EXHIBIT 10.1
LOAN AGREEMENT AND
GRANT OF RIGHTS OF FIRST REFUSAL
TO ACQUIRE ASSETS AND/OR CAPITAL STOCK
OF MILLTENN, INC. AND ITS SUBSIDIARIES
AMONG
CENTURY TELEPHONE ENTERPRISES, INC.
AND THE PARTIES NAMED HEREIN
DATED APRIL 27, 1994
LOAN AGREEMENT AND GRANT OF RIGHTS OF FIRST
REFUSAL TO ACQUIRE ASSETS AND/OR CAPITAL STOCK OF MILLTENN, INC.
AND ITS SUBSIDIARIES
This Loan Agreement and Grant of Rights of First Refusal to Acquire
Assets or Capital Stock of MillTenn, Inc. and its Subsidiaries (this
"Agreement") is entered into as of this 27th day of April, 1994, by
and among the following parties:
WILLIAM S. HOWARD, SR. ("WSH"), ANN A. HOWARD
("AAH"), HOLLY LEE STARNES, WILLIAM S. HOWARD, JR.,
LAURA LYNNE HOWARD and CHARLOTTE ANN HOWARD
THOMPSON, residents of Millington, Tennessee, (each
hereinafter referred to individually as
"Shareholder" and in the aggregate as
"Shareholders");
AND
MILLTENN, INC. ('"MTI" or "Borrower"), MILLINGTON TELEPHONE
COMPANY ("MTC"), BIG CREEK FINANCIAL, INC. ("BCFI") and
MILL-COMM ASSOCIATES, INC.
("MAI"), all Tennessee corporations, (each hereinafter
referred to individually as "Company" and in the
aggregate as "Companies");
AND
CENTURY TELEPHONE ENTERPRISES, INC., a Louisiana
corporation (hereinafter referred to as "Lender") .
W I T N E S S E T H
WHEREAS, Shareholders and the Companies have requested Lender
to lend to Borrower the principal sum of TWENTY-FIVE MILLION AND
N0/100 ($25,000,000) DOLLARS (the "Loan");
WHEREAS, the Loan to Borrower is for the purpose of acquiring
approximately 328 shares of capital stock of MTC (hereinafter
"Purchased MTC Stock)"
WHEREAS, a Shareholder and/or a Company or a combination of
them may in the future, desire to sell, transfer or otherwise
dispose of some or all of the capital stock and/or assets of any or
all of the Companies (hereinafter "Property"); WHEREAS, subject to
the conditions contained herein, Shareholders and the Companies have
agreed to grant Lender rights of first refusal and other rights
(collectively "Rights") in connection with the sale, transfer or
disposition of any or all Property in consideration of Lender
providing the Loan; and WHEREAS, Shareholders, Companies and Lender
desire to enter into this Agreement for the purpose of confirming
the rights and obligations of the parties including setting forth the
terms and conditions upon which Lender is willing to commit to make
the Loan to Borrower and Borrower is obligated to repay the Loan and
defining the Rights granted to Lender herein; NOW THEREFORE, for and
in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the benefits
to be derived from the Loan and this Agreement and for other valid
reasons, Shareholders and Companies agree with Lender as follows:
ARTICLE I
DEFINITION OF TERMS
Section 1.01 As used in this Agreement, the following terms shall
have the respective meanings indicated below:
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(a) "Adjusted Consolidated Net Worth" means, as of the date
of determination, Consolidated Net Worth minus (i)
deferred assets other than prepaid insurance, prepaid
taxes, prepaid interest, extraordinary retirements, and
deferred charges where such deferred charges are
considered by Tribunals when setting rates, (ii)
patents, copyrights, trademarks, trade names,
franchises, experimental expense, goodwill (other than
goodwill arising from the purchase of capital stock
or assets of a Person engaged in the telephone or
cellular mobile communications business) and similar
intangible or intellectual property, and (iii)
unamortized debt discount and expense (other than
debt discount and expense ofthe Companies located
in jurisdictions where such items are considered by
Tribunals when setting rates).
(b) "Advance" or "Advances" shall mean the disbursement(s)
of the sum to be loaned by Lender to Borrower pursuant
to this Agreement.
(c) "Affiliate" shall mean (i) any member of the family of
any Shareholder, (ii) Millington CATV, Inc. or (iii)
any Person under the control of any one of the
Shareholders, the Companies or the Persons referred
to in subsections (i) and (ii) of this definition.
(d) "Authorized Financial Officer" shall mean the President
or Treasurer of any Company.
(e) "Base Rate" means, for any date, a rate per annum
(rounded upwards to the next 1/16 of 1%, if not
already a whole multiple of 1/16 of 1%), equal to the
rate of interest established from time to time by the
Chase Manhattan Bank, N.A. as its "Prime Rate" (or
successor of similar import), plus 1.5%.
(f) "BCFI" shall mean Big Creek Financial, Inc., a Tennessee
business corporation.
(g) "Borrower" means MillTenn, Inc., a Tennessee business
corporation.
(h) "Business Day" shall mean a day when Lender is open for
business.
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(i) "Cash Flow" shall mean, for any Company, the net
income of such Company, plus (i) depreciation, (ii)
amortization, and (iii) all noncash items and
such other amounts, all of which shall be determined
in accordance with GAAP and on a consolidated basis,
if such Company consolidates financial statements with
other Companies for financial reporting purposes.
(j) "Closing" shall mean the exchange of the various
documents and instruments by the parties hereto in
order to consummate any transaction.
(k) "Code" means the Internal Revenue Code of 1986,
as amended, together with rules and regulations
promulated thereunder.
(l) "Collateral" shall mean Present Collateral and Future
Collateral as defined in Article III hereof.
(m) "Companies" shall mean collectively MillTenn, Inc.,
Millington Telephone Company, Big Creek Financial,
Inc. and Millcomm Associates, Inc., each a Tennessee
corporation and "Company" means any of the same.
(n) "Consolidated Net Worth" means, as of the date of
determination, the amount of stated capital plus (or
minus, in the case of a deficit) the capital surplus
and earned surplus of the Companies, as calculated
in accordance with GAAP (but treating Minority
Interests in Subsidiaries as liabilities).
(o) "Current Financials" means the consolidated financial
statements of the Companies (excluding MTI) for the
fiscal year ended December 31, 1993.
(p) "Debt" of any Person means, from time to time and
without duplications, all indebtedness, liabilities,
and obligations of such Person (including, without
limitation, indebtedness, liabilities, and obligations
secured by any assets of such Person regardless
whether such Person has assumed the liability so
secured), whether or not considered as liabilities
according to GAAP and whether matured or unmatured,
liquidated or unliquidated, primary or secondary,
direct or indirect, or absolute, fixed, or contingent.
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(q) "Debtor Relief Laws" means the Bankruptcy Code of the
United States of America and all other applicable
liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency,
reorganization, fraudulent transfer or conveyance,
suspension of payments, or similar Laws from time to
time in effect affecting the rights of creditors
generally.
(r) "Default" means the occurrence of any event which with
the giving of notice or the passage of time or both
would become an Event of Default.
(s) "Default Rate" means an annual interest rate equal to
the lesser of (a) 3% plus the Base Rate or (b) the
Highest Lawful Rate.
(t) "EBIT" means, for the applicable period, net income
before Tax expense and interest expense and excluding
the effects of nonrecurring and/or unusual noncash
transactions that reduce net income and items that do
not reduce the cash flow of the Companies (e.g.,
write-off of intangibles, write-down of assets, effects
of new accounting pronouncements, etc.).
(u) "Environmental Law" means any Law that relates to the
environment or handling or control of Hazardous
Substances.
(v) "ERISA" means the Employment Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated thereunder.
(w) "ERISA Affiliate" means any company or trade or
business (whether or not incorporated) which is a
member of a group of which any Company is a member
and which is under common control with any Company
within the meaning of section 414 of the Code.
(x) "Event of Default" means any of the events described
in Article IX, provided there has been satisfied any
requirement in connection therewith for the giving of
notice, lapse of time, or happening of any further
condition.
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(y) "Fair Market Value" shall mean the present
value, in U.S. dollars, of consideration paid or
to be paid in exchange for any Property. If
consideration is offered that is not payable
in cash or otherwise traded on a nationally
recognized exchange, then the Fair Market Value
of such consideration shall be the present cash
value of such consideration, as determined by
a nationally recognized investment banking and/or
appraisal firm with expertise in the industries
of the business for which Fair Market Value is
to be determined to be selected by Lender and
which has no prior investment banking relationship
with Lender as a lead manager in any underwriting
and agreed to by Borrower, provided, however, that
if Borrower fails to agree within five (5)
Business Days of notification by Lender to Borrower,
then Borrower shall submit a similarly
qualified firm and the two firms shall determine
Fair Market Value within thirty (30) days, in
default thereof the average of the two firms
valuations shall determine Fair Market Value.
(z) "Financial Statements" means balance sheets,
profit and loss statements, statements of
capital and surplus, and statements of cash flow
prepared in comparative form to the
corresponding period of the preceding fiscal year.
(aa) "FCC" shall mean the Federal Communications Commission.
(bb) "GAAP" means generally accepted accounting
principles of the Accounting Principles Board of
the American Institute of Certified Public
Accountants and the Financial Accounting
Standards Board which are applicable as of the date
of the Financial Statements in question.
(cc) "Guarantees" shall mean the Guaranty
Agreements of WSH, AAH and, subject to the
approval set forth on Schedule 3.02, MTC by which
such guarantor agrees to guarantee the Obligations.
(dd) "Hazardous Substance" means any hazardous or toxic
waste, pollutant, contaminant, or substance.
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(ee) "Highest Lawful Rate" means at the particular
time in question the maximum rate of interest
which, under applicable Law, Lender is per-
mitted to charge the Borrower on the
Obligations. If the maximum rate of interest
which, under applicable Law, Lender is per-
mitted to charge the Borrower on the
Obligations shall change after the date
hereof, the Highest Lawful Rate shall be auto-
matically increased or decreased, as the case may
be, as of the effective time of such change
without notice to the Borrower.
(ff) "Laws" means all applicable statutes, laws,
treaties, ordinances, rules, regulations, orders,
writs, injunctions, decrees, judgments or
opinions of any Tribunal.
(gg) "Lien" shall mean any lien, security interest,
pledge, assignment, charge, title retention
agreement, or encumbrance of any kind, and any
other Right of or arrangement with any creditor
to have his claim satisfied out of any property
or assets, or the proceeds therefrom, prior to
the general creditors of the owner thereof.
(hh) "Litigation" means any action conducted,
pending, or threatened by or before any
Tribunal.
(ii) "Loan" shall mean the loan made or to be made by
Lender to Borrower pursuant to Article II hereof.
(jj) "Loan Closing Date" shall specifically mean the
date specified in Article VI hereof.
(kk) "Loan Papers" means this Agreement, the Note, the
Pledges, the Guarantees, stock assignments and
other documents executed and delivered pursuant
to this Agreement.
(11) "MAI" shall mean Mill-Comm Associates, Inc., a
Tennessee corporation.
(mm) "Material Agreement" of any Person means any
material written or oral agreement, contract,
commitment, or understanding to which such
Person is a party, by which such Person is
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directly or indirectly bound, or to which any
assets of such Person may be subject, and which
is not cancelable by such Person upon 30 days or
less notice without liability for further payment
other than nominal penalty, and which requires
such Person to pay more than $250,000 during any
12 month period.
(nn) "Maturity Date" shall mean, with respect to the
Note or other Obligations, the date of maturity
thereof, regardless of how such maturity is
brought about, whether at stated maturity, upon
demand, by acceleration, or otherwise.
(oo) "MTI" shall mean MillTenn, Inc., a Tennessee
corporation.
(pp) "MTC" shall mean Millington Telephone Company, a
Tennessee telephone utility corporation regulated
by the PSC.
(qq) "Multiemployer Plan" means a multiemployer plan
as defined in sections 3(37) or 4001(a) (3) of
ERISA or section 414 of the Code to which any
Company or any ERISA Affiliate is making, or has
made, or is accruing, or has accrued, an obligation
to make contributions.
(rr) "Note" shall mean the promissory note evidencing
the principal and interest under the Loan,
and any and all renewals, extensions,
rearrangements, or modifications thereof.
(ss) "Obligation" or "Obligations" shall mean all
present and future obligations and indebtedness,
and all renewals and extensions thereof, or any
part thereof, of any Shareholder or any Company to
Lender now existing or hereafter arising including
without limitation the obligations and indebtedness
of Borrower to Lender arising pursuant to the
Note, and the other Loan Papers, and all interest
accruing thereon and reasonable attorneys' fees
incurred in the enforcement or collection thereof,
regardless of whether such obligations and
indebtedness are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several,
or joint and several, including, but not limited
to, the indebtedness and obligations evidenced by
this Agreement, the Note, and by any and all Loan
Papers.
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(tt) "Partnership" shall mean the Memphis SMSA
Limited Partnership, a Delaware limited partnership.
(uu) "PBGC" means the Pension Benefit Guaranty
Corporation, or any successor thereof,
established pursuant to ERISA.
(vv) "Permitted Liens" means the Liens described on
Schedules 10.03, 10.05 and 10.19 hereto.
(ww) "Person" shall mean and include all natural
persons, corporations (which shall be deemed to
include business trusts), joint ventures,
associations, companies, partnerships, Tribunal,
government or any department, agency or political
subdivision thereof, or any other entity.
(xx) "Pledge" shall mean the Security Agreement-
Pledge which grants a Security Interest and Lien
in the Pledged Shares.
(yy) "Pledged Shares" shall mean the shares of
stock of MTI and MTC described on Section 3.01
hereto, and all other shares of stock of the
Companies which may now or hereafter be or become
subject to the Security Interest of the Pledge.
(zz) "PSC" shall mean the Tennessee Public Service
Commission.
(aaa) "Principal Debt" shall mean the unpaid principal
balance of indebtedness arising by reason of the
Loan.
(bbb) "Property" shall mean the capital stock and/or
assets of any or all of the Companies.
(ccc) "REA" shall mean the United States of America,
Rural Electrification Administration and/or
Rural Telephone Bank.
(ddd) "Rights" shall mean rights, remedies, privileges,
and powers.
(eee) "Security Interest" shall mean a Lien,
mortgage, pledge, deed of trust, collateral
assignment, or security interest in and to any
Property or Collateral.
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(fff) "Subsidiary" shall mean any Person with respect
to which any Company, or one or more Companies, owns,
directly or indirectly, in the aggregate, of
record or beneficially, fifty percent (50%) or more
of the issued and outstanding voting stock or interests;
(ggg) "Tax" or "Taxes" means all tax(es), assessment(s)
fee(s), or other charge(s) at any time imposed by
any Laws or Tribunal.
(hhh) "Total Liabilities" shall mean, for any Company,
all items of Debt, obligation or liability of
such Company which would, in accordance with GAAP,
be classified as liabilities of the Company
conducting a business the same as or similar to that
of such corporation, including, without limitation: (i)
all Debt, guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or
deposit in the ordinary course of business) or
discounted with recourse; (ii) all Debt in effect
guaranteed, directly or indirectly, through agreements,
contingent or otherwise, (a) to purchase such Debt, or
(b) to purchase, sell or lease (as lessee or lessor)
property, products, materials or supplies, or to
purchase or sell transportation or services,
primarily for the purpose of enabling the debtor to
make payment of such Debt or to insure the owner
of the Debt against loss, or (c) to supply funds to
or in any other manner invest in the debtor and
(iii) all Debt secured by (or for which the holder
of such Debt has an existing right, contingent or
otherwise, to be secured by) any Security Interest
upon or in property (including, without
limitation, accounts and contract rights) owned by
the respective Company, whether or not such
Company has assumed or become liable for the payment
of such Debt.
(iii) "Tribunal" means any municipal, state, commonwealth,
federal, foreign, territorial, or other court,
governmental body, subdivision, agency, department,
commission, board, bureau, or instrumentality.
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Section 1.02 Accounting terms not specifically defined herein
shall have the meaning ordinarily accorded such terms in accordance
with GAAP consistently applied. All other terms used herein shall
have the meanings as otherwise stated herein.
ARTICLE II LOAN
Section 2.01 Loan. Subject to the terms and conditions of
of this Agreement, Lender shall lend to Borrower and Borrower shall
borrow from the Lender the sum of TWENTY-FIVE MILLION AND N0/100
($25,000,000.00) DOLLARS.
Section 2.02 Note. The obligation of the Borrower to repay
the Loan shall be evidenced by a promissory note payable to the order
of Lender, in substantially the form of Exhibit "A" attached hereto
(the "Note") in the principal amount of the Loan. The Note shall bear
interest from the date thereof on the outstanding principal balance
as set forth in Section 2.03.
Section 2.03 Interest. (a) Subject to the provisions of
Section 2.03 (b) , the Loan shall bear interest at the rate per
annum (computed on the basis of the actual number of days elapsed
over a year of 365 days) equal to the lesser of (i) the Highest
Lawful Rate or (ii) the Base Rate. (b) If the Borrower shall
default in the payment of the principal or interest on the Loan
or any other amount becoming due hereunder, the Borrower shall
on demand from time to time pay
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interest, to the extent permitted by Law, on such defaulted amount
up to (but not including) the date of actual payment (after as well
as before judgment) at a rate per annum equal to the lesser of (i)
the Highest Lawful Rate or (ii) the Default Rate. Section 2.04 Payments
and Prepayments.
(a) Commencing on the first day of August, 1994, and on the same
day of each and every quarter thereafter (November, February
and May) through and including May 1, 1995,
installments of accrued interest only shall be due and
payable.
(b) Commencing an August 1, 1995, and on the same day of each
and every quarter thereafter through and including May 1,
1998, equal installments of principal in the amount of
$416,666, plus accrued interest shall be due and payable.
(c) Although the amounts of said quarterly payments as provided
for herein shall be determined as if amortized over fifteen
(15) years, the entire balance of principal and all accrued
interest shall balloon and be due and payable on May 1,
1998.
Each payment or prepayment on the Note must be paid at the
principal office of Lender at 100 Century Park Drive, Monroe,
Louisiana in funds available for immediate use by Lender on the day the
payment is due. Upon giving Lender not less than seven (7) Business Days
prior written notice specifying the amount of the prepayment
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and the prepayment date, the Borrower shall have the right to prepay
principal on the Note without premium or penalty at any time in whole
or in part. Each payment and prepayment shall be applied first to
accrued interest and then to a principal reduction on the Note. At
any time during which an Event of Default has occurred, any payment or
prepayment shall be applied in the following order (i) outstanding
Obligations, including reasonable expenses of Lender incurred in
enforcing the Loan Papers (ii) accrued interest and (iii) the
remaining Principal Debt.
Section 2.05 Fee. On the date hereof Borrower has delivered
and Lender acknowledges receipt of a loan fee (the "Fee") in the
amount of .5% of the principal amount of the Loan or $125,000. The Fee
is considered earned as of the date hereof and is non-refundable.
ARTICLE III COLLATERAL
Secti on 3. 01 Present Collateral. To secure the full and
complete payment and performance of the Note and Obligations contained
in this Agreement, Borrower shall execute and deliver, or cause to be
delivered, to Lender the following-described collateral:
(a) Pledge by Shareholders of 10,000 shares of MTI stock
(100%) in substantially the form shown on Exhibit B
attached hereto;
(b) Pledge by MTI of 496 shares of MTC stock (100%) in
substantially the form shown on Exhibit C attached
hereto, consisting of two separate pledges, the first
of the Purchased Shares and the second of all remaining
MTC stock;
(c) Guarantees of WSH and AAH in substantially the form
shown on Exhibit D attached hereto;
(collectively, "Present Collateral").
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Section 3.02 Future Collateral. Borrower and Shareholders
shall use their best efforts to obtain the required approvals set
forth on Schedule 3.02 hereof to further secure the full and complete
performance of the Note and Obligations contained in this Agreement,
and if obtained, Borrower shall release from escrow (the "Escrow") at
Boles, Boles & Ryan ("BBR") so as to cause to be delivered to Lender
the following-described collateral which has been executed and
delivered into BBR:
(a) Pledge by MTC of (i) 1,000 shares of MAI stock
(100%) and (ii) 100 shares of BCFI stock, in substantially
the form shown on Exhibit E attached hereto; and
(b) Guaranty of MTC in substantially the form shown on
Exhibit F attached hereto.
(collectively, "Future Collateral"). Provided, however, the parties
agree to coordinate any one or more efforts to accomplish this purpose
and MTC agrees to act upon any reasonable request of Lender
in obtaining the required approvals necessary to permit delivery
of the Future Collateral and further provided that notwithstanding
anything to the contrary contained herein, a failure after
Borrower's and Shareholders best efforts to obtain such approvals
shall not result in a breach or an Event of Default under this
Agreement or the Loan Papers. In the event the REA requests return
of the Future Collateral from Escrow, Lender agrees to cause
BBR to release such Future Collateral from Escrow.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Loan. The effective-
ness of this Agreement and the obligations of Lender to consummate any
of the transactions contemplated hereby shall be subject to the satis-
faction of the following conditions precedent, at or prior to the time
of the Loan Closing Date (as defined below):
(a) The representations and warranties contained in
this Agreement shall be true in all material respects on and
as of the Loan Closing Date.
(b) No Event of Default and no condition, event or act
which, with the giving of notice or the lapse of time or both,
would become such an Event of Default shall have occurred and
be continuing on the Loan Closing Date.
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(c) On the Loan Closing Date, Borrower shall have
delivered to Lender, in form and substance satisfactory
to Lender:
(i) Resolutions of the Board of Directors of each
Company certified as of the Loan Closing Date by
its secretary, which resolutions shall authorize the
execution, delivery and performance by each Company of
this Agreement, its respective Pledge, and/or Guarantee
together with the other Loan Papers to which it is a
party;
(ii) A certificate of incumbency certified as of the
Loan Closing Date by the secretary of each Company with
specimen signatures of the president and secretary or
other officers of such Company who will sign this
Agreement and the other Loan Papers;
(iii) A certificate dated the Loan Closing Date of
the President of each Company certifying the accuracy of
the matters set forth in Section 4.01(a) and (b) above;
(iv) Articles of incorporation of each of the
Companies certified as of a recent date by the
Secretary of State of Tennessee;
(v) By-laws of each of the Companies certified as
of the Loan Closing Date by the secretary of such
Company; and
(vi) Recent certificates of the appropriate
government officials of the State of Tennessee (and
other states if required qualify to do business)
as to the existence of each Company.
(d) Borrower shall have executed and delivered to
Lender the Note and its Pledge and the other Loan Papers
to which it is a party.
(e) Each Company shall have executed and delivered to
Lender the Loan Papers to which it is a party.
(f) Each Shareholder shall have executed and delivered to
Lender the Loan Papers to which he or she is a party.
(g) Borrower shall have delivered the Opinion of Counsel
of Glankler Brown in substantially the form shown on Exhibit H
attached hereto.
(h) Shareholders and Companies shall have delivered to
Lender certificates representing all of the Pledged Shares,
together with appropriate stock assignments or powers signed
in blank.
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(i) Lender shall have received payment of all fees and
expenses due hereunder.
(j ) All proceedings taken in connection with the
transactions contemplated by this Agreement and all documents
incident thereto shall be satisfactory in form and substance
to Lender and its counsel, and Lender shall have received
copies of all documents which it may reasonably request
in connection with such transactions and all corporate
proceedings with respect thereto, in form and substance
satisfactory to Lender and its counsel.
Section 4.02 Materiality of Condition. Each condition pre-
cedent is material to the transactions contemplated herein and time is
of the essence in respect to each condition.
ARTICLE V
USE OF PROCEEDS Each Shareholder and Company
represents and warrants to and agrees with Lender that (i) the proceeds
of the Loan shall be used by Borrower only to acquire the Purchased
Shares and for no other purpose and (ii) Borrower shall become owner,
of record and beneficially, of 100% of the issued and outstanding
capital stock of MTC. ARTICLE VITHE CLOSING AND ADVANCES Section 6.01
Closing. The closing (the "Closing") of the Loan transactions
contemplated by this Agreement, and the delivery of all documents and
instruments required hereunder to be delivered at the Closing, shall
occur on or before April 29, 1994, at 10 o'clock a.m., central time,
or at such other later date and time as the parties hereto may
mutually agree (the "Loan Closing Date") at the offices of Lender,
100 Century Park Drive, Monroe, Louisiana 71203.
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Section 6.02 Advances. Advances hereunder shall occur
at the offices of Lender on the Loan Closing Date or on such other
date as may be agreed upon by the parties. ARTICLE VII AFFIRMATIVE
COVENANTS
So long as there are any amounts outstanding hereunder, and
until payment and performance in full of the Obligations, unless
they receive prior written approval from Lender of a deviation,
each Shareholder and Company agrees, to the fullest extent legally
capable of doing so, to cause each Company to, and each Company agrees
to:
Section 7.01 Incumbency. From time to time, at the request
of Lender, certify to Lender the name, signatures, and positions of
all persons authorized to execute and deliver any Loan Papers.
Section 7.02 Books and Records. For each Company, keep in
accordance with GAAP, proper and complete books, records and accounts
and permit an agent of Lender at any time and from time to time to
inspect and review the same as well as any Company's properties and to
review files, reports and other records during regular business hours
of any Company and make and take away copies thereof, and, upon
request by Lender, such Company shall assist Lender in any such
inspection.
Section 7.03 Financial Statements and other Information.
Furnish to Lender:
(a) As soon as available, and in any event within sixty
(60) days after the end of each quarterly accounting period
in each fiscal year, a copy of unaudited Financial Statements
of each Company as at the end of such quarter and for
the period then ended, containing (and for MTI on a
consolidated and consolidating basis), balance sheets,
statements ofincome, reconciliations of capital and surplus,
and statements
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of cash flows, all in reasonable detail and prepared in
accordance with GAAP consistently applied, certified by an
Authorized Financial Officer of such Company to fairly repre-
sent the financial condition and results of the operations of
such Company at the date and for the period indicated
therein;
(b) As soon as available, and in any event within one
hundred twenty (120) days after the end of each fiscal year,
beginning with its most recent fiscal year or its current
fiscal year, whichever is appropriate, a copy of the annual
audit report of each Company for such fiscal year containing
(and for MTI on a consolidated and consolidating basis),
balance sheets, statement of income, statements of
stockholders' equity, and statements of cash flows, all in
reasonable detail and certified by an independent certified
public accountant of recognized standing reasonably satis-
factory to Lender;
(c) Within sixty (60) days after the end of each
quarter during each fiscal year of each Company and within
one hundred twenty (120) days after the close of each fiscal
year of such Company, a certificate signed by an Authorized
Financial officer of such Company, which certificate shall:
(i) state that a review of the activities of the Company
during such quarter or fiscal year has been made under his
supervision with a view to determining whether such Company
has kept, observed, performed and fulfilled all its
Obligations under this Agreement and the Loan Papers; and (ii)
state that to the best of his knowledge, such Company has
kept, observed, performed and fulfilled each and every
covenant and condition of this Agreement and the Loan Papers,
and is not at the end of such quarter or fiscal year in
Default in the performance, observance or fulfillment of any of
the covenants and conditions hereof or in the Loan Papers, or,
if such Company shall be in Default, specifying all such
Defaults and the nature and status thereof; and (iii) show a
computation of all information necessary to show compliance
with Sections 8.13 and 8.14 hereof;
(d) (i) Promptly upon filing thereof copies of the
Financial Statements which any Company may file annually with
the FCC, the PSC or any other Tribunal, (ii) promptly upon
distribution thereof, copies of all such financial or other
statements, including proxy statements, and reports as any
Company shall send to any class of its stockholders or holder
ofits debt securities, (iii) promptly upon receipt thereof,
copies of any notices received from any Tribunal (including,
but not limited to, FCC and PSC) relating to any order, rule,
statute, or other Laws (or a possible violation or violation
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thereof) or other information which might herein materially and
adversely effect the franchises, permits or Rights for the
operation of the business of any Company or the
Partnership and (iv) notice, promptly after any Shareholder or
Company knows or has reason to know of, (1) the existence of
any Material Litigation as defined in Section 10.09, (2)
any material change in any material fact or circumstance
represented or warranted in any Loan Paper, or (3) a Default
or Event of Default, specifying the nature thereof and what
action the Borrower, any Company or Shareholder has taken, is
taking, or proposes to take with respect thereto.
(e) Such other information respecting the financial
condition and affairs of any of the Companies, WSH or AAH as
Lender may reasonably request.
Section 7.04 Compliance with Laws, This Agreement, and
Material Agreements. Comply with all applicable Laws, including but
not limited to, Environmental Laws and promptly take corrective action
to remedy any non-compliance with any Law, and comply with and observe
each and every covenant and agreement in this Agreement, the Loan
Papers and any Material Agreement, except as described on Schedule
7.04 hereof. No Company will violate the provisions of its charter
or bylaws, nor without the consent of Lender, not to be unreasonably
withheld, will any Company modify, repeal, replace, or amend any pro-
vision of its charter or bylaws.
Section 7.05 Expenses and Legal Fees. Pay all reasonable
out-of-pocket costs, fees and expenses arising in connection with this
Agreement or any amendment thereto and the Closing and the enforcement
or exercise of the Rights of Lender hereunder, including but not
limited to, all legal fees and reasonable expenses incurred by Lender
in the negotiation, preparation, delivery and execution of the Loan
Papers and other documents herein described and any amendments
thereof, said costs, fees and expenses to be paid at Closing and in
the case of any amendment to this Agreement or any other Loan Papers
or the enforcement of Lender's Rights hereunder, on demand.
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Section 7.06 Payment of Debts. (a) Promptly pay or cause to
be paid all of Debt and obligations of each Company as the same become
due in accordance with the terms of the instruments or documents evi-
dencing or securing the same. (b) No Company will make a voluntary
prepayment of the principal of any Debt other than the Obligation,
whether subordinate to the obligation or not.
Section 7.07 Preservation of Existence and Franchises and
Conduct of Business. Do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence
(and good standing thereof), rights, leases, patents, permits,
franchise agreements, and all other licenses or rights necessary to
comply with all Laws applicable to each of the Companies in the opera-
tion of its respective business and continue to engage primarily in
the business conducted by each as described on Schedule 7.07 hereto.
Section 7.08 Maintenance of Properties. Cause all of pro-
perties (including any Property) used or useful in the conduct of
any Company's business to be maintained and kept in good condition,
repair and working order, and supplied with all necessary equipment,
and cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof and thereto, all as in their
reasonable judgment may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted
at all times.
Section 7.09 Payment of Taxes and Other Charges. Promptly
pay and discharge, or cause to be paid and discharged, all lawful
Taxes imposed upon any Company, WSH or AAH or upon the property, real,
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personal or mixed, belonging to any of them, or upon any part thereof,
before the payment thereof shall become in default, as well as all
lawful claims for labor, materials and supplies, which, if unpaid,
might become a Lien upon such property, or upon any part thereof; pro-
vided, however, that no Company shall be required to pay and
discharge, or cause to be paid and discharged, any such Taxes or
claims so long as the validity or amount thereof shall be contested in
good faith by appropriate proceedings diligently pursued, if
appropriate reserves have been provided therefor, and further provided
that no Person shall be required to pay Taxes imposed on any other
Person but shall take all reasonable and lawful steps to insure such
other Person pays its Taxes. All deposits for taxes due as a result
of deductions for withholding with respect to wages of employees shall
be timely made.
Section 7.10 Insurance. Keep adequately insured by finan-
cially sound and reputable insurers all of each Company's tangible
property against loss or damage of the kinds customarily insured
against by owners of similar property, and maintain in full force and
effect all necessary workmen's compensation insurance, and such other
insurance as may be required by Laws or as may reasonably be required
in writing by Lender.
Section 7.11 Compliance with Regulations. Not take any
action nor permit any Person acting on its behalf to take any action
which might cause this Agreement or the Note to violate, and Borrower
will take all action necessary to comply with and shall not use any
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Loan proceeds to purchase stock in violation of Regulations G, T, U,
and X of the Board of Governors of the Federal Reserve System and the
Securities Exchange Act of 1934, in each case as now in effect or as
the same may hereafter be in effect.
Section 7.12 Preservation of Security Interests and Rights.
Perform all such acts as Lender may reasonably request in order to
enable Lender to report, file, and register every instrument that
Lender may deem necessary to perfect and maintain the Security
Interests of Lender and preserve and protect the Rights of Lender.
Section 7.13 Indemnification. Subject to the provisions of
Section 12.02 hereof, (a) if, by the granting of the Security
Interests in any of the Collateral or making the Loan, Lender shall be
in violation of any Laws or any Material Agreements of any Shareholder
and/or Company, each Shareholder and Company, jointly and severally,
shall indemnify Lender against, and defend and hold Lender harmless
from, any claim, proceeding, suit, action, loss, liability, obliga-
tion, damage, cost, judgment, fee, or penalty, expense (including,
without limitation, reasonable attorneys' fees and legal expenses
whether or not suit is brought (hereinafter "Expenses") arising out
of, or in connection with, the granting of the Security Interests in
the Collateral or making the Loan, and (b) each Company and
Shareholder, jointly and severally, shall indemnify, protect, and hold
Lenders, its officers, directors and affiliates harmless from and
against any and all suits and Expenses with respect to or as a direct
or indirect result of the violation by any Company of any
Environmental Law; or with respect to or as a direct or indirect
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result of any Company' s generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence in con-
nection with its properties of a Hazardous Substance including,
without limitation, (i) all damages of any such use, generation, manu-
facture, production, storage, release, threatened release, discharge,
disposal or presence, or (ii) the costs of any required or necessary
environmental investigation, monitoring, repair, cleanup, or detoxifi-
cation and the preparation and implementation of any closure, reme-
dial, or other plans. The provisions of and undertakings and
indemnification set forth in this Section 7.13(b) shall survive the
satisfaction and payment of the Obligations and termination of this
Agreement for a period of time set forth in the statute of limitations
in any applicable Environmental Law.
Section 7.14 Shareholders' Covenants. So long as there are
any amounts outstanding hereunder, and until payment and performance
in full of the Obligations, each Shareholder agrees to (i) give to
Lender notices promptly after any Shareholder knows or has reason to
know of the matters set forth in Section 7.03(d)(iv) (1)-(3), (ii)
such other information respecting the financial condition and affairs
of any of the Shareholders as Lender may reasonably request, and (iii)
perform such acts as Lender may reasonably request in order to enable
Lender to report, file and register every instrument that Lender may
deem necessary to perfect and maintain the Security Interests of
Lender and preserve and protect the Rights of Lender.
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ARTICLE VIII
Negative Covenants
So long as there are any amounts outstanding hereunder, and
until payment and performance in full of the Obligations, each
Shareholder will not, to the fullest extent legally capable of doing
so, permit any Company to, and each Company will not, and will not, to
the extent described herein, permit any other Company directly or
indirectly, without the prior written consent of the Lender, to:
Section 8.01 Debt. Create, suffer to exist, or incur any
Debt other than (i) Debt to Lender and; (ii) Debt described on
Schedule 8.01 hereto.
Section 8.02 Contingent Liabilities. Endorse, guarantee, or
otherwise become surety for, or contingently liable upon, or agree to
take any such action in connection with, the obligations or Debt of
any Person, except as set forth on Schedule 8.02 hereto.
Section 8.03 Sales of Assets. Sell or otherwise dispose of,
or agree to sell or otherwise dispose of, (a) any of the Collateral,
or (b) any other assets or property (including but not limited to any
Property) other than sales and dispositions of tangible personal pro-
perty in the ordinary course of business for fair and adequate con-
sideration of less than $100,000 in any calendar year.
Section 8.04 Mergers, Acquisitions and Dissolutions. Merge
or consolidate with, or acquire all or substantially all of the common
capital stock or assets of any other Person or dissolve any Company,
except as described in Schedule 8.04 hereof.
Section 8.05 Assignment of This Agreement. Assign or
transfer, or attempt to do so, any of its Rights or Obligations
hereunder or under any other Loan Papers.
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Section 8.06 New Businesses. Engage in any types of busi-
nesses other than the business which it is presently engaged as
described on Schedule 7.07 hereto.
Section 8.07 Fiscal Year. Change the fiscal year or accounting
methods of any Company.
Section 8.08 Sale and Issuance of Stock. Except as
described on Schedule 8.08 hereof, sell or issue any capital stock,
whether preferred or common, or other securities of any Company, or
become obligated under any agreement which may result in the sale or
issuance of any stock, whether common or preferred, or which results
in any granting of Rights to any securities, voting or otherwise of
any Company.
Section 8.09 Dividends. Declare or pay any cash dividends
or make any other distribution of any kind whatsoever with respect to
any shares of the capital stock of Borrower.
Section 8.10 Liens. Create, incur, or suffer or permit to
be created or incurred or to exist any Lien (other than Permitted
Liens) upon any of its assets or properties.
Section 8.11 Employee Benefit Plans. (a) Engage in any
"prohibited transaction" (as defined in section 406 of ERISA or sec-
tion 4975 of the Code), (b) permit the funding requirements under
ERISA with respect to any employee benefit plan established or main-
tained by any Company to ever be less than the minimum required by
ERISA, (c) permit any employee benefit plan established or maintained
by any Company to ever be subjected to involuntary termination pro-
ceedings, or (d) fully or partially withdraw from any multiemployer
Plan.
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Section 8.12 Holding Company and Investment Company Status.
Conduct its business in such a way that it will become (a) a "holding
company," a "subsidiary company" of a "holding company", an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," or a "public utility" all as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended, (b) a
"public utility" within the meaning of the Federal Power Act, as
amended, (c) an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or (d) an "investment
adviser" within the meaning of the Investment Advisers Act of 1940, as
amended.
Section 8.13 Ratio of EBIT to Interest Expense and Preferred
Stock Dividends. As calculated at the end of each fiscal quarter of
the Borrower (but computed for the four fiscal quarters ending on the
last day of such fiscal quarter), permit consolidated EBIT to be less
than 160% of the sum of (a) consolidated interest expense and (b)
preferred stock dividends declared or paid by the Borrower.
Section 8.14 Total Liabilities. Permit Total Liabilities on
a consolidated basis to ever be greater than $71,000,000.00.
Section 8.15 Loans, Advances, etc. Make any loan, advance,
extension of credit or capital contribution to, make any investment
in, or purchase or commit to purchase any stock or other securities or
evidence of Debt of, or interests in any Person except as set forth on
Schedule 8.15 hereto.
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Section 8.16 Transactions with Affiliates. Except as set
forth on Schedule 8.16, enter into any material transaction with any
of its Affiliates, other than transactions in the ordinary course of
business and upon fair and reasonable terms not materially less
favorable than such Company could obtain or could become entitled to
in an arm's-length transaction with a Person that was not its
Affiliate. For purposes of this Section 8.16, such transactions are
"material" if they, individually or in the aggregate, require any
Company to pay more than $100,000 over the course of any calendar
year.
ARTICLE IX
DEFAULT AND REMEDIES
If any of the following events ("Events of Default") shall
occur and such Events of Default are not cured (i) within five (5)
days of notice by Lender to Borrower in the case of Section 9.01 or
(ii) within sixty (60) days after any Events of Default set forth in
Sections 9.02 through 9.05 occur and any Company or Shareholder knows
or should have known of such Event of Default, then Lender may declare
the indebtedness evidenced by the Note to be in default and all such
indebtedness shall forthwith become immediately due and payable
without any action of any kind whatsoever, together with accrued
interest thereon, reasonable attorney's fees and other Obligations
and charges, and costs of Lender incurred in enforcing the Loan
Papers without presentment or demand, all of which are hereby
expressly waived, and Lender may enforce all its rights in the
Collateral immediately. An Event of Default shall occur if:
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Section 9. 01 Payment. A default is made in the payment of
any portion of the Obligations when due regardless of whether at the
due date thereof or by acceleration thereof or otherwise; or
Section 9.02 Other Agreements. A default is made in the
payment of principal or interest or any obligations of any Material
Agreements of any Company, WSH or AAH with any other Person other than
the defaults specified on schedule 7.04 and then only (i) to the
extent of the defaults existing as of the date hereof, (ii) for so
long as such lender does not threaten to accelerate payment of, or
initiate foreclosure under, any such loans, or (iii) in the case of
REA, if REA continues to fund approved loans within the scheduled time
periods for such fundings; or
Section 9.03 Other Provisions. Any representation, warranty,
affirmative covenant, negative covenant or other agreement, covenant
or warranty made to the Lender by any Shareholder or Company, or any
of its officers, directors or representatives in connection with this
Agreement, the Loan Papers or in any report, certificate, Financial
Statement or other instrument furnished Lender in connection herewith
shall prove to have been incorrect, false or misleading in any
material respect, shall be breached in any material respect or shall
have failed to have been punctually and properly performed, observed
or complied with; or
Section 9.04 Revocations. Any license, consent or approval
of any Tribunal required for the consummation of the transactions con-
templated by this Agreement and the instruments provided for herein or
required for the necessary operation of any Company is revoked,
withdrawn, materially and adversely modified or withheld or otherwise
fails to remain in full force and effect; or
Section 9.05 Other Events. Any Company, WSH or AAH shall:
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(i) Fail to pay their material debts as they
become due,
(ii) Voluntarily seek, consent to, or acquiesce
in the benefit of any Debtor Relief Law;
(iii) Become a party to or is made the subject of
any proceeding provided for by any Debtor
Relief Law, other than as a creditor or
claimant, that could suspend or otherwise
adversely affect the Rights of the Lender
granted in the Loan Papers;
(iv) Fail to have discharged within 60 days after
commencement any attachment, sequestration,
or similar proceeding which, individually or
together with all such other proceedings then
pending, affects assets of such Company
having a value (individually or collectively)
of $250,000 or more;
(v) Fail to pay any judgments or orders for the
payment of money in excess of $100,000
(individually or collectively) rendered
against it or any of its assets and either
(a) any enforcement proceedings shall have
been commenced by any creditor upon any such
judgment or order or (b) a stay of enfor-
cement of any such judgment or order, by
reason of pending appeal or otherwise, shall
not be in effect prior to the time its assets
may be lawfully sold to satisfy such
judgment.
Section 9.06 Lender Not in Control. None of the covenants or
other provisions contained in this Agreement or in any other Loan
Paper shall, or shall be deemed to, give the Lender the Right to exer-
cise control over the assets (including, without limitation, real pro-
perty), affairs, or management of any Company or Shareholder, the
power of the Lender being limited to the Right to exercise the reme-
dies provided in this Article IX.
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Section 9.07 Waivers. The acceptance by the Lender at any
time and from time to time of partial payment on the Obligations shall
not be deemed to be a waiver of any Event of Default then existing.
No waiver by Lender of any Event of Default shall be deemed to be a
waiver of any other then existing or subsequent Event of Default. No
delay or omission by the Lender, in exercising any Right under the
Loan Papers shall impair such Right or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial
exercise of any such Right preclude other or further exercise thereof,
or the exercise of any other Right under the Loan Papers or otherwise.
Section 9.08 Cumulative Rights. All Rights available to
Lender under the Loan Papers are cumulative of and in addition to all
other Rights granted to Lender at law or in equity, whether or not the
Obligation is due and payable and whether or not the Lender has insti-
tuted any suit for collection, foreclosure, or other action in connec-
tion with the Loan Papers.
Section 9.09 Prior Rights. Notwithstanding anything to the
contrary contained herein, if within one (1) year of the date of the
closing of the purchase of the Purchased MTC Stock as described in the
Consent Order of Compromise and Settlement entered in the Chancery
Court of Shelby County, Tennessee, on March 17, 1994, (the "Prior
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Rights"), the shares of capital stock of MTC become subject to any
foreclosure action or proceeding resulting from such Purchased MTC
Stock being pledged as collateral to the Lender, Selling Shareholders
may purchase and redeem the Purchased MTC Stock for a payment equal to
the amount of all unpaid Obligations and such Purchased MTC Stock will
be released, free and clear of the lien imposed by the Loan or the
Loan Papers, upon receipt of such payment.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
For the purpose of inducing Lender to enter into this
Agreement, each Shareholder and Company, jointly and severally, hereby
makes the following representations and warranties to Lender:
10.01 Corporate Organization. Borrower has no Subsidiaries
other than the Companies. Each Company is a corporation duly incor-
porated, validly existing and in good standing under the laws of the
State of Tennessee. Each Company possesses full corporate power and
authority to carry on the business in which it is presently engaged,
own, lease and operate its properties and, in the case of each
Shareholder and Company, to enter into and perform their respective
obligations under this Agreement. No Company has qualified as a
foreign corporation in any jurisdiction because neither the character
or location of its respective properties nor the nature of its activi-
ties makes such qualification necessary.
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10.02 Authorization. Each Shareholder and Company has full
power and authority to execute and deliver this Agreement and the
Loan Papers and to carry out the transactions contemplated hereby. The
Boards of Directors (and stockholders, if required) of each of the
Companies have duly approved and authorized the execution and delivery
of this Agreement and the Loan Papers and the consummation of the
transactions contemplated hereby, and no other corporate proceedings
on the part of any Company are necessary to approve and authorize the
execution, delivery and consummation of the transactions contemplated
in the Loan Papers. The Loan Papers have been duly executed and deli-
vered by each Shareholder and Company and assuming due execution,
delivery and performance of this Agreement by Lender, constitute valid
and legally binding Obligations of each Shareholder and Company,
enforceable in accordance with its terms, except as the enforceability
hereof may be limited by applicable Debtor Relief Laws or other laws
of general application relating to or affecting enforcement of credi-
tors' rights and the application of equitable principles in any
action, legal or equitable.
10.03 Capital Stock. The authorized capital stock of each
Company consists exclusively as follows: (i) 10,000 shares of
authorized common stock of MTI of which 10,000 shares are currently
issued and outstanding and all of which are owned by the Shareholders,
as set forth on Schedule 10.03 hereto (ii) 1,000 shares of authorized
common stock of MTC of which 496 shares are currently issued
and outstanding and all of which are owned by MTI
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(iii) 2,000 shares of authorized common stock of BCFI of which 100
shares are currently issued and outstanding and all of which are owned
by MTC (iv) 2,000 shares of authorized common stock of MAI of which
1,000 shares are currently issued and outstanding and all of which are
owned by MTC. All of such stock has been duly authorized, is duly and
validly issued and outstanding, fully paid, nonassessable and, except
as set forth on Schedule 10.03 or in favor of Lender, is free and
clear of preemptive or similar rights and all other Security Interests
or Liens. Except for the rights of Lender or set forth on Schedule
10.03, there are no outstanding subscriptions, warrants, options,
rights, puts, contracts, calls, restrictions, arrangements or other
commitments binding upon any Shareholder or Company of any nature
relating to the issuance, repurchase, redemption, sale, transfer or
voting of any shares of capital stock of any Company. There are no
outstanding securities, debt or other obligations of any Company con-
vertible into or exchangeable for shares of capital stock or other
securities of such Company. There are no equity equivalents,
interests in the ownership or earnings or other similar rights binding
upon any Shareholder of Company with respect to any Company. There
are no shares of capital stock of any Company held in its respective
treasury. Each share of capital stock of each Company is entitled to
one vote.
10.04 Partnership Interests. The Partnership interests
consist exclusively of (i) a 40% general partnership interest owned
by Memphis CGSA, Inc., (ii) a 35% limited partnership interest owned
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by Memphis CGSA, Inc., (iii) a 25% limited partnership interest owned
by MAI. Except as set forth on Schedule 10.04 hereto, (iv) MAI's
Partnership interest is free of any Liens and Security Interests, and
(v) the owners of the Partnership interests are not subject to any
present or future scheduled, or to the best of each Shareholder's and
Company's knowledge and belief, contemplated capital call or other
claim for monetary payment. To the best of each Shareholder's and
Company's knowledge, (vi) all Partnership interests have been fully
paid for by each owner thereof, (vii) there are no outstanding securi-
ties, debt or other obligations of the Partnership convertible into
or exchangeable for Partnership interests, rights to vote or other
securities or interests of the Partnership, and (viii) except as set
forth on Schedule 10.04, no partner of the Partnership has failed to
make any capital call. Other than the Partnership Agreement, there
are no partnership equivalents, interests in the ownership or ear-
nings or other similar rights binding upon any Company or Shareholder
with respect to the Partnership or Partnership interests thereof owned
by MAI.
10.05 Ownership of Properties. Except as set forth on
Schedule 10.05 hereto, each Property owned by such Shareholder and/or
Company is free and clear of all Liens and Security Interests of any
kind whatsoever, other than the restrictions imposed by federal and
state securities Laws other than Permitted Liens. Upon the consum-
mation of any Transfer (as defined below), merger or consolidation,
Lender will acquire good and marketable title to any Property subject
to such Transfer, merger or consolidation, free and clear of all Liens
and Security Interests or restrictions of any kind whatsoever, other
than the restrictions imposed by federal and state securities Laws or
Permitted Liens.
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Section 10.06 Stockholder and Partner Documents. Borrower
has delivered to Lender true, correct and complete copies of each
stockholder, Partnership and partner agreements to which any
Shareholder or Company or the Partnership is a party to relating to a
Company.
Section 10.07 No Holding Company. No Company is a Person of
the type referred to in Section 8.12(a)-(d).
Section 10.08 Financial Statements. The Financial Statements
for each of the Companies previously delivered to Lender and defined
on Schedule 10.08 hereto, (collectively, the "Current Financial
Statements"), were prepared in accordance with GAAP, consistently
applied, and fairly present their respective financial conditions as
of, and, if applicable, the results of their operations for the por-
tion of the relevant period ending on each such date and when
appropriate, such Financial Statements were prepared on a consolidated
basis. The Financial Statements of WSH and AAH previously delivered
to Lender fairly present their financial condition as of such date.
Except for transactions directly related to, or specifically con-
templated by, this Agreement and transactions disclosed on Schedule
10.08, there has been no change which might have a material adverse
effect on the financial condition of any Company or WSH or AAH from
that shown in such Financial Statements as delivered to Lender to the
date hereof.
Section 10.09 Litigation and Judgments. Except as set forth
on Schedule 10.09 hereto, (i) there is at the date hereof, no
Litigation pending, or to the best knowledge of any Shareholder or
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Company, threatened against any Company, WSH or AAH which might
result in any material adverse effect upon the business or condition
of any Company, WSH or AAH ("Material Litigation") and (ii) there are
no outstanding or unpaid judgments against any Company or Shareholder.
Section 10.10 Compliance with Laws and Material Agreements.
Except as set forth on Schedule 10.10, no Company, WSH or AAH is in
default under any Material Agreement, nor are any of them in violation
of any Laws in any respect which could have any effect whatsoever upon
the validity, performance, or enforceability of any of the terms of
the Loan Papers or which could have a material adverse effect upon any
Company or WSH or AAH. There are no proceedings, claims, or investi-
gations against or involving any Company, WSH or AAH by any Tribunal
under or pursuant to any Laws which could have a Material Adverse
Effect upon any Company, WSH or AAH. The execution, delivery, and
compliance with the terms of the Loan Papers will not violate, consti-
tute a Default (or an event which, with notice or lapse of time or
both, could become a default) under, or result in the breach of, any
Laws, the articles of incorporation or bylaws of any Company or any
Material Agreement to which any Company, WSH or AAH is a party or to
which any of their property may be subject.
Section 10.11 Tax Matters. Except as disclosed on
Schedule 10.11:
(a) Each Company, WSH and AAH has duly filed all material
federal, state and local Tax returns required to be filed by or with
respect to it with the IRS or other applicable taxing authority, and
no extensions with respect to such Tax returns have been requested or
granted.
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(b) Each Company has paid, or adequately reserved against in
the Financial Statements, all material Taxes due, or claimed by any
taxing authority to be due, from or with respect to it, except Taxes
that are being contested in good faith by appropriate legal pro-
ceedings and for which adequate reserves have been set aside as
disclosed on Schedule 10.11. There are no Tax liens outstanding or,
to the best knowledge of each Shareholder, threatened against such
Shareholder.
(c) To the best knowledge of each Shareholder and Company,
there has been no material issue raised or material adjustment pro-
posed (and none is pending) by the IRS or any other taxing authority
in connection with any of the Tax returns.
(d) Each Company has made all material deposits required
with respect to Taxes.
(e) No waiver or extension of any statute of limitations as
to any material federal, state, local, or foreign Tax matter has been
given by or requested from any Company.
(f) No Company has filed a consent under Section 341(f) of
the Code.
(g) No Company has made payments, is obligated to make any
payments, nor is a party to any agreement that under certain cir-
cumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code.
(h) No Company is a party to any Tax allocation or sharing
agreement.
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(i) No Company has been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group
the common parent of which was MTC) nor has it any liability for the
Taxes of any person other than the Company under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local, or foreign
Law) as a transferee or successor, by contract, or otherwise.
(j) For both accounting and ratemaking purposes in its regu-
lated books of account, MTC has been using, and will continue to use,
a normalization method of accounting as described in Sections 167(1)
(as in effect at the time the related assets were placed in service)
and 168(i) of the Code (as defined below) for the Federal Income Tax
effect of the use of accelerated depreciation.
(k) For both accounting and ratemaking purposes in its regu-
lated books of account, MTC has been using, and will continue to use a
method of accounting for investment credits which conforms with the
requirements of Section 46(f) of the Code, as in effect at the time
the related assets were placed in service.
For purposes of this Section, a Tax is due (and must there-
fore either be paid or adequately reserved against in the Financial
Statements) as it accrues under GAAP.
Section 10.12 ERISA. Each Company has complied with ERISA
with respect to all employee benefit plans and there are no existing
conditions which could give rise to any material liability of any
Company for damages, fines or penalties under ERISA. For purposes of
this Section, "material" shall mean any liability in excess of
$10,000.
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Section 10.13 No Approval Required. No registration or
approval of any Tribunal or other Person is necessary for the execu-
tion or validity of this Agreement, the Note or any of the other Loan
Papers, other than approvals required to permit Lender to acquire any
Property pursuant to Article XI hereof.
Section 10.14 Securities Laws. No Shareholder or Company
has, nor has any Person acting or purporting to act on behalf of any
Shareholder or Company, directly or indirectly, offered the Note for
sale to, or solicited any offer to sale the Note to, or otherwise
negotiated in respect thereof with, any Person, and has not done (or
omitted to do) any other act, so as to bring the issuance or sale
thereof within the registration requirements of the Securities Act of
1933, as amended, and Borrower has complied with or is exempt from the
registration provisions of all state securities or "blue sky" Laws
applicable to the issuance or delivery of the Note.
Section 10.15 Disclosure of Other Facts. There is no signi-
ficant material fact or condition relating to the financial condition,
results of operations, or business of any Company or Shareholder known
to any Shareholder or Company which could have a material adverse
effect which has not been related to Lender in writing.
Section 10.16 Genuineness of Writings, All writings hereto-
fore exhibited to Lender by or on behalf of any Shareholder or Company
are genuine and in all respects what they purport to be.
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Section 10. 17 Absence of Material Changes. Since the date
of the Current Financials Statements and except as set forth on
Schedule 10.17 hereto, no Company has:
(a) undergone any change in its financial condition,
assets, properties, liabilities, business, business prospects
or operations other than changes in the ordinary course of
business, none of which individually or in the aggregate has
been materially adverse to the entity which has undergone
such change;
(b) suffered any damage, destruction or loss (whether
or not covered by insurance), or condemnation or other taking
which materially and adversely affected the assets, proper-
ties or business of the entity which has suffered any such
event;
(c) issued or sold, or authorized the issuance and sale
of any interests, stock, bonds, notes or other securities or
obligations;
(d) granted any options, warrants or other rights for
the issuance of stock, partnership interests or securities;
(e) subjected any of its properties or assets to any
Security Interest or Lien of any kind whatsoever, except
Permitted Liens;
(f) increased or altered the payment obligations on any
Debt;
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(g) acquired or disposed of or leased any assets or pro-
perties having a value in excess of $10,000 in the case of
any single item;
(h) merged, consolidated or combined with any other
entity;
(i) failed to conduct its business in the ordinary
course of business;
(j) received notice of any dispute, claim, event or con-
dition of any character (including but not limited to
regulatory and administrative notices) that might materially
and adversely affect the business, prospects or property of
the entity receiving such notice;
(k) paid or incurred any obligations or liabilities
(absolute or contingent) in excess of $10,000;
(1) made any change in its accounting methods or prac-
tices which does not conform to GAAP;
(m) received any notice of any occurrence that would
give any entity receiving any such notice reason to believe
that any material labor unrest exists among any employees of
such entity or that any group, organization or union has
tried to organize any of its employees;
(n) declared or paid any dividend or any similar distri-
bution (whether in cash, stock or other property);
(o) granted any bonus or other special compensation or
increased the compensation or benefits payable or to become
payable to any director, officer or employee except, in the
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case of employees, for increases in the normal course of
operations consistent with past compensation practice not
exceeding 5% of the compensation and benefits payable to such
employee as of the date of the Current Financial Statements
or instituted any increase in or otherwise amended any profit
sharing, bonus, incentive, deferred compensation, insurance,
pension, retirement, medical, hospital, disability, welfare
or other employee benefit plan except for increases required
by Law;
(p) cancelled without payment in full or compromised any
claim, note, loan, or obligation or other material right of
value receivable by such entity from any Person;
(q) sold, assigned or transferred any material
copyrights, trademarks, trade names, patents, licenses or
other intangible assets or intellectual property;
(r) made or suffered any amendment or termination of any
Material Agreement to which it is or was a party, beneficiary
or designee or by which it is or was bound or cancelled,
modified or waived any debts owed to or claims held by it
(including the settlement of any claims or Litigation) or
waived any right, except for write-offs and write-downs of
receivables in the ordinary course of business consistent
with past practices which are not individually or in the
aggregate material;
(s) created, incurred, guaranteed or assumed any Debt
or entered into any capitalized leases;
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(t) accelerated collection of notes or accounts
receivable generated by it to a date prior to the date such
collection would have occurred in the ordinary course of
business consistent with past practice;
(u) delayed payment of any of its accounts payable or
other liabilities beyond its due date or the date when such
liability would have been paid in the ordinary course of
business consistent with past practice;
(v) purchased, redeemed, called for purchase or redemp-
tion or otherwise acquired any shares of its capital stock,
partnership interest or any other securities; or
(w) entered into any agreement or made any commitment
to do or to take any of the actions referred to in subsec-
tions (a) through (v) of this Section 10.17.
Section 10.18 Indebtedness. Schedule 10.18 hereto sets
forth all Debt of each of the Companies. Except as disclosed on said
Schedule 10.18, (i) all Debt is prepayable at any time at the option
of any such entity seeking to make any such prepayment, without pre-
mium or penalty and (ii) no Company is in default under any agreement
creating, or note evidencing, any Debt or in the performance, obser-
vance or fulfillment of any covenant or condition relating thereto,
and no event has occurred and is continuing which with the giving of
notice or lapse of time, or both, would constitute a Default.
Section 10.19 Title to Assets and Leases. Schedule 10.19
hereto sets forth a complete list of all real properties and buildings
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owned or leased by each Company. Each Company owns or leases all of
the property reflected on the balance sheets included in the current
Financial Statements except (i) property disposed of since said date
for fair and adequate consideration in the ordinary course of business
and (ii) leases which have expired since said date which are not
material or if material, which have been replaced by a lease of com-
parable property and price. Title to all real and personal property
owned by each of the Companies is in each case, good and marketable
and free and clear of any Security Interest or Lien, except for
(i) the Lien of the indentures, security interests, mortgages and/or
deeds of trust listed on Schedule 10.19, (ii) the lien for current
property taxes not yet due and payable or being contested in good
faith for which adequate reserves have been made and (iii) minor
imperfections of title and Liens, if any, that do not materially
detract from the value, or interfere with the use or marketability of
the property affected thereby, each of which are included in the defi-
nition of Permitted Liens. Each Company owns or has valid lease-
hold interest in all material properties and assets used in the con-
duct of its business. All real estate leases to which any Company is
a party are in good standing, valid and enforceable in accordance with
their respective terms and there is not under any of such leases any
existing default and, to the best of each Shareholder's and Company's
knowledge and belief, no event has occurred which with notice or lapse
of time, or both, would constitute such a default.
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Section 10.20 Condition of Assets. All buildings, equipment
and other assets owned by each of the Companies are in good repair,
order and condition for companies of comparable size and location,
reasonable wear and tear excepted, and such buildings, equipment and
assets conform in all material respects with all applicable Laws.
No Shareholder or Company has received notice of any breach or viola-
tion of any such Laws.
Section 10.21 Cellular Permits, Tariffs and Operations. (a)
To the best of each Shareholder's and Company's knowledge, (i)
Schedule 10.21 hereto sets forth all licenses and permits ("Permits")
which have been issued to the Partnership by any Tribunal (ii) all
Permits are in full force and effect and are not subject to any
pending or threatened challenge, revocation or forfeiture and all
applications for any of the foregoing have been promptly, legally and
timely filed or the time for filing has not expired (iii) all Permits
necessary or required for the construction and/or operation of the
Memphis, Tennessee "B" block cellular system have been obtained or
applied for or the time for filing with respect thereto has not
expired, and (iv) the Partnership is providing cellular service in
compliance with all Laws and fully and completely to the Cellular
Geographic Service Area.
b) Shareholders have previously delivered to the Lender
true, correct and complete copies of the tariffs containing, to the
extent included therein, service regulations, rates and charges for
radio common carrier services applicable on the date hereof, together
with all FCC records and PSC certifications with respect to the
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Partnership as well as complete copies of FCC records and state cer-
tifications.
c) To the best of each Shareholder's and Company's knowledge
(i) no action to change, alter, rescind or make obsolete any of said
tariffs, rates or charges is pending or under consideration other than
proceedings in the ordinary course of and those of general applicabi-
lity to the cellular industry and (ii) the Partnership has an aggre-
gate of at least 50,000 active customers.
Section 10.22 Absence of Undisclosed Liabilities. Except as
set forth in this Agreement, none of the Companies has any liability
or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, not incurred in the ordi-
nary course of business, which, either individually or in the aggre-
gate with other such liabilities, would have a material adverse effect
on the financial condition, properties or results of operations of
such entity.
Section 10.23 Labor Relations. No Company has engaged in
and there are no (i) unfair labor practice, unlawful employment prac-
tice or charges of discrimination (collectively "Unfair Labor
Practice") pending or threatened against any Company concerning any
allegation of Unfair Labor Practice or (iii) pending or threatened
grievances against any Company by the Communications Workers of
America labor union or any other labor union.
Section 10.24 Securities Laws. No Company has offered or
sold securities in violation of any securities Laws. All such offers
or sales of securities have been registered under securities Laws or
were exempt from the registration requirements thereof.
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Section 10. 25 Customers and Suppliers. Except as set forth
in Schedule 10.25 hereto, no Company nor any of its officers, direc-
tors, principal shareholders, or affiliates possess any direct or
indirect material financial interest in, or is a director or officer
of, any Person who has a material relationship with any Company, as a
customer, supplier, agent, advisor, consultant, representative,
lessor, lessee, lender, licensor, or competitor. Except as otherwise
set forth on Schedule 10.25, there exists no actual or threatened ter-
mination, cancellation or limitation of, or any modification in, the
business relationship of any Company with any customer or group of
customers whose payments to such entity individually or in the aggre-
gate are material to its operations, or with any vendor, agent, repre-
sentative, consultant, or group thereof, whose sales of services to
such entity individually or in the aggregate are material to its
operations.
Section 10.26 Accounts Receivable. All accounts receivable
of each Company have arisen from bonafide transactions in the ordinary
course of its business. All accounts receivable reflected in the
balance sheets contained in the Financial Statements are good and
collectible in the ordinary course of business at the aggregate
recorded amounts thereof, net of any applicable reserves for doubtful
accounts reflected in such balance sheets. Such reserves are adequate
and calculated consistent with past practice.
Section 10.27 No Omissions. None of the representations or
warranties contained herein and none of the information contained in
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the Schedules hereto or documents furnished to Lender or its represen-
tatives by any Shareholder or Company or any of their representatives
in connection with this Agreement, is false or misleading in any
material respect or omits to state a fact herein or therein necessary
to make the statements here or therein not misleading in any material
respect. Except as set forth or referred to in this Agreement, there
exists no present condition or state of facts or circumstances that
materially and adversely affects, or in the future could materially
adversely affect, the business, profits, or financial condition of any
of the Companies or prevent any such Company from conducting its busi-
ness after the consummation of the transactions contemplated by this
Agreement in substantially the same manner in which it has heretofore
been conducted.
ARTICLE XI
SALE OF PROPERTIES; RIGHTS OF REFUSAL
Section 11.01 Sale and Refusal Rights. In consideration of
Lender's making the Loan to Borrower, each Shareholder and Company
hereby, jointly and severally, covenants and agrees with Lender as
follows:
(a) Except as provided herein, no Shareholder nor
any Company will directly or indirectly, sell,
dispose, assign, encumber, donate or otherwise
transfer (a "Transfer") any of its Property,
and no Company shall enter into any agreement
of merger or consolidation with respect to
itself or any other Person, unless prior to
such Transfer, merger or consolidation Lender
is given the opportunity to purchase the
Property (i) at a negotiated price determined
by Lender and Shareholder and/or Company or
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(ii) if a Transfer, merger or consolidation is
proposed through a bona fide third party
offer, pursuant to the terms and conditions of
any third party offer which is accepted by the
Shareholder(s) and/or the Companies, as the
case may be (an "Acceptable Offer").
Shareholder(s) and/or the Companies shall pro-
vide true and complete copies of all offers to
Lender together with a statement that such
offer is rejected or is an Acceptable Offer so
as to initiate Lender's refusal Rights herein.
(b) If any Transfer, merger or consolidation is
proposed to be made, by any Shareholder or
Company pursuant to an Acceptable offer, such
offer will be analyzed solely on the basis of
the Fair Market Value of the consideration to
be received by any Shareholder, Company or any
combination of them, as the case may be.
Shareholder, Company, or any of them, as the
case may be, shall provide Lender with any
Acceptable Offer and Lender shall then have
the option, exercisable by notice to the
Shareholders, the Companies or any of them as
the case may be within thirty (30) days from
receipt of written notice from Shareholders
and/or Companies of the Acceptable offer, to
notify the appropriate Shareholder(s) and/or
Companies that Lender elects to purchase such
Property for consideration contained in the
Acceptable Offer.
(c) In the event any Shareholder(s) and/or
Companies deliver an Acceptable Offer within
six (6) months of the date of any two or more
offers which has been rejected, then Lender
shall have the right to elect to purchase such
Property in the manner set forth in Section
11.01 (b) above for a Purchase Price equal to
the Fair Market Value of the consideration
offered in the Accepted offer, less 2.5%.
(d) In the event Lender fails to exercise its
Rights hereunder and a Transfer, merger or
consolidation occurs, the balance of the Loan
and all obligations shall become due and
payable and Lender shall retain its refusal
Rights herein to any remaining Property
retained and/or owned by any Company,
Shareholder or any combination of them.
-49-
(e) Upon exercise by Lender of any rights pursuant
to this Section 11.01, the parties shall enter
into immediate good faith negotiations
designed to culminate in a definitive purchase
agreement containing such terms and conditions
as are customary in like and similar acquisi-
tions of such Property in the industry
generally, but containing the representations,
warranties, covenants and agreements set forth
herein, provided, however, that in the event
Lender, Shareholders, Companies or any of
them, as the case may be, are unable to
conclude, each acting in good faith, the nego-
tiation and execution of such agreement within
sixty (60) days from the date of exercise of
the election by the Lender as provided herein,
then each party will appoint an arbitrator
and, if necessary, such arbitrators will
appoint a third arbitrator to resolve disputes
as to such agreement within thirty (30) days
from the date of submission to arbitration.
Each arbitrator shall be experienced in defi-
nitive agreements for like and similar
acquisitions and their decision shall be final
and binding upon the parties. The arbitrators
shall be instructed to conclude such defini-
tive agreement within such thirty (30) day
period by any reasonable means. In the event
a proposed Transfer of capital stock is to be
made, a Shareholder or a Company, or any
combination of them, as the case may be, agree
to, at Lenders election, allow such Transfer
to occur as an asset sale, provided such
Shareholder, Company or combination thereof,
is placed in the same after tax economic posi-
tion as if Lender had purchased such stock.
(f) Notwithstanding anything contained in this
subsection, a Transfer to any Person which is
wholly owned by Shareholders and/or Companies,
or a transfer by a Shareholder by gift,
descent, devise, distribution, or otherwise,
is specifically permitted, and the Person
receiving such property shall thereafter be
bound by the provisions of this Article XI and
if not already a party hereto, shall execute
any documentation reasonably requested by
Lender to confirm to Lender such Person's con-
sent to be bound pursuant to this Article XI.
Section 11.02 Default Purchases.
(a) In the event of any default as herein described
which may result in an acceleration of the Loan
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and such default occurs prior to the expira-
tion of the Prior Rights, then Lender shall
have the sole, irrevocable and absolute right
to: (i) upon default of any payment due
hereunder, convert any such payment to common
stock of MAI, in full and complete satisfac-
tion of such Event of Default, based on a net
asset valuation equal to the sum of
$34,000,000 less the unpaid principal amount
due by MAI to third party lenders, (ii) waive
such default, or (iii) foreclose on the
Collateral, subject to the Prior Rights.
Notwithstanding any conversion pursuant to
this Section 11.02(a), Lender's Rights set
forth in Section 11.01 shall remain in full
force and effect.
(b) In the event of any default as herein
described which results in an acceleration of
the Loan and such default occurs after the
expiration of the Prior Rights, then Lender
shall have the sole, irrevocable and absolute
right to: (i) waive such default, (ii)
foreclose on the Collateral or (iii) purchase
100% of the capital stock of MTI owned by the
Shareholders for $37,500,000.00 cash, less (x)
the then outstanding principal balance of the
Loan, accrued interest thereon and all
outstanding costs due Lender and (y) the cost
of any conversions pursuant to Section
11.02(a)(i), or at the Lender's election
purchase:
(1) All of the assets of the Companies; or
(2) All of the capital stock of MTC, BCFI
and MAI; provided that in the case of a
purchase pursuant to either this subsec-
tion (1) or (2), the Lender will put the
Shareholders or Companies, as the case
may be, in the same after tax economic
position as if Lender had purchased all
of the capital stock of MTI pursuant to
Section 11.02(b)(iii) above.
Section 11.03 Credit to Price.
Where any purchase price is not a deter-
mination of the net asset value or value of
the Shareholders equity of the Borrower,
Lender shall be given credit toward the
purchase price of any acquisition pursuant to
this Article XI equal to the balance of the
Loan and all other remaining Obligations owed
hereunder.
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Section 11.04 Termination
(a) The Rights granted to Lender pursuant to this
Article XI shall survive the termination of
the Loan Agreement or satisfaction of the
Obligations, and shall remain outstanding and
inure to the benefit of Lender, its successors
and assigns for a period of 15 years from the
date hereof, it being acknowledged by each
Shareholder and Company that Lender's sole
reason and inducement for acting as Lender
herein is the Rights received by Lender
pursuant to this Article XI.
(b) In the event Lender declines to exercise its
Rights pursuant to an Acceptable offer,
Lender's Rights with respect to the Property
in question shall terminate, provided,
however, that Lender's Rights shall remain in
full force and effect if such Property (i) is
not sold or (ii) is to be sold on terms and
conditions with respect to the consideration
which are different from those contained in
the offer and in such event the varied offer
must be resubmitted to Lender in accordance
with Section 11.01 above.
(c) Lender acknowledges and agrees that its Rights
of refusal granted herein are subject to the
Prior Rights.
(d) In the event Lender's Rights of refusal
granted pursuant to this Article XI are lost
due to (i) a Transfer, merger or consolidation
pursuant to the Prior Rights or (ii) litiga-
tion brought by any Person (other than Lender)
then in such event Shareholders and/or
Companies, jointly and severally, agree to pay
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to Lender a fee of $2,500,000.00 due to the
loss of Lender's Rights herein (the "Loss of
Rights Fee"). The Loss of Rights Fee shall be
payable at Closing in the case of a Transfer,
merger or consolidation or 60 days after the
date any judgment becomes final and non-
appealable in the case of litigation. The
obligations of the Shareholders and Companies
to pay the Loss of Rights Fee is an Obligation
hereunder and each Shareholder's stock of MTI
shall remain in pledge to secure such
obligation.
Section 11-05 Legend and Filing. The existence of these
Rights of refusal and other Rights to Lender pursuant to this
Agreement and a brief description thereof, shall be set forth in a
legend on all present and future certificates representing stock of
the Companies.
ARTICLE XII
SHAREHOLDER MATTERS
Section 12.01 Certain Representations and Warranties.
Lender acknowledges that certain representations and warranties herein
of Shareholders (other than WSH and AAH) herein pertaining to the
Companies, WSH, AAH and the Partnership may have been made by such
Shareholders without actual knowledge of the truth or falsity thereof,
but were made by such Shareholders solely for the purpose of allo-
cating any economic risk of loss associated with a breach thereof.
Lender agrees that a breach of any such representations or warranties
will only give Lender the Rights provided for herein and under no cir-
cumstances will any such breach give Lender any claim for fraud or any
right to punitive damages unless Lender can prove that contrary to the
foregoing a representation or warranty with respect to a Company or
the Partnership was intentionally false.
-53-
Section 12.02 Shareholder Liability. Notwithstanding
anything to the contrary contained herein, no Shareholder (other than
WSH and AAH) shall have any liability (i) on the Loan or (ii) pursuant
to any indemnification unless, with respect to such indemnification,
such Shareholder either (a) was legally capable of preventing the
event which gave rise to such indemnification and failed to prevent
the occurrence of such event or (b) received, subsequent to the date
hereof, directly or indirectly, beneficial ownership of any stock
and/or assets of any of the Companies.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Louisiana Law. This Agreement, the Note and
the other Loan Papers are being executed and delivered, and are
intended to be performed, in the State of Louisiana, and the Laws
(other than conflict-of-laws provisions thereof) of such State and of
the United States of America shall govern the rights and duties of the
parties hereto and the validity, construction, enforcement, and
interpretation of this Agreement and the Loan Papers.
Section 13.02 Venue; Service of Process. Each party hereto,
in each case for itself, its heirs, successors, assigns and legal
representatives hereby (a) irrevocably submits to the exclusive
jurisdiction of the State and Federal Courts of the State of Louisiana
and agrees and consents that service of process may be made upon it in
any legal proceeding arising out of or in connection with the Loan
Papers and the Obligations by service of process as provided by
Louisiana law, (b) irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying
-54-
of venue of any litigation arising out of or in connection with the
Loan Papers and the Obligations in the Fourth Judicial District Court
for the Parish of Ouachita, State of Louisiana or the United States
District Court, Western District of Louisiana, Monroe Division, (c)
irrevocably waives any claims that any litigation brought in any such
court has been brought in an inconvenient forum, (d) agrees to
designate and maintain an agent for service of process in Monroe,
Louisiana, in connection with any such litigation and to deliver to
the agent and Lender evidence thereof, if requested, (e) irrevocably
consents to the service of process out of any of the aforementioned
courts in any such litigation by the mailing of copies thereof by cer-
tified mail, return receipt requested, postage prepaid, at its address
set forth herein, and (f) irrevocably agrees that any legal proceeding
against any party hereto arising out of or in connection with the Loan
Papers on the Obligations shall be brought in one of the aforemen-
tioned courts.
SECTION 13.03 WAIVER OF JURY TRIAL. EACH PARTY HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS RIGHT
TO A JURY TRIAL IN ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH
THE LOAN PAPERS AND THE OBLIGATIONS.
Section 13.04 Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and
shall not be deemed to constitute a part hereof.
Section 13.05 Survival of Warranties and Representations.
All covenants, agreements, representations, warranties and statements
-55-
by or on behalf of any Shareholder or Company made herein or in any of
Loan Papers or any other certificate, statement, document or other
instrument furnished by or on behalf of any Shareholder or Company to
Lender in connection with the negotiation of this Agreement shall be
considered to have been relied on by Lender and shall survive the
execution and delivery of the Note and the payment of all Obligations
regardless of any investigation made by Lender or on Lender's behalf
for so long as any portion of the Loan remains unpaid or the appli-
cable statute of limitations whichever is greater. All statements in
any such Loan Papers or certificate, statement, document or other
instrument shall constitute warranties and representations by each
Shareholder and Company under this Agreement.
Section 13.07 Successors and Assigns. All covenants,
agreements, representations and warranties made herein shall bind, and
inure to the benefit of, the heirs, successors, assigns and legal
representatives of Shareholders, whether so expressed or not, and all
such covenants, agreements, representations and warranties shall bind,
and inure to the benefit of Lender and its successors and assigns.
Section 13.08 Notices. Any and all notices or demands which
must or may be given hereunder or under any other instrument con-
templated hereby shall be given by registered or certified mail,
return receipt requested, postage prepaid, as follows:
To Lender: Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, LA 71203
Attention: Mr. R. Stewart Ewing
Copy to: Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, LA 71203
Attention: Harvey Perry, Esq.
To Shareholders Millington Telephone Company
and/or Companies: 4880 Navy Road
Millington, TN 38053
Attention: W. S. Howard, Sr.
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Copy to: Glankler Brown
Attorneys At Law
One Commerce Square
Seventeenth Floor
Memphis, TN 38103
Attention: Michael A. Robinson
All such communications, notices, or presentations and demands pro-
vided for herein shall be deemed to have been delivered when actually
delivered in person to the respective parties, or if mailed, then on
the date of receipt, provided that such mailing is by certified or
registered mail, return receipt requested, with postage prepaid.
Section 13.08 Amendment and Waiver. Any term, covenant,
agreement or condition of this Agreement may be amended, or compliance
therewith may be waived.
Section 13.09 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall consti-
tute one and the same instrument, and any party hereto may execute
this Agreement by signing one or more counterparts.
Section 13.10 Severability. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enfor-
ceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby and if any one or more of
such provisions shall be invalid, illegal or unenforceable in any
respect in any one jurisdiction, then, to the fullest extent permitted
by applicable law, the validity, legality and enforceability of such
remaining provisions shall not be affected or impaired thereby in
other jurisdictions.
-57-
Section 13.11 Terms. All capitalized terms used herein shall
have the same meanings and definitions set forth in this Agreement,
the Pledges, the Guarantees and the other Loan Papers, unless the use
of the term clearly indicates a different meaning.
Section 13.12 Complete Agreement. The Exhibits and
Schedules attached hereto shall form and become a part of this
Agreement.
Section 13.13 Conflicts and Ambiguities. Any conflict or
ambiguity between any of the terms and conditions herein and those
contained in any other Loan Paper shall be controlled by the terms and
conditions herein. The parties agree that the rules of construction
requiring interpretation against the drafter of such document shall
have no applicability to the Loan Papers.
Section 13.14 Specific Performance. The parties acknowledge
that their obligations hereunder are unique, and that it would be
extremely impracticable to measure the resulting damages if any party
should default in its obligations under this Agreement. Accordingly,
in the event of the failure by a party to consummate the transactions
contemplated hereby which failure constitutes a breach hereof by such
party, the nondefaulting party may, in addition to any other available
rights or remedies, sue in equity for specific performance and, in
connection with any such suit, the parties each expressly waives the
defense therein that the plaintiff has an adequate remedy at law.
-58-
Signed this 27th day of April, 1994.
/s/ WILLIAM S. HOWARD, Sr.
____________________
WILLIAM S. HOWARD, Sr.
/s/ ANN A. HOWARD
____________________
ANN A. HOWARD
/s/ HOLLY LEE STARNES
____________________
HOLLY LEE STARNES
/s/ WILLIAM S. HOWARD, JR.
_____________________
WILLIAM S. HOWARD, JR.
/s/ LAURA LYNNE HOWARD
_____________________
LAURA LYNNE HOWARD
/s/ CHARLOTTE AND HOWARD THOMPSON
____________________________
CHARLOTTE ANN HOWARD THOMPSON
MILLTENN, INC.
BY:/s/ W.S. HOWARD
Its President
MILLINGTON TELEPHONE COMPANY
BY:/s/ W.S. HOWARD
Its President
BIG CREEK FINANCIAL, INC.
BY:/s/ W.S. HOWARD
Its President
MILL-COMM ASSOCIATES, INC.
BY:/s/ W.S. HOWARD
Its President
CENTURY TELEPHONE ENTERPRISES, INC.
BY:/s/ GLEN F. POST III
Its President
SIGNATURE PAGE OF THAT CERTAIN LOAN AGREEMENT AND GRANTS OF RIGHTS OF
FIRST REFUSAL TO ACQUIRE ASSETS AND/OR CAPITAL STOCK OF MILLTENN, INC.
AND ITS SUBSIDIARIES AND CENTURY TELEPHONE ENTERPRISES, INC. DATED
APRIL 27, 1994.
-59-
WRJR/hw#129-33619
25/MILL5.1-5.59
INDEX
EXHIBITS
EXHIBIT A..................................... NOTE
EXHIBIT B...................... PLEDGE OF MTI STOCK
EXHIBIT C...................... PLEDGE OF MTC STOCK
EXHIBIT D............... GUARANTEES OF WSH AND AAH
EXHIBIT E............. PLEDGE OF MAI and BCFI STOCK
EXHIBIT F.......................... GUARANTY OF MTC
EXHIBIT G................... GLANKLER BROWN OPINION
INDEX
SCHEDULES
SCHEDULE 3.02............................ APPROVALS
SCHEDULE 7.04........................ NONCOMPLIANCE
SCHEDULE 7.07............ BUSINESS OF THE COMPANIES
SCHEDULE 8.01....................... PERMITTED DEBT
SCHEDULE 8.02............... CONTINGENT LIABILITIES
SCHEDULE 8.04................ MERGERS, ACQUISITIONS
AND DISSOLUTIONS
SCHEDULE 8-08............. SALE & ISSUANCE OF STOCK
SCHEDULE 8.15................ LOANS, ADVANCES, ETC.
SCHEDULE 8.16.......... TRANSACTION WITH AFFILIATES
SCHEDULE 10-03....................... CAPITAL STOCK
SCHEDULE 10.04................. PARTNERSHIP MATTERS
SCHEDULE 10.05............................... LIENS
SCHEDULE 10.08................ FINANCIAL STATEMENTS
SCHEDULE 10.09............ LITIGATION AND JUDGMENTS
SCHEDULE 10.10............................ DEFAULTS
SCHEDULE 10.11......................... TAX MATTERS
SCHEDULE 10.17......... ABSENCE OF MATERIAL CHANGES
SCHEDULE 10.18........................ INDEBTEDNESS
SCHEDULE 10.19......................... REAL ESTATE
SCHEDULE 10.21............................. PERMITS
SCHEDULE 10.25............. CUSTOMERS AND SUPPLIERS
The schedules listed above are not filed herewith. Copies
of such schedules will be furnished to the Securities and
Exchange Commission upon request.
EXHIBIT NO. "A"
PROMISSORY NOTE
BORROWER: MillTenn, Inc. LENDER: Century Telephone
Enterprises, Inc.
100 Century Park Drive
Monroe, LA 71203
Principal Amount: U.S. $25,000,000.00 Initial Rate: 8.25%
(Twenty-Five Million Dollars)
Date of Note: April 27, 1994
PROMISE TO PAY.
FOR VALUE RECEIVED:
(a) Borrower promises to repay to Lender or order in lawful
money of the United States of America the principal sum of Twenty-Five
Million and 00/100 Dollars (U.S. $25,000,000.00) representing borrowed
funds received by Borrower from Lender.
(b) Borrower also promises to pay to Lender or order simple
interest on the principal balance of this note as outstanding from
time to time, calculated on a variable rate basis at the rate per
annum equal to the Prime Rate as defined below plus 1.5% per annum, as
the Prime Rate may be adjusted from time to time, one or more times,
with interest commencing on the date hereof, and continuing until this
Note is paid in full.
PRIME RATE. The simple interest rate under this Note is subject to a
daily increase or decrease from time to time based on corresponding
increases or decreases in the Chase Manhattan Bank, N.A. rate of
interest established from time to time as its prime lending rate or
successor thereto (the "Prime Rate") . The Prime Rate is 6.75% per
annum as of the date this Note was prepared. The variable interest
rate to be applied to the unpaid principal balance of this Note shall
be at a rate equal to the Prime Rate plus 1.5% resulting in an initial
simple interest rate of 8.25% per annum as of the date this Note was
prepared. Determination of the Prime Rate and any changes thereto
shall be by reference to the Wall Street Journal and shall constitute
proof thereof.
PAYMENT SCHEDULE. Interest only on this note is payable quarter-
annually commencing on the first day of November 1994 and the first
day of February and May 1995 (each "Payment Date"). Beginning with
the Payment Date of August 1, 1995, Borrower shall pay eleven con-
secutive quarter-annual principal payments of Four Hundred Sixteen
Thousand Six Hundred Sixty-Six and 00/100 Dollars ($416,666.00) each
plus accrued simple interest on the entire principal balance at the
time of each quarter-annual payment. One final principal payment in
the amount of the unpaid principal balance then outstanding under this
Note, plus accrued simple interest, shall be due on May 1, 1998.
PLACE OF PAYMENT. Borrower will pay Lender all of payments required
under this note at the address shown above or such other place as
Lender may designate in writing addressed to Borrower.
ASSESSMENT OF SIMPLE INTEREST. Simple interest under this Note will
be assessed utilizing a 365-day daily interest factor over the actual
number of days elapsed in a calendar year (365 days or 366 days in a
leap year). Unless otherwise agreed, all payments under this Note
will be applied first to unpaid accrued interest, with any remaining
amount being applied to the outstanding principal balance of this
Note.
PREPAYMENT; MINIMUM INTEREST CHARGE. Subject to the terms of the
Agreement, Borrower may prepay this Note in part or in full at any
time without premium or penalty by paying the then unpaid principal
balance of this Note, plus accrued simple interest through date of
prepayment. If Borrower prepays this Note in full, or if Lender acce-
lerates payment, Borrower agrees that, unless otherwise required by
law, any prepaid fees or charges will not be subject to rebate and
will be earned by Lender at the time this Note is signed. Unless
otherwise agreed to in writing, early payments under this Note will
not relieve Borrower of Borrower's obligation to continue to make
regularly scheduled payments under the above payment schedule.
Prepayments will instead reduce the principal balance due under this
Note at maturity.
LENDER'S RIGHTS UPON DEFAULT. Should any one or more Events of
Default occur or exist under the Agreement, Lender shall have the
right, at its sole option, to accelerate the maturity and insist upon
immediate payment in full of the unpaid principal balance then
outstanding under this Note, plus accrued simple interest, together
with reasonable attorneys' fees, costs, expenses and other fees and
charges as provided herein. Lender shall have all other rights set
forth in the Agreement.
ADDITIONAL INTEREST. If Borrower defaults under this Note, Lender
shall have the right to prospectively increase the simple interest
rate under this Note to the Prime Rate plus 4.5% per annum (the
"Default Rate,,) until this Note is paid in full, provided however that
in the event the Default Rate is higher than the maximum interest rate
allowable by law then the Default Rate shall be the maximum rate of
interest allowable by law for transactions of this type.
ATTORNEYS' FEES. If after default Lender refers this Note to an
attorney for collection, or files suit against Borrower to collect
this Note, or if Borrower files for bankruptcy or other relief from
creditors, Borrower agrees to pay Lender's reasonable attorneys' fees
and all other costs of collection.
-2-
WAIVERS. Borrower and each guarantor of this Note hereby waive pre-
sentment for payment, protest, notice of protest and notice of non-
payment, and all pleas of division and discussion, and severally agree
that their obligations and liabilities to Lender hereunder shall be on
a "solidary" or "joint and several" basis. Borrower and each guaran-
tor further severally agree that discharge or release of any party who
is or may be liable to Lender for the indebtedness represented hereby,
or the release -of any collateral directly or indirectly securing
repayment hereof, shall not have the effect of releasing any other
party or parties, who shall remain liable to Lender, or of releasing
any other collateral that is not expressly released by Lender.
Borrower and each guarantor additionally agree that Lender's accep-
tance of payment other than in accordance with the terms of this Note,
or Lender's subsequent agreement to extend or modify such repayment
terms or Lender's failure or delay in exercising any Rights or reme-
dies granted to Lender, shall likewise not have the effect of
releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
indirectly secures repayment hereof. In addition, any failure or
delay on the part of Lender to exercise any of the Rights and remedies
granted to Lender shall not have the effect of waiving any of Lender's
Rights and remedies. Any partial exercise of any Rights and/or reme-
dies granted to Lender shall furthermore not be construed as a waiver
of any other Rights and remedies; it being Borrower's intent and
agreement that Lender's Rights and remedies shall be cumulative in
nature. Borrower and each guarantor further agree that, should any
Event of Default occur or exist under this Note, any waiver or for-
bearance on the part of Lender to pursue the Rights and remedies
available to Lender, shall be binding upon Lender only to the extent
that Lender specifically agrees to any such waiver or forbearance in
writing. A waiver or forbearance on the part of Lender as to one
event of default shall not be construed as a waiver or forbearance as
to any other default.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's and each guarantor's obli-
gations and agreements under this Note shall be binding upon
Borrower's and each guarantor's respective successors, heirs, lega-
tees, devisees, administrators, executors and assigns. The rights and
remedies granted to Lender under this Note shall inure to the benefit
of Lender's successors and assigns, as well as to any subsequent
holder or holders of this Note.
NO SET-OFF. This obligation is complete and absolute. No party obli-
gated on this Note shall enjoy any right of compensation or set-off
against Lender, all of which is specifically waived and renounced.
DEFINITIONS. Terms used herein but not defined shall have the meaning
set forth in the Loan Agreement and Grant of Rights of First Refusal
to Acquire Assets and/or Capital Stock of MillTenn, Inc. and its
Subsidiaries, of even date between Borrower, Leader and others (the
"Agreement").
-3-
DEFAULT. Default and Events of Default have the meanings as set forth
in the Agreement.
CAPTION HEADINGS. Caption headings of the sections of this Note are
for convenience purposes only and are not to be used to interpret or
to define their provisions. In this Note, whenever the context so
requires, the singular includes the plural and the plural also inclu-
des the singular.
SEVERABILITY. If any provision of this Note is held to be invalid,
illegal or unenforceable by any court, that provision shall be deleted
from this Note and the remaining provisions of this Note shall be
interpreted as if the deleted provision never existed.
MILLTENN, INC.
BY:/s/ WILLIAM S. HOWARD, SR.
WILLIAM S. HOWARD, SR.
its President
-4-
C/Note4.1 Note4.4
(129-33612)
EXHIBIT NO. "B"
PLEDGE AGREEMENT
BORROWER: MILLTENN, INC.
LENDER: CENTURY TELEPHONE ENTERPRISES, INC.
100 Century Park Drive
Monroe, LA 71203
THIS PLEDGE AGREEMENT is entered into between WILLIAM S. HOWARD, SR.,
ANN A. HOWARD, HOLLY LEE STARNES, WILLIAM S. HOWARD, JR. , LAURA LYNN
HOWARD AND CHARLOTTE ANN HOWARD THOMPSON (referred to below as
"Grantor"); and CENTURY TELEPHONE ENTERPRISES, INC. (referred to below
as "Lender"). This Pledge Agreement is given pursuant to Article III
of Loan Agreement and Grant of Rights of First Refusal to Acquire
Assets and/or Capital Stock of MillTenn, Inc. and its Subsidiaries
dated April 27, 1994 between Borrower, Lender and others (the "Loan
Agreement").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor
grants to Lender a continuing security interest in the Collateral to
secure the Indebtedness and agrees that Lender shall have the rights
stated in this Agreement with respect to the Collateral, in addition
to all other rights which Lender may have by law.
1. DEFINITIONS. The following words shall have the following
meanings when used in this Agreement.
1.1 Agreement. The word "Agreement" means this Pledge Agreement,
as this Pledge Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached or to be
attached to this Pledge Agreement from time to time.
1.2 Collateral. The word "Collateral, means individually,
collectively and interchangeably Grantor's present and future
rights, title and interest in and to the following, together with
any and all present and future additions thereto, substitutions
therefore, and replacements thereof, and further together with all
income and Proceeds as described below:
Certificates of Stock #001 through 006, issued by MillTenn,
Inc., in the name of Grantors, representing 10,000 (100%)
shares of stock.
1.3 Encumbrances. The word "Encumbrances" means individually,
collectively and interchangeably any and all presently existing
and/or future mortgages, liens, privileges and other contractual
and/or statutory security interests and rights of every nature and
kind that, now and/or in the future, may affect the Collateral or
any part or parts thereof.
1.4 Event of Default. The words "Event of Default" mean indivi-
dually, collectively, and interchangeably any of the Events of
Default set forth below in the section titled "Events of Default".
1.5 Grantor. The word "Grantor" means individually, collec-
tively and interchangeably MILLTENN, INC., its successors and
assigns.
1.6 Guarantor. The word "Guarantor" means and includes indivi-
dually, collectively, interchangeably and without limitation, each
and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
1.7 Income and Proceeds. The words "Income and Proceeds" mean
dividends or other similar payments, stock splits, bonuses or
other type of payments or liquidation payments.
1.8 Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note, in principal, interest, costs, expenses and
attorneys, fees and all other fees and charges, together with all
other indebtedness and costs and expenses for which Grantor is
responsible under this Agreement or under any of the Related
Documents.
1.9 Lender. The word "Lender" means CENTURY TELEPHONE
ENTERPRISES, INC., its successors and assigns, and any subsequent
holder or holders of the Note, or any interest therein.
1.10 Note. The word "Note" means the note or credit agreement
dated April 27, 1994, in the principal amount of $25,000,000.00
from Grantor to Lender, together with all substitute or replace-
ment notes therefor, as well as all renewals, extensions, modifi-
cations, refinancings, consolidations and substitutions of and for
the note or credit agreement.
1.11 Obligor. The word "Obligor", means and includes individually,
collectively and interchangeably without limitation any and all
persons or entities obligated to pay money or to perform some
other act under the Collateral.
1.12 Related Documents. The words "Related Documents" mean and
include individually, collectively, interchangeably and without
limitation all promissory notes, credit agreements, loan
agreements, guaranties, security agreements, mortgages, collateral
mortgages, deeds of trust, and all other instruments, agreements
and documents, whether now or hereafter existing, executed in con-
nection with the Indebtedness, including the Loan Agreement.
-2-
2. DELIVERY OF COLLATERAL. Contemporaneous with the execution of
this Agreement, Grantor has delivered or will deliver to Lender or
Lender's designated agent the above described Collateral. As long as
this Agreement remains in effect, Grantor further agrees to imme-
diately deliver to Lender, or Lender's designated agent, any and all
additions to and/or substitutions or replacements for the Collateral.
In the event that Grantor is unable to deliver any of the Collateral
to Lender or Lender's designated agent at the time this Agreement is
executed, or should Grantor ever withdraw or obtain temporary
possession of any of the Collateral while this Agreement remains in
effect, either under a trust receipt or otherwise, Grantor
unconditionally agrees to deliver immediately to Lender the
Collateral or, alternatively, such substitute or replacement colla-
teral security as may then be satisfactory to Lender.
3. DURATION. This Agreement shall remain in full force and effect
until such time as this Agreement and the security interests created
hereby are terminated and cancelled by Lender under a written can-
cellation instrument in favor of Grantor which shall be executed upon
satisfaction of all obligations of Borrower under the Note.
4. GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
COLLATERAL. Grantor represents and warrants to Lender that:
4.1 Ownership. Grantor at all times will continue to be the
legal and lawful owner of the Collateral free and clear of all
security interests, liens, encumbrances and claims of others
except as disclosed to and accepted by Lender in writing prior to
execution of this Agreement.
4.2 Right to Pledge. Grantor has the right, power and authority
to enter into this Agreement and to grant a continuing security
interest in the Collateral in favor of Lender.
4.3 Authorization. Grantor's execution, delivery and performance
of this Agreement have been duly authorized, and do not conflict
with, and will not result in a violation of, or constitute or give
rise to an event of default under Grantor's Articles of
Incorporation or Bylaws, or any agreement or other instrument
which may be binding upon Grantor, or under any law or governmen-
tal regulation or court decree or order applicable to Grantor
and/or Grantor's properties.
4.4 Perfection of Security Interest. Upon delivery of the
Collateral to Lender, this Agreement shall create a valid first
lien upon, and perfect a security interest in the Collateral sub-
ject to no prior security interest, lien, charge, Encumbrance or
other agreement purporting to grant to any third party a security
interest in the Collateral.
-3-
4.5 Binding Effect. This Agreement is binding upon Grantor, as
well as Grantor's heirs, successors, representatives and assigns,
and is legally enforceable in accordance with its terms.
4.6 No Further Assignment. Grantor has not, and will not, sell,
assign, transfer, encumber or otherwise dispose of any of
Grantor's rights in the Collateral except as provided in this
Agreement.
4.7 No Defaults. Except as set forth in the Loan Agreement,
there are no defaults existing under the Collateral, and there are
no offsets or counterclaims to the same. Grantor will strictly
and promptly perform each of the terms, conditions, covenants and
agreements contained in the Collateral which are to be performed
by Grantor if any.
4.8 No violation. The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to
which Grantor is a party, and its certificate or articles of
incorporation and bylaws do not prohibit any term or condition of
this Agreement.
4.9 Survivorship of Representations and Warranties. The
foregoing representations and warranties and all other represen-
tations and warranties of Grantor under this Agreement shall be
continuing in nature and shall survive as provided in the Loan
Agreement.
5. LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL.
Lender shall have the following rights in addition to all other rights
it may have by law:
5.1 Maintenance and Protection of Collateral. Lender may, but
shall not be obligated to, take such steps as it deems necessary
or desirable to protect, maintain, insure, store, or care for the
Collateral, including payment of any liens or claims against the
Collateral. Lender may charge any cost incurred in so doing to
Grantor.
5.2 Income and Proceeds from the Collateral. Lender shall have
the right, whether or not an Event of Default exists under this
Agreement, to directly collect and receive any and all Income and
Proceeds as such become due and payable. In order to permit the
foregoing, Grantor unconditionally agrees to deliver to Lender,
immediately following demand, any and all such Income and Proceeds
that may be received by or that may be payable to Grantor.
Grantor further unconditionally agrees that Lender shall have the
right to notify all other obligors to pay and/or deliver such
Income and Proceeds directly to Lender or Lender's nominee at an
address to be designated by Lender, and to do any and all other
-4-
things as Lender may deem necessary and proper, within Lender's
sole discretion, to carry out the terms and intent of this
Agreement. Lender shall have the further right, where
appropriate, and within Lender's sole discretion, to file suit,
either in Lender's own name or in the name of Grantor, to collect
and/or enforce performance, payment and/or delivery of any and all
such Income and Proceeds.
Where it is necessary for Lender to enforce performance, payment
and/or delivery of any such Income and Proceeds from the Obligor
therefor, Grantor unconditionally agrees that Lender may compro-
mise or take such other actions, either in Grantor's name or in
the name of Lender, as Lender may deem appropriate, within
Lender's sole judgment, with regard to performance, collection
and/or payment of the same, without affecting the obligations and
liabilities of Grantor under this Agreement and/or any
Indebtedness secured hereby. In order to further permit the
foregoing, Grantor agrees that Lender shall have the additional
irrevocable rights, coupled with an interest, to: (a) receive,
open and dispose of all mail addressed to Grantor pertaining to
any of the Collateral; (b) notify the postal authorities to change
the address and delivery of mail addressed to Grantor pertaining
to any of the Collateral to such address as Lender may designate;
and (c) endorse Grantor's name on any and all notes, acceptances,
checks, drafts, money orders or other instruments of payment of
such Income and Proceeds that may come into Lender's possession,
and to deposit or otherwise collect the same, applying such funds
to the unpaid balance of the Indebtedness in the manner provided
below.
In the event that Grantor should, for any reason, receive any
Income and Proceeds subject to this Agreement, and Grantor should
deposit such funds into one or more of Grantor's deposit accounts,
no matter where located, Lender shall have the additional right
following any Event of Default under this Agreement, to attach any
and all of Grantor's deposit accounts in which such funds may have
been deposited, whether or not any such funds were commingled with
other funds of Grantor, and whether or not any such funds then
remain on deposit in such an account or accounts. To this end,
Grantor additionally collaterally assigns and pledges to Lender
and grants to Lender a continuing security interest in and to any
and all of Grantor's present and future rights, title and interest
in and to any and all funds that Grantor may now and/or in the
future maintain on deposit with banks, savings and loan asso-
ciations and other financial institutions, as well as money
market accounts with other types of entities, in which Grantor at
any time may deposit any such Income and Proceeds.
-5-
5. 3 Application of Cash. At Lender's option, Lender may apply
any cash, whether included in the Collateral or received as Income
and Proceeds or through liquidation, sale, or retirement, of the
Collateral, to the satisfaction of the Indebtedness or such por-
tion thereof as Lender shall choose, whether or not matured.
Lender may alternatively and at its sole option and election hold
such cash as additional "cash collateral" to secure the
Indebtedness.
5.4 Transactions with others. Lender may (a) extend time for
payment or other performance, (b) grant a renewal or change in
terms or conditions, or (c) compromise, compound or release any
obligation, with any one or more Obligors, endorsers, or
Guarantors of the Indebtedness as Lender deems advisable, without
obtaining the prior written consent of Grantor, and no such act or
failure to act shall affect Lender's rights against Grantor or the
Collateral.
5.5 All Collateral Secures Indebtedness. All Collateral shall be
security for the Indebtedness, whether the Collateral is located
at one or more offices or branches of Lender and whether or not
the office or branch where the Indebtedness is created is aware of
or relies upon the Collateral.
6. EXPENDITURES BY LENDER. Grantor recognizes and agrees that Lender
may incur certain expenses in connection with Lender's exercise of
rights under this Agreement. If not discharged or paid when due,
Lender may (but shall not be obligated to) discharge or pay any
amounts required to be discharged or paid by Grantor under this
Agreement, including without limitation all taxes, Encumbrances and
other claims, at any time levied or placed on the Collateral. Lender
also may (but shall not be obligated to) pay all costs for insuring,
maintaining and preserving the Collateral, including without limita-
tion, the purchase of insurance protecting only Lender's interest in
the Collateral. Lender may further take such other action or actions
and incur such additional expenditures as Lender may deem to be
necessary and proper to cure or rectify any actions or inactions on
Grantor's part as may be required under this Agreement. Nothing under
this Agreement or otherwise shall obligate Lender to take any such
actions or to incur any such additional expenditures on Grantor's
behalf, or as making Lender in any way responsible or liable for any
loss, damage, or injury to the Collateral, to Grantor, or to any other
person or persons, resulting from Lender's election not to take such
actions or to incur such additional expenses. In addition, Lender's
election to take any such actions or to incur such additional expen-
ditures shall not constitute a waiver or forbearance by Lender of any
Event of Default under this Agreement. All such expenditures incurred
or paid by Lender for such purposes will then bear interest at the
-6-
rate charged under the Note from the date incurred or paid by Lender
to the date of repayment . All such expenses shall become a part of
the Indebtedness and, at Lender's option, will (a) be payable on
demand, (b) be added to the balance of the Note and be apportioned
among and be payable with any payments to become due during either (i)
the terms of any applicable insurance policy or (ii) the remaining
term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will
secure payment of these amounts. Such right shall be in addition to
all other rights and remedies to which Lender may be entitled upon the
occurrence of an Event of Default.
7. LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary
reasonable care in the physical preservation and custody of the
Collateral in Lender's possession, but shall have no other obligation
to protect the Collateral or its value. In particular, but without
limitation, Lender shall have no responsibility for (a) any depre-
ciation in value of the Collateral or for the collection or protection
of any Income and Proceeds from the Collateral, (b) preservation of
rights against parties to the Collateral or against third persons, (c)
ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any of the Collateral, or (c)
informing Grantor about any of the above, whether or not Lender has or
is deemed to have knowledge of such matters. Except as provided
above, Lender shall have no liability for depreciation or deteriora-
tion of the Collateral.
8. EVENTS OF DEFAULT. The following actions or inactions or both
shall constitute Events of Default under this Agreement:
The occurrence of any Event of Default as specified in Sections
9.02 through 9.05 of the Loan Agreement.
9. RIGHTS AND REMEDIES ON DEFAULT. In an Event of Default occurs
under this Agreement, at any time thereafter, Lender may exercise any
one or more of the following rights and remedies.
All rights or remedies specified in Article IX of the Loan
Agreement.
10. ASSIGNMENT OF INDEBTEDNESS; TRANSFER OF COLLATERAL. Grantor
hereby recognizes and agrees that Lender may assign all or any portion
of the Indebtedness to be one or more third party creditors. Such
transfers may include, but are not limited to, sales of participation
interests in the Indebtedness. Grantor specifically agrees and con-
sents to all such transfers and assignments and further waives any
subsequent notice of such transfers or assignments as may be provided
under applicable Louisiana law. Grantor additionally agrees that any
and all of Grantor's other and future loans, extensions of credit,
-7-
liabilities and obligations in favor of such a third party assignee
will be secured by the Collateral. Grantor further agrees that Lender
may transfer all or any portion of the Collateral to such third party
assignee, in which case Lender will be fully released from any and all
of Lender's obligations and responsibilities to Grantor with regard to
the transferred Collateral. Any third party creditor to whom the
Collateral is transferred will acquire all of Lender's rights and
powers with respect to the transferred Collateral, with Lender
retaining all powers and rights with regard to any of the Collateral
which is not transferred to another party.
11. PROTECTION OF LENDER'S SECURITY RIGHTS. Grantor agrees to appear
in and to defend all actions or proceedings purporting to affect
Lender's security rights and interests granted under this Agreement.
In the event that Lender elects to defend any such action or pro-
ceeding, Grantor agrees to reimburse Lender for Lender's costs asso-
ciated therewith, including without limitation, Lender's attorneys'
fees, which additional costs and expenses shall be secured by this
Agreement.
12. INDEMNIFICATION OF LENDER. Grantor agrees to indemnify, to defend
and to save and hold Lender harmless from any and all claims, suits,
obligations, damages, losses, costs, expenses (including without limi-
tation, Lender's reasonable attorneys' fees), demands, liabilities,
penalties, fines and forfeitures of any nature whatsoever which may be
asserted against or incurred by Lender, arising out of or in any
manner occasioned by this Agreement or the rights and remedies granted
to Lender hereunder. The foregoing indemnity provision shall survive
the cancellation of this Agreement as to all matters arising or
accruing prior to such cancellation, and the foregoing indemnity pro-
vision shall further survive in the event that Lender elects to exer-
cise any of the remedies as provided under this Agreement following
any Event of Default hereunder.
13. EFFECT OF WAIVERS. Grantor has waived, and/or does by these pre-
sents waive, presentment for payment, protest, notice of protest and
notice of nonpayment under all of the Indebtedness secured by this
Agreement. Grantor has further waived, and/or does by these presents
waive, all pleas of division and discussion, and all similar rights
with regard to the Indebtedness, and agrees that Grantor shall remain
liable, together with any and all Guarantors of the Indebtedness, on a
"solidary" or "joint and several" basis. Grantor further agrees that
discharge or release of any party who is, may, or will be liable to
Lender under any of the Indebtedness, or the release of the Collateral
or any other collateral directly or indirectly securing repayment of
the same, shall not have the effect of releasing or otherwise dimi-
nishing or reducing the actual or potential liability of Grantor
and/or any other party or parties guaranteeing payment of the
-8-
Indebtedness, who shall remain liable to Lender, and/or remain liable
to Lender, and/or of releasing any Collateral or other collateral that
is not expressly released by Lender.
Grantor additionally agrees that Lender's acceptance of payments other
than in accordance with the terms of any agreement, or agreements
governing repayment of the Indebtedness, or Lender's subsequent
agreement to extend or modify such repayment terms, shall likewise not
have the effect of releasing Grantor, and/or any other party or par-
ties guaranteeing payment of the Indebtedness, from their respective
obligations to Lender, and/or of releasing any of the Collateral or
other collateral directly or indirectly securing repayment of the
Indebtedness. In addition, no course of dealing between Grantor and
Lender, nor any failure or delay on the part of Lender to exercise any
of the rights and remedies granted to Lender under this Agreement, or
under any other agreement or agreements by and between Grantor and
Lender, shall have the effect of waving any of Lender's rights and
remedies. Any partial exercise of any rights and remedies granted to
Lender shall furthermore not constitute a waiver of any of Lender's
other rights and remedies, it being Grantor's intent and agreement
that Lender's rights and remedies shall be cumulative in nature.
Grantor further agrees that, upon the occurrence of any Event of
Default under this Agreement, any waiver or forbearance on the part of
Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees
to any such waiver or forbearance in writing. A waiver or forbearance
as to one Event of Default shall not constitute a waiver of for-
bearance as to any other Event of Default. None of the warranties,
conditions, provisions and terms contained in this Agreement or any
other agreement, document, or instrument now or hereafter executed by
Grantor and delivered to Lender, shall be deemed to have been waived
by any act or knowledge of Lender, Lender's agents, officers or
employees; but only by an instrument in writing specifying such
waiver, signed by a duly authorized officer of Lender and delivered
to Grantor.
14. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Agreement:
14.1 Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of
the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought
to be charged or bound by the alteration or amendment.
-9-
14.2 Applicable Law. This Agreement has been delivered to Lender
and accepted by Lender in the State of Louisiana. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Louisiana.
14.3 Expenses. Grantor agrees to pay upon demand all of Lender's
reasonable costs and expenses, including legal expenses, incurred
in connection with the enforcement of this Agreement. Lender may
pay someone else to help enforce this Agreement, and Grantor shall
pay the costs and expenses of such enforcement. Costs and expen-
ses include Lender's legal expenses whether or not there is a
lawsuit, including legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or
injunction), appeals and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such addi-
tional fees as may be directed by the court.
14.4 Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
14. 5 Notices. To give Grantor any notice required under this
Agreement, Lender may hand deliver or mail such notice to Grantor.
Lender will deliver or mail any notice to Grantor (or any of them
if more than one) at any address which Grantor may have given
Lender by written notice as provided in this paragraph. In the
event that there is more than one Grantor under this Agreement,
notice to a single Grantor shall be considered as notice to all
Grantors. To give Lender any notice under this Agreement, Grantor
(or any Grantor) shall mail the notice to Lender by registered or
certified mail at the address specified in this Agreement, or at
any other address that Lender may have given to Grantor (or any
Grantor) by written notice as provided in this paragraph. All
notices required or permitted under this Agreement must be in
writing and will be considered as given on the day it is delivered
by hand or deposited in the U.S. Mail, by registered or certified
mail to the address specified in this Agreement.
14.6 Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to
any person or circumstance, such finding shall not render that
provision invalid or unenforceable as to any other persons or cir-
cumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and
enforceable.
-10-
14.7 Sole Discretion of Lender. Whenever Lender's consent or
approval is required under this Agreement, the decision as to
whether or not to consent or approve shall be in the sole and
exclusive discretion of Lender and Lender's decision shall be
final and conclusive.
14.8 Successors and Assigns Bound; Solidary Liability. Grantor's
obligations and agreements under this Agreement shall be binding
upon Grantor's successors, heirs, legatees, devisees, administra-
tors, executors and assigns. In the event that there is more than
one Grantor under this Agreement, all of the agreements and obli-
gations made and/or incurred by Grantors under this Agreement
shall be on a "solidary" or "joint and several" basis.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
APRIL 27, 1994.
GRANTOR:
/s/ WILLIAM S. HOWARD, SR.
______________________
WILLIAM S. HOWARD, SR.
/s/ ANN A. HOWARD
_____________________
ANN A. HOWARD
/s/ HOLLY LEE STARNES
____________________
HOLLY LEE STARNES
/s/ WILLIAM S. HOWARD, JR.
_____________________
WILLIAM S. HOWARD, JR.
/s/ LAURA LYNNE HOWARD
____________________
LAURA LYNNE HOWARD
/s/ CHARLOTTE AND HOWARD THOMPSON
_____________________________
CHARLOTTE ANN HOWARD THOMPSON
14/Pledge7.1-7.11
EXHIBIT NO. "C"
PLEDGE AGREEMENT
BORROWER: MILLTENN, INC.
LENDER: CENTURY TELEPHONE ENTERPRISES, INC.
100 Century Park Drive
Monroe, LA 71203
THIS PLEDGE AGREEMENT is entered into between MILLTENN, INC.
(referred to below as "Grantor"); and CENTURY TELEPHONE ENTERPRISES,
INC. (referred to below as "Lender"). This Pledge Agreement is given
pursuant to Article III of Loan Agreement and Grant of Rights of First
Refusal to Acquire Assets and/or Capital Stock of MillTenn, Inc. and
its Subsidiaries dated April 27, 1994 between Borrower, Lender and
others (the "Loan Agreement").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor
grants to Lender a continuing security interest in the Collateral to
secure the Indebtedness and agrees that Lender shall have the rights
stated in this Agreement with respect to the Collateral, in addition
to all other rights which Lender may have by law.
1. DEFINITIONS. The following words shall have the following
meanings when used in this Agreement.
1.1 Agreement. The word "Agreement" means this Pledge Agreement,
as this Pledge Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached or to be
attached to this Pledge Agreement from time to time.
1.2 Collateral. The word "Collateral" means individually,
collectively and interchangeably Grantor's present and future
rights, title and interest in and to the following, together with
any and all present and future additions thereto, substitutions
therefore, and replacements thereof, and further together with all
income and Proceeds as described below:
Certificates of Stock #64 and 65, issued by Millington
Telephone Company, in the name of MillTenn, Inc. representing
496 (100%) shares of stock.
1.3 Encumbrances. The word "Encumbrances" means individually,
collectively and interchangeably any and all presently existing
and/or future mortgages, liens, privileges and other contractual
and/or statutory security interests and rights of every nature and
kind that, now and/or in the future, may affect the Collateral or
any part or parts thereof.
1.4 Event of Default. The words "Event of Default" mean indivi-
dually, collectively, and interchangeably any of the Events of
Default set forth below in the section titled "Events of Default".
1.5 Grantor. The word "Grantor" means individually, collec-
tively and interchangeably MILLTENN, INC., its successors and
assigns.
1.6 Guarantor. The word "Guarantor" means and includes indivi-
dually, collectively, interchangeably and without limitation, each
and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
1.7 Income and Proceeds. The words "Income and Proceeds" mean
dividends or other similar payments, stock splits, bonuses or
other type of payments or liquidation payments.
1.8 Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note, in principal, interest, costs, expenses and
attorneys' fees and all other fees and charges, together with all
other indebtedness and costs and expenses for which Grantor is
responsible under this Agreement or under any of the Related
Documents.
1.9 Lender. The word "Lender" means CENTURY TELEPHONE
ENTERPRISES, INC., its successors and assigns, and any subsequent
holder or holders of the Note, or any interest therein.
1.10 Note. The word "Note" means the note or credit agreement
dated April 27, 1994, in the principal amount of $25,000,000.00
from Grantor to Lender, together with all substitute or replace-
ment notes therefor, as well as all renewals, extensions, modifi-
cations, refinancings, consolidations and substitutions of and for
the note or credit agreement.
1.11 Obligor. The word "Obligor" means and includes individually,
collectively and interchangeably without limitation any and all
persons or entities obligated to pay money or to perform some
other act under the Collateral.
1.12 Related Documents. The words "Related Documents" mean and
include individually, collectively, interchangeably and without
limitation all promissory notes, credit agreements, loan
agreements, guaranties, security agreements, mortgages, collateral
mortgages, deeds of trust, and all other instruments, agreements
and documents, whether now or hereafter existing, executed in con-
nection with the Indebtedness, including the Loan Agreement.
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2. DELIVERY OF COLLATERAL. Contemporaneous with the execution of
this Agreement, Grantor has delivered or will deliver to Lender or
Lender's designated agent the above described Collateral. As long as
this Agreement remains in effect, Grantor further agrees to imme-
diately deliver to Lender, or Lender's designated agent, any and all
additions to and/or substitutions or replacements for the Collateral.
In the event that Grantor is unable to deliver any of the Collateral
to Lender or Lender's designated agent at the time this Agreement is
executed, or should Grantor ever withdraw or obtain temporary
possession of any of the Collateral while this Agreement remains in
effect, either under a trust receipt or otherwise, Grantor
unconditionally agrees to deliver immediately to Lender the
Collateral or, alternatively, such substitute or replacement colla-
teral security as may then be satisfactory to Lender.
3. DURATION. This Agreement shall remain in full force and effect
until such time as this Agreement and the security interests created
hereby are terminated and cancelled by Lender under a written can-
cellation instrument in favor of Grantor which shall be executed upon
satisfaction of all obligations of Borrower under the Note.
4. GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
COLLATERAL. Grantor represents and warrants to Lender that:
4.1 Ownership. Grantor at all times will continue to be the
legal and lawful owner of the Collateral free and clear of all
security interests, liens, encumbrances and claims of others
except as disclosed to and accepted by Lender in writing prior to
execution of this Agreement.
4.2 Right to Pledge. Grantor has the right, power and authority
to enter into this Agreement and to grant a continuing security
interest in the Collateral in favor of Lender.
4.3 Authorization. Grantor's execution, delivery and performance
of this Agreement have been duly authorized, and do not conflict
with, and will not result in a violation of, or constitute or give
rise to an event of default under Grantor's Articles of
Incorporation or Bylaws, or any agreement or other instrument
which may be binding upon Grantor, or under any law or governmen-
tal regulation or court decree or order applicable to Grantor
and/or Grantor's properties.
4.4 Perfection of Security Interest. Upon delivery of the
Collateral to Lender, this Agreement shall create a valid first
lien upon, and perfect a security interest in the Collateral sub-
ject to no prior security interest, lien, charge, Encumbrance or
other agreement purporting to grant to any third party a security
interest in the Collateral.
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4.5 Binding Effect. This Agreement is binding upon Grantor, as
well as Grantor's heirs, successors, representatives and assigns,
and is legally enforceable in accordance with its terms.
4.6 No Further Assignment. Grantor has not, and will not, sell,
assign, transfer, encumber or otherwise dispose of any of
Grantor's rights in the Collateral except as provided in this
Agreement.
4.7 No Defaults. Except as set forth in the Loan Agreement,
there are no defaults existing under the Collateral, and there are
no offsets or counterclaims to the same. Grantor will strictly
and promptly perform each of the terms, conditions, covenants and
agreements contained in the Collateral which are to be performed
by Grantor if any.
4.8 No Violation. The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to
which Grantor is a party, and its certificate or articles of
incorporation and bylaws do not prohibit any term or condition of
this Agreement.
4.9 Survivorship of Representations and Warranties. The
foregoing representations and warranties and all other represen-
tations and warranties of Grantor under this Agreement shall be
continuing in nature and shall survive as provided in the Loan
Agreement.
5. LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL.
Lender shall have the following rights in addition to all other rights
it may have by law:
5.1 Maintenance and Protection of Collateral. Lender may, but
shall not be obligated to, take such steps as it deems necessary
or desirable to protect, maintain, insure, store, or care for the
Collateral, including payment of any liens or claims against the
Collateral. Lender may charge any cost incurred in so doing to
Grantor.
5.2 Income and Proceeds from the Collateral. Lender shall have
the right, whether or not an Event of Default exists under this
Agreement, to directly collect and receive any and all Income and
Proceeds as such become due and payable. In order to permit the
foregoing, Grantor unconditionally agrees to deliver to Lender,
immediately following demand, any and all such Income and Proceeds
that may be received by or that may be payable to Grantor.
Grantor further unconditionally agrees that Lender shall have the
right to notify all other obligors to pay and/or deliver such
Income and Proceeds directly to Lender or Lender's nominee at an
address to be designated by Lender, and to do any and all other
-4-
things as Lender may deem necessary and proper, within Lender's
sole discretion, to carry out the terms and intent of this
Agreement. Lender shall have the further right, where
appropriate, and within Lender's sole discretion, to file suit,
either in Lender's own name or in the name of Grantor, to collect
and/or enforce performance, payment and/or delivery of any and all
such Income and Proceeds.
Where it is necessary for Lender to enforce performance, payment
and/or delivery of any such Income and Proceeds from the Obligor
therefor, Grantor unconditionally agrees that Lender may compro-
mise or take such other actions, either in Grantor's name or in
the name of Lender, as Lender may deem appropriate, within
Lender's sole judgment, with regard to performance, collection
and/or payment of the same, without affecting the obligations and
liabilities of Grantor under this Agreement and/or any
Indebtedness secured hereby. In order to further permit the
foregoing, Grantor agrees that Lender shall have the additional
irrevocable rights, coupled with an interest, to: (a) receive,
open and dispose of all mail addressed to Grantor pertaining to
any of the Collateral; (b) notify the postal authorities to change
the address and delivery of mail addressed to Grantor pertaining
to any of the Collateral to such address as Lender may designate;
and (c) endorse Grantor's name on any and all notes, acceptances,
checks, drafts, money orders or other instruments of payment of
such Income and Proceeds that may come into Lender's possession,
and to deposit or otherwise collect the same, applying such funds
to the unpaid balance of the Indebtedness in the manner provided
below.
In the event that Grantor should, for any reason, receive any
Income and Proceeds subject to this Agreement, and Grantor should
deposit such funds into one or more of Grantor's deposit accounts,
no matter where located, Lender shall have the additional right
following any Event of Default under this Agreement, to attach any
and all of Grantor's deposit accounts in which such funds may have
been deposited, whether or not any such funds were commingled with
other funds of Grantor, and whether or not any such funds then
remain on deposit in such an account or accounts. To this end,
Grantor additionally collaterally assigns and pledges to Lender
and grants to Lender a continuing security interest in and to any
and all of Grantor's present and future rights, title and interest
in and to any and all funds that Grantor may now and/or in the
future maintain on deposit with banks, savings and loan asso-
ciations and other financial institutions, as well as money
market accounts with other types of entities, in which Grantor at
any time may deposit any such Income and Proceeds.
-5-
5. 3 Application of Cash. At Lender's option, Lender may apply
any cash, whether included in the Collateral or received as Income
and Proceeds or through liquidation, sale, or retirement, of the
Collateral, to the satisfaction of the Indebtedness or such por-
tion thereof as Lender shall choose, whether or not matured.
Lender may alternatively and at its sole option and election hold
such cash as additional "cash collateral" to secure the
Indebtedness.
5.4 Transactions with Others. Lender may (a) extend time for
payment or other performance, (b) grant a renewal or change in
terms or conditions, or (c) compromise, compound or release any
obligation, with any one or more Obligors, endorsers, or
Guarantors of the Indebtedness as Lender deems advisable, without
obtaining the prior written consent of Grantor, and no such act or
failure to act shall affect Lender's rights against Grantor or the
Collateral.
5.5 All Collateral Secures Indebtedness. All Collateral shall be
security for the Indebtedness, whether the Collateral is located
at one or more offices or branches of Lender and whether or not
the office or branch where the Indebtedness is created is aware of
or relies upon the Collateral.
6. EXPENDITURES BY LENDER. Grantor recognizes and agrees that Lender
may incur certain expenses in connection with Lender's exercise of
rights under this Agreement. If not discharged or paid when due,
Lender may (but shall not be obligated to) discharge or pay any
amounts required to be discharged or paid by Grantor under this
Agreement, including without limitation all taxes, Encumbrances and
other claims, at any time levied or placed on the Collateral. Lender
also may (but shall not be obligated to) pay all costs for insuring,
maintaining and preserving the Collateral, including without limita-
tion, the purchase of insurance protecting only Lender's interest in
the Collateral. Lender may further take such other action or actions
and incur such additional expenditures as Lender may deem to be
necessary and proper to cure or rectify any actions or inactions on
Grantor's part as may be required under this Agreement. Nothing under
this Agreement or otherwise shall obligate Lender to take any such
actions or to incur any such additional expenditures on Grantor's
behalf, or as making Lender in any way responsible or liable for any
loss, damage, or injury to the Collateral, to Grantor, or to any other
person or persons, resulting from Lender's election not to take such
actions or to incur such additional expenses. In addition, Lender's
election to take any such actions or to incur such additional expen-
ditures shall not constitute a waiver or forbearance by Lender of any
Event of Default under this Agreement. All such expenditures incurred
or paid by Lender for such purposes will then bear interest at the
-6-
rate charged under the Note from the date incurred or paid by Lender
to the date of repayment. All such expenses shall become a part of
the Indebtedness and, at Lender's option, will (a) be payable on
demand, (b) be added to the balance of the Note and be apportioned
among and be payable with any payments to become due during either (i)
the terms of any applicable insurance policy or (ii) the remaining
term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will
secure payment of these amounts. Such right shall be in addition to
all other rights and remedies to which Lender may be entitled upon the
occurrence of an Event of Default.
7. LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary
reasonable care in the physical preservation and custody of the
Collateral in Lender's possession, but shall have no other obligation
to protect the Collateral or its value. In particular, but without
limitation, Lender shall have no responsibility for (a) any depre-
ciation in value of the Collateral or for the collection or protection
of any Income and Proceeds from the Collateral, (b) preservation of
rights against parties to the Collateral or against third persons, (c)
ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any of the Collateral, or (d)
informing Grantor about any of the above, whether or not Lender has or
is deemed to have knowledge of such matters. Except as provided
above, Lender shall have no liability for depreciation or deteriora-
tion of the Collateral.
8. EVENTS OF DEFAULT. The following actions or inactions or both
shall constitute Events of Default under this Agreement:
The occurrence of any Event of Default as specified in Sections
9.02 through 9.05 of the Loan Agreement.
9. RIGHTS AND REMEDIES ON DEFAULT. In an Event of Default occurs
under this Agreement, at any time thereafter, Lender may exercise any
one or more of the following rights and remedies.
All rights or remedies specified in Article IX of the Loan
Agreement.
10. ASSIGNMENT OF INDEBTEDNESS; TRANSFER OF COLLATERAL. Grantor
hereby recognizes and agrees that Lender may assign all or any portion
of the Indebtedness to be one or more third party creditors. Such
transfers may include, but are not limited to, sales of participation
interests in the Indebtedness. Grantor specifically agrees and con-
sents to all such transfers and assignments and further waives any
subsequent notice of such transfers or assignments as may be provided
under applicable Louisiana law. Grantor additionally agrees that any
and all of Grantor's other and future loans, extensions of credit,
-7-
liabilities and obligations in favor of such a third party assignee
will be secured by the Collateral. Grantor further agrees that Lender
may transfer all or any portion of the Collateral to such third party
assignee, in which case Lender will be fully released from any and all
of Lender's obligations and responsibilities to Grantor with regard to
the transferred Collateral. Any third party creditor to whom the
Collateral is transferred will acquire all of Lender's rights and
powers with respect to the transferred Collateral, with Lender
retaining all powers and rights with regard to any of the Collateral
which is not transferred to another party.
11. PROTECTION OF LENDER'S SECURITY RIGHTS. Grantor agrees to appear
in and to defend all actions or proceedings purporting to affect
Lender's security rights and interests granted under this Agreement.
In the event that Lender elects to defend any such action or pro-
ceeding, Grantor agrees to reimburse Lender for Lender's costs asso-
ciated therewith, including without limitation, Lender's attorneys'
fees, which additional costs and expenses shall be secured by this
Agreement.
12. INDEMNIFICATION OF LENDER. Grantor agrees to indemnify, to defend
and to save and hold Lender harmless from any and all claims, suits,
obligations, damages, losses, costs, expenses (including without limi-
tation, Lender's reasonable attorneys' fees), demands, liabilities,
penalties, fines and forfeitures of any nature whatsoever which may be
asserted against or incurred by Lender, arising out of or in any
manner occasioned by this Agreement or the rights and remedies granted
to Lender hereunder. The foregoing indemnity provision shall survive
the cancellation of this Agreement as to all matters arising or
accruing prior to such cancellation, and the foregoing indemnity pro-
vision shall further survive in the event that Lender elects to exer-
cise any of the remedies as provided under this Agreement following
any Event of Default hereunder.
13. EFFECT OF WAIVERS. Grantor has waived, and/or does by these pre-
sents waive, presentment for payment, protest, notice of protest and
notice of nonpayment under all of the Indebtedness secured by this
Agreement. Grantor has further waived, and/or does by these presents
waive, all pleas of division and discussion, and all similar rights
with regard to the Indebtedness, and agrees that Grantor shall remain
liable, together with any and all Guarantors of the Indebtedness, on a
"solidary" or "joint and several" basis. Grantor further agrees that
discharge or release of any party who is, may, or will be liable to
Lender under any of the Indebtedness, or the release of the Collateral
or any other collateral directly or indirectly securing repayment of
the same, shall not have the effect of releasing or otherwise dimi-
nishing or reducing the actual or potential liability of Grantor
and/or any other party or parties guaranteeing payment of the
-8-
Indebtedness, who shall remain liable to Lender, and/or remain liable
to Lender, and/or of releasing any Collateral or other collateral that
is not expressly released by Lender.
Grantor additionally agrees that Lender's acceptance of payments other
than in accordance with the terms of any agreement, or agreements
governing repayment of the Indebtedness, or Lender's subsequent
agreement to extend or modify such repayment terms, shall likewise not
have the effect of releasing Grantor, and/or any other party or par-
ties guaranteeing payment of the Indebtedness, from their respective
obligations to Lender, and/or of releasing any of the Collateral or
other collateral directly or indirectly securing repayment of the
Indebtedness. In addition, no course of dealing between Grantor and
Lender, nor any failure or delay on the part of Lender to exercise any
of the rights and remedies granted to Lender under this Agreement, or
under any other agreement or agreements by and between Grantor and
Lender, shall have the effect of waiving any of Lender's rights and
remedies. Any partial exercise of any rights and remedies granted to
Lender shall furthermore not constitute a waiver of any of Lender's
other rights and remedies, it being Grantor's intent and agreement
that Lender's rights and remedies shall be cumulative in nature.
Grantor further agrees that, upon the occurrence of any Event of
Default under this Agreement, any waiver or forbearance on the part of
Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees
to any such waiver or forbearance in writing. A waiver or forbearance
as to one Event of Default shall not constitute a waiver of for-
bearance as to any other Event of Default. None of the warranties,
conditions, provisions and terms contained in this Agreement or any
other agreement, document, or instrument now or hereafter executed by
Grantor and delivered to Lender, shall be deemed to have been waived
by any act or knowledge of Lender, Lender's agents, officers or
employees; but only by an instrument in writing specifying such
waiver, signed by a duly authorized officer of Lender and delivered
to Grantor.
14. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Agreement:
14.1 Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of
the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought
to be charged or bound by the alteration or amendment.
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14.2 Applicable Law. This Agreement has been delivered to Lender
and accepted by Lender in the State of Louisiana. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Louisiana.
14.3 Expenses. Grantor agrees to pay upon demand all of Lender's
reasonable costs and expenses, including legal expenses, incurred
in connection with the enforcement of this Agreement. Lender may
pay someone else to help enforce this Agreement, and Grantor shall
pay the costs and expenses of such enforcement. Costs and expen-
ses include Lender's legal expenses whether or not there is a
lawsuit, including legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or
injunction), appeals and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such addi-
tional fees as may be directed by the court.
14.4 Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
14. 5 Notices. To give Grantor any notice required under this
Agreement, Lender may hand deliver or mail such notice to Grantor.
Lender will deliver or mail any notice to Grantor (or any of them
if more than one) at any address which Grantor may have given
Lender by written notice as provided in this paragraph. In the
event that there is more than one Grantor under this Agreement,
notice to a single Grantor shall be considered as notice to all
Grantors. To give Lender any notice under this Agreement, Grantor
(or any Grantor) shall mail the notice to Lender by registered or
certified mail at the address specified in this Agreement, or at
any other address that Lender may have given to Grantor (or any
Grantor) by written notice as provided in this paragraph. All
notices required or permitted under this Agreement must be in
writing and will be considered as given on the day it is delivered
by hand or deposited in the U.S. Mail, by registered or certified
mail to the address specified in this Agreement.
14.6 Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to
any person or circumstance, such finding shall not render that
provision invalid or unenforceable as to any other persons or cir-
cumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and
enforceable.
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14.7 Sole Discretion of Lender. Whenever Lender's consent or
approval is required under this Agreement, the decision as to
whether or not to consent or approve shall be in the sole and
exclusive discretion of Lender and Lender's decision shall be
final and conclusive.
14.8 Successors and Assigns Bound; Solidary Liability. Grantor's
obligations and agreements under this Agreement shall be binding
upon Grantor's successors, heirs, legatees, devisees, administra-
tors, executors and assigns. In the event that there is more than
one Grantor under this Agreement, all of the agreements and obli-
gations made and/or incurred by Grantors under this Agreement
shall be on a "solidary" or "joint and several" basis.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
APRIL 27, 1994.
GRANTOR:
MILLTENN, INC.
BY: /s/ WILLIAM S. HOWARD, SR.
_________________________
WILLIAM S. HOWARD, SR.
Its President
14/Pledge8.1-8.11
EXHIBIT NO. "D"
GUARANTY
Borrower: MILLTENN, INC.
Lender: CENTURY TELEPHONE ENTERPRISES, INC.
Guarantor: WILLIAM S. HOWARD, SR. and ANN A. HOWARD
1. AMOUNT OF GUARANTY. The principal amount of this Guaranty is
Twenty Five Million & 00/100 Dollars ($25,000,000.00) and the
amount of the Indebtedness.
DEFINITIONS. The following terms shall have the following
meanings when used in this Agreement:
2.1 Agreement. The word "Agreement" means this Guaranty
Agreement as this Agreement may be amended or modified from
time to time.
2.2 Borrower. The word "Borrower" means individually,
collectively and interchangeably MILLTENN, INC.
2.3 Guarantor. The word "Guarantor" means individually William
S. Howard, Sr. and/or Ann A. Howard, and all other persons
guaranteeing payment and satisfaction of Borrower's indebted-
ness hereinafter defined.
2.4 Indebtedness. The word "Indebtedness" means individually,
collectively, interchangeably and without limitation any and
all present and future loans, loan advances, extensions of
credit, obligations and/or liabilities that Borrower may now
and/or in the future owe to and/or incur in favor of Lender,
whether direct or indirect, or by way of assignment or
purchase or a participation interest, and whether absolute or
contingent, voluntary or involuntary, determined or undeter-
mined, liquidated or unliquidated, due or to become due,
secured or unsecured, and whether Borrower may be liable
individually, jointly or solidarily with others, whether pri-
marily or secondarily, or as a guarantor or otherwise, and
whether now existing or hereafter arising, of every nature
and kind whatsoever, all up to a maximum amount outstanding
from time to time, at any one or more times, not to exceed
U.S. $25,000,000.00, in principal plus and in addition
thereto interest, costs, expenses and attorneys' fees; and
all obligations under the Loan Agreement and Grant of Rights
of First Refusal to Acquire Assets and/or Capital Stock of
MillTenn, Inc. and its Subsidiaries between Lender, Borrower
and others dated April 27, 1994 (the "Loan Agreement").
2.5 Lender. The word "Lender" means CENTURY TELEPHONE
ENTERPRISES, INC., its successors and assigns, and any sub-
sequent holder or holders of Borrower's Indebtedness.
3. GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby
absolutely and unconditionally agrees to, and by these presents
does hereby, guarantee the prompt and punctual payment,
performance and satisfaction of any and all of Borrower's present
and future Indebtedness in favor of Lender.
4. CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY AGREEMENT
UNDER WHICH GUARANTOR AGREES TO GUARANTEE PAYMENT OF BORROWER'S
PRESENT AND FUTURE INDEBTEDNESS IN FAVOR OF LENDER ON A CONTINUING
BASIS. Guarantor's obligations and liability under this Agreement
shall be open and continuous in effect. Guarantor intends to and
does hereby guarantee at all times the prompt and punctual
payment, performance and satisfaction of all of Borrower's present
and future Indebtedness in favor of Lender up to the maximum
limitations set forth above. Accordingly, any payments made in
Borrower's Indebtedness will not discharge or diminish the
obligations and liability of Guarantor under this Agreement for
any remaining and succeeding Indebtedness of Borrower in favor of
Lender.
5. JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations
and liability under this Agreement shall be on a "solidary" or
"joint and several" basis along with Borrower to the same degree
and extent as if Guarantor had been and/or will be a co-borrower,
co-principal obligor and/or co-maker of Borrower's Indebtedness.
In the event that there is more than one Guarantor under this
Agreement, or in the event that there are other guarantors,
endorsers or sureties of all or any portion of Borrower's
Indebtedness, Guarantor's obligations and liability hereunder
shall further be on a "solidary" or "joint and several" basis
along with such other guarantors, endorsers and/or sureties.
6. DURATION OF GUARANTY. This Agreement and Guarantor's obligations
and liability hereunder shall remain in full force and effect
until such time as this Agreement may be canceled or otherwise
terminated by Lender under a written cancellation instrument in
favor of Guarantor. Lender shall execute such cancellation
instrument upon satisfaction of all obligations of Borrower under
the Note.
7. CANCELLATION OF AGREEMENT; EFFECT. Unless otherwise indicated
under such a written cancellation instrument, Lender's agreement
to terminate or otherwise cancel this Agreement shall affect only,
and shall be expressly limited to, Guarantor's continuing obliga-
tions and liability to guarantee borrower's Indebtedness incurred,
originated and/or extended (without prior commitment) after the
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date of such a written cancellation instrument; with Guarantor
remaining fully obligated and liable under this Agreement for any
and all of Borrower's Indebtedness incurred, originated, extended,
or committed to prior to the date of such a written cancellation
instrument. Nothing under this Agreement or under any other
agreement or understanding by and between Guarantor and Lender,
shall in any way obligate, or be construed to obligate, Lender to
agree to the subsequent termination or cancellation of Guarantor's
obligations and liability hereunder; it being fully understood and
agreed to by Guarantor that Lender has and intends to continue to
rely on Guarantor's assets, income and financial resources in
extending credit and other Indebtedness to and in favor of
Borrower, and that to release Guarantor from Guarantor's con-
tinuing obligations and liabilities under this Agreement would so
prejudice Lender that Lender may, within its sole and uncontrolled
discretion and judgment, refuse to release Guarantor from any of
its continuing obligations and liability under this Agreement for
any reason whatsoever as long as any of Borrower's Indebtedness
remains unpaid and outstanding.
8. DEFAULT. Should any event of default occur or exist under any of
Borrower's Indebtedness in favor of Lender, Guarantor
unconditionally and absolutely agrees to pay Lender the then
unpaid amount of Borrower's Indebtedness, in principal, interest,
costs, expenses, attorneys' fees and other fees and charges,
subject to the maximum principal dollar amount limitations set
forth above. Such payment or payments shall be made at Lender's
offices indicated below, immediately following demand by Lender.
9. GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness,
notice of dishonor and of nonpayment, notice of intention to
accelerate, notice of acceleration, protest and notice of
protest, collection or institution of any suit or other
action by Lender in collection thereof, including any notice
of default in payment thereof, or other notice to, or demand
for payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any
nonpayment relating to any collateral directly or indirectly
securing Borrower's Indebtedness, or notice of any action or
nonaction on the part of Borrower, Lender, or any other
guarantor, surety or endorser of Borrower's Indebtedness, or
notice of the creation of any new or additional Indebtedness
subject to this Agreement.
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(d) Any rights to demand or require collateral security from
the Borrower or any other person as provided under applicable
Louisiana law or otherwise.
(e) Any right to require Lender to notify Guarantor of the
terms, time and place of any public or private sale of any
collateral directly or indirectly securing Borrower's
Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other
law which may prevent Lender from bringing any action,
including a claim for deficiency, against Guarantor, before
or after Lender's commencement or completion of any
foreclosure action, or any action in lieu of foreclosure.
(g) Any election of remedies by Lender that may destroy or
impair Guarantor's subrogation rights or Guarantor's right to
proceed for reimbursement against Borrower or any other
guarantor, surety or endorser of Borrower's Indebtedness,
including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or
discharging Borrower's Indebtedness.
(h) Any disability or other defense of Borrower, or any
other guarantor, surety or endorser, or any other person, or
by reason of the cessation from any cause of whatsoever,
other than payment in full of Borrower's Indebtedness.
(i) Any statute of limitations or prescriptive period, if at
the time an action or suit brought by Lender against
Guarantor is commenced, there is any outstanding Indebtedness
of Borrower to Lender which is barred by any applicable
statute of limitations or prescriptive period.
Guarantor warrants and agrees that each of the waivers set forth
above is made with Guarantor's full knowledge of its significance
and consequences, and that, under the circumstances, such waivers
are reasonable and not contrary to public policy or law. If any
such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent
permitted by law.
10. GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that guarantor
should for any reason (a) advance or lend monies to Borrower,
whether or not such funds are used by Borrower to make payment(s)
under Borrower's Indebtedness, and/or (b) make any payment(s) to
Lender or others for and on behalf of Borrower under Borrower's
Indebtedness, and/or (c) make any payment to Lender in total or
partial satisfaction of Guarantor's obligations and liabilities
-4-
under this Agreement, and/or (d) if any of Guarantor's property is
used to pay or satisfy any of Borrower's Indebtedness, Guarantor
hereby agrees that any and all rights that Guarantor may have or
acquire to collect from or to be reimbursed by Borrower (or from
or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reim-
bursement arise by way of subrogation to the rights of Lender or
otherwise, shall in all respects, whether or not borrower is pre-
sently or subsequently becomes insolvent, be subordinate, inferior
and junior to the rights of Lender to collect and enforce payment,
performance and satisfaction of Borrower's then remaining
Indebtedness, until such time as Borrower's Indebtedness is fully
paid and satisfied. In the event of Borrower's insolvency or con-
sequent liquidation of Borrower's assets, through bankruptcy, by
an assignment for the benefit of creditors, by voluntary liquida-
tion, or otherwise, the assets of Borrower applicable to the
payment of claims of both Lender and Guarantor shall be paid to
Lender and shall be first applied by Lender to Borrower's then
remaining Indebtedness. Guarantor hereby assigns to Lender all
claims which it may have or acquire against Borrower or any
assignee or trustee of Borrower in bankruptcy; provided that, such
assignment shall be effective only for the purpose of assuring to
Lender full payment of Borrower's Indebtedness guaranteed under
this Agreement.
If now or hereafter (a) Borrower shall be or become insolvent, and
(b) Borrower's Indebtedness shall not at all times until paid be
fully secured by collateral pledged by Borrower, Guarantor hereby
forever waives and relinquishes in favor of Lender and Borrower,
and their respective successors, any claim or right to payment
Guarantor may now have or hereafter have or acquire against
Borrower, by subrogation or otherwise, so that at no time shall
Guarantor be or become a "creditor" of Borrower within the meaning
of 11 U.S.C. section 547(b), or any successor provision of the
federal bankruptcy laws.
11. GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to
refrain from attempting to collect and/or enforce any of
Guarantor's collection and/or reimbursement rights against
Borrower (or against any other guarantor, surety or endorser of
Borrower's Indebtedness), arising by way of subrogation or other-
wise, until such time as all of Borrower's then remaining
Indebtedness in favor of Lender is fully paid and satisfied, or
under the "insider" circumstances described above, until the thir-
teen (130 month) anniversary date following the full and final
payment and satisfaction of Borrower's Indebtedness. In the event
that Guarantor should for any reason whatsoever receive any
payment(s) from Borrower (or any other guarantor, surety or
endorser of Borrower's Indebtedness) that Borrower (or such a
third party) may owe to Guarantor for any of the reasons stated
-5-
above, Guarantor agrees to accept such payment(s) in trust for and
on behalf of Lender, advising Borrower (or the third party payee)
of such fact. Guarantor further unconditionally agrees to imme-
diately deliver such funds to Lender, with such funds being held
by Guarantor over any interim period, in trust for Lender. In the
event that Guarantor should for any reason whatsoever receive any
such funds from Borrower (or any third party), and Guarantor
should deposit such funds in one or more of Guarantor's deposit
accounts, no matter where located, Lender shall have the right to
attach any and all of Guarantor's deposit accounts in which such
funds were deposited, whether or not such funds were commingled
with other monies of Guarantor, and whether or not such fund then
remain on deposit in such an account or accounts. To this end and
to secure Guarantor's obligations under this Agreement, Guarantor
collaterally assigns and pledges to Lender, and grants to Lender a
continuing security interest in, any and all of Guarantor's pre-
sent and future rights, title and interest to and to all monies
that Guarantor may now and/or in the future maintain on deposit
with banks, savings and loan associations and other entities
(other than tax deferred accounts with Lender), in which Guarantor
may at any time deposit any such funds that may be received from
Borrower (or any other guarantor, endorser or surety of Borrower's
Indebtedness) in favor of Lender.
12. ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its
sole option, at any time, and from time to time, without the con-
sent of or notice to Guarantor, or any of them, or to any other
party, and without incurring any responsibility to Guarantor or to
any other party, and without impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to
Borrower.
(b) Discharge, release or agree not to sue any party
(including, but not limited to, Borrower or any other
guarantor, surety, or endorser of Borrower's Indebtedness),
who is or may be liable to lender for any of Borrower's
Indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or
otherwise deal with, in any manner and in any order, any
collateral directly or indirectly securing repayment of any
of Borrower's Indebtedness.
(d) Alter, renew, extend, accelerate, or otherwise change
the manner, place, terms and/or times of payment or other
terms of Borrower's Indebtedness, or any part thereof,
including any increase or decrease in the rate or rates of
interest on any of Borrower's Indebtedness.
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(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of
all or any part of Borrower's Indebtedness, or Lender's
security rights in any collateral directly or indirectly
securing any such Indebtedness, to the payment and/or
security rights of any other present and/or future creditors
of Borrower.
(g) Apply any payments and/or proceeds to any of Borrower's
Indebtedness in such priority or with such preferences as
Lender may determine in its sole discretion, regardless of
which of Borrower's Indebtedness then remains unpaid.
(h) Take or accept any other collateral security or guaranty
for any or all of Borrower's Indebtedness.
(i) Enter into, deliver, modify, amend, or waive compliance
with, any instrument or arrangement evidencing, securing or
otherwise affecting, all or any part of Borrower's
Indebtedness.
13. NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing
between Lender and Borrower (or any other guarantor, surety or
endorser of Borrower's Indebtedness), nor any failure or delay on
the part of Lender to exercise any of Lender's rights and remedies
under this Agreement or any other agreement or agreements by and
between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of impairing or releasing
Guarantor's obligations and liabilities to Lender, or of waiving
any of Lender's rights and remedies under this Agreement or
otherwise. Any partial exercise of any rights and remedies
granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; it being Guarantor's intent
and agreement that Lender's rights and remedies shall be
cumulative in nature. Guarantor further agrees that, should
Borrower default under any of its Indebtedness, any wavier or
forbearance on the part of Lender to pursue Lender's available
rights and remedies shall be binding upon Lender only to the
extent that Lender specifically agrees to such waiver or
forbearance in writing. A waiver or forbearance on the part of
Lender as to one event of default shall not constitute a waiver or
forbearance as to any other default.
14. NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities
under this Agreement shall not be released, impaired, reduced, or
otherwise affected by, and shall continue in full force and effect
notwithstanding the occurrence of any event, including without
limitation any one or more of the following events:
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(a) The death, insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation, disability,
dissolution, or lack of authority (whether corporate,
partnership or trust) of Borrower (or any person acting on
Borrower's behalf), or of any other guarantor, surety or
endorser of Borrower's Indebtedness.
(b) Any payment by Borrower, or any other party, to Lender
that is held to constitute a preferential transfer or a
fraudulent conveyance under any applicable law, or any such
amounts or payment which, for any reason, Lender is required
to refund or repay to Borrower or to any other person.
(c) Any dissolution by Borrower, or any sale, lease or
transfer of all or any part of Borrower's assets.
(d) Any failure of Lender to notify Guarantor of the making
of additional loans or other extensions of credit in reliance
on this Agreement.
15. AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's
obligations and liabilities hereunder shall continue to be
effective, and/or shall automatically and retroactively be
reinstated, if a release or discharge has occurred, or if at any
time, any payment or part thereof to Lender with respect to any of
Borrower's Indebtedness, is rescinded or must otherwise be
restored by Lender pursuant to any insolvency, bankruptcy,
reorganization, receivership, or any other debt relief granted to
Borrower or to any other party to Borrower's Indebtedness or any
such security therefor. In the event that Lender must rescind or
restore any payment received in total or partial satisfaction of
Borrower's Indebtedness, any prior release or discharge from the
terms of this Agreement given to Guarantor shall be without
effect, and this Agreement and Guarantor's obligations and
liabilities hereunder shall automatically and retroactively
renewed and/or reinstated and shall remain in full force and
effect to the same degree and extent as if such a release or
discharge had never been granted. It is the intention of Lender
and Guarantor that Guarantor's obligations and liabilities
hereunder shall not be discharged except by Guarantor's full and
complete performance and satisfaction of such obligations and
liabilities; and then only to the extent of such performance.
16. REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents
and warrants that:
(a) Guarantor has the lawful power to own its properties and
to engage in its business as presently conducted.
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(b) Guarantor's guaranty of Borrower's Indebtedness and
Guarantor's execution, delivery and performance of this
Agreement are not in violation of any laws and will not
result in a default under any contract, agreement, or
instrument to which Guarantor is a party, or by which
Guarantor or its property may be bound.
(c) Guarantor has agreed and consented to execute this
Agreement and to guarantee Borrower's Indebtedness in favor
of Lender, at Borrower's request and not at the request of
Lender.
(d) Guarantor will receive and/or has received a direct or
indirect material benefit from the transactions contemplated
herein and/or arising out of Borrower's Indebtedness.
(e) This Agreement, when executed and deliver to Lender,
will constitute a valid, legal and binding obligation of
Guarantor, enforceable in accordance with its terms.
(f) Guarantor has established adequate means of obtaining
information from Borrower on a continuing basis regarding
Borrower's financial condition.
(g) Lender has made no representations to Guarantor as to
the creditworthiness of Borrower.
17. ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement
remains in effect, Guarantor has not and will not, without
Lender's prior written consent, sell, lease, assign, pledge,
hypothecate, encumber, transfer, or otherwise dispose of all or
substantially all of Guarantor's assets. Guarantor agrees to keep
Lender adequately informed of any facts, events or circumstances
which might in any way affect Guarantor's risks under this
Agreement. Guarantor further agrees that Lender shall have no
obligation to communicate to Guarantor any information or material
relating to Borrower or Borrower's Indebtedness.
18. ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable
request of Lender, Guarantor will, at any time, and from time to
time, execute and deliver to lender any and all such financial
instruments and documents, and supply such additional information,
as may be necessary or advisable in the opinion of Lender to
obtain the full benefits of this Agreement. Guarantor further
agrees to provide Lender with such financial statements and other
related information at such frequencies and in such detail as
Lender may reasonably request.
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19. TRANSFER OF INDEBTEDNESS. This Agreement is for the benefit of
Lender and for such other person or persons as may from time to
time become or be the holders of all or any part of Borrower's
Indebtedness. This Agreement shall be transferable and
negotiable with the same force and effect and to the same extent
as Borrower's Indebtedness may be transferable; it being
understood and agreed to by Guarantor that, upon any transfer or
assignment of all or any part of Borrower's Indebtedness, the
holder of such Indebtedness shall have all of the rights and
remedies granted to Lender under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of
Borrower's Indebtedness, Lender may transfer and deliver any and
all collateral securing repayment of such Indebtedness (including,
but not limited to, any collateral provided by Guarantor) to the
transferee of such Indebtedness, and such collateral shall secure
any and all of Borrower's Indebtedness in favor of such a
transferee. Guarantor additionally agrees that, after any such
transfer or assignment has taken place, Lender shall be fully
discharged from any and all liability and responsibility to
Borrower and Guarantor with respect to such collateral, and the
transferee thereafter shall be vested with all the powers and
rights with respect to such collateral.
20. CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that
Lender may, from time to time, one or more times, transfer all or
any part of Borrower's Indebtedness through sales of participation
interests in such Indebtedness to one or more third party lenders.
Guarantor specifically agrees and consents to all such transfers
and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under
Louisiana law. Guarantor additionally agrees that the purchaser
of a participation interest in Borrower's Indebtedness will be
considered as the absolute owner of a percentage interest of such
Indebtedness and that such a purchaser will have all of the rights
granted under any participation agreement governing the sale of
such a participation interest. Guarantor waives any rights of
offset that Guarantor may have against Lender and/or any purchaser
of such a participation interest, and Guarantor unconditionally
agrees that either Lender or such a purchaser may enforce
Guarantor's obligations and liabilities under this Agreement,
irrespective of the failure or insolvency of Lender or any such
purchaser.
21. NOTICES. Any notice provided in this Agreement must be in writing
and will be considered as given on the day it is delivered by hand
or deposited in the U.S. mail, postage prepaid, addressed to the
person to whom the notice is to be given at the address shown
above or at such other addresses as any party may designate to the
other in writing. If there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all
Guarantors.
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22. ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that
Guarantor may have previously granted, and may in the future
grant, one or more additional guaranties of Borrower's
Indebtedness in favor of Lender. Should this occur, the execution
of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this
Agreement or any of Guarantor's additional guaranties; it being
Guarantor's full intent and agreement that all such guaranties of
Borrower's Indebtedness in favor of Lender shall remain in full
force and effect and shall be cumulative in nature and effect.
23. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Guaranty:
23.1 Amendment. No amendment, modification, consent or waiver of
any provision of this Agreement, and no consent to any
departure by Guarantor therefrom, shall be effective unless
the same shall be in writing signed by a duly authorized
officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which
given.
23.2 Caption Headings. Caption headings of the sections of this
Agreement are for convenience purposes only and are not to be
used to interpret or the define their provisions. In this
Agreement, whenever the context so requires, the singular
includes the plural and the plural also includes the
singular.
23.3 Governing Law. This Agreement shall be governed and
construed in accordance with the substantive laws of the
State of Louisiana.
23.4 Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future
laws effective during the term hereof, such provision shall
be fully severable. This Agreement shall be construed and
enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining
provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically
as a part of this Agreement, a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be
possible and legal, valid and enforceable.
-11-
23. 5 Successors and Assigns Bound. Guarantor's obligations and
liabilities under this Agreement shall be binding upon
Guarantor's successors, heirs, legatees, devisees,
administrators, executors and assigns.
23.6 This Guaranty is executed pursuant to the provisions of
Article III of the Loan Agreement and shall be subject to the
terms thereof.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS
OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR
UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION
AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL
CONTINUE UNTIL TERMINATED. NO FORMAL ACCEPTANCE BY LENDER IS
NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED
APRIL 27, 1994.
GUARANTORS:
/s/ WILLIAM S. HOWARD, SR.
x ______________________
WILLIAM S. HOWARD, SR.
/s/ ANN A. HOWARD
x ______________________
ANN A. HOWARD
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C/GUAR2.1-2.12
EXHIBIT NO. "E"
PLEDGE AGREEMENT
BORROWER: MILLTENN, INC.
LENDER: CENTURY TELEPHONE ENTERPRISES, INC.
100 Century Park Drive
Monroe, LA 71203
THIS PLEDGE AGREEMENT is entered into between MILLINGTON TELEPHONE
COMPANY (referred to below as "Grantor"); and CENTURY TELEPHONE
ENTERPRISES, INC. (referred to below as "Lender"). This Pledge
Agreement is given pursuant to Article III of Loan Agreement and Grant
of Rights of First Refusal to Acquire Assets and/or Capital Stock of
MillTenn, Inc. and its Subsidiaries dated April 27, 1994 between
Borrower, Lender and others (the "Loan Agreement").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor
grants to Lender a continuing security interest in the Collateral to
secure the Indebtedness and agrees that Lender shall have the rights
stated in this Agreement with respect to the Collateral, in addition
to all other rights which Lender may have by law.
1. DEFINITIONS. The following words shall have the following
meanings when used in this Agreement.
1.1 Agreement. The word "Agreement" means this Pledge Agreement,
as this Pledge Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached or to be
attached to this Pledge Agreement from time to time.
1.2 Collateral. The word "Collateral, means individually,
collectively and interchangeably Grantor's present and future
rights, title and interest in and to the following, together with
any and all present and future additions thereto, substitutions
therefore, and replacements thereof, and further together with all
income and Proceeds as described below:
Certificates of Stock #1, issued by Big Creek Financial,
Inc., in the name of Grantor, representing 100 (100%) shares
of stock.
Certificates of Stock #1, issued by Mill-Comm Associates,
Inc., in the name of Grantor, representing 1,000 (100%)
shares of stock.
1.3 Encumbrances. The word "Encumbrances" means individually,
collectively and interchangeably any and all presently existing
and/or future mortgages, liens, privileges and other contractual
and/or statutory security interests and rights of every nature and
kind that, now and/or in the future, may affect the Collateral or
any part or parts thereof.
1.4 Event of Default. The words "Event of Default" mean indivi-
dually, collectively, and interchangeably any of the Events of
Default set forth below in the section titled "Events of Default".
1.5 Grantor. The word "Grantor" means individually, collec-
tively and interchangeably MILLTENN, INC., its successors and
assigns.
1.6 Guarantor. The word "Guarantor" means and includes indivi-
dually, collectively, interchangeably and without limitation, each
and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
1.7 Income and Proceeds. The words "Income and Proceeds" mean
dividends or other similar payments, stock splits, bonuses or
other type of payments or liquidation payments.
1.8 Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note, in principal, interest, costs, expenses and
attorneys, fees and all other fees and charges, together with all
other indebtedness and costs and expenses for which Grantor is
responsible under this Agreement or under any of the Related
Documents.
1.9 Lender. The word "Lender" means CENTURY TELEPHONE
ENTERPRISES, INC., its successors and assigns, and any subsequent
holder or holders of the Note, or any interest therein.
1.10 Note. The word "Note" means the note or credit agreement
dated April 27, 1994, in the principal amount of $25,000,000.00
from Grantor to Lender, together with all substitute or replace-
ment notes therefor, as well as all renewals, extensions, modifi-
cations, refinancings, consolidations and substitutions of and for
the note or credit agreement.
1.11 Obligor. The word "Obligor", means and includes individually,
collectively and interchangeably without limitation any and all
persons or entities obligated to pay money or to perform some
other act under the Collateral.
1.12 Related Documents. The words "Related Documents" mean and
include individually, collectively, interchangeably and without
limitation all promissory notes, credit agreements, loan
agreements, guaranties, security agreements, mortgages, collateral
mortgages, deeds of trust, and all other instruments, agreements
and documents, whether now or hereafter existing, executed in con-
nection with the Indebtedness, including the Loan Agreement.
-2-
2. DELIVERY OF COLLATERAL. Contemporaneous with the execution of
this Agreement, Grantor has delivered or will deliver to Lender or
Lender's designated agent the above described Collateral. As long as
this Agreement remains in effect, Grantor further agrees to imme-
diately deliver to Lender, or Lender's designated agent, any and all
additions to and/or substitutions or replacements for the Collateral.
In the event that Grantor is unable to deliver any of the Collateral
to Lender or Lender's designated agent at the time this Agreement is
executed, or should Grantor ever withdraw or obtain temporary
possession of any of the Collateral while this Agreement remains in
effect, either under a trust receipt or otherwise, Grantor
unconditionally agrees to deliver immediately to Lender the
Collateral or, alternatively, such substitute or replacement colla-
teral security as may then be satisfactory to Lender.
3. DURATION. This Agreement shall remain in full force and effect
until such time as this Agreement and the security interests created
hereby are terminated and canceled by Lender under a written can-
cellation instrument in favor of Grantor which shall be executed upon
satisfaction of all obligations of Borrower under the Note.
4. GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
COLLATERAL. Grantor represents and warrants to Lender that:
4.1 Ownership. Grantor at all times will continue to be the
legal and lawful owner of the Collateral free and clear of all
security interests, liens, encumbrances and claims of others
except as disclosed to and accepted by Lender in writing prior to
execution of this Agreement.
4.2 Right to Pledge. Grantor has the right, power and authority
to enter into this Agreement and to grant a continuing security
interest in the Collateral in favor of Lender.
4.3 Authorization. Grantor's execution, delivery and performance
of this Agreement have been duly authorized, and do not conflict
with, and will not result in a violation of, or constitute or give
rise to an event of default under Grantor's Articles of
Incorporation or Bylaws, or any agreement or other instrument
which may be binding upon Grantor, or under any law or governmen-
tal regulation or court decree or order applicable to Grantor
and/or Grantor's properties.
4.4 Perfection of Security Interest. Upon delivery of the
Collateral to Lender, this Agreement shall create a valid first
lien upon, and perfect a security interest in the Collateral sub-
ject to no prior security interest,lien, charge, Encumbrance or
other agreement purporting to grant to any third party a security
interest in the Collateral.
-3-
4.5 Binding Effect. This Agreement is binding upon Grantor, as
well as Grantor's heirs, successors, representatives and assigns,
and is legally enforceable in accordance with its terms.
4.6 No Further Assignment. Grantor has not, and will not, sell,
assign, transfer, encumber or otherwise dispose of any of
Grantor's rights in the Collateral except as provided in this
Agreement.
4.7 No Defaults. Except as set forth in the Loan Agreement,
there are no defaults existing under the Collateral, and there are
no offsets or counterclaims to the same. Grantor will strictly
and promptly perform each of the terms, conditions, covenants and
agreements contained in the Collateral which are to be performed
by Grantor if any.
4.8 No Violation. The execution and delivery of this Agreement
will not violate any law or agreement governing Grantor or to
which Grantor is a party, and its certificate or articles of
incorporation and bylaws do not prohibit any term or condition of
this Agreement.
4.9 Survivorship of Representations and Warranties. The
foregoing representations and warranties and all other represen-
tations and warranties of Grantor under this Agreement shall be
continuing in nature and shall survive as provided in the Loan
Agreement.
5. LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL.
Lender shall have the following rights in addition to all other rights
it may have by law:
5.1 Maintenance and Protection of Collateral. Lender may, but
shall not be obligated to, take such steps as it deems necessary
or desirable to protect, maintain, insure, store, or care for the
Collateral, including payment of any liens or claims against the
Collateral. Lender may charge any cost incurred in so doing to
Grantor.
5.2 Income and Proceeds from the Collateral. Lender shall have
the right, whether or not an Event of Default exists under this
Agreement, to directly collect and receive any and all Income and
Proceeds as such become due and payable. In order to permit the
foregoing, Grantor unconditionally agrees to deliver to Lender,
immediately following demand, any and all such Income and Proceeds
that may be received by or that may be payable to Grantor.
Grantor further unconditionally agrees that Lender shall have the
right to notify all other obligors to pay and/or deliver such
Income and Proceeds directly to Lender or Lender's nominee at an
address to be designated by Lender, and to do any and all other
-4-
things as Lender may deem necessary and proper, within Lender's
sole discretion, to carry out the terms and intent of this
Agreement. Lender shall have the further right, where
appropriate, and within Lender's sole discretion, to file suit
either in Lender's own name or in the name of Grantor, to collect
and/or enforce performance, payment and/or delivery of any and all
such Income and Proceeds.
Where it is necessary for Lender to enforce performance, payment
and/or delivery of any such Income and Proceeds from the Obligor
therefor, Grantor unconditionally agrees that Lender may compro-
mise or take such other actions, either in Grantor's name or in
the name of Lender, as Lender may deem appropriate, within
Lender's sole judgment, with regard to performance, collection
and/or payment of the same, without affecting the obligations and
liabilities of Grantor under this Agreement and/or any
Indebtedness secured hereby. In order to further permit the
foregoing, Grantor agrees that Lender shall have the additional
irrevocable rights, coupled with an interest, to: (a) receive,
open and dispose of all mail addressed to Grantor pertaining to
any of the Collateral; (b) notify the postal authorities to change
the address and delivery of mail addressed to Grantor pertaining
to any of the Collateral to such address as Lender may designate;
and (c) endorse Grantor's name on any and all notes, acceptances,
checks, drafts, money orders or other instruments of payment of
such Income and Proceeds that may come into Lender's possession,
and to deposit or otherwise collect the same, applying such funds
to the unpaid balance of the Indebtedness in the manner provided
below.
In the event that Grantor should, for any reason, receive any
Income and Proceeds subject to this Agreement, and Grantor should
deposit such funds into one or more of Grantor's deposit accounts,
no matter where located, Lender shall have the additional right
following any Event of Default under this Agreement, to attach any
and all of Grantor's deposit accounts in which such funds may have
been deposited, whether or not any such funds were commingled with
other funds of Grantor, and whether or not any such funds then
remain on deposit in such an account or accounts. To this end,
Grantor additionally collaterally assigns and pledges to Lender
and grants to Lender a continuing security interest in and to any
and all of Grantor's present and future rights, title and interest
in and to any and all funds that Grantor may now and/or in the
future maintain on deposit with banks, savings and loan asso-
ciations and other financial institutions, as well as money
market accounts with other types of entities, in which Grantor at
any time may deposit any such Income and Proceeds.
-5-
5.3 Application of Cash. At Lender's option, Lender may apply
any cash, whether included in the Collateral or received as Income
and Proceeds or through liquidation, sale, or retirement, of the
Collateral, to the satisfaction of the Indebtedness or such por-
tion thereof as Lender shall choose, whether or not matured.
Lender may alternatively and at its sole option and election hold
such cash as additional "cash collateral" to secure the
Indebtedness.
5.4 Transactions with others. Lender may (a) extend time for
payment or other performance, (b) grant a renewal or change in
terms or conditions, or (c) compromise, compound or release any
obligation, with any one or more obligors, endorsers, or
Guarantors of the Indebtedness as Lender deems advisable, without
obtaining the prior written consent of Grantor, and no such act or
failure to act shall affect Lender's rights against Grantor or the
Collateral.
5.5 All Collateral Secures Indebtedness. All Collateral shall be
security for the Indebtedness, whether the Collateral is located
at one or more offices or branches of Lender and whether or not
the office or branch where the Indebtedness is created is aware of
or relies upon the Collateral.
6. EXPENDITURES BY LENDER. Grantor recognizes and agrees that Lender
may incur certain expenses in connection with Lender's exercise of
rights under this Agreement. If not discharged or paid when due,
Lender may (but shall not be obligated to) discharge or pay any
amounts required to be discharged or paid by Grantor under this
Agreement, including without limitation all taxes, Encumbrances and
other claims, at any time levied or placed on the Collateral. Lender
also may (but shall not be obligated to) pay all costs for insuring,
maintaining and preserving the Collateral, including without limita-
tion, the purchase of insurance protecting only Lender's interest in
the Collateral. Lender may further take such other action or actions
and incur such additional expenditures as Lender may deem to be
necessary and proper to cure or rectify any actions or inactions on
Grantor's part as may be required under this Agreement. Nothing under
this Agreement or otherwise shall obligate Lender to take any such
actions or to incur any such additional expenditures on Grantor's
behalf, or as making Lender in any way responsible or liable for any
loss, damage, or injury to the Collateral, to Grantor, or to any other
person or persons, resulting from Lender's election not to take such
actions or to incur such additional expenses. In addition, Lender's
election to take any such actions or to incur such additional expen-
ditures shall not constitute a waiver or forbearance by Lender of any
Event of Default under this Agreement. All such expenditures incurred
or paid by Lender for such purposes will then bear interest at the
-6-
rate charged under the Note from the date incurred or paid by Lender
to the date of repayment. All such expenses shall become a part of
the Indebtedness and, at Lender's option, will (a) be payable on
demand, (b) be added to the balance of the Note and be apportioned
among and be payable with any payments to become due during either (i)
the terms of any applicable insurance policy or (ii) the remaining
term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will
secure payment of these amounts. Such right shall be in addition to
all other rights and remedies to which Lender may be entitled upon the
occurrence of an Event of Default.
7. LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary
reasonable care in the physical preservation and custody of the
Collateral in Lender's possession, but shall have no other obligation
to protect the Collateral or its value. In particular, but without
limitation, Lender shall have no responsibility for (a) any depre-
ciation in value of the Collateral or for the collection or protection
of any Income and Proceeds from the Collateral, (b) preservation of
rights against parties to the Collateral or against third persons, (c)
ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any of the Collateral, or (c)
informing Grantor about any of the above, whether or not Lender has or
is deemed to have knowledge of such matters. Except as provided
above, Lender shall have no liability for depreciation or deteriora-
tion of the Collateral.
8. EVENTS OF DEFAULT. The following actions or inactions or both
shall constitute Events of Default under this Agreement:
The occurrence of any Even of Default as specified in Sections
9.02 through 9.05 of the Loan Agreement.
9. RIGHTS AND REMEDIES ON DEFAULT. In an Event of Default occurs
under this Agreement, at any time thereafter, Lender may exercise any
one or more of the following rights and remedies.
All rights or remedies specified in Article IX of the Loan
Agreement.
10. ASSIGNMENT OF INDEBTEDNESS; TRANSFER OF COLLATERAL. Grantor
hereby recognizes and agrees that Lender may assign all or any portion
of the Indebtedness to be one or more third party creditors. Such
transfers may include, but are not limited to, sales of participation
interests in the Indebtedness. Grantor specifically agrees and con-
sents to all such transfers and assignments and further waives any
subsequent notice of such transfers or assignments as may be provided
under applicable Louisiana law. Grantor additionally agrees that any
and all of Grantor's other and future loans, extensions of credit,
-7-
liabilities and obligations in favor of such a third party assignee
will be secured by the Collateral. Grantor further agrees that Lender
may transfer all or any portion of the Collateral to such third party
assignee, in which case Lender will be fully released from any and all
of Lender's obligations and responsibilities to Grantor with regard to
the transferred Collateral. Any third party creditor to whom the
Collateral is transferred will acquire all of Lender's rights and
powers with respect to the transferred Collateral, with Lender
retaining all powers and rights with regard to any of the Collateral
which is not transferred to another party.
11. PROTECTION OF LENDER'S SECURITY RIGHTS. Grantor agrees to appear
in and to defend all actions or proceedings purporting to affect
Lender's security rights and interests granted under this Agreement.
In the event that Lender elects to defend any such action or pro-
ceeding, Grantor agrees to reimburse Lender for Lender's costs asso-
ciated therewith, including without limitation, Lender's attorneys,
fees, which additional costs and expenses shall be secured by this
Agreement.
12. INDEMNIFICATION OF LENDER. Grantor agrees to indemnify, to defend
and to save and hold Lender harmless from any and all claims, suits,
obligations, damages, losses, costs, expenses (including without limi-
tation, Lender's reasonable attorneys, fees), demands, liabilities,
penalties, fines and forfeitures of any nature whatsoever which may be
asserted against or incurred by Lender, arising out of or in any
manner occasioned by this Agreement or the rights and remedies granted
to Lender hereunder. The foregoing indemnity provision shall survive
the cancellation of this Agreement as to all matters arising or
accruing prior to such cancellation, and the foregoing indemnity pro-
vision shall further survive in the event that Lender elects to exer-
cise any of the remedies as provided under this Agreement following
any Event of Default hereunder.
13. EFFECT OF WAIVERS. Grantor has waived, and/or does by these pre-
sents waive, presentment for payment, protest, notice of protest and
notice of nonpayment under all of the Indebtedness secured by this
Agreement. Grantor has further waived, and/or does by these presents
waive, all pleas of division and discussion, and all similar rights
with regard to the Indebtedness, and agrees that Grantor shall remain
liable, together with any and all Guarantors of the Indebtedness, on a
"solidary" or "joint and several" basis. Grantor further agrees that
discharge or release of any party who is, may, or will be liable to
Lender under any of the Indebtedness, or the release of the Collateral
or any other collateral directly or indirectly securing repayment of
the same, shall not have the effect of releasing or otherwise dimi-
nishing or reducing the actual or potential liability of Grantor
and/or any other party or parties guaranteeing payment of the
-8-
Indebtedness, who shall remain liable to Lender, and/or remain liable
to Lender, and/or of releasing any Collateral or other collateral that
is not expressly released by Lender.
Grantor additionally agrees that Lender's acceptance of payments other
than in accordance with the terms of any agreement, or agreements
governing repayment of the Indebtedness, or Lender's subsequent
agreement to extend or modify such repayment terms, shall likewise not
have the effect of releasing Grantor, and/or any other party or par-
ties guaranteeing payment of the Indebtedness, from their respective
obligations to Lender, and/or of releasing any of the Collateral or
other collateral directly or indirectly securing repayment of the
Indebtedness. In addition, no course of dealing between Grantor and
Lender, nor any failure or delay on the part of Lender to exercise any
of the rights and remedies granted to Lender under this Agreement, or
under any other agreement or agreements by and between Grantor and
Lender, shall have the effect of waving any of Lender's rights and
remedies. Any partial exercise of any rights and remedies granted to
Lender shall furthermore not constitute a waiver of any of Lender's
other rights and remedies, it being Grantor's intent and agreement
that Lender's rights and remedies shall be cumulative in nature.
Grantor further agrees that, upon the occurrence of any Event of
Default under this Agreement, any waiver or forbearance on the part of
Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees
to any such waiver or forbearance in writing. A waiver or forbearance
as to one Event of Default shall not constitute a waiver of for-
bearance as to any other Event of Default. None of the warranties,
conditions, provisions and terms contained in this Agreement or any
other agreement, document, or instrument now or hereafter executed by
Grantor and delivered to Lender, shall be deemed to have been waived
by any act or knowledge of Lender, Lender's agents, officers or
employees; but only by an instrument in writing specifying such
waiver, signed by a duly authorized officer of Lender and delivered
to Grantor.
14. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Agreement:
14.1 Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of
the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought
to be charged or bound by the alteration or amendment.
-9-
14.2 Applicable Law. This Agreement has been delivered to Lender
and accepted by Lender in the State of Louisiana. This Agreement
shall be governed by and construed in accordance with the laws of
the State of Louisiana.
14.3 Expenses. Grantor agrees to pay upon demand all of Lender's
reasonable costs and expenses, including legal expenses, incurred
in connection with the enforcement of this Agreement. Lender may
pay someone else to help enforce this Agreement, and Grantor shall
pay the costs and expenses of such enforcement. Costs and expen-
ses include Lender's legal expenses whether or not there is a
lawsuit, including legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or
injunction), appeals and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such addi-
tional fees as may be directed by the court.
14.4 Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
14.5 Notices. To give Grantor any notice required under this
Agreement, Lender may hand deliver or mail such notice to Grantor.
Lender will deliver or mail any notice to Grantor (or any of them
if more than one) at any address which Grantor may have given
Lender by written notice as provided in this paragraph. In the
event that there is more than one Grantor under this Agreement,
notice to a single Grantor shall be considered as notice to all
Grantors. To give Lender any notice under this Agreement, Grantor
(or any Grantor) shall mail the notice to Lender by registered or
certified mail at the address specified in this Agreement, or at
any other address that Lender may have given to Grantor (or any
Grantor) by written notice as provided in this paragraph. All
notices required or permitted under this Agreement must be in
writing and will be considered as given on the day it is delivered
by hand or deposited in the U.S. mail, by registered or certified
mail to the address specified in this Agreement.
14.6 Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to
any person or circumstance, such finding shall not render that
provision invalid or unenforceable as to any other persons or cir-
cumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and
enforceable.
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14.7 Sole Discretion of Leader. Whenever Lender's consent or
approval is required under this Agreement, the decision as to
whether or not to consent or approve shall be in the sole and
exclusive discretion of Lender and Lender's decision shall be
final and conclusive.
14.8 Successors and Assigns Bound; Solidary Liability. Grantor's
obligations and agreements under this Agreement shall be binding
upon Grantor's successors, heirs, legatees, devisees, administra-
tors, executors and assigns. In the event that there is more than
one Grantor under this Agreement, all of the agreements and obli-
gations made and/or incurred by Grantors under this Agreement
shall be on a "solidary" or "joint and several" basis.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
APRIL 27, 1994.
GRANTOR:
MILLINGTON TELEPHONE COMPANY
BY: /s/ WILLIAM S. HOWARD, SR.
______________________
WILLIAM S. HOWARD, SR.
Its President
14/Pledge9.1-9.11
EXHIBIT NO. "F"
GUARANTY
Borrower: MILLTENN, INC.
Lender: CENTURY TELEPHONE ENTERPRISES, INC.
Guarantor: MILLINGTON TELEPHONE COMPANY
1. AMOUNT OF GUARANTY. The principal amount of this Guaranty is
Twenty Five Million & 00/100 Dollars ($25,000,000.00) and the
amount of the Indebtedness.
DEFINITIONS. The following terms shall have the following
meanings when used in this Agreement:
2.1 Agreement. The word "Agreement" means this Guaranty
Agreement as this Agreement may be amended or modified from
time to time.
2.2 Borrower. The word "Borrower" means individually,
collectively and interchangeably MILLTENN, INC.
2.3 Guarantor. The word "Guarantor" means individually
Millington Telephone Company, and all other persons
guaranteeing payment and satisfaction of Borrower's indebted-
ness hereinafter defined.
2.4 Indebtedness. The word "Indebtedness" means individually,
collectively, interchangeably and without limitation any and
all present and future loans, loan advances, extensions of
credit, obligations and/or liabilities that Borrower may now
and/or in the future owe to and/or incur in favor of Lender,
whether direct or indirect, or by way of assignment or
purchase or a participation interest, and whether absolute or
contingent, voluntary or involuntary, determined or undeter-
mined, liquidated or unliquidated, due or to become due,
secured or unsecured, and whether Borrower may be liable
individually, jointly or solidarily with others, whether pri-
marily or secondarily, or as a guarantor or otherwise, and
whether now existing or hereafter arising, of every nature
and kind whatsoever, all up to a maximum amount outstanding
from time to time, at any one or more times, not to exceed
U.S. $25,000,000.00, in principal plus and in addition
thereto interest, costs, expenses and attorneys' fees; and
all obligations under the Loan Agreement and Grant of Rights
of First Refusal to Acquire Assets and/or Capital Stock of
MillTenn, Inc. and its Subsidiaries between Lender, Borrower
and others dated April 27, 1994 (the "Loan Agreement").
2.5 Lender. The word "Lender" means CENTURY TELEPHONE
ENTERPRISES, INC., its successors and assigns, and any sub-
sequent holder or holders of Borrower's Indebtedness.
3. GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby
absolutely and unconditionally agrees to, and by these presents
does hereby, guarantee the prompt and punctual payment,
performance and satisfaction of any and all of Borrower's present
and future Indebtedness in favor of Lender.
4. CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY AGREEMENT
UNDER WHICH GUARANTOR AGREES TO GUARANTEE PAYMENT OF BORROWER'S
PRESENT AND FUTURE INDEBTEDNESS IN FAVOR OF LENDER ON A CONTINUING
BASIS. Guarantor's obligations and liability under this Agreement
shall be open and continuous in effect. Guarantor intends to and
does hereby guarantee at all times the prompt and punctual
payment, performance and satisfaction of all of Borrower's present
and future Indebtedness in favor of Lender up to the maximum
limitations set forth above. Accordingly, any payments made in
Borrower's Indebtedness will not discharge or diminish the
obligations and liability of Guarantor under this Agreement for
any remaining and succeeding Indebtedness of Borrower in favor of
Lender.
5. JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations
and liability under this Agreement shall be on a "solidary" or
"joint and several" basis along with Borrower to the same degree
and extent as if Guarantor had been and/or will be a co-borrower,
co-principal obligor and/or co-maker of Borrower's Indebtedness.
In the event that there is more than one Guarantor under this
Agreement, or in the event that there are other guarantors,
endorsers or sureties of all or any portion of Borrower's
Indebtedness, Guarantor's obligations and liability hereunder
shall further be on a "solidary" or "joint and several" basis
along with such other guarantors, endorsers and/or sureties.
6. DURATION OF GUARANTY. This Agreement and Guarantor's obligations
and liability hereunder shall remain in full force and effect
until such time as this Agreement may be canceled or otherwise
terminated by Lender under a written cancellation instrument in
favor of Guarantor. Lender shall execute such cancellation
instrument upon satisfaction of all obligations of Borrower under
the Note.
7. CANCELLATION OF AGREEMENT; EFFECT. Unless otherwise indicated
under such a written cancellation instrument, Lender's agreement
to terminate or otherwise cancel this Agreement shall affect only,
and shall be expressly limited to, Guarantor's continuing obliga-
tions and liability to guarantee Borrower's Indebtedness incurred,
originated and/or extended (without prior commitment) after the
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date of such a written cancellation instrument; with Guarantor
remaining fully obligated and liable under this Agreement for any
and all of Borrower's Indebtedness incurred, originated, extended,
or committed to prior to the date of such a written cancellation
instrument. Nothing under this Agreement or under any other
agreement or understanding by and between Guarantor and Lender,
shall in any way obligate, or be construed to obligate, Lender to
agree to the subsequent termination or cancellation of Guarantor's
obligations and liability hereunder; it being fully understood and
agreed to by Guarantor that Lender has and intends to continue to
rely on Guarantor's assets, income and financial resources in
extending credit and other Indebtedness to and in favor of
Borrower, and that to release Guarantor from Guarantor's con-
tinuing obligations and liabilities under this Agreement would so
prejudice Lender that Lender may, within its sole and uncontrolled
discretion and judgment, refuse to release Guarantor from any of
its continuing obligations and liability under this Agreement for
any reason whatsoever as long as any of Borrower's Indebtedness
remains unpaid and outstanding.
8. DEFAULT. Should any event of default occur or exist under any of
Borrower's Indebtedness in favor of Lender, Guarantor
unconditionally and absolutely agrees to pay Lender the then
unpaid amount of Borrower's Indebtedness, in principal, interest,
costs, expenses, attorneys' fees and other fees and charges,
subject to the maximum principal dollar amount limitations set
forth above. Such payment or payments shall be made at Lender's
offices indicated below, immediately following demand by Lender.
9. GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness,
notice of dishonor and of nonpayment, notice of intention to
accelerate, notice of acceleration, protest and notice of
protest, collection or institution of any suit or other
action by Lender in collection thereof, including any notice
of default in payment thereof, or other notice to, or demand
for payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any
nonpayment relating to any collateral directly or indirectly
securing Borrower's Indebtedness, or notice of any action or
nonaction on the part of Borrower, Lender, or any other
guarantor, surety or endorser of Borrower's Indebtedness, or
notice of the creation of any new or additional Indebtedness
subject to this Agreement.
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(d) Any rights to demand or require collateral security from
the Borrower or any other person as provided under applicable
Louisiana law or otherwise.
(e) Any right to require Lender to notify Guarantor of the
terms, time and place of any public or private sale of any
collateral directly or indirectly securing Borrower's
Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other
law which may prevent Lender from bringing any action,
including a claim for deficiency, against Guarantor, before
or after Lender's commencement or completion of any
foreclosure action, or any action in lieu of foreclosure.
(g) Any election of remedies by Lender that may destroy or
impair Guarantor's subrogation rights or Guarantor's right to
proceed for reimbursement against Borrower or any other
guarantor, surety or endorser of Borrower's Indebtedness,
including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or
discharging Borrower's Indebtedness.
(h) Any disability or other defense of Borrower, or any
other guarantor, surety or endorser, or any other person, or
by reason of the cessation from any cause of whatsoever,
other than payment in full of Borrower's Indebtedness.
(i) Any statute of limitations or prescriptive period, if at
the time an action or suit brought by Lender against
Guarantor is commenced, there is any outstanding Indebtedness
of Borrower to Lender which is barred by any applicable
statute of limitations or prescriptive period.
Guarantor warrants and agrees that each of the waivers set forth
above is made with Guarantor's full knowledge of its significance
and consequences, and that, under the circumstances, such waivers
are reasonable and not contrary to public policy or law. If any
such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent
permitted by law.
10. GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that guarantor
should for any reason (a) advance or lend monies to Borrower,
whether or not such funds are used by Borrower to make payment(s)
under Borrower's Indebtedness, and/or (b) make any payment(s) to
Lender or others for and on behalf of Borrower under Borrower's
Indebtedness, and/or (c) make any payment to Lender in total or
partial satisfaction of Guarantor's obligations and liabilities
-4-
under this Agreement, and/or (d) if any of Guarantor's property is
used to pay or satisfy any of Borrower's Indebtedness, Guarantor
hereby agrees that any and all rights that Guarantor may have or
acquire to collect from or to be reimbursed by Borrower (or from
or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reim-
bursement arise by way of subrogation to the rights of Lender or
otherwise, shall in all respects, whether or not borrower is pre-
sently or subsequently becomes insolvent, be subordinate, inferior
and junior to the rights of Lender to collect and enforce payment,
performance and satisfaction of Borrower's then remaining
Indebtedness, until such time as Borrower's Indebtedness is fully
paid and satisfied. In the event of Borrower's insolvency or con-
sequent liquidation of Borrower's assets, through bankruptcy, by
an assignment for the benefit of creditors, by voluntary liquida-
tion, or otherwise, the assets of Borrower applicable to the
payment of claims of both Lender and Guarantor shall be paid to
Lender and shall be first applied by Lender to Borrower's then
remaining Indebtedness. Guarantor hereby assigns to Lender all
claims which it may have or acquire against Borrower or any
assignee or trustee of Borrower in bankruptcy; provided that, such
assignment shall be effective only for the purpose of assuring to
Lender full payment of Borrower's Indebtedness guaranteed under
this Agreement.
If now or hereafter (a) Borrower shall be or become insolvent, and
(b) Borrower's Indebtedness shall not at all times until paid be
fully secured by collateral pledged by Borrower, Guarantor hereby
forever waives and relinquishes in favor of Lender and Borrower,
and their respective successors, any claim or right to payment
Guarantor may now have or hereafter have or acquire against
Borrower, by subrogation or otherwise, so that at no time shall
Guarantor be or become a "creditor" of Borrower within the meaning
of 11 U.S.C. section 547(b), or any successor provision of the
federal bankruptcy laws.
11. GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to
refrain from attempting to collect and/or enforce any of
Guarantor's collection and/or reimbursement rights against
Borrower (or against any other guarantor, surety or endorser of
Borrower's Indebtedness), arising by way of subrogation or other-
wise, until such time as all of Borrower's then remaining
Indebtedness in favor of Lender is fully paid and satisfied, or
under the "insider" circumstances described above, until the thir-
teen (130 month) anniversary date following the full and final
payment and satisfaction of Borrower's Indebtedness. In the event
that Guarantor should for any reason whatsoever receive any
payment(s) from Borrower (or any other guarantor, surety or
endorser of Borrower's Indebtedness) that Borrower (or such a
third party) may owe to Guarantor for any of the reasons stated
-5-
above, Guarantor agrees to accept such payment(s) in trust for and
on behalf of Lender, advising Borrower (or the third party payee)
of such fact. Guarantor further unconditionally agrees to imme-
diately deliver such funds to Lender, with such funds being held
by Guarantor over any interim period, in trust for Lender. In the
event that Guarantor should for any reason whatsoever receive any
such funds from Borrower (or any third party), and Guarantor
should deposit such funds in one or more of Guarantor's deposit
accounts, no matter where located, Lender shall have the right to
attach any and all of Guarantor's deposit accounts in which such
funds were deposited, whether or not such funds were commingled
with other monies of Guarantor, and whether or not such fund then
remain on deposit in such an account or accounts. To this end and
to secure Guarantor's obligations under this Agreement, Guarantor
collaterally assigns and pledges to Lender, and grants to Lender a
continuing security interest in, any and all of Guarantor's pre-
sent and future rights, title and interest to and to all monies
that Guarantor may now and/or in the future maintain on deposit
with banks, savings and loan associations and other entities
(other than tax deferred accounts with Lender), in which Guarantor
may at any time deposit any such funds that may be received from
Borrower (or any other guarantor, endorser or surety of Borrower's
Indebtedness) in favor of Lender.
12. ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its
sole option, at any time, and from time to time, without the con-
sent of or notice to Guarantor, or any of them, or to any other
party, and without incurring any responsibility to Guarantor or to
any other party, and without impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to
Borrower.
(b) Discharge, release or agree not to sue any party
(including, but not limited to, Borrower or any other
guarantor, surety, or endorser of Borrower's Indebtedness),
who is or may be liable to lender for any of Borrower's
Indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or
otherwise deal with, in any manner and in any order, any
collateral directly or indirectly securing repayment of any
of Borrower's Indebtedness.
(d) Alter, renew, extend, accelerate, or otherwise change
the manner, place, terms and/or times of payment or other
terms of Borrower's Indebtedness, or any part thereof,
including any increase or decrease in the rate or rates of
interest on any of Borrower's Indebtedness.
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(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of
all or any part of Borrower's Indebtedness, or Lender's
security rights in any collateral directly or indirectly
securing any such Indebtedness, to the payment and/or
security rights of any other present and/or future creditors
of Borrower.
(g) Apply any payments and/or proceeds to any of Borrower's
Indebtedness in such priority or with such preferences as
Lender may determine in its sole discretion, regardless of
which of Borrower's Indebtedness then remains unpaid.
(h) Take or accept any other collateral security or guaranty
for any or all of Borrower's Indebtedness.
(i) Enter into, deliver, modify, amend, or waive compliance
with, any instrument or arrangement evidencing, securing or
otherwise affecting, all or any part of Borrower's
Indebtedness.
13. NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing
between Lender and Borrower (or any other guarantor, surety or
endorser of Borrower's Indebtedness), nor any failure or delay on
the part of Lender to exercise any of Lender's rights and remedies
under this Agreement or any other agreement or agreements by and
between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of impairing or releasing
Guarantor's obligations and liabilities to Lender, or of waiving
any of Lender's rights and remedies under this Agreement or
otherwise. Any partial exercise of any rights and remedies
granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; it being Guarantor's intent
and agreement that Lender's rights and remedies shall be
cumulative in nature. Guarantor further agrees that, should
Borrower default under any of its Indebtedness, any wavier or
forbearance on the part of Lender to pursue Lender's available
rights and remedies shall be binding upon Lender only to the
extent that Lender specifically agrees to such waiver or
forbearance in writing. A waiver or forbearance on the part of
Lender as to one event of default shall not constitute a waiver or
forbearance as to any other default.
14. NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities
under this Agreement shall not be released, impaired, reduced, or
otherwise affected by, and shall continue in full force and effect
notwithstanding the occurrence of any event, including without
limitation any one or more of the following events:
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(a) The death, insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation, disability,
dissolution, or lack of authority (whether corporate,
partnership or trust) of Borrower (or any person acting on
Borrower's behalf), or of any other guarantor, surety or
endorser of Borrower's Indebtedness.
(b) Any payment by Borrower, or any other party, to Lender
that is held to constitute a preferential transfer or a
fraudulent conveyance under any applicable law, or any such
amounts or payment which, for any reason, Lender is required
to refund or repay to Borrower or to any other person.
(c) Any dissolution by Borrower, or any sale, lease or
transfer of all or any part of Borrower's assets.
(d) Any failure of Lender to notify Guarantor of the making
of additional loans or other extensions of credit in reliance
on this Agreement.
15. AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's
obligations and liabilities hereunder shall continue to be
effective, and/or shall automatically and retroactively be
reinstated, if a release or discharge has occurred, or if at any
time, any payment or part thereof to Lender with respect to any of
Borrower's Indebtedness, is rescinded or must otherwise be
restored by Lender pursuant to any insolvency, bankruptcy,
reorganization, receivership, or any other debt relief granted to
Borrower or to any other party to Borrower's Indebtedness or any
such security therefor. In the event that Lender must rescind or
restore any payment received in total or partial satisfaction of
Borrower's Indebtedness, any prior release or discharge from the
terms of this Agreement given to Guarantor shall be without
effect, and this Agreement and Guarantor's obligations and
liabilities hereunder shall automatically and retroactively
renewed and/or reinstated and shall remain in full force and
effect to the same degree and extent as if such a release or
discharge had never been granted. It is the intention of Lender
and Guarantor that Guarantor's obligations and liabilities
hereunder shall not be discharged except by Guarantor's full and
complete performance and satisfaction of such obligations and
liabilities; and then only to the extent of such performance.
16. REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents
and warrants that:
(a) Guarantor has the lawful power to own its properties and
to engage in its business as presently conducted.
-8-
(b) Guarantor's guaranty of Borrower's Indebtedness and
Guarantor's execution, delivery and performance of this
Agreement are not in violation of any laws and will not
result in a default under any contract, agreement, or
instrument to which Guarantor is a party, or by which
Guarantor or its property may be bound.
(c) Guarantor has agreed and consented to execute this
Agreement and to guarantee Borrower's Indebtedness in favor
of Lender, at Borrower's request and not at the request of
Lender.
(d) Guarantor will receive and/or has received a direct or
indirect material benefit from the transactions contemplated
herein and/or arising out of Borrower's Indebtedness.
(e) This Agreement, when executed and deliver to Lender,
will constitute a valid, legal and binding obligation of
Guarantor, enforceable in accordance with its terms.
(f) Guarantor has established adequate means of obtaining
information from Borrower on a continuing basis regarding
Borrower's financial condition.
(g) Lender has made no representations to Guarantor as to
the creditworthiness of Borrower.
17. ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement
remains in effect, Guarantor has not and will not, without
Lender's prior written consent, sell, lease, assign, pledge,
hypothecate, encumber, transfer, or otherwise dispose of all or
substantially all of Guarantor's assets. Guarantor agrees to keep
Lender adequately informed of any facts, events or circumstances
which might in any way affect Guarantor's risks under this
Agreement. Guarantor further agrees that Lender shall have no
obligation to communicate to Guarantor any information or material
relating to Borrower or Borrower's Indebtedness.
18. ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable
request of Lender, Guarantor will, at any time, and from time to
time, execute and deliver to lender any and all such financial
instruments and documents, and supply such additional information,
as may be necessary or advisable in the opinion of Lender to
obtain the full benefits of this Agreement. Guarantor further
agrees to provide Lender with such financial statements and other
related information at such frequencies and in such detail as
Lender may reasonably request.
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19. TRANSFER OF INDEBTEDNESS. This Agreement is for the benefit of
Lender and for such other person or persons as may from time to
time become or be the holders of all or any part of Borrower's
Indebtedness. This Agreement shall be transferable and
negotiable with the same force and effect and to the same extent
as Borrower's Indebtedness may be transferable; it being
understood and agreed to by Guarantor that, upon any transfer or
assignment of all or any part of Borrower's Indebtedness, the
holder of such Indebtedness shall have all of the rights and
remedies granted to Lender under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of
Borrower's Indebtedness, Lender may transfer and deliver any and
all collateral securing repayment of such Indebtedness (including,
but not limited to, any collateral provided by Guarantor) to the
transferee of such Indebtedness, and such collateral shall secure
any and all of Borrower's Indebtedness in favor of such a
transferee. Guarantor additionally agrees that, after any such
transfer or assignment has taken place, Lender shall be fully
discharged from any and all liability and responsibility to
Borrower and Guarantor with respect to such collateral, and the
transferee thereafter shall be vested with all the powers and
rights with respect to such collateral.
20. CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that
Lender may, from time to time, one or more times, transfer all or
any part of Borrower's Indebtedness through sales of participation
interests in such Indebtedness to one or more third party lenders.
Guarantor specifically agrees and consents to all such transfers
and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under
Louisiana law. Guarantor additionally agrees that the purchaser
of a participation interest in Borrower's Indebtedness will be
considered as the absolute owner of a percentage interest of such
Indebtedness and that such a purchaser will have all of the rights
granted under any participation agreement governing the sale of
such a participation interest. Guarantor waives any rights of
offset that Guarantor may have against Lender and/or any purchaser
of such a participation interest, and Guarantor unconditionally
agrees that either Lender or such a purchaser may enforce
Guarantor's obligations and liabilities under this Agreement,
irrespective of the failure or insolvency of Lender or any such
purchaser.
21. NOTICES. Any notice provided in this Agreement must be in writing
and will be considered as given on the day it is delivered by hand
or deposited in the U.S. mail, postage prepaid, addressed to the
person to whom the notice is to be given at the address shown
above or at such other addresses as any party may designate to the
other in writing. If there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all
Guarantors.
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22. ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that
Guarantor may have previously granted, and may in the future
grant, one or more additional guaranties of Borrower's
Indebtedness in favor of Lender. Should this occur, the execution
of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this
Agreement or any of Guarantor's additional guaranties; it being
Guarantor's full intent and agreement that all such guaranties of
Borrower's Indebtedness in favor of Lender shall remain in full
force and effect and shall be cumulative in nature and effect.
23. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Guaranty:
23.1 Amendment. No amendment, modification, consent or waiver of
any provision of this Agreement, and no consent to any
departure by Guarantor therefrom, shall be effective unless
the same shall be in writing signed by a duly authorized
officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which
given.
23.2 Caption Headings. Caption headings of the sections of this
Agreement are for convenience purposes only and are not to be
used to interpret or the define their provisions. In this
Agreement, whenever the context so requires, the singular
includes the plural and the plural also includes the
singular.
23.3 Governing Law. This Agreement shall be governed and
construed in accordance with the substantive laws of the
State of Louisiana.
23.4 Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future
laws effective during the term hereof, such provision shall
be fully severable. This Agreement shall be construed and
enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining
provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically
as a part of this Agreement, a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be
possible and legal, valid and enforceable.
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23 .5 Successors and Assigns Bound. Guarantor's obligations and
liabilities under this Agreement shall be binding upon
Guarantor's successors, heirs, legatees, devisees,
administrators, executors and assigns.
23.6 This Guaranty is executed pursuant to the provisions of
Article III of the Loan Agreement and shall be subject to the
terms thereof.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS
OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR
UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION
AND DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL
CONTINUE UNTIL TERMINATED. NO FORMAL ACCEPTANCE BY LENDER IS
NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED
APRIL 27, 1994.
GUARANTORS:
MILLINGTON TELEPHONE COMPANY
BY: /s/ WILLIAM S. HOWARD, SR.
______________________
WILLIAM S. HOWARD, SR.
Its President
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C/GUAR4.1-4.12
Exhibit "G"
GLANKLER BROWN
ATTORNEYS AT LAW
ONE COMMERCE SQUARE
SEVENTEENTH FLOOR
MEMPHIS, TENNESSEE 38103
(901) 525-1322
TELECOPIER (901) 525-2389
WRITER'S DIRECT DIAL
April 27,1994
Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, LA 71203
Re: Century Telephone Enterprises, Inc., a Louisiana
Corporation ("Lender") $25,000,000 loan to MillTenn,
Inc., a Tennessee Corporation ("Borrower")
Gentlemen:
We have acted as special counsel in the State of Tennessee
(the "State") to Borrower, in connection with the execution and
delivery of the $25,000,000.00 Loan Agreement and Grant of Rights
of First Refusal to Acquire Assets and/or Capital Stock of
MillTenn, Inc. and its Subsidiaries dated April 27, 1994 (the
"Agreement"), among William S. Howard, Sr., Ann A. Howard, Holly
Lee Starnes, William S. Howard, Jr., Laura Lynne Howard, and
Charlotte Ann Howard Thompson (such individuals are collectively
referred to as the "Shareholders"), Borrower, millington Telephone
Company, a Tennessee corporation ("MTC"), Big Creek Financial,
Inc., a Tennessee corporation ("BCFI"), Mill-Comm Associates, Inc. ,
a Tennessee corporation ("MAI"), (each of Borrower, MTC, BCFI and
MAI hereinafter referred to individually as "Company" and in the
aggregate as "Companies"), and Lender.
This opinion is delivered to you pursuant to Section 4.01(g)
of the Agreement and upon the express instructions of the Borrower
and the Guarantors. Unless otherwise defined herein, capitalized
terms have the meanings given to such terms in the Agreement.
In connection with this opinion, we have examined the
following:
1. Agreement, dated April 27, 1994;
2. Promissory Note, dated April 27, 1994, in the original
principal amount of $25,000,000.00 executed by the
Borrower in favor of the Lender (the "Note");
3. Guaranty, dated April 27, 1994, executed by William S.
Howard and Ann A. Howard (the "Guaranty");
Century Telephone Enterprises, Inc.
April 27, 1994
Page 2
4. Pledge Agreement, dated April 27, 1994, executed by
Shareholders for the benefit of the Lender (the
"Shareholder's Pledge Agreement"), granting a security
interest in the stock of Borrower, as more particularly
described in the Shareholder's Pledge Agreement;
5. Pledge Agreement, dated April 27, 1994, executed by the
Borrower for the benefit of the Lender (the "Borrower's
Pledge Agreement"), granting a security interest in the
stock of MTC, as more particularly described in the
Borrower's Pledge Agreement;
6. Certified copy of the Charter of Borrower, a Certificate
of Existence with respect to the Borrower issued by the
Tennessee Secretary of State on April 25, 1994, and
attached hereto as Exhibit "A" ("BCE") and the Borrower's
Bylaws (collectively the "Borrower's Organizational
Documents");
7. Certified copy of the Charter of MTC, a Certificate of
Existence with respect to MTC issued by the Tennessee
Secretary of State on April 14, 1994, and attached hereto
as Exhibit "B" ("MTCCE") and MTC's Bylaws (collectively
the "MTC Organizational Documents");
8. Certified copy of the Charter of BCFI, a Certificate of
Existence with respect to BCFI issued by the Tennessee
Secretary of State on April 14, 1994, and attached hereto
as Exhibit "C" ("BCFICE") and BCFI's Bylaws (collectively
the "BCFI Organizational Documents");
9. Certified copy of the Charter of MAI, a Certificate of
Existence with respect to MAI issued by the Tennessee
Secretary of State on April 14, 1994, and attached hereto
as Exhibit "D" ("MAICE") and MAI's Bylaws (collectively
the "MAI Organizational Documents") (the BCE, MTCCE,
BCFICE and MAICE, being collectively referred to as the
"Certificates of Existence");
10. Certificate of Secretary of Borrower, Certificate of
Assistant Secretary of MTC, Certificate of Assistant
Secretary of BCFI, and Certificate of Assistant Secretary
of MAI (collective the "Certificates of Secretaries");
and
11. Borrower's Certificate to Glankler Brown attached to this
opinion as Exhibit "E" the "Borrower's Certificate".
The documents listed in 1 through 5 above are referred to
collectively as the "Loan Documents". The documents listed in 1
through 11 are referred to collectively as the "Documents".
Century Telephone Enterprises, Inc.
April 27, 1994
Page 3
In basing the opinion set forth herein on, "to our knowledge".
the words "to our knowledge" or Similar language signify that, in
the courses of our representation of the Borrower, no facts have
come to our attention that would give us actual knowledge or actual
notice that any such opinions or other matters are not accurate or
that any of the Documents are not accurate or complete. Except as
otherwise Specifically stated in this opinion, we have undertaken
no investigation or verification of such matters. Further, the
words "to our knowledge" or similar language as used in this
opinion are intended to be limited to the actual knowledge, without
independent verification, of Michael A. Robinson, J. N. Raines,
Susan P. Harshbarger and Paul J. Posey, Jr., the attorneys within
our firm who have been directly involved in representing the
Borrower in connection with the Agreement.
Further, as we have advised you, we have not acted as counsel
to any of the Companies with respect to regulatory matters, and
accordingly do not express any opinion with respect to any such
matters.
In reaching the opinion set forth below, we have assumed with
your consent, and to our knowledge there are no facts inconsistent
with, the following: (a) each of the parties to the Loan
Documents, other than the Companies and Shareholders, has duly and
validly executed and delivered such instrument, document, and
agreement to be executed in connection with the Agreement to which
such party is a signatory, and such party's obligations set forth
in the Loan Documents are its legal, valid and binding obligations,
enforceable in accordance with their respective terms; (b) each
person, other than the Companies and Shareholders, executing any of
the Loan Documents, whether individually or on behalf of an entity,
is duly authorized to do so; (c) each natural person executing any
of the Loan Documents is legally competent to do so; (d) all
signatures on Documents, other than those of the Companies and
Shareholders on the Loan Documents, are genuine (as used herein,
the term "genuine" will include signatures executed pursuant to
validly existing power of attorney); (e) all Documents submitted to
us as originals are authentic; (f) all Documents submitted to us as
certified or photocopies conform to the original Documents; and (g)
the terms and conditions of the Agreement as reflected in the Loan
Documents have not been amended, modified or supplemented by any
other agreement or understanding of the parties or waiver of any of
the material provisions of the Loan Documents.
We are qualified to practice law in the State and our opinion
is restricted to the laws of the State. We have assumed that as
the substantive laws of the State of Louisiana which may be
applicable to any matters opened by us herein, are identical to the
substantive laws of the State.
Century Telephone Enterprises, Inc.
April 27, 1994
Page 4
Based upon the foregoing, and subject to the assumptions and
qualifications set forth herein we are of the opinion that:
1. Each of the Companies is a corporation duly organized,
validly existing, under the laws of the State. In rendering the
foregoing opinion, except with respect to Borrower, we have relied
with your permission solely upon the Certificates of Existence.
Each Company possesses all requisite corporate authority to
execute, deliver and comply with the terms of the Loan Papers, all
of which have been fully authorized and approved by all necessary
corporate action and have been executed by the officer of the
Company so authorized by such corporate action. In rendering this
opinion, we have relied, with your consent, on the Certificate and
the Certificates of Secretaries.
2. Each Company is not, nor will the execution, delivery, or
performance of the Loan Documents cause any Company to be in
violation of its Organizational Documents.
3. We have no knowledge of any Material Litigation, or
outstanding or unpaid Material Judgments against the Companies, or
the Shareholders except as is described on Exhibit 'IF".
4. The Borrower is not (a) a "holding company", a
"subsidiary company" of a "holding company", an "affiliate" of a
"holding company,, or of a "subsidiary company", of a "holding
company", or a "public utility" as those terms are defined in the
Public Utility Holding Company Act of 1935, as amended, (b) an
"investment company" or "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended, or (c) an "investment advisor" within the meaning of the
Investment Advisor Act of 1940, as amended. In rendering the
foregoing opinions, we have relied with your consent on the
Certificate.
5. To the extent governed by the laws of the State, each of
the Loan Documents constitutes a valid and binding obligation of
each of the Companies and Shareholders which executed it,
enforceable against such parties in accordance with its terms,
except as enforceability may be limited by (a) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, or other similar laws affecting creditor's rights
generally, (b) the exercise of judicial discretion in accordance
with general principle of equity (whether enforcement is sought by
proceedings in equity or at law). The Shareholder's Pledge
Agreement, when accompanied by delivery of the stock certificates
together with validly executed stock powers described therein
constitutes a valid and enforceable first ranking security interest
in favor of Lender, and the Borrower's Pledge Agreement when
accompanied by the delivery of the stock certificates together with
validly executed stock powers described therein constitutes a valid
Century Telephone Enterprises, Inc.
April 27, 1994
Page 5
and enforceable first ranking security interest in favor of Lender,
subject to the Prior Rights. In rendering the opinion in the
preceding sentence we have relied with your consent on the
Certificate.
6. The Borrower owns, beneficially and of record, all of the
issued and outstanding capital shares of MTC; MTC owns all of the
issued and outstanding capital shares of BCFI and MAI, and the
Shareholders own all of the issued and outstanding capital shares
of Borrower; such shares are validly issued, fully paid, and
nonassessable; and the shares of the Borrower are free and clear of
all liens except the security interest granted in favor of Lender.
In rendering the foregoing opinion, we have relied with your
permission solely upon copies of (i) Certificate, (ii) excerpts of
the minutes of the first meeting of the shareholders of the
Borrower (iii) the list of subscribers of the Borrower (iv) the
resolutions of the board of directors of the Borrower dated April
27, 1994, (v) stock certificate no. 001 for 8,565 shares of
Borrower issued to William S. Howard, Sr., (vi) Stock Certificate
No. 002 for 239 shares of Borrower issued to Ann A. Howard, (vii)
Stock Certificate No. 006 for 299 shares of Borrower issued to
Holly Lee Starnes, (viii) Stock Certificate No. 004 for 299 shares
of Borrower issued to William S. Howard, Jr., (ix) Stock
Certificate No. 005 for 299 shares of Borrower issued to Laura
Lynne Howard, (x) Stock Certificate No. 003 for 299 shares of
Borrower issued to Charlotte Ann Howard Thompson; (xi) stock powers
of shareholders transferring the shares of MTC to Borrower; (xii)
Stock Certificate No. 1 for 100 shares of BCFI issued to MTC; and
(xiii) Stock Certificate No. 1 for 1,000 shares of MAI issued to
MTC.
7. It is our opinion that the following discussion of
statutory and case law correctly summarizes current Tennessee law
governing choice of law in the enforcement of contracts generally,
as well as choice of law relating to usury, interest and other loan
related charges. Tennessee Code Annotated Section 47-1-105
provides as follows: "when a transaction bears a reasonable
relation to this state and also to another state . . . the parties
may agree that the laws either of this state or such other state
shall govern their rights and duties." T.C.A. S47-1-105.
With respect to choice of law relative to usury, interest
rates and other loan related charges, Tennessee Code Annotated
Section 47-14-119 provides as follows:
In any transaction otherwise subject to this chapter
which is not subject to the disclosure requirements of
the Federal Consumer Credit Protection Act, where the
transaction bears a reasonable relationship to this state
and also to another state or nation, the parties may
agree in the written contract evidencing such transaction
Century Telephone Enterprises, Inc.
April 27, 1994
Page 6
that the laws of this state or of any other such state or
nation shall govern their rights and duties with respect
to interest, loan charges, commitment fees, and brokerage
commissions.
Although T.C.A. S47-14-119 does not appear to have been
thoroughly interpreted in any published cases since its enactment,
it represents a codification of much of the prior case law in
Tennessee, and a review of several earlier cases is helpful in
evaluating current Tennessee law. In In Re Leeds Homes, Inc., 222
F. Supp. 20 (E.D. Tenn- 1963), the court construed the Tennessee
rules governing conflicts of laws and held that Tennessee interest
and usury laws would not apply. The transaction in Leeds involved
a business loan to a Tennessee corporation by an Illinois lender,
with the collateral located in Tennessee and the loan instruments
expressly made subject to Illinois law. In determining that
Illinois rather than Tennessee interest and usury laws would apply,
the court examined several factors including the following: (i)
the loan transaction was in good faith consummated in Illinois;
(ii) the obligations were repayable in Illinois; and (iii) the
parties expressed their intent that the laws of Illinois would
govern the interest to be charged. In Goodwin Brothers Leasing,
Inc. v. H&B, Inc., Supra, 597 S.W.2d 303 (Tenn. 1980), the
Tennessee Supreme Court affirmed the Tennessee rule that parties
are ordinarily free to contract concerning the laws which will
govern their relationship, and upheld the application of the laws
of another jurisdiction. This case enunciated the principle in
Tennessee, applicable in interest and usury cases, that the law
which will lend the greatest validity to the transaction will be
applied if it is otherwise logically relevant. Some factors that
the Tennessee court examined in determining choice of interest and
usury laws included (i) the place of performance under the
contract; (ii) the location of the principal offices of the
parties; (iii) knowledge by the parties of the applicable
jurisdictional usury laws- (iv) the sophistication of the parties;
(v) the absence or existence of fraud, chicanery or misleading by
either party; and (vi) whether the law chosen to govern had a
reasonable relation and was relevant to the transaction. Tennessee
Code Annotated Section 47-14-119 was not in force at the time of
the transaction under consideration in the Goodwin Brothers case,
but it had been enacted when the Tennessee Supreme Court issued its
decision. The Goodwin Brothers decision referred to the adoption
of this Section and indicated that this Section evidenced the
public policy of the State consistent with prior case law of the
Tennessee courts.
Based upon the choice of law rules of the State, it is our
opinion that the Loan Documents to which the Borrower is a party
shall be governed by and construed in accordance with the laws of
the State of Louisiana. For the purpose of rendering this opinion,
we have assumed with your permission that (a) payments are to be
Century Telephone Enterprises, Inc.
April 27, 1994
Page 7
made in Louisiana, (b) the Lender on the date of the opinion is
located in Louisiana, (c) the Loan Documents will be executed in
Louisiana, and (d) the parties to the Loan Documents intend to be
governed by the laws of the State of Louisiana.
In addition to the assumptions set forth above, the opinions
set forth above are also subject to the following qualifications:
(i) The opinions expressed herein are given as of the date
hereof. We assume no obligation to update or supplement such
opinions to reflect any fact or circumstance that maybe hereafter
come to our attention or any change in law that may hereafter
become effective. This opinion is limited to matters expressly set
forth herein and no opinion is to be implied or may be inferred
beyond the matters expressly stated herein. Except as expressly
set forth herein, we express no opinion concerning or with regard
to the accuracy of any facts contained in the Loan Documents or any
documents referred to or incorporated therein, or as to any matters
relating to the business affairs or condition of the Companies.
(ii) We express no opinion as to the validity or
enforceability of any provision of the Loan Documents which permits
the Lender, in the event of delinquency or default, to increase the
rate of interest or to collect a late charge or a prepayment
penalty.
(iii) In the event of conflicts between the Loan Documents,
we express no opinion as to which provision shall prevail.
(iv) We express no opinion as to the obligation of any
endorser, guarantor or other responsible party (other than
Borrower) to pay the outstanding principal balance of the Note and
observe the covenants under the Loan Documents in the event that
the time for payment under the Note is extended, a party is
released from liability under the Note, the principal balance under
the Loan Documents reduced to zero, the Note is renewed, the terms
of payment under the Note are modified, any security under the Note
is released or the terms of the Note and security therefor are made
subject to a subordination agreement without the prior consent of
such endorser, guarantor or other responsible party (other than
Borrower) to such modifications, amendments, releases or
subordinations.
(v) We express no opinion as to the validity or
enforceability of waivers or advance consents that have the effect
of waiving statutes of limitations, marshaling of assets or
similar requirements or defenses, or as to the jurisdiction of
courts, the venue of actions, the right to jury trial,
disabilities, election of remedies, or in certain cases, notices.
Century Telephone Enterprises, Inc.
April 27, 1994
Page 8
(vi) We express no opinion as to the validity or
enforceability of any provisions in any of the Loan Documents to
the extent that such provisions purport to waive any requirements
of diligent performance or other care on the part of Lender with
respect to the recognition or preservation of the rights of
Borrower to or interest in any property subject to the lien or
security interest granted by the Loan Documents.
(vii) We express no opinion with respect to the enforce-
ability of the severability provisions contained in the Loan
Documents to the extent that any provision affected by the
severability provision is material to the essence of the agreements
set forth in the Loan Documents.
(viii) We express no opinion as to the validity or
enforceability of any remedies which any of the Loan Documents
purport to grant Lender with respect to Lender's seizure or
disposition of personal property to the extent that such actions
are not carried out in a commercially reasonable manner. No
opinion is expressed as to the enforceability of any provision of
the Loan Documents which purports to define acts which will
constitute a commercially reasonable disposition of pledged
collateral.
(ix) We express no opinion as to the effect of course of
dealings, course of performance or the like, in modifying the terms
of any of the Loan Documents or the respective obligations of the
parties to the Loan Documents.
(x) We express no opinion as to the validity or
enforceability of any right of the Lender to recover its expenses
and/or attorneys' fees to the extent that such expenses and/or
attorneys' fees are not reasonable and customary for the total
services provided.
(xi) We express no opinion as to the validity or
enforceability of any indemnity provision regarding indemnities to
the extent that the same conflicts with CERCLA or any comparable
provision of the law of the State.
(xii) We express no opinion with respect to the relative
priority of the liens or security interests created by any of the
Loan Documents with respect to MAI stock or BCFI stock as same may
be affected by the Borrower's agreement with REA and National Bank
for Cooperatives (COBANK).
(xiii) We express no opinion with respect to any provisions
permitting the exercise by Lender under certain circumstances, of
rights without notice and/or without providing opportunity to cure.
Century Telephone Enterprises, Inc.
April 27, 1994
Page 9
This opinion is furnished solely in connection with the
transactions referred to in the Agreement and may not, without our
permission, be circulated to any Person, except Lender or Boles,
Boles & Ryan, and may not be relied upon by any other person.
Very truly yours,
GLANKLER BROWN
By:/s/ Michael A. Robinson
____________________
Michael A. Robinson
Partner
abs:a,.\century.4
EXHIBIT A
SECRETARY OF STATE ISSUANCE DATE: 04/25/1994
REQUEST NUMBER: 94115026
CORPORATIONS SECTION TELEPHONE CONTACT: (615) 741-6488
JAMES K. POLK BUILDING, SUITE 1800 CHARTER/QUALIFICATION DATE: 04/04/1994
STATUS: ACTIVE
NASHVILLE, TENNESSEE 37243-0306 CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0277615
JURISDICTION: TENNESSEE
TO: REQUESTED BY:
DELPHI COMMUNICATIONS INC. DELPHI COMMUNICATIONS INC.
500 CHURCH STREET 500 CHURCH STREET
NASHVILLE, TN 37219 NASHVILLE, TN 37219
CERTIFICATE OF EXISTENCE
I, RILEY C DARNELL, SECRETARY OF STATE OF THE STATE OF TENNESSEE DO HEREBY
CERTIFY THAT
----------------------------------------------------------------------------
"MILLTENN, INC."
----------------------------------------------------------------------------
IS A CORPORATION DULY INCORPORATED UNDER THE LAW OF THIS STATE WITH DATE OF
INCORPORATION AND DURATION AS GIVEN ABOVE;
THAT ALL FEES, TAXES, AND PENALTIES OWED THIS STATE WHICH AFFECT THE
EXISTENCE OF THE CORPORATION HAVE BEEN PAID;
THAT ARTICLES OF TERMINATION OF CORPORATE EXISTENCE HAVE NOT BEEN FILED
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
FOR: REQUEST FOR CERTIFICATE ON DATE: 04/25/94
FEE TAX
RECEIVED: $40.00 $40.00
FROM:
DELPHI COMMUNICATIONS INC TOTAL PAYMENT: $80.00
500 CHURCH STREET
ST. CLOUD CORNER RECEIPT NUMBER: 00001650334
NASHVILLE, TN 37219-0000 ACCOUNT NUMBER: 00005824
/s/ RILEY C. DARNELL
_________________
RILEY C. DARNELL
SECRETARY OF STATE
EXHIBIT "B"
SECRETARY OF STATE ISSUANCE DATE: 04/14/1994
REQUEST NUMBER: 94104057
CORPORATIONS SECTION TELEPHONE CONTACT: (615) 741-6488
JAMES K. POLK BUILDING, SUITE 1800 CHARTER/QUALIFICATION DATE: 05/17/1994
STATUS: ACTIVE
NASHVILLE, TENNESSEE 37243-0306 CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0021179
JURISDICTION: TENNESSEE
TO: REQUESTED BY:
DELPHI COMMUNICATIONS INC. DELPHI COMMUNICATIONS INC.
500 CHURCH ST. 500 CHURCH ST.
NASHVILLE, TN 37219 NASHVILLE, TN 37219
CERTIFICATE OF EXISTENCE
I, RILEY C DARNELL, SECRETARY OF STATE OF THE STATE OF TENNESSEE DO HEREBY
CERTIFY THAT
--------------------------------------------------------------------------
"MILLINGTON TELEPHONE COMPANY, INC."
--------------------------------------------------------------------------
IS A CORPORATION DULY INCORPORATED UNDER THE LAW OF THIS STATE WITH DATE OF
INCORPORATION AND DURATION AS GIVEN ABOVE;
THAT ALL FEES, TAXES, AND PENALTIES OWED THIS STATE WHICH AFFECT THE
EXISTENCE OF THE CORPORATION HAVE BEEN PAID;
THAT THE MOST RECENT CORPORATION ANNUAL REPORT REQUIRED HAS BEEN FILED
WITH THIS OFFICE; AND THAT ARTICLES OF TERMINATION OF CORPORATE EXISTENCE
HAVE NOT BEEN FILED
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
FOR: REQUEST FOR CERTIFICATE ON DATE: 04/14/94
FEE TAX
RECEIVED: $60.00 $60.00
FROM:
DELPHI COMMUNICATIONS, INC TOTAL PAYMENT: $120.00
500 CHURCH STREET
ST. CLOUD CORNER RECEIPT NUMBER: 00001646954
NASHVILLE, TN 37219-0000 ACCOUNT NUMBER: 00005824
/s/ RILEY C. DARNELL
___________________
RILEY C. DARNELL
SECRETARY OF STATE
EXHIBIT "C"
SECRETARY OF STATE ISSUANCE DATE: 04/14/1994
REQUEST NUMBER: 94104057
CORPORATIONS SECTION TELEPHONE CONTACT: (615) 741-6488
JAMES K. POLK BUILDING, SUITE 1800 CHARTER/QUALIFICATION DATE: 05/23/1994
STATUS: ACTIVE
NASHVILLE, TENNESSEE 37243-0306 CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0228949
JURISDICTION: TENNESSEE
TO: REQUESTED BY:
DELPHI COMMUNICATIONS, INC. DELPHI COMMUNICATIONS, INC.
500 CHURCH ST. 500 CHURCH ST.
NASHVILLE, TN 37219 NASHVILLE, TN 37219
CERTIFICATE OF EXISTENCE
I, RILEY C DARNELL, SECRETARY OF STATE OF THE STATE OF TENNESSEE DO HEREBY
CERTIFY THAT
--------------------------------------------------------------------------
"BIG CREEK FINANCIAL, INC."
--------------------------------------------------------------------------
IS A CORPORATION DULY INCORPORATED UNDER THE LAW OF THIS STATE WITH DATE OF
INCORPORATION AND DURATION AS GIVEN ABOVE;
THAT ALL FEES, TAXES, AND PENALTIES OWED THIS STATE WHICH AFFECT THE
EXISTENCE OF THE CORPORATION HAVE BEEN PAID;
THAT THE MOST RECENT CORPORATION ANNUAL REPORT REQUIRED HAS BEEN FILED
WITH THIS OFFICE; AND THAT ARTICLES OF TERMINATION OF CORPORATE EXISTENCE
HAVE NOT BEEN FILED
- - ---------------------------------------------------------------------------
FOR: REQUEST FOR CERTIFICATE ON DATE: 04/14/94
FEE TAX
RECEIVED: $60.00 $60.00
FROM:
DELPHI COMMUNICATIONS INC TOTAL PAYMENT: $120.00
500 CHURCH STREET
ST. CLOUD CORNER RECEIPT NUMBER: 00001646954
NASHVILLE, TN 37219-0000 ACCOUNT NUMBER: 00005824
/s/ RILEY C. DARNELL
___________________
RILEY C. DARNELL
SECRETARY OF STATE
EXHIBIT "D"
SECRETARY OF STATE ISSUANCE DATE: 04/14/1994
REQUEST NUMBER: 94104057
CORPORATIONS SECTION TELEPHONE CONTACT: (615) 741-6488
JAMES K. POLK BUILDING, SUITE 1800 CHARTER/QUALIFICATION DATE: 11/28/1986
STATUS: ACTIVE
NASHVILLE, TENNESSEE 37243-0306 CORPORATE EXPIRATION DATE: PERPETUAL
CONTROL NUMBER: 0228949
JURISDICTION: TENNESSEE
TO: REQUESTED BY:
DELPHI COMMUNICATIONS, INC. DELPHI COMMUNICATIONS, INC.
500 CHURCH ST. 500 CHURCH ST.
NASHVILLE, TN 37219 NASHVILLE, TN 37219
CERTIFICATE OF EXISTENCE
I, RILEY C DARNELL, SECRETARY OF STATE OF THE STATE OF TENNESSEE DO HEREBY
CERTIFY THAT
---------------------------------------------------------------------------
"MILL-COMM ASSOCIATES, INC."
---------------------------------------------------------------------------
IS A CORPORATION DULY INCORPORATED UNDER THE LAW OF THIS STATE WITH DATE OF
INCORPORATION AND DURATION AS GIVEN ABOVE;
THAT ALL FEES, TAXES, AND PENALTIES OWED THIS STATE WHICH AFFECT THE
EXISTENCE OF THE CORPORATION HAVE BEEN PAID;
THAT THE MOST RECENT CORPORATION ANNUAL REPORT REQUIRED HAS BEEN FILED
WITH THIS OFFICE; AND THAT ARTICLES OF TERMINATION OF CORPORATE EXISTENCE
HAVE NOT BEEN FILED
- - ---------------------------------------------------------------------------
- - ----------------------------------------------------------------------------
FOR: REQUEST FOR CERTIFICATE ON DATE: 04/14/94
FEE TAX
RECEIVED: $60.00 $60.00
FROM:
DELPHI COMMUNICATIONS INC TOTAL PAYMENT: $120.00
500 CHURCH STREET
ST. CLOUD CORNER RECEIPT NUMBER: 00001646954
NASHVILLE, TN 37219-0000 ACCOUNT NUMBER: 00005824
/s/ RILEY C. DARNELL
__________________
RILEY C. DARNELL
SECRETARY OF STATE
EXHIBIT "E"
CERTIFICATE OF BORROWER
MILLTENN, INC.
The undersigned, MillTenn, Inc., a Tennessee corporation,
having an address of , millington,
Tennessee ("Borrower") , does hereby represent, warrant and covenant
To Glankler Brown, a Tennessee general partnership, having an
address of 1700 One Commerce Square, Memphis, Tennessee 38103, on
behalf of Borrower as follows:
1. The Borrower has reviewed the following documents in
connection with the closing of a loan made by Century Telephone
Enterprises, Inc. ("Lender") to the Borrower in the original
principal amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00) (the "Loan"):
(i) Agreement, dated April _, 1994;
(ii) Promissory Note, dated April 1994, in the
original principal amount of $25,000,000.00
executed by the Borrower in favor of the Lender
(the "Note");
(iii) Guaranty, dated April 1994, executed by
William S. Howard and Ann A. Howard (the
"Guaranty");
(iv) Pledge Agreement, dated April _, 1994, executed
by Shareholders for the benefit of the Lender (the
"Shareholder's Pledge Agreement"), granting a
security interest in the stock of Borrower, as more
particularly described in the Shareholder's Pledge
Agreement;
(v) Pledge Agreement, dated April _, 1994, executed
by the Borrower for the benefit of the Lender (the
"Borrower's Pledge Agreement,,), granting a security
interest in the stock of MTC, as more particularly
described in the Borrower's Pledge Agreement;
The documents listed in (i) through (v) above are referred to
collectively as the "Loan Documents".
2. Each Company possesses all requisite corporate authority
to execute, deliver and comply with the terms of the Loan Papers,
all of which have been fully authorized and approved by all
necessary corporate action and have been executed by the officer of
the Company so authorized by such corporate action.
3. Each Company is not, nor will the execution, delivery,
performance or the Loan Documents cause any Company to be in
violation of its Organizational Documents.
4. Borrower does not directly or indirectly own, control or
hold with power to vote 10% or more of the outstanding voting
securities of any electric utility company or gas utility company
or holding company as defined in 15 U.S.C. S79(b).
5. Borrower will be primarily engaged, directly or through
wholly owned subsidiary or subsidiaries,, in a business or
businesses other than that of investing, reinvesting, owning,
holding, or trading and securities.
6. BorroweR does not and will not, for compensation, engage
in the business of advising others, either directly or through
publications or writings, as to the value of securities or as to
the advisability of investing in, purchasing, or selling
securities, or, as a part of a regular business, issue or
promulgate analyses or reports concerning securities.
7. Each of the Loan Documents constitutes a valid and
binding obligation of each of the Companies and Shareholders which
executed it, enforceable against such parties in accordance with
its terms, except as enforceability may be limited by (a)
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, or other similar laws affecting
creditor's rights generally, (b) the exercise of judicial
discretion in accordance with general principles of equity (whether
enforcement is sought by proceedings in equity or at law).
8. The Shareholders have not pledged the stock certificates
described in the Shareholder's Pledge Agreement to any party other
than the Lender. The Borrower has not pledged the stock
certificate described in the Borrower's Pledge Agreement to any
party other than the Lender.
9. The Borrower owns, beneficially and of record, all of the
issued and outstanding capital shares of MTC; and MTC owns all of
the issued and outstanding capital shares of BCFI and MAI, and the
Shareholders own all of the issued and outstanding capital shares
of Borrower; and such shares are validly issued, fully paid, and
nonassessable; and the shares of the Borrower are free and clear of
all liens except the security interest granted in favor of Lender.
10. William S. Howard, Sr. owns 8,565 shares, Ann A. Howard
owns 239 shares, Holly Lee Starnes owns 239 shares, William S.
Howard, Jr. owns 239 shares, Laura Lynne Howard owns 239 shares and
Ann Howard Thompson owns 239 shares of Borrower.
11. Mill-Comm, Inc. is one in the same as MillComm, Inc.
12. MTI owns all of the shares of MTC.
13. MTC owns all of the shares of MAI.
14. The Companies and Shareholders intend to be governed by
the laws of the State of Louisiana.
15. Each and every representation and warranty herein will
remain true and correct at all times from the date hereof until
closing of the transaction referenced herein.
16. The foregoing representations and warranties shall
survive the closing of the loan transaction referenced herein.
IN WITNESS WHEREOF, the undersigned has executed the foregoing
as of the _____ day of April, 1994.
MILLTENN, INC.,
a Tennessee corporation
By:/s/ WILLIAM S. HOWARD, SR.
______________________
WILLIAM S. HOWARD, SR.
Title:
EXHIBIT F
MATERIAL LITIGATION
MATERIAL JUDGMENTS
1. Carter, et al v. Howard, et al . Chancery Court of
Tennessee for the Thirtieth Judicial District at Memphis, Docket
No. 103192-3.
2. Kline v. Howard, et al, in the Circuit Court of Tennessee
for the Thirtieth Judicial District at Memphis, Docket No. 28203-4
T.D.