OLD MARKET CAPITAL Corp 8-K, filed Nov 7, 2024
OLD MARKET CAPITAL Corp (OMCC)
About this 8-K
OLD MARKET CAPITAL Corp filed this 8-K on November 7, 2024, reporting on events of September 23, 2024.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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(Exact name of registrant as specified in its Charter)
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(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Amplex Electric, Inc., an Ohio corporation (“Amplex”) and subsidiary of Old Market Capital Corporation., a Delaware corporation, entered into a Reconnect Program Loan and Security Agreement (the “Loan Agreement”) with the United States of America acting through the Administrator of the Rural Electric Services (“RUS”), pursuant to which RUS has extended Amplex a secured loan in the principal amount of up to $21,341,792 (the “Loan”). The purpose of the Loan is to finance the construction of a broadband infrastructure project to serve rural areas where at least 50% of the households are without sufficient access to broadband.
Amplex has five years to draw funds under the Loan Agreement, which expires on October 31, 2029. The Loan is secured by all of Amplex’s assets. The Loan bears interest at a rate of 2% per annum, calculated by daily accrual. All accrued interest and principal on advances will be deferred for a three year period ending on October 31, 2027, unless earlier payment is made by Amplex. At the end of the three-year deferral period, all unpaid accrued interest will be capitalized and added to the outstanding principal, and monthly payments will be established in an amount that amortizes the outstanding balance in equal payments over the remaining term of the Loan. The principal advanced pursuant to this Agreement and remaining unpaid, if any, and interest thereon, shall be due and payable on October 31, 2046. All, or a portion of the outstanding balance, of any advance made under the Loan Agreement may be prepaid on any payment date without penalty.
The obligation of RUS to advance funds to Amplex under the Loan Agreement is subject to conditions that are customary for loans made by RUS, including the accuracy of Amplex’s representations and warranties, no material adverse effect with respect to Amplex, no event of default, receipt of a financial requirement statement from Amplex, current financial statements, compliance with buildout timelines, material compliance with the Loan Agreement, obtaining specified permits, licenses and franchises and maintenance of on deposit in a pledged deposit account of required matching funds for completion of projects.. Other conditions include Amplex having positive cash flow from operations at the end of the fifth year of an award under the Loan Agreement and providing the specified level of broadband service for the period specified in the Loan Agreement. The Loan Agreement contains negative covenants of Amplex that are customary for loans made by RUS, including Amplex not merging, consolidating, reorganizing or selling, leasing or transferring a substantial part of its property without RUS’ prior written consent, not incurring additional debt with specified exceptions, Amplex not changing its principal place or place of business without RUS’ consent and not issuing preferred stock without RUS’ consent. RUS may suspend advances if Amplex suffers a material adverse effect or an event of default occurs.
The Loan Agreement contains customary events of default, including materially incorrect representations and warranties, nonpayment of the Loan, improper expenditures, failure to keep adequate records, failure to build in accordance with timelines, bankruptcy, dissolution or liquidation and impairment of business.. If an event of default occurs, RUS could restrict Amplex’s ability to obtain additional advances under the Loan Agreement, accelerate all amounts outstanding under the Loan Agreement, enforce their interest against collateral pledged under the Loan Agreement or enforce such other rights and remedies as they have under the loan documents or applicable law as secured lenders. The Loan Agreement was executed by Amplex on September 23, 2024, subject to customary closing conditions for loans of this type made by RUS.
The foregoing description is qualified in its entirety by reference to the Loan Agreement, which is filed with this Form 8-K as Exhibit 10.1.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure responsive to this Item is incorporated herein by reference to Item 1.01.
Item 7.01. Regulation FD Disclosure.
On November 7 , 2024 Old Market Capital Corporation issued a press release announcing that its subsidiary Amplex Electric, Inc. has received formal approval from the United States Department of Agriculture that funding was approved for a loan of up to $21,341,792 awarded under the Rural Development Broadband ReConnect Program. The Company has five years to draw funds under this loan which expires October 31, 2029. The press release is filed with this Form 8-K as Exhibit 99.1.
The Company intends to use the loan to build out fiber broadband to meet the requirements of the USDA Reconnect program in Ottawa and Sandusky County, Ohio over the next five years.
In accordance with General Instruction B.2. of Form 8-K, the information in this Item 7.01 hereto is being furnished for informational purposes only and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, except as otherwise expressly stated in such filing.
Item 9.01 Exhibits
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Exhibits: |
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Description |
10.1 |
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99.1 |
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104 |
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* Certain terms in the Loan Agreement have been omitted pursuant to Instruction 6 to Item 1.01 of Form 8-K because such terms are both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed. The registrant undertakes to furnish copies of any of the omitted schedules, exhibits and terms upon request by the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
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OLD MARKET CAPITAL CORPORATION |
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(Registrant) |
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Date: November 7, 2024 |
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/s/ Charles Krebs |
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Charles Krebs |
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Chief Financial Officer (Principal Financial Officer) |
Exhibit 10.1
RUS Project Designation: OH 1701-A72
ReCONNECT PROGRAM
LOAN AND SECURITY AGREEMENT
dated as of June 20, 2024 between
AMPLEX ELECTRIC, INC.
and
THE UNITED STATES OF AMERICA
UNITED STATES DEPARTMENT OF AGRICULTURE RURAL UTILITIES SERVICE
ReCONNECT PROGRAM LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as of June 20, 2024, is between AMPLEX ELECTRIC, INC. ("Awardee"), a for-profit corporation existing under the laws of Ohio and the UNITED STATES OF AMERICA, acting through the Administrator of the Rural Utilities Service ("RUS").
The Awardee has applied for financial assistance ("Application") from RUS to finance the construction of a broadband infrastructure project to serve rural areas where at least 50% of the households are without sufficient access to broadband.
RUS is willing to extend financial assistance, in the form of a loan to the Awardee, pursuant to the Consolidated Appropriations Act, 2018, Pub. L. 115-141, § 779 (the “FY2018 Appropriations”), the Infrastructure Investment and Jobs Act, Pub. L. 117-58 (the “IIJA”), the Funding Opportunity Announcement published at 87 Fed. Reg. 47690 (Aug. 4, 2022), and Title VI of the Rural Electrification Act of 1936 (7 U.S.C. §§ 901 et seq.), and all applicable federal regulations, on the terms and conditions stated herein.
The Awardee is willing to secure the loan and its other obligations to RUS on the terms stated
herein.
THEREFORE, in consideration of the promises and mutual covenants herein contained, the parties agree and bind themselves as follows:
ARTICLE I - DEFINITIONS
The terms defined herein include both the plural and the singular. Unless otherwise specifically provided herein or in the FOA, all accounting terms not otherwise defined herein shall have the meanings assigned to them, and all determinations and computations herein provided for shall be made in accordance with Accounting Requirements.
"Accounting Requirements" shall mean compliance with U.S. Generally Accepted Accounting Principles (GAAP) acceptable to RUS, as well as compliance with the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 C.F.R. 200 and the system of accounting prescribed by RUS Bulletin 1770B-1.
"Advance" or "Advances" shall mean the disbursement of Loan funds in accordance with this
Agreement.
"Affiliate" or "Affiliated Company" of any specified person or entity means any other person or entity directly or indirectly controlling of, controlled by, under direct or indirect common control with, or related to, such specified person or entity, or which exists for the sole purpose of providing any service to one company or exclusively to companies which otherwise meet the definition of affiliate. This definition includes Variable Interest Entities as described in Financial Accounting Standards Board Interpretation (FIN) No. 46(R), Consolidation of Variable Interest Entities. For the purpose of this definition, "control" means the possession directly or indirectly, of the power to direct or cause the direction of the management and policies of a company, whether such power is exercised through one or more intermediary companies, or alone, or in conjunction with, or pursuant to an agreement with, one or more other companies, and whether such power is established through a majority or minority ownership voting of securities, common directors, officers, or stockholders, voting trust, holding trusts (other than money exchanged) for property or services.
"Application" shall have the meaning as defined in the second paragraph hereof.
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“Approved Project Service Area” shall mean all or a portion of the Proposed Funded Service Area, as such term is defined in the FOA and detailed in the map submitted to the Agency by the Awardee, that is approved by the Agency for funding.
"Award" shall mean the Loan described in Article III.
"Awardee" shall mean the Loan recipient named in the first paragraph hereof.
"Buildout Timeline" shall mean the detailed schedule describing the Project build out, submitted with the RUS approved Application, as may be amended from time to time with prior written RUS consent.
"Business Day" shall mean any day that RUS and the Department of Treasury are both open
for business.
"Collateral" shall mean ALL ASSETS of the Awardee including but not limited to those licenses granted by the Federal Communications Commission (“FCC”), subject to the FCC’s prior approval of any assignment or transfer of de jure or de facto control of such licenses.
"Composite Economic Life" means the weighted (by dollar amount of each class of facility in the Award) average economic life of all classes of facilities in the Award, as determined by RUS.
“Current ratio” shall mean the current assets divided by the current liabilities, as set forth in Section 5.8 hereof.
“Debt Service Coverage Ratio (DSCR)” shall mean the ratio of the sum of the Awardee’s total net income or margins, depreciation and amortization expense, and interest expense, minus an allowance for funds used during construction, all divided by the sum of interest on funded debt, other interest and principal payment on debt and capital leases, as set forth in Section 5.8 hereof.
"Distribution" shall have the meaning as defined in Section 7.9.
"Eligible Purposes" shall mean purposes and expenses which are specified in the FOA as being eligible award costs for funding.
"Event of Default" shall have the meaning as defined in Article X. "Expiration Date" shall have the meaning as defined in Section 3.1(e).
“FOA” shall mean the Funding Opportunity Announcement, published in the Federal Register at 87 Fed. Reg. 47690 (Aug. 4, 2022).
“Financial Requirements Commencement Date" shall have the meaning as defined in Section
5.7.
"Form 481" shall have the meaning as defined in Section 4.3(d).
"GAAP" shall mean generally accepted accounting principles in the United States.
"Interest Expense" shall mean the accrual of interest on all classes of indebtedness, including capital leases and securities issued by the Awardee and shall also include the amortization of debt issuance expenses, premiums, and discounts.
"Laws" shall have the meaning as defined in paragraph (e) of Article II. "Loan" shall mean the loan described in Section 3.1.
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"Loan Agreement" shall mean, collectively, this Agreement, the Security Documents, and the
Note(s).
"Material Adverse Effect" shall mean a material adverse effect on, or change in, the condition, financial or otherwise, operations, properties, business or prospects of the Awardee or on the ability of the Awardee to perform its obligations under the Loan Agreement as determined by RUS.
"Net Income" or "Net Margins" shall mean the amount equal to the income that the Awardee has after subtracting costs and expenses from the total revenue. Costs and expenses include but are not limited to all operations and maintenance expenses, corporate operations, taxes, interest, dividends, depreciation, and gains and losses on the disposition of property.
"Network Design" shall mean the network as described in the RUS approved Application. "Net Worth" (equity) shall mean total assets less total liabilities of the Awardee. Net worth
includes the recorded value of capital stock, additional paid-in capital, treasury stock, retained earnings and other comprehensive income.
"Note(s)" shall have the meaning as defined in Section 3.2(a).
"Obligations" shall mean any and all indebtedness, obligations and liabilities of the Awardee to RUS, of every kind and description, direct or indirect, secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising, howsoever evidenced or created, including, without limitation, all loans (including any loan by renewal or extension); all indebtedness, all Notes, all undertakings to take or refrain from taking any action; and all interest, taxes, fees, charges, expenses, and attorney’s fees chargeable to Awardee or incurred by RUS under this Agreement or in any other document or instrument delivered hereunder or as a supplement hereto.
"Permitted Encumbrances" shall mean:
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"Pledged Deposit Account" shall have the meaning as defined in Section 5.4.
"Project" means all of the work, as approved by the Agency, to be performed to bring broadband service to all premises in the Approved Project Service Area under the Application, including construction, the purchase and installation of equipment, and professional services including engineering and accountant/consultant fees, whether funded by federal assistance or other funds.
"Project Completion" shall mean that all Award funds for construction of the broadband system, excluding those funds for subscriber drop connections and customer premise equipment, have been advanced to the Awardee by RUS.
"RE Act" shall mean the Rural Electrification Act of 1936 (7 U.S.C. §§ 901 et seq.). “ReConnect Program Construction Procedures" shall mean the procedures for construction and
Advances, attached hereto as Attachment 2.
“Release of Funds Date” shall mean the date funds are first made available as evidenced by the notice sent by the Agency to the Awardee.
"Security Documents" shall mean, collectively, any mortgage, security agreement, financing statement, deposit account control agreement or other document providing collateral for the Obligations, including without limitation, repayment of the Loan.
“Service Obligation” shall mean the period in which assets purchased with federal assistance and subsidized by a federal grant to lower the interest rate, must be placed into service to carry out the purposes of the ReConnect Program.
"Service Rates" shall mean the rates charged for data, video, voice or any other service proposed in the RUS approved Application.
"Subsidiaries" shall mean the subsidiaries listed in Schedule 1.
"TIER" shall mean the Awardee’s total Net Income or Net Margins plus Interest Expense payable minus Allowance for Funds Used During Construction for any year divided by Interest Expense payable minus Allowance for Funds Used During Construction for such year, as set forth in Section 5.8 hereof.
"Total Assets" shall mean all property owned by the Awardee. Total assets include current and noncurrent assets such as cash, receivables, material and supplies, prepayments, deferred charges, and
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investments; fixed assets (plant) such as buildings and equipment, both in service and under construction; as well as capital leases and intangibles.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
Recognizing that RUS is relying hereon, the Awardee represents and warrants, as of the date of this Agreement, as follows:
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thereof, there has been no material adverse change in the financial condition or operations of the Awardee.
ARTICLE III – THE LOAN
Section 3.1 Loan Amount, Interest Rate, and Expiration Date.
Section 3.2 Loan Agreement
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Section 3.3 Payment
Except as otherwise prescribed by RUS, the Awardee shall make all payments on the Note(s) utilizing electronic fund transfer procedures as specified by RUS.
Section 3.4 Project
Section 3.5 ACH Payments
The Awardee consents to the use of the Automated Clearing House (ACH) Payment System and to the deposit of award funds directly into the Pledged Deposit Account.
ARTICLE IV – CONDITIONS OF FINANCIAL ASSISTANCE
Section 4.1 Conditions Precedent to Closing
In connection with the execution and delivery of this Agreement, each of the following conditions shall be satisfied (all documents, certificates and other evidence of such conditions are to be satisfactory to RUS in its discretion):
(d) of Section 7.3;
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Section 4.2 General Conditions Precedent to RUS’ Obligations to Release Funds for Advance
The obligations of RUS hereunder are subject to the satisfaction of each of the following conditions precedent (all documents, certificates and other evidence of such conditions are to be satisfactory to RUS in its discretion):
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Section 4.3 Conditions to Individual Advances
The obligations of RUS to approve any Advance are subject to the satisfaction of each of the following conditions precedent on or before the date of such Advance (all documents, certificates and other evidence of such conditions precedent are to be satisfactory to RUS in its discretion):
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Section 4.4 First Advance to Pay Off Pre-Application Expenses
Funds to pay off certain pre-application expenses, as defined in the FOA, if any, must be included in the first Advance request.
ARTICLE V – AFFIRMATIVE COVENANTS
Section 5.1 General
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, the Awardee shall duly observe each of the affirmative covenants contained in this Article V.
Section 5.2 Use of Advances
The Awardee shall expend Award funds only for Eligible Purposes in accordance with the RUS approved line-item Project budget and Form(s) 481 submitted to RUS prior to the advance of funds.
Section 5.3 Unused and Disallowed Advances
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Section 5.4 Deposit of Advances into Pledged Deposit Account
Section 5.5 Additional Project Funding
The Awardee shall ensure that adequate funding is in place to complete the Project and will, after obtaining the prior written approval of RUS, obtain additional loans or funds or receive binding commitments for supplemental funding in an amount needed to ensure completion of the Project.
Section 5.6 Miscellaneous Notices
The Awardee shall furnish to RUS:
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Section 5.7 Rates and Financial Performance Criteria
The Awardee shall design, charge and maintain rates in effect which shall enable it to meet the Financial Requirements as specified in Section 5.8.
Section 5.8 Financial Requirements
The Awardee will meet the following requirements:
Section 5.9 Corrective Action
Within thirty (30) days of: (i) sending the financial reports required by Section 6.3 hereof that show the Financial Requirements of Section 5.8 were not met for the reported fiscal period; or (ii) being notified by RUS that such requirements were not met for the period, whichever is earlier, the Awardee, in consultation with RUS, shall provide a written plan satisfactory to RUS setting forth the actions that shall be taken to achieve the specified Financial Requirements on a timely basis and shall promptly implement said plan.
Section 5.10 Service Obligation
The Awardee shall provide the level of broadband service described in the RUS approved Application commencing from the date of Project Completion until the longer of (i) the Composite Economic Life of the facilities financed by the Award as specified on Schedule 1 or (ii) as long as the Note(s) is outstanding. Awardee acknowledges that given the significant amount of government contribution to the Project in the form of a subsidized interest rate through a federal grant, the Service Obligation is a significant portion of the public benefit of the Award, and that a material breach of the Service Obligation shall be an Event of Default.
Section 5.11 Obligations with Respect to the Construction, Operation and Maintenance of the Project
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using RUS form contracts or private contracts; provided that private contracts must comply with equal employment opportunity and civil rights requirements.
Section 5.12 Preservation of Existence and Rights
The Awardee shall take or cause to be taken all such actions as from time to time may be necessary to preserve its existence and to preserve and renew all franchises, contracts, rights of way, easements, permits, and licenses now or hereafter to be granted or conferred upon it, with respect to the Project, the loss of which would have a Material Adverse Effect.
Section 5.13 Compliance with Laws
Awardees shall comply with all applicable federal and state laws, including but not limited to: (i) The nondiscrimination and equal employment opportunity requirements of Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. § 2000e et seq., 7 CFR pt. 15); (ii) Section 504 of the Rehabilitation Act (29 U.S.C. § 794 et seq.; 7 CFR pt. 15b); (iii) The Age Discrimination Act of 1975, as amended (42 U.S.C.
§ 6101 et seq.; 45 CFR pt. 90); (iv) Executive Order 11375, amending Executive Order 11246, Relating to Equal Employment Opportunity (3 CFR pt. 102); (v) The Architectural Barriers Act of 1968, as amended (42 U.S.C. § 4151 et seq.); (vi) The Uniform Federal Accessibility Standards (UFAS), as published by the United States Access Board; (vii) The Council on Environmental Quality Regulations for Implementing the Procedural Provisions of NEPA and certain related federal environmental laws, statutes, regulations, and Executive Orders found in 7 CFR 1970; (viii) The Native American Graves Protection and Repatriation Act (25 USC 3001 et seq., 43 CFR § 10.4); (ix) The Communications Act of 1934, as amended, (47 U.S.C. § 151 et seq.); (x) The Telecommunications Act of 1996, as amended (Pub. L. 104-104, 110 Stat. 56 (1996); and
(xi) The Communications Assistance for Law Enforcement Act (47 U.S.C. § 1001 et seq.) (CALEA).
Section 5.14 Equal Opportunity Requirements
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Section 5.15 Purchases with Award Funds
Except as specifically authorized in writing in advance by RUS, all facilities, materials, equipment, supplies, replacements and all other items purchased with Award funds shall be purchased outright, and not subject to any conditional sales agreement, chattel mortgage, bailment lease or other agreement reserving to the seller any right, title or lien.
Section 5.16 Awardee to Defend Title and Remove Liens
Except for Permitted Encumbrances, the Awardee will maintain and preserve the lien of this Agreement superior to all other liens affecting the Collateral, and will forever warrant and defend the title to the Collateral against any and all claims and demands whatsoever. The Awardee shall make, execute, acknowledge, deliver, file and record all such mortgages, financing statements, continuation statements, security agreements, instruments and conveyances as is necessary to preserve the lien of this Agreement against the Collateral superior to all other liens. The Awardee shall maintain the Collateral free of all liens except for Permitted Encumbrances, and will promptly pay or discharge any and all obligations for or on account of which any such lien or charge might exist or could be created and any and all lawful taxes, rates, levies, assessments, liens, claims or other charges imposed upon or accruing upon any of the Collateral, as and when the same shall become due and payable; and whenever called upon so to do by RUS will furnish to RUS adequate proof of such payment or discharge; provided, however that this provision shall not be deemed to require the payment or discharge of any tax, rate, levy, assessment or other governmental charge while the Awardee is contesting the validity thereof by appropriate proceedings in good faith and so long as it shall have set aside on its books adequate reserves with respect thereto.
Section 5.17 Further Assurances
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Section 5.18 Buy American
Section 5.19 RDOF Funding
If the Awardee is a recipient of Rural Digital Opportunity Fund (RDOF) funding, Awardee acknowledges and certifies that neither funds under this Award nor under the RDOF award will be used to reimburse the same expenditures. Such Awardees must also maintain separate accounts to track sources and uses of each funding source.
Section 5.20 Additional Affirmative Covenants
The Awardee shall comply with the additional affirmative covenants set forth in Schedule 1
hereto.
ARTICLE VI – ACCOUNTING AND REPORTING
Section 6.1 Financial Records
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Section 6.2 Rights of Inspection
The Awardee shall afford RUS, the Office of the Inspector General of USDA, and the Government Accountability Office, through their representatives, reasonable opportunity, at all times during business hours and upon prior notice, to have access to and right to inspect the Project, any other property encumbered by the Security Documents, and any and all books, records, accounts, including electronic books, records, accounts and electronic mail messages, regardless of the physical form or characteristics, invoices, contracts, leases, payroll records, canceled checks, statements, and other documents, and papers of every kind belonging to or in any way pertaining to its property or business, including its Subsidiaries, if any, and to make copies or extracts therefrom.
Section 6.3 Annual Audit
Section 6.4 Reporting
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ARTICLE VII – NEGATIVE COVENANTS
Section 7.1 General
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, the Awardee shall duly observe each of the negative covenants set forth in this Article VII.
Section 7.2 Merger, Consolidation, Transfer of Property, or Change in Control
The Awardee shall not, without the prior written consent of RUS, take or suffer to be taken any steps to reorganize consolidate with or merge into any other corporation, or to sell, lease or transfer (or make any agreement therefor) all or any substantial part of its property, including, without limitation, the Project.
Section 7.3 Covenants for Limited Liability Companies and Similar Awardees
Awardees which are limited liability or similar organizations agree that:
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Section 7.4 Additional Indebtedness
The Awardee shall not, without the prior written consent of RUS, incur additional secured or unsecured indebtedness other than (i) purchase money security interests, (ii) unsecured trade indebtedness and (iii) other debt arising in the ordinary course of business. Indebtedness under items (i), (ii), and (iii) in the aggregate shall not exceed ten percent (10%) of the Awardee’s consolidated total assets.
Section 7.5 Negative Pledge
The Awardee shall not create, incur or suffer any lien, mortgage, pledge, assignment, or other encumbrance on, or security interest on its property, other than Permitted Encumbrances.
Section 7.6 Contracts
The Awardee shall not, without the prior written consent of RUS, enter into any contract or contracts for the operation or management of all or any substantial part of the Awardee's system, including, without limitation, the Project, and shall not enter into any contract for the use by others of all or any substantial part of its system, including, without limitation, the Project.
Section 7.7 Salaries
Salaries, wages, and other compensation paid by the Awardee for services, and directors’, members’, managers’ or trustees’ fees, shall be reasonable and in conformity with the usual practice of entities of the size and nature of the Awardee.
Section 7.8 Extension of Credit
Except as specifically authorized in writing in advance by RUS, the Awardee will make no advance payments or loans, or in any manner extend its credit, either directly or indirectly, with or without interest, to any of its directors, trustees, officers, employees, stockholders, members, managers, Affiliates or Affiliated companies.
Section 7.9 Distributions or Withdrawals
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“Distributions;”) provided, however, Distributions may be made in each fiscal year as follows:
Section 7.10 Changing Principal Place of Business, Place of Conducting Business, or Type of Organization
The Awardee shall not change its principal place of business, place of conducting business, or type of organization without the prior written consent of RUS.
Section 7.11 Changing Name or Place of Incorporation or Organization
The Awardee shall not change its legal name or place of incorporation or organization without giving RUS sixty (60) days prior written notice.
Section 7.12 Historic Preservation
The Awardee shall not, without the prior written consent of RUS, use any Advance to construct any facility which shall involve any district, site, building, structure or object which is included in, or eligible for inclusion in, the National Register of Historic Places maintained by the Secretary of the Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act of 1966.
Section 7.13 Affiliated Transactions
The Awardee shall not enter into any transaction, contract, or dealing with an Affiliate of the Awardee or with the Awardee’s or Affiliate’s directors, trustees, officers, managers, members (if the Awardee is a limited liability company), or other corporate officials, without the prior written consent of RUS. RUS' consent to advance loan funds for affiliated transactions will be limited to an amount which is the lower of cost or market rate and which is subject to verification by RUS and its representatives having access to the books and records of the Affiliate.
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Section 7.14 Preferred Stock
The Awardee shall not issue any new or additional preferred stock without the prior written approval of RUS, which approval shall not be unreasonably withheld if such stock issuance, in RUS’ sole opinion, would not be considered a debt instrument under GAAP.
Section 7.15 Restrictions on Transfers of Property
Section 7.16 Restrictions on Changes to Line-Item Budget
The Awardee agrees that the budget for the Project is a line-item budget and agrees not to make any revisions to the RUS approved line-item Project budget, including, without limitation, the part of the budget for construction, without the prior written approval of RUS.
Section 7.17 Additional Negative Covenants
The Awardee shall comply with the additional negative covenants set forth in Schedule 1
hereto.
ARTICLE VIII - LENDER’S RIGHTS
Section 8.1 Termination of Award Offer
RUS, in its sole discretion, may terminate the offer to make the Loan if it does not receive the Loan Agreement, duly executed on behalf of the Awardee and all conditions in Section 4.1 hereof are not satisfied within sixty (60) days from the date that RUS notifies in writing that the environmental review process has been concluded.
Section 8.2 Audits and Compliance Reviews
After giving prior notification to the Awardee, RUS has the right to conduct compliance reviews and audits of the Awardee to assure compliance with the Loan- Agreement, FOA and the Accounting Requirements.
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Section 8.3 Disallowed Expenditures
Upon a determination by RUS that the Awardee did not expend Award funds on Eligible Purposes in accordance with the RUS approved line-item Project budget and the Form(s) 481 approved by RUS prior to the advance of funds, RUS may, in its sole discretion:
Section 8.4 Suspension of Advances
RUS may, in its absolute discretion, suspend making Advances on the Award upon its making a determination that an event has occurred that is likely to have a Material Adverse Effect. RUS may also suspend making advances of the Award upon the occurrence of an Event of Default.
Section 8.5 Payment Extensions
RUS may, at any time or times in succession without notice to or the consent of the Awardee and upon such terms as RUS may prescribe, grant to any person, firm or entity who shall have become obligated to pay all or any part of the principal of or interest on any note held by or indebtedness owed to RUS or who may be affected by the lien created by the Loan Agreement, an extension of the time for the payment of such principal or interest, and after any such extension the Awardee will remain liable for the payment of such note or indebtedness to the same extent as though it had at the time of such extension consented thereto in writing.
Section 8.6 Right to Expend Money
RUS shall have the right (without prejudice to any of its rights with respect to any Event of Default) to advance or expend moneys for the purpose of procuring insurance, or for the payment of insurance premiums as required hereunder, or to advance or expend moneys for the payment of taxes, assessments or other charges, or to save the Collateral from sale or forfeiture for any unpaid tax or assessment, or otherwise, or to redeem the same from any tax or other sale, or to purchase any tax title thereon, or to remove or purchase any mechanics’ liens or other encumbrance thereon, or to make repairs thereon or to comply with any covenant herein contained or to prosecute and defend any suit in relation to the Collateral or in any manner to protect the Collateral and the title thereto, and all sums so advanced for any of the aforesaid purposes with interest thereon at the highest legal rate, but not in excess of twelve per centum (12%) per annum shall be deemed a charge upon the Collateral and shall be forthwith paid to RUS upon demand. It shall not be obligatory for RUS in making any such advances or expenditures to inquire into the validity of any such tax title, or of any such taxes or assessments or sales therefor, or of any such mechanics’ liens or other encumbrance.
Section 8.7 Right to File Financing Statements
RUS shall have the right to file such financing statements and continuation statements on its behalf, as secured party, and on behalf of the Awardee, as debtor, as RUS deems necessary to perfect a first lien on the Collateral and to maintain and preserve such perfected first lien as long as the Loan remains outstanding. The Awardee shall reimburse RUS for any expenses incurred in the exercise of this right.
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ARTICLE IX –SECURITY INTEREST
Section 9.1 Collateral
To secure the payment and performance of the Obligations, including without limitation, the Note, the Awardee hereby pledges, assigns, and transfers to RUS, and grants to RUS a continuing security interest in ALL ASSETS of the Awardee, whether now owned or hereafter acquired. Awardee also covenants that it will enter into a mortgage in favor of RUS for any future real property that is acquired while any Note is outstanding.
ARTICLE X - EVENTS OF DEFAULT
Section 10.1 Events of Default
The following shall be events of default (each an "Event of Default") under this Agreement:
(5) Business Days, as such term is herein defined;
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to carry on any material portion of its business or the Awardee files for or an event occurs which can reasonably be expected to result in its dissolution or termination;
(2) ordering the winding up or liquidation of its affairs; or the Awardee shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian or trustee, of a substantial part of its property, or make any general assignment for the benefit of creditors;
ARTICLE XI - REMEDIES
Section 11.1 General
Upon the occurrence of an Event of Default, RUS may pursue all rights and remedies available to RUS that are contemplated by the Loan Agreement in the manner, upon the conditions, and with the effect provided in the Loan Agreement, and may pursue such other remedies that are generally available at law or in equity including, without limitation, a suit for specific performance, injunctive relief or damages. Nothing herein shall limit the right of RUS to pursue all rights and remedies available to a creditor following the occurrence of an Event of Default listed in Article X hereof. Each right, power and remedy of RUS shall be cumulative and concurrent, and recourse to one or more rights or remedies shall not constitute a waiver of any other right, power or remedy.
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Section 11.2 Remedies
In addition to the remedies referred to in Section 11.1 hereof, upon the occurrence of an Event of Default, RUS may:
(iv) send requests for verifications of Collateral to customers or account debtors; (v) sell, assign, sue for, collect, or compromise payment of all any part of the Collateral in the name of the Awardee or in its own name, or make any other disposition of Collateral, or any part thereof, which disposition may be for cash, credit, or any combination thereof, and RUS may purchase all or any part of the Collateral at public or, if permitted by law, private sale, and in lieu of actual payment of such purchase price may set off the amount of such price against the Obligations; granting to RUS, as the attorney-in-fact of the Awardee, full power of substitution and full power to do any and all things necessary to be done in and about the premises fully and effectually as the Awardee might or could do but for this appointment, hereby ratifying all that said attorney-in-fact shall lawfully do or cause to be done by virtue hereof. Neither RUS, its employees, nor its agents shall be liable for any act or omissions or for any error of judgment or mistake of fact or law in its capacity as such attorney-in-fact. This power of attorney is coupled with an interest and shall be irrevocable during the term of this Agreement and so long as any Obligations shall remain outstanding;
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Obligations. RUS agrees to notify the Awardee promptly after any such setoff or recoupment and the application thereof, provided that the failure to give such notice shall not affect the validity of such setoff, recoupment or application. Awardee waives all rights of setoff, deduction, recoupment or counterclaim; and/or
ARTICLE XII - MISCELLANEOUS
Section 12.1 Notices
All notices, requests and other communications provided for herein including, without limitation, any modifications of, or waivers, requests or consents under, this Agreement shall be given or made in writing (including, without limitation, by email) and delivered to the intended recipient at the "Address for Notices" specified below; or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by email or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as provided for herein. The Addresses for Notices of the respective parties are as follows:
RUS
Rural Utilities Service
United States Department of Agriculture 1400 Independence Avenue, S.W. Washington, D.C.20250-1510 Attention: Administrator
Email: reconnect@usda.gov
With a copy to:
Rural Utilities Service
United States Department of Agriculture 1400 Independence Avenue, S.W.
Stop 1590, Room No. 4121
Washington, D.C. 20250-1590 Attention: Aylene Mafnas
Email: TelecomPMRA@usda.gov
Section 12.2 Notices of Actions Against Collateral
Awardee
See Schedule 1
With a copy to: See Schedule 1
Any notice required to be given by RUS of a sale or other disposition or other intended action by RUS with respect to any of the Collateral, or otherwise, made in accordance with this Agreement at least five (5) days prior to such proposed action, shall constitute fair and reasonable notice to the Awardee of any such action.
Section 12.3 Application of Proceeds
Any proceeds or funds arising from the exercise of any rights or the enforcement of any remedies herein provided after the payment or provision for the payment of any and all costs and expenses in connection with the exercise of such rights or the enforcement of such remedies shall be applied first, to
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the payment of indebtedness hereby secured other than the principal of or interest on the Notes; second, to the ratable payment of interest which shall have accrued on the Notes and which shall be unpaid; third, to the ratable payment of or on account of the unpaid principal of the Notes, and the balance, if any, shall be paid to whosoever shall be entitled thereto.
Section 12.4 Expenses
To the extent allowed by law, the Awardee shall pay all costs and expenses of RUS, including reasonable fees of counsel, incurred in connection with the enforcement of the Loan Agreement or with the preparation for such enforcement if RUS has reasonable grounds to believe that such enforcement may be necessary.
Section 12.5 Late Payments
If payment of any amount due hereunder is not received at the United States Treasury in Washington, DC, or such other location as RUS may designate to the Awardee within five (5) Business Days after the due date thereof or such other time period as RUS may prescribe from time to time in its policies of general application in connection with any late payment charge (such unpaid amount being herein called the "delinquent amount", and the period beginning after such due date until payment of the delinquent amount being herein called the "late-payment period"), the Awardee shall pay to RUS, in addition to all other amounts due under the terms of the Notes and this Agreement, any late payment charge as may be fixed from time to time on the delinquent amount for the late-payment period by regulations adopted by RUS.
Section 12.6 Filing Fees
To the extent permitted by law, the Awardee agrees to pay all expenses of RUS (including the fees and expenses of its counsel) in connection with the filing or recordation of all financing statements and instruments as may be required by RUS in connection with this Agreement, including, without limitation, all documentary stamps, recordation and transfer taxes and other costs and taxes incident to recordation of any document or instrument in connection herewith. Awardee agrees to save harmless and indemnify RUS from and against any liability resulting from the failure to pay any required documentary stamps, recordation and transfer taxes, recording costs, or any other expenses incurred by RUS in connection with this Agreement. The provisions of this section shall survive the execution and delivery of this Agreement and the payment of all other amounts due hereunder or due on the Notes.
Section 12.7 No Waiver
No failure on the part of RUS to exercise, and no delay in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise by RUS of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
Section 12.8 Governing Law
This Agreement shall be governed by and construed in accordance with applicable federal law and, in the absence of controlling federal law, by the laws of the State identified in the first paragraph herein, except those that would render such choice of law ineffective.
Section 12.9 Consent to Jurisdiction
The Awardee hereby irrevocably submits to the jurisdiction of the U.S. District Court for the District of Columbia and the US Court of Appeals for the Federal Circuit (both the "DC Federal Courts") for any action or proceeding arising out of or relating to this Agreement, and hereby irrevocably agrees that all claims in respect of such action or proceeding shall be heard and determined in such federal courts. The Awardee irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Awardee's address set forth in Schedule 1. The Awardee hereby irrevocably waives any objection which it
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may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the DC Federal Courts and hereby further irrevocably waives and agrees not to plead or claim in such court that any such action or proceeding brought in any such court has been brought in a forum non conveniens. Nothing herein shall affect the right of the Government to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Awardee in its own jurisdiction.
Section 12.10 Waiver of Jury Trial
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, SECURED PARTY, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 12.11 Holiday Payments
If any payment to be made by the Awardee hereunder shall become due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment.
Section 12.12 Rescission
The Awardee may elect to rescind the Award, in which event RUS shall release the Awardee from its obligations hereunder, provided the Awardee complies with such terms and conditions as RUS may impose for such release.
Section 12.13 Successors and Assigns
Section 12.14 Complete Agreement; Waivers and Amendments
Subject to RUS Regulations, this Agreement and all parts of the Loan Agreement are intended by the parties to be a complete and final expression of their agreement. However, RUS reserves the right to waive its rights to compliance with any provision of this Agreement and any other part of the Loan Agreement. No amendment, modification, or waiver of any provision hereof or thereof, and no consent to any departure of the Awardee herefrom or therefrom, shall be effective unless approved in writing by RUS in the form of either a RUS Regulation or other writing signed by or on behalf of RUS, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
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Section 12.15 Headings
The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and do not constitute part of this Agreement.
Section 12.16 Severability
If any term, provision, condition, or any part thereof, of this Agreement, Note(s) or the Security Documents shall for any reason be found or held invalid or unenforceable by any governmental agency or court of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder of such term, provision, or condition nor any other term, provision, or condition, and this Agreement, the Note(s), and the Security Documents shall survive and be construed as if such invalid or unenforceable term, provision or condition had not been contained therein.
Section 12.17 Right of Setoff
Upon the occurrence and during the continuance of any Event of Default, RUS is hereby authorized at any time and from time to time, without prior notice to the Awardee, to exercise rights of setoff or recoupment and apply any and all amounts held or hereafter held, by RUS or owed to the Awardee or for the credit or account of the Awardee against any and all of the obligations of the Awardee now or hereafter existing hereunder or under the Note(s). RUS agrees to notify the Awardee promptly after any such setoff or recoupment and the application thereof, provided that the failure to give such notice shall not affect the validity of such setoff, recoupment or application. The rights of RUS under this section are in addition to any other rights and remedies (including other rights of setoff or recoupment) which RUS may have. Awardee waives all rights of setoff, deduction, recoupment or counterclaim.
Section 12.18 Schedules and Attachments
Each Schedule and Attachment attached hereto and referred to herein is each an integral part of this Agreement.
Section 12.19 Authority of Representatives of RUS
In the case of any consent, approval or waiver from RUS that is required under this Agreement or any other part of the Loan Agreement, such consent, approval or waiver must be in writing and signed by an authorized RUS representative to be effective. As used in this section, "authorized RUS representative" means the Administrator of RUS, and also means a person to whom the Administrator has officially delegated specific or general authority to take the action in question.
Section 12.20 Term
This Agreement shall remain in effect until one of the following two events has occurred:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
AMPLEX ELECTRIC. INC.
By: /s/ Mark R. Radabaugh
Name: Mark R. Radabaugh
Title: President & CEO
(Seal)
Attested to By: /s/ Charles Krebs
Secretary
UNITED STATES OF AMERICA
By: /s/ Andrew Berke
Name: Andrew Berke
Title: Administrator of the Rural Utilities Service
Exhibit 99.1
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FOR IMMEDIATE RELEASE |
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Old Market CC |
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Contact: Charles Krebs |
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NASDAQ: OMCC |
Old Market Capital Corporation Corporate Headquarters 1601 Dodge St., Suite 3350 Omaha, NE, 68102 |
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CFO Ph # (402) 658-0809 |
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Website: www.nicholasfinancial.com Future Website: www.oldmarketcapital.com |
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Old Market Capital Announces
Approval of RUS Loan
November 7, 2024 – Omaha, Nebraska – Old Market Capital Corporation (NASDAQ: OMCC) (the "Company") announced that its subsidiary, Amplex Electric, Inc. has received formal approval from the United States Department of Agriculture that funding was approved for a loan of up to approximately $21.3M awarded under the Rural Development Broadband ReConnect Program. The Company has five years to draw funds under this loan which expires October 31, 2029.
The Company intends to use the loan to build out fiber broadband to meet the requirements of the USDA ReConnect program in Ottawa and Sandusky County, Ohio over the next five years.
Old Market Capital Corporation (NASDAQ:OMCC) was previously a specialized consumer finance company. After the Company announced the restructuring of its operations in November 2023, the company now operates as a holding company which owns a controlling interest in a broadband company and which seeks to pursue additional controlling interests in other companies and sectors yet to be determined. For an index of Old Market Capital’s new releases or to obtain a specific release, please visit our company’s legacy website at www.nicholasfinancial.com and future website currently under construction, www.oldmarketcapital.com.
Cautionary Note regarding Forward-Looking Statements
This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company’s current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as “anticipate,” “estimate,” intend,” “plan,” “expect,” “project,” "explore" “believe,” “may,” “will,” “should,” “would,” “could,” “probable” and any variation of the foregoing and similar expressions are forward-looking statements. These statements, are inherently uncertain and subject to certain risks, uncertainties and assumptions that may cause results to differ materially from those expressed or implied in forward-looking statements.