Exhibit 10.3
AMENDED AND RESTATED
EQUIPMENT LOAN AND SECURITY AGREEMENT
-------------------------------------
This AMENDED AND RESTATED EQUIPMENT LOAN AND SECURITY AGREEMENT
("AGREEMENT"), is originally dated as of May 28, 1996, as first amended by that
certain letter agreement dated November 18, 1996 and as now amended and restated
as of March 27, 1997 by and between the following parties:
LENDER/SECURED PARTY: NTFC CAPITAL CORPORATION, a Delaware corporation
with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("LENDER")
BORROWER/DEBTOR: ECONOPHONE, INC., a New York corporation with its
principal place of business at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("BORROWER"), and such
successors and assigns as may be permitted
hereunder.
This Amended and Restated Equipment Loan and Security Agreement includes the
general terms and conditions contained herein and all the exhibits and schedules
attached hereto, all of which are incorporated herein. In the event of a
conflict between the general terms and conditions and any schedule, the
additional terms and conditions stated in the schedule shall control.
By executing this Equipment Loan and Security Agreement, Lender agrees to make
loans to Borrower, and Borrower agrees to borrow from Lender and to provide
collateral to secure such loans, all on the terms and conditions set forth
herein.
IN WITNESS WHEREOF, the parties have executed this Equipment Loan and Security
Agreement by their duly authorized representatives:
LENDER: BORROWER:
NTFC CAPITAL CORPORATION ECONOPHONE, INC.
BY: BY:
TITLE: TITLE:
DATE: DATE:
AMERICAN TELEMEDIA, LTD, an English
corporation and wholly owned subsidiary of
Borrower, with its principal place of
business at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ E1496B, joins in
executing this Agreement to evidence its
liability, jointly and severally for all
obligations of Borrower hereunder.
BY:
TITLE:
TABLE OF CONTENTS
-----------------
ARTICLE 1: DEFINITIONS.......................................................
1.01. Certain Definitions...........................................
1.02. Accounting Principles; Subsidiaries...........................
1.03. UCC Terms....................................................
1.04. General Construction; Captions...............................
1.05. References to Documents and Laws.............................
ARTICLE 2: LOANS............................................................
2.01. Commitment...................................................
2.02. Note and Payment Terms.......................................
2.03. Procedures for Borrowing.....................................
2.04. Prepayments..................................................
2.05. Computation of Interest......................................
2.06. Payments.....................................................
2.07. Indemnity....................................................
2.08. Use of Proceeds..............................................
2.09. Fees.........................................................
2.10. Lender's Expenses............................................
2.11. Stock Pledge Agreement.......................................
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT................................
3.01. Grant of Security Interest...................................
3.02. Priority of Security Interests...............................
3.03. Further Documentation; Pledge of Instruments.................
3.04. Further Identification of Collateral.........................
3.05. Remedies.....................................................
3.06. Standard of Care.............................................
3.07. Advances to Protect Collateral...............................
3.08. License to Use...............................................
3.09 Priority of Security Interests and/or Liens on Equipment
located outside of the United States.........................
ARTICLE 4: REPRESENTATIONS AND WARRANTIES..................................
4.01. Organization and Qualification...............................
4.02. Authority and Authorization..................................
4.03. Execution and Binding Effect.................................
4.04. Governmental Authorizations..................................
4.05. Regulatory Authorizations....................................
4.06. Material Agreement; Absence of Conflicts.....................
4.07. No Restrictions..............................................
4.08. Financial Statements.........................................
4.09. Financial Accounting Practices...............................
4.10. Accurate and Complete Disclosure.............................
4.11. No Event of Default; Compliance with Material Agreements.....
4.12. Litigation...................................................
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4.13. Rights to Property...........................................
4.14. Financial Condition..........................................
4.15. Taxes........................................................
4.16. No Material Adverse Change...................................
4.17. No Regulatory Event..........................................
4.18. Trade Relations..............................................
4.19. No Brokerage Fees............................................
4.20. Margin Stock; Regulation U...................................
4.21. Investment Company; Public Utility Holding Company...........
4.22. Personal Holding Company.....................................
4.23. ERISA........................................................
4.24. Environmental Warranties.....................................
4.25. Security Interests...........................................
4.26. Place of Business............................................
4.27. Location of Collateral.......................................
4.28. Clear Title To Collateral....................................
4.29. Assumed Names................................................
4.30. [INTENTIONALLY OMITTED]......................................
4.31. NTI Purchase Agreement.......................................
ARTICLE 5: CONDITIONS OF CLOSING...........................................
5.01 Initial Closing..............................................
5.02 Amendment Closing............................................
ARTICLE 6: CONDITIONS OF LENDING............................................
6.01. Conditions for Initial Advance...............................
6.02. Conditions for All Advances..................................
6.03. Affirmation of Representations and Warranties................
6.04. Deadline for Funding Conditions..............................
ARTICLE 7: AFFIRMATIVE COVENANTS...........................................
7.01. Reporting and Information Requirements.......................
7.02 Other Notices................................................
7.03. Notice of Pension-Related Events.............................
7.04. Inspection Rights............................................
7.05. Preservation of Corporate Existence and Qualification........
7.06. Continuation of Business.....................................
7.07. Insurance....................................................
7.08. Payment of Taxes, Charges, Claims and Current Liabilities....
7.09. Financial Accounting Practices...............................
7.10. Compliance with Laws.........................................
7.11. Use of Proceeds..............................................
7.12. Government Authorizations; Regulatory Authorizations, Etc....
7.13. Contracts and Franchises.....................................
7.14. Consents.....................................................
7.15. Financial Covenants..........................................
7.16. Construction and Storage.....................................
7.17. Upgrade NTI Equipment........................................
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ARTICLE 8: NEGATIVE COVENANTS...............................................
8.01. Additional Indebtedness......................................
8.02. Restrictions on Liens and Sale of Collateral.................
8.03. Limitation on Contingent Obligations.........................
8.04. Fees and Commissions.........................................
8.05. Prohibition of Mergers, Acquisitions, Name, Office or Business
Changes......................................................
8.06. Limitation on Equity Payments................................
8.07. Limitation on Investments, Advances and Loans................
8.08. Capital Expenditures.........................................
8.09. Limitation on Leases.........................................
8.10. Transactions with Affiliates.................................
8.11. Termination of NTI Purchase Agreement........................
8.12. Removal of Collateral........................................
8.13. Assumed Names................................................
ARTICLE 9: EVENTS OF DEFAULT................................................
9.01. Events of Default............................................
9.02. Consequences of an Event of Default..........................
9.03. Exercise of Rights...........................................
9.04. Rights of Secured Party.......................................
9.05. Notices, Etc. Waived.........................................
9.06. Additional Remedies..........................................
9.07. Application of Proceeds......................................
9.08. Discontinuance of Proceedings................................
9.09. Power of Attorney............................................
9.10. Regulatory Matters...........................................
ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS................................
10.01. Modifications and Waivers.....................................
10.02. Advances Not Implied Waivers.................................
10.03. Deviation from Covenants......................................
10.04. Holidays.....................................................
10.05. Records......................................................
10.06. Notices......................................................
10.07. FCC and PUC Approval.........................................
10.08. Lender Sole Beneficiary......................................
10.09. Lender's Review of Information...............................
10.10. No Joint Venture.............................................
10.11. Severability.................................................
10.12. Rights Cumulative............................................
10.13. Duration; Survival...........................................
10.14. Governing Law................................................
10.15. Counterparts.................................................
10.16. Successors and Assigns.......................................
10.17. Participation................................................
10.18. Time of Essence..............................................
10.19. Disclosures and Confidentiality..............................
10.20. Jurisdiction and Venue.......................................
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10.21. Jury Waiver..................................................
10.22. Limitation on Liability......................................
10.23. Borrower Waivers.............................................
10.24. Schedules....................................................
10.25. Agreement to Govern..........................................
10.26. Entire Agreement.............................................
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SCHEDULES TO EQUIPMENT LOAN AND SECURITY AGREEMENT
--------------------------------------------------
Schedule 1 Borrower Information and Defined Terms
Schedule 2.01 Maximum Loan Amount
Schedule 2.02 Payment Terms and Governing Law
Schedule 2.09 Fees
Schedule 4.04 Required Consents
Schedule 4.05 Regulatory Authorizations
Schedule 4.07 Restrictions on Loans
Schedule 4.08 Financial Statements
Schedule 4.12 Pending Litigation
Schedule 4.25 UCC Filing Offices
Schedule 4.26 Principal Offices and Location of Collateral
Schedule 4.29 Assumed Names
Schedule 4.31 NTI Purchase Agreement
Schedule 6.02 Post-Closing Items
Schedule 7.07 Insurance
Schedule 7.15 Financial Covenants
Schedule 8.01 Permitted Specific Indebtedness
Schedule 8.02 Permitted Specific Encumbrances
Schedule 8.06 Permitted Equity Payments
EXHIBITS TO EQUIPMENT LOAN AND SECURITY AGREEMENT
-------------------------------------------------
Exhibit A Form of Note
Exhibit B Form of Borrowing Certificate
Exhibit C Form of Opinion of Counsel for Borrower
Exhibit D [INTENTIONALLY OMITTED]
Exhibit E Form of Landlord's Consent
Exhibit E-1 Form of Mortgagee's Consent
Exhibit F Certificate of Financial Condition
Exhibit G Form of Stock Pledge Agreement
Exhibit H Form of Memorandum Draft
v
AMENDED AND RESTATED
EQUIPMENT LOAN AND SECURITY AGREEMENT
-------------------------------------
THIS AMENDED AND RESTATED EQUIPMENT LOAN AND SECURITY AGREEMENT
("AGREEMENT") is dated as of the "AMENDMENT CLOSING DATE" set forth on SCHEDULE
1 hereto, by and between the entity or entities described on SCHEDULE 1 hereto
(collectively, "BORROWER") and NTFC CAPITAL CORPORATION, a Delaware corporation
("LENDER"), with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
B A C K G R O U N D:
--------------------
A. Borrower has entered into a certain purchase agreement with Northern
Telecom Inc., as described on SCHEDULE 1 hereto, providing for Borrower's
purchase of certain telecommunications equipment and the license of associated
software, all as described therein, and has requested Lender to extend credit to
Borrower to finance such purchase and license, as described on SCHEDULE 1
hereto.
B. WHEREAS, Borrower and Lender previously entered into an Equipment Loan
and Security Agreement dated as of May 28, 1996 (the "Original Agreement"),
pursuant to which the Lender agreed to loan Borrower up to Two Million Dollars
($2,000,000) subject to the terms and conditions stated in the Original
Agreement, and
C. WHEREAS, Borrower and Lender executed that certain Letter Agreement
dated as of November 18, 1996 extending the funding date.
D. Borrower has requested Lender to extend additional credit subject to
the terms and conditions set forth in this Agreement, and Lender is willing to
extend such credit upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE 1: DEFINITIONS
----------------------
1.01. CERTAIN DEFINITIONS. Certain terms are defined on SCHEDULE 1
hereto. In addition to other words and terms defined in the preamble hereof or
elsewhere in this Agreement, or on the Schedules hereto, the following words and
terms shall have the following meanings unless the context otherwise clearly
requires:
"ADDITIONAL EQUIPMENT": any equipment purchased by the Borrower in
furtherance of or in connection with the Description of Business set forth on
SCHEDULE 1, other than the purchase of the Equipment with the Advances.
"ADVANCE(S)": any advance or loan of funds made by Lender to Borrower
pursuant to this Agreement.
"AFFILIATE": as applied to any Person, any second Person directly or
indirectly controlling, controlled by, or under common control with that Person,
or related to such Person by blood, marriage or adoption. For purposes of this
definition and the definition of "Subsidiary", a Person shall be deemed to
control another Person if such first Person possesses, directly or indirectly,
the power to direct, or to cause the direction of, the management and policies
of such other Person, whether through ownership of voting securities, by
contract or otherwise.
"AFFILIATE TRANSACTION": the merger of the Borrower with an Affiliate,
whether the Borrower, Affiliate, or another entity is the surviving entity, or
other combination involving the Borrower and Affiliate, provided that (i) such
Affiliate Transaction does not cause a Change of Control of the Borrower (or in
the event that the surviving entity of such merger is not the Borrower, the
Owners of the Borrower immediately prior to such transaction continue to have
the direct or indirect control of, or the ability or right to control, a
majority of the voting shares of each class of securities or ownership rights in
the successor to the Borrower and the right and/or power to control the election
of the Board of Directors of the successor to the Borrower); (ii) the surviving
corporation assumes the obligations of the Borrower hereunder in writing
reasonably satisfactory to Lender; (iii) on or before the consummation of such
transaction, Lender receives an opinion of counsel to the surviving company with
respect to such matters as Lender deems reasonably necessary (including, but not
limited to, the validity and enforceability of the written assumption by such
successor and the continued priority and perfection of the security interests on
the Collateral in favor of the Lender); and (iv) immediately prior to, and after
giving effect to, such merger or consolidation and the assumption by such
successor of Borrower's obligations hereunder, there shall not exist a Default
or Event of Default.
"AMENDMENT CLOSING DATE": as defined in SCHEDULE 1 hereto.
"BASIC AGREEMENTS": a collective reference to this Agreement, the Original
Loan Agreement, each Note, and the Security Documents.
"BORROWING CERTIFICATE": a certificate substantially in the form of
EXHIBIT B hereto.
"BORROWING DATE": any Business Day on which an Advance is made to Borrower
hereunder.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on which
commercial banks in Nashville, Tennessee are authorized or required by law to
close.
"BUSINESS PLAN": the Borrower's business plan, including pro forma
projections, as described in, and attached to, SCHEDULE 1.
"CALENDAR QUARTER": each three month period starting on each January 1,
April 1, July 1, and October 1, during the term of this Agreement.
"CASH": at any time, the cash, cash equivalents or marketable investment
grade securities held by Borrower free of any claims or encumbrances.
"CASH FLOW": during any fiscal period of Borrower, the sum of (i) net
income (or loss) (which may be a positive or negative number) for such period,
plus (ii) all non-cash items deducted in determining such net income (or loss),
minus (iii) all non-cash items added in determining such net income (or loss)
during such period, less (iv) any Equity Payments pursuant to SECTION 8.06
hereof or
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payments on Subordinated Indebtedness made during such period.
"CERTIFICATE OF FINANCIAL CONDITION": a certificate in the form of EXHIBIT
F hereto, executed by Borrower.
"CHANGE IN CONTROL": any change in the direct or indirect control of, or
the ability or right to control, a majority of the voting shares of any class of
securities or ownership rights in the Borrower (other than the Preferred Stock)
or in the right and/or the power to control the election of the board of
directors of the Borrower.
"CLOSING DATE": as defined on SCHEDULE 1 hereto.
"CODE": the Internal Revenue Code of 1986, as amended from time to time.
"COLLATERAL": as defined in Section 3.01 hereof.
"COMMITMENT": as defined in Section 2.01 hereof.
"COMMUNICATIONS LAW": any and all of (i) the Communications Act of 1934, as
amended, and any similar or successor federal statute, and the rules and
regulations of the FCC thereunder, (ii) any state law governing the provision of
telecommunications services, and the rules and regulations of the PUC, all as
the same may be in effect from time to time.
"CONSENT": a consent to a collateral assignment of the NTI Purchase
Agreement, a Landlord Consent and/or a Mortgagee's Consent.
"CONTINGENT OBLIGATION": as to any Person, any obligation of such Person
guaranteeing, directly or indirectly, any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof.
"DEBT SERVICE": for any fiscal period of Borrower, the sum of all principal
and interest payments that Borrower is required to make during such period on
account of all of its Indebtedness including, without limitation, (a) amounts
due during such period on account of capitalized leases, (b) the then current
portion of any long-term Indebtedness, (c) amounts due on short-term
Indebtedness, and (d) amounts due under this Agreement and each Note.
"DEBT SERVICE COVERAGE RATIO": at the end of any fiscal period, the ratio
of Borrower's Cash Flow for such fiscal period to Borrower's Debt Service for
such fiscal period.
"DEFAULT": any of the conditions or occurrences specified in SECTION 9.01,
whether or not any
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requirement for the giving of notice, the lapse of time, or both, or any other
condition has been satisfied.
"DEFAULT RATE": a rate of interest equal to the lesser of (i) three percent
(3%) over the Interest Rate, or (ii) the maximum permissible rate under
applicable law in effect at any time.
"EBITDA": for any fiscal period, the Borrower's actual operating earnings
from ongoing operations and before interest, taxes, depreciation and debt
amortization for such fiscal period.
"ENVIRONMENTAL LAW": any current or future federal, state and local law
(including common law), statute, regulation, ordinance, rulings, codes, judicial
order, administrative order or terms of licenses or permits applicable to
environmental conditions (including without limitation conditions relating to
ambient air, surface water, groundwater, land surface or subsurface strata),
including without limitation all such laws governing employment, the generation,
use, storage, disposal or transportation of toxic or hazardous substances or
wastes (including, without limitation, asbestos and petroleum products), the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Superfund Amendment and
Reauthorization Act of 1986, the Toxic Substances Control Act, the Clean Air
Act, the Water Pollution Control Act, the Hazardous Waste Management Act, the
Mineral Lands and Leasing Act, the Surface Mining Control and Reclamation Act,
U.S. Department of Transportation Regulations, and all similar state and local
laws, regulations, all as now or hereafter amended.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute.
"EQUIPMENT": as defined in SECTION 3.01 hereof.
"EQUITY PAYMENT": any distribution of earnings or capital to any Owner, or
any redemption of stock or other ownership interests, either directly or
indirectly, whether in cash or property or in obligations of the Borrower.
"EVENT OF DEFAULT": any of the events specified in SECTION 9.01 hereof,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, under SECTION 9.01 or otherwise, has been
satisfied.
"FINANCING TERMINATION DATE": as defined on SCHEDULE 2.02 hereto.
"FCC": the Federal Communications Commission of the United States of
America, and any successor, in whole or in part, to its jurisdiction.
"FOREIGN TRANSACTION": the establishment by Borrower of foreign Affiliates,
Subsidiaries, or joint venture operations outside the United States.
"GAAP": subject to SECTION 1.02 hereof, generally accepted accounting
principles in the United States of America (as such principles may change from
time to time) applied on a consistent basis (except for changes in application
in which Borrower's independent certified public accountants concur), applied
both to classification of items and amounts.
"GENERAL INTANGIBLES": as defined in SECTION 3.01 hereof.
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"GOVERNMENTAL ACTIONS": actions by any Governmental Authority.
"GOVERNMENTAL AUTHORITY": the federal government, any state or political
subdivision thereof, any city or municipal entity, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"HIGH YIELD NOTES": unsecured unsubordinated obligations of Borrower, for
which it shall have received on the issuance thereof gross proceeds of not less
than seventy-five million dollars ($75,000,000), with a maturity date not
earlier than 2007, on which no interest will be payable prior to 2002, and which
are issued pursuant to documents containing substantially the same terms and
conditions as those described in the Memorandum Draft.
"HIGH YIELD PERIOD": the time during which Borrower has issued and has
outstanding High Yield Notes.
"INDEBTEDNESS": as to any Person, at a particular time, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which such Person otherwise assures a
creditor against loss, (b) obligations under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases in respect of
which obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor against loss, (c) obligations of such Person to purchase or repurchase
accounts receivable, chattel paper or other payment rights sold or assigned by
such Person, and (d) indebtedness or obligations of such Person under or with
respect to letters of credit, notes, bonds or other debt instruments, but (e)
excluding trade payables incurred by Borrower in the ordinary course of
business.
"INITIAL PAYMENT DATE": either a Tranche 1 or Tranche 2 Initial Payment
Date.
"INTEREST PAYMENT DATE": either a Tranche 1 or Tranche 2 Interest Payment
Date.
"INTEREST RATE": as defined on SCHEDULE 2.02 hereto.
"LANDLORD CONSENT": a consent substantially in the form of EXHIBIT E hereto
or in other form acceptable to Lender, to be executed by the owner/landlord,
sublessor and/or licensor (including carriers) of any real property where any of
the Collateral is to be located.
"LAW": any law (including common law), constitution, statute, regulation,
rule, ordinance, order, injunction, writ, decree or award of any governmental
body or court of competent jurisdiction or of any arbitrator (including but not
limited to ERISA, the Code, the UCC, any applicable tax law, product safety law,
occupational safety or health law, Communications Law, Environmental Law and/or
securities laws).
"LENDER'S EXPENSES": as defined in SECTION 2.10 hereof.
"LIEN": any mortgage, pledge, hypothecation, lien (statutory or other),
judgment lien, security interest, security agreement, charge or other
encumbrance, or other security arrangement of any nature whatsoever, including,
without limitation, any installment contract, conditional sale or other title
retention arrangement, any sale of accounts receivable or chattel paper, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and the filing of any financing statement under the
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UCC or comparable law of any jurisdiction.
"LOAN DOCUMENTS": a collective reference to this Agreement, each Note, the
Original Agreement, the Security Documents, and all other documents,
instruments, agreements and certificates evidencing or securing any advance
hereunder or any obligation for the payment or performance thereof and/or
executed and delivered in connection with any of the foregoing.
"MANDATORY PREPAYMENTS: as defined in SECTION 2.04(b) hereof.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE": a material adverse
effect on, or material adverse change in, (i) the business, operations or
financial condition of Borrower, (ii) the ability of Borrower to perform its
obligations under this Loan Agreement, any Note, or the other Loan Documents, or
(iii) the Lender's ability to enforce the rights and remedies granted under this
Agreement or the other Loan Documents, in all cases whether attributable to a
single circumstance or event or an aggregation of circumstances or events.
"MEMORANDUM DRAFT": the draft of the Offering Memorandum dated March 17,
1997, pertaining to the High Yield Notes, a copy of which is attached hereto as
EXHIBIT H.
"MORTGAGEE'S CONSENT": a consent substantially in the form of EXHIBIT E-1
hereto, to be executed by any Person holding a lien on real property leased or
otherwise provided to Borrower, on which any of the Equipment is located.
"NOTE": collectively, the Tranche 1 Note, the Tranche 2 Note and any other
promissory notes issued by Borrower to Lender pursuant to this Agreement, and
all extensions, renewals, modifications, replacements, amendments, restatements
and refinancings thereof.
"NTI": Northern Telecom Inc., a Delaware corporation.
"NTI EQUIPMENT": the equipment and licensed or sub-licensed software
manufactured or supplied by NTI to Borrower at any time pursuant to the NTI
Purchase Agreement or any purchase order issued by Borrower to NTI, including
installation and construction services provided by NTI pursuant thereto.
"NTI PURCHASE AGREEMENT": the NTI Purchase Agreement identified on SCHEDULE
4.31 hereto, together with any amendments or supplements thereto, and any other
purchase agreement between NTI and Borrower and all purchase orders and invoices
issued pursuant thereto, all as approved by Lender.
"OBLIGATIONS": all indebtedness, liabilities and obligations of Borrower to
Lender of any class or nature, whether arising under or in connection with this
Agreement and/or the other Loan Documents or otherwise, whether now existing or
hereafter incurred, direct or indirect, absolute or contingent, secured or
unsecured, matured or unmatured, joint or several, whether for principal,
interest, fees, expenses, lease obligations, indemnities or otherwise,
including, without limitation, future advances of any sort, all future advances
made by Lender for taxes, levies, insurance and/or repairs to or maintenance of
the Collateral, the unpaid principal amount of, and accrued interest on, each
Note, and any expenses of collection or protection of Lender's rights, including
reasonable attorneys' fees.
"ORGANIZATIONAL DOCUMENTS": with respect to a corporation, the articles of
incorporation and by-laws of such corporation; with respect to a partnership,
the certificate of partnership (or limited
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partnership, as applicable) and partnership agreement, together with the
analogous documents for any corporate or partnership general partner; with
respect to a limited liability company, the articles of organization and
operating agreement of such limited liability company; and in any case, any
other document governing the formation and conduct of business by such entity.
"ORIGINAL LOAN AGREEMENT": that certain Equipment Loan and Security
Agreement, dated as of May 28, 1996, as amended by that certain Letter Agreement
dated as of November 18, 1996 extending the funding date each between Borrower
and Lender.
"ORIGINAL STOCK PLEDGE AGREEMENT": the Stock Pledge Agreement, dated as of
May 28, 1996, executed by each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ as
Owners in connection with the execution of the Original Loan Agreement by
Borrower and Lender.
"OWNERS": all presently existing and future shareholders of Borrower and
all other Persons with ownership interests in Borrower.
"PAYMENT DATE": as defined on SCHEDULE 2.02 hereto.
"PAYMENT SCHEDULE": either the Tranche 1 or Tranche 2 Payment Schedule.
"PBGC": the Pension Benefit Guaranty Corporation established under Title IV
of ERISA or any other governmental agency, department or instrumentality
succeeding to its functions.
"PERMITS": all consents, licenses, notices, approvals, authorizations,
filings, orders, registrations, and permits required by any Governmental
Authority for the construction and operation of the Equipment (excluding
Regulatory Authorizations), issued or obtained as and when required in
accordance with all Requirements of Law.
"PERMITTED ENCUMBRANCES": the Liens permitted under SECTION 8.02 hereof.
"PERMITTED INVESTMENTS": (a) direct obligations of, or obligations for
the timely payment of the principal of and interest of which is fully and
unconditionally guaranteed by, the United States of America, (b) certificates of
deposits of national or state banks, certificates of deposit of federal savings
and loan associations and state building and loan associations which deposits
are fully insured by the Federal Deposit Insurance Corporation; (c) bankers
acceptances drawn on and accepted by commercial banks having a combined capital
and surplus of not less than $100,000,000 and rated "Aa" or higher by ▇▇▇▇▇'▇
Investor Service, and "AA" or higher by Standard & Poors Corporation; (d)
obligations of any agency or instrumentality of the United States of America
that are backed by the full faith and credit of the United States of America;
(e) notes or commercial paper (of entities other than Borrower or related
entities) rated in either of the two highest rating categories by ▇▇▇▇▇'▇
Investors Services and Standard & Poors Corporation; (f) repurchase agreements
with banking or financial institutions having a combined capital and surplus of
not less than $100,000,000, with respect to and fully secured by obligations
described in (a) or (d) above, and rated "Aa" or higher by ▇▇▇▇▇'▇ Investors
Service and "AA" or higher by Standard & Poors Corporation; and (g) money market
mutual funds which invest solely in investments meeting the criteria of
Permitted Investments.
"PERSON": an individual, corporation, limited liability company,
partnership, business or other trust, unincorporated association, joint venture,
joint-stock company, Governmental Authority or any
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other entity.
"PLAN": any employee pension benefit plan to which Section 4021 of ERISA
applies and (i) which is maintained for employees of Borrower or (ii) to which
Borrower made, or was required to make, contributions at any time within the
preceding five (5) years.
"PREFERRED STOCK": the Twelve Percent (12%) Redeemable Convertible
Preferred Stock of Borrower issued initially to Princes Gate Investors II, L.P.
(the "Investor"), pursuant to the Securities Purchase Agreement dated as of
November 1, 1996, between Borrower and Investor, the Securityholders Agreement
dated as of November 1, 1996, among Borrower, Investor and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇, and
the Amendment of the Certificate of Incorporation dated as of November 1, 1996
amending Borrower's Certificate of Incorporation (as amended, the "Amended
Certificate of Incorporation") relating to the authorization and issuance of the
Preferred Stock to Investor.
"PROCEEDS": as defined in SECTION 3.01 hereof.
"PUC": the public utilities commission for the state or any other
jurisdiction in which the Borrower operates its telecommunications business or
any portion of the Equipment is located, or any successor agency, and any
successor, in whole or in part, to its functions or jurisdictions, and any other
Persons specified as such on SCHEDULE 1 hereto.
"REGULATORY AUTHORIZATIONS": all approvals, authorizations, licenses,
filings, notices, registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings now
or hereafter made by, to or in respect of any telecommunications governmental or
other regulatory authority, including, without limitation, any certificates of
public convenience and all grants, approvals, licenses, filings and
registrations from or to the FCC or PUC or under any Communications Law
necessary in order to enable the Borrower to own, construct, maintain and
operate the Equipment, and any authorizations specified on SCHEDULE 1 hereto.
"REGULATORY EVENT": any of the following events: (i) Lender becomes subject
to regulation as a "carrier," a "telephone company," a "common carrier," a
"public utility" or otherwise under any applicable law or governmental
regulation, federal, state or local, solely as a result of the transactions
contemplated by this Agreement and the other Loan Documents, or (ii) Borrower
becomes subject to regulation by any Governmental Authority in any way that is
materially different from the regulation existing at the Closing Date and that
could materially adversely affect Borrower's ability to perform its material
obligations under the Loan Documents or Lender's rights thereunder, or (iii) the
FCC or PUC issues an order revoking, denying or refusing to renew, or
recommending the revocation, denial or non-renewal of, any Regulatory
Authorization.
"REPORTABLE EVENT": (i) a reportable event described in Section 4043 of
ERISA and regulations thereunder, (ii) a withdrawal by a substantial employer
from a Plan to which more than one employer contributes, as referred to in
Section 4063(b) of ERISA, or (iii) a cessation of operations at a facility
causing more than twenty percent (20%) of Plan participants to be separated from
employment, as referred to in Section 4062(f) of ERISA.
"REQUIRED CONSENTS": the Governmental Authority approvals or consents of
other Persons required with respect to the Borrower's execution, delivery and
performance of this Agreement and the other Loan Documents, as described in
SECTION 4.04 hereto.
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"REQUIREMENT OF LAW": as to any Person, the Organizational Documents of
such Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its properties or transactions or to
which such Person or any of its property or transactions is subject, including
without limitation, all applicable common law and equitable principles, all
provisions of all applicable state and federal constitutions, statutes, rules,
regulations and orders of governmental bodies, all Permits or Regulatory
Authorizations issued to Borrower, all Communications Laws, and all
Environmental Laws.
"RESPONSIBLE OFFICER": with respect to a corporation, its President or any
Vice President or Treasurer; with respect to a partnership, its general partner
(or the President, any Vice President or Treasurer of any corporate general
partner, as applicable); with respect to a limited liability company, a member
or manager (or the President, any Vice President or Treasurer of any corporate
member or manager), or the President or any Vice President of any other Person.
"RESTRICTED SUBSIDIARY": means any Subsidiary of the Borrower other than an
Unrestricted Subsidiary.
"SECURITY DOCUMENTS": this Agreement, the Consents, the Stock Pledge
Agreements, the Original Stock Pledge Agreements, all financing statements, all
documents and instruments executed and/or delivered by or on behalf of Borrower
in favor of Lender granting and perfecting liens and security interests on NTI
Equipment and related Software to be installed in London, England, Brussels,
Belgium, and Paris, France and any other documents granting, evidencing, or
perfecting any security interest or Lien with respect to or securing any of the
Obligations.
"SITE(S)": any of the sites where Equipment is or is to be located.
"SOFTWARE" AND "SOFTWARE LICENSES": any software now or hereafter owned by,
or licensed to, Borrower or with respect to which Borrower has or may have
license or use rights.
"STOCK PLEDGE AGREEMENT": the Amended and Restated Stock Pledge Agreement
executed by each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ as Owners of Borrower
(as of the date hereof) pursuant to Section 2.11 hereof, substantially in the
form of EXHIBIT G hereto.
"SUBORDINATED EQUIPMENT": such pieces of Equipment with respect to which
Israel Discount Bank subordinates its lien and security interest to the lien and
security interest of Lender pursuant to the terms of that Inter-Creditor
Agreement dated as of June 3, 1996, as amended from time to time as a condition
to all Advances as provided for in Section 6.02(l).
"SUBSIDIARY": as to any Person, any corporation or other entity that is an
Affiliate of such Person and of which shares of stock or equity interests having
ordinary voting power with respect to the election of one or more directors or
other managers of such corporation are at the time directly or indirectly owned
or controlled by such Person (regardless of any contingency which does or may
suspend or dilute the voting rights of such class).
"SYSTEM": the Borrower's complete telecommunications network or system
constructed and/or operated by Borrower, of which the Equipment forms a part in
connection with the Borrower's business, as described on SCHEDULE 1 hereto.
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"TOTAL DEBT": at any time, the total outstanding liabilities of the
Borrower, including, without limitation, current liabilities, long term
Indebtedness, all lease obligations under finance leases, operating leases
and/or capital leases, all Contingent Obligations, and all the Obligations, but
excluding the Preferred Stock.
"TRANCHE 1 FIRST BORROWING DATE": the date of the first borrowing by
Borrower hereunder for Advances made prior to the Amendment Closing Date.
"TRANCHE 2 FIRST BORROWING DATE": the date of the first borrowing by
Borrower hereunder for Advances made on or after the Amendment Closing Date.
"TRANCHE 1 INITIAL PAYMENT DATE": as defined on SCHEDULE 2.02 hereto.
"TRANCHE 2 INITIAL PAYMENT DATE": as defined on SCHEDULE 2.02 hereto.
"TRANCHE 1 INTEREST PAYMENT DATE": as defined on SCHEDULE 2.02 hereto.
"TRANCHE 2 INTEREST PAYMENT DATE": as defined on SCHEDULE 2.02 hereto.
"TRANCHE 1 MATURITY DATE": the date defined on SCHEDULE 2.02 hereto, on
which all principal, interest, premium, expenses, fees, penalties and other
amounts due under the Tranche 1 Note shall be finally due and payable.
"TRANCHE 2 MATURITY DATE": the date defined on SCHEDULE 2.02 hereto, on
which all principal, interest, premium, expenses, fees, penalties and other
amounts due under the Tranche 2 Note shall be finally due and payable.
"TRANCHE 1 NOTE": that certain promissory note dated as of May 28, 1996 in
the original principal amount of $2,000,000 executed by Borrower in favor of
Lender pursuant to the Original Loan Agreement, and all extensions, renewals,
modifications, replacements, amendments, restatements and refinancings thereof.
"TRANCHE 2 NOTE": that certain promissory note dated as of March 27, 1997
in the original principal amount of $3,000,000 executed by Borrower and joined
in by American Telemedia, Ltd. in favor of Lender and any other promissory notes
issued by Borrower to Lender pursuant to this Agreement, and all extensions,
renewals, modifications, replacements, amendments, restatements and refinancings
thereof.
"TRANCHE 1 PAYMENT SCHEDULE": as defined on SCHEDULE 2.02 hereto.
"TRANCHE 2 PAYMENT SCHEDULE": as defined on SCHEDULE 2.02 hereto.
"UCC": the Uniform Commercial Code as the same may from time to time be in
effect in the State of New York, or the Uniform Commercial Code of another
jurisdiction, to the extent it may be required to apply to any item or items of
Collateral.
"UNRESTRICTED SUBSIDIARY": (i) any Subsidiary of the Borrower that at the
time of determination shall be designated an Unrestricted Subsidiary by the
board of directors of the Borrower in the manner
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provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The board
of directors of the Borrower may designate any Restricted Subsidiary (including
any newly acquired or newly formed Subsidiary of the Borrower) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Borrower or any Restricted
Subsidiary; provided that (A) any Guarantee by the Borrower or any Restricted
Subsidiary of any Indebtedness of the Subsidiary being so designated shall be
deemed an "Incurrence" of such Indebtedness and an "Investment" by the Borrower
or such Restricted Subsidiary (or both, if applicable) at the time of such
designation; (B) either (I) the Subsidiary to be so designated has total assets
of $1,000 or less or (II) if such Subsidiary has assets greater than $1,000,
such designation would be permitted under the "Limitation on Restricted
Payments" covenant described on page 22-24 of the Memorandum Draft and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under the "Limitation on
Indebtedness" and "Limitation on Restricted Payments" covenants described on
pages 20-24 of the Memorandum Draft. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving effect to such designation (x) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation would, if
Incurred at such time, have been permitted to be incurred for all purposes of
the Indenture and (y) no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
Capitalized terms used in this definition which are defined in the Memorandum
Draft shall have the meanings assigned to them in the Memorandum Draft.
"WHOLLY OWNED": with respect to any Subsidiary of any Person, the ownership
of all of the outstanding Capital Stock of such Subsidiary (other than any
director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person. Capitalized terms used in this definition which are defined in the
Memorandum Draft shall have the meanings assigned to them in the Memorandum
Draft.
"WORKING CAPITAL": unencumbered and unrestricted capital of Borrower
available for general operational purposes after provision for all current
liabilities.
1.02. ACCOUNTING PRINCIPLES; SUBSIDIARIES. Except as otherwise provided
in this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), consistently applied, and all
accounting or financial terms shall have the meanings ascribed to such terms by
GAAP. If at any time Borrower has any Subsidiaries, all accounting and financial
terms herein shall be deemed to include references to consolidated and
consolidating principles, and covenants, representations and agreements with
respect to the Borrower and its properties and activities shall be deemed to
refer to the Borrower and its consolidated Subsidiaries collectively.
1.03. UCC TERMS. Except as otherwise provided or amplified (but not
limited) herein, terms used in this Agreement that are defined in the UCC shall
have the same meanings herein.
1.04. GENERAL CONSTRUCTION; CAPTIONS. All definitions and other terms
used in this Agreement shall be equally applicable to the singular and plural
forms thereof, and all references to any gender shall include all other genders.
The words "hereof", "herein" and "hereunder" and words of similar import
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when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, subsection, schedule
and exhibit references are to this Agreement unless otherwise specified. The
captions and table of contents in this Agreement and the other Loan Documents
are for convenience only, and in no way limit or amplify the provisions hereof.
1.05. REFERENCES TO DOCUMENTS AND LAWS. All defined terms and
references in this Agreement or the other Loan Documents with respect to any
agreements, notes, instruments, certificates or other documents shall be deemed
to refer to such documents and to any amendments, modifications, renewals,
extensions, replacements, restatements, substitutions and supplements of and to
such documents. All references to statutes and related regulations shall include
any amendments thereof and any successor statutes and regulations.
ARTICLE 2: LOANS
----------------
2.01. COMMITMENT. Subject to the terms and conditions herein provided,
and so long as no Event of Default has occurred and is continuing hereunder,
Lender agrees to lend to Borrower from time to time before the Financing
Termination Date, an aggregate principal amount not to exceed the amount set
forth on SCHEDULE 2.01 hereto as the maximum principal amount (the
"COMMITMENT"). If Borrower or NTI should terminate the NTI Purchase Agreement at
any time prior to the Initial Payment Date, then the Commitment shall
automatically terminate, subject to Lender's right to make further Advances
hereunder, including, but not limited to, Advances under Section 2.03 hereof.
All amounts advanced hereunder shall be used solely for the purchase of NTI
Equipment and related services (exclusive of sales tax) from NTI, and amounts
not exceeding the amount (if any) specified on Schedule 2.01 hereto may be used
for the purchase of network related third party equipment and the preparation of
a switch room for such NTI Equipment, legal fees, charges, expenses and closing
costs and other expenses incurred by Borrower or incurred by Lender and payable
by Borrower under Section 2.10 hereof. From and after the Amendment Closing
Date through and to the Financing Termination Date, up to, but not exceeding,
Three Million Dollars ($3,000,000) of the Commitment may be used to acquire NTI
Equipment and related Software to be located in London, England, Brussels,
Belgium, or Paris, France, in each case subject to the requirements of this
Agreement, including but not limited to the requirements of Section 3.09.
2.02. NOTE AND PAYMENT TERMS.
(a) PROMISSORY NOTE. The Loans shall be evidenced by one or more
Notes substantially in the form of EXHIBIT A hereto, with appropriate
insertions. Each Note shall be executed by Borrower, payable to the order
of Lender, and shall evidence the obligation of Borrower to repay all
principal amounts advanced under or pursuant to this Agreement, together
with interest and all other amounts due thereunder. The Tranche 1 Note
shall be originally dated May 28, 1996, have a stated maturity that is the
Tranche 1 Maturity Date, and bear interest at the Interest Rate from the
Tranche 1 First Borrowing Date until the Tranche 1 Note or any amount
thereunder is paid in full (whether on the Tranche 1 Maturity Date, by
acceleration or otherwise). The Tranche 2 Note shall be originally dated
March 27, 1997, have a stated maturity that is the Tranche 2 Maturity Date,
and bear interest at the Interest Rate from the Tranche 2 First Borrowing
Date until the Tranche 2 Note or any amount thereunder is paid in full
(whether on the Tranche 2 Maturity Date, by acceleration or otherwise).
All schedules attached to any Note shall be deemed a part thereof. Any such
schedule may be amended by Lender from time
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to time to reflect changes in the amounts includable thereon, but the
failure to attach or amend any schedule shall not diminish the obligation
of Borrower to repay all amounts due hereunder or on any Note.
(b) INTEREST PAYMENTS. Interest shall continue to accrue on the
principal amount outstanding on any Note at the Interest Rate and shall be
payable, in arrears, on each Interest Payment Date. All accrued interest
shall be payable, in arrears, with the principal payments described below.
(c) PRINCIPAL PAYMENTS. (i) The Tranche 1 Note is a term note, and
all principal amounts due with respect to the Tranche 1 Note shall be
payable in installments in accordance with the Tranche 1 Payment Schedule
set forth on SCHEDULE 2.02 hereto, commencing on the Tranche 1 Initial
Payment Date and on each Payment Date thereafter until the Tranche 1
Maturity Date. The amount of each such principal installment payment shall
be calculated, at the outset, by taking the applicable percentage (as
described on SCHEDULE 2.02 hereto) of the amount of all principal amounts
outstanding on the Tranche 1 First Borrowing Date; PROVIDED, HOWEVER, that
the principal payment amounts shall be recalculated by Lender each time
Advances are made hereunder after the Tranche 1 First Borrowing Date but
prior to the Amendment Closing Date, based on the aggregate amount of all
Advances made at any time. Borrower and Lender understand that this payment
schedule is intended to amortize fully the principal amount advanced under
the Tranche 1 Note in equal monthly payments from the date of such Advance
to the Tranche 1 Maturity Date and any other principal and interest amounts
outstanding representing amounts owed under Advances made prior to the
Amendment Closing Date will be added to the final payment on the Tranche 1
Maturity Date. In any event, the entire outstanding principal amount of the
Tranche 1 Note and all accrued but unpaid interest and all other
outstanding amounts due thereunder shall be paid on the Tranche 1 Maturity
Date.
(ii) The Tranche 2 Note is a term note, and all principal amounts due with
respect to the Tranche 2 Note shall be payable in installments in
accordance with the Tranche 2 Payment Schedule set forth on SCHEDULE 2.02
hereto, commencing on the Tranche 2 Initial Payment Date and on each
Payment Date thereafter until the Tranche 2 Maturity Date. The amount of
each such principal installment payment shall be calculated, at the outset,
by taking the applicable percentage (as described on SCHEDULE 2.02 hereto)
of the amount of all principal amounts outstanding on the Tranche 2 First
Borrowing Date; PROVIDED, HOWEVER, that the principal payment amounts shall
be recalculated by Lender each time Advances are made hereunder after the
Amendment Closing Date, based on the aggregate amount of all Advances made
at any time. Borrower and Lender understand that this payment schedule is
intended to amortize fully the principal amount advanced under the Tranche
2 Note in equal monthly payments from the date of such Advance to the
Tranche 2 Maturity Date and any other principal and interest amounts
outstanding representing amounts owed under Advances after the Amendment
Closing Date will be added to the final payment on the Tranche 2 Maturity
Date. In any event, the entire outstanding principal amount of the Tranche
2 Note and all accrued but unpaid interest and all other outstanding
amounts due thereunder shall be paid on the Tranche 2 Maturity Date.
(d) LATE PAYMENTS AND DEFAULT RATE. Notwithstanding the foregoing, if
Borrower shall fail to pay within ten (10) days after the due date any
principal amount or interest or other amount payable under this Agreement
or under any Note, Borrower shall pay to Lender, to defray the
administrative costs of handling such late payments, an amount equal to
interest on the
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amount unpaid, to the extent permitted under applicable law, at the Default
Rate (instead of the Interest Rate), from the due date until such overdue
principal amount, interest or other unpaid amount is paid in full (both
before and after judgment) whether or not any notice of default in the
payment thereof has been delivered under SECTION 9.01 hereof. In addition,
but without duplication, upon the occurrence and during the continuance of
an Event of Default, all outstanding amounts hereunder shall bear interest
at the Default Rate (instead of the Interest Rate) until such amounts are
paid in full or such Event of Default is waived in writing by Lender.
(e) EXCESS INTEREST. Notwithstanding any provision of any Note, this
Agreement or any other Loan Document to the contrary, it is the intent of
Lender and Borrower that Lender or any subsequent holder of any Note shall
never be entitled to receive, collect, reserve or apply, as interest, any
amount in excess of the maximum rate of interest permitted to be charged by
applicable Law, as amended or enacted from time to time. In the event
Lender, or any subsequent holder of any Note, ever receives, collects,
reserves or applies, as interest, any such excess, such amount which would
be excessive interest shall be deemed a partial prepayment of principal and
treated as such, or, if the principal indebtedness and all other amounts
due are paid in full, any remaining excess funds shall immediately be
applied to any other outstanding indebtedness of Borrower due to Lender,
and if none is outstanding, shall be paid to Borrower. In determining
whether or not the interest paid or payable, under any specific
contingency, exceeds the highest lawful rate, Borrower and Lender shall, to
the maximum extent permitted under applicable law, (a) exclude voluntary
prepayments and the effects thereof as it may relate to any fees charged by
Lender, and (b) amortize, prorate, allocate, and spread, in equal parts,
the total amount of interest throughout the entire term of the
indebtedness; provided that if the indebtedness is paid and performed in
full prior to the end of the full contemplated term hereof, and if the
interest received for the actual period of existence hereof exceeds the
maximum lawful rate, Lender or any subsequent holder of any Note shall
refund to Borrower the amount of such excess or credit the amount of such
excess against the principal portion of the indebtedness, as of the date it
was received, and, in such event, Lender shall not be subject to any
penalties provided by any laws for contracting for, charging, reserving or
receiving interest in excess of the maximum lawful rate.
2.03. PROCEDURES FOR BORROWING.
(a) TIMING OF ADVANCES. Advances shall not be made more than once per
calendar month, and all Advances in any calendar month shall be made on the
same Borrowing Date. Each Advance (other than the last Advance) shall be in
an aggregate principal amount of not less than $25,000. No amounts may be
borrowed hereunder on or after the Financing Termination Date. Lender is
hereby authorized to retain from each Advance all amounts of Lender's
Expenses accrued and unpaid by Borrower, for which invoices have been sent
to Borrower at least five (5) Business Days before such Advance. In any
event, all outstanding legal fees, charges and expenses not paid by
Borrower prior to any Borrowing Date shall be paid before any Advance is
made or concurrently with such Advance.
(b) BORROWING CERTIFICATES. To request an Advance hereunder, Borrower
shall send to Lender, at least ten (10) Business Days prior to the
requested Borrowing Date, a completed Borrowing Certificate, along with
invoices and such other supporting documentation as Lender may reasonably
request. Lender is hereby authorized to add to any Borrowing Certificate
all amounts payable by Borrower to Lender in respect of legal fees, charges
and expenses arising
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or incurred by Lender, to the extent such fees, charges and expenses have
then been incurred or charged and may be paid from proceeds of the Loan.
(c) TRANSMISSION OF ADVANCES. Advances shall be made by wire transfer
to the account(s) specified in the applicable Borrowing Certificate, except
that (i) proceeds of the Loans may be transmitted, at Lender's option,
directly to an NTI account for payment of any unpaid NTI invoices, and (ii)
Advances shall be transmitted to Borrower only to the extent that Borrower
provides Lender with satisfactory evidence that the amount of such Advance
has been paid to NTI or such other payee for a purpose permitted under
SECTION 2.01. No further authorization shall be necessary for any such
direct disbursements, and each such Advance shall satisfy PRO TANTO the
obligations of the Lender under this Agreement.
(d) BORROWING DATES. Advances shall be made by Lender on the
Borrowing Date specified in the applicable Borrowing Certificate if all
conditions for such Advance have been satisfied, or on such later Business
Date as all conditions for such Advance shall have been satisfied, as
determined by Lender.
(e) ADVANCES AFTER DEFAULT. At its option, after the occurrence and
continuance of a Default, Lender may but shall not be obligated to make
advances of portions of the Loan proceeds to any Person (including without
limitation NTI, suppliers, sub-contractors and materialmen) to whom Lender
in good faith determines payment is due with respect to the Equipment, and
any proceeds so disbursed by Lender shall be deemed disbursed as of the
date on which the Person to whom payment is made receives the same. No
further authorization from Borrower shall be necessary to warrant such
direct advances, and the execution of this Loan Agreement by Borrower
shall, and hereby does, constitute an irrevocable authorization and power
of attorney so to advance proceeds hereunder. All such Advances shall
satisfy PRO TANTO the obligations of Lender hereunder and shall be secured
by the Security Documents as fully as if made directly to Borrower.
2.04. PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. (i) TRANCHE 1 NOTE. On or after one year
from the Tranche 1 Initial Payment Date, the Borrower may, at its option,
at any time and from time to time, prepay the Advances under the Tranche 1
Note, in whole or in part, upon at least thirty (30) Business Days prior
written notice to the Lender specifying the date and amount of prepayment,
in a minimum amount of $50,000, plus the premium described below, and all
accrued but unpaid interest thereon. Such notice shall be irrevocable and
the principal amount specified in such notice shall be due and payable on
the date specified together with accrued interest on the amount prepaid.
Any such prepayment shall be subject to a prepayment premium equal to a
percentage of the amount prepaid as follows: one percent (1%) if the
prepayment is made during the second or third year following the Tranche 1
Initial Payment Date, and zero percent (0%) if prepayment is made
thereafter. Amounts under the Tranche 1 Note prepaid may not be reborrowed
and shall be applied as provided in Section 2.04(c). No voluntary
prepayments under the Tranche 1 Note shall be permitted prior to the
Tranche 1 Initial Payment Date.
(ii) TRANCHE 2 NOTE. On or after one year from the Tranche 2 Initial
Payment Date, the Borrower may, at its option, at any time and from time to
time, prepay the Advances under the
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Tranche 2 Note, in whole (but not in part), upon at least thirty (30)
Business Days prior written notice to the Lender specifying the date of
prepayment, plus the premium described below, and all accrued but unpaid
interest thereon. Such notice shall be irrevocable and the principal amount
shall be due and payable on the date specified together with accrued
interest on the amount prepaid. Any such prepayment shall be subject to a
prepayment premium equal to a percentage of the amount prepaid as follows:
three percent (3%) if the prepayment is made during the first full year
following the Amendment Closing Date, two percent (2%) if the prepayment is
made during the second full year following the Amendment Closing Date, one
percent (1%) if the prepayment is made during the third full year following
the Amendment Closing Date, and zero percent (0%) if prepayment is made
thereafter. Amounts prepaid may not be reborrowed and shall be applied as
provided in SECTION 2.04(c). No voluntary prepayments under the Tranche 2
Note shall be permitted prior to the Tranche 2 Initial Payment Date.
(iii) GENERAL. Mandatory Prepayments, excess interest payments under
SECTION 2.02(g) or prepayments made from insurance proceeds pursuant to
SECTION 6.03 or with any condemnation proceeds shall not be subject to a
prepayment premium.
(b) MANDATORY PREPAYMENT. Upon Lender's demand, (i) if the NTI
Purchase Agreement is terminated prior to the Financing Termination Date,
or (ii) if Borrower fails to complete all the required purchases thereunder
by the Financing Termination Date, or (iii) upon the occurrence of any
event pursuant to which the Preferred Stock may be redeemed (other than any
special optional redemption of the Preferred Stock under Section 7(a) of
Article Fourth of the Amended Certificate of Incorporation), Borrower shall
immediately prepay the loans in full, including all principal, accrued
interest and expenses (the "MANDATORY PREPAYMENTS").
(c) APPLICATION OF PREPAYMENTS. Any prepayments shall be applied
first to interest, then to premium, then to expenses, and then to the
installments of principal in reverse chronological order.
2.05. COMPUTATION OF INTEREST. Interest shall be calculated daily on
the basis of a 360-day year for the actual days elapsed in the period during
which it accrues.
2.06. PAYMENTS. All payments and prepayments to be made in respect of
principal, interest, prepayment premiums or other amounts due from Borrower
hereunder or under any Note shall be payable on or before 1:00 p.m., Nashville
time, on the day when due, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and an action therefor shall
immediately accrue. Such payments shall be made to Lender at Lender's office at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other location
specified in writing by Lender, in immediately available funds, without setoff,
recoupment, counterclaims or any other deduction of any nature.
2.07. INDEMNITY. Borrower hereby indemnifies Lender against any losses,
claims, penalties, expenses, actions, suits, obligations, liabilities and Liens
(and all costs and expenses, including reasonable attorneys' fees incurred in
connection therewith), that Lender has sustained or incurred or may sustain or
incur in connection with any of the Collateral, or the enforcement, performance
or administration of the Loan Documents, or as a consequence of any default by
Borrower in the performance or observance of any covenant or condition contained
in this Agreement or the Loan Documents, including without limitation, the
breach of any representation or warranty, any failure of Borrower to pay when
due (by
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acceleration or otherwise) any principal, interest, fee or any other amount due
hereunder or under any Note, and any failure of Borrower to comply with all
applicable Requirements of Law (collectively, "CLAIMS") except to the extent of
any Claims caused solely by Lender's gross negligence or willful misconduct.
Borrower's obligations under this Section 2.07 shall be part of the Obligations
and shall be secured by the Collateral. Borrower agrees that upon written notice
by Lender of the assertion of any Claims, Borrower shall, at Lender's option,
either assume full responsibility for, or reimburse Lender for the reasonable
costs and expenses of, the defense thereof. Lender shall have no liability for
consequential or incidental damages of any nature. The provisions of this
Section 2.07 shall survive the termination of this Agreement and payment of the
Obligations.
2.08. USE OF PROCEEDS. The proceeds of the Advances hereunder shall be
used by Borrower only for the purposes and in the amounts described in Section
2.01 hereof, and no amounts repaid may be reborrowed.
2.09. FEES. Borrower shall pay Lender the fees described on SCHEDULE
2.09 hereto in connection with this Agreement.
2.10. LENDER'S EXPENSES. Borrower agrees (a) to pay or reimburse Lender
for all its reasonable costs, fees, charges and expenses incurred or arising in
connection with the negotiation, review, preparation and execution of this
Agreement, the Loan Documents, any commitment or proposal letter, or any
amendment, supplement, waiver, modification to, or restructuring of this
Agreement, the Obligations or the other Loan Documents, including, without
limitation, reasonable outside counsel legal fees and disbursements, expenses,
document charges and other charges and expenses of Lender, (b) to pay or
reimburse Lender for all its reasonable costs, fees, charges and expenses
incurred in connection with the administration of the Loans or the enforcement,
protection or preservation of any rights under or in connection with this
Agreement or any other Loan Documents, including, without limitation, reasonable
outside counsel legal fees and disbursements, audit fees and charges, and all
out-of-pocket expenses, (c) to pay, indemnify, and to hold Lender harmless from,
any and all recording and filing fees and taxes and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other taxes
(excluding income and franchise taxes and taxes of similar nature), if any,
which may be payable or determined to be payable in connection with the
execution and delivery or recordation or filing of, or consummation of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement and the
other Loan Documents. Lender expects that its attorneys' fee and disbursements
payble by the Borrower under clause (a) of the preceding sentence in connection
with the negotiation, preparation and execution of this amendment and
restatement to the Original Loan Agreement shall not exceed twenty thousand
dollars ($20,000), and Lender will notify Borrower if it appears to Lender that
the fees of its counsel will exceed that amount. All of the amounts described
in this Section are referred to collectively as the "LENDER'S EXPENSES", shall
be payable upon Lender's demand, and shall accrue interest at the Interest Rate
in effect when such demand is made from five (5) days after the date of demand
until paid in full. All Lender's Expenses, and interest thereon, shall be part
of the Obligations and shall be secured by the Collateral. The agreements in
this SECTION 2.10 shall survive repayment of the Obligations. All Lender's
Expenses that are outstanding on any Borrowing Date shall be paid before or with
such advance. If Borrower has not paid to Lender the amount of all Lender's
Expenses billed to Borrower at least five (5) Business Days before such
Borrowing Date, Lender shall be authorized to retain from any Advance on such
Borrowing Date the amount of such Lender's Expenses that remain unpaid.
Borrower's obligation to pay Lender's Expenses shall not be limited by any
limitation on the amount of the Commitment that may be designated as available
for such purposes, and any amounts so designated shall be used to pay Lender's
Expenses
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accrued at the time of any Advance before any of Borrower's legal fees or
similar expenses.
2.11. STOCK PLEDGE AGREEMENT. Each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇ shall pledge; or cause the pledge of, stock and any other ownership
interest in Borrower to Lender as security for the Obligations pursuant to the
Stock Pledge Agreement, so that at all times Lender shall have a first priority,
perfected Lien on a majority of the voting shares of each class of such
securities or ownership interests in Borrower (other than the Preferred Stock,
but including in such calculation shares or ownership interests which Borrower
has agreed, or otherwise becomes committed, to issue, whether pursuant to
options, warrants, conversion rights or other agreements and including common
stock issuable upon conversion of the Preferred Stock).
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
--------------------------------------------
3.01. GRANT OF SECURITY INTEREST. Borrower (as debtor) hereby assigns
to Lender as collateral, and grants to Lender (as secured party), a continuing
security interest in and to, all of the Borrower's right, title and interest in
and to the following kinds and types of property, whether now owned or hereafter
acquired or arising, wherever located, together with all substitutions therefor
and all accessions, replacements and renewals thereof, and in all proceeds and
products thereof (collectively, the "COLLATERAL"):
(a) All the NTI Equipment, all third party equipment, including all
replacements and expansions, financed by Lender and any and all additions,
substitutions, and replacements to or of any of the foregoing, together
with all attachments, components, parts, improvements, upgrades, and
accessions installed thereon or affixed thereto (collectively, "EQUIPMENT")
and Borrower's rights under the NTI Purchase Agreement;
(b) All general intangibles and intangible property constituting part
of, or provided by or through NTI in connection with, the Equipment, or
associated with the System which is necessary for the proper operation of
the Equipment, including without limitation, insurance proceeds and amounts
due under insurance policies, licenses, license rights, rights in
intellectual property, software, software licenses, computer programming
(including source codes, object codes and all other embodiments of computer
programming or information), refunds, warranties and indemnification
rights, and all amounts owed at any time to Borrower by Lender or NTI
(collectively, "GENERAL INTANGIBLES"); and
(c) All proceeds and products of any of the foregoing, including
without limitation (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Borrower from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of governmental authority), and
(iii) any and all cash proceeds and non-cash proceeds in the form of
equipment, inventory, contracts, accounts, general intangibles, chattel
paper, documents, instruments, securities, or other proceeds (collectively,
"PROCEEDS").
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3.02. PRIORITY OF SECURITY INTERESTS. The security interests granted by
Borrower to Lender are and shall be continuing and indefeasible security
interests in the Collateral, subject to no Liens except for Liens permitted
under Section 8.02 hereof. The security interests in the Collateral in favor of
Lender shall be first-priority, provided, however, the Lien of Israel Discount
Bank on the Equipment located in the United States need only be subordinated to
the lien of Lender on the Collateral pursuant to the Inter-Creditor Agreement
dated as of June 3, 1996 (or an amendment thereto) on or before the presentation
of a Borrowing Certificate, the proceeds of which are to be used to acquire such
Equipment (either directly or indirectly by reimbursement of Borrower).
3.03. FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS. At any time and
from time to time, upon the written request of the Lender, and at the sole
expense of the Borrower, the Borrower shall promptly execute, deliver and record
any documents, instruments, agreements and amendments, and take all such further
action, as the Lender may reasonably deem desirable in obtaining the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing statements or
amendments under the UCC. The Borrower also hereby authorizes the Lender to file
any such financing statement or amendment thereto, without the signature of the
Borrower, or with a copy or telecopy of the Borrower's signature, to the extent
permitted by applicable law, or to execute any financing statement or amendment
thereof on behalf of the Borrower as Borrower's attorney-in-fact. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note or other instrument or any certificated
securities, such note, instrument or certificate shall be immediately pledged
and delivered to the Lender hereunder, duly endorsed in a manner satisfactory to
the Lender.
3.04. FURTHER IDENTIFICATION OF COLLATERAL. Borrower shall furnish to
the Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail.
3.05. REMEDIES. Lender shall have all the rights and remedies of a
secured party under the UCC, and shall be entitled to exercise any and all
remedies available under Article 9 hereof or otherwise available at law or in
equity upon the occurrence of an Event of Default.
3.06. STANDARD OF CARE. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as Borrower requests in
writing, but Lender's failure to comply with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure of Lender
to preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by Borrower, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.
3.07. ADVANCES TO PROTECT COLLATERAL. All insurance expense and all
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral (including, without limitation, all rent payable by
Borrower to any landlord of any premises where any of the Collateral may be
located), and, any and all taxes shall be borne and paid by Borrower. Lender may
(but shall not be obligated to) make advances to preserve, protect or obtain any
of the Collateral, including advances to cure defaults under any of the System
Agreements or advances to pay taxes, insurance and the like, and
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all such advances shall become part of the Obligations owing to Lender hereunder
and shall be payable to Lender on demand, with interest thereon from the date of
such advance until paid at the Default Rate in effect on the date of such
advance.
3.08. LICENSE TO USE. Lender is hereby granted a license or other right
to use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
tangible or intangible property or rights of a similar nature, as it pertains to
the Collateral, in advertising for sale and selling any Collateral, and
Borrower's rights under all licenses and franchise agreements with respect to
the Collateral shall inure to Lender's benefit.
3.09 PRIORITY OF SECURITY INTERESTS AND/OR LIENS ON EQUIPMENT LOCATED
OUTSIDE OF THE UNITED STATES. Lender and Borrower acknowledge that on or after
the Amendment Closing Date and prior to the Financing Termination Date, up to
Three Million Dollars ($3,000,000) of Advances drawn may be used by Borrower to
acquire NTI Equipment and related Software which will be installed in London,
England, Brussels, Belgium and/or Paris, France. As a condition to any Advance
by Lender to Borrower which Borrower uses to acquire NTI Equipment to be located
in London, England, Brussels, Belgium, or Paris, France, Borrower, at the time
it delivers a Borrowing Certificate requesting such Advance, shall (i) deliver a
list identifying all NIT Equipment and specifying where in such country such NTI
Equipment will be located, (ii) at the sole expense of Borrower, execute,
deliver and record any documents, instruments, agreements and amendments, and
take all such further action as Lender may reasonably deem desirable, to grant
and perfect a security interest and/or lien on the Collateral in favor of Lender
under the laws of such country where such NTI Equipment will be located, which
security interest and/or lien will be subject to no other liens or security
interest, and (iii) deliver an opinion of counsel in favor of Lender, in form
and substance to the satisfaction of the Lender, confirming that (x) all steps
have been taken to grant and perfect the security interest and/or lien in such
Collateral in favor of Lender, subject to no other liens or security interests,
and (y) compliance with all regulatory requirements in such jurisdiction for the
installation and operation of the Collateral in such jurisdiction and the right
of Lender to exercise foreclosure or repossession remedies without the necessity
of regulatory approval or licensing.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES
-----------------------------------------
Borrower hereby represents and warrants to Lender as follows:
4.01. ORGANIZATION AND QUALIFICATION. The Borrower is duly organized,
validly existing and in good standing as a corporation under the laws of its
state of organization. Borrower is duly qualified to do business and in good
standing in each jurisdiction in which the failure to receive or retain such
qualification would have a Material Adverse Effect.
4.02. AUTHORITY AND AUTHORIZATION. Borrower has all requisite corporate
right, power, authority and legal right to execute and deliver and perform its
obligations under this Agreement, to make the borrowings provided for herein,
and to execute and deliver and to perform its obligations under each Note.
Borrower's execution, delivery and performance of the Basic Agreements have been
duly and validly authorized by all necessary corporate proceedings on the part
of Borrower.
4.03. EXECUTION AND BINDING EFFECT. This Agreement, each Note and all
other Basic Agreements have been or will be duly and validly executed and
delivered by the Borrower, and constitute or, when executed and delivered will
constitute, the legal, valid and binding obligations of Borrower enforceable
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in accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium or
other laws affecting creditors' rights generally.
4.04. GOVERNMENTAL AUTHORIZATIONS. Except for the consents identified
on SCHEDULE 4.04 hereto (the "REQUIRED CONSENTS"), no authorization, consent,
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Governmental
Authority (other than the filing of financing statements and continuation
statements) is or will be necessary in connection with execution and delivery of
this Agreement, each Note or any other Loan Documents by Borrower, consummation
of the transactions herein or therein contemplated, performance of or compliance
by Borrower with the terms and conditions hereof or thereof or the legality,
validity and enforceability hereof or thereof.
4.05. REGULATORY AUTHORIZATIONS. Borrower holds all authorizations,
permits and licenses required by the FCC or the PUC or any Communications Law
for the construction and operation of the System, and all such Regulatory
Authorizations are in full force and effect, are subject to no further
administrative or judicial review and are therefore final. Lender will not by
reason of the execution, delivery and performance (other than the enforcement of
remedies) of any of the Loan Documents, be subject to the regulation or control
of either the FCC or the PUC. The Regulatory Authorizations are described on
SCHEDULE 4.05.
4.06. MATERIAL AGREEMENT; ABSENCE OF CONFLICTS. The execution and
delivery of this Agreement, each Note and the other Loan Documents, the
consummation of the transactions herein or therein contemplated and the
performance of or compliance with the terms and conditions hereof or thereof by
Borrower will not (a) materially violate any applicable Law; (b) conflict with
or result in a material breach of or a default under the Organizational
Documents of the Borrower or any agreement or instrument to which Borrower is a
party or by which Borrower or its properties is bound; or (c) result in the
creation or imposition of any Lien upon any property (now owned or hereafter
acquired) of Borrower except as otherwise contemplated by this Agreement.
4.07. NO RESTRICTIONS. Borrower is not a party or subject to any
contract, agreement, or restriction in its Organizational Documents that
materially and adversely affects its business or the use or ownership of any of
its properties or operation of its business. Borrower is not a party or subject
to any contract or agreement which restricts its right or ability to incur
Indebtedness, other than as set forth on SCHEDULE 4.07, none of which prohibit
the Borrower's execution of or compliance with this Agreement. Borrower has not
agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of the Collateral, whether now owned or hereafter
acquired, to be subject to a Lien that is not a Permitted Encumbrance.
4.08. FINANCIAL STATEMENTS. Borrower has furnished to Lender the most
recent annual or quarterly financial statements of the Borrower, certified by a
Responsible Officer of the Borrower, including balance sheets and related
statements of income, retained earnings and general ledger cash accounts, as
described on SCHEDULE 4.08 hereof. Such financial statements (including the
notes thereto) present fairly the financial condition of Borrower on a
consolidated basis as of the end of such fiscal period and the results of its
operations and the changes in its financial position for the fiscal period then
ended, all in conformity with GAAP applied on a basis consistent with that of
the preceding fiscal period.
4.09. FINANCIAL ACCOUNTING PRACTICES. Borrower has made and kept books,
records and accounts
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which, in reasonable detail, accurately and fairly reflect its respective
transactions and dispositions of its assets, and Borrower shall maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (a) transactions are executed in accordance with management's
general or specific authorization, (b) transactions are recorded as necessary
(i) to permit preparation of financial statements in conformity with GAAP and
(ii) to maintain accountability for assets, (c) access to assets is permitted
only in accordance with management's general or specific authorization and (d)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4.10. ACCURATE AND COMPLETE DISCLOSURE. No representation or warranty
made by Borrower under this Agreement and no statement made by Borrower or by
any Owner in any financial statement, certificate, report, exhibit or document
furnished by Borrower or any Owner to Lender pursuant to or in connection with
this Agreement (including without limitation any filings with the Securities
Exchange Commission, the FCC or the PUC) is or was false or misleading as of the
date made in any material respect (including by omission of material information
necessary to make such representation, warranty or statement not misleading).
There are no facts that evidence or create a Material Adverse Effect, or, so far
as the Borrower can now foresee, will evidence or create a Material Adverse
Effect, which has not been set forth in the financial statements referred to in
Section 4.08 hereof or otherwise disclosed in writing to the Lender prior to the
First Borrowing Date.
4.11. NO EVENT OF DEFAULT; COMPLIANCE WITH MATERIAL AGREEMENTS. No
event has occurred and is continuing and no condition exists which constitutes a
Default or an Event of Default after giving effect to the Advance to be made on
the First Borrowing Date and the Advance to be made immediately after the
Amendment Closing Date. As of the date hereof, Borrower is not in violation of
any term of its material agreements or instruments to which it is a party or by
which it or its properties is bound.
4.12. LITIGATION. Except as set forth in SCHEDULE 4.12, there is no
pending action, suit or threatened proceeding by or before any Governmental
Authority against or affecting Borrower or any of its properties, rights or
licenses which if adversely decided would have a Material Adverse Effect.
4.13. RIGHTS TO PROPERTY; INTELLECTUAL PROPERTY. Borrower has good and
marketable title, subject only to the Permitted Encumbrances, to the Collateral
and to all personal and real property purported to be owned by it as reflected
in the most recent balance sheet referred to in Section 4.08 hereof (except as
sold or otherwise disposed of in the ordinary course of business or as no longer
used or useful in the conduct of the business which sales or other disposals in
the aggregate do not have a Material Adverse Effect on such financial
statements). Borrower owns or possesses the right to use all patents,
trademarks, service marks, trade names, copyrights, know-how, franchises,
software and software licenses necessary for the operation of its business, free
from burdensome restrictions.
4.14. FINANCIAL CONDITION. The Borrower's financial condition is
accurately described in the Certificate of Financial Condition executed by
Borrower pursuant hereto.
4.15. TAXES. Borrower's federal tax identification number is set forth
on SCHEDULE 1 hereto. With respect to the United States (whether federal, state
or local), (i) all tax returns required to be filed by Borrower have been
properly prepared, executed and filed, and (ii) all taxes, assessments, fees and
other governmental charges upon Borrower or upon any of its respective
properties, incomes, sales or franchises which are shown to be due and payable
thereon have been paid, other than taxes or assessments the validity or amount
of which Borrower is contesting in good faith. The reserves and
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provisions for taxes on the books of Borrower are adequate for all open years
and for its current fiscal period. With respect to obligations outside the
United States, all tax returns required to be filed by Borrower have been
properly prepared, executed and filed and all taxes, assessments, fees and other
governmental charges upon Borrower or upon any of its respective properties,
incomes, sales or franchises which would be due and payable thereon have been
paid, other than taxes or assessments the validity or amount of which Borrower
is contesting in good faith and other than taxes, assessments or returns, with
respect to which the failure to pay or prepare, execute and file, as the case
may be, do not and will not have, in the aggregate, a Material Adverse Effect on
Borrower.
4.16. NO MATERIAL ADVERSE CHANGE. Since the date of the financial
statements referenced in Section 4.08, there has been no Material Adverse
Change.
4.17. NO REGULATORY EVENT. No Regulatory Event has occurred and is
continuing.
4.18. TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any carrier, any labor
organizations, any customer or any group thereof whose agreements with Borrower
or use of the Equipment individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would have a Material Adverse
Effect or prevent Borrower from conducting its business after the consummation
of the transaction contemplated by this Agreement.
4.19. NO BROKERAGE FEES. No brokerage or other fee, commission or
compensation is to be paid by Borrower to any Person other than Lender in
connection with the loans to be made hereunder. Borrower hereby indemnifies
Lender against any claims brought against Lender for brokerage fees or
commissions of any Person based on an agreement with Borrower and agrees to pay
all expenses incurred by Lender in connection with the defense of any action or
proceeding brought to collect any such brokerage fees or commissions.
4.20. MARGIN STOCK; REGULATION U. Borrower is not engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying margin stock. The making of the Advances
and the use of the proceeds thereof will not violate Regulations G, U or X of
the Board of Governors of the Federal Reserve System.
4.21. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY. Borrower is
not an "investment company" or a "company controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
4.22. PERSONAL HOLDING COMPANY. Borrower is not a "personal holding
company" as defined in Section 542 of the Code.
4.23. ERISA. (i) With respect to any Plan, there is no Reportable Event
currently under consideration by the PBGC which may reasonably result in any
material liability to the PBGC with respect to any Plan, (ii) no Plan has been
terminated, (iii) no trustee has been appointed by any United States District
Court to administer any Plan, (iv) the PBGC has not instituted proceedings to
terminate
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any Plan or to appoint a trustee to administer any such Plan, (v) neither the
Borrower nor any Affiliate has withdrawn, completely or partially, from any Plan
and (vi) neither the Borrower nor any Affiliate has incurred secondary liability
for withdrawal liability payments under any Plan.
4.24. ENVIRONMENTAL WARRANTIES. Borrower is in compliance with all
Environmental Laws applicable to Borrower or its business or to the real or
personal property owned, leased or operated by Borrower. Borrower has not
received notice of, and is not aware of, any violations or alleged violations,
or any liability or asserted liability, under any such Environmental Laws, with
respect to Borrower or its business or its properties.
4.25. SECURITY INTERESTS. The provisions of Article 3 hereof are
effective to create in favor of Lender a legal, valid and enforceable Lien on or
security interest in all of the Collateral, and, when the recordings and filings
described on SCHEDULE 4.25 hereto have been effected in the public offices
listed on said SCHEDULE 4.25, this Agreement will create a perfected security
interest in all right, title, estate and interest of Borrower in the Collateral,
subject to no Liens except for Permitted Encumbrances. The security interests in
the Collateral in favor of Lender shall be first-priority, provided, however,
the Lien of Israel Discount Bank on the Equipment need only be subordinated to
the lien of Lender on the Collateral pursuant to the Inter-Creditor Agreement
dated as of June 3, 1996 (or an amendment thereto) on or before the presentation
of a Borrowing Certificate, the proceeds of which are to be used to acquire such
Equipment (either directly or indirectly by reimbursement of Borrower). All
action necessary or desirable to protect and perfect such security interest in
each item of the Collateral will have been duly taken prior to the First
Borrowing Date. The recordings and filings shown on said SCHEDULE 4.25 are all
the actions necessary or advisable in order to establish, protect and perfect
the interest of Lender in the Collateral.
4.26. PLACE OF BUSINESS. The chief executive offices of Borrower are
identified on SCHEDULE 4.26 hereto. The Borrower's principal place of business
in the state(s) where the Equipment is located is identified on SCHEDULE 4.26
hereto. The Borrower's records concerning the Collateral are kept at one or both
of these addresses.
4.27. LOCATION OF COLLATERAL. The Collateral is and will be kept at the
locations identified on SCHEDULE 4.26 hereto or such other locations as may be
permitted under Section 8.12. Notwithstanding any other provision of this
Agreement, Equipment may not be relocated from any location identified on
SCHEDULE 4.26 (or such other location as may be permitted after compliance with
Section 8.12) to any other location identified on SCHEDULE 4.26 (or such other
location to which Collateral has been relocated after compliance with Section
8.12) without first complying again with the requirements of Section 8.12 in
connection with each relocation.
4.28. CLEAR TITLE TO COLLATERAL. The Borrower is, or will be, upon
purchase pursuant to the NTI Purchase Agreement and this Agreement the sole
owner of each item of the Collateral, having good and marketable title thereto,
free and clear of any and all Liens, claims, or rights of others, except for the
security interest granted herein to the Lender and the other Permitted
Encumbrances.
4.29. ASSUMED NAMES. Except as set forth on SCHEDULE 4.29 hereto,
Borrower does not conduct business under any assumed names or trade names, and
has not conducted business under any other names, or any assumed names or trade
names, at any time prior to the date hereof.
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4.30. [INTENTIONALLY OMITTED].
4.31. NTI PURCHASE AGREEMENT. The NTI Purchase Agreement has been duly
executed and delivered by the Borrower and NTI, is in full force and effect, and
a true, correct and complete copy thereof (including all annexes, attachments
and amendments thereto) has been delivered to Lender, and there are no other
side letters, waivers or other agreements affecting the terms thereof.
ARTICLE 5: CONDITIONS OF CLOSING
5.01. INITIAL CLOSING. On or before the Closing Date, the conditions
set forth in Section 5.01 of the Original Loan Agreement shall have been
satisfied.
5.02. AMENDMENT CLOSING. On or before the Amendment Closing Date, the
following conditions shall have been satisfied:
(a) A certificate of Borrower signed by a duly authorized Responsible
Officer, certifying as to (i) true copies of Organizational Documents of
Borrower in effect on such date; (ii) true copies of all corporate action taken
by Borrower relative to this Agreement, each Note and the other Loan Documents;
(iii) the names, true signatures and incumbency of the Responsible Officers of
Borrower authorized to execute and deliver this Agreement, each Note and the
other Loan Documents; (iv) a Certificate of Good Standing (or equivalent
certificate) for the Borrower, duly issued by the Secretary of State of each
state in which the Borrower intends to do business; and (v) such other matters
as Lender shall request.
(b) OPINIONS OF COUNSEL. Lender shall have received the following
opinions, all dated as of the Closing Date and all in form and substance
satisfactory to Lender:
(i) A written opinion of counsel to Borrower and each of ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, substantially in the form of EXHIBIT C-2
hereto; and
(ii) [INTENTIONALLY OMITTED]
(c) CLOSING DOCUMENTS. Lender shall have received the following documents,
all in form and substance satisfactory to Lender:
(i) AGREEMENT. This Agreement, duly executed by Borrower and American
Telemedia, Ltd.;
(ii) NOTE. The Tranche 1 and Tranche 2 Notes, duly executed by
Borrower and, with respect to the Tranche 2 Note, American Telemedia, Ltd.;
(iii) FINANCING STATEMENTS. All UCC-1 financing statements
necessary to perfect the Liens granted hereby, each duly executed by
Borrower, and duly recorded in all the offices identified on SCHEDULE 4.25
hereto;
(iv) NTI PURCHASE AGREEMENT. A copy of the executed NTI Purchase
Agreement;
-25-
(v) INSURANCE. Policies and certificates of insurance required by
Section 7.07, accompanied by evidence of the payment of the premiums
therefor;
(vi) FINANCIAL STATEMENTS. The financial statements described in
Section 4.08 hereto;
(vii) BALANCE SHEET. A balance sheet of the Borrower, dated as of
December 31, 1996, certified by a Responsible Officer as fairly presenting
the financial condition of the Borrower.
(viii) CERTIFICATE OF FINANCIAL CONDITION. A Certificate of
Financial Condition, duly executed by a Responsible Officer of the
Borrower.
(ix) PRE-CLOSING LIEN SEARCHES. Lien searches from all jurisdictions
reasonably determined by Lender to be appropriate, effective as of a date
reasonably close to the Closing Date, reflecting no other Liens (other than
Permitted Encumbrances) on any of the Collateral.
(x) STOCK PLEDGE AGREEMENT. The Stock Pledge Agreements, duly
executed by each of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇.
(xi) INTER-CREDITOR AGREEMENT. An Inter-Creditor Agreement dated as
of June 3, 1996 in form satisfactory to Lender, duly executed by each of
Lender and Israel Discount Bank subordinating the lien of Israel Discount
Bank on the Subordinated Equipment.
ARTICLE 6: CONDITIONS OF LENDING
--------------------------------
6.01. CONDITIONS FOR INITIAL ADVANCE. On or before the Tranche 1 First
Borrowing Date, the conditions set forth in Section 6.01 of the Original Loan
Agreement shall have been met to Lender's satisfaction. On or before the Tranche
2 First Borrowing Date, the following conditions shall have been met to Lender's
satisfaction:
(a) POST-CLOSING LIEN SEARCHES. Lender shall have received
satisfactory results of Lien searches in all jurisdictions reasonably
determined by Lender to be appropriate, reflecting the filing of financing
statements in favor of Lender pursuant hereto and no other Liens other than
Permitted Encumbrances.
(b) REQUIRED CONSENTS. Lender shall have received satisfactory
evidence of the Borrower's obtaining the Required Consents.
(c) FEES. Lender shall have received the fee(s) described in Section
2.09 hereof.
(d) MAINTENANCE AGREEMENT. [INTENTIONALLY OMITTED]
6.02. CONDITIONS FOR ALL ADVANCES. The obligation of Lender to make any
Advance hereunder is subject to the Borrower's performance of its obligations
hereunder on or before the date of such Advance, and to the satisfaction of the
following further conditions on or before the Borrowing Date for any Advance,
including the first Advance:
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(a) FILINGS, REGISTRATIONS AND RECORDINGS. Any financing statements
or other recordings required hereunder shall have been properly filed,
registered or recorded in each office in each jurisdiction required in
order to create in favor of the Lender a perfected first-priority Lien on
the Collateral, subject to no other Lien (other than Permitted
Encumbrances); the Lender shall have received acknowledgment copies of all
such filings, registrations and recordations stamped by the appropriate
filing officer; and Lender shall have received results of searches of such
filing offices, and satisfactory evidence that any other Liens (other than
Permitted Encumbrances) on the Collateral have been duly released, that all
necessary filing fees, recording fees, taxes and other expenses related to
such filings, registrations and recordings have been paid in full.
(b) BORROWING CERTIFICATE. Lender shall have received a duly executed
Borrowing Certificate in the form of EXHIBIT B, including a detailed
itemization of all costs of goods and services to be paid with the proceeds
of the Advance and accompanied by supporting documentation satisfactory to
Lender.
(c) REPORTING REQUIREMENTS. Borrower shall have provided Lender with
all relevant reports and information required under Article 7 hereof.
(d) NO REGULATORY EVENT. No Regulatory Event (in either Borrower's or
Lender's reasonable determination) shall have occurred and be continuing or
would exist upon the consummation of transactions to occur on such
Borrowing Date.
(e) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing or would exist upon the consummation
of transactions to occur on such Borrowing Date.
(f) NO MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have
occurred, or would occur after giving effect to such Advance, since the
date of the last financial statements delivered to Lender pursuant to
Section 4.08 or 7.01 hereof.
(g) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article 4 hereof shall be true on and as of the
date of each such Advance hereunder,
(h) LENDER'S EXPENSES. All closing costs, and other Lender's Expenses
shall have been paid in full, (or shall be paid first from such Advance as
provided in Section 2.03 hereof).
(i) OPINIONS. Lender shall have received from Borrower (if requested)
such opinions of counsel for the Borrower as may be reasonably acceptable
to Lender in form and substance with respect to the perfection and priority
of the Liens created by the Security Documents in each such jurisdictional
location.
(j) DETAILS, PROCEEDINGS AND DOCUMENTS. All legal details and
proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory to Lender and Lender shall have
received all such counterpart originals or certified or other copies of
such documents and proceedings in connection with such transactions, in
form and substance reasonably satisfactory to Lender, as Lender may from
time to time request.
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(k) POST-CLOSING ITEMS. The post-closing items described on SCHEDULE
6.02 hereto, if any, shall have been completed in the time permitted, and
Borrower shall have provided Lender with satisfactory evidence thereof.
(l) AMENDMENT TO INTER-CREDITOR AGREEMENT. Delivery of an amendment
to the Inter-Creditor Agreement dated as of June 3, 1996, between Israel
Discount Bank and Lender in form acceptable to Lender subordinating the
Lien of Israel Discount Bank on the Equipment which is to be acquired
directly (or indirectly by way of reimbursement of the Borrower) with the
proceeds of such requested Advance.
(m) ADVANCES FOR NTI EQUIPMENT AND RELATED SOFTWARE TO BE LOCATED IN
THE LONDON, ENGLAND, BRUSSELS, BELGIUM, OR PARIS, FRANCE. In the event the
proceeds of an Advance are to be used for the purchase of NTI Equipment and
related Software to be located in the London, England, Brussels, Belgium,
or Paris, France, the Borrower shall have complied with the requirements of
Section 3.09 of this Agreement.
(n) CONSENTS. Lender shall have received Consents duly executed by
all necessary parties and in form satisfactory to Lender.
6.03. AFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Any Borrowing
Certificate or other request for any Advance hereunder shall constitute a
representation and warranty that (a) the representations and warranties
contained in Article 4 hereof are true and correct on and as of the date of such
request with the same effect as though made on and as of the date of such
request, and (b) on the date of such request no Default or Event of Default has
occurred and is continuing or exists or will occur or exist after giving effect
to such Advance (for this purpose such Advance being deemed to have been made on
the date of such request). Failure of Lender to receive notice from Borrower to
the contrary before such Advance is made shall constitute a further
representation and warranty by Borrower that (x) the representations and
warranties of Borrower contained in the first sentence of this Section 6.03 are
true and correct on and as of the date of such Advance with the same effect as
though made on and as of the date of such Advance, and (y) on the date of the
Advance no Default or Event of Default has occurred and is continuing or exists
or will occur or exist after giving effect to such Advance.
6.04. DEADLINE FOR FUNDING CONDITIONS. Lender shall have no obligation
to make any Advances hereunder if all of the conditions set forth in Article 5
and in Sections 6.01 and 6.02 hereof have not been fully satisfied and in any
event after the Financing Termination Date.
ARTICLE 7: AFFIRMATIVE COVENANTS
--------------------------------
Borrower hereby agrees that as long as the commitment hereunder remains in
effect, any Note remains outstanding or unpaid or any other amount is owing to
Lender hereunder or under any of the Loan Documents, Borrower shall keep and
perform fully each and all of the following covenants:
7.01. REPORTING AND INFORMATION REQUIREMENTS.
(a) ANNUAL AUDIT REPORTS. As soon as practicable, and in any event
before July 12, 1996 for fiscal year 1995 and within three (3) months after
the close of each fiscal year of Borrower thereafter, Borrower shall
furnish or cause to be furnished to Lender audited statements
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of income, retained earnings and statements of cash flows for such fiscal
year and the Borrower's balance sheet as of the close of such fiscal year,
and notes to each, all in reasonable detail, and beginning with Borrower's
second full fiscal year setting forth in comparative form the corresponding
figures for the preceding fiscal year, with such statements and balance
sheet to be certified without qualification by independent certified public
accountants of recognized regional or national standing selected by
Borrower and reasonably satisfactory to Lender.
(b) QUARTERLY REPORTS. Within forty-five (45) days after the end of
each fiscal quarter, Borrower shall furnish to Lender (i) unaudited
consolidated statements of income and retained earnings and general ledger
cash accounts for Borrower for such quarter and for the period from the
beginning of Borrower's then current fiscal year to the end of such
quarter, and an unaudited consolidated balance sheet of Borrower as of the
end of such month, all in reasonable detail and certified by a Responsible
Officer of Borrower as presenting fairly the financial position of Borrower
as of the end of such quarter and the results of its operations and the
changes in its financial position for such quarter, in conformity with GAAP
(except for accompanying notes thereto), subject to year-end audit
adjustments, and (ii) upon Lender's request, an aging of accounts payable
and accounts receivable.
(c) COMPLIANCE CERTIFICATES. Within sixty (60) days after the end of
each Calendar Quarter, Borrower shall deliver to Lender a certificate dated
as of the end of such Calendar Quarter, signed on behalf of Borrower by a
Responsible Officer of Borrower: (i) stating that as of the date thereof no
Event of Default has occurred and is continuing or exists, or if an Event
of Default has occurred and is continuing or exists, specifying in detail
the nature and period of existence thereof and any action with respect
thereto taken or contemplated to be taken by Borrower; (ii) stating that
the signer has personally reviewed this Agreement and that such certificate
is based on an examination made by or under the supervision of the signer
sufficient to assure that such certificate is accurate; (iii) calculating
and certifying Borrower's compliance with the financial covenants set forth
in SECTION 7.15 hereof and (iv) (x) listing the name of each Owner of the
Borrower and the number of shares or other indicia of ownership held by
such Owner (including in such list the name and amount of options,
warrants, rights of conversion or other ownership right), provided that the
Borrower need not identify by name Owners whose ownership positions is less
than five percent (5%) of the voting shares of any class of securities or
the beneficial owners of Investor and (y) calculating and certifying that
Lender continues to have a first priority, perfected lien on a majority of
the voting shares of each class (other than the Preferred Stock) of such
outstanding securities or other ownership rights in Borrower (including in
such calculation shares or other ownership rights which Borrower has agreed
or otherwise has become committed to issue, whether by possible exercise at
a future date of an option, warrant, right of conversion or otherwise).
(d) [INTENTIONALLY DELETED].
(e) [INTENTIONALLY OMITTED]
(f) OTHER REPORTS AND INFORMATION. Promptly upon their becoming
available to Borrower, Borrower shall deliver to Lender copies of (i) all
regular or special reports or effective registration statements which
Borrower shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) financial statements,
material reports, and other information distributed by Borrower to its
creditors or the financial community in
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general, (iii) all press releases issued by or concerning Borrower or the
System, and (iv) during the High Yield Period, all material reports and
other information distributed to the trustee for the High Yield Notes
pursuant to the Indenture (as defined in the Memorandum Draft).
(g) FURTHER INFORMATION. Borrower will promptly furnish to Lender
such other information (including any report by independent auditors) in
such form as Lender may reasonably request.
7.02 OTHER NOTICES. Promptly upon a Responsible Officer of Borrower
becoming aware of any of the following, Borrower shall give Lender notice
thereof, together with a written statement of a Responsible Officer of Borrower
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by Borrower:
(a) a Default or Event of Default;
(b) any Material Adverse Change;
(c) a material default or breach by Borrower under any other
Contractual Obligation to which it is a party or by which it or its
properties is bound, if the consequences of such breach of default are
material to the business, operations or financial condition of Borrower;
(d) any event that the Borrower reasonably determines would
constitute a Regulatory Event;
(e) the commencement, existence or threat of any proceeding by or
before any Governmental Authority against Borrower which, if adversely
decided, would have a Material Adverse Effect;
(f) Borrower's receipt of any notice of violation of, or liability
under, any Environmental Laws affecting Borrower or any of its properties;
or
(g) any Change in Control or any material change in the management of
Borrower.
7.03. NOTICE OF PENSION-RELATED EVENTS. The Borrower shall promptly
furnish Lender with written notice upon the receipt by the Borrower or the
administrator of any Plan of any notice, correspondence or other communication
from the PBGC, the IRS, the Secretary of Treasury, the Department of Labor, or
any other Person, as the case may be, relating to (i) any Reportable Event, (ii)
any funding deficiency in excess of $50,000 (or $250,000 during any High Yield
Period) with respect to any Plan, (iii) any liability, either primary or
secondary, with respect to complete or partial withdrawal from any Plan, (iv)
proceedings to terminate any Plan or (v) the appointment of a trustee for any
Plan. Such notice shall be accompanied by any pertinent documents including, but
not limited to, the relevant notice, correspondence or other communication and a
statement of a Responsible Officer of the Borrower describing the event or the
action taken and the reasons therefor.
7.04. INSPECTION RIGHTS. Borrower shall upon reasonable notice permit
such persons as Lender may designate to visit and inspect the Collateral or any
other properties of Borrower, to examine its books and records and take copies
and extracts therefrom and discuss its respective affairs with its officers,
employees and independent engineers at such times and as often as Lender may
reasonably
-30-
request. Borrower hereby authorizes such officers, employees, and independent
engineers to discuss with Lender the affairs of Borrower. Lender agrees that it
will not, directly or indirectly, disclose to any third party confidential
information of Borrower obtained by it pursuant to the exercise of such
inspection rights, provided, however, this SECTION 7.04 shall not restrict the
disclosure by Lender of information if such disclosure is required by law, by
order of any court or by the order, rule or regulation of any administrative
agency, including without limitation any requirements of the FCC, any PUC, or
any state or federal securities commissions. Further, the disclosure of
information will not be restricted hereunder if such information (i) has been or
becomes published or is now, or in the future, in the public domain through (A)
no fault of Lender, (B) disclosure other than unauthorized disclosure by Lender
or (C) disclosure to third parties by Borrower without similar restrictions;
(ii) subsequent to disclosure to Lender, is lawfully received from a third party
having rights therein without restriction of the third party's or Lender's
rights to disseminate the information and without notice of any restriction
against its further disclosure; (iii) is disclosed with the written approval of
Borrower; or (iv) is or becomes publicly available free of any obligation to
keep it confidential.
7.05. PRESERVATION OF CORPORATE EXISTENCE AND QUALIFICATION. Borrower
shall maintain its existence, good standing and rights in full force and effect
in its jurisdiction of organization and shall qualify to do business and remain
qualified and in good standing and shall obtain all necessary authorizations to
do business in each jurisdiction in which failure to receive or retain such
would have a Material Adverse Effect, provided however, that nothing in this
Section 7.05 shall prohibit the Borrower from entering into an Affiliate
Transaction.
7.06. CONTINUATION OF BUSINESS. Borrower shall continue to engage
solely in the business described on SCHEDULE 1 hereto, and shall acquire and
maintain in full force and effect all rights, privileges, franchises and
licenses necessary for the operation and maintenance of the System (including,
without limitation any license or authorization required by the FCC or any PUC).
7.07. INSURANCE.
(a) Borrower shall provide and maintain or cause to be maintained at
all times insurance in such forms and covering such risks and hazards and
in such amounts and with an insurance corporation with a Best rating of "A"
or above, licensed to do business in the states where the Equipment and the
Borrower are located, as may be reasonably satisfactory to Lender, as shown
on SCHEDULE 7.07 hereto, and otherwise as may be required by the Security
Documents.
(b) Borrower shall cause (i) all liability insurance policies
covering any premises in which Collateral is located and all policies
insuring against liability arising from Borrower's operation of the
Collateral to name Lender as an additional insured, (ii) all physical
damage insurance policies to contain a lender's or mortgagee's loss payable
provision acceptable to Lender with respect to the Collateral, (iii) all
liability and physical damage insurance policies described in clauses (i)
and (ii) to provide that no assignment, cancellation, modification,
reduction in amount or adverse change in coverage thereof shall be
effective until at least thirty (30) days after receipt by Lender of
written notice thereof, (iv) all insurance policies to insure the interests
of Lender with respect to the Collateral regardless of any breach of or
violation by Borrower of any warranties, declarations or conditions
contained therein and (v) all liability and physical damage insurance
policies described in clauses (i) and (ii) to provide that Lender shall
have no obligation or liability for premiums, commissions, assessments or
calls in connection with such insurance. Lender shall be under no
obligation to verify the adequacy or existence of
-31-
any insurance coverage. Borrower shall furnish Lender copies of, or
acceptable certificates with respect to, all such policies prior to the
Closing Date, and shall provide to Lender, at least thirty days prior to
each policy expiration date, evidence of the insurance being maintained by
Borrower in compliance with this Section 7.07(b). Certificates for
insurance required under subsection (i) above shall be in ▇▇▇▇▇ Form 27
(attached hereto at SCHEDULE 7.07), and all certificates shall be
satisfactory in form and substance to Lender.
(c) If the Collateral is partially or totally damaged or destroyed,
Borrower shall give prompt notice to Lender, and all insurance proceeds,
less the costs of collection thereof, shall be paid to or retained by
Lender. Settlements, adjustments or compromises of any claims for loss,
damage or destruction to the Collateral shall be made by Borrower and
Lender as long as no Event of Default has occurred and is continuing, and
otherwise shall be made solely by Lender. Borrower hereby authorizes and
directs any affected insurance company to pay such proceeds directly to
Lender, and to rely on Lender's statement as to whether an Event of Default
has occurred. Borrower shall pay all costs of collection of insurance
proceeds payable on account of such damage or destruction. If no Default or
Event of Default has occurred and is continuing on the date the Collateral
is partially or totally damaged or destroyed, Lender shall make available
to Borrower the proceeds of any physical damage insurance actually paid to
Lender in respect of such damage or destruction of the Collateral (after
deducting therefrom any sums retained by Lender in reimbursement for costs
of collection) to pay the cost of restoration, and Borrower shall proceed
promptly with the work of restoration of the Collateral and shall pursue
the work of restoration diligently to completion. If any Default or Event
of Default has occurred and is continuing either on the date of such damage
or destruction or on the date such insurance proceeds are paid, or if any
Default or Event of Default shall occur prior to completion of such work of
restoration, then Lender, at its option, may apply such insurance proceeds
in payment of any of the Obligations, in such order as Lender may elect in
its sole discretion. Any insurance proceeds remaining after completion of
work or restoration shall, at Lender's election, be applied in accordance
with SECTION 2.04(c) hereof (but without prepayment premium), or paid over
to Borrower. Upon completion of any restoration, Borrower shall deliver to
Lender a certificate stating that the restoration has been duly completed
and accounting for the use of any insurance proceeds in such restoration.
7.08. PAYMENT OF TAXES, CHARGES, CLAIMS AND CURRENT LIABILITIES.
Borrower shall pay or discharge:
(a) on or prior to the date on which penalties thereto accrue, all
taxes, assessments and other government charges or levies imposed upon it
or any of its properties or income (including such as may arise under
Section 4062, Section 4063 or Section 4064 of ERISA, or any similar
provision of law);
(b) on or prior to the date when due, all lawful claims of
materialmen, mechanics, carriers, warehousemen, and other like persons
which could result in creation of a Lien upon any such property;
(c) on or prior to the date when due, all other lawful claims which,
if unpaid, might result in the creation of a Lien upon any such property
(other than Permitted Encumbrances) or which, if unpaid, might give rise to
a claim entitled to priority over general creditors of Borrower in a case
under Title 11 (Bankruptcy) of the United States Code, as amended, or in
any
-32-
insolvency proceeding or dissolution or winding-up involving Borrower; and
(d) all other current liabilities so that no amount, individually or
in the aggregate greater than $100,000, is overdue more than ninety (90)
days.
Notwithstanding the foregoing, Borrower shall be entitled to contest or
appeal the requirements of any Law or Governmental Authority or the payment of
any tax, assessment, charge, levy or claim, or any judgment entered against the
Borrower (collectively, in this Section 7.08, the "REQUIREMENTS"), as long as
(i) such requirements are being contested in good faith by appropriate
proceedings diligently conducted; (ii) for any such requirement with which the
failure to comply may have a Material Adverse Effect on Borrower, Borrower has
given Lender written notice of such requirements and its intent to contest them,
with supporting reasons for such contest, before the addition of any interest or
penalties that may accrue on such requirements; (iii) Borrower maintains
adequate cash reserves and makes other appropriate provisions as may be required
by GAAP to provide for any liability arising from such requirements; (iv) the
contesting of, or failure to comply with, such requirements does not in any way
jeopardize the Borrower's ability or authority to operate all or any part of the
Collateral or the continuing priority of Lender's security interests in the
Collateral; (v) the contesting of, or failure to comply with, such requirements
does not have a Material Adverse Effect; and (vi) any foreclosure, attachment,
execution, sale or similar proceeding against the Borrower or any of its
properties in connection with any such requirements is duly stayed by posting of
a bond or security deposit or by other action sufficient under applicable law to
stay such foreclosure, attachment, execution, sale or other proceedings.
7.09. FINANCIAL ACCOUNTING PRACTICES. Borrower shall make and keep
books, records and accounts which, in reasonable detail, accurately and fairly
reflect its transactions and dispositions of its assets and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP and (ii) to maintain
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
7.10. COMPLIANCE WITH LAWS. Borrower shall comply in all respects with
all Laws applicable to Borrower, provided that Borrower shall not be deemed to
be in violation of this SECTION 7.10 as a result of any failure to comply which
would not result in any liability or exposure to Lender or any fines, penalties,
injunctive relief or other civil or criminal liabilities which, in the
aggregate, would materially affect the business, operations or financial
condition of Borrower or the ability of Borrower to perform its obligations
under this Agreement or any Note.
7.11. USE OF PROCEEDS. Borrower shall use the proceeds of Advances
hereunder only as set forth in SECTION 2.01 hereof.
7.12. GOVERNMENT AUTHORIZATIONS; REGULATORY AUTHORIZATIONS, ETC.
Borrower shall at all times obtain and maintain in force all Regulatory
Authorizations and all other authorizations, permits, consents, approvals,
licenses, exemptions and other actions by, and all registrations,
qualifications, designations, declarations and other filings with, any
Governmental Authority necessary in connection with execution and delivery of
this Agreement or any Note, consummation of the transactions herein or therein
contemplated, performance of or compliance with the terms and conditions hereof
or thereof or to ensure
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the legality, validity and enforceability hereof or thereof.
7.13. CONTRACTS AND FRANCHISES. Borrower shall comply with all
agreements or instruments to which it is a party or by which it or any of its
properties (now owned or hereafter acquired) may be subject or bound and shall
maintain any and all franchises it may have or hereafter acquire, provided that
Borrower shall not be deemed to be in violation of this SECTION 7.13 as a result
of any failure to comply with any agreement if such failure would not have
Material Adverse Effect.
7.14. CONSENTS. Borrower shall obtain such Landlord's Consents,
Mortgagee's Consents and other third party consents as Lender shall reasonably
request to protect its Liens and its access to the Collateral.
7.15. FINANCIAL COVENANTS. Borrower shall comply with the financial
covenants set forth on SCHEDULE 7.15 hereto.
7.16. CONSTRUCTION AND STORAGE. The Collateral shall be installed and
equipped in full compliance with the Requirements of Law affecting the
Collateral except to the extent a failure to so comply would not have a Material
Adverse Effect on the construction or operation of the Collateral. All Equipment
financed with the proceeds of the Loan shall be safeguarded and stored until
installed in appropriate storage facilities owned or leased by Borrower. In the
event of any cessation of construction for more than fifteen (15) successive
calendar days, Borrower shall make adequate provision, reasonably acceptable to
Lender, for the protection of all materials stored on site against
deterioration, loss or damage.
7.17. UPGRADE NTI EQUIPMENT. Borrower shall update the software
customarily used in equipment of the same type as the NTI Equipment within two
releases of the most current batch change supplement release. Borrower shall
maintain the NTI Equipment in good working order and shall upgrade its
functionality to include batch change supplements releases generally available
to NTI customers and batch change supplements upgrades included in the original
purchase price of the NTI Purchase Agreement in the form in effect on the
Amendment Closing Date.
ARTICLE 8: NEGATIVE COVENANTS
-----------------------------
Borrower hereby agrees that so long as the Commitment hereunder remains in
effect or any Note remains outstanding and unpaid or any other amount is owing
to Lender hereunder or under any of the Loan Documents, Borrower shall not
directly or indirectly without prior written consent of Lender, do or permit to
exist any of the following:
8.01. ADDITIONAL INDEBTEDNESS. Create, incur, assume or suffer to exist
at any one time any Indebtedness in excess of $100,000 in the aggregate except
for (a) trade payables incurred in the ordinary course of business, and (b) any
Indebtedness described on SCHEDULE 8.01 hereto.
8.02. RESTRICTIONS ON LIENS AND SALE OF COLLATERAL. Create or suffer to
exist any Lien on the Collateral or on any other property of Borrower, or any
part thereof, whether superior or subordinate to the Lien of the Security
Documents, or assign, convey, sell or otherwise dispose of or encumber its
interest in the Collateral, or any part thereof (including, without limitation,
execution of any lease), nor permit any such action to be taken, except for the
following permitted dispositions and encumbrances (the
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"PERMITTED ENCUMBRANCES"): (i) the Lien created hereby and any purchase money
Liens in favor of NTI created by the NTI Purchase Agreement; (ii) Liens for
taxes not yet due, or which are being contested in good faith and by appropriate
proceedings in accordance with SECTION 7.08 hereof; (iii) carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are overdue for a period not
longer than thirty (30) days or which are being contested in good faith and by
appropriate proceedings in accordance with SECTION 7.08 hereof; (iv) pledges or
liens in connection with workers' compensation, unemployment insurance and other
social security legislation; (v) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (vi) easements,
rights-of-way, restrictions and other similar encumbrances that are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of Borrower; (vii) judgment liens with respect to which execution
has been stayed within ten (10) days by appropriate judicial proceedings and the
posting of adequate security which may not be any of the Collateral; and (viii)
specific liens, if any, identified on SCHEDULE 8.02 hereto. Any of the Liens
described in the second clause of subparagraph (ii), the second clause of
subparagraph (iii), and subparagraph (vii) above shall remain "Permitted
Encumbrances" as long as they are being contested by Borrower in compliance with
SECTION 7.08 hereof.
8.03. LIMITATION ON CONTINGENT OBLIGATIONS. Agree to, or assume,
guarantee, endorse or otherwise in any way be or become responsible or liable
for, directly or indirectly, any Contingent Obligation except for those created
or contemplated by the Loan Documents, except for (i) Indebtedness permitted
under SECTION 8.01 or (ii) Indebtedness of any Subsidiary of which Borrower
beneficially owns a majority of the outstanding capital stock engaged
principally in the business of Borrower as currently being conducted or as
contemplated in the Business Plan.
8.04. [INTENTIONALLY OMITTED]
8.05. PROHIBITION OF MERGERS, ACQUISITIONS, NAME, OFFICE OR BUSINESS
CHANGES, ETC. Except in connection with an Affiliate Transaction,
(a) Enter into or become the subject of, any transaction of merger,
acquisition or consolidation or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all
or any substantial part of Borrower's business or assets, whether now owned
or hereafter acquired.
(b) Change its name or corporate structure without giving Lender at
least thirty (30) days advance written notice of such change, and ensuring
that any steps that Lender may deem necessary to continue the perfection
and priority of Lender's security interests in the Collateral shall have
been taken.
(c) Change the fiscal year end of Borrower from December 31, except
with the prior written consent of Lender, which consent shall not be
unreasonably withheld.
(d) Other than in connection with the issuance of preferred or common
stock in a private placement that does not result in a Change of Control of
Borrower, amend, restate or otherwise modify, or violate any terms of, its
Organizational Documents without the prior written
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consent of Lender, which consent will not be unreasonably withheld.
(e) Become or agree to become a general or limited partner in any
general or limited partnership, or a member in a limited liability company
or a joint venturer in any joint venture not engaged principally in the
business of Borrower as currently conducted or related to the
telecommunications industry.
(f) Acquire or purchase substantially all of the stock, partnership,
membership or other ownership interests in, or substantially all of the
business, assets, customers or operations of, any other entity not engaged
principally in the business of Borrower as currently conducted or related
to the telecommunications industry.
(g) Enter into any new business or make any material change in any of
Borrower's business objectives, purposes and operations from those related
to the telecommunications industry.
8.06. LIMITATION ON EQUITY PAYMENTS. Make any Equity Payment, except
that, as long as no Default or Event of Default has occurred and is continuing,
or would be caused thereby, and if no other provision contained herein will be
violated by the disbursement of such Equity Payment, Borrower may make Equity
Payments described on SCHEDULE 8.06 hereto. Before making any Equity Payment in
accordance with this SECTION 8.06, Borrower shall deliver to Lender a
certificate of a Responsible Officer of Borrower, setting forth in detail the
calculation supporting the Borrower's compliance with the financial covenants,
stating that no Material Adverse Change has occurred since the date of the
latest financial statement delivered pursuant to SECTION 7.01(a), and stating
that no Default or Event of Default has occurred and is continuing or will be
caused by such Equity Payment.
8.07. LIMITATION ON INVESTMENTS, ADVANCES AND LOANS. (i) Organize,
create, acquire, capitalize or own any Subsidiaries not engaged principally in
the business of Borrower as currently conducted or as contemplated under
Borrower's Business Plan without Lender's prior written consent, or (ii) make or
commit to make any advance, loan, guarantee of any Indebtedness, extension of
credit or capital contribution to, or hold or invest in or purchase or otherwise
acquire any stock, bonds, notes, debentures or other securities of, or make any
other investment in, any Person (x) not engaged principally in the business of
Borrower as currently conducted or as contemplated under Borrower's Business
Plan (other than Permitted Investments) without Lender's prior written consent,
and (y) other than on terms no more onerous to Borrower than if negotiated on an
arms-length basis with an unrelated person.
8.08. CAPITAL EXPENDITURES. Except during the High Yield Period,
directly or indirectly make or commit to make any expenditure in excess of
$100,000 in the aggregate in any fiscal year in respect of the purchase or other
acquisition (including installment purchases or capital leases) of fixed or
capital assets, except for capital expenditures in accordance with the business
of Borrower as currently conducted or as contemplated under Borrower's Business
Plan and normal replacements and maintenance which are properly charged to
current operations.
8.09. LIMITATION ON LEASES. Except during the High Yield Period, enter
into any agreement, or be or become liable under any agreement, not in existence
as of the date hereof and reflected on Borrower's financial statements, for the
lease, hire or use of any real or personal property in excess of $100,000 in the
aggregate, including, without limitation, capital or operating leases, except
that Borrower may, in the ordinary course of business and on term standard in
the industry, enter into leases or
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agreements (i) for the use of real property for the System or sales offices,
(ii) for office space, office equipment, vehicles or tools, (iii) for the
location and storage of the Collateral, and (iv) for the use of capacity in
communication transmission facilities, such as but not limited to cables and
satellites.
8.10. TRANSACTIONS WITH AFFILIATES. Directly or indirectly, enter into,
renew or extend any transaction (including, without limitation, the purchase,
sale, lease or exchange of property or assets, or the rendering of any service)
with any holder (or any Affiliate of such holder) of 5% or more of any class of
capital stock of the Borrower or with any Affiliate of the Borrower or any
Restricted Subsidiary, except upon fair and reasonable terms no less favorable
to the Borrower or such Restricted Subsidiary than could be obtained, at the
time of such transaction or, if such transaction is pursuant to a written
agreement, at the time of the execution of the agreement providing therefor, in
a comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
board of directors of Borrower or (B) for which the Borrower or a Restricted
Subsidiary delivers to the Lender a written opinion of a nationally recognized
investment banking firm stating that the transaction is fair to the Borrower or
such Restricted Subsidiary from a financial point of view, (ii) any transaction
solely between the Borrower and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries, (iii) the payment of
reasonable and customary regular fees to directors of the Borrower who are not
employees of the Borrower, (iv) any payments or other transactions pursuant to
any tax-sharing agreement between the Borrower and any other Person with which
the Borrower files a consolidated tax return or with which the Borrower is part
of a consolidated group for tax purpose, (v) any Restricted Payments not
prohibited by the "Limitation on Restricted Payments" covenant in the Memorandum
Draft, or (vi) those matters listed on SCHEDULE 8.10 hereto. Notwithstanding
the foregoing, during the High Yield Period, any transaction covered by the
first paragraph of this Section 8.10 and not covered by clauses (ii) through (v)
of this paragraph, the aggregate amount of which exceeds $5,000,000 in value,
must be approved or determined to be fair in the manner provided for in clause
(i)(A) or (B) above.
8.11. TERMINATION OF NTI PURCHASE AGREEMENT. Fail to satisfy its
purchase obligations under the NTI Purchase Agreement, or terminate the NTI
Purchase Agreement prior to the earlier of (i) completion of and acceptance of
the NTI Equipment to be acquired thereunder, or (ii) the Financing Termination
Date.
8.12. REMOVAL OF COLLATERAL. Remove any material part of the Collateral
(except for sales or leases of Inventory in the ordinary course of business)
from the locations identified on SCHEDULE 4.26, without giving Lender thirty
(30) days prior written notice of such move and ensuring that any steps the
Lender may deem necessary to continue the perfection and priority of Lender's
security interest in the Collateral shall have been taken. Notwithstanding the
terms of any other section of this Agreement, no part of any Collateral may be
removed from locations identified on SCHEDULE 4.26 (or such other location as
may be permitted after compliance with SECTION 8.12), to any other location
identified on SCHEDULE 4.26 (or such other location to which such Collateral has
been relocated after compliance with SECTION 8.12) without first complying again
with the requirements of SECTION 8.12 in connection with each relocation.
8.13. ASSUMED NAMES. Transact or engage in business under any assumed
name, fictitious name, tradestyle or "d/b/a" except those identified on
SCHEDULE 4.29.
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8.14. EMPLOYMENT OF, OR COMPETITION BY, KEY EMPLOYEES. (i) Cease to
employ ▇▇▇▇▇▇ ▇▇▇▇ or (ii) suffer to exist any competition by any of ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇ with the business conducted now or hereafter by
Borrower.
8.15. ISSUANCE OF ADDITIONAL CAPITAL STOCK. After the date hereof
issue, or agree or otherwise become committed to issue (whether by possible
exercise at a future date of an option, warrant, rights of conversion or
otherwise), shares of any securities or other ownership rights in the Borrower
if immediately after the date of issuance, or the date on which Borrower agrees
or otherwise becomes committed to issue such shares, Lender does not have a
first priority, perfected Lien pursuant to one or more agreements substantially
in the form of the Stock Pledge Agreement on a majority of the voting shares of
each class of such securities or ownership rights in the Borrower (other than
the Preferred Stock, but including in such calculation shares which Borrower has
agreed or otherwise has become committed to issue whether pursuant to options,
warrants, conversion rights or other agreements and including common stock
issuable upon conversion of the Preferred Stock).
ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES
9.01. EVENTS OF DEFAULT. An Event of Default shall mean the occurrence
or existence of one or more of the following events or conditions (whatever the
reason for such Event of Default and whether voluntary, involuntary or effected
by operation of Law):
(a) PAYMENT DEFAULT. If Borrower fails to pay any sum, whether of
principal or interest on any Note or any prepayment premiums, or any other
amount due hereunder or under any Note within ten (10) calendar days after
such amount becomes due; or
(b) FALSE STATEMENT. If any statement, representation or warranty
made by Borrower or any of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇ in any
Loan Document or made in any financial statement, certificate, report,
exhibit or document furnished to Lender pursuant to any Loan Document,
proves to have been untrue, incomplete, false or misleading in any material
respect as of the time when made (including by omission of material
information necessary to make such representation, warranty or statement
not misleading) and such untruth, falsity, misleading statement or omission
shall not have been corrected or remedied to the satisfaction of Lender
within twenty (20) calendar days after the earlier of Borrower's (or ▇▇▇▇
▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇'▇ or ▇▇▇▇▇▇ ▇▇▇▇'▇) knowledge thereof or receipt of
written notice thereof from Lender; or
(c) COVENANT DEFAULTS. If Borrower defaults in the performance or
observance of any covenant or agreement in this Agreement, and such default
continues for a period of twenty (20) calendar days after the earlier of
Borrower's knowledge thereof or receipt of written notice from Lender
thereof, except for violations of SECTION 7.08(d), which shall become an
Event of Default at the end of the sixty (60) day period stated therein and
except for specific Defaults listed elsewhere in this SECTION 9.01, as to
which no notice or cure period shall apply unless specified; or
(d) [INTENTIONALLY OMITTED]
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(e) UNDISCHARGED JUDGMENTS. If one or more judgments for the payment
of money has been entered against Borrower or American Telemedia, Ltd. in
an amount in excess of $100,000 (or $1,000,000 during the High Yield
Period), and such judgment or judgments have remained undischarged and
unstayed for a period of thirty (30) calendar days, unless the validity
thereof is contested in compliance with SECTION 7.08 hereof; or
(f) ATTACHMENTS, ETC. If one or more writs or warrants of attachment,
garnishment, execution, distraint or similar process with respect to
obligations of Borrower in excess of $25,000 (or $250,000 during the High
Yield Period) individually or in the aggregate have been issued against
Borrower or American Telemedia, Ltd. or any of their respective properties
which have remained undischarged and unstayed for a period of thirty (30)
consecutive days and are not being contested in compliance with SECTION
7.08 hereof; or
(g) DEFAULT UNDER THIRD PARTY AGREEMENTS. If one or more defaults, or
events or conditions which with notice or lapse of time or both would
become a default, occur that give(s) the creditor the right to accelerate
in respect of any other obligation(s) of Borrower or American Telemedia,
Ltd. for borrowed money (including lease obligations) in the amount of
$100,000 (or $1,000,000 during the High Yield Period) individually or in
the aggregate; or
(h) DISSOLUTION; DISCONTINUANCE OF BUSINESS, ETC. If Borrower or
American Telemedia, Ltd. discontinues its usual business, dissolves, has
its Organizational Document revoked, winds up or liquidates itself or its
business, except as such acts may occur in connection with an Affiliate
Transaction; or
(i) INVOLUNTARY BANKRUPTCY OR RECEIVERSHIP PROCEEDINGS. If a
receiver, custodian, liquidator, or trustee of Borrower, American
Telemedia, Ltd., ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇, or of any of its
or his property is appointed by the order or decree of any court or agency
or supervisory authority having jurisdiction; or an order is entered
adjudicating Borrower, American Telemedia, Ltd., ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
or ▇▇▇▇ ▇▇▇▇▇ as bankrupt or insolvent; or any of the property of Borrower,
American Telemedia, Ltd., ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ is
sequestered by court order; or a petition is filed against Borrower,
American Telemedia, Ltd. or ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ under
any state or federal bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation, or receivership law of any
jurisdiction, whether now or hereafter in effect; or
(j) VOLUNTARY BANKRUPTCY. If Borrower, American Telemedia, Ltd.,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ takes affirmative steps to prepare
to file, or files, a petition in voluntary bankruptcy or to seek relief
under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing
of any petition against it or him under any such law; or
(k) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. If Borrower, American
Telemedia Ltd., ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ makes an assignment
for the benefit of creditors, or admits in writing its or his inability to
pay its or his debts generally as they become due, or consents to the
appointment of a receiver, trustee, or liquidator of itself or of all or
any part of its or his properties; or
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(l) NON-COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. If Borrower or
American Telemedia, Ltd. fails to comply with any requirement of any
Governmental Authority within twenty (20) calendar days after notice in
writing of such requirement shall have been given to Borrower by such
Governmental Authority, or such longer period of time permitted Borrower by
such Governmental Authority; or
(m) REGULATORY AUTHORIZATIONS. If any Regulatory Authorization in
connection with this Agreement or any other Loan Document or any such
Regulatory Authorization now or hereafter necessary or advisable to make
this Agreement or the other Loan Documents legal, valid, enforceable and
admissible in evidence or to permit Borrower or American Telemedia, Ltd. to
conduct its business is not obtained or has ceased to be in full force and
effect or has been modified or amended or has been held to be illegal or
invalid or is revoked or terminated and, after notice from Lender, is not
being contested by Borrower or American Telemedia, Ltd. in compliance with
SECTION 7.08 hereof and Lender has reasonably determined in good faith
(which determination shall be conclusive) that such event or occurrence may
have a Material Adverse Effect or a material adverse effect on Lender's
rights under this Agreement or any other Loan Documents; or
(n) DAMAGE OR DESTRUCTION. If the proceeds of any physical damage
insurance actually paid in respect of the partial or total damage or
destruction of the Collateral, together with any other cash or other
readily available funds, are insufficient to cover the cost of the
restoration thereof or such damage or destruction is so extensive that
repair or restoration cannot be expected within a time period short enough
to prevent a Material Adverse Effect;
(o) LANDLORD WAIVERS. If Borrower or American Telemedia, Ltd. fails
to provide the Landlord Waivers and Mortgagee Waivers required hereunder
and Lender determines in its sole discretion that such failure results in a
material impairment of Lender's security for the Loans; or
(p) CHANGE IN CONTROL. If any Change in Control should occur without
Lender's prior written consent, which may be withheld in Lender's sole and
absolute discretion; or
(q) ERISA DEFAULTS. If, with respect to any Plan, (i) there has
occurred a Reportable Event being considered by the PBGC which may
reasonably result in any material liability to the PBGC with respect to any
Plan, (ii) a Plan has been terminated not in compliance with ERISA, (iii) a
trustee has been appointed by a United States District Court to administer
a Plan, (iv) a PBGC or any other person has instituted proceedings to
terminate a Plan or to appoint a trustee to administer any such Plan, (v)
either the Borrower or any Affiliate has withdrawn, completely or
partially, from any Plan, (vi) either the Borrower or any Affiliate has
incurred secondary liability for withdrawal liability payments under any
Plan or (vii) a Plan has failed to meet the minimum funding standards
established under the Code or ERISA; or
(r) DEFAULTS UNDER OTHER LOAN DOCUMENTS. If any default,
misrepresentation or breach should occur under any Security Document or
other Loan Document and is not cured or waived within the time permitted
therein, or any such Loan Documents should cease to be in full force and
effect, or any party thereto should assert any unenforceability of, or deny
liability on, or admit inability to perform under, any such Loan Document.
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9.02. CONSEQUENCES OF AN EVENT OF DEFAULT. If any Event of Default
shall occur and be continuing or shall exist, Lender shall be under no further
obligation to make Advances hereunder, any remaining commitment hereunder shall
immediately terminate, with no further notice, and Lender may, by notice to
Borrower, declare the unpaid principal amount of each Note, interest accrued
thereon and all other amounts owing by Borrower hereunder or under each Note to
be immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived, and an action
therefor shall immediately accrue. Such consequences shall occur automatically
upon the occurrence of an Event of Default under SECTION 9.01 (h), (i), (j) OR
(k), without any notice or demand. Upon the occurrence of an Event of Default,
Lender may, in its sole discretion, exercise any and all remedies available to
it under this ARTICLE 9 or under any of the Loan Documents or under applicable
law without further notice or period of grace or opportunity to cure.
9.03. EXERCISE OF RIGHTS. Subject to any requirements for FCC or other
governmental approval upon the occurrence of any Event of Default, the rights,
powers and privileges provided in this Section and all other remedies available
to Lender under this Agreement or by statute or by rule of law may be exercised
by Lender at any time from time to time whether or not the Obligations shall be
due and payable, and whether or not Lender shall have instituted any foreclosure
or other action for the enforcement of this Agreement or any Note. No failure to
exercise nor any delay in exercising on the part of Lender, any right, remedy,
power or privilege hereunder or under any of the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or future
exercise thereof or the exercise of any other right, remedy, power or privilege.
9.04. RIGHTS OF SECURED PARTY; POSSESSION OR SALE OF COLLATERAL.
Without limiting the generality of the foregoing, Lender shall have all the
rights and remedies of a secured party under the UCC, and Lender may, without
demand and without advertisement or notice, except as may be required by Section
9-504(3) of the UCC, all of which Borrower waives, except as may be required by
Section 9-504(3) of the UCC, at any time or times, sell and deliver any or all
Collateral held by or for it at public or private sale, for cash, upon credit or
otherwise, at such prices and upon such terms as Lender deems advisable, in its
sole discretion, and/or collect, or enforce the collection of, the Collateral.
Lender may be the purchaser at any such sale. Upon the occurrence of an Event of
Default and upon Lender's request, Borrower shall assemble, at its own expense,
any or all Equipment and other Collateral at a convenient place acceptable to
Lender and shall pay to Lender or reimburse Lender for, on demand, all costs of
collection of all amounts due, and enforcement of all rights hereunder,
including reasonable attorneys' fees and legal expenses, and expenses of any
repairs to any realty or other property to which any of such Collateral may be
affixed. Upon an Event of Default Lender may, to the fullest extent permitted by
applicable law, without notice, advertisement, hearing or process of law of any
kind, enter upon any premises where any of the Collateral may be located and
take possession of and remove such Collateral.
9.05. NOTICES, ETC. WAIVED. Except as expressly provided in this
ARTICLE 9, Borrower hereby expressly waives, to the fullest extent permitted by
applicable law, presentment, demand, protest, any and all notices of any kind,
advertisements, hearing or process of law in connection with the exercise by
Lender of any of its rights and remedies upon the occurrence of an Event of
Default. If any notification of intended disposition of any of the Collateral is
required by law, such notification shall be deemed reasonably and properly given
if given in accordance with SECTION 10.06 hereto at least ten (10) days before
such disposition.
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9.06. ADDITIONAL REMEDIES. Lender's remedies upon the occurrence
and during the continuance of an Event of Default shall include, in addition to,
and not in lieu of, such remedies as are available at law or in equity or
provided for in any of the Loan Documents, the following:
(a) FORECLOSURE; RECEIVERSHIP. Lender shall be entitled to file one
or more suits at law or in equity to collect the Obligations and/or to
foreclose on Lender's Liens on and security interests created by this
Agreement or the Security Documents. Lender may apply or require Borrower
to apply for any necessary transfers, assignments, orders, consents or
licenses in connection with the operation or abandonment of the Collateral
or any part thereof, and the Lender shall also be entitled as a matter of
right and without notice and without requiring bond (notice and bond being
hereby waived), without regard to the solvency or insolvency of the
Borrower at the time of application and without regard to the value of the
Collateral at that time, to have a receiver appointed by a court of
competent jurisdiction in order to manage, protect, and preserve the
Collateral and to continue the operation of the business of Borrower, and
to collect all revenues and profits thereof and apply the same to the
payment of all expenses and other charges of such receivership until the
sale or other final disposition of the Collateral. Borrower hereby consents
to the appointment of such receiver.
(b) RIGHT TO CURE. If Borrower fails in any material respect to
perform or comply with any of its agreements contained herein or in any of
the other Loan Documents, Lender may take whatever actions it may deem
appropriate to perform or comply or otherwise cause performance or
compliance with such agreement, all at the risk, cost and expense of
Borrower.
(c) SETOFF. If the unpaid principal amount of any Note, interest
accrued thereon or any other amount owing by Borrower hereunder or under
any Note shall have become due and payable (by acceleration or otherwise),
Lender shall have the right, in addition to all other rights and remedies
available to it, without notice to Borrower, to setoff against and to
appropriate and apply to such due and payable amounts any debt owing to,
and any other funds held in any manner for the account of, Borrower by
Lender. Such right shall exist whether or not Lender shall have given
notice or made any demand hereunder or under such Note, whether or not such
debt owing to or funds held for the account of Borrower is or are matured
or unmatured, and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to
Lender. Borrower hereby consents to and confirms the foregoing arrangements
and confirms Lender's rights of setoff.
9.07. APPLICATION OF PROCEEDS. Any proceeds of any of the Collateral,
received by Lender through sale or disposition of the Collateral or otherwise,
may be applied by Lender toward the payment of the Obligations, including
expenses in connection with the Collateral (including reasonable fees and legal
expenses) in such order of application as Lender may from time to time elect.
9.08. DISCONTINUANCE OF PROCEEDINGS. If Lender should proceed to
enforce any right or remedy under this Agreement or any other Loan Document, and
then discontinue or abandon such proceeding for any reason, all rights, powers
and remedies of Lender hereunder shall continue as if no such proceeding had
been taken.
9.09. POWER OF ATTORNEY. For the purpose of carrying out the provisions
and exercising the rights, powers and privileges granted by the Loan Documents,
including, without limitation, this ARTICLE
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9, Borrower hereby irrevocably constitutes and appoints Lender its true and
lawful attorney-in-fact to execute, acknowledge and deliver any instruments and
do and perform any acts such as are referred to in the Loan Documents,
including, without limitation, this ARTICLE 9, in the name and on behalf of
Borrower, from time to time in Lender's reasonable discretion after the
occurrence and during the continuance of an Event of Default, in accordance with
the Loan Documents and any statute or rule of law. This power of attorney is a
power coupled with an interest and cannot be revoked. Borrower hereby ratifies
all that said attorney-in-fact shall lawfully do or cause to be done by virtue
and in accordance with the terms hereof.
Without limiting the generality of the foregoing, Lender may after the
occurrence and during the continuance of an Event of Default do the following
without notice to or assent by Borrower to accomplish the purposes of this
Agreement:
(a) upon failure of Borrower to timely pay or discharge taxes or Liens
levied or placed on or threatened against the Collateral or maintain
insurance on the Collateral, pay and discharge such taxes or Liens, effect
any repairs on the Collateral and/or pay the premiums for any insurance
called for by the terms of this Loan Agreement or any other Loan Document;
(b) (i) direct any party liable for any payment on any Collateral to make
payment of any and all monies due and to become due thereunder directly to
Lender or as Lender shall direct; (ii) in the name of Borrower or its own
name or otherwise, take possession of and endorse and collect any checks,
drafts, notes, acceptances, or other instruments for the payment of monies
due under, or otherwise receive payment of and receipt for any and all
monies, claims and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (iii) sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices in
connection with the Collateral; (iv) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect all or any of the Collateral and to enforce any
other right in respect of any Collateral; (v) defend any suit, action or
proceeding brought against Borrower with respect to any Collateral; (vi)
settle, compromise or adjust any suit, action or proceeding described above
upon commercially reasonable terms under the circumstances and, in
connection therewith, give such discharges or releases as Lender may
reasonably deem appropriate; and (vii) generally sell, use, operate,
transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though Lender were the
absolute owner thereof for all purposes, and, at Lender's option and
Borrower's expense, at any time or from time to time after the occurrence
and during the continuance of an Event of Default, all other acts and
things that Lender reasonably deems necessary to protect, preserve or
realize upon the Collateral and Lender's security interest therein, in
order to effect the intent of this Agreement and the other Loan Documents
all as fully and effectively as Borrower might do.
9.10. REGULATORY MATTERS. Notwithstanding any provision to the contrary
contained herein, Lender will not exercise any right or remedy under this
Agreement that requires prior FCC or PUC approval without first obtaining such
approval. If counsel to Lender reasonably determines that the consent of the FCC
or PUC is required in connection with any of the actions that may be taken by
Lender in the exercise of its rights hereunder or under any of the other Loan
Documents, then Borrower, at its sole cost and expense, agrees to use its best
efforts to secure such consent and to cooperate with Lender in any action
commenced by Lender to secure such consent. Upon the occurrence and during the
continuation of an Event of Default Borrower shall promptly execute and/or cause
the execution of all
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applications, certificates, instruments and other documents and papers that may
be required in order to obtain any necessary governmental consent, approval or
authorization, and if Borrower fails or refuses to execute such documents, the
clerk of the court with jurisdiction may execute such documents on behalf of
Borrower.
ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS
--------------------------------------------
The following conditions shall be applicable throughout the term of this
Agreement:
10.01. MODIFICATIONS AND WAIVERS. This Agreement, the other Loan
Documents, or any provision thereof may not be changed, waived or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver or termination is sought. No action or course
of dealing on the part of Lender, its officers, employees, consultants, or
agents, nor any failure or delay by Lender with respect to exercising any right,
power, or privilege of Lender under any Note, this Agreement, or any other Loan
Document shall operate as a waiver thereof, except as otherwise provided in this
Agreement. Any waiver shall be effective only to the extent and for the instance
specifically identified in such writing, and shall not be deemed to imply any
future waivers or other waivers. No amendment to the Loan Documents shall be
effective without written agreement signed by both Borrower and Lender.
10.02. ADVANCES NOT IMPLIED WAIVERS. No waiver of the requirements
contained in any Loan Document shall be effective unless in writing duly signed
by Lender. No Advance hereunder shall constitute a waiver of any of the
conditions of Lender's obligation to make further Advances nor, in the event
Borrower is unable to satisfy any such condition, shall any waiver of such
condition have the effect of precluding Lender from thereafter declaring such
inability to be an Event of Default as herein provided. Any Advance made by
Lender and any sums expended by Lender pursuant to the Loan Documents shall be
deemed to have been made pursuant to this Agreement, notwithstanding the
existence of an uncured Default or Event of Default. No Advance at a time when
an Event of Default exists shall constitute a waiver of any right or remedy of
Lender existing by reason of such Event of Default, including, without
limitation, the right to accelerate the maturity of the Indebtedness evidenced
by each Note or to foreclose the Lien on the Collateral or to refuse to make
further advances hereunder.
10.03. DEVIATION FROM COVENANTS. The procedure to be followed by
Borrower to obtain the consent of Lender to any deviation from the covenants
contained in this Agreement or any other Loan Document shall be as follows:
(a) Borrower shall send a written notice to Lender setting forth (i)
the covenant(s) relevant to the matter, (ii) the requested deviation from
the covenant(s) involved, and (iii) the reason for the requested deviation
from the covenant(s); and
(b) Lender, within a reasonable time, will send a written notice to
Borrower, permitting or refusing the request, but in no event will any
deviation from the covenants of this Agreement or any other Loan Document
be effective without the express prior written consent of Lender. Lender's
failure to provide such written notice shall be deemed a refusal of such
request.
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10.04. HOLIDAYS. Except as otherwise provided herein, whenever any
payment or action to be made or taken hereunder or under any Note shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day and such extension of
time shall be included in computing interest or fees, if any, in connection with
such payment or action.
10.05. RECORDS. From time to time Lender may send Borrower statements of
the unpaid principal amount of the a Note, the unpaid interest accrued thereon,
the Interest Rate or rates applicable to such unpaid principal amount, the
duration of such applicability, and the amount remaining available on any Loan,
and each statement shall be deemed correct and conclusively binding on Borrower
(absent manifest error) unless Borrower notifies Lender of an error in the
statement in writing within thirty (30) days of the date of any such statement
is provided to Borrower.
10.06. NOTICES. All notices, requests, demands, directions and other
communications (collectively, "notices") required under the provisions of this
Agreement or any other Loan Document shall be in writing (including
communication by facsimile transmission) unless otherwise expressly permitted
hereunder and shall be sent by hand, by registered or certified mail return
receipt requested, by overnight courier service maintaining records of receipt,
or by facsimile transmission with confirmation in writing mailed first-class, in
all cases with charges prepaid, and any such properly given notice shall be
effective upon the earlier of receipt or (i) when delivered by hand, or (ii) the
third Business Day after being mailed, or (iii) the following Business Day if
sent by overnight courier service, or (iv) when sent by facsimile, answer back
received. All notices shall be addressed as follows:
If to Borrower, to the Notice Address set forth on SCHEDULE 1, with
copies, if any, as set forth on SCHEDULE 1.
If to Lender: NTFC Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: NTFC Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Credit
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All notices shall be sent to the applicable party at the address stated
above or in accordance with the last unrevoked written direction from such party
to the other party hereto, given in accordance with the terms hereof.
10.07. FCC AND PUC APPROVAL. The exercise of any rights or remedies
hereunder or under any other Loan Document by Lender that may require FCC or PUC
approval shall be subject to obtaining such approval. Pending the receipt of any
PUC or FCC approval, Borrower shall not do anything to delay, hinder, interfere
with or obstruct the exercise of Lender's rights or remedies hereunder or the
obtaining of such approvals.
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10.08. LENDER SOLE BENEFICIARY. All conditions of the obligation of
Lender to make any Advances hereunder are imposed solely and exclusively for the
benefit of Lender and its assigns and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make any Advances in the absence
of strict compliance with any or all such conditions, and no Person shall under
any circumstances be deemed to be a beneficiary of such conditions, any or all
of which may be freely waived in whole or in part by Lender at any time if in
its sole discretion it deems it advisable to do so. Inspections and approvals of
the System, and the workmanship and materials used therein impose no
responsibility or liability of any nature whatsoever on Lender, and no Person
shall, under any circumstances, be entitled to rely upon such inspections and
approvals by Lender for any reason. Lender's sole obligation hereunder is to
make the Advances if and to the extent required by this Agreement or any Note.
10.09. LENDER'S REVIEW OF INFORMATION. Borrower acknowledges and agrees
that any review or analysis by Lender of financial information, operating
information, marketing data or other information provided to Lender by or on
behalf of Borrower at any time is and shall be conducted solely for Lender's
benefit and internal use and that Lender is under no duty or obligation to make
the results of such review or analysis available to Borrower. Borrower is not
relying, and will not rely, on Lender for financial or business advice.
10.10. NO JOINT VENTURE. Nothing in any of the Loan Documents or in this
Agreement shall be deemed to constitute any kind of partnership, joint venture
or fiduciary relationship between the Lender and the Borrower or between the
Lender and any Owners.
10.11. SEVERABILITY. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement or the other Loan Documents shall
be held invalid or unenforceable in whole or in part in any jurisdiction such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof or thereof in any jurisdiction.
10.12. RIGHTS CUMULATIVE. All rights, powers and remedies herein given
to Lender are cumulative and not alternative, and are in addition to all
statutes or rules of law.
10.13. DURATION; SURVIVAL. All representations and warranties of
Borrower contained herein or made in connection herewith shall survive the
making of and shall not be waived by the execution and delivery of this
Agreement and the other Loan Documents, any investigation by Lender, or the
making of any Advances hereunder. All covenants and agreements of Borrower
contained herein shall continue in full force and effect from and after the date
hereof so long as it may borrow hereunder and until payment in full of each
Note, interest thereon, all fees and all other Obligations of Borrower. Without
limitation, it is understood that all obligations of Borrower to make payments
to or indemnify Lender shall survive the payment in full of each Note and of all
other Obligations.
10.14. GOVERNING LAW. This Agreement and each Note and each of the other
Loan Documents shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, except to the extent, if any,
set forth on SCHEDULE 2.02 hereto, and except to the extent that the laws of
jurisdictions where the Collateral is located may be required to apply to the
Collateral.
10.15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts (by facsimile transmission or otherwise) and by the different
parties hereto on separate counterparts, each of
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which, when so executed, shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.
10.16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Lender and Borrower and their respective successors and
assigns; PROVIDED, HOWEVER, that Borrower may not assign or transfer any of its
rights or obligations hereunder or under the other Loan Documents (in whole or
in part), except to its successor in an Affiliate Transaction, without the prior
written consent of Lender. Lender may assign, transfer or pledge any of its
respective rights or obligations hereunder or under the other Loan Documents
without notice to or the prior written consent of Borrower. Upon receipt of
written notice from Lender of such assignment, Borrower shall promptly
acknowledge receipt thereof in writing. If Borrower is given written notice of
any assignment, it shall perform its obligations with respect to this Agreement
for the ratable benefit of the applicable assignee(s), and, if so directed,
shall pay all amounts due or to become due hereunder directly to the applicable
assignee(s) or to any other party designated by such assignee(s). Borrower shall
not assert against any such assignee any set-off, defense or counterclaim that
Borrower may have against Lender or any person other than such assignee.
Borrower shall also execute and deliver to Lender such documentation as any such
assignee may reasonably require, including but not limited to amended promissory
notes and acknowledgment of or consent to the assignment which may require
Borrower to make certain representations or reaffirmations as to some of the
basic terms and covenants contained herein. Lender shall not be relieved of its
obligations hereunder as a result of any such sale, assignment, transfer, grant
or pledge, unless such assignee specifically assumes all or part of Lender's
future obligations hereunder in a writing, a copy of which shall be delivered to
Borrower, in which event after the date of such assignment, Borrower's
obligations to any such assignee shall be proportionately as set forth herein
with respect to Lender, and Borrower shall not look to Lender to perform any of
such assignee's obligations hereunder which arise after the date thereof. Any
assignee shall be entitled to rely on Borrower's agreements as stated herein, as
applicable, and shall be considered a third party beneficiary thereof. Except to
the extent otherwise required by the context of this Agreement, the word
"Lender" where used in this Agreement shall mean and include any holder of any
Note originally issued to Lender hereunder, and any such holder of any Note
shall be bound by and have the benefits of this Agreement the same as if such
holder had been a signatory hereto.
10.17. PARTICIPATION. Lender shall have the right to enter into one or
more participation agreements, syndication agreements or similar agreements with
one or more participating lenders or other parties approved by Lender on such
terms and conditions as Lender shall deem advisable. Borrower shall furnish a
sufficient number of copies of reports and certificates to Lender so that Lender
and each participating lender shall receive a copy of each such document.
10.18. TIME OF ESSENCE. Time is of the essence of this Agreement and
each Note and the other Loan Documents.
10.19. DISCLOSURES AND CONFIDENTIALITY.
(a) Borrower agrees that it will obtain Lender's written consent
before using or generating any press release, advertisement, publicity
materials or other publication in which the name (except as permitted by
SECTION 10.19(b)) or logo of Lender or any of its Affiliates is used or may
be reasonably inferred, and will not distribute any such materials in the
absence of such prior written approval.
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(b) Borrower agrees that it will not, directly or indirectly,
disclose to any third party the terms of this Agreement or the other Loan
Documents or prior or future correspondence relating thereto, or the
transactions contemplated hereby, or any other information regarding Lender
or its Affiliates learned by Borrower during the course of negotiation
thereof. The term "third party" shall exclude only the Borrower, its
Affiliates, underwriters, prospective investors in Borrower, and
prospective lenders, and their respective attorney(s) and certified public
accountant(s). This SECTION 10.19(b) shall not restrict the disclosure of
information if such disclosure is required by law, by order of any court or
by the order, rule or regulation of any administrative agency, including
without limitation any requirements of the FCC, any PUC, or any state or
federal securities commissions (the "COMMISSIONS"); PROVIDED, HOWEVER,
that, except for disclosures required by the FCC, PUC or Commissions,
Borrower shall provide Lender with advance notice of any such required
disclosure of information so that Lender may seek an appropriate protective
order and/or waive compliance with this Section. Borrower shall not oppose
any action taken by Lender to obtain an appropriate protective order or
other reliable assurance that the information will be accorded confidential
treatment. The obligations set forth in this SECTION 10.19(b) shall survive
the termination of this Agreement.
(c) The disclosure of information by either Lender or Borrower will
not be restricted under this Agreement if such information (i) has been or
becomes published or is now, or in the future, in the public domain through
(A) no fault of the parties, (B) disclosure other than unauthorized
disclosure by the party to whom the information is disclosed, or (C)
disclosure to third parties by the disclosing party without similar
restriction; (ii) is property (other than proposal letters, commitment
letters or other correspondence between Lender and Borrower) within the
legitimate possession of the receiving party prior to disclosure hereunder;
(iii) subsequent to disclosure hereunder, is lawfully received from a third
party having rights therein without restriction of the third party's or
receiving party's rights to disseminate the information and without notice
of any restriction against its further disclosure; (iv) is disclosed with
the written approval of the other party; or (v) is or becomes publicly
available free of any obligation to keep it confidential.
(d) Borrower authorizes Lender to discuss with and furnish to any
Affiliate of the Lender, to any government or self-regulatory agency with
jurisdiction over the Lender, to any other Governmental Authority or to any
assignee, successor, participant, successor, or prospective assignee,
successor or participant, all financial statements, audit reports and other
information pertaining to the Borrower and/or its Subsidiaries whether such
information was provided by Borrower or prepared or obtained by the Lender
or third parties. Neither the Lender nor any of its employees, officers,
directors or agents makes any representation or warranty to any existing or
prospective assignee, successor or participant regarding any audit reports
or other analyses of Borrower that the Lender may distribute, whether such
information was provided by Borrower or prepared or obtained by the Lender
or third parties, nor shall the Lender or any of its employees, officers,
directors or agents be liable to any Person receiving a copy of such
reports or analyses for any inaccuracy or omission contained in such
reports or analyses or relating thereto.
(e) Every reference in this Agreement to disclosures of Borrower to
Lender (except the financial statements), to the extent that such
references refer or are intended to refer to disclosures at or prior to the
execution of this Agreement, shall be deemed strictly to refer only to
written disclosures delivered to Lender concurrently with the execution of
this Agreement and
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referred to specifically in the Loan Documents. The parties intend that
such disclosures are to be limited to those presented in an orderly manner
at the time of executing this Agreement and are not to be deemed to include
expressly or impliedly any disclosures that previously may have been
delivered from time to time to Lender, except to the extent that such
previous disclosures are again presented to Lender in writing concurrently
with the execution of this Agreement.
10.20. JURISDICTION AND VENUE. BORROWER HEREBY IRREVOCABLY CONSENTS TO
THE JURISDICTION OF THE COURTS LOCATED IN DAVIDSON COUNTY, TENNESSEE, INCLUDING
WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF TENNESSEE
AND THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE, FOR ANY SUIT BROUGHT OR
ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR
THE OBLIGATIONS, AND AGREES NOT TO CONTEST VENUE IN ANY SUCH COURTS. In any such
litigation, Borrower waives personal service of any summons, complaint or other
process, and agrees that the service thereof may be made by certified or
registered mail direct to Borrower at its address set forth in Section 10.06
hereof. Within thirty (30) days after such mailing, Borrower shall appear and
answer to such summons, complaint or other process. Should Borrower fail to
appear or answer within the said 30-day period, then such party shall be deemed
in default and judgment may be entered against Borrower for the amount or other
relief as demanded in any summons, complaint or other process so served. In the
alternative, in its sole discretion, Lender may effect service upon Borrower in
any other form or manner permitted by law. The choice of forum set forth herein
shall not be deemed to preclude the enforcement of any judgment obtained in such
forum or the taking of any action under this Agreement to enforce the same in
any appropriate jurisdiction.
10.21. JURY WAIVER. BORROWER AND LENDER HEREBY KNOWINGLY AND WILLINGLY
WAIVE THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS, OR ANY RELATIONSHIP
BETWEEN THE LENDER AND BORROWER. THE BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
10.22. LIMITATION ON LIABILITY. LENDER SHALL HAVE NO LIABILITY UNDER OR
IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS FOR
SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF
ANY SORT IN ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND, EXCEPT TO THE
EXTENT PROHIBITED BY LAW, EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT OTHER THAN ACTUAL DAMAGES.
10.23. BORROWER WAIVERS. To the fullest extent permitted by law, the
Borrower hereby waives (i) presentment, demand and protest and notice of
presentment, protest, default, non payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which the Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this
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regard; (ii) notice prior to taking possession or control of the Collateral or
any bond or security which might be required by any court prior to allowing
Lender to exercise any of Lender's remedies, including the issuance of an
immediate writ of possession, except as expressly required in any of the Loan
Documents; (iii) any marshalling of assets, or any right to compel Lender to
resort first to any Collateral or other Persons before pursuing the Borrower for
payment of the Obligations and any defenses based on suretyship or impairment of
Collateral; (iv) the benefit of all valuation, appraisement and exemption laws;
(v) any right to require Lender to terminate its security interest in the
Collateral or in any other property of the Borrower until termination of this
Agreement and the execution by the Borrower and by any person whose loans to the
Borrower are used in whole or in part to satisfy the Obligations, of an
agreement indemnifying Lender from any loss or damage Lender may incur as the
result of dishonored or unsatisfied items of any account debtor applied to the
Obligations; and (vi) notice of acceptance hereof. The Borrower acknowledges
that the foregoing waivers are a material inducement to Lender's entering into
this Agreement and that Lender is relying upon the foregoing waivers in its
future dealings with the Borrower.
10.24. SCHEDULES. The Schedules and Exhibits attached to this Agreement
are an integral part hereof, and are hereby made a part of this Agreement.
10.25. AGREEMENT TO GOVERN. In case of any conflict between the terms of
this Agreement and any of the other Loan Documents, the terms of this Agreement
shall govern.
10.26. ENTIRE AGREEMENT. This Agreement, the other Loan Documents and
other documents, agreements and certificates executed by the parties
contemporaneously herewith or subsequent hereto constitute the entire agreement
of the parties and supersede all prior understandings and agreements, written or
oral, between the parties hereto relating to the subject matter hereof. Borrower
is not entering into this Agreement in reliance on statements or representations
made by any Person other than as set forth herein.
[END OF GENERAL TERMS AND CONDITIONS. NEXT PAGE IS SCHEDULE 1.]
[SIGNATURES ARE ON COVER PAGE. ]
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BORROWER INFORMATION AND DEFINED TERMS
--------------------------------------
"CLOSING DATE": May 28, 1996.
"AMENDMENT CLOSING DATE": ▇▇▇▇▇ ▇▇, ▇▇▇▇
"▇▇▇▇▇▇▇▇": Econophone, Inc., a New York corporation.
BORROWER'S FEDERAL EMPLOYER/
TAX IDENTIFICATION NUMBER: ▇▇-▇▇▇▇▇▇▇
BORROWER'S CHIEF EXECUTIVE OFFICES (INCLUDING COUNTY):
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
BORROWER'S NOTICE ADDRESS:
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES TO:
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE EQUIPMENT IS LOCATED AT: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
London E1496B
BORROWER'S INITIALS:
LENDER'S INITIALS:
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92021 Nanterre Cedex
NTI EQUIPMENT: See Exhibits 1 and 2 attached hereto.
"PUC": the term "PUC" shall include, without limitation, the New York Public
Service Commission.
"REGULATORY AUTHORIZATIONS": the term "Regulatory Authorizations" shall include,
without limitation, the authorizations described on Schedule 4.05 hereto.
"DESCRIPTION OF BUSINESS": Borrower provides long-distance U.S. domestic and
international telephone service by means of the resale of the message telephone
services of other telephone carriers and also as a network provider, as further
described in the Business Plan of Borrower dated September 1996. In addition,
Borrower provides other telecommunications equipment to its domestic and
international customers, including, but not limited to, telephone calling card
services. Borrower also owns and leases its own submarine cable circuits
between the U.S. and the U.K. Borrower provides international telephone service
in the U.K. through affiliated companies. Borrower intends to expand its New
York-based operations both domestically and internationally. Borrower also
intends to expand its U.K. operations into the European continent and other
international points. The Borrower expects that the foregoing expansions will
require Borrower's acquisition of additional equipment and circuit facilities.
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 2.01 TO
LOAN AND SECURITY AGREEMENT
MAXIMUM LOAN AMOUNT
Maximum principal amount of all Loans: (i) Before the Amendment Closing Date,
Two Million Dollars ($2,000,000), One Million Four Hundred Thousand Dollars
($1,400,000) of which may be used to acquire NTI Equipment and related services
and Six Hundred Thousand Dollars ($600,000) of which may be used for the
purchase of network related third party equipment, the preparation of a switch
room for such NTI Equipment, and the payment of closing costs and Lender's fees
and expenses, including Lender's attorneys' fees pursuant to Section 2.10 and
the Origination Fee listed on Schedule 2.09, and (ii) from and after the
Amendment Closing Date to and through the Financing Termination Date, an
additional Three Million Dollars ($3,000,000) which may be used to acquire NTI
Equipment and related Software to be located in London, England, Brussels,
Belgium and/or Paris, France.
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 2.02 TO
LOAN AND SECURITY AGREEMENT
PAYMENT TERMS AND GOVERNING LAW
"FINANCING TERMINATION DATE": March 31, 1997
"FIRST BORROWING DATE": either a Tranche 1 or Tranche 2 First Borrowing
Date.
"INITIAL PAYMENT DATE": a Tranche 1 or a Tranche 2 Initial Payment Date.
"INTEREST PAYMENT DATE": the Initial Payment Date and the first (1st)
Business Day of each calendar month thereafter.
"INTEREST RATE": the variable interest rate per annum announced from time
to time as the ninety (90) day "Commercial Paper" rate (being defined as the
rate paid on high grade unsecured notes sold through major dealers by major
corporations in multiples of One Thousand Dollars ($1,000) for repurchase within
90 days) as reported in THE WALL STREET JOURNAL, plus three hundred and
ninety-five (395) basis points. The Interest Rate shall be automatically
adjusted prospectively on the last Business Day of each Calendar Quarter based
upon the rate quoted in THE WALL STREET JOURNAL on the immediately preceding
Business Day. If THE WALL STREET JOURNAL should cease publication or cease
publishing such rate, the Lender shall designate a comparable reference rate for
use in determining the Interest Rate hereunder.
"TRANCHE 1 FIRST BORROWING DATE": the first day an Advance is made under
the Tranche 1 Note.
"TRANCHE 2 FIRST BORROWING DATE": the first day an Advance is made under
the Tranche 2 Note.
"TRANCHE 1 INITIAL PAYMENT DATE": the first (1st) Business Day of the first
(1st) month to commence after the Tranche 1 First Borrowing Date.
"TRANCHE 2 INITIAL PAYMENT DATE": the first (1st) Business Day of the first
(1st) month to commence after the Tranche 2 First Borrowing Date.
"TRANCHE 1 MATURITY DATE": the earlier of (i) July 1, 2001, and (ii) the
first (1st) Business Day of the sixtieth (60th) month after the Tranche 1 First
Borrowing Date, on which date all then-outstanding principal, interest, premium,
expenses, fees, penalties and other amounts due under the Tranche 1 Note shall
be finally due and payable.
"TRANCHE 2 MATURITY DATE": the earlier of (i) April 1, 2002, and (ii) the
first (1st) Business Day of the sixtieth (60th) month after the Tranche 2 First
Borrowing Date, on which date all then-outstanding principal, interest, premium,
expenses, fees, penalties and other amounts due under the Tranche 2 Note
BORROWER'S INITIALS:
LENDER'S INITIALS:
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shall be finally due and payable.
"PAYMENT DATE": the Initial Payment Date and the first (1st) Business Day
of each month thereafter.
"TRANCHE 1 PAYMENT SCHEDULE: principal shall be paid in sixty (60) equal
consecutive monthly installments equal initially to 1.667% of the amount of the
Advances made hereunder on the Tranche 1 First Borrowing Date; PROVIDED,
HOWEVER, that the principal payment amounts payable hereunder shall be
recalculated by Lender each time subsequent Advances are made hereunder after
the Tranche 1 First Borrowing Date but prior to the Amendment Closing Date,
based on the aggregate amount of all Advances then outstanding so that the
payment schedule, as recalculated, will fully amortize the aggregate amount of
all Advances then outstanding in equal monthly payments of principal to the
Tranche 1 Maturity Date. Borrower and Lender understand that this payment
schedule is intended to amortize fully the principal amount advanced under the
Tranche 1 Note in equal monthly payments from the date of such Advance to the
Tranche 1 Maturity Date and any other principal and interest amounts advanced
prior to the Amendment Closing Date still outstanding will be added to the final
payment on the Tranche 1 Maturity Date. In any event, the entire outstanding
principal amount of the Tranche 1 Note and all accrued but unpaid interest and
all other outstanding amounts due thereunder shall be paid on the Tranche 1
Maturity Date.
"TRANCHE 2 PAYMENT SCHEDULE: principal shall be paid in sixty (60) equal
consecutive monthly installments equal initially to 1.667% of the amount of the
Advances made on the Tranche 2 First Borrowing Date; PROVIDED, HOWEVER, that the
principal payment amounts payable hereunder shall be recalculated by Lender each
time subsequent Advances are made hereunder after the Amendment Closing Date,
based on the aggregate amount of all Advances then outstanding under the Tranche
2 Note so that the payment schedule, as recalculated, will fully amortize the
aggregate amount of all Advances made after the Amendment Closing Date then
outstanding in equal monthly payments of principal to the Tranche 2 Maturity
Date. Borrower and Lender understand that this payment schedule is intended to
amortize fully the principal amount advanced under the Tranche 2 Note in equal
monthly payments from the date of such Advance to the Tranche 2 Maturity Date
and any other principal and interest amounts outstanding will be added to the
final payment on the Tranche 2 Maturity Date. In any event, the entire
outstanding principal amount of the Tranche 2 Note and all accrued but unpaid
interest and all other outstanding amounts due thereunder shall be paid on the
Tranche 2 Maturity Date.
Pursuant to SECTION 10.14 of the Agreement, the internal laws of the State
of New York shall govern the parties rights and duties with respect to interest,
loan charges, commitment fees and brokerage commissions.
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 2.09 TO
LOAN AND SECURITY AGREEMENT
FEES
1. ORIGINATION FEE. The Borrower has paid to Lender, on the Tranche 1
First Borrowing Date, a non-refundable Origination Fee of Ten Thousand
Dollars ($10,000), in consideration of Lender's structuring, preparing and
offering of the commitment to provide the Loan hereunder.
2. COMMITMENT FEE. The Borrower shall pay Lender, on the Amendment
Closing Date, a nonrefundable commitment fee of Thirty Thousand Dollars
($30,000).
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 4.04 TO
LOAN AND SECURITY AGREEMENT
REQUIRED CONSENTS
None, other than the financing statements to be filed as set forth in Schedule
4.25 hereto.
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 4.05 TO
LOAN AND SECURITY AGREEMENT
REGULATORY AUTHORIZATIONS
Authority to resell public switched services to all international points, FCC
Public Notice Report No. I-7017, August 10, 1994.
Authority to acquire and operate facilities in the PTAT-1 cable for service
between the U.S. and various international points, including the U.K., FCC
Order, File No. ITC-94-353, September 26, 1994.
Authority to acquire and operate additional facilities in the PTAT-1 cable for
service between the U.S. and various international points, including the U.K.,
FCC Order, File No. ITC-95-433, October 25, 1995.
Authority to resell private lines interconnected with the public switched
network, FCC Order, File No. ITC-95-479, November 3, 1995.
Authority to resell all forms of telephone service within New York State, New
York Public Service Commission Order, Case 94-C-0922, January 30, 1995.
Authority to acquire and operate facilities in various international submarine
cables and communications satellites for service between the U.S. and nearly all
foreign countries, FCC Order, File No. ITC-95-625, March 5, 1996.
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 4.07 TO
LOAN AND SECURITY AGREEMENT
RESTRICTIONS ON LOANS
None.
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 4.08 TO
LOAN AND SECURITY AGREEMENT
FINANCIAL STATEMENTS
Financial Statements for the Quarter Ended December 31, 1996
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 4.12 TO
LOAN AND SECURITY AGREEMENT
PENDING LITIGATION
NONE
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 4.25 TO
LOAN AND SECURITY AGREEMENT
UCC FILING OFFICES
(1) New York County:
New York City Register's Office
UCC Section
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(2) Kings County:
Brooklyn City Register's Office
Municipal Building
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(3) New York Department of State:
Secretary of State's Office
UCC Section
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FILING OR RECORDATION OFFICES IN LONDON, ENGLAND, BRUSSELS,
BELGIUM, OR PARIS, FRANCE
LONDON, ENGLAND: Prescribed particulars in respect of that certain
Security Agreement dated as of March 27, 1997 from
American Telemedia, Ltd. in favor of Lender, together
with such Security Agreement must be delivered to the
Registrar of Companies within 21 days of the date
thereof.
Brussels, Belgium: TO BE DETERMINED AND COMPLETED TO LENDER'S SATISFACTION
WITHIN THIRTY DAYS OF ANY FUNDING OF EQUIPMENT
PURCHASES TO BE INSTALLED THERE
Paris, France: TO BE DETERMINED AND COMPLETED TO LENDER'S SATISFACTION
WITHIN THIRTY DAYS OF ANY FUNDING OF EQUIPMENT
PURCHASES TO BE INSTALLED THERE
BORROWER'S INITIALS:
LENDER'S INITIALS:
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SCHEDULE 4.26 TO
LOAN AND SECURITY AGREEMENT
PRINCIPAL OFFICES AND LOCATION OF COLLATERAL
BORROWER'S CHIEF EXECUTIVE OFFICES (INCLUDING COUNTY):
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BORROWER'S INITIALS:
LENDER'S INITIALS:
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