20161221Application.pdf

Pi'HA WLEY Ri:CS:l'eff:tl ATTORNEYS AND COUNSELORS TR Q XELL-----~~~"'1-+ei,,,R---H-a_w_l_e_y_T_ro_x_e_ll_E_nn_is_&_H_a_w_l_ey-LL_P_
877 Main Street, Suite 1000 20i5 DEC 21 P 2: 4 7 P.O. Box 1617
STEVE FRINSKO
E-MAIL: [e-mail]
DIRECT DIAL: 208.388.4876
DIRECT FAX: [phone]
VIA HAND DELIVERY
Ms. Jean Jewell
Secretary
Idaho Public Utilities Commission
472 W. Washington Street
P.O. Box 83720
Boise, ID 83702-0074
· ·-Jrli iC ~I I ·• j \ J :-~ "1, • . :OMM!SS!Of'
December 21, 2016
Boise, Idaho 83701-1617
208.344.6000
www .hawleytroxell.com
Re: Case No. MID-T-16-01, Application of Midvale Telephone Company pursuant to
I. C. 61-905 for Authority to Execute a Loan Agreement and Promissory Note
Dear Ms. Jewell:
I am enclosing an original and four copies of Midvale Telephone Company's application
for loan approval, together with a filing fee in the amount of $505. Please acknowledge receipt
by returning a stamped copy of this cover letter to me. Thank you very much.
Sincerely,
Enclosures
48441.0003.8563528. I
Stephen M. Frinsko, ISB No. 8432
HAWLEY TROXELL ENNIS & HAWLEY LLP
877 Main Street, Suite 1000
P.O. Box 1617
Boise, ID 83701-1617
Telephone: [phone]
Facsimile: 208-954-5261
Email: [e-mail]
Attorneys for Midvale Telephone Company
-, -=c" ~= 1\tED r ._ ·~· .) L-, v
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF MIDVALE TELEPHONE COMPANY
FOR AUTHORITY TO BORROW FROM
THE RURAL UTILITIES SERVICE ("RUS")
IN AN AMOUNT NOT TO EXCEED
$12,691,000.
Case No. MID-T-16-01
APPLICATION OF MIDVALE
TELEPHONE COMPANY
Midvale Telephone Company ("Applicant") makes this Application pursuant to Idaho
Code§ 61-901 for authority to execute a Loan Agreement and Promissory Note in an amount not
to exceed $12,691,000 together with a supplemental mortgage with the United States of America,
acting through the Administrator of the Rural Utilities Service ("RUS"). In support of its
Application, Applicant states as follows:
1. Applicant is a certificated telephone corporation organized under the laws of the
State of Idaho providing telecommunication services including local exchange service within the
states of Idaho and Arizona. The Certificate of Public Convenience and Necessity (No. 254) of
Midvale Telephone Exchange, Incorporated ("MTE") was transferred to MTE 's wholly-owned
subsidiary, Applicant, by Order No. 30969 dated December 29, 2009 in Docket MID-T-09-03.
48441.0003.8399 I I 5.4
upon:
2. All notices and communications with regard to this Application should be served
Steve Frinsko
HAWLEY TROXELL ENNIS & HAWLEY LLP
877 Main Street, Suite 1000 (ZIP 83702)
P.O. Box 1617
Boise, Idaho 83701-1617
Telephone: [phone]
Facsimile: 208-954-5261
John Stuart
President & Chief Executive Officer
Midvale Telephone Company
2205 Keithley Creek Road
Midvale, Idaho 83645
[e-mail]
Telephone: [phone]
3. The proposed RUS loan proceeds will be used to pay for, and partially reimburse
general funds to: (1) extend services to approximately 368 new customers; (2) provide for router
· and switch upgrades to handle broadband traffic growth; (3) allow Applicant to provide faster
broadband speeds in each of its eleven exchanges; (4) provide fiber to the home ('FTTH") in
several areas and extend fiber for toll and broadband Ethernet transport facilities to provide
larger pipes and redundant paths; (5) build approximately 49.59 miles of new toll fiber, 83.61
miles of local fiber, and 17.56 miles of drops; (6) serve two new FfTH Carrier Serving Areas
("CSA") and one new CSA for copper DSL; and (7) replace six existing CSAs without Ethernet
capabilities. The total new Optical Network Terminals ("ONT") for FfTH are 309 and four
Digital Subscriber Line Access Multiplexers ("DSLAM") with 192 lines. The loan approval
letter dated September 27, 2016, is attached hereto as Exhibit A.
4. Applicant believes the proposed RUS loan will be designated a cost-of-money
loan and will bear interest at the Cost-of-Money interest rate for a term of 19 years. The actual
-2 -
48441 .0003.8399 I I 5.4
interest rate will be determined when each advance of funds is made to the Applicant, as
provided in 7 C.F.R. § 1735.31, but will not exceed 7 percent per year.
5. The proposed transaction is consistent with the public interest. The extension of
service and upgrades will improve service for Applicant's customers and make it possible for
Applicant to meet new service demands.
6. A copy of the Applicant's most recent Annual Report showing the authorized and
outstanding classes of Applicant's securities is on file with the Commission, and the Applicant
respectfully requests the Commission take official notice thereof.
7. A certified copy of Applicant's Board of Directors ' resolution authorizing the
proposed transaction is attached hereto as Exhibit B.
8. A Proposed Order granting this Application is attached hereto as Exhibit C.
9. Notice of this Application will be published within seven (7) days in The Idaho
Statesman (Boise) and the Idaho Business Review (Boise). A copy of this Notice is attached as
Exhibit D.
10. Applicant submits that the public interest does not require a hearing on this matter
and it requests that the Commission process this Application and determine this matter by
Modified Procedure, pursuant to Rule 144 of the Commission's Rule of Practice and Procedure.
In the event the Commission determines that formal proceedings on this Application are
necessary, Applicant stands ready for immediate hearing.
11. 33.8 percent of Applicant's total book value is located in Idaho. Applicant has
therefore attached its filing fee, calculated pursuant to Idaho Code Section 61-905, in the amount
of $505.
- 3 -
48441.0003.8399 115.4
WHEREFORE, Applicant respectfully requests an Order of this Commission:
1. Granting the foregoing Application of Midvale Telephone Company to execute
and deliver to the Rural Utilities Service a Loan Agreement, Promissory Note, and related
documents for a loan in an amount not to exceed $12,691,000; and
2. Granting such other relief as the Commission deems just and reasonable in this
matter.
Dated: December 1-1 , 2016
Attorney for Midvale Telephone Company
-4 -
48441 .0003.8399 I I 5.4
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 1:...!_ day of ])~rJl-1<. , 2016, I caused to be
served a true and correct copy of the foregoing document by the method indicated below, and
addressed to the following:
Ms. Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington Street
P. 0. Box 83720
Boise, ID 83702-0074
[ ] U.J. Mail
[ &J,fland Delivered
[ ] Overnight Mail
[ ] Facsimile
~Frinsko .
48441.0003.8399115.4
EXHIBIT A
LOAN APPROVAL LETTER
4844 1.0003.8399 I I 5.4
Mr. John Stuart
CEO
USDA •• z::::::::;; ~
Development
United States Department of Agriculture
Rural Development
SEP 2 7 2016
Midvale Telephone Company
P.O. Box 7
Midvale, Idaho 83645
Dear Mr. Stuart:
We are pleased to inform you that your application for a loan from the Rural Utilities Service
Telecommunications Program has been approved . We are offering you a loan in the amount of
$12,691 ,000 at the Cost-of-Money interest rate for a term of 19 years. The loan will bear interest
at the rate applicable to each advance of loan funds based on the average yield on outstanding
marketable obligations of the United States having a final maturity comparable to the final
maturity of the advance. The loan is subject to the terms of the enclosed Loan Agreement. The
loan designation for your project is ID 518-K42. This designation should be referenced in all
future correspondence concerning this loan.
Under USDA 's Fiscal Year 2016 Appropriations Act, Congress inserted specific restrictions on
use of funds to enter into financial transactions with corporations having felony convictions or
tax delinquencies. In order to comply with these provisions, you will need to execute and submit
the enclosed Form AD-3031, "Assurance Regarding Felony Conviction or Tax Delinquent Status
for Corporate Applicants."
Please indicate your acceptance of this offer by having the president or other authorized official
sign the second copy of this letter and the Form AD-3031 and immediately return them both by
e-mailing a scan of the signed copy and in hard copy to:
Mr. Shawn B. Amer
Deputy Assistant Administrator
Loan Origination and Approval Division
Teleconununications Program
USDA, Rural Utilities Service
Stop 1597, Room 2844, South Building
1400 Independence A venue, SW
Washington, DC 20250-1595
Shawn.Amer@wdc. usda. gov
We must receive both your acceptance and the Form AD-3031 by COB September 28, 2016, to
insure that the loan can be obligated.
1400 Independence Ave, S.W. · Washington DC 20250-0700
Web: http://www.rurdev.usda.gov
Committed to the future of rural communities.
"USDA Is an equal opportunity provider, employer and lender.•
To file a complaint of dlscrimlnallon, write USDA, Director, Office of Clvll Rights,
1400 Independence Avenue. S.W., Washlnglon, DC 20250-9410 or call [phone] (Voice) or [phone] (TOO).
Mr. John Stuart Page 2
Upon receipt of both documents, the loan documents will be prepared and forwarded in the near
future for execution. This loan is approved with the understanding that the loan documents will
be authorized and executed by your organization and returned to us within the time period which
will be set forth in the letter of transmittal.
Sincerely,
KE[TH B. ADAMS
Assistant Administrator
Telecommunications Program
Rural Utilities Service
Enclosure
AA# RT3764
ACCEPTANCE:
Midvale Telephone Company
By: s
Name: ~cHe-..l c:~::::>lu ~e2..-,
Title: :::Raes, Det-.JT / c...ao
Date: j-28-t(:.
This form is available electronically. Form Approved -0MB No. 0505-0025
Expiration Date: 04/30/2019
AD-3031
U.S. Department of Agriculture
ASSURANCE REGARDING FELONY CONVICTION
ORT AX DELINQUENT STATUS FOR CORPORA TE APPLICANTS
NOTE: The following statement is made in acconJance with the Privacy Act of 1974 (5 USC 552(a}-as amended). The authority for requesting the following information for
USDA agencies and offices is in sections 745 and 746 ofthe Consolidated Appropriafons Act, 2016, Pub. L. 114-113. as amended and/or subsequently
enacted. The informetion will be used to document compliance with appropria6ons restriclions.
According to the Paperwork Reduction Act of 1995 an agency may not conduct or sponsor. and a person is not required to respond to a collec6on of information unless ii
dsplays a vaid 0MB control number. The vaid 0MB control number of this information collection is 0505-0025. The time required to complete this information collection is
estimated to average 3 minutes per response. incJudng the time for reviewing instructions. searching existing data sources. gathering and maintaining the data needed. and
completing and reviewing the collection of information. The provisions of appropriate criminal and civil fraud, privacy. and other statutes may be applicable to the
informa6on provided.
This award is subject to the provisions contained in the Consolidated Appropriations Act, 2016, Pub. L. 114-113. Division
E. Title VII, sections 745 and 746, as amended and/or subsequently enacted for U.S. Department of Agriculture (USDA)
agencies and offices regarding corporate felony convictions and corporate federal tax delinquencies.
Accordingly, by accepting this award the corporation recipient acknowledges: (I) that it does not have a Federal tax
delinquency, meaning that it is not subject to any unpaid Federal tax liability that has been assessed, for which all judicial
and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to
an agreement with the authority responsible for collecting the tax liability, and (2) that it has not been convicted of a
felony criminal violation under any Federal law within 24 months preceding the award, unless a suspending and debarring
official of the USDA has considered suspension or debarment of the recipient corporation based on these convictions
and/or tax delinquencies and determined that suspension or debarment is not necessary to protect the interests of the
Government. If the recipient fails to comply with these provisions, the agency will annul this agreement and may recover
any funds the recipient has expended in violation of the above cited statutory provisions.
~
TITLE/RELATIONSHIP OF THE INDIVIDUAL IF SIGNING IN A
REPRESENTATIVE CAPACITY
M.,oitALe. 1 e, i?:i?dc:JYe Ca(V\e~y
BUSINESS NAME
C\-29-lb
DATE SIGNED (MM-DD-YYYY)
The U.S. Department of Agriculture (USDA) prohitits discrimination in an of its programs and activities on me basis of race. color. national origin. age. disability, and where
applicable. sex. marital status, familial status. parental status. reigion, sexual orientation, political beliefs, genetic information. reprisal. or because all or part of an individual's
income is derived from any public assistance program. (Not an prohibited bases apply to all programs.) Persons with dsatililies who require alternative means for
communica6on of progn,m information (BraiNe. large print. audotape, etc.) should contact USDA 's TARGET Center at [phone] (voice and TDD). To file a complaint of
dscrimination. write to USDA. Assistant Secretary for Civil Rights. Office of the Assistant Secretary for Civil Rights. 1400 Independence Avenue. S. W .. Stop 941 o.
Washington, DC 20250-9410, or call toll-free at [phone] (Eng#sh) or [phone] (TDD) or [phone] (Eng6sh Federal-relay) or [phone] {Spanish
Federal-relay). USDA is an equal opportunity provider and employer.
Rev: 02/16
EXHIBIT B
APPLICANT'S BOARD OF DIRECTORS ' RESOLUTION
48441.0003.8399 I I 5.4
MIDVALE TELEPHONE COMPANY
AN IDAHO CORPORATION
SECRETARY'S CERTIFICATE
, do hereby certify that:
1. I am the duly elected, qualified and acting Secretary of Midvale Telephone
Company, an Idaho corporation (the "Corporation").
2. The following resolutions are true and correct copies of resolutions duly adopted
by the Corporation's Board of Directors (the "Board") at the Board's regularly scheduled annual
meeting held on December 20, 2016 (the "Meeting"), and entered in the Corporation's minute
books:
WHEREAS, the Board of Directors {"Board") of Midvale Telephone
Company ("Corporation"), is familiar with the Corporation's proposal to borrow
funds from the United States of America, acting through the Rural Utilities
Service ("RUS"), in the principal amount not to exceed $12,691,000 (the "Loan")
upon the terms and conditions set forth in the Loan Agreement; Promissory
Note; Restated Mortgage, Security Agreement and Financing Statement; and
other documents and instruments contemplated therein (the "Loan
Documents");
WHEREAS, the Restated Mortgage, Security Agreement and Financing
Statement provides for RUS to have a first lien on the Corporation's property,
and which mortgage is intended to secure the Loan, as well as all prior loans
from RUS in parity; and
WHEREAS, the Board has reviewed the Loan Documents and desires and
has determined that it is in the best interests of the Corporation to approve and
execute the Loan Documents, by and between the Corporation and RUS, dated
effective as of October 14, 2016, copies of which are attached as Exhibits A, !!
and !;,.
NOW THEREFORE, BE IT:
RESOLVED that the Corporation (a) borrow from the United States
of America, acting through the Rural Utilities Service ("RUS"), an aggregate
amount not to exceed $12,691,000; and (b) use the funds so borrowed from RUS
for such purposes as approved by RUS;
MIDVALE TELEPHONE COMPANY, AN IDAHO CORPORATION
SECRETARY'S CERTIFICATE
48441.0003.8557143.1
RESOLVED that John Stuart, as president and CEO of the
Corporation, in conjunction with the Loan, is authorized on behalf of the
Corporation to execute and deliver as many counterparts of the Loan Documents
as required by RUS;
RESOLVED that the officers of the Corporation are, and each of
them is, authorized and directed to execute, deliver, and certify in the name and
on behalf of the Corporation, all such instruments and all such other documents,
make all such payments and do all such other acts as such officer, in such
officer's discretion, deems necessary or advisable to carry out the purposes and
intent of the foregoing resolutions or the transactions contemplated thereby;
and
RESOLVED that any person or entity may rely upon any of the
foregoing upon presentation of a copy of this Resolution certified by the
Secretary or any Assistant Secretary of the Corporation declaring that this
Resolution has not been later revoked.
3. The Meeting was duly and regularly called and held in accordance with the
Corporation's bylaws.
4. Each member of the Board of Directors of the Corporation was furnished with
notice of the Meeting in compliance with the bylaws of the Corporation.
5. None of the resolutions set forth above has been rescinded or modified.
IN WITNESS WHEREOF, the undersigned hereby makes the foregoing certification
effective as Dc.c..Ll,Y\.be..-w ~ . 2.c:>lb
di~ Secretary
(Corporate Seal)
MIDVALE TELEPHONE COMPANY, AN IDAHO CORPORATION
SECRETARY'S CERTIFICATE
48441.0003.855 7143 .1
' '·
RUS Project Designation:
Idaho S18-K42
LOAN AGREEMENT
dated as of October 14, 2016
between
MIDVALE TELEPHONE COMPANY
and
THE UNITED STATES OF AMERICA
UNITED STATES DEPARTMENT OF AGRICULTURE
RURAL UTILITIES SERVICE
L ,
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement,") dated as of October 14, 2016 is between
MIDVALE TELEPHONE COMPANY (hereinafter the "Borrower,") a corporation organized and
existing under the laws of Idaho, and the UNITED STATES OF AMERICA, (hereinafter
the "Government") acting through the Administrator of the Rural Utilities Service ("RUS.")
The Borrower has applied 10 RUS, requesting financial assistance (hereinafter the
"Application") to provide telecommunications and/or broadband services in rural areas.
RUS is willing to extend financial assistance, in the form of loans or loan guarantees to the
Borrower, pursuant to the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.)(the "Act,") and all
applicable federal regulations, on the terms and conditions stated herein.
THEREFORE, in consideration of the promises and mutual covenants herein contained, the
parties agree and bind themselves as follows:
ARTICLE I -DEFINfflONS.
The terms defined herein include bolh 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 mean the system of accounting prescribed by RUS in RUS
Regulations.
"Advance" or "Advances" shall mean an advance or advances made or approved by RUS
under its respective Note(s).
"Affiliate" or "Affiliated Company" of any specified person or entity means any other person
or entity directly or indirectly controlling of, controlled by, under direct or indirect common control with,
or related to, such specified person or entity. For the purpose of this definition, "control" of any specified
person or entity means the power to direct the management and policies of such specified person or entity,
directly or indirectly, whether through the ownership of stock, by contract, or otherwise.
"Application" shall have the meaning as defined above in the second paragraph hereof.
"Broadband Loan" shall mean the broadband loan described in Section 3.1.
"Broadband Loan Expiration Date" shall have the meaning as defined in Paragraph (aXii) of
Section 3.1.
"Business Day" shall mean any day that RUS and the Department of Treasury are both open
for business.
"Construction Fund Account" shall have the meaning as defined in Paragraph (d) of Section
5.4.
"Distributions" shall have the meaning as defined in Section 6.9.
"Event of Default" shall have the meaning as defined in Article VIII.
"Interest Expense" shall have the meaning as defined in Attachment 3.
Page2
"Laws" shall have the meaning as defined in paragraph (e) of Article II.
"l.oan(s)" shall mean, collectively, the loans described in Section 3.1.
"Loan 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 Borrower or on the
ability of the Borrower to perform its obligations under the Loan Documents as determined by RUS .
"Net Income" or "Net Margins" shall have the meaning as defined in Attachment 3.
"Net Worth" shall have the meaning as defined in Attachment 3.
"Note(s)" shall have the meaning as defined in Paragraph (a) of Section 3.2.
"Permitted Encumbrances" shall have the meaning as defined in the Security Documents.
"Pledged Deposit Account" shall have the meaning as defined in Section 5.4.
"Prior Telephone Loan Contracts" shall mean all telephone loan agreements previously
entered into by RUS and the Borrower.
"Project" shall have the meaning as defined in Paragraph (a) of Section 3.4.
"RUS Regulations" shall mean the rules, regulations and bulletins of general applicability
published by RUS from time to time, as such rules, regulations and bulletins exist at the date of
applicability thereof, and shall also include any rule and regulations of other Federal entities which RUS is
required by law to implement. Any reference to specific RUS Regulations shall mean the version of and
cite to such regulation effective at the date of applicability thereof.
"Security Documents" shall mean, collectively, any mortgage, security agreement, financing
statement, deposit account control agreement or other document providing collateral for the Loan(s).
"Subsidiaries" shall mean the subsidiaries listed in Schedule I.
"Telecommunications Loan" shall mean the telecommunications loan described in Section
3.1.
"Telecommunications Loan Expiration Date" shall have the meaning as defined in Paragraph
(b Xii) of Section 3.1.
"Telecommunications Loan Guarantee" shall mean the telecommunications loan guarantee
described in Section 3.1.
"TIER" shall mean the Borrower's total Net Income or Net Margins plus Interest Expense
payable for such year divided by Interest Expense payable for such year, as determined in Schedule I
hereto.
"TIER Commencement Date" shall have the meaning as defined in Section 5.12.
"Total Assets" shall have the meaning as defined in Attachment 3.
Page3
------------------------------------------------
ARTICLE II· REPRESENTATIONS AND WARRANTIES
Recognizing that RUS is relying hereon, the Borrower represents and warrants, as of the date
of this Agreement, the following:
(a) Organization; Power, Etc The Borrower: (i) is the type of organization specified in
the first paragraph 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 qualification necessary; (iii) has legal power to
own and operate its assets and to carry on its business and to enter into and perform
its obligations under the Loan Documents; (iv) has duly and lawfully obtained and
maintained all material licenses, certificates, permits, authorizations, and approvals
necessary to conduct its business or required by applicable Laws; and (v) is eligible
to obtain the financial assistance from RUS contemplated by this Agreement.
(b) Authority. The execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents and the performance 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 charter, articles of incorporation,
organization documents or bylaws of the Borrower or result in a breach of, or
constitute a default under, any agreement, security agreement, note or other
instrument to which the Borrower is a party or by which it may be bound. The
Borrower has not received any notice from any other party 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, filing, qualification, license, or
permit of any governmental authority is necessary in connection with the execution,
delivery, performance, or enforcement of the Loan Documents, except such as have
been obtained and are in full force and effect.
(d) Binding Agreement. Each of the Loan Documents is, or when executed and
delivered will be, the legal, valid, and binding obligation of the Borrower,
enforceable in accordance with its terms, subject only to limitations on enforceability
imposed in equity or by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally.
(e) Compliance with laws. The Borrower is in compliance in all material respects with
all federal, state and local laws, rules, regulations, ordinances, codes and orders
(collectively, .. Laws.")
(f) litigation. There are no pending or threatene.d legal, arbitration or governmental
actions or proceedings to which the Borrower is a party or to which any of its
property 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 1he Application were, al
the time the same were furnished, 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 of the Borrower and the
results of its operations in conformity with Accounting Requirements. Since the date
thereof, there has been no material adverse change in lhe financial condition or
operations of the Borrower.
Page 4
•
(h) Location of Properties. All real property and interests therein of the Borrower are
located in the states, counties, or parishes identified in the Security Documents.
(i) Principal Place of Business. The principal place· of business and chief executive
office of the Borrower is at the address of the Borrower specified in Schedule 1
hereto.
(j) Organization Number. The Borrower's organization number is correctly identified
in Schedule l hereto.
(k) Subsidiaries and Parent. Any subsidiaries or parent of the Borrower are disclosed
on the attached Schedule 1.
(I) Defaults Under Other Agreements. No default by the Borrower has occurred under
any agreement or instrument to which the Borrower is a party, or to which any of its
property is subject, that could have a Material Adverse Effect.
(m) Title to Property. Except as disclosed in writing in the opinion of counsel, the
Borrower holds good and marketable title to all of the collateral securing the
Loan(s), free and clear of any liens, security interests, or other encumbrances except
for Permitted Encumbrances.
ARTICLE ill -THE LOANS
Section 3.1 Loans
(a) Broadband Loan. RUS agrees to make and the Borrower agrees to accept, on the
terms and conditions stated in this Agreement, a Broadband Loan, in the amount
specified in Schedule 1 hereto.
(i) Interest Rate. The portion of the Broadband Loan specified in Schedule 1
hereto will bear interest at the comparable Treasury rate for comparable
maturities, as determined by RUS, and the portion of the Loan specified in
Schedule 1 hereto will bear interest at the rate of four percent (4%) per
annum.
(ii) Broadband Loan Expiration Date. The obligation of RUS to advance the
Broadband Loan or any portion thereof shall expire on a date ("Broadband
Loan Expiration Date") five years from the date of the Note(s). No portion
of the Broadband Loan will be advanced by RUS to the Borrower after the
Broadband Loan Expiration Date.
(b) Telecommunications Loan. RUS agrees to make and the Borrower agrees to accept,
on the terms and conditions stated in this Agreement, a Telecommunications Loan,
in the amount specified in Schedule 1 hereto.
(i) Interest Rate. The portion of the Telecommunications Loan specified in
Schedule 1 hereto will bear interest at the Cost-of-Money Interest Rate
determined by the Government pursuant to 7 U.S.C. 935(d)(2XA) of the
Act and its implementing regulations, as ·amended from time to time (7
C.F.R. 1735.31(c)) and the portion of the Telecommunications Loan
specified in Schedule 1 hereto will bear interest at the rate of five percent
(5%) per annum.
Pages
•
(ii) Telecommunications Loan Expiration Date. The obligation of RUS to
advance the Telecommunications Loan or any portion thereof shall expire
on a date ("Telecommunications Loan Expiration Date") five (S) years from
the date of the Note(s). No portion of the Telecommunications Loan will be
advanced by RUS to the Borrower after the Telecommunications Loan
Expiration Date.
(c) Telecommunications Loan Guarantee. RUS agrees to guarantee the loan identified
in Schedule 1 hereto and the Borrower agrees to accept such guarantee, on the terms
and conditions stated in this Agreement.
(i) Interest Rate. Each Advance of funds subject to the Telecommunications
Loan Guarantee shall bear interest at the rate established by FFB at the time
such Advance is made on the basis of the determination made by lhe
Secretary of lhe Treasury pursuant to 12 U.S.C. 228S(b) of the Federal
Financing Bank Act of 1973, as amended.
(ii) Telecommunications Loan Guarantee Expiration Date. The obligation of
RUS to approve requests for Advances made under the
Telecommunications Loan Guarantee or any portion thereof shall expire on
the Last Advance Date as specified in the applicable guaranteed Note.
Section 3.2 Loan Documents
(a) The debt created by the Loan(s) will be evidenced by a note(s) ("Note(s)") executed
by the Borrower and payable, as applicable, lo the United States of America or, in
the case of a loan guarantee, to the guaranteed lender. The Borrower shall repay the
Loan(s) in accordance with the Note(s) which shall be payable and bear interest in
accordance with its (their) terms.
(b) The Borrower shall execute the Security Documents covering all of the Borrower's
property, in form and substance satisfactory to RUS and such other security
instruments as required by RUS.
Section 3.3 Payment
Except as olhcrwise prescribed by RUS, if any, the Borrower shall make all paymenls on lhe
Note(s) utilizing electronic funds transfer procedures as specified by RUS.
Section 3.4 Project
(a) loan Purpose. The Loan has been made solely to finance the project specifically
described in the Application to furnish or improve telecommunications and/or
broadband services in rural areas (the "Project.")
(b) Changes to Project. The Borrower shall obtain the prior written approval of RUS
regarding any material change to the scope, loan design, construction, delivery of
services, or objectives of the Project.
ARTICLE IV -CONDmONS OF LENDING
Section 4.1 General Condltions
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):
Page6
•
(a) legal Matters. All legal matters incident to the consummation of the transactions
hereby contemplated shall be satisfactory 10 counsel for RUS;
(b) loan Documents. RUS shall receive duly executed originals of the Loan
Documents;
(c) Filed and Recorded Security Documents. RUS shall have received the following
documents securing the Loan(s): (i) executed, filed, and indexed financing
statements covering all of the personal property and fixtures of the Borrower and (ii)
executed, filed, and recorded counterparts of a mortgage covering all of the
Borrower's real property;
(d) Articles of Incorporation, Charter, Bylaws, and Organizational Documents. With
respect 10 corporate and cooperative Borrowers, RUS shall have received copies of
the Borrower's articles of incorporation, charter, and bylaws. With respect to limited
liability companies or similar organizations, RUS shall have received copies of the
Borrower's organizational documents containing provisions reOecting the
obligations oflhe Borrower in paragraphs (c) and (d) of Section 6.3.
( e) Authorizations. RUS shall have received satisfactory evidence that all Loan
Documents and proceedings of the Borrower necessary for duly authorizing the
execution, delivery, and performance of the Loan Documents have been obtained
and are in full force and effect;
(t) Approvals. RUS shall have received satisfactory evidence that the Borrower has
duly registered as required by law with all stale, federal, and other public authorities
and regulatory bodies and has obtained all authorizations, certificates, permits,
licenses, franchises and approvals necessary for, or required as a condition of, the
validity and enforceability of each of the Loan Documents and for the construction
and operation of the Project;
(g) Title Evidence. RUS shall have received satisfactory evidence that the Borrower has
good and marketable title to its property, including the Project, 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 its existing facilities and the Project;
(h) Tariff Evidence. RUS shall receive evidence from each Borrower with rates
imposed by tariff, that it has duly adopted a tariff, which (1) will provide for such
grades of telephone service as RUS may approve, (2) does not include mileage or
zone charges on any telephone service provided by the Project, and (3) is designed
with a view to (i) paying and discharging all taxes, maintenance expenses, and
operating expenses of the Borrower's system, (ii) making all payments in respect 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 Borrower, and (iv}
producing and maintaining the TIER, specified in Schedule 1 hereto;
(i) Broadband Rate Evidence. For Broadband loans, RUS shall receive evidence that
the Borrower has duly adopted rates which are designed with a view to (i} paying
and discharging all taxes, maintenance expenses, and operating expenses of the
Borrower's system, (ii) making all payments in respect of principal and interest on
the Nole(s} when and as the same shall become due, (iii) providing and maintaining
reasonable working capital of the Borrower, and (iv) producing and maintaining the
TIER, specified in Schedule l hereto.
Page7
(j) Opinion of Counsel. RUS shall receive an opinion of counsel for the Borrower
(who shall be acceptable lo RUS) in form and content acceptable to RUS;
Section 4.2 Conditions to Advances
The obligations of RUS to make any Advances under its Loan(s) or approve any requests for
Advances under its Loan Guarantec(s) are subject 10 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 lo be satisfactory to RUS in its discretion):
(a) Continuing Representations and Warranties. Thal the representations and warranties
of the Borrower contained in this Agreement be true and correct on and as of the date
of such Advance as though made on and as of such date;
(b) Material Adverse Effect. Thal no event has occurred which has had or could have a
Material Adverse Effect;
(c) Event of Default. Thal no Event of Default and no event which with the passage of
time or giving of notice, or both, would constitute an Event of Default shall have
occurred and be continuing, or shall have occurred after giving effect to such
Advance on the books of the Borrower;
(d) Requisitions and Supporting Doc11mentation
(1) Broadband Loans. That RUS shall have received a requisition for
Broadband loan funds, not more frequently than once a month, and
supporting documentation from the Borrower in accordance with Rural
Utilities Service RUS Bulletin 1738-2, Rural Broadband Access Loan and
Loan Guarantee Advance and Construction Procedures Guide, as amended
and supplemented from time to lime (hereinafter "RUS Bulletin 1738-2,"}
attached hereto as Attachment 1 or available at http://www.usda.gov/
rus/telecom/broadband/rus-bulletin-1738-web2-6-03.doc;
(2) Telecommunications Loan and loan Guarantee. That RUS shall have
received a requisition for Telecommunications Loan funds and Loan
Guarantee funds not more frequently than once a month, and supporting
documentation from the Borrower in accordance with RUS Regulations;
(e) Flood Insurance. That for any Advance used in whole or in part to finance the
construction or acquisition of any building in any area identified by the Secretary of
Housing and Urban Development pursuant to the Aood Disaster Protection Act of
1973 (the "Aood Insurance Act") or any rules, regulations or orders issued to
implement the Aood Insurance Act as any area having special flood hazards, or to
finance any facilities or materials to be located in any such building, or in any
building owned or occupied by the Borrower and located in such a flood hazard area,
the Borrower shall have submitted evidence, in form and substance satisfactory to
RUS or RUS has otherwise determined, that (i) the community in which such area is
located is then participating in the national flood insurance program, as required by
the Flood Insurance Act and any related regulations, and (ii) the Borrower has
obtained flood insurance coverage with respect to such building and contents as may
then be required pursuant to the Flood Insurance Act and any related regulations;
(f) Cu"ent Financial Information and Certification of Authority. That RUS has
received from the Borrower (i) its current, 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 officer, employee, or agent of
Page 8
lhe Borrower as lhe person or persons authorized lo execute and submit, on behalf of
the Borrower, REA Form 481, "Financial Requirement Statement;"
(g) Fidelity Bond or Theft Insurance Coverage. Thal RUS has received from the
Borrower, except Borrowers which are units of government, evidence, that the
Borrower has obtained fidelity bond or theft insurance coverage in accordance with
RUS Regulations;
(h) Pledged Deposit Account. That, in connection with Broadband loans (or with
respect to Telecommunications loans and loan Guarantees when required on
Schedule 1, or otherwise directed in writing by RUS), the Borrower has opened a
Pledged Deposit Account under terms satisfactory to RUS;
(i) Compliance with Deposit Requirements for Broadband Loans. Thal, in connection
with Broadband loans, RUS has received from the Borrower, evidence that lhe
Borrower has maintained on deposit in account, funds in the amount specified in
Schedule 1 to cover operating expenses, in accordance with 7 C.F.R. Section
1738.20(b), and has provided RUS with an advance schedule for such funds;
G) Compliance with Loan Documents. That the Borrower is in material compliance
with the loan Documents;
(k) RUS Loan Guarantee Requirements. In connection with the Telecommunications
Loan Guarantee:
(1) That RUS and the FFB have entered into a contract and that lhe FFB has
agreed to make the loan to the Borrower, which will be guaranteed by RUS;
(2) That RUS has received evidence that any conditions in the contract referred
to above in subparagraph (1) have been satisfied; and
(3) That RUS has received a promissory note payable to FFB in the amount to
be guaranteed by RUS and a reimbursement note payable to the order of the
Government, both duly authorized, executed and delivered by lhe Borrower,
within the time period prescribed by RUS;
(I) Additional Documents. The Borrower agrees lo provide RUS with such additional
documents as RUS may request; and
(m) Additional Conditions. The Borrower has met all additional conditions specified in
Schedule 1 hereto.
Seclion 4.3 First Advance to Pay Off Interim Construction Financing; Restrictions on Subsequent
Advances
Loan funds to pay off RUS approved interim construction financing, if any, will be included
in the first loan advance. Thereafter no further advances will be made unless and until the Borrower has
furnished evidence, in form and content satisfactory to RUS, thal such interim construction financing has
been paid in full and any associated liens have been duly discharged from record.
ARTICLE V-AFFIRMATIVE COVENANTS
Section S.1 Generally
Page9
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, the Borrower
shall duly observe each of the affirmative covenants contained in this Article V.
Section S.2 Use of Advance$
The Borrower shall apply the proceeds of Advances in accordance with its Application with
such modifications as may be mutually agreed to in writing by RUS and the Borrower.
Section S.3 Unused and Disallowed Advances
(a) The Borrower shall return forthwith to RUS any and all advanced portions of the
Loan(s) or Loan Guarantee(s) not disbursed by the Borrower for the Project or not
needed to complete the Project with any interest earned thereon when deposited in
the Pledged Deposit Account or other account approved by RUS.
(b) The Borrower shall reimburse RUS for any advanced funds whose original
expenditure has been disallowed by a RUS loan audit. Disallowances shall be
satisfied, as directed by RUS, by either administrative offset against requests for
Advances or repaying the disallowed amount directly to the United States Treasury.
Such disallowed amounts shall accrue interest payable to RUS from the date RUS
delivers to the Borrower a written demand for payment. Interest shall accrue at the
lesser of lhe following: the interest rate of the disallowed Advance or the then
current United States Treasury rate as prescribed by the Secretary of the Treasury in
the Federal Register and the Treasury Fiscal Requirements Manual Bulletin.
Closeout of the Loan will not affect such right 10 disallow expenditures and recover,
in full, any amount on the basis of a subsequent audit, or other review or the
Borrower's obligation to return any disallowed expenditures.
Section S.4 Deposit of Advances into Pledged Deposit Account and Construction Fund Account
(a) Broadband Loans. The Borrower of Broadband Loans shall open and maintain a
deposit account pledged to RUS ("Pledged Deposit Account,") in a bank or
depository whose deposits are insured by the Federal Deposit Insurance Corporation
or other federal agency acceptable to RUS and shall be designated by the RUS name
of the Borrower followed by the words "Pledged Deposit Account." The Borrower
shall promptly deposit proceeds from all Advances of the Broadband Loan, including
previously advanced funds whose original expenditure has been disallowed by a
RUS loan audit, and other funds described on Schedule 1 hereto (hereinafter
"Additional Funds") into the Pledged Deposit Account. Moneys in the Pledged
Deposit Account shall be used solely for the purposes for which the Advance was
made, for the purposes as set forth in Schedule I hereto (hereinafter "Additional
Purposes,") or for such other purposes as may be approved by RUS. Deposits and
disbursements from the Pledged Deposit Account shall be made and recorded in
accordance with Allachment 1 hereto, RUS Bulletin 1738-2, as amended and
supplemented from time to time.
(b) Telecommunications Loans and loan Guarantees and Bank Loans. The Borrower of
Telecommunications Loans and/or Loan Guarantees, when required on Sc):ledule 1 or
otherwise directed in writing by RUS, shall open and maintain a deposit account
pledged to RUS for Telecommunications Loans and Loan Guarantees. Such account
shall be in a bank or depository whose deposits are insured by the Federal Deposit
Insurance Corporation or other federal agency acceptable to RUS, and shall be
designated by the corporate name of the Borrower followed by the words "Pledged
Deposit Account." The Borrower shall promptly deposit proceeds from Loan
Advances, including previously advanced funds whose original expenditure has been
disallowed by a RUS loan fund audit, and any Additional Funds into the Pledged
Page 10
Deposit AccounL Moneys in the Pledged Deposit Account shall be used solely for
the purposes approved by RUS or other Additional Purposes and shall be withdrawn
from time to time only as permitted by RUS.
(c) First Lien on Pledged Deposit Account. The Borrower shall establish and maintain
the Pledged Deposit Account as a deposit account and perfect a first and prior lien in
such account for RUS, (pursuant to a deposit account agreement or similar
agreement or mechanism for perfecting as provided by applicable law) in form
acceptable to RUS.
(d) Construction Fund Account. The Borrower shall promptly deposit Loan Advances
not required to be deposited in a Pledged Deposit Account, including previously
advanced Loan funds whose original expenditure has been disallowed by a RUS loan
fund audit, in a bank or depository whose deposits are insured by the Federal Deposit
Insurance Corporation or other federal agency acceptable to RUS. Such account
(hereinafter called the Construction Fund Account) shall be designated by the
corporate name of the Borrower followed by the words "Construction Fund
Account." Moneys in the Construction Fund Account shall be used solely for the
purposes approved by RUS and shall be withdrawn from time to time only as
permitted by RUS.
Section 5.5 Use· of Operating Funds Required in Connection with Broadband Loans
The Borrower shall expend the operating funds required by 7 C.F.R. Section 1738.20(b}, as
approved by RUS.
Section 5.6 Financial Books
The Borrower shall maintain, at its premises, such books, documents, papers, or other records
and supporting documents, including, but not limited to, invoices, receipts, and bills of sale, adequate to
identify the purposes for which and the manner in which Loan and other funds were expended on the
ProjecL The Borrower shall at all times keep and safely preserve proper books, records, and accounts in
which full and true entries shall be made of all dealings, business, and affairs of the Borrower and its
Subsidiaries (as listed in Schedule 1 hereto,) in accordance with any applicable Accounting Requirements.
The Borrower shall maintain copies of all documents submitted to RUS in connection with the Loan until
the Loan has been paid in full and all audits have been completed.
Section 5. 7 Rights of Inspection
The Borrower shall afford RUS, the Office of Inspector General of USDA and the General
Accounting Office, through their representatives, reasonable opportunity, at all times during business hours
and upon prior notice, to access and inspect the Project, any other property encumbered by the Security
Documents, and any and all books, records, accounts, including electronic books, records, accounts, and
electronic mail messages, regardless of the physical form or characteristics, invoices, contracts, leases,
payrolls, canceled checks, statements, other documents, and papers of every kind belonging to or in any
way pertaining to its property or business, including its Subsidiaries, if any, and to make copies or extracts
therefrom.
Section S.8 Annual and Special financial Reports
(a) One hundred twenty (120) days from the end of the Borrower's fiscal year in which
the first Advance is made and, thereafter, one hundred twenty (120) days from the
close of each fiscal year of the Borrower, the Borrower shall cause to be prepared
and furnished to RUS a full and complete annual report of its financial condition and
of its operations in form and substance satisfactory to RUS, and as provided in 7
C.F.R. 1773, which is audited and certified by an independent certified public
Page 11
accountant satisfactory to RUS, and accompanied by a report of such audit in form
and substance satisfactory to RUS.
(b) The Borrower shall also furnish to RUS by March 31'' of each year, and on such
additional date(s) as specified in Schedule 1 (hereinafter "Additional Reporting
Dates,") or as otherwise requested in writing by RUS, balance sheets, income
statements, statements of cash flow, or such other reports concerning the financial
condition or operations of the Borrower, including its Subsidiaries, as RUS may
request or RUS Regulations require.
Section 5.9 Annual Compliance Certificate
Commencing forty-five (45) days from the date hereof, and thereafter within forty-five (45)
days after the close of each calendar year, or sooner if required in writing by RUS, the Borrower shall
deliver to RUS, a written statement signed by its general manager, managing member, or equivalent
corporate official satisfactory to RUS, stating that, during such year the Borrower has fulfilled its
obligations under the loan Documents in all material respects or, if there has been a material default in the
fulfillment of such obligations, specifying each such default known to such official and the nature and
status thereof.
Section 5.10 Miscellaneous Reports and Notices
The Borrower shall furnish to RUS:
(a) Notice of Default. Promptly after becoming aware thereof, notice of the occurrence
of any default under the loan Documents or the receipt of any notice with respect to
the occurrence of any event which with the giving of notice or the passage of time, or
both, could become an Event of Default hereunder or under the other loan
Documents.
(b) Notice of Litigation. Promptly after the commencement thereof, notice of the
commencement of all actions, suits or proceedings before any court, arbitrator, or
governmental department, commission, board, bureau, agency, or instrumentality
affecting the Borrower or any Affiliate which, if adversely determined, could have a
Material Adverse Effect on the Borrower.
(c) Regulatory and Other Notices. Promptly after receipt thereof, copies of any notices
or other communications received from any governmental authority with respect to
any matter or proceeding which could have a Material Adverse Effect on the
Borrower.
(d) Material Adverse Effect. Promptly after becoming aware thereof, notice of any
matter which has resulted or may result in a Material Adverse Effect on the
Borrower.
(e) Corporate Document Changes. Thirty (30) days prior to their effectiveness, any
amendments, supplements or modifications to the Borrower's Articles of
Incorporation, Charter, Bylaws, Operating Agreement, Members Agreements or
other Organizational Documents.
(f) Other Information. Such other information regarding the condition, financial or
otherwise, or operations of the Borrower as RUS may, from time to time, reasonably
request.
Section 5.11 Tariff and Rate Design
Page 12
(a) Tariff Requirements for Telecommunications Loan and Telecommunications Loan
Guarantee Borrowers are as follows:
(1) Regulatory Approval Necessary. If regulatory approval is required to
effectuate its telephone service tariff, the Borrower shall seek and use its
diligent best efforts to obtain all regulatory body approvals necessary to
place in effect and thereafter to maintain in effect a tariff for telephone
service which (A) provides for such grades of service as RUS shall approve,
(B) does not include mileage or zone charges for any telephone service
provided by the Project, and (C) is designed with a view to (1) paying and
discharging all taxes, maintenance expenses, and operating expenses of the
Borrower's system, (2) making all payments in respect of principal of and
interest on the Note(s) when and as the same shall become due, (3)
providing and maintaining reasonable working capital for the Borrower, and
(4) producing and maintaining the TIER specified on Schedule 1 hereto.
The Borrower shall place such tariff into effect as soon as permitted by
applicable laws and regulations and shall use its diligent best efforts to
obtain all necessary regulatory body approvals of such revisions of its tariff
as may be necessary from time to time to satisfy the requirements of this
provision.
(2) Regulatory Approval Not Required. If regulatory approval is not required
to effectuate its telephone service tariff, the Borrower shall design, charge
and maintain in effect a tariff for telephone service which (A) provides for
such grades of service as RUS shall approve, (B) does not include mileage
or zone charges for any telephone service provided by the Project, and (1)
pays and discharges all taxes, maintenance expenses, and operating
expenses of the Borrower's system, (2) makes all payments in respect of
principal of and interest on the Note(s) when and as the same shall become
due, (3) provides and maintains reasonable working capital for the
Borrower, and (4) produces and maintains the TIER specified on Schedule
1 hereto.
(b) Rate Requirement for Broadband Service. The Borrower shall design, charge, and
maintain in effect rates for Broadband service which (i) pay and discharge 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, (iii) provide and maintain reasonable working capital for the Borrower,
and (iv) produce and maintain the TIER specified on Schedule 1 hereto.
Section 5.12 TIER Requirement
From the date of this Agreement until the date specified in Schedule I, the Borrower will
endeavor, but not be required, to maintain a TIER of at least 1.0. Thereafter, starting on the date specified
in Schedule l (hereinafter called the "TIER Commencement Date") the Borrower shall maintain the TIER
level(s) as specified in Schedule 1.
Section 5.13 Corrective Action
Within thirty (30) days of (i) sending the financial reports required by Section 5.8 hereof that
shows the TIER specified by Section 5.12 was not achieved for the reported fiscal year or (ii) being notified
by RUS that the TIER specified in Section 5.12 was not achieved for the reported fiscal year, whichever is
earlier, the Borrower, in consultation with RUS, shall provide a written plan satisfactory to RUS setting
Page 13
forth the actions that shall be taken to achieve the specified TIER on a timely basis and shall promptly
implement said plan.
Section 5.14 ObligatJons with Respect to the Construction, Operation and Maintenance of the
Project Funded by the Broadband Loan
(a) Project Management and Operation. The Borrower shall be responsible for
managing the day to day operations of the Project and will operate the Project in an
efficient and economic manner as well as maintaining the Project in good repair.
(b) Design Standards, Construction Standards, and Lists of Materials. The Borrower
shall use design standards, construction standards, and lists of acceptable materials in
accordance with Attachment 1 hereto, RUS Bulletin 1738-2, as amended and
supplemented from lime to time.
(c) Plans and Specifications. The Borrower shall submit plans and specifications for
construction to RUS for review and approval in accordance with Attachment 1
hereto, RUS Bulletin 1738-2, as amended and supplemented from time to time.
(d) Standard Forms of Purchase Contracts, Installation Contracts, Construction
Contracts, and Engineering and Architectural Service Contracts. The Borrower
shall use the standard forms of contracts promulgated by RUS for construction,
procurement, engineering services, and architectural services in accordance with
Attachment 1 hereto, RUS Bulletin 1738-2, as amended and supplemented from
time to time, and shall submit to RUS such contracts for review and approval in
accordance with such Altachmenl 1.
(e) Contract Bidding Requirements. The Borrower shall follow RUS bidding procedures
when contracting for construction or procurement in accordance with Attachment 1
hereto, RUS Bulletin 1738-2, as amended and supplemented from time to time.
(I) Construction in Accordance with Loan Design. The Borrower shall cause the
Project to be constructed and completed in accordance with the loan design
submitted with the Application.
(g) General Insurance Requirements. The Borrower shall take out and maintain
insurance on the Project and any other property acquired with the Loan in
accordance with 7 CFR Section 1788 as well as maintaining the fidelity bond or theft
insurance coverage required in Section 4.2 paragraph (g) hereof.
Section 5.15 Obligations with Respect to the Construction, Operation and Maintenance of the
Project Funded by the Telecommunications IAan and Telecommunications Loan
Guarantee
(a) Project Management and Operation. The Borrower shall be responsible for
managing the day lo day operatic~ of the Project and will operate the Project in an
efficient and economic manner as well as maintaining the Project in good repair.
(b) Design Standards, Construction Standards and List of Material. The Borrower shall
use design standards, construction standards, and lists of acceptable materials in
accordance with RUS Regulations.
(c) Plans and Specifications. The Borrower shall submit plans and specifications for
construction to RUS for review and approval in accordance with RUS Regulations.
Page 14
(d} Standard Forms of Purchase Contracts, Installation Contracts, Construction
Contracts, and Engineering and Architectural Service Contracts. The Borrower
shall use the standard forms of contracts promulgated by RUS for construction,
procurement, engineering services. and architectural services in accordance with
RUS Regulations and shall submit to RUS such contracts for review and approval in
accordance with RUS Regulations.
(e) Contracts for Toll Traffic, Operator Assistance Services, and Extended Area Service.
The Borrower shall submit contracts for toll traffic, operator assistance services and
contracts for extended area service to RUS for review and approval in accordance
with RUS Regulations.
(I) Contract Bidding Requirements. The Borrower shall follow RUS bidding procedures
when contracting for construction or procurement in accordance wilh RUS
Regulations.
(g) Construction in Accordance with Loan Design. The Borrower shall cause lhe Project
to be constructed and completed in accordance with the loan design submitted with
the Application.
(h} General Insurance Requirements. The Borrower shall take oul and maintain
insurance on the Project and any other property acquired with the Loan as well as
maintaining fidelity bond or theft insurance coverage in accordance with RUS
Regulations.
Section 5.16 Obligations Applicable to Telecommunications Loan and Telecommunications Loan
Guarantee Borrowers with Respect to Area Coverage of Telephone Senice
The Borrower shall furnish adequate telephone service to the widest practicable number of
rural users in the Borrower's telephone service area, as such area is shown on the map which is a part of the
Borrower's application for the Telecommunications Loan or Telecommunications Loan Guarantee and
which map, as revised by agreement between the Borrower and RUS, is incorporated herein by reference
thereto. In the performance of this obligation, the Borrower shall:
(a} furnish service to all applicants for telephone service included in the Project funded
by the Telecommunications Loan, or Telecommunications Loan Guarantee, without
payment by such applicants of any extra charge as a contribution to the cost of
construction of facilities to provide such service; and
(b) take all action that may be required to enable it to extend service, without payment 10
the Borrower of any extra charge as a contribution to construction of facilities to
provide such service, 10 every unserved rural applicant for service in its telephone
service area if the cost of constructing the required line extension for such applicant
will not exceed seven times the estimated annual local service revenues from such
applicant. Such service shall be furnished with the use of such funds as may from
time to time be available to the Borrower, either from surplus earnings, increased
equity capital, additional loans made by lenders other than the Government, or
otherwise as the Borrower may elect, pursuant 10 terms and conditions set forth in
the Borrower's tariff, as duly filed with or approved by regulatory bodies having
jurisdiction in the premises, or in the absence of any such regulatory body, as
adopted by the Borrower; provided that the Borrower shall not file with or submit for
approval of appropriate regulatory bodies or adopt any proposed tariff, or continue in
effect any existing tariff not required to be continued by any regulatory body, unless
under such tariff the Borrower will be obligated to serve unserved rural applicants as
provided herein.
Page 15
Section 5.17 Preservation of Existence and Rights
The Borrower shall, until the Loan is repaid in full, take or cause to be taken all such actions
as from time to time may be necessary to preserve its existence and to preserve and renew all franchises,
contracts, rights of way, easements, permits, and licenses now or hereafter to be granted or conferred upon
it, with respect to the Project, the loss of which would have a Material Adverse Effect on the Borrower.
Section 5.18 Compliance with Laws
The Borrower shall operate and maintain the Project and its properties in compliance in all
material respects with all applicable Laws.
Section 5.19 Nondiscrimination
(a} Equal Opportunity Provisions in Construction Contracts. The Borrower shall
incorporate or cause to be incorporated into any construction contract, as defined in
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 guarantee,
or undertaken pursuant lo any RUS program involving such grant, contract, loan,
insurance or guarantee, the equal opportunity provisions set forth in Attachment 2
hereto, entitled Equal Opportunity Contract Provisions.
(b) Equal Opportunity Contract Provisions Also Bind the Borrower. The Borrower
further agrees that it shall be bound by such equal opportunity clause in any federally
assisted construction work which it performs itself other than through the permanent
work force directly employed by an agency of government.
(c) Sanctions and Penalties. The Borrower agrees that it shall cooperate actively with
RUS and the Secretary of Labor in obtaining the compliance of contractors and
subcontractors with the equal opportunity clause and the rules, regulations and
relevant orders of the Secretary of Labor, that it shall furnish RUS and the Secretary
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' primary responsibility for securing compliance. The Borrower
further agrees that it shall refrain from entering into any contract or contract
modification subject to Executive Order 11246 with a contractor debarred from, or
who has not demonstrated eligibility for, Government contracts and federally
assisted construction contracts pursuant lo Part II, Subpart D of Executive Order
11246 and shall carry out such sanctions and penalties for violation of the equal
opportunity clause as may be imposed upon contractors and subcontractors by RUS
or the Secretary of Labor pursuant to Part II, Subpart D of Executive Order 11246.
In addition, the Borrower agrees that if it fails or refuses to comply with these
undertakings RUS may cancel, terminate or suspend in whole or in part this
Agreement, may refrain from extending any further assistance under any of its
programs subject to Executive Order 11246 until satisfactory assurance of future
compliance has been received from the Borrower, or may refer the case to the
Department of Justice for appropriate legal proceedings.
Section 5.20 Buy American
The Borrower shall use or cause lo be used in connection with the expenditures of funds if
such funds were obtained in whole or in part by a loan being made or guaranteed by RUS only such
unmanufactured articles, materials, and supplies as have been mined or produced in the United States or
any eligible country, and only such manufactured articles, material, and supplies as have been
manufactured in the United States or any eligible country substantially all from articles, material, and
Page 16
supplies mined, produced or manufactured, as the case may be, in the United States or any eligible country,
except to the extent RUS shall determine that such use shall be impracticable or that the cost thereof shall
be unreasonable. For purposes of this section, an "eligible country" is any country that has with respect to
the United States an agreement ensuring reciprocal access for United States products and services and
United States suppliers to the markets of that Country, as determined by the United States Trade
Representative.
Section 5.21 Additional Affirmative Covenants
The Borrower shall comply with the additional affirmative covenants set forth in Schedule 1
hereto.
ARTICLE VI -NEGATIVE COVENANTS
Section 6.1 General
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, the Borrower
shall duly observe each of the negative covenants set forth in this Article VI.
Section 6.2 Merger, Consolidation and Transfer or Property
The Borrower shall not, without the prior written consent of RUS, take or suffer to be taken
any steps to reorganize, consolidate with, or merge into any other corporation, or to sell, lease or transfer
(or make any agreement therefor) all or any part of its property, including, without limitation, the Project.
Section 6.3 Covenants for Umited Uability Companies and Similar Borrowers
Borrowers which are limited liability companies or similar organizations agree that:
(a) The d~th, retirement, resignation, expulsion, termination, bankruptcy, or dissolution
of any member or the occurrence of any other event that terminates the continued
membership of any member shall not cause the Borrower to be dissolved or its
affairs to be wound up;
(b) Prior lo the dale on which any and all obligations owed to RUS or the guaranteed
lender with respect lo Telecommunications Loan Guarantees, including the note
evidencing the Loan, are discharged in full, the Borrower shall not be dissolved or
terminated;
(c) The organizational documents of the Borrower shall contain provisions reflecting the
obligations of the Borrower in paragraphs (a) and (b) immediately above and such
provisions shall not be amended without the prior written consent of RUS; and
(d) No direct or indirect addition, issuance, or transfer of any membership units (or any
other ownership interest) in the Borrower may be made by the Borrower or its
members without the prior written consent of RUS.
Section 6.4 Additional Indebtedness
The Borrower shall not, without the prior written consent of RUS, incur additional
indebtedness in the event:
(a) The Borrower is not maintaining a TIER of 1.0 or if the additional indebtedness will
cause the Borrower's TIER to fall below 1.0; or
Page 17
(b) An Event of Defauh as defined in Section 8.l(b) hereof has occurred and is
continuing.
Section 6.5 Negative Pledge
The Borrower shall not create, incur, or suffer any lien, mortgage, pledge, assignment, or
other encumbrance on, or security interest in its property, other than Permitted Encumbrances.
Section 6.6 Contracts
The Borrower shall not, without the prior written consent of RUS, enter into any contract or
contracts for the operation or maintenance of all or any part of its property, including, without limitation,
the Project, and shall not enter into any contract for the use by others of all or any part of its property,
including, without limitation, the Project.
Section 6. 7 Salaries
Salaries, wages and other compensation paid by the Borrower for services, and directors',
members', managers' or trustees' fees, shall be reasonable and in conformity with the usual practice of
entities of the size and nature of the Borrower.
Section 6.8 Extension of Credit
Except as specifically authorized in writing in advance by RUS, the Borrower will make no
advance payments or loans, or in any manner otherwise extend its credit, either direclly or indirectly, with
or without interest, to any of its directors, trustees, officers, employees, stockholders, members, managers,
Affiliates or Affiliated Companies; provided, however, the Borrower may make an investment for any
purpose described in section 607(c)(2) of the Rural Development Act of 1972 (including any investment in,
or extension of credit, guarantee or advance made to an A£filiated Company lhat 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 of the Net Worth and (2) the Borrower's Net Worth is at least
twenty percent (20%) of its Total Assets.
Section 6.9 Distributions or Withdrawals
(a) Corporations and Cooperatives. Corporate or cooperative Borrowers shall not,
without the prior written approval of RUS, make any dividend, stock, capital, or
other distribution in the nature of an investment, guarantee, extension of credit,
advance, or loan, nor make a capital credit distribution (all such distributions being
hereinafter collectively called "Distributions;") provided, however. Distributions
may be made in each calendar year as follows:
(1) Aggregate, annual Distributions not 10 exceed twenty-five percent (25%) of
prior calendar year's Net Income or Margins may be made if, after such
aggregate annual Distributions, the Borrower's net worth is al least one
percent ( 1 % ) of its Total Assets;
(2) Aggregate annual Distributions not to exceed fifty percent (50%) of the
prior calendar year's Net Income or Margins may be made if, after such
aggregate annual Distributions, the Borrower's Net Worth is at least twenty
percent (20%) of its Total Assets;
(3) Aggregate annual Distributions not to exceed seventy-five percent (75%) of
the prior calendar year's Net Income or Margins may be made if, after such
Page 18
aggregate annual Distributions, the Borrower's Net Worth is at least thirty
percent (30%) of its Total Assets; or
(4) There is no limit on aggregate, annual Distributions if, after making such
aggregate, annual Distributions, the Borrower's Net Worth is at least forty
percent (40%) of its Total Assets.
(b) Limited Liability Companies. Borrowers which are limited liability companies shall
not, without the prior written approval of RUS, make any membership withdrawals,
unit redemptions, or other type of profit allocation to its members and shall not,
without the prior written approval of RUS, make capital distributions in the nature of
an investment, guarantee, extension of credit, advance, or loan (all such actions
being hereinafter collectively called "Distributions;") provided, however.
Distributions may be made in each calendar year as follows:
(1) Aggregate, annual Distributions not to exceed twenty-five percent (25%) of
the prior calendar year's Net Income or Margins may be made if, after
such aggregate aMual Distributions, the Borrower's Net Worth is at least
one percent (I%) of its Total Assets;
(2) Aggregate annual Distributions not to exceed fifty percent (50%) of the
prior calendar year's Net Income or margins may be made if, after such
aggregate annual Distributions, the Borrower's Net Worth is at least twenty
percent (20%) of its Total Assets;
(3) Aggregate annual Distributions not to exceed seventy-five percent (75%) of
the prior calendar year's Net Income or Margins may be made if, after such
aggregate annual Distributions, the Borrower's Net Worth is at least thirty
percent (30%) of its Total Assets; or
(4) There is no limit on aggregate, annual Distributions if, after making such
aggregate, annual Distributions, the Borrower's net worth is at least forty
percent forty percent ( 40%) of its Total Assets.
(c) In addition to the Distributions authorized under the immediately, preceding
subsections, the Borrower may make any Distribution or investment as provided in 7
CFR 1744 Subpart E.
Section 6.10 Changing Principal Place of Business, Place of Conducting Business, or Type of
Organization
The Borrower shall not change its principal place of business, place of conducting business,
or type of organization without the prior consent of RUS.
Section 6.11 Changing Name or Place or Incorporation or Organization
The Borrower shall not change its legal name or place of incorporation or organization
without giving RUS sixty (60) days prior written notice.
Section 6.12 Changing Rates or Tariffs
The Borrower shall not file for or change its rates or tariffs without prior written approval by
RUS.
Section 6.13 Historic Preservation
Page 19
The Borrower shall not, without the prior writlen consent of RUS, use any Advance(s) to
construct any facility which shall involve any district, site, building, structure or object which is included
in, or eligible for inclusion in, the National Register of Historic Places maintained by the Secretary of the
Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act of 1966.
Section 6.14 Llmilatlons on Using non-FDIC Insured Depositories.
Without the prior written approval of RUS, the Borrower shall not place the proceeds of the
Loans or any loan which has been made or guaranteed by RUS, in the custody of any bank or other
depository that is not insur~ by . the Federal Deposit Insurance Corporation or other federal agency
acceptable to RUS.
Section 6.15 Affiliated Transactions
The Borrower shall not enter into any transaction, contract, or dealing with an Affiliate of the
Borrower or with the Borrower's or Affiliate's directors, trustees, officers, managers, members (if the
Borrower is a limited liability company), or other corporate officials, without the prior wriuen consent of
RUS.
Section 6.16 Obligations with Respect to Nonduplicatlon or Facilities for Telecommunications Loan and
Telecommunications Loan Guarantee Loan Borrowers
If the Borrower has outstanding Telecommunications Loan(s) or Telecommunications Loan
Guarantee(s) and provides telephone service in any state in which there is no state regulaiory body with
authority lo regulate telephone service and to require certificates of convenience and necessity to the
Borrower, the Borrower shall not use any portion of such l.oan(s) for the construction of telephone
facilities to furnish or improve service lo persons located in such stale receiving telephone service from any
other telephone company at the time the Borrower proposes to furnish or improve service to such persons,
except that the Borrower may provide or improve service to persons receiving service through facilities
acquired or to be acquired by the Borrower, and except to the extent RUS, on the basis of evidence
submitted to it by the Borrower, shall have determined that service by the Borrower to such persons will
not result in duplication of lines, facilities or systems providing reasonably adequate service.
Section 6.17 Additional Negative Covenants
The Borrower shall comply with the additional negative covenants set forth in Schedule I
hereto.
ARTICLE VII -LENDER'S RIGHTS
Section 7.1 Termination of Loan OITer
RUS, in its sole discretion, may terminate the offer to make the Loan(s) if Loan Documents,
duly executed on behalf of the Borrower, are not received and all other conditions in Section 4.1 hereof are
not satisfied wilhin one hundred 1wenty (120) days from the date hereof.
Section 7.2 Audits and Compliance Reviews
Afler giving prior nolification to the Borrower, RUS has the right to conduct compliance
reviews and audits of the Borrower to assure compliance with lhe Loan Documents and RUS Regulations.
Section 7.3 Disallowed Expenditures
Page 20
Upon a determination by RUS that the Borrower did not utilize the Loan in the manner and
exclusively for the Project as approved by RUS, RUS may, in its sole discretion:
(a) Disallow all or a part of the expenditures and disbursements of the Loan and require
the Borrower to deposit such funds in the Construction Fund Account or in the
Pledged Deposit Account, to be applied toward other approved Project purposes or to
reimburse the Government, as provided in Section 5.3 hereof;
(b) Suspend making Advances; and/or
(c) Take any other action RUS determines to be necessary including, without limitation,
exercising any right or remedy available under the Loan Documents or at law.
Section 7.4 Suspension of Advances
RUS may, in its absolute discretion, suspend making or approving Advances hereunder, if
RUS determines that an event has occurred that is likely 10 have a Material Adverse Effect on the
Borrower.
Section 7.5 Payment Extensions
RUS may, at any time or times in succession without notice to, or the consent of, the
Borrower and upon such terms as RUS may prescribe, grant to any person, firm or entity who shall have
become obligated lo pay all or any part of the principal of or interest on any Note held by, or indebtedness
owed to, RUS or who may be affected by the lien created by the Loan Documents, an extension of the time
for the payment of such principal or interest. After any such extension the Borrower will remain liable for
the payment of such Note or indebtedness to the same extent as though it had at the time of such extension
consented thereto in writing.
ARTICLE VIII· EVENTS OF DEFAULT
Section 8.1. Events of Default
The following shall be Events of Default under this Agreement:
(a) Representations and Warranties. Any representation or warranty made by the
Borrower in the Loan Documents or .in the Application, any certificate furnished to
RUS thereunder, shall prove lo 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 Actjons. Default by the Borrower in the observance or performance of
Section 5.13;
(d) Llmjted Liability Companjes. Default by the Borrower or its members in the
observance or performance of Section 6.3;
(e) Other Covenants. Default bY the Borrower in the observance or performance of any
other covenant or agreement contained in any of the Loan Documents, which shall
remain unremedied for thirty (30) calendar days, after written notice thereof had
been given to the Borrower by RUS;
Page 21
(f) Adverse Effects. The Borrower shall forfeit or otherwise be deprived of its charter,
articles of organization, franchises, permits, easements, consents, or licenses required
to carry on any material portion of its business, or the Borrower files for, or an event
occurs, which can reasonably be expected to result in its dissolution or termination;
. (g) Other Obli&ations. Default by the Borrower in the payment of any obligation,
whether direct or contingent, for borrowed money in excess of ten thousand dollars
($10,000.00) or in the performance or observance of the terms of any instrument
pursuant to which such obligation was created or securing such obligation which
default shall have resulted in such obligation becoming or being declared due and
payable prior to the date on which it would otherwise be due and payable;
(h) Bankruptcy. A court having jurisdiction in the premises shall enter a decree or order
for relief with respect to the Borrower in an involuntary case under any applicable
bankruptcy, insoJvency, or other similar law now or hereafter in effect: (1)
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official, or (2) ordering the winding up or liquidation of its affairs; or the Borrower
shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or under any such law, or consent to the
appointment or taking possession by a receiver, liquidator, assignee, custodian or
trustee, of a substantial part of its property, or make any general assignment for the
benefit of creditors;
(i) Dissolution or Liguidatjon. Other than as provided in the immediately preceding
subsection, the dissolution or liquidation of the Borrower, or the filing of such by the
Borrower;
G) Jrrmaired Business. The failure by the Borrower to promptly forestall or remove any
execution, garnishment or attachment of such consequence as shall impair its ability
10 continue its business or fulfill its obligations and such execution, garnishment or
attachment shall not be vacated within thirty (30) days; or
k) Payment of Final Judgment. A final judgment in an amount of ten thousand dollars
($10,000.00) or more shall be entered against the Borrower and shall remain
unsatisfied or without a stay in respect thereof for a period of thirty (30) days.
ARTICLE IX -REMEDIES
Section 9.1 Generally
Upon the occurrence of an Event of Default, RUS may pursue all rights and remedies that are
contemplated by the Loan Documents in the manner, upon the conditions, and with the effect provided in
the Loan Documents, including, but not limited to, a suit for specific performance, injunctive relief, or
damages. Nothing herein shall limit the rights of RUS to pursue, jointly or severally, all rights and
remedies available to a creditor following the occurrence of an Event of Default listed in Article Vlll
hereof. Each right, power, and remedy of RUS shall be cumulative and concurrent, and recourse to one or
more rights or remedies shall not constitute a waiver of any other right, power or remedy.
Section 9.2 Remedies
In addition to the remedies referred to in Section 9.1 hereof, upon the occurrence of an Event
of Default RUS may:
(a) Refuse to make any Advance or further Advance on account of the l.oan(s), but any
Advance thereafter made by RUS shall not constitute a waiver of such default; or
Page 22
(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 immediately due and payable.
ARTICLE X -MISCELLANEOUS
Section 10.1 Notices
All notices, requests, and other communications provided for herein including, without
limitation, any modifications, waivers, requests, or consents under, this Agreement shall be given or made
in writing (including, without limitation, by telecopy) and delivered to the intended recipient at the
"Address for Notices" specified below; or, as to any party, at such other address as shall be designated by
· such party in a notice to each other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when 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 parties are as follows:
RUS
Rural Utilities Service
United States Department of Agriculture
1400 Independence Avenue, S.W.
Washington, D.C.20250-1500
Attention: Administrator
Fax: [phone]
With a copy to:
See Schedule 1
Section 10.2 Expenses
Borrower
See Schedule 1
With a copy to:
See Schedule 1
To the extent allowed by law, the Borrower shall pay all costs and expenses of RUS,
including reasonable fees of counsel, incurred in connection with the enforcement of the Loan Documents
or with the preparation for such enforcement if RUS has reasonable grounds to believe that such
enforcement may be necessary.
Section 10.3 Late Payments
If payment of any amount due hereunder is not received at 1he United States Treasury in
Washington, DC or such other location as RUS may designate to the Borrower within five (5) Business
Days after the due date thereof, or such other time period as RUS may prescribe from time to time in its
policies of general application in connection with any late payment charge (such unpaid amount being
herein called the "delinquent amount", and the period beginning after such due date until payment of the
delinquent amount being herein called the "late-payment period,") the Borrower shall pay to RUS in
addition to all other amounts due under the terms of the Notes, the Security Docume.nts and this
Agreement, any late payment charge as may be fixed by RUS Regulations from time to time on the
delinquent amount for the late-payment period.
Section 10.4 Fjllng Fees
To the extent permitted by law, the Borrower agrees to pay all expenses of RUS (including
the fees and expenses of its counsel) in connection with the filing or recordation of all financing statements
and instruments as may be required by RUS in connection with this Agreement, including, without
limitation, all documentary stamps, recordation, transfer taxes, and other costs and taxes incident to
recorda1ion of any document or instrument in connection herewith. Borrower agrees to save harmless and
indemnify RUS from and againsl any liability rcsulling from the failure to pay any required documentary
Page 23·
stamps, recordation and transfer laxes, recording costs, or any other expenses incurred by RUS in
connection with this Agreement. The provisions of this section shall survive the execution and delivery of
this Agreement and the payment of all other amounts due hereunder or due on the Notes.
Section 10.S No Waiver
No failure on the part of RUS to exercise, nor any delay in exercising, any right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by RUS of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right.
Section 10.6 Governing Law
This Agreement shall be governed by and construed in accordance with applicable federal law
and, in the absence of controlling federal law, by the laws of the State identified in the first paragraph
herein, except !hose that would render such choice of law ineffective.
Section 10.7 Holiday Payments
If any payment 10 be made by !he Borrower hereunder shall become due on a day which is not
a Business Day, such payment shall be made on the next succeeding Business Day and such extension of
time shall be included in computing any interest in respect of such payment.
Section I 0.8 Rescission
The Borrower may elect not lo borrow the loan, in which event RUS shall release the
Borrower from its obligations hereunder, provided the Borrower complies wilh such terms and conditions
as RUS may impose for such release.
Section 10.9 Successors and Assigns
(a) This Agreement shall be binding upon and inure to the benefit of the Borrower and
RUS, and their respective successors and assigns, except thal the Borrower may not
assign or transfer its rights or obligations hereunder without the prior written
consent of RUS.
(b) Pursuant to federal claims collection laws, RUS' claims hereunder may be
transferred to other agencies of the United States of America; in the event of such a
transfer, all rights and remedies hereby granted or conferred on RUS shall pass to
and inure to the benefit of any such successor agency.
Section 10.10 Complete Agreement; Waivers and Amendments
Subject to RUS Regulations, this Agreement and the other loan Documents are intended by
the parties to be a complete and final expression of their agreement. However, RUS reserve the right to
waive its rights to compliance with any provision of this Agreement and the other loan Documents. No
amendment, modification, or waiver of any provision hereof or thereof, and no consent 10 any departure of
the Borrower herefrom or therefrom, shall be effective unless approved in writing 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 purpose for which given.
Section 10.11 Prior Telephone Loan Contracts
With respect to all Prior Telephone loan Contracts, the Borrower shall, commencing on the
delivery date hereof, prospectively meet the affirmative and negative covenants as set forth in this
Agreement rather than those set forth in the Prior Telephone Loan Contracts. In addition, any remaining
obligation or RUS 10 make or approve additional advances on promissory notes of the Borrower that have
Page 24
been previously delivered lo RUS under Prior Telephone Loan Contracts shall, after the date hereof, be
subject to the conditions set forth in this Agreement. In the event of any conflict between any provision set
forth in a Prior Telephone Loan Contract and any provision in this Agreement, the requirements as set forth
in this Agreement shall apply. Nothing in this section shall, however, eliminate or modify (i) any special
condition, special affirmative covenant or special negative covenant, if any, set forth in any Prior
Telephone Loan Contract or (ii) alter the repayment terms of any promissory notes which the Borrower has
delivered under any Prior Telephone Loan Contract, except, in either case, as RUS may have specifically
agreed to in writing.
Section 10.12 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 10.13 Sevemhility
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 governmental
agency or court of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder
of such term, provision, or condition nor any other term, provision, or condition, and this Agreement, the
Note(s), and the Security Documents shall survive and be construed as if such invalid or unenforceable
term, provision or condition had not been contained therein.
Section 10.14 Right of SetofT
Upon the occurrence and during the continuance of any Event of Default, RUS is hereby
authorized at any time, without prior notice to the Borrower, to exercise rights of setoff or recoupment and
apply any and all amounts held or hereafter held, by RUS, owed to the Borrower, or for the credit or
account of the Borrower against any and all of the obligations of lhe Borrower now or hereafter existing
hereunder or under the Note(s). RUS agrees to notify the Borrower 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 seloff, recoupmenl or application. The rights of RUS under this section are in addition to
any other rights and remedies (including other rights of setoff or recoupment) which RUS may have.
Borrower waives all rights of setoff, deduction, recoupment, or counterclaim.
Section 10.15 Schedules and Attachments
Each Schedule and Allachment attached hereto and referred to herein is each an integral part
of this Agreement.
Section 10.16 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 Document, such consent, approval, or waiver must be in writing and signed
by an authorized RUS representative to be effective. As used in this section, "authorized RUS
representative" means the Administrator of RUS or any person lo whom the Administrator has officially
delegated specific or general authority 10 take the action in question.
Section 10.17 Amendment or Laws and RUS Regulations
Nothing contained herein shall restrict in any way RUS' right to amend, rescind, or
supplement any of the RUS Regulations or to seek such changes lo existing Laws.
Section 10.18 Term
This Agreement shall remain in effect until one of the following two events has occurred:
Page25
(a) The Borrower and RUS replace this Agreement with another written agreement; or
(b) All of the Borrower's obligations under this Agreement have been discharged and
paid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
MIDVALE TELEPHONE COMPANY
(Seal)
Attested lo by: ___________ _
Secretary
by ____________ ~
Name:
Tille:
THE UNITED IITATES QhlCA
by ~E ·
·as Assistant Administrator,
Telecommunications Program,
of the Rural Utilities Service
Page 26
SCHEDULE 1
Article II Representations and Warranties
1. Paragraph (i) Borrower's address: Midvale Telephone Company
2206 Keithley Creek Road
Mldvale, Idaho 83645
2. Paragraph (j) Borrower's Organization Number: C184317
3. Paragraph (Jc) Borrower's Subsidiaries: None
4. Paragraph (Jc) Borrower's Parent: Midvale Telephone Exchange, lncorponted
Article lll The Loans
1. Broadband Loan
Section 3.l(a) Broadband Loan amount: $0
Section 3.l(a)(i) Broadband Loan portion at the cost-of-money interest rate: $0
Section 3.l(a)(i) Broadband Loan portion at the four percent (4%) rate of interest: $0
2. Telecommunications Loan
Section 3.l(b) Telecommunications Loan amount: $12,691,000
Section 3.l(b)(i)Telecommunications Loan amount al the cost-of-money interest rate:: $12,691,000
Section 3.l(b )(i) Telecommunications Loan amount five percent (5%) rate of interest: $0
3. Telecommunications Loan Guarantee
Section 3.l(c) Telecommunications Loan Guarantee amount: $0
Article IV Conditions of Lending
1. Section 4.2(i) funds required on deposit by Broadband borrower in accordance with 7 C.F.R. 1738.20(b):
None
2. The additional conditions to advance referred 10 in Section 4.2(m) are as follows: None
Article V Affirmative Covenants
1. Section 5.4(a) Additional Funds: $0
2. Section 5.4(a) Additional Purposes: None
3. Section 5.4(b) Pledged Deposit Account JS NOT required.
4. Section 5.8(b) Additional Reporting Date(s): Thirty (30) days aner the end ofMarch,June, September,
and December
5. Section 5.12 TIER: 1.50
6. Section 5.12 TIER Commencement Date: December 31, 2020
. 7. The additional affirmative covenants referred to in Section 5.21 are as follows: None
Page 27
Article VI Negative Covenants
I. The additional negative covenants referred lo in Section 6.17 are as follows: None
Article X Miscellaneous
2.
1. Section I 0.1 Borrower's address for purposes of notification: Midvale Telephone Company
2206 Keithley Creek Road
Midvale, Idaho 83645
Section IO. I Address for Borrower's notification copy: Perkins Coie, LLP
1111 West Jefferson Street
Suite 500
Boise, Idaho 83702-5391
3. Section IO. I Address for RUS' notification copy:
Mr. Peter Aimable, Deputy Assistant Administrator
Portfolio Management & RJsk Assessment Division
Telecommunications Program
USDA, Rural Utilities Service
STOP 1595, Room 2808
1400 Independence Avenue, S. W.
Washington, D.C. 20250-1595
Page 28
' ' .
Attachment 1
Not applicable
Page 29
I •
ATTACHMENT2
Equal Opportunity Contract Provisions
During the performance of this contract, the contractor agrees as follows:
(a) The contractor shall not discriminate against any employee or applicant for employment because
of race, color, religion, sex, or national origin. The contractor shall take affirmative action to
ensure that applicants are employed, and that employees are treated during employment without
regard to their race, color, religion, sex, or national origin. Such action shall include, but not be
limited to the following: employment, upgrading, demotion, or transfer, recruitment, or
recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and
selection for training, including apprenticeship. The contractor agrees to post in conspicuous
places, available to employees and applicants for employment, notices to be provided setting forth
the provisions of this non-discrimination clause.
(b) The contractor shall, in all solicitations or advertisements for employees placed by or on behalf of
the contractor, state that all qualified applicants shall receive consideration for employment
without regard to race, color, religion, sex, or national origin.
(c) The contractor shall send to each labor union or representative of workers with which he has a
collective bargaining agreement or other contract or understanding, a notice to be provided
advising the said labor union or worker's representative of the contractor's commitments under
this section, and shall post copies of the notice in conspicuous place available to employees and
applicants for employment.
(d) The contractor shall comply with all provisions of Executive Order 11246 of September 24,
1965and of the rules, regulations, and relevant orders of the Secretary of Labor.
(e) The contractor shall furnish all information and reports required by Executive Order 11246 of
September 24, 1965 and by the rules, regulations, and orders of the Secretary of Labor, or pursuant
thereto, and shall permit access to his books, records, and accounts by the administering agency
and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules,
regulation, and orders.
(f) In the event of the contractor's non-compliance with the non-discrimination clauses of this
contract or with any of the said rules, regulations, or orders, this contract may be cancelled,
terminated, or suspended in whole or part by the Government, and the contractor may be declared
ineligible for further Government contracts or federally assisted construction contracts in
accordance with the procedure authorized in Executive Order J 1246 of September 14, 1965, and
such other sanctions may be imposed and remedies invoked as provided in said Executive Order
or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.
(g) The contractor shall include the provisions of paragraphs (a) through (g) in every subcontract or
purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued
pursuant to Section 204 of Executive Order Jl246, dated September 24, 1965, so that such
provisions shall be binding upon each subcontractor or vendor. The contractor shall take such
action with respect to any subcontract or purchase order as the administering agency may direct as
a means of enforcing such provisions, including sanctions for non-compliance; provided, however,
that in the event a contractor becomes involved in, or is threatened with, litigation with a
subcontractor or vendor as a result of such direction by the agency, the contractor may request the
United States to enter into such litigation to protect the interests of the United States.
Page 30
AITACHMENT 3
UNIFORM SYSTEM OF ACCOUNTS
All references regarding account numbers are to 47 C.F.R. Part 32
ACCOUNT NAMES ACCOUNT NUMBERS
CLASS A CLASS B
NET INCOME OR NET MARGINS: the sum of the balances of the following accounts of the Borrower/Mortgagor
Local Network Services Revenues
Network Access Services Revenues
)
)
Long Distance Network Services Revenues )
Miscellaneous Revenues )
LESS: Uncollectible Revenues )
Other Operating Income and Expense
Non-operating Income and Expense
· Income Effect of Jurisdictional Rate-making Difference -Net
Non-regulated Net Income
Other Non-regulated Revenues
LESS: balances of the following accounts:
Plant Specific Operations Expense )
Plant Non-specific Operations Expense )
Customer Operations )
Corporate Operations )
Operating Taxes
Non-operating Taxes
Interest and Related Items
Extraordinary Items
5000s thru
1100•
7300·
7910
7990
7991
6100s thru
INTEREST EXPENSE: the sum of the balances of the following accounts of the Borrower/Mortgagor
Interest and Related Items
Interest on Funded Debt
Interest Expense -Capital Leases
Amortization of Debt Issuance Expense
Other Interest Deductions
LESS: Allowance for Funds Used During Construction
7500•
7510
7520
7530
7540
7340
TOTAL TELECOMMUNICATIONS PLANT: the sum of the balances of the following accounts of the
Borrower/Mortgagor
Telecommunications Plant in Service
Property Held for Future Telecommunications Use
Telecommunications Plant Under Construction -Short Term
Telecommunications Plant Under Construction -Long Term
Telecommunications Plant Adjustment
Non-Operating Plant
Goodwill
•summary Accounts
2001
2002
2003
2004
2005
2006
2007
Page 31
5300s
7100
7300
7910
7990
7991
6700s
7200
7400
7500
7600
7500
7300.4
2001
2002
2003
2004
2005
2006
2007
NET WORTH OR EQUITY: the sum of the balances of the following accounts of the Borrower/Mortgagor
Capital Stock
Additional Paid-in-Capital
Treasury Stock
Other Capital
Retained Earnings
4510
4520
4530
4540
4550
NOTE: For Non-Profit Organizations -Owner's equity shall be shown in sub-accounts of 4540 and 4550.
TOTAL ASSETS: the sum of the balances of the following accounts of the Borrower/Mortgagor
Current Assets 1100s thru
Non-Current Assets 1400s thru
Total Telecommunications Plant 2001 thru
LESS: Accumulated Depreciation 3100 thru
LESS: Accumulated Amortization 3400 thru
DEPRECIATION AND AMORTIZATION: the sum of the balances of the following accounts of the
Borrower/Mortgagor
Depreciation and Amortization Expenses
Depreciation Expense -Telecommunications Plant in Service
Depreciation Expense -Property Held for Future Telecommunications Use
Amortization Expense -Tangible
Amortization Expense -Intangible
Amortization Expense -Other
6560*
6561
6562
6563
6564
6565
Page 32
1300s
1500s
2007
3300s
3600s
RUS PROJECT DESIGNATION:
Idaho 518-K42
MORTGAGE NOTE
made by and between
Midvale Telephone Company
and
THE UNITED STATES OF AMERICA
Page I
PROMISSORY NOTE
Idaho 518-K42
Midvale, Idaho
THIS PROMISSORY NOTE (hereinafler the "Note,") dated as of October 14, 2016, is
made by MIDVALE TELEPHONE COMPANY (hereinafter the "Borrower,") a corporation,
duly organized and existing under the laws of the State of Idaho, and the UNITED STATES OF
AMERICA, (hereinafter the "Government,") acting through the Administrator of the Rural
Utilities Service. For value received, the Borrower promises to pay to the order of the
Government, at the United States Treasury, Washington, D.C., (Twelve Million Six Hundred and
Ninety One Thousand Dollars ($12,691,000), with interest payable, from the date of each
advance, on the amount advanced by the Government (hereinafter the "Advance,") pursuant to a
certain Loan Agreement, dated as of the same date as this Note (hereinafter the "Loan
Agreement,") made by and between the Borrower and the Government, and remaining unpaid
from time to time, in the time and manner herein provided:
1. Interest Rate. Interest on each Advance shall be at rate(s), per annum( the "Cost of Money
Interest Rate,") determined for each Advance in accordance with Section 305(d)(2)(A) of the
Rural Electrification Act of 1936, as amended (7 U.S.C. 935 (d)(2)(A)) and the implementing
regulations, as amended from time to time (7 C.F.R. 1735.3I(c)).
2. Maturity Dale. On a date Nineteen (19) years after the date hereof, the principal hereof
advanced pursuant to the Loan Agreement and remaining unpaid, if any, and interest thereon,
shall be due and payable (hereinafter the "Maturity Date.")
3. Fund Advance Period. Funds will be advanced pursuant to the Loan Agreement. The fund
advance period for this Note begins on the date hereof and terminates five (5) years from the date
of this Note (hereinafter the "Termination Date.") No funds will be advanced subsequent to the
Termination Date unless the Administrator extends the fund advance period in accordance with
the Loan Agreement.
4. Payments on Advances.
(a) Made Within Two (2) Years. Interest on Advances made during the first two (2)
years from the dale of the first Advance hereunder, and remaining unpaid, shall be
payable on the last day of each month (hereinafter the "Monthly Payment Date,")
beginning on the last day of the month following the month of each Advance for
the period ending two (2) years 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 which shall be: (i)
substantially equal to all subsequent monthly payments and (ii) in an amount that
Page 2
will pay aJI principal and interest due on each Advance no later than the Maturity
Date.
(b) Made After Two (2) Years. Interest and principal payments on Advances made
more than two (2) years after the date of the first Advance hereunder shaJI be
repaid in instaJlments beginning with the Monthly Payment Date of the month
following each Advance and ending on the Maturity Date. The first such payment
on an Advance shall be increased by the amount of interest accruing between the
date of the Advance and the first day of the next month. Thereafter, to and
including the Maturity Date, the Borrower shall make a payment every Monthly
Payment Date on each such Advance (i) substantially equal to every other
monthly payment on such Advance, and (ii) in an amount that will pay all
principal and interest of such Advance no later than the Maturity Date. This
payment shall be in addition to the payment on the Advances made within two (2)
years from the date of the first Advance hereunder and remaining unpaid.
S. App/ic:a1io11 of l'aymellls. 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 Fourth, to principal.
6. Prepaymem. 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 Loan Agreement shall remain unpaid, the Borrower shall be obligated to make
the monthly payment on account of principal and interest, in the amount provided herein, unless
the Borrower and the Government shall otherwise agree, in writing.
1. Lale l'aymems. 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 Secretary 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 Government.
8. Securil)'. This Note is secured by a security interest in collateral described in the Restated
Mortgage, Security Agreement and Financing Statement, dated as of the same date as this Note
made by and between the Borrower and the Government such mortgage, as amended,
supplemented, consolidated or restated from time to time, hereinafter called the "Mortgage.")
Rights and obligations with respect to the collateral are stated in the Mortgage.
9. Notelrolder. This Note evidences indebtedness created by a loan made under the Rural
Electrification Act (7 U.S.C. § 901 el seq.). The Government shall be, and shall have all rights
as, holder of this Note. If the Government shall at any time assign this Note and insure the
payment hereof, the Borrower shall continue to make payments hereunder to the Government as
Page3
•
collection agent for the insured holder, and for purposes of the Mortgage, the Government, and
not such insured holder, shall be considered to be, and shall have the rights of, the noteholder.
10. Deftmlt. In an event of default, as provided in the Loan Agreement and/or Mortgage, all
principal advanced pursuant to the Loan Agreement and remaining unpaid on this Note, and all
interest thereon may be declared or may become due and payable in the manner and with the
effect provided in the Loan Agreement and/or Mortgage.
11. Costs. The Borrower shall pay any and all costs and expenses incurred in connection with
the exercise of rights or the enforcement of remedies, as set forth in the Loan Agreement and/or
Mortgage.
12. Waivers. The Borrower waives demand, presentment for payment, notice of non-payment,
notice of dishonor, protest, and notice of non-payment of this Note.
13. Obligations. The obligations of the Borrower hereunder are absolute and unconditional,
irrespective of any defense or any right to set off, recoupment, or counterclaim it might
otherwise have against the Government.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its
corporate or legal name and its corporate seal, if any, to be hereunto affixed and attested by its
officers thereunto duly authorized, all as of the day and year first above written.
MIDVALE TELEPHONE COMPANY
Name:
Title:
(SEAL)
Attested to by:---------
Secretary
l'age 4
EXHIBIT C
Restated Mortgage, Security Agreement and Financing Statement
[attached]
.. .i I .. -,. · ....
RUS DESIGNATION:
Idaho 518-K42
RESTATED MORTGAGE,
SECURITY AGREEMENT
AND
FINANCING STATEMENT
made by and between
MIDVALE TELEPHONE COMPANY,
2205 Keithly Creek Road
Midvale, Idaho 83645
THE UNITED STATES OF AMERICA,
· Rural Utilities Service
Washington, D.C. 20250-1500,
as Mortgagor and Debtor,
as Mortgagee and secured party.
THIS INSTRUMENT GRANTS A SECURITY INTEREST IN A TRANSMITTING UTILITY.
THE DEBTOR AS MORTGAGOR IS A TRANSMITTING UTILITY.
THIS INSTRUMENT CONTAINS PROVISIONS TIIAT COVER REAL AND PERSONAL PROPERTY,
AFTER-ACQUIRED PROPERTY, FIXTURES, PROCEEDS, FUTURE ADVANCES AND FUTURE
OBLIGATIONS.
THIS INSTRUMENT WAS DRAFl'ED BY THE RURAL UTILITIES DIVISION, OFFICE OF
TIIE GENERAL COUNSEL, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 20250-
1400.
MORTGAGOR'S ORGANIZATION NUMBER: C184317.
No. ___ _
THIS RESTATED MORTGAGE, SECURITY AGREEMENT AND
FINANCING STATEMENT (hereinafter this "Restated Mortgage,") dated as of
October 14, 2016, made by and between MIDVALE TELEPHONE COMPANY
(hereinafter the "Mortgagor,") a corporation existing under the laws of 1he State of
Idaho, as Mortgagor and Debtor, and THE UNITED STATES OF AMERICA
(hereinaf1er lhe "Oovemmenl, ") acting through the Administralor of the Rural
Utilities Service ("RUS") as Mortgagee and secured party.
WHEREAS, the Mortgagor and Mortgagee are parties to certain prior telephone loan contracts
(the "Prior Telephone Loan Contracts;")
WHEREAS, the Mortgagor, for value received, has duly authorized, executed, and delivered to 1he
Government, or has assumed the payment of, certain mortgage notes, all payable to the order of, or obligating the
Mortgagor otherwise to, the Government (hereinafter the "Outstanding RUS Notes") identified in Schedule A
herelo, which are now outstanding and held by the Government;
WHEREAS, 1he Outstanding RUS Notes are secured by the securi1y instruments identified in
Schedule A hereto, (hereinafter the "Prior Mortgages") made by the Mortgagor lo lhe Government;
WHEREAS, 1he Morlgagor has determined al this time to borrow funds, or to obtain a loan
guaranlee, from the Government pursuant to the Rural Eleclrification Act of 1936 (7 U.S.C. § 901 et seq.)
(hereinafter the "Act") and the Loan Agreement identified in Schedule A, and accordingly the Mortgagor has duly
authorized, executed, and delivered to the Government, its mor1gage note(s) identified in Schedule A (hereinafter
the "Current RUS Note(s),") which are to be secured by this Restated Mortgage of the property hereinaf1er
described;
WHEREAS, it is contemplated that the Outstanding RUS Notes and the Current RUS Note shall
be secured by this Restated Mortgage, as may be additional funding and notes, and/or renewal and substitute notes
(hereinafter collec1ively the "Additional Notes,") which may from time to time be executed and delivered by the
Mortgagor to the Government, or notes which otherwise obligate the Mortgagor to the Government, as hereinafter
provided, (the Outstanding RUS Notes, Current RUS Note, and the Additional Notes are hereinafter collectively
called the "Notes;")
WHEREAS, the Mortgagor now owns or leases the facilities (hereinafter the "Existing Facilities")
identified in Schedule B;
WHEREAS, to the extent that any of the property described or referred to in this Restated
Mortgage is governed by 1he provisions of the Uniform Commercial Code of any Slate (hereinafler the "UCC, ") lhe
parlies herelo desire 1hat this Restated Morlgage be regarded as a •security agreement" under the UCC; and
WHEREAS, all acts necessary to make this Restated Morlgage a valid and binding legal
instrumenl for the securily of the Notes and other obligations of the Mortgagor have been, in all respects, duly
aulhorized.
NOW, THEREFORE, 1his Restated Mortgage
WITNESSETH:
That the inslruments conslituting lhe Prior Mortgages are hereby amended, supplemented, and consolidated
to read in their entirety from and after the date of execution of this Restated Mortgage as follows:
Page 2
GRANfING CLAUSE
NOW, THEREFORE, THIS RESTATED MORTGAGE WITNESSETH: That to secure the
payment of the principal, interest, and premium, if any, on the Outstanding RUS Notes, Current RUS Note, and all
Notes issued hereunder according to their tenor and effect, and lo secure the performance of all provisions therein,
herein, in the Prior Telephone Loan Contracts, and the Loan Agreement, and in consideration of the covenants
herein contained and other good and valuable consideration, the Mortgagor has mortgaged, pledged and granted a
continuing security interest in, and by these presents does hereby grant, bargain, sell, alienate, remise, release,
convey, assign, transfer, hypothecate, pledge, set over and confirm, pledge, and grant unto the Mortgagee, for the
purposes herein expressed, a continuing security interest and lien in all property, assets, rights, privileges, licenses
and franchises of the Mortgagor of every kind and description, real, personal or mixed, tangible and intangible, of
the kind or nature specifically mentioned herein, or any other kind or nature now owned or hereafter acquired or
arising by the Mortgagor (by purchase, consolidation, merger, donation, construction, erection or in any other way)
wherever located, including without limitation all or in part the following (hereinafter the "Mortgaged Property:")
All right, title, and interest of the Mortgagor in and to the Existing Facilities, buildings, plants,
works, improvements, structures, estates, grants, franchises, easements, rights, privileges and properties, whether
real, personal, or mixed, tangible or intangible, of every kind or description, now or hereafter owned, leased,
constructed, or acquired by the Mortgagor, wherever located, and in and to all extensions, improvements, and
additions thereto, including but not limited to all buildings, plants, works, structures, towers, antennas, fixtures,
apparatus, materials, supplies, machinery, tools, implements, poles, posts. crossanns, conduits, ducts, lines, wires,
cables, whether underground, overhead, or otherwise, exchanges, switches, including, without limitation, host and
remote switches, desks, testboards, frames, racks. motors, generators, batteries, and other items of central office
equipment, pay stations, protectors, instruments, connections and appliances, office furniture, equipment, and any
and all other property of every kind, nature, and description, used, useful, or acquired for use by the Mortgagor in
connection therewith, and including, without limitation, the following property:
(a) The Existing Facilities located in the Counties listed in Schedule B in the States identified
in Schedule B;
(b) The real estate described on Schedule B, and by this reference made a part hereof, as if
fully set forth at length at this point;
(c) If the real estate described in Schedule B is by reference to deeds, grantor(s), grantee,
etc., then the description of each of the properties conveyed by and through such deeds is,
by reference, made a part of Schedule B as though fully set forth at length therein; and
(d) The real estate described in Schedule B shall also include all plants, works, structures,
erections, reservoirs, dams, buildings, fixtures, towers, antennas, and improvements now
or hereafter located on such real estate, and all tenements, hereditaments, and
appurtenances now or hereafter belonging, or in any way appertaining, thereunto.
II
All right, title, and interest of the Mortgagor in, to, and under any and all grants, privileges, rights
of way and easements now owned, held, leased, enjoyed or exercised, or which may hereafter be owned, held,
leased, acquired, enjoyed or exercised, by the Mortgagor for the purposes of, or in connection with, the construction
Pagel
or operation by, or on behalf of, the Mortgagor of its properties, facilities, systems, or businesses, whether
underground, overhead, or otherwise, wherever located;
Ill
All right, title, and interest of the Mortgagor in, to, and under any and all licenses and permits
(including without limitation those granted by the FCC}, franchises, ordinances, and privileges, whether heretofore
or hereafter granted, issued, or executed, to it or to its assignors by the Government, or by any state, county,
township, municipality, village, or other political subdivision thereof, or by any agency, board, commission, or
department of any of the foregoing, authorizing the construction, acquisition, or operation of the Mortgagor's
properties, facilities, systems, or businesses, insofar as the same may by law be assigned, granted, bargained, sold,
conveyed, transferred, mortgaged, or pledged;
IV
All right, title, and interest of the Mortgagor in, to, and under all personal property and fixtures of
every kind and nature, including without limitation all goods (such as inventory, equipment and any accessions
thereto,) instruments (such as promissory notes or chattel paper, electronic or otherwise), documents, accounts (such
as deposit accounts or trust accounts pursuant hereto or to a Joan agreement), letter-of-credit rights, investment
property (such as certificated and uncertificated securities or security entitlements and accounts), software, general
intangibles (such as payment intangibles), supporting obligations, contract rights or rights to the payment of money,
insurance claims, and proceeds (as such terms are presently and hereafter defined in the UCC; provided, however,
that the term "instrument" shall be such tenn as defined in Article 9 of the UCC rather than Article 3);
V
All right, title, and interest of the Mortgagor in, to, and under any and all agreements, leases or
contracts heretofore or hereafter executed by and between the Mortgagor and any person, firm, corporation, or other
corporate entity relating to the Mortgaged Property (including contracts for the lease, occupancy, or sale of the
Mortgage Property, or any portion thereof);
VI
All right, title, and interest of the Mortgagor in, to, and under any and all books, records and
correspondence relating to the Mortgage Property, including, but not limited to, all records, ledgers, leases,
computer and automatic machinery, software, programs, databases, disc or tape files, print-outs, batches, runs, and
other electronically-prepared information indicating, summarizing, evidencing, or otherwise necessary or helpful in
the collection or realization on the Mortgaged Property;
VII
Also, all right, title, and interest of the Mortgagor in, to, and under all other property, real or
personal, tangible or intangible, of every kind, nature, and description, and wherever situated, now or hereafter
owned or leased by the Mortgagor, it being the intention hereof that all such property now owned or leased but not
specifically described herein, or acquired or held by the Mortgagor after the date hereof, shall be as fully embraced
within and subjected to the lien hereof as if the same were now owned by the Mortgagor and were specifically
described herein to the extent only, however, that the subjection of such property to the lien hereof shall not be
contrary to law;
Page4
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 property of the Mortgagor;
Provided, however, that except as provided in section 2.12 of Article II herein, no automobiles,
trucks, trailers, tractors or other vehicles (including without limitation aircraft or ships, if any) owned or used by the
Mortgagor shall be included in the Mortgaged Property.
TO HA VE AND TO HOLD all or in part the Mortgaged Property unto the Mortgagee and its
respective assigns forever, to secure equally and ratably the payment of the principal and interest on the Notes,
according to their tenor and effect, without preference, priority, or distinction as to interest, principal (except as
otherwise specifically provided herein,) lien, or otherwise, of any note over any other note by reason of the priority
in time of the execution, delivery, maturity, assignment, negotiation, or otherwise, thereof, and to secure the due
performance of the covenants, agreements and provisions herein and contained in the Prior Telephone Contracts and
the Loan Agreement, and for the uses and purposes and upon the terms, conditions, provisos, and agreements herein
expressed and declared.
ARTICLE I
ADDITIONAL NOTES
SECTION 1.1 Additional Notes
(a) The Mortgagor, when authorized by resolution(s) of its board of directors, members, or
other relevant governing body, may from time to time ·execute and deliver to the
Government one or more Additional Notes: (1) to evidence loans made or guaranteed by
the Government to the Mortgagor pursuant lo the Act, or to evidence indebtedness of the
Mortgagor incurred by the assumption by the Mortgagor of the indebtedness of a third
party, or parties to the Government, created by a loan or Joans theretofore made or
guaranteed by the Government to such third party or parties pursuant to the Act; and/or
(2) to refund any Note(s) at the time outstanding secured hereby, or in renewal of, or in
substitution for, any such Note(s) then outstanding.
(b) Additional Notes shall contain such provisions and shall be.executed and delivered upon
such terms and conditions as the Government and the board of directors, members, or
other relevant governing body of the Mortgagor authorizing the execution and delivery
thereof, shall prescribe; provided, however, that the outstanding principal balances owing
on the Notes shall not al any one time exceed the Mortgage Debt Limit set forth in
Schedule A, and no Note shall mature more than fifty (50) years after the date hereof.
Additional Notes, when and as executed and delivered, shall be secured by this Mortgage,
equally and ratably with all other Notes then outstanding, without preference, priority, or
distinction of any Note over any other Note by reason of the priority of the time of the
execution, delivery, maturity, assignment, or negotiation thereof. As used in this
Restated Mortgage, the term "directors" includes trustees.
SECTION 1.2 Supplemental Mortgage
The Mortgagor, when authorized by rcsolution(s) of its board of directors, members, or other relevant
governing body, may from time to time execute, acknowledge, deliver, record, and file mortgages supplemental to
this Restated Mortgage which thereafter shall Conn a pan hereof, for the purpose of formally confirming this
Restated Mortgage as security for the Notes.
Pages
ARTICLE II
PARTICULAR COVENANTS OF THE MORTGAGOR
The Mortgagor covenants with the Mortgagee and the holders of Notes secured hereby
(hereinafter collectively the "Noteholders") as follows: ,
SECTION 2.1 Authority to Execute and Deliver Notes, Prior Telephone Loan Contracts. the Loan
Agreement and Mortgage; All Action Taken; Enforceable Obligations
The Mortgagor has all requisite corporate and legal power to enter into and perform its obligations
under the Outstanding RUS Notes, Current RUS Note, Prior Telephone Loan Contracts, the Loan Agreement and
this Restated Mortgage and to execute and deliver Additional Notes; and all official action on its part for the
execution and delivery of the Outstanding RUS Notes, Current RUS Note, the Prior Telephone Loan Contracts, the
Loan Agreement and this Restated Mortgage has been duly and effectively taken; and the Outstanding RUS Notes,
Current RUS Note, the Prior Telephone Loan Contracts, the Loan Agreement and this Restated Mortgage are, or
when executed and delivered will be, the valid and enforceable obligations of the Mortgagor in accordance with
their respective terms.
SECTION 2.2 Warranty ofTitle
(a) Except as disclosed in writing in the opinion of counsel, at the time of execution and
delivery of this instrument, the Mortgagor has good and marketable title in fee simple to
the Mortgaged Property, free and clear of any deed of trust, mortgage, lien, charge, or
encumbrance thereon or affecting the title thereto, except for the following Permitted
Encumbrances:
(i) as to the Mortgaged Property that is real property, restrictions,
exceptions, reservations, conditions, limitations, interests, and other
matters which are set forth or referred to in deeds or other conveyance
documents, and each of which fits one or more of the clauses of this
definition; provided however, that such matters do not in the aggregate
materially detract from the value of the Mortgaged Property taken as a
whole and do not materially impair the use of such property for the
purposes for which it is held by the Mortgagor;
(ii) liens for taxes, assessments, and other governmental charges which are
not delinquent;
(iii) liens for taxes, assessments, and other governmental charges already
delinquent which are currently being contested in good faith by
appropriate proceedings; provided, the Mortgagor shall have set aside
on its books adequate reserves with respect thereto;
(iv) mechanics', workmen's, repairmen's, materialmen's, warehousemen's
and carriers' liens and other similar liens arising in the ordinary course
of business for charges which are not delinquent, or which are being
contested in good faith and have not proceeded to judgment; provided,
the Mortgagor shall have set aside on its books adequate reserves with
respect thereto;
(v) liens in respect of judgments or awards with respect to which the
Mortgagor shall in good faith currently be prosecuting an appeal or
Page6
proceedings for review and with respect to which the Mortgagor shall
have secured a stay of execution pending such appeal or proceedings
for review; provided, the Mortgagor shall have set aside on its books
adequate reserves with respect thereto;
(vi) easemenls and similar rights granted by the Mortgagor over, or in
respect of, any Mortgaged Property, provided that in the opinion of the
Mortgagor's board, members, other relevant governing body, or official
acceptable to RUS, such grant will not impair the usefulness of such
property in the conduct of the Mortgagor's business and will not be
prejudicial to the interests of the Mortgagee, and similar rights granted
by any predecessor in title of the Mortgagor;
(vii) easements, leases, reservations, or other rights of others in any property
of the Mortgagor for streets, roads, bridges, pipes, pipe lines, railroads,
electric transmission and distribution lines, telegraph and telephone
lines, the removal of oil, gas, coal or other minerals and other similar
purposes, flood rights, river control and development rights, sewage
and drainage rights, restrictions against pollution and zoning laws and
minor defecls and irregularities in the record of title; provided, that the
above do not materially affect the marketability of title to such property
and do not in the aggregate materially impair the use of the Mortgaged
Property taken as a whole for the purposes for which it is held by the
Mortgagor;
(viii) liens upon Ian~ over which easements or rights of way are acquired by
the Mortgagor for any of the purposes specified in Cause (vii) of this
definition, securing indebtedness neither created, assumed, nor
guaranteed by the Mortgagor, nor on account of which it customarily
pays interest, which liens do not materially impair the use of such
easements or rights of way for the purposes for which they are held by
the Mortgagor;
(ix) leases existing at the date of this instrument affecting property owned
by the Mortgagor at said date which have been previously disclosed to
the Mortgagee in writing, and leases for a term of not more than two
years (including any extensions or renewals) affecting property
acquired by the Mortgagor after said date;
(x) terminable or short term leases or permits for occupancy which
expressly gran1 to the Mortgagor the right to terminate at any time on
not more than six months' notice and which occupancy does not
interfere with the operation of the business of the Mortgagor;
(xi) any lien or privilege vested in any lessor, licensor, or permittor for rent
or other obligations or acts to be performed, the payment or
performance of which other obligations or acts is required under leases,
subleases, licenses or permits, so long as the payment of such rent or
the performance of such other obligations or acts is not delinquent;
(xii) liens or privileges of any employees of the Mortgagor for salary or
wages earned but not yet payable;
Page 7
(xiii) the burdens of any law, governmental regulation, or permit requiring
the Mortgagor to maintain certain facilities or to perform certain acts-as
a condition of the Mortgagor's occupancy of certain real estate, or
prohibiting the interference with any public lands or any river or stream
or navigable waters;
(xiv) any irregularities in or deficiencies of title to any rights-of-way for pipe
lines, telephone lines, telegraph lines, power lines or appurtenances
thereto, or other improvements thereon, and to any real estate used or to
be used primarily for right-of-way purposes; provided, that in the
opinion of counsel for the Mortgagor; (1) the Mortgagor shall have
obtained from the apparent owner of the lands or estates therein
covered by any such right-of-way, a sufficient right, by th~ terms of the
instrument granting such right-of-way, to the use thereof for the
construction, operation, or maintenance of the lines, appurtenances, or
improvements for which the same are used or to be used; or (2) the
Mortgagor has power under eminent domain, or similar statutes, to
remove such irregularities or deficiencies;
(xv) rights reserved to, or vested in, any municipal, governmental, or other
public authority to control or regulate any property of the Mortgagor, or
to use such property in any manner, which rights do not materially
impair the use of such property, for the purposes it is held by the
Mortgagor;
(xvi) any obligations or duties affecting the property of the Mortgagor, to
any municipal, governmental, or other public authority with respect to
any franchise, grant, license or permit;
(xvii) any right which any municipal, governmental, or other public authority
may have by virtue of any franchise, license, contract or statute (1) to
purchase, (2) to designate a purchaser of, or (3) to order the sale of, any
property of the Mortgagor upon payment of cash or reasonable
compensation therefor; or to terminate any franchise, license or other
rights; or to regulate the property and business of the Mortgagor;
provided however, that nothing in this clause is intended to waive any
claim or rights that the Government may otherwise have under federal
laws;
(xviii) any lien required by law or government regulation as a condition to the ·
transaction of any business or the exercise of any privilege or license,
or to enable the Mortgagor to maintain self-insurance or to participate
in any fund established to cover any insurance risks or in connection
with workmen's compensation, unemployment insurance, old age
pensions, or other social security, or to share in the privileges or
benefits required for companies participating in such arrangements;
provided however, that nothing in this clause is intended to waive any
claim or rights that the Government may otherwise have under federal
laws;
(xix) liens arising out of any defcased mortgage or indenture of the
Mortgagor;
Page8
(xx) the undivided interest of other owners, and liens on such undivided
interests, in property owned jointly with the Mortgagor, as well as the
rights of such owners to such property pursuant to the ownership
contracts;
(xxi) this Restated Mortgage and any Underlying Mortgages identified
therein.
(b) The Mortgagor warrants that it has good right and lawful authority to mortgage the
Mortgaged Property for the purposes herein expressed.
(c) At the time of execution and delivery of this Restated Mortgage, the Mortgagor lawfully
owns and is possessed of the personal property described in the Granting Clauses herein,
free and dear of any deed of trust, mortgage, lien, charge, or encumbrance thereon or
affccling the title thereto, except Permitted Encumbrances.
SECTION 2.3 Maintain Superior Lien of Mortgage, After-Acquired Property, Further Assurances,
Recording
(a) The Mortgagor will, so long as any of the Notes shall be outstanding, maintain and
preserve the lien of this Restated Mortgage superior lo all other liens affecting the
Mortgaged Property, and will execute, file and/or record such financing statements,
continuation statements, mortgages or other security instruments as necessary to maintain
such superior lien and will forever warrant and defend the title to said property against
any and all claims and demands whatsoever.
(b) All property of every kind acquired by the Mortgagor after the date hereof, shall,
immediately upon the acquisition thereof by the Mortgagor, and without any further
mortgage, conveyance, or assignment, become subject to the lien of this Restated
Mortgage. Nevertheless, the Mortgagor will do, execute, acknowledge, and deliver any
and all such further acts, conveyances, mortgages, security agreements, financing
statements, and assurances as the Mortgagee shall require for accomplishing the purposes
of this Restated Mortgage.
(c) The Mortgagor will cause this Restated Mortgage and all supplemental mortgages and
other instruments of further assurance, including all financing statements covering
security interests in personal property, to be promptly recorded, registered and filed, and
will execute and file such financing statements and cause to be issued and filed such
continuation statements, all in such manner and place as may be required by law, or
requested by the Mortgagee, fully to preserve and protect the rights of the Mortgagee and
Noteholders hereunder to the Mortgaged Property.
SECTION 2.4 Negative Pledge
The Mortgagor shall not create, incur, or suffer any lien, mortgage, pledge, assignment, or other
encumbrance on, or security interest in, the Mortgaged Property, other than the Permiued Encumbrances.
SECTION 2.S Payment o(Taxes
The Mortgagor will promptly pay or discharge any and all obligations for which, or on account of
which, any lien, claim, or charge against the Mortgagor's property might exist or could be created, and for any and
all lawful taxes, rates, levies, or assessments imposed upon, or accruing upon, any of the Mortgagor's property
(whether taxed to the Mortgagor or to any Noteholder), franchises, eamin~, or businesses, as and when the same
Pagc9
shall become due and payable; and whenever called upon to do so, the Mortgagor will furnish to the Mortgagee or to
any Noteholder adequate proof of such payment or discharge.
SECTION 2.6 Payment of Notes and Secured Obligatjons
The Mortgagor will duly and punctually pay the principal and interest on the Notes, at the time,
place, and manner provided therein, according to the true intent and meaning thereof, as well as all other sums
becoming due hereunder.
SECTION 2. 7 Restrictions on Transfers of Property
Except as provided in Section 2.8 below, the Mortgagor shall not sell, lease or transfer any
Mortgaged Property to any other person or entity (including any subsidiary or affiliate of the Mortgagor) without the
prior written consent of the Mortgagee.
SECTION 2.8 Disposal of Obsolete or Damaged Mortgaged Property
So long as the Mortgagor is not in default hereunder, the Mortgagor may, without obtaining the
consent of the Mortgagee or Noteholders, sell or otherwise dispose of, free from the lien hereof, any of its property
which is neither necessary to, nor useful for, the operation of the Mortgagor's business, or which has become
obsolete, worn out, damaged, or otherwise unsuitable for the purposes of the Mortgagor; provided, however, that the
Mortgagor shall to the extent necessary: (1) replace the same with other property of the same kind and nature, or
substitute thereof, which shall be subject to the lien hereof, free and clear of all prior liens, and apply the proceeds, if
any, derived from the sale or disposition of such property, which are not needed for the replacement thereof, to the
prepayment of the indebtedness on the outstanding Notes, and shall be applied to such notes and installments thereof
as may be designated by the respective Noteholders at the time of any such receipt; (2) immediately upon the
receipt of the proceeds of any sale or disposition of said property, apply the entire amount of such proceeds to the
prepayment of the indebtedness evidenced by the Notes; or (3) deposit all or such part of the proceeds derived from
the sale or disposition of said property into such bank accounts as the Mortgagee shall specify, and shall use the
same only for such additions to, or improvements in, the Mortgaged Property, on such terms and conditions as the
Mortgagee shall specify.
SECTION 2.9 Maintenance, Preservation and Operation of Mortgaged Property
(a) Al all times the Mortgagor wilJ maintain and preserve the Mortgaged Property in good
repair, working order, and condition, and will, subject to contingencies beyond its
reasonable control, keep its plant and properties in continuous operation, and from time
to time make all needed and proper repairs, renewals, replacements, useful ,and proper
alterations, additions, betterments and improvements, and use all reasonable diligence to
furnish the subscribers served by it through the Mortgaged Property with adequate
telecommunications and broadband telephone service.
(b) If in the sole judgment of the Mortgagee, the Mortgaged Property is not being maintained
and repaired in accordance with paragraph (a) of this section, the Mortgagee may send
the Mortgagor a written report of needed improvements, upon receipt of which the
Mortgagor will promptly undertake to accomplish such improvements.
SECTION 2.10 Mortgaged Property to be Purchased Free of Encumbrances
Except as specifically authorized in writing in advance by the Mortgagee, the Mortgagor will
purchase all materials, equipment, supplies, and replacements to be incorporated in, or used in connection with, the
Mortgaged Property outright, and not subject to any conditional sales agreement, chattel mortgage, bailment lease,
or other agreement reserving to the seller any right, title, or lien.
Page 10
SECTION 2.11 Insurance Requirements; Application o[ Insurance Proceeds
(a) The Mortgagor shall take out and maintain insurance on the property acquired with the
Loan in accordance with 7 C.F.R. Part 1788.
(b) Sums recovered under any policy or fidelity bond by the Mortgagor or any Noteholder
for a loss of funds advanced under the Notes or for any loss under such policy or bond
shall, unless applied as provided in 7 C.F.R. Part 1788, be used to finance construction of
utility plant secured or to be secured by this Restated Mortgage, or, unless otherwise
directed by the Mortgagee, be applied to the prepayment of the Notes then outstanding,
and shall be applied to such Notes and installments thereof as may be designated by the
respective Noteholders at the time of receipt. At the request of the Mortgagee, the
Mortgagor shall exercise such rights and remedies under such policy or fidelity bond as
designated by the Mortgagee, and the Mortgagor hereby irrevocably appoints the
Mortgagee as its agent to exercise such rights and remedies under such policy or bond as
the Mortgagee may choose, and the Mortgagor shall pay all costs and reasonable
expenses incurred by the Mortgagee in connection with such exercise.
SECTION 2.12 When Mortgage Lien Attaches to Vehicles, Ships, Etc.
In the event the Mortgagor has or suffers a deficit in Net Income or Net Margins, as such terms are
defined in the Loan Agreement, during any fiscal year while any of the Notes are outstanding. the Mortgagor will at
any time, upon written demand of the Mortgagee, make, execute, acknowledge and deliver or cause to be made,
executed, acknowledged, and delivered all such further and supplemental indentures of mortgages, security
agreements, financing statements, instruments, and conveyances, and take or cause to be taken all such further
action, as may be requested by the Mortgagee, in order to attach to this Restated Mortgage, as Mortgaged Property,
and to subject to all the terms and conditions of this Restated Mortgage, all right, title, and interest of the Mortgagor
in and to, all or in part, the automobiles, trucks, tractors, trailers, railcars, aircraft, ships, boats and other vehicles
then or thereafter owned or acquired by the Mortgagor. Upon the making of such written demand by the Mortgagee,
such vehicles shall be deemed part of the Mortgaged Property for all purposes hereof.
SECTION 2.13 Application of Proceeds from Eminent Domain
In the event the Mortgaged Property, or any part thereof, shall be taken under the power of
eminent domain, all proceeds and avails therefrom, except to the extent that all Noteholders shall consent to other
use and application thereof, shall forthwith be applied by the Mortgagor: First, to the ratable payment of any
indebtedness by this Restated Mortgage secured other than principal or interest on the Notes; Second, to the ratable
payment of interest which shall have accrued on the Notes and be unpaid; Third, to the ratable payment of, or on
account of, the unpaid principal of the Notes and to such installments thereof as may be designated by the respective
Noteholders at the time of any such payment; and if any, the balance shall be paid to whosoever shall be entitled
thereto.
SECTION 2.14 Compliance with Loan Agreement and Prior Telephone Loan Contracts
The Mortgagor will well and truly observe and perform all applicable covenants, agreements,
terms, and conditions contained in the Prior Telephone Loan Contracts and the Loan Agreement.
Page 11
SECTION 2.15 Government to be Noteholder
At all times when any Note is held by the Government, or in the event the Government shall
assign an Additional Note without having insured the payment of such Note, this Restated Mortgage shall secure
payment of such Note for the benefit of the Government or such uninsured holder thereof, as the case may be.
Whenever any Additional Note may be sold lo an insured purchaser, it shall continue to be considered a "Note" as
defined herein, but as 10 any such insured Note, the Government, and not such insured purchaser, shall be
considered and shall have the rights of the Noteholder for purposes of this Restated Mortgage. Notice of the rights
of the Government under the preceding sentence shall be sel forth in all such insured Notes. As to any Note which
evidences a loan made by a third party lender to the Mortgagor and guaranteed by the Government, acting through
the Administrator, pursuant 10 the Act, the Government and not such third party lender shall be considered to be and
shall have the rights of the Noteholder for purposes of this Restated Mortgage.
SECTION 2.16 Mortgagee Right to Expend Moqey to Protect Mortgaged Property
If in any respect the Mortgagor fails lo comply with the covenants and conditions herein contained
regarding the procuring of insurance, the payment of taxes, assessments, and other charges, the keeping of the
Mortgaged Property in repair and free of liens and other claims, or to comply with any other covenant contained in
this Restated Mortgage or the Loan Agreement, the Mortgagee shall have the right. without prejudice to any other
remedies arising by reason of such default: (1) to advance or expend moneys for the purpose of procuring such
insurance, or for the payment of insurance premiums, taxes, assessments or other charges; (2) to save the Mortgaged
Property from sale or forfeiture for any unpaid tax, assessment, or otherwise; (3) to redeem the same from any tax or
other sale; ( 4) to purchase any tax title thereon; (5) to remove or purchase any mechanics' liens or other
encumbrance thereon; (6) 10 make repairs thereon; (7) lo comply with any other covenant herein contained; (8) to
prosecute and defend any suit in relation lo the Mortgaged Property; or (9) in any manner, to protect the Mortgaged
Property and the title thereto. All sums so advanced for any of the aforesaid purposes with interest thereon at the
highest legal rate, but not in excess of twelve percent (12%) per annum, shall be deemed a charge upon the
Mortgaged Property in the same manner as the Notes are secured and shall be forthwith paid to the Mortgagee upon
demand. It shall not be obligatory for the Mortgagee in making any such advances or expenditures to inquire into
the validity of any.such title, tax. assessment, sale, mechanics' lien, or other encumbrance thereof.
ARTICLE DI
REMEDIES OF THE MORTGAGEE AND NOTEHOLDERS
SECTION 3.1. Events of Default:
Each of the following shall be an "Event of Default" under this Restated Mortgage:
(a) Representations and Wamntjcs. Any representation or warranty made by the Mortgagor
in the loan Documents, as such term is defined in the loan Agreement or in the
Application, or any certificate furnished to RUS thereunder, as such term is defined in the
loan Agreement, 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 defined in the Loan Agreement;
(c) Corrective Actions. Default by the Mortgagor in the observance or performance of
Section 5.13 of the loan Agreement;
Page 12
( d) Limited Liability Companies. Default by the Mortgagor or its members in the
observance or performance of Section 6.3 of the Loan Agreement;
(e) Other Covenants. Default by the Mortgagor in the observance or performance of any
other covenant or agreement contained in any of the Loan Documents, which shall
remain unremedied for thirty (30) calendar days, after written notice thereof had been
given to the Mortgagor by RUS;
(I) Adverse Effects. The Mortgagor shall forfeit or otherwise be deprived of its charter,
articles of organization, franchises, permits, easements, consents, or licenses required to
carry on any material portion of its business, or the Mortgagor files for, or an event
occurs, which can reasonably be expected to result in its dissolution or termination;
(g) Other Oblji=atjons. Default by the Mortgagor in the payment of any obligation, whether
direct or contingent, for borrowed money in excess of ten thousand dollars ($10,000.00)
or in the performance or observance of the terms of any instrument pursuant to which
such obligation was created or securing such obligation which default shall have resulted
in such obligation becoming or being declared due and payable prior to the date on which
it would otherwise be due and payable;
(h) Bankruptcy. A court having jurisdiction in the premises shall enter a decree or order for
relief with respect to the Mortgagor in an involuntary case under any applicable
bankruptcy, insolvency, or other similar law now or hereafter in effect: (1) appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official, or (2)
ordering the winding up or liquidation of its affairs; or the Mortgagor shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the appointment or taking possession by a receiver,
liquidator, assignee, custodian or trustee, of a substantial part of its property, or make any
general assignment for the benefit of creditors;
(i) Dissolution or Llguidation. Other than as provided in the immediately preceding
subsection, the dissolution or liquidation of the Mortgagor, or the filing of such by the
Mortgagor;
G) Impaired Business. The failure by the Mortgagor to promptly forestall or remove any
execution, garnishment or attachment of such consequence as shall impair its ability to
continue its business or fulfill its obligations and such execution, garnishment or
attachment shall not be vacated within thirty (30) days; and
(k) Payment of Final Judgment. A final judgment in an amount of ten thousand dollars
($10,000.00) or more shall be entered against the Mortgagor and shall remain unsatisfied
or without a stay in respect thereof for a period of thirty (30) days.
SECTION 3.2 Acceleration of Maturity; Annulment of Acceleration
(a) Ir any Event of Default has occurred and is continuing, the Mortgagee, and/or the
Noteholders, may, by notice in writing lo the Mortgagor and delivery of a copy thereof to
the other Noteholders, if any, declare all unpaid principal and accrued interest on any or
all of their respective Notes 10 be due and payable immediately; and upon any such
declaration, all such unpaid principal and accrued interest shall immediately become due
and payable, notwithstanding anything contained herein or in any Note lo the contrary.
{b) If after the unpaid principal and accrued interest on any of the Notes shall have been so
declared to be due and payable, all payments in respect of principal and interest which
Page 13
have become due and payable by the terms of such Note(s) shall be paid to the respective
Noteholders, and all other def au Its hereunder and under the Notes shall have been made
good or secured to the satisfaction of all of the Noteholders, the Noteholders which have
declared the principal and interest on the Notes held by such Noteholders to be due and
payable may, by wriuen notice to the Mortgagor and delivery of a copy thereof to the
other Noteholders, annul such declaration or declarations and waive such default(s) and
consequences thereof, wilh such waiver not extending to or affecting any subsequent
default or impairing any right consequent thereon.
SECTION 3.3 Remedies of Mortgagee
If any Event of Default shall occur and continues, the Mortgagee, for itself, and as the agent of the
other Noteholders, personally or by attorney, in its or their discretion, may, insofar as not prohibited by Jaw:
(a) (i) take immediate possession of the Mortgaged Property, (ii) collect and receive all
credits, outstanding accounts, bills, receivables, rents, income, revenues, and profits of
the Mortgagor, pertaining to or arising from the Mortgaged Property, or any part thereof,
and issue binding receipts therefor; and (iii) manage, control, and/or operate the
Mortgaged Property as fully as the Mortgagor might do if in possession thereof,
including, without limitation, the making of all repairs or replacements deemed necessary
or advisable;
(b) Mortgagee, or any employee or agent of it, is hereby constituted and appointed as true
and lawful attorney-in-fact of the Mortgagor with full power to (i) notify or require the
Mortgagor to notify any and all customers that the Mortgaged Property has been assigned
to Mortgagee and/or that Mortgagee has a security interest in the Mortgaged Property; (ii)
sign and endorse the name of the Mortgagor upon any notes, checks, acceptances, drafts,
money orders, or other instruments of payment (including payments made under any
policy of insurance) that may come into possession of Mortgagee, or upon any invoice,
freight or express bill, bill of lading, storage or warehouse receipt, assignment,
verification, or notice in connection with receivables, all in full or part payment of any
amount owing to any Noteholder; (iii) send requests for verifications of Mortgaged
Property to customers or account debtors; (iv) sell, assign, sue for, collect, or compromise
payment of all or any part of the Mortgaged Property in the name of the Mortgagor or in
its own name, or make any other disposition of Mortgaged Property, or any part thereof,
for cash, credit, or any combination thereof; and Mortgagee may purchase all or any part
of the Mortgaged Property 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
amounts owing to said Mortgagee; Mortgagee, is hereby granted, as the attorney-in-fact
of the Mortgagor, full power of substitution and full power to do any and all things
necessary to be done in and about the premises fully and effectually as the Mortgagor
might or could do but for this appointment, and hereby ratifying all that said attomey-in­
facl shall lawfully do or cause to be done by virtue hereof. The Mortgagee, its
employees, or agents shall not be liable for any act, omission, error of judgment, or
mistake of fact or law in its capacity as attorney-in-fact. This power of attorney is
coupled with an interest and shall be irrevocable during the tem:i of this Restated
Mortgage so long as any Notes shall remain outstanding;
(c) proceed to protect and enforce the rights of the Mortgagee and the rights of the
Notcholder(s) under this Restated Mortgage by suits or actions in equity or at law in any
court of competent jurisdiction, whether for specific performance of any covenant or any
agreement contained herein, for aid of execution of any power herein granted, for
foreclosure hereunder, for sale of the Mortgaged Property, or any part thereof, for
Page 14
collection of debts hereby secured, or for enforcement of other appropriate legal or
equitable remedies as may be deemed most effectual to protect and enforce the rights and
remedies herein granted or conferred; and in the event any such action or suit is
instituted, the Mortgagee or Noteholder(s) instituting such action or suit shall have the
right to have appointed a receiver of the Mortgaged Property and of all rents, income,
revenues, and profits pertaining thereto, or arising, derived, received, or had therefrom,
from the commencement of such suit or action. Such receiver shall have all the usual
powers and duties of receivers, in like and similar cases, to the fullest extent permitted by
Jaw; and if application shall be made for the appointment of a receiver, the Mortgagor
hereby expressly consents that the court to which such application shall be made may
make said appointment;
(d) sell or cause to be sold the Mortgaged Property, all or in part, and all right, title, interest,
claim, and demand of the Mortgagor therein or thereto, at public auction in any county in
which the property to be sold is located, at such time, place, and manner as may be
specified in the notice of sale, containing a brief general description of the property to be
sold, giving a copy thereof to the Mortgagor by mail at least fifteen (15) days prior to the
date fixed for such sale, and publishing the same once in each week for two successive
calendar weeks prior to the date of such sale in a newspaper of general circulation
published in said county, or if no such newspaper is published in such county, in a
newspaper of general circulation in such county, the first such publication to be not less
than fifteen (15) days nor more than thirty (30) days prior to the date fixed for such sale.
Any sale made under this subparagraph may be adjourned from time to time by
announcement, at the time and place appointed for such sale or adjourned salc(s); and
without further notice or publication the sale may be had at the time and place to which
the same shall be adjourned; provided, however, that in the event another or different
notice of sale or another or different manner of conducting the same shall be required by
law, the notice of sale shall be given or the sale shall be conducted, as the case may be, in
accordance with the applicable provisions of Jaw. The expenses incurred by the
Mortgagee, including but not limited to receiver's fees, attorneys' fees, cost of
advertisement, and agents' compensation, in the exercise of any of the remedies provided
in this Restated Mortgage shall be secured by this Restated Mortgage;
( e) Mortgagee shall have the right to enter and/or remain upon the premises of the Mortgagor
without any obligation to pay rent to the Mortgagor or others, or any other placc(s) where
any of the Mortgaged Property is located and kept, and: (i) remove the Mortgaged
Property therefrom in order to maintain, collect, sell, and/or liquidate the Mortgaged
Property or, (ii) use such premises, together with materials, supplies, books, and records
of the Mortgagor, to maintain possession and/or the condition of the Mortgaged Property,
and to prepare the Mortgaged Property for sale, liquidation, or collection. Mortgagee
may require the Mortgagor to assemble the Mortgaged Property and make it available to
Mortgagee at a place to be designated by Mortgagee;
(f) Mortgagee shall have the right, without prior notice to the Mortgagor, to exercise rights
of sctoff, recoupment, or any counterclaim and apply any and all amounts held or
hereafter held by Mortgagee, owed to the Mortgagor, or for the credit of the Mortgagor,
against any and all of the Notes. Mortgagee agrees to notify the Mortgagor promptly
after any such seloff or recoupment and the application thereof; provided that the failure
to give such notice shall not affect the validity of such setoff, rccoupment or application.
Mortgagor waives all rights of setoff, deduction, recoupment, or counterclaim; and/or
{g) Mortgagee shall have, in addition to any other rights and remedies contained in this
Restated Mortgage, and in any other agreements, guarantees, notes, mortgages,
Page IS
instruments, and documents heretofore, now, or at any time hereafter executed by the
Mortgagor and delivered to Mortgagee, all of the rights and remedies of a secured party
under the UCC in force in the state identified in the first paragraph hereof as of the date
hereof and any other jurisdiction where the Mortgaged Property is located, all of which
rights and remedies shall be cumulative, and nonexclusive.
SECTION 3.4 Right to Purchase Mortgaged Property
At any sale hereunder any Noteholder(s) shall have the right to bid for and purchase the
Mortgaged Property, or such part thereof as shall be offered for sale, and any Noteholder(s) may, in lieu of actual
payment of the purchase price, set off against the purchase price the amount owing to said Noteholder secured
hereunder and such set off amount shall be credited as a payment on account of principal and interest on the Note(s)
held by such Noteholder(s).
SECTION 3.S Application or Proceeds from Remedial Actions
Any proceeds or funds arising from the exercise of any rights or the enforcement of any remedies
herein provided after the payment, or provision for the payment, of any and all costs and expenses in connection
with the exercise of such rights or the enforcement of such remedies shall be applied: First, to the payment of
indebtedness hereby secured other than the principal 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 whomsoever shall be entitled
thereto.
SECTION 3.6 Notice of Default
The Mortgagor covenants that it will give immediate written notice to the Mortgagee and to all
Noteholders of the occurrence of an Event of Default, or in the event that any right or remedy described in Sections
3.2, 3.3, 3.4, or 3.5 of this Article Ill is exercised or enforced, of any action taken to exercise or enforce any such
right or remedy.
SECTION 3.7 Remedies Cumulative, No Election
Every right or remedy herein conferred upon or reserved to the Mortgagee or to the Noteholder(s)
shall be cumulative and shall be in addition to every other right and remedy given hereunder, or now or hereafter
existing at law, in equity, or by statute. The pursuit of any right or remedy shall not be construed as an election.
SECTION 3.8 Waiver of Appraisement ffights. Marshaling of Assets Not Required
The Mortgagor, for itself and for all who may claim through or under it, covenants that it will not
at any time insist upon or plead, or in any manner whatsoever, claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, or redemption laws, now or hereafter in force in any locality where any of the
Mortgaged Property may be si1uated, in order to prevent, delay or hinder lhe enforcement or foreclosure of lhis
Restated Mortgage, or the absolute sale of the Mortgaged Property, or any pan thereof, or the final and absolute
putting into possession thereof, immediately after such sale, of the purchaser(s) thereat, and the Mortgagor, for itself
and for all who may claim through or under it, hereby waives the benefit of all such laws, unless such waiver shall
be forbidden by law. Under no circumstance shall there be any marshalling of assets upon any foreclosure or other
enforcement of this Restated Mortgage.
Section 3.9 Federal Communkations Comrnjssjon Matters
Page 16
Notwithstanding any other provision of this Restated Mortgage, the following provisions shall be
applicable in the event that the Mortgaged Property includes (to the extent such property can be included under the
applicable law) licenses, permits, or similar rights granted by the Federal Communications Commission (hereinafter
referred to as 1he "FCC") to the Mortgagor (such licenses, permits or similar rights hereinafter referred to as "FCC
Licenses:")
(a) Any loss, revocation, foreclosure on, sale, transfer, or other disposition of FCC Licenses
by the Mortgagee shall be pursuant to Section 310(d) of the Communications Act of
1934, as amended, and applicable rules and regulations thereunder, and, if and to the
extent required thereby, subject to the prior approval or notice to and non-opposition of
the FCC.
(b) . If an Event of Default shall have occurred and be continuing, the Mortgagor shall take
any action which the Mortgagee may request in order to transfer and assign to the
Mortgagee, or to such one or more third parties as the Mortgagee may designate, or to a
combination of the foregoing, each FCC License held by the Mortgagor. The Mortgagee
is empowered, to the extent permitted by applicable law, to request the appointment of a
receiver from any court of competent jurisdiction. Such receiver may be instructed by
the Mortgagee to seek from the FCC an involuntary transfer of control of each such FCC
License for the purpose of seeking a bona fide purchaser to whom control will ultimately
be transferred. The Mortgagor hereby agrees to authorize such an involuntary transfer of
control upon the request of the receiver so appointed and, if the Mortgagor shall refuse to
authorize the transfer, its approval may be required by the court. Upon the occurrence
and during the continuance of an Event of Default, the Mortgagor shall further use its
best efforts to assist in obtaining approval of the FCC and any state regulatory bodies, if
required, for any action contemplated by this Restated Mortgage, including, without
limitation, the preparation, execution and filing with the FCC and any state regulatory
bodies of the assignor's or transferor's portion of any application or applications for
consent to the assignment of any FCC license or transfer of control necessary or
appropriate under the rules and regulations of the FCC or any state regulatory body for
approval or non-opposition of the transfer or assignment of any portion of the Mortgaged
Property, including, without limitation any FCC License.
(c) The Mortgagor acknowledges that the assignment, transfer, loss, or revocation of any
FCC License is integral to the Mortgagee's realization of the value of the Mortgaged
Property, that there is no adequate remedy at law for failure by the Mortgagor to comply
with the provisions of this Section and that such failure would not be adequately
compensable in damages, and therefore agrees, without limiting the rights of the
Mortgagee to seek and obtain specific performance of other obligations of the Mortgagor
contained in this Restated Mortgage, that the agreements contained in this Section may be
specifically enforced.
(d) In accordance with the requirements of 47 C.F.R. Section 22.937, or any successor
provision thereto, the Mortgagee shall notify the Mortgagor and the FCC in writing at
least ten (10) days prior to the date on which the Mortgagee intends lo exercise its rights
under this Restated Mortgage or any other document or instrument relating to the Notes,
by foreclosing on, or otherwise disposing of any Mortgaged Property in connection with
which such notice is required pursuant to 47 C.F.R. Section 22.937 or any successor
provision thereto.
Page 17
ARTICLE IV
POSSESSION UNTIL DEFAULT-DEFEASANCE CLAUSE
SECTION 4.1 Possession until Default
Until one or more of the Events of Default has happened, the Mortgagor shall be permitted to
retain actual possession of the Mortgaged Property, and to manage, operate and use the same and any part thereof,
with the rights and franchises appertaining thereto, and to collect, receive, take, use and enjoy the rents, revenues,
issues, earnings, income, products, and profits thereof or therefrom, subject to the provisions of this Restated
Mortgage.
SECTION 4.2 Defeasance
If the Mortgagor shall pay or cause to be paid the whole amount of the principal and interest on
the Notes at the time and manner therein provided, according to the true intent and meaning thereof, and shall also
pay or cause to be paid all other sums payable hereunder by the Mortgagor and shall well and truly keep and
perform according to the true intent and meaning of this Restated Mortgage, all covenants herein required to be kept
and performed by it, then and in that case, all property, rights, and interests hereby conveyed, assigned, or pledged
shall revert to the Mortgagor, and the estate, right, title and interest of the Mortgagee and the Noteholders shall
thereupon cease, determine, and become void and the Mortgagee and the Noteholders, in such case, on written
demand of the Mortgagor, but at the Mortgagor's cost and expense, shall enter satisfaction of this Restated Mortgage
upon the record. In any event, each Noteholder, upon payment in full to him by the Mortgagor of all principal and
interest on any Note held by him, and the payment and discharge by the Mortgagor of all charges due such
Noteholder hereunder, shall execute and deliver ·10 the Mortgagor such instrument of satisfaction, discharge, or
release as shall be required by law in the circumstances.
ARTICLEV
MISCELLANEOUS
SECTION 5.1 Mortgage to'Bind and Benefit Successors and Assigns
All of the covenants, stipulations, promises. undertakings, and agreements herein contained by, or
on behalf of, the Mortgagor shall bind its successors and assigns, whether so specified or not, and all titles, rights,
and remedies hereby granted to, or conferred upon, the Mortgagee shall pass to and inure to the benefit of the
successors and assigns of the Mortgagee and shall be deemed to be granted or conferred for the ratable benefit and
security of all who shall from time to time be the holders of Notes executed and delivered as herein provided.
SECTION 5.2 Headings
The descriptive headings of the various articles of this Restated Mortgage were formulated and
inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions
hereof.
SECTION 5.3 ~
All demands, notices, reports, approvals, designations, or directions required or permitted to be
given hereunder shall given or made in writing (including, without limitation, by telecopy) and delivered to the
intended recipient at the "Address for Notices" specified in Schedule • A;" or, as to any party, at such other address
as shall be designated by such party in a notice to each other party. All such communications shall be deemed to
have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon
Page 18
receipl, in each case given or addressed as provided for herein. The Addresses for Notice of the respective parties
are set forth in Schedule "A."
SECTION 5.4 Mortgage Deemed Security Agreement
To lhe extenl that any of the property described or referred to in this Restated Mortgage is
governed by the provisions of the UCC, this Reslated Morlgage is hereby deemed a "security agreement" under the
UCC. The mailing address of the Mortgagor, as debtor, and of the Mortgagee, as secured party, are as set forth in
Schedule "A."
SECTION 5.5 Mortgagee Right to File Financing Statements
Mortgagee shall have the right to file such financing statements and continuation stalements on
behalf of itself, as secured party, and Mortgagor, as Debtor, as Mortgagee deems necessary lo perfect a first lien on
lhe Mortgaged Properly and to maintain and preserve such perfected first lien as long as any Note remains
outstanding. Mortgagor shall reimburse lhe Morlgagee for any expenses incurred in the exercise of this right.
SECTION 5.6 Severability Cause
If any provision of 1his Res1a1ed Mor1gage shall for any reason be found or held invalid or
unenforceable by any governmental agency or courl of competent jurisdiction, such invalidity or unenforceability
shall not affect the validity, legality, and enforceability of the remainder of such provision nor any other provision
thereof and this Restated Mortgage shall survive and be construed as if such invalid or unenforceable provision had
not been contained therein.
SECTION 5.7 Indemnification by Mortgagor of Mortgagee
The Mortgagor agrees to indemnify the Mortgagee against any liability or damages which it may
incur or sustain in the exercise and performance of its rightful powers and duties hereunder. For such
reimbursement and indemnity, the Mortgagee shall be secured under this Restated Mortgage in the same manner as
the Notes and all such reimbursements for expense or damage shall be paid to the Mortgagee with interest at the rate
specified in Section 2.16 hereof. The Mortgagor's obligation to indemnify the Mortgagee under this section shall
survive the satisfaction of the Notes, the reconveyance or foreclosure of this Restated Mortgage, the acceptance of a
deed in lieu of foreclosure, or any transfer or abandonment of the Mortgaged Property.
IN WITNESS WHEREOF, MIDVALE TELEPHONE COMPANY, as Mortgagor, has caused this
Restaled Mortgage to be signed in its name and its seal, if any, to be hereunto affixed and attested by its duly
au1horized officer and the UNITED STATES OF AMERICA, as Mortgagee and secured party, has caused this
Restaled Mortgage to be duly executed on its behalf, all as of the day and year first above written.
(Seal)
Attesled 10 by:----------­
Sccrelary
MIDVALE TELEPHONE COMPANY
Name:
Title:
Page 19
Executed by the Mortgagor
in the presence of:
Name:
Name:
Executed by the Mortgagee
-In the presence of: ~ o\b\ t::&R.A
Name:
/j~ '-6~
Name:
THE UNITED STATES OF AMERICA
by ===11:) Cs~
KEITH B. ADAMS, as Assistant Administrator
of lhe Rural Utilities Service
Page20
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DISTRICT OF COLUMBIA ) ss
This instrument was acknowledged before me on ~_,.,..a __ cA_-,--_.A __ ~_...a..7 __ ~ __ -?_~
2016, by Keith B. Adams, Assistanl Administrator of the Rural Utilities Service of the United States of
America .
.............
.. ······;,ci or,/,?···.' / ~~ .. -···;;:~ .. ~·~.
/}/!tJ' ~f~o\.~~ ~ .... :. p : . . .. . . . . ! : n ~.. -....._ l :<>~. t o·,o.. n ~/ :~· ... ·~·... r• ... ··. '~ ··~'! ·"·' ••• ~-.~· C. ..
•• •••• re,8,'?i~~Jen;~xpires: ----------•,,, .,. "o ,,,, , -............. ,,,,, .
Notary Public
DEBORAH A.H. ANDERSON
Nota,y Public of District of Columbia
My C:Ommisslon Expires 6/30/2020
Pa&c 21
-
-. .._
STATE OF
COUNTY OF
)
)
)
ss
I cenif y that on this __ day of , 2 __ , the foregoing instrument
. was acknowledged before me, , a Notary Public in and for the
above-named County and State, and that , to me
personally known and the person whose name is signed to the foregoing instrument, did
personally appear before me, who being duly sworn and deposed according to law, did make
proof to my satisfaction and say that he/she was, at the time of execution thereof, the President of
Midvale Telephone Company, an Idaho corporation, that he/she knows the corporate seal of said
entity, if one exists, and that the foregoing instrument, whose contents are known to him/her, was
signed, sealed, and delivered on behalf of said entity by authority and/or Resolution of its board
of directors, and furthermore acknowledged the instrument to be his/her free and voluntary act
and deed, as well as that of the entity, for the purposes and uses therein set forth.
IN WITNESS WHEREOF, sworn and subscribed before me, I have hereunto set my hand
and official seal.
Notary Public
(Notarial Seal)
My Commission expires:
Page22
SCHEDULE A
1. The Outstanding RUS Notes referred to in the Recitals are:
Note Note
Designatjon Dare
TPlff/fAl (ID 514-Hll) 9/4/2007
TPl#l/fAl (ID 1105-A40) 9/20/2010
TPl#J/fAl (ID 1105•840) 9/20/2010
TPl#S/fAl (ID 1105-0IO) 9/20/2010
Stated Principal
Amount
$12,145,000
$334,924
$380,751
$644,045
Maturity
Date
9/4/2026
9/20/2035
9/20/2033
9/20/2033
Interest
~ s ..
Variable
Variable
Variable
2. The Prior Mortgages referred to in the Recitals are: Restated Mortgage, Security Agreement
and Financing Statement made by and among MIDVALE TELEPHONE EXCHANGE, INC., as
Mortgagor and Debtor, fflE UNITED STATES OF AMERICA, Rural Utilities Service, as
Mortgagee and secured party, and RURAL TELEPHONE FINANCE COOPERATIVE, as
Mortgagee and secured party, dated September 4, 2007, which prior Mortgage was assumed by the
Mortgagor under that certain Loan Assumption and Mortgage Modification Agreement made by
and among Midvale Telephone Exchange, Incorporated and Midvale Telephone Company and the
United States of America, dated as of July 27, 2012,
3. The Loan Agreement referred to in the Recitals is the loan Agreement, dated the same date as this
Restated Mortgage between the Mortgagor and the Mortgagee.
4. The Current RUS Note(s), made by the Mortgagor to the Government, dated the same date as this
Restated Mortgage and referred to in the Recitals are:
RUS Designation: ID 518-K42
Stated Principal Amount: $12,691,000
Interest Rate: Determined at time of advance
Maturity Date: October 14, 203S
5. The "Mortgage Debt Limit" referred to in section 1.1 is: Unlimited
6. The following addresses are for purposes of providing notice pursuant to section 5.4:
1.
Mortgagee: Rural Utilities Service
United States Department of Agriculture
1400 Independence Avenue, S.W.
Washington, D.C.202SO.ISOO
Attention: Administrator
With a copy to: Mr. Peter Aimable, Deputy Assistant Administrator
Portfolio Management & Risk Assessment Division
Telecommunications Program
Mortgagor:
USDA, Rural Utilities Service
STOP 159S, Room 2808
1400 Independence Avenue, S.W.
Washington, D.C. 20250-159S
Midvale Telephone Company
2206 Keithley Creek Road
Midvale, Idaho 8364S
Attention: President
Page2J
..
With a copy to: Perkins Cole, LLP
1111 West Jefferson Street
Suite500
Boise, Idaho 83702-5391
Page24
SCHEDULED
1. The "Existing Facilities" referred to in Granting Clause I are located in the counties of Custer and
Washington in the State of Idaho, the counties of Cochise, Gila, Pinal, and Yavapai, in the State of
Arizona and the county of Malheur in the State of Oregon.
2. The real estate mortgaged and pledged hereunder includes the following:
Custer County, Idaho
LOTS 5 AND 6, LESS THE WEST 35 FEET OF SAID LOT 6, BLOCK 3, STANLEY GOVERNMENT
TOWNSITE, CUSTER COUNTY, IDAHO, ACCORDING TO THE OFFICIAL SURVEY THEREOF,
NOW ON FILE IN THE OFFICE OF THE SURVEYOR GENERAL, BOISE, IDAHO.
ALSO:
THAT PORTION OF THE ALLEY, 20 FEET WIDE, LYING NORTHERLY AND IMMEDIATELY
ADJACENT TO LOT 5 AND PORTION OF LOT 6, EXCEPTING THE WEST 35 FEET THEREOF IN
BLOCK 3, STANLEY GOVERNMENT TOWNSITE VACATED BY ORDER OF THE CUSTER
COUNTY COMMISSIONERS APRIL 11, 1960. .
ALSO INCLUDING:
A PART OF THE LOWER STANLEY TOWNSITE LOCATED IN SECTION 34, TOWNSHIP 11
NORTH, RANGE 13 EAST, BOISE MERIDIAN, CUSTER COUNTY, IDAHO, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT CORNER 4 OF TRACT 5 OF THE SAWTOOTH NATIONAL RECREATION
AREA (AN ALUMINUM PIPE AND CAP); THENCE SOUTH 0° 33' 00" EAST FOR 128.69 FEET
ALONG THE EAST LINE OF TRACT 6 TO A BRASS CAP THAT IS CORNER 3 OF TRACT 6;
THENCE SOUTH 34° 39' 14" WEST FOR 84.38 FEET ACROSS THOMPSON STREET TO A BRASS
CAP THAT IS CORNER 2 OF TRACT 7 OF THE SAWTOOTH NATIONAL RECREATION AREA;
THENCE SOUTH 74° 57' EAST FOR 20.10 FEET ALONG THE SOUTH LINE OF THOMPSON
STREET TO THE NORTH CORNER OF LOT 12, BLOCK 3 OF THE LOWER STANLEY TOWNSITE;
THENCE SOUTH 20° 43' WEST FOR 108.19 FEET ALONG THE NORTHWEST LINE OF LOT 12,
THE POINT OF BEGINNING; THENCE SOUTH 36° 40' 51" WEST FOR 72.72 FEET TO CORNER 3
OF TRACT 7 OF THE SAWTOOTH NATIONAL RECREATION AREA; THENCE NORTH 20° 43'
EAST, APPROXIMATELY 81 FEET TO A POINT WHICH LIES NORTH 37° 27' WEST FROM THE
POINT OF BEGINNING; THENCE SOUTH 37° 27' EAST, APPROXIMATELY 25 FEET, MORE OR
LESS TO THE POINT OF BEGINNING.
PARCEL II:
LOT 3 IN BLOCK 1 OF ST AN LEY TOWN SITE IN NE1/4NE1/4 OF SECTION NINE (9), TOWNSHIP
TEN (IO) NORTH, RANGE THIRTEEN (13) EAST, BOISE MERIDIAN, AS SHOWN BY THE
OFFICIAL PLAT THEREOF NOW ON FILE IN THE OFACE OF THE CUSTER COUNTY
RECORDER IN CHALLIS, IDAHO.
Page2S
Washington County, Idaho
EXHIBIT "A"
Order No. 100-00-7731
Situated in Section 7, Township 13 North, Range 3 West of the Boise Meridian, in Washington
County, Idaho:
In the SW1/4SEI/ 4 of said Section 7: Commencing at the southeast comer of the SW1/4SE1/4;
thence North 0°34'30" West 322.41 feet to the True Point of Beginning;
thence South 88°42' West a distance of 150 feet, more or less;
thence South 0°34'30" East a distance of 150 feet, more or less;
thence Nonh 88°42' East 150 feet, more or less;
thence North 0°34'30" West 150 feet, more or less, to the True Point of Beginning.
ANO ALSO
A parcel of land in the SW1/4SWI/4 of Section 8, Township 13 Nonh, Range 3 West of the Boise
Meridian, Washington County, Idaho, described as follows:
\
Beginning at a point S 74°56' E 247 feet from the southeast comer of Lot 19 of Block 7, Middle Valley
Townsite, according to the official plat of said Townsite;
Thence N 14°5 l' E 150 feet, more or less, to the south line of Bridge Street, the True Point of Beginning;
Thence East 50 feet, more or less, lo the center of the channel of the Weiser River;
Thence southerly along the center of the Channel of the Weiser River 55 feet;
Thence westerly 50 feet. more or less;
Thence northerly 55 feet, more or less, to the True Point of Beginning.
SAVE AND EXCEPT that portion deeded to Washington County in Deed recorded November 2, 1994 as
Instrument No. 161713, Official Records.
Cochise County, Arizona
PARCELi:
That portion of the Northwest quarter of Section 2, Township 17 South, Range 20 East of the Gila and Salt
River Base and Meridian, Cochise County, Arizona, more particularly described as follows:
COMMENCING at the North quarter comer of said Section 2;
thence South 00° 05' 50" West along the North-South center section line a distance of 982.26 feet. more
or less, to the Southeast corner of the Northeast quarter of the Southeast quarter of Government Lot 3 of
said Section 2;
thence South 00° 05' 18" West along the North-South center section line a distance of 327.42 feet;
thence South 87° 41' 09" West a distance of 281.03 feet to the POINT OF BEGINNNG;
thence continuing South 87° 41' 09" West a distance of 150.00 feet;
thence North 00° 05' 18" East a distance of 290.40 feet;
thence North 87° 41' 09" East a distance of 150.00 feet;
thence South 00° 05' 18" West a distance of 290.40 feet the POINT OF BEGINNING;
PARCEL II:
Lot 29, Block 18, BENSON TOWNSITE, according to Book 1 of Maps, page 130, records of Cochise
County, Arizona.
Page26
Gila County, Arizona
FIRST AMENDED
HQ. 903-000-1301657
A portion of that certain piece or parcel of land, situate, lying and being in the Southeast quarter of Section
17 and the Southwest quarter of Section 16 and the Northeast quarter of Section 20, Township 9 North,
Range 14 East of the Gila and Salt River Base and Meridian, Gila County, Arizona, more particularly
described as follows:
That parcel shown as "Lot I" on Record of Survey on. October 30, 1996, as Map No. 1. 275.
PINAL COUNTY, ARIZONA
No. 242-1381592
Lot 47, of SILVER BELL ESTATES UNIT FOUR, according to the plat of record in the office of the
County Recorder of Pinal County, Arizona, recorded in Book 16 of Maps, Page 59;
EXCEPT all coal, gas and other minerals as reserved in Patent from the United States of America; and
EXCEPT all coal, oil, gas and other minerals, hydrocarbon, hydro-thermo and geo-thermo rights or
deposits, as reserved in Deed recorded in Docket 668, Page 964.
YAVAPAI COUNTY.ARIZONA
That part of Parcel 9, of HENDERSON VALLEY RANCH NORTH as shown on Record of Survey Map
recorded in Book 4 of Land Surveys, Page 37 Yavapai County Recorders Office, located within Section 28,
Township 14 North, Range 2 East of the Gila and Salt River Base and Meridian, Yavapai County, Arizona,
more particularly described as follows:
COMMENCING at the Southeast comer of said Parcel 9;
thence South 89 degrees 58 minutes 01 seconds West, along the South line of said Parcel 9, a distance of
264.46 feet to the TRUE POINT OF BEGINNING;
thence continuing South 89 degrees 58 minutes 01 seconds West along said South line, a distance of 330.57
feet;
thence North 00 degrees 02 minutes 04 seconds West, a distance of 263.76 feet;
thence North 89 degrees 58 minutes 30 seconds East, a distance of 33050 feet;
thence South 00 degrees 03 minutes 02 seconds East, a distance of 263.71 feet to the TRUE POINT OF
BEGINNING;
EXCEPTING all coal and other minerals as reserved in the Patent to said land.
Reserving a 20 foot wide easement for ingress, egress, and utility purposes, lying East of, adjacent to, and
parallel with the West line of subject Parcel. Also reserving a 68 foot wide easement for ingress, egress,
and utility purposes, lying North of, adjacent to, and parallel with the South line of subject Parcel.
Page27
/
and utility purposes, lying North of, adjacent to, and parallel with the South line of subject Parcel.
Parcel No. 2
An easement for ingress and egress and public utilities being 68.00 feet in width and lying 68.00 feet
Northerly of and parallel to and contiguous with the following described sideline:
Located on Parcel 9 of HENDERSON VALLEY RANCH NORTH as recorded in Book 4 of Land Surveys,
pages 37 and 38, records of Yavapai County, Arizona and being located in the Northeast one-quarter of
Section 28 Township 14 North Range 2 East of the Gila and Salt River Base and Meridian, Yavapai
County, Arizona, being more particularly described as follows:
COMMENCING for reference at the North one-quarter comer of said Section 28;
thence South 89 degrees 58 minutes 47 seconds East along the North line of the said Northeast one-quarter
of Section 28, a distance of 1715.93 feet to the Northeast comer of the foresaid Parcel 9;
thence South 00 degrees 01 minutes 52 seconds along the East line of said Parcel 9, a distance of 1319.08
feet to the Southeast comer of said Parcel 9 and the TRUE POINT OF BEGINNING of this easement;
thence South 89 degrees 59 minutes 29 seconds West along the South line of said Parcel 9, a distance of
629.00 feet to the POINT OF TERMINATION of this easement.
EXCEPT any portion lying within Parcel No. 1
Page 28
EXHIBIT C
PROPOSED ORDER
4844 l.0003.8399 11 5.4
Stephen M. Frinsko, ISB No. 8432
HAWLEY TROXELL ENNIS & HAWLEY LLP
877 Main Street, Suite 1000
P.O. Box 1617
Boise, ID 83701-1617
Telephone: [phone]
Facsimile: 208-954-5261
Email: [e-mail]
Attorneys for Midvale Telephone Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF MIDVALE TELEPHONE COMPANY
FOR AUTHORITY TO BORROW FROM
THE RURAL UTILITIES SERVICE ("RUS")
IN AN AMOUNT NOT TO EXCEED
$12,691,000.
Case No. MID-T-16-0 l
PROPOSED ORDER
On December 21, 2016, Midvale Telephone Company ("Applicant") filed an Application
for Loan Approval with this Commission requesting authority to execute a loan contract
amendment and supplemental mortgage in an amount not to exceed $12,691,000 with the United
States of America, acting through the Rural Utilities Service ("RUS").
In support of its Application, Applicant states that the proceeds of the RUS loan will be
used to pay for, and partially reimburse general funds to: (1) extend services to approximately
368 new customers; (2) provide for router and switch upgrades to handle broadband traffic
growth; (3) allow Applicant to provide faster broadband speeds in each of its eleven exchanges;
(4) provide fiber to the home ('FTTH") in several areas and extend fiber for toll and broadband
Ethernet transport facilities to provide larger pipes and redundant paths; (5) build approximately
49.59 miles of new toll fiber, 83.61 miles of local fiber, and 17.56 miles of drops; (6) serve two
new FTTH Carrier Serving Areas ("CSA") and one new CSA for copper DSL; and (7) replace
six existing CSAs without Ethernet capabilities. The total new Optical Network Terminals
48441.0003.84043 l l.4
("ONT") for FfTH are 309 and four Digital Subscriber Line Access Multiplexers ("DSLAM")
with 192 lines.
After examining the Application and supporting documents and being fully advised in the
premises, the Commission hereby finds that a hearing in this matter is not required, and that the
proposed transaction is consistent with the public interest and the Applicant's proper
performance of its duties as a public utility.
IT IS THEREFORE ORDERED that the Application of Midvale Telephone Company for
authority to execute a loan contract amendment and supplemental mortgage with the RUS in an
amount not to exceed $12,691,000 be, and the same is hereby granted.
DONE by Order of the Idaho Public Utilities Commission this __ day of
ATTEST:
Jean D. Jewell
Commission Secretary
- 2 -
Paul Kjellander, President
Kristine Raper, Commissioner
Eric Anderson, Commissioner
48441.0003.84043 l I .4
LEGAL NOTICE OF MIDVALE TELEPHONE EXCHANGE, IN CORPORA TED
APPLICATION FOR AUTHORITY TO BORROW FUNDS
NOTICE IS HEREBY GIVEN that on December 21, 2016, Midvale Telephone
Exchange Incorporated, completed and filed with the Idaho Public Utilities Commission an
Application for authority to borrow up to $12,691,000 from the United States of America, acting
through the Rural Utilities Service, to be used for upgrades and expansions to its plant. The loan
will be evidenced by Notes given to the Rural Utilities Services and secured by a Restated
Mortgage, Security Agreement, and Financing Statement.
The Application is on file and is available for public inspection at the Idaho Public
Utilities Commission. Any person desiring to comment on said Application must file petitions
or protests with the Idaho Public Utilities Commission within fourteen (14) days of the filing
date. If no protests are received within this time limit, the Commission may consider the
Application and enter its Order without setting the matter for hearing. If written protests are
filed with the Commission within the time limit set, the Commission will consider the same, and
in its discretion, may set a hearing. Petitions or protests must be filed with: Jean Jewell,
Secretary, Idaho Public Utilities Commission, Statehouse, Boise, Idaho 83720.
Jean Jewell, Secretary
Idaho Public Utilities Commission
- 3 -
48441.0003.84043 l l.4
EXHIBIT D
NOTICE OF THIS APPLICATION
48441.0003.8399 I I 5.4
LEGAL NOTICE OF MIDVALE TELEPHONE COMPANY'S
APPLICATION FOR AUTHORITY TO BORROW FUNDS
NOTICE IS HEREBY GIVEN that on December 21, 2016, Midvale Telephone
Exchange Incorporated, completed and filed with the Idaho Public Utilities Commission an
Application for authority to borrow up to $12,691,000 from the United States of America, acting
through the Rural Utilities Service, to be used for upgrades and expansions to its plant. The loan
will be evidenced by Notes given to the Rural Utilities Services and secured by a Restated
Mortgage, Security Agreement, and Financing Statement.
The Application is on file and is available for public inspection at the Idaho Public
Utilities Commission. Any person desiring to comment on said Application must file petitions
or protests with the Idaho Public Utilities Commission within fourteen (14) days of the filing
date. If no protests are received within this time limit, the Commission may consider the
Application and enter its Order without setting the matter for hearing. If written protests are
filed with the Commission within the time limit set, the Commission will consider the same, and
in its discretion, may set a hearing. Petitions or protests must be filed with: Jean Jewell,
Secretary, Idaho Public Utilities Commission, Statehouse, Boise, Idaho 83720.
Jean Jewell, Secretary
Idaho Public Utilities Commission
48441.0003.8404388.2