as capital leases and intagibles.
ARTICLE II - REPRESENTATIONS AND WARNTIES
Recognizing that RUS is relying hereon, the Awardee represents and warants, as of the dae
of this Agreement, as follows:
(a) Organization; Power, Etc. The Awardee: (i) is the tye of organization specified in
the first paragaph hereof, duly organized, validly existing, and in good stdmg
under the laws of the State identified in the first paragraph heref; (ii) is duly
qualified to do business and is in good stading in each jursdiction in which the
transaction of its busmess make such qualification necessar; (iü) has legal power to
own and operate its assets and to car on its business and to enter into and peñorm
its obligations under the Loan-Grant Documents; (iv) has duly and lawfully obtained
and maintained all material licenses, certificates, permits, autorizations, and
approvals necessar to conduct its business or required by applicable Laws; and (v)
is eligible to obtam the financial assistace from RUS contemplatd by this
Agreement.
(b) Authority. The execution, deliver and peñormce by the Awaree of this
Agrement and the other Loan-Grat Documents and the pedormance of the
transactions contemplated hereby and thereby have been duly authorized by all
necessar actions and do not violate any provision of law or any chaer, aricles of
incorporation, organization documents or bylaws of the Awaree or result in a
breach of, or constitute a default under, any agreement, security agrment, note or
other instrent to which the Awardee is a par or by which it may be bound. The
Awardee has not received any notice from any other par to any of the foregoing
that a default ha occurd or that any event or condition exis tht with the giving
of notice or lapse of time or both would constitute such a default.
(c) Consents. No consent, approval, authoriztion, order, fiing, qualification, license, or
permit of any govermental authority is necessar m connection with the execution,
delivery, peñormance or enforcement of the Loan-Grant Documents, except such as
have been obtained and are in full force and effect.
(d) Binding Agreement. Each of the Loan-Grant Documents is, or when executed and
delivered wil be, the legal, valid, and binding obligation of the Awardee,
enforceable in accordance with its ters, subject only tolimitations on enforceabilty
imposed in equity or by applicable banptcy, insolvency, reorganiztion,
moratorium or similar laws affectig creditors' rights generally.
(e) Compliance with Laws. The Awardee is in compliance in all material respects with
all federal, state and local laws, rules, regulations, ordinances, codes and order
(collectively, "Laws.")
PageS
(f) Litigation. There are no pending or theatened legal, arbitration orgovemmental
actions or proceedings to which the Awardee is a par or to which any of its
propert is subject which, if adversely determined, could have a Material Adverse
Effect.
(g) Information Submitted with Application. All information, reports, and other
documents and data submitted to RUS in connection with the Applicaton were, at
the time the same were fuished, complete, and correct in all material respects. Any
financial statements or data submitted to RUS in connection with the Application
present fairly, in all materal respects, the fiancial position of the Awardee and the
results of its operaions in conformity with Accountig Requirments. Since the date
thereof, there has been no material adverse change in the financial condition or
operations of the Awardee.
(h) Principal Place of Business. The principal place of business and chief executive
offce of the Awardee is at the address of the Awardee spcified in Schedule i
hereto.
(i) Organization Number. The Awardee's organization number is corrtly identified in
Schedule 1 hereto.
G) Subsidiaries and Parent. Any subsidiares or parent of the Awardee ar disclosed on
the attched Schedule i.
(k) Defaults Under Other Agreements. No default by the Awardee has occured under
any agreement or instrment to which the Awardee is a par or to which any of its
propert is subject that could have a Material Adverse Effect.
(1) Title to Property. Except as disclosed in wrting in the opinion of counsel, the
Awardee holds good and marketable title to all of the Collateral, free and clear of
any liens, security interests or other encumbrances except for Peritted
Encumbrances.
(m) RUS Mortgage. The RUS Mortgage is in ful force and effect, wil secure the
Obligations, including the Note, and creates a valid fist lien on the propert pledged
thereunder and hereunder.
(n) Additonal Representations and Warranties. The Awardee fuer repreents and
warants as set forth on Schedule 1.
ARTICLE II- THE LOAN AND GRANT
Section 3.1 Loan and Grant Amounts, Interest Rate, and Expiration Date.
(a) Loan Amounts. RUS agrees to make and the Awardee agees to accept, on the ters
and conditions stated in this Agreement and subject to 3 i U.S.C. 1551 and 1552, a
loan, in the amount specified in Schedule 1 hereto (the "Loan").
(b) Grant Amount. RUS agrees to make and the Awardee agrees to accept, on the terms
and conditions stated in this Agreeent and subject to 31 U.S.C. 1551 and 1552, a
grant, in the amount specified in Schedule 1 hereto (the "Grant").
(c) Interest Rate. The amount of the Loan specified in Schedule i herto wil bear
interest on each Advance at the Treasur rate for comparable loans with comparble
matuities.
Page 6
(d) Expiration Date. The obligation ofRUS to advance the Award, or any portion
thereof, shall expire on a date ("Expiron Date") thee (3) year from the date of
this Agreement.
Section 3.2 Loan-Grant Documents
(a) The debt crated by the Loan wil be evidenced by a note(s) ("Note(s)") executed by
the Awardee and payable to the United States of America. The Awardee shall
repay the Loan in accordace with the Note(s) which shall be payable and bear
interest in accordance with its (their) terms.
(b) The Awardee shall execute the Securty Documents, in form and substance
satisfactory to RUS, and such other securty instrents as required by RUS.
Section 3.3 Payment
Except as otherwise prescribed by RUS, the Awardee shall make all payments on the Note(s)
utilzing electronic fud trsfer procedures as specified by RUS.
Section 3.4 Project
(a) Loan and Grant Purpose. The Loan and Grant have been made solely to finace the
broadband infrstrctue project speifically described in the RUS approved
Application ("Project.")
(b) Changes to Project. The Awardee shall obtain the prior wrtten approval ofRUS for
any material change to. the system design, constrction, Timeline, delivery of
services, and/or objective(s) of the Project.
Section 3.5 ACH Payments
The Awardee consents to the use of the Automated Clearing House (ACH) Payment System
and to the deposit of award fuds directly into the Pledged Deposit Account.
ARTICLE iv - CONDITIONS OF FIANCIAL ASSISTANCE
Section 4.1 Conditions Precedent to Closing
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 Matters. All legal matters incident to the consumation of the transactions
hereby contemplated shall be satisfactory to counsel for RUS;
(b) Loan-Grant Docuents. RUS shall receive duly executed originals of the Loan-
Grant Documents;
(c) Filed and Recorded Security Documents. RUS shall have received executed, fied
and indexed financing statements covering all of the personal propert and fixtres
of the Awardee;
(d) Articles of Incorporation, Charter, Bylaws and Organizational Documents. With
respect to corporate and cooperative Awardees, RUS shall have reeived certifed
Page 7
copies of the Awardee's most recent aricles of incorporation or charer and bylaws.
With respect to limited liabilty companies or similar organiztions, RUS shall have
received certified copies of the Awardee's most recent organization docuents
contaiing provisions reflecting the obligations of the Awardee in pargrphs (c) and
(d) of Section 7.3;
(e) Authorizations. RUS shal have received satisfactory evidence that all Loan-Grant
Documents and proceedings of the Awardee necssar for duly authorizing the
execution, delivery and performance of the Loan-Grant Documents have been
obtaned and are in full force and effect;
(f) Approvals. RUS shall have received satisfactory evidence that the Awardee has duly
registered when and where required by law with all state, Federal and other public
authorities and regulatory bodies and obtained all authorizations, certficates, and
approvals necessar for, or required as a condition of, the validity and enforceabilty
of each of the Loan-Grant Documents;
(g) Title Evidence. RUS shall have received satisfactory evidence that the Awardee has
good and marketable title to its propert, including the Projec, and holds such
franchises, permits, leases, easements, rights, privileges, licenses, or right-of-way
instruments, reasonably adequate in form and substance, as may be required by law
for the continued maintenance and operation of the existing facilties and Project;
(h) Management, Service, and Operating Agreements. Except as otherise provided in
Sections 4.2 and/or 4.3 herein, RUS shall have received all management, service, and
operating agreements, in form and substace acceptable to RUS, which shall be in
accordace with fees or rates presented in the pro forma financial statements
submitted to RUS in the RUS approved Application;
(i) Opinion of Counsel. RUS shall have received an opinon of counsel for the Awardee
(who shall be acceptable to RUS) in form and substance acceptable to RUS for each
state in which the Awardee operates; and
G) Additional Conditions. The Awardee has met all additional conditions specified in
Schedule 1 hereto.
Section 4.2 General Conditions Precedentto RUSJ Obligations to Release Funds for Advance
The obligations of RUS hereunder are subject to the satisfaction of each of the following
conditions precedent (all documents, certificates and other evidence of such conditions are to be
satisfactory to RUS in its discretion):
(a) Service Rate Evidence. RUS shall have received satisfactory evidence that the
Awardee has duly adopted Service Rates for all proposed services which are
designed with a view to (i) paying and discharging all taxes, maintenance expenses,
and operating expenses of the Awaree, (ii) making all payments in respect of
pricipal and interest on the Note(s) when and as the same shall become due, (iii)
providing and maintaining reasonable workig capita of the Awardee, and (iv)
producing and maintaining the TIER specified in Section 5.8 hereof;
(b) Fidelity Bond or Theft Insurance Coverage. RUS has received copies of the fidelity
bond or theft insurance policy from the Awardee, identifyng RUS as a loss payee,
from a surety doing business with the United States listed in 3 i CFR Par 223, in the
amount specified in Schedule 1, covering all offcers, employees, or agents of the
Awardee authorized to receive, disburse, or receive and disburse the Loan and Grant.
Notwithtading, for curent RUS borrowers, RUS may waive this fidelity bond
Page 8
coverage requirement, if, after evaluation, RUS has determined that adequate fidelity
bond coverage is already maintained by the Awardee as a RUS borrower under
existing loan or guarantee agreements between the Awardee and RUS;
(c) Current Financial Information and Certifcate of Authority. RUS has received from
the Awardee: (i) its updated balance sheet, statement of cash flow, and income
statement and (ii) a duly authonzed and executed certification, Form 675,
"Certification of Authority," designating an officer, employee, or agent of the
Awardee as the person or persons authorized to execute and submit, on belf of the
Awardee, RUS Form 481, "Financial Requirement Statement;"
(d) Deposited Funds. RUS has received from the Awardee evidence, satisfactory to
RUS, ven:ting that the Awardee has maintained on deposit in an account, fuds
suffcient to complete the Project as specified on Schedule 1; and
(e) Additional Conditions. The Awardee has met all additional conditions specified in
Schedule 1 hereto.
Section 4.3 Conditions to Indiyidual Advances
The obligations of RUS to approve any Advance are subject to the satisfaction of each of the
following conditions precedent on or before the date of such Advance (all documents, cerficates and other
evidence of such conditions precedent are to be satisfactory to RUS in its discretion):
(a) Continuing Representations and Warranties. That the representations and warties
of the Awardee contaned in ths Agreement be tre and correct on and as of the dat
of such Advance as though made on and as of such date;
(b) Material Adverse Effect. That no event has occured which has had or could have a
Matenal 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 shal have
occurred and be contiuing, or shall have occurd after giving effect to any
Advances on the books of the Awardee;
(d) Requisitions and Supporting Documentation. That RUS shall have received not
more frequently than once a month, unless otherwise agreed to by RUS, a completed
RUS Form 481, "Financial Requirement Statement" (hereinafter" Form 481,")
bearg the original signatue of the offcer, employee, or agent of the Awardee
authonzed to receive, disburse, or receive and disburse the Award, with supportg
docuientation from the Awardee in accordace with the BIP Contractig, Work
Order and Advance Procedurs Guide. Advances shall be limited to the minimum
amounts required for the Awardee's imediate disburement needs and shall be
requested by the Awardee only for actual immediat cash requirements of the
Awardee. Such loangrant advances shall be provided on a reimbursement basis, or
based on unpaid third par invoices for Eligible Puroses, or contrcts approved by
RUS, in accordace with the BIP Contracting, Work Order and Advance Procedures
Guide. .. Grant fuds must be advanced concurently with Loan funds in the same
proportion as the Grant is to the total Award;
(e) Flood Insurance. That for any Advance used in whole or in par to fmance the
constrction or acquisition of any buildig in any ara identified by the Secreta of
Housing and Urban Development pursuant to the Flood Disaser Protection Act of
1973 (the "Flood Insurance Act") or any rules, regulations or orders issued to
implement the Flood Insurance Act as any area havig special flood hazards, or to
Page 9
finance any facilties or materials to be located in any such building, or in any
building owned or occupied by the Awardee and located in such a flood had ara,
the Awardee shall have submitted evidence, in form and sùbstance satisfactory to
RUS or RUS has otherwise determined, that (i) the community in which such area is
located is then paricipating in the national flood insurance program, as requi by
the Flood Insurance Act and any related regulations, and (ii) the Awardee has
obtaied flood insurce coverage with respect to such building and contents as may
then be requird pursuat to the Flood Insurance Act and any related regulations;
(t) Current Financial Information. Tht RUS has received from the Awardee: its
curent, updated balance sheets, income statements and statements of cash flow;
(g) Compliance with Timeline. That RUS has received from the Awardee evidence,
satisfactory to RUS, that the Project is being constrcted in accordance with the
Timeline;
(h) Compliance with Loan~Grant Documents. That the Awardee is in material
compliance with the Loan-Grant Documents and the RUS Mortgage;
(i) Permits, Licenses and Franchises. That RUS shall have received satisfactory
evidence that the Awardee has obtained the permits, licenses, franchises and other
approvals identified on Schedule i;
G) Additional Documents. That the Awaree agrs to provide RUS with such
additional documents as RUS may request; and
(k) Additional Conditions. That the Awardee has met all additional conditions specified
in Schedule i hereto.
Section 4.4 Fiqt Âdvancetf):PYr()ftheADptn.iunsapdIJtr!;Ii~!!
on Subsequent Advan.ces
Funds to payoff cerin pre-application expenses, as defied in the NOFA, and expenditues
for Eligible Puroses incured aftr submission of the Application to RUS, if any, wil be included in the
fit Advance. Thereafer no fuer Advances wil be made unless and unti the Awardee has fuished
evidence, in form and content satisfactory to RUS, that such interi fiancing has been paid in full and any
associated liens have been duly discharged of record.
ARTICLE V - AFFIRMATIV COVENANTS
Section 5.1 Generally
Unless otherwise agred to in writing by RUS, while this Agreement is in effect, the Awardee
shall duly observe each of the affrmative covenants contained in this Aricle V.
Section 5.2 Use of Adyances
The Awardee shall expend Award fuds only for Eligible Purpses in accordance with the
RUS approved line item Project budget and Form(s) 48 i submittd to RUS prior to the advance of fuds.
Section 5.3 Unused and Disallowed Adyançes
(a) The Awaree shal retu to RUS fortwith all or any advanced porton of the Loan
and Grant not disbursed by the Awardee for the Project or not needed to complete
Page 10
the Project with any interest eared thereon when deposited in the Pledged Deposit
Account.
(b) The Awardee shall reimburse RUS for any advanced fuds whose original
expenditure has been disallowed by an RUS loan and grt audit. Disallowances
shall be satisfied, as dircted by RUS, by either adinistrative offset against other
approved puroses on Form(s) 481 or repayig the disallowed amount direcly to the
United States Treasur. Such disallowed amounts shall accre interest payable to
RUS from the date RUS delivers to the Awardee a written demand for payment.
Interest shall accrue on disallowed Loan Advances at the lesser of the following: the
interest rate of the disallowed Advance or the then curent United States Treasur
rate as prebed by the Secreta of the Treasur in the Federl Register and the
Treasur Fiscal Requiements Manua Bulletin. Interest shall accrue on disallowed
Grant Advances at the then curnt United States Treasur rate as prscnbed.by the
Secretar of the Treaur in the Federal Register and the Treur Fiscal
Requirements Manual Bulletin. Closeout of the Loan and Grant wil not afect the
right of RUS to disallow expenditues and recover, in full, any amount on the basis
of a subsequent audit or other review or the Awardee's obligation to retu any
disallowed expenditues.
Section 5.4 Deposit of Advances into Pledged Deposit Account
(a) The Awardee shall open and maintain a deposit account pledged to RUS ("Pledged
Deposit Account,") in a ban or depository whose deposits are insured by the Federal
Deposit Insurance Corporation or other federal agency acceptable to RUS and shll
be identified by the RUS' designation of the Awardee followed by the words
"Pledged Deposit Account." The Awardee shall promptly deposit proceeds from all
Advances, including previously advanced fuds whose original expenditue has been
disallowed by an RUS audit into the Pledged Deposit Account. Moneys in the
Pledged Deposit Account shall be used solely for the purses for whích Advances
were made, or for such other purses as may be approved in writig by RUS.
Deposits and disbursements from the Pledged Deposit Account shall be made and
recorded in accordance with the BIP Contractng, Work Order and Advance
Procedur Guide.
(b) First Lien on Pledged Deposit Account. The Awardee shall perfect and maitain a
first and prior lien in the Pledged Deposit Account (pursuant to a deposit account
agreement or similar agreement or mechanism for perfecting as provided by
applicable law) in form acceptable to RUS.
Section 5.5 Additional Project Funding
The Awardee shall ensure that adequate fuding is in place to complete the Project and wil,
afer obtaining the prior wrtten approval of RUS, obtain additional loans or fuds or receive binding
commitments for supplemental fuding in an amount needed to ensure completion ofthe Project.
Section 5.6 Miscellaneous Nntices
The Awardee shall fuish to RUS:
(a) Notice of Default. Promptly after becoming aware thereo~ notice of the occurence
of any default under the Loan-Grant Documents or the RUS Mortgage or the receipt
of any notice given pursuant to the Loan-Grat Docuents or RUS Mortgage 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, the other Loan-Grant
Documents or under the RUS Mortgage.
Page II
(b) Notice of Litigation. Promptly aftr the commencement thereof, notice of the
commencement of all actions, suits or proceedgs before any cour, aritrator, or
governental deparent, commission, board, bureau, agency, or instrentity
affectig the Awardee or any Affiliate which, if adversely determined, could have a
Material Adverse Effect.
(c) Regulatory and Other Notices. Prmptly after receipt thereof, copies of any notices
or other communications received from any governental authority with respect to
any matter or proceeding which could have a Material Adverse Effect.
(d) Material Adverse Effect. Promptly after becoming aware thereofo notice of any
matter which has resulted or may result in a Material Adverse Effect.
(e) Corporate Document Changes. Thir (30) days prior to their effectiveness, any
amendments, supplements or modifications to the Awardee's Arcles of
Incorporation, Charer, Bylaws, Operating Agreement, Members Agreements or
other Organizational Documents.
(t) Other Information. Such other information regarding the condition, financial or
otherwise, or operations of the Awardee as RUS may, from time to time, reasonablyrequest. .
Section 5. 7 Rates and Financial Performance Criteria
The Awardee shall design, charge and matai rates in effect which (i) pay and discharge all
taxes, maintenace expenses and operatig expenses of its system (ü) make all payments in respt of
pricipal of and interest on the Note(s) when and as the same shall become due, (ii) provide and maitain
reasonable working capita for the Awardee, and (iv) maintain the TIER specified in Section 5.8 herof.
Section 5.8 TIR
The Awardee wil maintain the TIER required in the Prior RUS Loan Contract and, upon the
termination of the obligation to maintain such TIR, wil maintain a TIER of 1.0 until the Loan is repaid in
fulL.
Section 5.9 Corrective Actjon
Within thir (30) days of (i) sending the financial reports required by Section 6.3 hereof that
shows the TIER specified in Section 5.8 was not achieved for the reported fiscal period or (ii) being
notified by RUS that the TIE specified in Section 5.8 was not achieved for the reportd fical period,
whichever is earlier, the Awardee, in consultation with RUS, shall provide a wrtten plan satisfactory to
RUS setting fort the actions that shall be taen to achieve the specified TIER on a timely basis and shall
promptly implement said plan.
Section 5.10 Service Obligation
The Awardee shall provide the broadband service described in the RUS approved Application
commencing from the date the Project is Substatially Complete for at least as long as the Composite
Economic Life of the facilties financed by the Award as specified on Schedule 1.
Section 5.11 Obllga:tions with Rest to tlnt Constl'n. Operati and Maigtene of tb Prlèt
(a) Project Management and Operation. The Awardee shall be responsible for the
management of the Project and wil operate the Project in an efficient ard economic
manner as well as maintaining the Project in good repai.
Page 12
(b) Construction in Accordance with System Design and Timeline. The Awardee shall
cause the Project to be constrcted and/or built out, and completed in accordace
with the system design submittd with the RUS approved Application, as such
design may be amended with prior RUS consent, and the Timeline.
(c) General Insurance Requirements. The Awardee shall take out and maintan
insurance on the Projec and any other propert acquired with the Loa and OTant in
accordance with 7 CFR Secton 1788 as well as maitaing the fidelity bond or theft
insurance coverage required in Section 4.2(b) hereof.
(d) Contracting. The Awardee may, in accordance with the BIP Contracting, Work
Order and Advance Procedures Guide, contrct for goods' and serices to be fuded
by the Award, using RUS form contracts or private contrts; provided tht private
,contracts must comply with equal employment opportity and civil rights
requirements, as well as the Davis Bacon Act.
(e) Commencement and Completion o/Constrction andlor Installation.
(1) Awardees are requird to commence constrction and/or installation of the
Project within 180 days from the date hereof, and
(2) The Project shall be Substatially Complete within two years of the date
hereof, and Projec Completion shall occur within thee year of the date
hereof.
Section 5.12 Preservation of Existence and Rights
The Awardee shall take or cause to be taken all such actions as from time to time may be
necessar to preserve its existence and to preserve and renew all franchises, contracts, rights of way,
easements, permits, and licenses now or hereafer to be granted or conferred upon it, with repect to the
Project, the loss of which would have a Material Adverse Effect.
Section 5.13 Compliance with Laws
Awardees shall comply with aU applicable federal and state laws, including but not limited to:
(i) The nondiscrimination and equal employment opportity requirements of Title VI of the Civil Rights
Act of 1964, as amended (42 U.S.C. § 2000e et seq., 7 CFR pt. 15); (ii) Section 504 of the Rehabiltation
Act (29 U.S.C. § 794 et seq.; 7 CFR pt. 15b); (iii) The Age Discrmination Act of 1975, as amended (42
U.S.C. § 6101 et seq.; 45 CFR pt. 90); (iv) Executive Order 11375, amending Executiv.e Order 11246,
Relating to Equal Employment Opportity (3 CFR pt 102). See 7 CFR pts. 15 and 15band 45 CFR pt.
90, RUS Bulletin i 790-1 ("Nondiscrimination among Beneficiares of RUS Program"), and RUS Bulletin
20-15:320-15 ("Equal Employment Opportity in Constrction Financed with RUS Loans"). The RUS
Bulletins are available at htt://www.broadbandusa.gov.;(v)TheArchitectuIBariersActof1968.as
amended (42 U.S.C. ~ 4151 et seq.); (vi) The Uniform Federa Accessibilty Standards (UF AS) (Appendix
A to 41 CFR subpar 101-19.6); (vii) The Council on Envirnmental Quality Regulations for Implementing
the Procedural Provisions of NEP A and certin related federal environmental laws, statutes, regulations,
and Executive Orders found in 7 CFR1794; and (vii) The Communications Act of 1934, as amended, (47
U.S.C. § 151 et seq.), the Telecommunications Act of 1996, as amended (Pb. L. 104.104, 110 Stat. 56
(1996), and the Communications Assistance for Law Enforcement Act (47 U.S.C. § 1001 et seq.)
(CALEA).
Section 5.14 Equal Opportunity Requirements
(a) Equal Opportunity Provisions in Construction Contracts. The Awardee shall
incorporate or cause to be incorporated into any constrction contrct, as defined in
Page 13
Executive Order 1 1246 of September 24, 1965 and implementing regulations, which
is paid for in whole or in par with fuds obtained from RUS or borrowed on the
crdit of the United States puruant to a grt, contrct, loan, insurance or guartee,
or undertaken pursuant to any RUS progra involving such grant, contract, loan,
inurance or guarantee, the equal opportity provisions set forth in Attchment 2
hereto, entitled Equal Opportnity Contract Provisions.
(b) Equal Opportunity Contract Provisions Also Bind the Awardee. The Awardee
fuer agrees that it shall be bound by such equal opportity clause in any federally
assisted constrction work which it performs itself other than though the permanent
work force directly employed by an agency of governent.
(c) Sanctions and Penalties. The Awardee agrees that it shall cooperate actively with
RUS and the Secretar of Labor in obtaining the compliance of contractors and
subcontrctors with the equal opportity clause and the rules, regulations and
relevant orders of the Secreta of Labor, that it shall fuish RUS and the Secreta
of Laor such information as they may require for the superision of such
compliance, and tht it shall otherise assist the administering agency in the
dischare of RUS' primar responsibilty for securing compliance. The Awardee
furter agrees that it shall refrai from enterig into any contract or contrct
modification subject to Executive Order 11246 with a contractor debared from, or
who has not demonsted eligibilty for, Governent contrcts and federally
assisted constrction contrcts pursuant to Par n, Subpar D of Executive Order
11246 and shall car out such sactions and penalties for violation of the equal
opportity clause as may be imposed upon contrctors and subcontrctors byRUS
or the Secretar of Labor puruant to Par II, Subpar D of Executive Order 11246.
In addition, the Awardee agrees that if it fails or refues to comply with these
undertings RUS may cancel, terminate or suspend in whole or in par this
Agreement, may refrain frm extendig any fuer assistace under any of its
programs subjec to Executive Order 11246 unti satisfactory assurance of futue
compliance has been received from the Awardee, or may refer the case to the
Deparent of Justice for appropriate legal proceedigs.
Section 5.15plrcllases with Award Fynds
Except as specifically authorid in wrting in advance by RUS, all facilties, materialsr
equipment, supplies, replacements and all other items purchased with Award funds shall be purhased
outright, and not subject to any conditiona sales agreement, chattel mortgage, bailment lease or other
agreement reserving to the seller any right, title or lien.
Section 5.16 Awardee to Defeni; Title and Remove Liens
Except for Permitted Encumbrances, the Awaree wil maintan and preserve the lien of this
Agreement superior to all other liens afecting the Collateral, and wil forever wart and defend the title
to the Collateral against any and aU claims and demands whatsoever. The Awardee shall make, execute,
acknowledge, déliver, fie and record all such mortgages, financing statements, continuation statements,
security agreements, instrments and conveyances as is necessar to preserve the lien of this Agreement
against the Collateral superior to all other liens. The Awardee shall maintain the Collateral free of all liens
except for Permitted Encumbrances, and wil promptly payor discharge any and all obligations for or on
account of which any such lien or charge might exist or could be created and any and all lawful taes, rates,
levies, assessments, liens, claims or other charges imposed upon or accruing upon any of the Collateral, as
and when the same shall become due and payable; and whenever called upon so to do by RUS wil fush
to RUS adequate proof of such payment or discharge; provided, however that this provision shal not be
deemed to require the payment or discharge of any tax, rate, levy, assessment or other governental charge
while the Awardee is contesting the validity thereof by appropriate proceedings in good faith and so long as
it shall have set aside on its books adequae reserves with respect thereto.
Page 14
Section 5.17 Furtller Asurances
(a) The Awardee shall from time to time upon written demand of RUS make, execute,
acknowledge and deliver or cause to be made, executed, acknowledged and delivered
all such fuer and supplemental mortgages, financing sttements, continuation
statements, security agreements, instrents and conveyances as may be requested
by RUS and take or cause to be tatln all such further action as may reaonably be
requested by RUS to provide for the securing and payment of the principal of,
interest on, and any and all other amounts payable hereunder and under the Note(s)
according to the terms thereof and for the purose of fully conveying, transferrng
and confiring the propert hereby conveyed, mortgaged and pledged or intended so
to be, whether now owned by the Awardee or hereafter acquired by it.
(b) The Awardee shall cause this Agreement, finacing statement, continuation
statement and every additional instrument which shall be executed pursuat to
subsection (a) immediately above, to fortwith upon' execution to be filed and
recorded and refied and rerecorded as conveyances and security interests in real and
personal propert in such maner and in such places as may be required by law or
requested by RUS in order to fully preserve the security for the Obligations,
including the Loan, and to perfect and maintain the superior lien of this Agreement
and all supplemental security instrments.
Section 5.18 Buy American - GeneralProhibitioQ and Waiver
For Awardees that are Staes, local governents, or any agency, subdivision, instrmentality,
or political subdivision thereof, puruant to § 1605 of the Recovery Act, no Loan or Grat fuds may be
used for the constrction, alteration, maintenance, or repair of a public building or public work (as such
terms are defined in 2 CFR § 176.140) unless all of the iron, steel, and manufacturing goods used in the
project are produced in the United States, except as provided in OMB regulations at 75 Fed. Reg. 14323
(Mar. 25,2010). Notwithstanding. such Awardees have been granted a general waiver by the secrtary of
Agricultue with respect to certin broadband equipment, as outlined in the Federa Register at 74 Fed. Reg.
31402 (July i, 2009). All other waivers must be requested of RUS pursuant to 2 CFR § 176.60
Section 5.19 Nondiscriminatioq and Interconnection Obligations
The Awardee agrees to (i) adere to the priciples contained in the FCC's Internet Policy
Statement (FCC 05-151, adopted August 5, 2005); (ii) not favor any lawful Internet applications and
content over others; (iii) display any network management policies in a prominent location on the service
providets webpage, provide notice to customers of changes to these policies, such policies include any
business practices or technical mechanisms they employ, other than stadard best efforts Internet delivery,
to allocate capacity; differentiate among applications, providers, or sources, limit usage and manage ilegal
or harfu content; (iv) connect to the public Internet directly or indirectly, such that the project is not an
entirely private closed network; and (v) offer interconnection, where technically feasible without exceeding
curent or reasonably anticipated capacity limitations, on reasonable rates and terms to be negotiated with
requesting pares. This includes both the abilty to connect to the public Internet and physical
interconnection for the exchange of traffc.
(a) Notwithstading the above, the Awardee may not offer interconnection to anyone
that wil provide services that duplicate services provided by projects fuded by
outstading telecommunications loan made under the RE Act. Furer,
interconnecton may not be used for an ineligible purpose under the Recovery Act.
(b) These obligations are subject to the needs of law enforcement and reasonable
network management. As such, the Awardee may employ generally accepte
technica measures to provide acceptable service levels to all customer, such as
Page 15
caching and application-neutral bandwidth allocation, as well as measurs to address
spam denial of service attcks, ilegal content, and other harful activities.
(c) In the event the Awardee contracs with another entity to operate the Project, the
Awardee shall require such entity to comply with the terms of this Section, exprssly
including this Section in their contrctual arangement.
(d) These obligations do not apply to the Awardee's existing network.
Section 5.20 Davis-Bacon Wage Requirements
The Awardee shall comply with the Davis-Bacon Act, and the guidance found at 29 C.F.R.
pts. 1,3, and 5, such that any covered contract with a contractor or subcontractor in excess of $2,000 for
constrction, alteration or repair (including painting and decorating) shall contain the contract clauses
found in 29 C.F.R. 5.5(a), to ensur that all laborers and mechanics employed on the Project receive
payment of not less than the prevailng wage.
Section 5.21.Addiional Affirmative Covenants
The Awardee shall comply with the additional affirative covenants set fort in Schedule i
hereto.
ARTICLE VI - ACCOUNTING AND REPORTING
Section6.1 Financial Records
(a) Awardees must establish an accounting system satisfactory to RUS in compliance
with Accounting Requirments. Such a system of accounts must account for all
fuds advanced under this Agrement separtely from all other funds for the Project,
as required by the Recovery Act.
(b) The Awardee shall maintai, at its premises, such books, documents, papers, or other
record and supporting documents, including, but not limited to, invoices, receipts,
payroll records and bils of sale, adequate to identitY the puroses for which, and the
maner in which Loan Grant, and other fuds were expended on the Project. The
Awardee shall at all times keep, and safely preserve, proper books, records and
accounts in which full and tre entres shall be made of all dealings, business, and
affairs of the Awaree and its Subsidiaries, in accordance with its system of accounts
complying with Paragraph (a) immediately above. The Awaree shall maintan
copies of all documents submitted to RUS in connection with the Award unti the
longer of (i) the Loan being paid in ful and all audits have been completed, (ii) the
term of this Agreement or (ii) thee year subsequent to close-out of the Award.
Section 6.2 Rights of Inspection
The Awardee shal afford RUS, the Offce of the Inspector Genera of USDA, and the
Government Accountability Offce, though their representatives, reasonable opportity, at all times
during business hours and upon prior notice, to have access to and right to inspect the Project, any other
propert encumbered by the Securty 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, contrac, leases, payroll records, canceled checks, statements, and other
documents, and papes of every kind belongig to or in any way pertaiing to its propert or business,
includig its Subsidiaries, if any, and to make copies or extrct therefrom.
Page 16
Section 6.3 Annual Audit
Effective aftr an Advance has been made, one hundred twenty (120) days from the end of
the Awardee's curent fiscal year and, thereafter, one hundred twenty (120) days from the close of each
subsequent fiscal year, the Awardee must submit anual audited fiancial statements along with a report on
compliance and on internal control over ficial reporting, and a management letter in accordace with
the requirements of7 CFR 1773. The CPA conducting the anual audit must meet the requirements for a
qualified CPA as set forth in 7 CFR § 1773.5. However, if the Awardee is a state, local government, or
non-profit organization that expends $500,000 or more of federal fuds during its fiscal year, an audit must
be performed in accordance with OMB Circular A-133, Audits of States, Local Goverments, and Non-
Profit Organizations, located at http://ww.whitehouse.gov/omb/circulars/a133/aB3.htiL. Awardees are
also responsible for ensuring that sub-recipient audit report ar received and for resolving any audit
findings.
Section 6.4 BIP Reporting
(a) Quarterly Report. No later than thir (30) calendar days after the end of each
calendar year quarer the Awardee must submitto RUS utilizing RUS's online
Broadband Collection and Analysis System (BCAS), the following information;
balance sheets, income statements, statements of cash flow, summares of its rate
packages, the number of customers taing broadband servce on a per communty
basis, the completion statu of the build-out and whether the project is Substatially
Complete. In addition the Awardee must provide RUS with such other report
concerning the financial condition or operation of the Awardee, including its
Subsidiaries, as RUS may request.
(b) Annual Report. For the lesser of five years or as long as the Awardee is requird to
provide service hereunder, on each January 31sl, stag the first Januar 31'1 af
Project Completion, the Awardee must submit the following informaton to RUS
utilizig BCAS:
(i) Number of households and businesses subscrbing to broadbad service;
(ii) Number of households and businesses subscrbing to broadband serice that
receive improved access; and
(ii) Number of educational, librar, healthcare, and public safety providers
receiving either new or improved acceSS to broadband servce.
(c) Annual Compliance Certifcate. Within fort-five (45) days after the close of each
calendar year, or more often if requested in writing by RUS, the Awardee shall
deliver to RUS a written statement signed by its general manager, manging
member, or equivalent corporate offcial satisfactory to RUS, stating that, duing
such year the Awardee has fulfilled its obligations under the Loan-Grat Documents
thoughout such year 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
offcial and the natue and statu therof
(d) Close Out Report. The Awardee shall deliver a close out report to RUS no later than
niety (90) days after the expiration or termination of the Award, or the completion
of the Project and expenditure of all Award fuds. The close out report shal
address: (i) a comparison of actal accomplishments to the objectives set forth in the
Application; (ii) a description of problems, delays, or adverse conditions that
occured, or which affected the attainment of overal Project objectives, prevented
the meeting of time schedules or objectives, or precluded the attent of parcular
Project work elements durng established time periods; and (ii) a comparson of
Page 17
how fuds were spent against the original general budget submitted with the RUS
approved Application.
Section 6.5 Recovery Act Reporting
No later than ten (iO) calenda days after each calendar quaer in which the Awardee receives
the assistace award funded in whole or par with Award funds, the Awardee shall submit though
htt://www.federalrporting.gov the information required by 2 C.F.R. 176. The fial report should
summarize the Awardee's quarterly fiings and state wheter the project's goals have been satisfied.
ARTICLE VII - NEGATIVE COVENANTS
Sedion 7.1 General
Unless otherwise agreed to in wrting by RUS, while this Agrement is in effect, the Awardee
shall duly observe each of the negative covenants set fort in this Aricle VII.
Section 7.2 Merger, Consolidation, Transfer of Property or Change in Control
The Awardee shall not, without the prior written consent of RUS, take or suffer to be taen
any steps to reorganize consolidate with or merge into any other corpration, or to sell, lease or transfer (or
make any agreement therefor) all or any substatial par of its propert, including, without limitation, the
Project.
Section 7.3 Covenants for Limited Liabilty Companies and Similar Awardees
Awardees which are limited liabilty or similar organiztions agre that:
(a) The death, retiment, resignation, expulsion, termination, banptcy or dissolution
of any member or the occurence of any other event that terminates the continued
membership of any member shal not cause the Awardee to be dissolved or its afairs
to be wound up;
(b) Pror to the date on which any and all obligations owed to RUS, includig the Note
evidencing the Loan, are discharged in full, the Awardee shall not be dissolved or
terminate;
(c) The organizational documents of the Awardee shal contain provisions reflecting the
obligations of the Awadee in pargraphs (a) and (b) imediately above and such
provisions shall not be amended without the prior written consent of RUS; and
(d) No direct or indiect addition or issuance of any membership units (or any other
ownership interest) in the Awardee may be made by the Awardee or it members
without the prior written consent of RUS and no trsfer, whether individually or in
the aggregate, of any membership units (or any other ownership interest) in th
Awardee which will result in the transfer of more than 49% of the equity interests (of
whatever nature, including votig and non-voting) in the Awardee may be made by
the Awardee or its members without the prior wrtten consent ofRUS.
Section 7.4 Additional Indebtedness
The Awardee shall not, without the prior writtn consent of RUS, incur additiona secured or
unsecured indebtedness other than (i) purchae money security interests, (ii) unsecud trade indebtedness
and (ii) other debt arising in the ordin coure of business. Indebtedness under items (i), (ii), and (iii) in
the aggregate shall not exceed five percent (5%) of the Awardee's consolidated total assets.
Page is
Section 7.5 Negative Pledge
The Awardee shall not create, incur or suffer any lien, mortgage, pledge, assignent, or other
encumbrance on, or securty interest on it propert, other than Permitted Encumbrances.
Section 7.6 Contracts
The Awardee shall not, without the prior wrttn consent of RUS, enter into any contract or
contracts for the operation or management of all or any substantial par of the Awardee's system, includig,
without limitation, the Project, and shall not enter into any contract for the use by others of all or any
substatial par of its system, including, without limitation, the Project.
Section 7.7 Salaries
Salaries, wages, and other compensation paid by the Awardee for services, and directors',
members', managers' or trstees' fees, shall be reasonable and in conformity with the usual practice of
entities of the size and natue of the Awardee.
Section 7.8 Extension of Credit
Except as specifically authorized in writing in advance by RUS, the Awardee wil make no
advance payments or loans, or in any maner extend its credit, either directly or indirectly, with or without
interest, to any of its directors, trstees, offcers, employees, stockholders, members, managers, Affliates
or Affliated companies; provided, however, that the Awardee may make an investment for any purose
described in section 607(c)(2) of the Rur Development Act of 1972 (including any investment in or
extension of credit, guarantee, or advance made to an Affliated Company that is used by such Affliate for
such purose) to the extent that, immediately after such investment: (l) the aggegate of such investments
does not exceed one-third of the Net Wort and (2) the Awardee's Net Worth is at least twenty (20) percent
of its Total Assets.
Section 7.9 Distributions or Witbdrawals
(a) Except for payments made for tax liabilties, the Awardee shall not, without the prior
written approval of RUS, make any membership withdrawal, unit redemptions, or
other tye of profit allocation to its members, if it is a limited liabilty company, nor
make any dividend, stock, capital, capital credit or other distribution in the natur of
an investment, guarantee, extension of credit, loan or advance payment on
obligations, if it is a corpration or cooperative (all such distributions being
hereinafter collectively called "Distributions") which would violate the distribution
restriction(s) of the Prior RUS Loan Contract or RUS Mortgage descn"bed in
Schedule I hereto.
(b) Additional Negative Restrictions. The Awardee shall comply with the additional
negative restrictions on Distributions and Withdrwals set forth in Schedule 1 hero.
Section 7.10 ÇbangiPrincipal Place of Busineu Place QfConduçtuii Bmin.. or Ty ofOrganization .
The Awardee shall not change its principal place of business, place of conducting business, or
tye of organization without the prior wrtten consent of RUS.
Section 7.Il Changing Name or Place of Incorporation or Organization
The Awardee shall not change its legal name or place of incorporation or organzation without
giving RUS sixty (60) days prior written notice.
Page 19
Section 7.12 Historic Preservation
The Awadee shall not, without the prior writtn consent of RUS, use any Advance to
constrct any facilty which shall involve any distrct, site, building, strctue or object which is included
in, or eligible for inclusion in, the National Register of Historic Places maintained by the Secret of the
IÎtenor pursuant to the Historic Sites Act of 1935 and the National Histonc Preservation Act of 1966.
Section 7.13 Affiliated Transactions
With regard to the Project, the Awardee shall not enter into any tranaction, contract, or dealig
with an Affliate of the Awardee or with the Awaree's or Affliate's directors, trstees, offcers, managers,
members (if the Awardee is a limited liabilty company), or other corporate offcials, without the pnor
wrtten consent ofRUS. RUS' consent to advance loan fuds for affiated transactions wil be liited to an
amount which is the lower of cost or market rate and which is subject to venfication by RUS and its
representatives having access to the books and records of the Affliate.
Section 7.14 Preferred Stoçk
The Awardee shall not issue any new or additional preferred stock without the prior writtn
approval of RUS, which approval shall not be uneasonably withheld if such stock issuance, in RUS' sole
opinion, would not be considered a debt instrent under GAAP.
Section 7.15 Restrictions on Transfers of Property
(a) Except as provided in Paragph (b), and excluding any propert which the Awardee
must sell to customers in the ordinar coure of business, the Awardee shaH not sell,
lease or transfer any Collateral to any other person or entity (including any
subsidiar or afliate of the Awardee) without the pnor wrtten consent of the RUS.
(b) So long as the Awardee is not in default hereunder, the Awardee may, without
obtaining the consent ofRUS, sell or otherwise.dispose of, free from the lien hereof,
any of its propert which is neither necessar to, nor useful for, the operation of the
Awardee's business, or which has become obsolete, worn out, damaged, or otherwise
unsuitable for the puroses of the Awardee; provided, however, that the Awardee
shall to the extent necessar: (i) replace the sae with other propert of the same
kind and natue, or substitute thereof, which shall be subject to the lien hereof, free
and clear of all prior liens, and apply the proceeds, if any, denved from the sale or
disposition of such propert, which are not needed for the replacement thereof, to the
prepayment of the indebtedness on the outstanding Notes; (2) imediately upon the
receipt of the proceeds of any sale or disposition of said propert, apply the entie
amount of such proceeds to the prepayment of the indebtedness evidenced by the
Notes; or (3) deposit all or such part of the proceeds derived from the sale or
disposition of said propert into the Pledged Deposit Account , and shall use the
same only for such additions to, or improvements in, the Collateral, on such terms
and conditions as RUS shall specify.
Section 7.16 Restrictions on Cbanges to Line Item Budget
The Awardee agrees tht the budget for the Project is a line item budget and agrees not to
make any revisions to the RUS approved line item Project budget, including, without límitation, the par of
the budget for constrction, without the pnor wrtten approval ofRUS.
Page 20
Section 7.17 Additionaí Negative Covenants
The Awardee shall comply with the additional negative covenants set fort in Schedule i
hereto.
ARTICLE VII - LENDER'S RIGHTS
Section 8,1 Termination of Award Offer
RUS, in its sole discretion, may terminate the offer to make the Loan or LoanGrat
Combination if it doe not receive the Loan-Grant Documents, duly executed on behalf of the Awardee and
all conditions in Section 4.1 hereof are not satisfied within sixty (60) days from the date hereof.
Section 8.2 Audits and Complìance Reviews
After giving prior notification to the Awardee, RUS has the right to conduct compliance
reviews and audits of the Awardee to assure compliance with the Loan-Grant Documents, NOFA and the
Accountig Requirements.
Section 8.3 Disallowed Expenditures
Upon a determination by RUS that the Awardee did not expend Awar fuds on Eligible
Puroses in accordance with the RUS approved line item Project budget and the Form(s) 481 approved by
RUS prior to the advance of fuds, RUS may, in its sole discretion:
(a) Disallow all or a par of the expenditues and disbursements of the Award and
requie the Awardee to deposit such funds in the Pledged Deposit Account 'to be
applied toward other approved Project puroses on Form(s) 481 or to reimburse the
Government, as provided in Section 5.3 herof;
(b) Suspend making Advances;
(c) Take any other action RUS determes to be necessar including, without limitation,
exercising any right or remedy available under the Loan-Grat Documents or law.
Section 8.4 Suspension of Advances
RUS may, in its absolute discretion, suspend maing Advances on the Award upon its
making a determination that an event ha occured that is likely to have a Mateial Adverse Effect. RUS
may also suspend makng advances of the Award upon the occurence of an Event of Default.
Section 8.5 Payment Extensions
RUS may, at any time or times in succession without notice to or the consent of the Awardee
and upon such terms as RUS may prescribe, grt to any person, firm or entity who shall have become
obligated to pay all or any par of the principal of or interest on any note held by or indebtedess owed to
RUS or who may be afected by the lien created by the Loan-Grat Documents, an extension of the time
for the payment of such principal or interest, and after any such extension the Awardee wil re liable
for the payment of such note or indebtedess to the same extent as though it had at the tie of such
extension consented thereto in wrting.
Section 8.6 Right to Expend Money
RUS shall have the right (without prejudice to any of its rights with respect to any Event of
Default) to advance or expend moneys for the purpse of procurng insurance, or for the payment of
Page 21
insurance premiums as required hereunder, or to advance or expend moneys for the payment of taxes,
assessments or other charges, or to save the Collaterl from sale or forfeitue for any unpaid ta or
assessment, or otherwise, or to redeem the same from any tax or other sale, or to purchase any ta title
thereon, or to remove or purchas any mechanics' liens or other encumbrance thereon, or to make repairs
theren or to comply with any covenant herein contained or to prosecute and defend any suit in relation to
the Collateral or in any maner to protect the Collateral and the title thereto, and all sums so advanced for
any of the aforesaid purses with interest thereon at the highest legal rate, but not in excess of twelve per
centu (12%) per anum shall be deemed a charge upon the Collateral and shall be fortwith paid to RUS
upon demand. It shall not be obligatry for RUS in makg any such advances or expenditus to inquire
into the validity of any such tax title, or of any such taxes or assessments or sales therefor, or of any such
mechanics' liens or other encumbrace.
Section 8.7 Right to File Financing Statements
RUS shall have the right to file such financing statements and continuation statements on its
behalf, as seCWed par, and on behalf of the Awardee, as debtor, as RUS deems necessary to perfec a fit
lien on the Collateral and to maintain and presere such perfected fit lien as long as the Loan remains
outsanding. The Awardee shall reimburse RUS for any expenses incured in the exercise of ths right.
ARTICLE ix ~ GRANT OF SECURITY INTEREST
To secure the payment and performance of the Obligations, including, without limitation, the
Note(s), the Awardee hereby pledges, assigns, and transfers to RUS, and grants to RUS a continuing
securty interest in and to all propert, tangible and intagible, of every kind, natue or descriptíon, now
owned, leased, or hereafter acuired by the Awardee, wherever located, including but not limite to,
accounts, chattel paper, documents, instrments, general intangibles, licenses,. (including, without
limitation, those granted by the Federal Communications Commission ("FCC"), subject to the FCC's prior
approval of any assignent or trsfer of de jur or de facto contrl of such licenses), permts, equipment,
goods, proceeds, product, and accessions, as well as its right, title and interes in fixes and real
propert, now owned leased or hereafter acquired and wherever located, and the propert described in
Schedule 2 hereto.
ARTICLE X - EVENTS OF DEFAULT
Section 10.1 Evegm of Default
The following shall be events of default (each an "Event of Defaultlf) under ths Agrment:
(a) Representations and Waranties. Any representation or waranty made by the
Awardee in Loan-Grant Documents, Form(s) 481 or any certifcate fuished to RUS
under the Loan-Grant Documents, or in the Application shall prove to have been
incorrect in any material respect at the time made;
(b) Non-Payment. The nonpayment of any required and due installment of interest on, or
pricipal of, any Note, whether by acceleration or otherwse, which continues for
five (5) Business Days, as such ter is herein defined;
(c) Corrective Actions. Default by the Awardee in the observance or performance of
Section 5.9;
(d) Limited Liabilty Companies. Default by the Awardee or its members in the
obserance or performance of Section 7.3;
Page 22
(e) Improper Expenditues. The Awardee expends Award fuds on costs which are not
for Eligible Puroses in accordance with the RUS approved line item Project budget
and the Form(s) 481 approved by RUS pnor to the advance of fuds;
(f) Failur to Keep Adequate Records. The Awardee fails to keep adequate records,
including the failure to document Award fud expenditues for Eligible Puoses as
requird herein;
(g) Failure. to Build in Accordce with Timeline. The Awardee fails to commence
buid out of the Project within 180 days from the date hereof or otherwise fails to
meet or exceed milestones established in the Timeline, as it may be amended with
pnor written RUS consent;
(h) Failure to Comply with Accounting and Reportg Requirements. The Awaree fails
to comply with the accounting and reportg requirments in Aricle VI;
(i) Other Covenants. Default by the Awardee in the observance or performance of any
other covenant or ageement contained in any of the Loan-Grant Documents, which
shall remain unmedied for thir (30) calendar days aftr wntten notice thereof
shall have been given to the Awardee by RUS;
(j) Adverse Effects. The Awardee shall forfeit or otherwise be deprived of its charer,
aricles of organization, franchises, permits, easements, consents or licenses required
to car on any matenal portion of its business or the Awardee fies for or an event
occurs which can reasonably be expected to result in its dissolution or termintion;
(k) Other Obligations. Default by the Awardee in the payment of any obligation,
whether direct or contigent, for borrowed money in excess of ten thousand dollars
($10,000.00) or in the performance or observance of the terms of any intrent
pursuant to which such obligation was created or securing such obligation which
default shall have resulted in such obligation beoming or being declard due and
payable prior to the date on which it would otherwise be due and payable;
(1) Banptcy. A cour having jurisdiction in the premises shall enter a decree or order
for relief with respect to the Awardee in an involuntar cas under any applicable
banptcy, insolvency, or other similar law now or hereafer in effect: (1)
appointing a receiver, liquidator, assignee, custodian tree, sequestrator, or similar
offcial, or (2) ordering the winding up or liquidation of its afairs; or the Awaree
shall commence a voluntary case under any applicable bantcy, insolvency or
other similar law now or hereafer in effect, or under any such law, or consent to the
appointment or taing possession by a reciver, liquidator, assignee, custodian or
trstee, of a substantial par of its propert, or mae any general assignment for the
benefit of creditors;
(m) Dissolution or Liquidation. Other than as provided in the immediately preceding
subsection, the dissolution or liquidation of the Awardee, or the fiing of such by the
Awardee;
(n) Impaired Business. The failure by the Awardee to promptly forestall or remove any
execution, garishment or attachment of such consequence as shall impai its abilty
to continue its business or fulfill its obligations and such execution, garishment or
attachment shall not be vacated within thir (30) days;
(0) Payment of Final Judgment. A final judgment in an amount of ten thousand dollars
($10,000.00) or more shall be entered against the Awardee and sball remain
unsatisfied or without a stay in respect thereof for a penod of thirt (30) days; and/or
Page 23
(P) Default under RUS Mortgage. An event of default occur under the RUS Mortgage
and is continuing for thirt (30) days.
ARTICLE XI - REMEDIES
Section 11.1 Generally
(a) Upon the occurence of an Event of Default, RUS may pursue all rights and remedies
available to RUS that are contemplated by the Loan-Grant Documents and/or the RUS
Mortgage in the maner, upon the conditions, and with the effect provided in such
documents, and may pursue such other remedies that are generlly available at law or in
equity including, without limitation, a suit for specific performance, injunctive relief or
daages. Nothing herein shall limit the right of RUS to pursue all rights and remedies
available to a credtor following the occurence of an Event of Default listed in Arcle X
hereof. Each right, power and remedy of RUS shall be cumulative and concurent, and
recour to one or more rights or remedies shall not constitute a waiver of any other right,
power or remedy.
(b) RUS and the Awardee acknowledge they are, respectively, mortgagee and mortgagor,
under the RUS Mortgage and agree that the RUS Mortgage securs the Obligations,
including the Note, and that the RUS Mortgage creates or wil create a fit lien on the
CollateraL. RUS and the Awardee fuher agree than an Event of Default hereunder shall
constitute an event of default under the RUS Mortgage perittng RUS to exercise rights
and remedies thereunder.
Section 11.2 Remedies
In addition to the remedies referred to in Section i 1. i hereof, upon the occurnce of an Event
of Default, RUS may:
(a) Refuse to make any advance or fuer advance on account of the Award, but any
advance thereafter made by RUS shall not constitute a waiver of such default;
(b) Declare all unpaid principal of and all interest accrued on the Note(s) to be
immediately due and payable and upon such declaration all such principal and
interest shall become due and payable immediately;
(c) Terminate the obligation to furter advance on account of the Award;
(d) Takè . imediate possession of the Collateral, collect and receive all credits,
outstading accounts and bils receivable of the Awardee and all rents, income,
revenues and profits pertaining to or arising from the Collateral, or any par thereof,
and issue binding receipts therefor; manage and control and operate the Collateral as
fully as the Awardee might do if in possession thereof; RUS, any employee or agent
ofRUS is hereby constituted and appointed as tre and lawful attorney-in-fact of the
Awardee with full power to (i) notify or require the Awardee to notify any and all
Customers that the Collateral has been assigned to RUS and/or that RUS ha a
security interest in the Collateral; (ii) endorse the name of the Awardee upon any
notes, checks, acceptaces, draft, money orders, or other instrents or payment
(including payments made under any policy of insurce) that may come into
possession of RUS in full or par payment of any amount owing to RUS; (ii) sign
and endorse the name of the Awardee upon any invoice, freight, or express bil, bil
of lading, storage or warehouse receipt, assignent verification or notice in
connection with receivables; (iv) send requests for verifications of Collateral to
Page 24
customers or account debtors; (v) sell, "assign, sue for, collect or compromise
payment of all any par of the Collateral in the name of the Awardee or in its own
name, or make any other disposition of Collateral, or any par thereof, which
disposition may be for cash, credit, or any combination thereof, and RUS may
purchase all or any par of the Collateral at public or, if permttd by law, private
sale, and in lieu of actul payment of such purchase price may set off the amount of
such price against the Obligations; granting to RUS, as the attorney-in-fact of the
Awardee, full power of substitution and full power to do any and all things necessar
to be done in and about the premises fully and effectually as the Awaree might or
could do but for this appointment, hereby ratifying all that said attorney-in-fact shall
lawfully do or cause to be done by virte hereof. Neither RUS, its employees, nor its
agents shall be liable for any act or omissions or for any error of judgment or miake
of fact or law in its capacity as such attorney-in-fact. Ths power of attorey is
coupled with an interest and shall be irevocable durng the term of this Agreement
and so long as any Obligations shall remain outstading;
(e) RUS shall have the right to enter and/or remai upon the premises of the Awardee
without any obligation to pay rent to the Awardee or others, or any other place or
places where any of the Collateral is located and kept and: (i) remove the Collatera
therefrom in order to maintain, collect, sell, and/or liquidate the Collateral or, (iì) use
such premises, together with materials, supplies, books, and records of the Awardee,
to maintain possession and/or the condition of the Collateral, and to prepare the
Collateral for sale, liquidation, or collection. RUS may require the Awardee to
assemble the Collateral and make it available to RUS at a place to be designated by
RUS;
(f) RUS shall have the right, without prior notice to the Awardee, to exercise rights of
setoff or recoupment and apply any and all amounts held or hereafter held, by RUS
or owed to the Awardee or for the credit of the Awardee against any and all of the
Obligations. RUS agrees to notify the Awardee 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. Awardee
waives all rights of setoff deduction, recoupment or counterclaim; and/or
(g) RUS shall have, in addition to any other rights and remedies contained in ths
Agreement, and in any other agrements, guartees, notes, mortages, instruments,
and documents heretofore, now, or at any time or times hereafter executed by the
Awardee and delivered to RUS, all of the rights and remedies of a secured part
under the Uniform Commercial Code in force in the state identified in the first
paragraph hereof, as well as the state where the Collateral is located, as of the date
hereof, all of which rights and remedies shall be cumulative, and nonexclusive.
ARTICLE XII - MISCELLANEOUS
Section 12.1 Notices
All notices, requests and other communications provided for herein including, without
limitation, any modifications of, or waivers, requests or consents under, this Agreement shall be given or
made in writig (including, without limitation, by telecopy) and delivered to the intended recipient at the
"Address for Notices". specified below; or, as to any par, at such other address as shall be designated by
such par in a notice to each other par. Except as otherwise provided in this Agreement, 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, upon receipt, in each case given or addressed as provided for
herein. The Addresses for Notices of the respective paries are as follows:
Page 25
.ß
Rural Utìlties Serice
United States Deparent of Agrcultue
1400 Independence Avenue, S.W.
Washington, D.C.20250-1510
Attention: Administrtor
Fax: [phone]
Awardee
See Schedule 1
With a copy to:
Rurl Utilities Serce
United States Deparent of Agricultue
1400 Indepedence Avenue, S. W.
Stop 1599, Room No. 2868
Washington, D.C. 20250-1599
Attention: Kenneth Kuchno
Fax: [phone]
With a copy to:
See Schedule 1
Section 12.2 Notices of Actions Against Collateral
Any notice required to be given by RUS of a sale or other disposition or other intended action
by RUS with respect to any of the Collateral, or otherise, made in accordance with this Agreement at leat
. five (5) days prior to such proposed action, shall constitute fair and reasonable notice to the Awardee of any
such action.
Section 12.3 Application of Proceeds
Any proceeds or fuds arsing from the exercise of any rights or the enforcement of any
remedies herein provided after the payment or provision for the payment of any and all costs and expnses
in connection with the exercise of such rights or the enforcement of such remedies shall be applied firt, to
the payment of indebtedness hereby secured other than the principal of or interest on the Notes; second, to
the ratable payment of interest which shall have accrued.on the Notes and which shall be unpad; thir, to
the ratable payment of or on account of the unpaid pricipal of the Notes, and the balance, if any, shall be
paid to whosoever shall be entited thereto.
Section 12.4 Expenses
To the extent allowed by law, the Awardee shall pay all costs and expenses ofRUS, including
reasonable fees of counsel, incurred in connection with the enforcement of the Loan-Grat Douments or
with the prearation for such enforcement if RUS has reasonable grounds to believe that such enforcementmay be necessar. .
Section 12.5 Late Payments
If payment of any amount due hereunder is not received at the United Staes Treasur in
Washington, DC, or such other location as RUS may designate to the Awardee 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 chage (such unpaid amount being
herein called the "delinquent amount", and the period beginng after such due date until payment of the
delinquent amount being herein called the "late-payment period"), the Awardee shan pay to RUS, in
addition to all other amounts due under the term of the Notes, the Mortgage and this Agreement, any late
payment charge as may be fixed from time to time on the delinquent amount for the late-payment period
by regulations adopted by RUS.
Page 26
Section 12.6 FiJng Fees
To the extent permitted by law, the Awardee agrees to pay all expenses ofRUS (including the
fees and expenses of its counsel) in connection with the filing or recordation of all fincing sttements .and
instrents as may be required by RUS in connection with this Agreement, including, without limitation,
aU documenta stamps, recordation and transfer taes and other costs and taes incident to recordation of
any document or instrent in connection herewith. Awardee agrees to save harless and indemnify RUS
from and against any liabilty resulting from the failure to pay any required documentar staps,
recordation and transfer taxes, recording costs, or any other expenses incured by RUS in connection with
this Agreement. The provisions of this section shall surve the execution and delivery of this Agreement
and the payment of all other amounts due hereunder or due on the Notes.
Section 12.7 No Waiver
No failure on the par ofRUS to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or parial exercise by RUS of any right hereunder preclude
any other or fuer exercise thereof or the exercise of any other right.
Section 12.8 Governing Law
This Agreement shall be governed by and constred in accordance with applicable federal law
and, in the absence of controlling federal law, by the laws of the State identified in the first pargrph
herein, except those that would render such choice of law ineffective.
Section 12.9 ConsenttgJurisdiçti.OIl
The Awardee hereby irevocably submits to the jursdiction of the U.S. District Court for the
District of Columbia and the US Cour of Appeals for the Federal Cirit (both the "DC Federal Cours")
for any action or proceeding arising out of or relatig to this Agreement, and hereby irevocably agrees that
all claims in respect of such action or proceeding shall be heard and determined in such federal cour. The
Awardee irevocably consents to the serice of process out of any of the aforementioned cours in any such
action or proceeding by the mailing of copies thereof by registerd or certified mail, postage prepaid, to the
Awardee's address set fort in Schedule 1. The Awardee hereby irvocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arsing out
of or in connection with this Agreement brought in the DC Federal Cour and hereby fuer irvocably
waives and agres not to plead or claim in such cour that any such action or proceeding brought in any
such cour has been brought in a foru non conveniens. Nothing herein shall affect the right of the
Government to serve process in any other maner permitted by law or to commence legal proceedigs or
otherwise proceed against the Awardee in its own jurisdiction.
Section 12.10 Waiver of Jury Trial
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMTTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HA VB TO A TRAL BY JUY IN ANY LEGAL
PROCEEDING DIRECTLY OR INIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHTHR BASED ON
CONTRCT, TORT, OR ANY OTHER THORY). EACH PARTY HETO (A) CERTIFES THT
NO REPRESENTATIVE. SECURED PARTY, OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THGS, TH MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
Page 27
Section 12.11 Holiday Payments
If any payment to be made by the Awardee hereunder shall become due on a day that 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 computig any interest in respect of such payment.
Section 12.12 Rescision
The Awardee may elect to rescind the Award, in which event RUS shall release the Awardee
from its obligations hereunder, provided the Awardee complies with such ters and conditions as RUS
may impose for such release.
Section 12.13 Successors and Assigns
(a) This Agreement shall be binding upon and inure to the benefit of the Awardee and
RUS and their respective successors and assign, except that the Awadee may not
assign or transfer its rights or obligations hereunder without the prior wren
consent of RUS.
(b) Pusuant 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 grted or conferred on RUS shall pass to
and inure to the benefit of any such successor agency.
Section 12.14 Complete Agreement; Waivers and Amendments
Subject to RUS Regulations, this Agreement and the other Loan-Grat Documents are
intended by the pares to be a complete and final expresion of their agrement. However, RUS reserves
the right to waive its rights to compliance with any provision of this Agrement and the other Loan-Grt
Documents. No amendment, modification, or waiver, of any provision hereof or therot: and no consent to
any depare of the Awardee herefrm or therfrom, shall be effective unless approved in writig by RUS
in the form of either a RUS Regulation or other writing signed by or on behalf of RUS, and then such
waiver or consent shall be effective only in the specific instance and for the specific purose for which
given.
Section 12.15 Headings
The headings and sub-headings contained in the titling of this Agreement ar intended to be
used for convenience only and do not constitute par of this Agreement.
Section 12.16 Severability
If any term, provision, condition, or any par thereot: of ths Agreement, Note(s) or the
Security Documents shall for any reason be found or held invalid or unenforceable by any governenta
agency or cour of competent jurisdiction, such invalidity or unenforceabilty shall not affect the remainder
of such term, provision, or condition nor any other term, provision, or condition, and this Agreement, the
Note(s), and the Security Documents shall surive and be constred as if such invalid or unenforceable
term, provision or condition had not been contaied therein.
Section 12.17 Right of Setoff
Upon the occurrence and dug the contiuance of any Event of Default, RUS is hereby
authorized at any time and from time to time, without prior notice to the Awardee, to exercise rights of
setoff or recoupment and apply any and all amounts held or hereafter held, by RUS or owed to the Awardee
or for the credit or account of the Awardee against any and all of the obligations of the Awaree now or
hereafter existing hereunder or under the Note(s). RUS agrees to notify the Awardee promptly afer any
Page 28
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 ths section are in
addition to any other rights and remedies (includig other rights of setoff or recoupment) which RUS may
have. Awardee waives all rights of setoff, deduction, recoupment or counterclaim.
Section 12.18 Schedules and Attachments
Each Schedule and Attachment attached hereto and referrd to herein is each an integral par
of this Agreement.
Section 12.19 Authority of Representatives ofRUS
In the case of any consent, approval or waiver from RUS that is requied under this
Agreement or any other Loan.Grat Document, such consent, approval or waiver must be in wrtig and
signed by an authorized RUS representative to be effective. As used in this section, "authoried RUS
representative" means the Administrator of RUS, and also means a person to whom the Administror has
offcially delegated specific or genera authority to tae the acton in question.
Section 12.20Prepayment of Loan
In the event the Awardee prepays the entir Lòan portion of the Loan within thre (3) year
from the date hereof, the Awardee shall, within thir (30) days of makg such prepayment, execute a
standard grant agreement with the RUS.
Section 12.21 Term
This Agrement shall remain in effect until one of the followig two events has occurred:
(a) The Awardee and RUS replace this Agreement with another written agreement;
(b) All of the Awardee's obligations under this Agreeent have been discharged and
paid.
Page 29
IN WI WHF, tb pa he ha ca th Agr to be duex as oftb da and ye fi abe wr
(~)
~"!'lJ '*~.¿." Se duL¡
MIVAL TEONE EXCHGE,
INCORPRATE
~_*tri.:.H".. S\...awuu..
Tit: President
by
Pae 30
SCHEDULE 1Aricle I Defitions
1. Prior RUS Loan Contrct: Loan Agreement dated as of September 4,2007.
2. RUS Mortgage: Restated MortgageJ Security Agreement and Financing Statement
dated as of September 4, 2007.
Aricle II Representations and Warties
1. Paragraph (h) Awardee's principal place of business: 2205 Keithley Creek Road
MidvaleJ Idaho 83645
2. Paragraph (i) Awardee's Organization Number: C 30686
3. Paragph G) Awardee's Subsidiaries: None
4. Paragraph (j) Awardee's Parent: None
5. Paragraph (n) Additional Representations and Waranties:
The Awardee represents and warrants that it is primarily engaged in the business of
transmitting communications electrically, electromagneticaIly, or by light.
Aricle II The Loan
Section 3.I(a) Loan amount: $380,751
2. Section 3 .1 (b) Grant amount: $888A20
Aricle iv Conditions Precedent to Loan Closing
The additional conditions referred to in Section 4.im are as follows: None
ÇondltiQns Precedent to Release of Fun
2. Section 4.2(b) amount of fidelity bond coverage: $190J376
3. Section 4.2(d) fuds deposited for Project completion: $0
4. The additional conditions referr to in Section 4.2(e) are as follows:
a. The Awardee has provided RUS with documentation of its consultåtion with its
local U.S. Fish and Wildlife Services (USFWS) Ecological Services offce
(http://www.fws.gov/offces) with respect to the affect of the Project on any listed
threatened or endangered species, candidate species or their critical habitat; and
b. The consultation proces referred to immediately above in paragraph (a) has
concluded.
Çonitions Precedent tQ Individual Advanes
5. Section 4.3(i) Required permits, licenses, frchise, and other approvals: None
Page 31
6.The additional conditions to advace referred to in Section 4.3(k) are as follow:
No funds wil be advanced for construction that disturbs ground or involves land
c1earingJ unti the Awardee has received written confirmation from RUS that the
requirements of Section 106 of the National Historic Preservation Act (16 U.S.C.
4701) have been met in accordance with implementing regulations, "Protecion of
Historic Properties" (36 C.F.R. Part 800).
Aricle V Affrmative Covenants
1. Section 5.10 Composite Economic Life ofRUS financed facilties: 23 years
2. The additional affrmative covenants referred to in Section 5.21 are as follows:
a. Within sixty (60) days from the date hereofJ the Awardee shall provide Project
construction plans to their local U.S. Fish aod Wildlife Service (USFWS) Ecological
Servièes offce (http://www.fws.gov/offcesD to initiate the consultation process as to
whether Project construction will affect any listed threatened or endangered species,
candidate species or their critical habitat.
b. Within sixty (60) days from the date hereof the Awardee shall provide all
information necssary to the applicable organizations to complete the review and
approval processes required by Section 106 of the National Historic Preservation
Act (16 U.S.C. 4701), in accordance with implementing regulationsJ "Protection of
Historic Properties" (36 C.F.R. 800), relating to construction that disturbs ground
or iiivolves land clearing.
c. The Awardee shall insert the following language in all construction contracts:
If previously unidentified historic properties (that iSJ propertes listed on or eligible
for listing on the National Register of Historie Places) or unanticipated effects to
historic properties are discovered during Project construction, the construction
contractor shall immediately halt all activty within a one hundred (100) foot radius
of the discoverYJ notify Midvale Telephone Exchange, Incorporated and law
enforcement of the discovery and implement interim measures to protec the
discovery from further impact, especially looting and vandalism. Construction shall
Dot resurne within a 100 foot radius of the discovery until the construction
contractor has received written instructions to proceed from Midvale Telephone
Exchange, Incorporated.
d. Immediately upon receipt of notification from the construction contractor that a
discovery of unidentified historic properties (properties listed or eligible for listing
on the National Register of Historic Places) or unanticipated effects to historic
properties are discovered during Project construction, the Awardee shall :
(i) Inspect the construction site to determine the scope of the discovery
and to ensure that construction activities have halted;
(ii) Clearly mark the area ofthe discovery;
(ii) Implement additional measuresJ as appropriate, to protect the
discovery from further impactJ especially looting and vandalism;
(iv) Notify USDA Rural Utilties Service (RUS), Engineering and
Environmental Staff, Federal Preservation Offcer at 202-720-
9583; and
(iv) If the discovery contains human remains, comply with all
applicable state laws, notify the State Historic Preservation
Page 32
Offce(s) and any Indian Tribes or Hawaiian organizations which
might be interested in the discovery.
Article VII Negative Covenants
l. The additional negative restrictions on Distributions and Withdrawals referrd to in Section
7.9(b) are as follows: None
2. The additional negative covenants referred to in Section 7.17 are as foiiows~
a. The Awardee agrees not to start or proceed with any ground breaking construction
activities relating to the Project prior to completing the consultation proces
required by the Endangered Species Act and referred to on this Schedule under
Article IVJ Paragraphs 5(a) and (b).
b. The Awardee agrees not to engage in construction activities which disturb ground
or involves land clearing until the Awardee has received written confirmation from
RUS that the requirements of Section 106 of the National Historic Preservation Act
(16 U.S.C. 4701) have been met in accordance with implementing regulationsJ
"Protection of Historic Properties" (36 C.F.R. Part 800).
c. The Awardee agrees not to resume construction or authorize a construction
contractor to resume construction within a 100 foot radius of a discovery of
unidentified historic properties (properties listed or eligible for listing on the
National Register of Historic Places) or unanticipated effects to historic properties
unti receipt of written notification from RUS that the requirements of the National
Historic Preservation Act (16 U.S.C. 4701) have been met.
Aricle XII Miscellaneous
Section 12.1 Awardee's address for purposes of notification:
Mr. Lane Wiliams
President
Midvale Telephone Exchange, Incorporated
2205 Keithley Creek Road
MidvaleJ Idaho 83645
Phone: [phone]
Fax: [phone]
2. Section 12.1 Address for Awardee's notificaion copy: same as above
Page 33
SCHEDULE 2
COLLATERAL
I. Collateral shall include the following:
All propert, assets, rights, prìvileges, licenses and franchises of the Awardee of every
kind and description, real, personal or mixed, tagible and intagible, of the kind or natue specifically
mentioned herein, or any other kind or nature now owned or hereafter acquired or arsing by the Awardee
(by purchase, consolidation, merger, donation, constrction, erecion or in any other way) wherever
located, including without limitation all or in par the following (hereinafter the "Collateral:")
i
All right, title, and interest of the Awardee in and to the Existing Facilties, buildings,
plants, works, improvements, strctues, estates, grts, franchises, easements, rights, privileges and
properties, whether real, personal, or mixed, tagible or intangible, of every kind or descrption, now or
herefter owned, leased, çonstrcted, or acquied by the Awardee, wherever located, and in and to all
extensions, improvements, and additions thereto, including but not limited to all buildings, plants, works,
strctues, towers, antennas, fixtures, appartu, materìals, supplies, machinery, tools, implements, poles,
posts, crossars, conduits, ducts, lines, wires, cables, whether underground, overhead, or otherwis,
exchanges, switches, including, without limitation, host and remote switches, desks, testboards, frames
racks, motors, generators, batterìes, and other items of centrl offce equipment, pay sttions, protectors,
instrents, connections and appliances, offce fuitue, equipment, and any and all other propert of
every kid, natue, and descrìption, used, usefu, or acquired for use by the Awardee in connection
therewith;
II
All right, title, and interes of the Awardee in, to, and under any and all grts, prìvileges,
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 Awardee for the puroses of, or in comiection
with, the constrction or operation by, or on behalf of, the Awardee of its properties, facilties, systems, or
businesses, whether underground, overhead, or otherwise, wherever located;
II
All right, title, and interest of the Awardee in, to, and under any and all licenses and
permits (including without limitation those granted by the Federal Communications Commission ("FCC"),
subject to the FCC's prior approval of any assignent or transfer of de jure or de facto control of such
licenses), frchises, ordinances, and privileges, whether heretofore or hereafter granted, issued, or
executed, to it or to its assignors by the Governent, or by any state, county, township, municipality,
vilage, or other political subdivision theref, or by any agency, board, commission, or deparent of any
of the foregoing, authorizing the constrction, acquisition, or operation of the Awardee's properties,
facilities, systems, or businesses, insofar as the same may by law be assigned, grnted, bargained, sold,
conveyed, transferred, mortgaged, or pledged;
iv
All right, title; and interest of the Awardee in, to, and under all personal propert and
fixtures of every kind and natue, includig without limitation all goods (such as inventory, equipment and
any accessions thereo), instrents (such as promissory notes or chattel paper, electronic or otherwise),
documents, accounts (such as deposit accounts or trt accounts purant hereto or to a loan agreement),
letter-of-credit rights, investment propert (such as certificated and uncertificated securities or security
entitlements and accounts,) software, general intagibles (such as payment intagibles), supporting
Page 34
obligations, contract rights or rights to the payment of money, insurance claims, and proceeds (as such
terms are presently and hereafter defied in the UCC; provided, however, that the term "instrument" shall
be such ter as defined in Aricle 9 of the UCC rather than Aricle 3);
v
All right, title, and interest of the Awardee in, to, and under any and all agreements,
leases or contracts heretofore or hereafter executed by and between the Awardee and any person, firm,
corporation, or other corporate entity relating to the Collateral (including contracts for the leas, occupancy,
or sale of the Collateral, or any portion thereot);
VI
All right, title, and interest of the Awardee in, to, and under any and all books, records
and corresondence relating to the Collateral, including, but not limited to, all records, ledger, lease,
computer and automatic machinery, softare, programs, databases, disc or tape files, prit-outs, batches,
rus, and other electronically-prepard information indicating, sumaring, evidencing, or otherwise
necessar or helpful in the collecion or realization on the Collateral;
VII
Also, all right, title, and interest of the Awardee in, to, and under all other proper real
Or personal, tangible or intagible, of every kind, nature, and description, and wherever situatd, now or
hereafter owned or leased by the Awardee, it being the intention hereof that all such proper now owned or
leased but not specifically described herein, or acquired or held by the Awardee after the date 'heret: shall
be as fully embraced within and subjected to the lien hereof as if the same were now owned by the
Awardee and were specifcally described herein to the extent only, however, that the subjection of such
propert to the lien hereof shall not be contrar to law;
Together with all rents, income, revenues, proceeds, products, profits and benefits at any
time derived, received, or had from any and all of the above-described propert of the Awardee;
Provided; however, no automobiles, trcks, trailers, tractors or other vehicles (includig
without limitation aicraft or ships, if any) owned or used by the Awardee shall be included in the
CollateraL.
2. Additionally, propert pledged as Collateral shall also include the following specifically described
propert, if any: None
Page 35
AITACHMENT 1
BIP CONTRCTG, WORK OliER AND ADY ANCE PROCEDURS GUIQE
, .
.'
~,
Rural I)evelopment
Un.ite(jStates J.epartIlent of Ag~culture ... .
l
RURAL UTILITIES SERVICE
.,
Broadband Initiatives Program
Contractin.g, Work Order and
. Advance Procedures. Guide
~'.
t.
GENERA
This guide implements and explains the provisions of the loan and grant docuents containing the
requirements and procedures to be followe. by an Awardee peiormiig work to be financed with RUS
Recver fund,.' The Awardee shall maintain accounting and plant reds suffcient to docuent the cost
. and location of all constrction and to support fund adance and'disbureme,nts. Tbê'stdard Loa and
Grat Documents also contan provisions regaing adances and disbursem.ent of broadband funds. This
document also implements certin provisions by settng fort requirements and procedures to be followed
by the A war~ees in obtaining advances ançl making disburements of fuds.
ABBREVIATIONS
FOr purppse of this guide:
c.F.R. štads for Code of Federa Regulations.
FRS stads for RUSForm 481, Financial Requirent Statement.
GFR stads for RUS geieral fi~ld representative.
Pub. L. stads for Public Law.
us. ç. stads for United States Code.
DEFIONS
For purpses of thiS' gude:
Advance meanstrferngfuds frm aUS to the Awardee's deposit accunt
Architect meas a peson reistered as an archite in the stte where constctoii is perormed.
Award mean ~y.broadbad award made by RUS.
Award docllnient mean the document covering an awa made by RUS, incluing the i~an or grt
ageement, note, and mortgage or other sety documents betw the Awadee and ltUS.
Awardfuds mell fuds provided by RUS through an award.
Awardee means any organization that hás recived finacing from RUS.
Bid guarantee mea~ a bid bond or certified check required of contractors bidding on constction work to
ensure thai the bidder, if succssful, will fuish a performance bond.
Buy American R~quir.ement mean the reuirements as staed in the RecoverY Act and an asociatedwaivers. . .
Bri:dband 'Service meas the minimum trsmissìon rat as defined in the applicale NOF A for the
Broadband Initiatives Program, under which the award wa made. :
Closeout docments mean the documents reuired to certifY satisfacory completon of all' obligations under
a contract. . .
Contacr means the agreement between the Awaree and. an independent contrctor côvering the purchaie
and/or instalation of equipment or the constrction offailties to deliver broaband serce for aI
Awardee's.system.
CO,!trct work meas any work perormed puruant to àn RUS form contract, or áNon-Stadard Cotr.
Disbursement means payment by the Awaree out of tie deposit account for approved award purses.
Engineer mea a person registered as an enginee in the stte where constcton is performed, or a peron
on the Awardee's stà autorize~by RUS to perorm engineerng serces.
In-house engineerng meas any preloan or post-loan engineeing serices peormooby the AwadeeJssta.
Interm work means any W9rk that coences aier an application hiÙ ~en su~mitt to RUS. but prior to
relea 'of award .fuds.
Non-8landad Contract meas a non-RUS form contr for ~ specifc work that is sibmitt by' the
Awaree, which must be approved. by. RUS beforc-cxection, ifit is to be fund.ed.
Outside plant means th~ par of the ,telecommunications netork that is physiea. located outsidé of
'teleommunication buildings. This includes cable, conduits. poles and otheršupportg strctes and
ce other assoat equipment ites.
Pe1formnce bond means a. sure bond in form satsfactry to RUS guart.eing the contr~s faithl
perormapce of a contr. (See 7 cP Par 1788.) '. . ' .' ,
. PJan wid specifcatirJns mean a copy of the appropriate con~ the speifièations, and such additional
inforation and documents neded to provide a clea. a¿cuate, an complete undersd~ng of the work to00 peoormed. .
Pletlged Deposit account mean an acunt rêqired by the award agrent into which all RUS fuds areadvanced. .
RUS meas the Ru.ral Utiities Service;' an ag~cy of the United States Deparent 'of .Agrcuture an4successor to the Rur Electfication Administon. .
RUS form contract méan contrac identified as a RUS form.
Subcontract mean á. secndai contract underting some of the oblÌgatiôns ora priar contrct.
System design.rnea the system described in th~ approved Application. .
Work means 'any purhae of equipment, softare and/or instalation, if applicable; constrcton offailties; or professional serices. ,"
Warko;der means any workpeÌformed by the Awar~ee's employees, pursuant to its work order,procdure,
with the Awardee fuishing all mat.nals, equipment, tools. and trnsporttion.
CONTRACTING PROCEURES
GENRAL
All work must conform to the Application. as approved by RUS,and shall 00 covered by' an EnVionmental
Report prepared in accordance with 7 CP,Par 1794 and approved by RUS. No constrcton and/or
. installation activities shall commence until all necessar local, stae and federa reiremets have be
satisfied.
All work pêdormed pnor to the submission of an aplicaon tò RUS wi!! not be eli~bie for fian~ing. In
addition, only new materials and equipment may be finance with awnr. fuds, unles otherse approved,in writing by RUS. .
A. Interim Work
Once RUS has received an application, the applicat may proc with intem work. However,
this should not be consted as a commitment that RUS wil 'approve the application. To ensue
that intenm work is eligible för reimbursement with award fuds. the Awardee mus comply with
all the proceures in this Guide, including the following r~quiremènts:. .. .
(1) Equal. employment opportty requirements in RUS Bulletin 320-15; and
(2) Environmenta rCuirements contaned in 7 9FR 1794;.
Bo. . Non"'Standar Contrac
The Awardee may chooe to use a Non-Stadar contrac to peorm work. The.Non-Stadard
(Antrct mus include' a provisiOn that it win not be binding on the pares, until adinistative .
approval by RUS has been grte; RUS wil not approve use of the Non-8tadard Contr i~ inRUS' judgment: ".
(1) The contr. is forwork Iiot:coveied in the approved Applicaon, or is not for an Eligi~le
Purpose;
(2) The contrttens and conditions are vague, inadequaè, or uiieaon~ie; or
(3) The contr presents unacceptale loa secty nsk to RUS~
C. Contrct Amendments
The Awardee shall obtain RUS approval beore execion of any amendmeQ~ to an approved
contrct if;
(1) . The amendment alte the ter and conditions of the contract or changes the scope of
the proj~ covered .by the contr' regardles of the :amount of the contr befo~
. amendment;
(2) The amendment by itself (or together with precing amendments) incrases th onginal
contrii pnce'l: 20% or more. In this c¡; a bond extension will be required to bnng
the penal sum of the bond to the tota amended contract pnce; or:
0) The amendment caes an unoonded contrct to reuire a contraets pedormance bond.
This would Occu when an amendment ìnÇres the conÌr pnce to an amount
requiring a pedormance bond per 7 CP Par 1788. Subpar C.
Once RUS approval to amend the contrac has beei grante or for any other contrac amendrents
not requiring appr~val, the Awaee mus submit an onginal eXecuted aiendment to RUS.
D. Insurace
A pedormance bond is required for constrction of. facilties exceeding $250,000, as indicate in
7 CFR Par 1788, Subpar C, or certn signifcant inslation, as outln~ in the Agenc's'
memorandum found a. htt://ww.usda.gov/rusltelecomlpublicationslpdf.filesContraors-Bond-Requirement7-28-09.pdf. .
The Awardee is responsible for ensuring that its contractor and enginee comply with àii the
insurance and bond requirements of7 CFR Par 1788, Subpar C. .
E. TItle Clearnce
F ør an building constrtion over $250,00, the Awaree. sh~ii -proide title evidence satsfactory
to RUS,'prior to releasing the invitations to bid.
F. Softare License
As par of an equipment purchas, the origial equipment manufact may ieuire that the
Awaree enter ino a ~ftare license agreement for the use of the equpment. The Awardee may
Use RUS F6rm 390, Softare License Agreemeni -scial Eqipment Contract, or a Non-
Stadard Contrct
G. Buy Amencan
All irn, steel, or manufacted 'goods that ar purased with Recver Act ímds by sta or loca
govemaients or an instentait thereof, which are not included in the Agency's waier
coveg Broadband Switching Equipment, Broadband Routig Equipment, Broadand Trasport
Equipment, Broadbad Accs Equipment, Broadband Cuomer Premises Eqipment and End-
User Device, or Billng/Operons Systs, shall be 'subjec to the Buy Amercan provision of
the R~covery Act, unles a waver is requeted from the RUS. For fuer detls se 74 Fed.. Reg.31402. .
H. Dayis.B~on Act
The Awardee shall comply with The Davs-Bacn Act 8Id'the gudan~ found at 29C.F.R pts. I,
3, and 5, such 'that any covere cont with a contracor or subcn1JacQr in exces of $2,00 for
constrcton, alteration or repair (inludin paitig an decrating) shall contan the contrt
claus found in ~ C.F.R. S.5(a), t~ ensure tht all labore and mechanics employed on theProject reeive payment of not les ~ the preailing wae: .
1. Affliated Tranactons
With regard to the Prjec, the Awadee shall not enter into, any trcton, contract or deaing
will anAffliate of tl Awardee Qi with the Awàrdee's or Affiate's dirors. tr, offcer,
managers,' memrs (if the Awardee is a limited liabilty company), or other Corpra offcials,
without tle pnòr wrtten consnt of RUS. ,RUS' cwnsent to advance award funds for afliatd
trsácons will be limited to an amòun which is the lower of cot or marke rat and which is
subjec to verification by ,RUS and its rerestatives baving acs to the boks 'aid reCord of
the Affliate.
Asdefined in the approprate aWard document, "Affliate" ór "Affliated Compay" of any
specified person or entity mean any otler peon or entity diretly or indir contrllng of,
coIi1Jolled by, urder tlirect or indire common control with or relat to, such speified person or
entity, or w,hich exists for the sole purpe of providing any service tp oné company or exclusively
to companies which otherwise meet the defmition of aflia. This definition includes Varable
Interest Entities as descnbed in Finacial Aceunting. Stadards 'Boar Interretaon (FIN No.
46(R), Consolidation of Varable Interest Entities. r'or'the purse of this defiition. "contrl"
meas the possession diectly or indirey, of the power to dir or cause the ~oii of.the
management and policies of-a dompany, whether such power is exrcisea thugh-one or more
intemiedar companies, or alône, or in conjuncton with or puruant to an ageeent with, one'or
more' other companies, and wbeter suc ..power' is eslished though a majority or mionty
ownership votig of secities. common directors, offcers, or stocolder, voting trst holding
trsts (oter than money exchanged) far propè or services. . .
J. Records
Recrds supportng all assets finance 'by RUS shall be retaed until audite and approved by
R.US.
Recrds must b~ suffcient tt d~ent the co and location of all expenditues and to support
advances and disbusement of awd funds. Th support records mus include, but not be Umited
to, contrts. thrd par invoices timesheets. payroll records, m~terial records. and overhead
allocation' recrds and summar schedles
Records relate to plant lii ~ce must be retaed until the facilties are peraneitl reoved
frm utilty seice all removal and restoration acvities are completed. and all cost ar rered
frm the accuntig re unless accnti adjustments resltig from relasification and
origina costs studies have bee apved by RUS or other regulatory body having jurdiction. .
Life and mortality study da for depeciaton purses must be retained for. 25 yeas or for 10
yea afer plant is rer:d..whic;ever is longer.
II ¡JROFESSIONAL SERVICES~'.
Awaees shall only obta profesonal service frm ~rsns or fIrms not afliated with or that do not
represent a contractr. vendor or manufactrer presently providing labor, materals. or equipment to the
A ""aree. This does not include inhouse services. .
A. Éngineenng Serce!
All engineering serices reqed by an Awadee includig inspe:on and certficaon. shl be
rendered by an enee select by the Awaee and licese in the State where the faities will
be locate, or by qualified employee on the Awaees sta. whoaf submission of
. qualifica?ons to RUS, have be approVed to peorm such services.'
(i)
(2)
Out8ide Consltant. Engineeg services perf011ed by an oùtside conSUtat may be
covere under RUS Form 217, Postloan Engineering Services Cont1oct -
TelecommurÌcotions. RUS. Form 245, Engineering Serice Contract - Special Services.
or a Non-Stadar Contr .
In-Houe Enneerig. When. the. propoed work is sUch that the engineering invòlved is
within the capabilties ofthc employee' on the Awardee~ st. Awadees may reqUest
RUS approvaL to provide such serices. Th request shall include:
(i) A descrtion of services to be'perfonned;
(ii) Thc names and qualifcåtons of eac employee that will be pero~g the
specific serces. In addion. the Awardee shall identify an employee who wil
be in chare of the seices. Such employee must meet the State etpeence
requirments for a registeed engineer in the State where facilties will be
located. In thc aQsene of specific Stae experience reuirements. this employee
. should havc at leat eight yea experence in the design and conson of
telecmmunicaton falities with at leat two yea of the work eXerence at a
supeisry level. RUS does not reuire professional' regitron of thisemployee but this' does no~ relicve the Awadee frm compliance wi
applicale stae registtion reqirements which may reuire.. a; licesed
individuåJ to perform such service an
~.. ;.~
(ii)A letter signed by an autorized representave of the Awardee reesg in-
house engineeing approval and certifYing the supportg information. '
RUS shall notiiY the Awardee by let of approval or disapproval to peñorm in-house
.engineerig. The letter shall set fort any conditions asci.ated wi an apprval' or the
reasns for disapprOval. RUS approval of in.hous engineenng seces sha be only for
the specific serice cover by the apval. . ,
B. Architeetal Serices
Th Awadee shall select an arhitec lice in the state where the faclity will be located. The
borrower may use either RUS Form 220 or RUS Form 217 when contrctng for aritetural
serces. or,a Non-Stadard Contract. .
C. Contr and C)oaeout Documents
The Awardee mus submit thee execte copies of the RUSform contr or. the aproved Non-
Staar Contrac, coverg the professional. serce to be provided, for fial adisttive
approva. Once all serice and obligations reqred undettheprofe,ional seice èOntr have
been completed, Awardees shall submit. two copies òf RUS Form 288, Frna Staement oj
Architect's Fees and/or RUS Fonn 506, Fina Statement of Engiering Fe.es. to i:1~e out the
specific RUS Form contract. Awardee usng Non..tadardContrcts should provide a simiJar
cerification for Non-Stadard Con1r.
ii PURCHSE AND INSTALLA TION OF EQUIMET
General
When purclasing any eqpment,incl)ling instalation, tht costs more than $100,000, th Awaee mus
use a contrct for the purchas. Any equipment purhaes for les th Sl00.000. includi intalaton
can be pmchased under a purcase order and rembursed afer submision of the invoice along with an
. RUS Form 7718, followig the inspection and reimbursement prdues under Work Orer procedures.~ .
A. Equipment Purchas with Contr
Awaee may us RUS For 397. Special Equipment Contact (Includig InstaJlation).. RUS
Form 398. Special Equipment Contract (Not Including Installation), or ,a Non-Stdad Contrac.
The enginei: shalip~epare th~ performance ri:uirements. including an inslaton reuirements,if"liCä1e.pròr lô. relèl~ii. .thaIOl~witl th~~~pe~ecentrt to prospee vendors.
T)~ AWlU~rmput.~uipmentus~a~~e, although RUS recmmendstlt~A:Wiw~óbt#.qul)tê ftorn. allêa tb.clt:vendot. -.
Equipmentpurchàsèd under RUS Form 398 or aNon-Stadard Contr' that does n~t include,
instalaton, ~ay be instal~ by the Awaree usig the Work Order method or RUS Fonn 173. as
outined" in the Work Order procedures below.
B. Contract and CloseofDocuments
Oncê a vendor bas been selected the Awaree must submit thee execed Copies of the RUS fonn
contrt or the approved Non.Stadad Contrct, including the non.stdard peormance
reqirements covenng the equipment to be provided. for fina adiiistrve approval. Once all
equipment purchased under the contr has be instaled, and tested. and meets the peronnce
requireents, the Awardee shall proce- witn the closeut. of the contrt and submit a firiaI
contract,closet cefication on RUS Fon 756 or a similar cefication for Non-tadadContraCt. . .
IV CONSTRUcrON OF FACILITS
General
Constrction for iôUt$ê ì)1äi.fa,ii~bti1ding, an towers may be perormed using the work order
method or by anøudl~' .'Yenusing an outside contractor, either RUS Contrct Forms 773,257, or 515, or aN~tä~.nibe used. ' .
A. Outside Contror
If usingà staard"RUS C~ntrct Form the Awardee shall use the form wiout modifcations,
and atch an diagram, sketes and taulations necsar to spify clearly the work to be
peñonned and who shall proide which mateal.,
The engin shall prepll the constrcton spefications prior to releaÍßg them along with the
respecive contr to prospeve" CODtracrs." RUS recends that Awardees obta quotes
from seeral contracors beore enterig into a cotr to ense obtaning the lowest cot. The
Awaree shall ensue that the contrr seleced mee all feder, stae. and local licensing
requirements, as well as bon~ing reuirements; and that the contror maintas the insure
coverae ,r~quire by the contr for the duraon of the work (See 7 C.F .R. Par I788.)
OnC?e' a contractor has been selec, the Awaee mus submit th execte copies of the RUSform contrac (except RUS Fon 773, Whic shall .follow the procedu below) or thê approved
Non-Stadai Contriict, includig the cotrcton spectfieaons for the work to be pedoned, for
fial 'administrtive approal. . Onc constrcton ha be completed per the constrction '
specifications and all ~ tes have bee made, the Awadee shall pro. 'with, the. closeout of the contr an submit a: fiaJ contrct closeo ceficaton on RUS Fon 756 or a
símilar ceficaton for Non-Stadard Contr. "
B. Work Order Prce
Work order constrlon shal be perfomied to all local, state, an~ Fedei reirements. As work
order constrcton is peonned the AwåÎdee shåll kee daiy tiesheetand material.repórt,
reference by the work project nuibe, to recoi:d lab and' materials us. Cost ,a~untlg
system mus be in place to meet the requirents of7 CFR 3015 (inluding 48 CPR 31.2),3016,3019 as applicable, to show the sour~ an summa ~rds to support requested and exenged
fuds.
(l)Irtpection rid Ce;tí!ication. Upon completon and priórto closeout, the Awaee sh~l.
obtn the engineets cerfication on RUS Form 77.1a for all constrction complete
using RUS Fonn 773 or the work order method: An' authori offcial of the Awardee
shall execute the, AWaee's cerfication.
(2)Rlimbii.' To reue 1ùds for consctn coplei ui. ~. wor or4e
cPns pr or RUS For m cotr consn ~ut the A'W~
sha ~bmit RUS For 77i~ intialed by th OPR, along wi a 'Qß.O:f.eaprojec as wel RUS Fom 4tn, F'màtl Req St_nt . . RUS Poo
77tuhøuld be S'mittèd onl with th FlUB hat it supp. tiii apby RUS, the Awaee shall ßnaau woík òr án RUS For Tr coeonsction with non-loan fuds and obtan. Ieimbursent with RUS fuds when
constcton is completed' and properly' exected ,closut docents have been
. sùbmitted to RUS.
.
.v ADV ~CE AN DISBURSEM OF FUS
General
The awar docent contas ~e provisions regarding adances and disbusement.; Qf fuds to th~
Awaree. This section implements cen provisions by seting fort reqirents and predures to be
followed by the Awardee in obta~g advas and makng withwaldisbursents of ñm~.
RUS ís.under, no obligation to make or'approve adances of funds unless the Awardee complies with all
terms and conditions of the award docments.
A. Broadband Budget
The Awadee will be proided a bradband budget, 'based on the appro~ed Application. This
budget divides the awar into budget cagoris that ar associated with the proposed projects.
such as equipment. outside plat land and building. profesional seice etc. Fun frm one
budget category må not be used,for a,differnt budget caegory 'without ,pror wrtt approvalfroniRUS. '
B. Budget Adjustments
Ifmore fuds are require than ar avalable in a budget catgory. the AWadee ma reuest RUS'
approval of a budget adjustment to use fuds frm another budget caegory. The reuest shall
inlude an explanation as to why the adjustent is neeed and the afeced budget cagones.
, RUS wil not approve a budget adjustment unes ihe' Awardee ca demonstrat that aJl pures
..-an 'still be completd with the requeste adjusent. RUS, at its discretion, m.ay mae a budget
adjUstment without' a fonnal reuet to encuber fuds for a cont: when fu within the
budget category are inscient, and when it detines that the bUdget 'adjustment isinsignficat.' .
C. 'Pledged Depsit Accqu'
The Awaree shall establis ånd mai~ a pledged deposìt acunt to bold all Advance
depoite by the Agen. The pledged deposit account shall only' be estlishe in a ban Of
~epository whose depits a( ins'ed by the FDIC or other feder agen acceple to RUS.
Funds in the pledged depit acount shaIl be used solely for the purpse aproved. in th
Application and shal be withdrwndisbursed (or thè approved pu for 'whch' they Viere
reqest in the fiia reuiremnt staement. All Advance wil be deposited into the pledged'deposit acount bY elecfonic trsfer.',
RUS may require that other fuds be,deposited into the pledged depsit account. These may
include equity or general fud contríbutions to constrcton proceeds from the sale of propert,
Interest reived 'on award fuds 'and similar type of reeipts. Deposit slips for any depsits to
the pledgea depsit account shall show the soure and amount offunds deposite and be exected
by an .authønZed represtative of the bank. The disbursement ornon-award fus deposite into
the pledged deposit account requires the same RUS approvál as Advances on,the awar.
For acunting purposes,all withdrwals/disbursents from thè Pledged Depoit Account must
be e.videnced by canceled checks or support fot other ronns of payment. Disbursements to
reimburse the Awadee's general 'fud account shall be docmente by a reimbursement schedule
to be retaned in the Awadee's records that list the pledged deposit acunt chec number, date,
and an explanation of amounts rei~burséd for the Prjec '
D. Financial Requirement Statement CF)
To request Advances the Awaree must submit RUS Fon 481, Finacial Requement Statement
("FRS"), a desription of the Advances desired. and other related infonnation to the tranons
as requied by RUS.
The A Viarde~ mustrequ~t funds in the ,fit Advance to repaý any interi fiancing indebteness, .~~li~;~~ed~1k~es. RUS ma ~ot make furthei Advace until~ .~~..ln.su'b~ ~etin.røill/~~cesa~ ~ ltn'S, that: (1) anyiQ~..er~~ge_rn~møand~tiet~~bave been fullydi~o:fre4t.lU (i) tî~ J\Wl~ bassaed;ål~~iijoiC)ilthe adance ofåIti1Øå~ .
If.the soUrce of fuds 'for inter finaning is'the Awarees internally generte fuds; the.
Awadee may reest reibursent of those fuds along with Advans for òther puroses onthe first FRS submitt to RUS. '.
The Awardee shall reqest advaces as n.eeed to mee its obligatons prmptly. Öenerallý, RUS
doe not approve an advance reqeste more thårl30 days before Íhe obligation is payable.
~Uttf$muSt bo~U.slJtòr'~i~r1 t"Qi' lVCb they were advanced excet in the following
~lâlfthe.,~ci~tepaalmyoice which has been approved' on an FRS. forw~iù~blel\be~~4Jbisement of adån fuds for anothr ite has
.~tflill~theli 1ùin bed~4t'to pay the due and owing invoice up to the amount
~edfCl.r~iJÇon tbPR8. 'l A.wâee shall make entres on.the next FR& showing tbt'
chanRes under "Tota Advance to Date" ánd shall explain the changés in wrtlng before RUS will
process the nex FRS.
T1è ceeaon on ea of the thee copies of th FR set toRUS sha be.sgn by a coøffee 'Of ~ auorize to sign sucb stents. R.US Pon 675, Ceat of A:.
Sb 6è sUbJ~ to RUS indicatig the naes of all ~ auri tò sigr aPR. RUS, wll
not process l: .FRS signed by an indivi~ual whoe nam is no ~ oJth mø re For615." . .
Funds other th award funds th ar depositeej in the pledged deposit acount arc reort as a
credit wider tota disbursemts. Disburents of thèse fund are subjec to the sam RUS
approvals 8$ RUS fuds. .
The documentation required for audit of ras tractions, include but are not limited to deposit
slips for the pledged deposit account, all cacelled pledged deposit accout checks and the
supportng thir pa invoices, timeshects, payroll records, accunts payable record, gener
ledger, etc.,. and/or reimburèment schedles.' These shall be ,kept in the Awardee's fies for
periodic audits by RUS. . . . .
Thè FRS shall be the primar method used by the Awardee to recrd and Control transactons in
the deposit acunt. Approved contr'and other items ar shown on the FRS under "Approved
Purposes." Funds ar approved for adance as follows: . . ,
(1) Contretork Orders
(a). ..il~n.t c'Ørt.ø4: '.~in percent of ,e approved.' contrac amount,
inbí~~t$'\¥tl~~final 10 perct available when RUS approvesthcontr cioeo\lt~i()n. .
(b) Construction contracts: Ninety-five percent of the approved contr amount
including amendments, with th final 5 pecet available when RUSapproves
the contr closeout cerificaon. '
( c) Work ordrrs: The amount shown on the RUS form 771 a that RUS deteines tobe eligible for reimbursement. '
(2) Pre~Applicatjon Expenses ånd Engineering
(à) Pre-Application, expenses: Basci on th final itemize invoice from the
person(s) or firm(s) that provide service ,to complete the Application,
engineeng, and. acounting, as approved by RUS.
. .
(b) Post-loan engineering contacts: Ninet-five percet of th amount of the RUSapproed engieerig contract with .the fial 5 percent available when RUS
approves, the fial sttement of engineenng/arhitectra fèe.
(c) In-houe engineering: One hundred pet of the iiOut approved by RUS.
'(3) Operåting Equipment
Offce equipment, vehicles, and work: equipment wil be 'reimbured ,bas on copies ofmvoices.
E. Temporar Excess Constrction Funds
'When Wlan ev dela th.Awa.'d~mt,òradce fuds thfU,DlYbe ~C! for otêr apvø pur as ~ ab or mu re ~ tl. pl~'dep.~ If th ple¡é deit att is an in be al in èa mus
ie in th pleed deit ac and ca be di JJappiQva
F. Metod of Advancing Funds'
The first or sûbseuent adances maY be coIiitioned on the satisfacon of cen reirementsstated in the AWlldee's agiment with RUS. .,
AU advances'shall be made eleconically using the Automatic Cleag House (ACH. Normally,
for advance of tuds ACr only makes one paymet pe FRS. .
The folJo~ing information shall be include wit. eah 'aance:
(1) Name and address ,of Awardee'~ ban. .I(the Àwadee's bank is not a m~mber of theFedera Reserve System, the name and. address af its correspondent ban that is a
member of the Federal Reserve System;' ,
(2) ACH routing infoanation;
(3) Awaree's baik accunt title and nuabe; wid.
(4) Any other necessar identifYing informati.on.
ATTACHMENT 2
EQUAL OPPORTIITY CONTRCT PRQVISIONS
.... "
Durng the performance of ths contract, the contract~r agrees as follows:
(a) The contrctr shal not discnate againt any employee or aPp1i~ant for employment because
of race, color, religion, sex, or natonal origin. The contrctor shall tae afiratve action to
ensure that applicants are employed, and that employees are trated durg employment without
regard to their race, color, religion, sex, or national origi. Suchacsl1me~bU~~
limited to' thè followig:' e~loyient, upgrding, demotion, .or~~t ~eit .~'."
recrtment advertsin~ layoff or termintion, rates of payor, othr foJ' ot eoin~sao~;~
selection for trg, including apprenticeship. The contrctor agrees to post in conspicuous
places, available to employeès and applicats for employment, notices to be provided seing ford
. the. provisions oftl non-discnaton clause. .
(b) ~The contrctor .shall. in all solicitations or adversements for employees place by or 'on behalf of
the' contrtor, state that aÙ qufied applicants shl receive considertion for employméntwithout regard to race, color: religion, sex, or national origi.. .
(c) The contrctor shall send to each labor union or repretative of worker with which he has a
collective bargaining agreement or other contrct or understadig, a notice to be provided
. advising the said låbor union or worker's representative of the contraCor's comments under
this section, and shall por copies of the no~ce in conspiCuous place available to employe.es ~dapplicats for ~~ployme~t. " " .
(d) The èontrctor shal C9IIply with ~ali proviions of Executve Orer i 1246 of September 24,
1965and of~e rues, regulations, anø relevant order of the Secrta of Labor.. ;
(e) The. contractor shall fuishall information and report .requied by Executive Orer~1l246 of
'September.24, 1965 and by the rules, regutions, and orders oÌthe Secrta of Labor, or purt
thereto, and shal permit access to his boks, records, and, accounts by the aøinisterg agencyand the Sècr of Laor for pUIoses of investigation to ascer compliance with such niles,regulation, and orders. ' ,
(t) In the event of the coitra~tor's non-cmplice with the non-dsciíiinaton clauses of thscontrct or with my of the said nii~ I'~gûlatiem'orô~tbcó~~~cancelled,
termated, or suspended in whole or.~ õytleOóveeit, andt1e~~i.a)'~e decla
ineligible for' fuer . Governent '~1lct 'or federal .a.. ',consçion çOntrci in
acc,?rdnce with the, procedure authorjd in Executive Order. 11246 of Septembe 14J i 965, and
such other sanctions may be imposed and remedies invoked as provided in said Execuve Orer
or by rule, regulation, or order of the Seceta of Labor, or as otherwise provided by law.
(g) The contractor shall include the'provisians of pargraphs (a) though (g) in,everý subcntrct or
purchase order uness exempted by iules~ regulations, or orders of the Secreta of Labor isued
puruant to Section 204 of Executive Order i 1246, dated September 24, 1965, so tht such
provisions shall be binding upon each subcontrctor or vendor. The contrctor shal tae such
acton wjth respect to' any subCOntrt or purhae order as the administerig ágency rny. diec as
a m(\ of enør~$U?roVìiÖns. including sanctions for non-compliance; proyided however,
that in the event a conictorbemes involved in or. is theatened with, .litigation with a
subcontractC?o! vendOtüateitøfsu~h directon by the agency, the contrctor may request the
United States to enter into such litigation to protect the interests of the United States.
PROMISSORY NOTE
Idaho 11 05-B40
Midvale, Idaho
THIS PROMISSORY NOTE (hereinaftr the "Note II), dated as of September 20,2010, is
made by MIDVALE TELEPHONE EXCHANGE, INCORPORATED (hereinaftr the
"Borrower"), a corporation duly organized and existing under the laws of the State of Idao, to
the UNITED STATES OF AMERICA, (hereinafter the "Governent"), acting through the
Administrator of the Rural Utilties Service ("RUS"). For value received, the Borrower promises
to pay to the order of the Governent, at the United States Treasury, Washington, D.C., Three
Hundred Eighty Thousand, Seven Hundred Fift One Dollars ($380,751), with interest payable,
from the date of each advanceJ on the amount advanced by the Government (hereinafter the
"Advance"), pursuant to a certain Loan/Grant and Securty Agreement, dated the same date as
this Note (hereinafter the "LoanGrant Agreement"), made by and between the Borrower and the
Governent, and remaining unpaid from time to time, in the time and manner herein provided:
1. Interest Rate. Interest on each Advance shall be at rate(s) per anum, published by the
Secretary of the Treasur, which shal be equal to the cost of borrowing of the
Deparent of Treasury for obligationsJ as determined by the Governent, of
comparable maturity (hereinafer the "Cost-of-Money Interest Rate").
2. Maturity Date. On a date twenty three (23) years after the date hereofJ the principal
hereof advanced pursuant to the LoanGrat Agreement and remaining unpaid, if any,
and interest thereon, shall be due and payable (hereinafter the "Maturity Date").
3.. Fund Advance Period. Funds wil be advanced pursuant to the LoanGrant Agreement.
The fud advance period for this Note begins on the date hereof and terminates thee (3)
years from the date of this Note (hereinafer the "Termnation Datetl). No fuds will be
advanced subsequent to the Termination Date.
4. Payments on Advances.
(a) Made Within One (1) Year. Interest on Advances made during the first year from
the date of the first Advance hereunder, and remaining unpaid, shall be payable
on the last day of each month (hereinafer the "Monthy Payment Date")J
beginning on the last day of the month followig the month of each Advance for
the period ending one (1) year from the date of the first Advance hereunder.
Thereafer, to and including the Matuity Date, the Borrower shall make a
payment every Monthly Payment Date on each Advance made durng such period
which shall be: (i) substatially equa to all subsequent monthly payments and (ii)
in an amount that wil pay all principal and interest due on each Advance no later
than the Maturity Date.
Page 1
(b) Made After One (1) Year. Interest and pricipal payments on Advances made
more than one (1) year after the date of the first Advance hereunder shall be
repaid in installments begining with the Monthly Payment Date of the month
following each Advance and ending on the Matuty 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. Thereafer, to and
including the Matuity Date, the Borrower shall make a payment every Monthly
Payment Date on each Advance (i) substatially equal to every other monthly
payment on such Advance, and (ii) in an amount that wil 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 one (1) year 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; Thrd, to the payment of
interest on principal; and Fourh, 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 advanced pursuant to the LoanGrant 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, unless the Borrower and the Governent shall
otherwse agree, in wrting.
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 as prescribed and published by the Secretay of the Treasur. In addition,
the Borrower shall pay administrative costs and penalty charges assessed in accordance
with applìcable Governent regulations. Acceptance by the Government of a late
payment shall not be deemed to be a waiver of any right or remedy of the Governent.
8, Security. This Note is secured by a security interest in collateral described in the
LoanGrant Agreement as such agreement may be amended, supplemented, consolidated
or restated from time to time. Rights and obligations with respect to the collateral are
stated therein.
9, Noteholder. This Note evidences indebtedness created by a loan made pursuant to the
American Recovery and Reinvestment Act of 2009, Pub. L. 111-5, 123 Stat. 115 (2009),
the Notice of Funds Availabilty published at 75 Fed. Reg. 3820 and Title VI of the Rural
Electrification Act of 1936 (7 U.S.C. 901 et seq.). The Government shall be and shall
have all rights as holder of ths Note.
10. Default. In an event of default, as provided in the Loan/Grant Agreement, all principal
advanced pursuant to the LoanGrant Agreement and remaining unpaid on this Note, and
Page 2
al int thern may be declar or may becme due an payale in th maer and
with the effect prvided in the LoanGrt Agrent.
11. Costs. Th Borrwer shal pay any and all cost and expe incur in connecon
with the exercise of rights or the enorement of reedes, as se fort in the LoanGrt
Agent.
12. Waiers. The Borrower waves demand, prsentmt for payment, notice of non-
payent, notice of dishonor, protet, and notice of non-payment of ths Note.
13. Obligations. The obligations hereunder of the Borrwer on th Note ar absolute and
unconditiona, irespetive of any defen or any right to set offJ recupment, or
counla it might otherwse have agait the Goverent.
IN WISS WHREOF, the Borrwer ha cause th Note to be signed in its
corp or legal nae an its corprate se, if any, to be hereunto afed and atsted by its
offce theruno duly authori, all as of the day an year firs above wrtt.
(SEAL)
Ati to by:~ Já
MIDVALE TEHONE EXCHGE, INCORPORATEDL_.~t ec)~.r ..
~: :.ne R Williams
Title: President
Pa 3
RUS Project Designationt
IDAHO 11 OS-e40
BROADBAND lNITIATIES PROGRA
LOAN/GRAT AN SECURTY AGREEMET
dated as of September 20,2010
between
MIVALE TELEPHONE EXCHAGE, INCORPORATED
and
TH UNITED STATES OF AMRICA
UNED STATES DEPARTMET OF AGRICULTURE
RURL UTILITIS SERVICE
Page 1
BROADBAN INIIATIVES PROGRAM
LOAN/GRAT AND SECURITY AGREEMENT
THIS LOAN/GRAT AND SECURITY AGREEMENT (ths "Agreement"), dated as of
September 20, 2010 is between MIDVALE TELEPHONE EXCHANGE1 INCORPORATED
("Awardee"), a corporation existing under the laws of IDAHO, and the UNITED STATES OF
AMERICA, acting through the Administrator of the Rura Utilties Service ("RUS").
The Awardee has applied for fiancial assistance ("Applicaton") from RUS to fmance the
constrction of a broadband infrctue project to serve areas that are at least 75% rual.
RUS is willig to extend financial assistce, in the form of a loan and grant to the Awardee,
pursuant to the American Recovery and Reinvestment Act of2009, Pub. L. 111-5, 123 Sta. 115 (2009)
(the "Recovery Act"), the Notice of Funds Availabilty published at 75 Fed. Reg. 3820 and Title VI of the
Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), and all applicable federa regulatons, on the ter
and conditions stated herein.
The Awardee is willng to secure the loan and grant and its other obligations to RüS on the
terms stated herein.
THEREFORE, in consideration of the promises and mutual covenants herein contained, the
pares agree and bind themselves as follows:
ARTICLE I - DEFINITIONS
The terms defied herein include both the plural and the singular. Unless otherwise
specifically provided, all accountig terms not otherwise defied herein shall have the meangs assigned
to them, and all determinations and computations herein provided for shall be made in accordance with
Accountig Requiements.
"Accounting Requirements" shall mean the system of accounting prescribed by RUS in RUS
Regulations.
"Advance" or "Advances" shall mean the disbusement of Loan and/or Grant fuds in
accordance with this Agreement.
"Affliate" or "Affliated 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 control with
or related to, such specified person or entity, or which exists for the sole purpose of providig any servce
to one company or exclusively to companies which otherwise meet the defiition of affiliate. This
definition includes Variable Interest Entities as described in Financial Accounting Standards Board
Interpretation (FI) No. 46(R), Consolidation of Variable Interest Entites. For the purose of this
defmition, "control" means the possession directly or indirectly, of the power tô diect or cause the
direction of the management and policies of a company, whether such power is exercised though one or
more intermediar companies, or alone, or in conjunction with, or pursuant to an agreement with, one or
more other companies, and whether such power is established though a majority or minority ownership
voting of securties, common directors, officers, or stockholders, voting trst, holding trsts (other than
money exchapged) for propert or serices.
"Application" shall have the meaning as defined in the second parllgraph hereof.
"Award" shall mean the Loan or LoanGrat Combination described in Aricle II.
"Awardee" shall mean the Loan or LoanGrant Combination recipient named in the first
paragraph hereof.
Page 2
"BIP" shall mean the Broadband Initiatives Progr, administered by RUS and created
pursuant to the Recovery Act.
"BIP Contrcting, Work Order and Advance Procedues Guide" shall mea the procedures for
constnction and Advances, atthed hereto as Áttchment 1.
"Business Day" shall mean an day that RUS and the Dearent of Treasur are both open
for business.
"Collateral" shall mean any and all prope pledged as security for the Obligations,
including, without limitation, securty for the Loan, and other amounts owing to RUS under the Loan-Grat
Documents, including, without limitation, the propert described in Arcle IX and on Schedule 2.
"Composite Economic Life" means the weighted (by dollar amount of each clas of facilty in
the A ward) average economic life of all classes of facilties in the A ward, as determined by RUS.
"Distribution" shall have the meaning as defined in Section 7.9.
"Eligible Puroses" shall mean puroses and expenses which are specified in the NOF A as
being eligible for funding.
"Event of Default" shall have the meaning as defined in Arcle X.
"Expiration Date" shall have the meaning as defined in Paragraph (d) of Section 3.1.
"Form 481" shall have the meaning as defmed in Section 4.3(d).
"Grant" shall mean the grant described in Section 3.1.
"Interest Expense" shall mean the accral of interest on all classes of indebtedness, including
capital leases and securties issued by the Awardee and shall also include the amortzation of debt issuance
expenses, premiums, and discounts.
"Laws" shall have the meaning as defied in pargraph (e) of Arcle II.
"Loan" shall mean the loan described in Section 3 .1.
"LoanGrat Combination" shall mean, collectively, the loan and grant described in Section
3.1.
"Loan-Grant Documents" shall mean, collectively, this Agreement, Security Documents and
the Note(s).
"Material Adverse Effect" shall mean a material adverse effect on, or change in, the condition,
financial or otherwise, operations, properties, business or prospects of the Awardee or on the abilty of the
Awardee to perform its obligations under the Loan-Grant Documents as determined by RUS.
"Net Income" or "Net Margis" shall mean the amount equal to the income that the Awardee
has afer subtracting costs and expenses from the total revenue. Costs and expenses include but are not
limited to all operations and maintenance expense, corporate operations, taxes, interest dividends,
depreciation, and gains and losses on the disposition of propert.
"Net Wort" (equity) shall mean tota assets less total liabilties of the Awardee. Net worth
includes the recorded value of capital stock, additional paid-in capital, treasur stock, retained earings and
other comprehensive income.
Page 3
"NOFA" shall mean the Notice of Funds Availabilty, published in the Federal Register at 75
Fed. Reg. 3820.
"Note(s)" shall have the meaning as defmed in Pargrph (a) of Section 3.2.
"Obligations" shall mean any and all indebtedness, obligations and liabilties of the Awardee
to RUS, of every kind and description, direct or indirect, secured or unsecured, joint or several, absolute or
contigent, due or to become due, whether for payment or perfonnance, now existig or hereafter arising,
howsoever evidenced or created, including, without limitation, all loans (includig any loan by renewal or
extension); all indebtedness, all Notes, all undertings to tae or refrain frm taking any action; and all
interest, taes, fees, charges, expenses, and attorney's fees chargeable to Awardee or incured by RUS
under this Agreement or in any other document or intrment delivered hereunder or as a supplement
hereto.
"Pennitted Encumbrances" shall mean the liens and encumbrances permitted by the RUS
Mortgage.
"Pledged Deposit Account" shall have the meaning as defined in Secton 5.4.
"Prior RUS Loan Contrct" shall mean the contract identified on Schedule 1 as it may have
been amended or supplemented frm time to time.
"Project" shall have the meaing as defined in Paragph (a) of Section 3.4.
"Projec Completion" shall mean that all Award fuds have been advanced to the Awaree by
RUS.
"RE Act" shall mean the Rural Electrification Act of 1936 (7 U.S.C. 9(1 et seq.).
"RUS Mortgage" shall mean the mortgage identified on Schedule i as it may be amended,
supplemented and restated from time to time.
"RUS Regulations" shall mean the rules, regulations and bulletins of general applicabilty
published by RUS from time to time, as such rules, regulations and bullets exist at the date of
applicabilty thereof, and shall also include 7 C.F.R. 3015 (and, by adoption, 48 C.F.R. 31.2 of the Federal
Acquisition Regulations), 3016 and 3019 and applicable OMB Circulars, as well as any rule and
regulations of other Federal entities which RUS is required by law to implement. Any reference to specific
RUS Regulations shall mea the version of and cite to such regulation effective at the date of applicabilty
thereof.
"Securty Documents" shall mean, collectively, any mortgage, security agreement, financing
statement, deposit account control agrment or other document providing collateral for the Obligations,
including without limitation, repayment of the Loan.
"Service Rates" shall mean the rates charged for data, video, voice or any other service
proposed in the RUS approved Application.
"Subsidiares" shall mean the subsidiaries listed in Schedule 1.
"Substatially Complete" shall mean that 67% of Award fuds have been advanced to the
Awardee by RUS.
"System Design" shall mean the system as described in the RUS approved Application.
Page 4
"TIER" shall mean the Awardee's total Net Incomeor Net Margins plus Interest Expense
payable for any year divided by Interest Expense payable for such year, as set fort in Section 5.8 hereof.
"Time line" shall mean the detailed schedule describing the Project build out, submitted with
the RUS approved Application, as may be amended from time to time with prior wrtten RUS consent.
"Total Assets" shall mean all proper owned by the Awardee. Tota assets include curnt
and noncurent assets such as cash, receivables, material and supplies, prepayments, deferrd charges, and
investments; fixed assets (plant) such as buildings and equipment, both in service and under constrction;
as well as capita leases and intangibles.
ARTICLE II ~ REPRESENTATIONS AND WARRANTIES
Recognzing that RUS is relying hereon, the Awardee represents and warants, as of the date
of this Agreement, as follows:
(a) Organization; Power, Etc. The Awardee: (i) is the tye of organization specified in
the fist paragraph hereof, duly organized, validly existig, and in good stadig
under the laws of the State identified in the first paragraph hereof; (ii) is duly
qualified to do business and is in good stading in each jursdiction in which the
transaction of its business make such qualification necessar; (ii) ha legal power to
own and operate its assets and to car on its business and to enter into and peorm
its obligations under the Loan-Grat Douments; (iv) has duly and lawfully obtained
and maintained all material licenses, certificates, permits, authorizations and
approvals necessar to conduct its business or required by applicable Laws; and (v)
is eligible to obtain the financial assistce from RUS contemplated by this
Agreement.
(b) Authority. The execution, delivery and performance by the Awardee of thisAgrement and the other Loan-Grat Douments and the performance of the
tranactions contemplate hereby and thereby have been duly authorized by all
necessar actions and do not violate any provision of law or any charter, aricles of
incorporation, organization documents or bylaws of the Awardee or result in a
breach of, or constitute a default under, any ageement, security agreement, note or
other instrent to which the Awardee is a par or by which it may be bound. The
Awardee has not received any notice from any other par to any of the foregoing
that a default has occured or tht any event or condition exists that with the giving
of notice or lapse of time or both would constitute such a default.
(c) Consents. No consent, approval, authorization, order, filing, qualification, license, or
perit of any governental authority is necessar in connection with the execution,
delivery, performance or enforcement of the Loan-Grat Documents, except such as
have been obtained and are in full force and effect.
(d) Binding Agreement. Each of the Loan-Grant Documents is, or when executed and
delivered will be, the legal, valid, and binding obligation of the Awardee,
enforceable in accordace with its terms, subject only to limitations on enforceabilty
imposed in equity or by applicable banptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights,generally.
(e) Compliance with Laws. The Awardee is in compliance in all material respects with
all federa, state and local laws, rules, regulations, ordinances, codes and orders
(collectively, "Laws.")
Page 5
(f) Litgation. There are no pending or thatened legal, arbitration or .governental
actions or proceedings to which the Awardee is a par or to which any of its
propert is subject which, if adversely determined, could have a Materal Adverse
Effect.
(g) Information Submitted with Application. All information, reports, and other
documents and dat submitted to RUS in connection with the Application were, at
the time the same were furnished, complete, and corrt in all material respects. Any
financial statements or data submitted to RUS in comiecion,.vvith.. the Applicatio~
presnt fairly, in all material respects, the fian.cial posltiQ.naftñA~~,t¥
results ofits operations in conformity with AccountingJ,eq~n~~in~~.,~
thereof, there has been no materal adverse changehitlø~çiai.~al ..ør.
operations of the Awardee.
(h) Principal Place of Business. The principal place of business and chief executive
offce of the Awardee is at the address of the Awardee specifed in Schedule 1
hereto.
(i) Organization Number. The Awaree's organization number is correctly identified in
Schedule i hereto.
Q) Subsidiaries and Parent. Any subsidiaries or parent of
the Awardee are disclose on
the attached Schedule i.
(k) Defaults Under Othtr Agreemèns. Nodetàtt by th Awaree has occured under
any agreemen or innt to which thè Awarde is. a pa or to which any of its
propert is subject th could have a Mat AdVere Eff
(1) Title to Property. Except as disclosed in writing in the opinion of counsel, the
Awardee holds good and maketable title to all of the Collateral, free and clear of
any liens, security interests or other encumbrances except for Peritted
Encumbrances.
(m) RUS Mortgage. The RUS Mortgage is in full force and effect, wil secure the
Obligations, including the Note, and creates a valid first lien on the proper pledged
thereunder and hereunder.
(n) Additional Representations and Warranties. The Awardee fuer represents and
warants as set fort on Schedule i .
ARTICLE III- THE LOAN AN GRANT
Section 3.1 Loan and Grant Amounts, Interest Rate, and Expiration Date.
(a) Loan Amounts. RUS agres to make and the Awardee agrees to accept, on the terms
and conditions stated in this Agreement and subject to 31 U.S.C. 1551 and 1552, a
loan, in the amount specified in Schedule 1 hereto (the "Loan").
(b) Grant Amount. RUS agrees to make and the Awardee agrees to accept, on the term
and conditions stated in this Agreement and subject to 31 U.S.C. 1551 and 1552, a
grant, in the amount specified in Schedule 1 hereto (the "Grant").
(c) Interest Rate. The amount of the Loan specified in Schedule 1 hereto wil bear
interest on each Advance at the Treasur rate for comparble loan with comparable
maturities.
Page 6
(d) Exiration Date. The obligation ofRUS to advance the Award, or any porton
thereof, shall expire on a date ("Expiration Date") thee (3) yea from the date of
this Agreement.
Section 3.2 Loan-Grant Documents
(a) The debt created by the Loan wil be evidenced by a note(s) (''Note(s)'') executed by
the Awardee and payable to the United States of America. The Awardee shall
repay the Loan in accordance with the Note(s) which shall be payable and bear
interest in accordance with its (their) terms.
(b) The Awardee shall execute the Securty Documents, in form and substance
satisfactory to RUS, and such other secuty instrents as required by RUS.
Section 3.3 Payment
Except as otherwise prescribed by RUS, the Awardee shall make all payments on the Note(s)
utilzing electronic fund transfer procedures as specified by RUS.
Section 3.4 Project
(a) Loan and Grant Purpose. The Loan and Grant have been made solely to finançe the
broadband infrstctue project specifically desribed in the RUS approved
Application ("Project. ")
(b) Changes to Project. The Awardee shall obtain the pror wrtten approval ofRUS for
any material change to the system design, constrction, Timeline, deliver of
services, and/or objectve(s) of the Project.
Section3.S ACH Payments
The Awardee consents to the use of the Automated Clearing House (ACH) Payment System
and to the deposit of award fuds directly into the Pledged Deposit Account.
ARTICLE IV - CONDITIONS OF FIANCIAL ASSISTANCE
Section 4.1 Conditions Precedent to Closing
In connection with the execution and delivery of this Agreement, each of the following
conditions shall be satisfied (all documents, cerificates and other evidence of such conditions are to be
satisfactory to RUS in its discretion):
(a) Legal Matters. All legal matters incident to the consumation of the trsactions
hereby contemplated shall be satisÎactory to counsel for RUS;
(b) Loan-Grant Documents. RUS shall receive duly executed originals of the Loan-
Grant Documents;
(c) Filed and Recorded Security Documents. RUS shall have received executed, fied
and indexed financing statements covering all of the personal propert and fixtes
of the Awardee;
(d) Articles of Incorporation. Charter, Bylaws and Organizational Documents. With
respect to corporate and cooperatve Awardees, RUS shall have received certified
Page?
copies of the Awardee's most recent aricles of incorporation or charer and bylaws.
With respect to limited liabilty companies or similar organizations, RUS shall have
received certfied copies of the Awardee's most recent organization documents
containing provisions reflecting the obligations of the A wardeein pargraphs (c) and
(d) of Section 7.3;
(e) Authorizations. RUS shall have received satisfactory evidence that all Loan-Grant
Documents and proceedings of the Awardee necessar for duly authonzig the
execution, delivery and performance of the Loan-Grat Documents have been
obtaed and are in ful force and effect;
(t) Approvals. RUS shall have received satisfactory evidencethttb~Äward~;~~¥
registered when and where required by law with all statt\.Fe4~ ~QØçp\li:i~
authorities and regulatory bodies and obtaied all auth~l~~~..~
approvals necessar for, or required as a condition of, the validity and enforceabilty
of each of the Loan-Grant Documents;
(g) Tile Evidence. RUS shall have received satisfactory evidence that the Awardee has
good and marketable title to its~. .inciUdin~tne Projec and holds such
franchises, permits, leases, easement' ri&l.priie~, licenses, or right-of~way
intrments, reasonably adequate inforiand.su~ef as may be reuired by law
for the continued maintenance and operation of the existing facilties and Project;
(h) Management, Service, and Operating Agreements. Except as otherise provided in
Sections 4.2 and/or 4.3 herein,RUS shall have received all management, service, and
operating agrements, in form and substance acceptable to RUS, which shall be in
accordance with fees or rates presented in the pro forma financial statements
submitted to RUS in the RUS approved Application;
(i) Opinion of Counsel. RUS shall have received an opinon of counsel for the Awardee
(who shall be acceptable to RUS) in form and substance acceptable to RUS for each
state in which the Awardee operates; and
u) Additional Conditions. The Awardee has met all additional conditions specified in
Schedule 1 hereto.
Section 4.2 GeneralCgiidiûoiiPmedent tgR.t1S' t)b1lfilìJÎ loRêleas!Func5förÂ,4v.
The obligations of RUS hereunder are subject to the satisfaction of each of the following
conditions precedent (all documents, certficates and other evidence of such conditions are to be
satisfactry to RUS in its discretion):
(a) Serice Rate Evidence. RUS shall have received satisfactory evidence that theAwardee has duly adopted Service Rates for all proposed serices which are
designed with a view to (i) paying and discharging all taxes, maintenance expenses,
and operating expenses of the Awardee, (ii) makg all payments in respect of
principal and interest on the Note(s) when and as the same shall become due. (ii)
providing and maintaining reasonable working capital of the Awardee, and (iv)
producing and maintaining the TIER specified in Section 5.8 hereof;
(b) Fidelity Bond or Theft Insurance Coverage. RUS has received copies of
the fidelity
bond or theft insurance policy from the Awardee, identifying RUS as a loss payee,
from a surety doing business with the United States listed in 31 CFR Par 223, in the
amount specified in Schedule 1, covering all offcers, employees, or agents of the
Awardee authorized to receive, disbure, or receive and disbure the Loan and Grant.
Notwithstading, for curent RUS borrowers,. RUS may waive this fidelity bond
Page 8
coverge reuirement, if, after evaluat~a, RUS has de tht adequate fidelity
bond coverage is already maîtaed by th Awar as a ßUS borrower under
exisinK loa òr guarantee agrents beeen th Awa and aus;
( c) Curren Fincial Informatwn and Cetttcate ofAut1wrilJ. R-uS bas reived from
the Awareè: (0 it upd baance ~steii of ca flow, and inome
ståtêín an (if) a duly authori and execed cecaoo, Form 675,
"Cecaon of Authori.1I desgntig an offcer, empìoye. or agen of th
Awaree as the pen or persns aùori to execute and submit, onbehafof thè
Awardee, RUS Form 481, "Fincial Requirement Statement;"
(d) Deposited Funds. RUS has received from the Awardee evidence, satisfactory to
RUS, verifying that the Awardee has maintaned on deposit in an account, fuds
suffcient to complete the Project as specified on Schedule 1; and
(e) Additional Conditions. The Awardee has met all additional conditions specified in
Schedule 1 hereto.
Section 4.3 Conditions to Individual Advances
The obligations of RUS to approve any Advance are subject to the satisfaction of each of the
following conditions precedent on or before the date of such Advance (all documents, certificates and other
evidence of such conditions precedent are to be satisfactory to RUS in its discretion):
(a) Continuing Representations and Warranties. That the representations and warties
of the Awardee contained in th Agrement be tre and correct on and as of the date
of such Advance as though made on and as of such date;
(b) Material Adverse Effect. That no event has occured which ha had or could have a
Material Adverse Effect;
(c) Event a/Default. That no Event of Default and no event which with the pasage of
time or giving of notice, or both, would consttute an Event of Default shall have
occurd and be contiuing, or shall have occured after giving effect to any
Advances on the books of the Awardee;
(d) Requisitions and Supporting Documentation. That RUS shall have received not
more frquently than once a month, unless otherise agreed to by RUS, a complete
RUS Form 481, "Financial Requirement Statement" (hereinaftr" Form 481,")
bearing the original signatue of the offcer, employee, or agent of the Awardee
authorized to receive, disburse, or receive and disburse the Award, with supporting
documentation from the Awaree Ù1 accordace with the RIP Contractig, Work
Order and Advance Proçedures Guide. Advances shall be limited to the minimum
amounts required for the Awardee's immediate disbursement needs and shall be
requested by the Awardee only for actal imediate cash requirements of the
Awardee. Such loangrant advances shall be provided on a reimbursement basis, or
based on unpaid thd par invoices for Eligible Purposes, or contracts approved by
RUS, in accordace with the BIP Contracting, Work Order and Advance Prcedues
Guide. Grant funds must be advanced concurrently with Loan fuds in the sae
proporton as the Grant is to the total Award;
(e) Floodlnsura~c~. .... Thatfor anY Advance used in whole orin par to fiance the
~()~ct()orac(ljsiti~nofan:rbUildg inlûYâreail'eJtìfiel'l)"the ~~ of
I-~inK'im~ tJrb IJêvel?inent P~wut .tô .tlefJbOf)~t~ ~teti~l\çt ofr9'$(t1~i "~I00d.Inc~Aet")or. aiY l'f~j r~~o~~Qtl'~i~p~ toinpleiØ$the FióOlnurceiAetas.anyarahåvÚlg~lMfløPl'b~ds., ør to
Page 9
finance any facilties or materials to be located in any such buildig, or in any
buildig owned or occupied by the Awardee and locted in such a flood had area,
the Awardee shall have submitted evidence, in form and substace satisfactory to
RUS or RUS has otherwise determned, that (i) the community in which such area is
located is then parcipating in the national flood insurance program, as required by
the Flood Insurance Act and any related regulations, and (ii) the Awardee has
obtained flood insurance coverage with respect to such buildig and contents as may
then be required pursuant to the Flood Insurance Act and any related regulations;
(t) Curent Financial Information. That RUS has received from the Awardee: its
curent, updated balance sheets, income statements and statements of cash flow;
(g) Compliance with Timeline. Tht RUS has received from the Awardee evidence,
satisfactory to RUS, that the Project is being constrcted in accordance with the
Timeline;
(h) Compliance with Loan-Grant Documents. That the Awardee is in material
compliance with the Loan-Grant Documents and the RUS Mortage;
(i) Permits, Licenses and Franchises. That RUS shall have received satisfactory
evidence that the Awardee has obtained the permits, licenses, frchises and other
approvals identified on Schedule 1;
G) Additonal Documents. That the Awardee agrees to provide RUS with such
additional documents as RUS may request; and
(k) Additional Conditions. That the Awardee has met all additional conditions speified
in Schedule i hereto.
Section 4.4 First Adviiuee to Pay Of PrAppJion EXpeDSes im Igtem FlIWI¡ llrimon Subsequent Advances .
Funds to payoff certn pre-application expeses, as defied in the NOF A, and expenditures
for Eligible Puroses incured aftr submission of the Application to RUS, if any, wil be included in the
fit Advance. Thereafter no fuer Advances wil be made unless and until the Awardee has fushed
evidence, in form and content satisfactory to RUS, that such inteim fmacing has been paid in full and any
associated liens have been duly discharged of record.
ARTICLE V - AFFIRATIVE COVENANTS
Section 5.1 Generally
Unless otherwise agreed to in writing by RUS, while this Agrement is in effect, the Awardee
shall duly observe each of the affirative covenants contained in this Aricle V.
Section 5.2 Use of Advances
The Awardee shall expend Award fuds only for Eligible Puroses in accordance with the
RUS approved line item Project budget and Form(s) 481 submitted to RUS prior to the advance of fuds.
Section 5.3 Unused and Disallowed Advances
(a) The Awardee shall re to RUS forthwith all or any advanced porton of the Loan
and Grant not disbursed by the Awardee for the Project or not needed to complete
Page 10
the Project with any interest eared thereon when deposited in the Pledged Deposit
Account.
(b) The Awardee shall reimbure RUS for any advanced funds whose origialexpenditure has been disallowed by an RUS lóa and gr audit. Dislowace
shall be satsfied, as directed by RUS, by tither adintle off agast odi
approved puroses on Form(s) 481 or repayng the disaUQwed áìoun ditò the
United States Treasu. Such dislowed amounts shal a. irte pale to
RUS frm the date RUS delivers to the Awardee a wrtten demand for payment.
Interest shall accre on diallowed Loan Advances at the lesser of the following: the
interest rate of the disallowed Advance or the then curent United States Treasur
rate as pròe by the Seçetl of the Treasur in the Feder Reg and th
Ti Fisca Remets Manal Bulletin. Interest shall accr on diwed
Grat Advanes at the thncur United States Treaur rate as preseriÐè by thSecry of the TrU1 in the Fedl Règite and the Treas Fisc
Recents Manua Bulleti. Clost of the Loa and Grant will not afect the
ri ot RUS to disallow expditu and recover, in ful, any amount on the basisof a subset audi or oth reew or the Awa's obligation to retu any
disallowed expen~itus.
Section 5.4 Deposit of Advances into Pledged Deposit Account
(a) The Awardee shall open and maintain a depósit account pledged to RUS ("Fledged
Deposit Account,") in a ban or depository whose deposits are insured by the Federal
Deposit Insurance Corpration or other federal agency acceptable to RUS and shall
be identified by the RUS' designation of the Awardee followed by the words
"Pledged Deposit Accout." The Awardee shall promptly deposit proceed from all
Advances, including previously advanced fuds whose origial expenditue has be
disallowed by an RUS audit into the Pledged Deposit Account. Moneys in the
Pledged Deposit Account shall be used solely for the puroses for which Advances
were made, or for such other puroses as may be approved in wrting by RUS.
Deposits and disbursements from the Pledged Deposit Account shall be made and
recorded in accordance with the BIP Contractig, Work Order and Advance
Procedures Guide.
(b) First Lien on Pledged Deposit Account. The Awardee shall perfect and mainta a
first and prior lien in the Pledged Deposit Account (puruant to a deposit account
agreement or similar agrement or mechanism for perfectig as provided by
applicable law) in form acceptable to RUS.
Section 5.5 Additional Project Funding
The Awardee shall ensure that adequate funding is in place to complete the Project and wil,
after obtaining the prior written approval of RUS, obtain additional loans or fuds or receive binding
commitments for supplemental fuding in an amount needed to ensue completon of the Project.
Section 5.6 Miscellaneous Notices
The Awardee shall fuish to RUS:
(a) Notice of Default. Promptly after becoming awar thereof, notice of the occurrnce
of any default under the Loan-Grat Documents or the RUS Mortage or the receipt
of any notice given pursuant to the Loan-Grant Documents or RUS Mortgage with
respect to the occurence of any event which with the giving of notice or the passage
of time, or both, could become an Event of Default hereunder, the other Loan-Grant
Documents or under the RUS Mortgage.
Page 11
(b) Notice of Litigation. Prmptly afer the commencement thereof, notice of the
commencement of all actions, suits or proceedings before any cour, aritrator, or
governmental deparent, commission, board, bureau, agencyi or instrentaity
affecting the Awardee or any Affliate which, if adversely deterined, could have a
Material Adverse Effect.
(c) Regulatory and Other Notices. Promptly after receipt thereof, copies of any notices
or other communcations received from any governental authority with respect to
any matter or proceeding which could have a Mateal Adverse Effect.
(d) Material Adverse Effect. Promptly af becoming aware thereof, notice of any
matter which has resulted or may result in a Material Adverse Effec.
(e) Corporate Document Changes. Thir (30) days prior to their effectiveness, any
amendments, supplements or modifications to the Awardee's Aricles of
Incorporation, Charer, Bylaws, Operating Agreement, Members Agreements or
other Organizational Documents.
(t) Other Information. Such other information regarding the condition, financial or
otherwise, or operations of the Awardee as RUS may, from tie to time, reaonably
request.
Section 5.7 Rates and Financial Performance Criteria
The Awaree shall design, charge and maintain rates in effect which (i) pay and dischare all
taxes, maintenance expenses and operating expenses of its system (ii) make all payments in respect of
principal of and interest on the Note(s) when and as the same shall become due, (iü) provide and maintain
reasonable working capital for the Awardee, and (iv) maintain the TIR specified in Section 5.8 hereof.
Section 5.8 TIER
The Awardee wil maintain the TIER requird in the Prior RUS Loan Contract and, upon the
termination of the obligation to maintain such TIER, wil maintain a TIER of 1.0 unti the Loan is repaid in
full.
Section 5.9 Correctie Action
Within thir (30) days of (i) sending the financial report required by Section 6.3 hereof that
shows the TIER specified in Section 5.8 was not achieved for the reported fiscal period or (ii) being
notified by RUS that the TIER specifed in Section 5.8 was not achieved for the reported fiscal period,
whichever is earlier, the Awardee, in consultation wit RUS, shall provide a written plan satisfactory to
RUS setting fort the actions that shall be taken to achieve the specified TIER on a timely basis and shall
promptly implement said plan.
Section 5.10 Service Obligation
The Awardee shall provide the broadband service described in the RUS approved Application
commencing from the date the Project is Substatially Complete for at leas as long as the Composite
Economic Life of the facilties fmanced by the A ward as specified on Schedule 1.
Section 5.1 ¡Obligations with Respet to the CODsletin, OArâtlon and Mlintenanceof the frleçt
(a) Project Management and Operation. The Awaree shall be reponsible for the
management of the Project and wil operate the Prject in an effcient and economic
maner as well as maintaining the Project in good repair.
Page 12
(b) Construction in Accordance with System Design an Timeline. The Awardee shall
cause the Project to be constcted and/or built out, and completed in accordce
with the system design submitted with the RUS approved Application, as such
design may be amended with prior RUS consent, and the Timeline.
(c) General Insurance Requirements. The Awardee shall tae out and mainta
insurace on the Projec and any other propert acquired with the Loan and Grat in
accordance with 7 CFR Section 1788 as well as maintaining the fidelity bond or theft
insurance coverge requied in Section 4.2(b) hereof.
(d) Contracting. The Awardee may, in accordance with the BIP Contracting, Work
Order and Advance Procedur Guide, contract for goods and service to be funded
by the Award, using RUS form contracts or private contracts; provided that private
contrcts must comply with equal employment opportity and civil rights
requirements, as well as the Davis Bacon Act.
(e) Commencement and Completion of Constrction and/or Installation.
(I) Awardees are requid to commence constrction and/or installation of the
Project within 180 days from the date hereof, and
(2) The Project shall be Substantially Complete withi two years of the date
hereof, and Project Completion shall occur within thee years of the date
hereof.
Section 5.12 Preservation of Existence and Rights
The Awardee shall take or cause to be taken all such actions as from time to time may be
necessar to preserve its existence and to presere and renew all franchises, contracts, rights of way,
easements, permits, and licenses now or hereafter to be granted or conferred upon it, with respect to the
Project, the loss of which would have a Material Adverse Effect.
Section 5.13 Compliance with Laws
Awardees shall comply with all applicable federal and state laws, including but not limited to:
(i) The nondiscrimintion and equal employment opportity requirements of Tite VI of the Civil Rights
Act of 1964, as amended (42 U.S.C, § 2000e et seq., 7 CFR pt. 15); (ii) Section 504 of the Rehabiltation
Act (29 U.S.C. § 794 et seq.; 7 CFR pt. 15b); (ii) The Age Discrimition Act of 1975, as amended (42
U.S.C. § 6101 et seq.; 45 CFR pt. 90); (iv) Executive Order 11375, amending Executive Order 11246,
Relating to Eqi. Employment Opportnity (3 CFR pt. 102). See 7 CFR pts. 15 and 15b and 45 CFR pt.
90, RUS Bulletin 1790-1 ("Nondiscrimination among Beneficiares ofRUS Programs''), and RUS Bulletin
20-15:320-15 ("Equal Employment Opportity in Constrction Financed with RUS Loans"). The RUS
Bulletins are available at htt://ww.broadbandusa.gov.; (v) The Architectual Barers Act of 1968, as
amended (42 U.S.C. §. 4151 et seq.); (vi) The Uniform Federa Accessibilty Stadards (UFAS) (Appendix
A to 41 CFR subpart 101-19.6); (vii) The Council on Environmental Quality Regulations for Implementing
the Procedural Provisions of NEPA and certain related federal envionmental laws, statutes, regulations,
and Executive Orders found in 7 CFR1794; and (viii) The Communications Act of 1934, as amended, (47
U.S.C. § 151 et seq.), the Telecommunications Act of 1996, as amended (pub. L. 104-104, 110 Stat 56
(1996), and the Communications Assistance for Law Enforcement Act (47 U.S.C. § 1001 et seq.)
(CALEA).
Section 5.14 Equal Opportunity Requirements
(a) Equal Opportunity Provisions in Construction Contracts. The Awardee ,shall
incorporate or cause to be incorprated into any constrction contrct, as defined in
Page 13
Executive Order 11246 of September 24, 1965 and implementing regulations, which
is paid for in whole or in par with funds obtained from RUS or borrowed on the
credit of the United States pursuant to a grant, contrct, loan, insuce or guartee,
or undertaken pursuat to any RUS progr involving such grant, contract, loan,
insurce or guarantee, the equal opportity provisions set forth in Attchment 2
hereto, entitled Equa Opportnity Contract Provisions.
(b) Equal Opportnity Contract Provisions Also Bind the Awardee. The Awardee
furter agrees that it shall be bound by such equal opportity clause in anyfederally
assisted constrction work which it peorm itself other than though the peranent
work force directly employed by an agency of governent.
(c) Sanctions and Penalties. The Awaree agees that it shall cooperate actively with
RUS and the Secreta of Labor in obtaining the compliance of contrctors and
subcontractors with the equal opportty clause and the rules, regulations and
relevant orders of the Secreta of Labor, that it shall fuish RUSand the Secetar
of Labor such information as they may require for the supervision of such
compliance, and that it shall otherwise assist the admistering agency in the
dischage of RUS' primar responsibilty for seuring compliance. The Awadee
fuher agrees that it shall refr from entering into any contract or contract
modification subject to Executive Order 11246 with a contractor debared from, or
who has not demonstrted eligibilty for, Governent contrcts and federally
assisted constrction contracts puruant to Part II, Subpar D of Executive Order
1 1246 and shall car out such sactions and penaties for violation of the equal
opportity clause as may be imosed upon contrctors and subcontractors by RUS
or the Secreta of Labor pursuant to Par II, Subpar D of Executive Orer i 1246.
In addition, the Awardee agrees that if it fails or refuses to comply with these
widertakings RUS may cancel, terminate or suspend in whole or in par this
Agreement, may refrin from extending any fuer assistace under any of its
programs subject to Exective Order 1 1246 until satisfactory assuance of fue
compliance has been received frm the Awardee, or may refer the case to the
Deparent of Justice for appropriate legal proceedigs.
Section 5.15 Purchases with Award Fund§
Except as specifically authorized in wrting in advance by RUS, all facilties, material,
equipment, supplies, replacements and all other item purhased with A ward fuds shall be purchased
outrghtJ and not subject to any conditional sales agreement, chattel mortgage, bailment lease or other
agrment reserving to the seller any right, title or lien.
Section 5.16 Awardee to Defend Title and Remove Liens
Except for Permitted Encumbraces, the Awardee wil maintain and presere the lien of this
Agreement superior to all other liens affecting the Collateral, and wil forever warant and defend the title
to the Collateral against any and all claims and demands whatsoever. The Awardee shall make, execute,
acknowledge, deliver, file and record all such mortgages, financing statements, continuation statements,
security agreements, instrments and conveyances as is necessar to preserve the lien of this Agreement
againt the Collateral superior to all other liens. The Awardee shall maintain the Collateral fre of all liens
except for Permitted Encumbrances, and wil promptly payor discharge any and all obligations for or on
account of which any such lien or charge might exist or could be created and any and all lawful taxes, rates,
levies, assessments, liens, clai or other charges imposed upon or accruing upon any of the Collateral, as
and when the same shall become due and payable; and whenever called upon so to do by RUS wil furnsh
to RUS adequate proof of such payment or discharge; provided, however that this provision shall not be
deemed to require the payment or dischage of any tax, rate, levy, assessment or other governental charge
while the Awardee is contesting the validity thereof by appropriate proceedings in good faith and so long as
it shall have set aside on its books adequate reserves with respect thereto.
Page 14
Section 5.17 Further Assurances
(a) The Awardee shall from time to tie upon written demand ofRUS make, execute,
acknowledge and deliver or cause to be made, executed, acknowledged and delivered
all such fuer and supplemental mortgages, financing sttements, continuation
statements, . security agreements, instrni~nts andconveYaices as may be requested
ÐrR.US~ tâe.Ol çase to be ~./ålis\J~,f~~Ql as may reasonably be
~esedbYR'US to.pl'ovide fottle .s~.~~payant of the principal of,in~øn.and lly/and all other ai.pl)'~Ieheld~ and under the Note(s)
according to the terms thereof and for the purose of fully conveying, transferrg
and confiring the propert hereby conveyed, mortgaged and pledged or intended so
to be, whether now owned by the Awardee or hereafter acquird by it.
(b) The Awardee shall cause this Agreement, financing statement, continuaton
statement and every additional instrent which shall be executed puruat to
subsection (a) immediately above, to forthwith upon exection to be fied and
recorded and refied and rerecorded as conveyances and security interest in real and
personal propert in such manner and in such places as may be requird by law or
requested by RUS in order to fully preserve the securty for the Obligations,
including the Loan, and to perfect and maintai the superior lien of ths Agreement
and all supplemental securty instrents.
Section 5.18 Buy American - General Prohibition andc,¥aiver
For Awardee that are States, local governments, or any agency, subdivision, instrentaity,
or political subdivision thereof, pursuat to § 1605 of the Recovery Act, no Loan or Grat fuds may be
used for the constrction, alteration, maintenance, or repair of a public building or public work (as such
terms are defied in 2 CFR § 176.140) unless all of the iron, steel, and manufactung good used ìn the
project are produced in the United Staes, except as provided in OMB regulations at 75 Fed. Reg. 14323
(Mar. 25, 2010). Notwithstadig, such Awardees have been grted a general waiver by the Secret of
Agricultue with respect to certai broadband equipment, as outlined in the Federal Register at 74 Fed. Reg.
31402 (July 1, 2009). AU other waivers must be requested ofRUS pursuant to 2 CFR § 176.60
Section 5.19 Nondiscrimination and Interconnection Obligations
The Awardee agrees to (i) adhere to the principles contained in the FCC's Internet Policy
Statement (FCC 05-151, adopted Augst 5, 2005); (ii) not favor any lawful Internet applications and
content over others; (ii) display any network management policies in a prominent location on the service
provider's webpage, provide notice to customers of changes to these policies, such policies include any
business practices or teclmical mechansms they employ, other than standard best efforts Interet delivery,
to allocate capacity; differentiate among applications, providers, or soures, limit usage and manage ilegal
or harl content; (iv) connect to the public Internet directly or indirectly, such that the project is not an
entirely private closed network; and (v) offer interconnection, where technically feasible without exceeding
curent or reasonably anticipated capacity limitations, on reasonable rates and terms to be negotiated with
requesting pares. This includes both the abilty to connect to the public Internet and physical
interconnection for the exchange of trafc.
(a) Notwithding the above, the Awardee may not offer interconnection to anyone
that wil provide services that duplicate services provided by projects fuded by
outsnding telecommunications loans . made under the RE Act. Furer,
interconnection may not be used for an ineligible purse under the Recovery Act
(b) These obligations are subject to the needs of law enforcement and reasonable
network management. As such, the Awardee may employ generally accepted
technical measures to provide acceptable service levels to all customers, such as
Page 15
caching and application-neutrl bandwidth allocation, as well as measues to address
spam, denial of service attcks, ilegal content, and other harful activities.
(c) In the event the Awardee contrcts with anothr entity to operate the Project, the
Awardee shall require such entity to comply with the term of this Secion, expressly
including this Section in their contractual arangement.
(d) These obligations do not apply to the Awardee's existing network.
Section 5.20 Davis-Bacon Wage Requirements
The Awardee shall comply with the Davis-Bacon Act, and the guidance found at 29 C.F.R.
pts. 1,3, and 5, such that any covered contrt with a contrctor or subcontractor in excess of $2,000 for
constrction, alteraon or repair (including painting and decorating) shall contan the contract clauses
found in 29 C.F.R. 5.5(a), to ensure that all laborers and mechanics employed on the Project receive
payment of not less than the prevailing wage.
Section 5.21 Additional Aftjrmative Covenants
The Awardee shall comply with the additional affirative covenants set forth in Schedule i
hereto.
ARTICLE VI - ACCOUNTING AND REPORTING
Section 6.1 Financial Records
(a) Awardees must establish an accounting system satisfactry to RUS in compliance
with Accounting Requirments. Such a system of accounts must account for all
funds advanced under this Agreement separately from aU other fuds for the Project,
as required by the Recover Act.
(b) The Awardee shall mainta, at its premies, such boks, documents, papers, or other
records and supportg documents, including, but not limited to, invoices, receipts,
payroll records and bils of sae, adequate to identify the puroses for which, and the
maner in which Loan Grat, and other fuds were expended on the Project. The
Awardee shall at all times keep, and safely preserve, proper books, records and
accounts in which full and tre entres shall be made of all dealings, business, and
affirs of the Awardee and its Subsidiaries, in accordace with its system of accounts
complying with Pargraph (a) imediately above. The Awardee shall mainta
copies of all documents submitted to RUS in connection with the Award until the
longer of (i) the Loan being paid in full and all audits have been completed, (ii) the
term ofthis Agreement or (ii) thee years subsequent to close-out of the Award.
Section 6.2 Rights of Inspection
The Awardee shall afford RUS, the Offce of the Inspector General of USDA, and the
Goverment Accountabilty Offce, though their representatives, reasonable opportity, at all times
during business hours and upon prior notice, to have access to and right to inpect the Project, any other
propert encumbered by the Security Documents, and any and all books, records, accounts, including
electronic books, records, accounts and electonic mail messages, regardless of the physical form or
characteristics, invoices, contrct, leases, payroll records, canceled checks, statements, and other
documents, and papers of every kind belonging to or in any way pertaining to it propert or business,
including its Subsidiaries, if any, and to make copies or extracts therefrom.
Page 16
Section 6.3 Apnual Audit
Effective afer an Advance has ben made, one hundred twenty (120) days from the end of
the Awardee's curent fiscal year and, thereafter, one hundred twenty (120) days frm the close of each
subsequent fiscal year, the Awardee must submit annual audited financial statements along with a report on
compliance and on internal control over financial reportg, and a maagement letter in accordance 'with
the requirements of 7 CFR 1773. The CPA conducting the anual audit must meet the requirements for a
qualified CPA as set forth in 7 CFR § 1773.5. However, if the Awardee is a state, local governent, or
non-profit organization that expends $500,000 or more of federal fuds during its fiscal year, an audit must
be performed in accordance with OMB Circular A-133, Audits of States, Local Governents, and Non-
Profit Organizations, located at htt://ww.whitehouse.gov/omb/circularsla133/a133.htmJ. Awardees ar
also responsible for eusuring that sub-recipient audit report are reeived and for resolving any audit
findings.
Section 6.4 BIP Reporting
(a) Quarterly Report. No later th thir. (30) calendar days after the end of each
calendar year quarer the Awardee must submit to RUS utilzing RUS's oriine
Broadband Collection and Analysis System (BCAS), the followig information:
balance sheets, income statements, statements of cash flow, summares of its rate
packages, the number of customers taking broadband service on a per community
basis, the completion status of the build-out and whether the projec is Substantially
Complete. In addition the Awardee must provide RUS with such other reports
concerning the financia condion or operation of the Awardee, including its
Subsidiaries, as RUS may request.
(b) Annual Report. For the lesser of five years or as long as the Awardee is required to
provide service hereunder, on each Januar 31 st, staing the first Janua 31st afer
Projec Completion, the Awaree must submit the following information to RUS
utilizing BCAS:
(i) Number of households and businesses subscribing to broadband service;
(ii) Number of households and businesses subscribing to broadband service that
receive improved access; and
(iii) Number of educational, librar, healthcare, and public safety provider
receiving either new or improved access to broadband service.
(c) Annual Compliance Certifcate. Within fort-five (45) days after the close of each
caendar year, or more often if reqested in wrting by RUS, the Awardee shall
deliver to RUS a written statement signed by its general manager, managing
member, or equivalent corporate offcial satisfactory to RUS, statig that, durg
such year the Awardee has fulfilled its obligations under the Loan-Grant Documents
thoughout such year in all material respects or, if there ha been a material default in
the fulfillment of such obligations, specifying each such default known to such
offcial and the natue and statu thereof.
(d) Close Out Report. The Awardee shall deliver a close out report to RUS no later than
ninety (90) days afer the expiration or termination of the Award, or the completion
of the Project and expenditure of all Award funds. The clo'se out report shall
address: (i) a comparison of actual accomplishments to the objectives set fort in the
Application; (ii) a description of problems, delays, or adverse conditions that
occured, or which affected the attnment of overal Project objectives, prevented
the meeting oftIme schedules or objectives, or precluded the attinment of partcular
Project work elements during estalished time periods; and (ii) a comparison of
Page 17
how fuds were spent against the origial general budget submitted with the RUS
approved Application.
Section 6.5 Recovery Act Reporting
No later than ten (10) calendar days after each calendar quer in which the Awardee receives
the assistace award fuded in whole or par with Award fuds, the Awardee shall submit though
htt://www.federalreportng.gov the infonnation required by 2 C.F.R. 176. The fmal report should
summarize the Awardee's quarerly fiings and state wheter the project's goals have been satified.
ARTICLE VII - NEGATIVE COVENANTS
Section 7.1 General
Unless otherwise agreed to in writig by RUS, while this Agreement is in effect, the Awardee
shall duly observe each of the negative covenants set fort in this Aricle VII.
Section 7.2 Merger, Consolidation, Transfer of Propert, or Change in Control
The Awardee shall not, without the prior wrtten consent of RUS, tae or suffer to be taken
any steps to reorganize consolidate with or merge into any other corpration, or to sell, leae or tranfer (or
make any agrment therefor) all or any substatial par of its proper, includig, without limitation, the
Project.
Section 7.3 Covenam (or Limited Liability Compimig lDd Sit t\dee
A wardees which are limited liabilty or similar organizations agree that
(a) The death, retirement, resignation, expulsion, tenninaion, banptcy or dissoluton
of any member or the occurce of any other event that tenninates the continued
membership of any member shall not cause the Awardee to be dissolved or its affir
to be wound up;
(b) Prior to the date on which any and all obligations owed to RUS, including the Note
evidencing the Loan are discharged in full, the Awardee shall not be dissolved or
termnate;
(c) The organizational documents of the Awardee shall contain provisions reflecting the
obligations of the Awardee in paragraphs (a) and (b) imediately above and such
provisions shall not be amended without the prior written consent of RUS; and
(d) No direct or indiect addition or issuance of any membership units (or any other
ownership interest) in the Awardee may be made by the Awardee or its members
without the prior written consent of RUS and no transfer, whether individually or in
the aggregate, of any membership units (or any other ownership interest) in the
Awardee which wil result in the transfer of more than 49% ofthe equity interests (of
whatever natue, including votig and non-votig) in the Awardee may be made by
the Awardee or its members without the pror writtn consent ofRUS.
Section 7.4 Additional Indebtedness
The Awardee shal not, without the prior written consent of RUS, incur additional secued or
unsecured indebtedness other th (i) purchase money security interests, (ii) unsecurd trade indebtedness
and (ii) other debt arsing in the ordinar coure of business. Indebtedness under items (i), (ii), and (iü) in
the aggregate shall not exceed five percent (5%) of the Awardee's consolidated total assets.
Page is
Section 7.5 Negative Pledge
The Awardee shall not create, incur or suffer any lien, mortgage, pledge, assignent, or other
encumbrance on, or security interest on its propert, other than Permitted Encumbrances.
Section 7.6 Contracts
The Awardee shall not, without the prior written consent of RUS, enter into any contrct or
contracts for the operation or management of all or any substantial par of the Awardee's system, including,
without limitation, the Project, and shall not enter into any contract for the use by others of all or any
substatial part of its system, including, without limitation, the Projec.
Section 7.7 Salaries
Salares, wages, and other compensation paid by the Awardee for services, and diectors',
members', managers' or trstees' fees, shall be reasonable and in conformity with the usual prctice of
entities of the size and nate of the Awardee.
Section 7.8 Extension oCCredit
Except as specifically authorized in writig in advance by RUS, the Awardee wil make no
advance payments or loans, or in any maner extend its credit, either directly or indirectly, with or without
interest, to any of its diecors, trtees, offcers, employees, stockholders, members, managers, Affliates
or Affliated companies; provided, however, that the Awardee may make an investment for any purse
described in secton 607( c )(2) of the Rural Development Act of 1972 (including any investment in, or
extension of creditJ guartee, or advance made to an Affliated Company th is used by such Afflia for
such purose) to the extent that, immediately after such investment: (1) the aggegate of such investments
does not exceed one-third of the Net Worth and (2) the Awardee's Net Worth is at least twenty (20) pecent
of its Total Assets.
Section 7.9 Distributions or Withdrawals
( a) Except for payments made for ta liabilties, the Awardee shall not, without the prior
written approval of RUS, make any membehip withdrwal, unit redemptions, or
other tye of profit allocation to its membe, if it is a limited liabilty company, nor
make any dividend, stock, capital, capital credt or other distrbution in the natue of
an investment, guarantee, extension of credit, loan or advance payment on
obligations, if it is a corporation or cooperative (all such distributions being
hereinafter collectively called "Distrbutions") which would violate the distrbution
restriction(s) of the Prior RUS Loan Contract or RUS Mortgage described in
Schedule I hereto.
(b) Additonal Negative Restrictions. The Awardee shall comply with the additional
negative restrctions on Distributions and Withdrwals set fort in Schedule 1 hereo.
Section 7.10 Chaneini Pricipal Place of Busines Place ofConduetù Bus. or Type of
Organization
The Awardee shall not change its principal place of business, place of conducting business, or
tye of organzation without the prior written consent ofRUS.
Section 7.11 Changing Name or Place oflncorporation or Organization
The Awardee shall not change its legal name or place of incorporation or organization without
giving RUS sixty (60) days prior written notice.
Page 19
Section 7.12 Historic Preservation
The Awardee shall not, without the prior written consent of RUS, use any Advance to
constrct any facilty which shall involve any distrct, site, building, stcte or object which is included
in, or eligible for inclusion in, the National Register of Historic Places maintained by the Secret of the
Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act of 1966.
Section 7.13 Affliated Transactions
With regard to the Project, the Awardee shall not enter into any tranaction, contract, or dealing
with an Affliate of the Awardee or with the Awardee's or Affiliate's diectors, trstees, officers, managers,
members (if the Awardee is a limited liabilty company), or other corporate offcials, without the prior
written consent ofRUS. RUS' consent to advance loan fuds for afliated trsactions wil be limited to an
amount which is the lower of cost or market rate and which is subject to verification by RUS and its
representatives having access to the books and records of the Affliate.
Section 7.14 Preferred Stock
The Awardee shall not issue any new or additional preferred stock without the prior written
approval of RUS, which approval shall not be uneasonably witheld if such stock issuance, in RUS' sole
opinion, would not be considered a debt intrment under GAAP.
Section 7.15 Restrictions on Transfers of Property
(a) Except as provided in Paraph (b), and excludig any propert which the Awardee
must sell to cusomers in the ordiar course of business, the Awardee shall not sell,
lease or trsfer any Collatera to any other person or entity (including any
subsidiar or afliate of the Awardee) without the prior wrtten consent of the RUS.
(b) So long as the Awardee is not in default herunder, the Awardee may, without
obtaiing the consent of RUS, sell or otherwise dispose of, free from the lien hereof,
any of its propert which is neither necessar to, nor useful for, th operaion of the
Awardee's business, or which has become obsolete, worn out, damaged, or otherwise
unsuitable for the purses of the Awardee; provided, however, that the Awardee
shall to the extent necessar: (1) replace the sae with other propert of the same
kid and nate, 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 propert, which are not needed for the replacement thereof, to the
prepaymeIit of the indebtedness on the outstding Notes; (2) imediately upon the
receipt of the proceeds of any sale or disposition of said propert, apply the entire
amount of such proceeds to the prepayment of the indebtedness evidenced by the
Notes; or (3) deposit all or such par of the proceeds derived from the sale or
disposition of said propert into the Pledged Deposit Account , and shall use the
same only for such additions to, or improvements in, the Collateral, on such term
and conditions as RUS shall specify.
Section 7.16 Restrictions on Cbanges to Line Item Budget
The Awardee agrees that the budget for the Project is a line item budget and agrees not to
make any revisions to the RUS approved line item Project budget, including, without limitation, the par of
the budget for constction, without the prior wrtten approval of RUS.
Page 20
Section 7.17 Additional Negative Covenants
The Awardee shall comply with the additional negative covenants set fort in Schedule 1
hereto.
ARTICLE VII - LENDER'S RIGHTS
Section 8.1 Termination of Award Offer
RUS, in its sole discretion, may terminate the offer to make the Loan or LoanGrant
Combination if it does not receive the Loan-Grant Documents, duly executed on behalf of the Awardee and
all conditions in Section 4.1 hereof are not satisfied within sixty (60) days frm the date hereof.
Section 8.2 Audits and Compliance Reviews
After giving prior notication to the Awardee, RUS has the right to conduct compliance
reviews and audits of the Awardee to assure compliance with the Loan-Grat Documents, NOFA and the
Accounting Requirements.
Section 8.3 Disallowed Expenditures
Upon a determination by RUS that the Awardee did not expend Award fuds on Eligible
Puroses in accordance with the RUS approved lie item Project budget and the Form(s) 481 approved by
RUS prior to the advance of fuds, RUS may, in its sole discretion:
(a) Diallow all or a par of the expenditues an disbursements of the Award and
requi the Awardee to deposit such fuds in the Pledged Deposit Account to be
applied toward other approved Project puroses on Form(s) 481 or to reimburse the
Governent, as provided in Section 5.3 hereof;
(b) Suspend making Advances;
(c) Take any other action RUS determnes to be necessar including, without limitaton,
exercising any right or remedy available under the Loan-Grant Douments or law.
Section 8.4 Suspension of Advances
RUS may, in its absolute discretion, suspend making Advances on the Award upon its
making a determination that an event has occured that is likely to have a Materal Adverse Effect. RUS
may also suspend making advances Dfthe Award upon the occurrence of an Event of Default.
Section 8.5 Payment Extensions
RUS may, at any time or times in succession without notice to or the consent of the Awardee
and upon such terms as RUS may prescrbe, grant to any person, fi or entity who shall have become
obligated to pay all or any par of the principal of or interest on any note held by or indebtedness owed to
RUS or who may be affected by the lien create by the Loan-Grant Documents, an extension of the time
for the payment of such pricipal or interest, and afer any such extension the Awardee wil remai liable
for the payment of such note or indebtedness to the same extent as though it had at the time of such
extension consented thereto in writing.
Section 8.6 Right to Expend Money
RUS shall have the right (without prejudice to any of its rights with 'respct to any Event of
Default) to advance or expend moneys for the purose of procuring insurance, or for the payment of
Page 21
insurance premiums as required hereunder, or to advance or expend moneys for the payment of taes,
assessments or other charges, or to save the Collateral from sale or forfeitur for any unpaid tax or
assessment, or otherwise, or to redeem the same from any ta or other sale, or to purchase any tax title
thereon, or to remove or purchase any mechanics' liens or other encumbrance thereon, or to make repairs
thereon or to comply with any covenant herein contained or to prosecute and defend any sui in relation to
the Collateral or in any manner to protect the Collate and the title thereto, and all sums so advanced for
any of the aforesaid puroses with interest thereon at the highest legal rate, but not in excess of twelve per
centum (12%) per arum shall be deemed a charge upon the Collateral and shall be fortwith paid to RUS
upon demand. It shall not be obligatory for RUS in making any such advances or expenditues to inquire
into the validity of any such tax title, or of any such taes or assessments or sales therefor, or of any such
mechacs' liens or other encumbrance.
Section 8.7 Right to File Financing Statements
RUS shall have the right to file such finàncing sttements and continuation statements on its
behalf, as secured par, and on behalf of the Awardee, as debtor, as RUS deems necessar to perfect a fi
lien on the Collateral and to mainta and preserve such 'perfected fist lien as long as the Loan remains
outstanding. The Awardee shall reimbure RUS for any expenses incurred in the exercise of this right.
ARTICLE ix - GRAT OF SECURITY INTEREST
To secure the payment and peormance of the Obligations, including, without limitation, the
Note(s), the Awardee herby pledges, assign, and transfers to RUS, and grants to RUS a continuing
security interest in and to all propert, tagible and intangible, of every kind, natue or desciption, now
owned, leased, or hereafter acquired by the Awardee, wherever located, including but not limited to,
accounts, chattel paper, documents, instrments, general intangibles, licenses, (including, without
limitation, those granted by the Federa Communications Commission ("FCC"), subject to the FCC's prior
approval of any assignent or transfer of de jure or de facto control of such licenses), permits, equipment,
goods, proceeds, products, and accessions, as well as its right, title and interests in fixtes and real
propert, now owned, leased or hereafer acquired and wherever located, and ' the propert descrbed in
Schedule 2 hereto.
ARTICLE X - EVENTS OF DEFAULT
Section 10.1 Events of Default
The followig shall be events of default (each an "Event of Default") under this Agreement:
(a) Representations and Waranties. Any representation or warrty made by the
Awardee in Loan-Grat Documents, Form(s) 481 or any certificate fushed to RUS
under the Loan-Grant Documents, or in the Application shall prove to have been
incorrect in any material respect at the time made;
(b) Non-Payment. The nonpayment of any reuired and due installment of interest on, or
principal of, any Note, whether by acceleration or otherwise, which continues for
five (5) Business Days, as such term is herein defined;
( c) Corrective Actions. Default by the Awardee in the observance or performance of
Section 5.9;
(d) Limited Liabilty Companies. Default by the Awardee or its members in the
observance or perormce of Section 7.3;
Page 22
( e) Improper E:ienditus. The Awardee expends Award fuds on costs which are not
for Eligible Puoses in accordance with the RUS approved line item Project budget
and the Form(s) 481 approved by RUS prior to the advance offuds;
(f) Failure to Keep Adequate Records. The Awardee fails to keep adequate records,
including the failur to document Award fud expenditues for Eligible Puroses as
requird herein;
(g) Failure to Build in Accordace with Time1ine. The Awardee fails to commence
build out of the Project within 180 days from the date hereof or otherwise fails to
meet or exceed milestones estalished in the Time1ine, as it may be amended with
prior written RUS consent;
(h) Failure to Comply with Accoúnting and Reporting Requirements. The Awardee fails
to comply with the accounting and reporting reuirements in Aricle VI;
(i) Other Covenants. Default by the Awardee in the observance or pedormance of any
other covenan or agreement contained in any of the Loan-Grt Documents, which
shall remain unemedied for thir (30) calenda days afer writtn notice thereof
shall have been given to the Awardee by RUS;
ü) Adverse Effects. The Awardee shall forfeit or otherwise be deprived of its charer,
arcles of orgaization, franchises, permits, easements, consents or licenses required
to car on any material portion of its business or the Awardee files for or an event
occurs which can reasonably be expected to result in its dissolution or termination;
(k) Other Obligations. Default by the Awardee in the payment of any obligation,
whether direct or contingent, for borrowed money in excess of ten thousd dollar
($10,000.00) or in the pedonnance or obserance of the term of any instrent
pursuant to which such obligation was created or securing such obligationwhicb
default shall have resulted in such obligation becomig or being declared due and
payable prior to the date on which it would otherwise be due and payable;
(1) Banuptcy. A cour having jurisdiction in the premises shall enter a decree or order
for relief with respect to the Awardee in an involuntar case under any applicable
banptcy, insolvency, or other similar law now or hereaftr in effect: (1)
appointing a receiver, liquidator, assignee, custodian, trstee, sequestator, or similar
offcial, or (2) ordering the winding up or liquidation of its affair; or the Awardee
shall commence a voluntar case under any applicable banptcy, 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, cusodan or
trstee, of a substantial par of its propert, or make any general assignent for the
benefit of creditors;
(m) Dissolution or Liquidation. Oter than as provided in the immediately precedg
subsection, the dissolution or liquidation of the Awardee, or the filig of such by the
Awardee;
(n) Impaired Business. The failure by the Awardee to promptly forestall or remove any
execution, garishment or attchment of such consequence as shall impair its abilty
to continue its business or fulfill its obligations and such execution, garshment or
attchment shall not be vacated within thir (30) days;
(0) Payment of Final Judgment. A final judgment in an amount often thousand dollars
($10,000.00) or more shall be entered againt the Awardee and shall remain
unsatisfied or without a stay in respect thereof for a period of thir (30) days; and/or
Page 23
(P) Default under RUS Mortgage. An event of default occurs under the RUS Mortgage
and is continuing for thir (30) days.
ARTICLE XI - REMEDIES
Section 11.1 Generally
(a) Upon the occurence of an Event of Default, RUS may purue all rights and remdies
available to RUS that ar contemplated by the Loan-Grant Documents and/or the RUS
Mortgage in the maner, upon the conditions, and with the effec provided in such
documents, and may pursue such other remedies that are generally available at law or in
equity including, without limitation, a suit for specific performance, injunctive relief or
damages. Nothing herein shall limit the right of RUS to pursue all rights and remedies
available to a creditor followig the occurence of an Event of Default listed in Artcle X
hereof. Each right, power and remedy of RUS shall be cumulative and concunt, and
recourse to one or more rights or remedies shall not constitute a waiver of any other right,
power or remedy.
(b) RUS and the Awaree acknowledge they are, respectively, mortgagee and mortgagor,
under the RUS Mortgage and agree that the RUS Mortgage secures the Obligations,
including the Note, and that the RUS Mortgage creates or wil create a fist lien on the
Collateral. RUS and the Awardee fuer agree than an Event of Default hereunder shall
constitute an event of default under the RUS Mortgage permitting RUS to exercise rights
and remedies thereunder.
Section 11.2 Remedies
In addition to the remedies referred to in Section 1 i . i hereof, upon the occurnce of an Event
of Default, RUS may:
(a) Refuse to make any adce or fuer advance on account of the Award, but any
advance thereafter made by RUS shall not constitute a waiver of such default;
(b) DeClare all unpaid prcipal of and all interest accrued on the Note(s) to beimmediately due and payable and upon such declartion all such principa and
interest shall become due and payable immediately;
(c) Terminte the obligation to fuer advance on account of the Award;
(d) Take imediate possession of the CollateraL, collect and receive all credits,
outstanding accounts and bils reeivable of the Awardee and all rents, income,
revenues and profits pertining to or arising frm the Collateral, or any par thereof:
and issue binding receipts therefor; manage and control and operate the Collateral as
fully as the Awardee might do if in possession thereof; RUS, any employee or agent
ofRUS is hereby constituted and appointed as tre and lawful attrney-in-fact of the
Awardee with ful power to (i) notify or require the Awardee to notify any and all
Customers that the Collateral has been assigned to RUS and/or that RUS has a
securty interest in the Collateral; (ii) endorse the name of the Awardee upon any
notes, checks, acceptaces, draf, money orders, or other intrents or payment
(including payments made under any policy of insurance) that may come into
possession of RUS in ful or par payment of any amount owing to RUS; (ii) sign
and endorse the name of the Awardee upon any invoice, freight, or expess bil, bil
of lading, storage or warehouse receipt, assigment verification or notice in
connection with receivables; (iv) send request for verifications of Collatera to
Page 24
customers or account debtors; (v) sell, assign, sue for, collect, or compromise
payment of all any par of the Collateral in the nae of the Awardee or in it own
name, or make any other disposition of .Coll~teral, or any par thereof, which
disposition may be for .~a.crdi1 Olt.Y.G(tnination thereof, and RUS may
purchase all or any par (, the Ç()l~ealatpubli or, if peritted by law, private
sale, and in lieu of actlpaento~lì1,Çl¥.Purcba price may set off th amount of
such price against the Obligations; grting to RUS, as the attorney-in-fact of the
Awardee, full power of substtution an full power to do any and al things necessar
to be done in and about the premses fuly and effectually as the Awardee might or
could do but for this appointment, hereby ratifYing all that said atorney-in-fact shall
lawfully do or cause to be done by vire hereof. Neither RUS, its employees, nor its
agents shall be liable for any act or omissions or for any error of judgment or mistake
of fact or law in its capacity as such attorney-in-fact. This powèr of attrney is
coupled with an interest and shall be irevocable duing the term of this Agreement
and so long as any Obligations shall remain outstading;
( e) RUS shall have the right to enter and/or remain upon the premises of the Awardee
without any obligation to pay rent to the Awardee or others, or any other place or
places where any of the Collater is located and kept and: (i) remove the Collateral
therefrm in order to mainin, collec, sell, and/or liquidae the Collateral or, (ii) use
such premises, together with materials, supplies, books, and records of the Awardee,
to maintain possession' and/or the condition of the Collateral, and to prepare the
Collateral for sale, liquidation, or collection. RUS may require the Awardee to
assemble tbe Collateral and make it avalable to RUS at a place to be designated by
RUS;
(t) RUS shall have the right, without prior notice to the Awardee, to exercie rights of
setoff or recoupment and apply any and all amounts held or hereafter held, by RUS
or owed to the.Awarde or for the creditofthe.A\¥atdee agaist any and all of the
Pbllgatpt,R.USages to notifytie A~ee prnitly after any such setoff or
ft~lDent~f.tJealplicaiion th~tplv~thtl failure to give such notice
..$Jalnota~ .~. V8idity of such ...$ètE reíient or application. Awardee
waives all rights of setoff, dedcton, recoupment or counterclaim; and/or
(g) RUS shall have, in addition to any other rights and remedies contained in this
Agreement, and in any other agreements, guarantees, notes, mortgages, instrents,
and documents heretofore, now, or at any time or times hereafer execute by the
Awardee and delivered to RUS, all of the rights and rem:edies of a secured par
under the Uniform Commercial Code in force in the state identified in the fit
pargraph hereof, as well as the state where the Collatera is located, as of the date
hereof, all of which rights and remedies shall be cumulative, and nonexclusive.
ARTICLE XII - MISCELLANOUS
Section 12.1 Notices
All notices, requests and other communications provided for herein including, without
limitation, any modifications of, or waivers, requests or consents under, this Agreement shall be given or
made in wrting (including, without limitation, by telecopy) and delivered to the intended recipient at the
"Address for Notices" specified below; or, as to any par, at such other address as shall be designated by
such par in a notice to each other par. Except as otherwise provided in this Agreement, 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, upon receipt, in each case given or addressed as provided for
herein. The Addresses for Notices of the respective paries are as follows:
Page 25
RUS
Rural Utilties Service
United States Deparment of Agrcultue
1400 Independence Avenue, S.W.
Washington, D.C.20250-151 0
Attention: Adminstrator
Fax: [phone]
Awardee
See Schedule 1
With a copy to:
Rural Utilíties Service
United States Deparent of Agrcultue
1400 Indepedence Avenue, S.W.
Stop 1599, Room No. 2868
Washington, D.C. 20250-1599
Attention: Kenneth Kuchno
Fax: [phone]
With a copy to:
See Schedule 1
Section 12.2 Notices of Actions Against Collateral
Any notice requied to be given by RUS of a sale or other disposition or other intended action
by RUS with respect to any of the Collateral, or otherise, made in accordace with this Agreement at leas
five (5) days prior to such proposed action, shall constitute fair and reasonable notice to the Awardee of any
such action.
Section 12.3 Application of Proceeds
Any proceeds or fuds arising from the exercise of any rights or the enforcement of any
remedies herein provided after the payment or provision for the payment of any and all costs and expenses
in connection with the exercise of such rights or the enforcement of such remedies shal be applied first, to
the payment of indebtedness hereby secured other than the principal of or interet on the Notes; second, to
the ratable payment of interest which shall have accrued on the Notes and which shall be unpaid; third, to
the ratable payment of or on account of the unpaid pricipal of the Notes, and the balance, if any, shall be
paid to whosoever shall be entitled therto.
Section 12.4 Expenses
To the extent allowed by law, the Awardee shall pay all costs and expenses ofRUS, including
reasonable fees of counsel, incured in connection with the enforcement of the Loan-Grant Documents or
with the preparation for such enforcement if RUS has reasonable grounds to believe that such enforcement
may be necessar.
Section 12.5 Late Payments
If payment of any amount due hereunder is not received at the United States Treasur in
Washington, DC, or such other location as RUS may designat to the Awardee within five (5) Business
Days aftr 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 begining after such due date until payment of the
delinquent amount being herein called the "late-payment period"), the Awardee shall pay to RUS, in
addition to all other amounts due under the terms of the Notes, the Mortgage and this Agreement, any late
payment charge as may be fixed from time to time on the delinquent amount for the late-payment period
by regulations adopted by RUS.
Page 26
Section 12.6 Filng Fees
To the extent permittd by law, the Awardee agrees to pay all expenses ofRUS (including the
fees and expenses of its counel) in connection with the filing or recordation of all fmancing statements and
instrments as may be required by RUS in connecton with this Agreement, including, without limitation,
all documentar stamps, recordation and transfer taxes and other costs and taes incident to recordation of
any document or instrent in connection herewith. Awardee agres to save harless and indemnify RUS
from and against any liabilty resulting from the failure to pay any required documentar stamps,
recordation and trsfer taxes, recording costs, or any other expenses incured by RUS in connecton with
this Agreement. The provisions of this section shall surive the execution and delivery of this Agreement
and the payment of all other amounts due hereunder or due on the Notes.
Section 12.7 No Waiver
No failure on the par ofRUS to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or parial exercise by RUS of any right hereunder preclude
any other or fuer exercise thereof or the exercise of any other right.
Section 12.8 Governing Law
This Agreement shall be governed by and constred in accordance with applicable federal law
and, in the absence of controlling federal law, by the laws of the State identified in the first paragaph
herein, except those that would render such choice of law ineffective.
Section 12.9 Consent to Jurisdiction
The Awardee hereby irevocably submits tó the jursdiction of the U.S. DistctCour for the
District of Columbia and the US Court of Appeals for the Federal Ciruit (bth the "DC Feder Cour")
for any action or proceeding arising out of or relatig to this Agreement, and hereby irevocably agrees th
all claims in respect of such action or proceeding shall be heard and determned in such federal cours. The
Awardee irevocably consents to the service of proces out of any of the aforementioned cour in any such
action or proceeding by the mailing of copies thereof by registered or cerifed mail, postage prepaid, to the
Awardee's address set fort in Schedule 1. The Awardee hereby irevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedigs arsing out
of or in connection with this Agrement brought in the DC Federal Cours and hereby fuer irevocably
waives and agrees not to plead or claim in such cour that any such action or proceeding brought in any
such cour has been brought in a forum non conveniens. Nothing herein shall affect the right of the
Governent to serve process in any other maner permtted by law or to commence legal proceedings or
otherwise proceed against the Awardee in its own jursdiction.
Section 12.10 Waiver of JUry Trial
EACH PARTY HERETO HEREBY WAIVES, TO TH FULLEST EXTENT PERMTTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRNSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRCT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIV, SECURD PARTY, OR ATTORNY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHRWISE, THT SUCH OTHR PARTY WOULD NOT, IN
THE EVENf OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND TH OTHER PARTIES HERETO HAVE BEEN INUCED TO
ENTER INTO THIS AGREEMENT BY~ AMONG OTHER THIGS, TH MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
Page 27
Section 12.11 Holiday Payments
If any payment to be made by the Awardee hereunder shall become due on a day that 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 12.12 Rescission
The Awardee may elect to rescind the A ward, in which event RUS shall release the Awardee
from its obligations hereimder, provided the Awardee complies with such term and conditions as RUS
may impose for such release.
Section 12.13 Successors and Assigns
(a) This Agreement shall be binding upon and inur to the benefit of the Awardee and
RUS and their respective successors and assigns, except that the Awardee may not
assign or transfer its rights or obligations hereunder without the prior writtn
consent of RUS.
(b) Pusuant 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 confered on RUS shall pass to
and inure to the benefit of any such successor agency .
Section 12.14 Complete Agreement; Waivers and Amendments
Subject to RUS Regulations, this Agreement and the other Loan-Grant Documents are
intended by the paries to be a complete and final expression of their agreement. However, RUS reserves
the right to waive its rights to compliance with any provision of this Agreement and the other Loan-Grant
Documents. No amendment, modification, or waiver of aný provision hereof or thereof, and no consent to
any depare of the Awardee herefrom or therefrom, shall be effective imless approved in wrtig by RUS
in the fonn of either a RUS Regulation or other wrting signed by or on behalf of RUS, and then such
waiver or consent shall be effective only in the specific instance and for the specific purose for which
given.
Section 12.15 Headings
The headings and sub-headings contained in the titling of this Agreement ar intended to be
used for convenience only and do not constitute par of this Agreement.
Section 12.16 Severabilty
If any term, provision, condition, or any par thereof, of this Agreement, Note(s) or the
Security Documents shall for any reason be foimd or held invalid or unenforceable by any governental
agency or cour of competent jurisdiction, such invalidity or unenforceabilty shall not affect the remainder
of such term, provision, or condition nor any other term, provision, or condition, and this Agreement, the
Note(s), and the' Security Documents shall survve and be constred as if such invalid or imenforceable
term, provision or condition had not been contained therein.
Section 12.17 Right of Setoff
Upon the occurence and during the continuance of any Event of Default, RUS is hereby
authorized at any time and from time to time, without prior notice to the Awardee, to exercise rights of
setoff or recoupment and apply any and all amounts held or hereafter held, by RUS or owed to the Awardee
or for the credit or accoimt of the Awardee against any and an of the obligations of the Awardee now or
hereafter existing hereunder or under the Note(s). RUS agrees to notify the Awardee promptly afer any
Page 28
such setoff or recoupment and the application thereof, provided that the failur to give such notice shall not
affect the validity of such setoff, recoupment or application. The rights of RUS under this section ar ín
addition to any other rights and remedies (including other rights of setoff or recoupment) which RUS may
have. Awardee waives all rights of setoff, deduction, recoupment or counterclaim.
Section 12.18 Schedules and Attachments
Each Schedule and Attchment attached hereto and referd to herein is each an integral par
of this Agreement.
Section 12.19 Authority of Representatives ofRUS
In the case of any consent, approval or waiver from RUS that is required under this
Agreement or any other Loan-Grant Document, such consent, approval or waiver must be in writing and
signed by an authorized RUS representative to be effectve. As used in this section, "authorized RUS
representative" means the Administrator of RUS, and also means a person to whom the Administator has
offcially delegated specific or generl authority to take the action in question.
Section 12.20Prepayment of Loan
In the event the Awardee prepays the entie Loan porton of the Loan within three (3) year
from the date hereof, the Awardee shall, within th (30) days of making such prepayment, execute a
standard grant agreement with the RUS.
Section 12.21 Term
Ths Agreement shall remain in effect unti one of the following two events has occured:
(a) The Awardee and RUS replace this Agreement with another written agrement;
(b) All of the Awardee's obligations under this Agrement have been discharged and
paid.
Page 29
IN WI WIOF. di paes he ha ca Ib Ag to be dU ex as of th
da an ye fi abve wr
MIVAL TEHONE EXCHGE,~TE
~....'.'....... ...~ cer¿J. ...
Tite:' Lane R WilliaPresident
(Se)...-1Dby.~ ~
~.L..C....A" .........mb~~_
Pa 30
SCHEDULE 1
Arcle I Definitions
L Prior RUS Loan Contrct: Loan Agreement dated as of September 4, 2007.
i. RUS Mortgage: Restated MortgageJ Security Agreement and Financing Statement
dated as of September 4, 2007.
Aricle II Representations and Waranties
Paragraph (h) Awardee's principal place of business: 2205 Keithley Creek Road
Midvale, Idaho 83645
2, Paragraph (i) Awardee's Organization Number: C 30686
3. Paragraph G) Awardee's Subsidiaries: None
4. Paragrph G) Awardee's Parent: None
5; Paragraph (n) Additional Representations and Waranties:
The Awardee represents aod warrants that it is primarily engaged in the business of
transmitting communications electricallYJ electromagneticallYJ or by light.
Aricle II Th Loan
1. Section 3.1 (a) Loan amount: $64,045
2. Section 3. 1 (b) Grat amount: $1,502,769
Article iv Conditions Precedent to Loan Closing
1. The additional conditions referrd to in Section 4.10) are as follows: None
Conditions Precedent 19 Release ofFynr,
2.Section 4.2(b) amount of fidelity bond coverae: $322J022
3.Section 4.2(d) fuds deposited for Project completion: $0
4.The additional conditions referred to in Section 4.2(e) are as follows:
The obligations of RUS hereunder are subject to the satisfaction of the folJowing
additional conditions precedent:
a. The Awardee has provided RUS with documentation of its consultation with its
local U.S. Fish and Wildlife Services (USFWS) Ecological Services offce
(http://www.fws.gov/offces) with respect to the affect of the Project on any listed
threatened or endangered speciesJ candidate species or their critieal habitat; and
b. The consultation process referre to immediately above in paragraph (a) has
concluded.
Page 31
Conditions Precegent to Wtvidu!l Adyanes
5. Secion 4.3(i) Required permits, licenses, franchise, and other approvals: None
6. The additional conditions to advance referrd to in Section 4.3(k) are as follow:
No funds wil be advanced for construction that disturbs ground or involves land
clearingJ unti the Awardee has received written confirmation from RUS that the
requirements of Section 106 of the National Historic Preservation Act (16 U.S.C.
4701) have been met in accordance with implementing regulations, "Protecon of
Historic PropertiesJt (36 C.F.R. Part SOO).
Arcle V Aff1latie CQvenants
Section 5.10 Composite Economic Life ofRUS financed facilties: 23 years
2. The additional affirative covenants referred to in Secton 5.21 are as follows:
a. Within sixty (60) days from the date hereofJ the Grantee shall provide Project
construction plans to their local U.S. Fish and Wildlife Service (USFWS) Ecological
Servicès offce (http://www.fws.gov/offcesD to initiate the consultation process as to
whether Project construction wil affect any listed threatened or endangered speciesJ
candidate species or their critical habitat.
b. Within sixty (60) days from the date hereof the Awardee shall provide aU
information necessary to the applicable organizations to complete the review and
approval processes required by Section 106 of the National Historic Preservation
Act (16 U.S.c. 470f), in accordance with implementing regulations, "Protection of
Historic Properties" (36 C.F.R. 800), relating to construction that disturbs ground
or involves land clearig.
c. The Awardee shall insert the following language in all construction contract:
If previously unidentified historic properties (that is, properties listed on or eligible
for listing on the National Register of Historic Places) or unanticipated effects to
historic properties are discovered during Project construction, the construction
contractor shall immediately halt all activity within a one hundred (100) foot radius
of the discovery, notify Midvale Telehone Exchange Incorporated and law
enforcement of the discovery and implement interim measures to protect tbe
discovery from furtber impact, especially looting and vandalism. Construction sball
not resume within a 100 foot radius of the discovery unti the construction
contractor has received written instructions to proceed from Midvale Telephone
Exhange Incorporated.
d. Immediately upon receipt of notification from the construction contractor that a
discovery of unidentified historic properties (properties listed or eligible for listing
on the National Register of Historic Places) or unanticipated effects to historic
propertes are discovered during Project construction, the Awardee shall :
(i) Inspect the construction site to determine the scope of the discovery
and to ensure that construction activities have halted;
(ii) Clearly mark the area of the discovery;
(ii) Implement additional measuresJ as appropriateJ to protet the
discovery from further impactJ especially looting and vandalim;
Page 32
(iv) Notify USDA Rural Utilities Service (RUS), Engineering and
Environmental StaffJ Federal Preservation Offcer at 202-720-
9583; and
(iv) if the discovery contains human remains, comply with all
applicable state iawsJ notify the State Historic Preservation
Offce(s) and any Indian Tribes or Hawaiian organizations which
might be interested in the discovery.
Aricle VII Negative Covenants
t The additional negative restrctions on Distributions and Withdrawals referred to in Section
7.9(b) are as follows: None
2. . The additional negative covenants referr to in Section 7.17 are as follows:
a. The Grantee agrees not to start or proceed with any ground breaking construction
activities relating to the Project prior to completing the consultation process
required by the Endangered Species Act and referred to on this Schedule under
Article IV, Paragraphs 5(a) and (b).
b. The Awardee agrees not to engage in construction activities which disturb ground
or involves land clearing until the Awardee has received written confirmation from
RUS that the requirements of Section 106 of the National Historic Preservation Act
(16 U.S.C. 4701) have been met in accordance with implementing regulationsJ
"Protection of Historic PropertiesJ' (36 C.F.R. Part 800).
c. The Awardee agrees not to resume construction or authorie a construction
contractor to resume construction within a 100 foot radius ofa discovery of
unidentified historic properties (properties listed or eligible for listing on the
National Register of Historic Places) or unanticipated effects to historic properties
until receipt of written notifcation from RUS that the requirements of the National
Historic Preservation Act (16 U.S.C. 4701) have been met.
Aricle XII Miscellaneous
L Section 12.1 Awardee's address for puroses of notification:
Mr. Lane Wiliams
President
Midvale Telephone ExchangeJ Incorporated
2205 Keithley Creek Road
Midvale, Idaho 83645
Phone: [phone]
Fax: [phone]
2.Section 12.1 Address for Awardee's notification copy: same as above
Page 33
SCHEDULE 2
COLLATERAL
L. Collateral shall include the following:
All propert, assets, rights, privileges, licenses and frchises of the Awardee of every
kind and description, real, personal or mixed, tagible and intangible, of the kind or natu specifcally
mentioned herein, or any other kind or natue now owned or hereafter acquired or arising by the Awardee
(by purchase, consolidation, merger, donation, constrction, erection or in any other way) wherever
located, including withont limitation all or in par the following (hereinafter the "Collateral:")
I
All right, title, and interest of the Awardee in and to the Existing Facilties, buildings,
plants, works, improvements, strctues, estates, grants, franchises, easments, rights, privileges and
properties, whether real, personal, or mixed, tagible or intagible, of every kind or description, now or
hereafter owned, leased, constrcted, or acquired by the Awardee, wherever located, and in and to all
extensions, improvements, and additions thereto, including but not limited to all buildings, plants, works,
strctues, towers, antennas, fitues, apparatus, materials, supplies, machiner, tools, implements, poles,
posts, crossar, conduits, ducts, lines, wires, cables, whether underground, overhead, or otherise,
exchanges, switches, includig, without limitation, host and remote switches, desks, testboards, frames,
racks, motors, generators, batteries, and other items of centrl offce equipment, pay stations, protectors,
instrments, connections and appliances, offce fuitue, equipment, and any and all other proper of
every kind, nature, and description, used, useful, or acquird for use by the Awardee in connection
therewith;
II
All right, tite, and interest of the Awardee in, to, and under any and all grts, privileges,
rights of way and easements now owned, held. leased, enjoyed or exercised, or which may hereafr be
owned, held, leased, acquired, enjoyed or exercised, by the Awardee for the puroses of, or in connection
with, the constrction or operation by, or on behalf of, the Awardee of its propertes, facílties, systems, or
businesses, whether underground, overhead, or otherwise, wherever located;
II
All right, title, and interest of the Awardee in, to, and under any and all licenses and
permits (including without limitation those granted by the Federal Communications Commission ("FCC"),
subject to the FCC's prior approval of any assignment or transfer of de jure or de facto control of such
licenses), franchises, ordinances, and privileges, whether heretofore or hereafter granted, issued, or
executed, to it or to its assignors by the Governent, or by any state, county, township, municipality,
vilage, or other political subdivision thereof, or by any agency, board, commssion, or deparent of any
of the foregoing, authorizing the. constrction, acquisition, or operation of the Awardee's properties,
facilties, systems, or businesses, insofar as the same may by law be assigned, granted baraied, sold,
conveyed, transferred, mortgaged, or pledged;
IV
All right, title, and interest of the Awardee in, to, and under all personal propert and
fixtues of every kind and nature, including without limitation all goods (such as inventory, eq.uipment and
any accessions thereto), instrments (such as promissory notes or chattel paper, electronic or otherwise),
documents, accounts (such as deposit accounts or trst accounts pursuant hereto or to a loan agement),
letter-of-credit rights, investment proper (such as certificated and uncertificated securities or security
entitlements and accounts,) softare, genera intagibles (such as payment intagibles), suppoitg
Page 34
obligations, contract rights or rights to the payment of money, insuance claims, and proceeds (as such
term are presently and hereafter defined in the UCC; prvided, however, that the term "instrent" shall
be such term as defined in Aricle 9 of the UCC rather than Aricle 3);
v
All right, title, and interest of the Awardee in, to, and under any and all agrements,
leases or contrct heretofore or hereafter executed by and between the Awaree and any person, finn,
corporation, or other corporate entity relating to the Collateral (including contracts for the lease, occupancy,
or sale of the Collateral, or any portion thereof);
VI
All right, title, and interest of the Awardee in to, and under any and all books, records
and correspondence relating to the Collateral, includig, but not limited to, all records, ledgers, leases,
computer and automatic machinery, softare, programs, dataases, disc or tape fies, prit-outs, batches,
rus, and other electronically-prepard informtion indicatig, sumarzing, evidencing, or otherwise
necessar or helpful iñ the collection or realiztion on the Collateral;
VII
Also, all right, title, and interest of the Awardee in, to, and under all other propert, real
or pesonal, tangible or intagible, of ever kind, nate, and description, and wherever situated, now or
hereaer owned or leased by the Awardee, it being the intèntion heref that all such propert now owned or
leased but not specifcally described herein or acquired or held by the Awardee afer the date hereof, shall
be as fully embraced within and subjected to the lien hereof as if the same were now owned by the
Awardee and were specifically descrbed herein to the extent only, however, that the subjection of such
propert to the lien hereof shall not be contr to law;
Together with all rents, income, revenues, proceeds, product, profits and benefits at any
time derived, received, or had from any and all of the above-described propert of the Awaee;
Provided, however, . no automobiles, trcks, trailers, tractors or other vehicles (includig
without limitation airraft or ships, if any) owned or used by the Awardee shall be included in the
Collater.
2. Additionally, propert pledged as Collateral shall also include the following specifically describe
propert, if any: None
Page 35
ATTACHENT 1
BIP CONTCTING, WORK ORDER AND ADVANCE PROCEDURS GUlD.E
~
'Rural ~eveiopnlent .
United States Department of Agriculture. .
RURAL UTILITIES SERVICE
.
. ,
Broadband Initiatives Program
. Contracting, Work Order ~ìid '
, Advance Procedures. Guide'
~.:,:'.
GENERA
This guide implements ,andexl~ns the provisions of the loan and grait doc.eitscoiitaning. tlC:requirem~ts lt~~tl'*rollowe. by an Awardee peionniig~tk(9~~.~SRecover~" ni.e,,~~~maintan accountig and plant recordS~CIllt4~~~
'and locatiQofll CQnsetonandtø support fud adances and 'disbur~t$. 'le'~~~ ana
Grat Documents also contan prvisions regarding advances and disburem~t of broadban funds. This
docment also implements certin provisions by seg fort requirements and procedures to be followed
by the A waraees in obtaning advances anli making disbursments of ñids.
ABBREVIATIONS
For purpiise of ihis gmde:
C,F.R. Sts for Coe of Feder Regulatons.
FRS stads for RUS 'F ann 481. Financial Reairemnt Statement
GFR stads for RUS general ti~ld represimtative.
Pub. L. stads for Public Law.,.
u.s. ç. stads for Unite Staes Code.. .~
DEFITIONS
For purses of this guide:
~dvane means transferngfunds from ltUS to the Awadee'.s deposit accunt.
Architect means a person registered as an architec in the stte where constcton is peronned.
Award means any.broadband awad made by RUS.t .
Award documents mean the documents coverg an award made by RUS. including the l~an or grt
agment, note, and mortgage or other secty documents. betwee the Awaree and RUS.
Awardfùnds mea funds provided by RUS.tirugb,an award.
Awardee meaS any organizaon that háS received finacing from RUS.
.Bid guarantee means a bid bond or certfied check required of contractors bidding on constrction work to
ensure that the bidder, if successfu, wil furnish a perfònnance bond. .
Buy A.merlca Requirement mea the requrements as stated in the Recovery Act and an asciatedwaivers.' , . .
BriJaàband 'Service meas the minimum tranmission rate as defined in the applicable NOF A for the
Broadband Initiatives Progr, u.nder which the award wa made. ;
Closeout doments mean the documents required to cerifY satisfactor completion of all'obligatons under
a contract. . ' .
Contract mean the agreeent between the A warte and' an independent Contracor coverg th~ purchase
and/or mstlation of eeuipment or the constcton of. facilti to deüver broadband serice for a.
Awardee' s,syster.
Contrct work mea any work perormed puruat to án RUS for contrct, or àNon-Stadard Contrct.
Disbursement meas payment by the Awardee out of Íhe deposit account for approved awad purses.
Engineer mea a persn registered as an enginee in the state where constrcton is peÎormed. or a peon
on the Awardee's staff authrized by RUS to peorm engineering serices.
In-house engierng means any preloan or post-loan engineeng serces perormed by the Awardee'ssta.
Interim work meas ~y W?rk that comence after an applicaton haS ~en su\:itt to RUS, bu pnor to
relea 'of awar' fuds.
Non-Standa Contrac meis a non-RUS form contr for'specifc work that is slbm~ by...th~
Awaree, wlúch must be approved' by. RUS before'execon, if it is to be fied.
Outs.ide plant mea th~ par of the ,telecmmunications network that is physically ..locate outsidè of
'teleommunication buildings. This includes cale. conduits, poles and other supportng stres and
certn other assocat. equipment items.
Pe1fore bl!nd mea ii sur ~ond in form sasfactOIy to RUS guarteing the ~ontrs faiful
perform~ce ofa contrt. (Se 7 CPR Par 1788.), . , . " .
.p'lan arid sp'eclfcations meanS a copy of the appropriate contrct the spefications. and such additional
information and doCents needed to. provide a clear, aècte. and complete undetad~iig of th work tobe perormed. .
Pletlged Deposit account meas an account rêquired by the awar agren into which all RUS fuds are .adance. .' .
RUS mea the Raral Ua1ities Service;' an ag~cy of the Unite State Deparent 'of Agrcultu and, ;
succesor to the Rural Eleçtfication Administrtion. . ,
RUS form contract means cotracts identfied as a RUS' form.
Subontract mea å. secondiu contrct undertng some of the obìigatiòns ora primi contr.
System design.Jßea the syst described in the approved Application. .
,..;
. .
Work means 'any purchase of ,equipment, softar and/or instalation, if åpplicle; constretion of
faclities; or professional serices.
Worko;der meas an work peiformed by the Awar,dee's employee, pursuimt to its work ordeq;rodue,
with the Awardee fuishing all m~t.erals, equipment, tools, and transporttion.
CONTRACTG :PROCEDURE
1 GENERAL
All work must conform. to the Application, as approved by RUS,.and shall be covered'hi an Environnenta
Report prepared in asrdance with 7 CPR Par 1794 and approved by RUS. No constcton and/or
. instaliation acvities shall commence until aii necessar loc, state and federa requirements have beensatisfied. .
All work pèromied prior" to the submission of an apP'i~ation to RUS wil not be eligible for fianing. In
addition. only new materials and equipment may be fianced with awnrd. ftas, unl,es othere approved .in writing by RUS. .
A. Interim Work
Once RUS has recived an application, the applicant may' procee with intem w~rk. However,
this should not be consted as a commitment that RUS wil 1!proe th aPplication. To ensue
that interm work is eligible for reimburent with awar funds, the Awardee mus comply with
all the procés in this 6uide, including th following rèquireènts:. .
(1) Equal eiÌloyment opPortity feuirènts'in RUS Bulletn 320-15; and
(2) Environmental rCreents contaned in 7 CFR 1794;.
B.. . Non-Standard Contrct
'leiAWiiÇt~Qñøt6~a'Nv.~ cotract to pedomi work, The .Non-Stadard
~~.ll~~ucldap1'$Íai ~ (it "Wnø be binding on ti pares, until adinístrative .
appr9V.bylU.JShifigr. R.i)Switlapprove us of the Non-tada Contr if, in
RUS' judgment: . .
(1) The contrt.s for'work not-coveied in the approved Application, or is not for an EligiblePuos; .
(2) The contact tes and conditions, are vagu inadequatè, or \lnreaon~lè; or
(3) The cotr prests unaceptale loan sety risk to RUS~.'
C. Contrct Amendments
The Awardee shall obtain RUS aproval before execon of any amendment to an aprovedcontract if;' .
(1). . The amendment altes the te and condtions of the contrac. or changes the scope of
the projec cover.by the contract' regarless of the. amount of the cont before
. amendment;
. (2) The amendment by itself (or togeter with preeding amendments) increa the origial
contrac price ay 20% or more. In this ~e; a bod extension will be require to ~ng
the penal sum of the bond to the tota amended contrt pnce; or:
(3) The amendment causes an unbOnded contract to requie a contractts performance bond.This would occr when an améndment "inÇres the conirct price to an amount
requiring a performance bQnd per 7 CPR Par 1788. Subpar C. .
Once RUS approval to amend the cøntrac ha be grante or for any other contract amendments
not requirig approval, the Awardee mus sumit an original executed amendment to RUS.
D. Insurace
A perormce oond ís require for constrcton of. facilties exceing $250,000, as indicat in
7 CPR Par 1788, Subpar C. or cerin significant inslaton, as outln~d iq the Agency's"
memorandum found at htt://ww.usda.gòv/rusitelecom/publieaonslpdf.ßlesContraetorsBond-
Requirement7-28-09.pdf.
The Awardee is respnsible for ens.ng that its contrctr and engieer comply with an the
insurce and botid reqrements of7 CFR Par 1788, Subpar C. '
E. Tite Clearance
Fpr an building constrcton over $250,000, the Awareesha'n provide titi evdence satsfactory
to RUS,'prior to itleaing the invitations to bid.
F. Softar License
As par of an equipmtmt purchase. the original eqipment manufae may reqwo that the
Awaree ente into a softe license ,agreeent for the use of the eqipment. The Awadee may.
u~ RUS Form 390, Software License Agreemerit-8pecial Equipment Contact, or a Non-Stada Contr
G. BUý Amercan
All irn. steel, or manufac 'goo that are purchaed witl Recver Act fuds by state or loca
goverents. or an instentaity therof, which are not included in the Agency's waiver
covenng Broadand Switching Equipment. Broadband Routig Equipment, Broadband Trasport
Equipment, Brodband Access Equipment, Broadband Customer Premises Equipment and End-User Dece, or Biling/Opions Systems, shall be 'subjec to the Buy America provision of
the Recover Act unless a waver is reesed from the RUS. For fuer detal$ see 74 Fed,. Reg.31402. .
H. Dayis-~on Act
Tho Awadee shall coply with The Davis-Bacn Act and'the guidance found at 29'Ç.F.R pt. 1,
3, and 5, such 'that any cover contr with a contracor or subcoDtr~r in exce of $2,000 for
constron, alteaton or repai (fucludig pantig and decg) shl conta the contrac
claus found in 29 C.P.R. 5.5(a). t~ enur that all labre and mecanics employed on the
Prject recive payment of not less ti the preailing wae; , .
1. Affliated,Trasactons
With regad to the Project the Awaree shall not enter into. any tranÎon~ contrac; or deaing
with an Affiate of the Awardee oi' with thcÁ'\liaràee' s or' Afliatc's dirrs, trstees, offce,
manager' member (if the Awaree is a liiie liabilty compay), or oth Cora otiiclals,
without the priór wrtten const' of RUS. ,RUS' aDnset to adce award funds for afliatd
trsàons will be limited to an amount whic is the lower of Cost or market rate and which is
subjeC to verification by .RU$ and its repretatives having acs to the books 'and rerds of
the Affliate.
As .défie~r in the appropriat~ award do~ument, "Affliate" or' "Affliated Company" of åny
specified pern or entity mea any other peron or entity direy or indly CQntrollng of,
contrlled by, ~der direct or indirec common cotrol with, or related to, such specified peson or'
entity, or v.hich exists for the sole purpe of provding an serce to one company or exclusively
to companies which otherse mee the definition of afliat. This definition inludes Varable.
Interes Entities as describèd in Financial Accuntig. Stadards 'Board Interpreton (FIN No.
46(R). Consolidation of Varable Interest Enities. f1or.the pur of this defition, "control"
means the posession directy or indirecy, of the power to dírec or cae the ~oiì of, the,
management and policies of, a company. whethér such power is exercsed' though- one or more
intenrediar companies, or alone. or in conjuncton with or purt to an agreement with, one' or
more- other .companies and whe~er such Power' is estlished thugh a majority or inority
ownership votig of securties, common direcors, offcers, or stolder, voting tr holding
trsts (other th money exchanged) for propC Of service. . .
J. Records
Records supportng all assets finace 'by RUS sha be retained until audite and aproved by
RUS.
Record must be suffcien to d~ent the cost and location of all exditues and ~ support
advance and disburent of award fuds. The. support rerds must include, but not be limited
to, contrcts, third par invoices timesee, payll rerdS; materal records, and overhead
allocation' recrds an summar scheules
Recrd relatd to plant lr seice must be rened until the facilites ar peanently reòved
from utilty seice all remova and restoraion actvities are completed, and all cost are retiredfrom the accountig recrds uness acunti adjustments resultig frm reclasifition and
origial costs studies have bee apprved by RUS or other regulatry body bavgjurdieton.
Life and mortalit study da for depreciaton pues must be rened for. 2S yea or for i 0
yea af plant is rered.. whic;~ever is longer.
II ~ROFESSIONAL SEVICES~d,
Awardees shall only obta profesona seice from perns or fi not afliat with, or tht do not
represt a contrr, vendor or manufacre prentl providing labr, matals, or equipment ~ the
A ".dee. This does not include in-house seces. .
A. Engineerg Serces
All engig seices requied by an Awarde, ïnluding inspetion and cercaon, shall be
render by an enneer seleced by the Awaree an licensed in the Sta wbere the faclities will
be locate or by qualfied emloyee on the Awarees sta who' at submision of
. qualificiition to RUS, have been appred to peorm such services. '
(1) Ouistdi Consultat. Engineeng seces pe~ed by an outside conšultat may be
covered under RUS Form 217, Postloa Engineering Services Conhact -
Telecommunteations, RUS. Form 245, Engieering Service Contact - Special Services.
or a Non-8tadard Contr
(2) In-House Engine,ering. . When. the. propo~d ~ork is such that the engineeng mvólved is
with the capabilties of the employees on the Awaree'!" sta Awadee may request
RUS approval, to províde such serces. The request shall include:
(i) A description of'service.s to be 'perfonned;
(íi) The names and qualificatons of each employee that will be perotming the
speific service. In addition, the Awardee shall identify an employee whO will
be in charge of the serice Such employee must meet the Sta etpence
requirents for a registere engieer in the State where failties will be
locat~. In the a1sence of specific State expeënce requirents, ths employee
should have at leat eight yeas experence in the design and constrcton of
teecommunicaon faclities with at leat two years of the work eXperience at a
supervisory level. RUS does not requir professional' regison ... of this
employee, but this' does n~t relieve the Awardee irom compliance with
applicale sta regison requirements, which may requir., a 'licensed
individuåi to perform such serice; and
(ii) A leter signed by an authonzed represetave of the Awadee ieqestig in-
house engineerng approval and cerfying the suportng infonntion... ..RUS shall notify the Awardee by lett,ô;t~()rdis~'\"peli in-house
.engieeg. The leter shall set forttmÇ9nditiC)n&~at .\Vtl li.~aJ. or the
reans for disapprOval. RUS approval()f~c:~se~lIba.~only for
the specific serces covered by the ap~ . .'
B. Architeetal Serces
TheAwal!sl~wi~ licesed in the stte whee the facilty will be loced. The
bOi1f rn, i. ei~ RUS FOt 220 or RÙS .Fonn 217 when contting for arhitecralse~ of.aNOßSta Co. .
C. Contr and Closeout Docuents
Th Awade nm subm thèé exec coie of the RUS' fo CO1l or, th ap Non
St Cotr eoerà the pr1èona. sece to be pr for fi ad~eapva . () all se an obligaon re ui.thprfCßOn secê èò _,be copletéd Awa shall subt, two coes òf R.t1 For 28. FL St OJ
Arc1ittcf$ Feu and/or RUS For 50. Fb Stme1t if Energ Fee to ølo ou the
spe RUS Por ~ Awade usg Nc:ta. ~ shou pr a si
. oecatin for NM-Stadad Ccntn.
m PURCHASE AND INSTALLA TION OF EQUIMET
General
Wh pticbin an eqt, "inekina im tb èQS mo thai $100,000, the A~ardee mustUs a COtn for tho pu An eqen ~ tò le tbanSlOO,oOO, includi instalaton,
ca be pmha ûner a pu ord and re al subtio of the invoice along with' an" RUS Fann 7711, föllowg~inQD an rebursement ~ UDde Worl Order ~èS.
A. EJuipment Purclied with Contrct
Awadee may use RUS Fonn 397, Special. Equipment Contract (Including I~~la6n),. RUS
Form 398, Special Eqipment Contract (Not Includng InstaJlation), or.a Non-tada Cotrac. "
The enginee sb pr tl pe rereents inudig.àinàton reen
if applicle. prior to releaing thtr alng with the nipe cotr top'~ ven
The Awaree may pu equipment using a neti pu iithough RUS rernènds
tht the Awaree ob quote from at iéat th differt ve ' ,
Equipment :purchasCd under RUS Fonn 398 or a 'Non-8tadard Contrac that doe n~t include,
instalation, may be inst~d by the Awardee using the Work' Order metod or RUS Fonn 7.73, as
olltline(i"n the Work Order procedures below.
. B. Contrac and Closeout Docments
Once a ve:idor has been selected, the Awaree mus subm th exeø óopiea of th RUS Corcontr or the iqptve Non-Stada Cotr inlug thnoD penbrniai
reuire covergtbe eqpmt to be prvided tOr fi
adti apal. On alequpment pued uner th COtr ha be intale, am te. and me tb pedce
reuiis the Awaee sh pr'witt thclos. of th c:tr and: su~ a fi
contract closeout certfication on RUS Form 756 or a similar certfication for Non-StandardContr. . . .
iv CONSTRUClON OF FACILITIS
General
ConstrctionfOf~lSdt.pia~1ities, building, and towers may be perormed using the work order
method or by¡i~~C9~' When using an outside contror, either RUS Contrct Fonns 773,
257, or 515, QlaNö"Sfadaçotraet may be use. .'
A. Outside Contror
If using ii stañdarlRUS Canti For the Awardee shall use the form without modifons,
and attch any di. sket and tans necsar to spify clealy the work to be
perrmed an who sha prvide whi ma.
Th engir sh pr tl coet sp:6~Ol pr to Rleaing tb al Wi the
rese cont tó ~.cors. RU$ tCCends th Awa obt quote
from seer eotr beor enteg in a cotn to en obin the löwes COt. The
t\ wa shall en th tho CO so.ee mé øn fe st an lo .li
requirements, as well as bonaing remr; an th th ~ maita th Ù1
coverae .reuied by the cont for th du of
th Wo (Se '1 c. .Rl"ar î188.). .
On a CØtr ha bl se~ th Awaee mu sumi th exed coie ofthi RUS.fb éOtr (exce RUS Fó m. wh lb. . pr beJor.. apNon-tada ~~ inclg th CO. for tl wo tt be peom fatiaI . ~ ap. " ~ coon ha be cole P. th ëóønspeifJ1 an al ~co tes ha be in th AW8 slal pr, :Wf. theo oIut.of the cont an su á tlna ~cJos ee on RUS Fòr 756 ora
timila ceea for NOJtaatd COl '.
B. Work Order Pres
Work ørde CÒ sb be ~ tò an lo st ~ Ped rêq. .As workord COt:on is peored th A wàee shke da ~ee and ma re
reeren by the wo proje num, ~. te lab an' ~s ti. Co .actig
system m.us be in pla to mee th Í'en of1 CP 3015 (inchidig48 CP 31.2), 3~16.3019 as aplicale, to sh th ~ an su rard to su re an ex~fb.. .'
(l-) . Upo copietin and prior to closeout the Awaree shR1Iengi ceficaon on RUS Fonn 77,la for all constncton corpiete
using RUS Fòm m or the wor orer metod: An' authorize offcial of the Awadee
sbaIi ex=iie the,A Wa's c:ean. .
(2) Reîb!lt To reqes fuds fOr constrction complete under the work oreter .Cónstreton ptii or RUSPom 113 contr conscton ~ the AW8f~
shal suit RUS For 771a. inialed by the GPR along wi a deCrpton of.eapret as wel RUS Fom 481. FI Req _mé (P. . RUS For
171a $h()d be Slinttcd on with the FR th itsu. Uii otfs. apveby -aUS.. the Awade sbfi an wo or and RUS Fom 773 CotrCOnsetÒl' wi noian funds and obta ret wi RUS lu Whcotrcton is coplet. and iier' ex~ . clo~ doen ha be
"Si to RUS.
~
.v ADV ~NCE AN DISBUREM OF FUS
General
Th aww d~ent co ai ptOl RÍing ad an dib'l Qt fu to the.
Awaee. Tbse~n imlem ce pioN ,by setting for ~. li ~ to be
fQllwe by tb~ Awareeinob ad and mag whaJil~ of ft'!
RUS is, under, no obligation to make or' approve advance of fuds unes the Awardee complies with allters and conditions of the awad docments. '
A. Broajband Budget '
'l A 'Wde will be prde a bran budget bas 01\ the ÇPoV App 1b
buet diides th aWá in buge cago th ar asatwitb th pr ptjeesu as êqent, Oldeplant la and bu prfeona SC tt Jí 6'JJ óne
liudget cate l' no be us,for a,differt budget category 'without .prior wr apprval
from RUS.,
B. Budget Adjusents
lfmore fù ar re ib ar avable in a budget caor. th Awii ma rees aU$"
appial of a buget adus to use føds l' anoth bu eaor. ~. te $háU
inlue an exanaì it to Wh, th adUs ,is ll and th af buJe CIries
. aus appr a bu ad unles the A:wa cacl th all pu
:'C' complet witb.th re adUSt. RUS. at its diet m. mak a bidg
adjunnent withou' à foima re to encubè tùds føt a co whe Ai :ttb Uibudgã ca ar inen and whe it dete$ tb th buet 'adeø is, ùíigncat. .
C. 'P'ie(ge DePsit Accnt'
The Awardee shall estabUsh åndmaintaa,pl~geddepsìt acunt .to, bold al Advancedepoited by the Agency. The l)Jegød ~it ~shon\)~~,~ii~ tl
aepoitoiy whose deposits aie ~.'1l .91.~'EleOl0llfe~~~I!itrltt1~.. Funds . in the pledged depsit ~ $hf ~iî$Ølèl forfIpuapavöcb"'~
ApplicatiOD and shal be withdrÍlwndisbt (ertbctlppød~. tø'Wdld~ .~
.reueste in the flancial.rirint stteent. All Advance wil be depted into the pledgeddeposit acunt by eleconic trsfer. '
RUS may require tht other fuds be', deposite iito the pledged depsit account. These may
iDclude ~uit)o~ genera fud. contrbutions to constcton, proeed from the sale of propert,interesreivød'():iawar~~ 'and ~iinlar tyes of reipts. Deposit slips for any deposits to
the pied~d~~açtshl show the source and amount of funds depite and be execute
by an ,8ltt~ rerestaive Of the bank. The disburement of non-awad fuds depsited into
the pledged deposit account requires the same RUS appro'ì as Advance on. the award.
For accounting 'purses, 'all withdrals/disbursements from thè Piedged Deit Accunt must
be widenced by canceled checks or support fot other fonn of payment. Disburents to
reimburse Ìhe Awardee's genera'fund account shall be docmente by a reimbursement schediile
to be retaied in the Awardee's record that list Uie pledged i,eposit account check numbe, da
,and an explanatïon of amounts reimburséd for the Projec '
D. Financ.ial Requiremen Statement (FS)
To reqaes Advances the Awardee must submit RUS Form 481, Finanial Requirement Statement
("FRS"). a desption of the Advances desir. and other relate information to the trsacons
as req~íred by RUS.
1' A wa mus nl fids in th ti Adv to repa an inteim 1ig mdbtêSì,.as wel ll ot apped pro-pJi ex RUS ma no ma iù AcMunl
tb Awade ha submed ev~ in for an4 suce sat to RUS. tb (l).ai
indlJ cr by th ih tig an an Ii_ ll ther ha be full
dicbarof ri an. (2) th Awa ha satified all other COnditions on the advance ofadon loa1ùs. ' .
It,th~ ,so of 1ù tor ii finag is'the Awarees internally generate fuds. the.
AWì ma rees ~ of those fuds along with Advances for óther puroses ontb firs FR submtt to RUS. '.
The Awadee shall reues adances ~ n.eeed to mee its obligations prmptly. 'Oenerlý, RUS
does not approve an advan re\lested more thàn'30 days before the obligation .is payable. .
Fll~ musr be dibu tò' tb ite for Which they were advlmce except in the following
clr. If tbAwaee ne to pa an invoice which h¡i be apprved'on an FRS for
Whic Amds hae no be adce an disement of adànce fuds for anther item hasbe dela th la iù ma be'dito pa th due an ow Inoice up to the amount
8peç for such it on thPR. neA~ shall makeentres .o.tbnePR showing the.
. cbies un4e "TotAdv to D~ ái sbl explàin the dì in wr beore RUS winpr th nextFRS. " . . . .
The ceea on ea of the th eoes of the FRS se to RUS sh be siged by a eoofBor maager aùnz to sign SU stents. RUS For 615. Cø ó/ bI*
sll iè subm~ 10 aus î. th Da of al peau.tosig ~~. aua Wirr pre ~.FR' sign'by an invidu WI nam is no inç~ OI th mo re Fom:sS.... , .
Funds other than award fuds that ar depsiie in the pleded deposit acunt are n=ortd as a
crit wider tota disbursements. Disburseents of these fuds are subjec to the sae RUS
approvals 8$ RUS fuds. .
The cJmeôl rtre for au of F. tron. in but ar no limite to deslips for the pled det ac aU ~ned pledge deit acun ch and tbsug th pa inie tihe. Pan reds ac paabe res. ~ledger. et..' and/or rebu scedes' Thes shl be .kep in the Awa's ñlea for
peodic auts by RDS.
Thè FRS shal be th pr meth us by tie Awardee to record and control transacons in
the deposit a. Apped cotrcts'and other items are shown on the FR under "Approved
Purpses!' Funds araøve tò adèe as follows:
(1) Contraeork Orers
(a) . Equipment Contácts: 'Ninety percet of tie apoyed.' contrt amount,
including amendments. with1he fmal 10 perct avalable when RUS approves.
the contr closeout certfication. .
(b) t.gNt1Ç1ønnø1ìlrdctS. l'iiei"five perct of the approved Contr amount,
iiela~g~~~ 'IlltlÇ fial 5 pet available when RUS approves.~~.ølQ~1.~().' .
(c) Work orders: 1Je amount shown on thë RUS fonn 771a that RUS detines to
be eligible for reimbursement.
(2) Pre-AoPlication Expenses ild Engineerng
(a).Rrt..)fjJPJJjQtlt;~9J Basd on the final iteiz invoice frm the
~~$)orfirrs~~ provide serces . to complet th Application,
~g.àQCi~g.as approved by RUS.
(b )Jiøst",rÐfengi~ contracts; Nine".e~l~f~_ount of the RUS~~Ye4engilíg contrt. with"thøfiis~~le when RUSap~.tb fi.s_ment oteiginee~.~.- .-.... ...... -.'-..- .,-......" -. .'
(c) In-houe engineering: One hundred pe~nt of the iiount approved by RUS.
(3) Qperàting Equipment
Offce equipment, vehicles, and work equipmet wil be.reimbur ,bas on copies of
ínvoices.
1;. Temporar Excess Constrction Funds
'WI uinti CVen de the ,A'W's' dit.òf àd fb tØ tùndunaybe l1 ror ot aped pt as de"b ab ot.mureai la th ple.delt
'~ It th pted deit ac is an inte be ac aU ii ea muStrelì ii the pl de ac and'Ça bò~ withut Rl iiYa.
F. Metod of Advcing Funds'
The fist or súbsequent adces maY be conditioned øn the satsfaction of cen reuirementsstated in the Aw~dee's agreementwith RUS. '
All adances' shll be made eleconically using the Automac Clearng House (ACH. Normally,
for adance of fids ACl only makeS one payment pe FRS. .
The following information shl be included with, each advance:
(1)Nam and ad .ot Awaree's bll If the Awardee's ban is not a member of the
Fédpr Rese Sys_ the 1Ue and. iidr af its coespodent bank that. is a
membe ofthc Fedei Ree Syste; .
(2)
(3)
(4)
ACH routing infornation;
A war~ee's baik account title and nimber; ai¡t
Any other necesar identifYng informati.on.
ATTACHMENT 2
EQUAL OPPORTIITY CONTRCT PRQVISIONS
Dung the performance of this contract the contract9r agrees as follows:
(a) The contrctor shall not discriat again any employe or applicat for employment beause
of race. color, religion, sex or naûònal ongi. The contrctor shall tae a.tive acon to
ensue that applicants are employed, and that employees are treated durg employment without
rega to their rae, color, religion, sex, or nationa ongi. Such acton shall include, but not, be
limited to 'thè following:' ~pioyment, upgrg. demoton. or trfer, recroitment, 'or
recntrent advertsmg. layoff or terinon, rates of payor. other forms of compenstion, and
selection for tring. including apprenticesh. The contror agrees to post in conspicuous
places, available to employees and aplicats for employmentJ notices to be provided settg for
. theprovisions of th non-discriaton claus. '. .
(b) The contr~r.shal. in all solicitations or adveents for employees plaèed by or on bebalfof
tle' contrctor, stte th ali quafied applicats shall receive consideration for employment
without regard to race, coi.ör~ religion sex. or national ongin.
(c) The contractor shall send to each lab unon or representative of workers with which he ha a
Collective bargaiing agreement or other contrct or underdig, a notice to be provided
. advising the said låbor union or worker's rereentve of the contror's commtments undei:
ths section. and sha post copies of the notíce. in conspicUous plac available to employees '~dapplicats for ~~ploymnt. . . .
(d) The èontrctor shal C9mply with. al proviions of Executive Orer 11246 of Septembe 24,
1965and of~e rules, reguations and relevat orders of the Secta bfLabor.
(e) The, contractor shall fuish all informon and report.requi by Executive Orer'1l246 of
. September.24. 1965 and by the rules, reguations, and order oÌ'the Secreta of Labor. or purt
thereto, and shall permt aces to his books. reords, and'accunts by the ~teg agency
and the Secreta of Labor for purose of invesgation to asce compliance with such rues,regulation, and order. . . .
(f) ,IIl the event of the cootra~tor's non-complice with the non-disiminatión clauss of thiscontrt or With ~y of the said rues. reguations, or order, ,ths contrct may be cacelled,
terminated, or susended in whole or l?ar by the Goverent and the contrctor maybe d~cla
ineligible for, fuer. Governent 'contracts . or federaly assisted ',constrcton. contrts in
acc~r~ce with the. procedure authrized inExecuììve Order.U246 of September 14,1965, and
such other sactions may be imposed. a.d remedies invoked as provided in said Executive Orer
or by rule, reguaton, or order of the Seceta of Labor. or as otheTwse provided by law.
(g) The contractor shall include the' provisions of pargraphs (a) though (g) in every subcontract or
purase order uness exempted by rules; regulations, or orders of the Secreta of Labor issued
puruant to Section 2~ of Executve Order 11246, dated September 24, 1965, so th such
provisions shall be bindig upon eac subcontrctor or vendor. The contractor shall tae sUch
acton wlth respct to any subcontrct or purchae order as the adisterig ágency rnay. diec as
a meas of enforcing such proviions. including sanctions for non-compliance; pryided however,
that in the event a: contrctor becomes involved in, or is thatened with, .litigation wit a
subcntractar or vendor as a resut of sui:h dirtion by the agency. the contrctor may request the
United States to enter into such litigation to protect the interests of the United States.
PROMISSORY NOTE
Idaho 1105-C40
MidvaleJ Idaho
THIS PROMISSORY NOTE (hereinafer the "Note"), dated as of September 20, 2010~ is
made by MIDVALE TELEPHONE EXCHANGE, INCORPORATED (hereinafer the
"Borrower"), a corporation duly organzed and existing under the laws of the State of IDAHO, to
the UNITED STATES OF AMERICAJ (hereinafter the "Governent"), actig though the
Administrator of the Rural Utilities Servce ("RUS"). For value received, the Borrower promises
to pay to the order of the Governent, at the United States Treasur, Washington, D.C., Six
Hundred Forty Four Thousand, Fort Five Dollars ($644,045), with interest payableJ from the
date of each advanceJ on the amount advanced by the Governent (hereinafer the "Advance"),
pursuant to a certain Loan/Grant and Security Agreement, dated the same date as this Note
(hereinafer the "Loan/Grant Agreement"), made by and between the Borrower and the
Government, and remaining unpaid from time to time, in the time and maner herein provided:
1. IntereslR9te. Interest on each Advance shall be at rate(s) per anum, published by the
Secretary of the Treasur, which shall be equa to the cost of borrowig of the
Deparent of Treasur for obligations, as determined by the Governent, of
comparable maturty (hereinafter the "Cost-of-Money Interest Rate").
2. Maturity Date. On a date twenty three (23) years after the date hereofJ the principal
hereof advanced pursuant to the LoanGrant Agreement and remaining unpaid, if any~
and interest thereon, shall be due and payable (hereinafer the "Matuity Date").
3. Fund Advance Period. Funds will be advanced pursuant to the LoanGrant Agreeent.
The fud advance period for this Note begins on the date hereof and terminates three (3)
years from the date of this Note (hereinafer the "Termination Date"). No fuds will be
advanced subsequent to the Termination Date.
4. Payments on Advances.
(a) Made Within One (1) Year. Interest on Advances made durng the first year 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 one (1) year from the date of the first Advance hereunder.
Thereafter, to and including the Maturity Date~ the Borrower shall make a
payment every Monthly Payment Date on each Advance'made durng such period
which shall be: (i) substantially equal to all subsequent monthly payments and (ii)
in an amount that wil pay all principal and interest due on each Advance no later
than the Maturty Date.
Page 1
(b) Made After One (1) Year. Interest and principal payments on Advances made
more than one (1) year afer the date of the first Advance hereunder shall be
repaid in installments beginning with the Monthly Payment Date of the month
following each Advance and ending on the Matuity 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 and
including the Matuty Date, the Borrower shall make a payment every Monthly
Payment Date on each Advance (i) substatially equal to every other monthly
payment on such Advance, and (ii) in an amount that wil 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 one (1) year 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 expensesJ costs and penalties; Second, to late charges; Third, to the payment of
interest on principal; and Fourh, to principal.
6. Prepayment. All, or a porton of the outstading balance, of any Advance may be
prepaid on any payment date, as herein provided. However, so long as any of the
principal advanced puruant to the LoanGrant Agreement shall remai unpaid, the
Borrower shall be obligated to make the monthly payment on account of principal and
interest, in the amount provided herein, unless the Borrower and the Governent shall
otherwse agree, in writing.
7. Late Payments. A late charge shall be chaged 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 as prescribed and published by the Secretar of the Treasury. In addition,
the Borrower shall pay administrative costs and penalty charges assessed in accordance
with applicable Government regulations. Acceptance by the Government of a late
payment shall not be deemed to be a waiver of any right or remedy of the Governent.
8. Security. This Note is secured by a securty interest in collateral described in the
LoanGrant Agreement as such agreement may be amended, supplementedJ consolidated
or restated from time to time. Rights and obligations with respect to the collateral are
stated therein.
9. Noteholder. This Note evidences indebtedness created by a loan made pursuant to the
American Recovery and Reinvestment Act of 2009, Pub. L. 111-5, 123 Stat. 115 (2009),
the Notice of Funds Availabilty published at 75 Fed. Reg. 3820 and Title VI of the Rural
Electrification Act of 1936 (7 U.S.C. 901 et seq.). The Governent shall be and shall
have all rights as holder of this Note.
10. Default. In an event of default, as provided in the LoanGrant Agreement, all principal
advanced pursuant to the Loan/Grant Agreement and remaining unpaid on this Note, and
Page 2
all interest thereon may be declar or may beme due and payable in the maer an
with the effect provided in the LoanGrt Agrment.
i 1. Costs. The Borrower shall pay any and all costs and expeses incu in connecon
with the exercise of nghts or the enforcement of remedes, as set fort in the LoanGrt
Agreeent.
12. Waivers. The Borrower waves demand, pretment for payment, notice of non-
payment, notice of dishonor, protest and notice of non-payment of ths Note.
13. Obligations. The obligations hereder of the Borrwer on this Note ar absolut and
unconditiona, iresctive of any defen or any right to set off, reupent or
counterclaim it might otherwse have agaist the Goverent.
IN WITSS WHEREOF, the Borrower ha caus this Note to be signed in its
corprate or legal nae and its corprae se, if any, to be herunto afed and atst by its
offce therunto duly autorize, all as of the day and yeai fi above written.
(SEAL)
Attsted to bY:~ ~creta
MIVALE TEEPHONE EXCHAGE, INCORPRATEbyt:.~' ."
. . q L"" R Willia
Title: President
Pa 3
II
DEPOSIT ACCOUNT CONTROL AGREEMENT
(Access Restricted after Notice)
ThiS Depoit Account Control Agrement (the "Agreement"), dated as of the date specifed on the
initial signature page of this AgreementJ is entered into by and among Midvale Telephone Exchange,
Incorprated ("Companv"), United States of America, acting through the Administrator of the
Rural Utilities Service ("Secured Part) and Wells Fargo Bank, National Asciation (".a"), and
sets forth the rights of Secured Part and the obligations of Bank with respect to the deposit accounts
of Company at Bank identified at the end of this Agreement as the Collateral Accounts (eah
hereinafter referred to individually as a "Collateral Account' and collectvely as the "Collateral
Accounts"). Each account designated as a Collateral Accnt includes, for purposes of this
Agreement, and without the necessity of separately listing subacount numbers, all subaccounts
presently existing or hereafter established for deposit reporting purposes and integrated with the
Collateral Accunt by an arrangement in which deposits made through subaccunts are posted only to
the Collateral Accnt. Each Collateral Accont operated as a "Multi-Currency Account" is a deposit
accnt maintained with Bank's Cayman Islands Branch, which may be denominated in foreign
currency.
1. Secured Part's Interet in Collateral Accounts. Secred Part represets that it is either (i)
a lender who has extende credit to Company and has been granted a security interes in the
Collateral Accounts or (ii) such a lender and the agent for a group of such leders. Company
hereby confirms the security interest granted by Company to Secured Part in all of Company's
right, title and interest in and to the Collateral Accunts and all sums now or hereafter on
deposit in or payable or withdrawable from the Collateral Accounts (the "Collateral Accunt
Funds"). In furtherance of the intentions of the partes hereto, this Agreement constitutes written
notice by Secured Part to Bank and Bank's Cayman Islands Branch of Secured Parts
security interest in the Collateral Accnts.
2. Seured Part Contl. Bank, Secred Part and Company each agree that Bank will comply
with instructions given to Bank by Secured Part directing dispsition of funds in the Collateral
Accounts ("Disposition Instructions") without further consent by Company. Except as otherwise
required by law, Bank wil not agree with any third party to comply with instructions for
dispoition of funds in the Collateral Accunts originated by such third part.
3. Company Access to Collateral Accounts. Notwithstanding the provisions of the "Secured
Part Control" secion of this Agreement, Secured Part agrees that Company will be allow
access to the Collateral Accounts and Collateral Accunt Funds until Bank receives, and has
had a reasonable opportunity to act on, written notie from Secured Part directing that
Company no longer have access to any Collateral Accunts or Collateral Account Funds (an
"Acc Terminatio Notice"). Copany irrevocably authorizes Bank to copl with any
Access Terination Notice and/or Disposition Instructions even if Company objecs to them in
any way, and agrees that Bank may pay any and aU Collateral Account Funds to Secured Part
in response to any Disposition Instructions. Company further agrees that after Bank receies an
Access Termination Noice, Company will not have access to any CoUateral Accounts or
Collaterl Account Fund.
DACA-5TD.AR
(Re O3f5-O)
Pa 1
4. Transfers in Response to Dispoition Instructions. Notwthstanding the provisions of the
"Secured Part COntrol" secion of this AgreementJ unles Bank separately agree in wriing to
the contrary, Bank will have no obligation to disburse funds in response to Dispition
Instructons other than by automatic standing wire. Bank agree that on each Business Day
afer it receies and has had a reasonable opportunity to act on an Accss Termination Notice
and coresponding Dispoition Instructions it will transfer to the account spfied at the end of
this Agreement as the Destinatio Account or, if no accnt is specfied, to such accunt as
Secured Part speies in the Access Termination Notice (in either case, the "Deination
Accunl) the full amount of the colleced and available balance in the. Collateral Acunts at the
beginning of such Busines Day. Any disposition of funds which Bank makes in response to
Disposition Instructions is subject to Bank's standard poicies, procedures and documentation
governing the tye of disposition made; provided, however, that in no circumstances wiH any
such disposition require Company's consent. To the extent any Colateral Accunt is a
certificate of depoit or time deposit, Bank wil be entitle to deduct any applicable early
withdrawal penalty prior to disbursing funds from such account in response to Dispition
Instructons. To the extent Secured Part requests that funds be transferred from any CoUateral
Account in a currency diferent from the currency denomination of the Collateral Accnt, the
funds transfer will be made after currency conversion at Bank's then current buying rate for
exchange applicable to the new currency.
5. Lockboxes. To the extent items depoited to a Collateral Accunt have been recived in one
or more post offce locboxes maintained for Company by Bank (each a "Lockbo~ and
proceed by Bank for deposit, Company acknowledges that Company has granted Secured
Part a security interes in all such items (the "Remittances"). Company agrees that after Bank
receives an Accss Terination Notice, Copany wil have no further right or abilit to instru
Bank regarding the receipt, processing or deposit of Remittances, and that Seured Part alone
will have the right and ability to so instruct Bank. Company and Secured Part acknowedge
and agree that Bank's operation of each Lockbox, and the receipt, retrieval, processing and
deposit of Remitance, will at all times be governed by Bank's Master Agreement for Treasury
Management Serves or other applicable treasury management service agreement, and by
Bank's applicable standard lockbox Servce Description.
6. Balance Repors and Bak Statements. Bank agrees, at the reqes of Secured Part on any
day on whic Bank is open to conduct its regular banking business, other than a Saturday,
Sunday or public holiday (eaCh a "Business 08\"), to make available to Secured Par a report
("Balance Report) showing the opening available balance in the Collateral Accunts as of the
beginning of such Business Day, by a transmission method determined by Bank, in Bank's sole
discretion. Company expressly consents to this transmission of information. After Bank
receives an Access Termination Notice, Bank will, on receiving a written request from Secred
Part, send to Secured Part by United States mail, at the address indicated for Secred Part
after its signature to this Agreement, duplicate copies of all periodic statements on the Collateral
Accunts which are subseuently sent to Company.
7. Returned Items. Secred Part and Company understand and agree that the face amount
("Returned Item Amount') of each Returned Item will be paid by Bank debiting the Collateral
Account to which the Returned Item was originaiiy credited, without prior notice to Secured
Part or Company. As used in this Agreement, the term "Returned Item" means (i) any item
deposited to a Collateral Account and returned unpaid, whether for insuficient funds or for any
other reason, and without regard to timelines of the return or the occrrence or timelines of any
drawee's notic of non-pyment; (ii) any item subjec to a claim against Bank of breach of
transfer or presentment warranty undr the Uniform Commercial Cod (as adopted in the
apicable stte) or Regulation CC (12 C.F.R. §229), as in efect from time to time; (iii) any
automted clearng house (llACH") entry credited to a Collateral Account and returned unpaid or
subjec to an adjustment entry under applicable clearing house rules. whethr for insufficient
OAC.A/
(Re03J5-O)PII2
funds or for any other reason, and wiou regard to timeliness of the return or adjusent; (iv)
any credit to a Collateral Account from a merchant card transacton, against which a contractual
demand for chargeback has been made; and (v) any credit to a Collateral Account made in
error. Company agrees to pay all Returned Item Amunts immediately on demand, withot
setoff or counterclaim, to the extent there are not suficient funds in the appicable Collateral
Account to cover the Returned Item Amounts on the day Bank attempts to debit them from the
Colateral Accunt. After Bank receives an Accss Termination Notice, Secured Part agree to
pay all Retumed Item Amounts within fifteen (15) calendar days after deand, wihout setoff or
conterclaim, to the extent that (i) the Returne Item Amounts are not paid in full by Company
within five (5) caendar days after demand on Company by Bank, and (ii) Secured Part has
received proceds from the corresponding Returned Items under this Agreement.
8. Settlement Items. Secured Part and Company. understand and agree that the face amount
("Settement Item Amounr) of each Settlement Item will be paid by Bank debiting the applicle
Collateral Account, without prior notie to Secured Part or Company. As used in this
Agreement, the term "Settement Item" means (i)' each check or other payment ord drawn on
or payable against any controlled disbursement account or other deposit accunt at any time
linked to any Collateral Account by a zero balance accont connection or other automated
funding mechanism (each a "Linked Accounn, which Bank cashes or exchanges for a cashier's
check or official check in the ordinary course of business prior to reciving an Acces
Termination Notice and having had a reasoable opportnit to act on it, and which is presented
for settemet agains the Collateral Account (after having been presented against the Unked
Account) after Bank receives the Access Termination Notice, (ii) each check or other payment
order drawn on or payable against a Collateral Account, which, on the Business Day Bank
receives an Accss Termination NoticeJ Bank cashes or exchanges for a cashier's chec or
official check in the ordinary course of business after Bank's cutoff time for poting, (ii) each
ACH credit entry initiated by Bank, as originating depository financial institution, on behalf of
Company, as originator, prior to Bank having received an Access Termination Notice and
having had a reasonable opprtunity to act on it, which ACH credit entry settles after Bank
receives an Access Termination Notice, and (iv) any other payment order drawn on or payable
against a Collateral Account or any Unked Accunt, which Bank has paid or funded prior to
receivig an Access Termination Notice and having had a reasonable opportunity to act on it,
and which is first preseted for settlement against the Collateral Accnt in the ordinary corse
of business after Bank receives the Access Termination Notice and has transferred Collateral
Account Funds to Secured Pay under this Agreement. Company agrees to pay all Settleent
Item Amounts immediately on demand, without setof or counterclaim, to the extent there are
not suficient funds in the applicable Collateral Accunt to cover the Settlement Item Amounts
on the day they are to be debited from the Collateral Accunt. Secured Part agrees to pay all
Settlement Item Amounts within fifteen (15) calendar days after demand, without setoff or
counterclaim, to the extent that (i) the Settlement Item Amounts are not paid in full by Company
within five (5) calendar days after demand on Company by Bank, and (ii) Secured Party has
received Collateral Account Funds under this Agreement.
9. Bank Fees. Company agrees to pay all Bank's fees and charges for the maintenance and
administration of the Collateral Accounts and for the treasury management and other accunt
services provided with respect to the Collateral Accnts and any Locboxes (collectively "Bank
Fees"), including, but not limited to, the fees for (a) Balance Reports provided on the Collateral
Accounts, (b) funds transfer services recived with respec to the Collateral Accounts, (c)
loCk box processing services, (d) Returned Items, (e) fund advanced to cover overdraft in the
Collateral Accounts (but without Bank being in any way obligated to make any such advances),
and (f) duplicate bank statements. The Bank Fees will be paid by Bank debiting one or more of
the Collateral Accounts on the Business Day that the Bank Fees are due, without notice to
Secure Part or Company. If there are not sufficient funds in the Collateral Accunts to cover
fully the Bank Fees on the Business Day Bank attempts to deb them from the Colteral
Accnts, such shortall or the amount of such Bank Fees will be paid by Company to Bank,
wihout setoff or counterclaim, within five (5) calendar days after demand from Bank. Secred
OM;.STO.AI
(Re03-IS-IOJ
Pag3
Part agrees to pay any Bank Fees which accrue after Bank recives an Access Termination
NoticeJ within fifteen (15) calendar days after demand, without setof or counterclaim, to the
extent such Bank Fee are not paid in full by Company within five (5) calendar days after
demand on Company by Bank.
10. Account Documentation. Except as specifically proded in this Agreement, Secured Part
and Company agree that the Collateral Accunts wil be subject to, and Bank's operation of the
Collateral Acconts will be in accordance with, the terms of Bank's applicable depot accnt
agreement governing the Collateral Accunts ("Accunt Agreement"). In addition to the Accunt
Agreement, each Collateral Account operated as a "Multi-Currency Account" will be governed
by Bank's Master Agreement for Treasury Management Services or other applicable treasury
management services agreement, and by Bank's Multi-Currency Account Service Descption in
effec from time to time. All documentation referenced in this Agreement as governing any
Collateral Account or the procesing of any Remittances is hereinafter collectively referred to as
the "Account Doumentation".
11. Partial Subordination of Bank's Rights. Bank hereb subordinates to the secrity interest of
Secured Part in the Collateral Accunts (i) any secrity interest which Bank may have or
acquire in the Collateral Accounts, and (ii) any right which Bank may have or acquire to set of
or otherwise apply any Collateral Account Funds against the payment of any indebtedness from
time to time owing to Bank from Company, except for debits to the Collateral Accunts
permited under this Agreement for the payment of Returned Item Amounts, Settlement Item
Amounts or Bank Fees.
12. Bankruptcy Notice; Effect of Filng. If Bank at any time receives notice of the
commencement of a bankruptcy case or other inslvency or liquidation proceeding by or against
Company, Bank will continue to comply with its obligations under this Agreement, except to the
extent that any action required of Bank under this Agreement is prohibited under applicable
bankruptcy laws or regulations or is stayed pursuant to the automatic stay imposed under the
United States Bankruptcy Code or by order of any court or agency. With respec to any
obligation of Secured Part hereunder which requires prior demand on Company, the
commencement of a bankruptcy case or other insolvency or liquidation proceeding by or against
Company will automaticlly eliminate the necessity of such demand on Company by Bank, and
wiU immedtely entitle Bank to make demand on Secured Part with the same effec as if
demand had been made on Company and the time for Companys penormance had expired.
13. Legal Process, Legal Notice and Court Orders. Bank wil comply with any legal process,
legal notice or court order it receives in relation to a Collateral Accunt if Bank determines in its
sole discretion that the legal process, legal notice or court order is legally binding on it.
14. Indemnification. Company will indemnify, defend and hold harmless Bank, its officer,
direcors, employees, and agents (collecively, the "Indemnified Parties") from and against any
and all claims, demands, losses, liabilities, damages, costs and expenses (including reasonable
attorneys' fees) (collectively "Losses and Liabilties") Bank may suffer or incur as a result of or in
connection with (a) Bank complying with any binding legal process, legal notice or court order
referred to in the immediately preceding section of this Agreement. (b) Bank following any
instruction or request of Secured Part. including but not limited to any Access Termination
Notice or Disposition Instrctions, or (c) Bank complying with its obligations under this
Agreeent, except to the extent such Loss an Liabilties are caused by BankJs gross
negligene or wilful miscnduct. To the extent suc obligations of indemnity are not satisfed by
Company within five (5) days after demand on Company by Bank, Secured Part will indemnify,
defend and hold harmless Bank and the other Indemnified Parties against any and all Losses
and Liabilities Bank may sufer or incur as a result of or in connecon with Bank following any
instruion or reques of Secured Part, except to the extent such Loses and Liabilities are
caused by Bank's gross negligence or willful misconduct. PROVISO TO THE
DA-STD
(Rø 03 '5"0)
Pag 4
GOVERNMENTS CONSENT TO ACCEPT THIS NON-STANDARD RUS DEPOSIT ACCOUNT
CONTROL AGREEMENT - NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED TO
SUBJECT THE GOVERNMENT TO LIABILITY FOR ANY CHARGES OR COSTS
ASSOCIATED WITH THIS DEPOSIT ACCOUNT CONTROL AGREEMENT. BANK AND
COMPANY AGREE THAT RECOURSE TO ANY AND ALL SUCH LIABILIT SHALL ONLY BE
AVAILABLE FROM EACH OTHER. WITH RESPECT TO CLAIMS ARISING OUT OF ANY
INSTRUCTION GIVEN TO BANK FROM THE GOVERNMENT AS SECURED PARTY,
COMPANY AGAREES TO HOLD BANK FREE FROM ANY AND ALL LIABILIT
WHATSOEVER AND THAT ALL SUCH CLAIMS MAY ONLY BE BROUGHT UNDER THE
APPLICABLE LOAN AND/OR GRANT AGREEMENT ENTERED INTO WIT THE
GOVERNMENT. THE PARTIES AGREE THAT ANY PROVISION PURPORTING TO ATTACH
LIABILITY TO THE GOVERNMENT HEREIN SHALL BE NULL AND VOID. IN ADDITION,
BANK REPRESENTS AND WARRANTS THAT NOTHING HEREIN SHALL BE CONSRUED
TO GIVE BANK THE RIGHT TO EXERCISE SET-OFF OR RECOUPMENT FROM THIS
ACCOUNT WIT RESPECT TO ANY LIABILITY OF COMPANY ARISING OUT OF THIS
ACCOUNT OR ANY OTHER ACCOUNT OF COMPANY, AND THAT NO STATE LAW EXIST
WHICH WOULD ABROGATE THOS REPRESENTATION AND WARRANTY.
15. Bank's Resposibilty. This Agreement does not create any obligations of Bank, and Bank
makes no express or implied representations or warranties with respec to its obligations under
this Agreement, except for those expressly set forth herein. In particular, Bank need not
investgate whether Secured Part is entitled under Secred Parts agreements with Compan
to give an Access Termination Notice or Dispoitin Instructons. Bank may rely on any and all
notice and communications it believes are given by the appropiate pa. Bank wil not be
liable to Company, Secured Part or any other part for any Losses and Liabifities caused by (i)
circumstnces beyon Bank's reasonable control (including, without limitation, computer
malfunctions, interrptions of comunication facilities. labor difficulties, acts of God, wars, or
terro attcks) or (ii) any other circumstances, except to the extent that such Losses and
Liabilities are directly caused by Bank's gross negligence or willful miscoduct. In no event wil
Bank be liable for any indirec, special, cosequential or punitive damages. whether or not the
likelihod of such damages was known to Bank, and regardless of the form of the claim or
acion. or the legal theory on which it is based. Any action against Bank by Company or
Secred Part under or related to this Agreement must be brought wihin twve (12) months
after the cause of action acces.
16. Termination. This Agreeent may be terminated by Secred Part or Bank at any time by
either of them giving thirt (30) calendar days prior written notice of such terination to the other
parties to this Agreement at their contact addresss specified after their signatures to this
Agreement; provided. however, that this Agreement may be terminated immediately upon
written notice (i) from Bank to Company and Secred Part should Company or Secred Part
fail to make any payment when due to Bank from Company or Secured Part under the terms of
this Agreeent. or (ii) from Secured Part to Bank on termination or release of Secured Parts
secrity interes in the Collateral Accounts; provided that any notice from Secured Part unde
clause (ii) of this sentence must contain Secured Part's acknowledgement of the termination or
release of its secri interest in the Colateral Accunts. Copany's and Secured Parts
respeive obligations to report errors in funds transfers and bank statements and to pay
Returned Items Amounts, Settement Item Amounts, and Bank Fees, as well as the
indemnifcatios made, and the limitations on the liability of Bank accepted, by Company and
Seured Part under this Agreement will continue after the termination of this Agreement wi
respec to all the circumstances to which they are applicable, existing or occurring before such
termination, and any liability of any part to this Agreement. as determined undr the provsios
of this Agreeent, with respec to acts or omissions of such part prior to such terinatio will
also surve such termination. Up any termination of this Agreeent which ocurs afer Bank
OAA-s
(Re æ-J50JØJ
PagS
has recived an Accss Termination Notice and has had a reasonable oportnity to act on it,
(i) Bank will transfer all colleed and available balances in the Collateral Accunts on the date
of such termination in accrdance with Secred Parts written instrctons, and (ii) Bank will
close any Lockbox and forward any mail received at the Lockbox unopened to such addres as
is comunicated to Bank by Secured Part under the notice provisions of this Agreement for a
period of three (3) months after the efective termination date, unless otherise arranged
between Secred Part and Bank, provided that Bank's fees with respec to such dispoition
must be prepaid direcly to Bank at the time of termination by cashiers check payabie to Bank
or other payment method aceptable to Bank in its soe discretion.
17. Modificatons, Amendments, and Waivers. This Agreement may not be modified or
amended, or any provision thereof waived, except in a wring signed by all the parties to this
Agreement.
18. Notices. All notices from one part to another must be in writing, must be delivere to
Company, Sered Part and/or Bank at their contact addresses specified after their signatures
to this Agreement, or any other address of any part communicated to the other parties in
writing, and will be effective on receipt. Any notice sent by a part to this Agreeent to another
part must also be set to all other parties to this Agreement. Bank is authorized by Company
and Secured Part to act on any instrucions or notices received by Bank if (a) such instructions
or notices purport to be made in the name of Secred Part, (b) Bank reasonably believes that
they are so made, and (c) they do not conflict with the terms of this Agreeent as such terms
may be amended from time to time, unless such coflicting instrctons or notices are supported
by a court order.
19. Succesrs and Assigns. Neither Company nor Sered Part may assign or transfer its
rights or obligations under this Agreement to any person or entity witht the prior written
consent of Bank, which cosent will not be unreasoably withheld or delayed. Notwithstanding
the foregoing, Secured Part may transfer its rights and duties under this Agreement to (i) a
trasferee to which, by cotract or operation of law, Secured Part transfers substantiaUy all of
its rights and duties under the financing or other arrangements between Secured Part and
Company, or (ii) if Secured Part is acting as a representative in whose favor a secrit interes
is created or provided for, a transferee that is a successor representative; provided that as
betwen Bank and Secured Part, Secred Part wil not be released from its obligations under
this Agreement unless and until Bank recves any such transferee's binding written agreeent
to assume all of Secured Part's obligations hereunder. Bank may not assign or transfer its
rights or obligations under this Agreeent to any person or entit wihout the prior wrtten
consent of Secred Part, which consent wil not be unreasonably withheld or delayed;
provided, however, that no such consent wil be required if such assignment or transfer takes
place as part of a merger, acquisition or corporate reorganization affecting Bank.
20. Governing Law. This Agreement will be govemed by and be construed in accdance with the
laws of the state in which the office of Bank that maintains the Collateral Accunts is locted,
without regard to conflict of laws principles. This state will also be deemed to be Bank's
juriSdicton, for purposes of ArticJe 9 of the Uniform Commercial Code as it applies to this
Agreeent.
21. Severbilit. To the extent that the terms of this Agreement are inconsistent with, or prohibited
or unenforceable under, any applicable law or reglation, they wil be deemed inefece only to
the extent of such prohibition or unenforabili, and wil be deemed modfied and applid in a
manner consistent wih such law or regulation. Any provision of this Agreeent which is
deemed unenforceable or invalid in any jurisdiction will not affect the enforceabilty or validit of
the remaining provisions of this Agreeent or the same provision in any other jursdictn.
OACAoSTDAR
(Rev 03 ,5- '0)Pa 6
22. Counterpart. This Agreement may be execued in any number of counterparts each of whic
will be an onginal with the same effec as if the signatures were on the same instrument.
Delivery of an executed counterpart of a signature page of this Agreement by telecopier or
electronic image scan transmission (such as a "pdf' file) wil be effective as delivery of a
manually exected counterprt of the Agreement.
23. Entire Agrement. This Agreement, together with the Account DocumentationJ contains the
entire and only agreement among all the parts to this Agreement and beteen Bank and
Compay, on the one hand, and Bank and Secured Part, on the other han, with respec to (a)
the interest of seured Part in the Collateral Accounts and Collateral Accunt Funds, and (b)
Bank's obligations to Secured Part in connecion with the Collateral Accounts and Collateral
Account Funds.
(SIGNATURE PAGES FOllOW)
QAnM
(Re03.'S.,O)
Pa 7
This Agreeent has been signed by the duly authoized offcers or repestativèS Of copay,
Secured Part and Bank on the date specified below.
Date; August 2." , 2011
collateral Account Numbers:
Desination Account Number:
Bank of Destination Account:
3190704928
MIDVAlE TELEPHONE EXCHANGE,
INCORPORATED~: ~
Næn: s_::
UNITD STATE OF AMERICA ACTING
THROUGH THE ADMINISTRATOR OF THE:~
Name: Kennet Kuchno
Title: Chief Executive Oficr Title: Direcor, Broband Divsion
Midvale, ID 835
Addre for Notice:
14( Indepndence Ave., SW
Stóp 1599. Roo 2868, Soth Building
Wasingon, DC 20
Attention: Kenneth KuChno, Direcor,
Broadband Division
Address for Notices:
2205 Keithly Cree Road
Attention: Steve Child, Chief Executive
Oficer
(SIGNATURE PAGES CONTINUE)
OACTlMRI
(Re 03t5. to)Pa II
Name: .Dana R on
TitJè:RegonaJ Pret
Adre for No:
an W. Main Stree. Sue 20
Boe, 10 83702
Attentn: Dana Rengon, Real
President
with a copy to:
George Valetine
Reltiship Manager
103 12'" Avenue So. 1 st Fl
Napa,ID 831
Amy GarciBusiness Aste
130 12'" Avenue So, 1st Flr
Narnpa, 10831
Briony RoeelBusines Aste
10312'" Aveue So. lSl Flr
Nampa, 10831
0A
(Re031S-10J
Pag9
# 339636 aSH
RURA UTILITIES SERVICE U. S. DEPARTMENT OF AGRlCUTUI
STOP 1599 i ROM 2868, S. BLD
1400 INDEPENDENCE AVEE SW
WAHINGTON, DC 20250
~'J
OF ecAC AT Ft (o
IJAO llTll OF srA IE04/~8/~Øl1 ti3 l 85
CKI II i:= 162' lib 127142
1. 1M. = 12.. BAC SR II 3filini N"'iy ¡S~~~36
UCC FINACING STATEENT
10 Øà al~)
~urai Utilities SeiceU. . of Agtu. J~A'
St 1599, Rc 28. SouthWasitgt D.C. :zlS99~tten: Kt Kuo
T F\1. LEGA NA':~
TH AI01'alPACI ISI' I' 0I
.. __ ii (1. or 1l. do nol ll" DD n..
':
OR
IRNAOR
2205 Keithey Crek Roa
1d; TAlDll . OR
82-0381622.~
lI
2&
.,
OR
Unite Stes of Amerca Rura Utilities Serice althe Unite States Depaent of Agculture
RaT
l:1400 Indepdene Aveue, S.W. Washingtn USA
4,Tl FiCINO~l~.~"1a1 co.
II ALL ASSETS acuire with Americ Recovery and Reinvement Act Broadband Initiatve Prgr fuding, and all
momies of the debto, as lOet fob in Attachment" A" ati:hed hemo and incororate herin."
FlUN OFFIC CQPV- NAno UCC FIANIN STATEMENT (FORM UC1)(R. 07/29)
IDAHO SECRETARY OF STATE
STATEHOUSE
BOISE, IDAHO 83702
UCC SEACH REPORT
Page 1 of 6
SEACH # 339636
BY: JSH
4/29/2011
08:40 am
DEBTOR/PRODUCER NAME PER REQUEST:
MIDVALE TELEPHONE EXCHAGE, INCORPORATED
2205 KEITHLEY CREK ROA
MIDVALE, 10 83645
REQUESTING PARTY:
RURA UTILITIES SERVICE U. S. DEPARTMNT OF AGRICUTUE
1400 INDEPENDENCE AVE SW
STOP 1599, ROO 2868, S. BLDG
WASHINGTON, DC 20250
COPIES REQUESTED: NONE
TYPES OF LIENS SEARCH: BASIC
THE SECRETARY OF STATE OF THE STATE OF IDAO CERTIFIES THT THE FOLLWING LIST SHOWS AL
PRESENY EFFECTIVE FILINGS OF THE TYPES REQUESTED NAING THE ABOVE DEBTOR WHICH ARE ON
FILE IN HIS OFFICE AS OF 5:00 PM ON April 28, 2011 FOR AGRICUTU LIENS (F,S,L,C)
AN April 28, 2011 FOR NON-AGRICULTU UCC LIENS (B, liN) .
STATE LIENS ('1) ARE EFFECTIVE AS OF THE DATE AN TIME OF THIS REPORT.
A SEARCH LIMITED TO A PARTICULA CITY, FILING DATE, OR FILING-DATE RAGE MAY NO REV
ALL FILINGS AGINST THE DEBTOR SEACHED AN THE SEACHE BEAS TH RISK OF RELYING ON
SUCH A SEACH.
AN ORIGINA AMS SHOWN WERE CORRECT WHEN TH LIENS WERE FILED. FOR A VARIET OF
REAONS (INTEREST, PARTIAL PAYMNTS, ETC.) TH CUEN AMUN IS LIKEY TO BE
DIFFERE IF TIME HA PASSED. ANONE IN NEED OF THE CURREN TOTAL OWED AN SECUED
BY TH LIEN SHOULD CONTACT TH FILING AGENCY.
* * BAIC UCC LIENS * *
WITH TH .'r¡.. L 'WO. ....::.00 7k. t:~... ...............
BY... .....i$~.UCC CLERK
THIS SEACH REPORT ENS
FILING NUBER
B 222012
DATE & TIME FILED
12/20/1985 03:00
STATUSCU
- DEBTOR NAE: MIDVALE TELEPHONE EXCHGE, INC.
- DEBTOR TYPE: NOT SPECIFIED
~ SECUD PARTIES OR ASSIGNEES:
(S) UNITE STATES OF AMERICA
RUR UTILITIES SERVICE
WASHINGTON, DC 20250
(S) UNITED STATES OF AMERICA, RURL UTILITIES SERVICE
WASHINGTON, DC 20250
- COLLATERAL:
SEE FILING DOENTS
- AMENS:
IDAHO SECRETAR¥ OF STATE
STATEOUSE
BOISE, IDAO 83702
UCC SEACH REPORTSEARCH # 339636 4/29/2011B¥: JSH 08 :40 am
Page 2 of 6
#6318790 FILED 10/26/1995 09: 00
RELEASE
SEC PARTY NAE CHGE
#6376140 FILED 10/26/2001 05:: 0
RELEAE
SEC PARTY NAME CHGE
#6545141 FILED 02/26/2010 04:: 5
RELEASE
FILING NUBER
B 522481
DATE & TIME FILED06/26/1992 09: 00 STATUS
CURET
- DEBTOR NAM: MIDVALE TELEPHONE EXCHAGE, INCORPORATED
- DEBTOR TYPE i NOT SPECIFIED
- SECUED PARTIES OR ASSIGNEES:
(8) UNITED STATES OF AMRICA
RUR UTILITIES SERVICE
WAHINGTON, DC 20250
(S) UNITED STATES OF AMERICA, RURA UTILITIES SERVICE
WASHINGON, DC 20250
- COLLATERAL:
SEE FILING DOCUMENTS
- AMENDMETS:
#6318789 FILED 10/26/1995 09:00
RELEASE
SEC PARTY NAME CHANGE
#6376139 FILED 10/26/2001 05:: 0
RELEASE
SEC PARTY NAME CHAGE
#6545139 FILED 02/26/2010 04:: 5
RELEASE
FILING NUBER
B 658444
DATE & TIME FILED05/03/1995 09: 00 STATUS
CURRE
- DEBTR NAE: MIDVALE TELEPHONE EXCHGE, INC.
- DEBTOR TYPE: NOT SPECIFIED
- SECUED PARTIES OR ASSIGNEES:
(8) UNITED STATES OF AMERICA
RURA UTILITIES SERVICE
WASHINGTON, DC 20250
(S) UNITED STATES OF AMICA, RURL UTILITIES SERVICE
IDAHO SECRETARY OF STATE
STATEHOUSE
BOISE, IDAHO 83702
UCC SEARCH REPORT
Page 3 of 6
SEARCH # 339636
BY: JSH
4/29/2011
08:40 am
WASHINGTON, DC 20250
- COLLTERA:
SEE FILING DOCUNTS
- AMNDMENS:
#6318791 FILED 10/26/1995 09: 00
SEC PARTY NAM CHGE
RELEASE
#6376138 FILED 10/26/2001 05:: 0
RELEAE
SEC PARTY NAME CHAGE
#6545140 FILED 02/26/2010 04:: 5
RELEAE
FILING NUBER
B 725959
DATE & TIME FILED10/16/1996 02: 00 STATUS
CURREN
- DEBTOR NAME: MIDVALE TELEPHONE EXCHAGE t INCORPORATED
- DEBTOR TYPE: NOT SPECIFIED
~ SSCURED ~ARTIES OR ASSIGNEES:
(S) RURA TELEPHONE FINACE COOPERATIVE
WOODLAD PARK
2201 COOPERATIVE WAY
HERNDN, VA 22071
,~ COLLATEL:
SEE FILING DOS
- AMENDMETS:
#6386130 FILED 04/09/2002 05::0
LIEN TERMINATION
FILING NUBER
B 200109109113
DATE & TIME FILED10/26/2001 05: 00 STATUS
CURENT
- DEBTOR NAE: MIDVALE TELEPHONE EXCHANGE t INCORPORATED
- DEBTOR TYPE: ORGANIZATION
- SECUED PARTIES OR ASSIGNES:
(8) RURA TEEPHONE FINACE COOPERATIVE
2201 COPERATIVE WAY
HERNDON, VA 20171
- COLLATEL:
SEE FILING DOCUNTS
IDAHO SECRETARY OF STATE
STATEOUSE
BOISE, IDAHO 83702
UCC S~CH REPORT
Page" of 6
SEARCH '# 339636
BY: JSH 4/29/2011
08:40 am
AMENDMES:
#6530241 FILED 04/23/2009 16: 33
LIEN TERMINATION
FILING NUBER
B 200209189711
DATE & TIME FILED
03/12/2002 05: 00 STATUSCUNT
~ DEBTOR NAME: MIDVALE TELEPHONE EXCHAGE, INCORPORATED
- DEBTOR TYPE: ORGAIZATION
SECURED PARTIES OR ASSIGNES:
(S) UNITE STATES OF AMERICA
RURAL UTILITIES SERVICE
WASHINGTON, DC 20250
(S) RURA TELEPHONE FINACE COOPERATIVE
2201 COOPERATIVE WAY
HERNDO, VA 20171
~ COLLATERA:
SEE FILING DOENTS
AMNTS:
#6545137 FILED 02/26/2010 04: : 5
RELEAE
FILING NUMBER
B 200710216505
DATE & TIME FILED
03/14/2007 05: 00 STATUS
CURENT
~ DEBTOR NAME: MIDVALE TELEPHONE EXCHGE, INCORPORATED
- DEBTOR TYPE: ORGAIZATION
- SECURE PARTIES OR ASSIGNEES:
(S) ZIONS FIRST NATIONAL BAN
2460 SOUTH 3270 WEST
WEST VALLEY CITY, UT 84119
- COLLATERA:
SEE FILING DOCUMENS
FILING NUBER
B 200710367758
DATE & TIME FILED11/14/2007 1:: 00 STATUS
CUENT
- DEBTOR NAME: MIDVALE TELEPHONE EXCHAE, INC.
- DEBTOR TYPE: ORGANIZATION
- SECURED PARTIES OR ASSIGNEES:
(S) UNITED STATES OF AMERICA, RURA UTILITIES SERVICE-
1400 INDEPENENCE AVEE, S.W.
WASHINGTON, DC 20250
IDAHO SECRETARY OF STATE
STATEHOUSE
BOISE, IDAHO 83702
UCC SEACH REPORT
Page 5 of 6
SEARCH # 339636
BY: JSH
4/29/2011
08 :40 am
(S) RURA TELEPHONE FINANCE COOPERATIVE
2201 COOPERATIVE WAY
HERN, VA 20171
- COLLATERA:
SEE FILING DOCUMENTS
- AMNDENTS:
#6545138 FILED 02/26/2010 04:: 5
RELEAE
FILING NUBER
B 200810443399
DATE & TIME FILED
04/04/2008 12: 00
STATUS
CURRENT
'" DEBTOR NAE: MIDVALE TELEPHONE EXCHAGE, INCORPORATED
- DEBTOR T:lPE: ORGANIZATION
'" SECURED PARTIES OR ASSIGNEES:
(S) RDO EQUIPMENT CO.
2649 N 29TH AVE
PHOENIX, AZ 85009
USA
- COLLATER:
SEE FILING DOCENTS
FILING NUMER
B 200810547392
DATE & TIME FILED
09/30/2008 12: 00
STATUS
CURREN
- DEBTOR NAME: MIDVALE TELEPHONE EXCHAGE, INCORPORATED
DEBTOR TYPE: ORGANIZATION
- SECUED PARTIES OR ASSIGNEES:
(S) DELL FINACIAL SERVICES L.L.C.12234 N. IH-35, BLD. B
AUSTIN, TX 78753
USA
'" COLLATERAL:
SEE FILING DOENS
FILING NUBER
B 200910110271
DATE & TIME FILED
10/20/2009 09: 00
STATUSCURE
'" DEBTOR NAME: MIDVALE TEEPHONE EXCHAGE, INCORPORATED
- DEBTOR TYPE: ORGANIZATION
- SECURD PARTIES OR ASSIGNEES:
(5) WELLS FARGO BAK, N.A.
PO BOX 8203
IDAO SECRETARY OF STATE
STATÊOUSE
BOISE, IDAHO 83702
UCC SEACH REPORT
Page 6 of 6
SEARCH # 339636
BY: JSH
4/29/2011
08:40 am
BOISE, ID
USA
83707
- COLLATER:
SEE FILING DOCUMENS
FILING NUBER
B 201010819218
DATE & TIME FILED
07/30/2010 10:00
STATUS
CURRENT
- DEBTOR NAM: MIDVALE TELEPHONE EXCHANGE, INCORPORATED
- DEBTOR TYE: ORGANIZATION
- SECUR PARTIES OR ASSIGNEES:
(S) DELL FINANCIAL SERVICES L.L.C.
WAY
MAIL STOP-PS2DF-23 ONE DELL
ROUN ROCK, TX 78682
USA
COLLATERA :
SSE FILING DOMENS
FILING NUBER
B 201110922310
DATE & TIME FILED04/28/2011 03: 00 STATUS
CUREN
- DEBTOR NAME: MIDVALE TELEPHONE EXCHAGE, INCORPORATE
- DEBTOR TYPE: ORGAIZATION
- SECURD PARTIES OR ASSIGNES:
(8) UNITED STATES OF AMERICA, RURAL UTILITIES SERVICE
1400 INDEPENENCE AVEN, S.W.
WASHINGTON, DC 20250
- COLLATERL:
SEE FILING DOCUENS
* * * NOTHING FOLLOWS * * *
Arizona Secretary of State's Office
Cenffcate of Financing Statements
The search date and time listed below refl the date and time the search was
conducted. The date and time through this search is effctive to reealall relevant
UCC reords filed on or pror to the date: April 27, 2011
Page: 1
As of May 2, 2011 at 09:37 AM,the attched pages are listings of presently
effectie financing statements, statements of assignment or tax liens on file wi
the Secretary of State's Ofce for:
DEeTOR Organiztion Name = MIDVALE TELEPHONE EXCHANGE, INCORPORATED
DEeTOR Organization Name = MIDVALE TELEPHONE EXCHANGE, INCORPORATED
Dated: 51212011 ~)j~\R. VALENICA
Requested by:
Arizona Secretary of State's Offce Page: 2
Certificate of Financing Statements
File No: 1208953.9 Orlglnat:3/1912002 Expire: Lien Type: Utilit
Type: New Filng Flied: Mar 19,200201:19 PM Optical: 37 Page(s)Entere: Mar 20, 200209:06 AM_ $_
Debtors
MlD'lAIE,ta.ePHONe EXCHANGE,
INCORPORATED
2206 KEITHLEY CREEK RD
PO BOX 7
sered Partes
RURA..."lLEPHONE..FI.NAHCE..OOOPERAtlVE
2201 COOPERATl\I WAY
HERNDON, VA 201713025
f
I.. ....u... N. .'.TEOSTATES... OF. ..AM.................e...R....IQA./R.URA
. UTILITIES SERVlCE
1400 INDEPENDENCE AVE SW
AG BOX 1597 ROOM 2835. . .. . .Ï'
Type: Partial Release Filed: Mar 1, 2010 11 :57 AM
Entered: Mar 1, 201003:42 PM
Optcal: 10 Page(s)-$--
DebtOlS
IOVAle..TEL.HONEexCHAGE.,
INCORPORATED
2206 KEITHLEY CREEK RD
POBOX7
secure Partes
RURATEl.PHONE FINANCECOP. M
2201 COOPERATIVE WAY
HERNDON, VA 201713025
f
File No: 1514098-2
Type: Ne FlUng
Deors
Originated: 11/1512007 Exres: 11/1512012 Lien Type: utility
Filed: Nov 15, 200711:22 AM Optical: 12 Page(s)Entered: Nov 16, 200709:51 AM _ $ _
Seçure Parts
MI()'lAl TeLËPHONE6(CHANGE, INC.
2205 KEITHLEY CREEK RD
MIDVALE, 10 83645
RURA TELEPHONE FINACE COOPERA1'
2201 COOPERATIVE WAY
HERNDON, VA 20171
¡
I. · .....UNltED
StATES OF AMERICA,. RURAL
. UTILITIES SERVICE-USDA
1400 INDEPENDENCE AVE S.W;
WASHINGTON, DC 20250
Type: Partal Release Flied: Mar 1,201011:57 AM
Entered: Mar 1,201004:53 PM
Optical: 10 Page(s)-$-
Debtors secured Parties
Mltl\lAlËTEl..EPHONeEXcHANße,INC.RURA TELEPHON.EFlNANCEC()ERATl\
2205 KEITHLEY CREEK RD 2201 COOPERATIVE WAY
MIDVALE,10 83645 HERNDON,VA 20171
Arizona Secretary of State's Office Page: 3
Certifcate of Financing Statements
¡ læ~~~~~RUR&
File No: 1650772.6 Originated: 412912011 Expire: Lien Type: Utilit
Type: New FIling Filed: Apr 29.201110:32 AM Optical: 3 PageCs)Entered: May 2, 2011 09:27 AM _$_
Debtors
MI£)'lAli:TELEPHONeexcHAN$i:,
INCORPORATED
2205 KEITHLEY CREEK RD
MIDVALE,ID 83645
Secure Partes
UNlTTD$TATTSQFJ\ERl~Rl:~
UTILITIES SERVICE OF THE UNITED STATES
DEPARTMENT OF AGRICULTURE
1400 INDEPENDENCE AVE S W
UCC FINANCING STATEMENT
Fou.~Vcllmue:QNtl'8lbå~CAREFULLY
~.NAMi: &~ÇFç()Acr AT FILER (optonlll)
.a SENOAeTQ (NamMdAd)I
Rural Utilties Service
U.S. Deparent of Agrcultue
1400 Independence Avenue, S.W.
Stop 1599, Room 2868, South Bldg.
Washington, D.C. 20250-1599
Llttention: Kennet Kuchno .
--COpy
Arona Secretary of Stae
THE ABOVE SPACE IS FORFlØ~__Y
1 OEBTo.R'$ ~ FULL LEGAL NAE ineeØlìl debto name (1. crib) do no ebbiete or cobin nam
..
-.1..ORGllZTiolill
Midvale Telephone Exchange,Incorporated
OR Ib.INDMDUAL'S LAST NAME FlSTNAME MIDOte NAE ~
1g'lCi S'Ai-e lPOTALcooe ~lN
2205 Keithley Creek Road Midvale lD 83645 USA
1d.TAXilO#: SSORæ . ... .L... . .,f1&ll ;lfal
D...82 IORGATION' . C .i Idao I C30686-0238162 DEBTOR I ororation
2 ADDITION DEBTOR'S EXCT FULL LEGAL NAME 1_ only ll deb 11B (2aor 2&1- do no ebbrviate oroone neme-
2à
OR :26. INDl\OOAL'S LA NAAE FIRS NA MIDDI\E I~~~~CI STATE It' IAl.l:."".
r ... '/iR/, t~"lpi0I~iA~
~ivTI .~.~~IZTiONI
i I
3 SECURED PARTYS NAE (or NAEofTOTALASSIGNEEofASS1GNOR~ . secillsereJInama(3cr3l1-in$iOR~1'NAE
United Stas of America, Rural Utilities Serice of the United Staes Deparent of Agrcultue
OR 3b.INtIVIOUAl'S ì.T NAME FIRST NAME MlLENAME '~.
C1 STATE ~~ALCOE .a¡\l
1400 Indepedence Avenue, S.W.Wasingtn DC 20250-1500 USA
4. This FINANING STATEMENT coai the fOllOWing coløl1l:
"ALL ASSETS acquired with American Recover and Reinvestment Act Broadband Initiative Progr fuding, and all
revenues of the debtor, as set fort in Attchment "A" attched hereo and incorported herein."
8. OPIONFIlSHIEFenATA
LeSSlI
ot
FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT (FORM UCC1) (REV. 07/29/98)
UCC FINANCING STATEMENT ADDENDUMfWu.CWlN$1'ClJfrtmt.àI_\OAeiV
9. N"'ME.OFFl~SìQEØR(1aor 1~r()NREtTÉl) FIN.CìNG STA.T!:MENT
~a:ORGAIZATION NA
Midvale Telephone Exchange,IncorpliteGOR9b.INOMOÜÄisl.AsT NA
rFlRSNAME r~rOOLE
NA,šOl'
1Ö.MISCEi.I.OÜS:
THEAaOVE 8PAÇi:18 FQR.FlUNG ()l"ÇE USEQNLY
11 AoomONAL DEBTOR'S EXACT FULLLEGAL NAME.litiIÌÌl_jtf1.,*11b).¡jnø~_ or__l1_...
11.; OFlGANrZATrON'S NAMe .
OR 11b.INOII0U'S LA NAE FIRST NA MIDDLE NAME .$J
'lJjif\IlØ:~i:ll CI STAT!¡POSTAL COE couN'
ltd: TAX 10 #: SSNOREl
ItD'lINI'ORE 111''li:Øf~_
llf.~lO()~1'"1ii~~1("'..any ..~.ORIZATI I J ìDEBTOR
12:~EC~PARTY'S lid IASSIl3NOR S/P;S AA.liòiii_
NAME
OR 12b.lNOMOUAL'S lATNAME FIRST NAM f;IDOLENA ~
1~Ç;MAG ADSS CI STATE
I
POTAL CODE jC'
13. Thls.FINÄNCING STATEMEN~lItOtiCi(lLJ.as:xl 16.Adllon cOlateral dêbOl:
colataral, or Is flled.as aDfi flUng.
14. DascrpUon ofre~.
15.Namanadess ofa RECOROWNR of abovescrbe real asle
(IDa dosnothaY8 a ni liist):
........
17. Ch i: If apc: an c:i: oi an bo
"Is ~rhll.t¡(J Trutee ecng wl respto ~Ii In lr iirnOecs Es
18.Ch.Jii an ch oi on bo.
~De Is a TRSMlTNGUTILIl~
iì Fled In
co wi .ManreHemTrase -at 30ye
.IR' II co wi . PuflT..'- ..~30__:
FlUNG OFFICE COPY -NAnONAL UCC FINANCING STATEMEN ADDENDUM (F0R UCC1Ad) (REV. 07l2)
ATTACHMENT A
COLLTERA
1. Collatera shall include the following:
All propert, assets, rights, privileges, licenses and frchises of the Granee of ever kind an
description, peronal or mixed, tagible and intaible, acuid by the Grantee with grt fuds, wherver locat
including without limitation, aftr acquied propert and all or par of the following:
I
All right, title, and interest of the Gratee in and to buildings, plants, works, improvements,
strctes, estates, grts, franchises, easments, rights, privileges and propertes, whether peona, or mixed,
tagible or intagible, of every kind or description, now or herer owned, leased, constrcted, or acquired by the
Gratee with grant fuds, wherever locat and in and to all extensions, improvement, and additions thereto,
including but not limited to all buildings, plants, works strctes, towers, antennas fixtues, appartus, materials,
supplies, machinery, tools, implements, poles, posts, crossar, conduits, ducts, lines, wires, cables, whether
undergrund, overhead, or otherwise, exchages, switches, including, without limtation, host and remote switches,
desks, testboards, fres, racks, motors, generators, batteres, and other items of central offce equipment, pay
stations, protectors, intrents, connectons and appliances, offce fuitue, eqUipment, and any and all other
prope of every kind, natue, and description, used usful, or acquired by the Grante with grt fuds;
II
All right, title, and interest of the Grante in, to, and under all persona propert and fixtes
acuired with grt fuds including without liitaon all goods (such as inventory, equipment and any acessions
thereto), softare, and proceeds (as such term ar presently and hereafter defed in the UCC);
II
All right, title, and interest of the Gratee in, to, and under any and all books, reords and
correspondence relatig to the Pledged Propert, including, but not limite to, all recrds, ledger, leases, comput
and automatic machinery, softare, programs, databass, disc or tape fies, print-outs, bathes, rus, and other
electnically-prepared information indicating. summarizin evidencing, or otherwise necsar or helpful in the
collection or realizaion on the Collateral;
2. Additionally, propert pledged as Collateral shall also include the following specificaly described
propert, if any: None
stŠ1-ÄiÊ ~il IDAiió'¡ i:
LooHG :ì£Cli:TIlY Il StimØ4/~8/~~11 ~3:05
~K: NONE ~Ti 1626 BM: 12/1424
1 ~ l~.ti = 12.0U UDCl FILE B ?
filng Hul'bèr:B C~11-1~9~~~1-~
UCC FINANCING STATEMENT
Fôow iNs"RÛdtIÓwsltnlwbati\ l".lu:lt:í:UI'LY
A. NAME & PHONE OF CONTACT AT FILER (opllnal¡
20f I APR 28 PM 3: 05
B. SEND ACKNOWLEDGMENI TO: . (Nam and Ades)IRural Utilties Service
U.S. Departent of Agrìculture
1400 Independence Avenue, S.W.
Stop 1599, Room 2868, South Bldg.
Washington, D.C. 20250-1599
~ttention; Kenneth Kuchno
l
SEAn
TlE ABOVE SPACE IS FOR FlUNG 0P1 US ONLY
1. DEBTOR'S EXCT FULL LEGAL NAME -Insert only llQ debtor name (1 a or lb). do not abeviate or combin nam8$
lÌ
..
~ale Telephone Exchange, Incorporated
. ASiJl MIOOL NAME IX
1c. 'AO
2205 Keithley Creek Road
lcl. TAX io II S$N OR EI
~
OR; 21. INDIVIDUL'S LAT NAME flRSTNAME e il!~
2c./vAI CIT sTATE POTAl COOl ~
21UAX io l: 3S OR ~ f :=ZATlON :29. IT", UI 0 I 2f.JIeTlO ~ r ?f
3. SECUREO PARTY~E WNAME o(TOTAL ASlGE or ASSI$I. 1n00òn QI søcrecl-name l3.ot31)
United States of America, Rural Utilties Service of the United States Departent of AgricultureOR 3b.INDIVIOUAL'S LAST NAM MlDDE NAME:
ony fL
.st
1400 Independence Avenue, S.W.
CIT
Washington
STATE. r~~ALCODE
DC 120250-1500
tX .
USA
4. This FINACING STATEMeNT co the fOllowing coDateil:
"ALL ASSETS acquired with American Recovery and Reinvestt Act Broadband Initiative Progra fuding, and all
revenues of the debtor, as set forth iIl Attachment "Alf attached hereto and incorprated herein."
u:ssE/LESSR
FlUNG OFFICE COPY - NATIONAL vec FINANCING STATEMÊNT (FORM UCC1) (REV. 0712)
UCC FINANCING STATEMENT ADDENDUM
f'öUQWlNSt.lJN8 andbt.idAAleFUi.'I
9. NAME OF FIRST(1a or 11)) ON ~ELA TEO..FINACU\IGSIÄTëMENT~.~
OR . Midvale Telephone Exchange. Il1c:orporateg!i. INDIVIDUAL'S LA NA FIRST NA MIDDLE NAMESUl'1X
SE An
10. MISCELLANEOUS:
SEXT Fuu LEG NA. inmt
THe ABove SPACE IS FOR fILING OFFICE USE ONLY
or co names
OR l1b. lNIDUAL'8 LA NAME FIRS'NAE MtOONAE SUIX
l1ç. MA~CI STATe POTAl CO CO
ncL TAX 10 #: SSN OR elN 11f.JUOlOMTl . 1'g.OA~~lOM;lhny
ASSIGNOR SI'S
as-eracted fS. Addlii cialeral dêSpiion:
2b.F' NAM
miWiACRESS CITY
15, Nae an adess of a RECOD OWER of above.(/çrlbd t8 8S81e
(if OGor does noi have a ",co Inerest):
or Oecell.. e.
" OGrlsa TFlNSMlT1NG UTILITY
Flie In cone wih a Mønui.Hom Traacion - effaciv 30 yefI~..PuFi'l~,,,""'30
fILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT ADDENDUM (FORM UCC1Ad) (REV. 071291)
UCC FINANCING STATEMENT
FouOW INltnt an be) CAULLY
A. NAE & PHE OF COAC AT FIR (o
SECRETARY GF STATE
20" APR 29 AM 10: 32
FILED
B. SE AC TO: (N an Adres)IRui Utes SeceU.S. Det of Agrcutu
140 Ince Avene, S.W.
Sto 1599, Rom 2868, Sout Bldg
Wasgt D.C. 20250-1599
~tttion: Ke Kuchno
..
05/022011 7: 4: 000l0 #U
IJCC 11DISP COL $5.00
201116507726
THE AB SPAC IS FO Fl 0I US ONY
1 DEBTOR EX RJ LEGA NA ii cily ii dø na (1a or 1b) do noabble or co__
..
--~a~lK~
Midve Telephoe Exchge, Inrprated
OR 1b.Il'S lAT NA FIRST NA MIDDE NA 15UGÇ
1c. .. AA.N$$CI STATE
IPOAL CO
-c-
2205 Kethley Cre Roa Midvale il 83645 USA
1:- IN RE, It. lYPE OF
ORIZTIO 1I.JI .T '0.IOt.lhny
.DøORTI C .
I Idao I C30686DEOR I orpration
2 ADION DEBTOR EX FUll LEGA NAE - in on li de na (2& or 2b)- do no eb or ca__2l~~NA
OR 2b IND'S lA NA FIRS NA MIDNA ¡...nA
2c ~.AO CI STATE
I POAL CO
CO
2d; TAXIDI:SSOREI
IrlNF RE, 12l TY OF ORTI
....ORTI 120.:n !DS,.. an
.Da..=:TI i
I I
3 SECURED PAR NA(or NA of TOAL ASIGN of AS SI ,"on øsepøii (3 arab)-:i~lîNA
Unite Sta of Amerca Rur Utilities Serce of the United States Deent of Agcutu
OR 3b1l'S lAT NA FIRST NA MIDNAE SlFI
3c CI STAll IPOAL CO I..'..'.
140 Indede Avenue, S.W.Wasingtn DC 20250- i 500 USA
4. Th Fl STATE "" ii fi cø:
"ALL ASSET acui with Amca Revery and Reinvesent Act Broadd Intie Pr fudig, and aU
reues of th der, as se for in Atthment" A n atthed here and incora hern. "
05/022011 7:43A 0~210 un
EXITE SEICE $25.00
O5..0211 7:43t ifJ0l0 tt
LiCe InT ~JEH $6.00
flUN OFFI CO -NATI uc FIING STATEMENT (FORM UC1) (REV. 0712)
UCC FINANCING STATEMENT ADDENDUM
¡:øit:QWINS1'ønøÑ$~ftøri.iibäi:id.CAREFUlL y
9.NAME OF FIRST DEBTOR (1a Qr 1b) ON RELATED FINANCING STATEMENT
9a. ORGANIZATION'S NAE
.
Midvale Telephone Exchange,Incorporated
OR
ll. INDIVDUAL'S LAST NAME
rlRSTNAME ..1 MIOoLENAl:.SUFFIX
10, MISCELLEOUS:
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
11. ADDITIONAl DEBTOR'S EXACT FULL LEGAL NÅME -iÎOlI1_name rna or 11liÎ - do not abbrelate Of cobine names
l1a. ORGAIZATION'S NAME
OR :l1b. INOÍVIOUAL'S LÁ$T NAME FIRST NAME MIDDLE NAME SUFFIX
.AODR$S CllY 1IA1' IPOTAL CODE COUNTR
lld. TAXIO/l SSNOR EIN
IfOO'L INFO RE rl1e.~OFORGIfVTl9N
Uf,JUAlll;QN OF ORNIZATION .119. ORGANIZATIONAL IOll,ltiiriy .~
g;;:6:ZATION l I .1
12,I ADDlnONAl SECURED PARTY'S llJ fAS$(GNOR sip's NAME. - Inser ll..lI\tra or 12lil~~TiNA~
OR 12b. INDIVIOUAL'SLAST NAMË ftRSTNAME MIOENAE ...¡~
12c.MALl$~Cil $TÃÎE . ¡POSTAL COOl:CdNT
13.This FINANCINGSTATEMENT:~ timber to be cut orW as-extraed 16.AddlUonal coaterl deslptlon:
colateral, or I. flie as aD flxture..fl
14.Descriptio of real eslale.
15.Name and address of e RECORD OWNER of above-describe real estate
(ff Debtor does not have a reco Intaresl):
17. Check ll if ,;pDcti and ch 2l Cle bo.
Debto Is al"Trust ;:0 Trustee acting wlh~ to ~ held in Ifustö(nOecnl'S Estate
tIt Check ll ff appHcabie and chck ll on box.,.~Debtr Is a TRASMITTING UTILITY
..Rle In conetio wih a Menufaclurd-Hom Transacll - efec 30 yea
í' in coio wi a PubliFinc TiactQ/ efecveaO)""w.
FILING OFFICE COPY -NATIONAL UCC FINANCING STATEMENT ADDENDUM (FORM UCC1Ad) (REV. 07/29198)
ATTACHMENT A
COLLATERAL
1. Collateral shall include the following:
All propert, assets, rights, privileges, licenses and franchises of the Grantee of every kind and
description, personal or mixed, tangible and intangible, acquired by the Grantee with grant fuds, wherver located,
including without limitation, after acquired propert and all or par of the following:
I
All right, title, and interest of the Grantee in and to buildings, plants, works, improvements,
strctures, estates, grants, franchises, easements, rights, privileges and propertes, whether personal, or mixed,
tangible or intagible, of every kind or description, now or hereafter owned, leased, constrcted, or acquied by the
Grantee with grant fuds, wherever located, and in and to all extensions, improvements, and additions thereto,
including but not limited to all buildings, plants, works, structues, towers, antennas, fixtues, apparatus, materials,
supplies, machinery, tools, implements, poles, posts, crossarms, conduits, ducts, lines, wires, cables, wheter
underground, overhead, or otherwise, exchanges, switches, including, without limitation, host and remote switches,
desks, testboards, frmes, racks, motors, generators, batteries, and other items of central offce equipment, pay
stations, protectors, instruments, connections and appliances, offce funiture, equipment, and any and all other
propert of every kind, nature, and description, used, useful, or acquired by the Grantee with grant funds;
II
All right, title, and interest of the Grtee in, to, and under all personal propert and fixtues
acquired with grant fuds including without limitation all goods (such as inventory, equipment and any accessions
thereto), softare, and proceeds (as such terms are presently and hereafter defined in the UCC);
II
All right, title, and interest of the Grantee in, to, and under any and all books, records and
correspondence relating to the Pledged Propert, including, but not limited to, all records, ledgers, leases, computer
and automatic machinery, software, programs, databases, disc or tape fies, print-outs, batches, runs, and other
electronically-prepared information indicating, summarzing, evidencing, or otherwse necessar or helpful in the
collection or realization on the Collateral;
2. Additionally, propert pledged as Collateral shall also include the following specifically described
propert, if any: None