Exhibit 10.1

 

I N T E R E S T    R A T E

 

S W A P    A G R E E M E N T

 

Dated as of February 26, 2008

 

CoBank, ACB (“CoBank”) and New Ulm Telecom, Inc. (“Company”) have entered and/or
anticipate entering into one or more transactions (each a “Swap Transaction”).
The parties agree that each Swap Transaction will be governed by the terms and
conditions set forth in this document (which includes the schedule attached
hereto (the “Schedule”)) and in the documents (each a “Confirmation”) exchanged
between the parties confirming such Swap Transactions. Each Confirmation
constitutes a supplement to and forms part of this document and will be read and
construed as one with this document, so that this document and all the
Confirmations constitute a single agreement between the parties (collectively
referred to as this “Agreement”). The parties acknowledge that all Swap
Transactions are entered into in reliance on the fact that this document and all
Confirmations will form a single agreement between the parties, it being
understood that the parties would not otherwise enter into any Swap
Transactions. Accordingly, the parties agree as follows:

 

1.

Interpretation

 

(a)

Definitions. The terms defined in Section 12 hereof, in the Schedule and in each
Confirmation will have the meanings therein specified for the purpose of this
Agreement.

 

(b)

Inconsistency. In the event of any inconsistency between the provisions of any
Confirmation and this document, such Confirmation will prevail for the purpose
of the relevant Swap Transaction.

 

2.

Payments

 

(a)

Obligations and Conditions.

 

(i)

Each party will make each payment specified in each Confirmation as being
payable by it.

 

(ii)

Payments under this Agreement will be made not later than the due date for value
on that date in the place of the account specified in the relevant Confirmation
or otherwise pursuant to this Agreement. All payments will be made in U.S.
dollars and in freely transferable funds.

 

(iii)

Each obligation of each party to pay any amount due under Section 2(a)(i) is
subject to the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is continuing.

 

(b)

Change of Account. Either party may change its account by giving notice to the
other party at least five days prior to the due date for payment for which such
change applies.

 

(c)

Netting. If on any date amounts would otherwise be payable in respect of the
same Swap Transaction by each party to the other, then, on such date, each
party’s obligation to make payment of any such amount will be automatically
satisfied and discharged and, if the aggregate amount that would otherwise have
been payable by one party exceeds the aggregate amount that would otherwise have
been payable by the other party, replaced by an obligation upon the party by
whom the larger aggregate amount would have been payable to pay to the other
party the excess of the larger aggregate amount over the smaller aggregate
amount.

 

(d)

Default Interest. A party that defaults in the payment of any amount due under
this Agreement will be required to pay interest (before as well as after
judgment) on such amount to the other party on demand for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and on the actual number of days elapsed in a year
consisting of 360 days.

 

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3.

Representations

 

Each party represents to the other party (which representations and warranties
will be deemed to be repeated on each date on which a Swap Transaction is
entered into) that:

 

(a)

Basic Representations.

 

(i)

Powers. It has the power to execute and deliver this Agreement and to perform
its obligations hereunder, and has taken all necessary action to authorize such
execution, delivery, and performance;

 

(ii)

No Violation or Conflict. Such execution, delivery, and performance do not
violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets, or any contractual restriction
binding on or affecting it or any of its assets;

 

(iii)

Consents. All consents that are required to have been obtained by it with
respect to this Agreement have been obtained and are in full force and effect
and all conditions of any such consents have been complied with; and

 

(iv)

Obligations Binding. Its obligations under this Agreement constitute its legal,
valid, and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors’ rights generally).

 

(b)

Absence of Certain Events. No Event of Default or Potential Event of Default
with respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its
obligations under this Agreement.

 

4.

Agreements

 

(a)

Documents. Each party agrees to deliver to the other party any document
specified in Part 1 of the Schedule or in any Confirmation by the date specified
therein (or if no date is specified, as soon as practicable).

 

(b)

Covenants. So long as it has any obligations under Section 2 hereof, the Company
shall continue to observe and perform the covenants contained in any loan
agreements between CoBank and the Company which are in force at the time this
Agreement is executed, or which may be entered into at any time while any Swap
Transactions under this Agreement are outstanding (as such agreements have been
or may hereafter be amended or restated in whole or part), regardless of whether
any indebtedness is outstanding thereunder or such agreements are otherwise
terminated.

 

(c)

Payment of Tax. The Company will pay any stamp, registration, documentation, or
similar tax levied or imposed upon it or in respect of its execution or
performance of this Agreement by any taxing authority body having jurisdiction
over it.

 

(d)

Confirmation Acknowledgment. Company will promptly respond in writing to any
Confirmation addressed to it by CoBank. In the event such response is not
received by CoBank within three days after the date of the Confirmation, Company
will be deemed to have acknowledged that the Confirmation accurately reflects
the agreement of the parties.

 

5.

Events of Default

 

(a)

Events of Default. The occurrence at any time with respect to a party of any of
the following events constitutes an event of default (an “Event of Default”)
with respect to such party:

 

(i)

Failure to Pay. Failure by the party to pay, when due, any amount required to be
paid by it under this Agreement if such failure is not remedied on or before the
third Business Day after notice of such failure to pay is given to the party;

 

(ii)

Breach of Agreement. Failure by the party to comply with or perform any other
agreement or obligation hereunder if (A) such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the party or
(B) remedy is not effected within grace period, if any, allowed by such other
agreement.

 

(iii)

Misrepresentation. A representation made or repeated or deemed to have been made
or repeated by the party in this Agreement proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have been
made or repeated.

 

(iv)

Default under Other Agreements. Either party should be declared to be in default
under the terms of any other agreement between the parties.

 

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(v)

Bankruptcy. The party: (1) is dissolved; (2) becomes insolvent or fails or is
unable or admits in writing its inability generally to pay its debts as they
become due; (3) makes a general assignment, arrangement, or composition with or
for the benefit of its creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law affecting creditors’
rights, or a petition is presented for the winding-up or liquidation of the
party; (5) has a resolution passed for its winding-up or liquidation; (6) seeks
or becomes subject to the appointment of an administrator, receiver, trustee,
custodian, or other similar official for it or for all or substantially all its
assets or (7) takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the foregoing acts.

 

6.

Early Termination

 

(a)

Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the “Defaulting Party”) has occurred and is
then continuing, the other party may, by not more than 20 days’ notice to the
Defaulting Party specifying the relevant Event of Default, designate a day not
earlier than the day such notice is effective as an Early Termination Date in
respect of all outstanding Swap Transactions.

 

(b)

Effect of Designation.

 

(i)

If notice designating an Early Termination Date is given under Section 6(a), the
Early Termination Date will occur on the date so designated, whether or not the
relevant Event of Default is continuing on the relevant Early Termination Date.

 

(ii)

Upon the effectiveness of notice designating an Early Termination Date the
obligations of the parties to make any further payments under Section 2(a)(i) in
respect of the Terminated Transactions will terminate, but without prejudice to
the other provisions of this Agreement.

 

(c)

Calculations.

 

(i)

Statement. Following the occurrence of an Early Termination Date, each party
will make the calculations on its part, if any, contemplated by Section 6(d) and
will provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations) and specifying any amount
payable under Section 6(d) and (2) giving details of the relevant account to
which any amount payable to it is to be paid. In the absence of written
confirmation from the source of a quotation obtained in determining a Market
Quotation, the records of the party that obtained such quotation will be
conclusive evidence of the existence and accuracy of such quotation.

 

(ii)

Due Date. The amount calculated as being payable under Section 6(d) will be due
on the Early Termination Date designated as a result of an Event of Default.
Such amount will be paid together with interest thereon from (and including) the
relevant Early Termination Date to (but excluding) the relevant due date, at the
Default Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed in a year consisting of 360 days.

 

(d)

Payments on Early Termination.

 

(i)

Amount Payable. If notice is given designating an Early Termination Date an
amount will be payable equal to (A) the sum of the Settlement Amount (determined
by the Non-defaulting Party) in respect of the Terminated Transactions and the
Unpaid Amounts owing to the Non-defaulting Party less (B) the Unpaid Amounts
owing to the Defaulting Party. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of that amount to
the Defaulting Party, subject to set-off as contemplated in the Schedule to this
agreement.

 

(ii)

Pre-Estimate of Loss. The parties agree that the amounts recoverable under this
Section 6(d) are a reasonable pre-estimate of loss and not a penalty. Such
amounts are payable for the loss of bargain and the loss of protection against
future risks and, except as otherwise provided in this Agreement, neither party
will be entitled to recover any additional damages as a consequence of such
losses.

 

7.

Transfer

 

Neither this Agreement nor any interest or obligation in or under this Agreement
may be transferred by either party without the prior written consent of the
other and any purported transfer without such consent will be void. In the event
any such transfer results in tax liability to the consenting party, the party
that transferred such interests or obligations will indemnify the consenting
party in the amount of the said tax liability.

 

 

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8.

Miscellaneous

 

(a)

Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

 

(b)

Amendments. No amendment, modification, or waiver in respect of this Agreement
will be effective unless in writing and executed by each of the parties or
confirmed by an exchange of facsimiles.

 

(c)

Survival of Obligations. Except as otherwise provided in Section 6(b)(i), the
obligations of the parties under this Agreement will survive the termination of
any Swap Transaction.

 

(d)

Remedies Cumulative. Except as provided in this Agreement, the rights, powers,
remedies, and privileges provided in this Agreement are cumulative and not
exclusive of any rights, powers, remedies, and privileges provided by law.

 

(e)

Counterparts and Confirmations. A Confirmation may be executed in counterparts
or be created by an exchange of facsimiles, which in either case will be
sufficient for all purposes to evidence a binding supplement to this Agreement.
Any such counterpart or facsimile will specify that it constitutes a
Confirmation.

 

(f)

No Waiver of Rights. A failure or delay in exercising any right, power, or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power, or privilege will
not be presumed to preclude any subsequent or further exercise of that right,
power, or privilege or the exercise of any other right, power, or privilege.

 

(g)

Headings. The headings used in this Agreement are for convenience of reference
only and are not to affect the construction of or to be taken into consideration
in interpreting this Agreement.

 

9.

Expenses

 

A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees,
incurred by such other party by reason of the enforcement and protection of its
rights under this Agreement or by reason of the early termination of any Swap
Transaction, including, but not limited to, costs of collection.

 

10.

Notices

 

(a)

Effectiveness. Any notice or communication in respect of this Agreement will be
sufficiently given to a party if in writing and delivered in person, sent by
certified or registered mail or the equivalent (with return receipt requested)
or by overnight courier or given by facsimile at the address or facsimile number
specified in Part 2 of the Schedule. A notice or communication will be
effective:

 

(i)

if delivered by hand or sent by overnight courier, on the day it is delivered
(or if that day is not a day on which the party is open for business, or if
delivered after the close of business, on the first following day that the party
is open for business); or

 

(ii)

if sent by facsimile, on the day sent (or if that day is not a day on which the
party is open for business, or if sent after the close of business, or on the
first following day that the party is open for business); or

 

(iii)

if sent by certified or registered mail (return receipt requested), three local
business days after dispatch.

 

(b)

Change of Addresses. Either party may by notice to the other change the address
or telex number at which notices or communications are to be given to it.

 

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11.

Governing Law and Jurisdiction.

 

This Agreement will be governed by and construed in accordance with the laws of
the State of New York without reference to choice of law doctrine.

 

12.

Definitions

 

As used in this Agreement:

 

“Default Rate” means the National Variable Rate established by CoBank from time
to time plus 2 percent per annum.

 

“Defaulting Party” has the meaning specified in Section 6(a).

 

“Early Termination Date” means the date specified as such in a notice given
under Section 6(a).

 

“Event of Default” has the meaning specified in Section 5(a).

 

“Loss” means, with respect to a Terminated Transaction and a party, an amount
equal to the total amount (expressed as a positive amount) required, as
determined as of the relevant Early Termination Date by the party in good faith,
to compensate it for any losses and costs (including loss of bargain and costs
of funding but excluding legal fees and other out-of-pocket expenses) that it
may incur as a result of the early termination of the obligations of the parties
in respect of such Terminated Transaction. If a party determines that it would
gain or benefit from such early termination, such party’s Loss will be an amount
(expressed as a negative amount) equal to the amount of the gain or benefit as
determined by such party.

 

“Market Quotation” means, with respect to a Terminated Transaction and a party
to such Terminated Transaction making the determination, an amount (which may be
negative) determined on the basis of quotations from Reference Market-makers for
the amount that would be or would have been payable on the relevant Early
Termination Date, either by the party to the Terminated Transaction making the
determination (to be expressed as a positive amount) or to such party (to be
expressed as a negative amount), in consideration of an agreement between such
party and the quoting Reference Market-maker and subject to such documentation
as they may in good faith agree, with the relevant Early Termination Date as the
date of commencement of such agreement (or, if later, the date specified as the
effective date of such Terminated Transaction in the relevant Confirmation),
that would have the effect of preserving for such party the economic equivalent
of the payment obligations of the parties under Section 2(a)(i) in respect of
such Terminated Transaction that would, but for the occurrence of the relevant
Early Termination Date, fall due after such Early Termination Date (excluding
any Unpaid Amounts in respect of such Terminated Transaction but including,
without limitation, any amounts that would, but for the occurrence of the
relevant Early Termination Date, have been payable (assuming each applicable
condition precedent had been satisfied) after such Early Termination Date by
reference to any period in which such Early Termination Date occurs). The party
making the determination (or its agent) will request each Reference Market-maker
to provide its quotation to the extent practicable as of the same time (without
regard to different time zones) on the relevant Early Termination Date. The time
as of which such quotations are to be obtained will be selected in good faith by
that party. If more than three such quotations are provided, the Market
Quotation will be the arithmetic mean of the quotations, without regard to the
quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the quotations having the highest and lowest values. If fewer
than three quotations are provided, it will be deemed that the Market Quotation
in respect of such Terminated Transaction cannot be determined.

 

“Potential Event of Default” means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

 

“Reference Market-makers” means four leading dealers in the relevant swap market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.

 

“Scheduled Payment Date” means a date on which a payment is due under Section
2(a)(i) with respect to a Swap Transaction.

 

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“Settlement Amount” means, with respect to a party and any Early Termination
Date, the sum of:-

 

(a)  the Market Quotations (whether positive or negative) for each Terminated
Transaction for which a Market Quotation is determined; and

 

(b)  for each Terminated Transaction for which a Market Quotation is not, or
cannot be, determined, such party’s Loss (whether positive or negative);

 

“Terminated Transactions” means with respect to any Early Termination Date
occurring as a result of an Event of Default, all Swap Transactions which are in
effect as of the time immediately preceding the effectiveness of the notice
designating such Early Termination Date.

 

“Unpaid Amounts” owing to any party means, with respect to any Early Termination
Date, the aggregate of the amounts that became due and payable (or that would
have become due and payable but for Section 2(a)(iii) or the designation or
occurrence of such Early Termination Date) to such party under Section 2(a)(i)
in respect of all Terminated Transactions by reference to all periods ended on
or prior to such Early Termination Date and which remain unpaid as at such Early
Termination Date, together with interest thereon from (and including) the date
such amounts became due and payable or would have become due and payable to (but
excluding) such Early Termination Date, calculated as follows:-

 

 

(i)

interest on such amounts due and payable by a Defaulting Party will be
calculated at the Default Rate; and

 

(ii)

interest on such amounts due and payable by the other party will be calculated
at the National Variable Rate.

 

Such amounts of interest will be calculated on the basis of daily compounding
and the actual number of days elapsed.

 

IN WITNESS WHEREOF the parties have executed this agreement as of the date
specified on the first page hereof.

 

CoBank, ACB

 

By:

 

 

 

Name:

 

Title:

 

 

 

New Ulm Telecom, Inc.

 

By:

/s/ Nancy Blankenhagen

 

 

Name:

Nancy Blankenhagen

Title:

CFO

 

 

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