Exhibit 10.7
AGREEMENT
The undersigned, RSL Communications, Ltd., a Bermuda corporation ("RSL")
and Xxxxxx X. Xxxxxx having an address at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000 ("Lauder"), in consideration for the mutual promises
contained herein, agree as follows:
1. RSL shall prepay, on October 1, 1996, the outstanding Accreted Value of
the Subordinated Promissory Note, dated September 10, 1996, issued by RSL to
Lauder. Such payment shall be made in accordance with Sections 1(b) and 4 of the
Subordinated Promissory Note.
2. In consideration for such prepayment, Lauder agrees that he will, upon
ten (10) business days prior written notice from RSL with respect to each
request for funding, either (at Lauder's option) (i) (in addition to his
existing $15,000,000 Chase Manhattan Bank guarantee) guarantee one or more
subordinated bank borrowings by RSL in an aggregate amount not to exceed
$35,000,000 at any one time outstanding, each such personal guarantee to be in
such form as is normal and customary for the bank from which RSL shall borrow;
(ii) directly loan funds to RSL on a subordinated basis in an amount not in
excess of $35,000,000 at any one time outstanding at an interest rate of 11% per
annum which amounts may be repaid and reborrowed; or (iii) provide a combination
of loan guarantees or direct loans, as set forth above, in an amount not in
excess of $35,000,000 at any one time outstanding. The terms of such
subordination shall be substantially in accordance with
Schedule I hereto. Such obligation with respect to guaranteed bank loans or
direct loans shall remain until the earlier of (i) December 15, 2006 or (ii) the
date on which RSL receives net proceeds from an equity offering in excess of
$35,000,000 (the "Equity Proceeds") provided, that if any loans are then
outstanding, the Equity Proceeds are utilized to repay such loans, at which time
Lauder's obligation to provide loan guarantees and/or direct loans shall cease.
Interest on the loan or loans hereunder shall not be paid in cash prior to
December 15, 2001.
The undersigned have executed this Agreement as of this 30th day of
September, 1996.
RSL COMMUNICATIONS, LTD.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx, President
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
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SCHEDULE I TO
AGREEMENT DATED AS OF SEPTEMBER 30, 1996
Subordination. (a) Except as otherwise provided with respect to Equity
Proceeds, principal, interest on and any other amount due in respect of loans
under this Agreement (the "Loans") shall, as provided in (b) and (c) below, be
subordinated and made junior to (i) the payment of the principal amount,
redemption premium, if any, all interest and any other amounts due on the
12 1/4% Senior Notes due 2006 (the "Senior Notes") issued by RSL Communications
PLC, a United Kingdom corporation and wholly owned subsidiary or RSL (the "Note
Issuer"), and guaranteed by RSL (the "Guaranty") (ii) and the Guaranty.
(b) Except as otherwise provided with respect to Equity Proceeds, and
subject to subparagraph (c) below, until the Senior Notes shall have been paid
in full, RSL shall not make any direct or indirect payment or reduction (whether
by way of loan, set-off or otherwise) in respect of the principal amount or
accreted value of, or interest on or any other amount due in respect of the
Loans, whether such amounts shall have become payable on maturity, by
acceleration or otherwise, if on the date such payment would (but for this
Section (b)) be payable pursuant to the Loans (hereinafter referred to as a
"Payment Date"), (i) either RSL or the Note Issuer shall have failed to make
payments required to be made on or with respect to the Guaranty or all or any
portion of the Senior Notes as and when the same became or becomes due and
payable and such failures to pay have not been cured or waived, (ii) any Default
(as defined in the Indenture pursuant to which the Senior Notes are issued) or
event of default shall have occurred and be continuing under the Senior Notes,
whether or not the holders of the Senior Notes (the "Senior Lenders") shall,
pursuant to such Senior Notes, have declared all or any portion of the Senior
Notes due and payable in full on the basis of the occurrence of such default or
event of default, or (iii) if such a Default or event of default shall not be
continuing on any Payment Date, but the Senior Lenders shall, pursuant to the
Senior Notes, have declared all or any portion of the Senior Notes due and
payable in full on the basis of the occurrence of such Default or event of
default and such acceleration shall not have been specifically rescinded in
writing by the Senior Lenders. Scheduled payments of interest on the Loans and
the payment of the principal amount or accreted value the Loans which are not
otherwise prohibited pursuant to this Schedule I from being made, may be made,
but only upon, subject and pursuant to the other terms and provisions set forth
herein.
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(c) In the event of (x) any insolvency, bankruptcy, receivership,
custodianship, liquidation, reorganization, readjustment of debt, arrangement,
composition, assignment for the benefit of creditors, or other similar
proceeding relative to RSL, as such, or its property, or (y) any proceeding for
voluntary liquidation, dissolution or other winding up or bankruptcy proceedings
relative to RSL, then the Senior Notes shall first be paid in full before any
payment or distribution of any character, whether in cash, securities,
obligations or other property, shall be made in respect to the Loans.
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