UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
----------------------
November 30, 2004
Date of Report
(Date of earliest event reported)
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
Virginia 0-9881 54-1162807
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
500 Shentel Way
P.O. Box 459
Edinburg, VA 22824
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (540) 984-4141
Item 1.01 Entry into a Material Definitive Agreement.
On November 30, 2004, the Company amended the terms of its Master Loan Agreement
with CoBank, ACB to provide for a $15 million revolving reducing credit
facility. Under the terms of the amended credit facility, the Company can borrow
up to $15 million for use in connection with the acquisition of NTC
Communications LLC and other corporate purposes. The revolving credit facility
has a 12 year term. Borrowings under the facility can be at either an adjustable
or fixed rate. The loan is secured by a pledge of the stock of all of the
subsidiaries of the Company as well as all of the outstanding membership
interests in NTC.
Item 7.01 Regulation FD Disclosure
The following news release is being filed pursuant to Item 7.01 of Form 8-K
NEWS RELEASE
For further information, please contact Earle A. MacKenzie at 540-984-5192.
SHENANDOAH TELECOMMUNICATIONS COMPANY COMPLETES ACQUISITION
OF NTC COMMUNICATIONS AND EXPANDS DEBT FACILITY WITH CoBANK.
EDINBURG, VA, (December 2, 2004) - Shenandoah Telecommunications Company
(Shentel; NASDAQ: SHEN) announces the closing of the acquisition of NTC
Communications previously announced on August 27, 2004. In connection with the
acquisition, Shentel has obtained a $15 million revolving credit facility from
CoBank.
Shentel purchased the 83.88% of NTC that it did not currently own, for
approximately $10 million plus the assumption of $13.2 million of debt and
capital leases. The proceeds from the CoBank facility will be used to refinance
the NTC debt and capital leases.
About CoBank
As Rural America's Cooperative Bank, CoBank specializes in providing
financial solutions and leasing services to cooperatives, agribusinesses, Farm
Credit associations and rural communications, energy and water companies. The
bank also finances agricultural exports. CoBank has a national office in Denver,
additional offices across the U.S., and several
international representative offices. CoBank is part of the $121-billion U.S.
Farm Credit System. Additional information about the bank is available at
www.cobank.com.
About Shenandoah Telecommunications
Shenandoah Telecommunications Company is a holding company that provides a
broad range of telecommunications services through its operating subsidiaries.
The Company is traded on the NASDAQ National Market under the symbol "SHEN." The
Company's operating subsidiaries provide local and long distance telephone,
Internet and data services, cable television, wireless voice and data services,
alarm monitoring, and telecommunications equipment, along with many other
associated solutions in the Mid-Atlantic and Southeastern United States.
* * * * *
This release contains forward-looking statements that are subject to various
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
unforeseen factors. A discussion of factors that may cause actual results to
differ from management's projections, forecasts, estimates and expectations is
available in the Company filings with the SEC. Those factors may include changes
in general economic conditions, increases in costs and other competitive
factors.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
10.16 Second Amended and Restated Master Loan Agreement, dated as of
November 30, 2004, by and between CoBank, ACB and Shenandoah
Telecommunications Company
10.17 Third Supplement to the Master Loan Agreement dated as Of November
30, 2004, between CoBank, ACB and Shenandoah Telecommunications
Company
10.18 Second Amendment to the Term Supplement to the Master Loan Agreement
dated as Of November 30, 2004, between CoBank, ACB and Shenandoah
Telecommunications Company
10.19 Pledge Agreement dated November 30, 2004 between CoBank, ACB and
Shenandoah Telecommunications Company
10.20 Membership Interest Pledge Agreement dated November 30, 2004 between
CoBank, ACB and Shenandoah Telecommunications Company
10.21 Membership Interest Pledge Agreement dated November 30, 2004 between
CoBank, ACB and Shentel Converged Services, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Registrant)
December 3, 2004 /S/ EARLE A. MACKENZIE
------------------------
Earle A. MacKenzie
Chief Financial Officer
Exhibit 10.16
MLA No. ML0743
SECOND AMENDED AND RESTATED MASTER LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED MASTER LOAN AGREEMENT (this "Agreement"),
dated as of November 30, 2004, is made by and between COBANK, ACB ("CoBank") and
Shenandoah Telecommunications Company (the "Borrower").
WHEREAS, the Borrower and CoBank have previously entered into that certain
Master Loan Agreement, dated as of January 12, 2000, as amended and restated by
that certain Amended and Restated Master Loan Agreement, dated as of June 22,
2001 (the "Prior MLA").
WHEREAS, the Borrower and CoBank now wish to amend and restate the Prior
MLA on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, intending to be legally
bound hereby, and in consideration of CoBank making one or more loans to the
Borrower, CoBank and the Borrower hereby amend and restate the Prior MLA in its
entirety as follows:
SECTION 1. Supplements. In the event the Borrower desires to borrow from
CoBank and CoBank is willing to lend to the Borrower, or in the event CoBank and
the Borrower desire to consolidate any existing loans hereunder, the parties
will enter into a Supplement to this Agreement (each supplement, as it may be
amended, modified, supplemented, extended or restated from time to time, a
"Supplement" and, collectively, the "Supplements"). Each Supplement will set
forth CoBank's commitment to make a loan or loans (each, a "Loan" and,
collectively, the "Loans") to the Borrower, the amount of the Loan(s), the
purpose of the Loan(s), the interest rate or rate options applicable to the
Loan(s), the repayment terms of the Loan(s), and any other terms and conditions
applicable to the Loan(s). Each Loan will be governed by the terms and
conditions contained in this Agreement and in the Supplement relating to that
Loan.
SECTION 2. Availability. Advances under the Loans will be made available
on any day on which CoBank and the Federal Reserve Banks are open for business
(a "Business Day") upon the telephonic or written request of an authorized
employee of the Borrower. Requests for advances under the Loans must be received
no later than 12:00 noon Eastern time on the date the advance is desired or at
such earlier date and time as may be specified in the relevant Supplement.
Advances under the Loans will be made available by wire transfer of immediately
available funds. Wire transfers will be made to such account or accounts as may
be authorized by the Borrower. In taking actions upon telephonic requests,
CoBank shall be entitled to rely on (and shall incur no liability to the
Borrower in acting upon) any request made by a person identifying himself or
herself as one of the persons authorized by the Borrower to request advances
hereunder, so long as any funds advanced are wired to an account previously
designated by the Borrower.
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
SECTION 3. Notes and Payments. The Borrower's obligation to repay the
Loans made under each Supplement shall be evidenced by a promissory note (which
may be part of such Supplement) in form and content acceptable to CoBank (such
notes, as they may be amended, modified, supplemented, extended, restated or
replaced from time to time, collectively, the "Notes", and each a "Note"). The
Borrower shall make each payment which it is required to make under the terms of
this Agreement, each Supplement, the Notes and all security and other
instruments and documents relating hereto and thereto (such agreements,
Supplements, Notes, instruments and documents, as they may be amended from time
to time, collectively, at any time, the "Loan Documents") by wire transfer of
immediately available funds or by check. Wire transfers shall be made to ABA No.
307088754 for advice to and credit of CoBank (or to such other account as CoBank
may direct by notice). The Borrower shall give CoBank telephonic notice no later
than 12:00 noon Eastern time of its intent to pay by wire. Funds received by
wire before 3:00 p.m. Eastern time shall be credited on the day received and
funds received by wire after 3:00 p.m. Eastern time shall be credited on the
next Business Day. Checks shall be mailed to CoBank, at Department 167, Denver,
Colorado 80291-0167 (or to such other place as CoBank may direct by notice).
Credit for payment by check will not be given until the later of: (i) the day on
which CoBank receives immediately available funds; or (ii) the next Business Day
after receipt of the check. If any date on which a payment is due under any Loan
Document is not a Business Day, then such payment shall be made on the next
Business Day and such extension of time shall be included in the calculation of
interest due.
SECTION 4. Security. The Borrower's obligations under the Loan Documents
shall be secured by a statutory first lien on all equity interests in CoBank
which the Borrower may now own or hereafter acquire or be allocated. In
addition, the Borrower's obligations under this Agreement, any Supplement or
Note may be secured as provided in such Supplement or Note, and may be
guaranteed as provided in any future Supplement. The Borrower agrees to take
such steps (including the execution of such instruments and documents) as CoBank
may from time to time reasonably require to enable CoBank to obtain, perfect and
maintain its security interests in such property as is described in the
Supplements.
SECTION 5. Conditions Precedent.
(A) Conditions to Initial Supplement. CoBank's obligation to extend
credit under the initial Supplement is subject to the conditions precedent that
CoBank receive, in form and substance satisfactory to CoBank, each of the
following:
(1) This Agreement, Etc. A duly executed original of this
Agreement and all instruments and documents contemplated hereby.
(2) Delegation Form. A duly completed and executed original of
a CoBank Delegation and Wire Transfer Authorization form.
(B) Conditions to Each Supplement. CoBank's obligations, if any, to
extend credit under, each Supplement, including the initial Supplement, is
subject to the conditions precedent that CoBank receive, in form and content
satisfactory to CoBank, each of the following:
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(1) Supplement. A duly executed original of such Supplement,
the Note relating thereto, and all other instruments and documents
contemplated by such Supplement.
(2) Evidence of Authority. Such certified board resolutions,
evidence of incumbency, and other evidence that CoBank may require that
the Supplement, the Note relating thereto and all other instruments and
documents executed in connection therewith, and, in the case of the
initial Supplement, this Agreement and all instruments and documents
executed in connection herewith, have been duly authorized and executed.
(3) Consents and Approvals. Such evidence as CoBank may
require that all required regulatory and other consents and approvals have
been obtained and are in full force and effect.
(4) Fees and Other Charges. All fees and other charges
provided for herein or in the Supplement.
(5) Insurance. Such evidence as CoBank may require that the
Borrower is in compliance with Subsection 7(E) hereof.
(6) Evidence of Perfection, Etc. Such evidence as CoBank may
require that CoBank has a duly perfected first priority security interest
in all collateral contemplated by the Supplement.
(7) Opinions of Counsel. Opinions of counsel to the Borrower
and any other entity party to the Loan Documents relating to such
Supplement acceptable to CoBank.
(C) Conditions to Each Advance. CoBank's obligation under each
Supplement to make any Loan or advance to the Borrower thereunder is subject to
the further conditions set forth in such Supplement and that no Event of Default
(as defined in Section 9 hereof) or event which with the giving of notice and/or
the passage of time would become an Event of Default hereunder (a "Potential
Default"), shall have occurred and be continuing.
SECTION 6. Representations and Warranties. The execution by the Borrower
of each Supplement and each request for an advance thereunder shall constitute a
representation and warranty to CoBank that:
(A) Organization; Powers; Etc. The Borrower and each of its
subsidiaries (collectively, the "Subsidiaries") (i) is duly organized, validly
existing, and in good standing under the laws of its state of incorporation or
formation, as the case may be; (ii) is duly qualified to do business and is in
good standing in each jurisdiction in which the character of its properties or
the nature of its business requires such qualification; (iii) has all requisite
legal and corporate power to own and operate its assets and to carry on its
business and to enter into and perform its obligations under the Loan Documents
to which it is a party; and (iv) has duly and lawfully
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obtained and maintained all franchises, licenses, certificates, permits,
authorizations, approvals, and the like which are necessary in the conduct of
its business.
(B) Due Authorization; No Violations; Etc. The execution and
delivery by the Borrower of, and the performance by the Borrower of its
obligations under, the Loan Documents to which it is a party have been duly
authorized by all requisite corporate action and do not and will not (i) violate
its articles of incorporation, its bylaws, any provision of any law, rule or
regulation, any judgment, order or ruling of any court or Governmental
Authority, any agreement, indenture, mortgage, or other instrument to which the
Borrower is a party or by which the Borrower or any of its property is bound, or
(ii) be in conflict with, result in a breach of, or constitute with the giving
of notice or lapse of time, or both, a default under any such agreement,
indenture, mortgage, or other instrument. All actions, if any, on the part of
the shareholders of the Borrower necessary in connection with the execution and
delivery by the Borrower of, and the performance by the Borrower of its
obligations under, the Loan Documents to which it is a party have been taken and
remain in full force and effect.
(C) Binding Agreement. Each of the Loan Documents to which the
Borrower is a party is, or when executed and delivered will be, the legal,
valid, and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms, subject only to limitations on enforceability
imposed by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors' rights generally, and (ii) general equitable
principles.
(D) Financial Statements, Budgets, Projections, Etc. All financial
statements of the Borrower and any of the Subsidiaries submitted to CoBank in
connection with the Loans present fairly in all material respects the financial
condition of such entity to which such statements relate and the results of such
entity's operations for the periods covered thereby, and are prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied (except, in the case of unaudited financial statements, for the omission
of footnotes, other schedules and the effect of normal year-end audit
adjustments). All budgets, projections, feasibility studies, and other
documentation submitted to CoBank in connection with the Loans, by or on behalf
of the Borrower or any of the Subsidiaries were based upon assumptions that were
believed to be reasonable at the time submitted, and as of the date of such
Supplement or request for advance, no fact has come to the attention of the
Borrower, and no event or transaction has occurred, which would cause any
assumption made therein not to be reasonable.
(E) Consents and Approvals. No consent, permission, authorization,
order or license of any Governmental Authority is necessary in connection with
the execution, delivery, performance or enforcement of the Loan Documents to
which the Borrower is a party or the creation and perfection of the liens and
security interests granted thereby, except as such have been obtained and are in
full force and effect.
(F) Compliance with Laws. The Borrower and each of the Subsidiaries
is in compliance in all material respects with all federal, state and local
laws, rules, regulations, ordinances, codes and orders (collectively, "Laws"),
the failure to comply with which could reasonably be expected to have a Material
Adverse Effect. The term "Material Adverse
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Effect" shall mean a material adverse effect on the condition, financial or
otherwise, operations, properties or business of the Borrower and the
Subsidiaries, taken as a whole, or on the ability of the Borrower to perform its
obligations under the Loan Documents.
(G) Environmental Compliance. Without limiting the provisions of
Subsection 6(F), all property owned or leased by the Borrower or any of the
Subsidiaries and all operations conducted by them are in compliance in all
material respects with all Laws relating to environmental protection, the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect.
(H) Litigation. There are no pending legal, arbitration, or
governmental actions or proceedings to which the Borrower or any of the
Subsidiaries is a party or to which any of their respective property is subject
which could reasonably be expected to have a Material Adverse Effect, and to the
best of the Borrower's knowledge, no such actions or proceedings are threatened
or contemplated.
(I) Principal Place of Business; Records. The principal place of
business and chief executive office of the Borrower and the place where the
records required by Subsection 7(G) are kept is at the address of the Borrower
shown in Section 14.
(J) Employee Benefit Plans. The Borrower and each of the
Subsidiaries is in compliance in all material respects with the applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations and published interpretations thereunder, the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect.
(K) Taxes. The Borrower and each of the Subsidiaries has filed or
caused to be filed all federal, state and local tax returns that are required to
be filed, and has paid all taxes as shown on such returns or on any assessment
received by them to the extent such taxes have become due, except where the
payment of such tax or assessment is being contested by the Borrower or such
Pledged Subsidiary in good faith and by appropriate proceedings and then only if
and to the extent reserves required by GAAP have been set aside on the
Borrower's or such Pledged Subsidiary's books therefor.
(L) Investment Company Act; Public Utility Holding Company Act. The
Borrower is not an "investment company" as that term is defined in, or otherwise
subject to regulation under, the Investment Company Act of 1940, as amended. The
Borrower is not a "holding company" as that term is defined in, or otherwise
subject to regulation under, the Public Utility Holding Company Act of 1935, as
amended.
(M) Use of Proceeds. The funds to be borrowed under this Agreement
and each Supplement are being borrowed for use only as contemplated thereby. No
part of such funds are being borrowed to purchase any "margin securities" or
otherwise in violation of the regulations of the Federal Reserve System.
(N) Subsidiaries. The Borrower has no direct subsidiaries other than
as set forth on Schedule 6(N) to this Agreement. The Borrower is the registered
(if applicable) and
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beneficial owner, directly or indirectly, of the specified percentage of the
shares of issued and outstanding capital stock or the membership interest, as
applicable, of each of the Subsidiaries as set forth on Schedule 6(N), which
stock or membership interest is owned free and clear of all liens, warrants,
options, rights to purchase, rights of first refusal and other interests of any
person (except for liens granted to CoBank under the Loan Documents) and which
has been duly authorized and validly issued and is fully paid and
non-assessable.
(O) Licenses; Permits; Etc. The Borrower and each of the
Subsidiaries is the valid holder of all franchises, licenses, certificates,
permits, authorizations, approvals and the like which are material to the
conduct of its business and which may be required by law, including, without
limitation, all licenses and permits of the Federal Communications Commission
(the "FCC"), the Virginia State Corporation Commission (the "PUC"), the public
utility commissions of any other states in which the Borrower operates and all
required cable television franchises and all such franchises, licenses,
certificates, permits, authorizations, approvals, and the like are in full force
and effect on the date hereof.
(P) Business Neither the Borrower nor any of the Subsidiaries is
engaged in any business activity or operation other than the provision of
wireline telephone, cellular telephone, cable television and personal
communications services, other telecommunications services and other services
related to such businesses.
SECTION 7. Affirmative Covenants. Unless otherwise agreed to in writing by
CoBank, which consent shall not be unreasonably withheld, so long as this
Agreement shall remain in effect or the obligations hereunder shall be unpaid or
otherwise unsatisfied, the Borrower will, and (except for Subsections 7(I)(1)
and (2), 7(J), 7(K), 7(L) and 7(M)) will cause each of the Subsidiaries to
(provided that following its acquisition, any Pledged Subsidiary, including,
without limitation, NTC Communications, LLC, shall have 90 days to be in
compliance with the affirmative covenants applicable to it):
(A) Existence. Preserve and keep in full force and effect its
corporate or limited liability company existence and good standing in the
jurisdiction of its incorporation or formation, and its qualification to
transact business and its good standing in all places in which the character of
its properties or the nature of its business requires such qualification.
(B) Compliance with Laws and Agreements. Comply in all material
respects with all Laws and agreements, indentures, mortgages, and other
instruments to which it is a party or by which it or any of its property is
bound, the failure to comply with which could reasonably be expected to have a
Material Adverse Effect.
(C) Compliance with Environmental Laws. Without limiting the
provisions of Subsection 7(B), comply in all material respects with, and cause
all persons occupying or present on any properties owned or leased by it to so
comply with, all Laws relating to environmental protection, the failure to
comply with which could reasonably be expected to have a Material Adverse
Effect.
(D) Licenses; Permits; Etc. Duly and lawfully obtain and maintain in
full force and effect all franchises, licenses, certificates, permits,
authorizations, approvals, and the
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like which are material to the conduct of its business or which may be required
by applicable Laws, including without limitation, all FCC licenses and permits,
all licenses and permits of the PUC, and all required cable television
franchises, which the failure to so obtain or maintain could reasonably be
expected to have a Material Adverse Effect.
(E) Insurance. Maintain insurance with insurance companies or
associations acceptable to CoBank in such amounts and covering such risks as are
usually carried by companies engaged in the same or similar business and
similarly situated, and make such increases in the type or amount of coverage as
CoBank may reasonably request.
(F) Property Maintenance. Maintain and preserve at all times its
property and each and every part and parcel thereof necessary to the proper
functioning of its business in good repair, working order, and condition,
ordinary wear and tear excepted, and in compliance in all material respects with
all applicable Laws.
(G) Books and Records. Keep adequate records and books of account in
accordance with GAAP consistently applied and any system of accounts to which it
is subject.
(H) Inspection. Permit CoBank or its agents, at CoBank's expense,
upon reasonable notice and during normal business hours or at such other times
as the parties may agree, to (i) examine its properties, books, and records,
(ii) discuss its affairs, finances, operations, and accounts with its officers,
directors, and independent certified public accountants and (iii) with the prior
consent of, and in the presence of, an officer of the Borrower in each instance,
which consent shall not be unreasonably withheld, discuss its affairs, finances,
operations, and accounts with one or more of its employees.
(I) Reports and Notices. Furnish, or cause to be furnished, to
CoBank:
(1) Annual Financial Statements. As soon as available, but in
no event later than 120 days after the end of each fiscal year of the
Borrower occurring during the term hereof, annual financial statements of
the Borrower prepared on a Consolidated Basis (as hereafter defined) in
accordance with GAAP consistently applied and in a format that
demonstrates any accounting or formatting change that may be required by
the various jurisdictions in which the business of the Borrower is
conducted (to the extent not inconsistent with GAAP). Such financial
statements shall: (i) be audited by independent certified public
accountants selected by the Borrower and reasonably acceptable to CoBank;
(ii) be accompanied by a report of such accountants containing an
unqualified opinion or an opinion otherwise acceptable to CoBank; (iii) be
prepared in reasonable detail, and set forth in comparative form
corresponding figures for the preceding fiscal year; and (iv) include a
balance sheet, a statement of income, a statement of retained earnings, a
statement of cash flows, and all notes and schedules relating thereto. In
addition, each of such audited consolidated annual financial statements
shall be accompanied by separate unaudited annual financial statements for
each of the subsidiaries of the Borrower whose accounts are, in accordance
with GAAP, consolidated with the Borrower, consisting of a balance sheet
and a statement of income.
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(2) Quarterly Financial Statements. As soon as available but
in no event later than 60 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower occurring during the
term hereof, unaudited quarterly financial statements of the Borrower, in
each case, prepared on a Consolidated Basis in accordance with GAAP
consistently applied (except for the omission of footnotes and for the
effect of normal year-end audit adjustments) and in a format that
demonstrates any accounting or formatting change that may be required by
various jurisdictions in which the business of the Borrower is conducted
(to the extent not inconsistent with GAAP). Each of such financial
statements shall (i) be prepared in reasonable detail and set forth in
comparative form corresponding figures for the corresponding period of the
preceding fiscal year, and (ii) include a balance sheet, a statement of
income for such quarter and for the period year-to-date, a statement of
cash flows and such other quarterly statements as CoBank may specifically
request, which quarterly statements shall include any and all supplements
thereto; provided, however, that the Borrower shall not be obligated to
provide any quarterly consolidating financial statements if such
statements have not been prepared for any other purpose.
(3) Notice of Default. Promptly after becoming aware thereof,
notice of (i) the occurrence of any Potential Default or Event of Default
under any of the Loan Documents; provided, however, that the failure to
give such notice shall not affect the right and power of CoBank to
exercise any and all of the remedies specified herein.
(4) Notice of Non-Environmental Litigation. Promptly after the
commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department,
commission, board, bureau, agency, or instrumentality affecting it which
could reasonably be expected to have a Material Adverse Effect.
(5) Notice of Environmental Litigation. Without limiting the
provisions of Subsection 7(I)(4), promptly after receipt or becoming aware
thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or other communications (i) alleging a condition that may
require it to undertake or to contribute to a cleanup or other response
under Laws relating to environmental protection, or which seek penalties,
damages, injunctive relief, or criminal sanctions related to alleged
violations of such Laws, or which claim personal injury or property damage
to any person as a result of environmental factors or conditions and (ii)
which could reasonably be expected to have a Material Adverse Effect.
(6) Regulatory and Other Notices. Promptly after filing,
receipt or becoming aware thereof, copies of any filings or communications
sent to and notices or other communications received by it from any
Governmental Authority, including, without limitation, the Securities and
Exchange Commission, the FCC, the PUC, any cable television franchisor or
any other state utility commission relating to any material noncompliance
by it with any Laws or with respect to any matter or proceeding the effect
of which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect.
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(7) Material Adverse Change. Prompt notice of any matter which
has had or could reasonably be expected to have a Material Adverse Effect.
(8) Compliance Certificates. Concurrently with each statement
required to be furnished pursuant to Subsection 7(I)(1) or (2), a
compliance certificate in the form attached hereto as Exhibit A executed
by the President or chief financial officer of the Borrower.
(9) ERISA Reportable Events. Within 30 days after it becomes
aware of the occurrence of any Reportable Event (as defined in Section
4043 of ERISA) applicable to it, a statement describing such Reportable
Event and the actions it proposes to take in response to such Reportable
Event.
(10) Other Information. Such other information regarding the
condition, financial or otherwise, or operations of the Borrower and the
Subsidiaries as CoBank may, from time to time, reasonably request.
(J) Total Leverage Ratio. Achieve as of the last day of each fiscal
quarter of the Borrower (each a "Quarterly Date"), a Total Leverage Ratio (as
hereinafter defined), determined in accordance with GAAP consistently applied of
the Borrower and all subsidiaries whose accounts are, at the time of
determination, in accordance with GAAP, consolidated (on a "Consolidated Basis")
with the Borrower, not exceeding 2.50:1.00. The term "Total Leverage Ratio"
shall mean the ratio of Indebtedness to Operating Cash Flow (as such terms are
hereinafter defined). The term "Indebtedness" shall mean (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property or services other than accounts payable arising in connection with the
purchase of goods or services on terms customary in the trade, (iii)
obligations, whether or not assumed, secured by liens or payable out of the
proceeds or production from property now or hereafter owned or acquired, (iv)
obligations which are evidenced by notes, acceptances or other instruments, (v)
leases of real or personal property which are required to be capitalized under
GAAP or which are treated as operating leases under regulations applicable to
them but which otherwise would be required to be capitalized under GAAP (each a
"Capital Lease"), (vi) fixed rate hedging obligations that are due (after giving
effect to any period of grace or notice requirement applicable thereto) and
remain unpaid, and (vii) fixed payment obligations under guarantees that are due
and remain unpaid. For purposes of this Agreement, the term "Operating Cash
Flow" (i) shall mean the sum of (a) net income or deficit, as the case may be,
excluding extraordinary gains and the write-up of any asset, (b) total interest
expense (including non-cash interest), (c) depreciation and amortization expense
and other similar non-cash expense and (d) federal, state and/or local income
taxes and (ii) shall be measured for the then most recently completed four
fiscal quarters, adjusted to give effect to any acquisition, sale or other
disposition of any operation or business (or any portion thereof) during the
period of calculation as if such acquisition, sale or other disposition occurred
on the first day of such period of calculation.
(K) Debt Service Coverage Ratio. Achieve as of each Quarterly Date,
a Debt Service Coverage Ratio (as hereinafter defined), determined in accordance
with GAAP consistently applied and calculated on a Consolidated Basis, greater
than or equal to 2.00:1.00. The term "Debt Service Coverage Ratio" shall mean
the ratio of (i) Operating Cash Flow minus
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cash taxes to (ii) the aggregate of principal and interest payments due on
Indebtedness during the applicable period. Debt Service Coverage Ratio shall be
measured for the then most recently completed four fiscal quarters, adjusted to
give effect to any acquisition, sale or other disposition of any operation or
business (or any portion thereof) during the period of calculation as if such
acquisition, sale or other disposition occurred on the first day of such period
of calculation.
(L) Equity to Total Assets Ratio. Achieve as of each Quarterly Date,
an Equity to Total Assets Ratio (as hereinafter defined), determined in
accordance with GAAP consistently applied and calculated on a Consolidated
Basis, greater than or equal to 35.0%. The term "Equity to Total Assets Ratio"
shall mean the percentage derived by dividing (i) the amount derived by
subtracting total liabilities from total assets by (ii) total assets, each as of
the last day of the applicable period.
(M) Capitalization. The Borrower agrees to purchase such equity in
CoBank as CoBank may from time to time require in accordance with its bylaws and
capital plan; provided, however, that CoBank may not require the Borrower to
purchase equity in CoBank in an amount greater than 13% of the portion of
CoBank's five-year average risk-adjusted asset base attributable to loans made
by CoBank to the Borrower. In connection with the foregoing, the Borrower hereby
acknowledges receipt, prior to the execution of this Agreement, of CoBank's
bylaws, a written description of the terms and conditions under which the equity
is issued, CoBank's Loan-Based Capital Plan, CoBank's most recent annual report,
and if more recent than CoBank's latest annual report, its latest quarterly
report. The Borrower hereby consents and agrees that the amount of any
distributions with respect to its patronage with CoBank that are made in
qualified written notices of allocation (as defined in 26 U.S.C. ss. 1388) and
that are received by the Borrower from CoBank, will be taken into account by the
Borrower at the stated dollar amounts whether the distribution is evidenced by a
Participation Certificate or other form of written notice that such distribution
has been made and recorded in the name of the Borrower on the records of CoBank.
All such investments and all other equities in CoBank which the Borrower may now
own or hereafter acquire or be allocated shall be subject to a statutory first
lien in favor of CoBank.
SECTION 8. Negative Covenants.
(A) Borrower. Unless otherwise consented to in writing by CoBank,
which consent shall not be unreasonably withheld, the Borrower covenants and
agrees with CoBank that, so long as this Agreement shall remain in effect or the
obligations hereunder shall be unpaid or otherwise unsatisfied, the Borrower
will not:
(1) Borrowings. Create, incur, assume, or allow to exist,
directly or indirectly, any Indebtedness except for (i) Indebtedness to
CoBank, (ii) Indebtedness under purchase money security agreements and
Capital Leases ("Purchase Money Indebtedness") not to exceed $5,000,000 in
the aggregate for the Borrower and its subsidiaries at any one time, (iii)
obligations to any Pledged Subsidiary, and (iv) other unsecured
Indebtedness (including, for purposes of this clause (iv), Indebtedness to
SunTrust Bank pursuant to that certain Commercial Note, dated as of May 8,
2001 (the "SunTrust Note"), from the Borrower to SunTrust Bank) not to
exceed $5,000,000 in the aggregate for the Borrower and its subsidiaries
at any one time.
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(2) Liens. Create, incur, assume, or allow to exist any
mortgage, deed of trust, deed to secure debt, pledge, lien (including the
lien of an attachment, judgment, or execution), security interest, or
other encumbrance of any kind upon any of its property, real or personal.
The foregoing restrictions shall not apply to (i) liens in favor of
CoBank; (ii) liens for taxes, assessments, or governmental charges that
are not past due, unless the same are being contested in good faith and by
appropriate proceedings and then only if and to the extent reserves
required by GAAP have been set aside therefor; (iii) liens, pledges, and
deposits under workers' compensation, unemployment insurance, social
security and similar laws; (iv) liens, deposits, and pledges to secure the
performance of bids, tenders, contracts (other than contracts for the
payment of money), and like obligations arising in the ordinary course of
its business as conducted on the date hereof; (v) liens imposed by law in
favor of mechanics, materialmen, warehousemen, lessors and like persons
that secure obligations that are not past due, unless the same are being
contested in good faith and by appropriate proceedings and then only if
and to the extent reserves required by GAAP have been set aside therefor;
(vi) liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property
of the Borrower that, in the sole judgment of CoBank, do not materially
detract from the value of such real property or impair the use thereof in
the Borrower's business; (vii) purchase money security interests and
equipment leases securing Purchase Money Indebtedness permitted under
Subsection 8(A)(1)(ii), provided that such security interests and leases
do not encumber any property other than the items purchased with the
proceeds thereof or leased thereby and any proceeds thereof; (viii) the
"Collateral" as defined in the SunTrust Note, without giving effect to any
amendments of such SunTrust Note after the date hereof; and (ix) liens on
capital stock of any subsidiary of the Borrower that is not a Pledged
Subsidiary, provided that CoBank shall have consented to the related
borrowing as required under Subsection 8(A)(1).
(3) Fundamental Changes. (i) merge or consolidate with any
other entity, acquire all or substantially all of the assets of any person
or entity, provided that the Borrower and the Pledged Subsidiaries may
without the consent of CoBank acquire, in the aggregate, all or
substantially all of the assets of any person or person or entity or
entities in an amount up to $20,000,000 over the term of the Loans, so
long as after giving effect to such asset acquisitions, the Borrower in
each case is in compliance on a pro forma basis with the covenants set
forth in Subsections 7(J) through 7(L) hereof, (ii) form or create any
subsidiary or affiliate other than in compliance with the provisions of
Section 2 of the Second Amended and Restated Pledge Agreement, dated as of
even date herewith), by and between CoBank and the Borrower (the "Pledge
Agreement"), or (iii) commence operations under any other name,
organization, or entity, including any joint venture.
(4) Transfer of Assets. Sell, transfer, lease, enter into any
contract for the sale, transfer or lease of, or otherwise dispose of, any
of its operating assets, except in the ordinary course of its business;
provided, however, that the Borrower may sell, transfer, lease or other
disposition of assets which in the aggregate for the Borrower and its
subsidiaries do not exceed $5,000,000 in any fiscal year or exceed
$25,000,000 over the term of the Loans so long as no Potential Default or
Event of Default exists
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before such disposition and no violation of Subsections 7(J) though 7(L)
hereof will result after giving affect to such disposition.
(5) Loans and Investments. After the date hereof, make any
loan or advance to, invest in, purchase or make any commitment to purchase
any commercial paper, stock, bonds, notes, or other securities of any
person or entity (each, whether made directly or indirectly, an
"Investment") other than a Pledged Subsidiary other than:
(a) commercial paper maturing not in excess of one
year from the date of acquisition and rated "P1" by Moody's
Investors Service, Inc., or "A1" by Standard & Poor's Corporation on
the date of acquisition;
(b) certificates of deposit in North American
commercial banks rated "C" or better by Keefe, Bruyette & Woods,
Inc., or "3" or better by Cates Consulting Analysts, maturing not in
excess of one year from the date of acquisition;
(c) securities or deposits issued, guaranteed, or
fully insured as to payment by the United States government or any
agency thereof, and Class C stock or stock or other securities of,
or investments in CoBank or CoBank investment services or programs;
(d) repurchase agreements of any bank or trust
company incorporated under the laws of the United States of America
or any state thereof and fully secured by a pledge of obligations
issued or fully and unconditionally guaranteed by the United States
government;
(e) money market funds maintained by nationally
recognized investment firms or financial institutions, which funds
are from time to time invested only in securities of the type
described in (a) through (d) above and other securities having a
rating of "A" or better by a nationally recognized rating agency;
provided that the aggregate amount invested in such money market
funds shall not at any time exceed $3,000,000 for any one such fund
and $5,000,000 for any one such investment firm or financial
institution; and
(f) commercial paper, stocks, bonds, notes, other
securities and other ownership interests that are excluded from the
scope of (a) through (e) and are issued by corporations or other
entities incorporated or organized under the laws of the United
States of America or any state thereof (collectively "Other
Investments"); provided that:
(i) the aggregate amount (calculated as the lower of cost or
market value) of all Other Investments made by the
Borrower and the Subsidiaries at any one time shall not
in any event exceed 15% of the Borrower's total assets
calculated on a Consolidated Basis, and
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(ii) the Borrower will provide CoBank with a schedule of all
Other Investments (including valuations) at the end of
each fiscal quarter and more frequently upon CoBank's
request.
The Borrower acknowledges that CoBank is not in any way acting as an advisor to
it with respect to its or the Subsidiaries investments or otherwise and shall
have no responsibility to it in connection with CoBank's rights under this
Subsection or Subsection 8(B)(5), whether or not CoBank exercises any right to
review investments or makes any recommendation concerning the advisability of
any Other Investment, and the Borrower agrees that the Borrower and the
Subsidiaries will be solely responsible for all decisions made by the Borrower
or any of the Subsidiaries with respect to their respective investments.
(6) Change in Business. Engage in any business activity or
operation different from or unrelated to the business activities and
operations described in Subsection 6(P).
(7) Guarantees. Guarantee, assume, or otherwise become
obligated or liable with respect to the indebtedness or other obligations
of any person or entity, other than (i) guaranties made in favor of
CoBank, (ii) the endorsement of checks, and (iii) guaranties made pursuant
to that certain Performance Guaranty, dated as of November 5, 1999, made
by the Borrower for the benefit of Sprint PCS with respect to obligations
of Shenandoah Personal Communications Company in connection with the
construction and lease of a PCS system in FCC designated basic trading
areas 179, 479, 183, 12, 181 and 483.
(8) Distributions. Make, declare or pay, directly or
indirectly, any dividend or other distribution of assets to shareholders
of the Borrower, or retire, redeem, purchase or otherwise acquire for
value any capital stock of the Borrower; provided, that the Borrower may
declare or pay a dividend or other distribution of assets, or retire,
redeem, purchase or otherwise acquire capital stock of the Borrower in any
fiscal year in an aggregate amount equal to the greater of (i) $10,000,000
or (ii) 100% of the immediately preceding fiscal year's aggregate
after-tax consolidated net income of the Borrower if, and only if, no
Potential Default or Event of Default then exists and no violation of
Sections 7(J) through 7(L) hereof will result after giving effect to such
dividend, distribution, retirement, redemption, purchase or other
acquisition.
(9) Salaries; Wages; Compensation. Pay any wages, salaries or
other compensation to any officer, director, stockholder, or partner (or
relative of any thereof) of the Borrower or any of the Subsidiaries unless
such compensation shall be (i) reasonable and comparable with compensation
paid by companies of like nature, similarly situated, and (ii) payment for
services actually rendered.
(B) The Subsidiaries. Unless otherwise consented to in writing by
CoBank, which consent shall not be unreasonably withheld, the Borrower covenants
and agrees with CoBank that, so long as this Agreement shall remain in effect or
the obligations hereunder shall be unpaid or otherwise unsatisfied, none of the
Subsidiaries will (provided that following its
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MLA No. ML0743
acquisition, any Pledged Subsidiary, including, without limitation, NTC
Communications, LLC, shall have 90 days to be in compliance with these negative
covenants):
(1) Borrowings. Create, incur, assume, or allow to exist,
directly or indirectly, any Indebtedness except for (i) Indebtedness to
CoBank, (ii) Purchase Money Indebtedness, the aggregate amount of which
does not exceed $5,000,000 for the Borrower and its subsidiaries at any
one time, (iii) Indebtedness to the Borrower or any other Pledged
Subsidiary, and (iv) Indebtedness of Shenandoah Telephone Company to the
Rural Utilities Service (the "RUS") and the Rural Telephone Bank (the
"RTB") outstanding on the date hereof or incurred pursuant to any RUS loan
commitment in effect on the date hereof.
(2) Liens. Create, incur, assume, or allow to exist any
mortgage, deed of trust, deed to secure debt, pledge, lien (including the
lien of an attachment, judgment, or execution), security interest, or
other encumbrance of any kind upon any of its property, real or personal.
The foregoing restrictions shall not apply to (i) liens in favor of
CoBank; (ii) liens for taxes, assessments, or governmental charges that
are not past due, unless the same are being contested in good faith and by
appropriate proceedings and then only if and to the extent reserves
required by GAAP have been set aside therefor; (iii) liens, pledges, and
deposits under workers' compensation, unemployment insurance, and social
security laws; (iv) liens, deposits, and pledges to secure the performance
of bids, tenders, contracts (other than contracts for the payment of
money), and like obligations arising in the ordinary course of its
business as conducted on the date hereof; (v) liens imposed by law in
favor of mechanics, materialmen, warehousemen, lessors and like persons
that secure obligations that are not past due, unless the same are being
contested in good faith and by appropriate proceedings and then only if
and to the extent reserves required by GAAP have been set aside therefor;
(vi) liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property
of a Pledged Subsidiary that, in the sole judgment of CoBank, do not
materially detract from the value of such real property or impair the use
thereof in the business of such Pledged Subsidiary; (vii) purchase money
security interests and equipment leases securing Purchase Money
Indebtedness permitted under Subsection 8(B)(1)(ii), provided that such
security interests and leases do not encumber any property other than the
items purchased or leased thereby and any proceeds thereof; and (viii)
liens granted by Shenandoah Telephone Company from time to time in favor
of the RUS and the RTB granted pursuant to that certain Restated Mortgage,
Security Agreement and Financing Statement, dated as of February 1, 1991,
by and among Shenandoah Telephone Company, the United States of America,
acting through the Administrator of the RUS (as successor to the Rural
Electrification Administration) and the RTB, or any amendment or
supplement thereto, but only to the extent such liens secure indebtedness
of Shenandoah Telephone Company to the RUS and the RTB outstanding on the
date hereof or incurred pursuant to any RUS loan commitment in effect on
the date hereof.
(3) Fundamental Changes. (i) Merge or consolidate with any
other entity, or acquire all or substantially all of the assets of any
person or entity, provided that
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the Borrower and the Pledged Subsidiaries may without the consent of
CoBank acquire, in the aggregate, all or substantially all of the assets
of any person or person or entity or entities in an amount up to
$20,000,000 over the term of the Loans, so long as after giving effect to
such asset acquisitions, the Borrower in each case is in compliance on a
pro forma basis with the covenants set forth in Subsections 7(J) through
7(L) hereof, (ii) form or create any subsidiary other than in compliance
with the provisions of Section 2 of the Pledge Agreement, or (iii)
commence operations under any other name, organization, or entity,
including any joint venture, or issue any additional capital stock other
than to the Borrower or any Pledged Subsidiary.
(4) Transfer of Assets. Sell, transfer, lease, enter into any
contract for the sale, transfer or lease of, or otherwise dispose of, any
of its operating assets, except in the ordinary course of its business;
provided, however, that a Pledged Subsidiary may sell, transfer, lease or
other disposition of assets which in the aggregate for the Borrower and
its subsidiaries do not exceed $5,000,000 in any fiscal year or exceed
$25,000,000 over the term of the Loans so long as no Potential Default or
Event of Default exists before such disposition and no violation of
Subsections 7(J) though 7(L) hereof will result after giving affect to
such disposition.
(5) Loans and Investments. After the date hereof, make any
Investment in any person or entity other than the Borrower or any other
Pledged Subsidiary, other than
(a) commercial paper maturing not in excess of one year
from the date of acquisition and rated "P1" by Moody's Investors
Service, Inc., or "A1" by Standard & Poor's Corporation on the date
of acquisition;
(b) certificates of deposit in North American commercial
banks rated "C" or better by Keefe, Bruyette & Woods, Inc., or "3"
or better by Cates Consulting Analysts, maturing not in excess of
one year from the date of acquisition;
(c) securities or deposits issued, guaranteed, or fully
insured as to payment by the United States government or any agency
thereof, and Class C Stock or other securities of CoBank;
(d) repurchase agreements of any bank or trust company
incorporated under the laws of the United States of America or any
state thereof and fully secured by a pledge of obligations issued or
fully and unconditionally guaranteed by the United States
government;
(e) money market funds maintained by nationally
recognized investment firms or financial institutions, which funds
are from time to time invested only in securities of the type
described in Subsections (a) through (d) above, and other securities
having a rating of "A" or better by a nationally recognized rating
agency; provided that the aggregate amount invested in such
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Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
money market funds shall not at any time exceed $3,000,000 for any
one such fund and $5,000,000 for any one such investment firm or
financial institution; and
(f) Other Investments, provided that:
(i) the aggregate amount (calculated as the lower
of cost or market value) of all Other Investments made
by the Borrower and the Subsidiaries shall not in any
event exceed 15% of the Borrower's total assets
calculated on a Consolidated Basis, and
(ii) the Borrower will provide CoBank with a
schedule of all Other Investments (including valuations)
at the end of each fiscal quarter and more frequently
upon CoBank's request.
(6) Change in Business. Engage in any business activity or
operation different from or unrelated to its current business activities
or operations.
(7) Salaries; Wages; Compensation. Pay any wages, salaries or
other compensation to any officer, director, stockholder, or partner (or
relative of any thereof) of the Borrower or any of the Subsidiaries unless
such compensation shall be (i) reasonable and comparable with compensation
paid by companies of like nature, similarly situated, and (ii) payment for
services actually rendered.
SECTION 9. Events of Default. Each of the following shall constitute an
"Event of Default" under this Agreement:
(A) Payment Default. The failure by the Borrower to make any payment
or investment required to be made hereunder, under the Note, or under any other
Loan Document to which it is a party when due (other than any such required
investment the payment of which is entirely within the control of CoBank).
(B) Representations and Warranties. Any representation or warranty
made by the Borrower herein or in any other Loan Document, or any factual
statement made in any certificate delivered in connection with the Loan, shall
prove to have been false or misleading in any material respect on or as of the
date made and the Borrower fails to commence and diligently pursue action to
remedy such inaccuracy within 10 days after written notice thereof shall have
been delivered by CoBank to the Borrower or such inaccuracy is not remedied
within 60 days after receipt by the Borrower of such notice or CoBank shall
determine that the Borrower intentionally made such false or misleading
representation, warranty or factual statement with knowledge of its false or
misleading nature.
(C) Covenants and Agreements. The failure by the Borrower or any
Pledged Subsidiary to perform or comply with any other covenant or agreement
contained herein (other than covenants in Subsections 7(A), 7(I)(3) through
7(I)(7) and 7(I)(9) hereof) or any other Loan Document, and the Borrower fails
to commence and diligently pursue action to remedy such default within 10 days
after written notice thereof shall have been delivered by CoBank to the
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Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
Borrower or such default is not remedied within 60 days after receipt by the
Borrower of such notice.
(D) Other Covenants. The failure by the Borrower to perform or
comply with any covenant excluded under Subsection (C).
(E) Cross-Default. The occurrence, after giving effect to any
applicable notice and grace period, of any breach, default, or event of default
under any agreement (other than the Loan Documents) between either the Borrower
or any Pledged Subsidiary and CoBank, including, without limitation, any
guaranty, loan agreement, security agreement, mortgage, deed to secure debt, or
deed of trust.
(F) Other Indebtedness. The occurrence of any breach, default, event
of default, or event which with the giving of notice or lapse of time, or both,
could become a default or event of default under any agreement, indenture,
mortgage, or other instrument by which the Borrower, or any of the Subsidiaries
or any of their respective property is bound or affected (other than the Loan
Documents) if the effect of such breach, default, event of default, or event is
to accelerate, or to permit the acceleration of, the maturity of any
indebtedness under such agreement, indenture, mortgage, or other instrument and
the aggregate amount of indebtedness the maturity of which has been accelerated
or is then subject to acceleration by reason of any one or more such breach,
default, event of default or other event under any such agreement, indenture,
mortgage or instrument equals or exceeds at any one time $500,000 in the
aggregate.
(G) Judgments. Any judgment, decree or order for the payment of
money shall be rendered against the Borrower or judgments, decrees, or orders
for the payment of money in an aggregate amount for the Borrower and the
Subsidiaries in excess of $500,000 at any one time shall be rendered against the
Borrower or any of the Subsidiaries and either (1) enforcement proceedings shall
have been commenced; or (2) such judgments, decrees, and orders shall continue
unsatisfied and in effect for a period of 30 consecutive days without being
vacated, discharged, satisfied, or stayed pending appeal.
(H) Insolvency, Etc. Any of the Borrower or any of the Subsidiaries
(1) shall become insolvent or shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they come due; or (2)
shall suspend its business operations or a material part thereof or make an
assignment for the benefit of creditors; (3) shall apply for, consent to, or
acquiesce in the appointment of a trustee, receiver, or other custodian for it
or any of its property or, in the absence of such application, consent, or
acquiescence, a trustee, receiver, or other custodian is so appointed; (iv)
shall commence with respect to it any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
law or statute of any jurisdiction; or (v) shall have commenced against it any
such proceeding and such proceeding is not dismissed within 90 days of its
commencement.
(I) Security. The Pledge Agreement or the filings contemplated
thereby shall for any reason fail to create a valid and perfected first-priority
lien, security interest, or security title (subject only to such exceptions as
are therein permitted) on any of the property identified therein.
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SECTION 10. Remedies Upon Event of Default.
(A) Automatic Acceleration. Upon the occurrence of an Event of
Default under Subsection 9(H), the entire unpaid principal balance of the Loans,
all accrued interest thereon, and all other amounts payable under this
Agreement, all Supplements, all Notes, and all other agreements between CoBank
and the Borrower shall become immediately due and payable without protest,
presentment, demand, or further notice of any kind, all of which are hereby
expressly waived by the Borrower.
(B) Acceleration; Etc. Upon the occurrence of an Event of Default
other than under Subsection 9(H), upon notice to the Borrower, CoBank may
declare the entire unpaid principal balance of all Loans, all accrued interest
thereon, and all other amounts payable under this Agreement, all Supplements and
all other agreements between CoBank and the Borrower, to be immediately due and
payable. Upon such a declaration, the unpaid principal balance of all Loans and
all such other amounts shall become immediately due and payable, without
protest, presentment, demand, or further notice of any kind, all of which are
hereby expressly waived by the Borrower.
(C) Enforcement. Upon the occurrence of an Event of Default, CoBank
may proceed to protect, exercise, and enforce such rights and remedies as may be
provided by agreement or under law including, without limitation, the rights and
remedies provided for in this Agreement and any of the other Loan Documents.
Each and every one of such rights and remedies shall be cumulative and may be
exercised from time to time, and no failure on the part of CoBank to exercise,
and no delay in exercising, any right or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
preclude any other or future exercise thereof, or the exercise of any other
right. In addition, CoBank may hold and/or set off and apply against the
Borrower's indebtedness any and all cash, accounts, securities, or other
property in CoBank's possession or under its control.
(D) Application of Payments. After acceleration of the Loans, all
amounts received by CoBank shall be applied to the amounts owing hereunder, the
Supplements, under the Notes, and the other Loan Documents in whatever order and
manner as CoBank shall elect.
(E) Regulatory Approvals. Upon any action by CoBank to commence the
exercise of remedies hereunder or under the Pledge Agreement, the Borrower
hereby undertakes and agrees to cooperate and join with CoBank in any
application to the PUC, the FCC, the SEC or any other regulatory body,
administrative agency, court or other forum (any such entity, a "Governmental
Authority") with respect thereto and to provide such assistance in connection
therewith as CoBank may request, including, without limitation, the preparation
of filings and appearances of officers and employees of the Borrower before such
Governmental Authority, in each case in support of any such application made by
CoBank, and the Borrower shall not, directly or indirectly, oppose any such
action by CoBank before any such Governmental Authority.
(F) Default Rate. If prior to maturity the Borrower fails to make
any payment or investment required to be made under the terms of any Note or
Supplement (except to extent the making of such required investment is entirely
within the control of CoBank) or
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Master Loan Agreement/Shenandoah Telecommunications Company
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following the occurrence of an Event of Default then, at CoBank's option in each
instance, such payment or investment shall accrue interest at 2% per annum in
excess of the interest rate otherwise applicable to such Loan until such amount,
including interest accrued thereon in accordance with the terms hereof, is paid
in full. After maturity, whether by reason of acceleration or otherwise, the
unpaid principal balance of the Loan shall automatically accrue interest at 2%
per annum in excess of the interest rate otherwise applicable to such Loan. All
interest provided for in this Subsection 10 (F) shall be payable on demand and
shall be calculated from and including the date such payment or investment was
due to but excluding the date paid on the basis of a year consisting of 360
days.
SECTION 11. Complete Agreement, Amendments. The Loan Documents are
intended by the parties to be a complete and final expression of their
agreement. No amendment, modification, or waiver of any provision of this
Agreement or the other Loan Documents, and no consent to any departure by the
Borrower herefrom or therefrom, shall be effective unless approved by CoBank and
contained in a writing signed by or on behalf of CoBank, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. In the event this Agreement is amended or restated,
each such amendment or restatement shall be applicable to all Supplements
hereto. Each Supplement shall be deemed to incorporate all of the terms and
conditions of this Agreement as if fully set forth therein. Without limiting the
foregoing, any capitalized term utilized in any Supplement (or in any amendment
to this Agreement or Supplement) and not otherwise defined in the Supplement (or
amendment) shall have the meaning set forth herein.
SECTION 12. Other Types of Credit. From time to time, CoBank may issue
letters of credit or extend other types of credit to or for the account of the
Borrower. In the event the parties desire to do so under the terms of this
Agreement, such extensions of credit may be set forth in any Supplement and this
Agreement shall be applicable thereto.
SECTION 13. Applicable Law. Except to the extent governed by applicable
federal law, this Agreement and each Supplement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
reference to choice of law doctrine.
SECTION 14. Notices. All notices hereunder or under any Supplement shall
be in writing and shall be deemed to be duly given upon delivery if personally
delivered or sent by telegram or facsimile transmission, or 3 days after mailing
if sent by express, certified or registered mail, to the parties at the
following addresses (or such other address for a party as shall be specified by
like notice):
19
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
If to CoBank, as follows:
If to the Borrower, as follows:
CoBank, ACB
900 Circle 75 Parkway Shenandoah Telecommunications Company
Suite 1400 124 South Main Street
Atlanta, Georgia 30339 P.O. Box 459
Attn: Communications and Energy Edinburg, Virginia 22824
Banking Group Attn: Vice President - Finance
Fax No.: (770) 618-3202 Fax No.: (540) 984-8192
SECTION 15. Costs, Expenses and Taxes. To the extent allowed by law, the
Borrower agrees to reimburse all reasonable out-of-pocket costs and expenses
(including the fees and expenses of counsel retained by CoBank) incurred by
CoBank in connection with the origination, negotiation, documentation,
administration, collection, and enforcement of this Agreement and the other Loan
Documents, including, without limitation, all costs and expenses incurred in
perfecting, maintaining, determining the priority of, and releasing any security
for the Borrower's obligations to CoBank, and any stamp, intangible, transfer,
or like tax payable in connection with this Agreement or any other Loan Document
or the recording hereof or thereof.
SECTION 16. Effectiveness and Severability. This Agreement shall continue
in effect until all indebtedness and obligations of the Borrower under this
Agreement, all Supplements, all Notes and all other Loan Documents shall have
been fully and finally paid or satisfied and CoBank has no commitment to extend
credit to or for the account of the Borrower under any Supplement. Any provision
of this Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof.
SECTION 17. Obligations Absolute. The obligation of the Borrower to make
all payments required to be made under this Agreement shall be absolute and
unconditional and shall be independent of any action by the PUC or the FCC with
respect to rates and/or disallowance of debt.
SECTION 18. Successors and Assigns. This Agreement, each Supplement, and
the other Loan Documents shall be binding upon and inure to the benefit of the
Borrower and CoBank and their respective successors and assigns, except that the
Borrower may not assign or transfer its rights or obligations under this
Agreement, any Supplement or any other Loan Document without the prior written
consent of CoBank. Without the consent of, but with confirmed notice to, the
Borrower, CoBank may (a) sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement,
or (b) assign to one or more banks or other entities all or a portion of its
rights and obligations under this Agreement.
SECTION 19. Counterparts. This Agreement, each Supplement and any other
Loan Document may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original and shall
20
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
be binding upon all parties and their respective permitted successors and
assigns, and all of which taken together shall constitute one and the same
agreement.
[Signatures follow on next page.]
21
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
IN WITNESS WHEREOF, the Borrower has caused this Agreement to be executed
and attested under seal and delivered, and CoBank has caused this Agreement to
be executed and delivered, each by their respective duly authorized officers as
of the date first shown above.
SHENANDOAH TELECOMMUNICATIONS COMPANY
By:________________________________,
Name:____________________________
Title:___________________________
Attest:________________________________
Name:___________________________
Title:__________________________
[CORPORATE SEAL]
[Signatures continue on next page.]
[Signature Page to Amended and Restated Master Loan Agreement]
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
[Signatures continue from previous page.]
COBANK, ACB
By:_________________________________
John P. Cole, Vice President
[Signature Page to Amended and Restated Master Loan Agreement]
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
EXHIBIT A
COMPLIANCE CERTIFICATE - MLA NO. ML0743
THIS COMPLIANCE CERTIFICATE is given by [Name], [President or
chief financial officer] of Shenandoah Telecommunications Company (the
"Borrower"), pursuant to Subsection 7(I)(8) of that certain Second Amended and
Restated Master Loan Agreement, dated as of November 30, 2004 (the "MLA"), by
and between the Borrower and CoBank, ACB.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in the MLA.
I hereby certify as follows:
1. I am the [President or chief financial officer] of the Borrower and as
such possess the knowledge and authority to certify to the matters set
forth in this Compliance Certificate;
2. Attached hereto as Annex A are the [audited/unaudited] [annual/quarterly]
financial statements of the Borrower for the fiscal [year/quarter] ended
______________, as required by Subsection [7(I)(1)/(2)] of the MLA. The
attached consolidated financial statements present fairly in all material
respects to the financial condition of the Borrower, during the periods
covered thereby and as of the dates thereof, and were prepared on a
Consolidated Basis, and all attached financial statements were prepared in
accordance with GAAP consistently applied and any system of accounts to
which the Borrower is subject (except, in the case of unaudited financial
statements, for the omission of footnotes, other schedules and the effect
of normal year-end audit adjustments);
3. As of the date of such financial statements, the Borrower is in compliance
with the covenants set forth in Subsections 7(J) through (L) of the MLA.
Attached hereto as Annex B are calculations which demonstrate the
compliance by the Borrower with such covenants;
4. I have reviewed the Loan Documents and the activities of the Borrower and
the Subsidiaries during the fiscal [year/quarter] ended ________________
in a manner reasonably designed to determine whether there exists a
Potential Default or Event of Default under the MLA. As of the date of
this Compliance Certificate, to the best of my knowledge on the basis of
such review, there exists no condition, event or act which would
constitute a Potential Default or Event of Default under the MLA, except
as disclosed on Annex C hereto.
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
IN WITNESS WHEREOF, I have executed this Compliance Certificate as of
_____________, _____.
____________________________________
[Name], [Title] of Shenandoah
Telecommunications Company
Master Loan Agreement/Shenandoah Telecommunications Company
MLA No. ML0743
Schedule 6(N)
SUBSIDIARIES
Number of Percentage of Total
Shares or Other Interests Outstanding Shares or Other
Entity Owned by the Borrower Interests Owned by the Borrower
------ --------------------- -------------------------------
NTC Communications, LLC ___ 100%
Shenandoah Cable Television Company 3,610 100%
ShenTel Service Company 4,800 100%
Shenandoah Personal
Communications Company 18 100%
Shenandoah Valley Leasing Company 1,500 100%
Shenandoah Mobile Company 5,000 100%
Shenandoah Long Distance Company 50 100%
ShenTel Communications Company 1 100%
Shenandoah Network Company 712 100%
Shenandoah Telephone Company 5,000 100%
Shentel Management Company 1 100%
Shentel Converged Services, Inc. 1 100%
Exhibit 10.17
Loan No. ML0743-T3
THIRD SUPPLEMENT
TO THE MASTER LOAN AGREEMENT
THIS THIRD SUPPLEMENT TO THE MASTER LOAN AGREEMENT (this "Third
Supplement"), entered into as of November 30, 2004, is between COBANK, ACB
("CoBank") and SHENANDOAH TELECOMMUNICATIONS COMPANY (the "Borrower"), and
supplements that certain Second Amended and Restated Master Loan Agreement,
dated as of even date herewith, between CoBank and the Borrower (as the same may
be amended, modified, supplemented, extended or restated from time to time, the
"MLA"). Capitalized terms used and not otherwise defined in this Third
Supplement have the meanings assigned to them in the MLA.
SECTION 1. Reducing Revolving Loan Commitment. On the terms and conditions
set forth in the MLA and this Third Supplement, CoBank agrees to make one or
more advances (collectively, the "Loan") to the Borrower during the period
beginning as of the Closing Date (as defined in Section 3 of this Third
Supplement) and ending on the Business Day immediately preceding the Maturity
Date (as defined herein in this Section) (the "Termination Date") in an
aggregate principal amount outstanding at any one time not to exceed $15,000,000
(the "Commitment"). The Commitment will be reduced from time to time as provided
in Sections 6 and 8 of this Third Supplement, and will expire at 12:00 noon
Eastern time on December 31, 2016 (the "Maturity Date"). Subject to Sections 6
and 8 of this Third Supplement, under the Commitment amounts borrowed and repaid
may be reborrowed at any time prior to and including the Termination Date.
SECTION 2. Purpose. The purposes for which advances under the Commitment
may be used are (i) to refinance existing debt and other obligations of NTC
Communications, LLC ("NTC") of approximately $8,000,000 (collectively, the
"Existing Debt") in connection with the purchase by the Borrower or one of its
wholly owned subsidiaries of all outstanding membership interests in NTC not
currently owned by the Borrower (the "NTC Acquisition"), and (ii) for general
corporate purposes of the Borrower and/or its Subsidiaries, including closing
costs and fees associated with the Loan. The Borrower agrees that the proceeds
of the Loan are to be used only for the purposes set forth in this Section 2.
SECTION 3. Availability. Subject to Section 2 of the MLA, Section 10 of
this Third Supplement and the other conditions set forth in the MLA, during the
period commencing on the date on which all conditions precedent to the Loan are
satisfied (the "Closing Date") and ending on the Termination Date, advances
under the Loan will be made as provided in the MLA; provided, however, that with
respect to any advance to be subject to a fixed rate option (Subsections 4(A)(2)
and 4(A)(3) of this Third Supplement), a request for such advance must be
received no later than 12:00 noon Eastern time three Business Days or Banking
Days (as defined in Subsection 4(A)(2) of this Third Supplement), as applicable,
prior to the day such advance is desired; and provided, further, that the
Closing Date must occur on or prior to December 31, 2004.
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
SECTION 4. Interest.
(A) Rate Options; Etc. The Borrower agrees to pay interest on the unpaid
principal balance of the Loan in accordance with one or more of the following
interest rate options, as selected by the Borrower:
(1) Variable Rate Option. As to any portion of the unpaid principal
balance of the Loan selected by the Borrower (any such portion, and any
portion selected pursuant to Subsections 4(A)(2) and 4(A)(3) below, is
hereinafter referred to as a "Portion" of the Loan), interest will accrue
pursuant to this variable rate option at a variable annual interest rate
(the "Variable Rate") equal at all times to the rate of interest
established for the Borrower by CoBank in its sole and absolute discretion
on the first Business Day of each week. The rate of interest so
established by CoBank shall be effective from and including the first
Business Day of each week to and excluding the first Business Day of the
next week. Each change in the Variable Rate will be applicable to the
Portion of the Loan subject to this option and information about the then
current Variable Rate shall be made available to the Borrower upon
telephonic request.
(2) LIBOR Option. As to any Portion or Portions of the Loan selected
by the Borrower, interest shall accrue pursuant to this LIBOR option at a
margin (the "LIBOR Margin") equal to the percentage determined from time
to time in accordance with Subsection 4(A)(5) of this Third Supplement.
Under this option: (i) rates may be fixed for Interest Periods (as
hereinafter defined) of one, two, three, or six months, as selected by the
Borrower; (ii) amounts fixed must be in increments of $100,000 or
multiples thereof; and (iii) rates may only be fixed on a Banking Day (as
hereinafter defined) on three Banking Days' prior written notice;
provided, however, that the LIBOR option is not available with respect to
new advances during the continuance of any Event of Default. "LIBOR" means
the rate (rounded upward to the nearest sixteenth and adjusted for
reserves required on Eurocurrency Liabilities (as hereinafter defined) for
banks subject to FRB Regulation D (as hereinafter defined) or required by
any other federal law or regulation) quoted by the British Bankers
Association (the "BBA") at 11:00 a.m. London time two Banking Days before
the commencement of the Interest Period for the offering of U.S. dollar
deposits in the London interbank market for the Interest Period designated
by the Company, as published by Bloomberg or another major information
vendor listed on BBA's official website. "Banking Day" means a day on
which CoBank is open for business, dealings in U.S. dollar deposits are
being carried out in the London interbank market, and banks are open for
business in New York City and London, England. "Interest Period" means the
time period chosen by the Borrower during which the chosen fixed rate is
to apply to a Portion of the Loan, which period commences on the day a
rate fixed under this Subsection 4(A)(2) or Subsection 4(A)(3) of this
Third Supplement becomes effective. The Interest Period for Portions
accruing interest at the LIBOR option rate will end on the day in the next
calendar month or in the month that is one, two, three, or six months
thereafter which corresponds numerically with the day the Interest Period
commences; provided, however, that: (a) in the event such ending day is
not a Banking Day, such period will be extended to the
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Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
next Banking Day unless such next Banking Day falls in the next calendar
month, in which case it will end on the preceding Banking Day; and (b) if
there is no numerically corresponding day in the month, then such period
will end on the last Banking Day in the relevant month. No Interest Period
shall extend beyond the Maturity Date. "Eurocurrency Liabilities" has the
meaning as set forth in FRB Regulation D. "FRB Regulation D" means
Regulation D as promulgated by the Board of Governors of the Federal
Reserve System, 12 CFR Part 204, as amended from time to time.
(3) Quoted Rate Option. As to any Portion or Portions of the Loan
selected by the Borrower, interest shall accrue pursuant to this quoted
rate option at a fixed annual interest rate (the "Quoted Rate") to be
quoted by CoBank in its sole and absolute discretion in each instance.
Under this option, the interest rate on such Portion or Portions of the
Loan may be fixed for such Interest Periods as may be agreeable to CoBank
in its sole and absolute discretion in each instance; provided, however,
that (i) such Interest Period shall not extend beyond the Maturity Date
and such Interest Period may only expire on a Business Day, (ii) the
minimum fixed period shall be 30 days, (iii) amounts fixed must be in
increments of $100,000 or multiples thereof, and (iv) the Quoted Rate
option is not be available with respect to new advances during the
continuance of any Event of Default.
(4) Rate Combinations. Notwithstanding the foregoing, at any one
time there may be no more than five Portions of the Loan in the aggregate
accruing interest pursuant to any fixed rate option.
(5) Applicable Margin. The LIBOR Margin will be determined based on
the Borrower's consolidated Total Leverage Ratio on the last day of each
fiscal quarter of the Borrower, as set forth in the following table:
LIBOR Margin during any period the
Borrower is using CoBank's cash
Total Leverage Ratio LIBOR Margin management services
-------------------- ------------ -------------------
Greater than 1.50:1.00 1.60% 1.50%
Greater than 1.00:1.00 and less
than or equal to 1.50:1.00 1.35% 1.25%
Less than or equal to 1.00:1.00 1.10% 1.00%
The LIBOR Margin shall be (i) increased, if warranted, beginning the
5th Business Day following CoBank's receipt of the financial statements
required pursuant to Subsections 7(I)(1) and 7(I)(2) of the MLA and the
compliance certificate required
3
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
pursuant to Subsection 7(I)(8) of the MLA and (ii) decreased, if
warranted, beginning the 5th Business Day following CoBank's receipt of
such financial statements and compliance certificate and the Borrower's
written request to decrease such margin. In the event that (a) an Event of
Default occurs or (b) CoBank shall not receive when due such financial
statements and compliance certificate, then from such due date and until
the 5th Business Day following CoBank's receipt of such overdue financial
statements and compliance certificate (and in the event a decrease in the
LIBOR Margin is then warranted, receipt of the Borrower's written request
to decrease such margin), the LIBOR Margin shall be 1.60% (or 1.50%, if
applicable).
(6) Selection and Changes of Rates. The Borrower shall select the
rate option or options applicable to the Loan at the time it requests an
advance under the Loan. Thereafter, with respect to Portions of the Loan
accruing interest at the Variable Rate Option, the Borrower may, on any
Business Day, subject to Subsections 4(A)(2), 4(A)(3) and 4(A)(4) of this
Third Supplement, elect to have one of the fixed rate options apply to
such Portion. In addition, with respect to any Portion of the Loan
accruing interest pursuant to a fixed rate option, the Borrower may,
subject to Subsections 4(A)(2), 4(A)(3) and 4(A)(4) of this Third
Supplement, on the last day of the Interest Period for such Portion, elect
to fix the interest rate accruing on such Portion for another Interest
Period pursuant to one of the fixed rate options. From time to time the
Borrower may elect, on a Business Day prior to the expiration of the
Interest Period for any Portion of the Loan accruing interest pursuant to
a fixed rate option, and upon payment of the applicable Surcharge (as
defined in, and calculated pursuant to, Section 7 of this Third
Supplement) to convert all, but not part, of such Portion of the Loan so
that it accrues interest at the Variable Rate option or a combination of
the Variable Rate option and a fixed rate option, for a new Interest
Period or Interest Periods selected in accordance with Subsections
4(A)(2), 4(A)(3) or 4(A)(4) of this Third Supplement. Except for the
initial selection, all interest rate selections provided for herein shall
be made by electronic (if applicable), telephonic or written request of an
authorized employee of the Borrower and must be received by CoBank by
12:00 noon, Eastern time, on the relevant day. In taking actions upon
telephonic requests, CoBank shall be entitled to rely on (and shall incur
no liability to the Borrower in acting upon) any request made by a person
identifying himself or herself as one of the persons authorized by the
Borrower to select interest rates hereunder; provided, however, that in
the case of LIBOR rate loans, all such selections must be confirmed in
writing upon CoBank's request. Notwithstanding the foregoing, rates may
not be fixed in such a manner as to cause the Borrower to have to break
any fixed rate balance in order to pay any installment of principal.
(7) Accrual of Interest. Interest shall accrue pursuant to the fixed
rate options from and including the first day of the applicable Interest
Period to but excluding the last day of the Interest Period. If the
Borrower elects to refix the interest rate on any Portion of the Loan
accruing interest pursuant to one of the fixed rate options pursuant to
Subsection 4(A)(6) of this Third Supplement, the first day of the new
Interest Period shall be the last day of the preceding Interest Period. In
the absence of any such election, interest shall accrue on such Portion at
the Variable Rate Option from and including the
4
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
last day of such Interest Period. If the Borrower elects to convert from a
fixed rate option to the Variable Rate Option pursuant to Subsection
4(A)(6) of this Third Supplement upon payment of the applicable Surcharge
as provided in Section 7 of this Third Supplement, interest at the
applicable fixed rate shall accrue through the day before such conversion
and interest at the Variable Rate Option shall accrue on the Portion of
the Loan so converted from and including the date of conversion.
(B) Payment and Calculation. The Borrower shall pay interest on the Loan
(i) monthly in arrears on the 20th day of the following month (or on such other
day in such month as CoBank shall require in a written notice to the Borrower);
provided, however, in the event the Borrower elects to fix all or a portion of
the indebtedness outstanding under the LIBOR interest rate option above, at
CoBank's option upon written notice to the Borrower, interest shall be payable
at the maturity of the Interest Period and if the LIBOR interest rate fix is for
a period longer than 3 months, interest on that Portion shall be payable
quarterly in arrears on each three-month anniversary of the commencement date of
such Interest Period, and at maturity of such Interest Period, (ii) upon any
prepayment (whether due to acceleration or otherwise) and (iii) on the Maturity
Date. Interest shall be calculated on the actual number of days the Loan, or any
part thereof, is outstanding on the basis of a year consisting of 360 days or
365 days in the case of any Portion accruing interest at the Variable Rate
Option. In calculating accrued interest, the date the Loan is made shall be
included and the date any principal amount of the Loan is repaid or prepaid
shall be excluded as to such amount.
SECTION 5. Fees.
(A) Loan Origination Fee. In consideration of the Commitment, the Borrower
agrees to pay to CoBank on the Closing Date a non-refundable origination fee in
the amount of $37,500.
(B) Commitment Fee. In consideration of the Commitment, the Borrower
agrees to pay to CoBank a commitment fee on the average daily unused portion of
the Commitment at the rate of 0.375% per annum (the rate will be 0.25% per annum
during any period the Borrower is using CoBank's cash management services),
payable quarterly in arrears by the 20th day of the month following each
calendar quarter, or such other day as CoBank may require in a written notice to
the Borrower. Such fee is payable for each quarter (or portion thereof)
occurring during the original or any extended term of the Commitment.
SECTION 6. Reductions of Commitment; Repayments of the Loan.
(A) Scheduled Reductions of the Commitment. Commencing on March 31, 2005,
and on each June 30, September 30, December 31 and March 31 occurring thereafter
through December 31, 2016, the Commitment shall be permanently reduced on each
such date (each such reduction, a "Commitment Reduction") in the amount of
$312,500 (such reductions shall be cumulative and subject to modification
pursuant to Section 8 of this Third Supplement). At the time of each Commitment
reduction provided for in this Section 6, the Borrower shall repay the Loan in
an amount sufficient to reduce the aggregate principal balance of the Loan then
outstanding to the amount of the Commitment as so reduced. If not sooner
required to be repaid,
5
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
all advances under the Loan and all other amounts due and owing hereunder and
under the other Loan Documents relating to the Loan shall be due and payable on
the Maturity Date. All repayments made pursuant to this Section 6 shall be
applied to such portions of the Loan as the Borrower shall direct in writing or,
in the absence of such direction, as the Borrower and CoBank shall agree. At the
time of each repayment pursuant to this Section 6, the Borrower shall pay all
accrued and unpaid interest on the amount repaid, and any Surcharge due pursuant
to Section 7 of this Third Supplement in connection with such payment.
(B) Repayments from Insurance Proceeds. If an Event of Default with
respect to Section 7(J), (K) or (L) of the MLA has occurred and is continuing or
is anticipated to occur within the next twelve (12) months after taking into
account on a pro forma basis the proposed use of all Net Insurance Proceeds (as
hereinafter defined in this Subsection 6(B)) received by the Borrower during any
fiscal year in excess of $1,000,000 (and the Borrower hereby covenants to cause
such Net Insurance Proceeds to be used as so proposed), the Borrower shall repay
the Loan in an amount equal to the amount of such Net Insurance Proceeds which
are not reinvested in equipment or other assets that are used or useful in the
business of the Borrower within 180 days of receipt by the Borrower of such Net
Insurance Proceeds. All such repayments shall be applied in accordance with
Subsection 6(D) of this Third Supplement.
"Net Insurance Proceeds" means cash proceeds received by the Borrower or
any Pledged Subsidiary from any insurer under any casualty insurance policy,
business interruption policy or similar insurance policy with respect to any
loss, damage or destruction of any asset or property owned by it, net of (i) the
costs of recovery of such insurance proceeds and (ii) amounts applied to
repayment of Indebtedness (other than to CoBank) secured by a lien on the
related asset or property.
(C) Repayments from Asset Dispositions. The Borrower shall repay the Loan
within 180 days of receipt by the Borrower or any Pledged Subsidiary of Net
Proceeds (as hereinafter defined in this Subsection 6(C)) from any Asset
Disposition (as hereinafter defined in this Subsection 6(C)) in an amount equal
to such Net Proceeds, unless such Net Proceeds have been reinvested in equipment
or other assets that are used or useful in the business of the Borrower or its
Pledged Subsidiaries within such 180-day period. All such repayments shall be
applied in accordance with Subsection 6(D) of this Third Supplement.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, or otherwise (other than as a result of loss, damage or destruction),
by the Borrower, of any or all of its assets, other than (a) bona fide sales of
inventory to customers for fair value in the ordinary course of business, (b)
dispositions of obsolete equipment not used or useful in the business of the
Borrower or its Pledged Subsidiaries, (c) sales of Investments for fair value;
and (d) dispositions of assets for which the aggregate market value of assets
sold in any one transaction or series of related transactions for any calendar
year does not exceed $1,000,000 for the Borrower and its Pledged Subsidiaries.
"Net Proceeds" means cash proceeds (other than insurance proceeds)
received by the Borrower or any Pledged Subsidiary from any Asset Disposition
(including payments under
6
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
notes or other debt securities received in connection with any Asset
Disposition), net of (i) the costs of such sale, lease, transfer or other
disposition (including taxes attributable to such sale, lease or transfer) and
(ii) amounts applied to repayment of Indebtedness (other than to CoBank) secured
by a lien on the asset or property disposed.
(D) Application of Mandatory Repayments; Related Interest and Surcharge
Payments. All mandatory repayments made pursuant to Subsections 6(B) and 6(C) of
this Third Supplement shall be applied to the remaining Commitment Reductions in
the inverse order of their maturity (such that the Commitment may terminate
prior to the Maturity Date) and to such portions of the Loan as the Borrower
shall direct in writing or, in the absence of such direction, as the Borrower
and CoBank shall agree. At the time of each such mandatory repayment, the
Borrower shall pay all accrued and unpaid interest on the amount repaid and any
Surcharge due pursuant to Section 7 of this Third Supplement in connection with
such payment. As between mandatory repayments required pursuant to this Section
6 and Section 6 of that certain Term Supplement, dated as of June 22, 2001,
between CoBank and the Borrower (CoBank Loan No. ML0743-T2), the Borrower shall
first make mandatory repayments under this Section 6.
SECTION 7. Prepayment and Surcharge. The Borrower may, on three Business
Day's prior written notice, prepay in full or in part, in minimum amounts of
$100,000, any portion of the Loan. Notwithstanding the foregoing, the Borrower's
right to pay any portion of the Loan subject to a fixed rate option (whether
such payment is made voluntarily, as a result of an acceleration, mandatory
repayment or scheduled repayment or otherwise, including for purposes of this
Section 7 any conversion under Subsection 4(A)(6) of this Third Supplement)
shall be conditioned upon the payment of, on the date of such prepayment (or
conversion), a surcharge ("Surcharge"), determined and calculated as follows:
(A) Determine the difference between: (i) the rate estimated by CoBank on
the date the rate was originally fixed to be its cost to fund the Loan in the
manner set forth in its then current methodology; minus (ii) the rate estimated
by CoBank on the date the Surcharge is calculated to be its cost, less dealer
concessions and other issuance costs, to fund a new fixed rate loan in
accordance with its then current methodology having the same fixed rate period
and repayment characteristics as the balance being repaid. If such difference is
negative, then for purposes of the remaining calculations, such difference shall
be deemed to be zero.
(B) Divide the result determined in (A) above by the number of times
interest is payable during the year.
(C) For each interest payment period (or portion thereof) during which
interest was scheduled to accrue at the fixed rate, multiply the amount
determined in (B) above by the principal balance scheduled to have been
outstanding during such period (such that there is a calculation for each
interest payment period during which the amount repaid was scheduled to have
been outstanding at the fixed rate).
(D) Determine the present value of each calculation made under (C) above
based upon the scheduled time that interest on the amount repaid would have been
payable and a discount rate equal to the rate set forth in (A)(ii) above.
7
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
(E) Add all of the calculations made under (D) above. The result is the
Surcharge.
SECTION 8. Voluntary Reduction of Commitment. The Borrower has the right,
from to time upon at least three Business Days' prior notice, to permanently
reduce the Commitment in increments of $1,000,000. Each reduction will be
applied to reduce pro rata the then remaining Commitment Reductions. No
Commitment reduction under this Section 8 will be permitted if, after giving
effect to such reduction and any simultaneous payment to CoBank, the aggregate
outstanding principal amount of the Loan would exceed the Commitment as so
reduced.
SECTION 9. Security. The Loan is secured by the Second Amended and
Restated Pledge Agreement, dated as of even date herewith, between the Borrower
and CoBank (as the same may be amended, modified, supplemented, extended or
restated from time to time, the "Pledge Agreement") and the Membership Interests
Pledge Agreements, each dated as of even date herewith, between the Borrower and
CoBank and Shentel Converged Services, Inc. ("Converged") and CoBank (as the
same may be amended, modified, supplemented, extended or restated from time to
time, collectively, the "LLC Pledge Agreements"), pursuant to which each of the
Borrower and Convergent has granted to CoBank a first-priority lien and security
interest in all of its now owned or hereafter acquired capital stock or other
voting securities in NTC.
SECTION 10. Additional Conditions Precedent. In addition to the conditions
precedent set forth in the MLA, CoBank's obligation to make any advance under
the Loan, including the initial advance, is subject to the satisfaction of each
of the following conditions precedent on or before the date of such advance:
(A) No Material Adverse Change. That from December 31, 2003 to the date of
such advance, there has not occurred any event which has had or could reasonably
be expected to have a Material Adverse Effect on the Borrower or any of its
subsidiaries;
(B) Closing Certificate. That CoBank receive on the date of the initial
advance a certificate, in the form of Exhibit A attached hereto, from the
President of the Borrower as to, among other things, the continuing truth and
accuracy of the representations and warranties of each of the Borrower and its
Subsidiaries under the Loan Documents to which it is a party and the
satisfaction of each of the conditions applicable to the making of the initial
advance;
(C) Consummation of NTC Acquisition. That CoBank receive evidence
satisfactory to it that the NTC Acquisition has closed on terms substantially
similar to those set forth in that certain Interest Purchase Agreement, dated as
of November 30, 2004, among Converged, NTC and the other interest holders named
therein; and
(D) Pledge of NTC Interests. That CoBank receive a first-priority,
perfected pledge, satisfactory to CoBank in all respects, of all membership
interests of the Borrower and Converged in NTC, pursuant to the LLC Pledge
Agreements.
[Signatures commence on following page.]
8
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
IN WITNESS WHEREOF, the parties have caused this Third Supplement to be
executed by their duly authorized officers as of the date shown above.
SHENANDOAH TELECOMMUNICATIONS COMPANY
By:__________________________________
Name:_____________________________
Title:____________________________
[Signatures continue on next page.]
9
Third Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T3
[Signatures continue from previous page.]
CoBANK, ACB
By:______________________________________
John P. Cole, Vice President
10
EXHIBIT A
CLOSING CERTIFICATE -- LOAN NO. ML0743-T3
THIS CLOSING CERTIFICATE is given by ________________, President of
SHENANDOAH TELECOMMUNICATIONS COMPANY (the "Borrower"), pursuant to Section 5(C)
of that certain Master Loan Agreement, dated as of November 30, 2004 (the
"MLA"), and pursuant to Section 10(B) of that certain Third Supplement to the
MLA, dated as of November 30, 2004 (the "Third Supplement"), each between
CoBank, ACB ("CoBank") and the Borrower. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the MLA and
in the Third Supplement.
The undersigned hereby certifies as follows:
1. I am the President of the Borrower and as such possess the knowledge
and authority to certify to the matters herein set forth, and the matters herein
set forth are true and accurate to the best of my present knowledge, information
and belief after due inquiry;
2. Since December 31, 2003, no event has occurred which has had or could
have a Material Adverse Effect on any of the Borrower or its subsidiaries;
3. All representations and warranties of each of the Borrower and its
subsidiaries contained in the Loan Documents to which it is a party are true and
correct in all material respects on and as of the date hereof;
4. No Potential Default or Event of Default exists as of the date hereof
or will result from the making of the initial advance with respect to which this
Certificate is delivered; and
5. Each of the conditions specified in Section 5 of the MLA and in Section
10 of the Third Supplement required to be satisfied on or prior to the date of
the making of the initial advance under the Loan has been fulfilled as of the
date hereof.
IN WITNESS WHEREOF, I have executed this Advance Certificate as of
______________.
____________________________________________
President,
Shenandoah Telecommunications Company
Exhibit 10.18
Loan No. ML0743-T2
SECOND AMENDMENT TO TERM SUPPLEMENT
This SECOND AMENDMENT TO TERM SUPPLEMENT (this "Amendment"), dated as of
November 30, 2004, is entered into between SHENANDOAH TELECOMMUNICATIONS COMPANY
(the "Borrower") and COBANK, ACB ("CoBank").
RECITALS
WHEREAS, CoBank and the Borrower are parties to that certain Term
Supplement, dated as of June 22, 2001, as amended by that certain First
Amendment to Term Supplement, dated as of September 1, 2001 (as so amended, the
"Supplement");
WHEREAS, the Borrower and CoBank desire to enter into this Amendment to
amend certain provisions of the Supplement; and
NOW, THEREFORE, in consideration of the premises and the agreements,
covenants and provisions herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. AMENDMENTS TO SUPPLEMENT
The Borrower and CoBank hereby agree that the Supplement be, and it hereby
is, amended as follows:
1.1 General. Upon and after the date hereof, all references to the
Supplement in any Loan Document (as defined in the Second Amended and Restated
Master Loan Agreement, dated as of November 30, 2004, between the Borrower and
CoBank) shall mean the Supplement as amended hereby. Except as expressly
provided herein, the execution and delivery of this Amendment do not and will
not amend, modify or supplement any provision of, or constitute a consent to or
a waiver of any noncompliance with the provisions of, the Supplement, and,
except as specifically provided in this Amendment, the Supplement shall remain
in full force and effect and is hereby ratified and confirmed.
1.2 Amendment to Subsection 6(C) of the Supplement. Subsection 6(C) of the
Supplement is amended and restated in its entirety, as follows:
"(C) Repayments from Asset Dispositions. The Borrower shall repay
the Loan within 180 days of receipt by the Borrower or any Pledged
Subsidiary of Net Proceeds (as hereinafter defined in this
Subsection 6(C)) from any Asset Disposition (as hereinafter defined
in this Subsection 6(C)), the Borrower shall repay the Loan in an
amount equal to such Net Proceeds, unless such Net Proceeds have
been reinvested in equipment or other assets that are used or useful
in the business of the Borrower or its
Second Amendment to Term Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T2
Pledged Subsidiaries within such 180-day period. All such repayments
shall be applied in accordance with Subsection 6(D) of this
Supplement.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, or otherwise (other than as a result of loss, damage or
destruction), by the Borrower, of any or all of its assets, other
than (a) bona fide sales of inventory to customers for fair value in
the ordinary course of business, (b) dispositions of obsolete
equipment not used or useful in the business of such Borrower, (c)
sales of Investments for fair value; and (d) dispositions of assets
for which the aggregate market value of assets sold in any one
transaction or series of related transactions for any calendar year
does not exceed $1,000,000 for the Borrower and its Pledged
Subsidiaries.
"Net Proceeds" means cash proceeds (other than insurance proceeds)
received by the Borrower or any Pledged Subsidiary from any Asset
Disposition (including payments under notes or other debt securities
received in connection with any Asset Disposition), net of (i) the
costs of such sale, lease, transfer or other disposition (including
taxes attributable to such sale, lease or transfer) and (ii) amounts
applied to repayment of Indebtedness (other than to CoBank) secured
by a lien on the asset or property disposed."
SECTION 2. MISCELLANEOUS
2.1 Counterparts. This Amendment may be executed by each party to this
Amendment upon a separate copy, and in such case one counterpart of this
amendment shall consist of enough of such copies to reflect the signature of all
of the parties to this Amendment. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Amendment or its terms to produce or account
for more than one of such counterparts.
2.2 Construction. This Amendment is a Loan Document and shall be
construed, administered and applied in accordance with all of the terms and
provisions of the Loan Agreement.
2.3 Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with the laws of the Commonwealth of Virginia, without
reference to the conflicts or choice of law principles thereof.
2.4 Successors and Assigns. This amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
[Signatures Begin on Next Page]
2
Second Amendment to Term Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the day and year
first written above.
SHENANDOAH TELECOMMUNICATIONS
COMPANY
By:_____________________________________
Title:__________________________________
[Signatures Continue on Next Page]
3
Second Amendment to Term Supplement/Shenandoah Telecommunications Company
Loan No. ML0743-T2
[Signatures Continued from Previous Page]
COBANK, ACB
By: _____________________________________
John P. Cole
Vice President
4
Exhibit 10.19
SECOND AMENDED AND RESTATED
PLEDGE AGREEMENT
Dated as of November 30, 2004
By and Between
CoBank, ACB
and
Shenandoah Telecommunications Company
Table of Contents
SECTION 1. Definitions.......................................................1
SECTION 2. Pledge............................................................1
SECTION 3. Representations, Warranties and Covenants.........................3
SECTION 4. Additional Shares of Capital Stock; Transfer......................3
SECTION 5. Voting Rights; Dividends; Etc.....................................4
SECTION 6. Remedies upon Default.............................................5
SECTION 7. CoBank Appointed Attorney-in-Fact.................................6
SECTION 8. Event of Default..................................................7
SECTION 9. Application of Proceeds of Sale and Cash..........................8
SECTION 10. Further Assurances...............................................8
SECTION 11. No Waiver; Election of Remedies..................................8
SECTION 12. Governing Law; Amendments........................................9
SECTION 13. Binding Agreement; Assignment....................................9
SECTION 14. Notices..........................................................9
SECTION 15. Headings.........................................................9
i
SECTION 16. Counterparts.....................................................9
SECTION 17. Severability.....................................................9
SECTION 18. CoBank's Duties..................................................9
SECTION 19. Termination; Reinstatement......................................10
SECTION 20. FCC Matters.....................................................10
ii
Loan No. ML0743
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT
THIS SECOND AMENDED AND RESTATED PLEDGE AGREEMENT (this "Pledge
Agreement") is made as of November 30, 2004, by and between SHENANDOAH
TELECOMMUNICATIONS COMPANY, as pledgor (the "Pledgor"), and COBANK, ACB, as
pledgee ("CoBank").
R E C I T A L S:
WHEREAS, CoBank and the Pledgor have entered into that certain Second
Amended and Restated Master Loan Agreement, dated of even date herewith (as the
same may be amended, supplemented, extended or restated from time to time, the
"MLA"), that certain Term Supplement, dated as of June 22, 2001 (as the same may
be amended, supplemented, extended or restated from time to time, the "Term
Supplement") providing for a term loan of $45,965,690 (the "Term Loan"), and
that certain Third Supplement to the Master Loan Agreement, dated as of even
date herewith (as the same may be amended, supplemented, extended or restated
from time to time, the "Third Supplement") providing for a reducing revolving
line of credit of up to $15,000,000 (the "Revolving Loan"); and
WHEREAS, as an inducement to CoBank to execute the Third Supplement and to
make the Revolving Loan, the Pledgor has agreed to amend and restate the
existing amended and restated pledge agreement (the "Original Pledge
Agreement"), dated as of June 22, 2001, between CoBank and the Pledgor; and
WHEREAS, to secure the Pledgor's obligations to CoBank under the MLA (as
such obligations relate to the Term Supplement and the Third Supplement), the
Term Supplement and the Third Supplement, the Pledgor has agreed to pledge to
CoBank the hereinafter defined Pledged Collateral on the terms and conditions
set forth in this Pledge Agreement;
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, the Pledgor and CoBank hereby amend and restate the
Original Pledge Agreement in its entirety as follows:
SECTION 1. Definitions. Capitalized terms used in this Pledge Agreement,
unless otherwise defined herein, shall have the meanings assigned to them in the
MLA.
SECTION 2. Pledge. To secure the payment and performance of the Secured
Obligations (as hereinafter defined), the Pledgor hereby pledges, hypothecates,
assigns, transfers, sets over and delivers unto CoBank, and grants to CoBank a
lien upon and a security interest in (a) all capital stock of Shenandoah
Telephone Company, Shenandoah Cable Television Company, ShenTel Service Company,
Shenandoah Personal Communications Company,
Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
Shenandoah Valley Leasing Company, Shenandoah Mobile Company, Shenandoah Long
Distance Company, Shenandoah Network Company, Shentel Management Company,
Shentel Converged Services, Inc. and ShenTel Communications Company now owned or
hereafter acquired by the Pledgor, and any other corporation of which the
Pledgor now owns or hereafter acquires fifty percent (50%) or more of the issued
and outstanding capital stock (all such corporations, collectively, the "Pledged
Subsidiaries") and (b) any cash, additional shares or securities or other
property at any time and from time to time receivable or otherwise distributable
in respect of, in exchange for, or in liquidation of, any and all such stock,
together with the proceeds thereof (all such shares, capital stock, securities,
cash, property and other proceeds thereof, collectively, the "Pledged
Collateral"). Notwithstanding the foregoing, if at any time the Pledgor
demonstrates to CoBank on a pro forma basis, taking into consideration the
acquisition of any Pledged Subsidiary hereafter acquired by the Pledgor, that
the Pledgor will achieve and maintain for the then remaining life of the Loans
(i) a Total Leverage Ratio (as determined in accordance with Section 7 of the
MLA) less than or equal to 2.5:1.0 and (ii) an Equity to Total Assets Ratio (as
determined in accordance with Section 7 of the MLA) greater than or equal to
35.0%, and the remaining life of the all Loans then outstanding is less than 7
years, CoBank shall release the lien and security interest granted herein in
such shares, capital stock, securities, cash, property and other proceeds
thereof of such Pledged Subsidiary. Upon a determination by CoBank to grant such
a request, for purposes of this Pledge Agreement such entity shall no longer be
considered a Pledged Subsidiary, all such shares, capital stock, securities,
cash, property and other proceeds shall no longer be considered part of the
Pledged Collateral, and CoBank shall deliver to the Pledgor UCC termination
statements and any other documents reasonably requested by the Pledgor to
evidence such release.
The Pledgor shall promptly deliver to CoBank (i) all certificates or other
instruments representing any securities now or hereafter included in the Pledged
Collateral (the "Pledged Securities"), accompanied by duly executed stock powers
in blank and by such other instruments or documents as CoBank or its counsel may
reasonably request and (ii) all other property now or hereafter comprising part
of the Pledged Collateral, accompanied by proper instruments of assignment duly
executed by the Pledgor and by such other instruments or documents as CoBank or
its counsel may reasonably request. Each delivery of certificates for such
Pledged Securities shall be accompanied by a schedule showing the number of
shares and the numbers of the certificates therefor, theretofore and then being
pledged hereunder, which schedules shall be attached hereto as Schedule 1 and
made a part hereof. Each schedule so delivered shall supersede any prior
schedules so delivered.
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights,
titles, interests, powers, privileges and preferences pertaining or incidental
thereto, unto CoBank, its successors and assigns, forever, subject, however, to
the terms, covenants and conditions hereinafter set forth.
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Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
The lien and security interest granted hereunder shall secure the
following obligations on a pro rata basis (the "Secured Obligations"): (i) the
payment and performance of all obligations of the Pledgor under the MLA (as such
obligations relate to the Term Supplement and the Third Supplement), the Term
Supplement and the Third Supplement, any related Notes and other Loan Documents
executed in connection therewith, and (ii) the payment of all other indebtedness
and the performance of all other obligations of the Pledgor to CoBank under any
future supplement which by its terms provides that the loan or other extension
of credit described therein shall be secured by a lien and security interest in
the Pledged Collateral pursuant to this Pledge Agreement.
SECTION 3. Representations, Warranties and Covenants. The Pledgor hereby
represents, warrants and covenants that it is the registered and beneficial
owner of the shares and percentage of the issued and outstanding capital stock
of each of the Pledged Subsidiaries set forth on Schedule 1 hereto; that, except
for security interests granted to CoBank the Pledgor is the legal, equitable and
beneficial owner of the Pledged Collateral, holds the same free and clear of all
liens, charges, encumbrances, security interests, warrants, options, rights to
purchase, rights of first refusal and other interests of any kind or nature of
any person other than CoBank and will make no voluntary assignment, pledge,
mortgage, hypothecation or transfer of the Pledged Collateral (except as may be
permitted under this Pledge Agreement with respect to cash dividends); that the
issued and outstanding capital stock of each of the Pledged Subsidiaries
included in the Pledged Collateral has been duly authorized and is validly
issued, fully paid and non-assessable; that the Pledgor has good right and legal
authority to pledge the Pledged Collateral in the manner hereby done or
contemplated and will defend its title thereto against the claims of all persons
whomsoever; that the execution and delivery of this Pledge Agreement, and the
performance of its terms, will not result in any violation of any provision of
the Pledgor's articles of incorporation or bylaws, or violate or constitute a
default under the terms of any agreement, indenture or other instrument,
license, judgment, decree, order, law, statute, ordinance or other governmental
rule or regulation applicable to the Pledgor or any of the Pledgor's property;
that no approval, consent or authorization of any governmental or regulatory
authority which has not heretofore been obtained is necessary for the execution
or delivery by the Pledgor of this Pledge Agreement or for the performance by
the Pledgor of any of the terms or conditions hereof or thereof; and that this
Pledge Agreement is effective to vest in CoBank the rights of the Pledgor in the
Pledged Collateral as set forth herein.
SECTION 4. Additional Shares of Capital Stock; Transfer. Without the prior
written consent of CoBank, which consent shall not be unreasonably withheld, the
Pledgor will not (a) consent to or approve of the issuance of any additional
shares of any class of capital stock by any of the Pledged Subsidiaries (other
than issuances of any such shares to the Pledgor, which shares shall be subject
to the lien and security interest granted herein as provided in Section 1) or to
any options, subscription rights, warrants or other instruments in respect
thereof, (b) consent to or approve of the establishment of any additional class
or classes of capital stock by any of the Pledged Subsidiaries or the issuance
of any shares thereunder, (c) consent to or approve of any
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Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
merger, consolidation, reorganization or any sale or lease of substantially all
the assets of any of the Pledged Subsidiaries, or (d) consent to or approve the
repurchase or redemption by any of the Pledged Subsidiaries of any of its
capital stock.
SECTION 5. Voting Rights; Dividends; Etc.
(A) In the absence of the occurrence of an Event of Default. In the
absence of the occurrence and continuation of an Event of Default (as
defined in Section 8):
(i) The Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of
the Pledged Securities or any part thereof for any purpose not
inconsistent with the terms of this Pledge Agreement (including
Section 4) or any agreement giving rise to any of the Secured
Obligations; provided, subject to clause (iii) hereof, that the
Pledgor shall not exercise, or refrain from exercising, any such
right or power if any such action would have a material adverse
effect on the value of such Pledged Securities or any part thereof;
(ii) The Pledgor shall have the right to receive cash
dividends declared and paid with respect to the Pledged Securities.
CoBank agrees that all such permitted cash dividends shall be
received by the Pledgor free and clear of the security interests
granted to CoBank hereunder.
(iii) Any and all stock and/or liquidating dividends, other
distributions in property, return of capital or other distributions
made on or in respect of Pledged Securities, whether resulting from
an increase or reduction of capital, a subdivision, combination or
reclassification of outstanding capital stock of any corporation,
capital stock of which is pledged hereunder, or received in exchange
for Pledged Securities or any part thereof or as a result of any
merger, consolidation, acquisition, spin-off, split-off or options,
warrants, or rights, whether as an addition to, or in substitution
or in exchange for, any of the Pledged Collateral, or otherwise, or
dividends, distributions, or other exchange of assets on the
liquidation, whether voluntary or involuntary, of any issuer of the
Pledged Securities, or otherwise, shall be and become part of the
Pledged Collateral pledged hereunder and, if received by the
Pledgor, then the Pledgor shall accept the same as CoBank's agent,
in trust for CoBank, and shall deliver them forthwith to CoBank in
the exact form received with, as applicable, the Pledgor's
endorsement when necessary, or appropriate stock powers duly
executed in blank, to be held by CoBank, subject to the terms
hereof, as part of the Pledged Collateral; and
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Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
(iv) CoBank shall promptly execute and deliver to the Pledgor,
or cause to be executed and delivered to the Pledgor, as
appropriate, all such proxies, powers of attorney, dividend orders
and other instruments as the Pledgor reasonably may request for the
purpose of enabling the Pledgor to exercise the voting and/or
consensual rights and powers which the Pledgor is entitled to
exercise pursuant to paragraph (A)(i) above.
(B) Upon Default. Upon the occurrence of an Event of Default, all
rights of the Pledgor to exercise the voting and/or consensual rights and
powers which the Pledgor is entitled to exercise pursuant to paragraph
(A)(i) above shall become vested in CoBank upon one day's prior written
notice to the Pledgor, subject to all notification and approval
requirements set forth in Section 20, which shall have the sole and
exclusive right and authority to exercise such voting and/or consensual
rights and powers which the Pledgor shall otherwise be entitled to
exercise pursuant to paragraph (A)(i) above. Upon the occurrence of an
Event of Default, all dividends otherwise payable to the Pledgor in
respect of the Pledged Securities shall be delivered to CoBank as
additional security hereunder or applied toward satisfaction of the
Secured Obligations.
SECTION 6. Remedies upon Default. If an Event of Default shall have
occurred and be continuing, CoBank may sell, assign, transfer, endorse and
deliver the whole or, from time to time, any part of the Pledged Collateral at
public or private sale or disposition or on any securities exchange, for cash,
upon credit or for other property, for immediate or future delivery, and for
such prices and on such terms as CoBank in its discretion shall deem
appropriate. CoBank shall be authorized at any sale or disposition (if it deems
it advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Pledged
Collateral for their own account in compliance with all applicable federal and
state securities laws, and upon consummation of any such sale or disposition
CoBank shall have the right to assign, transfer, endorse and deliver to the
purchaser or purchasers thereof the Pledged Collateral so sold. Each such
purchaser at any such sale or disposition shall hold the property sold
absolutely free from any claim or right on the part of the Pledgor, and the
Pledgor hereby waives (to the extent permitted by law) all rights of redemption,
stay and/or appraisal which the Pledgor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted. CoBank
shall give the Pledgor ten (10) days' written notice (which the Pledgor agrees
is reasonable notification within the meaning of Section 9-504(3) of the Uniform
Commercial Code as in effect in the Commonwealth of Virginia) of CoBank's
intention to make any such public or private sale or sales or dispositions on
any such securities exchange. Such notice, in case of public sale or
disposition, shall state the time and place for such sale or disposition, and,
in the case of sale on a securities exchange, shall state the exchange at which
such sale or disposition is to be made and the day on which the Pledged
Collateral, or portion thereof, will first be offered for sale or disposition at
such exchange. Any such public sale or disposition shall be held at such time or
times within ordinary business hours and at such
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Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
place or places as CoBank may fix and shall state in the notice or publication
(if any) of such sale or disposition.
At any such sale or disposition, the Pledged Collateral, or portion
thereof to be sold or disposed, may be sold or disposed in one lot as an
entirety or in separate portions, as CoBank in its sole discretion may
determine. CoBank shall not be obligated to make any sale or disposition of the
Pledged Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of the Pledged Collateral may have been given. At any public
sale or disposition made pursuant to this Pledge Agreement, CoBank may bid for
or purchase, free from any right of redemption, stay and/or appraisal on the
part of the Pledgor (all said rights being also hereby waived and released to
the extent permitted by law), any part of or all the Pledged Collateral offered
for sale or disposition and may make payment on account thereof by crediting
against the purchase price amounts to which the proceeds of any sale or
disposition are to be applied as provided in Section 9 of this Pledge Agreement,
and CoBank may, upon compliance with the terms of sale or disposition, hold,
retain and dispose of such property without further accountability to the
Pledgor therefor. For purposes hereof, a written agreement to purchase all or
any part of the Pledged Collateral shall be treated as a sale or disposition
thereof; to the extent permitted by law, CoBank shall be free to carry out such
sale or disposition pursuant to such agreement and the Pledgor shall not be
entitled to the return of any Pledged Collateral subject thereto,
notwithstanding the fact that after CoBank shall have entered into such an
agreement all Events of Default may have been remedied or the Secured
Obligations may have been paid in full. As an alternative to exercising the
power of sale or disposition herein conferred upon it, CoBank may proceed by
suit or suits at law or in equity to foreclose this Pledge Agreement and may
sell or dispose of the Pledged Collateral or any portion thereof pursuant to
judgment or decree of a court or courts having competent jurisdiction. Any sale
or disposition pursuant to this Section 6 shall be deemed to conform to
commercially reasonable standards as provided in Section 9-610 of the Uniform
Commercial Code as in effect in the Commonwealth of Virginia if conducted in
conformity with reasonable commercial practices of asset-based lenders disposing
of similar property.
SECTION 7. CoBank Appointed Attorney-in-Fact. The Pledgor hereby
constitutes and appoints CoBank during the term of any of the Secured
Obligations the attorney-in-fact of the Pledgor which appointment is irrevocable
and shall be an agency coupled with an interest. This power of attorney is for
the purpose, upon the occurrence and during the continuance of an Event of
Default, of carrying out the provisions of this Pledge Agreement and taking any
action and executing any instrument which CoBank may deem necessary or advisable
to accomplish the purposes hereof. Without limiting the generality of the
foregoing, CoBank shall have the right, after the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
CoBank's name or in the name of the Pledgor, to ask for, demand, sue for,
collect, receive, receipt and give acquittance for any and all moneys due or to
become due under and by virtue of any Pledged Collateral, to endorse checks,
drafts, orders and other instruments for the payment of money payable to the
Pledgor, representing any interest or dividend or other
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Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
distribution payable in respect of the Pledged Collateral or any part thereof or
on account thereof and to give full discharge for the same, to settle,
compromise, prosecute, or defend any action, claim or proceeding with respect
thereto, and to sell, assign, endorse, pledge, transfer and make any agreement
respecting, or otherwise deal with, the same; provided, however, that nothing
herein contained shall be construed as requiring or obligating CoBank to make
any commitment or to make any inquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or notice, or to take
any action with respect to the Pledged Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby,
and no action taken by CoBank or omitted to be taken with respect to the Pledged
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of the Pledgor or to any claim or action against CoBank.
SECTION 8. Event of Default. For purposes of this Pledge Agreement, an
"Event of Default" shall exist hereunder upon the happening of any of the
following events:
(i) any Event of Default under the MLA; or
(ii) the Pledgor shall default in the performance or
observance of any provision of this Pledge Agreement other than
clause (c) of Section 4 and shall fail to commence and diligently
pursue action to remedy such default within five days after written
notice thereof shall have been delivered by CoBank to the Pledgor or
such default is not remedied within 30 days after receipt by the
Pledgor of such notice; or
(iii) the Pledgor shall default in the performance or
observance of clause (c) of Section 4 of this Pledge Agreement and
shall fail to commence and diligently pursue action to remedy such
default within ten days after written notice thereof shall have been
delivered by CoBank to the Pledgor or such default is not remedied
within 60 days after receipt by the Pledgor of such notice; or
(iv) the Pledgor from and after the date hereof shall, or
shall attempt to, encumber, subject to any further pledge or
security interest, sell, transfer or otherwise dispose of any of the
Pledged Collateral or any interest therein except as otherwise
permitted herein or in any other Loan Document, or any of the
Pledged Collateral shall be attached or levied upon or seized in any
legal proceedings, or held by virtue of any lien; or
(v) this Pledge Agreement shall not or shall no longer be
effective in granting to CoBank a first-priority perfected lien on
the Pledged Collateral.
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SECTION 9. Application of Proceeds of Sale and Cash. The proceeds of any
sale of the whole or any part of the Pledged Collateral, together with any other
moneys held by CoBank under the provisions of this Pledge Agreement, shall be
applied by CoBank as follows:
First: to the payment of all reasonable costs and expenses incurred
by CoBank in connection herewith, including but not limited to, all court
costs and the fees and disbursements of counsel for CoBank in connection
herewith, and to the repayment of all advances made by CoBank hereunder
for the account of the Pledgor, and the payment of all reasonable costs
and expenses paid or incurred by CoBank in connection with the exercise of
any right or remedy hereunder; and
Second: to the payment in full of the Secured Obligations.
Any amounts remaining after such application shall be promptly remitted to the
Pledgor, its successors, legal representatives or assigns, or as otherwise
provided by law.
SECTION 10. Further Assurances. The Pledgor agrees that it will join with
CoBank in executing and will file or record such notices, financing statements
or other documents as may be necessary to the perfection of the security
interest of CoBank hereunder, and as CoBank or its counsel may reasonably
request, such instruments to be in form and substance satisfactory to CoBank and
its counsel, and that the Pledgor will do such further acts and things and
execute and deliver to CoBank such additional conveyances, assignments,
agreements and instruments as CoBank may at any time reasonably request in
connection with the administration and enforcement of this Pledge Agreement or
relative to the Pledged Collateral or any part thereof or in order to assure and
confirm unto CoBank its rights, powers and remedies hereunder.
SECTION 11. No Waiver; Election of Remedies. No course of dealing between
the Pledgor and CoBank or failure on the part of CoBank to exercise, and no
delay on its part in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power, or remedy preclude any other or the further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder or
under the MLA are cumulative and in addition to and are not exclusive of any
other remedies provided by law. No enforcement of any remedy shall constitute an
election of remedies.
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Loan No. ML0743
SECTION 12. Governing Law; Amendments. Except to the extent governed by
applicable federal law, this Pledge Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia without reference to
choice of law doctrine. This Pledge Agreement may not be amended or modified nor
may any of the Pledged Collateral be released, except in writing signed by the
parties hereto.
SECTION 13. Binding Agreement; Assignment. Binding Agreement; Assignment.
This Pledge Agreement, and the terms, covenants and conditions hereof, shall be
binding upon and inure to the benefit of CoBank and to all holders of the
indebtedness secured hereby and their respective successors and assigns and to
the Pledgor and its successors, legal representatives and assigns, except that
the Pledgor shall not be permitted to assign this Pledge Agreement or any
interest herein or in the Pledged Collateral, or any part thereof, or any cash
or property held by CoBank as collateral under this Pledge Agreement. No notice
to or demand on the Pledgor shall entitle the Pledgor to any other or further
notice or demand in the same, similar or other circumstances.
SECTION 14. Notices. All notices hereunder shall be deemed to be duly
given upon delivery in the form and manner set forth in Section 14 of the MLA.
SECTION 15. Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Pledge Agreement.
SECTION 16. Counterparts. This Pledge Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which when taken together constitute but one and the same instrument.
SECTION 17. Severability. If any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Pledge Agreement, but this Pledge Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had not
been contained herein.
SECTION 18. CoBank's Duties. Beyond the exercise of reasonable care to
assure the safe custody of the Pledged Collateral while held hereunder, CoBank
shall have no duty or liability to preserve rights pertaining thereto and shall
be relieved of all responsibility for the Pledged Collateral upon surrendering
it or tendering surrender of it to the Pledgor.
SECTION 19. Termination; Reinstatement. This Pledge Agreement shall remain
in full force and effect until (i) all Secured Obligations have been paid in
full, (ii) CoBank has no further commitment or obligation to make advances to be
secured hereby, and (iii) any preference period applicable to payments made on
or security given for the Secured Obligations
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Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
has expired under applicable bankruptcy and insolvency laws, at which time
CoBank shall deliver all Pledged Collateral in its possession to the Pledgor and
the Pledgor may request a written instrument of termination be executed and
delivered by a duly authorized officer of CoBank. If so terminated, this Pledge
Agreement and the Pledgor's obligations hereunder shall be automatically
reinstated if at any time payment in whole or in part of any of the Secured
Obligations is rescinded or restored to the Borrower, the Pledgor or other payor
or guarantor of the Secured Obligations, or must be paid to any other person,
upon the insolvency, bankruptcy, liquidation, dissolution or reorganization of
the Borrower, the Pledgor or other payor or guarantor of the Secured
Obligations, all as though such payment had not been made.
SECTION 20. FCC Matters. Notwithstanding any other provision of this
Pledge Agreement:
(A) Any foreclosure on, sale, transfer or other disposition of, or
the exercise or relinquishment of any right to vote or consent with respect to,
any of the Pledged Collateral or FCC licenses or permits, by CoBank shall, to
the extent required, be pursuant to Section 310(d) of the Communications Act of
1934, as amended, and the applicable rules and regulations thereunder, and, if
and to the extent required thereby, subject to the prior approval or notice to
and non-opposition of the FCC.
(B) If an Event of Default shall have occurred and be continuing,
the Pledgor shall take any action, and shall cause the Pledged Subsidiaries to
take any action, which CoBank may reasonably request in order to seek FCC
consent to, and subsequent thereto, to consummate, the transfer and assignment
to CoBank, or to such one or more third parties as CoBank may designate, or to a
combination of the foregoing, of each FCC license or permit owned by the Pledged
Subsidiaries. CoBank is empowered, to the extent permitted by applicable law, to
request the appointment of a receiver from any court of competent jurisdiction.
Such receiver may be instructed by CoBank to seek from the FCC an involuntary
transfer of control of each such FCC license or permit for the purpose of
seeking a bona fide purchaser to whom control will ultimately be transferred.
The Pledgor hereby agrees to authorize, subject to FCC approval, such an
involuntary transfer of control upon the request of the receiver so appointed
and, if the Pledgor shall refuse to authorize the transfer, its approval may be
required by the court. Upon the occurrence and during the continuance of an
Event of Default, the Pledgor shall further use its best efforts to assist in
obtaining approval of the FCC and any state regulatory bodies, if required, for
any action or transactions contemplated by this Pledge Agreement, including,
without limitation, the preparation, execution and filing with the FCC and any
state regulatory bodies of the assignor's or transferor's portion of any
application or applications for consent to the assignment of any FCC license or
permit or transfer of control necessary or appropriate under the rules and
regulations of the FCC or any state regulatory body for approval or
non-opposition of the transfer or assignment of any portion of the Pledged
Collateral, together with any FCC license or permit.
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(C) The Pledgor acknowledges that the assignment or transfer of each
FCC license or permit is integral to CoBank's realization of the value of the
Pledged Collateral, that there is no adequate remedy at law for failure by the
Pledgor to comply with the provisions of this Section 20 and that such failure
would not be adequately compensable in damages, and therefore agrees, without
limiting the right of CoBank to seek and obtain specific performance of other
obligations of the Pledgor contained in this Pledge Agreement, that the
agreements contained in this Section 20 may be specifically enforced.
(D) In accordance with the requirements of 47 C.F.R. Section 22.937,
or any successor provision thereto, CoBank shall notify the Pledgor and the FCC
in writing at least ten (10) days prior to the date on which CoBank intends to
exercise its rights, pursuant to this Pledge Agreement, the MLA or the Term
Supplement, by foreclosing on, or otherwise disposing of, any Pledged Collateral
in connection with which such notice is required pursuant to 47 C.F.R. Section
22.937 or any successor provision thereto.
(Signatures Appear On Next Page)
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IN WITNESS WHEREOF, CoBank has caused this Pledge Agreement to be executed
and delivered by its duly authorized officer and the Pledgor has caused this
Pledge Agreement to be executed and attested under seal and delivered by its
duly authorized officers, all as of the date first written above.
SHENANDOAH TELECOMMUNICATIONS COMPANY
By:_______________________________________
Name:__________________________________
Title:_________________________________
Attest:___________________________________
Name:______________________________
Title:_____________________________
[CORPORATE SEAL]
[Signatures continued on following page.]
[Signature Page to Amended and Restated Pledge Agreement]
Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
[Signatures continued from previous page.]
COBANK, ACB
By:________________________________
John P. Cole, Vice President
[Signature Page to Amended and Restated Pledge Agreement]
Exhibit 10.20
Loan No. ML0743
MEMBERSHIP INTEREST PLEDGE AGREEMENT
This MEMBERSHIP INTEREST PLEDGE AGREEMENT (this "Agreement"), dated as of
November 30, 2004, is entered into by SHENANDOAH TELECOMMUNICATIONS COMPANY
("Pledgor") in favor of COBANK, ACB ("Secured Party").
R E C I T A L S:
WHEREAS, Secured Party and Pledgor have entered into that certain Second
Amended and Restated Master Loan Agreement, dated of even date herewith (as the
same may be amended, supplemented, extended or restated from time to time, the
"MLA"), that certain Term Supplement, dated as of June 22, 2001, as amended by
that certain First Amendment to term Loan Supplement, dated as of September 1,
2001, and by that certain Second Amendment to Term Supplement, dated as of even
date herewith (as the same may be further amended, supplemented, extended or
restated from time to time, the "Term Supplement") providing for a term loan in
the original principal amount of $45,965,690, and that certain Third Supplement
to the Master Loan Agreement, dated as of even date herewith (as the same may be
amended, supplemented, extended or restated from time to time, the "Third
Supplement"; the MLA, as supplemented by the Term Supplement and the Third
Supplement, the "Loan Agreement") providing for a reducing revolving line of
credit of up to $15,000,000 (the "Revolving Loan"); and
WHEREAS, Pledgor is the legal and beneficial owner of the Membership
Interests (as defined in Section 2 hereof) of each Person as specified on
Schedule 1 attached hereto and incorporated herein by reference (collectively,
the "Pledged Entities"); and
WHEREAS, as an inducement to Secured Party to execute the MLA and Third
Supplement and to make the Revolving Loan, Pledgor desires to grant Secured
Party a first-priority security title and lien in and to the Collateral (as
hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, Pledgor and Secured Party agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Pledge Agreement,
unless otherwise defined herein, shall have the meanings assigned to them in the
Loan Agreement.
SECTION 2. Secured Obligations; Pledge; Collateral. To secure (i) the
payment and performance in full of all (i) the payment and performance of all
obligations of Pledgor under the MLA (as such obligations relate to the Term
Supplement and the Third Supplement), the Term Supplement and the Third
Supplement, any related Notes and other Loan Documents executed in connection
therewith, (ii) the payment of all other indebtedness and the performance of all
other obligations of Pledgor to Secured Party under any future Supplement to the
MLA that by its terms provides that the loan or other extension of credit
described therein shall be secured
Membership Interests Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
by a lien and security interest in the Collateral pursuant to this Pledge
Agreement, and (iii) the payment of any and all additional advances made or
costs or expenses incurred by Secured Party to protect or preserve the
Collateral or the security title, lien and security interest created hereby or
for any other purpose provided herein (whether or not Pledgor remains the owner
of the Collateral at the time such advances are made or costs or expenses are
incurred) (collectively, the "Secured Obligations"), Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto Secured Party, and
grants to Secured Party a lien upon and a security interest in (a) all right,
title and interest of Pledgor, whether legal or equitable, now or hereafter
existing or acquired, and howsoever evidenced or arising, in each Pledged Entity
(collectively, the "Membership Interests"), (b) any cash, additional Membership
Interests or other property at any time and from time to time receivable or
otherwise distributable in respect of, in exchange for, or in liquidation of,
any and all of the Membership Interests, together with the proceeds thereof
(collectively, the "Distributions") and (c) all certificates, accounts, chattel
paper, instruments, general intangibles, cash, books, records, notices and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for the Membership Interests or the Distributions,
together with all rights of Pledgor to receive and retain any of the foregoing
and all proceeds of the foregoing (all such Membership Interests, Distributions
and other proceeds thereof, collectively, the "Collateral"). Notwithstanding the
foregoing, if at any time Pledgor demonstrates to Secured Party on a pro forma
basis, taking into consideration the acquisition of any Pledged Entity hereafter
acquired by Pledgor, that Pledgor will achieve and maintain for the then
remaining life of the Loans (i) a Total Leverage Ratio (as determined in
accordance with Section 7 of the MLA) less than or equal to 2.5:1.0 and (ii) an
Equity to Total Assets Ratio (as determined in accordance with Section 7 of the
MLA) greater than or equal to 35.0%, and the remaining life of the all Loans
then outstanding is less than 7 years, Secured Party shall release the lien and
security interest granted herein in such shares, capital stock, securities,
cash, property and other proceeds thereof of such Pledged Entity. Upon a
determination by Secured Party to grant such a request, for purposes of this
Pledge Agreement such entity shall no longer be considered a Pledged Entity, all
such membership and other ownership interests, cash, property and other proceeds
shall no longer be considered part of the Collateral, and Secured Party shall
deliver to Pledgor UCC termination statements and any other documents reasonably
requested by Pledgor to evidence such release.
Upon delivery to Secured Party, all property comprising part of the
Collateral, except as provided below, shall be accompanied by proper instruments
of assignment duly executed by Pledgor and by such other instruments or
documents as Secured Party may reasonably request. Upon any certification of the
Membership Interests or the issuance to Pledgor of any additional certificates
representing Membership Interests in the Pledged Entities thereafter, Pledgor
shall hold such certificates as Secured Party's agent and in trust for Secured
Party as additional Collateral and shall pledge and deliver to Secured Party
such certificates, along with proper instruments of assignment or membership
interest transfer powers in blank duly executed by Pledgor and by such other
instruments or documents as Secured Party or its counsel may reasonably request.
Each delivery of such certificates or other issuance of uncertificated
Membership Interests to Pledgor shall be accompanied by a schedule showing the
numbers of the certificates (or other interests) therefor, theretofore and then
being delivered or pledged to Secured Party hereunder, which schedules shall be
attached hereto as Schedule 1 and made a part hereof. Each schedule so delivered
shall supersede any prior schedules so delivered. In case any
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Membership Interests Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
distribution of any additional Membership Interests shall be made on or in
respect of the Membership Interests or any property shall be distributed upon or
with respect to the Membership Interests pursuant to the recapitalization or
reclassification of the Membership Interests or pursuant to the reorganization
thereof, the property so distributed shall be delivered to Secured Party to be
held by it as additional Collateral. All sums of money and property so paid or
distributed in respect of the Membership Interests which are received by Pledgor
may be received by Pledgor and used in the ordinary course of its business;
provided, however, upon the occurrence and during the continuance of an Event of
Default, such sums shall, until paid or delivered to Secured Party, be held by
Pledgor in trust for the benefit of Secured Party as additional Collateral.
TO HAVE AND TO HOLD the Collateral, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto Secured Party, its successors and assigns, forever, subject, however, to
the terms, covenants and conditions hereinafter set forth.
SECTION 3. Representations and Warranties. Pledgor hereby represents and
warrants that, except for security interests granted herein, Pledgor is the
legal, equitable and beneficial owner of the Membership Interests, and holds the
same free and clear of all liens, charges, encumbrances and security interests
of every kind and nature and free and clear of all warrants, options, rights to
purchase, rights of first refusal and other interests of any Person; that
Pledgor has legal authority to pledge the Collateral in the manner hereby done
or contemplated; that the execution and delivery of this Pledge Agreement, and
the performance of its terms, will not result in any violation of any provision
of Pledgor's or any Pledged Entity's articles of organization or operating
agreement, or violate or constitute a default under the terms of any trust
agreement or other agreement, indenture or other instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or regulation
applicable to Pledgor or any Pledged Entity or any of Pledgor's or any Pledged
Entity's property; that no approval, consent or authorization of any
Governmental Authority which has not heretofore been obtained is necessary for
the execution or delivery by Pledgor of this Pledge Agreement or for the
performance by Pledgor of any of the terms or conditions hereof or thereof; and
that this pledge is effective to vest in Secured Party the rights of Pledgor in
the Collateral as set forth herein.
SECTION 4. Membership Interests of the Pledged Entities. Pledgor
represents that it is the registered and beneficial owner of Membership
Interests in the Pledged Entities set forth on Schedule 1 hereto, as such
schedule may be amended by Pledgor from time to time pursuant to this Sections 2
and 4. The outstanding Membership Interests owned by Pledgor of each Pledged
Entity has been duly authorized and are validly issued, fully paid and
non-assessable. Pledgor shall amend Schedule 1 from time to time as necessary
for the information thereon to be true and correct and, with each such delivery,
shall be deemed to remake all of the representations and warranties contained in
this Pledge Agreement. Schedule 1 shall be amended by Pledgor's delivery of an
amended Schedule 1 to Secured Party in accordance with Section 2 of this Pledge
Agreement.
SECTION 5. Additional Membership Interests; Transfer. Without the prior
written consent of Secured Party, Pledgor will not (i) consent to or approve of
the issuance of
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Membership Interests Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
any additional Membership Interests or certificates representing Membership
Interests by any Pledged Entity, or to any options, subscription rights,
warrants or other instruments in respect thereof, (ii) consent to, approve of or
permit any merger, consolidation, reorganization or any sale or lease of
substantially all the assets of any Pledged Entity (except as permitted by the
Loan Agreement), or (iii) consent to or approve the repurchase or redemption by
any Pledged Entity of any of its Membership Interests.
SECTION 6. Covenants with Respect to Collateral. Pledgor hereby covenants
and agrees with respect to the Collateral as follows:
(A) Pledgor will cause any additional Membership Interests issued to
Pledgor by any Pledged Entity or property issued by any Pledged Entity
with respect to the Collateral, whether for value paid by Pledgor or
otherwise, to be forthwith deposited and pledged hereunder and delivered
to Secured Party, free and clear of all liens, charges, encumbrances and
security interests of every kind and nature, and in each case accompanied
by proper instruments of assignment duly executed.
(B) Pledgor will defend its title to, and the interest of the
Secured Party in the Collateral against the claims of all Persons
whomsoever.
(C) Without the prior written consent of Secured Party, Pledgor will
not sell, assign, transfer or otherwise dispose of, grant any option with
respect to, or pledge or grant any security interest in or otherwise
encumber or restrict any of the Collateral or any interest therein, except
for the pledge thereof, and security interest therein, provided for in
this Pledge Agreement.
SECTION 7. Rights Regarding Collateral. Pledgor shall have the right to
receive distributions from the Pledged Entities until the occurrence and during
the continuance of an Event of Default. In the event Pledgor shall receive any
distribution not permitted pursuant to this Section 7, Pledgor shall pay and
contribute into such Pledged Entities all such distributions and any and all
money and other property received by Pledgor in contravention of this Section 7.
So long as no Event of Default hereunder shall have occurred and be continuing,
Pledgor shall have the right to exercise all of its voting, consensual and other
powers of ownership pertaining to the Collateral for all purposes not
inconsistent with the terms of this Pledge Agreement or any of the other Loan
Documents. Upon the occurrence and during the continuance of a Default
hereunder, all rights of Pledgor to exercise its voting, consensual and other
powers of ownership pertaining to the Collateral shall become vested in Secured
Party upon written notice from Secured Party to Pledgor, and thereupon Secured
Party shall have the sole and exclusive authority to exercise such voting,
consensual and other powers of ownership which Pledgor shall otherwise be
entitled to exercise.
SECTION 8. Event of Default. The breach of or failure to pay or perform
any of the obligations secured hereby in accordance with their respective terms,
the breach of or failure to perform or observe any representation, warranty,
covenant or agreement contained in this Pledge Agreement or the existence of any
breach, Default or Event of Default under any of the Loan Documents shall
constitute a "Event of Default" hereunder; provided that any breach of the
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Membership Interests Pledge Agreement/Shenandoah Telecommunications Company
Loan No. ML0743
terms of this Pledge Agreement which shall also constitute a breach of any other
Loan Document shall be subject to the same notice and cure right applicable to
such breach under such Loan Document.
SECTION 9. Secured Party's Rights and Remedies. Upon the occurrence of an
Event of Default, and subject to any applicable requirements contained in the
organizational documents of the Pledged Entities:
(A) Secured Party shall thereupon have, in addition to all other
rights provided herein and in the Loan Documents, subject to any necessary
approval of the FCC, the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the Commonwealth of Virginia, and
further, Secured Party may, without demand and without advertisement,
notice or legal process of any kind (except as may be required hereunder
or by applicable Law), all of which Pledgor waives, at any time or times,
sell and deliver any portion or all of the Collateral, including, without
limitation, the right to receive all profits, Distributions, income,
revenues and proceeds of the Membership Interests attributable to the
Membership Interests, at public or private sales held by or for Secured
Party, for cash, upon credit or otherwise, at such prices and upon such
terms as Secured Party deems advisable, at its sole discretion. Secured
Party or any affiliate of Secured Party may be the purchaser at any sale
as described above, free from the right of redemption after such sale,
which right of redemption Pledgor also waives. Secured Party may, if it
deems it reasonable, postpone or adjourn any sale of the Collateral from
time to time by an announcement at the time and place of such postponed or
adjourned sale, without being required to give a new notice of sale.
Pledgor agrees that Secured Party has no obligation to preserve rights to
the Collateral against prior parties or to marshall any Collateral for the
benefit of any person or entity.
(B) In addition thereto, Pledgor further agrees (i) in the event
that notice is necessary under applicable Law, written notice mailed to
Pledgor in the manner specified in Section 16 hereof not less than 20
Business Days prior to the date of public sale of any of the Collateral
subject to the security interest created herein or prior to the date after
which private sale or any other disposition of said Collateral will be
made shall constitute reasonable notice, but notice given in any other
reasonable manner or at any other time shall be sufficient; (ii) without
precluding any other methods of sale, the sale of Collateral shall have
been made in a commercially reasonable manner if conducted in conformity
with reasonable commercial practices of lenders disposing of similar
property but Secured Party may sell on such terms as it may choose without
assuming any credit risk and without any obligation to advertise or give
notice of any kind; and (iii) the proceeds of any such sale or disposition
shall be applied first to the satisfaction of Secured Party's attorneys'
fees, legal expenses, and other costs and expenses incurred in connection
with the taking, retaking, holding, preparing for sale and selling of the
Collateral and second to the payment (in whatever order Secured Party
elects) of the Secured Obligations. After the application of all such
proceeds as aforesaid, Secured Party will return any excess to Pledgor. To
the extent permitted by applicable Law, Pledgor waives all claims, damages
and demands against Secured Party arising out of the repossession,
retention or sale of the Collateral.
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SECTION 10. Application of Proceeds of Sale and Cash. The proceeds of any
sale of the whole or any part of the Collateral, together with any other moneys
held by Secured Party under the provisions of this Pledge Agreement, shall be
applied by Secured Party as follows:
First: to the payment of all reasonable costs and expenses incurred
by Secured Party in connection herewith, including but not limited to, all
court costs and the fees and disbursements of counsel for Secured Party in
connection herewith, and to the repayment of all advances made by Secured
Party hereunder for the account of Pledgor, and the payment of all
reasonable costs and expenses paid or incurred by Secured Party in
connection with the exercise of any right or remedy hereunder; and
Second: to the payment in full of the Secured Obligations in such
order as Secured Party may elect.
Any amounts remaining after such application shall be promptly remitted to
Pledgor, its successors, legal representatives or assigns, or as otherwise
provided by Applicable Law.
SECTION 11. Further Assurances. Pledgor agrees that it will join with
Secured Party in executing and will file or record such notices, financing
statements or other documents as may be necessary to the perfection of the
security interest of Secured Party hereunder, and as Secured Party may
reasonably request, such instruments to be in form and substance satisfactory to
Secured Party, and that Pledgor will do such further acts and things and execute
and deliver to Secured Party such additional conveyances, assignments,
agreements and instruments as Secured Party may at any time reasonably request
in connection with the administration and enforcement of this Pledge Agreement
or relative to the Collateral or any part thereof or in order to assure and
confirm unto Secured Party its rights, powers and remedies hereunder. Pledgor
shall notify Secured Party in writing promptly upon its acquisition of
Memberships Interests of any of the Pledged Entities and shall execute and
deliver to Secured Party, upon request, an amendment to this Pledge Agreement or
such other instruments as Secured Party may request together with certificates
evidencing such Membership Interests accompanied by membership interest transfer
powers executed in blank, and shall take such other action requested by Secured
Party to effectuate the pledge of such Membership Interests to Secured Party in
accordance with the provisions of this Pledge Agreement. Pledgor hereby
constitutes and appoints Secured Party or Secured Party's designee during the
term of any Secured Obligations secured by this Pledge Agreement as its
attorney-in-fact, effective upon the occurrence of an Event of Default, which
appointment is an irrevocable, durable agency, coupled with an interest, with
full power of substitution. This power of attorney and mandate is for the
purpose of taking, whether in the name of Pledgor or in the name of Secured
Party, any action which Pledgor is obligated to perform hereunder or which
Secured Party may deem necessary or advisable to accomplish the purposes of this
Pledge Agreement. The powers conferred upon Secured Party in this Section are
solely to protect its interest in the Collateral and shall not impose any duty
upon Secured Party to exercise any such powers. Secured Party shall exercise its
power of attorney only upon the occurrence and during the continuance of an
Event of Default or in the event Secured Party deems such action necessary or
advisable to protect its interest in the Collateral.
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SECTION 12. Non-Waiver; Election of Remedies. No course of dealing between
Pledgor and Secured Party or failure on the part of Secured Party to exercise,
and no delay on its part in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power, or remedy preclude any other or the further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder or under any of the Loan Documents are cumulative and in addition to
and are not exclusive of any other remedies provided by law. No enforcement of
any remedy shall constitute an election of remedies.
SECTION 13. Pledgor's Obligations Not Affected. To the extent permitted by
Applicable Law, the obligations of Pledgor hereunder shall remain in full force
and effect without regard to, and shall not be impaired by (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of Pledgor, the Pledgor or any other obligor of the Secured
Obligations; (ii) any exercise or nonexercise, or any waiver, by Secured Party
of any right, remedy, power or privilege under or in respect of any of the
Secured Obligations or any security thereof (including this Pledge Agreement);
(iii) any amendment to or modification or waiver of any provision of the Loan
Agreement, the Notes or any of the other Loan Documents; (iv) any amendment to
or modification of any instrument (other than this Pledge Agreement) securing
any of the Secured Obligations, including, without limitation, any of the Loan
Documents; or (v) the taking of additional security for, or any other assurances
of payment of, any of the Secured Obligations or the modification, release or
discharge or termination of any security or other assurance of payment or
performance for any of the Secured Obligations, all whether or not Pledgor shall
have notice or knowledge of any of the foregoing.
SECTION 14. Governing Law; Amendments. Except to the extent governed by
applicable federal law, this Pledge Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia, without reference
to choice of law doctrine. This Pledge Agreement may not be amended or modified
nor may any of the Collateral be released, except in writing signed by the
parties hereto.
SECTION 15. Binding Agreement; Assignment. This Pledge Agreement shall be
binding upon and inure to the benefit of Secured Party and its successors and
assigns, and in the event of an assignment of any or all of the obligations
secured hereby, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This Pledge
Agreement shall be binding upon Pledgor and its successors and assigns. Pledgor
may not assign any of its rights or obligations hereunder without the prior
written consent of Secured Party.
SECTION 16. Notices. All notices hereunder shall be delivered in
accordance with the terms and provisions of the Loan Agreement.
SECTION 17. Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Pledge Agreement.
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SECTION 18. Counterparts. This Pledge Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which when taken together constitute but one and the same instrument.
SECTION 19. Severability. If any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Pledge Agreement, but this Pledge Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had not
been contained herein.
SECTION 20. Secured Party's Duties. Beyond the exercise of reasonable care
to assure the safe custody of the Collateral while held hereunder, Secured Party
shall have no duty or liability to preserve rights pertaining thereto and shall
be relieved of all responsibility for the Collateral upon surrendering it or
tendering surrender of it to Pledgor.
SECTION 21. Secured Party's Exoneration. Under no circumstances shall
Secured Party be deemed to assume any responsibility for or obligation or duty
with respect to any part or all of the Collateral of any nature or kind or any
matter or proceedings arising out of or relating thereto, other than after a
Event of Default shall have occurred and be continuing, to act in a commercially
reasonable manner. Secured Party shall not be required to take any action of any
kind to collect, preserve or protect its or Pledgor's rights in the Collateral
or against other parties thereto. Secured Party's prior recourse to any part or
all of the Collateral shall not constitute a condition of any demand, suit or
proceeding for payment or collection of any of the Secured Obligations.
SECTION 22. Termination; Reinstatement. This Pledge Agreement shall remain
in full force and effect until (i) Secured Party has no further commitment or
obligation to make advances to be secured hereby with respect to the Secured
Obligations, and (ii) all Secured Obligations have been indefeasibly paid in
full or any preference period applicable to payments made on or security given
for the Secured Obligations has expired under applicable bankruptcy and
insolvency laws, at which time Pledgor may request a written instrument of
termination be executed and delivered by a duly authorized officer of Secured
Party. If so terminated, this Pledge Agreement and all Pledgor's obligations
hereunder shall be automatically reinstated if at any time payment in whole or
in part of any of the Secured Obligations is rescinded or restored to Pledgor or
all other payor or guarantor of the Secured Obligations, or must be paid to any
other Person, upon the insolvency, bankruptcy, liquidation, dissolution or
reorganization of Pledgor or any other payor or guarantor of the Secured
Obligations, all as though such payment had not been made.
SECTION 23. FCC Matters. Notwithstanding any other provision of this
Pledge Agreement:
(A) Any foreclosure on, sale, transfer or other disposition of, or
the exercise or relinquishment of any right to vote or consent with respect to,
any of the Collateral by Secured Party shall, to the extent required, be
pursuant to Section 310(d) of the Communications Act of
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1934, as amended, and the applicable rules and regulations thereunder, and, if
and to the extent required thereby, subject to the prior approval or notice to
and non-opposition of the FCC.
(B) If a Event of Default shall have occurred and be continuing,
Pledgor shall take any action, and shall cause the Pledged Entities to take any
action, which Secured Party may reasonably request in order to transfer and
assign to Secured Party, or to such one or more third parties as Secured Party
may designate, or to a combination of the foregoing, each FCC license or permit
owned by Pledgor. Secured Party is empowered, to the extent permitted by
Applicable Law, to request the appointment of a receiver from any court of
competent jurisdiction. Such receiver may be instructed by Secured Party to seek
from the FCC an involuntary transfer of control of each such FCC license or
permit for the purpose of seeking a bona fide purchaser to whom control will
ultimately be transferred. Pledgor hereby agrees to authorize such an
involuntary transfer of control upon the request of the receiver so appointed
and, if Pledgor shall refuse to authorize the transfer, its approval may be
required by the court. Upon the occurrence and during the continuance of a Event
of Default, Pledgor shall further use its best efforts to assist in obtaining
approval of the FCC and any state regulatory bodies, if required, for any action
or transactions contemplated by this Pledge Agreement, including, without
limitation, the preparation, execution and filing with the FCC and any state
regulatory bodies of the assignor's or transferor's portion of any application
or applications for consent to the assignment of any FCC license or permit or
transfer of control necessary or appropriate under the rules and regulations of
the FCC or any state regulatory body for approval or non-opposition of the
transfer or assignment of any portion of the Collateral, together with any FCC
license or permit.
(C) Pledgor acknowledges that the assignment or transfer of each FCC
license or permit is integral to Secured Party's realization of the value of the
Collateral, that there is no adequate remedy at law for failure by Pledgor to
comply with the provisions of this Section 23 and that such failure would not be
adequately compensable in damages, and therefore agrees, without limiting the
right of Secured Party to seek and obtain specific performance of other
obligations of Pledgor contained in this Pledge Agreement, that the agreements
contained in this Section 23 may be specifically enforced.
(D) In accordance with the requirements of 47 C.F.R. Section 22.937,
or any successor provision thereto, Secured Party shall notify Pledgor and the
FCC in writing at least ten (10) days prior to the date on which Secured Party
intends to exercise its rights, pursuant to this Pledge Agreement or any of the
other Loan Documents, by foreclosing on, or otherwise disposing of, any
Collateral in connection with which such notice is required pursuant to 47
C.F.R. Section 22.937 or any successor provision thereto.
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IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be
executed and delivered, and Secured Party has caused this Pledge Agreement to be
executed and delivered by its duly authorized officer, as of the date first
above shown.
Pledgor:
SHENANDOAH TELECOMMUNICATIONS
COMPANY
By:_____________________________________
Name:________________________________
Title:_______________________________
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[Signatures Continued from Previous Page]
COBANK, ACB
By:_________________________________________
John P. Cole, Vice President
Exhibit 10.21
Loan No. ML0743
MEMBERSHIP INTEREST PLEDGE AGREEMENT
This MEMBERSHIP INTEREST PLEDGE AGREEMENT (this "Agreement"), dated as of
November 30, 2004, is entered into by SHENTEL CONVERGED SERVICES, INC.
("Pledgor") in favor of COBANK, ACB ("Secured Party").
R E C I T A L S:
WHEREAS, Secured Party and Shenandoah Telecommunications Company (the
"Borrower") have entered into that certain Second Amended and Restated Master
Loan Agreement, dated of even date herewith (as the same may be amended,
supplemented, extended or restated from time to time, the "MLA"), that certain
Term Supplement, dated as of June 22, 2001, as amended by that certain First
Amendment to term Loan Supplement, dated as of September 1, 2001, and by that
certain Second Amendment to Term Supplement, dated as of even date herewith (as
the same may be further amended, supplemented, extended or restated from time to
time, the "Term Supplement") providing for a term loan in the original principal
amount of $45,965,690, and that certain Third Supplement to the Master Loan
Agreement, dated as of even date herewith (as the same may be amended,
supplemented, extended or restated from time to time, the "Third Supplement";
the MLA, as supplemented by the Term Supplement and the Third Supplement, the
"Loan Agreement") providing for a reducing revolving line of credit of up to
$15,000,000 (the "Revolving Loan"); and
WHEREAS, the Borrower owns 100% of the issued and outstanding capital
stock of Pledgor; and
WHEREAS, Pledgor is the legal and beneficial owner of the Membership
Interests (as defined in Section 2 hereof) of each Person as specified on
Schedule 1 attached hereto and incorporated herein by reference (collectively,
the "Pledged Entities"); and
WHEREAS, as an inducement to Secured Party to execute the MLA and Third
Supplement and to make the Revolving Loan, Pledgor desires to grant Secured
Party a first-priority security title and lien in and to the Collateral (as
hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, Pledgor and Secured Party agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Pledge Agreement,
unless otherwise defined herein, shall have the meanings assigned to them in the
Loan Agreement.
SECTION 2. Secured Obligations; Pledge; Collateral. To secure (i) the
payment and performance in full of all (i) the payment and performance of all
obligations of the Borrower under the MLA (as such obligations relate to the
Term Supplement and the Third Supplement), the Term Supplement and the Third
Supplement, any related Notes and other Loan Documents executed in connection
therewith, (ii) the payment of all other indebtedness and the performance
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of all other obligations of the Borrower to Secured Party under any future
Supplement to the MLA that by its terms provides that the loan or other
extension of credit described therein shall be secured by a lien and security
interest in the Collateral pursuant to this Pledge Agreement, and (iii) the
payment of any and all additional advances made or costs or expenses incurred by
Secured Party to protect or preserve the Collateral or the security title, lien
and security interest created hereby or for any other purpose provided herein
(whether or not Pledgor remains the owner of the Collateral at the time such
advances are made or costs or expenses are incurred) (collectively, the "Secured
Obligations"), Pledgor hereby pledges, hypothecates, assigns, transfers, sets
over and delivers unto Secured Party, and grants to Secured Party a lien upon
and a security interest in (a) all right, title and interest of Pledgor, whether
legal or equitable, now or hereafter existing or acquired, and howsoever
evidenced or arising, in each Pledged Entity (collectively, the "Membership
Interests"), (b) any cash, additional Membership Interests or other property at
any time and from time to time receivable or otherwise distributable in respect
of, in exchange for, or in liquidation of, any and all of the Membership
Interests, together with the proceeds thereof (collectively, the
"Distributions") and (c) all certificates, accounts, chattel paper, instruments,
general intangibles, cash, books, records, notices and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for the Membership Interests or the Distributions, together with all
rights of Pledgor to receive and retain any of the foregoing and all proceeds of
the foregoing (all such Membership Interests, Distributions and other proceeds
thereof, collectively, the "Collateral"). Notwithstanding the foregoing, if at
any time Pledgor demonstrates to Secured Party on a pro forma basis, taking into
consideration the acquisition of any Pledged Entity hereafter acquired by
Pledgor, that the Borrower will achieve and maintain for the then remaining life
of the Loans (i) a Total Leverage Ratio (as determined in accordance with
Section 7 of the MLA) less than or equal to 2.5:1.0 and (ii) an Equity to Total
Assets Ratio (as determined in accordance with Section 7 of the MLA) greater
than or equal to 35.0%, and the remaining life of the all Loans then outstanding
is less than 7 years, Secured Party shall release the lien and security interest
granted herein in such shares, capital stock, securities, cash, property and
other proceeds thereof of such Pledged Entity. Upon a determination by Secured
Party to grant such a request, for purposes of this Pledge Agreement such entity
shall no longer be considered a Pledged Entity, all such membership and other
ownership interests, cash, property and other proceeds shall no longer be
considered part of the Collateral, and Secured Party shall deliver to Pledgor
UCC termination statements and any other documents reasonably requested by
Pledgor to evidence such release.
Upon delivery to Secured Party, all property comprising part of the
Collateral, except as provided below, shall be accompanied by proper instruments
of assignment duly executed by Pledgor and by such other instruments or
documents as Secured Party may reasonably request. Upon any certification of the
Membership Interests or the issuance to Pledgor of any additional certificates
representing Membership Interests in the Pledged Entities thereafter, Pledgor
shall hold such certificates as Secured Party's agent and in trust for Secured
Party as additional Collateral and shall pledge and deliver to Secured Party
such certificates, along with proper instruments of assignment or membership
interest transfer powers in blank duly executed by Pledgor and by such other
instruments or documents as Secured Party or its counsel may reasonably request.
Each delivery of such certificates or other issuance of uncertificated
Membership Interests to Pledgor shall be accompanied by a schedule showing the
numbers of the certificates (or other interests) therefor, theretofore and then
being delivered or pledged to
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Secured Party hereunder, which schedules shall be attached hereto as Schedule 1
and made a part hereof. Each schedule so delivered shall supersede any prior
schedules so delivered. In case any distribution of any additional Membership
Interests shall be made on or in respect of the Membership Interests or any
property shall be distributed upon or with respect to the Membership Interests
pursuant to the recapitalization or reclassification of the Membership Interests
or pursuant to the reorganization thereof, the property so distributed shall be
delivered to Secured Party to be held by it as additional Collateral. All sums
of money and property so paid or distributed in respect of the Membership
Interests which are received by Pledgor may be received by Pledgor and used in
the ordinary course of its business; provided, however, upon the occurrence and
during the continuance of an Event of Default, such sums shall, until paid or
delivered to Secured Party, be held by Pledgor in trust for the benefit of
Secured Party as additional Collateral.
TO HAVE AND TO HOLD the Collateral, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto Secured Party, its successors and assigns, forever, subject, however, to
the terms, covenants and conditions hereinafter set forth.
SECTION 3. Representations and Warranties. Pledgor hereby represents and
warrants that, except for security interests granted herein, Pledgor is the
legal, equitable and beneficial owner of the Membership Interests, and holds the
same free and clear of all liens, charges, encumbrances and security interests
of every kind and nature and free and clear of all warrants, options, rights to
purchase, rights of first refusal and other interests of any Person; that
Pledgor has legal authority to pledge the Collateral in the manner hereby done
or contemplated; that the execution and delivery of this Pledge Agreement, and
the performance of its terms, will not result in any violation of any provision
of Pledgor's or any Pledged Entity's articles of organization or operating
agreement, or violate or constitute a default under the terms of any trust
agreement or other agreement, indenture or other instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or regulation
applicable to Pledgor or any Pledged Entity or any of Pledgor's or any Pledged
Entity's property; that no approval, consent or authorization of any
Governmental Authority which has not heretofore been obtained is necessary for
the execution or delivery by Pledgor of this Pledge Agreement or for the
performance by Pledgor of any of the terms or conditions hereof or thereof; and
that this pledge is effective to vest in Secured Party the rights of Pledgor in
the Collateral as set forth herein.
SECTION 4. Membership Interests of the Pledged Entities. Pledgor
represents that it is the registered and beneficial owner of Membership
Interests in the Pledged Entities set forth on Schedule 1 hereto, as such
schedule may be amended by Pledgor from time to time pursuant to this Sections 2
and 4. The outstanding Membership Interests owned by Pledgor of each Pledged
Entity has been duly authorized and are validly issued, fully paid and
non-assessable. Pledgor shall amend Schedule 1 from time to time as necessary
for the information thereon to be true and correct and, with each such delivery,
shall be deemed to remake all of the representations and warranties contained in
this Pledge Agreement. Schedule 1 shall be amended by Pledgor's delivery of an
amended Schedule 1 to Secured Party in accordance with Section 2 of this Pledge
Agreement.
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SECTION 5. Additional Membership Interests; Transfer. Without the prior
written consent of Secured Party, Pledgor will not (i) consent to or approve of
the issuance of any additional Membership Interests or certificates representing
Membership Interests by any Pledged Entity, or to any options, subscription
rights, warrants or other instruments in respect thereof, (ii) consent to,
approve of or permit any merger, consolidation, reorganization or any sale or
lease of substantially all the assets of any Pledged Entity (except as permitted
by the Loan Agreement), or (iii) consent to or approve the repurchase or
redemption by any Pledged Entity of any of its Membership Interests.
SECTION 6. Covenants with Respect to Collateral. Pledgor hereby covenants
and agrees with respect to the Collateral as follows:
(A) Pledgor will cause any additional Membership Interests issued to
Pledgor by any Pledged Entity or property issued by any Pledged Entity
with respect to the Collateral, whether for value paid by Pledgor or
otherwise, to be forthwith deposited and pledged hereunder and delivered
to Secured Party, free and clear of all liens, charges, encumbrances and
security interests of every kind and nature, and in each case accompanied
by proper instruments of assignment duly executed.
(B) Pledgor will defend its title to, and the interest of the
Secured Party in the Collateral against the claims of all Persons
whomsoever.
(C) Without the prior written consent of Secured Party, Pledgor will
not sell, assign, transfer or otherwise dispose of, grant any option with
respect to, or pledge or grant any security interest in or otherwise
encumber or restrict any of the Collateral or any interest therein, except
for the pledge thereof, and security interest therein, provided for in
this Pledge Agreement.
SECTION 7. Rights Regarding Collateral. Pledgor shall have the right to
receive distributions from the Pledged Entities until the occurrence and during
the continuance of an Event of Default. In the event Pledgor shall receive any
distribution not permitted pursuant to this Section 7, Pledgor shall pay and
contribute into such Pledged Entities all such distributions and any and all
money and other property received by Pledgor in contravention of this Section 7.
So long as no Event of Default hereunder shall have occurred and be continuing,
Pledgor shall have the right to exercise all of its voting, consensual and other
powers of ownership pertaining to the Collateral for all purposes not
inconsistent with the terms of this Pledge Agreement or any of the other Loan
Documents. Upon the occurrence and during the continuance of a Default
hereunder, all rights of Pledgor to exercise its voting, consensual and other
powers of ownership pertaining to the Collateral shall become vested in Secured
Party upon written notice from Secured Party to Pledgor, and thereupon Secured
Party shall have the sole and exclusive authority to exercise such voting,
consensual and other powers of ownership which Pledgor shall otherwise be
entitled to exercise.
SECTION 8. Event of Default. The breach of or failure to pay or perform
any of the obligations secured hereby in accordance with their respective terms,
the breach of or failure to perform or observe any representation, warranty,
covenant or agreement contained in this Pledge
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Agreement or the existence of any breach, Default or Event of Default under any
of the Loan Documents shall constitute a "Event of Default" hereunder; provided
that any breach of the terms of this Pledge Agreement which shall also
constitute a breach of any other Loan Document shall be subject to the same
notice and cure right applicable to such breach under such Loan Document.
SECTION 9. Secured Party's Rights and Remedies. Upon the occurrence of an
Event of Default, and subject to any applicable requirements contained in the
organizational documents of the Pledged Entities:
(A) Secured Party shall thereupon have, in addition to all other
rights provided herein and in the Loan Documents, subject to any necessary
approval of the FCC, the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the Commonwealth of Virginia, and
further, Secured Party may, without demand and without advertisement,
notice or legal process of any kind (except as may be required hereunder
or by applicable Law), all of which Pledgor waives, at any time or times,
sell and deliver any portion or all of the Collateral, including, without
limitation, the right to receive all profits, Distributions, income,
revenues and proceeds of the Membership Interests attributable to the
Membership Interests, at public or private sales held by or for Secured
Party, for cash, upon credit or otherwise, at such prices and upon such
terms as Secured Party deems advisable, at its sole discretion. Secured
Party or any affiliate of Secured Party may be the purchaser at any sale
as described above, free from the right of redemption after such sale,
which right of redemption Pledgor also waives. Secured Party may, if it
deems it reasonable, postpone or adjourn any sale of the Collateral from
time to time by an announcement at the time and place of such postponed or
adjourned sale, without being required to give a new notice of sale.
Pledgor agrees that Secured Party has no obligation to preserve rights to
the Collateral against prior parties or to marshall any Collateral for the
benefit of any person or entity.
(B) In addition thereto, Pledgor further agrees (i) in the event
that notice is necessary under applicable Law, written notice mailed to
Pledgor in the manner specified in Section 16 hereof not less than 20
Business Days prior to the date of public sale of any of the Collateral
subject to the security interest created herein or prior to the date after
which private sale or any other disposition of said Collateral will be
made shall constitute reasonable notice, but notice given in any other
reasonable manner or at any other time shall be sufficient; (ii) without
precluding any other methods of sale, the sale of Collateral shall have
been made in a commercially reasonable manner if conducted in conformity
with reasonable commercial practices of lenders disposing of similar
property but Secured Party may sell on such terms as it may choose without
assuming any credit risk and without any obligation to advertise or give
notice of any kind; and (iii) the proceeds of any such sale or disposition
shall be applied first to the satisfaction of Secured Party's attorneys'
fees, legal expenses, and other costs and expenses incurred in connection
with the taking, retaking, holding, preparing for sale and selling of the
Collateral and second to the payment (in whatever order Secured Party
elects) of the Secured Obligations. After the application of all such
proceeds as aforesaid, Secured Party will return any excess to Pledgor. To
the extent permitted by applicable Law,
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Pledgor waives all claims, damages and demands against Secured Party
arising out of the repossession, retention or sale of the Collateral.
SECTION 10. Application of Proceeds of Sale and Cash. The proceeds of any
sale of the whole or any part of the Collateral, together with any other moneys
held by Secured Party under the provisions of this Pledge Agreement, shall be
applied by Secured Party as follows:
First: to the payment of all reasonable costs and expenses incurred
by Secured Party in connection herewith, including but not limited to, all
court costs and the fees and disbursements of counsel for Secured Party in
connection herewith, and to the repayment of all advances made by Secured
Party hereunder for the account of Pledgor, and the payment of all
reasonable costs and expenses paid or incurred by Secured Party in
connection with the exercise of any right or remedy hereunder; and
Second: to the payment in full of the Secured Obligations in such
order as Secured Party may elect.
Any amounts remaining after such application shall be promptly remitted to
Pledgor, its successors, legal representatives or assigns, or as otherwise
provided by Applicable Law.
SECTION 11. Further Assurances. Pledgor agrees that it will join with
Secured Party in executing and will file or record such notices, financing
statements or other documents as may be necessary to the perfection of the
security interest of Secured Party hereunder, and as Secured Party may
reasonably request, such instruments to be in form and substance satisfactory to
Secured Party, and that Pledgor will do such further acts and things and execute
and deliver to Secured Party such additional conveyances, assignments,
agreements and instruments as Secured Party may at any time reasonably request
in connection with the administration and enforcement of this Pledge Agreement
or relative to the Collateral or any part thereof or in order to assure and
confirm unto Secured Party its rights, powers and remedies hereunder. Pledgor
shall notify Secured Party in writing promptly upon its acquisition of
Memberships Interests of any of the Pledged Entities and shall execute and
deliver to Secured Party, upon request, an amendment to this Pledge Agreement or
such other instruments as Secured Party may request together with certificates
evidencing such Membership Interests accompanied by membership interest transfer
powers executed in blank, and shall take such other action requested by Secured
Party to effectuate the pledge of such Membership Interests to Secured Party in
accordance with the provisions of this Pledge Agreement. Pledgor hereby
constitutes and appoints Secured Party or Secured Party's designee during the
term of any Secured Obligations secured by this Pledge Agreement as its
attorney-in-fact, effective upon the occurrence of an Event of Default, which
appointment is an irrevocable, durable agency, coupled with an interest, with
full power of substitution. This power of attorney and mandate is for the
purpose of taking, whether in the name of Pledgor or in the name of Secured
Party, any action which Pledgor is obligated to perform hereunder or which
Secured Party may deem necessary or advisable to accomplish the purposes of this
Pledge Agreement. The powers conferred upon Secured Party in this Section are
solely to protect its interest in the Collateral and shall not impose any duty
upon Secured Party to exercise any such powers. Secured Party shall exercise its
power of attorney only upon
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the occurrence and during the continuance of an Event of Default or in the event
Secured Party deems such action necessary or advisable to protect its interest
in the Collateral.
SECTION 12. Non-Waiver; Election of Remedies. No course of dealing between
Pledgor and Secured Party or failure on the part of Secured Party to exercise,
and no delay on its part in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power, or remedy preclude any other or the further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder or under any of the Loan Documents are cumulative and in addition to
and are not exclusive of any other remedies provided by law. No enforcement of
any remedy shall constitute an election of remedies.
SECTION 13. Pledgor's Obligations Not Affected. To the extent permitted by
Applicable Law, the obligations of Pledgor hereunder shall remain in full force
and effect without regard to, and shall not be impaired by (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of Pledgor, the Borrower or any other obligor of the Secured
Obligations; (ii) any exercise or nonexercise, or any waiver, by Secured Party
of any right, remedy, power or privilege under or in respect of any of the
Secured Obligations or any security thereof (including this Pledge Agreement);
(iii) any amendment to or modification or waiver of any provision of the Loan
Agreement, the Notes or any of the other Loan Documents; (iv) any amendment to
or modification of any instrument (other than this Pledge Agreement) securing
any of the Secured Obligations, including, without limitation, any of the Loan
Documents; or (v) the taking of additional security for, or any other assurances
of payment of, any of the Secured Obligations or the modification, release or
discharge or termination of any security or other assurance of payment or
performance for any of the Secured Obligations, all whether or not Pledgor shall
have notice or knowledge of any of the foregoing.
SECTION 14. Governing Law; Amendments. Except to the extent governed by
applicable federal law, this Pledge Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia, without reference
to choice of law doctrine. This Pledge Agreement may not be amended or modified
nor may any of the Collateral be released, except in writing signed by the
parties hereto.
SECTION 15. Binding Agreement; Assignment. This Pledge Agreement shall be
binding upon and inure to the benefit of Secured Party and its successors and
assigns, and in the event of an assignment of any or all of the obligations
secured hereby, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This Pledge
Agreement shall be binding upon Pledgor and its successors and assigns. Pledgor
may not assign any of its rights or obligations hereunder without the prior
written consent of Secured Party.
SECTION 16. Notices. All notices hereunder shall be delivered in
accordance with the terms and provisions of the Loan Agreement.
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SECTION 17. Headings. Section headings used herein are for convenience
only and are not to affect the construction of or be taken into consideration in
interpreting this Pledge Agreement.
SECTION 18. Counterparts. This Pledge Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which when taken together constitute but one and the same instrument.
SECTION 19. Severability. If any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Pledge Agreement, but this Pledge Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had not
been contained herein.
SECTION 20. Secured Party's Duties. Beyond the exercise of reasonable care
to assure the safe custody of the Collateral while held hereunder, Secured Party
shall have no duty or liability to preserve rights pertaining thereto and shall
be relieved of all responsibility for the Collateral upon surrendering it or
tendering surrender of it to Pledgor.
SECTION 21. Secured Party's Exoneration. Under no circumstances shall
Secured Party be deemed to assume any responsibility for or obligation or duty
with respect to any part or all of the Collateral of any nature or kind or any
matter or proceedings arising out of or relating thereto, other than after a
Event of Default shall have occurred and be continuing, to act in a commercially
reasonable manner. Secured Party shall not be required to take any action of any
kind to collect, preserve or protect its or Pledgor's rights in the Collateral
or against other parties thereto. Secured Party's prior recourse to any part or
all of the Collateral shall not constitute a condition of any demand, suit or
proceeding for payment or collection of any of the Secured Obligations.
SECTION 22. Termination; Reinstatement. This Pledge Agreement shall remain
in full force and effect until (i) Secured Party has no further commitment or
obligation to make advances to be secured hereby with respect to the Secured
Obligations, and (ii) all Secured Obligations have been indefeasibly paid in
full or any preference period applicable to payments made on or security given
for the Secured Obligations has expired under applicable bankruptcy and
insolvency laws, at which time Pledgor may request a written instrument of
termination be executed and delivered by a duly authorized officer of Secured
Party. If so terminated, this Pledge Agreement and all Pledgor's obligations
hereunder shall be automatically reinstated if at any time payment in whole or
in part of any of the Secured Obligations is rescinded or restored to Pledgor or
all other payor or guarantor of the Secured Obligations, or must be paid to any
other Person, upon the insolvency, bankruptcy, liquidation, dissolution or
reorganization of Pledgor or any other payor or guarantor of the Secured
Obligations, all as though such payment had not been made.
SECTION 23. FCC Matters. Notwithstanding any other provision of this
Pledge Agreement:
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(A) Any foreclosure on, sale, transfer or other disposition of, or
the exercise or relinquishment of any right to vote or consent with respect to,
any of the Collateral by Secured Party shall, to the extent required, be
pursuant to Section 310(d) of the Communications Act of 1934, as amended, and
the applicable rules and regulations thereunder, and, if and to the extent
required thereby, subject to the prior approval or notice to and non-opposition
of the FCC.
(B) If a Event of Default shall have occurred and be continuing,
Pledgor shall take any action, and shall cause the Pledged Entities to take any
action, which Secured Party may reasonably request in order to transfer and
assign to Secured Party, or to such one or more third parties as Secured Party
may designate, or to a combination of the foregoing, each FCC license or permit
owned by Pledgor. Secured Party is empowered, to the extent permitted by
Applicable Law, to request the appointment of a receiver from any court of
competent jurisdiction. Such receiver may be instructed by Secured Party to seek
from the FCC an involuntary transfer of control of each such FCC license or
permit for the purpose of seeking a bona fide purchaser to whom control will
ultimately be transferred. Pledgor hereby agrees to authorize such an
involuntary transfer of control upon the request of the receiver so appointed
and, if Pledgor shall refuse to authorize the transfer, its approval may be
required by the court. Upon the occurrence and during the continuance of a Event
of Default, Pledgor shall further use its best efforts to assist in obtaining
approval of the FCC and any state regulatory bodies, if required, for any action
or transactions contemplated by this Pledge Agreement, including, without
limitation, the preparation, execution and filing with the FCC and any state
regulatory bodies of the assignor's or transferor's portion of any application
or applications for consent to the assignment of any FCC license or permit or
transfer of control necessary or appropriate under the rules and regulations of
the FCC or any state regulatory body for approval or non-opposition of the
transfer or assignment of any portion of the Collateral, together with any FCC
license or permit.
(C) Pledgor acknowledges that the assignment or transfer of each FCC
license or permit is integral to Secured Party's realization of the value of the
Collateral, that there is no adequate remedy at law for failure by Pledgor to
comply with the provisions of this Section 23 and that such failure would not be
adequately compensable in damages, and therefore agrees, without limiting the
right of Secured Party to seek and obtain specific performance of other
obligations of Pledgor contained in this Pledge Agreement, that the agreements
contained in this Section 23 may be specifically enforced.
(D) In accordance with the requirements of 47 C.F.R. Section 22.937,
or any successor provision thereto, Secured Party shall notify Pledgor and the
FCC in writing at least ten (10) days prior to the date on which Secured Party
intends to exercise its rights, pursuant to this Pledge Agreement or any of the
other Loan Documents, by foreclosing on, or otherwise disposing of, any
Collateral in connection with which such notice is required pursuant to 47
C.F.R. Section 22.937 or any successor provision thereto.
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IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be
executed and delivered, and Secured Party has caused this Pledge Agreement to be
executed and delivered by its duly authorized officer, as of the date first
above shown.
Pledgor:
SHENTEL CONVERGED SERVICES, INC.
By:___________________________________
Christopher E. French, President
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COBANK, ACB
By:______________________________________
John P. Cole, Vice President
SCHEDULE 1
to
Pledge Agreement
Made by Pledgor
in favor of
CoBank, ACB as Secured Party
Percentage of Membership Interest
Pledged Entity Owned by Pledgor
- -------------- ----------------
NTC Communications, LLC 83.88%
