Exhibit 10.5
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CREDIT AND SECURITY AGREEMENT
Dated as of July 18, 1997
among
MTEL LATIN AMERICA INC.
and
CREDIT LYONNAIS NEW YORK BRANCH
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TABLE OF CONTENTS
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1. DEFINITIONS............................................................. 1
2. THE LOANS............................................................... 7
SECTION 2.1. Loans.................................................. 7
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SECTION 2.2. Making of Loans........................................ 8
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SECTION 2.3. Notes.................................................. 8
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SECTION 2.4. Interest............................................... 9
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SECTION 2.5. Commitment Fee......................................... 9
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SECTION 2.6. Optional and Mandatory Termination or Reduction of
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Commitment.......................................................... 9
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SECTION 2.7. Default Interest....................................... 10
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SECTION 2.8. Prepayment of Loans; Reimbursement of Lender........... 10
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SECTION 2.9. Change in Circumstances................................ 11
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SECTION 2.10. Manner of Payments.................................... 13
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3. REPRESENTATIONS AND WARRANTIES.......................................... 14
SECTION 3.1. Corporate Existence and Power.......................... 14
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SECTION 3.2. Corporate Authority and No Violation................... 14
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SECTION 3.3. Governmental Approval.................................. 15
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SECTION 3.4. Financial Condition.................................... 15
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SECTION 3.5. No Material Adverse Change............................. 15
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SECTION 3.6. UCC Filing Information................................. 16
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SECTION 3.7. Litigation............................................. 16
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SECTION 3.8. Taxes.................................................. 16
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SECTION 3.9. Compliance with ERISA.................................. 16
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SECTION 3.10. Agreements............................................ 17
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SECTION 3.11. Existing Indebtedness................................. 17
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SECTION 3.12. Security Interest..................................... 17
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4. CONDITIONS OF LENDING................................................... 17
SECTION 4.1. Conditions Precedent to the Initial Loans.............. 17
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SECTION 4.2. Conditions Precedent to Each Loan...................... 19
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5. AFFIRMATIVE COVENANTS................................................... 20
SECTION 5.1. Financial Statements and Reports....................... 20
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SECTION 5.2. Corporate Existence; Compliance with Statutes;
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Maintenance of Properties........................................... 21
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SECTION 5.3. Chief Executive Office................................. 21
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SECTION 5.4. Access to Books and Records; Examinations.............. 21
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SECTION 5.5. Further Assurances..................................... 22
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6. NEGATIVE COVENANTS...................................................... 22
SECTION 6.1. Limitation on Indebtedness............................. 22
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SECTION 6.2. Limitation on Guaranties............................... 23
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SECTION 6.3. Changes in Business.................................... 23
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SECTION 6.4. Sale of Assets, etc.................................... 23
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SECTION 6.5. Limitations on Liens................................... 23
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SECTION 6.6. Transactions with Affiliates........................... 25
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SECTION 6.7. Dividends and other Restricted Payments................ 25
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SECTION 6.8. Joint Ventures......................................... 25
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7. EVENTS OF DEFAULT....................................................... 25
8. GRANT OF SECURITY INTEREST; REMEDIES.................................... 28
SECTION 8.1. Security Interests..................................... 28
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SECTION 8.2. Proceeds............................................... 28
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SECTION 8.3. Credit Parties to Hold in Trust........................ 28
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SECTION 8.4. Collections, etc....................................... 28
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SECTION 8.5. Possession, Sale of Collateral, etc.................... 29
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SECTION 8.6. Application of Proceeds on Default..................... 30
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SECTION 8.7. Power of Attorney...................................... 30
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SECTION 8.8. Financing Statements, Direct Payments, Confirmation of
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Receivables and Audit Rights........................................ 31
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SECTION 8.9. Termination............................................ 31
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SECTION 8.10. Remedies Not Exclusive................................ 31
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9. MISCELLANEOUS........................................................... 32
SECTION 9.1. Notices................................................ 32
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SECTION 9.2. Survival of Agreement, Representations and Warranties,
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etc................................................................. 32
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SECTION 9.3. Successors and Assigns; Loan Sales; Participations..... 32
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SECTION 9.4. Expenses; Documentary Taxes............................ 33
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SECTION 9.5. Indemnity.............................................. 34
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SECTION 9.6. CHOICE OF LAW.......................................... 35
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SECTION 9.7. No Waiver.............................................. 35
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SECTION 9.8. Extension of Maturity.................................. 36
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SECTION 9.9. Amendments, etc........................................ 36
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SECTION 9.10. Severability.......................................... 36
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SECTION 9.11. SERVICE OF PROCESS; WAIVER OF JURY TRIAL.............. 36
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SECTION 9.12. Headings.............................................. 38
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SECTION 9.13. Execution in Counterparts............................. 38
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SECTION 9.14. Entire Agreement...................................... 38
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CREDIT AND SECURITY AGREEMENT, dated
as of July __, 1997, among MTEL LATIN
AMERICA INC., a Delaware corporation (the
"Borrower") and CREDIT LYONNAIS NEW
YORK BRANCH (the "Lender").
INTRODUCTORY STATEMENT
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All terms not otherwise defined above or in this Introductory
Statement are as defined in Article 1 hereof, or as defined elsewhere herein.
The Borrower has requested that the Lenders make Loans to the Borrower
of up to $6,500,000 in the aggregate. The proceeds of the Loans will be used to
finance the acquisition of a paging business in Argentina, working capital and
for other general corporate purposes.
As a condition precedent to the initial Loans hereunder and to provide
assurance for the repayment of the Loans and all the other Obligations of the
Borrower hereunder, the Borrower will provide or cause to be provided to the
Lender, a security interest in, and assignment of, the Borrower's rights under
that certain Quota Assignment and Transfer Agreement dated February 5, 1997 (the
"Quota Transfer Agreement") among the Borrower, Mtel International, Inc. and
Vicom Servicos de Radiochamada Ltda., together with the related bank guarantee
issued by Banco Itau S.A.
Subject to the terms and conditions set forth herein, the Lender is
willing to make Loans to the Borrower in the maximum aggregate principal amount
of $6,500,000.
Accordingly, the parties hereto hereby agree as follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise requires, all
section references herein shall be deemed to correspond with sections herein,
the following terms shall have the meanings indicated, all accounting terms not
otherwise defined herein shall have the respective meanings accorded to them
under GAAP and all terms defined in the New York Uniform Commercial Code and not
otherwise defined herein shall have the respective meanings accorded to them
therein. Unless the context otherwise requires, any of the following terms may
be used in the singular or the plural, depending on the reference:
"Affiliate" shall mean with respect to any Person, any other Person
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which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person.
For purposes of this definition, a Person shall be deemed to be "controlled by"
another Person if such latter Person possesses, directly or indirectly, power
either to (i) vote 10% or more of the securities (or other ownership interests)
having ordinary voting power for the election of directors (or the equivalent
thereof) of such controlled Person or (ii) direct or cause the direction of the
management and policies of such controlled Person whether by contract or
otherwise.
"Agreement" shall mean this Credit and Security Agreement, as it may
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be amended, supplemented or otherwise modified, renewed or replaced from time to
time.
"Applicable Law" shall mean all provisions of statutes, rules,
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regulations and orders of a Governmental Authority applicable to a Person, all
decisional authorities and all orders and decrees of all courts and arbitrators
in proceedings or actions in which the Person in question is a party.
"Base Rate" shall mean, as determined by the Lender on a daily basis,
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the higher of (i) the rate per annum established by the Lender from time to time
as the reference rate (not necessarily the lowest rate) for short-term
commercial loans in United States dollars to domestic corporate borrowers, such
rate to change as and when such reference rate changes or (ii) the overnight
cost of funds of the Lender plus one quarter of one percent per annum.
"Borrowing" means a borrowing of Loans by the Borrower of the same
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interest rate type and having the same Interest Period made by the Lender
hereunder on any given day.
"Business Day" shall mean any day other than a Saturday, Sunday or
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other day on which banks in the State of New York are permitted to.
"Capital Lease" shall mean, as applied to any Person, any lease of any
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property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Closing Date" shall mean the date on which the conditions precedent
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to the making of the initial Loans as set forth in Article 4 hereof have been
satisfied or waived, which shall in no event be later than July 31, 1997.
"Code" shall mean the Internal Revenue Code of 1986 and the rules and
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regulations issued thereunder, as now and hereafter in effect, or any successor
provision thereto.
"Collateral" shall mean all of the Borrower's right, title and
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interest in and to the Quota Transfer Agreement, including without limitation,
all amounts now or hereafter payable to the Borrower thereunder, together with
that certain bank guaranty (carta de fianca) No. D-0011038-7 issued by Banco
Itau and any other collateral security or guaranty supporting the payment
obligations under the Quota Transfer Agreement, wherever located or situated and
whether now owned, presently existing or hereafter acquired or created, and any
products or
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proceeds thereof and income therefrom.
"Commitment" shall mean the commitment of the Lender to make Loans to
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the Borrower up to the maximum amount of $6,500,000 in accordance with, and
subject to, the terms of this Agreement.
"Commitment Fee" shall mean the commitment fees referred to in Section
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2.6 hereof.
"Commitment Termination Date" shall mean October 13,1997 or such
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earlier date on which the Commitment shall terminate in accordance with Section
2.7 or Article 7 hereof.
"Consolidated Subsidiaries" shall mean with respect to any Person, all
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Subsidiaries of such Person that are required to be consolidated with such
Person for financial reporting purposes in accordance with GAAP.
"Controlled Group" shall mean all members of a controlled group of
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corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code.
"Default" shall mean any event, act or condition which with notice or
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lapse of time, or both, would constitute an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of
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America.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as heretofore and hereafter amended, and the regulations promulgated
thereunder.
"Event of Default" shall have the meaning given such term in Article 7
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hereof.
"Fundamental Documents" shall mean this Agreement, the Note, the
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notice of assignment and acknowledgment contemplated by Section 4.1(e) hereof,
and any other ancillary documentation which is required to be or is otherwise
executed by the Borrower and delivered to the Lender in connection with this
Agreement and if any such ancillary documentation is delivered at any time after
the Closing Date, then such documentation which has been designated by the
Lender as a Fundamental Document.
"GAAP" shall mean United States generally accepted accounting
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principles consistently applied (except for accounting changes in response to
FASB releases, or other authoritative pronouncements).
"Governmental Authority" shall mean any federal, state, municipal or
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other
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governmental department, commission, board, bureau, agency or instrumentality,
or any court or arbitrator, in each case whether of the United States or a
foreign jurisdiction.
"Guaranty" shall mean, as to any Person, any direct or indirect
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obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, Capital Lease, dividend or other monetary obligation ("primary
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obligation") of any other Person (the "primary obligor") in any manner, whether
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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, in each case,
primarily for the purpose of assuring the owner of any such primary obligation
of the repayment of such primary obligation, or (d) as a general partner of a
partnership or a joint venturer of a joint venture in respect of Indebtedness of
such partnership or such joint venture which is treated as a general partnership
for purposes of Applicable Law unless such obligation of such Person with
respect to such partnership or joint venture is as a matter of law, or expressly
made, non-recourse to such Person on terms acceptable to the Lender. The amount
of any Guaranty shall be deemed to be an amount equal to (i) the stated or
determinable amount of the primary obligation in respect of which such Guaranty
is made or the amount to which such Guaranty is limited or, (ii) if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder). The term "Guaranty"
shall not include any obligation to make additional Investments which are at the
discretion of the Borrower.
"Indebtedness" shall mean, at any time and with respect to any Person,
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(i) indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services purchased (other than amounts constituting accrued expenses
and trade payables (payable within 90 days) arising in the ordinary course of
business); (ii) obligations of such Person in respect of letters of credit,
acceptance facilities, or drafts or similar instruments issued or accepted by
banks and other financial institutions for the account of such Person; (iii)
obligations of such Person under Capital Leases; and (iv) indebtedness of others
of the type described in clauses (i), (ii) and (iii) hereof which such Person
has (a) directly or indirectly assumed or guaranteed in connection with a
Guaranty or (b) secured by a Lien on the assets of such Person, whether or not
such Person has assumed such indebtedness.
"Interest Payment Date" shall mean the last day of each Interest
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Period and, in addition, the date or dates during each Interest Period that is
or are an integral multiple of three months from the commencement of such
Interest Period.
"Interest Period" shall mean as to any Loan, the period commencing on
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the date of such Loan and ending on the Maturity Date.
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"Investment" shall include any stock, evidence of indebtedness or
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other security of any Person, any loan, advance, contribution of capital
(whether such contribution is of cash or another asset, and including
obligations of a partner or joint venturer to satisfy additional capital calls),
extension of credit or commitment therefor (except for current trade and
customer accounts receivable for services rendered in the ordinary course of
business and payable in accordance with customary trading terms in the ordinary
course of business), and any purchase of (i) any security of another Person or
(ii) any business or undertaking of any Person or any commitment to make any
such purchase, or any other investment. Except as otherwise specified herein,
the amount of any Investment shall be the original principal amount, capital
amount or price thereof and shall, if made by the transfer or exchange of
property other than cash, be deemed to have been made in an original principal
or capital amount equal to the book value (exclusive of goodwill) of such
property.
"Joint Venture" shall mean any Person in which no more than 50% of the
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equity interest is, at the time of which any determination is being made,
directly or indirectly, owned or controlled by the Borrower.
"Joint Venture Subsidiary" shall mean (i) any corporation which is a
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wholly owned Subsidiary of the Borrower and which has no assets other than an
Investment in a Joint Venture, cash, cash equivalents and/or other assets of
nominal value or (ii) any partnership (A) whose general partner is one or more
corporations which are wholly owned Subsidiaries of the Borrower and have no
assets other than the Investment in such partnership and (B) which has no assets
other than an Investment in a Joint Venture, cash, cash equivalents and/or other
assets of nominal value.
"Lending Office" shall mean the branch or branches (or affiliate or
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affiliates) from which any the Lender's Loans or Base Rate Loans, as the case
may be, are made or maintained and for the account of which all payments of
principal of, and interest on, the Lender's Loans or Base Rate Loans are made
from time to time.
"Matched Rate" shall mean, with respect to each Loan, an interest rate
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per annum equal to the quotient (rounded upwards to the next 1/100 of 1%) of (A)
the rate determined by the Lender, in its discretion, as being representative of
its cost of obtaining funding for such Loan at a fixed rate for a maturity equal
to the applicable Interest Period in immediately available funds, two (2)
Business Days prior to the commencement of such Interest Period divided by (B)
one minus the applicable statutory reserve requirements of the Lender, expressed
as a decimal (including without duplication or limitation, basic, supplemental,
marginal and emergency reserves), from time to time in effect under Regulation D
or similar regulations of the Board of Governors of the Federal Reserve System.
It is agreed that for purposes of this definition, Loans made hereunder shall be
deemed to constitute Eurocurrency Liabilities as defined in Regulation D and to
be subject to the reserve requirements of Regulation D.
"Lien" shall mean any mortgage, pledge, security interest,
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encumbrance, lien or
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charge of any kind whatsoever (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction).
"Loans" shall be as defined in Section 2.1 hereof.
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"Material Adverse Effect" shall mean any event or condition that (a)
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has a material adverse effect on the business, assets, properties, operations,
condition (financial or otherwise) of any of the Borrower, or the Borrower and
its Consolidated Subsidiaries taken as a whole, (b) materially impairs the
ability of the Borrower to perform any of its obligations under any Fundamental
Document to which it is or will be a party, (c) materially impairs the validity
or enforceability of, or materially impairs the rights or remedies available to
the Lender under, any Fundamental Document or (d) materially adversely affects
the collectibility of amounts due or to become due under the Quota Transfer
Agreement; provided, however, that any event or condition will be deemed to have
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a "Material Adverse Effect", if such event or condition when taken together with
all other events or conditions occurring or in existence at such time with
respect to the Borrower and/or any of its Subsidiaries (including all other
events and conditions which, but for the fact that any representation or
warranty contained herein is subject to a "Material Adverse Effect" exception,
would cause such representation or warranty to be untrue) would result in a
"Material Adverse Effect", even though, individually, such event or condition
would not do so.
"Maturity Date" shall mean February 12, 1998.
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"Mtel" shall mean Mobile Telecommunication Technologies Corp., a
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Delaware corporation and in-direct parent corporation of the Borrower.
"Multiemployer Plan" shall mean a plan described in Section 3(37) of
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ERISA.
"Note" shall be as defined in Section 2.4 hereof.
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"Obligations" shall mean the obligation of the Borrower to make due
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and punctual payment of principal of, and interest on, the Loans, the Commitment
Fee and all other monetary obligations of the Borrower to the Lender under this
Agreement, the Note, the other Fundamental Documents or with respect to any
Interest Rate Protection Agreement or Currency Agreement or other transaction
which is entered into between the Borrower and the Lender.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
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"Permitted Encumbrances" shall mean Liens permitted under Section 6.6
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hereof.
"Person" shall mean any natural person, corporation, division of a
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corporation, partnership, limited liability company, trust, joint venture,
association, company, estate, unincorporated organization or government or any
agency or political subdivision thereof.
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"Plan" shall mean an employee pension benefit plan described in
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Section 3(2) of ERISA, other than a Multiemployer Plan, maintained by the
Borrower or any member of the Controlled Group, or to which the Borrower or any
member of the Controlled Group contributes or is required to contribute or any
other plan covered by Title IV of ERISA that covers any employees of the
Borrower or any member of the Controlled Group.
"Reportable Event" shall mean any reportable event as defined in
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Section 4043(b) of ERISA (other than a reportable event as to which provision
for 30-day notice to the PBGC would be waived under applicable regulations had
the regulations in effect on the Closing Date been in effect on the date of
occurrence of such reportable event).
"Restricted Payment" shall mean (i) any distribution, dividend or
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other direct or indirect payment on account of shares of any class of stock of
the Borrower now or hereafter outstanding, except distributions, dividends or
payments solely in additional shares of stock of the Borrower; (ii) any
redemption, retirement or other acquisition or re-acquisition by the Borrower of
any class of its own stock or other equity interest now or hereafter
outstanding; (iii) any payment made to retire, or obtain the surrender of any
outstanding warrants or options or other rights to purchase or acquire shares of
any class of stock of the Borrower now or hereafter outstanding; and (iv) any
payment of principal of, premium, if any, or interest on, or any redemption,
purchase, retirement, defeasance, sinking fund or similar payment with respect
to, any Subordinated Debt.
"Subsidiary" shall mean, with respect to any Person, (i) any
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corporation (whether now existing or hereafter organized) of which at least a
majority of the voting stock having ordinary voting power for the election of
directors is, at the time as of which any determination is being made, directly
or indirectly owned or controlled by such Person and (ii) any partnership, joint
venture, association or other business entity (whether now existing or hereafter
organized) of which more than 50% of the equity interest is, at the time as of
which any determination is being made, directly or indirectly owned or
controlled by such Person.
2. THE LOANS
SECTION 2.1. Loans.
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The Lender hereby agrees, upon the terms and subject to the conditions
hereof, to make loans (the "Loans") to the Borrower on any Business Day and from
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time to time on or after the Closing Date and prior to the Commitment
Termination Date, in an aggregate principal amount which when added to the
original principal amount of all Loans previously made will not exceed the
amount of the Commitment. Once repaid, Loans may not be reborrowed. Subject to
Section 2.2, the Loans shall be made at such times as the Borrower shall
request.
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SECTION 2.2. Making of Loans.
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(a) The Lender may at its option fulfill its Commitment with respect
to any Loan by causing a foreign branch or affiliate to make such Loan, provided
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that any exercise of such option shall not affect the obligation of the Borrower
to repay such Loan in accordance with the terms hereof and of the applicable
Note.
(b) The Borrower shall give the Lender at least three (3) Business
Days' prior written, telecopy or telephonic (promptly confirmed in writing)
notice of each Borrowing. Each such notice in order to be effective must be
received by the Lender not later than 11:00 a.m., New York City time, on the day
required and shall specify the date (which shall be a Business Day) on which
such Borrowing is to be made, and the aggregate principal amount of the
requested Borrowing. Each such notice shall be irrevocable.
(c) The Lender shall disburse the proceeds of each Loan by depositing
them into an account of the Borrower maintained with the Lender or such other
account as the Borrower may direct in writing, with any fees or costs incurred
in depositing funds to such other account to be paid by the Borrower.
(d) The amount of any Borrowing shall be in principal amount of
$2,000,000 (or such lesser amount as shall equal the available but unused
portion of the Commitment then in effect) or such greater amount which is an
integral multiple of $500,000.
SECTION 2.3. Notes.
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(a) The Loans shall be evidenced by a promissory note substantially
in the form of Exhibit A hereto (the "Note") in the face amount of the
Commitment, payable to the order of the Lender, duly executed on behalf of the
Borrower and dated as of the date hereof. The outstanding principal balance of
the Loans as evidenced by the Note shall be payable in full on the Maturity
Date, subject to any mandatory prepayment as provided in Section 2.10 hereof and
acceleration as provided in Article 7 hereof.
(b) The Note shall bear interest on the outstanding principal balance
thereof as set forth in Section 2.4 hereof. The Lender is hereby authorized by
the Borrower, but not obligated, to enter on the last page of the Note, the
amount of each Loan made hereunder and the other information provided for on
such last page; provided, however, that the failure of the Lender to set forth
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the amount of such Loans, or the other information, or any error with respect
thereto, shall not in any manner affect the obligation of the Borrower to repay
the Loans.
SECTION 2.4. Interest
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(a) Interest shall be payable on each Loan at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the Matched Rate
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plus 2%. Interest shall be payable on each Loan on each applicable Interest
Payment Date, on the date of any prepayment thereof and at maturity. The Lender
shall determine the applicable Matched Rate for each Interest Period as soon as
practicable on the date when such determination is to be made in respect of such
Interest Period and shall notify the Borrower of the applicable interest rate so
determined. Such determination shall be conclusive absent manifest error.
(b) Anything in this Agreement or the Notes to the contrary
notwithstanding, the interest rate on the Loans shall in no event be in excess
of the maximum rate permitted by Applicable Law.
(c) Interest in respect of any Loan hereunder shall accrue from and
including the date of such Loan to but excluding the date on which such Loan is
paid.
SECTION 2.5. Commitment Fee and Structuring Fee.
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(a) The Borrower agrees to pay in arrears to the Lender a commitment
fee of 1/2 of 1% per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days), on the average daily amount, if any, by which
the Commitment (as such Commitment may be permanently reduced in accordance with
the provisions of this Agreement) exceeds the aggregate principal amount of
outstanding Loans during the preceding period or quarter. Such commitment fee
shall be payable on the last Business Day of each March, June, September and
December in each year (commencing on the first such Business Day following the
Closing Date), on any date on which the Commitment is reduced or on which the
Commitment or any portion thereof is terminated (in each case, in accordance
with the terms hereof), and on the Commitment Termination Date. Such commitment
fees shall commence to accrue from the Closing Date.
(b) The Borrower also agrees to pay to the Lender on or prior to the
Closing Date, a one-time structuring fee in the amount of $30,000.
SECTION 2.6. Optional and Mandatory Termination or Reduction of
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Commitment.
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(a) Upon written, telecopy or telephonic (promptly confirmed in
writing) notice to the Lender, which notice must be received by the Lender not
later than 11:00 a.m., New York City time, on the same Business Day, the
Borrower may at any time prior to the Commitment Termination Date permanently
terminate the Commitment in its entirety, or from time to time permanently
reduce the Commitment in part. Each such partial reduction shall be in a
minimum principal amount of $500,000 or an integral multiple thereof.
(b) Simultaneously with each reduction or termination of the
Commitment, the Borrower shall pay to the Lender all accrued but unpaid
Commitment Fees on the amount of the Commitment so terminated or reduced through
the date thereof.
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SECTION 2.7. Default Interest.
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Upon the occurrence of a Default or Event of Default and for so long
as such Default or Event of Default shall be continuing, the Borrower shall on
demand from time to time pay interest, to the extent permitted by Applicable
Law, on all Loans and overdue amounts outstanding up to the date of actual
payment of any such amount (after as well as before judgment) at the following
rates per annum: (i) for the remainder of the then current Interest Period for
each Loan, at 4% in excess of the Matched Rate and (ii) for all periods
subsequent to the then current Interest Period for each Loan, and for all other
overdue amounts hereunder, at 3% in excess of the Base Rate.
SECTION 2.8. Prepayment of Loans; Reimbursement of Lender.
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(a) Subject to the terms of Section 2.8(b), the Borrower shall have
the right at its option at any time and from time to time to prepay any Loan, in
whole or in part, upon at least three (3) Business Days' telephonic (promptly
confirmed in writing), written or telecopier notice, in the principal amount of
$2,000,000 or such greater amount which is an integral multiple of $500,000.
Each notice of prepayment shall specify the prepayment date, each Loan to be
prepaid and the principal amount thereof to be prepaid, shall be irrevocable and
shall commit the Borrower to prepay such Loan in the amount and on the date
stated therein.
(b) The Borrower shall reimburse the Lender on demand for any loss
incurred or to be incurred by it in the reemployment of the funds released (i)
by any prepayment (for any reason) of any Loan required or permitted under this
Agreement or (ii) in the event that after the Borrower delivers a notice of
borrowing under Section 2.2(b), such Loan is not made on the day specified in
such notice of borrowing for any reason other than a breach by the Lender of
its obligation hereunder. Such loss shall be the amount as reasonably
determined by the Lender as the excess, if any, of (A) the amount of interest
which would have accrued to the Lender on the amount so paid or not borrowed, at
a rate of interest equal to the interest rate applicable to such Loan pursuant
to Section 2.4 hereof, for the period from the date of such payment or failure
to borrow, to the last day (x) in the case of a payment other than on the last
day of the Interest Period for such Loan, of the then current Interest Period
for such Loan, or (y) in the case of such failure to borrow, continue or
convert, of the Interest Period for such Loan which would have commenced on the
date of such failure to borrow, continue or convert, over (B) the amount
realized by the Lender in reemploying the funds not advanced or the funds
received in prepayment during the period referred to above. The Lender shall
deliver to the Borrower from time to time one or more certificates setting forth
the amount of such loss (and in reasonable detail the manner of computation
thereof) as determined by the Lender in accordance with this Section 2.8(b),
which certificates shall be conclusive absent manifest error.
(c) In the event the Borrower fails to prepay any Loan on the date
specified in any
- 10 -
prepayment notice delivered pursuant to Section 2.8(a), the Borrower on demand
by the Lender shall pay to the Lender any amounts required to compensate the
Lender for any loss incurred by the Lender as a result of such failure to
prepay, including, without limitation, any loss, cost or expenses incurred by
reason of the acquisition of deposits or other funds by the Lender to fulfill
deposit obligations incurred in anticipation of such prepayment. The Lender
shall deliver to the Borrower from time to time one or more certificates setting
forth the amount of such loss (and in reasonable detail the manner of
computation thereof) as determined by the Lender, which certificates shall be
conclusive absent manifest error.
(d) All prepayments shall be accompanied by accrued but unpaid
interest on the principal amount being prepaid to (but not including) the date
of prepayment.
SECTION 2.9. Change in Circumstances.
-----------------------
(a) In the event that after the date hereof any change in Applicable
Law or in the interpretation or administration thereof (including, without
limitation, any request, guideline or policy not having the force of law) by any
Governmental Authority charged with the administration or interpretation thereof
or, with respect to clause (ii), (iii) or (iv) below any change in conditions,
shall occur which shall:
(i) subject the Lender to, or increase the net amount of, any
tax, levy, impost, duty, charge, fee, deduction or withholding with
respect to any Loan (other than withholding tax imposed by the United
States of America or any political subdivision or taxing authority
thereof or therein or any other tax, levy, impost, duty, charge, fee,
deduction or withholding (A) that is measured with respect to the
overall net income of the Lender or of a Lending Office of the Lender,
and that is imposed by the United States of America, or by the
jurisdiction in which the Lender or Lending Office is incorporated, in
which such Lending Office is located, managed or controlled or in
which the Lender has its principal office (or any political
subdivision or taxing authority thereof or therein), or (B) that is
imposed solely by reason of the Lender failing to make a declaration
of, or otherwise to establish, nonresidence, or to make any other
claim for exemption, or otherwise to comply with any certification,
identification, information, documentation or reporting requirements
prescribed under the laws of the relevant jurisdiction, in those cases
where the Lender may properly make such declaration or claim or so
establish nonresidence or otherwise comply); or
(ii) except as expressly provided in (i) above, change the
basis of taxation of any payment to the Lender of principal of, or any
interest on, any Loan; or
(iii) impose, modify or deem applicable any reserve, deposit or
similar requirement against any assets held by, deposits with or for
the account of, or loans or commitments by, an office of the Lender
with respect to any Loan; or
- 11 -
(iv) except as expressly provided in (i) above, impose upon the
Lender any other condition with respect to any Loan or this Agreement;
and the result of any of the foregoing shall be to increase the actual cost to
the Lender of making or maintaining any Loan hereunder or to reduce the amount
of any payment (whether of principal, interest or otherwise) received or
receivable by the Lender, or to require the Lender to make any payment in
connection with any Loan, in each case by or in an amount which the Lender in
its sole judgment shall deem material, then and in each case the Borrower shall
pay to the Lender, as provided in paragraph (c) below, such amounts as shall be
necessary to compensate the Lender for such cost, reduction or payment.
(b) If the Lender shall have determined that the adoption after the
date hereof of any law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Government Authority, central bank
or comparable agency charged with the interpretation or administration thereof,
or compliance by the Lender (or any Lending Office of the Lender) or the
Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such Governmental
Authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Lender's capital or on the capital of the
Lender's holding company, if any, as a consequence of this Agreement or the
Loans made pursuant hereto to a level below that which the Lender or the
Lender's holding company could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's policies on capital adequacy)
by an amount deemed by the Lender to be material, then from time to time the
Borrower shall pay to the Lender such additional amount or amounts as will
compensate the Lender or the Lender's holding company for any such reduction
suffered.
(c) The Lender shall deliver to the Borrower from time to time one or
more certificates setting forth the amounts due to the Lender under paragraphs
(a) and (b) above, the changes or events as a result of which such amounts are
due and the manner of computing such amounts. Each such certificate shall be
conclusive in the absence of manifest error. The Borrower shall pay to the
Lender the amounts shown as due on any such certificate within ten (10) Business
Days after its receipt of the same. No failure on the part of the Lender to
demand compensation under paragraph (a) or (b) above on any one occasion shall
constitute a waiver of its rights to demand compensation on any other occasion.
The protection of this Section shall be available to the Lender regardless of
any possible contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any demand by the Lender
for compensation hereunder.
(d) The Lender agrees that, as promptly as practicable after it
becomes aware of the occurrence of an event or the existence of a condition that
(i) would cause it to incur any increased cost hereunder under this Section 2.9
or (ii) would require the Borrower to pay an increased amount under this Section
2.9, it will use reasonable efforts to notify the Borrower of such event or
condition and, to the extent not inconsistent with the Lender's internal
policies, it
- 12 -
will use its reasonable efforts to make, fund or maintain the affected Loans
through another Lending Office of the Lender if as a result thereof, the
additional monies which would otherwise be required to be paid or the reduction
of amounts receivable by the Lender in respect of such Loans would be materially
reduced, or such inability to perform would cease to exist, or the increased
costs which would otherwise be required to be paid in respect of such Loans
pursuant to this Section 2.9 would be materially reduced or the taxes or other
amounts otherwise payable under, this Section 2.9 would be materially reduced,
and if, as determined by the Lender, in its sole discretion, the making, funding
or maintaining of such Loans through such other Lending Office would not
otherwise materially adversely affect such Loans or the Lender.
SECTION 2.10. Manner of Payments.
------------------
All payments by the Borrower hereunder and under the Note shall be
made without offset or counterclaim, in Dollars, in Federal or other immediately
available funds, at the office of the Lender located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Loan Servicing, reference: Mtel
Latin America, Inc., in each case no later than 12:00 noon, New York City time,
on the date on which such payment shall be due. Any payment received at such
office after such time shall be deemed received on the following Business Day.
SECTION 2.11. Foreign Currency Conversion; Withholding.
----------------------------------------
(a) If the net amount of any payment received by the Lender
hereunder, after such amount has (in the case of an amount received in foreign
currency and/or received outside the United States) been converted into Dollars
and transferred to New York in accordance with normal banking procedures, is
less than the amount otherwise then due and owing by the Borrower to the Lender
hereunder, or if the Lender is unable to immediately convert and transfer any
such amount as aforesaid, then the Borrower agrees as a separate obligation to
the Lender to indemnify the Lender against the loss incurred by reason of such
shortfall or delay to the extent but only to the extent such shortfall or delay
is due to (i) the application of any exchange controls or similar laws and
regulations or (ii) the fact that such amount was received in foreign currency
and not in Dollars; and if the amount of Dollars thus received by the Lender,
after such conversion, exceeds the amount otherwise then due and owing, the
Lender shall apply such excess to prepay any Loans then outstanding until the
Loans shall have been reduced to zero, and thereafter shall remit any further
excess to the Borrower.
(b) If any amount is withheld or any deduction is made from any
payment by or on behalf of the Borrower to the Lender by any taxing authority or
Governmental Authority of any jurisdiction inside or outside the United States
in connection with any stamp tax, withholding tax, deposit requirement, duty or
otherwise imposed under any Applicable Law, guideline or order in effect in such
jurisdiction, or if the Lender become liable for any other tax imposed under the
Applicable Law of any jurisdiction in connection with the Loans being made
hereunder (other than any tax payable in respect of the income of any Lender),
the Borrower agrees, as a separate obligation to the Lender, that it will pay
such additional amounts as may be
- 13 -
necessary so that after making all required withholdings and deductions
(including withholdings and deductions applicable to additional sums payable
under this Section 2.11), and after the payment of any required taxes, the
Lender receives an amount equal to the sum it would have received had no such
amounts been required to be deducted or withheld and no such taxes required to
be paid.
3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
the Loans provided for herein, the Borrower hereby makes the following
representations and warranties to the Lender, all of which shall survive the
execution and delivery of this Agreement and of the Note, and the making of the
Loans:
SECTION 3.1. Corporate Existence and Power.
-----------------------------
The Borrower and each of its Subsidiaries has been duly organized and
is validly existing in good standing under the laws of its jurisdiction of
incorporation or organization and is in good standing as a foreign corporation
or other foreign entity in all jurisdictions where the nature of its properties
or business so requires, except where the failure to be in good standing as a
foreign corporation or other foreign entity would not have a Material Adverse
Effect. The Borrower and each of its Subsidiaries has the corporate or
partnership power (as applicable) and authority (i) to own their respective
properties and carry on their respective businesses as now being conducted, and
(ii) in the case of the Borrower, to execute, deliver and perform its
obligations under this Agreement, the Note and the other Fundamental Document to
which it is a party, to borrow hereunder and to grant to the Lender, a security
interest in the Collateral as contemplated by Article 8 hereof and the other
Fundamental Documents.
SECTION 3.2. Corporate Authority and No Violation.
------------------------------------
The execution, delivery and performance of this Agreement and the
other Fundamental Documents to which it is a party, the grant to the Lender of a
security interest in the Collateral as contemplated by Article 8 hereof and the
other Fundamental Documents by the Borrower, and the Borrowings hereunder (a)
have been duly authorized by all necessary corporate or partnership action on
the part of the Borrower, (b) will not in any material respect, violate or
involve the Lender in a violation of, any provision of any Applicable Law
applicable to the Borrower or any of its properties or assets, (c) will not
violate any provision of the Certificate of Incorporation, By-Laws or any other
organizational document of the Borrower or any Subsidiary of the Borrower , (d)
will not violate any provision of any indenture, any agreement for borrowed
money, any bond, note, debenture or other similar instrument or any other
material agreement to which the Borrower or any Subsidiary of the Borrower is a
party or by which the Borrower or any Subsidiary of the Borrower or any of their
respective properties or assets are bound, in any case where as a consequence
thereof a Material Adverse Effect would occur,
- 14 -
(e) will not be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, any such indenture, agreement
for borrowed money, bond, note, debenture, instrument or other material
agreement, in any case where as a consequence thereof a Material Adverse Effect
would occur, and (f) will not result in the creation or imposition of any Lien
upon any material property or assets of the Borrower or any Subsidiary of the
Borrower other than pursuant to this Agreement or another Fundamental Document.
SECTION 3.3. Governmental Approval.
---------------------
No action, consent or approval of, or registration or filing with, or
any other action by, any Governmental Authority is required in connection with
the perfection of the security interests in the Collateral contemplated by
Article 8 hereof and the other Fundamental Documents, or with the execution,
delivery and performance by the Borrower of this Agreement or the other
Fundamental Documents except for the filing of the UCC-1 financing statements in
each of the applicable jurisdictions listed on Schedule 3.6.
SECTION 3.4. Financial Condition.
-------------------
(i) The audited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of, and the related audited consolidated
statements of operations, changes in stockholders' investment and cash flows for
the fiscal year ended December 31, 1996, and (ii) the unaudited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end
of, and the related unaudited consolidated statements of operations, changes in
stockholders' investment and cash flows for the three-month period ended March
31, 1997, have been prepared in accordance with GAAP consistently applied,
subject in the case of such unaudited statements to changes resulting from year-
end audit adjustments. All of such financial statements fairly present the
consolidated financial position or the results of operations, as the case may
be, of the Borrower and its Consolidated Subsidiaries, at the dates or for the
periods indicated, subject to year-end and audit adjustments in the case of
unaudited statements (and in the case of balance sheets, including the notes
thereto) and reflect all known liabilities, contingent or otherwise, that GAAP
requires, as of such dates, to be shown, reserved against or disclosed in notes
to financial statements.
SECTION 3.5. No Material Adverse Change.
--------------------------
Except as disclosed in Schedule 3.5, since December 31, 1996, no event
or condition has occurred which has, or is reasonably expected to have, a
Material Adverse Effect.
SECTION 3.6. UCC Filing Information.
----------------------
The chief executive office of the Borrower is, on the date hereof, as
set forth on Schedule 3.6 hereto, which office is the place where the Borrower
is "located" for the purpose of Section 9-103(3)(d) of the Uniform Commercial
Code in effect in the State of New York and in
- 15 -
any State in which any such Person is so located.
SECTION 3.7. Litigation.
----------
Except as set forth on Schedule 3.7 hereto, there are no lawsuits or
other proceedings pending (including, but not limited to, matters relating to
environmental liability), or, to the knowledge of the Borrower, threatened,
against or affecting the Borrower or any Subsidiary of the Borrower or any of
their respective properties or assets, by or before any Governmental Authority
or arbitrator, which if adversely determined would reasonably be expected to
have a Material Adverse Effect or which involve this Agreement or any of the
transactions contemplated hereby. Neither the Borrower nor any Subsidiary of
the Borrower is in default with respect to any order, writ, injunction, decree,
rule or regulation of any Governmental Authority, which default would have a
Material Adverse Effect.
SECTION 3.8. Taxes.
-----
The Borrower and each of its Subsidiaries has filed or caused to be
filed all federal, state, local and foreign tax returns which are required to be
filed, and has paid or has caused to be paid all taxes as shown on said returns
or on any assessment received by them in writing, to the extent that such taxes
have become due, except where the failure to so file or pay would not have a
Material Adverse Effect.
SECTION 3.9. Compliance with ERISA.
---------------------
The Borrower and each of its Subsidiaries is in compliance in all
material respects with the provisions of ERISA and the Code applicable to Plans,
and the regulations and published interpretations thereunder, if any, which are
applicable to it. Neither the Borrower nor any Subsidiary of the Borrower has,
with respect to any Plan established or maintained by it, engaged in a
prohibited transaction which would subject it to a material tax or penalty
imposed by ERISA or Section 4975 of the Code. No liability to the PBGC that is
material to the Borrower or any Subsidiary of the Borrower has been, or to the
Borrower 's best knowledge is reasonably expected to be, incurred with respect
to any Plans and there has been no Reportable Event and no other event or
condition that presents a material risk of termination of a Plan by the PBGC.
Neither the Borrower nor any Subsidiary of the Borrower has engaged in a
transaction which would result in the incurrence of a material liability under
Section 4069 of ERISA. As of the Closing Date, neither the Borrower nor any
Subsidiary of the Borrower contributes to a Multiemployer Plan, nor has any such
Person incurred any liability that would result in a Material Adverse Effect on
account of a partial or complete withdrawal (as defined in Sections 4203 and
4205 of ERISA, respectively) with respect to any Multiemployer Plan.
SECTION 3.10. Agreements.
----------
(a) Neither the Borrower nor any Subsidiary of the Borrower is
subject to any
- 16 -
charter or other corporate restriction, or any judgment, order, writ, injunction
or decree, which if a default, breach or violation thereof should occur, would
result in a Material Adverse Effect.
(b) Neither the Borrower nor any Subsidiary of the Borrower is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument or contract to
which it is a party which if the other party thereto enforced its rights
thereunder would result in a Material Adverse Effect.
SECTION 3.11. Existing Indebtedness.
----------------------
Except for this Agreement and as otherwise disclosed on Schedule 6.1
hereto, as of the Closing Date, neither the Borrower nor any Subsidiary of the
Borrower has any outstanding Indebtedness.
SECTION 3.12. Security Interest.
-----------------
This Agreement and the other Fundamental Documents when executed and
delivered by the Borrower will create and grant to the Lender (upon the making
of the first Loan hereunder) a valid and first priority perfected security
interest in the Collateral assuming the filing of the UCC financing statements
listed on Schedule 3.6 hereto. On the date of the first Loan hereunder, no
Person will have any right, title or interest in or to the Collateral which is,
or which shall be, prior, paramount, superior or equal to the right, title or
interest of the Lender (on behalf of the Lenders) therein or thereto.
4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to the Initial Loans.
-----------------------------------------
The obligation of the Lender to make the initial Loan is subject to
the following conditions precedent:
(a) Corporate Documents. The Lender shall have received:
-------------------
(i) a copy of the Borrower's certificate of incorporation or
other organizational document(s), certified as of a recent date by an
appropriate official of the jurisdiction of its incorporation or
organization;
(ii) a certificate of each such appropriate official, dated as
of a recent date, as to the good standing of, and payment of taxes by,
the Borrower which certificate lists the Borrower's charter or
organizational documents on file in the office of such official; and
(iii) a certificate of the Secretary of the Borrower dated the
date of the
- 17 -
initial Loan and certifying (A) that attached thereto is a true and
complete copy of the by-laws (or equivalent document) of the Borrower
as in effect on the date of such certification, (B) that attached
thereto is a true and complete copy of resolutions adopted by the
Board of Directors (or the equivalent thereof) of the Borrower
authorizing the execution, delivery and performance in accordance with
their respective terms of this Agreement, the Note, the other
Fundamental Documents to which the Borrower will be a party, and any
other documents required or contemplated hereunder or thereunder to
which the Borrower will be a party, and the Borrowings hereunder, and
the granting of the security interests contemplated by the Fundamental
Documents, (C) that the certificate of incorporation or other
organizational document(s) of the Borrower have not been amended since
the date of the last amendment thereto indicated on the certificate of
the Secretary of State furnished pursuant to clause (i) above except
to the extent specified in such Secretary's Certificate and (D) as to
the incumbency and specimen signature of each officer of the Borrower
executing this Agreement, the Note, the other Fundamental Documents or
any other document delivered by it in connection herewith or therewith
(such certificate to contain a certification by another officer of the
Borrower as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iii)).
(b) Note. The Lender shall have received the Note, duly executed on
----
behalf of the Borrower, dated the date hereof and payable to the order of the
Lender in the principal amount equal to the Commitment.
(c) Opinions of Counsel. The Lender shall have received the
-------------------
favorable written opinions, dated the date of the initial Loan hereunder,
addressed to the Lender and satisfactory to ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel
to the Lender, of counsel to the Borrower, as to the matters specified Exhibit B
hereto.
(d) UCC Financing Statements and UCC Searches, etc. The Lender shall
----------------------------------------------
have received (i) UCC financing statements executed on behalf of the Borrower
for filing in the applicable jurisdictions set forth on Schedule 3.6 hereto in
order to provide the with a perfected security interest in the Collateral as to
which a security interest may be perfected by filing and (ii) UCC searches
satisfactory to the Lender indicating that no other filings with regard to the
Collateral are of record in any of such jurisdictions.
(e) Notice of Assignment. Written notice of the assignment of the
--------------------
Collateral to the Lender as security shall have been given to (and acknowledged
by) both Vicom Servicos de Radiochamada Ltda. and Banco Itau S.A., such notice
and acknowledgment to be substantially in the form of Exhibit C hereto.
(f) Payment of Fees. All fees and expenses then due and payable by
---------------
the Borrower in connection with the transactions contemplated hereby shall have
been paid.
- 18 -
(g) Other Documents. The Lender shall have received such other
---------------
documents as the Lender may reasonably require.
(h) Other Matters. All legal matters incident to this Agreement and
-------------
the transactions contemplated hereby shall be reasonably satisfactory to ▇▇▇▇▇▇,
▇▇▇▇▇ & Bockius LLP, counsel to the Lender.
SECTION 4.2. Conditions Precedent to Each Loan.
---------------------------------
The obligation of the Lender to make each Loan (including the initial
Loan) is subject to the following conditions precedent:
(a) Notice. The Lender shall have received a notice with respect to
------
such Borrowing as required by Article 2 hereof.
(b) Representations and Warranties. The representations and
------------------------------
warranties set forth in Article 3 hereof and in the other Fundamental Documents
shall be true and correct in all material respects on and as of the date of each
Borrowing hereunder (except to the extent that such representations and
warranties expressly relate to an earlier date) with the same effect as if made
on and as of such date.
(c) No Event of Default. On the date of (and after giving effect to)
-------------------
each Borrowing hereunder, the Borrower shall be in compliance with all of the
terms and provisions set forth herein to be observed or performed and no Event
of Default or Default shall have occurred and be continuing.
(d) Additional Documents. The Lenders shall have received from the
--------------------
Borrower on the date of each Borrowing, such documents and information as they
may reasonably request relating to the satisfaction of the conditions in this
Section 4.2.
Each Borrowing shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing as to the matters specified in paragraphs
(b) and (c) of this Section.
5. AFFIRMATIVE COVENANTS
From the date of the initial Loan and for so long as the Commitment
shall be in effect, or any amount shall remain outstanding under the Note or
unpaid under this Agreement, the Borrower agrees that it will, and will cause
each of its Subsidiaries to:
SECTION 5.1. Financial Statements and Reports.
--------------------------------
- 19 -
Deliver to the Lender:
(a) As soon as is practicable, but in any event within sixty (60)
days after the end of each fiscal quarter of each fiscal year, the unaudited
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end
of, and the related unaudited statements of operations, changes in stockholders'
investment and cash flows for, such quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal quarter and
the comparable financial statements as at the end of, and for, the corresponding
periods in the preceding fiscal year, together with a certificate signed by the
Chief Financial Officer of the Borrower to the effect that such financial
statements, while not examined by independent public accountants, reflect, in
his or her opinion and in the opinion of the Borrower, all adjustments necessary
to present fairly, in all material respects, the financial position of the
Borrower and its Consolidated Subsidiaries as at the end of the fiscal quarter
and the results of its operations for the quarter and the period then ended in
conformity with GAAP consistently applied, subject only to year-end audit
adjustments and to the absence of footnote disclosure;
(b) Promptly upon any executive officer of the Borrower obtaining
knowledge (i) of any Default, or becoming aware that the Lender has given notice
or taken any other action with respect to a claimed Event of Default or (ii)
that any Person has given any notice to the Borrower or any Subsidiary of the
Borrower or taken any other action with respect to a claimed default or event
or condition of the type referred to in paragraph (e) of Article 7, a
certificate of the president or Chief Financial Officer of the Borrower
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person and the
nature of such Default or claimed Event of Default and what action the Borrower
have taken, are taking and propose to take with respect thereto;
(c) Promptly upon any executive officer of the Borrower obtaining
knowledge of (i) the institution of, or threat of, any action, suit, proceeding,
investigation or arbitration by any Governmental Authority or other Person
against or affecting the Borrower , any Subsidiary of the Borrower or any of
their respective property or assets, including, without limitation, any such
action, suit, proceeding, investigation or arbitration relating to any material
paging license or concessions or any notice, oral or written, of the intention
of any issuing agency to revoke, suspend, cancel, amend or not renew for any
reason any material paging license or concession or (ii) any material
development in any such action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to the Lender), which might reasonably be
expected to have a Material Adverse Effect, the Borrower shall promptly
give notice thereof to the Lender and provide such other information as may be
reasonably available to it (without waiver of any applicable evidentiary
privilege) to enable the Lender to evaluate such matters; and, in addition to
the requirements set forth in clauses (i) and (ii) of this Section 5.1(c), the
Borrower upon request shall promptly give to the Lender notice of the status of
any action, suit, proceeding, investigation or arbitration covered by a report
delivered to the Lender pursuant to clause (i) or (ii) above to the Lender and
provide such other information as may be reasonably available to it (without
waiver of any applicable evidentiary privilege) to enable the Lender to evaluate
such
- 20 -
matters;
(d) With reasonable promptness, such other information and data with
respect to the Borrower , any Subsidiary of the Borrower or any Joint Venture
as from time to time may be reasonably requested by the Lender.
SECTION 5.2. Corporate Existence; Compliance with Statutes;
----------------------------------------------
Maintenance of Properties.
-------------------------
(a) Do or cause to be done all things necessary to (i) preserve,
renew and keep in full force and effect its corporate existence, material
rights, permits and franchises and (ii) comply in all material respects with all
provisions of Applicable Law, and all applicable restrictions imposed by, any
Governmental Authority.
(b) Keep its properties which are material to its business in good
repair, working order and condition consistent with industry practice and, from
time to time (i) make all appropriate repairs, renewals, replacements, additions
and improvements thereto and (ii) comply at all times with the provisions of all
material leases and other material agreements to which it is a party so as to
prevent any loss or forfeiture thereof or thereunder
SECTION 5.3. Chief Executive Office.
----------------------
The Borrower will not change its corporate name or the location of its
chief executive office or any of the offices where such entity keeps the records
concerning the Collateral without (i) giving the Lender thirty (30) days'
written notice of such change and (ii) filing any additional UCC financing
statements and/or such other documents reasonably requested by the Lender as are
necessary or desirable to continue the first perfected security interest of the
Lender in the Collateral.
SECTION 5.4. Access to Books and Records; Examinations.
-----------------------------------------
Maintain or cause to be maintained at all times true and complete
books and records of its financial operations (in accordance with GAAP) and
provide the Lender and its designated representatives access to all such books
and records and to any of their properties or assets during regular business
hours and after reasonable notice, in order that the Lender may make such audits
and examinations and make abstracts from such books, accounts, records and other
related papers and may discuss the affairs, finances and accounts with, and be
advised as to the same by, officers and independent accountants, all as the
Lender may deem appropriate for the purpose of verifying the various reports
delivered to the Lender pursuant to this Agreement or for otherwise ascertaining
compliance with this Agreement.
SECTION 5.5. Further Assurances.
------------------
- 21 -
Upon the request of the Lender, at the cost and expense of the
Borrower, duly and promptly execute and deliver, or cause to be duly and
promptly executed and delivered, such further instruments, documents, consents,
authorizations, approvals and orders (in form and substance satisfactory to the
Lender and including, without limitation, the execution, amendment or
supplementation of any financing statement and continuation statement or other
statement for filing under the provisions of the Uniform Commercial Code of any
jurisdiction or any other statute, rule or regulation of any applicable foreign,
federal, state or local jurisdiction) and promptly perform or cause to be
promptly performed, any and all acts, in all cases as may be necessary, proper
or advisable from time to time, in the reasonable judgment of the Lender, to
carry out the provisions and purposes of this Agreement and the other
Fundamental Documents, and to provide, perfect or preserve the Liens hereunder
and under the Fundamental Documents, in the Collateral and any portion thereof.
6. NEGATIVE COVENANTS
From the date of the initial Loan and for so long as the Commitment
shall be in effect or any amount shall remain outstanding under any Note or
unpaid under this Agreement, the Borrower agrees that it will not, and will not
permit any of its Subsidiaries, directly or indirectly, to:
SECTION 6.1. Limitation on Indebtedness.
--------------------------
Incur, assume or suffer to exist any Indebtedness except:
(a) Indebtedness hereunder;
(b) Indebtedness of the Borrower or any of its Subsidiaries, which
Indebtedness is in existence on the date hereof and is listed on Schedule 6.1
hereto, but not any extensions or renewals thereof, unless effected on
substantially the same terms;
(c) purchase money Indebtedness (including Capital Leases), provided
--------
that (i) any Lien granted with respect to such Indebtedness is permitted by
Section 6.6(b) hereof and (ii) the aggregate amount thereof incurred by all the
Borrower and all of its Subsidiaries does not exceed $5,000,000 at any one time
outstanding;
(d) intercompany loans and advances from the Borrower to its
Subsidiaries permitted by Section 6.5(c) hereof;
(e) Guaranties permitted by Section 6.2 hereof; and,
(f) Indebtedness of any Person which becomes a Subsidiary of the
Borrower after the date hereof, and which Indebtedness is outstanding on the
date on which such Subsidiary becomes a Subsidiary of the Borrower (other than
Indebtedness issued in connection with, or in
- 22 -
anticipation of, such Subsidiary becoming a Subsidiary of the Borrower).
SECTION 6.2. Limitation on Guaranties.
------------------------
Assume or incur any Guaranty except:
(a) endorsements of negotiable instruments for deposit or collection
in the ordinary course of business;
(b) the existing Guaranties listed on Schedule 6.1 hereto, but not
any extensions or renewals thereof, unless effected on substantially the same
terms; and
(c) any Guaranties by the Borrower of the contractual obligations of
its Subsidiaries (other than any obligations relating to Indebtedness of such
Subsidiaries) incurred by such Subsidiaries in the ordinary course of business
which contractual obligations are otherwise permitted by this Agreement.
SECTION 6.3. Changes in Business.
-------------------
Engage in any line of business other than (i) those lines of business
in existence on the date hereof and (ii) other lines of business for the
delivery of advanced messaging services, or other messaging products that are
integrally related to such lines of business.
SECTION 6.4. Sale of Assets, etc.
--------------------
Whether in one transaction or a series of transactions, wind up,
liquidate or dissolve its affairs, or enter into any transaction of merger or
consolidation, or sell or otherwise dispose of all or substantially all of the
property or assets of the Borrower or any Subsidiary, or a majority of the
capital stock of any Subsidiary.
SECTION 6.5. Limitations on Liens.
--------------------
Suffer any Lien on its property, except:
(a) deposits under worker's compensation, unemployment insurance and
social security laws or to secure statutory obligations or surety or appeal
bonds or performance or other similar bonds in the ordinary course of business,
or statutory Liens of landlords, carriers, warehousemen, mechanics and material
men and other similar Liens, in respect of liabilities which are not yet due or
which are being contested in good faith, Liens for taxes not yet due and
payable, and Liens for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate proceedings and as to
which foreclosure and other enforcement proceedings shall not have been
commenced (unless fully bonded or otherwise effectively stayed);
- 23 -
(b) purchase money Liens granted in connection with the incurrence of
Indebtedness permitted by Section 6.1(c), to the vendor or Person financing the
acquisition of property, plant or equipment if (i) such Lien is limited to the
specific assets acquired or, in the case of tangible assets, other property
which is an improvement to or is acquired for specific use in connection with
such acquired property or which is real property being improved by such acquired
property; (ii) the debt secured by the Lien is the unpaid balance of the
acquisition cost of the specific assets on which the Lien is granted; and (iii)
such transaction does not otherwise violate this Agreement;
(c) Liens upon real and/or tangible personal property, which property
was acquired after the date of this Agreement (by purchase, construction or
otherwise) by the Borrower or any Subsidiary of the Borrower, each of which
Liens existed on such property before the time of its acquisition and was not
created in anticipation thereof; provided, however, that no such Lien shall
-------- -------
extend to or cover any property of the Borrower or any Subsidiary of the
Borrower other than the respective property so acquired and improvements
thereon;
(d) Liens arising out of attachments, judgments or awards as to which
an appeal or other appropriate proceedings for contest or review are promptly
commenced (and as to which foreclosure and other enforcement proceedings (i)
shall not have been commenced (unless fully bonded or otherwise effectively
stayed) or (ii) in any event shall be promptly fully bonded or otherwise
effectively stayed);
(e) Liens securing Indebtedness permitted by Section 6.1(f) hereof,
which Liens existed prior to the date on which the applicable Subsidiary became
a Subsidiary of the Borrower (other than Liens created in connection with, or in
anticipation of, such Subsidiary becoming a Subsidiary of the Borrower);
(f) Liens created under any Fundamental Document;
(g) Liens existing on the date hereof and described on Schedule 6.6
hereto, without giving effect to any extensions or renewals thereof (except for
such Liens securing Indebtedness expressly permitted to be extended pursuant to
Section 6.1 hereof); and
(h) rights of first offer or similar rights granted in connection
with the equity interests of a Joint Venture.
SECTION 6.6. Transactions with Affiliates.
----------------------------
Except for transactions expressly permitted by the other provisions of
this Agreement, directly or indirectly enter into any transaction with an
Affiliate (other than the Borrower) on terms less favorable (including, but not
limited to, price and credit terms) to the Borrower or any Subsidiary of the
Borrower than would be the case if such transaction had been
- 24 -
effected at arms length with a Person other than an Affiliate.
SECTION 6.7. Dividends and other Restricted Payments.
---------------------------------------
Declare, make or incur any liability to make any Restricted Payments
except for Restricted Payments by any Subsidiary of the Borrower to the Borrower
or any other Subsidiary of the Borrower.
SECTION 6.8. Joint Ventures.
--------------
(a) Except as shall be set forth on Schedule 6.8 hereto, be a general
partner of any Person, provided, however, that a Joint Venture Subsidiary may be
-------- -------
a general partner of a non-wholly owned Subsidiary or Joint Venture; and
(b) Except as shall be set forth on Schedule 6.8 hereto, permit a
Joint Venture to incur, assume or suffer to exist any Indebtedness which is
recourse to the Borrower or any of their respective Subsidiaries, other than
the applicable Joint Venture Subsidiary or Joint Venture.
7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of any of the
following events (herein called "Events of Default"):
-----------------
(a) any representation or warranty made by the Borrower in this
Agreement or any other Fundamental Document or any representation and warranty
made at any time after the date hereof by the Borrower or any Subsidiary of the
Borrower in connection with this Agreement, any other Fundamental Document or
the Borrowings hereunder, shall prove to have been, or to be, taken together
with all such other representations and warranties, false or misleading in any
material respect when made or delivered; provided, however, that no Event of
-------- -------
Default shall occur hereunder based on the inaccuracy of any financial
projections unless such financial projections were not prepared in good faith or
when made, did not represent the reasonable, good faith opinion of the
Borrower or Subsidiary of the Borrower of the most probable course of its
business;
(b) default shall be made in the payment of any principal of, or
interest on, the Note or of any fees or other amounts payable by the Borrower
hereunder, when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise and, in the case of payments of interest, such default
shall continue unremedied for three (3) Business Days, and in the case of
payments other than of any principal amount of, or interest on, the Note, such
default shall continue unremedied for three (3) days after receipt by the
Borrower of an invoice therefor;
(c) default shall be made by the Borrower in the due observance or
performance
- 25 -
of any covenant, condition or agreement contained in Section 5.1(b) (with
respect to notice of Defaults or Events of Default) or Article 6 of this
Agreement;
(d) default shall be made by the Borrower in the due observance or
performance of any other covenant, condition or agreement to be observed or
performed pursuant to the terms of this Agreement or any other Fundamental
Document and such default shall continue unremedied for thirty (30) days after
the Borrower obtains knowledge of such occurrence;
(e) default in payment shall be made with respect to any Indebtedness
(other than the Indebtedness incurred by the Borrower hereunder) of the Borrower
or any Subsidiary of the Borrower in an amount or amounts in excess of
$2,000,000 in the aggregate, or any other default shall occur with respect to
the performance of any other obligation incurred in connection with any such
Indebtedness, if the effect of such other default is, or with the giving of
notice or passage of time or both would be, to accelerate the maturity, of such
Indebtedness or to permit the holder thereof (after giving effect to any
applicable grace periods) to cause such Indebtedness to become due prior to its
stated maturity, or any such Indebtedness shall not be paid when due, whether at
the due date thereof or at acceleration thereof or otherwise, or any other
circumstance shall arise (other than the mere passage of time) by reason of
which the Borrower or any Subsidiary of the Borrower is required (prior to any
scheduled redemption or repurchase) to redeem or repurchase, or offer to holders
the opportunity to have redeemed or repurchased, any such Indebtedness;
(f) the Borrower or any material Subsidiary of the Borrower shall
generally not pay its debts as they become due or shall admit in writing its
inability to pay its debts, or shall make a general assignment for the benefit
of creditors; or the Borrower or any material Subsidiary of the Borrower shall
commence any case, proceeding or other action seeking to have an order for
relief entered on its behalf as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, administrative receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, or
shall file an answer or other pleading in any such case, proceeding or other
action admitting the material allegations of any petition, complaint or similar
pleading filed against it or consenting to the relief sought therein; or the
Borrower or any material Subsidiary of the Borrower shall take any action to
authorize any of the foregoing;
(g) any involuntary case, proceeding or other action against the
Borrower or any material Subsidiary of the Borrower shall be commenced seeking
to have an order for relief entered against it as debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, administrative receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
property, and such case, proceeding or other action (i) results in the
- 26 -
entry of any order for relief against it or (ii) shall remain undismissed for a
period of sixty (60) days;
(h) final judgment(s) for the payment of money in excess of
$2,000,000, in the aggregate, shall be rendered in the aggregate, against the
Borrower or any Subsidiary of the Borrower and within thirty (30) days from the
entry of such judgment(s), it shall not have been discharged or stayed pending
appeal or shall not have been discharged within thirty (30) days from the entry
of a final order of affirmance on appeal;
(i) this Agreement shall, for any reason, not be, or shall cease to
be, in full force and effect or shall be declared, or asserted to be, null and
void, or shall not give, or shall cease to give, the Lender the Liens in the
Collateral purported to be created hereby, in favor of the Lender, superior to
and prior to the rights of all third Persons and subject to no other Liens
(except to the extent expressly permitted herein), or the validity or
enforceability of the Liens granted, to be granted, or purported to be granted,
hereby shall be contested by the Borrower or any of its Affiliates;
(j) a "change in control" shall occur; as used herein a "change in
---------
control" shall mean (i) the failure of Mtel to directly or indirectly own a
-------
majority of the outstanding capital stock of the Borrower owned by it on the
date hereof, or (ii) "Continuing Directors" shall no longer constitute at least
a majority of Mtel's Board of Directors, and a "Continuing Director" means any
-------------------
individual who at the date hereof was a member of Mtel's Board of Directors and
any new director who was specifically approved by a majority of the directors on
Mtel's Board of Directors who at the time of such individual's initial election
or appointment to such Board, were either directors at the date hereof or whose
election was previously so approved, or (iii) the acquisition by any Person or
group (as defined in the Securities Exchange Act of 1934 and the regulation
thereunder) of ownership and/or voting control of more than 30% of Mtel's issued
and outstanding common stock;
then, in every such event and at any time thereafter during the continuance of
such event, the Lender may take any or all of the following actions, at the same
or different times: (1) terminate forthwith the Commitment and/or (2) declare
the principal of and the interest on the Loans and the Note and all other
amounts payable hereunder or thereunder to be forthwith due and payable,
whereupon the same shall become and be forthwith due and payable, without
presentment, demand, protest, notice of acceleration, notice of intent to
accelerate or other notice of any kind, all of which are hereby expressly
waived, anything in this Agreement or in the Note to the contrary
notwithstanding. If an Event of Default specified in paragraphs (f) or (g)
above shall have occurred, the principal of and interest on the Loans and the
Note and all other amounts payable hereunder or thereunder shall thereupon and
concurrently become due and payable without presentment, demand, protest, notice
of acceleration, notice of intent to accelerate or other notice of any kind, all
of which are hereby expressly waived, anything in this Agreement or the Note to
the contrary notwithstanding and the Commitment of the Lender shall thereupon
forthwith terminate.
- 27 -
8. GRANT OF SECURITY INTEREST; REMEDIES
SECTION 8.1. Security Interests.
------------------
As security for the Obligations, the Borrower hereby mortgages,
pledges, assigns, transfers, sets over, conveys and delivers to the Lender, and
grants to the Lender a security interest in, all of its right, title and
interest in and to the Collateral.
SECTION 8.2. Proceeds.
--------
The Borrower agrees to take all steps necessary to cause all sums,
monies, royalties, fees, commissions, charges, payments, advances, income,
profit, and other proceeds constituting proceeds of the Collateral to be applied
to the repayment of the Obligations.
SECTION 8.3. Credit Parties to Hold in Trust.
-------------------------------
The Borrower will, upon receipt by it of any revenue, income, profits
or other sums in which a security interest is granted by this Article 8, payable
pursuant to any agreement or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the sum or instrument in trust for the Lender, and forthwith, without any
notice, demand or other action on the part of the Lender whatsoever (all
notices, demands, or other actions on the part of the Lender being expressly
waived), endorse, transfer and deliver any such sums or instruments or both, to
the Lender to be applied to the repayment of the Obligations.
SECTION 8.4. Collections, etc.
-----------------
Upon the occurrence and during the continuation of an Event of
Default, the Lender may, in its sole discretion, in the name of the Lender or in
the name of the Borrower or otherwise, demand, ▇▇▇ for, collect or receive
any money or property at any time payable or receivable on account of, or in
exchange for, or make any compromise or settlement deemed desirable with respect
to, any of the Collateral, but shall be under no obligation so to do, or the
Lender may, to the fullest extent permitted by Applicable Law, extend the time
of payment, arrange for payment in installments, or otherwise modify the terms
of, or release, any of the Collateral, without thereby incurring responsibility
to, or discharging or otherwise affecting any liability of, any of the Borrower.
The Lender shall not be required to take any steps to preserve any rights
against prior parties to the Collateral, except as may be required by Applicable
Law. If the Borrower fails to make any payment or take any action required
hereunder, the Lender may, after notice to the Borrower, make such payments and
take all such actions as the Lender reasonably deems necessary to protect the
Lender's security interests in the Collateral and/or the value thereof, and the
Lender is hereby authorized (without limiting the general nature of the
- 28 -
authority hereinabove conferred) to pay, purchase, contest, or compromise any
Liens that in the judgment of the Lender appear to be equal to, prior to or
superior to the security interests of the Lender in the Collateral and any Liens
not expressly permitted by this Agreement.
SECTION 8.5. Possession, Sale of Collateral, etc.
------------------------------------
Upon the occurrence and during the continuation of an Event of
Default, the Lender may enter upon the premises of the Borrower or wherever the
Collateral may be, and take possession of the Collateral, and may reasonably
demand and receive such possession from any Person who has possession thereof,
and the Lender may take such measures as it may deem necessary or proper for the
care or protection thereof, including (without limitation) the right to remove
all or any portion of the Collateral, and with or without taking such possession
may sell, or cause to be sold, whenever the Lender shall decide, in one or more
sales or parcels, at such prices as the Lender may deem best, and for cash or on
credit or for future delivery, without assumption of any credit risk, all or any
portion of the Collateral, at any broker's board or at public or private sale,
without demand of performance or notice of intention to sell or of the time or
place of sale (except 10 days' written notice to the Borrower of the time and
place of any such public sale or sales or of the time after which any private
sale or other disposition is to be made (it being acknowledged by the Borrower
that such notice constitutes "reasonable notification") and such other notices
as may be required by Applicable Law and cannot be waived), and any Person may
be the purchaser of all or any portion of the Collateral so sold and thereafter
hold the same absolutely, free from any claim or right of whatever kind,
including any equity of redemption, of any of the Borrower, any such demand,
notice, claim, right or equity being hereby expressly waived and released. At
any sale or sales made pursuant to this Article 8, the Lender may bid for or
purchase, free (to the fullest extent permitted by Applicable Law) from any
claim or right of whatever kind, including any equity of redemption, of any of
the Borrower, any such demand, notice, claim, right or equity being hereby
expressly waived and released, any part of or all of the Collateral offered for
sale, and may make any payment on account thereof by using any claim for moneys
then due and payable to the Lender by the Borrower hereunder as a credit against
the purchase price. The Lender shall in any such sale make no representations
or warranties with respect to the Collateral or any part thereof, and the Lender
shall not be chargeable with any of the obligations or liabilities of any of the
Borrower. The Borrower hereby agrees (i) that it will indemnify and hold the
Lender harmless from and against any and all claims with respect to the
Collateral asserted before the taking of actual possession or control of the
relevant Collateral by the Lender pursuant to this Article 8, or arising out of
any act of, or omission to act on the part of, any Person (other than the
Lender) prior to such taking of actual possession or control by the Lender, or
arising out of any act on the part of any of the Borrower or any of their agents
before or after the commencement of such actual possession or control by the
Lender; and (ii) the Lender shall not have any liability or obligation to the
Borrower arising out of any such claim except for acts of willful misconduct or
gross negligence or acts not taken in good faith. In any action hereunder, the
Lender shall be entitled to the appointment of a receiver without notice, to the
extent permitted by Applicable Law, to take possession of all or any portion of
the Collateral and to exercise such powers as the court shall confer upon the
- 29 -
receiver. Notwithstanding the foregoing, the Lender shall be entitled to apply,
without prior notice to the Borrower, any cash or cash items constituting
Collateral in the possession of the Lender to payment of the Obligations.
SECTION 8.6. Application of Proceeds on Default.
----------------------------------
Upon the occurrence and during the continuance of an Event of Default,
the balances in any account of the Borrower with the Lender, all other income
on the Collateral, and all proceeds from any sale of the Collateral pursuant
hereto, shall be applied first, toward payment of the reasonable costs and
expenses incurred by the Lender in enforcing this Agreement, in realizing on or
protecting any Collateral and in enforcing or collecting any of the Obligations
or any Guaranty thereof, including, without limitation, the reasonable
attorney's fees and expenses incurred by the Lender, and then to the Obligations
in such order as the Lender may elect. Any amounts remaining after such payment
shall be remitted to the Borrower or as a court of competent jurisdiction may
otherwise direct.
SECTION 8.7. Power of Attorney.
-----------------
Upon the occurrence and during the continuation of an Event of Default
(a) the Borrower does hereby irrevocably make, constitute and appoint the Lender
and any of its officers or designees its true and lawful attorney-in-fact with
full power in the name of the Lender or the Borrower to receive, open and
dispose of all mail addressed to the Borrower, and to endorse any notes, checks,
drafts, money orders or other evidences of payment relating to the Collateral
that may come into the possession of the Lender, with full power and right to
cause the mail of the Borrower to be transferred to the Lender's own offices or
otherwise, and to do any and all other acts necessary or proper to carry out the
intent of this Agreement and the grant of the security interests hereunder and
under the other Fundamental Documents, and the Borrower hereby ratifies and
confirms all that the Lender or its substitutes shall properly do by virtue
hereof; (b) the Borrower does hereby further irrevocably make, constitute and
appoint the Lender or any of its officers or designees its true and lawful
attorney-in-fact in the name of the Lender or the Borrower (i) to enforce all of
the Borrower's rights under and pursuant to all agreements with respect to the
Collateral, all for the sole benefit of the Lender, (ii) to enter into and
perform such agreements as may be necessary in order to carry out the terms,
covenants and conditions of the Fundamental Documents that are required to be
observed or performed by the Borrower, (iii) to execute such other and further
mortgages, pledges and assignments of the Collateral, and related instruments or
agreements, as the Lender may reasonably require for the purpose of perfecting,
protecting, maintaining or enforcing the security interests granted to the
Lender hereunder and under the other Fundamental Documents, and (iv) to do any
and all other things necessary or proper to carry out the intention of this
Agreement and the grant of the security interests hereunder and under the other
Fundamental Documents and the Borrower hereby ratifies and confirms in advance
all that the Lender as such attorney-in-fact or its substitutes shall properly
do by virtue of this power of attorney.
- 30 -
SECTION 8.8. Financing Statements, Direct Payments, Confirmation of
------------------------------------------------------
Receivables and Audit Rights.
----------------------------
The Borrower hereby authorizes the Lender to file UCC financing
statements and any amendments thereto or continuations thereof and any other
appropriate security documents or instruments and to give any notices necessary
or desirable to perfect the Lien of the Lender on the Collateral, in all cases
without the signature of the Borrower or to execute such items as attorney-in-
fact for the Borrower. The Borrower further authorizes the Lender (i) to notify
any account debtors that all sums payable to the Borrower relating to the
Collateral shall be paid directly to the Lender and (ii) to confirm (which
request for confirmation shall, prior to the occurrence of an Event of Default
or at any time when an Event of Default is not continuing, be directed by the
Lender to the independent public accountants of the Borrower, which independent
public accountants shall request such confirmation from the applicable account
debtor and upon receipt thereof, provide such confirmation to the Lender) with
any account debtors the amounts payable by them to the Borrower with regard to
the Collateral.
SECTION 8.9. Termination.
-----------
The security interests granted under this Article 8 shall terminate
when all the Obligations have been fully paid and performed, and the Commitment
shall have terminated. Upon request by the Borrower following such termination,
the Lender will, at the expense of the Borrower, execute and deliver to the
Borrower such documents (in form and substance satisfactory to the Lender) as
the Borrower shall reasonably request to evidence such termination.
SECTION 8.10. Remedies Not Exclusive.
----------------------
The remedies conferred upon, or reserved to, the Lender in this
Article 8 are intended to be in addition to, and not in limitation of, any other
remedy or remedies available to the Lender. Without limiting the generality of
the foregoing, the Lender shall have all the rights and remedies of a secured
party under Article 9 of the New York Uniform Commercial Code and any other
Applicable Law.
9. MISCELLANEOUS
SECTION 9.1. Notices.
-------
Notices and other communications provided for herein shall be in
writing and shall be delivered or mailed (or if by telecopier, delivered by such
equipment) addressed, if to the Lender, to it at 1301Avenue of the Americas, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and if to the Borrower, to it at its address set forth on the signature pages
hereof, or such other address as such party may from time to time designate by
giving written notice to the other parties hereunder. All notices and other
- 31 -
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on (i) the fifth Business Day
after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail, (ii) when delivered, if delivered by hand
or courier service or (iii) when receipt is acknowledged, if by telecopier, in
each case addressed to such party as provided in this Section 9.1 or in
accordance with the latest unrevoked written direction from such party.
SECTION 9.2. Survival of Agreement, Representations and Warranties,
------------------------------------------------------
etc.
----
All warranties, representations and covenants made by the Borrower
herein or in any certificate or other instrument delivered by the Borrower or on
its behalf in connection with this Agreement or any other Fundamental Document
shall be considered to have been relied upon by the Lender and shall survive the
making of the Loans herein contemplated and the issuance and delivery to the
Lender of the Note, regardless of any investigation made by the Lender or on its
behalf and shall continue in full force and effect so long as any Obligation due
or to become due hereunder is outstanding and unpaid and so long as the
Commitment has not been terminated in its entirety. All statements in any such
certificate or other instrument shall constitute representations and warranties
by the Borrower hereunder.
SECTION 9.3. Successors and Assigns; Loan Sales; Participations.
--------------------------------------------------
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party (provided, however, that the Borrower shall not assign its rights and
-------- -------
obligations hereunder without the prior written consent of the Lender), and all
covenants, promises and agreements by or on behalf of the Borrower which are
contained in this Agreement shall inure to the benefit of the successors and
assigns of the Lender.
(b) The Lender may (but only with the prior written consent of the
Borrower which consent shall not be unreasonably withheld or delayed, and shall
not be required at any time while an Event of Default is continuing) assign to
any commercial lender or financial institution which makes or invests in loans
in the ordinary course of its business, all or a portion of its interests,
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and the same portion of the Loans at the time
owing to it).
(c) The Lender may without the consent of the Borrower sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and the Loans owing to it and the Note held by
it); provided, however, that (i) any the Lender's obligations under this
-------- -------
Agreement shall remain unchanged, (ii) such participant shall not be granted any
voting rights or any right to control the vote of the Lender under this
Agreement, except with respect to proposed changes to interest rates, amounts of
Commitment, final maturity of Loans, releases of substantially all the
Collateral and fees (as applicable to such participant), (iii) the
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Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participating banks or other entities
shall be entitled to the cost protection provisions contained in Sections 2.8
and 2.9 hereof but a participant shall not be entitled to receive pursuant to
such provisions an amount larger than its share of the amount to which the
Lender granting such participation would have been entitled to receive and (v)
the Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement.
(d) The Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to the Lender by
or on behalf of the Borrower; provided that prior to any such disclosure, each
--------
such assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any information relating to any of the Borrower
received from the Lender.
(e) The Borrower hereby consents that the Lender may at any time and
from time to time pledge or otherwise grant a security interest in any Loan or
any Note evidencing the Loans (or any part thereof) to any Federal Reserve Bank.
SECTION 9.4. Expenses; Documentary Taxes.
---------------------------
Whether or not the transactions hereby contemplated shall be
consummated, the Borrower agrees to pay all reasonable out-of-pocket expenses
incurred by the Lender in connection with the negotiation, preparation,
execution, delivery, waiver or modification and administration of this Agreement
and any other documentation contemplated hereby, the Note, the making of the
Loans and the Collateral, but not limited to, the reasonable fees and
disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel for the Lender,
and any other counsel or consultants that the Lender shall retain, as well as
all reasonable out-of-pocket expenses and all allocated costs of in-house
counsel incurred by the Lender in the enforcement or protection of its rights
and remedies in connection with this Agreement, the Note, or the other
Fundamental Documents (including, without limitation, in connection with any
bankruptcy, reorganization or other similar proceeding), and with respect to any
action which may be instituted by any Person against the Lender in respect of
any of the foregoing, or as a result of any transaction, action or nonaction
arising from any of the foregoing, including but not limited to the fees and
disbursements of any counsel for the Lender. Such payments shall be made on the
date of execution of this Agreement and thereafter on demand. The Borrower
agrees that it shall indemnify the Lender from and hold it harmless against any
documentary taxes, assessments or charges made by any Governmental Authority by
reason of the execution and delivery of this Agreement or the Note. The
obligations of the Borrower under this Section shall survive the termination of
this Agreement and/or the payment of the Loans.
SECTION 9.5. Indemnity.
---------
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Further, by the execution hereof, the Borrower agrees to indemnify and
hold harmless the Lender and its directors, officers, employees and agents (each
an "Indemnified Party") (to the fullest extent permitted by law) from and
against any and all expenses, losses, claims, demands, judgments, damages and
liabilities (including liabilities for penalties) incurred by any of them as a
result of, arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not the Lender is a
party thereto) related to the entering into and/or performance of any
Fundamental Document or the use of the proceeds of any Loans hereunder or the
consummation of any other transaction contemplated in any Fundamental Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). If any proceeding, including any
governmental investigation, shall be instituted involving any Indemnified Party,
in respect of which indemnity may be sought against the Borrower, such
Indemnified Party shall promptly notify the Borrower in writing, and the
Borrower shall assume the defense thereof on behalf of such Indemnified Party
including the employment of counsel (reasonably satisfactory to such Indemnified
Party) and payment of all reasonable expenses. Any Indemnified Party shall have
the right to employ separate counsel in any such proceeding and participate in
the defense thereof, but the fees and expenses of such separate counsel shall be
at the expense of such Indemnified Party unless (i) the employment of such
separate counsel has been specifically authorized by the Borrower or (ii) the
named parties to any such action (including any impleaded parties) include such
Indemnified Party and the Borrower, and such Indemnified Party shall have been
advised by its counsel that there may be one or more legal defenses available to
such Indemnified Party which are different from or additional to those available
to the Borrower (in which case the Borrower shall not have the right to assume
the defense of such action on behalf of such Indemnified Party, it being
understood, however, that the Borrower shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees or expenses of more than one separate firm of
attorneys for all such Indemnified Parties). The Borrower shall not be liable
for any settlement of any such proceeding effected without the written consent
of the Borrower, but if settled with the written consent of the Borrower or if
there is a final judgment for the plaintiff in any such action, the Borrower
agrees to indemnify and hold harmless any Indemnified Party from and against any
loss or liability by reason of such settlement or judgment. At any time after
the Borrower has assumed the defense of any proceeding involving any Indemnified
Party in respect of which indemnity has been sought against the Borrower, such
Indemnified Party may elect, by written notice to the Borrower, to withdraw its
request for indemnity and thereafter the defense of such proceeding shall be
maintained by counsel of the Indemnified Party's choosing and at the Indemnified
Party's expense. The foregoing indemnity agreement includes any reasonable
costs incurred by an Indemnified Party in connection with any action or
proceeding which may be instituted in respect of the foregoing by the Lender or
by any other Person either against the Lender or in connection with which any
officer or employee of the Lender is called as a witness
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or deponent, including, but not limited to, the reasonable fees and
disbursements of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the Lender and any out-
of-pocket costs incurred by the Lender in appearing as a witness or in otherwise
complying with legal process served upon them. The obligations of the Borrower
under this Section 9.5 shall survive the termination of this Agreement and/or
payment of the Loans and shall inure to the benefit of any Person who was a
Lender notwithstanding such Person's assignment of all its Loans and Commitment
hereunder.
If the Borrower shall fail to do any act or thing which it has
covenanted to do hereunder or under a Fundamental Document, or any
representation or warranty of the Borrower shall be breached, the Lender may
(but shall not be obligated to) do the same or cause it to be done or remedy any
such breach and there shall be added to the Obligations hereunder the cost or
expense incurred by the Lender in so doing, and any and all amounts expended by
the Lender in taking any such action shall be repayable to it upon its demand
therefor and shall bear interest at 3% in excess of the Base Rate from time to
time in effect from the date advanced to the date of repayment.
SECTION 9.6. CHOICE OF LAW.
-------------
THIS AGREEMENT AND THE NOTE SHALL IN ALL RESPECTS BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WHICH ARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND,
IN THE CASE OF PROVISIONS RELATING TO INTEREST RATES, ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
SECTION 9.7. No Waiver.
---------
No failure on the part of the Lender to exercise, and no delay in
exercising, any right, power or remedy hereunder under the Fundamental Documents
or under the Note shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
SECTION 9.8. Extension of Maturity.
---------------------
Except as otherwise specifically provided in Article 2 hereof, should
any payment of principal of, or interest on, the Note or any other amount due
hereunder become due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of principal, interest shall be payable thereon at the rate herein
specified during such extension.
SECTION 9.9. Amendments, etc.
----------------
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No modification, amendment or waiver of any provision of this
Agreement, and no consent to any departure by the Borrower herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Borrower shall entitle the Borrower to any other or further notice or demand in
the same, similar or other circumstances. Each holder of a Note shall be bound
by any amendment, modification, waiver or consent authorized as provided herein,
whether or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent and any consent by any holder of a Note shall
bind any Person subsequently acquiring such Note, whether or not a Note is so
marked.
SECTION 9.10. Severability.
------------
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 9.11. SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
----------------------------------------
(a) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE STATE COURTS OF THE STATE OF NEW YORK AND TO THE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF
ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT
OR THE SUBJECT MATTER HEREOF, ANY FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER OF
ANY THEREOF BROUGHT BY THE LENDER. THE BORROWER TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT,
AND (B) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING
ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR
OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. THE BORROWER HEREBY CONSENTS TO
SERVICE OF PROCESS BY
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MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 9.1
HEREOF. THE BORROWER AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO
SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE LENDER. FINAL
JUDGMENT AGAINST THE BORROWER IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (A) BY SUIT, ACTION OR
PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE
CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF
THE LENDER THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT
TO THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE LENDER MAY
-------- -------
AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
BORROWER OR ANY OF ITS ASSETS IN ANY ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
OR OF ANY COUNTRY OR PLACE WHERE THE BORROWER OR SUCH ASSETS MAY BE FOUND.
(b) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, THE BORROWER HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN
ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION
ARISING OUT OF, OR BASED UPON, THIS AGREEMENT, THE SUBJECT MATTER HEREOF, ANY
FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE
BORROWER ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE PROVISIONS OF THIS
SECTION 9.11(b) CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE LENDER HAS
RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY OTHER
FUNDAMENTAL DOCUMENT. THE LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION 9.11(b) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
BORROWER TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
SECTION 9.12. Headings.
--------
Section headings used herein are for convenience only and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.
SECTION 9.13. Execution in Counterparts.
-------------------------
This Agreement may be executed in any number of counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute one and the same instrument.
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SECTION 9.14. Entire Agreement.
----------------
This Agreement represents the entire agreement of the parties with
regard to the subject matter hereof and the terms of any letters and other
documentation entered into between the Borrower and the Lender prior to the
execution of this Agreement which relate to Loans to be made hereunder, shall be
replaced by the terms of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and the year first written.
BORROWER:
MTEL LATIN AMERICA, INC.
By
----------------------------
Name:
Title:
NOTICES:
-------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Security Centre
South Building
Jackson, MS 39201
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT LYONNAIS NEW YORK BRANCH
By
-----------------------------
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇