Exhibit 10.1
MLA No. RX0383
MASTER LOAN AGREEMENT
THIS MASTER LOAN AGREEMENT (this “Agreement”), dated as of April 18, 2006, is
between COBANK, ACB (“CoBank”) and CT COMMUNICATIONS, INC. (“Borrower”).
WHEREAS, from time to time CoBank may make loans to Borrower, and in order to
reduce the amount of paperwork associated therewith, CoBank and Borrower would
like to enter into a master loan agreement;
NOW, THEREFORE, in consideration of the foregoing, intending to be legally bound
hereby, and in consideration of CoBank making one or more loans to Borrower,
CoBank and Borrower agree as follows:
Section 1. Supplements. In the event Borrower desires to borrow from CoBank and
CoBank is willing to lend to Borrower, or in the event CoBank and Borrower
desires 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 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 teens and conditions applicable to the Loan(s). Each
Loan will be governed by the terms and conditions contained in this Agreement
and in the Note and 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 Borrower. Requests for advances under the Loans must be received no later
than 1:00 p.m. 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
designated in writing by Borrower. In taking actions upon telephonic requests,
CoBank shall be entitled to rely on (and shall incur no liability to Borrower in
acting upon) any request made by a person identifying himself or herself as one
of the persons designated in writing by Borrower to request advances under a
Delegation and Wire and Electronic Transfer Authorization form with CoBank, so
long as any funds advanced are wired to an account previously designated by
Borrower.
Section 3. Notes and Payments. Borrower’s obligation to repay the loans made
under each Supplement shall be evidenced by a promissory note in form and
content acceptable to

 

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Master Loan Agreement/CT Communications, Inc,
MLA No. RX 0383
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”). Borrower is to make each payment which it is required to make under the
terms of this Agreement, each Supplement, each Note, any Interest Rate Agreement
(as hereinafter defined in this Section 3) provided by CoBank and all security
and other instruments and documents relating hereto and thereto (this Agreement,
the Supplements, the Notes, any Interest Rate Agreement provided by CoBank, and
all such instruments and documents, including, without limitation, all security
and guarantee documents described in Section 5 of this Agreement, as they may be
amended, modified, supplemented, extended or restated from time to time,
collectively, at any time, the “Loan Documents”) by wire transfer of immediately
available funds, by check, or by automated clearing house (ACH), 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). 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. Cheeks 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. “Interest Rate Agreement” means any
interest rate swap, hedge, cap, collar or similar agreement or arrangement, in
form and content acceptable to CoBank, designed to protect Borrower against
fluctuations in interest rates.
Section 4. Mandatory Repayments; Application.
(A) Insurance Proceeds. If an Event of Default has occurred and is continuing,
Borrower shall repay the Loans in an amount equal to the extent that insurance
proceeds in excess of $5,000,000 from any Asset Disposition are not reinvested
in equipment or other assets that are used or useful in the business of Borrower
or its Subsidiaries within 180 days of receipt by Borrower or its Subsidiaries
of such proceeds.
“Asset Disposition” shall mean the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, by Borrower or
any Subsidiary, of any of the following: (i) any of the capital stock or the
ownership interest of any Subsidiary (other than to Borrower or another
Subsidiary) or (ii) any or all of Borrower’s or any Subsidiary’s 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 Borrower or its Subsidiaries, or (c) sales of Cash
Equivalents and other investments permitted under Subsection 9(F)(iii) and set
forth on Schedule 9(F) hereto for fair value; but shall not include dispositions
of assets for which all of the following conditions are met: (i) the aggregate
market value of assets sold in any one transaction or series of related
transactions (other than ordinary course dispositions of inventory or obsolete
equipment) for any calendar year does not exceed $1,000,000 for Borrower and its
Subsidiaries; (ii) the consideration received is at least equal to

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
the fair market value of such assets; (iii) 75% or more of the consideration
received is cash; (iv) after giving effect to the sale or other disposition of
such assets, Borrower, on a consolidated basis with its Subsidiaries, is in
compliance on a pro forma basis with the covenants set forth in Subsection 8(I)
recomputed for the most recently ended month for which information is available;
and (v) no Default or Event of Default then exists or shall result from such
sale or other disposition.
“Net Proceeds” shall mean the cash proceeds received by Borrower or any
Subsidiary from any Asset Disposition, (including insurance proceeds, awards of
condemnation, and payments under notes or other debt securities received in
connection with any Asset Disposition), net of (i) the costs of such sale,
lease, or transfer, (including taxes attributable to such sale, lease, transfer,
issuance or other disposition) and (ii) amounts applied to repayment of
Indebtedness (other than Indebtedness outstanding hereunder) secured by a lien
on the asset or property disposed.
“Subsidiary" or “Subsidiaries” shall mean, with respect to any entity, any
corporation, partnership, association, limited liability company, joint venture
or other business entity of which more than 50% of the total voting power of
shares of stock (or equivalent ownership or controlling interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that entity or one or more Subsidiaries of that
entity or any combination thereof.
(B) Repayments from Asset Dispositions. To the extent (i) Net Proceeds (other
than insurance proceeds) in excess of $5,000,000 are not reinvested in equipment
or other assets that are used or useful in the business of Borrower or its
Subsidiaries, as applicable, or (ii) Borrower or its Subsidiaries, as
applicable, have not entered into a binding agreement to purchase equipment or
other assets that are used or useful in their business, in each case within
180 days of receipt by Borrower or any Subsidiary of such Net Proceeds (other
than insurance proceeds) from any Asset Disposition (whether or not such Asset
Disposition is permitted under Subsection 9(E) hereof without the consent of
CoBank), Borrower shall repay the Loans in an amount equal to such Net Proceeds,
except Net Proceeds from the sale of (i) Borrower’s or any Subsidiary’s
Broadband Radio Service spectrum licenses and Educational Broadband Service
spectrum lease rights to Fixed Wireless Holdings, LLC for approximately
$16,000,000 (the “Spectrum Sale”), or (ii) Borrower’s or any Subsidiary’s sale,
liquidation, or other distribution of interests in PMN, Inc., Palmetto
MobileNet, L.P. or any related RSA partnership (the “PMN Sale”). All such
repayments shall be applied in accordance with Subsection 4(C) hereof.
(C) Application of Repayments; Related Interest and Surcharge Payments. All
repayments made pursuant to this Section 4 will be applied first pro rata to all
term Loans, based upon the principal amount then outstanding, and then pro rata
to all revolving Loans, based upon the principal amount of the Commitments (as
defined in the Supplements evidencing the revolving Loans). All term Loan
repayments made pursuant to this Section 4 will be applied to principal
installments in the inverse order of their maturity and to such portions or
Portions (as defined in the Supplements evidencing the term Loans) of the term
Loans as Borrower specifies in writing or, in the absence of such direction, as
CoBank specifies, and all repayments on revolving Loans will be applied to such
Portions (as defined in the

 

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Supplements evidencing the revolving Loans) of the revolving Loans as Borrower
specifies in writing or, in the absence of such direction, as CoBank specifies.
All reductions provided for in this Section 4 will be in addition to any
voluntary reductions and all scheduled reductions and, accordingly, may result
in the termination of the Commitments prior to the Maturity Dates (as such terms
are defined in the Supplements evidencing the revolving Loans). All repayments
required under this Section 4 are to be accompanied by payment of all applicable
Surcharges (as defined in Subsection 4(D) below) and accrued interest on the
amount repaid.
(D) Prepayment and Surcharge. Borrower may (i) on one Business Day prior written
notice, prepay in full or in part any Portion of the Loan accruing interest at a
variable rate of interest and (ii) on three Business Days prior written notice,
prepay in full or in part any Portion of the Loan accruing interest at a fixed
rate option. Notwithstanding the foregoing, in connection with Borrower repaying
or prepaying any amount accruing interest pursuant to a fixed rate option
(whether such payment is made voluntarily, as a result of an acceleration, or
otherwise), Borrower must also pay a Surcharge as defined and calculated below.
“Surcharge” means an amount equal to the present value of any funding losses
incurred by CoBank to have been incurred as a result of such prepayment for the
period such amount was scheduled to have been outstanding at such fixed rate
(which, if less than $0, shall be deemed to be $0), For purposes of calculating
the Surcharge provided for in this Subsection 4(D), early conversion of a
Portion of the Loan accruing interest pursuant to a fixed rate option so that it
accrues interest at a different rate pursuant to the related Supplement shall be
deemed a prepayment in full of that Portion of the Loan. Such Surcharge,
including the amount of any funding losses incurred by CoBank, shall be
reasonably determined and reasonably calculated in accordance with methodology
established by CoBank,
Section 5. Security. Borrower’s obligations under the Loan Documents will be
secured by a statutory first lien on all equity which Borrower may now own or
hereafter acquire or be allocated in CoBank, and by such additional collateral
as provided in the Supplements.
Section 6. Conditions Precedent.
(A) Conditions to Initial Supplement. CoBank’s obligation to extend credit under
the initial Supplement is subject to the condition precedent that CoBank
receives, 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 and Electronic
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

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
conditions precedent that CoBank receive, in form and content satisfactory to
CoBank, each of the following:
(1) Supplement. A duly executed original of such Supplement 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 reasonably require that such
Supplement 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 reasonably 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
such Supplement.
(5) Insurance. Such evidence as CoBank may require that Borrower and its
Subsidiaries are in compliance with Subsection 8(D) of this Agreement.
(6) Opinions of Counsel. Opinions of counsel (who shall be acceptable to CoBank)
to Borrower and any guarantor 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 Borrower thereunder is subject to the further
conditions set forth in such Supplement and the condition that no Event of
Default (as defined in Section 10 of this Agreement) 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 7. Representations and Warranties. The execution by Borrower of each
Supplement and each request for an advance thereunder constitutes a
representation and warranty to CoBank that:
(A) Application. Each representation and warranty and all other information set
forth in any application or other document submitted in connection with, or to
induce CoBank to enter into, such Supplement is correct in all material respects
as of the date of the Supplement or request for advance.
(B) Disclosure. No representation or warranty of Borrower contained in this
Agreement, the financial statements referred to in Subsection 7(F) below, any
other document, certificate or written statement furnished to CoBank by or on
behalf of Borrower for use in connection with the Loan Documents contains any
untrue statement of a material fact or omits

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the same
were made.
(C) Organization; Powers; Etc. Borrower and each of its Subsidiaries (i) is duly
incorporated, organized, or formed (as applicable), validly existing, and in
good standing under the laws of its state of incorporation, organization or
formation (as applicable); (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, partnership or limited liability company power (as
applicable) 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 obtained and maintained all licenses,
certificates, permits, authorizations, approvals, and the like which are
necessary in the conduct of its business, or which may be otherwise required by
law, which if not obtained and maintained, could have a Material Adverse Effect
(as hereinafter defined in this Subsection 7(C)) on Borrower or its
Subsidiaries, taken as a whole.
“Material Adverse Effect” when used with reference to any entity means a
material adverse effect on the direct or indirect ability of such entity to
perform its obligations under the Loan Documents to which it is a party.
(D) Due Authorization; No Violations; Etc. The execution and delivery by
Borrower and each of its Subsidiaries of, and the performance by Borrower and
each of its Subsidiaries of its obligations under, the Loan Documents to which
it is a party have been duly authorized by all requisite corporate, partnership
or limited liability company action (as applicable) and do not and will not
(i) violate its articles or certificate of incorporation, articles or
certificate of organization or articles or certificate of formation (as
applicable), its bylaws, partnership agreement or operating agreement (as
applicable), any provision of any law, rule or regulation, any judgment, order
or ruling of any court or Governmental Authority (as hereinafter defined in this
Subsection 7(D)), any agreement or any indenture, mortgage, or other instrument
to which Borrower or any Subsidiary is a party or by which Borrower or any
Subsidiary or any of their respective properties are 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 on the part of the shareholders, partners or
members (as applicable) of Borrower and its Subsidiaries necessary in connection
with the execution and delivery by Borrower or its Subsidiaries of, and the
performance by Borrower or its Subsidiaries of their obligations under, the Loan
Documents to which it is a party have been taken and remain in full force and
effect.
“Governmental Authority” means any regulatory body (including the FCC (as
defined in Subsection 7(S) below), the PUC (as defined in Subsection 7(S) below)
or any other state commission), administrative agency, court or other forum.
(E) Binding Agreement. Each of the Loan Documents to which Borrower or any
Subsidiary is a party is, or when executed and delivered will be, the legal,
valid, and binding obligation of Borrower or such Subsidiary, enforceable
against Borrower or Subsidiary in accordance with its terms, subject only to
limitations on enforceability imposed by such

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
(i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors’ rights generally, and (ii) general equitable
principles.
(F) Financial Statements, Budgets, Projections, Etc. All financial statements of
any entity submitted to CoBank in connection with, or to induce CoBank to enter
into, this Agreement or any Supplement fairly and fully present the financial
condition of such entity in all material respects 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 any unaudited financial statements, the omission
of footnotes and, in the case of any interim financial statements, normal
year-end adjustments. As of the date of such financial statements, there were no
material liabilities of such entity, fixed or contingent, not reflected in such
financial statements or the notes thereto. Since the date of such financial
statements, there has been no material adverse change in the financial condition
or operations of such entity. All budgets, projections, feasibility studies, and
other documentation submitted by Borrower to CoBank in connection with, or to
induce CoBank to enter into, any Supplement are based upon assumptions that are
reasonable and realistic, and as of the date of any Supplement or request for
advance, no fact has come to light, and no event or transaction has occurred,
which would cause any such assumption not to be reasonable or realistic.
(G) Consents and Approvals. Except as set forth on Schedule 7(G) attached
hereto, no consent, permission, authorization, order or license of any
Governmental Authority or of any party to any agreement to which Borrower or any
Subsidiary is a party or by which they or any of their respective property may
be bound or affected, is necessary in connection with the project, acquisition
or other activity being financed by such Supplement, the execution, delivery,
performance or enforcement of the Loan Documents 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 or which are required in connection
with the enforcement of or exercise of remedies under any Loan Document.
(H) Compliance. Borrower and each Subsidiary is in compliance with all of the
terms of the Loan Documents to which it is a party and no Event of Default or
Potential Default exists.
(I) Compliance with Laws. Except as set forth on Schedule 7(I) attached hereto,
Borrower and its Subsidiaries are in compliance in all material respects with
all laws, rules, regulations, ordinances, codes, orders, and the like
(collectively, “Laws”), the failure to comply with which could have a Material
Adverse Effect on Borrower or its Subsidiaries, taken as a whole.
(J) Environmental Compliance. Without limiting the provisions of Subsection 7(1)
above, all property owned or leased by Borrower or any Subsidiary 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 have a Material Adverse Effect on Borrower or its Subsidiaries, taken as a
whole.

 

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Master Loan Agreement/CT Communications, Inc.
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(K) Litigation. Except as set forth on Schedule 7(K) attached hereto, there are
no pending legal, arbitration, or governmental actions or proceedings to which
Borrower or its Subsidiaries is a party or to which any of their respective
properties are subject which, if adversely determined, could have a Material
Adverse Effect on Borrower or its Subsidiaries, taken as a whole, and to the
best of Borrower’s knowledge, no such actions or proceedings are threatened or
contemplated.
(L) Principal Place of Business; Records. The principal place of business and
chief executive office of Borrower and the place where the records required by
Subsection 8(F) of this Agreement are kept is at the address of Borrower shown
in Section 15 of this Agreement.
(M) Employee Labor Matters. Except as set forth on Schedule 7(M) attached
hereto, neither Borrower, its Subsidiaries nor any of their respective employees
is subject to any collective bargaining agreement, (ii) no petition for
certification or union election is pending with respect to the employees of any
such entity and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any such entity
and (iii) there are no strikes, slowdowns, work stoppages or controversies
pending or, to the best knowledge of Borrower or its Subsidiaries after due
inquiry, threatened between any such entity and its respective employees, other
than employee grievances arising in the ordinary course of business which could
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
(N) Employee Benefit Plans. Borrower and each Subsidiary 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
have a Material Adverse Effect on Borrower or its Subsidiaries, taken as a
whole,
(O) Taxes. Except as set forth on Schedule 7(0) attached hereto, Borrower and
its Subsidiaries have filed or caused to be filed all federal, state and local
tax returns that are required to be filed, and has paid and shall continue to
pay when due all taxes as shown on such returns, and has paid and shall continue
to pay when due all other taxes, assessments and governmental charges or levies
upon it and its property, income, profits and assets which are due and payable,
except where the payment of such tax, assessment, government charge or levy is
being contested in good faith and by appropriate proceedings and adequate
reserves in compliance with GAAP have been set aside on Borrower’s or its
Subsidiaries’ books therefor.
(P) Investment Company Act; Public Utility Holding Company Act. Neither Borrower
nor any Subsidiary is an “investment company” as that term is defined in, or is
otherwise subject to regulation under, the Investment Company Act of 1940, as
amended. No Borrower or any Subsidiary is a “holding company” as that term is
defined in, or is otherwise subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
(Q) Use of Proceeds. The funds to be borrowed under this Agreement and each
Supplement will be used only as contemplated thereby. No part of such funds will
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Master Loan Agreement/CT Communications, Inc.
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to purchase any “margin securities” or otherwise in violation of the regulations
of the Federal Reserve System.
(R) Subsidiaries. Borrower has no Subsidiaries other than as set forth on
Schedule 7(R) to this Agreement. Borrower or one of its Subsidiaries is the
registered and beneficial owner of the specified percentage of the shares of
issued and outstanding capital stock or other equity interests of each of the
Subsidiaries as set forth on Schedule 7(R), which stock and other equity
interests are owned free and clear of all liens, warrants, options, rights to
purchase, rights of first refusal and other interests of any person other than
CoBank. The stock or other equity interests of each such Subsidiary has been
duly authorized and validly issued and is fully paid and non-assessable.
(S) Licenses; Permits; Etc. Borrower and its Subsidiaries are the valid holders
of all franchises, licenses, certificates, permits, authorizations, approvals
and the like which are material to the conduct of their business or which may be
required by law, including, without limitation, all licenses and permits of the
Federal Communications Commission (the “FCC”), the North Carolina Utilities
Commission (the “PUC”) and the public utility commission of any other states in
which Borrower or any Subsidiary operates, and all such franchises, licenses,
certificates, permits, authorizations, approvals, and the like are in full force
and effect.
(T) Credit Agreements, Etc. Set forth on Schedule 7(T) hereto is a complete and
correct list of all loan agreements, incentives, guarantees, Capital Leases (as
defined in Subsection 8(I)(l) of this Agreement), and other credit agreements
(including agreements for the issuance of letters of credit) in effect on the
date of this Agreement in respect of which Borrower or its Subsidiaries are in
any manner directly or contingently obligated.
(U) Title to Properties. Borrower and each Subsidiary has such title or
leasehold interest in and to the real property owned or leased by it as is
necessary or desirable to the conduct of its business and valid and legal title
or leasehold interest in and to all of its personal property, including those
reflected on the financial statements of Borrower delivered pursuant to
Subsection 8(H) of this Agreement, except those which have been disposed of by
Borrower subsequent to the date of such delivered financial statements which
dispositions have been in the ordinary course of business or as otherwise
expressly permitted hereunder.
(V) Material Contracts, Borrower and each Subsidiary has performed all of its
material obligations under all Material Contracts and, to the best knowledge of
Borrower, each other party thereto is in compliance with each such Material
Contract (as hereafter defined in this Subsection 7(V). Each such Material
Contract is in full force and effect in accordance with the terms thereof.
Borrower has made available a true and complete copy of each such Material
Contract for inspection by CoBank.
“Material Contract” means (a) any written contract or any other agreement of
Borrower or any Subsidiary involving monetary liability of or to any such person
in an amount in excess of $2,000,000 per annum and (b) any other written
contract or agreement of Borrower or any Subsidiary the failure to comply with
which could reasonably be expected to have a Material

 

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Adverse Effect on Borrower or its Subsidiaries; provided, however, that any
contract or agreement which is terminable by a party other than Borrower or any
Subsidiary without cause upon notice of 95 days or less shall not be considered
a Material Contract.
(W) Intellectual Property. Except as would not, individually or in the
aggregate, result in a Material Adverse Effect on Borrower or its Subsidiaries,
taken as a whole, Borrower and each Subsidiary owns, or possesses through valid
licensing arrangements, the right to use all patents, copyrights, trademarks,
trade names, service marks, technology knowhow and processes used in or
necessary for the conduct of its business as currently or anticipated to be
conducted (collectively, the “Intellectual Property Rights”) without infringing
upon any validly asserted rights of others. Except as would not, individually or
in the aggregate, result in a Material Adverse Effect on Borrower or its
Subsidiaries, taken as a whole, no event has occurred which permits, or after
notice or lapse of time or both would permit, the revocation or termination of
any such rights. Neither Borrower nor any Subsidiary has been threatened with
any litigation regarding Intellectual Property Rights that would present a
material impediment to the business of any such person.
(X) Liens. The property of Borrower and its Subsidiaries is subject to no lien,
security interest or other encumbrance except as permitted pursuant to
Subsection 9(B) of this Agreement.
Section 8. Affirmative Covenants. Unless otherwise agreed to in writing by
CoBank, while this Agreement is in effect, Borrower will, and will cause each of
its Subsidiaries to:
(A) Existence, Licenses. Etc. (i) Preserve and keep in full force and effect its
existence and good standing in the jurisdiction of its incorporation,
organization or formation (as applicable); (ii) qualify and remain qualified to
transact business in all jurisdictions where such qualification is required by
applicable Laws, except where the failure to do so would not, individually or in
the aggregate, result in a Material Adverse Effect on Borrower and its
Subsidiaries, taken as a whole; and (iii) obtain and maintain all licenses,
franchises, certificates, permits, authorizations, approvals and the like, which
if not obtained and maintained, could reasonably be expected to have a Material
Adverse Effect on Borrower or its Subsidiaries, taken as a whole.
(B) Compliance with Laws and Agreements. Comply in all material respects with
(i) all Laws, the failure to comply with which could reasonably be expected to
have a Material Adverse Effect on Borrower or any Subsidiaries, taken as a
whole, and (ii) all agreements, indentures, mortgages, and other instruments to
which Borrower or any Subsidiary 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 on Borrower or its Subsidiaries, taken as a
whole.
(C) Compliance with Environmental Laws. Without limiting the provisions of
Subsection 8(B) above, 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

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
relating to environmental protection, the failure to comply with which could
reasonably be expected to have a Material Adverse Effect on Borrower or its
Subsidiaries, taken as a whole.
(D) Insurance. Maintain insurance with insurance companies or associations in
such amounts and covering such risks as are usually carried by companies engaged
in the same business and similarly situated. Such proceeds shall be applied, to
the extent applicable, as provided in the Loan Documents. At CoBank’s request,
Borrower agrees to deliver to CoBank such proof of compliance with this
Subsection 8(D) as CoBank may require.
(E) Property Maintenance. Maintain and preserve all of its property that is
necessary to or useful in the proper conduct 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, and make all alterations,
replacements, and improvements thereto as may from time to time be necessary in
order to ensure that its properties remain in good working order and condition
and compliance. Borrower agrees that upon the occurrence and continuing
existence of an Event of Default, at CoBank’s request, Borrower will furnish to
CoBank a report on the condition of Borrower’s and its Subsidiaries’ property
prepared by a professional engineer satisfactory to CoBank.
(F) Books and Records. Keep adequate records and books of account in which
complete and accurate entries will be made in accordance with GAAP consistently
applied.
(G) Inspection. Permit CoBank or its representatives, upon reasonable notice and
during normal business hours or at such other times as the parties may agree, to
examine Borrower’s and its Subsidiaries’ properties, books, and records, and to
discuss Borrower’s or any of its Subsidiaries’ affairs, finances, and accounts,
with Borrower’s or any Subsidiary’s officers, directors, employees, and
independent certified public accountants. Such inspection right shall be limited
to one time per year, unless an Event of Default shall have occurred and be
continuing.
(H) 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 90 days after the end of each fiscal year of Borrower occurring during the
term hereof, annual consolidated financial statements of Borrower, prepared 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 Borrower is conducted (to the extent not
inconsistent with GAAP). Such financial statements shall: (i) be audited by
Borrower’s independent registered public accounting firm (ii) be accompanied by
a report of such accountants containing an opinion thereon acceptable to CoBank;
(iii) be prepared in reasonable detail, and in comparative form; and
(iv) include a consolidated balance sheet, a consolidated statement of income, a
consolidated statement of stockholders’ equity, a consolidated statement of cash
flows, and all notes and schedules relating thereto.

 

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Master Loan Agreement/CT Communications, Inc.
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(2) Quarterly Financial Statements. As soon as available but in no event later
than 45 days after the end of each of the first three fiscal quarters of each
fiscal year of Borrower occurring during the term hereof, unaudited quarterly
consolidated financial statements of Borrower, in each case prepared 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 Borrower is conducted (to the extent not
inconsistent with GAAP). Each of such financial statements shall (i) be prepared
in reasonable detail and in comparative form, and (ii) include a consolidated
balance sheet, a consolidated statement of income for such quarter and for the
period year-to-date.
(3) Budgets. As soon as reasonably available, but in no event later than 30 days
after the first day of each fiscal year of Borrower occurring during the term
hereof, consolidated operating and capital assets budgets of Borrower and any
Subsidiaries for such fiscal year.
(4) 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; and (ii) the occurrence of any breach, default, event of default, or
other event or occurrence of any other condition which with the giving of notice
or lapse of time, or both, could become a breach, default, or event of default
under any Material Contract (other than the Loan Documents) to which it is a
party or by which it or any of its property is bound or affected; 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.
(5) 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 Borrower or any Subsidiaries which, if
determined adversely, could reasonably be expected to have a Material Adverse
Effect on Borrower or its Subsidiaries, taken as a whole.
(6) Notice of Environmental Litigation. Without limiting the provisions of
Subsection 8(H)(5) above, promptly after receipt thereof, notice of the receipt
of all pleadings, orders, complaints, indictments, or any other communication
alleging a condition that could reasonably be expected to have a Material
Adverse Effect on Borrower or its Subsidiaries, taken as a whole and (i) that
may require Borrower or any Subsidiary to undertake or to contribute to a
cleanup or other response under all Laws relating to environmental protection,
or (ii) 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.

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
(7) 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 Borrower or any Subsidiary from any
Governmental Authority, including, without limitation, the Securities and
Exchange Commission, the FCC, the PUC, or any other state utility commission
relating to any material noncompliance by Borrower or any of its Subsidiaries
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 on Borrower or any Subsidiary, taken as a whole.
(8) Material Adverse Change. Promptly after becoming aware thereof, notice of
any matter which has had or could reasonably be expected to have a Material
Adverse Effect on Borrower or its Subsidiaries, taken as a whole.
(9) Compliance Certificates. Concurrently with each statement required to be
furnished pursuant to Subsection 8(H)(I) or Subsection 8(H)(2) above, a
compliance certificate in the form attached hereto as Exhibit A executed by the
chief executive officer or chief financial officer of Borrower.
(10) 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 Borrower or any Subsidiary, a statement describing such Reportable
Event and the actions it proposes to take in response to such Reportable Event.
(11) PUC Approval. No later than 30 days after receipt by Borrower or any
Subsidiary, such Borrower or Subsidiary shall provide to CoBank copies of all
approvals, authorizations, consents, and notices of fines or violations or other
similar negative communications that could reasonably be expected to have a
Material Adverse Effect on Borrower or any Subsidiary, between such Borrower or
Subsidiary and the PUC with respect to this Agreement, any Supplement and the
Loans.
(12) Other Information, Such other information regarding the condition,
financial or otherwise, or operations of Borrower or any Subsidiary as CoBank
may, from time to time, reasonably request.
(I) Financial Covenants. All of the following financial covenants shall, except
as expressly provided otherwise, be calculated on the basis of financial
statements prepared in accordance with GAAP consistently applied:
(1) Total Leverage Ratio. Borrower shall maintain at all times during the
periods identified below, measured and reported on a consolidated basis as of
the last day of each fiscal quarter of Borrower (each, a “Quarterly Date”) and
maintained through the next measurement date, a Total Leverage Ratio (as
hereinafter defined in this Subsection 8(I)(I) not to exceed 3.0:1.0.

 

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Master Loan Agreement/CT Communications, Inc.
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“Total Leverage Ratio” means the ratio of Indebtedness (as hereinafter defined
in this Subsection 8(I)(l) on the Quarterly Date to EBITDA (as hereinafter
defined in this Subsection 8(I)(1)) for the then most recently completed four
fiscal quarters.
“Indebtedness” means without duplication (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 and not outstanding more than
90 days unless contested in good faith, (iii) obligations, whether or not
assumed, secured by liens or a pledge of or an encumbrance on the proceeds or
production from property now or hereafter owned or acquired, (iv) obligations
which are evidenced by notes, bonds, debentures, acceptances or other
instruments, (v) net termination obligations under Interest Rate Agreements,
calculated as of any date of calculation as if such agreements or arrangements
were terminated as of such date, (vi) that portion of any obligation with
respect to leases of real or personal property which is required to be
capitalized under GAAP or which is treated as operating leases under regulations
applicable to them but which otherwise would be required to be capitalized under
GAAP (each a “Capital Lease”), obligations with respect to principal under
guarantees and other contingent obligations with respect to the payment of
money, whether or not due and payable, and
the capital amount appearing on the consolidated balance sheet with respect to
any synthetic lease, tax retention operating lease or similar transaction.
“EBITDA” (i) means the sum of (a) operating revenues minus operating expenses,
plus (b) depreciation and amortization expense, and all other non-cash items,
and (ii) will be adjusted to give effect to any acquisition, sale or other
disposition, directly or through a Subsidiary, of any 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.
(2) Equity to Assets Ratio. Borrower shall maintain at all times, measured and
reported on a consolidated basis as of each Quarterly Date, an Equity to Assets
Ratio (as hereinafter defined in this Subsection 8(I)(2)) of no less than
0.40:1.0.
“Equity to Assets Ratio” means the ratio derived by dividing (i) Equity by
(ii) total assets. “Equity” means (i) total assets minus (ii) total liabilities.
(J) Capital. Acquire non-voting participation certificates in CoBank in such
amounts and at such times as CoBank may from time to time require in accordance
with its Bylaws and Capital Plan (as each may be amended from time to time),
except that the maximum amount of non-voting participation certificates that
Borrower may be required to purchase in connection with a Loan may not exceed
the maximum amount permitted by the Bylaws at the time the Supplement relating
to such Loan is entered into or such Loan is renewed or refinanced by CoBank.
The rights and obligations of the parties with respect to such non-voting
participation certificates and any patronage or other distributions made by
CoBank shall be governed by COBank’s Bylaws.

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
Section 9. Negative Covenants. Unless otherwise agreed to in writing by CoBank,
while this Agreement is in effect Borrower will not and will cause its
Subsidiaries not to:
(A) Borrowings. Create, incur, assume, or allow to exist, directly or
indirectly, any Indebtedness except for (i) obligations to CoBank,
(ii) Indebtedness incurred in connection with an Interest Rate Agreement;
(iii) contingent obligations permitted by Subsection 9(C); (iv) Indebtedness
under purchase money security agreements, Capital Leases and unsecured
Indebtedness in an amount not to exceed $10,000,000 in the aggregate at any one
time; (v) Indebtedness which is expressly subordinate in right of payment to the
Loans hereunder on terms and conditions satisfactory to CoBank in its sole
discretion; and (vi) Indebtedness described on Schedule 9(A) hereto (Subsections
9(A)(i) through (vi) collectively, the “Permitted Indebtedness”); provided, that
none of the Permitted Indebtedness shall (X) restrict, limit or otherwise
encumber (by covenant or otherwise) the ability of any Subsidiary of Borrower to
make any payment to Borrower or any Subsidiary (in the form of dividends,
intercompany advances or otherwise) for the purpose of enabling Borrower to pay
the Obligations, or (Y) contain any covenants more restrictive than any in
Sections 8 or 9.
(B) Liens. Create, incur, assume, or allow to exist any mortgage, deed of trust,
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 other governmental charges
(excluding any lien imposed pursuant to any provisions of applicable
environmental laws) not yet due and payable or as to which the period of grace
(not to exceed thirty (30) days), if any, related thereto has not expired unless
the same are being diligently contested in good faith and by appropriate
proceedings and then only if and to the extent that adequate reserves therefor
are maintained in accordance with GAAP; (iii) statutory liens of landlords,
carriers, depository institutions, warehousemen, mechanics, materialmen and
other similar liens imposed by law, which are incurred in the ordinary course of
business for sums not more than thirty (30) days delinquent or which are being
contested in good faith; (iv) liens incurred or deposits made in the ordinary
course of business in connection with workers‘ compensation, unemployment
insurance and other types of social security (other than any lien imposed by the
Employee Retirement Income Security Act of 1974 or any rule or regulation
promulgated thereunder), or to secure the performance of tenders, statutory
obligations, surety, stay, customs and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return of money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money); (v) deposits, in an aggregate amount not to exceed $500,000, made in the
ordinary course of business to secure liability to insurance carriers; (vi) any
attachment or judgment lien not constituting an Event of Default under
Subsection 10(H); (vii) easements, rights of way, restrictions and other similar
charges or encumbrances which in the aggregate are not substantial in amount and
which do not, in any case, materially detract from the value of such property or
impair the use thereof in the ordinary conduct of the business of Borrower or
any of its Subsidiaries; (viii) liens securing purchase money security
agreements and Capital Leases permitted under Subsection 9(A)(iv), provided that
such liens are created substantially simultaneously with the acquisition or
lease of the related asset, do not encumber any property other than the items
purchased with the proceeds of

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
such Indebtedness or leased pursuant to such Indebtedness and such liens do not
secure any amounts other than amounts necessary to purchase or lease such items;
(ix) liens securing subordinated Indebtedness to the extent permitted under
Subsection 9(A)(v), provided that such liens are expressly subordinate to any
lien in favor of CoBank, granted hereunder on terms satisfactory to CoBank in
its sole discretion; and (x) the claims of customers of Borrower on deposits
made by such customers in connection with the purchase of goods or services from
Borrower.
(C) Contingent Liabilities. Assume, guarantee, become liable as a surety,
endorse, contingently agree to purchase, or otherwise be or become liable,
directly or indirectly (including, but not limited to, by means of a maintenance
agreement, an asset or stock purchase agreement, or any other agreement designed
to ensure any creditor against loss), for or on account of the obligation of any
person or entity greater than $1,000,000, except (i) by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of Borrower’s or any Subsidiary’s business.
(D) Fundamental Changes. Merge or consolidate with any other entity.
(E) Disposal of Assets or Subsidiary Stock. Borrower will not and will not
permit any Subsidiary directly or indirectly to: convey, sell, lease (including,
without limitation, a lease and leaseback transaction), sublease, transfer or
otherwise dispose of, or grant any entity an option to acquire, in one
transaction or a series of transactions, any of its property, business or
assets, or the capital stock of or other equity interests in any such Subsidiary
whether now owned or hereafter acquired, except for (i) bona fide sales of
inventory to customers for fair value in the ordinary course of business and
dispositions of obsolete equipment not used or useful in the business, (ii) fair
market value sales of Cash Equivalents, (iii) the transfer, sale, lease,
assignment or other disposition of assets to Borrower or any wholly-owned
Subsidiary of Borrower, (iv) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection with the
compromise or collection thereof, (v) the lease or sublease of property in the
ordinary course of business, (vi) the Spectrum Sale, (vii) the PMN Sale, and
(viii) all other dispositions of assets if all of the following conditions are
met: (a) the aggregate market value of assets sold in any one transaction or
series of related transaction for any calendar year does not exceed $5,000,000
for Borrower and any Subsidiaries; (b) the consideration received is at least
equal to the fair market value of such assets; (c) the sole consideration
received is cash; (d) after giving effect to the sale or other disposition of
such assets, Borrower, on a consolidated basis with any Subsidiary, is in
compliance on a pro forma basis with the covenants set forth in Subsection 8(1)
recomputed for the most recently ended month for which information is available;
and (e) no Default or Event of Default then exists or shall result from such
sale or other disposition.
(F) Investments. Borrower will not and will not permit any Subsidiary directly
or indirectly to make or own any Investment in any entity except: (i) Borrower
and any Subsidiary may make and own Investments in Cash Equivalents;
(ii) equities in CoBank; (iii) Investments not otherwise permitted by this
Subsection 9(F) in a Subsidiary of Borrower, and the other existing loans,
advances and Investments not otherwise permitted by this Subsection 9(F)
described on Schedule 9(F); (iv) Permitted Acquisitions (as defined herein);
(v) loans,

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
advances and any other investments by any Borrower or any Subsidiary thereof in
any other entity in an aggregate amount not to exceed $5,000,000 during any
fiscal year of Borrower; provided, however, that any portion of such $5,000,000
not used in any such fiscal year of Borrower may be applied to the next
succeeding fiscal year or years on a cumulative basis.
“Investments” means (i) any direct or indirect purchase or other acquisition by
Borrower or any Subsidiary of any beneficial interest in, including stock,
partnership interest or other equity securities of, any other entity, other than
trade associations and similar organizations purchased or acquired in the
ordinary course of business; and (ii) any direct or indirect loan, advance,
guarantee, assumption of liability or other obligation of liability, or capital
contribution by Borrower or any Subsidiary to any other entity, including all
indebtedness and accounts receivable from that other entity that are not current
assets or did not arise from sales to that other entity in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
“Cash Equivalents” means (i) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-I from Standard &
Poor’s Rating Service or at least P-I from Moody’s Investors Service, Inc.;
(iii) certificates of deposit or bankers’ acceptances maturing within one
(1) year from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000; and (iv) time
deposits maturing no more than thirty (30) days from the date of creation
thereof with commercial banks having membership in the Federal Deposit Insurance
Corporation in amounts at any one such institution not exceeding the lesser of
$100,000 or the maximum amount of insurance applicable to the aggregate amount
of Borrower’s deposits at such institution.
“Permitted Acquisitions” means Investments by Borrower or any Subsidiary thereof
in the form of acquisitions of all or substantially all of the business or a
line of business (whether by the acquisition of capital stock, assets or any
combination thereof) which are consummated in accordance with the following
requirements: (i) the acquired entity shall be engaged in and substantially all
of the acquired assets shall be utilized in a similar line of business as
Borrower or any Subsidiary, unless otherwise approved in writing by CoBank,
(ii) no Default or Event of Default shall have occurred and be continuing or be
created by the relevant Permitted Acquisition, (iii) for any single Permitted
Acquisition, or series of related Permitted Acquisitions, having an aggregate
consideration equal to or in excess of $ I0,000,000 during any fiscal year of
Borrower, (A) the Borrower shall deliver a certificate to CoBank, in form and
substance reasonably satisfactory to CoBank, demonstrating pro forma compliance
with the financial covenants set forth in Subsection 8(I) and the other terms of
the Loan Documents prior to the closing of such Permitted Acquisition, (B) a
description of the relevant Permitted

 

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Master Loan Agreement/CT Communications, Inc.
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Acquisition in reasonable detail and the corresponding documentation shall be
furnished by the Borrower to CoBank at least ten (10) Business Days prior to the
closing date thereof (to be followed by any changed pages and fully executed
copies promptly after the creation thereof) and (C) the Borrower shall have
received the prior written approval of CoBank.
(G) Change in Business. Engage in any business activity or operation that is not
similar to or a logical extension of Borrower’s or any Subsidiary’s present
business activities and operations.
(H) Fiscal Year. Change its or their fiscal year from a fiscal year ending on
December 31 of each year.
(I) Disposition of Licenses. Except for the Spectrum Sale, sell, assign,
transfer or otherwise dispose of, or attempt to dispose of, in any way, any
franchise, license, certificates, permits, authorization, approvals and the like
which may be required by law or which are material to the conduct of its
business, the disposition of which could reasonably be expected to have a
Material Adverse Effect on Borrower or any Subsidiary, taken as a whole.
(J) Dividends and Other Distributions. Directly or indirectly declare, order,
pay, make or set apart any sum for any dividend or any other distribution of
assets to its shareholders or retire, redeem, purchase or otherwise acquire for
value any capital stock or other ownership interest in Borrower; provided,
however, that (i) Borrower or any Subsidiary thereof may pay dividends in shares
of its own capital stock; (ii) any Subsidiary may pay dividends or make
distribution to Borrower; (iii) Borrower may pay cash dividends to its equity
holders; provided that (a) such dividends shall not exceed in any fiscal year
100% of Borrower’s immediately prior three-year average consolidated net income,
determined in accordance with GAAP, and (b) Borrower shall have delivered to
CoBank evidence reasonably satisfactory thereto demonstrating compliance with
Subsection 8(I) hereof both before and after giving effect to such dividend
payment; (iv) Borrower may redeem all or any portion of its preferred stock; and
(v) Borrower may purchase its outstanding shares of common stock.
(K) Transactions with Affiliates. Directly or indirectly to enter into or permit
to exist any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate, other than
Borrower, or with any director, officer or employee of Borrower or any
Affiliate, except (i) as set forth on Schedule 9(K); (ii) transactions in the
ordinary course of and pursuant to the reasonable requirements of the business
of Borrower or such Subsidiary and upon fair and reasonable terms which are
fully disclosed to Lenders and are no less favorable to Borrower or such
Subsidiary than would be obtained in a comparable arm’s length transaction with
a entity that is not an Affiliate; or (iii) payment of compensation to
directors, officers and employees in the ordinary course of business for
services actually rendered in their capacities as directors, officers and
employees, provided such compensation is reasonable and comparable with
compensation paid by companies of like nature and similarly situated.
Notwithstanding the foregoing, upon the election of CoBank no payments may be
made with respect to any items set forth in clauses (i) and (ii) of the
preceding sentence upon the occurrence and during the continuation of a Default
or Event of Default.

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
“Affiliate” means any person or entity: (i) directly or indirectly controlling,
controlled by, or under common control with, Borrower or any Subsidiary;
(ii) directly or indirectly owning or holding five percent (5%) or more of any
equity interest in Borrower or any Subsidiary; or (iii) five percent (5%) or
more of whose voting stock or other equity interest is directly or indirectly
owned or held by Borrower or any Subsidiary, provided that the beneficial, and
not the legal, holder of title to any equity interest in Borrower or any
Subsidiary shall be deemed an Affiliate. For purposes of this definition,
“control” (including with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”) means the possession directly
or indirectly of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities or
by contract or otherwise.
(L) Negative Pledge to Other Entities. Directly or indirectly to enter into or
assume any agreement (other than the Loan Documents) prohibiting the creation or
assumption of any lien upon its or their properties or assets, whether now owned
or hereafter acquired or which has any covenant more restrictive than any in
Sections 8 or 9.
(M) Amendments: Payments and Prepayments of Subordinated Debt. Amend or modify
(or permit the modification or amendment of) any of the terms or provisions of
any Indebtedness permitted under Subsection 9(A)(v) other than administrative or
immaterial amendments or modifications not detrimental to CoBank, or cancel or
forgive, make any voluntary or optional payment or prepayment on, or redeem or
acquire for value (including without limitation by way of depositing with any
trustee with respect thereto money or securities before due for the purpose of
paying when due) any such Indebtedness.
Section 10. Events of Default. Each of the following shall constitute an “Event
of Default” under this Agreement.
(A) Payment Default. Borrower should (i) fail for 5 days to make any payment to
CoBank when due hereunder, under any Note, any Supplement or under any other
Loan Document to which it is a party, or (ii) should fail to make any investment
in CoBank required to be made hereunder when due.
(B) Representations and Warranties. Any opinion, certificate or like document
furnished to CoBank by or on behalf of Borrower or any Subsidiary, or any
representation or warranty made herein, in any Note, any Supplement or in any
other Loan Document shall prove to have been false or misleading in any material
respect on or as of the date made or deemed made.
(C) Certain Affirmative Covenants. Borrower should fail to perform or comply
with any covenant set forth in Section 8 of this Agreement (other than
Subsection 8(H)(4) through Subsection 8(H)(8) and Subsection 8(1)) and such
failure continues for 30 days after written notice thereof shall have been
delivered by CoBank to Borrower.
(D) Other Covenants and Agreements. Borrower should fail to perform or comply
with Subsection 8(H)(4) through Subsection 8(H)(8), Subsection 8(I), or any
other

 

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Master Loan Agreement/CT Communications, Inc.
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covenant or agreement contained in this Agreement or in any other Loan Document
or should use the proceeds of any Loan for an unauthorized purpose.
(E) Cross-Default. (i) The occurrence of a breach, default or event of default
under any other Loan Document, (ii) the failure, after any applicable grace
period, on the part of Borrower or any other entity that is a party to any other
Loan Document, other than CoBank, to observe, keep or perform any covenant or
agreement contained in such other Loan Document, or (iii) the failure, after any
applicable grace period, on the part of Borrower or any Subsidiary or any
guarantor of Borrower’s obligations hereunder to observe, keep or perform any
covenant or agreement contained in any agreement (other than the Loan Documents)
between such entity and CoBank, including, without limitation, any guaranty,
loan agreement, security agreement, mortgage, deed to secure debt, or deed of
trust.
(F) Other Indebtedness. (i) Borrower or any Subsidiary or any guarantor of
Borrower’s obligations hereunder should fail to pay when due any indebtedness to
any other person or entity for borrowed money or any long-term obligation for
the deferred purchase price of property (including any capitalized lease) or
(ii) any other event occurs under any agreement or instrument relating to such
indebtedness or obligation, which in the case of either of the foregoing
subsections (i) or (ii) has the effect of accelerating or permitting the
acceleration of such indebtedness or obligation having an aggregate principal
amount for Borrower or any Subsidiary in excess of $1,000,000, whether or not
such indebtedness or obligation is actually accelerated or the right to
accelerate is conditioned on the giving of notice, the passage of time, or
otherwise.
(G) Governmental Liens. Any lien, levy or assessment (other than Permitted
Encumbrances) is filed or recorded with respect to or otherwise imposed upon all
or any material part of the assets of Borrower or any Subsidiary by the United
States or any department or instrumentality thereof or by any state, county,
municipality or other Governmental Authority, in each case, except where
Borrower or any Subsidiary is not material to the operations of Borrower and its
Subsidiaries on a consolidated basis.
(H) Judgments. A judgment, decree, or order for the payment of money in excess
of $1,000,000 should be rendered against Borrower or any Subsidiary or any
guarantor of Borrower’s obligations hereunder and either: (i) enforcement
proceedings should have been commenced; (ii) a lien prohibited under Subsection
9(B) of this Agreement shall have been obtained; or (iii) such judgment, decree,
or order should continue unsatisfied and in effect for a period of 30
consecutive days without being vacated, discharged, satisfied, or stayed pending
appeal.
(I) Insolvency, Etc. Borrower or any Subsidiary or any guarantor of Borrower’s
obligations hereunder should: (i) become insolvent or should generally not, or
should be unable to, or should admit in writing its inability to, pay its debts
as they come due; or (ii) suspend its business operations or a material part
thereof or make an assignment for the benefit of creditors; or (iii) 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; or (iv)

 

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Master Loan Agreement/CT Communications, Inc.
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commence or have commenced against it any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
Law of any jurisdiction, which, in the case of a proceeding commenced against
Borrower or any Subsidiary or any guarantor of Borrower’s obligations hereunder,
is not dismissed within 45 days.
(J) Material Adverse Change. Any event, change or condition not referred to
elsewhere in this Section 10 should occur which results in a Material Adverse
Effect on Borrower or any Subsidiary or any guarantor of Borrower’s obligations
hereunder.
(K) Guarantees, Etc. Any guarantee, suretyship, subordination agreement,
maintenance agreement, or other agreement furnished in connection with
Borrower’s obligations hereunder and under any Supplement and Note shall, at any
time, cease to be in full force and effect, or shall be revoked or declared null
and void, or the validity or enforceability thereof shall be contested by the
guarantor, surety or other maker thereof (individually or collectively, the
“Guarantor”), or the Guarantor shall deny any further liability or obligation
thereunder, or shall fail to perform its obligations thereunder, or any
representation or warranty set forth therein shall be breached, or the Guarantor
shall breach or be in default under the terms of any other agreement with CoBank
(including any loan agreement or security agreement), or a default set forth in
Subsection 10(F) through Subsection 10(I) hereof shall occur with respect to the
Guarantor or the Guarantor shall die or be determined to be legally incompetent.
(L) Security. Any security agreement or other agreement executed by Borrower or
any other entity (other than CoBank) intended to create a valid and perfected
lien, security interest or security title in property as described herein or in
a Supplement shall for any reason (other than upon payment in full of the
obligations secured thereby) fail (i) to create a valid and perfected lien,
security interest, or security title (subject only to such exceptions as are
therein permitted) as contemplated herein or by the Supplement, (ii) to secure
thereunder the obligations purported to be secured thereby, or (iii) to have the
intended priority as contemplated by the Loan Documents. Any guaranty described
herein or in a Supplement as guaranteeing the obligations of Borrower hereunder
shall fail for any reason to be the valid and binding obligation of the
guarantor (other than upon payment in full of the obligations guaranteed
thereby), or the guarantor should in any way contest or dispute the validity and
binding effect of any such guaranty.
(M) ERISA Pension Plans. (i) Borrower or any Subsidiary or any guarantor of
Borrower’s obligations hereunder fails to make full payment when due of all
amounts which, under the provisions of any employee benefit plans or any
applicable provisions of the Internal Revenue Code of 1986, as amended from time
to time and all rules promulgated thereunder, and any successor statute and
regulations (the “IRC”), are required to pay as contributions thereto, and such
failure results in or could reasonably be expected to have a Material Adverse
Effect on such entity; or (ii) an accumulated funding deficiency occurs or
exists whether or not waived, with respect to any such employee benefit plans;
or (iii) any employee benefit plan of Borrower or any Subsidiary or any
guarantor of Borrower’s obligations hereunder loses its status as a qualified
plan under the IRC and such loss results in or could reasonably be expected to
have a Material Adverse Effect on such entity.

 

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(N) Licenses and Permits. (i) The loss, suspension or revocation of, or failure
to renew, any franchise, license, certificate, permit, authorization, approval
or the like now held or hereafter acquired by Borrower or any of its
Subsidiaries, if such loss, suspension, revocation or failure to renew could
reasonably be expected to have a Material Adverse Effect on Borrower, or
(ii) any regulatory or Governmental Authority replaces the management of
Borrower or any Subsidiary or assumes control over Borrower or such Subsidiary.
(O) Material Contracts. Borrower should breach or be in default under a Material
Contract in any material respect, unless the existence of such breach or default
is being contested by Borrower in good faith by appropriate proceedings and
Borrower has made adequate reserves on its books as required by GAAP.
Section 11. Remedies. Upon the occurrence and during the continuance of an Event
of Default or any Potential Default, CoBank shall have no obligation to continue
to extend or continue to extend credit to Borrower under any Note or any
Supplement and may discontinue doing so at any time without prior notice. Upon
the occurrence of an Event of Default under Subsection 10(I) of this Agreement,
the entire unpaid principal balance of the Loans, all accrued interest thereon,
and all other amounts payable under this Agreement, all Notes, all Supplements
and all other Loan Documents and all other agreements between CoBank and
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 Borrower. In addition, upon the occurrence and during the continuance of any
Event of Default, CoBank may:
(A) Termination and Acceleration. Terminate any commitment and declare the
entire unpaid principal balance of the Loans, all accrued interest thereon, and
all other amounts payable under this Agreement, all Notes and Supplements, and
the other Loan Documents to be immediately due and payable. Upon such a
declaration, the unpaid principal balance of the 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 Borrower.
(B) Enforcement. Proceed to protect, exercise, and enforce such rights and
remedies as may be provided by this Agreement, any other Loan Document or under
applicable Laws. 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, and no single or partial exercise of any right or
remedy shall preclude any other or future exercise thereof, or the exercise of
any other right. Without limiting the foregoing, CoBank may hold and/or set off
and apply against Borrower’s obligations to CoBank the proceeds of any equity in
CoBank, any cash collateral held by CoBank, or any balances held by CoBank for
Borrower’s account (whether or not such balances are then due).
(C) Application of Funds. Apply all payments received by it to Borrower’s
obligations to CoBank in such order and manner as CoBank may elect in its sole
discretion; provided that any payments received from any guarantor shall only be
applied against obligations guaranteed by such guarantor.

 

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Master Loan Agreement/CT Communications, Inc.
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(D) Default Rate of Interest. In addition to the rights and remedies set forth
above and notwithstanding any Supplement: (i) if Borrower fail to make any
payment to CoBank when due (including, without limitation, any purchase of
equity of CoBank when required), then at CoBank’s option in each instance, such
obligation or payment shall bear interest from the date due to the date paid at
2% per annum in excess of the rate of interest that would otherwise be
applicable to such obligation or payment, (ii) upon the occurrence and during
the continuance of an Event of Default, at CoBank‘s option in each instance, the
unpaid balances of the Loans shall bear interest from the date of the Event of
Default or such later date as CoBank shall elect at 2% per annum in excess of
the rate(s) of interest that would otherwise be in effect on the Loans under the
terms of the applicable Note and the applicable Supplement and (iii) after the
maturity of any Loan, whether by reason of acceleration or otherwise, the unpaid
principal balance of the Loan (including without limitation, principal,
interest, fees and expenses) shall automatically bear interest at 2% per annum
in excess of the rate of interest that would otherwise be in effect on the Loan
under the terms of the applicable Note and the applicable Supplement. All
interest provided for herein shall be payable on demand and shall be calculated
from the date any such payment was due to the date paid on the basis of a year
consisting of 360 days.
Once CoBank has commenced the exercising of remedies pursuant to this Section 11
or any other Loan Documents upon the occurrence of an Event of Default, CoBank
may proceed with the exercising of such remedies notwithstanding any curative
action by Borrower.
Section 12. Complete Agreement; Amendments. This Agreement, the Notes, the
Supplements and the other 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 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 Notes and all Supplements hereto. Each Note and 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 Note or any Supplement (or in any amendment
to this Agreement or any Note or any Supplement) and not otherwise defined in
the Note or the Supplement (or amendment) shall have the meaning set forth
herein.
Section 13. 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 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 a Note or a Supplement and this
Agreement shall be applicable thereto.
Section 14. Applicable Law. Except to the extent governed by applicable federal
law, this Agreement, each Note and each Supplement shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to choice of law doctrine,

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
Section 15. Notices. All notices hereunder or under any Note or any Supplement
shall be in writing and shall be deemed to be duly given upon delivery if
personally delivered or sent by facsimile transmission (electronic confirmation
received), or three 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):

     
If to CoBank, as follows:
  If to Borrower, as follows:
 
   
CoBank, ACB
  CT Communications, Inc.
900 Circle Parkway
  1000 Progress Place, NE
Suite 1400
  P.O. Box 227
Atlanta, Georgia 30339
  Concord, North Carolina 28026-0227
Attn: Communications and Energy
  Attn: Chief Financial Officer
               Banking Group
  Fax No.: 704-722-2558
Fax No.: 770-618-3202
   
 
   
With copy to:
   
 
   
CoBank
   
5500 S. Quebec Street
   
Greenwood Village, Colorado 80111
   
Attn: Communications and Energy Banking Group
   
Fax No.: 303-224-2718
   

Section 16. Costs, Expenses and Taxes. To the extent allowed by law, Borrower
agrees to pay all reasonable out-of-pocket costs and expenses (including the
fees and expenses of counsel retained or employed by CoBank) incurred by CoBank
in connection with the origination, negotiation, documentation, administration,
amendment, collection, and enforcement of this Agreement and the other Loan
Documents, including, without limitation, all costs and expenses incurred in
obtaining, perfecting, maintaining, determining the priority of, and releasing
any security for 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 17. Effectiveness and Severability. This Agreement shall continue in
effect until: (i) all indebtedness and obligations of Borrower under this
Agreement, all Notes, all Supplements and all other Loan Documents shall have
been paid or satisfied; (ii) CoBank has no commitment to extend credit to or for
the account of Borrower under any Note or any Supplement; and (iii) either party
sends written notice to the other terminating this Agreement. 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.

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
Section 18. Regulatory Approvals. Upon any action by CoBank to commence the
exercise of remedies hereunder, or under the Note, the Supplements or other Loan
Documents, Borrower hereby undertakes and agrees on behalf of itself and its
Subsidiaries to cooperate and join with CoBank, and cause its Subsidiaries to
cooperate and join with CoBank, in any application to any 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 Borrower or such Subsidiary before
such Governmental Authority, in each case in support of any such application
made by CoBank, and neither Borrower nor any of its Subsidiaries shall directly
or indirectly, oppose any such action by CoBank before any such Governmental
Authority.
Section 19. Successors and Assigns. This Agreement, each Note, each Supplement,
and the other Loan Documents shall be binding upon and inure to the benefit of
Borrower and CoBank and their respective successors and assigns, except that
neither party may assign or transfer its rights or obligations under this
Agreement, any Note, any Supplement or any other Loan Document without the prior
written consent of the other party.
Section 20. Consent to Jurisdiction. To the maximum extent permitted by law,
Borrower agrees that any legal action or proceeding with respect to this
Agreement or any of the other Loan Documents may be brought in the courts of the
State of Colorado, or of the United States of America for the District of
Colorado, all as CoBank may elect. By execution of this Agreement, Borrower
hereby irrevocably submits to each such jurisdiction, expressly waiving any
objection it may have to the laying of venue by reason of its present or future
domicile. Nothing contained herein shall affect the right of CoBank to commence
legal proceedings or otherwise proceed against Borrower in any other
jurisdiction or to serve process in any manner permitted or required by law.
Section 21. Waiver of Jury Trial. BORROWER AND COBANK HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY NOTE, ANY SUPPLEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER AND COBANK
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. BORROWER AND COBANK FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT. BORROWER AND COBANK ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF COBANK.
Section 22. Counterparts. This Agreement, each Note, 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 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.
Section 23. Participations, Etc. From time to time, CoBank may sell to one or
more banks, financial institutions or other lenders a participation in one or
more of the loans or other extensions of credit made pursuant to this Agreement
and any Note and any Supplement. However, no such participation shall relieve
CoBank of any commitment made to Borrower hereunder. In connection with the
foregoing, CoBank may disclose information concerning Borrower, any Subsidiary
and any guarantor of Borrower’s obligation hereunder and under such Note and
such Supplement, if any, to any participant or prospective participant, provided
that such participant or prospective participant agrees to keep such information
confidential. CoBank agrees that all loans that are made by CoBank and that are
retained for its own account and are not included in a sale of a participation
interest shall be entitled to patronage distributions in accordance with the
bylaws of CoBank and its practices and procedures related to patronage
distribution. Accordingly, all loans that are included in a sale of a
participation interest shall not be entitled to patronage distributions. A sale
of a participation interest may include certain voting rights of the
participants regarding the Loan hereunder (including, without limitation, the
administration, servicing and enforcement thereof). CoBank agrees to give
written notification to Borrower of any sale of a participation interest.
Section 24. Confidentiality. CoBank agrees to hold any confidential information
that it may receive from Borrower or any of its Subsidiaries pursuant to this
Agreement in confidence, except for disclosure: (i) on a confidential basis, as
necessary or appropriate, to directors, officers, employees, agents or legal
counsel, independent public accountants and other professional advisors of
CoBank; (ii) to regulatory officials having jurisdiction over CoBank; (iii) as
required by applicable Law or legal process or (iv) in connection with any legal
proceeding between CoBank and Borrower or any of its Subsidiaries (provided
that, in the event CoBank is so required to disclose such confidential
information pursuant to clauses (iii) or (iv) of this Subsection 24, CoBank
shall promptly notify Borrower so that Borrower or any of its Subsidiaries may
seek, at its sole cost and expense, a protective order or other appropriate
remedy); and (v) to another person in connection with a disposition or proposed
disposition to that person of all or part of CoBank’s interests hereunder or a
participation interest in a Loan,

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
provided that such disclosure is made subject to an appropriate confidentiality
agreement on terms substantially similar to this Subsection 24. For purposes of
the foregoing, “confidential information” shall mean all information respecting
Borrower or any of its Subsidiaries, other than (A) information previously filed
by Borrower or any of its Subsidiaries with any Governmental Authority and
available to the public, (B) information previously published in any public
medium from a source other than, directly or indirectly, CoBank and
(C) information obtained by CoBank from a source independent of Borrower or its
Subsidiaries that is not under any obligation of confidentiality to Borrower or
any of its Subsidiaries.
Section 25. Refinancing of Term Loan. Notwithstanding anything herein, Borrower
may at any time refinance Loan No. RX0383-T2 under the Second Supplement to
Master Loan Agreement dated as of even date herewith, pursuant to a new
unsecured term loan from either CoBank or a third party.
[Signatures Follow on Next Page]

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed and
delivered, and CoBank has caused this Agreement to be executed and delivered,
each by its respective duly authorized officer as of the date first shown above.

              [CORPORATE SEAL]   CT COMMUNICATIONS, INC.    
 
           
 
  By:   /s/ Michael R. Coltrane    
 
                Michael R. Coltrane         President and Chief Executive
Officer    

[Signatures Continue on Next Page]

 

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Master Loan Agreement/CT Communications, Inc.
MLA No. RX 0383
[Signatures Continued from Previous Page]

                  COBANK, ACB      
 
  By:   /s/ Kurt Morris    
 
                Kurt Morris
Vice President    

 

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Loan No. RXO383-T1
FIRST SUPPLEMENT TO MASTER LOAN AGREEMENT
This FIRST SUPPLEMENT TO MASTER LOAN AGREEMENT (this "First Supplement”), dated
as of April 18, 2006, is between COBANK, ACB (“CoBank”) and CT COMMUNICATIONS,
INC. (“Borrower”), and supplements that certain Master Loan Agreement, dated as
of even date herewith, by and between CoBank and 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 First
Supplement shall have the meanings assigned to them in the MLA.
SECTION 1. The Revolving Loan Commitment. On the terms and conditions set forth
in the MLA and this First Supplement, CoBank agrees to make a loan to Borrower
(the “Loan”), by means of one or more advances, during the Availability Period
(as defined in Section 3 hereof) in an aggregate principal amount outstanding at
any one time not to exceed $40,000,000 (the “Commitment”). The Commitment shall
expire at 12:00 noon Eastern time on the Business Day immediately preceding
March 31, 2011 (the “Maturity Date”). Under the Commitment, amounts borrowed and
later prepaid may be reborrowed.
SECTION 2. Purpose. The proceeds of the Loan shall be used by Borrower (i) for
working capital, capital expenditures and other general corporate purposes, and
(ii) pay fees and other costs and expenses associated with obtaining the Loan.
Borrower agrees that the proceeds of the Loan shall be used only for the
purposes set forth in this Section 2.
SECTION 3. Availability. Subject to Section 2 of the MLA and Section 9 hereof,
during the period commencing on the date on which all conditions precedent to
the Loan are satisfied (the “Closing Date”) and ending on the Business Day
immediately preceding the Maturity Date (the “Availability Period”), 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) hereof), a request for such advance must be received no
later than 12:00 noon Eastern time three Business Days or three Banking Days (as
defined in Subsection 4(A)(3) hereof), as applicable, prior to the day such
advance is desired.
SECTION 4. Interest.
(A) Rate Options; Etc. The unpaid principal balance of each advance under the
Loan shall accrue interest at the rate or rates determined or selected by
Borrower in accordance with this Subsection 4(A).
(1) Base Rate Option. As to any portion of the unpaid principal balance of the
Loan selected by Borrower (any such portion, and any portion selected pursuant
to Subsections 4(A)(2) or 4(A)(3) of this First Supplement, is hereinafter
referred to as a “Portion” of the Loan), interest shall accrue pursuant to this
base rate option (a) at a variable annual interest rate equal, on any day, to
the higher of (i) the Prime Rate (as

 

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T1
hereinafter defined) or (ii) the sum of the Federal Funds Rate (as hereinafter
defined) plus 0.50% (such base rate of interest, the “Base Rate”). The term
“Prime Rate” shall mean a base rate of interest per annum equal, on any day, to
the rate of interest published on such day in the Eastern Edition of The Wall
Street Journal as the average prime lending rate for 75% of the United States’
30 largest commercial banks, or if the Eastern Edition of The Wall Street
Journal or such rate is not published on such day, such rate as last published
in the Eastern Edition of The Wall Street Journal. In the event the Eastern
Edition of The Wall Street Journal ceases to publish such rate or an equivalent,
the term “Prime Rate” shall be determined by reference to such other regularly
published prime rate based upon any averaging of such 30 banks, as CoBank shall
determine, or if no such published average prime rate is available, then the
term “Prime Rate” shall mean a variable rate of interest per annum as determined
by CoBank equal to the highest of the “prime rate,” “reference rate,” “base
rate” or other similar rate announced from time to time by any of Bankers Trust
Company and Citibank as selected by CoBank (with the understanding that any such
rate may merely be a reference rate and may not necessarily represent the lowest
or best rate actually charged to any customer by such bank). The “Prime Rate”
shall change on a date established by CoBank as the effective date of any change
therein and CoBank agrees to notify Borrower of any such change. The term
“Federal Funds Rate” shall mean, for any day, the rate of interest per annum
(rounded upward, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the weighted average of the rates on overnight federal funds
transactions with partners of the Federal Reserve System arranged by federal
funds brokers, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day and (ii) if no such rate is so
published on the next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to CoBank on such day on such transactions
as determined by CoBank.
(2) Quoted Rate Option. Subject to Subsections 4(A)(4) and (5) below, as to any
Portion or Portions of the Loan selected by 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. Under this
option, the interest rate on such Portion or Portions of the Loan, may be fixed
for such Interest Periods (as defined in Subsection 4(A)(3) below) as may be
agreeable to CoBank in its sole and absolute discretion in each instance;
provided, however, that (i) such Interest Period shall be for a minimum of one
year and shall not extend beyond the Maturity Date (as defined in Section 6
hereof), (ii) such Interest Period may only expire on a Business Day,
(iii) amounts fixed shall be in increments of $2,000,000 or any whole multiple
of $500,000 in excess thereof, and (iv) the Quoted Rate Option shall not be
available with respect to new advances during the continuance of any Event of
Default.
(3) LIBOR Option. Subject to Subsections 4(A)(4) and (5) below, as to any
Portion or Portions of the Loan selected by Borrower, interest shall accrue
pursuant to this LIBOR option at a fixed rate per annum equal to LIBOR (as
hereinafter defined) plus

 

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T1
a margin (“LIBOR Margin”) equal to the percentage determined from time to time
in accordance with Subsection 4(B) hereof. Under this option: (i) rates may be
fixed on such Portion or Portions of the Loan in minimum principal amounts of
$2,000,000 or any whole multiple of $500,000 in excess thereof; (ii) rates may
be fixed for Interest Periods (as hereinafter defined) of 1, 2, 3, 6, 9 or
12 months, as selected by Borrower; and (iii) rates may only be fixed on a
Banking Day (as hereinafter defined) or, at the option of Borrower, on three
Banking Days’ prior notice. “LIBOR” means the rate (rounded upward to the
nearest sixteenth and adjusted for reserved 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 “BSA”) at 11:00 a.m. London time three 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 Borrower, as published by Bloomberg or another major information
vendor listed on BBA’s official website. “Banking Day” shall mean 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” shall mean the time period chosen by
Borrower during which the chosen fixed rate is to apply to a Portion of the
Loan, which period commences on the day Borrower elects to fix a rate under
Subsection 4(A)(2) above or this Subsection 4(A)(3) (or, at the option of
Borrower, three Banking Days later), The Interest Period for Portions accruing
interest at the LIBOR option rate shall end on the day in the next calendar
month or in the month that is 2, 3, 6, 9 or 12 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 shall be extended to the next Banking Day unless such next Banking Day
falls in the next calendar month, in which case it shall end on the preceding
Banking Day; and (b) if there is no numerically corresponding day in the month,
then such period shall 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.
Upon the occurrence and during the continuance of an Event of Default, as the
Interest Periods for Portions of the Loan accruing interest at a LIBOR option
rate expire, at CoBank’s option, such Portions of the Loan shall be converted to
the Base Rate option and the LIBOR option rate will not be available to Borrower
until all Events of Default are no longer continuing.
(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 (Sections 4(A)(2) and 4(A)(3)).
(5) Selection and Changes of Rates. Borrower shall select the rate option or
options applicable to the Loan at the time it requests the Loan. Thereafter,
with respect to

 

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T1
Portions of the Loan accruing interest at the Base Rate, Borrower may, on any
Business Day, subject to Subsections 4(A)(2) and 4(A)(3) above, 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,
Borrower may, subject to Subsections 4(A)(2) and 4(A)(3) above, 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 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 to convert all, but not part, of such Portion of
the Loan so that it accrues interest at the Base Rate or a combination of the
Base Rate and a fixed rate option, for a new Interest Period or Interest Periods
selected in accordance with Subsections 4(A)(2) or 4(A)(3) above. Except for the
initial selection, all interest rate selections provided for herein shall be
made by telephonic or written request of an authorized employee of Borrower
(designated in writing by Borrower) 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 Borrower in acting upon) any request
made by a person identifying himself or herself as one of the persons designated
in writing by Borrower to request the Loan or select interest rates hereunder so
long as any funds advanced are wired to an account previously designated in
writing by Borrower. Notwithstanding the foregoing, rates may not be fixed in
such a manner as to cause Borrower to have to break any fixed rate balance in
order to pay any installment of principal.
(6) 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 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)(5) above, 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 Base Rate from and including the last day of such Interest Period. If
Borrower elects to convert from a fixed rate option to the Base Rate option
pursuant to Subsection 4(A)(5) above, interest at the applicable fixed rate
shall accrue through the day before such conversion and either (i) the first day
of any new Interest Period shall be the date of such conversion, or
(ii) interest at the Base Rate shall accrue on the Portion of the Loan so
converted from and including the date of conversion.
(B) Margins. Initially, and continuing through the day immediately preceding the
first Adjustment Date (as defined below) on which Borrower demonstrates that a
change in the LIBOR Margin is warranted and requests such change, the applicable
LIBOR Margin shall be 0.625%. Commencing on such Adjustment Date, the applicable
margin shall be determined based on the Total Leverage Ratio, determined in
accordance with Subsection 8(J)(1) of the MLA, as of the last day of each fiscal
quarter of Borrower, as set forth in the following table:

 

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T1

          Total Leverage Ratio   LIBOR Margin
Greater than or equal to 2.00:1.00
    1.000 %
 
       
Less than 2.00:1.00 and greater than or equal to 1.50:1.00
    0.875 %
 
       
Less than 1.50:1.00
    0.625 %

The applicable margin shall be (i) increased, if warranted, beginning on the
date which is the 5th Business Day following CoBank’s receipt of the financial
statements required pursuant to Subsections 8(I)(1) and 8(1)(2) of the MLA, and
the compliance certificate required pursuant to Subsection 8(I)(9) of the MLA
and (ii) decreased, if warranted, beginning on the date which is the 5th
Business Day following CoBank’s receipt of such financial statements and
compliance certificate and Borrower’s written request to decrease such margin
(each such date described in (i) and (ii), an “Adjustment Date”). In the event
that 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 applicable margin is then warranted, receipt
of Borrower’s written request to decrease such margin) or upon the occurrence of
any Event of Default, the LIBOR Margin shall be 0.625%.
(C) Payment and Calculation. Borrower shall pay interest on the Loan monthly in
arrears on the last day of each calendar quarter, upon any prepayment (whether
due to acceleration or otherwise) and on the Maturity Date; provided, however,
at the election of CoBank with respect to the Portions accruing interest under
the LIBOR option, interest shall be payable at the maturity of an Interest
Period, or, if such Interest Period exceeds three months, quarterly in arrears
on each three month anniversary of the beginning date of such Interest Period
and at the maturity of such Portion and upon any prepayment (whether due to
acceleration or otherwise). 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. 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. Loan Fees.
(A) Origination Fee. In consideration of the Commitment, Borrower shall pay to
CoBank a non-refundable origination fee in the amount of $35,000, which shall be
due upon the Closing Date.
(B) Commitment Fee. In consideration of the Commitment, Borrower shall pay to
CoBank a commitment fee on the average daily unused portion of the Commitment as
the same may be reduced from time to time hereunder at the Applicable Commitment
Rate (as defined

 

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T1
below) per annum (calculated on the basis of the actual number of days elapsed
and a year consisting of 360 days), payable quarterly in arrears on the 20th day
of each July, October, January and April; provided, however, that the last such
payment shall be due and payable on the Maturity Date. Such fee shall be payable
for each quarter (or portion thereof) occurring during the period commencing on
the Closing Date and ending on, but not including, the Maturity Date.
“Applicable Commitment Rate” initially, and continuing through the day
immediately preceding the first Adjustment Date on which Borrower demonstrates
that a change in the Applicable Commitment Rate is warranted and requests such
change, the Applicable Commitment Rate shall be 0.150%. Commencing on such
Adjustment Date, the Applicable Commitment Rate shall be determined based on the
Total Debt Leverage Ratio, determined in accordance with Subsection 8(J)(1) of
the MLA, as of the last day of each fiscal quarter of Borrower, as set forth in
the following table:

              Applicable Total Debt Leverage Ratio   Commitment Rate
Greater than or equal to 2.00:1.00
    0.250 %
 
       
Less than 2,00:1.00 and greater than or equal to 1.50:1.00
    0.200 %
 
       
Less than 1.50:1.00
    0.150 %

The Applicable Commitment Rate shall be (i) increased, if warranted, beginning
on the date which is the 5th Business Day following an Adjustment Date and
(ii) decreased, if warranted, beginning on the date which is the 5th Business
Day following an Adjustment Date and the after receipt of Borrower’s written
request to decrease the Applicable Commitment Rate. In the event that 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 Applicable Commitment Rate is then warranted,
receipt of Borrower’s written request to decrease the Applicable Commitment
Rate), the Applicable Commitment Rate shall be 0.150%.
SECTION 6. Repayment of the Loan.
(A) Repayment. On the Maturity Date, the amount of the then unpaid principal
balance of the Loan and any and all other amounts due and owing hereunder or
under any other Loan Document relating to this Loan shall be due and payable.
(B) Application of Repayments; Related Interest. All repayments made pursuant to
this Section 6 will be applied to such Portions of the Loan as Borrower direct
in writing and, in the absence of such direction, will first be applied to the
Portion of the Loan accruing interest pursuant to the Base Rate option, then to
such Portions of the Loan accruing interest at the LIBOR option and finally to
such Portions of the Loan accruing interest at the Quoted Rate Option. At the
time of each repayment pursuant to this Section 6, Borrower must pay all accrued

 

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T1
and unpaid interest on the amount repaid.
SECTION 7. Prepayment. Borrower may, (i) on any Business Day prepay in full or
in part any Portion of the Loan accruing interest at the Base Rate, and (ii) on
three Business Days prior written notice prepay in full or in part any Portion
of the Loan accruing interest pursuant to the LIBOR rate option or the Quoted
Rate option. Unless otherwise agreed, all mandatory repayments required pursuant
to Subsections 4(A) and 4(B) of the MLA (whether or not any advances are then
outstanding and available to be repaid) shall be applied to permanently reduce
the Commitment (such that the Commitment may terminate prior to the Maturity
Date) and first to Portions of the Loan accruing interest at the Base Rate and
then to such Portions of the Loan accruing interest pursuant to fixed rate
options as the parties shall agree (and if the parties shall fail to agree, to
such Portions of the Loan as CoBank shall specify).
SECTION 8. Security. Borrower’s obligations hereunder and, to the extent related
thereto, the MLA, shall be secured as provided in Section 5 of the MLA.
SECTION 9. Additional Conditions Precedent. In addition to the conditions
precedent set forth in the MLA, CoBank’s obligation to make the initial advance
and each additional advance under the Loan is subject to the satisfaction of
each of the following conditions precedent on or before the date of such
advance:
(A) Capital Contribution to CoBank. That Borrower has acquired participation
certificates in CoBank in an initial amount of $1,000.
(B) Closing of Term Loan. That all conditions precedent to the Second Supplement
to Master Loan Agreement have been satisfied;
(C) Intentionally Omitted.
(D) No Material Adverse Change. That from December 31, 2004 to the date of such
advance there shall not have occurred any event which has had or could
reasonably be expected to have a Material Adverse Effect on the business or
prospects of Borrower or any of its Subsidiaries, taken as a whole;
(E) Representations and Warranties. That the representations and warranties of
each Borrower contained in the MLA, this First Supplement and any other Loan
Document to which it is a party; be true and correct in all material respects on
and as of the date of each advance, as though made on and as of such date;
(F) Advance Certificate. That CoBank receive a certificate, in the form of
Exhibit A attached hereto, from the President or Treasurer of each Borrower as
to, among other things, the continuing truth and accuracy of the representations
and warranties of each Borrower under the Loan Documents to which it is a party
and the satisfaction of each of the conditions applicable to the making of the
advance;

 

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-Tl
(G) Opinions of Counsel. That CoBank receives, in form and content reasonably
acceptable to CoBank, opinions of counsel (who shall be acceptable to CoBank)
for Borrower; and
(H) Other Information. That CoBank receives such other information regarding the
condition, financial or otherwise, and operations of Borrower as CoBank shall
request and such other opinions, certificates or documents as CoBank shall
reasonably request.
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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-TI
IN WITNESS WHEREOF, Borrower and CoBank have caused this First Supplement to be
executed and delivered by their respective duly authorized officers as of the
date first shown above.

              [CORPORATE SEAL]   CT COMMUNICATIONS, INC.    
 
           
 
  By:   /s/ Michael R. Coltrane
 
        Michael R. Coltrane         President and Chief Executive Officer    

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First Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T1
[Signatures Continued from Previous Page]

                  COBANK, ACB    
 
           
 
  By:   /s/ Kurt Morris
 
        Kurt Morris         Vice President    

 

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Loan No. RX0383-T2
SECOND SUPPLEMENT TO MASTER LOAN AGREEMENT
THIS SECOND SUPPLEMENT (this “Second Supplement”) to Master Loan Agreement dated
as of April 18, 2006, is made by and between CoBANK, ACB (“CoBank”) and CT
COMMUNICATIONS, INC. (“Borrower”) and supplements that certain Master Loan
Agreement, dated as of even date herewith, by and between CoBank and Borrower
(as the same may be amended, modified, supplemented, extended or restated from
time to time, the “MLA”). Capitalized terms used herein and not otherwise
defined in this Second Supplement shall have the meanings ascribed to them in
the MLA.
SECTION 1. The Term Loan. On the terms and conditions set forth in the MLA and
this Second Supplement, CoBank agrees to make a loan to Borrower, by means of a
single advance in an aggregate principal amount of $43,750,000 (the “Loan”).
Loan amounts borrowed and later repaid may not be reborrowed.
SECTION 2. Purpose. The purpose of the Loan is to consolidate Borrower’s
existing term loan (under that certain Credit Agreement dated as of May 4, 2001
by and among Borrower, CoBank as Administrative Agent and a Lender, and the
other Lenders named therein (the “Existing Term Loan”)) to Borrower’s Master
Loan Agreement No. 0383 with CoBank. 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 Sections 2 of the MLA and Section 6 of this
Second Supplement, the Loan will be advanced in a single advance on the date on
which all conditions precedent to the Loan are satisfied (the “Closing Date”).
SECTION 4. Interest; Payment; Prepayment.
(A) Fixed Rate Interest. Borrower agrees to pay interest on the unpaid principal
balance of the Loan at a fixed annual interest rate of 7.32% per annum,
calculated on the basis of a 360 day year for the actual number of days elapsed,
together with any accrued but unpaid interest on the Existing Term Loan from
January 1, 2006 through the date immediately preceding the Closing Date.
Interest shall accrue on the unpaid principal balance of the Loan from and
including the Closing Date to but excluding December 31, 2014 (the “Maturity
Date”).
(B) Payment and Calculation. Commencing on June 30, 2006 and on each
September 30, December 31, March 31 and June 30 thereafter through and including
the Maturity Date, Borrower shall pay principal and interest on the Loan in
equal quarterly payments of $1,250,000. On the Maturity Date, the amount of the
then unpaid principal balance of the Loan and any and all other amounts due and
owing hereunder or under any other Loan Document relating to this Loan shall be
due and payable.

 

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Second Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T2
(C) Prepayment. Subject to Section 4(D) of the MLA and that certain Forward Fix
Letter Agreement dated March 5, 2001, a copy of which is attached hereto as
Exhibit A, Borrower may, on two Business Day’s prior written notice, prepay the
Loan in full or in part.
SECTION 5. Security. Borrower’s obligations hereunder and, to the extent related
thereto, the MLA, shall be secured as provided in Section 5 of the MLA.
SECTION 6. Additional Conditions Precedent. In addition to the conditions
precedent set forth in the MLA, CoBank’s obligation to make the Loan is subject
to the satisfaction of each of the following conditions precedent on or before
the date of the Loan:
(A) Closing of Revolver Loan. That all conditions precedent to the First
Supplement to Master Loan Agreement have been satisfied;
(B) Existing Indebtedness. That CoBank shall have received evidence satisfactory
to it that, simultaneously with the initial advance under the Loan, the Existing
Term Loan will be deemed repaid in full under the terms of the related credit
agreement; and
(C) No Material Adverse Change. That from December 31, 2004, to the date of such
advance there shall not have occurred any event which has had or could
reasonably be expected to have a Material Adverse Effect on the business or
prospects of Borrower or any of their Subsidiaries, taken as a whole;
(D) Representations and Warranties. That the representations and warranties of
each Borrower contained in the MLA, this Second Supplement and any other Loan
Document to which it is a party be true and correct in all material respects on
and as of the date of each advance, as though made on and as of such date;
(E) Closing Certificate. That CoBank receive a certificate, in the form of
Exhibit B attached hereto, executed by the President or Treasurer of each
Borrower, certifying as to, among other things, the continuing truth and
accuracy of the representations and warranties of each Borrower under the Loan
Documents to which it is a party and the satisfaction of each of the conditions
applicable to the making of the Loan;
(F) Opinions of Counsel. That CoBank receives, in form and content reasonably
acceptable to CoBank, opinions of counsel (who shall be acceptable to CoBank)
for Borrower;
(G) Other Information. That CoBank receives such other information regarding the
condition, financial or otherwise, and operations of Borrower as CoBank shall
request and such other opinions, certificates or documents as CoBank shall
reasonably request.
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Second Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T2
IN WITNESS WHEREOF, Borrower and CoBank have each caused this Second Supplement
to be executed and delivered by their respective duly authorized officer as of
the date first shown above.

     
[CORPORATE SEAL]
  CT COMMUNICATIONS, INC.

                  By:   /s/ Michael R. Coltrane       Michael R. Coltrane     
President and Chief Executive Officer     

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Second Supplement to Master Loan Agreement/CT Communications, Inc.
Loan No. RX0383-T2
[Signatures Continued from Previous Page]

            COBANK, ACB
      By:   /s/ Kurt Morris       Kurt Morris      Vice President