EXHIBIT 10.5
PROMISSORY NOTE
$2,000,000 as of August 26 1999
(plus Capitalized Interest)
FOR VALUE RECEIVED, each Of AMERICAN TELESOURCE INTERNATIONAL, INC., a
Delaware corporation ("ATII"), and the other undersigned Borrowers (ATII and the
other undersigned Borrowers are individually referred to as a "Maker" and
collectively as the "Makers"), hereby promises to pay, jointly and severally, to
the order of NTFC CAPITAL CORPORATION ("Lender"), its successors, assigns or any
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subsequent holder of this Note (the "Lender") at its offices located at 501
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Corporate Centre Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxx 00000, or at such other
place as may be designated in writing by Lender, in lawful money of the United
States of America in immediately available funds, (i) the lesser of Two Million
Dollars ($2,000,000) or all amounts advanced to one or more Borrowers pursuant
to Section 1of the Loan Agreement (defined below), plus (ii) all amounts of
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Capitalized Interest, deemed advanced and calculated as provided below, together
with interest thereon and other amounts due as provided below. Lender may note
amounts advanced, paid and/or added as Capitalized Interest on the schedules
attached hereto. Notations on the schedules attached hereto are for convenience
only, and the failure of the Lender to make any notation on any schedule, or any
incorrect notation by the Lender on any schedule, shall not diminish the
obligations of any Maker under this Note.
This Note is issued pursuant to that certain Loan and Security Agreement
dated as of July 31, 1999 between and among ATII, the Domestic Subsidiaries of
ATII which are signatories to the Loan Agreement, and such additional Domestic
Subsidiaries of ATII which thereafter may become a party thereto pursuant to
Section 1(b) thereof and Lender (as it may be modified, amended or restated from
time to time, the "Loan Agreement"). Any term not otherwise defined in this Note
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shall have the same meaning as in the Loan Agreement. Reference is made to the
Loan Agreement, which, among other things, permits the acceleration of the
maturity hereof upon the occurrence of certain events and for prepayments in
certain circumstances and upon certain terms and conditions. This Note is
secured by, among other things, the Collateral described in the Loan Agreement
and the other Loan Documents.
All Advances hereunder shall bear interest from the date of such Advance
until such amount is due and payable (whether on any Payment Date, at maturity,
by acceleration, or otherwise) at a fixed rata per annum of interest equal to
the five year bank swap rate as reported on the First Borrowing Date on the Dow
Xxxxx & Company Telerate screen, plus four hundred ninety-five (495) basis
points. If Dow Xxxxx & Company should cease service or cease publishing such
rate, the Lender shall designate a comparable reference rate for use in
determining the Interest Rate hereunder.
During the period (the "Capitalized Interest Period") from the First
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Borrowing Date to the last day of the sixth full calendar month after the First
Borrowing Date (the "Conversion Date"), interest shall accrue at the Interest
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Rate and shall be capitalized and added to the principal amounts outstanding
hereunder ("Capitalized Interest").
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Following the end of the Capitalized Interest Period, interest shall accrue
at the Interest Rate on all, principal amounts outstanding hereunder (including
Capitalized Interest) and shall, be payable in arrears, commencing on the first
day of the first calendar quarter following the Conversion Date (the "Initial
Payment Date"), and on the first day of each consecutive calendar quarter
thereafter (together with the Initial Payment Date, a "Payment Date") until the
twentieth Payment Date (the "Maturity Date").
All principal amounts borrowed and outstanding hereunder shall be amortized
and repaid quarterly, in arrears, in 20 equal payments of interest and principal
sufficient to pay this Note in full, commencing on the Initial Payment Date, and
on each Payment Date thereafter through and including the Maturity Date,
provided, however, in any event the final payment shall be in an amount equal to
all outstanding principal hereunder, plus all accrued and unpaid interest and
all other unpaid charges hereunder.
The principal payment amounts shall be recalculated by Xxxxxx if any
Advances are made hereunder after the Conversion Date, based on the aggregate
amount of all Advances (including Capitalized Interest) made at any time. It is
intended that the above amortization schedule will fully amortize the principal
amounts advanced under
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this Note. If any principal interest, or other charge or expense remains
outstanding on the Maturity Date, such amount shall be added to the payment due
on the Maturity Date.
Notwithstanding the foregoing, if Makers shall fail to pay within five (5)
days after the due date any principal amount or interest or other amount payable
under this Note, Makers shall pay, jointly and severally, to Lender, to defray
the administrative costs of handling such late payments, an amount equal to
interest on the amount unpaid, to the extent permitted under applicable law, at
a rate equal to the lesser of three percent (3%) higher than the then applicable
interest rate or the maximum permissible interest rate under applicable law (the
"Default Rate") (instead of the Interest Rate), from the due date until such
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overdue principal amount, interest or other unpaid amount is paid in full (both
before and after judgment) whether or not any notice of default in the payment
thereof has been delivered under the Loan Agreement. In addition, but without
duplication, upon the occurrence and during the continuance of an Event of
Default, all outstanding amounts hereunder shall bear interest at the Default
Rate (instead of the Interest Rate) until such amounts are paid in full or such
Event of Default is waived in writing by Leader.
Notwithstanding any provision of this Note or the Loan Agreement to the
contrary, it is the intent of the Lender and the Makers that the Lender or any
subsequent holder of this Note shall never be entitled to receive, collect,
reserve or apply, as interest, any amount in excess of the maximum rate of
interest permitted to be charged by applicable Law, as amended or enacted, from
time to time. In the event Lender, or any subsequent holder of this Note, ever
receives, collects, reserves or applies, as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial prepayment of
principal and treated as such (except that no prepayment premium will be payable
thereon), or, if the principal indebtedness and all other amounts due are paid
in full, any remaining excess funds shall immediately be paid to the Makers. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the highest lawful rate, the Makers and the Lender shall,
to the maximum extent permitted under applicable law, (a) exclude voluntary
prepayments and the effects thereof as it may relate to any fees charged by the
Lender, and (b) amortize, prorate, allocate, and spread, in equal parts, the
total amount of interest throughout the entire term of the indebtedness;
provided that if the indebtedness is paid and performed in full prior to the end
of the full Contemplated term hereof, and if the interest received for the
actual period of existence hereof exceeds the maximum lawful rate, the Lender or
any subsequent holder of the Note shall refund to the Makers the amount of such
excess or credit the amount of such excess against the principal portion of the
indebtedness, as of the date it was received, and, in such event, the Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging, reserving or receiving interest in excess of the maximum lawful rate.
All amounts received for payment under this Note shall at the option of
Lender be applied first to any unpaid expenses due Lender under this Note or
under any other documents evidencing or securing the obligations of any Maker to
Lender, then to any unpaid late charges, then to any unpaid interest accrued at
the Default Rate, then to all other accrued but unpaid interest due under this
Note and finally to the reduction of outstanding principal due under this Note.
Upon the occurrence of any one or more of the Events of Default specified
in the Loan Agreement (each, an "Event of Default"), all amounts then remaining
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unpaid on this Note shall be, or may be declared to be, immediately due and
payable as provided in the Loan Agreement, without further notice, at the option
of the Lender. Lender may waive any Event of Default before or after the same
has been declared and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a continuing one, but
one waiver shall not imply any additional or subsequent waiver. Time is of the
essence of this Note.
Each Maker hereby expressly waives demand, presentment, notice and protest.
Each Maker and any and all endorsers, guarantors and other parties liable on
this Note, and any and all general partners of any Maker or of any endorsers,
guarantors or other parties liable on this Note (collectively, the "Obligors")
jointly and severally waive presentment for payment, protest, notice of protest,
notice of nonpayment of this Note, demand and all legal diligence in enforcing
collection, and all other claims and defenses based on suretyship principles,
and hereby expressly consent to (i) any and all delays, extensions, renewals or
other modifications of this Note or any waivers of any term hereof (ii) any
release or discharge by Lender of any of the Obligors, (iii) any release,
substitution or exchange of any security for the payment hereof (iv) any failure
to act on the part of Lender, and (vi) any indulgence shown by Xxxxxx from time
to time (without notice or further assent from any of the Obligors) and hereby
agree that
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no such action, failure to act or failure to exercise any right or remedy by
Lender shall in any way affect or impair the obligations of any of the Obligors.
EACH MAKER HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS
LOCATED IN DAVIDSON COUNTY, TENNESSEE, AND XXXXXXXXXX COUNTY, TENNESSEE,
INCLUDING WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF
TENNESSEE AND THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE, AND THE
CHANCERY COURT FOR XXXXXXXXXX COUNTY, TENNESSEE, FOR ANY SUIT BROUGHT OR ACTION
COMMENCED IN CONNECTION WITH THIS NOTE, ANY DOCUMENTS EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, INCLUDING WITHOUT LIMITATION THE LOAN AGREEMENT, OR ANY
RELATIONSHIP BETWEEN LENDER AND ANY MAKER, AND AGREES NOT TO CONTEST OR
CHALLENGE VENUE IN ANY SUCH COURTS.
Each Maker irrevocably consents to the service of process of any such
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail postage prepaid, return receipt requested, to such
Maker at the address set forth in the Loan Agreement or to such other address as
such Maker may have furnished to Lender in writing, and agrees that such service
shall become effective thirty (30) days after such mailing. However, nothing
herein shall affect the right of Lender or any Maker to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against Lender or any Maker in any other jurisdiction.
EACH MAKER HEREBY KNOWINGLY, WILLINGLY AND IRREVOCABLY WAIVES ITS RIGHTS TO
DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS NOTE, ANY
DOCUMENTS EXECUTED OR DELIVERED IN CONNECTION HEREWITH INCLUDING WITHOUT
LIMITATION THE LOAN AGREEMENT OR ANY RELATIONSHIP BETWEEN SUCH MAKER AND LENDER.
EACH MAKER AGREES THAT XXXXXX MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF SUCH MAKER'S EXPRESS WAIVER OF
ITS RIGHT TO TRIAL BY JURY.
IN ANY ACTION TO ENFORCE THIS NOTE, EACH MAKER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHTS UNDER THE LAWS OF ANY STATE OR OTHER JURISDICTION CLAIM OR RECOVER ANY
SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN ACTUAL
DIRECT DAMAGES.
In the event this Note is placed in the hands of one or more attorneys for
collection or enforcement or protection of the holder's rights described herein
or in the Loan Agreement or the other Loan Documents, the [each] Maker agrees to
pay, jointly and severally, all reasonable attorneys' fees and all court and
other out-of-pocket costs incurred by the holder hereof (as of which shall be
due on demand and shall bear interest at the rate then payable hereunder from
five (5) days after such demand is made until paid).
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Tennessee. If any Provision of this Note should
for any reason be invalid or unenforceable, the remaining provisions hereof
shall remain in full force and effect.
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This Note may not be changed, extended or terminated except in writing. No
waiver of any term or provision hereof shall be had unless in writing signed by
Xxxxxx.
Executed as of the date first written above.
AMERICAN TELESOURCE
INTERNATIONAL, INC.
(Delaware)
BY:__________________________________
Xxxxxx X. Xxxxx
Chief Executive Officer
AMERICAN TELESOURCE
INTERNATIONAL, INC.
(Texas)
BY:__________________________________
Xxxxxx X. Xxxxx
President
TELESPAN, INC.
BY:__________________________________
Xxxxxxx X. Xxxxx
President
GLOBALSCAPE, INC.
BY:__________________________________
Xxxxxx X. Xxxxx
Chairman
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SCHEDULE A TO NOTE
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ADVANCES AND PAYMENTS
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Initial Payment Date:
Maturity Date:
Amount Advanced Date of Advance Payment Amount Payment Date
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Balance
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SCHEDULE B TO NOTE
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CAPITALIZED INTEREST
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Original Capitalized Principal
Principal Interest Date Balance
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