Exhibit 10.33
LOAN AGREEMENT
LOAN AGREEMENT, dated as of November 22, 1995, among FIVECOM, INC., a
Massachusetts corporation (the "Borrower"), and CENTRAL MAINE POWER COMPANY, a
Maine corporation (the "Lender").
PRELIMINARY STATEMENT
The Borrower and MaineCom Services, a wholly-owned subsidiary of the
Lender ("MaineCom"), are entering into a Stock Subscription Agreement of even
date herewith (the "Stock Subscription Agreement"), under which MaineCom agrees,
subject to the conditions contained therein, to purchase Series B Preferred
Stock of the Borrower for $10,000,000. Closing is conditioned upon, among other
things, Borrower closing on a third-party loan in an additional amount of at
least $25,000,000. Borrower has determined that it will need operating funds
before such closing, and has requested Lender to extend credit hereunder.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
SECTION 1. TERMS OF CREDIT.
1.1 Commitment. (a) Subject to and upon the terms and conditions herein
set forth, the Lender agrees, from time to time on or after the date hereof, to
lend to the Borrower up to $200,000, plus the amount of fees provided in Section
6 (together, the "Loan"), in several installments (each an "Advance").
(b) If Applied Telecommunications Technologies, Inc. ("ATTI")
shall have advanced to Borrower an additional $62,000, or any portion thereof,
under the "Leases" referenced in Exhibit 2.4, the amount of the commitment in
subsection (a) above shall be reduced by the amount so advanced. Lender states
that it has no intention of advancing any such amount to the extent advanced by
ATTI.
1.2 Request for Credit. The Borrower shall give to the Lender notice (a
"Request for Advance") (by telecopy, promptly confirmed by a "hard copy"
writing) requesting an Advance hereunder. Such notices shall (i) be in the form
of Exhibit 1.2 annexed hereto, duly completed in conformity herewith, (ii) be
submitted bi-weekly, (iii) specify the date of the proposed borrowing, which
shall be ten (10) business days after the date of submission and (iv) specify
the aggregate amount of the proposed Advance.
1.3 Use of Proceeds. The Borrower represents that the proceeds of the
Loan will be used by the Borrower only to finance its working capital needs,
including, without limitation, operational and maintenance expenses, general and
administrative expenses, in each case, to the extent not otherwise prohibited by
this Agreement.
1.4 The Note. (a) The Borrower's obligation to repay the principal
amount of, and interest on, the Loan shall be evidenced by a single promissory
note of the Borrower substantially in the form of Exhibit 1.4 hereto.
(b) The Lender shall maintain a register (the "Credit
Register") on which it shall record the principal amount of the Loan outstanding
from time to time, and interest accrued thereon. Any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded
or endorsed. Notwithstanding the foregoing, the failure to make a notation in
the Credit Register or any error with respect to any such notation, shall not
limit or otherwise affect the obligation of the Borrower hereunder or under the
Note with respect to any Advance, and payments by the Borrower shall not be
affected by the failure to make a notation thereof or by an error in such
notation, nor shall such failure or error affect any rights of the Borrower
hereunder or under applicable law.
SECTION 2. CONDITIONS PRECEDENT TO INITIAL EXTENSION OF
CREDIT.
The Lender shall not be obligated to make the initial Advance unless
each of the following conditions precedent shall have been satisfied:
2.1 Note, Security Agreement and Stock Subscription Agreement. There
shall have been delivered to the Lender an executed Note in the form attached
hereto as Exhibit 1.4, an executed Security Agreement in the form attached
hereto as Exhibit 2.1 (together with this Agreement, the "Loan Documents"), and
an executed Stock Subscription Agreement in form and substance satisfactory to
the Lender.
2.2 Opinions of Counsel. The Lender shall have received a favorable
opinion of Xxxx and Xxxx, counsel to the Borrower, substantially in the form of
Exhibit 2.2 hereto, dated on the date of such extension of credit; such opinion
shall be addressed to the Lender and shall cover such other matters as the
Lender may reasonably request.
2.3 Corporate and Legal Proceedings. All corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to the Lender, and the Lender shall have
received all information and copies of all documents and papers, including
records of corporate and governmental proceedings and the financial information
required under this Agreement which the
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Lender may reasonably have requested in connection therewith, such documents
and papers (when appropriate) to be certified by proper corporate or
governmental authorities and shall, in any event, include: (A) a long form good
standing certificate for the Borrower, (B) a certified copy of the Articles of
Organization of the Borrower and (C) a certificate of the Clerk or an Assistant
Clerk of the Borrower substantially in the form of Exhibit 2.3 annexed hereto
certifying (1) the by-laws and corporate resolutions of the Borrower relating to
the entering into and performance of the Loan Documents and the Stock
Subscription Agreement and the transactions contemplated thereby and (2) the
incumbency and specimen signatures of officers or representatives of the
Borrower authorized to execute the Loan Documents and the Stock Subscription
Agreement and other documents and papers, and to take any other action, in
connection herewith and therewith.
2.4 Standstill Agreement; No Other Lien Filings. Lender shall have
received a Standstill Agreement substantially in the form of Exhibit 2.4 hereto,
executed by Borrower and ATTI. Except for the UCC-1 financing statements filed
to secure ATTI's interests, there shall be no lien filings of record against
Borrower.
2.5 Other Conditions. All acts, conditions and things required to be
done and performed and to have happened precedent to the execution and delivery
of this Agreement, the other Loan Documents and the Stock Subscription Agreement
in order that the same constitute the legal, valid and binding obligations of
the Borrower and the other parties thereto, as the case may be, enforceable in
accordance with their terms, shall have been done and performed and have
happened in strict compliance with all applicable laws.
2.6 Deadline Not Elapsed. If all other conditions precedent in this
Section 2 shall not have been satisfied or waived by Lender on or before
November 22, 1995, then Lender shall have the option, in its sole discretion, of
terminating this Agreement.
All of the Loan Documents, opinions of counsel and other documents and
papers referred to in this Section 2 shall be in form and substance satisfactory
to the Lender and its counsel.
SECTION 3. CONDITIONS PRECEDENT TO EACH ADVANCE.
Lender shall not be obligated to make any Advance unless, at the time
of such Advance and after giving effect thereto:
3.1 No Default. On the date of such Advance, and after giving effect
thereto, there shall exist no Event of Default.
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3.2 Correctness of Representations. On the date of such Advance, and
after giving effect thereto, all representations and warranties contained in
this Agreement, any other Loan Document or in any writing delivered to the
Lender by the Borrower in connection with this Agreement or any other Loan
Document or in satisfaction of any conditions set forth in this Section 3
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of such time.
3.3 No Governmental Action. No law, regulation, rule, guideline or
other action by any Governmental Authority shall be in effect or shall have
occurred, the effect of which is to prevent the Lender or the Borrower from
fulfilling their respective obligations hereunder or under the other Loan
Documents.
3.4 Lender Satisfaction. Lender shall have determined, in its sole
discretion, that Borrower is making progress toward satisfaction of all
conditions precedent to the Closing under the Stock Subscription Agreement, and
Lender shall otherwise be satisfied with the business and prospects of the
Borrower.
As at the date of each Advance under this Agreement, the Borrower shall
be deemed to have represented and warranted to the Lender that (i) no Event of
Default exists, (ii) all representations and warranties incorporated by
reference are true and correct and (iii) to the best of its knowledge all other
conditions in this Section 3 are satisfied at such time.
SECTION 4. COVENANTS, REPRESENTATIONS AND WARRANTIES.
4.1 All covenants, representations and warranties of the Borrower in
the Stock Subscription Agreement are incorporated herein by reference.
4.2 Information. Until the Note is paid in full, the borrower shall
furnish to the Lender promptly (and, in any event, within 10 days), (i) notice
in writing of any development in the Borrower's affairs, financial or otherwise,
or any action, proceeding or claim which has been commenced or asserted against
the Borrower or any of its assets or any dispute between the Borrower and any
governmental regulatory body which, in the reasonable judgment of the Borrower,
may have a material adverse effect on its affairs or business, and (ii) notice
of the occurrence of any Event of Default, the nature and period of existence
thereof and the action which the Borrower proposes to take with respect thereto.
SECTION 5. EVENTS OF DEFAULT.
Each of the following events, conditions or acts shall constitute an
event of default (an "Event of Default") under this Agreement:
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5.1 Principal and Interest. The Borrower shall fail to pay when due any
principal or interest on the Note;
5.2 Representations and Warranties. Any representation, warranty or
statement made or deemed made by the Borrower herein, in any other Loan Document
or otherwise in connection herewith or therewith, shall be breached or be untrue
in any material respect on or as of the date made or deemed made;
5.3 Covenants. The Borrower shall default in the observance or
performance of any obligation contained or deemed contained herein or in any
other Loan Document or the Stock Subscription Agreement;
5.4 Other Obligations. The Borrower shall default in the payment when
due (after giving effect to any applicable grace period) of any indebtedness for
borrowed money or any obligation under any of the Contracts (as defined in the
Stock Subscription Agreement) or, except as disclosed in Schedule 4.8 to the
Stock Subscription Agreement, any holders of any such indebtedness (or a person
acting on their behalf) shall become entitled to exercise default remedies under
the Contracts or to cause any such indebtedness to become, or any such
indebtedness shall become, due prior to its stated maturity;
5.5 Judgments; Attachments, etc. One or more judgments or decrees shall
be entered against the Borrower involving in the aggregate a liability (not paid
or fully covered by insurance) of $20,000 or more and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof; or there shall be commenced against the
Borrower any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief that shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or
5.6 Insolvency, etc. The Borrower shall suspend or discontinue its
business, or shall make an assignment for the benefit of, or composition with,
creditors, or shall become insolvent or be unable, or generally fail (within the
meaning of Title 11 of the United States Code (entitled "Bankruptcy")), to pay
its debts when due; or the Borrower shall become a party or subject to any
liquidation or dissolution action or proceeding for the relief of financially
distressed debtors with respect to the Borrower or a receiver, liquidator,
custodian or trustee shall be appointed for the Borrower or a substantial part
of its assets and, if any of the same shall occur involuntarily as to the
Borrower, it shall not be dismissed, stayed or discharged within 60 days; or if
any order for relief shall be entered against the Borrower under Title 11 of the
U.S. Code; or the Borrower shall take any action to effect, or which indicates
its acquiescence in, any of the foregoing with respect to itself.
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SECTION 6. PAYMENT OF EXPENSES
The Borrower shall, whether or not the transactions hereby contemplated
shall be consummated, pay all out-of-pocket costs and expenses (including,
without limitation, the reasonable fees and disbursements of counsel or, after
the occurrence of any Event of Default, any other expert or consultant) (a) of
the Lender in connection with any Advance, the preparation, negotiation,
execution, delivery and administration of this Agreement or the other Loan
Documents (including, without limitation, any consent, waiver or other
modification) and (b) of the Lender in connection with the enforcement of, or
preservation of any rights under this Agreement and any of the other Loan
Documents, and any investigation of any action or claim relating to the Loan
Documents. The amount due hereunder for the fees and expenses of Lender's
counsel, Xxxxxx Xxxxxxx Xxxxxxx Broder & Micoleau Limited Liability Company,
P.A., for the work leading to the closing, shall not exceed $10,000. The amount
of such fees and expenses shall be in addition to the fees and expenses for such
counsel due under the Stock Subscription Agreement, and shall be added to the
Loan and be disbursed in the Advance following the Closing.
SECTION 7. MISCELLANEOUS.
7.1 Notices. Except as otherwise expressly provided herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be in writing and shall be deemed to have been duly given
or made (i) if mailed, three business days after being deposited in the mails,
registered or certified mail, postage prepaid, (ii) in the case of telex,
telegraphic, cable or telecopy notice, when sent or (iii) if by messenger or by
Federal Express (or any similar overnight express or courier service) 24 hours
after being sent, in each case, addressed to the relevant party, at its address
specified in the Stock Subscription Agreement, or to such other addresses as any
of the parties hereto may hereafter specify to the others in writing; provided
that communications with respect to a change of address shall be deemed to be
effective when actually received. All communications which are required to be
given, or may be given, pursuant to this Agreement by telex, telegraph or cable,
may be given by telecopy and shall be effective when sent to a telecopy number
specified in the Stock Subscription Agreement. Except as otherwise expressly
provided herein, no other form of notice is hereby precluded.
7.2 Benefit of Agreement, etc. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, and, in particular, shall inure to the
benefit of the holder from time to time of the Note; provided, that the Borrower
may not assign or transfer its rights or obligations under this Agreement or any
of the other Loan Documents or in connection herewith or therewith (voluntarily,
by operation of law or otherwise) without the prior written consent of the
Lender.
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7.3 Governing Law. This Agreement, the Note and the other Loan
Documents and the rights and obligations of the parties hereunder and thereunder
shall be construed in accordance with and governed by the laws of the State of
Maine, without regard to any provisions relating to conflicts of law.
7.4 Consent of Jurisdiction, etc. The Borrower agrees that any legal
action or proceeding against the Borrower with respect to this Agreement or any
other Loan Document may be brought in the courts of the State of Maine or of the
United States of America for the District of Maine, as the Lender may elect,
and, by execution and delivery of this Agreement, the Borrower accepts, for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Borrower irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified air mail,
postage prepaid, to the Borrower at its address for notices as specified herein,
such service to become effective 30 days after such mailing. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
the right of the Lender to bring legal action or proceedings in any other
competent jurisdiction. The Borrower agrees that any action commenced by the
Borrower asserting any claim arising under or in connection with this Agreement
shall be brought in the courts of the State of Maine located in the City of
Portland or in the courts of the United States of America for the District of
Maine, that any counterclaim in an action brought by Lender shall be brought in
the same court as the original claim, and that such courts shall, unless waived
by the Lender, have exclusive jurisdiction with respect to any such action. The
Borrower agrees that final judgment against it in any action or proceeding
brought in any of the aforementioned courts shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the fact and of the
amount of its indebtedness. THE BORROWER WAIVES ANY RIGHT TO STAY, DISMISS OR
OBJECT TO ANY ACTION OR PROCEEDING BROUGHT BEFORE SUCH COURTS ON THE BASIS OF
VENUE OR FORUM NON CONVENIENS.
7.5 Amendment, etc. No amendment or waiver of any provision of this
Agreement or the other Loan Documents, nor consent to any departure by the
either party therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Borrower and the Lender. Any amendment,
modification or supplement of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure by the
Borrower from the terms of any provision of this Agreement, shall be effective
only in the specific instance and for the specific purpose for which made or
given.
7.6 Severability. If any provision of this Agreement is prohibited or
unenforceable in any jurisdiction or in any particular circumstance, such
provision (i)
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shall, as to such jurisdiction or circumstance, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction or circumstance and (ii) shall (without any further
act or deed) be replaced by a provision as similar to such prohibited or
unenforceable provision as possible as shall be enforceable and not prohibited
in such jurisdiction or circumstance.
7.7 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Lender and the Borrower and their respective successors and
assigns (except as otherwise expressly provided herein) and nothing contained
herein shall be deemed to confer upon anyone other than the Lender, the Borrower
and their respective successors and assigns any right to insist on or to enforce
the performance or observance of any of the obligations contained herein. All
conditions to the obligations of the Lender to make Advances hereunder are
imposed solely and exclusively for the benefit of the Lender and its successors
and assigns and no other person shall have standing to require satisfaction of
such conditions in accordance with their terms and no other person shall under
any circumstances be deemed to be a beneficiary of such conditions.
7.8 Survival. All of the representations, warranties, terms, covenants,
agreements and conditions contained in this Agreement and the other Loan
Documents shall specifically survive the execution and delivery of this
Agreement and the other Loan Documents and the Advances and shall, unless
otherwise expressly provided, continue in full force and effect until the Loan,
together with interest thereon, and all other obligations of the borrower under
the Loan Documents are paid in full. Furthermore, the provisions of Section 6
shall survive the payment in full of the Note and the termination of this
Agreement.
7.9 No Usury. This Agreement is subject to the condition that at no
time shall the Borrower be obligated or required to pay interest at a rate which
could subject the holder of the Note to either civil or criminal liability,
forfeiture or loss of principal, interest or other sums as a result of being in
excess of the maximum interest rate which the Borrower is permitted by law to
contract or agree to pay or which the holder of the Note is permitted to
receive. If by the terms of the Note, the Borrower is at any time required or
obligated to pay interest at a rate in excess of such maximum rate, the interest
rate under the Note shall be deemed to be immediately reduced to such maximum
rate for so long as such maximum rate shall be in effect and shall thereafter be
payable at the rate therein provided.
7.10 Adjustment. The Borrower expressly agrees that to the extent the
Borrower makes a payment or payments hereunder or under the Note and such
payment or payments, or any part thereof, are subsequently invalidated, declared
to be fraudulent or preferential, set aside or are required to be repaid to a
trustee, receiver, or any other party under any bankruptcy act, state or federal
law, common
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law or equitable cause, then the indebtedness to the Lender or part thereof
intended to be satisfied by such payment or payments shall be revived and
continued in full force and effect as if said payment or payments had not been
made.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
counterparts taken together shall be deemed to constitute one and the same
instrument.
7.12 Rights. All rights, powers, privileges, protections and benefits
of any party hereto under this Agreement and/or the other Loan Documents shall
be construed to be cumulative and supplementary and shall not be limited because
the terms of any Loan Document provide rights, powers, privileges or benefits
more limited in scope than that provided in any other Loan Document.
7.13 Entire Agreement. This Agreement and any other agreement, document
or instrument attached hereto or referred to herein integrate all the terms and
conditions mentioned herein or incidental hereto, and supersede all oral
negotiations and prior writings with respect to the subject matter hereof. The
parties hereto acknowledge that the Lender has not made any agreement or
commitment to provide any financing except as set forth herein.
SECTION 8. WAIVER OF JURY TRIAL.
EXCEPT TO THE EXTENT PROHIBITED BY LAW WHICH CANNOT BE WAIVED, EACH
PARTY HERETO WAIVES TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING OF
ANY NATURE WHATSOEVER ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY, AND ANY COURSE OF DEALING OR REPRESENTATIONS, WARRANTIES, STATEMENTS OR
AGREEMENTS MADE OR ALLEGEDLY MADE IN CONNECTION HEREWITH OR THEREWITH AND IN
CONNECTION WITH ANY CLAIM, COUNTERCLAIM, OFFSET OR DEFENSE ARISING IN CONNECTION
WITH SUCH ACTION OR PROCEEDING, WHETHER ARISING UNDER STATUTE (INCLUDING ANY
FEDERAL OR STATE CONSTITUTION) OR UNDER THE LAW OF CONTRACT, TORT OR OTHERWISE
AND INCLUDING, WITHOUT LIMITATION, ANY CHALLENGE TO THE LEGALITY, VALIDITY,
BINDING EFFECT OR ENFORCEABILITY OF THIS SECTION 8 OR THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or representatives thereunto duly
authorized, all as of the date first above-mentioned.
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Witness: FIVECOM, INC.
/s/ Xxxxxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
------------------------------- --------------------------
Title: President
--------------------------
CENTRAL MAINE POWER COMPANY
/s/ Xxx Xxx By: /s/ Xxxxxx Xxxxxxxx
------------------------------ --------------------------
Title: Vice President
--------------------------
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LIST OF EXHIBITS
Exhibit 1.2 Request for Advance
Exhibit 1.4 Note
Exhibit 2.1 Security Agreement
Exhibit 2.2 Opinion of Counsel
Exhibit 2.3 Closing Certificate
Exhibit 2.4 Standstill Agreement
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EXHIBIT 1.2
TO
LOAN AGREEMENT
REQUEST FOR ADVANCE
Central Maine Power Company
00 Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Vice President
Generation and Technical Support
MaineCom Services
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx, President
Re: Loan Agreement ("Agreement") dated as of November __, 1995, between
Central Maine Power Company (the "Lender") and FiveCom, Inc. (the
"Borrower").
Gentlemen:
This letter constitutes a Request for Advance pursuant to Section 1.2
of the Agreement. A facsimile transmission of this Request for Advance shall be
deemed to be an original.
In accordance with the terms of the Agreement, you are hereby requested
to make an Advance in an amount of $_________________ on ____________________
[10 business days from the date hereof].
The proceeds of the requested Advance will be used for the following
purpose[s]:
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Copies of all relevant invoices are attached hereto.
In order to induce you to make the Advance requested herein, the
Borrower hereby certifies that:
1. All Loan Documents are in full force and effect.
2. This Credit Request constitutes a representation and warranty
by the Borrower to you that (i) no Event of Default exists,
(ii) all representations and warranties of the Borrower set
forth in the Agreement are true as of the date hereof, and
(iii) all other conditions precedent set forth in the
Agreement are satisfied as at the date hereof.
Unless otherwise indicated herein, all capitalized terms used herein
are intended to have the respective meanings set forth in the Agreement.
FIVECOM, INC.
By: ____________________________
Title: __________________________
Date: __________________
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EXHIBIT 1.4
TO
LOAN AGREEMENT
PROMISSORY NOTE
$210,000 November __, 0000
Xxxxxxxx, Xxxxx
FOR VALUE RECEIVED, FIVECOM, INC., a Massachusetts corporation
("FiveCom"), promises to pay to the order of CENTRAL MAINE POWER COMPANY, a
Maine corporation ("CMP"), the principal sum of Two Hundred Ten Thousand Dollars
($210,000.00)], or so much thereof as been advanced under the Loan Agreement of
even date herewith between CMP and FiveCom (the "Loan Agreement"), with interest
on said principal sum at the rate of nine percent (9%) per annum, on the earlier
to occur of (a) January 31, 1995 and (b) the Closing, as defined in the Stock
Subscription Agreement dated of even date herewith between MaineCom Services,
Inc. and FiveCom.
This Note is the Note as defined in the Loan Agreement, which governs
amendment of this Note. Capitalized terms used herein without definition shall
have the meanings set forth in the Loan Agreement.
Upon the occurrence of an Event of Default, then the holder may, at its
option, without further demand and notice, declare the entire outstanding
balance and accrued interest due and payable. Failure to exercise this option
shall not constitute a waiver of the right to exercise the same in the event of
any subsequent default. Interest shall accrue on all amounts due hereunder at
the rate of fourteen percent per annum (14%) from the date of such Event of
Default until such amounts are paid.
This Note may be prepaid in whole or in part without penalty.
All principal and interest due hereunder shall be paid to the holder
hereof at its principal office or to such other parties or addresses as the
holder hereof may from time to time designate in writing to FiveCom or any other
parties liable hereunder.
This Note is subject to the condition that at no time shall FiveCom be
obligated or required to pay interest at a rate which could subject the holder
hereof to either civil or criminal liability, forfeiture or loss of principal,
interest or other sums as a result of being in excess of the maximum interest
rate which FiveCom is permitted by law to contract or agree to pay or which the
holder hereof is permitted to receive. If by the terms of this Note FiveCom is
at any time required or obligated to pay interest at a rate in excess of such
maximum rate, the interest rate under this Note shall be deemed to be
immediately reduced to such maximum rate for so long as such
maximum rate shall be in effect and shall thereafter be payable at the rate
herein provided.
In the event that legal proceedings are instituted to collect any
amount due under this Note, FiveCom agrees to pay to the holder hereof, in
addition to the amount of the unpaid balance of principal and interest, all
costs and expenses of such proceedings, including reasonable attorneys' fees.
FiveCom hereby waives demand, protest, presentment and notice of every
kind, and waives recourse to suretyship defenses generally, including extensions
of time, releases of security, and other indulgences which may be granted from
time to time by the holder of this Note to FiveCom.
If any obligation or portion of this Note is determined to be invalid
or unenforceable under the law, such invalidity or unenforceability shall not
affect the validity or enforceability of the remaining obligations or portions
of this Note.
This Note shall be governed by and construed and interpreted in
accordance with the laws of the State of Maine.
This Note is secured under the Security Agreement of even date between
FiveCom and CMP.
This Note evidences a loan for business and commercial purposes and not
for personal, family or household purposes.
WITNESS: FIVECOM, INC.
_______________________ By: ______________________________
Xxxxxx Xxxxxxxxxx, President
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EXHIBIT 2.1
to Loan Agreement
SECURITY AGREEMENT
SECURITY AGREEMENT, made this ____ day of November, 1995, by and
between Central Maine Power Company, a Maine corporation having its principal
place of business in Augusta, Maine (the "Lender"), and FiveCom, Inc., a
Massachusetts corporation, with its principal place of business in Waltham,
Massachusetts (the "Borrower").
PRELIMINARY STATEMENT
The Borrower and the MaineCom Services, a wholly-owned subsidiary of
Lender ("MaineCom") are entering into a Stock Subscription Agreement of even
date herewith (the "Stock Subscription Agreement"), under which MaineCom agrees,
subject to the conditions contained therein, to purchase Series B Preferred
Stock of the Borrower for $10,000,000. Closing is conditioned upon, among other
things, Borrower closing on a third-party loan in an additional amount of at
least $25,000,000. Borrower has determined that it will need operating funds
before such closing, and has requested Lender to extend credit pursuant to a
Loan Agreement of even date herewith (the "Loan Agreement"). Lender has required
collateral for such loan, and it is the intent of the parties that such
collateral be provided under the terms hereunder.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, and to induce the Lender to enter into the Loan
Agreement and to make the Loan under the Loan Agreement, the Borrower and the
Lender hereby agree as follows:
1. Definitions. (a) Unless otherwise defined herein, terms defined in
the Loan Agreement and used herein or in the recitals hereto have the meanings
given to them in the Loan Agreement, and the following terms which are defined
in the Uniform Commercial Code in effect in the State of Maine on the date
hereof are used herein as so defined: accounts, chattel paper, farm products,
general intangibles, instruments and inventory.
(b) As used in this Security Agreement, the following terms shall have
the following meanings (such definitions to be equally applicable to both
singular and plural forms of the terms defined):
"Code": the Uniform Commercial Code from time to time in
effect in the State of Maine, except that "Code" may mean the Uniform
Commercial Code as the same may from time to time be in effect in the
Commonwealth of Massachusetts with respect to the provisions hereof
relating to the creation and enforcement of security interests on
tangible personal property of the Borrower located in the Commonwealth
of Massachusetts.
"Collateral": as defined in Section 2 of this Security
Agreement.
"Contracts": the contracts listed on Schedule 4.7 to the Stock
Subscription Agreement and all other contracts now or in the future
from time to time entered into by Borrower, as any of the same may be
amended, supplemented or otherwise modified from time to time,
including, without limitation, (a) all rights of the Borrower to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of the Borrower to damages arising out of or
for breach or default in respect thereof and (c) all rights of the
Borrower to exercise all remedies thereunder.
"Equipment": as defined in Section 2 of this Security
Agreement.
"Lien": any mortgage, deed of trust, security interest,
pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other) or preference, priority or other security
agreement or preferential arrangement of any kind of nature (including,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement under the Code or
comparable law of any jurisdiction in respect of any of the foregoing).
"Obligations": all obligations of the Borrower under the Loan
Agreement, the Note or any other Loan Document, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise.
"Proceeds": as defined in the Code and, in any event,
including, but not limited to, (i) any and all proceeds of any
insurance, judgment, indemnity, warranty or guaranty payable to the
Borrower from time to time with respect to any of the Collateral; (ii)
any and all payments (in any form whatsoever) made or due and payable
to the Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of
the Collateral by any Governmental Authority (or any person acting
under color of Governmental Authority); and (iii) any and all other
amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Security Agreement" or "Agreement": this Security Agreement,
as amended, supplemented or otherwise modified from time to time.
(c) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto.
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(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(e) Terms defined in this Agreement by reference to any other
agreement, document or instrument shall have the meaning assigned to it in such
agreement, document or instrument whether or not such agreement, document or
instrument is then in effect.
2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations, the Borrower hereby grants,
bargains, sells, transfers and assigns to the Lender, a first security interest
in, all of the following property now owned or at any time hereafter acquired by
the Borrower or in which the Borrower now has or at any time in the future may
acquire any right, title or interest (all of which being hereinafter
collectively called the "Collateral:)
(a) all of the Borrower's inventory, equipment, construction materials,
fixtures, chattels, electronic business machines, machinery, apparatus, fittings
and articles of personal property of every kind and nature whatsoever, and all
appurtenances, accessions and additions thereto and substitutions or
replacements and products thereof, currently owned or hereafter acquired by the
Borrower, including but not limited to, all such goods now or hereafter attached
to, or contained in or used or usable in any way in connection with any present
or future operation of its fiber optic transmission system to be known as the
New England Optical Network ("NEON"), and all warehouse receipts, bills of
lading and other documents of title now or hereafter covering such goods
(hereinafter collectively referred to as the "Equipment"), including, but
without limiting the generality of the foregoing, all Equipment kept at the
locations listed on Schedule 3(d) hereto and, to the extent not included
therein, all optical fiber cables, telephone wires, other types of wire and
cable, screens, awnings, shades, blinds, curtains, draperies, carpets, rugs,
storm doors and windows, furniture and furnishings, heating, electrical,
mechanical, lighting, switchboards, lifting, plumbing, ventilating, air
conditioning and air-cooling apparatus, boilers, furnaces, oil burners and
transformers, refrigerating, incinerating, escalator, elevator, power, loading
and unloading equipment and systems, stoves, ranges, laundry, cleaning systems,
communication systems, sprinkler systems and other fire prevention and
extinguishing apparatus and materials, dynamos, generators, ducts, controls,
belting, heaters, motors, engines, machinery, pipes, pumps, tanks, fans,
conduits, appliances, equipment, fittings and fixtures, and motor vehicles of
every kind and description;
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(c) any and all leases, subleases, underlettings, concession agreements
and licenses of the Equipment, NEON, or any part thereof, now existing or
hereafter entered into by the Borrower;
(d) all Contracts;
(e) (i) all monies, deposits, funds and accounts and all collections,
contract rights, instruments, documents, general intangibles (including all
trademarks, trade names, partnership names, company names, business names,
fictitious business names, trade styles, service marks, logos and other symbols
used in connection therewith, the goodwill associated therewith, all
registrations and recordings thereof and all applications in connection
therewith and all trademark licenses), partnership interests, the plans and
specifications, patent rights, patents, applications for patents, patent
licenses, copyrights, claims, demands and notes or chattel paper arising from or
by virtue of any transactions related to the foregoing; (ii) all permits,
recordings, registrations, filings, consents, orders, authorizations, waivers,
variances, permissions, declarations, licenses, franchises, approvals,
exemptions, certificates, and other rights and privileges obtained in connection
with the foregoing (including, without limitation, all permits and approvals
listed on Schedule 4.14 to the Stock Subscription Agreement); and (iii) all
books, records, documents (including, but not limited to, computer programs,
tapes, and related electronic data and processing software) and instruments of
the Borrower relating in whole or in part to any of the Collateral;
(f) all rents, royalties, issues, profits, revenues, earnings, income
and other benefits, instruments, documents, securities, cash or property derived
from the Collateral or arising from the ownership, operation or management of
NEON or the Equipment, or from any lease or agreement pertaining thereto;
(g) all other personal property of the Borrower comprising NEON
developed, constructed, installed, completed, operated and/or maintained and all
other personal property of the Borrower used in or relating to such development,
construction, installation, completion, operation and maintenance;
(h) all extensions, improvements, betterments, renewals, accessions,
substitutes and replacements of, and all additions and appurtenances to, any and
all of the foregoing, hereafter acquired by or released to the Borrower or
constructed, assembled or placed by the Borrower into NEON, and all conversions
of the security constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case may be; and
(i) all Proceeds, both cash and noncash, arising from or by virtue of
the sale, lease or other disposition of any and all of the foregoing or any
interest therein and all products of any and all of the foregoing.
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3. Borrower's Representations and Warranties. The Borrower hereby
represents and warrants that:
(a) Title to Collateral; No Liens; No Filing, etc. Except for the
security interest granted to the Lender pursuant to this Agreement and the Liens
described in Schedule 3(a) hereto, the Borrower owns each item of Collateral and
has good and marketable title thereto, and none of such property is subject to
any Lien. No security agreement, financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Lender, pursuant
to this Agreement or as are permitted pursuant to the Loan Agreement.
(b) Perfection. The security interests granted pursuant to this
Agreement (i) constitute perfected security interests in the Collateral in favor
of the Lenders, (ii) are prior to all other Liens on the Collateral in existence
on the date hereof, except the Liens described in Schedule 3(a) hereto and (iii)
are enforceable as such against (x) all creditors of and purchasers from the
Borrower (except purchasers of inventory in the ordinary course of business) and
(y) any person having any interest in the real property where any of the
Equipment is located. The recordings and filings shown on Schedule 3(b) hereto,
all of which recordings and filings have been duly made, are all the recordings,
filings and other action (other than the periodic filing of continuation
statements) necessary and appropriate in order to establish, protect and perfect
the Lender's, lien on and security interest in the right, title, estate and
interest of the Borrower in and to all the Collateral prior and superior to all
other Liens existing on the date hereof and prior and superior to all other
Liens which may exist in the future, except the Liens described in Schedule 3(a)
hereto.
(c) Chief Executive Office. The Borrower's chief executive office and
chief place of business, and the place where it keeps its records concerning the
Collateral, are located at 000 Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxxxxx 00000.
(d) Location of Equipment. No item of Equipment is kept at any location
other than the locations listed on Schedule 3(d) hereto.
(e) No Farm Products, Instruments or Chattel Paper. None of the
Collateral constitutes, or is the Proceeds of, farm products. None of the
Collateral is evidenced by any instrument or chattel paper.
(f) Contracts. No consent or authorization of, or filing with or other
act by or in respect of any Person (including, without limitation, any
Governmental Authority), is required in connection with the execution, delivery
or performance by, or the validity or enforceability against, any party of any
of the Contracts other than those which have been duly obtained, made or
performed, and are in full force and effect. Each of the Contracts is in full
force and effect and constitutes a legal, valid
-5-
and binding obligation of the parties thereto, and is enforceable against each
such party in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity. All governmental approvals and other consents and
approvals required in connection with the execution, delivery, and performance
of the Contracts by the parties thereto have been duly obtained or made, are in
full force and effect and are not subject to appeal or judicial, governmental or
other review. The Borrower has duly performed and complied with all agreements
and conditions required to be performed or complied with by it as of the date
hereof under each Contract. The right, title and interest of the Borrower in, to
and under each Contract are not subject to any defense, offset, counterclaim or
claim which would materially adversely affect the value of such Contract as
Collateral, nor have any of the foregoing been asserted or alleged against the
Borrower as to any Contract.
4. Covenants. The Borrower hereby covenants and agrees with the Lender
that, from and after the date of this Agreement until this Agreement is
terminated and the security interests created hereby are released:
(a) Payment of Obligations. The Borrower shall pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, all
taxes, assessments and governmental charges or levies imposed on the Collateral
or in respect of income or profits therefrom, and all lawful claims against or
with respect to the Collateral which, if unpaid, might become a Lien upon the
property of the Borrower.
(b) Further Documentation; Maintenance of Security Interest. The
Borrower will (i) at any time and from time to time, upon the written request of
the Lender and at the Borrower's sole expense, promptly execute and deliver, or
cause the execution and delivery of, and thereafter register, file or record in
each appropriate governmental office, any document or instrument supplemental to
or confirmatory of this Security Agreement and take such further action as the
Lender may reasonably request for the purpose of obtaining or preserving the
full benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the security interests created hereby; and (ii)
maintain the security interest created by this Security Agreement as a first
perfected security interest, subject only to the Liens described in Schedule
3(a) hereto not create or suffer to exist any Lien on the Collateral (or
attempt, offer or contract to do so) and protect and defend such security
interest and its interest in the Collateral against Liens, claims and demands
asserted by any third Person, other than the Liens described in Schedule 3(a)
hereto and immediately discharge any such Lien so asserted.
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(c) Insurance. Without limiting any of the other obligations or
liabilities of the Borrower under this Security Agreement, the Borrower shall at
all times carry and maintain, at the Borrower's expense, the insurance required
under Section 4.13 of the Stock Subscription Agreement.
(d) Requirements of Law. The Borrower will comply with all requirements
of law applicable to the Collateral or any part thereof.
(e) Changes of Location, Name, etc. The Borrower will not (i) permit
any of the Equipment to be kept at a location other than those listed on
Schedule 3(d) hereto; or (ii) change the location of its chief executive office
and chief place of business from that specified in Section 3(c) hereof; (iii)
remove its books and records from the location specified in Section 3(c) hereof;
or (iv) change its name, identity or corporate structure to such an extent that
any financing statement filed by the Lender in connection with this Security
Agreement would become seriously misleading, unless it shall have given the
Lender at least 30 days' prior written notice of such change and all action
necessary or advisable in the Lender's opinion to protect and perfect the liens
and security interests with respect to the right, title, and interest of the
Borrower in and to the Collateral created by this Security Agreement shall have
been taken.
(f) Instruments and Chattel Paper. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
instrument or chattel paper, such instrument or chattel paper shall be delivered
to the Lender, duly endorsed in a manner satisfactory to the Lender, to be held
as Collateral pursuant to this Security Agreement.
(g) Further Information. The Borrower will furnish to the Lender from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Lender may reasonably request, all in reasonable detail.
(h) Maintenance of Records. The Borrower will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral
including, without limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings with the
Collateral. The Borrower will xxxx its books and records pertaining to the
Collateral to evidence this Agreement and the security interests granted hereby.
For the further security of the Lender, the Borrower agrees that the Lender,
shall have a special property interest in all of the Borrower's books and
records pertaining to the Collateral and the Borrower shall, upon the
acceleration of the Loan and any other amounts due under any Loan Document,
deliver and turn over any books and records to the Lender or to its
representatives at any time on demand of the Lender. The Lender in turn agrees
to provide the Borrower with reasonable access to such records during normal
business
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hours and also with such copies of such records (made at the Borrower's expense)
as the Borrower may reasonably request, such access and such copies to be
available subject to the Lender's prior right to use such records to enforce its
rights in or to realize upon the Collateral.
(i) Notices. The Borrower will advise the Lender promptly, in
reasonable detail, of (x) any Lien (other than security interests created
hereby) on, or claim asserted against, any of the Collateral; and (y) of the
occurrence of any other event which could reasonably be expected to have a
material adverse effect on the aggregate value of the Collateral or on the
security interests created hereby.
(j) Accounts. The amount represented by the Borrower to the Lender from
time to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually owing
by such account debtor or debtors thereunder. Other than in the ordinary course
of business as generally conducted by the Borrower over a period of time, the
Borrower will not grant any extension of the time of payment of any of the
accounts, compromise, compound or settle the same for less than the full amount
thereof, release, wholly or partially, any person liable for the payment
thereof, or allow any credit or discount whatsoever thereon.
(k) Maintenance of Collateral. The Borrower shall maintain the
Collateral as provided in the Loan Agreement. The Borrower shall not sell,
assign, lease, transfer, exchange or otherwise dispose of the Collateral, or
grant any option with respect thereto, or attempt, offer or contract to do so,
except as permitted by the Loan Agreement.
(l) Indemnification. The Borrower agrees to pay, and to save the Lender
harmless from, any and all liabilities, costs and expenses (including, without
limitation, legal fees and expenses) except those that are a direct result of
the Lender's gross negligence or willful misconduct (x) with respect to, or
resulting from any delay in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (y) with respect to, or resulting from, any delay in complying with
or failure to comply with any Contract or any agreement relating to the
Collateral or any requirement of law applicable to any of the Collateral, and
(z) in connection with any of the transactions contemplated by this Security
Agreement.
5. Remedies. (a) If an Event of Default shall occur and be continuing,
the Lender may exercise, in addition to all other rights and remedies granted to
it in this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Lender without demand of performance or other demand, presentment, protest,
advertisement or notice of any
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kind (except any notice required by law referred to below) to or upon the
Borrower or any Person (all and each of which demands, defenses, advertisements
and notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Lender or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Borrower, which right or equity is hereby waived
or released. The Borrower further agrees at the Lender's request, to assemble
the Collateral and make it available to the Lender at places which the Lender
shall reasonably select, whether at the Borrower's premises or elsewhere. The
Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any of the Collateral or in any way relating to the Collateral
or the rights of the Lender hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Lender may elect, in accordance with the Loan
Agreement, and only after such application and after the payment by the Lender
of any other amount required by any provision of law, including, without
limitation, Section 9-504(l)(c) of the Code, need the Lender account for the
surplus, if any, to the Borrower. To the extent permitted by applicable law, the
Borrower waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by it of any rights hereunder except those
that are a direct result of the Lender's gross negligence or willful misconduct.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Borrower shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Borrower to collect such
deficiency.
(b) The Borrower also agrees to pay all costs of the Lender, including
attorneys' fees, incurred with respect to the collection of any of the
Obligations and the enforcement of any of the rights of the Lender hereunder.
(c) The Borrower hereby waives presentment, demand, protest or any
notice (to the extent permitted by applicable law) of any kind in connection
with this Agreement or any Collateral.
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(d) The foregoing rights and powers of the Lender shall be in addition
to, and not a limitation upon, any rights and powers of the Lender given by law,
custom, elsewhere by this Security Agreement, the Loan Agreement or otherwise.
6. Lender's Appointment as Attorney-in-Fact. (a) The Borrower hereby
irrevocably constitutes and appoints the Lender and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in the Lender's own
name, from time to time in the Lender's discretion, for the purpose of carrying
out the terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement, and, without
limitation, the Borrower hereby gives the Lender the power and right, on behalf
of the Borrower, without notice to or assent by the Borrower, to do the
following:
(i) in the case of any patents or trademarks, to execute and
deliver any and all agreements, instruments documents, and papers as
the Lender may request to evidence the Lender's security interest in
any patent or trademark and the goodwill and general intangibles of the
Borrower relating thereto or represented thereby;
(ii) at any time and from time to time, to execute, in
connection with the sale provided for in Section 5 hereof, any
endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(iii) upon the occurrence and during the continuance of any
Event of Default, (A) to direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Lender or as the Lender shall
direct; (B) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(C) to sign and indorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against the Borrower with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith,
to give such discharges or releases as the Lender may deem appropriate;
(G) to assign any patent or trademark (along with the goodwill of
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the business to which any such trademark pertains), throughout the
world for such term or terms on such conditions, and in such manner, as
the Lender shall in its sole discretion determine; (H) to compromise,
settle or otherwise agree to waive, amend or modify the obligation of
any account debtors or obligors under such accounts and Contracts; (I)
to communicate, in its own name or in the name of others, with account
debtors and parties to the Contracts to verify the existence, amount
and terms of any accounts or Contracts; (J) to pay or discharge taxes
and Liens levied or placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by the terms of this
Security Agreement or the Loan Agreement and to pay all or any part of
the premiums therefor and the costs thereof; and (K) generally, to
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though the Lender were the absolute owner thereof for all purposes, and
to do, at the Lender's option and the Borrower's expense, at any time,
or from time to time, all acts and things which the Lender reasonably
deems necessary to protect, preserve or realize upon the Collateral and
the Lender's Liens thereon and to effect the intent of this Security
Agreement, all as fully and effectively as the Borrower might do.
(b) The Borrower hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof.
(c) All powers, authorizations and agencies contained in this Security
Agreement are coupled with an interest and are irrevocable until this Security
Agreement is terminated and the security interests created hereby are released.
7. Performance by Lender of the Borrower's Obligations. If the Borrower
fails to perform or comply with any of its agreements contained herein, the
Lender, at its option, but without any obligation to do so, may perform or
comply, or otherwise cause performance or compliance, with such agreement. The
expenses of the Lender incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to the
default interest rate specified in the Note, shall be payable by the Borrower to
the Lender on demand and shall constitute Obligations secured hereby.
8. Proceeds. If an Event of Default shall occur and be continuing (a)
all Proceeds received by the Borrower consisting of cash, checks and other
near-cash items shall be paid to the Lender for application in accordance with
the terms of the Loan Agreement, and otherwise shall be held by the Borrower in
trust for the Lender, segregated from other funds of the Borrower, and shall,
forthwith upon receipt by the Borrower, be turned over to the Lender in the
exact form received by the Borrower (duly indorsed by the Borrower to the
Lender, if required), and (b) any and all such Proceeds received by the Lender
(whether from the Borrower or otherwise) may, in
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the sole discretion of the Lender, be held by the Lender as collateral security
for, and/or then or at anytime thereafter may be applied by the Lender against,
the Obligations (whether matured or unmatured), such application to be in such
order as the Lender shall elect. Any balance of such Proceeds remaining after
the Obligations shall have been paid in full shall be paid over to the Borrower
or to whomsoever may be lawfully entitled to receive the same.
9. Performance of Accounts and Contracts; Limitations on Lender's
Obligations. It is expressly agreed by the Borrower that, anything herein to the
contrary notwithstanding, the Borrower shall remain liable under each account
and Contract to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to
the terms and provisions of each such account or Contract. The Lender shall have
no obligation or liability under any account or Contract by reason of or arising
out of this Security Agreement or the assignment to or receipt by the Lender of
any payment relating to any account or Contract pursuant hereto, nor shall the
Lender be required or obligated in any manner to perform or fulfill any of the
obligations of the Borrower under or pursuant to any account or Contract, or to
make any payment, or to make any inquiry as to the nature or the sufficiency of
any payment received by it or the sufficiency of any performance by any party
under any account or Contract, or to present or file any claim, or to take any
action to enforce any performance or collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
10. Duty of Lender. The Lender's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the same
manner as the Lender deals with similar property for its own account. Neither
the Lender nor any of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Borrower or any other Person
or to take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Lender hereunder are solely to protect the
interest of the Lender in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct, and specifically disclaim any
liability for negligence.
11. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, the Borrower authorizes the Lender, to the extent permitted by applicable
law, to file financing statements with respect to the Collateral without the
signature of the
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Borrower in such form and in such filing offices as the Lender reasonably
determines appropriate to perfect the security interests of the Lender under
this Security Agreement. A carbon, photographic or other reproduction of this
Security Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
12. Notices. Notices hereunder may be given by mail, by telex or by
facsimile transmission, addressed or transmitted as set forth in the Loan
Agreement and shall be effective as provided for in the Loan Agreement. The
Lender and the Borrower may change their addresses and transmission numbers for
notices as provided in the Loan Agreement.
13. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14. Integration. This Security Agreement represents the agreement of
the Borrower with respect to the subject matter hereof and there are no promises
or representations by the Lender relative to the subject matter hereof not
reflected herein or in the other Loan Documents or the Stock Subscription
Agreement.
15. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of
the terms or provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Borrower and the Lender, provided that any provision of this Security
Agreement may be waived by the Lender in a letter or agreement executed by the
Lender or by telex or facsimile transmission from the Lender.
(b) The Lender shall not by any act (except by a written instrument
pursuant to Section 15(a) hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Lender would otherwise have on any future occasion.
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(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
16. Successors and Assigns. This Security Agreement shall be binding
upon the successors and assigns of the Borrower and shall inure to the benefit
of the Lender and its successors and assigns.
17. Governing Law. This Security Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State of Maine.
18. Section Headings. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
19. Term of Security Agreement. This Security Agreement shall remain in
full force and effect and be binding in accordance with and to the extent of its
terms, and the security interest created by this Security Agreement shall not be
released, until payment in full of all the Obligations. To the extent not
otherwise provided by law, if at any time payment, or any part thereof, of any
of the Obligations is rescinded or must otherwise be restored or returned by the
Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any other person making such payment, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, the Borrower or any such person or any
substantial part of its property, or otherwise, the security interest created by
this Agreement shall continue to secure payment and performance of the
Obligations, as reinstated, all as though such payments had not been made.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or representatives thereunto duly
authorized, all as of the date first above-mentioned.
Witness: FIVECOM, INC.
_____________________ By: _______________________________
Title: ___________________________
CENTRAL MAINE POWER COMPANY
_____________________ By: _______________________________
Title: ___________________________
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LIST OF SCHEDULES
Schedule 3(a) Permitted Liens
Schedule 3(b) Recordings and filings of financing statements
Schedule 3(d) Locations of Equipment
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