LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY
AGREEMENT (as amended, modified or restated from time to time, this
“Agreement”)
dated as of JUNE 4, 2009
(the “Closing
Date”), will serve to set forth the terms of the Credit Facility by and
among THERMO CREDIT,
LLC, a Colorado limited liability company (together with its successors
and assigns, “Lender”),
FLINT TELECOM GROUP,
INC., a Nevada corporation (“Parent”),
CVC INT’L, INC., a
Florida corporation (“CVC”),
PHONE HOUSE OF FLORIDA,
INC., a Florida corporation (“Phone
House Florida”), DIAL-TONE COMMUNICATION, INC.,
a Florida corporation (“Dial-Tone”),
DIGITAL PHONE SOLUTIONS,
INC., a Florida corporation (“Digital”),
BETTER CHOICE COMMUNICATIONS,
INC., a Florida corporation (“Better
Choice”), WIZE
COMMUNICATIONS, INC., a Florida corporation (“Wize”),
STARCOM ALLIANCE, INC.,
a Florida corporation (“Starcom”),
and PHONE HOUSE, INC. a
California corporation (“Phone
House California,” and together with CVC, Phone House Florida, Dial-Tone,
Digital, Better Choice, Wize and Starcom, each a “Subsidiary”
and jointly and severally, the “Subsidiaries,”
and together with Parent, jointly and severally, the “Debtor”).
RECITALS
WHEREAS, Parent and
Subsidiaries desire to establish their borrowing potential on a consolidated
basis to the same extent possible if they were merged into a single entity, and
this Agreement reflects the establishment of a credit facility which would not
otherwise be available to Parent and Subsidiaries if they were not jointly and
severally liable for payment and performance of the Indebtedness under the Loan
Documents; and
WHEREAS, Parent and
Subsidiaries have (1) determined that each will benefit specifically and
materially from the Credit Facility contemplated by this Agreement, and (2) have
requested and bargained for the structure, terms and obligations set forth in
the Loan Documents; and
WHEREAS, Debtor has requested
that Lender extend the Credit Facility to Debtor on the terms described in this
Agreement; and
WHEREAS, Lender is willing to
make the Credit Facility available to Debtor upon and subject to the provisions,
terms and conditions set forth in the Loan Documents;
NOW THEREFORE, the parties
hereto, intending to be legally bound, agree as follows:
1. Definitions. As
used in this Agreement, all exhibits, appendices and schedules hereto, and in
any other Loan Documents made or delivered pursuant to this Agreement, the
following terms will have the meanings given such terms in this Section 1 or in the
provisions, sections or recitals herein:
(a) “Affiliate”
means, with respect to a specified Person, another Person that directly or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.
(b) “Borrowing
Base” means a sum equal to the amount that Lender determines is available
for Loans available under the Credit Facility based on Debtor’s accounts,
equipment, software, contracts and other assets.
(c) “Business
Day” means any day other than a Saturday, Sunday, or any other day on
which the Federal Reserve Bank of New Orleans, Louisiana, is
closed.
(d) “Code”
means the Uniform Commercial Code as the same may, from time to time, be enacted
and in effect in the State of Louisiana; provided, that to the extent that the
Code is used to define any term herein or in any Loan Document and such term is
defined differently in different articles or divisions of the Code, the
definition of such term contained in Article 9 shall govern; provided further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or
priority
of, or remedies with respect to, Lender’s lien on any Collateral is governed by
the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of Louisiana, the term “Code” shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority or
remedies and for purposes of definitions related to such
provisions.
(e) “Collateral”
means:
(i) All
present and future accounts, chattel paper (including electronic chattel paper),
commercial tort claims, commodity accounts, commodity contracts, deposit
accounts, documents, financial assets, general intangibles, health care
insurance receivables, instruments, investment property (including, but not
limited to, the Pledged Interests), letters of credit, letter of credit rights,
payment intangibles, securities, security accounts, and security entitlements
now or hereafter owned, held, or acquired.
(ii) All
present and hereafter acquired inventory and goods (including without
limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of services, in whole or in part, wherever
located.
(iii) All
equipment and fixtures of whatsoever kind and character now or hereafter
possessed, held, acquired, leased or owned, together with all replacements,
accessories, additions, substitutions and accessions to all of the foregoing,
and all records relating in any way to the foregoing.
(iv) All
books, records, data, plans, manuals, computer software, computer tapes,
computer systems, computer disks, computer programs, source codes and object
codes containing any information, pertaining directly or indirectly to the
Collateral and all rights to retrieve data and other information pertaining
directly or indirectly to the Collateral from third parties.
The term
“Collateral,”
as used herein, shall also include (i) any other property or assets, real or
personal, tangible or intangible, now existing or hereafter acquired, of any
Debtor that may at any time be or become subject to a security interest or lien
in favor of Lender as security for the Indebtedness, and (ii) all SUPPORTING OBLIGATIONS,
PRODUCTS and PROCEEDS of all of the
foregoing (including without limitation, insurance payable by reason of loss or
damage to the foregoing property) and any property, assets securities,
guaranties or monies of any Debtor which may at any time come into the
possession of Lender. The designation of proceeds does not authorize
Debtor to sell, transfer or otherwise convey any of the foregoing property
except in the ordinary course of Debtor’s business or as otherwise provided
herein.
(f) “Constituent
Documents” means (i) in the case of a corporation, its articles or
certificate of incorporation and bylaws; (ii) in the case of a general
partnership, its partnership agreement; (iii) in the case of a limited
partnership, its certificate of limited partnership and partnership agreement;
(iv) in the case of a trust, its trust agreement; (v) in the case of a
joint venture, its joint venture agreement; (vi) in the case of a limited
liability company, its articles of organization and operating agreement or
regulations; and (vii) in the case of any other entity, its organizational
and governance documents and agreements.
(g) “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling”
and “Controlled”
have meanings correlative thereto.
(h) “Debt”
means as to any Person at any time (without duplication) all items of
indebtedness, obligation or liability of a Person, whether mature or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, that should be classified as liabilities in accordance with
GAAP.
(i) “GAAP”
means generally accepted accounting principles, applied on a consistent basis,
as set forth in Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or in statements of the Financial
Accounting Standards Board and/or their respective successors and which are
applicable in the circumstances as of the date in
question. Accounting principles are applied on a “consistent basis”
when the accounting principles applied in a current period are comparable in all
material respects to those accounting principles applied in a preceding
period.
(j) “Governmental
Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
(k) “Guarantor”
means any Person, whether one or more, who from time to time guarantees all or
any part of the Indebtedness.
(l) “Guaranty”
means a GUARANTY
AGREEMENT, whether one or more, executed by Guarantor
(as the same may be amended, restated or modified from time to
time).
(m) “Indebtedness”
means (i) all indebtedness, obligations and liabilities of Debtor to Lender of
any kind or character, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several or joint and several, and regardless of whether such
indebtedness, obligations and liabilities may, prior to their acquisition by
Lender, be or have been payable to or in favor of a third party and subsequently
acquired by Lender (it being contemplated that Lender may make such acquisitions
from third parties), including without limitation all indebtedness, obligations
and liabilities of Debtor to Lender now existing or hereafter arising under the
Note, this Agreement, the other Loan Documents or any draft, acceptance,
guaranty, endorsement, letter of credit, assignment, purchase, overdraft,
discount, indemnity agreement or otherwise, (ii) all accrued but unpaid interest
on any of the indebtedness described in (i) above, (iii) all obligations of
Obligors to Lender under the Loan Documents, (iv) all costs and expenses
incurred by Lender in connection with the collection and administration of all
or any part of the indebtedness and obligations described in (i), (ii) and (iii)
above or the protection or preservation of, or realization upon, the collateral
securing all or any part of such indebtedness and obligations, including without
limitation all reasonable attorneys’ fees, and (v) all renewals, extensions,
modifications and rearrangements of the indebtedness and obligations described
in (i), (ii), (iii) and (iv) above.
(n) “Loan
Documents” means this Agreement, the Note, the Guaranty and the other
agreements, instruments and documents evidencing, securing, governing,
guaranteeing or pertaining to the Loans.
(o) “Loans”
means all advances under the Credit Facility as established pursuant to the Loan
Documents from time to time.
(p) “Material
Adverse Effect” means a material adverse effect on (i) the business,
assets, property, operations, condition (financial or otherwise) or prospects,
of an Obligor (individually or taken as a whole), (ii) the ability of an
Obligor to pay or perform the Indebtedness, (iii) any of the rights of or
benefits available to Lender under the Loan Documents, or (iv) the validity
or enforceability of the Loan Documents.
(q) “Obligors”
means Debtor, any Subsidiary that becomes a Debtor hereunder, any Guarantor or
any other Person who guaranteed or is otherwise obligated to pay or perform all
or any portion of the Indebtedness.
(r) “Permitted
Encumbrances” means the following encumbrances:
(i) liens
for taxes, assessments or governmental charges or levies not yet due and payable
or liens for taxes, assessments or governmental charges or levies being
contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP;
(ii) liens
in respect of property of a Person imposed by law which were incurred in the
ordinary course of business and which have not arisen to secure Debt for
borrowed money, such as carriers’, materialmen’s, warehousemen’s and mechanics’
liens, statutory and common law landlord’s liens, and other similar liens
arising in the ordinary course of business, and which either (1) do not in the
aggregate materially detract from the value of such property or materially
impair the use thereof in the operation of the business of a Person, or (2) are
being contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject to such
lien;
(iii) liens
created by or pursuant to the Loan Documents;
(iv) liens
in existence on the Closing Date which are listed, and the property subject
thereto described, on Schedule 1(r),
without giving effect to any extensions or renewals thereof;
(v) liens
arising from judgments, decrees, awards or attachments in circumstances not
constituting an Event of Default;
(vi) liens
(1) incurred or deposits made in the ordinary course of business in connection
with general insurance maintained by a Person, (2) incurred or deposits made in
the ordinary course of business of a Person in connection with workers’
compensation, unemployment insurance and other types of social security,
(3) to secure the performance by any Person of tenders, statutory
obligations (other than excise taxes), surety, stay, customs and appeal bonds,
statutory bonds, bids, leases, government contracts, trade contracts,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money) to the extent incurred in the
ordinary course of business, and (4) to secure the performance by a Person of
leases of real property, to the extent incurred or made in the ordinary course
of business consistent with past practices;
(vii) licenses,
sublicenses, leases or subleases granted to third Persons in the ordinary course
of business not interfering in any material respect with the business of a
Person;
(viii)
easements, rights-of-way, restrictions, minor defects or irregularities in
title, encroachments and other similar charges or encumbrances, in each case not
securing Indebtedness and not interfering in any material respect with the
ordinary conduct of the business of a Person;
(ix) liens
arising from precautionary Code financing statements regarding operating
leases;
(x) liens
created pursuant to or in connection with capital leases permitted pursuant to
this Agreement, provided that (1) such liens only serve to secure the payment of
rent or indebtedness arising under such capital leases, and (2) the liens
encumbering the assets leased or purported to be leased under such capital
leases do not encumber any other assets of a Person;
(s) “Person”
means any individual, corporation, limited liability company, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity, and shall include such Person's heirs, administrators, personal
representatives, executors, successors and assigns.
(t) “Pledged
Interests” means all right, title and interest in and to all of the
securities or other equity interests in any corporation, partnership, joint
venture or limited liability company now or hereafter owned by such
Person, regardless of class or designation, including, without
limitation, in any Person (including, but not limited to those Pledged Interests
more fully described on Schedule 1(t) hereto,
and all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, including, without limitation, any certificates
representing such securities or other equity interests, the right to request
after the occurrence and during the continuation of an Event of Default that
such securities or equity interests be registered in the name of Lender or any
of its nominees, the right to receive any certificates representing any of the
securities or equity interests and the right to require that such certificates
be delivered to Lender together with undated powers or assignments of investment
securities with respect thereto, duly endorsed in blank by such Person, all
warrants, options, share appreciation rights and other rights, contractual or
otherwise, in respect thereof and of all dividends, distributions of income,
profits, surplus, or other compensation by way of income or liquidating
distributions, in cash or in kind, and cash, instruments, and other property
from time to time received, receivable, or otherwise distributed in respect of
or in addition to, in substitution of, on account of, or in exchange for any or
all of the foregoing.
(u)
“Subsidiary”
has the mean set forth in the preamble hereto and any entity (i) of which
at least a majority of the ownership, equity or voting interest is at the time
directly or indirectly owned or controlled by a Person and/or its Subsidiaries,
and (ii) which is treated as a subsidiary in accordance with
GAAP.
All words
and phrases used herein shall have the meaning specified in the Code except to
the extent such meaning is inconsistent with this Agreement. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words “hereof”, “herein”, and
“hereunder” and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement. Any accounting term used in the Loan Documents shall have,
unless otherwise specifically provided therein, the meaning customarily given
such term in accordance with GAAP, and all financial computations thereunder
shall be computed, unless otherwise specifically provided therein, in accordance
with GAAP consistently applied; provided, that all financial covenants and
calculations in the Loan Documents shall be made in accordance with GAAP as in
effect on the Closing Date unless Debtor and Lender shall otherwise specifically
agree in writing. That certain items or computations are explicitly
modified by the phrase “in accordance with GAAP” shall in no way be construed to
limit the foregoing.
2. Credit
Facility.
(a) Joint and
Several Liability. Parent, each Subsidiary and any other
Person named or identified as a Debtor under the Loan Documents from time to
time hereby irrevocably and unconditionally: (i) agree that each is JOINTLY and SEVERALLY liable to Lender for
the full and prompt payment and performance of the Indebtedness under the Loan
Documents in accordance with the terms thereof; (ii) agree to fully and promptly
perform all of their obligations hereunder and the other Loan Documents with
respect to each Loan hereunder as if such Loan had been made directly to it; and
(iii) agree as a primary obligation to indemnify Lender on demand for and
against any loss incurred by Lender as a result of any of the Indebtedness of
any Debtor being or becoming void, voidable, unenforceable or ineffective for
any reason whatsoever, whether or not known to Lender or any person, the amount
of such loss being the amount which Lender would otherwise have been entitled to
recover from any one or more of Parent, Subsidiary and any other Person named as
a Debtor under the Loan Documents from time to time. Each Debtor
hereby designates Parent as its representative and agent on its behalf for the
purposes of giving instructions with respect to the disbursement of the proceeds
of the Loans, selecting interest rate options, giving and receiving all other
notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on
behalf of Debtor under the Loan Documents. Parent hereby accepts such
appointment. Lender may regard any notice or other communication
pursuant to any Loan Document from Parent as a notice or
communication
from each
Debtor. Each warranty, covenant, agreement and undertaking made on
behalf of a Debtor by Parent shall be deemed for all purposes to have been made
by each Debtor and shall be binding upon and enforceable against such Debtor to
the same extent as it if the same had been made directly by such
Debtor.
(b) Cross-Guaranty. Each
Debtor hereby agrees that such Debtor is JOINTLY and SEVERALLY liable for, and
hereby absolutely and unconditionally guarantees to Lender and its successors
and assigns, the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Indebtedness owed or
hereafter owing to Lender by any Debtor. Each Debtor agrees that its
guaranty obligation hereunder is a continuing guaranty of payment and
performance and not of collection, that its obligations under this Section 2(b) shall
not be discharged until indefeasible payment and performance, in full, of the
Indebtedness has occurred, and that its obligations under this Section 2(b) shall be
absolute and unconditional, irrespective of, and unaffected by:
(i) the
genuineness, validity, regularity, enforceability or any future amendment of, or
change in, this Agreement, any other Loan Document or any other agreement,
document or instrument to which any Debtor is or may become a
party;
(ii) the
absence of any action to enforce this Agreement, including this Section 2(b), or any
other Loan Document or the waiver or consent by Lender with respect to any of
the provisions thereof;
(iii) the
existence, value or condition of, or failure to perfect its lien against, any
security for the Indebtedness or any action, or the absence of any action, by
Lender in respect thereof (including the release of any such
security);
(iv) the
insolvency of any Debtor; or
(v) any
other action or circumstance that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.
Each
Debtor shall be regarded, and shall be in the same position, as principal debtor
with respect to the Indebtedness guaranteed hereunder. Notwithstanding any
provision herein contained to the contrary, each Debtor’s liability under this
Section 2(b),
which liability is in addition to amounts for which such Debtor is liable under
Section 2(a),
shall be limited to an amount not to exceed as of any date of determination the
greater of: (i) the net amount of all Loans advanced to any Debtor under this
Agreement and then re-loaned or otherwise transferred to, or for the benefit of,
such Debtor; and (ii) the amount that could be claimed by Lender from such
Debtor under this Section 2(b) without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common law after
taking into account, among other things, each Debtor’s right of contribution and
indemnification from each other Debtor. To the extent that any Debtor
shall make a payment under this Section 2(b) of all
or any of the Indebtedness (other than Loans made to such Debtor for which it is
primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments then
previously or concurrently made by any Debtor, exceeds the amount that such
Debtor would otherwise have paid if each Debtor had paid the aggregate
Indebtedness satisfied by such Guarantor Payment in the same proportion that
such Debtor’s Allocable Amount (as defined below) (as determined immediately
prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each
Debtor as determined immediately prior to the making of such Guarantor Payment,
then, following indefeasible payment in full in cash of the Indebtedness, such
Debtor shall be entitled to receive contribution and indemnification payments
from, and be reimbursed by, each other Debtor for the amount of such excess, pro
rata based upon their respective Allocable Amounts in effect immediately prior
to such Guarantor Payment. As of any date of determination, the
“Allocable
Amount” of any Debtor shall be equal to the maximum amount of the claim
that could then be recovered from such Debtor under this Section 2(b) without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common
law. This Section 2(b) is
intended only
to define
the relative rights of each Debtor and nothing set forth herein is intended to
or shall impair the obligations of each Debtor, jointly and severally, to pay
any amounts as and when the same shall become due and payable in accordance with
the terms of this Agreement. Nothing contained in this Section 2(b) shall
limit the liability of any Debtor to pay the Loans made directly or indirectly
to that Debtor and accrued interest, fees and expenses with respect thereto for
which such Debtor shall be primarily liable. The liability of Debtor
under this Section
2(b) is in addition to and shall be cumulative with all liabilities of
each Debtor to Lender under the Loan Documents to which such Debtor is a party
or in respect of any Indebtedness of any other Debtor, without any limitation as
to amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
(c) Credit
Facility. Subject to the terms and
conditions set forth in this Agreement and the other Loan Documents, Lender
hereby agrees to lend to Debtor in one or more advances an aggregate sum not to
exceed the lesser of (i) the
Borrowing Base, of (ii) TWO
MILLION AND NO/100 DOLLARS ($2,000,000.00) (the “Credit
Facility”), commencing on the date hereof and continuing until: (i) the
acceleration of the Indebtedness pursuant to the terms of the Loan Documents;
(ii) MAY 30, 2011;
or (iii) such other date as may be established by a written instrument between
Debtor and Lender from time to time (the “Maturity
Date”). If at any time the sum of the aggregate principal
amount of Loans outstanding hereunder exceeds the Credit Facility or the
Borrowing Base, such amounts shall be deemed an “Overadvance.” Debtor
shall repay the amount of such Overadvance plus all accrued and
unpaid interest thereon upon written demand from
Lender. Notwithstanding anything contained herein to the contrary,
Lender shall have no obligation to make any Loan under the Credit Facility from
and after SEPTEMBER 30,
2009.
(d) Funding. Lender
reserves the right to require not less than ONE (1) Business Day prior
notice of each Loan under the Credit Facility, specifying the aggregate amount
of such Loan together with any documentation relating thereto as Lender may
reasonably request; such request to be submitted no later than 1:00 p.m. (New
Orleans, Louisiana time) on the date provided herein. Lender at its
option may accept telephonic requests for such Loan, provided that such
acceptance shall not constitute a waiver of Lender's right to require delivery
of a written request in connection with subsequent Loans. Lender
shall have no liability to Debtor for any loss or damage suffered by Debtor as a
result of Lender's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically, by facsimile or electronically and purporting to have been sent
to Lender by Debtor and Lender shall have no duty to verify the origin of any
such communication or the identity or authority of the Person sending
it. Subject to the terms and conditions of this Agreement, each Loan
under this section shall be made available to Debtor by depositing the same, in
immediately available funds, in an account of Debtor designated by Debtor or by
paying the proceeds of such Loan to a third party designated by
Debtor.
(e) Use of
Proceeds. The Loans under the Credit Facility shall be used by
Debtor for working capital in the ordinary course of business.
(f) Fees. Debtor
agrees to pay to Lender:
(i) A
commitment fee equal to TWO PERCENT (2.00%) of the amount
of the Credit Facility as of the Closing Date; which commitment fee shall be due
and payable in TWO (2)
equal installments, such installments to be due and payable on the Closing Date
and on the FIRST (1st) anniversary of the Closing
Date (the commitment fee shall be deemed fully earned as of the Closing Date);
and
(ii) An
unused facility fee on the daily average unused amount of the Credit Facility
for the period from the Closing Date to and including the Maturity Date, at the
rate of ONE QUARTER OF ONE
PERCENT (0.25%) per annum based on a 360 day year and the actual number
of days elapsed. For the purpose of calculating the facility fee
hereunder, the Credit Facility shall be deemed utilized by the
amount of
all outstanding Loans under the Credit Facility. The accrued facility
fee shall be payable in arrears on each Payment Date (as such term is defined in
the Note) and on the Maturity Date; and
(iii) A
monitoring fee for the period from the Closing Date to and including the
Maturity Date, in an amount measured as of each Payment Date equal to the
greater of (A) ONE THOUSAND
FIVE HUNDRED AND NO/100 DOLLARS ($1,500.00) per month, or (B) ONE TWENTIETH OF ONE PERCENT (0.05%)
of the Credit Facility per week or portion thereof (each week being
deemed to have commenced on a Sunday). The accrued monitoring fee shall be
payable in arrears on each Payment Date (as such term is defined in the Note)
and on the Maturity Date.
The
commitment fee, the unused facility fee and monitoring fee shall be to
compensate Lender for its costs and expenses in the structuring of the Credit
Facility, monitoring the Collateral, and for the commitment of funds hereunder
and (to the maximum extent permitted by applicable law) shall not be deemed
interest. In addition to the foregoing, Debtor shall pay to Lender an
origination fee in an amount equal to the GREATER
of (a) TEN THOUSAND AND NO/100
DOLLARS ($10,000.00), or (b) the actual costs, fees and expenses incurred
in the due diligence relating to the transactions contemplated by this
Agreement, the drafting and execution of the Loan Documents and closing costs
relating to the Loan Documents, of which Debtor has made a deposit equal to TEN THOUSAND AND NO/100 DOLLARS
($10,000.00), as reimbursement for the
cost and expenses incurred by Lender in the establishment of the Credit
Facility.
3. Note,
Rate and Computation of Interest. The Credit Facility shall be
evidenced by a promissory note (as amended, modified or restated from time to
time, the “Note”)
duly executed by Debtor and payable to the order of Lender, in form and
substance acceptable to Lender. Interest on the Note shall accrue at
the rates set forth therein. The principal of and interest on the
Note shall be due and payable in accordance with the terms and conditions set
forth in the Note and in this Agreement.
4. Collateral.
(a) Grant of
Security Interest. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Indebtedness, Debtor hereby pledges to and grants Lender, a
security interest in, all of Debtor's right, title and interest in the
Collateral, whether now owned by Debtor or hereafter acquired and whether now
existing or hereafter coming into existence. If Debtor at any time
holds or acquires a commercial tort claim, Debtor shall notify Lender in writing
within FIVE (5) Business
Days of such occurrence with the details thereof and grant to Lender a security
interest therein or lien thereon and in the proceeds thereof, in form and
substance satisfactory to Lender.
(b) Additional
Documents. To secure full and complete payment and performance
of the Indebtedness, Debtor shall execute and deliver or cause to be executed
and delivered all of the Loan Documents reasonably required by Lender covering
the Collateral. Debtor shall execute and cause to be executed such
further documents and instruments, as Lender, in its reasonable discretion,
deems necessary or desirable to create, evidence, preserve, and perfect its
liens and security interests in the Collateral. In the event any of
the Loan Documents evidencing or securing the Indebtedness misrepresents or
inaccurately reflects the correct terms and/or provisions of the Indebtedness,
each Obligor shall upon request by Lender and in order to correct such mistake,
execute such new documents or initial corrected, original documents as Lender
may deem necessary to remedy said errors or mistakes. Each Obligor
shall execute such other documents as Lender shall deem reasonably necessary to
correct any defects or deficiencies in the Loan Documents. Any
Obligor’s failure to execute such documents as requested shall constitute an
Event of Default under this Agreement.
(c) Setoff. If
an Event of Default shall have occurred and be continuing, Lender shall have the
right to set off and apply against the Indebtedness in such manner as Lender may
determine, at any time and without notice to Debtor, any and all deposits
(general or special, time or demand, provisional or final) or other sums at any
time credited by or owing from Lender to Debtor whether or not the Indebtedness
is
then
due. The rights and remedies of Lender hereunder are in addition to
any other rights and remedies (including, without limitation, other rights of
setoff) which Lender may have.
(d) Satisfaction
of Indebtedness. Until the Indebtedness has been indefeasibly
paid and fully satisfied (other than contingent indemnification obligations to
the extent no unsatisfied claim has been asserted) and the commitments of Lender
under the Credit Facility have been terminated, Lender shall be entitled to
retain the security interests in the Collateral granted under the Loan Documents
and the ability to exercise all rights and remedies available to Lender under
the Loan Documents and applicable laws.
5. Conditions
Precedent.
(a) Initial
Loan. The obligation of Lender to make the initial Loan under
the Credit Facility, is subject to the condition precedent that Lender shall
have received on or before the day of such Loan all of the following, each dated
(unless otherwise indicated) as of the Closing Date, in form and substance
satisfactory to Lender:
(i) Resolutions. Resolutions
of the governing body of each Obligor that is not a natural Person certified by
an authorized officer or representative of such Obligor which authorize the
execution, delivery, and performance of the Loan Documents that such Obligor is
a party to;
(ii) Incumbency
Certificate. A certificate of incumbency certified by an
authorized officer or representative of an Obligor certifying the names of the
individuals or other Persons authorized to sign the Loan Documents to which any
Obligor that is not a natural Person is to be a party (including the
certificates contemplated herein) together with specimen signatures of such
Persons;
(iii) Constituent
Documents. The Constituent Documents of each Obligor that is
not a natural Person certified to Lender as being true and correct as of the
date of this Agreement;
(iv) Governmental
Certificates. Certificates of the appropriate government
officials of the state of organization of each Obligor that is not a natural
Person and any state such Obligor is currently doing business as to the
existence, qualification and good standing of such Obligor, dated within TEN (10) days of the date of
this Agreement;
(v) Loan
Documents. The Loan Documents executed by each Obligor party
thereto;
(vi) Financing
Statements. Code financing statements covering the Collateral
shall have been filed with such filing offices as Lender may
request;
(vii) Insurance
Matters. Copies of insurance certificates describing all
insurance policies as may be required by Lender from time-to-time, together with
loss payable and lender endorsements in favor of Lender with respect to all
insurance policies covering the Collateral;
(viii) Uniform
Commercial Code Search. The
results of a Code search showing all financing statements and other documents or
instruments on file against Debtor in such locations as Lender may reasonably
request, such search to be as of a date no more than TEN (10) days prior the
Closing Date;
(ix) Fees and
Expenses. Evidence that the costs and expenses of Lender
(including reasonable attorneys' fees) and all fees owing to Lender, shall have
been paid in full by Debtor;
(x) Other
Matters. Such other documents and agreements as may be
required by Lender in its reasonable discretion.
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
(b) All
Loans. The obligation of Lender to make any Loan shall be
subject to the following additional conditions precedent:
(i) Request
for Loan. Lender shall have received in accordance with this
Agreement, a request for a Loan in form and content satisfactory to Lender in
its reasonable discretion dated as of the date of request and executed by an
authorized officer of Debtor;
(ii) No Event
of Default, Etc. No Event of Default, event which with the
passage of time and/or notice would be an Event of Default, or event which could
have a Material Adverse Effect shall have occurred and be continuing, or would
result from or after giving effect to such Loan; and
(iii) Representations
and Warranties. All of the representations and warranties
contained in the Loan Documents shall be true and correct in material respects
on and as of the date of such Loan with the same force and effect as if such
representations and warranties had been made on and as of such
date.
6. Representations
and Warranties. Each Obligor hereby represents and warrants,
and upon each request for a Loan represents and warrants to Lender as
follows:
(a) Existence. Debtor
(i) is duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its organization; (ii) has all requisite power
and authority to own its assets and carry on its business as now being or as
proposed to be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
Debtor has the power and authority to execute, deliver, and perform its
obligations under the Loan Documents to which it is or may become a
party. The federal tax identification number and state organizational
number for Debtor are set forth below:
|
Debtor
|
Federal
Tax Identification Number
|
State
Filing Number
|
|
FLINT
TELECOM GROUP, INC.
|
Nevada
C13360-1996
|
|
|
CVC
INT’L, INC.
|
Florida
P07000034616
|
|
|
PHONE
HOUSE OF FLORIDA, INC.
|
Florida P08000024181
|
|
|
DIAL-TONE
COMMUNICATION, INC.
|
Florida P07000082131
|
|
|
DIGITAL
PHONE SOLUTIONS, INC.
|
Florida P09000010197
|
|
|
BETTER
CHOICE COMMUNICATIONS, INC.
|
Florida P09000028792
|
|
|
WIZE
COMMUNICATIONS, INC.
|
Florida P09000028774
|
|
|
STARCOM
ALLIANCE, INC.
|
Florida
P07000131456
|
|
|
PHONE
HOUSE, INC.
|
California C2314420
|
(b) Binding
Obligations. The execution, delivery and performance of the
Loan Documents by each Obligor have been duly authorized by all necessary action
by such Obligor, and constitute legal, valid and binding obligations of such
Obligor, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors’ rights and except to the extent
specific remedies may generally be limited by equitable principles.
(c) No
Consent. The execution, delivery and performance of the Loan
Documents, and the consummation of the transactions contemplated thereby, do not
(i) conflict with, result in a violation of, or constitute a default under
(1) any provision of the Constituent Documents (if any) or other instrument
binding upon any Obligor, (2) any law, governmental regulation, court
decree or order applicable to any Obligor, or (3) any contractual obligation,
agreement, judgment, license, order or permit applicable to or binding upon any
Obligor, (ii) require the consent, approval or authorization of any third party,
or (iii)
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
result
in or require the creation of any lien, charge or encumbrance upon any property
of any Obligor except as may be expressly contemplated in the Loan
Documents.
(d) Financial
Condition. Each financial statement of each Obligor supplied
to Lender truly discloses and fairly presents such Person’s financial condition
as of the date of each such statement. There has been no material
adverse change in such financial condition or results of operations of any
Obligor subsequent to the date of the most recent financial statement supplied
to Lender.
(e) Operation
of Business. Debtor possesses all contracts, licenses,
permits, franchises, patents, copyrights, trademarks and tradenames, or rights
thereto, necessary to conduct its businesses substantially as now conducted and
as presently proposed to be conducted, and Debtor is not in violation of any
valid rights of others with respect to any of the foregoing, except any
violations that could not reasonably be expected to have a Material Adverse
Effect.
(f) Litigation
and Judgments. There is no action, suit, investigation, or
proceeding before or by any Governmental Authority or arbitrator pending, or to
the knowledge of Debtor, threatened against or affecting any Obligor that would,
if adversely determined, have a Material Adverse Effect. There are no
outstanding judgments against any Obligor.
(g) Rights in
Properties; Liens. Debtor has good and indefeasible title to
or valid leasehold interests in its properties, including the properties
reflected in the financial statements provided to Lender, and none of the
properties of Debtor is subject to any lien, except Permitted
Encumbrances.
(h) Disclosure. No
statement, information, report, representation, or warranty made by any Obligor
in the Loan Documents or furnished to Lender in connection with the Loan
Documents or any of the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no
fact known to any Obligor which could reasonably be expected to have a Material
Adverse Effect that has not been disclosed in writing to Lender.
(i) Subsidiaries. Parent
has no Subsidiaries other than those listed on Schedule 1(t) and
such Schedule sets forth the jurisdiction of organization of each such Person
and the percentage of Parent’s ownership interest in such Person.
(j) Agreements. Debtor
is not a party to any indenture, loan, or credit agreement, or to any lease or
other agreement or instrument, or subject to any charter or corporate or other
organizational restriction which could reasonably be expected to have a Material
Adverse Effect. Debtor is not in default in any material respect in
the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business.
(k) Compliance
with Laws. Debtor is not in violation of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator, the
violation of which could reasonably be expected to have a Material Adverse
Effect.
(l) Taxes;
Governmental Charges. Debtor has filed all federal, state and
local tax reports and returns required by any law or regulation to be filed by
it and has either duly paid all taxes, duties and charges indicated due on the
basis of such returns and reports, or made adequate provision for the payment
thereof, and the assessment of any material amount of additional taxes in excess
of those paid and reported is not reasonably expected.
(m) Security
Interest. Debtor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to Lender in
the manner provided herein, free and clear of any lien, security interest or
other charge or encumbrance other than for the Permitted
Encumbrances. This Agreement creates a legal, valid and binding first
priority security interest (subject to Permitted
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
Encumbrances)
in favor of Lender in the Collateral securing the
Indebtedness. Possession by Lender of certain types of Collateral
from time to time or the filing of the financing statements delivered prior
hereto or concurrently herewith by Debtor to Lender will perfect and establish
the first priority of Lender’s security interest hereunder in the Collateral (to
the extent that perfection can be accomplished through the filing of a financing
statement or the possession of such Collateral) other than for the Permitted
Encumbrances.
(n) Pledged
Securities and Other Investment Property. Schedule 1(t) sets
forth a complete and accurate list of the securities and other investment
property owned by Debtor and the Pledged Interests owned by each
Debtor. Debtor is the direct and beneficial owner of each security
and other type of investment property listed on Schedule 1(t) as
being owned by it, free and clear of any liens, except for the security interest
granted to Lender hereunder. Debtor further represents and warrants
that (i) all such securities or other types of investment property which are
shares of stock in a corporation or ownership interests in a partnership or
limited liability company have been (to the extent such concepts are relevant
with respect to such instrument, security or other type of investment property)
duly and validly issued, are fully paid and non-assessable and (ii) with respect
to any certificates delivered to Lender representing an ownership interest in a
partnership or limited liability company, either such certificates are
securities as defined in Article 8 of the Code of the applicable jurisdiction as
a result of actions by the issuer or otherwise, or, if such certificates are not
securities, Debtor has so informed Lender so that Lender may take steps to
perfect its security interest therein as a general intangible. Each
Debtor is the direct and beneficial owner of each instrument, security and other
type of investment property listed on Schedule 1(t)as
being owned by such Debtor, free and clear of any liens, except for the security
interest granted to Lender hereunder. Each Debtor further represents
and warrants that (i) all such instruments, securities or other types of
investment property which are shares of stock in a corporation or ownership
interests in a partnership or limited liability company have been (to the extent
such concepts are relevant with respect to such instrument, security or other
type of investment property) duly and validly issued, are fully paid and
non-assessable and (ii) with respect to any certificates delivered to Lender
representing an ownership interest in a partnership or limited liability
company, either such certificates are securities as defined in Article 8 of the
Code of the applicable jurisdiction as a result of actions by the issuer or
otherwise, or, if such certificates are not securities, each Debtor has so
informed Lender so that Lender may take steps to perfect its security interest
therein as a general intangible.
(o) Solvency. On
the Closing Date and on the date of each Loan, Debtor will be and after giving
effect to the requested Loan, will be, solvent.
7. Covenants. Until
all Indebtedness of Debtor under the Loan Documents is indefeasibly paid or
performed, and Lender has no further commitment to lend under the Credit
Facility, Debtor agrees and covenants as follows:
(a) Compliance
with Laws. Debtor will conduct its business in an orderly and
efficient manner consistent with good business practices, and perform and comply
with all applicable statutes, rules, regulations or ordinances imposed by any
Governmental Authority upon Debtor and its businesses, operations and properties
(including without limitation, all applicable environmental statutes, rules,
regulations and ordinances) where the failure to perform or comply could have a
Material Adverse Effect.
(b) Payment
of Obligations. Debtor will pay its obligations, including tax
liabilities, that, if not paid, could become a lien on any of its property,
before the same shall become delinquent or in default, except where (i) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, and (ii) Debtor has set aside on its books adequate reserves
with respect thereto in accordance with GAAP.
(c) Maintenance
and Conduct of Business. Debtor will (i) keep, maintain and
preserve all property (tangible and intangible) material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
(ii) do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits,
privileges, agreements and franchises material to the conduct of its business,
and (iii) engage in an efficient and
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
economical
manner in a business of the same general type and within Debtor's powers under
Constituent Documents.
(d) Books and
Records; Inspection Rights. Debtor will keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and
activities. Debtor will permit any representatives designated by
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
(e) Insurance. Debtor
will maintain insurance, including but not limited to, fire insurance,
comprehensive property damage, public liability, worker’s compensation, business
interruption and other insurance deemed reasonably necessary. Debtor
will, at its own expense, maintain insurance with respect to all Collateral in
such amounts, against such risks, in such form and with such insurers, as shall
be satisfactory to Lender. Each policy of insurance maintained by
Debtor shall (i) name Debtor and Lender as insured parties thereunder (without
any representation or warranty by or obligation upon Lender) as their interests
may appear, (ii) contain the agreement by the insurer that any loss thereunder
shall be payable to Lender notwithstanding any action, inaction or breach of
representation or warranty by Debtor, (iii) provide that there shall be no
recourse against Lender for payment of premiums or other amounts with respect
thereto, and (iv) provide that prior written notice of cancellation or of lapse
shall be given to Lender by the insurer in accordance with the insurer’s
commercial practices as adopted from time to time. Debtor will
deliver to Lender original or duplicate policies of such
insurance. Debtor will also, at the request of Lender, duly execute
and deliver instruments of assignment of such insurance policies and cause the
respective insurers to acknowledge notice of such assignment. All insurance
payments in respect of loss of or damage to any Collateral shall be paid to
Lender and applied by Lender in accordance with the Loan Documents, provided,
however, that so long as no Event of Default or event which with notice and/or
the passage of time would be an Event of Default exists, Debtor may use such
insurance payments for the repair or replacement of such lost or damaged
property.
(f) Compliance
with Agreements. Debtor will comply, in all material respects
with all material agreements, contracts and instruments binding on it or
affecting its properties or business.
(g) Additional
Subsidiaries. If any Subsidiary of Parent is formed or
acquired after the Closing Date, Debtor will notify Lender thereof and
(i) Debtor will (if requested by Lender) cause such Subsidiary to become a
Guarantor or Debtor within FIVE
(5) Business Days after such Subsidiary is formed or acquired and
promptly take such actions to create and perfect liens on such Subsidiary's
assets to secure the Indebtedness as Lender shall reasonably request, and
(ii) cause the equity interests in such Subsidiary to be pledged to Lender
within FIVE (5) Business
Days after such Subsidiary is formed or acquired.
(h) Instruments,
Securities, Chattel Paper, and Documents. Debtor will upon
written request from Lender (i) deliver to Lender the originals of all
chattel paper, securities, warrants documents and instruments constituting
Collateral, and (ii) hold in trust for Lender upon receipt and thereafter
deliver to Lender any chattel paper, securities warrants, documents, and
instruments constituting Collateral upon written request. Prior to
any written request for the delivery of such chattel paper, securities, warrants
documents and instruments constituting Collateral, Debtor shall cause such
chattel paper, securities, warrants documents and instruments constituting
Collateral to be marked with the following legend: THIS INSTRUMENT AND ALL RIGHTS
HEREUNDER HAVE BEEN PLEDGED TO THERMO CREDIT, LLC UNDER A LOAN AND SECURITY
AGREEMENT DATED AS OF JUNE 00, 2009 (AS THE SAME MAY BE AMENDED, MODIFIED OR
RESTATED FROM TIME TO TIME).
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
(i) Uncertificated
Securities and Certain Other Investment Property. Each Debtor
will permit Lender from time to time to cause the appropriate issuers (and, if
held with a securities intermediary, such securities intermediary) of
uncertificated securities or other types of investment property not represented
by certificates which are Collateral to xxxx their books and records with the
numbers and face amounts of all such uncertificated securities or other types of
investment property not represented by certificates and all rollovers and
replacements therefor to reflect the lien of Lender granted pursuant to this
Agreement. Each Debtor will, upon written request, take any actions
necessary to cause (i) the issuers of uncertificated securities which are
Collateral and which are securities and (ii) any financial intermediary
which is the holder of any investment property, to cause Lender to have and
retain control over such securities or other investment
property. Without limiting the foregoing, each Debtor will, with
respect to investment property held with a financial intermediary that is
Collateral, cause such financial intermediary to enter into a control agreement
with Lender in form and substance satisfactory to Lender.
(j) Stock and
Other Ownership Interests.
(i) Registration
of Pledged Securities and other Investment Property. Each
Debtor will permit any registerable Collateral held in the name of such Debtor
to be registered in the name of Lender or its nominee at any time during the
occurrence and continuation of an Event of Default.
(ii) Exercise
of Rights in Pledged Securities and other Investment
Property. Each Debtor will permit Lender or its nominee at any
time after the occurrence of an Event of Default, without notice, to exercise
all voting and corporate rights relating to the Collateral, including, without
limitation, exchange, subscription or any other rights, privileges, or options
pertaining to any corporate securities or other ownership interests or
investment property in or of a corporation, partnership, joint venture or
limited liability company constituting Collateral and the rights relating to any
Pledged Interest pledged as Collateral as if it were the absolute owner
thereof.
(iii) Issuance
of Securities. Not Debtor shall permit any limited partnership
interests or ownership interests in a limited liability company which are
included within the Collateral to at any time constitute a security or consent
to the issuer of any such interests taking any action to have such interests
treated as a security unless (i) all certificates or other documents
constituting such security have been delivered to Lender and such security is
properly defined as such under Article 8 of the Code of the applicable
jurisdiction, whether as a result of actions by the issuer thereof or otherwise,
or (ii) Lender has entered into a control agreement with the issuer of such
Security or with a securities intermediary relating to such security and such
security is defined as such under Article 8 of the Code of the applicable
jurisdiction, whether as a result of actions by the issuer thereof or
otherwise.
(k) Deposit
Accounts. Debtor will (i) notify each bank or other
financial institution in which it maintains a deposit account or other deposit
(general or special, time or demand, provisional or final) of the security
interest granted to Lender hereunder and cause each such bank or other financial
institution to acknowledge such notification in writing. and (ii) deliver
to each such bank or other financial institution a letter, in form and substance
acceptable to Lender, transferring dominion and control over each such account
to Lender.
(l) Letters-of-Credit
Rights. If Debtor is at any time a beneficiary under a letter
of credit now or hereafter issued in favor of Debtor, Debtor shall promptly
notify Lender thereof in writing and, at Lender’s request, Debtor shall,
pursuant to an agreement in form and substance satisfactory to Lender, either
(i) arrange for the issuer or any confirmer of such letter of credit to
consent to an assignment to Lender of the proceeds of any drawing under the
letter of credit or (ii) arrange for Lender to become the transferee
beneficiary of the letter of credit, with Lender, in each case, that the
proceeds of any drawing under the letter of credit are to be applied as provided
in this Agreement.
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
(m) Notice of
Indebtedness. Debtor will promptly inform Lender of the
creation, incurrence or assumption by Debtor of any actual or contingent
liabilities not permitted under this Agreement.
(n) Notices
of Material Events. Debtor will furnish to Lender prompt
written notice of the following:
(i) the
occurrence of any Event of Default;
(ii) the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting Debtor, its
Subsidiaries that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;
(iii) any
and all material adverse changes in any Obligor’s financial condition and all
claims made against any Obligor that could materially affect the financial
condition of such Obligor.
Each
notice delivered under this Section shall be accompanied by a statement of
an executive officer of parent setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
(o) Ownership
and Liens. Debtor will maintain good and indefeasible title to
the Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for Permitted Encumbrances. Debtor will cause
any financing statement or other security instrument with respect to the
Collateral to be terminated, except for Permitted
Encumbrances. Debtor will defend at its expense Lender’s right, title
and security interest in and to the Collateral against the claims of any third
party.
(p) Accounts
and General Intangibles. Debtor will, except as otherwise
provided herein, collect, at Debtor’s own expense, all amounts due or to become
due under each of the accounts and general intangibles. In connection
with such collections, Debtor may and, at Lender’s direction, will take such
action not otherwise forbidden herein as Debtor or Lender may deem reasonably
necessary or advisable to enforce collection or performance of each of the
accounts and general intangibles. Debtor will also duly perform and
cause to be performed all of its material obligations with respect to the goods
or services, the sale or lease or rendition of which gave rise or will give rise
to each account and all of its obligations to be performed under or with respect
to the general intangibles. Debtor also covenants and agrees to take
any action and/or execute any documents that Lender may reasonably request in
order to comply with law relating to the assignment of the
accounts.
(q) Dividends
or Distribution. With respect to any period for which Debtor
was or is (i) a “subchapter S” corporation for federal income tax purposes, (ii)
treated as a partnership for federal income tax purposes and/or (iii) an entity
that is disregarded for federal income tax purposes, Debtor may pay dividends or
make distributions to the holder or holders of its equity interests in an
aggregate amount equal to the aggregate liability (reduced by any tax refunds
received by such equity holders in prior periods) of the holder or holders of
equity interests in Debtor for federal, state and local income taxes solely
attributable to such Persons equity ownership interests in Debtor, which
liability will be calculated based upon the maximum federal, state and local tax
for an individual resident in Florida applied to the taxable income of Debtor;
provided, that Debtor may only make payments pursuant to this Section within
THIRTY (30) days prior
to the date any such taxes are due and payable.
(r) Fundamental
Change. Debtor will not (i) make any material change in
the nature of its business as carried on as of the date hereof, (ii) liquidate,
merge or consolidate with or into any other Person, or (iii) make a change in it
legal name, organizational structure or the jurisdiction in which it is
organized.
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
(s) Indebtedness. Debtor
will not create, incur, assume or permit to exist any Debt except for the
following (“Permitted
Indebtedness”):
(i) The
Indebtedness created hereunder;
(ii) Intercompany
indebtedness between Parent and Subsidiaries;
(iii) Other
Debt existing on the date hereof and set forth in Schedule 7(s).
(t) Loans. Debtor
will not make loans or guarantee any obligation of any other Person or entity
other (i) than loans or advances to employees of Debtor not to exceed TEN THOUSAND AND NO/100 DOLLARS
($10,000.00) in the aggregate outstanding at any time, including such
loans and advances outstanding on the Closing Date, (ii) accounts receivable for
sales of inventory and other products and services provided by Debtor to its
respective customers in the ordinary course of business of Debtor, and (iii)
intercompany indebtedness between Parent and Subsidiary.
(u) Transactions
With Affiliates. Debtor will not enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate of Debtor, except in the ordinary
course of and pursuant to the reasonable requirements of Debtor’s business (upon
prior written notice to Lender) and upon fair and reasonable terms no less
favorable to Debtor than would be obtained in a comparable arm’s-length
transaction with a Person or entity not an Affiliate of Debtor.
(v) Transfer
or Encumbrance. Debtor will not (i) sell, assign (by operation
of law or otherwise), transfer, exchange, lease or otherwise dispose of any of
the Collateral or its property, (ii) xxxxx x xxxx or security interest in or
execute, file or record any financing statement or other security instrument
with respect to the Collateral or its property other than the Permitted
Encumbrances, or (iii) deliver actual or constructive possession of any of the
Collateral or its property to any party other than Lender, except for (1)
transfers previously disclosed to Lender, (2) the sale or lease of inventory in
the ordinary course of business, (3) transfers of property from one Debtor to
another Debtor (provided, however, that any such transfer does not effect the
validity or priority of Lender’s lien on such property), or (4) the sale or
other disposal of any item of equipment which is worn out or obsolete and which
has been replaced by an item of equal suitability and value, owned by Debtor and
made subject to the security interest under this Agreement, but which is
otherwise free and clear of any lien, security interest, encumbrance or adverse
claim other than Permitted Encumbrances.
(w) Impairment
of Security Interest. Debtor will not take any action that
would in any manner impair the enforceability of Lender’s security interest in
any Collateral.
(x) Compromise
of Collateral. Debtor will not adjust, settle,
compromise, amend or modify any Collateral, except an adjustment, settlement,
compromise, amendment or modification in good faith and in the ordinary course
of business; provided, however, this
exception shall terminate following written notice from Lender upon the
occurrence and during the continuation of an Event of Default. Debtor
shall provide to Lender such information concerning (i) any adjustment,
settlement, compromise, amendment or modification of any Collateral, and (ii)
any claim asserted by any account debtor for credit, allowance, adjustment,
dispute, setoff or counterclaim, as Lender may reasonably request from time to
time.
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
(y) Financial
Covenant. Debtor will maintain (on a consolidated basis) a
ratio of cash flow to scheduled principal payments plus all accrued
interest and related fees on funded debt of not less than 1.00 to 1.00 as of the
end of each fiscal quarter subsequent to DECEMBER 31,
2009. For the purposes of this Section 7(y), (i)
"cash
flow" means the sum of net income after taxes, plus depreciation and
amortization expenses for the period, and (ii) "funded
debt" means all indebtedness for borrowed money.
8. Reporting
Requirements. Until all Indebtedness of Debtor under the Loan
Documents is indefeasibly paid and satisfied, and Lender has no further
commitment to lend under the Credit Facility, Debtor agrees and covenants that
it will furnish or cause to be furnished the following:
(a) Interim
Financial Statements. As soon as available, and in any event
within THIRTY (30) days
after the end of each calendar month, financial statements to include a balance
sheet, income statement and cash flow statement of Debtor (on a consolidated and
consolidating basis), as of the end of such calendar month all in form and
substance and in reasonable detail satisfactory to Lender and duly certified
(subject to year-end review adjustments) by an appropriate officer of Debtor (i)
as being true and correct in all material aspects to the best of such officer’s
knowledge (subject to year end adjustments), and (ii) as having been prepared in
accordance with GAAP.
(b) Annual
Financial Statements and Tax Returns. As soon as available and
in any event (i) within NINETY
(90) days after the end of each fiscal year, a financial statement to
include a balance sheet, income statement and cash flow statement of Debtor (on
a consolidated and consolidating basis), as of the end of such fiscal year,
audited by independent certified public accountants of recognized standing
satisfactory to the Lender, and (ii) within THIRTY (30) days of filing,
annual income tax returns for Debtor.
(c) Compliance
Certificate. Concurrently with the delivery of each of the
financial statements of Debtor referred to in Sections 8 (a) and
(b), a certificate of an officer of Parent stating that to such officer's
knowledge, no Event of Default has occurred and is continuing, or if an Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action which is proposed to be taken with respect thereto.
(d) Notice of
Default and Events of Default. As soon as possible and in any
event within FIVE (5)
Business Days after the occurrence of each Event of Default, a written notice
setting forth the details of such Event of Default and the action which is
proposed to be taken by Parent with respect thereto.
(e) General
Information. Debtor shall promptly deliver such other
information concerning Debtor or any Obligor as Lender may request.
9. Rights of
Lender. Lender shall have
the rights contained in this Section at all times that this Agreement is
effective.
(a) Financing
Statements. Debtor hereby authorizes Lender to file, without
the signature of Debtor, one or more financing or continuation statements, and
amendments thereto, relating to the Collateral. Debtor hereby
irrevocably authorizes Lender at any time and from time to time to file in any
Code jurisdiction any initial financing statements and amendments thereto that
(i) indicate the Collateral (1) as all assets of Debtor or words of
similar effect; regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Code, or (2) as being
of an equal or lesser scope or with greater detail, and (ii) contain any
other information required by Article 9 of the Code for the sufficiency or
filing office acceptance of any financing statement or amendment.
LOAN AND
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
(b) Power of
Attorney. Debtor hereby irrevocably appoints Lender as
Debtor’s attorney in fact, such power of attorney being coupled with an
interest, with full authority in the place and stead of Debtor and in the name
of Debtor or otherwise, from time to time following the occurrence and during
the continuation of an Event of Default in Lender’s reasonable discretion, to
take any action and to execute any instrument which Lender may deem necessary or
appropriate to accomplish the purposes of this Agreement.
(c) Performance
by Lender. If any Obligor fails to perform any agreement or
obligation provided for in any Loan Document, Lender may itself perform, or
cause performance of, such agreement or obligation, and the expenses of Lender
incurred in connection therewith shall be a part of the Indebtedness, secured by
the Collateral and payable by Debtor on demand.
(d) Debtor’s
Receipt of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, all amounts and proceeds (including
instruments and writings) received by Debtor in respect of the Collateral shall
be received in trust for the benefit of Lender hereunder and, upon the written
request of Lender, shall be segregated from other property of Debtor and shall
be forthwith delivered to Lender in the same form as so received (with any
necessary endorsement) and applied to the Indebtedness in accordance with the
Loan Documents.
(e) Notification
of Account Debtors. Lender may at its reasonable discretion,
from time to time, during the continuation of an Event of Default notify any or
all obligors under any accounts or general intangibles (i) of Lender’s security
interest in such accounts or general intangibles and direct such obligors to
make payment of all amounts due or to become due to Debtor thereunder directly
to Lender, and (ii) to verify the accounts or general intangibles with such
obligors. Lender shall have the right, at the expense of Debtor, to
enforce collection of any such accounts or general intangibles and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as Debtor.
10. Events of
Default. Each of the following shall constitute an “Event of
Default” under this Agreement:
(a) Payment
Default. The failure, refusal or neglect of Debtor to pay when
due any part of the principal of, or interest on the Indebtedness owing to
Lender by Debtor from time to time and such failure, refusal or neglect shall
continue unremedied for a period of TEN (10) days from the date
such payment is due.
(b) Performance
or Warranty Default. The failure of any Obligor to timely and
properly observe, keep or perform any covenant, agreement, warranty or condition
required herein or in any of the other Loan Documents (other than with respect
to a payment default as set forth in Section 10(a)) which
is not cured within FIVE
(5) Business Days following written notice from Lender to such Obligor;
provided, that (i) if such default cannot be cured within FIVE (5) Business Days, (ii)
such Obligor has, within such period, taken such actions as deemed reasonably
necessary and appropriate by Lender to cure such default, and (iii) such Obligor
shall continue to diligently pursue such actions, such cure period shall be
extended for a period of THIRTY
(30) days.
(c) Representations. Any
representation contained herein or in any of the other Loan Documents made by an
Obligor is false or misleading in any material respect.
(d) Default
Under Other Indebtedness. The occurrence of any event which
results in the acceleration of the maturity of any indebtedness for borrowed
money in an aggregate principal amount in excess of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00) owing by any Obligor to any third party under any
agreement or understanding.
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
(e) Insolvency. If
any Obligor (i) becomes insolvent, or makes a transfer in fraud of creditors, or
makes an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not paying its
debts as such debts become due; (iii) has a receiver, trustee or custodian
appointed for, or take possession of, all or substantially all of its assets,
either in a proceeding brought by it or in a proceeding brought against it and
such appointment is not discharged or such possession is not terminated within
SIXTY (60) days after
the effective date thereof or it consents to or acquiesces in such appointment
or possession; (iv) files a petition for relief under the United States
Bankruptcy Code or any other present or future federal or state insolvency,
Bankruptcy or similar laws (all of the foregoing hereinafter collectively called
“Applicable
Bankruptcy Law”) or an involuntary petition for relief is filed against
it under any Applicable Bankruptcy Law and such involuntary petition is not
dismissed within SIXTY
(60) days after the filing thereof, or an order for relief naming it is
entered under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter existing
is requested or consented to by it; or (v) fails to have discharged within a
period of SIXTY (60)
days any attachment, sequestration or similar writ levied upon any property of
it.
(f) Judgment. The
entry of any judgment against any Obligor or the issuance or entry of any
attachments or other liens against any of the property of such Obligor or its
Subsidiaries for an amount in excess of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00) (individually or in the aggregate) if uninsured,
undischarged, unbonded or undismissed on the date on which such judgment could
be executed upon.
(g) Action
Against Collateral. The Collateral or any portion thereof is
taken on execution or other process of law in any action.
(h) Action of
Lien Holder. The holder of any lien or security interest on
any of the assets of any Obligor, including without limitation, the Collateral
(without hereby implying the consent of Lender to the existence or creation of
any such lien or security interest on the Collateral), declares a default
thereunder or institutes foreclosure or other proceedings for the enforcement of
its remedies thereunder.
(i) Material
Adverse Effect. Any event shall have occurred or is continuing
which shall have had a Material Adverse Effect.
(j) Loan
Documents. The Loan Documents shall at any time after their
execution and delivery and for any reason cease (i) to create a valid and
perfected first priority security interest (subject to Permitted Encumbrances)
in and to the property purported to be subject to the Loan Documents; or (ii) to
be in full force and effect or shall be declared null and void.
Nothing
contained in this Agreement shall be construed to limit the events of default
enumerated in any of the other Loan Documents and all such events of default
shall be cumulative.
11. Remedies
and Related Rights. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the Loan Documents or otherwise available to Lender, Lender may
exercise one or more of the rights and remedies provided in this
Section.
(a) Certain
Remedies. Upon the occurrence of any one or more of the
foregoing Events of Default, (i) the entire unpaid balance of principal of the
Note, together with all accrued but unpaid interest thereon, and all other
Indebtedness owing to Lender by Debtor at such time shall, at the option of
Lender, become immediately due and payable without further notice, demand,
presentation, notice of dishonor, notice of intent to accelerate, notice of
acceleration, protest or notice of protest of any kind, all of which are
expressly waived by Debtor, and (ii) Lender may, at its option, cease further
advances under the Note and this Agreement; provided, however, concurrently
and automatically with the occurrence of an Event of
LOAN AND
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
Default under Section 10(e) further
advances under the Loan Documents shall automatically cease, the Indebtedness at
such time shall, without any action by Lender, become due and payable, without
further notice, demand, presentation, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest or notice of protest of
any kind, all of which are expressly waived by Debtor. All rights and
remedies of Lender set forth in this Agreement and in any of the other Loan
Documents may also be exercised by Lender, at its option to be exercised in its
sole discretion, upon the occurrence of an Event of Default, and not in
substitution or diminution of any rights now or hereafter held by Lender under
the terms of any other agreement. If an Event of Default occurs,
Lender shall also have all the rights of a secured party under the Louisiana
Commercial Laws (La. R. S. 10:1-101, et seq.). In addition, and without
limitation, Lender shall be entitled to foreclose upon its security interests
granted under this Agreement under ordinary or executory process and to cause
the Collateral to be immediately seized wherever found and sold with or without
appraisal, in regular session of court or in vacation, in accordance with
applicable Louisiana law, without the necessity of further demanding payment
from Debtor or of notifying Debtor or placing Debtor in default. For purposes of
foreclosure under Louisiana executory process procedures, Debtor confesses
judgment and acknowledges to be indebted to Lender up to the full amount of the
Indebtedness in principal, interest, late charges, costs, attorneys’ fees and
other fees and charges, and all other amounts secured under this Agreement. To
the extent permitted under applicable Louisiana law, Debtor additionally
waives: (i) the benefit of appraisal as provided in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and all other laws
with regard to appraisal upon judicial sale; (ii) the three days delay as
provided under Article 2721 of the Louisiana Code of Civil Procedure; (iii) the
notice of seizure as provided under Articles 2293 and 2721 of the Louisiana Code
of Civil Procedure; (iv) the three days delay provided under Articles 2331 and
2722 of the Louisiana Code of Civil Procedure and (v) all other benefits
provided under Articles 2331, 2722 and 2723 of the Louisiana Code of Civil
Procedure and all other Articles not specifically mentioned
above. Debtor further agrees that Lender may appoint a keeper of the
Collateral in the event of foreclosure in accordance with LA. R.S.
9:5136-5140.2. (c)Disposition of Pledged Interest by Lender. None of
the Pledged Interest existing as of the Closing Date of this Agreement is, and
none of the Pledged Interest hereafter acquired on the date of acquisition
thereof will be, registered or qualified under the various federal or state
securities laws of the United States and disposition thereof after an Event of
Default has occurred and is continuing may be restricted to one or more private
(instead of public) sales in view of the lack of such registration; provided
that no Debtor shall ever be required to cause the registration of any Pledged
Interest under any securities laws. Each Debtor understands that in connection
with such disposition, Lender may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for the Pledged Interest than if the Pledged Interest were
registered and qualified pursuant to federal and state securities laws and sold
on the open market. Each Debtor, therefore, agrees that: (i) if Lender shall,
pursuant to the terms of this Agreement, upon the occurrence and during the
continuation of an Event of Default sell or cause the Pledged Interest or any
portion thereof to be sold at a private sale, Lender shall have the right to
rely upon the advice and opinion of any nationally recognized brokerage or
investment firm (but shall not be obligated to seek such advice and the failure
to do so shall not be considered in determining the commercial reasonableness of
such action) as to the best manner in which to offer the Pledged Interest or any
portion thereof for sale and as to the best price reasonably obtainable at the
private sale thereof; and (ii) such reliance shall be conclusive evidence that
Lender has handled the disposition in a commercially reasonable
manner.
(b) Voting
Rights.
(i) Upon
the occurrence and during the continuation of an Event of Default and upon
notice to each Debtor pursuant this Agreement, (i) Lender may, at its option,
and in addition to all rights and remedies available to Lender under any other
agreement, at law, in equity, or otherwise, exercise all voting rights, and all
other ownership or consensual rights in respect of the Pledged Interest owned by
such Debtor, but under no circumstances is Lender obligated by the terms of this
Agreement to exercise such rights, and (ii) if Lender duly exercises its right
to vote any of such Pledged Interest, each Debtor hereby appoints Lender, such
Debtor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such
Pledged Interest in any manner Lender deems advisable for or against all matters
submitted or which may be submitted to a vote of shareholders, partners or
members,
LOAN AND
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
as
the case may be. The power-of-attorney granted hereby is coupled with
an interest and shall be irrevocable.
(ii) For
so long as any Debtor shall have the right to vote the Pledged Interest owned by
it, such Debtor covenants and agrees that it will not, without the prior written
consent of Lender, vote or take any consensual action with respect to such
Pledged Interest which would adversely affect the rights of Lender, or the value
of the Pledged Interest or that would be inconsistent with or result in any
violation of any provision of the Loan Documents.
(c) Remedies
Cumulative. Each right, power, and remedy of Lender as
provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Lender, of any one or more of such
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by Lender of any or all such other rights, powers, or
remedies.
(d) Marshaling. Lender
shall not be required to marshal any present or future collateral security
(including but not limited to the Collateral) for, or other assurances of
payment of, the Indebtedness or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of its
rights and remedies hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, each Debtor hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement of
Lender’s rights and remedies under this Agreement or under any other instrument
creating or evidencing any of the Indebtedness or under which any of the
Indebtedness is outstanding or by which any of the Indebtedness is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each Debtor hereby irrevocably waives the benefits of all such
laws.
(e) Other
Remedies. Lender may from time to time at its discretion,
without limitation and without notice except as expressly provided in any of the
Loan Documents:
(i) Exercise
in respect of the Collateral all the rights and remedies of a secured party
under the Code (whether or not the Code applies to the affected
Collateral);
(ii) Require
Debtor to, and Debtor hereby agrees that it will at its expense and upon request
of Lender, assemble the Collateral as directed by Lender and make it available
to Lender at a place to be designated by Lender which is reasonably convenient
to both parties;
(iii) Reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest granted hereunder by any available judicial
procedure;
(iv) Sell
or otherwise dispose of, at its office, on the premises of Debtor or elsewhere,
the Collateral, as a unit or in parcels, by public or private proceedings, and
by way of one or more contracts (it being agreed that the sale or other
disposition of any part of the Collateral shall not exhaust Lender’s power of
sale, but sales or other dispositions may be made from time to time until all of
the Collateral has been sold or disposed of or until the Indebtedness has been
paid and performed in full), and at any such sale or other disposition it shall
not be necessary to exhibit any of the Collateral;
(v) Buy
the Collateral, or any portion thereof, at any public sale;
(vi) Buy
the Collateral, or any portion thereof, at any private sale if the Collateral is
of a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
LOAN AND
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
4
(vii) Apply
for the appointment of a receiver for the Collateral, and Debtor hereby consents
to any such appointment; and
(viii) At
its option, retain the Collateral in satisfaction of the Indebtedness whenever
the circumstances are such that Lender is entitled to do so under the Code or
otherwise.
Debtor
agrees that in the event Debtor is entitled to receive any notice under the
Code, as it exists in the state governing any such notice, of the sale or other
disposition of any Collateral, reasonable notice shall be deemed given when such
notice is deposited in a depository receptacle under the care and custody of the
United States Postal Service, postage prepaid, at Debtor’s address set forth on
the signature page hereof, TEN
(10) days prior to the date of any public sale, or after which a private
sale, of any of such Collateral is to be held. Lender shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Lender may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Lender
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Debtor specifically understands and agrees
that any sale by Lender of all or part of the Collateral pursuant to the terms
of this Agreement may be effected by Lender at times and in manners which could
result in the proceeds of such sale as being significantly and materially less
than might have been received if such sale had occurred at different times or in
different manners, and Debtor hereby releases Lender and its officers and
representatives from and against any and all obligations and liabilities arising
out of or related to the timing or manner of any such sale. If, in
the opinion of Lender, there is any question that a public sale or distribution
of any Collateral will violate any state or federal securities law, Lender may
offer and sell such Collateral in a transaction exempt from registration under
federal securities law, and any such sale made in good faith by Lender shall be
deemed "commercially reasonable.”
(f) Application
of Proceeds. If any Event of Default shall have occurred,
Lender may at its discretion apply or use any cash held by Lender as Collateral,
and any cash proceeds received by Lender in respect of any sale or other
disposition of, collection from, or other realization upon, all or any part of
the Collateral as follows in such order and manner as Lender may
elect:
(i) to
the repayment or reimbursement of the reasonable costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses) incurred by Lender
in connection with (1) the administration of the Loan Documents, (2) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, the Collateral, and (3) the exercise or enforcement of
any of the rights and remedies of Lender hereunder;
(ii) to
the payment or other satisfaction of any liens and other encumbrances upon the
Collateral;
(iii) to
the satisfaction of the Indebtedness;
(iv) by
holding such cash and proceeds as Collateral;
(v) to
the payment of any other amounts required by applicable law; and
(vi) by
delivery to Debtor or any other party lawfully entitled to receive such cash or
proceeds whether by direction of a court of competent jurisdiction or
otherwise.
(g) License. Lender
is hereby granted a license or other right to use, following the occurrence and
during the continuance of an Event of Default, without charge, Debtor's labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, customer lists and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in
completing
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
4
production of, advertising
for sale, and selling any Collateral, and, following the occurrence and during
the continuance of an Event of Default, Debtor's rights under all licenses and
all franchise agreements shall inure to Lender’s benefit. In
addition, Debtor hereby irrevocably agrees that Lender may, following the
occurrence and during the continuance of an Event of Default, sell any of
Debtor's inventory directly to any Person, including without limitation Persons
who have previously purchased Debtor's inventory from Debtor and in connection
with any such sale or other enforcement of Lender’s rights under this Agreement,
may sell inventory which bears any trademark owned by or licensed to Debtor and
any inventory that is covered by any copyright owned by or licensed to Debtor
and Lender may finish any work in process and affix any trademark owned by or
licensed to Debtor and sell such inventory as provided herein.
(h) Deficiency. In
the event that the proceeds of any sale of, collection from, or other
realization upon, all or any part of the Collateral by Lender are insufficient
to pay all amounts to which Lender is legally entitled, Debtor (unless otherwise
provided) shall be liable for the deficiency, together with interest thereon as
provided in the Loan Documents.
(i) Non-Judicial
Remedies. In granting to Lender the power to enforce its
rights hereunder without prior judicial process or judicial hearing, Debtor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Lender to enforce its rights by judicial
process. Debtor recognizes and concedes that non-judicial remedies
are consistent with the usage of trade, are responsive to commercial necessity
and are the result of a bargain at arm’s length. Nothing herein is
intended to prevent Lender or Debtor from resorting to judicial process at
either party’s option. Each Debtor hereby acknowledges that the
Indebtedness arose out of a commercial transaction, and agrees that if an Event
of Default shall occur and be continuing, Lender shall have the right to an
immediate writ of possession without notice of a hearing. Lender
shall have the right to the appointment of a receiver for the properties and
assets of each Debtor, and each Debtor hereby consents to such rights and such
appointment and hereby waives any objection such Debtor may have thereto or the
right to have a bond or other security posted by Lender.
(j) Other
Recourse. Debtor waives any right to require Lender to proceed
against any third party, exhaust any Collateral or other security for the
Indebtedness, or to have any third party joined with Debtor in any suit arising
out of the Indebtedness or any of the Loan Documents, or pursue any other remedy
available to Lender. Debtor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension of the Indebtedness. Debtor further waives any
defense arising by reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of the liability of any
third party. Until all of the Indebtedness shall have been paid in
full, Debtor shall not have any right of subrogation and Debtor waives the right
to enforce any remedy which Lender has or may hereafter have against any third
party, and waives any benefit of and any right to participate in any other
security whatsoever now or hereafter held by Lender. Debtor
authorizes Lender, and without notice or demand and without any reservation of
rights against Debtor without affecting Debtor’s liability hereunder or on the
Indebtedness to (i) take or hold any other property of any type from any third
party as security for the Indebtedness, and exchange, enforce, waive and release
any or all of such other property, (ii) apply such other property and direct the
order or manner of sale thereof as Lender may in its discretion determine, (iii)
renew, extend, accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv) waive, enforce or
modify any of the provisions of any of the Loan Documents executed by any third
party, and (v) release or substitute any third party.
(k) No
Waiver; Cumulative Remedies. No failure on the part of Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power, or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power, or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
LOAN AND
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CREDIT, LLC – FLINT TELECOM GROUP, INC.
(l) Equitable
Relief. Debtor recognizes that in the event Debtor fails to
pay, perform, observe, or discharge any or all of the Indebtedness, any remedy
at law may prove to be inadequate relief to Lender. Debtor therefore
agrees that Lender, if Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
12. Indemnity. Debtor hereby
indemnifies and agrees to hold harmless Lender, and its officers, directors,
employees, agents and representatives (each an “Indemnified
Person”) from and against any and all liabilities, obligations, claims,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature (collectively, the “Claims”)
which may be imposed on, incurred by, or asserted against, any Indemnified
Person arising in connection with the Loan Documents, the Indebtedness or the
Collateral (including without limitation, the enforcement of the Loan Documents
and the defense of any Indemnified Person’s actions and/or inactions in
connection with the Loan Documents). WITHOUT LIMITATION, THE FOREGOING
INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS
WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
AND/OR ANY OTHER INDEMNIFIED PERSON, EXCEPT TO THE LIMITED EXTENT THE
CLAIMS AGAINST AN INDEMNIFIED PERSON ARE PROXIMATELY CAUSED BY SUCH INDEMNIFIED
PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. If Debtor or
any third party ever alleges such gross negligence or willful misconduct by any
Indemnified Person, the indemnification provided for in this Section shall
nonetheless be paid upon demand, subject to later adjustment or reimbursement,
until such time as (a) a court of competent jurisdiction enters a final judgment
as to the extent and effect of the alleged gross negligence or willful
misconduct, or (b) Lender expressly agrees in writing with Debtor that such
Claim is proximately caused by such Indemnified Person’s gross negligence or
willful misconduct. The indemnification provided for in this Section
shall survive the termination of this Agreement and shall extend and continue to
benefit each individual or entity that is or has at any time been an Indemnified
Person hereunder.
13. Limitation
of Liability and Releases. Neither Lender nor any affiliate,
officer, director, employee, attorney, or agent of Lender shall have any
liability with respect to, and each Debtor hereby waives, releases, and agrees
not to xxx any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by such Debtor in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. Each Debtor hereby waives, releases, and
agrees not to xxx Lender or any of Lender's affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents.
14. No
Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to Debtor or any of Debtor’s equity holders or any other
Person. Documents in connection with the transactions contemplated
hereunder have been prepared by GARDERE XXXXX XXXXXX LLP
(“Lender’s
Counsel”). Debtor acknowledges and understands that Lender’s
Counsel is acting solely as counsel to Lender in connection with the transaction
contemplated herein, is not representing Debtor in connection therewith, and has
not, in any manner, undertaken to assist or render legal advice to Debtor with
respect to this transaction. Debtor has been advised to seek other
legal counsel to represent each of their interests in connection with the
transactions contemplated herein.
15. Waiver
and Agreement. Neither the failure nor any delay on the part
of Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. No waiver of any provision in this Agreement or in any of
the other Loan Documents and no departure by any Obligor therefrom shall be
effective unless the same shall be in writing and signed by Lender, and then
shall be effective only in the specific instance and for the purpose for which
given and to the extent specified in such writing. No modification or
amendment to this Agreement or to any of the
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
DALLAS
2045610v.4
other
Loan Documents shall be valid or effective unless the same is signed by the
party against whom it is sought to be enforced.
16. Benefits. This
Agreement shall be binding upon and inure to the benefit of Lender and Obligors,
and their respective successors and assigns, provided, however, that no
Obligor may, without the prior written consent of Lender, assign any rights,
powers, duties or obligations under this Agreement or any of the other Loan
Documents.
17. Notices. All
notices, requests, demands or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and given by (a) personal
delivery, (b) expedited delivery service with proof of delivery, or (c) United
States mail, postage prepaid, registered or certified mail, return receipt
requested, sent to the intended addressee at the address set forth on the
signature page hereof and shall be deemed to have been received either, in the
case of personal delivery, as of the time of personal delivery, in the case of
expedited delivery service, as of the time of the expedited delivery and in the
manner provided herein, or in the case of mail, upon the third day after deposit
in a depository receptacle under the care and custody of the United States
Postal Service. Any party shall have the right to change its address
for notice hereunder to any other location within the continental United States
by notice to the other party of such new address.
18. Construction;
Venue; Service of Process. The Loan Documents have been
executed and delivered in the State of Louisiana, shall be governed by and
construed in accordance with the laws of the State of Louisiana (without giving
effect to its choice of laws provisions), and shall be performable by the
parties hereto in the parish in Louisiana where Lender’s address set forth on
the signature page hereof is located (the “Venue
Site”). Any action or proceeding against Debtor under or in
connection with any of the Loan Documents may be brought in any state or federal
court within the Venue Site. Debtor hereby irrevocably (a) submits to
the nonexclusive jurisdiction of such courts, and (b) waives any objection it
may now or hereafter have as to the venue of any such action or proceeding
brought in any such court or that any such court is an inconvenient
forum. Debtor agrees that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address specified
or determined in accordance with the provisions this
Agreement. Nothing in any of the other Loan Documents shall affect
the right of Lender to serve process in any other manner permitted by law or
shall limit the right of Lender to bring any action or proceeding against Debtor
or with respect to any of its property in courts in other
jurisdictions. Any action or proceeding by Debtor against Lender
shall be brought only in a court located in the Venue Site.
19. Invalid
Provisions. If any provision of the Loan Documents are held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and the remaining provisions of the Loan
Documents shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance.
20. Expenses. Debtor
shall pay all reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees) in connection with (a) the drafting and execution of
the Loan Documents and the transactions contemplated therein, (b) any action
required in the course of administration of the indebtedness and obligations
evidenced by the Loan Documents, and (c) any action in the enforcement of
Lender’s rights upon the occurrence of an Event of Default.
21. Participation
of the Loans. Debtor agrees that Lender may, at its option,
sell interests in the Loans and its rights under this Agreement to a financial
institution or institutions and, in connection with each such sale, Lender may
disclose any financial and other information available to Lender concerning
Debtor to each perspective purchaser subject to obtaining a confidentiality
agreement with each prospective purchaser prior to disclosing Debtor’s
confidential information.
22. Conflicts. Except
as otherwise expressly provided in the Note, in the event any term or provision
of this Agreement is inconsistent with or conflicts with any provision of the
other Loan Documents, the terms and provisions contained in this Agreement shall
be controlling.
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
23. Counterparts. The
Loan Documents may be separately executed in any number of counterparts, each of
which shall be an original, but all of which, taken together, shall be deemed to
constitute one and the same instrument.
24. Survival. All
representations and warranties made in the Loan Documents or in any document,
statement, or certificate furnished in connection with this Agreement shall
survive the execution and delivery of the Loan Documents, and no investigation
by Lender or any closing shall affect the representations and warranties or the
right of Lender to rely upon them.
25. Waiver of
Right to Trial by Jury. THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THE LOAN
DOCUMENTS OR THE ACTS OR FAILURE TO ACT OF OR BY LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THE LOAN DOCUMENTS.
26. Patriot
Act Notice. Lender hereby notifies each Obligor that pursuant
to the requirements of Section 326 of the USA Patriot Act of 2001, 31 U.S.C. §
5318 (the “Act”),
that Lender is required to obtain, verify and record information that identifies
such Obligor, which information includes the name and address of such Obligor
and other information that will allow such Lender to identify such Obligor in
accordance with the Act.
27. Notice of
Final Agreement. It is the intention of each Obligor and
Lender that the following NOTICE OF FINAL AGREEMENT be
incorporated by reference into each of the Loan Documents (as the same may be
amended, modified or restated from time to time). Each Obligor and
Lender warrant and represent that the entire agreement made and existing by or
among each Obligor and Lender with respect to the Loans is and shall be
contained within the Loan Documents, and that no agreements or promises exist or
shall exist by or among, any Obligor and Lender that are not reflected in the
Loan Documents.
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
DALLAS
2045610v.4
NOTICE OF FINAL
AGREEMENT
THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
4
AGREED as of the date first
written above.
LENDER: ADDRESS:
THERMO
CREDIT,
LLC 000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
By: /s/
Xxxx X. Xxxxxx, Xx.
Name: Xxxx
X. Xxxxxx, Xx.
Title: EVP
With copies of
notices
to: Gardere
Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxx, Xxxxx
0000
Xxxxxx,
XX 00000-0000
Attention: Xxxxxx
X. Xxxx
DEBTOR:
FLINT
TELECOM GROUP,
INC. 0000
X. Xxxxxxx Xxxx, Xxxxx 0
Xxx Xxxxx, XX 00000
By: /s/
Xxxxxxx Xxxxxx
Name: Xxxxxxx
Xxxxxx
Title: Chief
Executive Officer
CVC
INT’L, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
PHONE
HOUSE OF FLORIDA, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
DIAL-TONE
COMMUNICATION, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
DIGITAL
PHONE SOLUTIONS, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
BETTER
CHOICE COMMUNICATIONS, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
[SIGNATURES
CONTINUED ON NEXT PAGE]
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
WIZE
COMMUNICATIONS, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
STARCOM
ALLIANCE, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
PHONE
HOUSE, INC.
By: /s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: President
Documents
Prepared By:
Xxxxxx X.
Xxxx
Xxxxxxx
Xxxxx Xxxxxx LLP
0000 Xxx
Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
000-000-0000
LOAN AND
SECURITY AGREEMENT – PAGE
THERMO
CREDIT, LLC – FLINT TELECOM GROUP, INC.
