Exhibit 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is entered into as of
September 30, 2002, among Phone1, Inc. (the "Borrower"), a Florida corporation,
Phone1Globalwide, Inc. ("Global") a Delaware corporation, Globaltron
Communications Corporation ("GCC" and together with Global, "Guarantors") a
Delaware corporation and GNB Bank Panama S.A. (the "Lender"), a bank organized
under the laws of the Republic of Panama.
R E C I T A L S
WHEREAS, Borrower currently owes Lender (i) the sum of
US$9,231,438.49 under an outstanding overdraft facility (the "Overdraft
Facility") signed on March 27, 2002 and amended on April 29, 2000, May 30, 2002,
June 20, 2002, July 8, 2002 and (ii) the sum of US$10,000,000 plus accrued
interest, pursuant to a loan dated October 31, 2001, guaranteed by Global, which
matures on October 31, 2002 (the "US$10 million Loan");
WHEREAS, the parties wish to replace the Overdraft Facility
and amend the US$10 million Loan by consolidating all the money owed by Borrower
under those two agreements into this Agreement subject to and upon the terms and
conditions herein set forth;
WHEREAS, Lender wishes to loan Borrower the additional amount
of US$768,561.51 (the "Additional Loan"), which will result in an overall loan
in the aggregate principal amount of US$20,000,000 (the "Loan").
WHEREAS, as an inducement to the Lender, (i) the Guarantors
wish to guaranty Borrower's obligations hereunder, including but not limited to
the repayment of the Loan and its interest and (ii) Borrower and Guarantors wish
to give Lender a first security interest in all of their assets pursuant to the
terms of the Security Agreement (the "Security Agreement") attached hereto as
Exhibit A.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
(a) As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"Agreement" means this Loan Agreement, the Exhibits and any
other documents or instruments delivered in accordance herewith, as the same may
be amended from time to time in accordance with the terms hereof.
"Borrower" has the meaning ascribed to it in the forepart of
this Agreement.
"Business Day" means any day other than a Saturday, Sunday or
any day on which State and Federal banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
"Event of Default" has the meaning ascribed to it in Article
III.
"Exchange Act" shall mean the Securities Exchange Act of 1934
or any successor statute thereof.
"Global SEC Reports" shall have the meaning set forth in
Section 4.5.
"Guarantors" has the meaning ascribed to it in the forepart of
this Agreement.
"Guaranteed Obligations" shall have the meaning set forth in
Section 7.1.
"Indebtedness" shall mean as to any Person (i) all
indebtedness (including principal, interest, fees and charges) of such Person
(x) evidenced by any notes, bonds, debentures or similar instruments made or
issued by such Person, (y) for borrowed money or (z) for the deferred purchase
price of property or services, (ii) the face amount of all letters of credit
issued for the account of such Person, (iii) all liabilities secured by any lien
on any property owned by such Person, whether or not such liabilities have been
assumed by such Person (provided, however, if such liability is non-recourse to
such Person, the amount of the Indebtedness attributed thereto shall not exceed
the greater of the fair market value of such property or the book value of such
property), (iv) the aggregate amount required to be capitalized in accordance
with GAAP under leases under which such Person is the lessee and (v) all
guarantees or other contingent obligations of such Person as to any of the
foregoing.
"Interest Rate" shall mean the Prime rate which Citibank N.A.
announces from time to time as its Prime rate, the Interest Rate to change when
and as such Prime rate changes. The Interest Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer.
"Lender" has the meaning attributed to it in the forepart of
this Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
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preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
any recording or notice statute, and any lease having substantially the same
effect as any of the foregoing).
"Loan" means the aggregate amount of US$20,000,000 loaned by
Lender to Borrower consisting of the US$10 million Loan, the replaced Overdraft
Facility and the Additional Loan.
"Material Adverse Effect" shall mean (a) any material adverse
effect on the condition (financial or otherwise), business, operations, assets,
revenues, properties or prospects of the Borrower or the Guarantors, or (b) any
material adverse effect on the ability of the Borrower or the Guarantors to
perform any of their obligations under this Agreement or under the Note dated as
of this date executed among the Borrower, the Lender and the Guarantors.
"Note" means the convertible Promissory Note due on the
Repayment Date of the Borrower issued pursuant to Section 2.2, in the form
attached as Exhibit 1 hereto and made a part hereto.
"Notice of Conversion" shall mean the notice by which the
Lender notifies the Borrower about its intention to exercise its conversion
rights.
"Per Share Price" shall mean initially $.40; provided, that if
Global raises equity or debt capital at a price per share below $.40, then the
Per Share Price shall be such number below $.40.
..
"Person" or "Persons" shall mean any natural person,
corporation, limited liability company, general partnership, limited
partnership, limited liability partnership, proprietorship, joint venture, other
business organization, trust, union, association or governmental or regulatory
authority.
"Repayment Date" shall have the meaning set forth in Section
2.8.
"SEC" shall have the meaning set forth in Section 4.5.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor statute thereof.
(b) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender; (ii) words using the singular
or plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; and (v) the phrases "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of the Borrower.
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ARTICLE II
THE LOAN
2.1 The Loan.
Lender does hereby grant Borrower the Loan..
2.2 Note.
The Borrower's obligations to pay the principal of, and
interest on, the Loan made by the Lender are evidenced by the Note to be duly
executed and delivered by the Borrower, substantially in the form of Exhibit 1,
and delivered to the Lender.
2.3 Method, Place and date of Payment.
Except as otherwise specifically provided herein, all payments
under this Agreement or the Note shall be made to the Lender not later than
12:00 Noon (New York time) on the Repayment Date or on the date when due, in
accordance with the terms of this Agreement and shall be made in lawful money of
the United States of America in New York Clearing House funds, at the principal
offices of Lender at Xxxxx 00 x Xxxxxxxx xx xx Xxxxxxx, Torre Banco Continental,
Piso 30, Panama City, Republic of Panama or such other place as may be
designated by the Lender in a written notice given to the Borrower. Whenever any
payment to be made hereunder or under the Note shall be stated to be due on a
day, which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day.
2.4 Prepayment.
The Note may not be prepaid without the express written
consent of the Lender.
2.5 Interest.
(a) The Borrower shall pay interest in respect of the unpaid
principal amount of the Loan from the date hereof until the Repayment Date
(whether by acceleration or otherwise) at a rate per annum which shall be equal
to the Interest Rate in effect from time to time plus 2%.
(b) If principal or interest on the Loan is not paid when due,
thereafter the Borrower shall pay interest in respect of the unpaid principal
amount of the Loan at a rate per annum equal to 5% in excess of the Interest
Rate but not in excess of usury laws.
(c) Accrued (and theretofore unpaid) interest in respect of
the Loan shall be payable (i) monthly in arrears commencing on October 31, 2002;
or (ii) in the occurrence of an Event of Default, on demand.
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2.6 Net Payments.
All payments made by the Borrower hereunder or under the Note
will be made without setoff, counterclaim or other defense. All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein.
2.7 Compensation.
The Borrower shall compensate the Lender for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or re-employment of
deposits or other funds required by the Lender to fund the Loan) which the
Lender may sustain as a consequence of any default of the Borrower of its
obligation under this Agreement or the Note, including but not limited to the
repayment of the Loan.
2.8 Repayment.
The Loan and the interest shall be pay in full on the
Repayment Date which shall occur on the earliest of (i) October 31, 2003; (ii)
the occurrence of an Event of Default or (iii) November 30, 2002, if on or prior
to such date, neither Borrower nor Guarantors have received a loan for a period
of 12 months in the amount of at least US$5,000,000.
2.9 Conversion.
(a) By notice in writing to the Borrower and Global, the
Lender may elect (either prior to the Repayment Date or after the Repayment
Date, if the Loan and the Note have not been fully paid) to convert the Loan and
the Note in whole or in part, as elected by the Lender into (i) such number of
shares of common stock of Global or (ii) such number of securities of Global
into which any other lender with conversion rights elects to convert its debt,
equal to the principal and interest accrued thereon under the Note that the
Lender elects to convert divided by the Per Share Price.
(b) In the event that the Lender exercises its conversion
right with respect to only a portion of the outstanding principal amount and/or
accrued interest under the Loan and the Note, that portion of the principal
amount not so converted shall continue to accrue interest and shall be repayable
by the Borrower in accordance with the terms hereof and the Borrower shall issue
a new promissory note to the Lender in substantially the form of the surrendered
Note, in an aggregate principal amount equal to the remaining unpaid principal
balance of the surrendered Note.
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2.10 Additional Loans.
Lender shall have the right, at any time prior to the date the
principal of, and interest on the Loan has been paid in full, to make an
additional loan to Borrower guaranteed by Guarantors, for the sum of
US$5,000,000 under the same terms and conditions (other than funding dates) as
this Loan.
2.11 Registration Rights.
In the event that Lender elects to convert the Loan and the
Note into shares of Global, Global will file a shelf registration statement
covering the sale of the securities issued upon conversion (or the underlying
common stock issued upon conversion of such preferred stock) and will use its
best efforts to cause such registration statement promptly to be declared
effective by the SEC (and in any event within 45 days) thereafter and to remain
continuously effective until all shares held by Lender have been sold.
2.12 Expenses.
Borrower will reimburse Lender for its reasonable legal costs
relating to this Agreement and any documentation to be prepared in connection
with this Agreement up to a maximum of US$50,000.
ARTICLE III
EVENTS OF DEFAULT
It shall be an Event of Default if any of the conditions or
events described in Sections 3.1 through 3.8 ("Events of Default") shall occur
and be continuing:
3.1 Failure To Make Payments When Due.
The Borrower shall (i) default in the payment when due of the
principal amount or the interest on the Loan or the Note or (ii) default, and
such default shall continue unremedied for two or more Business Days, in the
payment when due of any interest on the Loan or the Note or any other amounts
owed by Borrower hereunder or under the Note;
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3.2 Breach of Agreements.
Failure of the Borrower to perform or comply with any of its
obligations contained in this Agreement or in the Security Agreement;
3.3 Representations, etc.
Any representation, warranty, covenant or statement made by or
on behalf of the Borrower and Guarantors in this Agreement, in the Note, in the
Security Agreement or in any certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made;
3.4 Involuntary Bankruptcy. Appointment of Receiver, Etc.
(i) A court shall enter a decree or order for relief in
respect of the Borrower or any of the Guarantors in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief shall
be granted and remain unstayed under any applicable federal or state law; or
(ii) an involuntary case is commenced against the Borrower or any of the
Guarantors under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect; or a decree or order of a court having jurisdiction in
the premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the Borrower, any
of the Guarantors or over all or a substantial part of any of their respective
assets and properties, shall have been entered; or an interim receiver, trustee
or other custodian of the Borrower, any of the Guarantors for all or a
substantial part of their respective assets and properties is involuntarily
appointed; or a warrant of attachment, execution or similar process is issued
against any substantial part of the assets and properties of the Borrower or any
of the Guarantors and the continuance of any such events in this clause (ii) for
thirty (30) days unless dismissed, bonded, stayed, vacated or discharged; or
3.5 Voluntary Bankruptcy; Appointment of Receiver, Etc.
The Borrower or any of the Guarantors shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
making possession by a receiver, trustee or other custodian for all or a
possession by a receiver, trustee or other custodian for all or a substantial
part of its assets and properties; the making by the Borrower or any of the
Guarantors of any assignment for the benefit of creditors; the admission by the
Borrower or any of the Guarantors in writing of their inability to pay their
debts as such debts become due; or the board of directors of the Borrower or any
of the Guarantors, when applicable, (or any committee thereof) adopts any
resolution or otherwise authorizes any action to approve any of the foregoing.
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3.6 Default Under Other Agreements.
If either the Borrower, GCC, Global or any of its subsidiaries
shall (i) default in any prepayment of all or any portion of any Indebtedness
other than the Note or (ii) default in the observance or performance of any
agreement, covenant or condition relating to any Indebtedness other than the
Note, or contained in any instrument or agreement evidencing, securing or
relating thereto and, in the case of clauses (i) and (ii), and such default
shall continue without having been duly cured, waived or consented to, beyond
the period of grace, if any, specified in the agreement or instrument relating
thereto.
3.7 Judgments or Liens.
One or more judgments or decrees shall be entered against the
Borrower, GCC, Global or any of its subsidiaries involving in the aggregate for
them a liability of the equivalent of US$500,000 or more, and all such judgments
or decrees shall not have been vacated, discharged or stayed or bounded pending
appeal within 30 days after the entry thereof or a Lien is imposed on the assets
or properties of the Borrower in an amount of in excess, together with other
Liens, of US$500,000 exclusive of Liens to equipment vendors in the ordinary
course of business.
3.8 Change in Condition.
Any material adverse change in the condition (financial or
otherwise), operations, assets, liabilities or prospects of the Borrower or any
of its subsidiaries.
3.9 Remedies.
Upon the occurrence of any Event of Default described in this
Article III, the unpaid principal amount of and accrued interest on the Loan
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by the Borrower, and the obligations of the Lender hereunder
shall thereupon terminate.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce the Lender to enter into this Agreement and
to make the Loan, the Borrower and the Guarantors, when applicable, make the
following representations, warranties and agreements as of the date hereof,
jointly and severally, which shall survive the execution and delivery of this
Agreement and the Note and the making of the Loan:
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4.1 Legal Status.
The Borrower, GCC, Global and each of its subsidiaries (i) is
a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its incorporation, (ii) has the power and authority
and possesses all franchises, permits, authorizations and approvals necessary to
carry on their business as now being conducted and to own its property and
assets, and (iii) has good and marketable title to their respective assets free
and clear of any Lien, except for Liens that do not cause a Material Adverse
Effect in the condition of the Borrower, GCC, Global and its subsidiaries and
except as set forth in the Global SEC Reports (as defined in Section 4.5 below).
The Borrower, GCC, Global and each of its subsidiaries are in good standing in
each jurisdiction where the ownership, leasing or operation of property or the
conduct of its business requires such qualification.
4.2 Subsidiaries.
The only subsidiaries of Global are set forth in the Global
SEC Reports. The Borrower and GCC do not have any subsidiaries.
4.3 Power and Authority.
(i) The Borrower and each of the Guarantors have the power and
authority to execute, deliver and perform the terms and provisions of this
Agreement and the Note and have taken, as the case may be, all necessary
corporate action to authorize the execution, delivery and performance by it of
this Agreement; (ii) the Borrower and each of the Guarantors have duly executed
and delivered this Agreement and the Note which constitutes their legal, valid
and binding obligation enforceable in accordance with their terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or other similar laws relating to or limiting
creditors' rights generally or by general equity principles.
4.4 No Violation.
Neither the execution, delivery or performance by the Borrower
and each of the Guarantors of this Agreement, nor the compliance by them with
the terms and provisions thereof, nor the use of the proceeds of the Loan (i)
will contravene any provision of any law, statute, rule or regulation or any
order, writ, injunction or decree of any court or governmental instrumentality
binding on the Borrower or any of its subsidiaries, (ii) will conflict or be
inconsistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default in respect of the terms of
any indenture, mortgage, deed or trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which the Borrower or any of its
subsidiaries is a party or by which its respective properties or assets is bound
or to which it may be subject.
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4.5 Global SEC Reports, Financial Statements.
Global has filed all reports required to be filed by it with
the United States Securities and Exchange Commission ("SEC") since its
incorporation (collectively, the "Global SEC Reports"). As of the respective
dates they became effective, the Global SEC Reports filed pursuant to the
Securities Act, and as of the respective dates of filing of the last applicable
amendment thereto the Global SEC Reports which were filed pursuant to the
Exchange Act, did not contain any untrue statement of a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of Borrower and those of Guarantors included in the Global SEC
Reports complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise noted in
those reports) and fairly present the consolidated financial position of
Borrower and the Guarantors and its consolidated subsidiaries as at the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended, except that in the case of the unaudited consolidated
financial statement included in any form 10-Q, the presentation and disclosure
conform with the applicable rules of the Exchange Act and are subject to
year-end adjustments.
4.6 Litigation.
Except as set forth in the Global SEC Reports or as set forth
in Schedule 4.6 attached hereto, there is no claim, counterclaim, action, suit,
order, proceeding or investigation pending or, to the knowledge of the Borrower
and each of the Guarantors, threatened against or affecting any of them with
respect to or affecting the Borrower, GCC, Global or any of its subsidiaries, or
their assets, properties or rights, or relating to the transactions contemplated
hereby, before any court, agency, regulatory, administrative or other
governmental body or officer of before any arbitrator.
4.7 Undisclosed Liabilities.
Except as set forth in the Global SEC Reports, the Borrower,
GCC, Global and its subsidiaries have no liabilities or obligations of any
nature (whether accrued, absolute, contingent, un-asserted or otherwise),
including any liabilities or obligations the Borrower, GCC, Global and its
subsidiaries may incur for product liability, misrepresentation, fraud or
comparable claims arising out of the conduct of the business of the Borrower,
GCC, Global and its subsidiaries prior to the date hereof, except as set forth
on the Global SEC Reports.
4.8 True and Complete Disclosure.
All factual information (taken as a whole) heretofore or
contemporaneously furnished by or on behalf of the Borrower and each of the
Guarantors in writing to the Lender for purposes of or in connection with this
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Agreement or any transaction contemplated herein or in the Note is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of the Borrower and each of the Guarantors in writing to any Lender will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading at
such time in light of the circumstances under which such information was
provided. There is no fact or circumstances which has, or is reasonably likely
to have, a Material Adverse Effect on the Borrower or any of the Guarantors or
taken as a whole which has not been disclosed herein or in such other documents,
certified and statements furnished to the Lender for use in connection with the
transactions contemplated hereby.
4.9 Tax Returns and Payments.
Except as provided in Schedule 4.9, the Borrower and the
Guarantors have filed all tax returns required to be filed by them and have paid
all taxes payable by them which have become due pursuant to such tax returns and
all other taxes and assessments payable by them which have become due, other
than those not yet delinquent and except for those contested in good faith and
for which adequate reserves have been established.
4.10 Capitalization.
(a) As of the date hereof, the authorized capital stock of the
Borrower consists of 1,000 shares of common stock, US$.001 par value per share,
of which all are issued and outstanding. All the outstanding shares have been
duly and validly issued, are fully paid and non-assessable.
(b) As of the date hereof, the authorized capital stock of the
Global consists of 200,000,000 shares of common stock, US$.001 par value per
share, of which 41,078,702 shares are issued and outstanding and 10,000,000
shares of preferred stock, US$.001 par value per share, of which 9,000,000
shares are issued and outstanding. All the outstanding shares have been duly and
validly issued, are fully paid and non-assessable.
(c) As of the date hereof, the authorized capital stock of the
GCC consists of 50,000,000 shares of common stock, US$.001 par value per share,
of which 15,700,000 shares are issued and outstanding. All the outstanding
shares have been duly and validly issued, are fully paid and non-assessable.
4.11 Compliance with Laws, etc.
The Borrower, GCC, Global and all of its subsidiaries are in
compliance in all material respects with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls).
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4.12 Labor Relations.
To the Borrower's and the Guarantors' knowledge there is (i)
no significant unfair labor practice complaint pending or threatened against
either the Borrower, GCC, Global or any of its subsidiaries, or before any
governmental body or agency and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Borrower or any of its subsidiaries,
threatened against the Borrower, GCC, Global or any of its subsidiaries or, (ii)
no significant strike, labor dispute, slowdown or stoppage pending against the
Borrower, GCC, Global or any of its subsidiaries or, threatened against the
Borrower, GCC, Global or any of its subsidiaries, (iii), no union representation
question existing with respect to the employees of the Borrower, GCC, Global or
any of its subsidiaries.
4.13 Properties.
Except as set forth in the Global SEC Reports, the Borrower
and each of the Guarantors have good and marketable title, without regard to
defects of title, which do not have a Material Adverse Effect, to all properties
owned by them, free and clear of all Liens. With respect to any lease or rental
agreement to which the Borrower or any of the Guarantors are a party, (i) such
lease or rental agreement is in full force and effect, (ii) the Borrower and/or
the Guarantors have complied in all material respects with all of the terms of
such lease or rental agreement.
4.14 Assets other than Real Property.
The Borrower, GCC, Global and its subsidiaries have good title
to all tangible assets owned by them, free and clear of all Liens that
individually or in the aggregate would not have a Material Adverse Effect on the
Borrower, GCC, Global or its subsidiaries. The Borrower, GCC, Global and its
subsidiaries own, or lease all the intangible personal property currently used
in the conduct of its business as presently conducted. All the intangible
personal property owned by the Borrower, GCC, Global or its subsidiaries is in
all material respects in good operating condition and repair, ordinary wear and
tear excepted, and all personal property leased by the Borrower or the
Guarantors is in all material respects in the condition required of such
property by the terms of the lease applicable thereto.
4.15 Patents, Licenses, Franchises and Formulas.
The Borrower and the Guarantors own all the patents,
trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or rights with respect to the foregoing, and have
obtained assignments of all leases and other rights of whatever nature,
necessary for the present conduct of their business, without any known conflict
with the rights of others which, or the failure to obtain which, as the case may
be, would result in a Material Adverse Effect on the Borrower or the Guarantors.
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4.16 Intellectual Property.
(a) The Borrower and the Guarantors own and possess all right,
title and interest in and to, or have a valid license to use, all of the
Proprietary Rights (as defined below) used in the operation of their business as
presently conducted and none of such Proprietary Rights have been abandoned;
(b) neither the Borrower nor the Guarantors has received any
notice of any reasonable basis for an allegation of, any infringement or
misappropriation by, or conflict with, any third party with respect to such
Proprietary Rights; and
(c) neither the Borrower nor the Guarantors or any of Global's
subsidiaries has infringed, misappropriated or otherwise violated any material
Proprietary Rights of any third parties, and neither the Borrower nor the
Guarantors has knowledge of any infringement, misappropriation or conflict which
will occur as a result of the continued operation of the Borrower and the
Guarantors as presently operated.
As used herein, the term "Proprietary Rights" means all
proprietary information of the Borrower and/or Guarantors, including all
patents, patent applications, patents rights and inventions, trademarks, service
marks, trade names, copyrights and trade secrets.
4.17 Insurance.
The Borrower, GCC, Global and its subsidiaries presently
maintain and have maintained in effect since their formation all the insurance
policies required by applicable law or reasonably appropriate in connection with
the operation of its business as presently conducted.
4.18 No Misrepresentation.
The representations and warranties contained in this Article
IV and any Schedules of Exceptions attached hereto, do not contain any untrue
statement or a material fact or omit to state any material fact necessary in
order to make the statements and information in this Section 4 and Schedules of
Exceptions not misleading.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower and the Guarantors covenant and agree that on and
after the date hereof and until the Note, together with all accrued interest,
fees and all other obligations incurred hereunder and thereunder, are paid in
full:
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5.1 Information Covenants.
The Borrower and the Guarantors will furnish or cause to be
furnished to the Lender:
(a) Promptly, copies of all financial information, proxy
materials and material filings, reports and information which either of the
Borrower and the Guarantors shall file or be required to file with any agency,
regulatory authority or instrumentality of the Government.
(b) Other Information. From time to time, such other
information or documents (financial or otherwise) as any Lender may reasonably
request.
5.2 Books, Records and Inspections.
The Borrower, GCC, Global and each of its subsidiaries will
keep proper books of record and account in which full, true and correct entries
in conformity with generally accepted accounting principles in the United States
consistently applied in the jurisdiction of each corporation and all
requirements of applicable law shall be made of all dealings and transactions in
relation to its business and activities.
5.3 Maintenance of Property, Insurance.
The Borrower, GCC, Global and each of its subsidiaries will
(i) keep all property useful and necessary in its business in good working order
and condition (ordinary wear and tear excepted), (ii) maintain with financially
sound and reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks as are customary and in
accordance with industry standards for the business in which it is engaged.
5.4 Corporate Franchises.
The Borrower, GCC, Global and each of its subsidiaries will do
or cause to be done, all things reasonably necessary to preserve and keep in
full force and effect its existence and its material rights, franchises,
licenses and other intellectual property.
5.5 Compliance with Statutes, etc.
The Borrower, GCC, Global and each of its subsidiaries will
comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of their respective business and the
ownership of their respective property, except where the failure to so comply
would not have a Material Adverse Effect on the Borrower, GCC, Global or any of
its subsidiaries. Global will timely comply with the filing of all the Global
SEC Reports.
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5.6 Performance of Obligations.
The Borrower, GCC, Global and each of its subsidiaries will:
(i) perform all of its obligations under (a) this Agreement, (b) the security
agreement attached hereto as Exhibit A and (c) the terms of each other mortgage,
indenture, security agreement, and other debt instrument by which it is bound,
except where the failure to so perform would not have a Material Adverse Effect
on the Borrower, GCC, Global or any of its subsidiaries.
5.7 Taxes.
The Borrower, GCC, Global and each of its subsidiaries will
pay and discharge or cause to be paid and discharged all applicable federal,
state, local and other material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon any of its
property, real, personal or mixed or upon any part thereof, when due, as well as
all lawful claims for labor, materials and supplies which, if unpaid might by
law become a lien upon such property.
5.8 Compliance.
The Borrower, GCC, Global and each of its subsidiaries will
maintain all material authorizations, qualifications, licenses and permits
necessary for the operation of their respective business and the ownership of
their respective property.
5.9 Shares.
Global shall maintain sufficient number of authorized shares
of its Series A Preferred Stock and common stock for issuance in the event that
Lender converts the Loan into Series A Preferred Stock of Global and then
desires to convert such Series A Preferred Stock into common stock of Global.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower and the Guarantors, when applicable, covenant and
agree that on and after the date hereof and until the Loan and the Note,
together with interest, fees and all other obligations incurred hereunder and
thereunder, are paid in full:
6.1 Liens.
The Borrower, GCC, Global and each of its subsidiaries will
not, create, incur, assume or suffer to exist any Lien upon or with respect to
any property or assets (real or personal, tangible or intangible) of each of
them, whether now owned or hereafter acquired, without the prior consent of
Lender.
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6.2 Consolidation, Merger, Sale of Assets, etc.
The Borrower, GCC, Global and each of its subsidiaries will
not wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing, at any future time) all or any part of its
property or assets, or purchase or otherwise acquire (in one or a series of
related transactions) any part of the property or assets (other than purchases
or other acquisitions of inventory, materials and equipment in the ordinary
course of business) of any Person.
6.3 Dividends and Redemptions.
(a) The Borrower, GCC, Global and each of its subsidiaries
will not declare or pay any dividends, or return any capital, to its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for any consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any options or
warrants issued by the Borrower or the Guarantors with respect to its capital
stock), or set aside any funds for any of the foregoing purposes; and (b) the
Borrower or the Guarantors will not redeem any common stock of either the
Borrower or the Guarantors.
6.4 Indebtedness.
Except hereunder, the Borrower and the Guarantors will not,
and will not permit any of its subsidiaries to, contract, create, incur, assume
or suffer to exist any Indebtedness without Lender's prior consent, at Lender's
sole discretion, except (i) certain vendor financing as described in the Global
SEC Reports and (ii) obligations incurred in the ordinary course of business.
In the event that Lender consents to any loan by a third party
to Borrower or any of the Guarantors which terms and conditions are more
favorable to such third party in such loan than the terms and conditions of this
Loan to Lender, then such consent may be given upon the condition that the terms
of this Loan are amended to reflect the more favorable terms and conditions
granted to the third party in the loan to be consented by Lender.
6.5 Advances, Investments and Loans.
The Borrower and the Guarantors will not, and will not permit
any of its subsidiaries to, lend money or credit or make advances to any Person,
or purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person, except that
the following shall be permitted: (i) advances, investments and loans to
wholly-owned subsidiaries of the Borrower or upstream advances, investments and
loans to Global; (ii) extensions of credit made in the ordinary course of
business in accordance with customary trade practices; (iii) capital
expenditures and (iv) presently outstanding loans and investments if any, as
disclosed in the Global SEC Reports.
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6.6 Transactions with Affiliates.
Neither the Borrower nor the Guarantors will enter into any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any affiliate other than on terms and conditions
substantially as favorable to, as the case may be, the Borrower, the Guarantors
or any such subsidiary as would be obtainable by the Borrower or the Guarantors
at the time in a comparable arm's-length transaction with a Person other than an
affiliate.
6.7 Limitation on Issuance of Common Stock or other
Securities.
The Borrower and the Guarantors will not, and will not permit
any of its subsidiaries to, issue any common stock or other securities
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, common stock, except for (i) transfers
and replacements of then outstanding shares of common stock, (ii) stock splits,
stock dividends and similar issuances which do not decrease the percentage
ownership of the Guarantors in any class of the common stock of the any of the
subsidiaries of the Borrower.
6.8 Business.
Neither the Borrower nor the Guarantors will engage (directly
or indirectly) in any business other than the business in which they are engaged
on the date hereof.
ARTICLE VII
GUARANTY
7.1 The Guarantors irrevocably and unconditionally,
guarantee the full and prompt payment when due of the principal amount of and
interest on the Note issued under this Agreement and of all other obligations
and liabilities of the Borrower now existing or hereafter incurred under,
arising out of or in connection with this Agreement and the Note and the due
performance and compliance with the terms of this Agreement and the Note by the
Borrower ("Guaranteed Obligations"). The Guarantors understand, agree and
confirm that the Lender may enforce this guaranty obligation up to the full
amount of the Guaranteed Obligations against any of them without proceeding
against the Borrower. The Guarantors irrevocably and unconditionally promise to
pay such Guaranteed Obligations to the Lender, or order, on demand, when due, in
lawful money of the United States of America. The guaranty provided herein shall
constitute a guarantee of payment and not of collection.
7.2 The Guarantors hereby waive notice of acceptance of
this guaranty obligation and notice of any liability to which it may apply, and
waive presentment, demand of payment, protest, notice of dishonor or nonpayment
of any such liability, suit or taking of other action by the Lender against, and
any other notice to, any party liable thereon (including the Guarantor).
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7.3 The obligations of the Guarantors under this
agreement are absolute and unconditional and shall remain in full force and
effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, requests and other
communications hereunder must be in writing and delivered personally against
written receipt, by facsimile transmission with answer back confirmation or
mailed by prepaid first class certified mail (air mail, if faster delivery),
return receipt requested, or mailed by overnight (or in the case of notices
being sent or delivered outside the United States, second day) courier prepaid,
to the parties at the following addresses or facsimile numbers:
If to Borrower or Guarantors, to:
000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx and Xxxx Xxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxxxx, Esq.
c/o Phone1, Inc.
000 Xxxxx Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
If to Lender, to:
GNB Bank Panama X.X
Xxxxx 50 y Xxxxxxxx de la Guardia,
Torre Banco Continental, Piso 30
Ciudad de Panama', Panama'.
Attn: Xxxxxx Xxxxxxxxxx
Fax: (000-000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx
Fax: (000) 000-0000
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All such notices, requests and other communications will (i)
if delivered personally to the address as provided in this Section, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
applicable facsimile number as provided in this Section, be deemed given upon
receipt, (iii) if delivered by United States mail in the manner described above
to the address as provided in this Section, be deemed given on the earlier of
the tenth Business Day following mailing or upon receipt and (iv) if delivered
by courier to the address as provided in this Section, be deemed given on the
earlier of the first Business Day (second Business Day in the case of notices
given or sent outside the United States) following the date sent by such courier
or upon receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of such
notice is to be delivered pursuant to this Section). Any party from time to time
may change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other party
hereto at least ten (10) Business Days prior to the effective date of such
notice.
8.2 Entire Agreement.
This Agreement, the Security Agreement and the Note supersede
all prior discussions and agreements between the parties with respect to the
subject matter hereof and thereof and contain the sole and entire agreement
between the parties hereto with respect to the subject matter hereof and
thereof.
8.3 Independence of Representations, Warranties and
Covenants.
All representations, warranties and covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another representation,
warranty or covenant shall not avoid the occurrence of an Event of Default if
such action is taken or condition exists.
8.4 No Third Party Beneficiary.
The terms and provisions of this Agreement are intended solely
for the benefit of each party hereto and their respective successors or
permitted assigns, and it is not the intention of the parties to confer
third-party beneficiary rights.
8.5 Assignment; Binding Effect.
This Agreement, all the rights, interest or obligation
hereunder may be assigned by the other party with the prior written consent of
the other party. This Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective permitted successors and
assigns.
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8.6 Headings.
The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
8.7 Invalid Provisions.
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance here from and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
8.8 Governing Law.
This Agreement has been signed in the State of New York and
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to conflict of law principles. In the event of any
claim or dispute in respect to the subject matter hereof or the rights or
obligations of the parties hereto, all actions or proceedings must be
exclusively brought in the United States District Court for the Southern
District of New York of if such Court lacks subject matter jurisdiction, in the
Supreme Court of the State of New York, County of New York. Each party waives
the right to object to the exclusive jurisdiction of either of such Court or the
right to object to the venue of such Court or that such Court is an inconvenient
forum.
8.9 Computations.
All computations of interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable.
8.10 Counterparts.
This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
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8.11 Independent Advice.
Lender confirms that he fully understands his rights and
obligations hereunder and that he has had an opportunity to consult with such
independent advisors, including counsel, as he deemed necessary or appropriate.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party hereto as of the date first above
written.
PHONE1, INC.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
PHONE1GLOBALWIDE, INC.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
GLOBALTRON COMMUNICATIONS CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
GNB BANK PANAMA S.A.
By: /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: General Manager
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