20110124Application.pdf

Michael C. Creaer (ISB No. 4030)
Kelsey J. Nunez (ISB No. 7899)
GIVNS PURSLEY LLP
601 W. Banock Str
P. O. Box 2720
Boise, il 83701-2720
Telephone No. [phone]
Fax No. [phone]
mcc(givenurley.com
kjn~givenpurley.com
RECEIVED
in, I JAN 24 PM 3:57
¡;~¡'L,.,'
Attorneys for Rur Telephone Company
1716-3:U063S6a_l
BEFORE THE IDAHO PULIC UTILITIES COMMISSION
IN THE MATTR OF THE APPLICATION
OF RURA TELEPHONE COMPANY FOR
AUTHORI TO BORROW FROM THE
RURL UTILITIES SERVICE ("RUS") IN
THE AMOUN OF NOT MORE THAN
$728,700.00
Case No. RUR- T -11-01
APPLICATION OF RUR
TELEPHONE COMPAN
Rur Telephone Company ("Rur" or "Applicant"), by and thrugh. its attorneys Given
Puley LLP, makes ths Application purt to Idao Code § 61-901 for authority to execte a
Promissory Note in the amount of Seven Hundr Twenty Eight Thousand Seven Hundred
Dollar ($728,700.00) in favor of the United States of Amerca, actg thugh the Rur Utilities
Sece (hereiafter called "RUS") to be sec by a LoanGrt and Secty Agreeen and
Applicant's prexisting Mortgage. In surt of its Application, Rur sttes as follows:
1. Applicant is a ceficated telephone corpraon orgazed under the laws of the
State of Idaho providig telecunication serce includig loca exchange serce with the
state of Idao.
APPLICATION OF RUR TELEPHONE COMPAN - i
2. All notices and communcations with regad to ths Applicaton should be sered
upon:
Michael C. Creaer
GIVNS PURSLEY LLP
601 W. Banock Strt
P. O. Box 2720
Boise, ID 83701-2720
Mar Marell
Rural Telephone Company
892 W. Madison Avenue
Glens Fer, il 83623
3. Rurl has quaified for an RUS grt to be made under the feder Broadband
Intiatives Progr ("BIP") in the amount of$ 1,700,300.00 ("Grt"). As a condition of the
Grant, Rural is reuired to provide a twenty-five perent match of fuds ("Rur Match"), which
is to be derved frm a $728,700.00 loan ("Loan") fr RUS evdenced by a Prmiss Note
("Note"). The Note will be seced by a LoanGrant and Secty Agreeent ("LoanGrt
Agrent") and Rur's pre-existig Rested Mortgage, Secty Agrent and Financing
Statement date March 9, 2005 ("Mortgage"), which Mortgage was apprved by the
Commission in Case No. RUR-T-04-o1, Order No. 29566. Copies of the Note and the
LoanGrant Agreeent are attched hero as Exhbit A an Exhbit B, revely.
4. The interest rate on the Loan will be at the Treaur rate for coparble loan
with comparble matuties at the time advace are made.
5. The prcees of th Grt and Rur Match wil be us to extend ADSL2+
seces into Rur's Nort Fork, Tuscarra and Jardge Serce Area - all in Elko County,
Nevada. Cerai of these new facilities, includg apprxiately 2.4 miles of fibe, will
necsarly be interonneced with Rur's Idao telecmmuncations faclities.
6. The falities to be constrcted in Nevad will be boked to Rur's Nevada
opetions and the Loan wil be repaid out of revenues generted by its Nevada opeations.
7. The prjec also wil provide some beefits to Rur's Idao cutomer by freeig
up capacity on an Idao-located switch for Idao cutomer, allowig Raft River Rur Elecc
APPLICATION OF RUR TEEPHONE COMPAN - 2
Coopertive to beer monitor its electrcal system in Nevada, and providig high spee interet
access to Nevada customer who routiely trvel to and conduct business in Twi Falls county
and other ar of souther Idaho.
8. The propose transacton is consisten with the public interest. Constrcton and
upgrng of high spee inftrcte wil improve serce for Rurl's customer, fuer sere
the goals of unver serce and provide neeed ecnomic stulus to ru counties in
norter Nevada and in souther Idaho.
9. A Proposed Order grting ths Application is attached her as Exhbit C.
10. Notice of ths Application wil be published with seven (7) days in The IdahQ
Statesman (Boise). A copy of ths Notice is attched as Exhbit D.
11. Rur submts that the public intert does not requie a heag on ths matter an
it requests that the Commission prces ths Application and deterne this matter by Modified
Proceur, purt to Rules 201 to 210 of the Commssion's Rules of Prctce and Proced.
In the event the Commssion deteres that formal preeings on ths Application ar
necessa, Applicat stds rey for imedate heag.
12. Applicant has attched its filing fee, cacuated purtto Section 61-905, Idaho
Code, in the amount of$257.oo.
WHEREFORE, Applicant resecly reuests an Orer of ths Commission grantig the
foregoing Application of Rural Telephone Company to execte and deliver to the Rur Utilities
Serce the Note in an amount not to excee $728,700.00, the Grtlan and Secty
Agrent and related docuents in connection with the Grt and the Loan.
RESPECTFLY SUBMITD ths 24th day of Janua 2011.
GfVSP~SLEi~
By~
Michael C. Creamer
Attorneys for Rur Telephone Company
APPLICATION OF RUR TELEPHONE COMPAN - 3
CERTIFICATE OF SERVICE
I HEREBY CERTIF that on ths 18th day of Janua 2011, I caused to be sered the
original and four (4) copies of the foregoing Application by the metod indicated below, and
addresse to the following:
Jea Jewell, Secet
Idaho Public Utilities Commssion
472 W. Washigton Str
P.O. Box 83720
Boise, il 83720-0074
U.S. Mail
X Hand Delivered
Overght Mail
Facsimile
td&:Michal C. Creer
APPLICATION OF RUR TELEPHONE COMPAN - 4
EXHIBIT A
PROMISSORY NOTE
Idaho 1 i 04-A40
GLENNS FERRY, IDAHO
TIilS PROMISSORY Nom (herein the "Note"), dated as of August 12,2010, is
ma by RUR TELEPHONE COMPAN (herinaer the "Borrwer"), a corpraton duly
organze and existg under the laws of the State of Idaho, to the UNITED STATES OF
AMRICA, (hereinafer the "Goverent"), acting thugh the Admnistrtor of the Rural
Utities Serce ("RUS"). For value reeived, the Borrwer promises to pay to the order of the
Goverent, at the United States Treur, Wasgton, D.C., Seven Hundr Twenty Eight
Thousand Seven Hundred Dollar ($728,700), with interes payable, from the date of each
advance, on the amount advanced by the Governent (hereiner the "Advance"), puruat toa
cert LoaGrt and Securty Agreement, dated the same date as ths Note (hereiner the
"LoanGrt Agrement"), mad by and betwee the Borrower and the Goverent, and
remaining unpaid frm time to tie, in the time and maner herein provided:
1. Interest Rate. Interest on eah Advance shall be at rate(s) per anum, published by the
Secta of the Treasur, which shl be equa to the cost of borrowi of the
Deparent of Treasur for obligatons, as determed by the Govemment, of
comparble matuty (hereinafer the "Cost-of-Money Interet Rate").
2. Matuity Date. On a date nineteen (19) year afr the date hereof, the principa hereof
advanced puruat to the LoanGrant Agreeent and remang unpaid, if any, and
intest theren, shall be due and payable (hereiner the "Matuty Date").
3. Fun Advance Period. Funds wil be advanced puruat to the LoanGrt Agrment.
The fud advance peod for ths Note begins on the date hereof and termnates th (3)
year frm the date of this Note (hereinaer the "Terintion Date"). No fuds will be
advanced subsequent to the Ternation Date.
4. Payents on Advances.
(a) Made Within One (1) Year. Interst on Advances made durg the first year frm
the date of the firs Advance hereuder, and reaing unpaid, shal be payable
on the las day of eah month (hereiner the "Monthy Payment Dat"),
begig on the last day of the month followi the month of eah Advance for
the peod endig one (1) year frm the date of the fi Advance hereunde.
Thereaf, to and includg the Matuty Date, the Borrwer shall make a
payment ever Monthy Payment Date on each Advance mae durg suh peod
which shal be: (i) substtially equa to al subsequent monthy payments and (ü)
in an amount tht wil pay al pricipal and interest due on eah Advance no late
th the Matty Date.
Pag I
(b) Made After One (1) Year. Interst and principal payments on Advances made
more th one (1) yea afer the date of the first Advance hereunder shl be
reaid in intalments beging with the Monthy Payment Date of the month
followig each Advance and ending on the Matuty Date. The fi such payment
on an Advance shall be increased by the amount of intert accrung between the
date of the Advance and the fi day of the next month. Therafer, to and
including the Matuty Date, the Borrwer shal mae a payment ever Monthy
Payment Date on each Advance (i) substtially equa to ever other monthy
payment on such Advace, and (ii) in an amount tht will pay all pricipa an
intest of such Advance no later than the Matuty Date. Ths payment shal be
in addition to the payment on the Advances made with one (1) year from the
date of the first Advance herunder and remng unpaid.
5. Amlication of Payents. Each payment made on ths Note shl be applied as follows:
First, to expenses, costs and penaties; Secnd, to late chages; Thrd, to the payment of
interest on principal; and Four to pricipal.
6. Prepament. All, or a portion of the outstanding balce, of any Advance may be
prepaid on any payment date, as herein provided. However, so long as any of the
prncipal advanced pursuat to the LoanGrt Agrement shal remai unpaid, the
Borrwer shall be obligated to make the monthly payment on account of pricipal and
interest, in the amount provided herein uness the Borrwer and the Governent shall
otherse agre, in wrting.
7. Late Payments. A late charge shall be chaged on any payment not made with five (5)
days of the date the payment beomes due. The late chage rate shall be computed on the
payment from the due date at a rate equa to the rate of the cost of fuds to the United
State Treur as prescribed and published by the Secreta of the Treaur. In adtion,
the BorIwer shl pay adminstrtive costs and penalty charges assessed in accordace
with applicable Governent reguations. Acceptace by the Goverent of a late
payment shal not be deemed to be a waver of any right or remedy of the Goverent.
8. Secuity. Ths Note is seured by a securty interest in collatera describe in the
LoanGrt Agrement as such agreement may be amended, supplemented, conslidate
or restte frm time to tie. Rights and obligatons with repect to the collate are
stated therin.
9. Noteholder. Ths Note evidences indebte created by a loan mad puruat to the
American Recovery and Reinvestent Act of 2009, Pub. L. 111-5, 123 Stat. 115 (2009),
the Notice of Funds Availabilty published at 74 Fed. Reg. 33104 and Title VI of the
Rur Electrfication Act of 1936 (7 U.S.C. 901 et seq.). The Governt shal be and
shal have all rights as holder of ths Note.
10. Default. In an event of default, as provided in the LoanGrt Agreement, all prcipal
advanced puruat to the LoanGrt Agren and remaig unpaid on ths Note; an
Pa 2
,,
all interest thereon may be declared or may become due and payable in the maner and
with the effect provided in the LoanGrt Agrement.
11. Costs. The Borrower shal pay any and all cost and expeses incurd in conntion
with the exercise of rights or the enforcement of remedes, as set fort in the LoanGrant
Agrement.
12. Waivers. The Borrwer waves demand, preentment for payment, notice of non-
payment, notice of dishonor, protest, and notice of non-payment of ths Note.
13. Obligations. The obligations herunde of the Borrwer on this Note are absolute and
unconditional, irrespective of any defense or any right to set offrecoupmen~ or
counterclai it might otherwse have agai the Goverent.
IN WITSS WHREOF, the Borrwer ha causd ths Note to be signed in its
corporate or legal name and its corprate seal, if any, to be hereuntoaffixed and attested by its
offcer thereunto duly authorize, all as of the day and year first above wrtten.
R
(SEAL) Tite: President
Att to by:~m ~z7Æ
Secreta
Pag 3
EXHIBITB
"
RUS Project Designation:
IDAHO 11 04-A40
BROADBAND INTIATIVES PROGRAM
LOAN/GRAT AND SECURTY AGREEMENT
dated as of August 12, 2010
between
RURL TELEPHONE COMPANY
and
THE UNTED STATES OF AMERICA
UNTED STATES DEPARTMT OF AGRICULTURE
RURL UTILITIES SERVICE
Page i
BROADBANl INITIATIES PROGRAM
LOAN/GRANT AND SECURITY AGREEMENT
THIS LOAN/GRANT ,ANP SECURTY ,AGREEMEN'T (this "Agreement"), dated asof
August 12, 2010 is. between:RUR TELEPIlONE COMPANY ("Awatdeel'),a corporation existg
under the laws of Idaho, and th~ UN'lEll STATES OF AMERICA, acting through the Açlinistrtor of
the Rural UtiltieS S~rvce ("RUS").
The Awardee hasapplied for financial assistace C'Application") from RUS to fiance the
constrction ora broadband infrastrcture project to serve aras that are at least 75% rul.
RUS is willng to extend financial assistance, in the form of a loan and grant to the Awardee,
pursuant to the Anerican Recovery and Reinvestment Act of 2009, Pub. L. 111-5, 123 Stat. 115 (2009)
(the "Recovery Act"), the Notice of Funds Availabilty publìshed at 74 Fed. . Reg. 33104 and Title Vl ofthe
Rural Electrfication Act of 1936 (7 U.S.C. 901 et seq.), and all applìcable federal regulations, on the terms
and conditions stated herein.
The Awardee is willng to secure the loan and grant and its other obligations to RUS on the
terms stated herein.
THREFORE, in consideration of the promises and mutual covenants herein contained, the
pares agree and bind themselves as follows:
ARTICLE 1- DEFINITIONS
The terms defined herin include both the plural and the singular. Unless otherwse
specifically provided, an accounting term not otherwise defined herein shall have the meangs assigned
to them, and an determinations and computations herein provided for shall be made in accordance with
Accounting Requirements.
"Accountin Requirements" shall mean the system ofaccountingprescribed.byRUS in RUS
Regulations.
"Advance" or "Advances" shall mean the disbursement of Loan and/or Grt fuds in
accordance with this Agreement.
"Affliate" or "Affiliated Company" orany specified person or entity means any other person
or entity directly or indirectly controllng of, controlled by, under direct or indirect common control with,
or related to, such specifiedperson or entity, or which exists for the sole purose of providing any service
to one company or exclusively to companies which otherwse meet the definition of affliate. This
definitìon includes Variable Interest Entities as described in Financial Accounting Stadards Board
Interpretation (FIN) No. 46(R), Collolidation of Yariåblè lntèrest Entities. For the purose of tls
definition, "control" means the possession directly or indiectly, of. the power to direct or cause the
direction of the management and policies of a company, whether such power is exercised though one or
more intermediar companies, or alone, orin conjunction with, or pursuant to an agreement with, one or
more other companes, and whether such power is. establìshed though a majority or minority ownership
voting of secuities, common directors, offcers, or stockholders, voting trst, holding trs (other than
money exchanged) for propert or services.
"Applìcation" shall have the meaning as defined in the second paragraph hereof.
"Award" shall mean. theLQan or LoanGrant Combination described in Aricle m.
"Awardee" shall mean the Loa or LoanGrat Combination recipient named in the first
paragraph hereof.
Page 2
"BIP" shall mean the Broadband Initiatives Program, administere by RUS and creted
puruant to the Recvery Act
"BIP Contracting, Work Order and Advance Procedures Guide" shall mean the proedurs for
constrction and Advances, attched hereto as Attachment I.
"Business Day" shall mean any day that RUS and the Deparent of Treasur are both open
for business.
"Collateral" shall mea any and all propert pledged as securty for the Obligaions,
including, without limitation, security for the Loan, and other amounts owing to RUS under the Loan-Grat
Document, including, without limitation, the propert described in Arcle ix and on SChedule 2.
"Composite Economic Life" means the weighted (by dollar amount of each class of failty in
the Award) average economic life of all classes of facilities in the A wad, as determined by RUS.
"Distbution" shall have the meaning as defied in Section 7.9.
"Eligible Puoses" shall mean puroses and expenes which ar specified in the NOF A as
being eligible for funding.
"Event of Default" shall have the meaing as defied in Aricle X.
"Expiration Date" shall have the meang as defined in Pargrph (d) ofSeetion 3.1.
"Form 481" shall have the meaning as defied in Section 4.3(d).
"Grat" shall mean the grant described in Section 3.1.
"Interet Expense" shall mean the accrl of interest on all classes of indebtedness, includig
capital leases and seurties issued by the Awardee and shall also include the amorttion of debt issuace
expenses, premiums, and discounts.
"Laws" shall have the meaning as defined in parph (e) of Aricle II.
"Loan" shall mea the loan described in Section 3. I.
"LoGrat Combination" shall mea, colIectively, the loan and grt descbed in Section
3.1.
"Loan-Grant Documents" shall mean, colIectively, ths Agreement, Securty Douments and
the Note(s).
"Material Adverse Effect" shall mean a material adverse effect on, or change in, the condition,
fiancial or otherise, operaons, propertes, business or prospects of the Awardee or on the abilty oftbe
Awardee to perform its obligations under the Lo-Grat Documents as determined by RUS.
"Net Income" or "Net Marins" shall mea the amount equal to the income that the Awaree
has aft subtrtig costs and expenss from the total revenue. Costs and expenss include but are not
limite to all opertions and mainteance expnses, corporate operations, taes, interest dividends,
depreciation, and gas and losses on the disposition of propert.
"Net Wort" (equity) shall mean total asets less tota liabilties of the Awardee. Net wort
includes the rerded value of capita stock, additional paid-in capita, treas stock, reined earings and
other comprehensive income.
Page 3
"NOFA" shall mean the Notice of Funds Availabilty, published in the Federal Register at 75
Fed. Reg. 3820.
"Note(s)" shall have the meaning as defmed in Pargrph (a) of Section 3.2.
"Obligations" shall mean any and all indebtedness, obligations and liabilties of the Awardee
to RUS, of every kind and description, direct or indiret, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now existing or hereaftr arsing,
howsoever evidenced or created, including, without limitation, all loans (including any loan by renewal or
extension); all indebtedness, all Notes, all undertngs to take or refrain from taking any action; and all
interest taes, fees, charges, expenses, and attorney's fees chargeable to Awardee or incurred by RUS
under this Agreement or in any other document or instent delivere hereunder or as a supplement
hereto.
"Permittd Encumbraces" shall mean the liens and encumbrances permttd by the RUS
Mortgage.
"Pledged Deposit Account" shall have the meaning as defmed in Section 5.4.
"Prior RUS Loan Contrct" shall mea the contract identified on Schedule i as it may have
been amended or supplemented from time to time.
"Project" shall have the meaning as defied in Paragraph (a) of Section 3.4.
"Project Completion" shall mean that all Awar funds have been advanced to the Awardee by
RUS.
"RE Act" shall mean the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.).
"RUS Mortgage" shall mean the mortgage identified on Schedule 1 as it may be amended,
supplemented and restated frm tie to time.
"RUS Regulations" shall mean the rules, regulations and bulletins of genera applicabilty
published by RUS from time to time, as such rules, regulations and bulletins exist at the date of
applicabilty thereof, and shall also include 7 C.F.R. 3015 (and, by adoption, 48 C.FR 31.2 of the Feder
Acquisition Regulations), 3016 and 3019 and applicable OMB Circular, as well as any rule and
regulations of other Federal entities which RUS is requi by law to implement. Any reference to specific
RUS Regulations shall mean the version of and cite to such regulation effective at the date of applicabilty
thereof.
"Securty Documents" shall mean, collectively, any mortage, security agreement, financing
statement, deposit account control agreement or other document providing collateral for the Obligations,
including without limitaion, repayment of the Loan.
"Service Rates" shall mean the rates charged for data, video, voice or any other service
proposed in the RUS approved Application.
"Subsidiaries" shall mean the subsidiaries listed in Schedule 1.
"Substantially Complete" shall mean tht 67% of Award funds have ben advanced to the
Awardee by RUS.
"System Design" shall mean the system as described in the RUS approved Application.
Page 4
\
"TIER" shall mea the Awardee's tota Net Income or Net Margins plus Interest Expense
payable for any year divided by Interest Expense payable for such year, as set fort in Section 5.8 herof.
"Timeline" shall mean the detailed schedule describing the Project build out, submitted with
the RUS approved Application, as may be amended frm time to time with prior wrttn RUS consent.
"Tota Assets" shall mean all proper owned.by the Awardee. Total assets include curnt
and noncurnt assets such as cash, receivables, materal and supplies, prepayments, deferrd chares, and
investments; fixed assets (plant) such as buildings and equipment, both in service and under constrction;
as wel1 as capital leases and intagibles.
ARTICLE II - REPRESENTATIONS AN WARNTIES
Recognzing that RUS is relying hereon, the Awardee represents and warts, as of the date
of this Agreement, as fol1ows:
(a) Organization; Power, Etc. The Awaree: (i) is the tye of organiztion spified in
the first paragraph hereof, duly orgaize, validly existing, and in good stding
under the laws of the State identified in the fir pargraph herf; (ii) is duly
qualified to do business and is in good stading in each jurdicton in which the
traction of its business make such qualification necessar; (ii) has legal power to
own and operate its assets and to car on its business and to enter into and perform
its obligations under the Loan-Grat Docwnents; (iv) has duly and lawful1y obtaed
and maintaed all materal licenses, cerficates, permits, authoritions and
approvas necess to conduct its business or requir by applicable Laws; and (v)
is eligible to obtain the fiancial asistace frm RUS conteplated by this
Agrment.
(b) Authority. The exection, delivery and perormce by the Awardee of this
Agreement and the other Loan-Grat Documents and the performce. of the
tranactons contemplated hereby and thereby have been duly authorid by all
necessar actions and do not violate any provision of law or any charer, arcles .of
incorporation, organization docuents or bylaws of the Awadee or result in a
breach of, or constitute a default under, any agrent, securty agrement, note or
other intrent to which the Awardee is a par or by which it may be bound. The
Awardee ha not received any notice frm any other par to any of the foregoing
that a default has occured or that any event or condition exsts that with the giving
of notice or lapse of tie or both would constitute such a default.
(c) Consent. No consent, approvaL. authorion, order, filig, qualification, license, or
permit of any governental authority is necesar in connection with the execution,
delivery, perfonnance or enforcement of the Loan-Grat Docwnents, except such as
have been obtained and ar in ful force and effect.
(d) Binding Agreement. Each of the Loan-Grat Docuents is, or when execute and
delivered wil be, the legal, vaid, and binding obligation of the Awardee,
enforceble in accordce with its tenn, subject only to limitations on enforceabilty
imposed in equity or by applicable banptcy, inolvency, reorganiztion,
moratorium or similar laws affectig crtors' rights generaly.
(e) Compliance with Lows. The Awardee is in compliance in all mater respec with
all federal, state and loc laws, rues, regulations, ordinance, codes and orders
(collectively, "Laws.")
PageS
(f) Litigation. There ar no pending or theatened legal, arbitration or governenta
actions or proceedings to which die Awardee is a par or to which any of its
propert is subject which, if adversely determined, could have a Material Adver
Effect.
(g) Information Submitted with Application. All information, report, and odier
documents and data submitted to RUS in connection widi the Application were, at
the time the same were fuished, complete, and corrct in all material respect. Any
financial statements or da submitted to RUS in connection with the Application
present fairly, in all material respect the fmancial position of the Awadee and die
results of its operations in conformty with Accountig Requirments. Since the date
thereof, there has be no materal adverse change in the fiancial condition or
operations of the Awaree.
(h) Principal Place of Business. The pricipal place of business and chief executive
offce of the Awadee is at the address of the Awardee specified in Schedule i
hereto.
(i) Organization Number. The Awardee's organiztion number is corrctly identified in
Schedule I hereto.
G) Subsidiaries and Parent. Any subsidiares or parent of the Awardee are disclosed on
the atched Schedule i.
(k) Defaults Under Other Agreements. No default by the Awardee has occured under
any agrement or instent to which the Awardee is a par or to which any of its
propert is subject that could have a Material Adverse Effect.
(1) Title to Property. Excet as disclosed in wrtig in the opinion of counsel, the
Awardee holds good and marketble title to all of the Collateral, free and clear of
any liens, securty interests or other encubraces except for Peritted
Encumbraces.
(m) RUS Mortgage. The RUS Mortgage is in full forc and effect, will secur the
Obligations, including the Note, and creates a valid fist lien on the propert pledged
thereunder and hereunder.
(n) Additional Representations and Waranties. The Awardee fuer represents and
warts as set fort on Schedule 1.
ARTICLE II - THE LOAN AN GRANT
Section 3.1 Loan and Grant Amounts. Interest Rate. and Expiration Date.
(a) Loan Amounts. RUS ages to make and the Awardee ags to accept, on the term
and conditions stated in this Agreement and subject to 31 U.S.C. 1551 and 1552, a
loan, in the amount speified in Schedule 1 hereto (the "Loan").
(b) Grant Amount. RUS agrees to make and the Awardee ages to accept, on the terms
and conditions stated in this Agrement and subject to 31 U.S.C. 1551 and 1552, a
grt, in the amount specified in SChedule 1 hereto (the "Grant").
(c) Interest Rate. The amount of the Lo speified in Schedule 1 hereto wil bear
interest on each Advance at the Treur rate for comparable loans with compable
matuties.
Page 6
(d) Expiration Date. The obligation of RUS to advance the Award, or any portion
thereof, shall expire on a date ("Expirtion Date") thee (3) years from the date of
this Agreement
Section 3.2 Loan-Grant Documents
(a) The debt crated by the Loan wil be evidenced by a note(s) ("Note(s)") executed bythe Awardee and payable to the United States of America. The Awardee shall
repay the Loan in accordance with the Note(s) which shall be payable and bear
interest in accordace wit its (their) ters.
(b) The Awardee shall execute the Security Documents, in fonn and substace
satisfactory to RUS, and such other sety instrents as requid by RUS.
Section 3.3 Payment
Except as otherwise prescribed by RUS, the Awaree shall make all payments on the Note(s)
utilzig electonic fud transfer procedurs as specified by RUS.
Section 3.4 Prolect
(a) Loan and Grant Purpose. The Loan and Grat have been made solely to finance thebroadband infrastrcture projec specifically descrbed in the RUS approved
Application ("Project.")
(b) Changes to Project. The Awardee shl obta the prior writen approval ofRUS for
any material change to the system design, constrction, Timeline, deliver of
services, and/or objective(s) of the Project.
Section 3.5 ACH Payments
The Awardee consents to the use of the Automated Clearg House (ACH) Payment System
and to the deposit of award fuds ditly into the Pledged Deposit Account.
ARTICLE IV - CONDITIONS OF FIANCIAL ASSISTANCE
Section 4.1 Conditions Precedent to Closing
In connection with the execution and delivery of ths Agrement, each of the following
conditions shall be satisfied (all documents, certficates and other evidence of such conditions ar to be
satisfactory to RUS in its discretion):
(a) Legal Matters. All legal matt incident to the consumation of the trsacons
hereby cotemplate shall be satsfactory to counel for RUS;
(b) Loan-Grant Documents. RUS shall receive duly execud originals of the Loan-
Grt Documents;
(e) Filed and Recorded Security Documens. RUS shall have received executed filed
and indexed financing statements coverng all of the personal prope and fitus
of the Awardee;
(d) Articles of Incorporation, Charter, Bylaws and Organizational Documents. With
respect to corpe and cooperative Awardees, RUS shall have recived certfied
Page?
copies of the Awardee's most recent arcles of incorpration or charer and bylaws.
With respect to limite liabilty companes or similar organiztions, RUS shall have
received cerified copies of the Awaee's most recent organization docuents
containing provisions reflecng the obligations of the Awardee in pargrphs (c) and
(d) of Section 7.3;
(e) Authorizations. RUS shall have received satifactory evidence that all Loan-GrtDocuments and proceedings of the Awardee necessar for duly authorizig the
execution, delivery and perfonnance of the Loan-Grat Documents have been
obtaed and are in full force and effect;
(t) Approval. RUS shall have received satisfactory evidence tht the Awardee has duly
registerd when and where requird by law with all state, Fecieral and other public
authorities and regulator bodies and obtaed all authorizaions, certficates, and
approvas necssar for, or reuired as a condition of, the validity and enforceabilty
of each of the Loan-Grat Documents;
(g) Title Evidence. RUS shall have received satisfactory evidence that the Awardee hagood and marketable title to its prope, including the Projec and holds such
frchises, penn its, leases, easements, rights, privileges, licenses, or right-of-way
intrents, reasonably adequate in fonn and substace, as may be required by law
for the continued maintenance and opetion of the existing facilties and Project;
(h) Management. Serice, and Operating Agreements. Except as otherwise provided in
Sectons 4.2 and/or 4.3 herein, RUS shall have received all management, service, and
operatig agreements in fonn and substace acceptable to RUS, which shl be in
accordace with fees or rates presented in the pro forma financial stteents
submittd to RUS in the RUS approved Application;
(i) Opinion of Counel. RUS shal have reeived an opinion of counsel for the Awardee
(who shall be acceptable to RUS) in fonn and substace acceptable to RUS for each
state in which the Awadee operates; and
G) Additional Conditions. The Awardee has met all additional conditions spcified in
Schedule 1 hereto.
Section 4.2 General Conditions Precedent to RUS' Obligations to Release Funds for Advance
The obligations of RUS herunder are subject to the saisfaction of each of the following
conditions precedent (all documents, certficates and other evidence of such conditions are to be
satisfacory to RUS in its disetion):
(a) Service Rate Evidence. RUS shall have received satisfactory evidence that the
Awaree has duly adopte Service Rates for all proposed services which ar
designed with a view to (i) paying and discharing all taes, maintenance expees,
and operating expenses of the Awaree, (ii) makg all payments in respec of
pricipal and interest on the Note(s) when and as the same shall become due, (ii)
providi and maitag renale workig capita of the Awadee, and (iv)
producing and maintaing the TIR specified in Section 5.8 hereof;
(b) Fidelity Bond or Theft Insrance Coverage. RUS ha received copies of the fidelity
bond or theft insurce policy frm the Awardee, identifying RUS as a loss payee,
from a surty doing business with the United States listed in 31 eFR Par 223, in the
amount speifed in Schedule 1, cover all offcers, employees, or agents of the
Awaree authoried to receive, disbure, or recive and disbure the Loan and Grat.
Notwithstading, for curent RUS borrowers, RUS may waive this fidelity bond
Page 8
\
coverage requirement, if, after evaluation, RUS has detenined that adequate fidelity
bond coverage is already maintained by the Awaree as a RUS borrower under
exising loan or guarantee agreements beteen the Awardee and RUS;
(c) Cu"ent Financial Information and Certifcate of Authority. RUS ha received frm
the Awardee: (i) its updated balance sheet, statement of cah flow, and income
sttement and (ii) a ,duy authorize and executed certification, Form 675,
"Certification of Authority," designating an offce, employee, or agent of the
Awardee as the peron or persons authori to execute and submit, on behalf of the
Awardee, RUS Form 481, "Financial Requirement Statement;"
(d) Deposited Funds. RUS has reeived from the Awardee evidence, satisfactory to
RUS, verifying that the Awardee has maintaned on deposit in an account, fuds
suffcient to complete the Project as specified on Schedule 1; and
(e) Additional Conditions. The Awardee has met all additional conditions specified in
Schedule 1 hereto.
Section 4.3 Conditions to Individual Advances
The obligations of RUS to approve any Advace ar subject to the satisfaction of each of the
followig conditions precedent on or before the date of such Advance (all documents, certificates and other
evidence of such conditions precedent ar to be satisfaory to RUS in its discretion):
(a) Continuing Representations and Warranties. Th the representations and waties
of the Awardee contained in th Agrement be tre and correct on and as of the date
of such Advance as though made on and as of such dat;
(b) Material Adverse Effect. That no event has occured which has had or could have a
Material Adverse Effec
(c) Event of Default . That no Event of Default and no event which with the passage of
tie or giving of notice, or both, would consitute an Event of Default shall have
occued and be continuing, or shall have occued afer giving effect to any
Advaces on the books of the Awardee;
(d) Requisitions and Supporting Documentation. Tht RUS shall have received not
more frquently than once a month, unless otherwise agrd to by RUS, a completed
RUS Form 481, "Financial Requirement Statement" (hereinafter" Form 481,")
bearg the original signatue of the offcer, employee, or agent of the Awaree
authorized to receive, disburse, or reive and disbure the Awar with supportg
documentaton from the Awaree in accordace with the BIP Contractig, Work
Order and Advance Produ Guide. Advances shall be limite to the minimum
amounts reui for the Awaree's immediate disburement nee and shall be
requested by the Awadee only for acal immediate cash requirments of the
Awardee. Such loangrant advances shaD be prvided on a reimburement basis, or
based on unpaid third par invoices for Eligible Puses, or contrct approved by
RUS, in accordance with the BIP Contrtig, Work Order and Advance Prceds
Guide. Grat fuds must be advaced concurtly with Loan funds in the sae
proporton as the Grat is to the tota Award;
(e) Flood Insurance. Tht for any Advance.used in whole or in par to fice the
constrction or acquisition of any building in any ara identified by the Secreta of
Housin and Urban Development purant to the Flood Disaster Prteon Act of
1973 (the "Flood Insurance Act") or any rules, regulations or orders issed to
implement the Flood Insuance Act as any ara havig special floo hads, or to
Page 9
fmance any facilties or materials to be located in any such building, or in any
buildig owned or occupied by the Awaree and located in such a flood hazd ara,
the Awardee shall have submitted evidence, in form and substace satisfaory to
RUS or RUS has otherwise detennined, that (i) the community in which such ar is
located is then parcipatig in the national flood insurce progr, as reuir by
the Flood Inurce Act and any related regulations, and (ii) the Awaree has
obtained flood inurce coverage with repect to such buildig and contents as may
then be requird puruant to the Flood Insurance Act and any related reguations;
(t) Cu"ent Financial Information. Tht RUS ha received from the Awardee: its
curnt, updated balance sheets, income statements and statements of cah flow;
(g) Compliance with Timeline. Tht RUS has reived frm the Awardee evidenc,
satisfactory to RUS, that the Project is being constrcted in accordance with the
Timeline;
(h) Compliance with Loan-Grant Documents. That the Awardee is in material
compliance with the Loan-Gt Documents and the RUS Mortgae;
(i) Permits, Licenses and Franchises. That RUS shall have received satisfaory
evidence that the Awaree has obtained the permits, licenses, frchises and other
approvals identified on Schedule 1;
CD Additional Docments. That the Awardee agrees to provide RUS with such
additional documents as RUS may request; and
(k) Additional Conditions. That the Awardee has met all additional conditions specified
in Schedule 1 herto.
Section 4.4 First Advance to Pay orr PreApplication Expenses and Interim Financing; Restnctions
on Subsequent Advances
Funds to payoff ce preapplication exnses, as defmed in the NOFA, and expditus
for Eligible Puoses incur aft submission of the Applicaon to RUS, if any, wil be included in the
fi Advance. Therafer no fuer Advances wil be made unless and until the Awardee has fuished
evidence, in form and content saisfacry to RUS, that such interi fmancing ha ben paid in full and any
associated liens have been duly dischaged of recrd.
ARTICLE V - AFFIATIVE COVENANTS
Seetion 5.1 Generally
Unless otherwise aged to in wrting by RUS, while'ths Agreement is in effect, the Awaree
shall duly observe each of the affirtive covenants contaed in this Arcle V.
Section 5.2 Use of Advances
The Awaree shall expend Awar fuds only for Eligible Puoses in accordane with the
RUS approved line item Prject budget and Form(s) 481 submitted to RUS prior to the advance of fuds.
Section 5.3 Unused and Disallowed Advances
(a) The Awardee shall retu to RUS fortwith all or any advance portion of the Loan
and Grt not disburd by the Awaree for the Project or not needed to complet
Page 10
the Project with any interest eamed thereon when deposite in the Pledged Deposit
Account.
(b) The Awardee shall reimbure RUS for any advanced fuds whose original
expenditu has been disallowed by an RUS loan and grant audit. Disallowances
shaH be satisfied, as directed by RUS, by either administrive offet aginst other
approved puroses on Fonn(s) 481 or repayig the disallowed amount directly to tle
United States Treasu. Such disallowed amounts shall acene interst payable to
RUS from the date RUS delivers to the Awardee a wnen demand for payent.
Interest shal accrue on disallowed Lo Advaces at the lesse of the followig: the
interest rate of the disallowed Advance or the then curent Unite States Treur
rate as prescribe by the Secreta of the Treasur in the Federal Register and the
Tre Fiscal Requirements Manual Bulleti. Interest shall accrue on disallowed
Grat Advances at the then curent Unite Staes Treur rae as prescbed by the
Secret of the Treas in the Federl Registe and the Tre Fiscal
Requirments Maual Bulletin. Closeout of the Loan and Grat will not afect the
right of RUS to disallow expnditus and recover, in ful, any amount on the basis
of a subsequent audit or other review or the Awardee's obligation to retu any
disallowed expenditu.
Section 5.4 Deposit of Advances into Pledged Deposit Account
(a) The Awardee shall open and mata a deposit account pleded to RUS ("Pledged
Deposit Account, ") in a ban or depository whose depsits ar inur by the Federa
Depsit Insurce Corporation or other federa agency accetable' to RUS and shall
be identified by the RUS' designation of the Awardee followed by the word
"Pledged Deosit Account. " The Awaee shal promptl depsit pro from all
Advaces, including previously advaced fuds whos original expnditu has been
disalowed by an RUS audit into the Pledged Deposit Account. Moneys in the
Pledged ,Deposit Account shall be used solely for the purses for which Advaces
were made, or for such other purs as may be approved in writing by RUS.
Depsits and disburements from the Pledged Depsit Account shal be made and
recorded in accordace wit the BIP Contractg, Work Order and Advance
Proceures Guide.
(b) First Lien on Pledged Deposit Account. The Awadee shall perec and maita a
fit and prior lien in the Pledged Depit Account (purant to a deposit account
agreement or similar agrent or mechanism for penectg as provided by
applicable law) in fonn acceptale to RUS.
Secion 5.5 Additional Project Funding
The Awardee shall ensure that adeqte fuding is in place to complet the Project and wil,
afr obtaing the prior wrtten approval of RUS, obta additional loans or fuds or receive binding
commitments for supplementa fuding in an amount neeed to enure completion of the Project.
Section 5.6 Miscellaneous Notices
The Awardee shall fuish to RUS:
(a) Notice of Default. Prmptly afr becomig aware thereof. notice of the occunce
of any default under the Loan-Grat Documents or the RUS Mortage or the reipt
of any notice given pursuat to the Loan-Grat Documents or RUS Mortage with
repec to the occurce of any event which with the giving of notice or the pasage
of time, or both could become an Event of Default hereunder, the other Loan-Grat
Documents or under the RUS Mortge.
Page 11
(b) Notice of Litigation. Promptly after the commencement thereo~ notice of the
commencement of all actions, suits or proceedings before any cour arbitrtor, or
goverental deparent, commission, boad, burau, agency, or intrentaity
affecting the Awardee or any Affliate which, if adversely determined, could have a
Material Adverse Effect.
(c) Regulatory and Other Notices. Promptly aft receipt thereof, copies of any notices
or other communications received frm any governental authority with respect to
any matter or proceeding which could have a Material Adverse Effect.
(d) Material Adverse Effect. Promptly afr beoming aware thereof, notice of any
matter which has resulted or may result in a Material Advers Effect.
(e) Corporate Document Changes. Thir (30) days prior to their effectiveness, any
amendments, supplements or modifications to the Awardee's Arcles of
Incorporation, Charr, Bylaws, Operting Agreement, Membes Agrents or
other Organizational Documents.
(f) Other Information. Such other information regarding the condition, fiancial or
otherwise, or opetions of the Awardee as RUS may, from time to time, reasonably
request.
Section 5.7 Rates and Financial Penormance Criteria
The Awaree shall design, chare and mainta rates in effect which (i) pay and discharge all
taes, maintenance expenses and opertig expenses of its systm (ii) make all payments in respect of
pricipal of and intert on the Note(s) when and as the sae shall become due, (iii) provide and matain
reasonable working capita for the Awaree, and (iv) maintain the TIER specified in Secton 5.8 hereof.
Section 5.8 TIER
The Awardee wil mainta the TIER requir in the Prior RUS Loan Contract and, upon the
termination of the obligation to maintain such TIER, wil maintain a TIER of 1.0 until the Loan is repaid in
full.
Section 5.9 Correcive Action
Within thir (30) days of (i) sending the financial report required by Section 6.3 herf tht
shows the TIER specified in Secton 5.8 was not achieved for the rert fiscal period or (ü) being
notified by RUS that the TIER spified in Section 5.8 was not achieved for the reort fiscal perod,
whichever is ealier, the Awardee, in consultation with RUS, shall provide a wrtten pla satisfactory to
RUS setg fort the actions tht shal be taen to aceve the specified TIR on a tiely basis and shall
promptly implement said pla.
Section 5.10 Service Obligation
The Awardee shal provide the broadband serce desribe in the RUS approved Applicaton
commencing from the date the Project is Substatially Complete for at leat as long as the Composite
Ecnomic Life of the facilties fianced by the Award as specifed on Schedule 1. The Awaree may
update its seice offergs upon receipt of RUS' pror wrtten consent.
Page 12
"'
Section 5.11 Obligations with Respect to the Construction. Operation and Maintenance of the Project
(a) Project Management and Operation. The Awardee shall be responsible for the
management of the Project and wil operte the Projec in an effcient and ecnomic
manner as well as maintaining the Project in good repair.
(b) Constrction in Accordance with System Design and Timeline. The Awardee shall
cause the Project to be constrcted and/or built out, and completed in accordance
with the system design submitted with the RUS approved Application, as such
design may be amended with prior RUS consent, and the Timeline.
(c) General Insurance Requirements. The Awardee shall tae out and maintain
inurce on the Project and any other propert acqui with the Loan and Grt in
accordance with 7 CFR Section 1788 as well as maintaining the fidelity bond or theft
insurance coverae requir in Secon 4.2(b) heref.
(d) Contracting. The Awardee may, in accordance with the BlP Contracg, Work
Order and Advance Procdures Guide, contr for goods and services to be funded
by the Awar using RUS fonn contrct or prvate contrct; provided that private
contract must comply with equal employment opportty and civil rights
requiments, as well as the Davis Bacon Act
(e) Commencement and Completion of Constrction and/or Installation.
(i) A wardees are required to commence constrtion and/or intallation of the
Prject withi 180 days from the date hereof, and
(2) The Project shall be Substtially Complete with two year of the dae
hereof, and Project Completion shall occur within th yea of the dae
hereof.
Section 5.12 Preervation of Existence and Rights
The Awadee shal tae or cause to be taen all such actions as from time to tie may be
necssar to presere its existence and to presere and renew all frchises, contracts, rights of way,
easements, permts, and licenses now or hereafer to be grted or conferred upon it, with rect to the
Project, the loss of which would have a Material Advee Effec.
Section 5.13 Compliance with Laws
Awardees shall comply with all applicable federal and state laws, including but not liited to:
(i) The nondiscrimination and equal employment opportty reements of Title VI of the Civil Rights
Act of 1964, as amended (42 U.S.C. § 2000e et seq., 7 CFR pt. 15); (ii) Section S04 of the Rehabiltaon
Act (29 U.S.C. § 794 et seq.; 7 CFR pt. 15b); (ii) The Age Discriination Act of 1975, as amended (42
U.S.C. § 6101 et seq.; 45 CFR pt. 90); (iv) Executive Order 11375, amendig Executive Order 11246,
Relating to Equal Employment Opportty (3 CFR pt. 102). See 7 CFR pts. 15 and 15b and 45 CFR pt.
90, RUS Bulletin 1790-1 ("Nondiscrination among Beneficiares ofRUS Progrs"), and RUS Bulleti
20-15:320-15 ("Equal Employment Opportity in Constrction Financed with RUS Loans"). The RUS
Bulletin are available at li://ww.broadbandusa.gov.;(v)TheArhitectuBarerActofI968.as
amended (42 U.S.C. 1.4151 et seq.); (vi) The Unifonn Feder Accessibilty Stadads (UAS) (Appendix
A to 41 CFR subpar 101-19.6); (vii) The Council on Envinmental Quality Regulations for Implementig
the Procedurl Provisions of NEPA and cein related federal envirnmenta laws, statutes, regulatons,
and Executive Orders found in 7 CFR1794; and (viü) The Communications Act of 1934, as amended, (47
U.S.C. § lSi et seq.), the Telecmmunicatons Act of 1996, as amended (Pb. L. 104-104, 110 Sta. 56
(1996), and the Communications Assistace for Law Enforcement Act (47 U.S.C. § 1001 et seq.)
(CALEA).
Page 13
Section 5.14 Equal Opportunitv Requirements
(a) Eqal Opportunity Provisions in Construction Contracts. The Awardee shal
incorporate or cause to be incorprate into any constrction contr, as dermed in
Executive Order 1 1246 of Sep¡ember 24, 1965 and implementing regulations, which
is paid for in whole or in par with fuds obtaied frm RUS or borrowed on the
credit of the United Staes pursuant to a grt, contrct, loan, insuce or gutee,
or underten pursuat to any RUS program involving such grt, contr loan,
inurce or gutee, the equal opportity provisions set for in Attchment 2
hereto, entitled Equal Opportity Contrct Provisions.
(b) Equal Opportnity Contract Provisions Also Bind the Awardee. The Awadee
fuer agres tht it shall be bound by such equal opportity clause in any federUy
assisted constrction work which it perorms itself other than though the permanent
work force ditly employed by an agency of goverent.
(c) Sanctions an Penalties. The Awardee agrees that it shan cooperate actively with
RUS and the Secreta of Labor in obtaining the compliance of contrtors and
subcontrctors with the equa opportty clause and the nies, regulations and
relevant orders of the Secreta of Labor, that it shall fuish RUS and the Seceta
of Labor such infonnation as they may require for the supervision of such
compliance, and tht it shall otherwse asist the administering agency in the
dischare of RUS' primar responsibilty for securing compliance. The Awadee
fuer agres that it shaU refrai from entering into any contract or contrct
modification subjec to Executive Order 11246 with a contrctor ,debard from, or
who has not demonstred eligibilty for, Governent contrts and federlly
assisted constrction contrcts puruant to Par II, Subpa D of Executive Order
11246 and shall ca out such sanctions and penalties for violation of the equa
opportty clause as may be imposed upon contrctors and subcontrors by RUS
or the Secreta of Labor puruat to Par lI, Subpar D of Executive Order 11246.
In addition, the Awardee agres that if it fails or refuses to comply with these
undergs RUS may cancel, terminate or susend in whole or in par ths
Agreement, may refr from extending any fuer assistace under any of its
programs subject to Executive Order 11246 until satisfactory assurance of fue
compliance has been reeived from the Awardee, or may refer the case to the
Deparent of Justce for appropriate lega proceings.
Section 5.1S Purchases with Award Funds
Except as specifically authorid in wrtig in advance by RUS, aU facilties, maters,
equipment, supplies, replacements and all other items purchasd with Award fuds shaU be purhased
outrght, and not subject to any conditional sales agreement, chattel mortage, bailment lease or other
agrement reserving to the seller any right, title or lien.
Setion 5.16 Awardee to Defend Title and Remove Liens
Except for Pertted Encumbraces, the Awardee wil maintain and preserve the lien of this
Agreement supeor to aU other liens affecting the Collatera, and wil forever warant and defend the title
to the Collateral agaist any and aU clais and demands whatsoever. The Awaree shll mae, execut,
acknowledge, deliver, file and reord aU such morgages, fiancing sttements, contiuation statements,
securty agreements, instrents and conveyances as is necessar to preerve the lien of this Agreement
agast the CoUatra superor to all other liens. The Awaree shall mainta the CoUateal free of al liens
except for Permtted Encumbrances, and will promptly payor discharge any an all obligations for or on
account of which any such lien or charge might exist or could be creatd and any and all lawful taes, rates,
levies, assessments, liens, claims or other charges imposed upon or accrg upon any of the CollateraL, as
Page 14
and when the same shall become due and payable; and whenever called upon so to do by RUS wil fwish
to RUS adequate proof of such payment or discharge; provided, however tht thi provision shall not be
deemed to require the payment or discharge of any ta, rate, levy, assessment or other governental charge
while the Awardee is contesting the validity thereof by appropriate prceegs in good faith and so long as
it shall have set aside on its books adequate reserves with respect thereto.
Section 5.17 Further Assurances
(a) The Awardee shall frm tie to tie upon wrttn demand of RUS make, execute,
acknowledge and deliver or caus to be made, executed, acknowledged and delivere
all such fuer and supplemental mortgages, fiancing statements, continuation
staements, securty agreements, intrments and conveyances as may be requested
by RUS and tae or caue to be taen all such fuer action as may reasonably be
requested by RUS to provide for the securng and payment of the priçipal of,
interest on, and any and all either amounts payable hereunder and under the Note(s)
according to the terms thereof and for the pmpose of fully conveying, trferrg
and confiing the propert hereby conveyed, mortgaged and pledged or intended so
to be, whether now owned by the Awaree or hereafter acquir by it.
(b) The Awardee shall caus this Agreement, fiancing sttement, continuaton
statement and every additional instrent which shall be executed plUt to
subsection (a) immediately above, to fortwith upon execution to be filed and
recorded and refiled and rereorded as conveyances and securty interests in real and
persnal propert in such maner and in such places as may be reuire by law Qr
requeste by RUS in order to fully preserve the securty for the Obligaons,
includig the Loan and to peect and maintain the superior lien of this Agrement
and aU supplementa securty instents.
Section 5.IS Buv American - General Prohibition and Waiver
For Awardees that are States, local goverents, or any agency, subdivision, instrentaity,
or political subdivision thereof, pursuant to § i 60S of the Recovery Act, no Lo or Grat fuds may be
used for the constrction, altetion, maintenance, or reai of a public building or public work (as such
terms ar defined in 2 CFR § 176.140) unless all of the irn, steel, and maufactug goods used in the
project ar produced in the United States, except as provided in OMB regulations at 75 Fed. Reg. 14323
(Mar. 25, 2010). Notwthstading, such Awadees have been grted a genera waiver by the Secre of
Agrcultue with respect to cert broadband equipment, as outined in the Federl Regiter at 74 Fed. Reg.
31402 (July 1,2009). AU other waivers must be requestd ofRUS puruant to 2 CFR § 176.60
Section 5.19 Nondiscrimination and Interconnecton Obligations
The Awardee agees to (i) adere to the priciples contaed in the FCC's Interet Policy
Statement (FCC 05-151, adopted Augut 5, 2005); (ii) not favor any lawful Internet applications and
content over other; (ii) display any netork management policies in a prominent location on the seice
providets webpage, provide notice to cutomers of chages to thes policies, such policies include any
business pratices or technical mechanisms they employ, other th stadar best effort Internet deliver,
to allocate capacity; differntiate among applications, providers, or sour, limit usge and manage ilegal
or haful content; (iv) connect to the public Internet diry or indictly, such that the project is not an
entily private closed network; and (v) offer interconnection, where tehncally feasible without exceeding
curt or reonably anticipated caacity liitations, on l"asonable rate and term to be negotiated with
reuesting pares. Ths includes both the abilty to connec to the public Internet and physical
interconnection for the exchange of trffc.
(a) Notwthstding the above, the Awardee may not offer inteconnecon to anyone
that wil provide services that duplicate services provided by projec fuded by
Page is
outtading telecommunications loans made under the RE Act. Furer,
interconnection may not be used for an ineligible purose under the Recovery Act.
(b) These obligations ar subject to the needs of law enforcement and reasnablenetwork mangement. As such, the Awardee may employ generally accepte
technical measurs to provide acceptable service levels to al cutomer, such as
caching an application-neutr badwidt allocation, as well as measurs to addrss
spam denial of serice attcks, ilegal content, and other harful activities.
( c) In the event the Awadee contrcts with another entity to opete the Project, the
Awardee shall requie such entity to comply with the tenns of this Section, expresly
including this Section in their contrctal argement.
(d) These obligatons do not apply to the Awardee's existing network.
Section 5.20 Davis-Bacon Wage Requirements
The Awardee shall comply with the Davis-Bacon Act, and the guidace found at 29 C.F.R.
pts. 1,3, and 5, such that any covered contrct with a contrctor or subcntrctor in excess of $2,000 for
constrction, alteraon or repair (including paiting and decrating) shall conta the contrct clauss
found in 29 C.F.R. 5.5(a), to ensur that all laborers and mechanics employed on the Project receive
payment of not less th the prevailing wage.
Section 5.21 Additional Affrmative Covenants
The Awaree shall comply with the additional afative covenants set for in Schedule i
hereto.
ARTICLE VI - ACCOUNTG AND REPORTING
Section 6.1 Financial Records
(a) Awardees must estlish an accounting system satisfacory to RUS in compliance
with Accountig Requirments. Such a system of accounts must account for all
funds advanced under this Agrment sepately from all other fuds for the Project,
as required by the Recovery Act.
(b) The Awardee shall maitain, at its prmises, such books, documents, papers, or other
records and supportg documents, includig. but not limited to, invoices, receipts,
payroll record and bils of sale, adeqate to idenfy the purses for which. and the
maner in which Loan, Grat, and other fuds wer expende on the Prjec. The
Awar shall at all times keep, and saely prsee, proper boks rerd and
accounts in which fu and tre entres shal bt made of all dealings, business, and
afair of the Awardee and it Subsidiares, in accordace with its system of accounts
complyin with Parph (a) immedately above. The Awardee shall mainta
copies of all documents submittd to RUS in connection with the A war until the
longer of (i) the Loa being pad in full and all audits have be completed, (ii) the
tenn of ths Agrement or (ii) the years subsequent to close-out of the Award.
Section 6.2 Rights of Inspection
The Awardee shall afford RUS, the Offce of the Inpector Generl of USDA, and the
Goverent Accountabilty Ofce, thugh their representatives, reasnale opportity, at all ties
durg business hour and upon prior notice, to have access to and right to inspect the Project, any other
propert encumbered by the Securty Documents, and any and all books, reord, acunts, including
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electrnic books, records, accounts and electonic mail messages, regardless of the physical fonn or
charcteristics, invoices, contrcts, leass, payrll records, canceled checks, statements, and other
documents, and papers of every kind belongig to or in any way pertaining to its propert or business,
including its Subsidiaries, ifany, and to make copies or extracts therefrom.
Section 6.3 Annual Audit
Effective after an Advance has ben made, one hundred twenty (120) days from the end of
the Awardee's curent fiscal year and, thereftr, one hundrd twenty (120) days frm the close of each
subsequent fiscal year, the Awardee must submit anual audied fiancial statements along with a reort on
compliance and on internal control over fiancial rerting, and a management leter in accordce with
the requirements of 7 CFR 1773. The CPA conductig the anua audit must meet the requirements for a
qualified CPA as set forth in 7 CFR § 1773.5. However, if the Awardee is a state, local goverent, or
non-profit organization that expnds $500,000 or more offederl fuds durg its fiscal year, an audit must
be perfonned in accordance with OMB Cirular A-l33, Audits of States, Local Governents, and Non-
Profit Organiztions, located at htt://www.whitehouse.gov/omb/circulara133/a133.htmL. Awadees are
also responsible for ensurg that sub-reipient audit report ar reived and for reolving any audit
findings.
Seetion 6.4 DIP Reporting
(a) Quarterly Report. No later than th (30) caenda days after the end of eachcalenda year quaer the Awardee must submit to RUS utilizing RUS's online
Broadband Collecon and Analysis Syste (BCAS), the following inonnation:
balance sheet, income statements, stateents of cah flow, sumares of its mte
packages, the number of customer ta broaband serce on a pe community
basis, the completion status of the build-out and whether the project is Substatially
Complete. In addition the Awaree mus provide RUS with such other report
concerning the financial condition or operaion of the Awardee, including its
Subsidiares, 'as RUS may request.
(b) Annual Report. For the lesser of five yea or as long as the Awaee is required to
provide service hereunder, on each Janua 31st, staing the fist Januar 3ll af
Project Completion, the Awardee must submit the following information to RUS
utlizig BCAS:
(i) Number of households and businesses subscbing to broadbad seice;
(ii) Numbe of households and businesses' subscribing to broaand service that
receive improved access; and
(ii) Number of educational, libra, healthcare, and public saety providers
receiving either new or improved access to bradband sece.
(c) Annual Compliance Certifcate. With fort-five (45) days afer the close of each
calendar yea, or more oftn if requested in wrtig by RUS, the Awadee shall
deliver to RUS a wrtten sttement signed by its geneml manager, managg
membe, or equivalent corpomte offcial satisfatory to RUS, statig that, durg
such year the Awardee ha fufilled its obligations under the Loan-Grat Docuents
thoughout such year in al materal respcts or, if there has be a mateial default in
the fulflment of such obligations specifying each such default known to such
offcial and the natu and sttu thereof.
(d) Close Ou Report. The Awardee shall deliver a close out report to RUS no later than
ninety (90) days afer the expirtion or tennintion of the Award, or the completion
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of the Project and expenditue of all Award funds. The close out report shal
addrss: (i) a comparison of actual accomplishments to the objectives set fort in the
Application; (ii) a description of problems, delays, or advers conditions tht
occured, or which affected the attinment of overall Project objecives, prevente
the meeting of time schedules or objectives, or preluded the attinent of parcular
Project work elements during established tie period; and (ii) a comparson of
how fuds were spent against the origial gener budget submitted with the RUS
approved Application.
Section 6.5 Recovery Act Reportng
No later th ten (10) calenda days after eah calendar quaer in which the Awardee reives
the assistce award fuded in whole or par with Awar funds, the Awardee shall submit though
htm://www.federalreporting.gov the information requir by 2 C.F.R. 176. The fmal report should
summarize the Awardee's quarerly filings and state whether the project's goals have ben satisfied.
ARTICLE VII - NEGATI COVENANS
Section 7.1 General
Unless otherise agred to in wrting by RUS, while ths Ageeent is in effect, the Awaree
shall duly observe each of the negative covenants se fort in this Arcle VII.
Section 7.2 Merger, Consolidation, Transfer of Propert, or Change in Control
The Awardee shall not, without the pror writtn consent of RUS, tae or suffer to. be taen
any steps to reorganiz consolidate with or merge into any other corporation, or to sell, lease or trfer (or
make any agreement therefor) all or any substtial par of its propert, including, without liitaon, the
Project.
Section 7.3 Covenants for Limited Liabilty Companies and Similar Awardee
A wadees which ar limite liabilty or similar organizations age that:
(a) The death, retiement, resignation, expulsion, tentination, baptcy or disoluton
of any member or the occurce of any other event that terinates the cotiued
membehip of any member shall not cause the Awardee to be dissolved or its af
to be wound up;
(b) Prior to the date on which any and all obligations owed to RUS, including the Note
evidencing the Loan, ar dischared in full, the Awaree shall not be dissolved or
terinated;
(c) The organtional docents of the Awardee shall contain provisions reflecting the
obligations of the Awardee in paragraphs (a) ii (b) imediately above and such
provisions shall not be amended without the prior wrttn consent of RUS; and
(d) No dict or indirect addition or issuance of any membership units (or any other
ownerhip. interest) in th Awardee may be made by. the Awardee or its members
without the prior written consent of RUS and no trsfer, whether individualy or in
the agggate, of any membership unit (or any other ownership inteest) in the
Awardee which wil result in the trsfer of more than 49% of the equity interest (of
whatever natu, including votig and non-votig) in the Awardee may be made by
the Awardee or its members without the prior wrttn consnt of RUS.
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Section 7.4 Additional Indebtedness
The Awardee shall not, without the pnor wrtten consent of RUS, incur additional secud or
unsecur indebtedness other than (i) purhas money securty interets, (ii) unsecured trade indebtedness
and (ii) other debt arsing in the ordinar coure of business. Indebtedness under items (i), (ii), and (iii) in
the aggregate shall not exceed five pert (5%) of the Awardee's consolidated tota assets.
Section 7.S NegativePledge
The Awaree shall not crea, incur or suffer any lien, mortgage, pledge, assignent, or other
encumbrace on, or securty interest on its propert, other than Pennitted Encumbraces.
Section 7.6 Contracts
The Awardee shall not, without the pnor writn consent of RUS, enter into any contrct or
contracts for the operation or management of all or any substatial pa of the Awardee's system, including,
without limitation, the Project, and shall not enter into any contrct for the use by others of all or any
substatial par ofits system, includig, without limitation, the Project.
Section 7.7 Salaries
Salaries, wages, and other compensation paid by the Awardee for services, and dirors',
members', managers' or trstees' fees, shall be reasonable and in confonnity with the usual practce of
entities of the siz and natue of the Awardee.
Section 7.8 Extension of Creit
Except as specifically authonz in wrti in advance by RUS, the Awardee wil make no
advance payments or loans, or in any maner extend its crdit, either dirctly or indirecty, with or without
interest, to any of its dirctors, trtees, offcers, employees, stockholders, members, managers, Affiates
or Affliated companies; provided, however, that the Awaree may make an investent for any purose
descnbed in section 607(cX2) of the Rural Development Act of 1972 (including any investment in Or
extension of credit, guaantee, or advance made to an Affliated Company that is used by such Affliate for
such purose) to the extent that, immediately after such investment: (1) the agggate of such investments
does not exceed one-thir of the Net Wort and (2) the Awadee's Net Wort is at leas twenty (20) percent
ofits Total Assets.
Section 7.9 Distributions or Withdrawals
(a) Except for payments mae for ta liabilties, the Awardee shall not, without th pnor
written approval of RUS, make any memberhip withdrwal, unit reemptions, or
other tye of profit allocation to it membe, if it is a liited liabilty company, nor
make any dividend, stock, capita, capita crdit or other distrbution in the natu of
an investment, gutee, extension of crdit, loan or advace payment on
obligations, if it is a corporaion or coopetive (all such distrbutions being
hereinfter collectively called "Distrbutions") which would violate the distbution
restriction(s) of the Pnor RUS Loan Contrct or RUS Mortgage descnbe in
Schédule I hereto.
(b) Additional Negative Restrictions. The Awardee shall comply with the additional
negative retrctions on Distrbutions and Withdrwals set fort in Schedule i hereto.
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Section 7.10 Changing Principal Place of Business. Place of Conducting Business. or Type of
Organiztion
The Awardee shall not change its pricipal place of business, place of conducting business, or
tye of organization without the prior written consent of RUS.
Section 7.11 Changing Name or Place oflncorporation or Organization
The Awardee shall not change its legal name or place of incorporation or organiztion without
giving RUS sixty (60) days prior wrtten notice.
Section 7.12 Historic Preservation
The Awardee shall not, without the prior wrtten consent of RUS. use any Advance to
constrct any facilty which shall involve any district, site. building, stctue or object which is included
in, or eligible for inclusion in. the National Register of Historic Places mantained by the Secta of the
Interior purant to the Historic Sites Act of 1935 and the Nationa Historic Preservation Act of 1966.
Section 7.13 Affliated Transactions
With regard to the Projec, the Awardee shall not enter into any trsaction, contrct, or dealing
with an Affliate of the Awardee or with the Awadee's or Affliate's dirctors. trees. offcers, mager.
members (if the Awardee is a limited liabilty company), or other cororate offcials. without the pror
wrtten consent of RUS. RUS' consent to advance loan fuds for afliated trsaons wil be limte to an
amount which is the lower of cost or market ra and which is subject to verification by RUS and its
representatives havig access to the books and records of the Affliate.
Section 7.14 Preferred Stock
The Awardee shall not issue any new or additional prefered stock without the prior written
approval ofRUS, which approval shall not be unonably witheld if such stock issuace. in RUS' sole
opinion, would not be considered a debt inent under GAA.
Section 7.15 Restrictions on Transfers ofPropert
(a) Except as provided in Pargrph (b). and excludig any prope which the Awaree
must sell to customers in the ordin cour of business. the Awadee shall not sell.
lease or trfer any Collatera to any other person or entity (including any
subsidiar or afliate of the Awardee) without the prior written consent of the RUS.
(b) So long as the Awardee is not in defauh hereunder. the Awaree may. without
obtag the consent of RUS. sell or otherise dispose of. fr frm the lien hereof,
any of its propert which is neither necssa to, nor useful for. the opeaton of the
Awardee's business, or which ha become obsolete. worn out, daged. or otherwise
unsuitable for the puoses of the Awardee; prvied, however. tht the Awaree
shall to the extent necessa: (I) replace the sae with other propert of the sae
kid and natu, or substtute thereof, which shl be. subjec to. the lien herof. fre
and clear of all prior liens. and apply the proceed. if any. derived frm the sae or
disposition of such proper, which ar not neeed for the replacement thereof. to the
prepayment of the indebteess on the outstdig Notes; (2) imediatly upon the
receipt of the proceeds of any sale or disposition of said proper. apply the entire
amount of such procds to the preyment of the indebtedess evidenced by the
Notes; or (3) deposit all or such par of the proceeds derived frm the sale or
disposition of said propert into the Pledged Deposit Account . and shall use the
same only for such additions to, or improvements in, the Collate. on such terms
and conditions as RUS shall specify.
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Section 7.16 Restrictions on Changes to Line Item Budget
The Awaree agres tht the budget for the Project is a line item budget and agrees not to
make any revisions to the RUS approved line item Prjec budget, including, without limitation, the par of
the budget for constrction, without the prior wrtten approval of RUS.
Section 7.17 Additional Negative Covenants
The Awardee shall comply with the additional negative covenants set forth in Schedule I
hereto.
ARTICLE VII - LENDER'S RIGHTS
Section 8.1 Termination of Award Offer
RUS, in its sole discretion, may teninte the offer to make the Loan or LoaGrat
Combination if it does not receive the Loan-Grat Documents, duly executed on behalf of the Awardee and
all conditions in Section 4.1 hereof are not satisfied within six (60) days from the date hereof.
Section 8.2 Audits and Compliance Reviews
After giving. prior notification to the Awaree, RUS ha the right to conduct compliance
reviews and audits of the Awardee to assue compliance with the Loan-Grant Documents, NOFA and the
Accounting Requirents.
Section 8.3 Disallowed Expenditures
Upon a deteninaton by RUS that the Awardee did not exped Award fuds on Eligible
Puoses in accordace with the RUS approved line item Project budget and the Form(s) 481 approved by
RUS prior to the advance of fuds, RUS may, in its sole discretion:
(a) Disallow all or a par of the expenditus and disbursements of the Award and
requir the Awardee to depsit such fuds in the Pledged Deposit Account to be
applied toward other approved Project puroses on Form(s) 481 or to reimbure the
Governent, as provided in Section 5.3 herof;
(b) Suspend making Advances;
(c) Take any other acton RUS deteines to be necess including, without limitation,
exercising any right or remedy available under the Loan-Grat Documents or law.
Section 8.4 Suspension of Advances
RUS may, in its absolute discreton, suspend makng Advaces on the Award upon its
making a determination that an event has occud that is likely to have a Material Adverse Effec. RUS
may also suspend makng advances of the Award upon the occurence of an Event of Default.
section 8.5 Payment Extensions
RUS may, at any time or ties in succession without notice to or the consent of the Awardee
and upon such tes as RUS may prescribe, grt to any person, fi or entity who shal have become
obligated to pay all or any par of the principal of or interest on any note held by or indebtess owed to
RUS or who may be affected by the lien creted by the Loan-Grat Documents, an extsion of the tie
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for the payment of such principal or interet, and after any such extension the Awardee wil remain liable
for the payment of such note or indebtedness to the same extent as though it had at the tie of such
extension consented thereto in writing.
Section 8.6 Right to Expend Money
RUS shall have the right (without prejudice to any of its rights with respect to any Event of
Default) to advace or expend moneys for the purse of procg insurce, or for the payment of
insurance premiums as required hereunder, or to advance or expend moneys for the payment of taes,
assessments or other charges, or to save the Collate from sale or forfeitue for any unpaid ta or
assessment, or otherwise, or to redeem the sae from any ta or other sale, or to purchas any ta tide
thereon, or to remove or purhase any mechaics' liens or other encumbrace thereon, or to make repair
thereon or to comply with any covenant herein contained or to proscute and defend any suit in relation to
the Collateral or in any maner to protect the Collateral and the title thero, and all sums so advace for
any of the aforesad puroses with inteest thereon at the highest lega rae, but not in excess of twelve per
centum (12%) pe anum shall be deemed a charge upon the Collaeral and shal be fortwith paid to RUS
upon demand. It shall not be obligatory for RUS in makng any such advaces or expenditu to inquir
into the validity of any such ta title, or of any such taes or asessments or sales therfor, or of any such
mechanics' liens or other encumbrace.
Section 8.7 Right to File Financing Statements
RUS shall have the right to fie such fincing statements and continuation statements on its
behalf, as secured par, and on behalf of the Awadee, as debtor, as RUS deems necessar to perfec a fit
lien on the Collatera and to maintain and preserve such perected fit lien as long as the Loan remains
outding. The Awardee shall reimburse RUS for any expenses incured in the exercise of this right
ARTICLE IX - GRANT OF SECUITY INTEREST
To secur the payment and perfonnance of the Obligations, including, without limitaion, the
Note(s), the Awaree hereby pledges, assigns, and trsfer to RUS, and grts to RUS a contiuig
secty interest in and to all propert, tagible and intagible, of evei kind, natu or description, now
owned, leased, or hereafer acquired by the Awardee, wherever located, including but not limited to,
accounts, chattel paer, documents instients, . genera intagibles, lìcenses, (including, without
limitation, those grte by the Federa Communcations Commission ("FCC"), subject to the FCC's prior
approval of any assignent or transfer of de jure or de facto contrl of such licenses), pen its, equipment,
goods, proceeds, products, and accessions, as well as its right, tide and interests in fixts and real
prope, now owned, leased or hereaftr acquir and wherver located, and the propert descnöed in
Schedule 2 hereto.
ARTICLE X - EVENTS OF DEFAULT
section 10.1 Events of Default
The following shall be events of default (each an "Event of Default") under this Agrement:
(a) Repreentations and Warties. Any rerentation or warty made by the
Awardee in Loan-Gt Documents, Form(s) 481 or any cerficat fuished to RUS
under the Loan-Grant Doents, or in the Application shal prove to have ben
incorrt in any material respec at the tie made;
(b) Non-Payment. The nonpayment of any requir and due instlment of interst on, or
pricipal of, any Note, whether by acleration or otherise, whch continues for
five (5) Business Days, as such ten is herein defined;
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(c) Correcive Actions. Default by the Awardee in the observance or peormance of
Section 5.9;
(d) Limited Liabilty Companies. Default by the Awardee or its members in the
observance or performance of Setion 7.3;
(e) Imprope Expenditus. The Awardee expeds Award fuds on costs which are not
for Eligible Puroses in accordce with the RUS approved line item Projec budget .
and the Form(s) 481 approved by RUS prior to the advance of fuds;
(f) Failur to Keep Adequate Record. The Awadee fails to kee adequae records
including the failur to document Award fud expenditus for Eligible Puoses as
required herein;
(g) Failur to Build in Accrdace with Timeline. The Awardee fails to commence
buid out of the Prject with 180 days frm the date hereof or otherwise fals to
meet or exceed milesnes esblished in the Timeline, as it may be amended with
prior wrttn RUS consnt
(h) Failure to Comply with Accounting and Reprtg Requements. The Awardee fails
to comply with the accounting and reportg requirments in Arcle VI;
(i) Other Covenants. Default by the Awardee in the obseance or performance of any
other covenant or agement contained in any of the Loan-Grant Documents, which
shall remai unmedied for thir (30) calenda days afr wrtt notice thereof
shall have been given to the Awadee by RUS;
0) Adverse Effcts. The Awardee shall forfeit or otherwise be deprived of its charr,
aricles of organiztion, franchises, permits, easements, consents or licenses requid
to car on any material portion of its business or the Awaree files for or an event
occur which can reasonably be expected to result in its dissolution or termination;
(k) Oter Obligations. Default by the Awadee in the payment of any obligatin,whether dirct or contigent, for borrwed money in excess of te thousand dollar
($10,000.00) or in the performance or observance of the tenns of any instrent
puruat to which such obligation was crated or securng such obligation which
default shall have reulted in such obligation beoming or being declar due and
payable prior to the date an which it would otherwise be due and payable;
(1) Banptcy. A cour having jursdcton in the premises shall ente a dece or order
for relief with respect to the Awardee in an involunta case under.any applicable
bantcy, insolvency, or other similar law now or hereaf in effect: (I)
appointing a reciver, liquidaor, assignee, cusan 1Istee, sequestr,. or simlar
offcial, or (2) orderi the wining up or liquidation of its aff; or the Awardee
shall commence a volunta case under any applicable banptcy, insolvency or
other similar law now or hereafer in effect, or under any such law, or consent to the
appoinbnent or taing possesion by a reiver, liquidator, assignee, custian or
1Istee, of a substtial par of its prope, or make any genera asignent for the
benefit of creditors;
(m) Dissolution or Liquidation. Oter than as prvided in the imediately preceg
subsection, the dissolution or liquidation of the Awaree, or the filing of such by the
Awardee;
Page 23
(n) Impaire Business. The failure by the Awaree to promptly forestll or remove any
execution, garishment or attchment of such consequence as shall impair its abilty
to continue its business or fulfill its obligations and such execution, garishment or
attchment shall not be vacated within thir (30) days;
(0) Paymt of Final Judgment. A fial judgment in an amount of ten thousd dolla
($10,000.00) or more shall be enteed against the Awaree and shall remain
unsatisfied or without a sty in respect thereoffor a peod of thir (30) days; and/or
(p) Default under RUS Mortgage. An event of default occurs under the RUS Mortage
and is continuing for thir (30) days.
ARTICLE XI- REMEDIES
Section 11.1 Generally
(a) Upon the occurnce of an Event of Default, RUS may purue all rights and remedies
available to RUS tht are contemplated by the Loan-Grat Documents and/or the RUS
Mortgage in the maner, upon the conditions, and with the effect provided in such
documents, and may purue such other remedes that are generally avalable at law or in
equity including, without limitation, a suit for specific performce, injunctive relief or
damages. Nothing herein shall limit the right of RUS to purue all rights and remedies
available to a creitor following the occurnce of an Event of Default liste in Arcle X
hereof. Each right, power and remedy of RUS shall be cumulative and concurt, and
recoure to one or more rights or remedies shall not constitu a waiver of any other right,
power or remedy.
(b) RUS and the Awadee acknowledge they ar, respectively, mortgee and mortgagor,
under th RUS Mortage and agree that the RUS Mortage ses the Obligaons,
including the Note, and that the RUS Mortgage cretes or wil crte a fi lien on the
CollateraL. RUS and the Awardee fuer agre th an Event of Default hereunder shall
constitute an event of default under the RUS Mortgage permittg RUS to exercise rights
and remedies thereunder.
Section 11.2 Remedies
In addition to the remedies referred to in Section 1 i. I hereof, upon the ocurnce of an Event
of Default, RUS may:
(a) Refuse to make any advance or fuer advance on account of the Awa but any
advace thereafter made by RUS shall not constitute a waiver of such default;
(b) Decla all unpaid pricipal of and all interet accrued on the Notes) to be
immediately due and payable and upon such declaration all such pricipal and
inter shall become due and payale imediately;
(c) Terinate the obligation to fuer advance on account of the Awad;
(d) Take imediate possession of the Collaterl, collect and receive all credits,
outstading accounts and bils recivable of the Awardee and all rets, income,
revenues and profits pering to or arsing frm the Collateral, or any par therof,
and issue binding receipts therefor; maage and control and ope the Collateral as
fully as the Awadee might do if in possssion theref; RUS, any employee or agent
of RUS is hereby constitute and appointed as tre and lawfl atorney-in-fact of the
Awardee with full power to (i) notify or reuie the Awardee to noti any and all
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Customers that the Collaterl has been assigned to RUS and/or that RUS has a
securty interest in the Collate; (ii) endorse the name of the Awardee upon any
notes, checks,. acceptaces, dr, money order, or other instrents or payment
(including payments made under any policy of inurce) that may come into
possession of RUS in full or par payment of any amount owing to RUS; (ii) sign
and endorse the name of the Awaree upon any invoice, freight, or express bil, bil
of lading, storage or warhoUse receipt, assignent verification or notice in
connection with receivables; (iv) send requests for verifications of Collatel to
cutomers or account debtors; (v) sell, assign, sue for, collect, or compromise
payment of ali. any par of the Collateral in the name of the Awardee or in its own
name, or make any oter disposition of Collate, or any par thereot which
dispsition may be for cash, crit, or any combination thereot and RUS may
purha all or any par of the Collateal at public or, if pertt by law, private
sae, and in lieu of acal payment. of such purchae price may se off the amount of
such price .against the Obligations; grting to RUS, as the atrney.in.fat of the
Awardee, ful power of substitution and full power to do any and all things necessar
to be done in and about the premises fully and effectlly as the Awardee might or
could do but for this appointment, herby ratifying all tht said attorney-in-fac shal
lawfully do or cause to be done by vire heref. Neither RUS, its employees, nor its
agents shal be liable for any act or omissions or for any eror of judgment or mistae
of fact or law in its capaity as such attorney-in-fact. This power of atorney is
coupled with an intest and shall be irvocable durg the term of this Agrment
and so long as any Obligaions shall remai outstading;
(e) RUS shall have the right to enter and/or remain upon the premises of the Awaree
without any obligation to pay rent to the Awardee or other, or any other pla or
places where any of the Collatera is located and kept and: (i) reove the Collateral
therefrom in order to manta, collect, sell, and/or liquidate the Collateral or, (ii) use
such premises, together with materials, supplies, boks and record of the Awarde,
to matain possession and/or the condition of the Collatera, and to prepar the
Collateral for sale, liquidation, or collecon. RUS may require the Awardee to
asemble the Collaterl and make it available to RUS at a place to be designated by
RUS;
(f) RUS shall have the right, without prior notice to the Awaree, to exercise rights of
seoff or recoupment and aply any and all amounts held or hereafer held, by RUS
or owed to the Awaree or for the credt of the Awaree against any and all of the
Obligations. RUS agres to notify the Awardee promptly af any such setoff or
reoupment and the application thereof, provided that the failur to give such notice
shall not affec the validity of such setoff, recoupment or application. Awadee
waives all rights of setotf deducton, recoupment or counterclai; and/or
(g) RUS shall have, in addition to any other rights and reedes contaed in th
Agreement, and in any other agreements, guartees, notes, mortgages, instrments,
and documents heretofore, now, or at any tie or ties hereafer executed by the
Awardee and delivered to RUS, all of the rights and remedies of a seured pa
under the Uniform Commercial Code in force in the state identified in the fit
pargrh hereof, as well as the state where the Collater is locate, as of the dae
hereof, all of which rights and remedies shall be cumulative, and nonexclusive.
Page 25
ARTICLE XII - MISCELLANEOUS
Section 12.1 ~
All notices, requests and other comunications provided for herein including, witout
limitation, any modifications of, or waivers, requests or consents under, this Agrement shall be given or
made in wrtig (including, without limitation, by telecpy) and delivered to the intended recipient at the
"Address for Notices" specified below; or, as to any par, at such other address as shall be designte by
such par in a notice to each other par. Except as otherwise provided in this Agreement, all such
communications shall be deeed to have been duly given when trsmittd by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given or addred as provided for
herein. The Addresses for Notices of the respective paries are as follows:
RUS
Rural Utilities Servce
Unite States Dearent of Agrcultue
1400 Independence Avenue, S.W.
Washington, D.C.20250-1510
Attntion: Administror
Fax: [phone]
Awaree
See Schedule I
With a copy to:
Rur Utilties Servce
United States Deparent of Agricultu
1400 Independence Avenue, S.W.
Stop 1599, Room No. 2868
Washington, D.C. 20250~1599
Attention: Kenneth Kucho
Fax: [phone]
With a copy to:
See Schedle 1
Section 12.2 Notices of Actions Against Collateral
Any notice required to be given by RUS of a sale or other disposition or other intended action
by RUS with respect to any of the Collateral, or otherwis, made in accordace with ths Agrement at least
five (5) days prior to such proposed acon, shall constitute fair and reasonable notce to the Awardee of any
such action.
Section 12.3 Application of Proceeds
Any proceeds or fuds arising from the exercise of any rights or the enforcement of any
remedies herein provided afer the payment or provision for the payment of any and all costs and expenses
in connection wit the exercise of such rights or the enforcement of such remedies shall be applied fit, to
the payment of indebtedness hereby securd other th the prcipal of or interet on the Note; second, to
the ratble payment of interest which shal have accred on the Notes and which shal be unpaid; third, to
the ratable payment of or on account of the unpaid pricipal of the Note, and the balance, if any, shall be
paid to whosoever shall be entitled thereto.
Section 12.4 Expenses
To the extent allowed by law, the Awaree shall pay all cost and expenses ofRUS, including
reaonable fees of counsel, incured in connection with the enforcement of the Loan-Grat Documents or
with the preparion for such enforcement if RUS has reonable grounds to believe that such enforcement
may be necessa.
Page 26
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Section 12.5 Late Payments
If payment of any amount due hereunder is not received at the United States Treasur in
Washington, DC, or such other locaton as RUS may designate to the Awardee within five (5) Business
Days aft the due date thereof or such other time peod as RUS may prescrbe from time to tie in its
policies of genera application in connecon with any late payment charge (such unpaid amount being
herein called the "delinquent amount", and the period beging after such due date until payment of
the
delinquent amount being herein called the "late-payment period"), the Awardee shall pay to RUS, in
addition to all other amounts due under the terms of the Notes, the Mortgage and ths Agreement, any late
. payment chare as may be fixed from time to time on the delinquent amount for the late-payment period
by regulations adopted by RUS.
Section 12.6 Filng Fees
To the extent permitted by law, the Awardee agrees to pay all expnses ofRUS (including the
fees and expenses of its counsel) in connecton with the filing or recordation of all fiancing statements and
instrents as may be required by RUS in connection with this Agreement, including, without limitation,
all documenta staps, recordation and trsfer taes and other cost and taes incident to recordation of
any docuent or instrent in connection herewith. Awardee agres to save harless and indemnify RUS
from and againt any liabilty resulting frm the failure to pay any required documenta staps,
recordation and tranfer taes, recordin costs, or any other expenses incured by RUS in connection with
this Agreement. The provisions of this secton shall surive the execution and deliver of this Agrement
and the payment of all other amounts due hereunder or due on the Notes.
Section 12.7 No Waiver
No failure on the par ofRUS to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or paral exercise by RUS of any right hereunder preclude
any other or furter exercise thereof or the exercise of any other right.
Section 12.8 Governing Law
Ths Agreement shall be governed by and constred in accordance with applicable feder
law
and, in the absence of controlling federal law, by the laws of the Stae identified in the fit pagraph
herein except those that would render such choice of law ineffective.
Section 12.9 Consent to Juridiction
The Awaree hereby irevocably submits to the jursdicton of the U.S. Distrct Cour for the
Distrct of Columbia and the US Cour of Appeals for the Federa Circuit (both the "DC Federa Cours")
for any action or proceedig arsing out of or relating to this Agreement, and hereby irevocbly agrees that
all claims in respect of such acton or proceeing shall be heard and determined in such feder cour. The
Awardee irvocably consets to the service of pres out of any of the aforementioned cour in any such
action or proceedin by the mailig of copies thereof by registered or certfied mai, postage prepaid, to the
Awardee's address set fort in Schedule 1. The Awardee hereby irvocably waives any objecion which it
may now or hereaft have to the layig of venue of any of the aforesaid actions or proeedings aring out
of or in connection wit this Agrment brought in the DC Feder Cour and hereby fuer irevocably
waives and agrees not to plead or claim in such cour that any such acion or proceeding brought in any
such cour has been brought in a foru non conveniens. Nothing herein shall afect the right of the
Governent to serve process in any other maner permttd by law or to commence legal predings or
otherwise proceed agaist the Awardee in its own jursdiction.
Section 12.10 Waiver of JUry Trial
EACH PARTY HERETO HEREBY WAIV, TO TH FULEST EXTE PERMITD
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TR BY JUY IN ANY LEGAL
Page 27
PROCEEDING DIRECTLY OR INIRECTLY ARISING OUT OF OR RELATIG TO THIS
AGREEMENT OR TH TRSACTIONS CONTMPLATED HEREBY (WHTHR BASED ON
CONTRCT, TORT, OR ANY OTHR THORY). EACH PARTY HERETO (A) CERTIIES THAT
NO REPRESENTATIVE, SECURD PARTY, OR ATTORNY OF ANY OTHER PARTY HAS
REPRESENTE, EXPRESSLY OR OTHERWISE, THT SUCH OTHR PARTY WOULD NOT, IN
TH EVE' OF LITIGATION, SEEK TO ENFORCE TH FOREGOING WAIVR AN (B)
ACKNOWLEDGES THAT IT AND TH OTHR PARTIS HEREO HAVE BEEN INDUCED TO
ENTER INO THIS AGREEMT BY, AMONG OTHR TIGS, TH MUAL WAIVERS AND
CERTIFICA nONS IN TIS SECTION.
Secion 12.11 Holiday Payments
If any payment to be made by the Awardee hereuner shall beome due on a day tht is not a
Business Day, such payment sh be made on the next succeeding Business Day and such extesion of
time shall be included in computig any intert in respect of such payment.
Section 12.12 Rescission
The Awardee may elect to rescind the Award, in which event RUS shall release the Awardee
frm its obligations hereunder, provided the Awardee complies with such ters and conditions as RUS
may impose for such release.
Section 12.13 Succesrs and Assigns
(a) This Agrment shall be binding upon and inure to the benefit of
the Awardee and
RUS and their repectve succesrs and assigns, excet that the Awardee may not
assign or trsfer its rights or obligations hereunder without the prior wrtten
consent ofRUS.
(b) Pusut to federa clais collecon laws, RUS' c1ai herunder may be
tranferrd to other agencies of the United Stas of America; in the event of such a
trsfer, aii rights and remedies hereby granted or conferred on RUS shall pass to
and inur to the benefit of any such successor agency.
Section 12.14 Complete Agreement; Waivers and Amendments
Subject to RUS Regulations, ths Agrment and the other Loan-Grat Documents ar
intended by the paies to be a complete and final exression of their agrent. However, RUS reserves
the right to waive its rights to compliace with any provision of this Agrment and the other Loan-Grat
Docuents. No amendment, modificaton, or waver of any provision heref or therf, and no const to
any depare of the Awadee herefrom or therefrom, shal be effectve uness approved in wrtig by RUS
in the form of either a RUS Regulation or other wrtig signed by or on behalf of RUS, and then such
waiver or consent shall be effectve only in the specific intace and for the speific purse for which
given.
Section 12.15 Headings
The headings and sub-headings contained in the titling of ths Agrment ar intended to be
used for convenience only and do not constitute par of ths Agreement.
Section 12.16 SeverabUity
If any term, provision, condition, or any par therof, of this Agrent, Notes) or the
Securty Documents shall for any reaon be found or held invalid or uIenforceable by any goverenta
agency or cour of competent jursdiction, such invalidity or unenforcbilty shall not affect the remaider
of such term, provision, or condion nor any other ter, provision, or condition, and this Agrent, the
Page 28
Note(s), and the Security Documents shall surive and be constred as if such mvaid or unenforceable
term provision or condition had not been contained therem.
Section 12.17 Right or Setoff
Upon the occurence and dug the contmuance of any Event of Default, RUS is hereby
authorid at any time and from time to tie, without prior notice to the Awardee, to exercise rights of
setoff or recoupment and apply any and all amounts held or hereaftr held, by RUS or owed to the Awardee
or for the crdit or account of the Awardee agamst any and all of the obligations of the Awadee now or
hereafter existing hereunder or under the Note(s). RUS agrs to notify the Awardee promptly afer any
such setoff or reoupment and the application thereof, provided that the failur to give such notice shal not
afect the validity of such setoff, recoupment or applicaion. The rights of RUS under ths secton ar in
addition to any other rights and remedies (including other rights of seoff or reoupment) which RUS may
have. Awadee waives all rights of setoff, deduction, reoupment or counterclaim.
Setion 12.18 Schedules and Attchments
Each Schedule and Atthment atthed hereto and referd to herein is each an integrl par
of ths Agreement.
Section 12.19 Authority or Representatives orRUS
In the cas of any consnt, approval or waver from RUS that is reuird under this
Agrment or any other Loan-Gt Docuent, such consnt, approva or waiver must be in wrtig and
signed by an authorize RUS representative to be effective. As used in this section, "authorze RUS
representative" means the Administrator of RUS, and als meas a person to whom the Administrtor ha
offcially delegated specific or gener authority to tae the action in question.
Section 12.20Prepayment of Loan
In the event the Awardee prepays the entire Loan porton of the Loan within thee (3) year
from the date hereof, the Awardee shall, withm thir (30) days of making such prepayment, execute a
stadard grt agrment with the RUS.
Section 12.21 Term
Ths Agrement shall remam in effect until one of the following two events has occu:
(a) The Awardee and RUS replace this Agrement with another wrtten agrement;
(b) All of the Awardee's obligations under this Agrement have been dischaged and
paid.
Page 29
\
IN WITNESS WHEREOF, the paries hereto have caused this Agreement to be duly executed as of the
day and year first above written.
Attsted to by:~k ~ 7.J,(ï?'Secreta
(Seal)
UNITE STATES OF AMERICAPr1'~by
inistator
o e Rural Utilities Serce
Page 30
SCHEDULE 1
Aricle I Definitions
i. Prior RUS Loan Contract: LOAN AGREEMENT Dated as of March 9, 2005
2. RUS Mortgage: RESTATED MORTGAGE, SECURITY AGREEMENT AND FIANCING
STATEMENT Dated as of March 9, 2005
Aricle II Representations and Warties
1. Pargrph (h) Awaree's principal plac of business:
892 W Madison Avenue
Glenns Ferry, Idaho 83623
2. Pargraph (i) Awardee's Organzation Number: C61691
3. Pargrph G) Awardee's Subsidiares: Pend Oreile Telephone Company and
Nehalem Telecommunications, Inc.
4. Paragrph G) Awardee's Part: None
5. Paragraph (n) Additional Representations and Warties:
The Awardee represnts and warrants that it is primarily engaged in the busines of
transmitting communications electrically, electromagnetically, or by light.
Aricle II The Loan
1. Section 3. i (a) Loan amount: 5728,700
2. Section 3.1(b) Grat amount: 51,700,300
Aricle IV Conditions Predent to Loan Closing
I. The additional conditions referred to in Section 4. I (j) are as follows: None
Conditions Predent to Releae of Funds
2. Secon 4.2(b) amount of fidelity bond coverage: 5364,350
3. Section 4.2(d) fuds deposited for Projec completion: None
4. The additional conditions referr to in Section 4.2(e) ar as follows:
The obligations of RUS hereunder are subject to the satisfaction of the following
additional conditions preceent:
a. The Awardee has provided RUS with documentation of its consultation with its
local U.S. Fish and Wildlife Service (USFWS) Ecological Services offce
(htt://ww.fws.gov/offces) with respect to the affect of the Project on any lied
thretened or endangered specie candidate species or their critical habitat; and
b. Tbe consultation process referre to immediately above in paragraph (a) has
concluded.
Page 31
Conditions Predent to Individual Advance
5. Section 4.3(i) Requird pennits, licenses, frchise, and other approvals: None
6. The additional conditions to advance referr to in Setion 4.3(k) are as follows:
No funds wil be advanced for constrction that disturbs ground or involves land
clearing, unti the Awardee has received written confirmation from RUS that the
requirements of Section 106 ofthe National Historic Preervation Act (16 U.S.C. 470f)
have been met in accordance with implementing regulations, "Protecton of Historic
Properties" (36 C.F.R. Part 800).
Aricle V Affative Covenants
1. Section 5.10 Composite Economic Life ofRUS fianced facilties: 19 Years
2. The additional atirative covenants referrd to in Section 5.21 are as follows:
a. Within sixty (60) days from the date hereof, the Grantee shall provide Project
construction plans to their loeal U.S. Fish and Wildlife Service (USFWS) Ecological
Services offce (http://ww.fws.gov/offcesl) to initiate tbe consultation process as to
wbether Project construction wil affect any listed tbreatened or endangere species,
candidate species or their critical habitat.
b. Within sixty (60) days from tbe date heref the Awardee shall provide all
information necessary to the applicable organiztions to complete the review and
approval proceses required by Section 106 of the National Historic Preervation
Act (16 U.S.C. 470f), in accordance with implementing reulations, "Protection of
Historic Properties" (36 C.F.R. 800), relating to construction that disturbs ground
or involves land clearing.
c. The Awardee shall insert the following language in aU construction contracts:
If previously unidentified historic properties (that is, propertes listed on or eligible
for listing on the National Register of Historic Places) or unanticipated effects to
historic properties are discovered during Project construction, the construction
contractor shall immediately bait all activty within a one hundred (100) foot radius
of the disovery, notify Rural Telephone Company and law enforcement of tbe
discovery and implement interim measures to protect the discovery from further
impact, especially looting and vandalism. Construction shall not resume within a
100 foot radius of the discovery until the constructon contrctor bas received
written instructions to procee from Rural Telepbone Company.
d. Immediately upon receipt of notifcatin from the constructon contractor that a
discovery of unidentified historic propertes (properties lited or eligible for liting
on the National Register of Historic Place) or unanticipated effects to historic
properties are discovered during Project construction, tbe Awardee sbaD :
(i) Inspect tbe construction site to determine the scpe of the discovery and
to ensure that constructon activities bave baited;
(Ii) Clearly mark the ara oftbe discovery;
(ii) Implement additional measures, as appropriate, to protet the
discovery from furter impact, especially looting and vandalism;
(iv) Notify USDA Rural Utilties Service (RUS), Engineering and
Environmental Staff, Federal Preservation Offcer at 202-720-9583; and
Page 32
\
(v) If the discovery contains bumanremains, comply with all applicable
state laws, notify the State Historic Preservation Offces) and any Indian
Tribes or Hawaiian organiztions which might be interested in the
discovery.
Article VII Negative Covenats
i. The additional negative retrctions on Distributions and Withdrawals referred to in Section
7.9(b) are as follows: None
2. The additional negative covenants referrd to in Section 7.17 are as follows:
a. The Grantee agrees not to start or proceed with any ground breaking constrction
activities relating to the Project prior to completing the consultation process
required by the EndaDgered Species Act and referr to on this Schedule under
Article IV, Paragraphs S(a) and (b).
b. The Awardee agree not to engage in construction activities which disturb ground
or involves land clearing until the Awardee has received written confirmation from
RUS tbat the requirements of Setion 106 oftbe National Historic Preservation Act
(16 U.S.C. 4701) bave been met in accordance witb implementig reulations,
"Protection of Historic Properties" (36 C.F.R. Part 800).
c. Tbe Awardee agrees not to resume construction or authori a construction
contractor to resume construction witbin a 100 foot radius of a discovery of
unidentified bistoric propertes (properties listed or eligible for listing on tbe
National Register of Historic Places) or unanticipated errects to bistoric properties
until receipt of written notifiation from RUS tbat tbe requirements of the National
Historic Preservation Act (16 U.S.C. 4701) have been met.
Aricle XII Miscellaneous
i. Section 12.1 Awardee's addrss for puroses of notification:
James R. Martell
President
Rural Telepbone Company
891 W Madison Avenue
Glenns Ferry, Idaho 83623
Phone: [phone]
2. Secion 12.1 Addrss for Awaree's notification copy: Same as above
Page 33
SCHEDULE 2
COLLATERAL
i. Collateral shaD include the following:
All propert, assets, rights privileges, licenses and frchises of the Awaree of ever
kind and desciption, real, personal or mixed, tagible and intagible, of the kind or natue specifically
mentioned herein, or any other kind or natu now owned or hereaf acquir or arsing by the Awaree
(by pÚTchase, consolidation, merger, donation, constrcton, erction or in any other way) wherever
located, including without limitation all or in par the followig (hereinafr the "Collate:")
I
All right, title, and intert of the Awaree in and to the Existig Facilties, buildings,
plants, works, improvements, strctu, estas, grts, frchis, easements, rights, privileges and
propertes, whether real, personal, or mied, tagible or intagible, of every kind or description, now or
hereafter owned, leased, constrcted, or acuir by the Awardee, wherever located, and in and to all
extensions, improvements, and additions there, including but not limited to all buildings, plants, work,
strctues, .towers, antenas, fies, appartu, materials, supplies, machinery, tools, implements, poles,
post, crossar, conduits, ducts, lines, wires, cables, whether underground, overhead, or otheiwise,
exchages, switches, including, without limitation, host and remote switches, desks, testboards, fres,
racks, motors, genertors, batteries, and other items of centr offce equipment, pay stations, protetor,
instrments, connecions and appliances, offce futu, equipment, and any and all other proper of
every kind, natu, and description, used, usfu or acquird for use by the Awaree in connecton
therewith;
IT
All right, title, and intet of the Awardee in, to, and under any and all grts, privileges,
rights of way and easements now owned, held, leas, enjoyed or exercised, or which may hereafter be
owned, held, leased, acquired, enjoyed or exercised, by the Awardee for the purses of, or in connection
with, the constrction or opertion by, or on behalf of, the Awaree of its properes, facilties, systems, or
businesses, whether underground, overhea, or otheiwis, wherever located;
II
All right, title, and interest of the Awardee in to, and under any and all licens and
pennits (including without limitaion those grante by the Feder Communcations Commission ("FCC
it),
subjec to the FCC's prior approval of any assignent or trfer of de jure or de facto contrl of such
licenss), frchises, ordinances, and privileges, wheter hertofore or hereafter grted, issued, or
executed, to it or to its assignors by the Goverent, or by any ste, county, township, muncipality,
village, or other political subdiviion thereof, or by any agency, boa, commission, or deparent of any
of the foregoing, authorig the constrction, acquisition, or operation of the Awaree's propertes,
facilties, systems, or businesses, inofar as the same may by law be assigned, grted, baraied, sold,
conveyed, trferred, mortgaged, or pledged;
iv
All right, title, and inteest of the Awaree in, to, and under all personal prope and
fixtus of every kind and natu, including without limitation all goo (such as inventory, equipment and
any accessions thereto), intrents (such as promissory note or chattel paper, electonic or otherse),
documents, accounts (such as deposit accounts or tist acunts puruant hereto or to a loan agement),
letter-of-credit rights, investment propert (such as cerficated and uncertficated securties or securty
entitlements and accounts,) softar, genera intagibles (such as payment intagibles), suprtg
Page 34
obligations, contrct nghts or nghts to the payment of money, insurce claims, and proceeds (as such
terms are presently and hereafter defined in the DCC; provided, however, that the te "instrent" shall
be such term as defied in Aricle 9 of the DCC rather than Arcle 3);
v
All nght, title, and interest of the Awaree in, to, and under any and all agrements,
leases or contr heretofore or hereaf executed by and between the Awadee and any person, fim,
corpration, or other corporate entity relating to the Collateral (including contrcts for the leas, occupancy,
or sale of the Collateral, or any portion thert);
VI
All nght, title, and interest of the Awardee in to, and under any and all books, rerd
and correspondence relatig to the Collateral, including, but not limited to, all records, ledger, leaes,
computer and automatic machinery, softare, progr, databa, disc or tape fies, prit-outs, batches,
rus, and other eleconically-prepared inforation indicatig, sumarg, evidencin, or otherise
necessar or helpful in the collection or realiztion on the Collater;
VII
Also, all nght, title, and interest of the Awardee in to, and under all other propert, rea
or personal, tagible or intagible, of every kid, natu, and descnption, and wherever situated, now or
hereafr owned or leased by the Awardee, it being the intention hereof that all such proprt now owned or
leas but not specifically descnbe herein, or acquird or held by the Awaree afer the date heref, shall
be as fully embraced with and subjected to the lien herof as if the sae wer now owned by the
Awardee and were specifically descnbe herein to the extent only, however, that the subjecton of such
propert to the lien hereof shall not be contr to law;
Together with all rents, income, revenues, proceeds, products, profits and benefits at any
time derved, received, or had from any and all of the above-descn'bed propert of the Awadee;
Prvided, however, no automobiles, trcks, trler, trctors or other vehicles (includig
without limitation aircra or ships, if any) owned or used by the Awardee shall be included in the
Collatera.
2. Additionally, propert pledged as Collater shall also include the followig specifcally descn'bd
prope, ifany: None
Page 35
I Attachment 1 I
Rural Development
United States Department of Agriculture
RURAL UTILITIES SERVICE
Broadband Initiatives Program
Contracting, Work Order and
Advance Procedures Guide
GENERA
This guide implements and explains the provisions of the loa and gran docments contaning the
requirements and proceures to be followed by an Awaee performing work to be finance wit RUg
Recvery funds. The Awardee shall maintain accounting and plant reord suffcient to docent the cost
and location of all constrction and to support fund advances and disbursements. The stadard Loa and
Grat Documents also contan provisions regarding advances and disburment of broadband fuds. This
document also implements certin provisions by settng fort requients and proceurs to be followed
by the A wadees in obtining advances and making disburements of fuds.
ABBREVIATIONS
For purse of this guide:
c.F.R. stds for Code of Federal Regulations.
FRS stds for RUg Form 481, Financial Requirement Statement.
GFR stads for RUg general field representative.
Pub. L. stads for Public Law.
U.S.c. stands for Unite States Code.
DEFIITIONS
For purpses of this guide:
Advance mes trsferrg funds from RUg to the Awadee's deposit account.
Architect means a persn registered as an architect in the stae where constrction is performed.
Award mes any broadband award made by RUg.
Award documents mean the documents covering an awar mae by RUS, including the loan or grt
ageement, note, and mortgage or other securty documents betwee the Aware and RUg.
Awarfunds meas fuds provided by RUS though an awad.
Awardee means any organzaion that has received fiancing from RUS.
Bid gurantee means a bid bond or certfied check reuir of contracors bidding on constrcton work to
ensure that the bidder, if succsful, wil fuish a peormance bond.
Buy American Requirement means the requirements as staed in the Recover Act and any associated
waiver.
Broadbnd Service means the minimum trsmission rat as defined in the applicable NOF A for the
Broadband Initiatves Progr, under which the awa was made.
Closeout dOCments mea the douments require to cerfy saisfacory completon of all obligations under
a contrt.
Contrt meas the agreement between the Awaree and an independent contrctor coverg the purchase
and/or installation of equipment or the constrction of facilties to deliver broadbad servce for an
Awadee's systm.
Contact work meas any work perfonned pursuat to an RUS fonn contract, or a Non-Standard Contrt.
Disbursement meas payment by the Awardee out of the deposit accunt for approved awad purpses.
Engineer means a person registeed as an enginee in the state where constrction is perfonned, or a persn
on the Awardee's staff autonzed by RUS to pefor engieenng services.
In-house engineering meas an pre-loan or post-loa engineeing services perfonned by the Awar's
sta.
Interim work mea any work that commences afer an applicaon has be submitted to RUS, but pnor to
relea of awar funds.
Non-Stand Contract mea a non-RUS fonn contr for ~ific work that is submitted by the
Awardee, which must be approved by RUS before execution, if
it is to be funded.
Outside plant mean the pa of the telecmmuncaions netork tht is physically locate outside of
telecmmunication buildings. This includes cable, conduits, poles and other supportng stnicts and
certn other associated equipment items.
Performance bond means a suret bond in form satisfacry to RUS guteing the contracots faithful
perfonnance ofa contr. (See 7 CFR Par 1788.)
Plans and specifcations mean a copy of the apprpnate contr, the specifications, and such additional
infonnaton and documents neeed to provide a clear, acate, and complete understading of
the work to
be peronned.
Pledged Deposit account meas an acount reuir by the awad agreement into which all RUS fuds are
advance.
RUS meas the Rur Utilities Service; an agcy of the Unite Staes Deparent of Agrcultu and
successor to the Rural Electrfication Administrtion.
RUSform contract means contrct identified as a RUS fonn.
Subcontract mean a seconda contrac undertng some of the obligations of a prima cotrt.
System design means the system descrbed in the approved Applicaion.
Work means any purha of equipmen, softare and/or installaton, if applicable; constrcton of
facilties; or professional services.
Work order meas any work perfonned by the Awaree's employees, puruant to its work order produre,
with the Awardee furnishing all materials, equipment, tols, and trnsporton.
CONTRCTG PROCDURES
GENRAL
All work must conform to the Application, as approved by RUS, and shall be covered by an Environmenta
Report prepar in acrdance with 7 CFR Par 1794 and approved by RUS. No consction and/or
installation activities shal commence until all necear loc, state and federal requirements have be
satisfied.
AlI work perfonned prior to the submission of an aplicaion to RUS wil not be eligible for fiancing. In
addition, only new materials and equipment may be financed with award funds, unles otherwse approved
in wrting by RUS.
A. Interim Work
Once RUS ha received an application, the applicat may proceed with interim work. However,
this should not be consted as a commitment that RUS wil approve the applicaon. To ensure
that interim work is eligible for reimbursement with award funds, the Awardee must comply with
all the procedures in this Guide, including the folIowing reuireents:
(1) Equal employment opportit requirements in RUS Bulletin 320-15; and
(2) Environmenta requirements contaned in 7 CPR 1794;
B. Non-Stadar Contr
The Awadee may choose to use a Non-Stadard contrac to perfonn work. The Non-Stadar
Contr must include a provision that it wil not be binding on the paes, until administratve
approval by RUS has bee grted. RUS wil not aprove use ofthe Non-Stada Contr if, in
RUS' judgment:
(1) The contrct is for work not covered in the approved Application, or is not for an EligiblePurse;
(2) The contract ter and conditions, ar vage, inadequate, or unonable; or
(3) The contrt presets unccble loan secunty risk to RUS.
C. Contrct Amendments
The Awaree shall obtain RUS approval before executon of any amendment to an approved
contrct if:
(i) The amendment alters the tenns and conditions of the contrac or changes the scope of
the projec covered by the contr regardless of the amount of the contrac before
amendment;
(2) The amendment by itslf (or togeter with precing amendments) increases th origial
contrct price by 20% or more. In ths ca, a bond extension wil be reuire to bring
the penal sum of the bond to the tota amended contract price; or
(3) The amendment case an unbonded cotrac to reuire a contrctts peronnance bond.
This would occur when an amendment increas the contrac price to an amount
reuiring a perfonnance bond pe 7 CFR Par 1788, Subpa C. .
Once RUS approva to amend the contrac ha be grted, or for any other contr amendments
not reuiring approval, the Awaree must submit an origial execute amendment to RUS.
D. Insra
A performce bond is reuire for constrcton of faiíities exceeding $250,000, as indicate in
7 CFR Par 1788, Subpa C, or certin significant instalation, as outlined in the Agency's
memoradum found at http://www.usda.gov/rusltelecm/publicationslpdC fileslContrctors-Bond-
Requirement7-28-Q9.pdf.
The Awaee is responsible for ensmng that its contractr and enginee comply with all the
insurance and bond requirements of 7 CFR Par 1788, Subpar C.
E. Title Clearance
For any building constJcton over $250,000, the Awardee shall provide title evidence satisfactory
to RUS. prior to releasing the invittions to bid.
F. Softar Licese
As pa of an equipment purchase. the original equipment maufactuer may require tht the
Awaree enter into a softe lice ageeent for the use of the equipment. The Awaree may
use RUS Form 390. Softare License Agreement -Special Equipment Contract, or a Non-
Standar Contr.
G. BUY American
All iron. steel, or manufac goo tht are purchased with Recver Act fuds by state or loc
governents, or an instrentality theref, which ar not included in the Agency's waiver
covering Broaband Swiching Equipment, Broadband Routing Equipment. Broadband Trasprt
Equipment. Broadband Accs Equipment. Broadband Customer Prem Equipment and End-
User Devices, or Billng/Operatons Systems, shall be subjec to the Buy American provision of
the Recover Act unless a waiver is reues from the RUS. For fuer detls see 74 Fed. Reg.
31402.
H. Davis-Bacon Act
The Awardee shall comply with The Davis-Bacn Act and the guidance found at 29 C.F.R pts. 1,
3, and 5, such that any covered contrt with a cotractor or subcontrr in exces of $2,00 for
consction, alteaton or repair (including paintig and decorating) shall contan the contr
clauses found in 29 C.F .R. 5.5(a), to ensure that all laborers and mechanics employed on the
Projec reive payment of not less than the prevaiing wage.
1. Affliated Transaons
With reard to the Projec the Awaree shall not enter into any tron, cotrt. or deang
with an Affliate of th Awaree or with the Awadee's or Affliat's dirors trstee, offcers,
managers, membe (if the Awardee is a limite liabilty compay), or other corate offcial,
without the prior written const of RUS. RUS' consnt to advance awad fuds for aftUiat
transations wil be limited to an amoun which is the lower of cost or market rate and which is
subjec to verification by RUS and its reprentaves having ac to the boks an rerds of
the Affliate.
As defined in "th appropriate awar docment. "Affliat" or "Affliat Company" of any
specified person or entity mean any other pern or entity direy or indiry controlling of,
contrlled by, under direct or indir common contrl with, or relate to, such specified person or
entity, or which exists for the sole purse of providing an service to one company or exclusively
to companies which othere mee the defiition of afliate. Ths definition includes Varable
Inte Entities as described in Financial Accunting Stada Boar Interetion (FIN) No.
46(R), Conso/idDtion of Variable Interest Enities. For the purpose of ths definition, "contrl"
meas the possession directly or indirecy, of the power to dir or cause the dircton of the
manement and policies of a company, wheter such powe is exerised thugh one or more
intermediar compaies, or alone, or in conjuncton with, or puruant to an agrment wi, one or
more other compaies, and wheter such power is esblished thugh a majority or minority
ownershp voting of securities, common dirers, offcers, or stkhlders. voting trst holdin
trst (other th money exchanged) for propert or services.
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J. Recrds
Recrds supporting all asets finance by RUS shall be retaned until audite and approved by
RUS.
Records must be suffcient to document the cost and loction of all expnditu and to support
advances and disbursement of award fuds. The support rerds mus include, but not be limited
to, contracts, third par invoice tiesheets, payroll rerds, material rerds, and overhead
allocation recrds and summar schedules
Records related to plant in service must be retaned until the failties ar peanently remove
frm utilty service all removal and resration aCvities are completed, and all costs ar rere
frm the acounting recrd unless acunting adjusents reulting from reclasification and
original costs stdies have ben approved by RUS or other reatory body havingjurisdicûon.
Life and mortity study dat for depreciation puroses must be retned for 25 year or for 10
years afr plant is retired, whichever is longer.
II PROFESSIONAL SERVICES~
Awardees shall only obta professional services frm perons or finn not affliat with, or that
do not
represent a contracor, vendor or maufacr presently providing labor, materials, or equipment to the
Awadee. This does not include in-house serices.
A. Engineeg Serices
All engneering serice reuired by an Awarde, including inspeon and certficaton shall be
rendere by an engineer seleced by the Awaree and licese in the State wher the failties will
be locatd, or by qualified employees on the Awaree's st, who afr submission of
qualifications to RUS, have been approved to perrm such services.
(1) Outside Constant. Engineng serices performed by an outside consulta may becovered under' RUS Fonn 217, Postloan Engineering Services Contract -
Telecommunications, RUS Fonn 245, Engineering Service Contract - Special Services,or a Non-Stadard Contrt. .
(2) In-Houe Engineering. When the proed work is such that the engineerig involved is
within the caabilties of the employees on the Awardee's s~ Awardees may request
RUS approval to provide such service. The request shall include:
(i) A desription of services to be perfonned;
(ii) The naes and qualificatons of ea employee that wil be peorming the
spefic seices. In addition, the Awarde shall identify an emloyee who wil
be in chare of the service. Such employee mus mee the Sta expeence
requirements for a registred engine in the Sta wher facilties will be
loced. In the absece of speific Sta experience requirements ths employee
should have at leat eight yea expeence in the design and constcton of
telecommunicaion faclities with at lea two yea of the work exprience at a
supervisory leveL. RUS doe not requir professiona registon of this
employee, but this doe not relieve the Awadee from compliance with
applicable sta registtion reuireents, which may reuire a licesed
individua to perform such servces; and
(ii) A letr signed by an autorize representative of the Awardee reuesing in-
house engineeng approval and certfYing the supportg informtion.
RUS shall notifY the Awardee by letr of approval or disapproval to peorm in-houe
engineerng. The lett shall set fort any conditions associated with an approva or the
reasns for disapproval. RUS appral of in-house engineering serices shalbe only for
the specific serices cover by the approval.
B. Architectral Serics
The Awadee shall selec an arhitect licensed in the st wher the facilty wil be locat. The
borrower may use either RUS Form 220 or RUS Form 217 when contring for arhite
servces, or a Non-Stadad Contt.
C. Contr an ClOseout Documents
The Awardee must submit thee executed copies of the RUS form contract or the approved Non-
Stadard Contr, coverig the professional serices to be provided, for final administve
approval. Once all servces and obligation reuired under the profesional seice contrac have
bee completd, Awarees shall submit two copies of RUS Form 288, Final Statment of
Architect's Fees and/or RUS Form 506, Final Statement of Engineering Fees, to close out the
speific RUS Form contr. Awaree using Non-Stadad Cotrac should provide a similar
certfication for Non-Stadard Contrac.
II i PURCHSE AND lNSTALLA TlON OF EQUIPMENT
General
When purchasing any equipment, including insalation, that cost more than $100,000, the Awaree mus
use a contract for the purhase. Any equipment puhases for less than $100,000, including instalaton,
ca be purchas under a purchase order and reimbured afer submission of the invoices along with an
RUS Form 771a, following the inspecton and reimbursement prceure under Work Order proes.
A. Equipment Pucha with Contrac
Awardee may use RUS Form 397, Special Eqipment Contract (Including Installation), RUS
Form 398, Spcial Equipment Contract (Not Including Installation), or a Non-Stadad Cotr.
The engieer shall prear the performce reuirements including any installaton reuireen,
if applicable, prior to releasing them along with the respecve contr to prspetive vendors.
The Awaree may purhase equipmen using a negotiated puchase, although RUS remmends
that the Awardee obta quote frm at leat th differet vendors.
Equipment purchad under RUS Form 398 or a Non-Stada Contrac that does not include
instalation, may be instled by the Awardee using the Work Order metod or RUS Form 773, as
outlned in the Work Order proceurs below.
B. Contrt and Closeout Documents
Once a vendor has been selec, the Awardee mus submit th executed copies of
th RUS form
contrac or the approved Non-Stadad Contr including the non-stada perormce
requirements covering the equipment to be provided, for fina adinistative approval. Once all
equipment purchased under the contrac ha been instaled, and te, and meet the performance
requirements, the Awardee shall proceed wit the closeout of the contrt and submit a fina
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contrac closeout certfication on RUS Form 756 or a similar certficaon for Non-Stadard
Contracts.
IV CONSTRUCTON OF FACILITES
General
Constrction for outide plant facliies, building, and towers may be peormed using the work order
metod or by an outside contractor. When using an outside contrtor, either RUS Contract Forms 773,
257, or 515, or a Non-Stadard contract may be used.
A. Outside Contracor
If using a stadard RUS Contr Form, the Awaree shall use the form without modificatons,
and atth any diagram, sketches, and taulatons necessar to spefY clearly the work to be
peormed and who shall provide which mateials.
The engineer shall prepare the constction specificaons prior to releasing them along with the
respecve contrac to prospecive contrctrs. RUS recommends that A warees obtn quotes
from several contrrs before entering into a co to ensure obtaning the. lowest cost. The
Awadee shall ensure tht the contacor selec mee all federa, stte, and local licensing
requirements, as well as bonding requirements and that the contrr maintas the insurance
coverae require by the contrt for the duraon of the work. (See 7 C.F .R. Par 1788.)
Once a contrctor ha be selected, the Awaree must submit th execute copies of the RUS
form contract (except RUS Form 773, which shall follow the procs below) or the approved
Non-Stadar Contr including the constrcton specificaions for the work to be performed, for
final adinistratve approval. Once conscton has be completed pe the constcton
speificaions and all acceptace test have been mae, the Awaree shal proee with the
closeout of the contr and submit a fial contr closeout certficaton on RUS Form 756 or a
similar certificaton for Non-Stadard Contr.
B. Work Order Procedus
Work order constrction shall be performed to all loc, state, and Feder reirements. As work
order constrction is peormed the Awarde shal kee daily timeshee and marial report,
referced by the work project number, to recrd labor and materals used. Cost acuntig
system must be in plac to mee the reuirements of7 CFR 3015 (including 48 CFR 31.2),3016,
3019 as applicale, to show the sourc and summar rerd to support reueste and expded
funds.
(1) Inspection an Cerfiation. Upon completon and prior to closeout, the Awade shallobtan the enginees certifcaton on RUS Form 771a for all constrcton complete
using RUS Form 773 or the work ord metod. An authorize offcial of the Awadee
shall execte the Awardee's ceficaion.
(2) Reimbursement. To request fuds for constrcton complet under the work orderconstrction prures or RUS Form 773 contr constrcton proures, the Awar
shall submit RUS Form 771a, initaled by the GFR. along wi a descrpton of eah
project, as well RUS Form 481, Financial Requirement Statement (FS). RUS Form
771a should be submitt only with the FRS that it support. Unles otherise approved
by RUS, the Awaree shal fice all work order and RUS Form 773 contract
conscton with non-loa fuds and obn reimbursent with RUS fuds when
constrcton is completd and properly exected closeut docuents have bee
submitt to RUS.
\
V ADVANCE AND DISBURSEME OF FUNS
General
The award document contains the provisions regaing advances and disbW'ement of fuds to the
Awardee. This seon implements cerain provisions by seing fort requirements and proedures to be
followed by the Awardee in obtaning adva an making withdrawais/disbW'ements offuds.
RUS is under no obligation to make or approve advances of fuds unless the Awardee complies with all
terms and conditions of the awad docments.
A. Broadba Budget
The Awardee will be provided a bradband budget, basd on the approved Application. This
budget divides the awad into budget caegones that are asociat with the propose projec,
such as equipment, outside plant, land and buildings, professional services, etc. Funds frm one
budget category may not be use for a different budge category without pnor wnttn approval
from RUS.
B. Budget Adjustments
If more fuds ar required th ar available in a budget category, the Awardee may rees RUS'
appral of a budget adjustent to use fuds from another budget cagory. The reuest shallinclude an explanion as to why the adjustment is neeed and the afec budget categones.
RUS wil not approve a budget adjustment unless the Awardee can demonse that all pures
ca still be completed with the reuested adjustment RUS, at its discretion, ma make a budget
adjustment without a formal request to encuber fuds for a contrct, when fuds within the
budge category are insuffcient, and when it determines that the budget adjustent is
insignificant.
C. Pledged Depoit Accunt
The Awadee shall estalish an maitan a pledged deposit acount to hold all Advances
depoite by the Agency. Th pledged depsit acunt shal ony be estalished in a ban or
depository whose deposits ar insur. by the FDIC or other federa agency acptable to RUS.
Funds in the pledged deposit acount shall be used solely for the purpse aproved in the
Application and shall be withdrawndisbur for the approved purpse for which they were
reques in the financial reuirement staement. All Advances wil be depsited into the pledged
deposit acunt by elecnic trsfer.
RUS may reuire that other fuds be depoite into the pledged depsit account. These may
include equity or genera fud contrbutions to constcton, proced frm the sale of proper,
interest received on award funds and similar types of reeipts. Deposit slips for any depits to
the pledged deposit account shall show the soure and amount of fuds deposite and be execute
by an authorize representative of the bank. The disbursent of non-awar funds depsite into
the pledged deposit acunt requires the same RUS aproval as Advaces on the awar.
For acunting pur all withdrwals/disburents frm the Pledged Depsit Accunt must
be evidenced by caceled checks or support for other form of payment Disburments to
reimbur the Awadee's general fud acunt shall be docmente by a reimbW'ement schedule
to be retaned in the Awardee's records that list the pledged deposit acunt check number, dae,
and an explanation of amounts reimbursed for the Projec.
D. Financial Requirement Staement (FRS)
To request Advances the Awardee must submit RUS Form 481, Finanial Requirement Statement
("FRS"), a descnption of the Advances desir, and other relate information to the trsacons
as required by RUS.
The Awardee must request funds in the first Advance to repay any interim financing indebtedess,
as well as other approved preapplication expense. RUS may not make fuer Advances unl
the Awardee ha submitted evidence, in form and substace satisfacory to RUS, that: (1) any
indebtedess creaed by the inteim finacing and any liens associated therewith have be fully
discharged of rerd; and (2) the Awaree has satsfied all other conditions on the advance of
additional loa funds.
If the sourc of fuds for interi fiancing is the Awarees internally generted funds, the
Awardee may request reimbursent of those fuds along with Advans for other purses on
the firs FRS submitt to RUS.
The Awaree shall request advance as needed to mee its obligations promptly. Generally, RUS
does not approve an advance requested more than 30 days before the obligation is payable.
Funds must be disbursed for the ite for which they were advance except in the following
circumstace. If the Awadee nee to pay an invoice which has been approved on an FRS for
which funds have not been advanced, and disbursment of advance funds for another item has
be delayed, the lat funds may be disburd to pay the due and owing invoice up to the amunt
approved for such ite on the FRS. The Awaee shal make entries on the nex FRS showing the
changes under "Tota Advances to Dat" and shal explain the changes in writing before RUS will
process the next FRS.
The cerification on eac of the three copies of the FRS set to RUS shal be signed by a corporate
offcer or manager authonze to sign such statement. RUS For 675, Certifcate of Authority,
shall be submitted to RUS indicatig the names of all persons authonze to sign a FRS. RUS wiD
not proce a FRS signed by an individua whose name is not included on the most rect Form
675.
Funds other than awar fuds that ar deposite in the pledged deposit acunt ar reorted as a
credit under tota disburements. Disburments of these fuds are subject to the same RUS
approvals as RUS fuds.
The documentation required for audit of FRS trsacons, include but ar not limited to desit
slips for the pledged deposit accunt, all cacelled pledge deposit acount checks and the
supportng third pa invoice, timesee, payroll res, acunts payable rerds, gener
ledger, etc., and/or reimburment schedules. Thes shall be kept in the Awadee's ties for
penodic audits by RUS.
The FRS shall be the pnmar method used by the Awar to rerd and contrl tranons in
the deposit acunt. Approved contrts and other ite ar shown on the FRS under" Approved
Purposes." Funds ar approved for advance as follows:
(I) Contracts ork Order
(a) Eqipment Contracts: Ninet pert of the approved contrac amount,
including amendments, with the final i 0 percent available when RUS approves
the contrct closeout ceficaon.
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(b) Constrction contracts: Ninet-five perent of the approved contr amowit,
including amendments, with the final 5 percnt available when RUS approve
the contrac closeut certification.
(c) Work orders: The amount show on the RUS fonn 771a that RUS detines to
be eligible for reimburement.
(2) Pre-Appiication Exnse and Engineering
(a) Pre-Application expenses: Bas on the fina itemize invoice frm the
pern(s) or finn(s) that provide services to complet the Applicaton,
. engineering, and acounng, as appred by RUS.
(b) Post-loa engneering contracts: Ninety-five percet of the amoun of the RUS
approved engieeg contr wit the final 5 pecent available when RUS
approves the fial statement of engineeglarchitecra fee.
(c) In-houe engineering: One hundred percet of the amowit approved by RUS.
(3) Operang Eguipment
Offce equipment, vehicles, and work equipment wil be reimbursed bas OD copies of
invoices.
E. Temp Exces Constrcton Fwids
When wianticipated events delay the Awadee's disbursement of adance funds, the fu may
be us for other approved purses as decribe above or must remain in the pledged depsit
acunt. If the pledged depoit acowit is an interest beng acunt, all intees eaed must
remain in the pledged deposit acwit and canot be disbured without RUS approva.
F. Method of Advancing Fwids
The fit or subsequent advances may be conditioned on the sasfacon of ce requiments
stted in the Awaree's agrent with RUS.
All advances shall be made elecnically using the Automaic Cleag House (ACH. Normly,
for advance offids ACH only makes one payment pe FRS.
The following inforraton shall be included with eah advance:
(1) Name and addrss of Awadee's ban. If the Awadee's bank is not a member of the
Federal Reserve Syst, the name and address of its correspondent ban that is a
member of the Federal Reserve System;
(2) ACH routing infonnation;
(3) Awadee's ban acwit title and numbe; and
(4) Any other necessar identifYing infonnation.
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ATTACHENT i
EQUAL OPPORTUTY CONTRCT PROVISIONS
Dug the peonnance of this contrct, the contrtor agrees as follows:
(a) The contror shall not discrinate against any employe or applicant for employment bese
of race, color, religion, sex, or national origin. The contrctor shall tae affinative action to
ensure that applicants are employed, and th employees ar. trted durg employment without
regard to their race, color, religion, sex, or nationa origin. Such action shall include, but not be
limted to the following: employment, upgring, demotion, or trsfer, reitment, or
reitment advertising, layoff or teination, rates of payor other. fonns of compensation, and
selection for trg, including appreticesip. The contrr agrees to post in conspicuous
places, available to employees and applicats for employment, notices to be provided settg fort
the provisions of this non-discniination claus.
(b) The contrctor shal, in all solicitaons or advertements for employees placed by or on behaf of
the contrctor, stae that all quaifed applicants shall receive considerion for employment
without regad to rac, color, religion, sex, or national origi.
(c) The contrctor shall sed to each labor union or representative of worker with which he has acollective bargainng agrement or other contrct or undersding, a notice to be provided
advising the said labor union or worker's reresentative of the contrctor's commitments under
this secton, and shall post copies of the notice in conspicuous place available to employee and
applicants for employment.
(d) The contrctor shall comply wit all provisions of Executive Orer 11246 of September 24,
i 965and of the roles, regulations, and relevant orders of the Seceta of Labor.
(e) The contrtor shall fiish all infonnation and report reui by Executive Order 11246 of
Septembe 24, 1965 and by the roles, reguations, and orders of the Sec of Labor, or purant
there, and shall pennit access to his books records, and accounts by the adinisteg agency
and the Secreta of Labor for puioses of inestigation to ascein compliance with such rues,
regulation, and orders.
(t) In the event of the contractor's non-compliance with the non-discniintion clauses of this
contrac or with any of the said roles, regulations, or order, ths contrt may be cancelled,
tenninatd, or suspended in whole or pa by the Goverent, and the contrctor may be declar
ineligible for fuer Governent contrct or federally assisted constrcton contracts in
accordance with the procdure authorize in Executve Order 11246 of Septeber 14, 1965, and
such other sanctions may be imposed and remedes invoked as prvided in said Executive Order
or by role, regulation, or order of the Secreta of Labor, or as otherise provided by law.
(g) The contractor shall include the provisions of pargrphs (a) though (g) in every subcontrct orpurhas order unless exempted by roles, reguations, or order of the Secreta of Labor issued
pursuat to Secon 204 of Executive Orer 11246, dad September 24, 1965, so tht such
provisions shall be bindig upon each subcontrctor or vendor. The contrctor shall tae such
action with respect to any subcntrct or purchase order as the administerg agency may dirct as
a mean of enforcing such provisions, including sanctions for non-compliance; provided, however,
that in the event a contrctor bemes involved in,. or is thtened with, litigation with a
subcontractor or vendor as a result of such dircton by the agency, the contrtor may request the
United States to enter into such litigation to protect the interests of the United States.
EXHIBITC
Michael C. Creamer (ISH No. 4030)
Kelsey J. Nunez (ISB No. 7899)
GIVNS PURSLEY LLP
601 W. Banck Str
P. O. Box 2720
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Attorneys for Rur Telephone Company
1116-33_1063672_1
BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION
IN THE MATTER OF THE APPLICATION
OF RURA TELEPHONE COMPANY FOR
AUTHORI TO BORROW FROM TH
RUR UTILITIES SERVICE ('"RUS") IN
THE AMOUN OF NOT MORE THN
$728,700
Case No. RUR- T -11-01
APPLICATION OF RURA
TELEPHONE COMPAN
ORDER NO.
On Janua 24,2011, Rural Telephone Company (hereiafer "Applicat" or "Rur")
filed an Application for Loan Appva with this Comssion reuesting authorization to
execte a Promissory Note in the amount of Seven Hundred Twenty Eight Thousad Seven
Hundr Dollar ($728,700.00) in favor of the United States of Amerca, acng thugh the
Rural Utilities Serice (hernafer called "RUS") to be seur by a LoanGrt and Securty
Agrent and Applicat's pre-exstig Mortgage.
The Applicant has qualified for a grt fr RUS under the federal Broadban Intiatives
Progr ("BIP") in the amount of $ 1,700,300.00. As a condition of the grant, the Applicant is
reuired to provide a twenty-five pecent match of fuds, to be derved from the $728,700.00
ORDER-Page 1
RUS loan evidenced by the Promissory Note. The Note Promissory Note will be seced by a
LoanGrt and Secty Agreeent ("LoanGrant Agreeent") to be exected by the Rural in
connecton with the Note, and by Rurl's preisting RUS Restated Mortgage, Secty
Agrement and Fincig Statement dated March 9, 2005, which Mortgage was apoved by the
Commission in Case No. RUR- T -0401, Orer No. 29566.
In surt of its Application, Rur alleges that the prposed RUS loa prs wil be
used to extend ADSL2+ serces into Rur's Nort Fork, Tuscra, and Jardge Serce
Areas, which are situted in Elko County, Nevada. Cerin of these new facilities will be
interconneced with the Applicant's existig Idaho telecommuncations facilities. The Applicat
fuher alleges that proposed RUS loan is consistent with the public intert inasuch as
constrction and upgradng of high sped infrtrcte will improve serce for Rur's
cuomer, including to some extent, its Idaho custmer, will fuer the goas of univeral
serice and provide ecnomic stimulus to ru communties in souther Idaho and norther
Nevada.
After examg the Application and supportg docmnents and beg fuy advise in the
preises, the Commssion hereby finds that a heag in ths matter is not require and that the
proposed tracton is consistent with the public interest and the Applicant's prpe
peronnance of its duties as a public utility.
IT IS THEREFORE ORDERED tht the Application of Rur Telephone Company for
authrity to execte and deliver to the Rur Utilities Serce a Promissory Note in an amount
not to exce $728,700.00, a Grt/Loan and Securty Agreeent and related docents in
connecon with the Grt and the Loan is herby GRAD.
ORDER - Page 2
DONE by Order of the Idao Public Utilities Comssion ths _day of
.2011.
ORDER - Page 3
Jim Kemton, Prident
Mack Redford, Commssioner
Marha Smith, Commissioner
EXHIBITD
LEGAL NOTICE OF RUR TELEPHONE COMPAN
APPLICATION FOR AUTHORI TO BORROW FUDS
NOTICE is HEREBY GWEN that on Janua 24,2011, Rur Telephone Company filed
with the Idaho Public Utiities Commsion an Application for authority to borrw up to
$728,700.00 frm the United States of Amerca, actng thugh the Rur Utilities Serce
("RUS"), to be used as matching fuds for a $1,700,300.00 grt under the Broadand Intiatives
Program to extend ADSL2+ serce into Rur's Nort Fork Tusora and Jarbidge Serce
Ar, in Elko County, Nevada. The RUS loan will be sec by a LoanGrant and Secty
Agrent an by a pre-existig RUS mortgage.
The Application is on file and is available for public inspecon at the Idao Public
Utilities Commssion. Any pen desirg to comment on said Application must fie petion
or prtests with the Idaho Public Utilities Commssion with fouree (14) days of the filing
date. If no protests are reeived with ths tie limit, the Commisson may consider the
Application and enter its Order without setng the maer for hearg. If wrtten prtests are
filed with the Commssion withn the tie limt set the Commission will consider the sae, and
in its disceton, may se a hearng. Pettions or protests must be filed with: Jea Jewell,
Sec~ Idaho Pulic Utiities Commssion, Statehouse, Boise, Idao 83720.
Jea Jewell, Secet
Idao Public Utilities Commission