1
[1 SEAFIRST BANK LETTERHEAD]
BUSINESS LOAN AGREEMENT
THIS BUSINESS LOAN AGREEMENT ("AGREEMENT") IS MADE BETWEEN BANK OF AMERICA
NT&SA DOING BUSINESS AS SEAFIRST BANK ("BANK") AND TELEDESIC L.L.C.
("BORROWER") WITH RESPECT TO THE FOLLOWING:
PART A
LINE OF CREDIT #1. Subject to the terms of this Agreement, Bank will make
loans to Borrower under a [X] revolving [ ] non-revolving line of credit as
follows:
(a) TOTAL AMOUNT AVAILABLE: The lesser of $9,960,000.00 or 80% of total
project cost.
[ ] Subject to the provisions of any accounts receivable and/or
inventory borrowing plan required herein; it is expressly
understood that collateral ineligible for borrowing purposes is
determined solely by Bank.
[ ] Subject to (describe): N/A.
(b) AVAILABILITY PERIOD: 6/17/98 through 06/30/2000. However, if loans are
made and/or new promissory notes executed after the last date, such
advances will be subject to the terms of this Agreement until repaid
in full unless a written statement signed by the Bank and Borrower
provides otherwise, or a replacement loan agreement is executed. The
making of such additional advances alone, however, does not constitute
a commitment by the Bank to make any further advances or extend the
availability period.
(c) INTEREST RATE:
[X] Bank's publicly announced Reference Rate plus 0.00 percent of the
principal per annum. "Reference Rate" means the rate of interest
publicly announced from time to time by Bank in San Francisco,
California as its "Reference Rate." The Reference Rate is set
based on various factors including Bank's cost and desired return,
general economic conditions, and other factors, and is used as a
reference point for pricing some loans. Bank may price loans to
its customers at, above, or below the Reference Rate. Any change
in the Reference Rate shall take effect at the opening of business
on the day specified in the public announcement of a change in the
Reference Rate.
[X] or LIBOR + 225 basis points.
(d) INTEREST RATE BASIS: All interest will be calculated at the per annum
interest rate based on a 360-day year and applied to the actual number
of days elapsed.
(e) REPAYMENT: At the times and in amounts as set forth in note(s)
required under Part B Article 1 of this Agreement.
(f) COLLATERAL. This line of credit shall be secured by a security
interest, which is hereby granted, in favor of Bank on the following
collateral: UCC filing on equipment, fixtures and all proceeds
thereof.
Also, collateral securing other loans with Bank may secure this loan.
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[1 SEAFIRST BANK LETTER HEAD]
BUSINESS LOAN AGREEMENT
Part B
1. PROMISSORY NOTE(S). All loans shall be evidenced by promissory notes in a
form and substance satisfactory to Bank.
2. CONDITIONS TO AVAILABILITY OF LOAN/LINE OF CREDIT. Before Bank is
obligated to disburse/make any advance, Bank must receive all of the
following, each of which must be in form and substance satisfactory to
Bank ("loan documents"):
2.1 Original, executed promissory note(s);
2.2 Original executed security agreement(s) and or deed(s) of trust
covering the collateral described in Part A;
2.3 Financing statement(s) executed by Borrower;
2.4 Such evidence that Bank may deem appropriate that the security
interests and liens in favor of Bank are valid, enforceable, and
prior to the rights and interests of others except those consented
to in writing by Bank;
2.5 Evidence that the execution, delivery, and performance by Borrower
of this Agreement and the execution, delivery, and performance by
Borrower and any corporate guarantor or corporate subordinating
creditor of any instrument or agreement required under this
Agreement, as appropriate, have been duly authorized;
2.6 Pay or reimburse Bank for any out-of-pocket expenses expended in
making or administering the loans made hereunder including without
limitation attorney's fees (including allocated costs of in-house
counsel) not to exceed $3,500 in the aggregate; and
+2.7 Other (describe): See Exhibit A.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Bank,
except as Borrower has disclosed to Bank in writing, as of the date of
this Agreement (and as of a date of any drawdown):
+3.1 Borrower is duly organized and existing under the laws of the state
of its organization as a limited liability company with perpetual
duration.
Borrower is properly licensed and in good standing in each state in
which Borrower is doing business and Borrower has qualified under,
and complied with, where required, the fictitious or trade name
statutes of each state in which Borrower is doing business, and
Borrower has obtained all necessary government approvals for its
business activities as currently conducted; the execution,
delivery, and performance of this Agreement and such notes and
other instruments required herein are within Borrower's powers,
have been duly authorized, and, as to Borrower and any guarantor,
are not in conflict with the terms of any charter, bylaw, or other
organization papers of Borrower, and this Agreement, such notes and
the loan documents are valid and enforceable according to their
terms;
3.2 The execution, delivery, and performance of this Agreement, the
loan documents and any other instruments are not in conflict with
any law or any material indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is bound or affected;
3.3 Borrower has title to certain material assets as reflected in its
financial statements (except such assets which have been sold or
otherwise disposed of in the ordinary course of business;
3.4 All financial information, statements as to ownership of Borrower
and all other statements submitted by Borrower to Bank, whether
previously or in the future, are and will be true and correct in
all material respects upon submission and are and will be complete
upon date of submission insofar as may be necessary to give Bank a
true and accurate knowledge of the subject matter thereof;
3.5 Borrower has filed all tax returns and reports as required by law
to be filed and has paid all taxes and assessments applicable to
Borrower or to its properties which are presently due and payable,
except those being contested in good faith;
3.6 There are no proceedings, litigation or claims (including unpaid
taxes) for an amount in excess of $25,000,000 against Borrower
pending or, to the knowledge of the Borrower, threatened, before
any court or government agency, and no other event has occurred
which may have a material adverse effect on Borrower's financial
condition;
3.7 There is no event which is, or with notice or lapse of time, or
both, would be, an Event of Default (as defined in Section 7) under
this Agreement;
+3.8 Each chief place of business of Borrower, and the office or offices
where Borrower keeps its records concerning any of the collateral,
is located at: 0000 - 000xx Xxxxxx XX, Xxxxxxxx, XX 00000. Until
January 1, 1999, it is anticipated Borrower will continue to be
conducting business at its current address: 0000 Xxxxxxxx Xxxxx,
Xxxxxxxx, XX.
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4. AFFIRMATIVE COVENANTS. So long as credit granted under this Agreement is
available and until full and final payment of all sums outstanding under
this agreement and promissory note(s) Borrower will:
+4.1 Use the proceeds of the loans covered by this Agreement only in
connection with Borrower's business activities and exclusively for
the following purposes: Finance (or reimburse Borrower for)
remodeling, furnishing and other tenant improvements for new
headquarters;
+4.2 Promptly give written notice to Bank of any Event of Default under
this Agreement or any other agreement with Bank or any other
creditor (where the obligation to any other creditor for borrowed
money exceeds $25,000,000) or any event which become an Event of
Default;
+4.3 Borrower shall as soon as available, but in any event within 120
days following the end of each Borrower's fiscal years and within
30 days following the end of each quarter provide to Bank, in a
form prepared by Borrower in its normal course of business, such
financial statements respecting the financial condition and
operations of Borrower with all annual statements to be audited by
independent certified public accountants.
4.4 Borrower will maintain in effect property and casualty insurance
with responsible insurance companies in such amounts and against
such risks as is customarily maintained by persons engaged in
businesses similar to that of Borrower and all policies covering
property given as security for the loans shall have loss payable
clauses in favor of Bank. Borrower agrees to deliver to Bank such
evidence of insurance as Bank may reasonably require and, within
thirty (30) days after notice from Bank, to obtain such additional
insurance with an insurer satisfactory to the Bank;
4.5 Borrower will pay all indebtedness taxes and other obligations for
which the Borrower is liable or to which its income or property is
subject before they shall become delinquent, except any which is
being contested by the Borrower in good faith;
4.5 Borrower will maintain adequate books, accounts and records and
prepare all financial statements required hereunder in accordance
with generally accepted accounting principles and practices
consistently applied, and in compliance with the regulations of any
governmental regulatory body having jurisdiction over Borrower or
Borrower's business;
4.7 Borrower will perform, on request of Bank, such acts as may be
necessary or advisable to perfect any lien or security interest
provided herein or otherwise carry out the intent of this
Agreement;
4.8 Borrower will comply with all applicable material federal, state
and municipal laws, ordinances, rules and regulations relating to
its properties, charters, businesses and operations, including
compliance with all minimum funding and other requirements related
to any of Borrower's employee benefit plans;
NEGATIVE COVENANTS. So long as credit granted under this Agreement is
available and until full and final payment of all sums outstanding under
this Agreement and promissory note(s):
5.1 Borrower will not liquidate or dissolve.
EVENTS OF DEFAULT. The occurrence of any of the following events ("Events
of Default") shall terminate any and all obligations on the part of Bank
to make or continue the loan and/or line of credit and, at the option of
Bank, shall make all sums of interest and principal outstanding under the
loan and/or line of credit immediately due and payable, without notice of
default, presentment or demand for payment, protest or notice of non
payment or dishonor, or other notices or demands of any kind or
character, all of which are waived by Borrower, and Bank may proceed
with collection of such obligations and enforcement and realization upon
all security which it may hold and to the enforcement of all rights
hereunder or at law:
6.1 The Borrower shall fail to pay within 10 business days any amount
payable by it hereunder on any loans or notes executed in
connection herewith;
6.2 Borrower shall fail to comply with the provisions of any other
covenant, obligation or term of this Agreement or the Security
Agreement for a period of thirty (30) days after written notice
thereof shall have been given to the Borrower by Bank;
6.3 Borrower shall fail to pay when due any other obligation for
borrowed money exceeding $25,000,000, or to perform any term or
covenant on its part to be performed under any agreement relating to
such obligation and such other debt then shall be declared to be due
and payable and such failure shall continue after the applicable
grace period;
6.4 Any representation or warranty made by Borrower in this Agreement
or in any other statement to Bank shall prove to have been false or
misleading in any material respect when made, unless the Borrower
remedies such condition within 30 days after written notice from
the Bank;
6.5 Borrower makes an assignment for the benefit of creditors, files a
petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions to any court for a receiver or trustee for Borrower or
any substantial part of its property, commences any proceeding
relating to the arrangement, readjustment, reorganization or
liquidation under any bankruptcy or similar laws, or if there is
commenced against Borrower any such proceedings which remain
undismissed for a period of thirty (30) days or, if Borrower by
any act indicates its consent or acquiescence in any such
proceeding or the appointment of any such trustee or receiver;
6.6 Any judgment attaches against Borrower or any of its properties for
an amount in excess of $25,000,000 which remains unpaid, unstayed
on appeal, unbonded or undismissed for a period of thirty (30)
days;
6.6 Loss of any required government approvals, and/or any governmental
regulatory authority takes or institutes action which, in the
opinion of Bank, will materially affect in an adverse manner
Borrower's ability to repay the loan and/or line of credit;
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6.7 Borrower ceases to exist as a going concern.
7. SUCCESSORS; WAIVERS. Notwithstanding the Events of Default above, this
Agreement shall be binding upon and inure to the benefit of Borrower and
Bank, their respective successors and assigns, except that Borrower may not
assign its rights hereunder. No consent or waiver under this Agreement
shall be effective unless in writing and signed by the Bank and shall not
waive or affect any other default, whether prior or subsequent thereto, and
whether of the same of different type. No delay or omission on the part of
the Bank in exercising any right shall operate as a waiver of such right or
any other right.
8. ARBITRATION.
8.1 At the request of either Bank or Borrower any controversy or claim
between the Bank and Borrower, arising from or relating to this
Agreement or any loan document executed in connection with this
Agreement or arising from any alleged tort shall be settled by
arbitration in Seattle, Washington. The United States Arbitration Act
will apply to the arbitration proceedings which will be administered
by the American Arbitration Association under its commercial rules of
arbitration except that unless the amount of the claim(s) being
arbitrated exceeds $5,000,000 there shall be only one arbitrator. Any
controversy over whether an issue is arbitrable shall be determined
by the arbitrator(s). Judgement upon the arbitration award may be
entered in any court having jurisdiction. The institution and
maintenance of any action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the
right of either party, including plaintiff, to submit the controversy
or claim to arbitration if such action for judicial relief is
contested.
8.2 For purposes of the application of the statute of limitations the
filing of an arbitration as provided herein is the equivalent of
filing a lawsuit and the arbitrator(s) will have the authority to
decide whether any claim or controversy is barred by the statute of
limitations, and if so, to dismiss the arbitration on that basis. The
parties consent to the joinder in the arbitration proceedings of any
guarantor, hypothecator or other party having an interest related to
the claim or controversy being arbitrated.
8.3 Notwithstanding the provisions of Section 9.1, no controversy or
claim shall be submitted to arbitration without the consent of all
parties if at the time of the proposed submission, such controversy
or claim arises from or relates to an obligation secured by real
property or by a marine vessel;
8.4 No provision of this Section 9 shall limit the right of the Borrower
or the Bank to exercise self-help remedies such as setoff,
foreclosure or sale of any collateral, or obtaining any ancillary
provisional interim remedies from a court of competent jurisdiction
before, after or during the pendency of any arbitration proceeding.
The exercise of any such remedy does not waive the right of either
party to request arbitration.
9. COLLECTION ACTIVITIES, LAWSUITS AND GOVERNING LAW. Borrower agrees to
pay the Bank's reasonable costs and expenses (including reasonable
attorney's fees and the allocated cost for in-house legal services
incurred by Bank), incurred in the documentation and administration of
this Agreement and the loans reflected herein. Upon the occurrence and
continuance of an event of default, the nonprevailing party shall, upon
demand by the prevailing party, reimburse the prevailing party of all of
its costs, expenses and reasonable attorneys' fees (including the
allocated cost of in-house counsel) incurred in connection with any
controversy or claim between said parties relating to this Agreement or
any of the loan documents, or to an alleged tort arising out of the
transactions evidenced by this agreement or any of the loan documents,
including those incurred in any action, bankruptcy proceeding, arbitration
or other alternative dispute resolution proceeding, or appeal, or in the
course of exercising any judicial or nonjudicial remedies. If suit is
instituted by Bank to enforce this Agreement or any of the loan documents,
Borrower consents to the personal jurisdiction of the courts of the State
of Washington and Federal Courts located in the State of Washington.
Borrower further consents to the venue of such suit being lain in Seattle,
Washington. This Agreement and any notes, security agreements and other
loan documents entered into pursuant to this Agreement shall be construed
in accordance with the laws of the State of Washington.
10. ADDITIONAL PROVISIONS. Borrower agrees to the additional provisions set
forth immediately following this Section 11 or on any "Exhibit A" attached
to and hereby incorporated into Agreement. This Agreement supersedes all
oral negotiations of agreements between Bank and Borrower with respect to
the subject matter hereof and constitutes the entire understanding and
Agreement of the matters set forth in this Agreement.
11. MISCELLANEOUS. If any provision of this Agreement is held to be invalid or
unenforceable, then (a) such provision shall be deemed modified if
possible, or if not possible, such provision shall be deemed stricken, and
(b) all other provisions shall remain in full force and effect.
11.1 If the imposition of or any change in any law, rule, or regulation
guideline or the interpretation or application of any thereof by any
court of administrative or governmental authority (including any request
or policy whether or not having the force of law) shall impose or modify
any taxes (except U.S. federal, state or local income, gross receipts or
franchise taxes imposed on Bank), or reserve requirements which would:
(a) increase the cost to Bank for extending or maintaining any loans and/or
line of credit to which this Agreement relates, (b) reduce the amounts
payable to Bank under this Agreement, such notes and other instruments, or
(c) reduce the rate of return on Bank's capital as a consequence of Bank's
obligations with respect to any loan and/or line of credit to which this
Agreement relates, then Bank agrees to give Borrower notice thereof within
thirty (30) days of such change and Borrower, at its option, may prepay
the promissory note within ten (10) business days without penalty. Or,
alternatively, Borrower agrees to pay Bank such additional amounts as will
compensate Bank therefor, within thirty (30) days after Bank's written
demand for such payment, which demand shall be accompanied by an
explanation of such imposition or charge and a calculation in reasonable
detail of the additional amounts payable to Borrower;
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11.2 Bank will not sell participation in or assign this loan in whole or
in part without notice to Borrower and Bank will not provide
information regarding the Borrower and this Agreement to any
prospective participant or assignee.
12. NOTICES. Any notices shall be given in writing to the opposite party's
signature below or as that party may otherwise specify in writing.
13. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
This Business Loan Agreement (Parts A and B) executed by the parties on June
19, 1998 Borrower acknowledges having read all of the provisions of this
Agreement and Borrower agrees to its terms.
Bank of America NT&SA, D.B.A, Seafirst Western Commercial Banking, Team 2.
-----------------------------------
(Branch/Office)
By: /s/ XXXXXXX X. XXXXXXX Title: Vice President
---------------------- --------------
Xxxxxxx X. Xxxxxxx
Address: 00000 XX 0xx Xxxxxx, Xxxxx 000 Xxxx, Xxxxx, Xxx: Xxxxxxxx, Xxxxxxxxxx 00000.
------------------------------ ---------------------------
Phone: (000) 000-0000 Fax: (000) 000-0000.
-------------- ---------------
TELEDESIC LLC by TELEDESIC CORPORATION, MANAGING MEMBER.
--------------------------------------------------------
(Borrower Name)
By: /s/ XXXX X. XXXXXXXXX Title: Chief Financial Officer
-------------------------- ----------------------------
Xxxx X. Xxxxxxxxx
Address: 0000 Xxxxxxxx Xxxxx Xxxx, Xxxxx, Xxx: Xxxxxxxx, Xxxxxxxxxx 00000
-------------------------- ----------------------------
Phone: (000) 000-0000 Fax: (000) 000-0000
-------------------------- ----------------------------
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EXHIBIT A TO BUSINESS LOAN AGREEMENT
BETWEEN BANK OF AMERICA NT & SA dba SEAFIRST BANK
AND
TELEDESIC L.L.C. by TELEDESIC CORPORATION, MANAGING MEMBER
DATED June 17, 1998
Financial Covenants:
* Teledesic L.L.C. will maintain a minimum balance of unencumbered cash and
short term investments equal to the commitment of this facility.
Other Conditions:
1 Prior to any advances made under this facility, there must be evidence that
material progress regarding the program agreements between the Borrower
and its prime contractor(s) has continued to occur.
2. - Principal Group must contribute $400,000.00 in cash; Borrower must
contribute no less than $400,000.00 in cash and no less than 20% of
total project cost, currently budgeted to be $12,453,489.
3. Borrower's LLC agreements and Unit Purchase Agreement must be in a form
satisfactory to Bank.
7
FIRST AMENDMENT ("AMENDMENT")
TO THE
BUSINESS LOAN AGREEMENT ("AGREEMENT") DATED JUNE 19, 0000
XXXXXXX
XXXX XX XXXXXXX NT & SA dba SEAFIRST BANK
AND TELEDESIC L.L.C. ("BORROWER")
The above-referenced loan agreement is hereby amended as follows:
- Total Amount Available in Section 1(a) is amended in its entirety to the
following:
The lesser of $11,275,000 or 80% of total project cost.
- Financial Covenants Section in Exhibit A to Business Loan Agreement is
amended in its entirety to the following:
Borrower will maintain a minimum of $25,000,000 in unencumbered cash and
short term marketable securities. This requirement shall not be additive
to any terms and conditions included in the related Lease Agreement
between Borrower and The Principal Group.
This Amendment is executed by the parties on August 4, 1998.
Bank of America NT&SA Teledesic L.L.C. by
Teledesic Corporation, Managing Member
by: /s/ XXXXXXX X. XXXXXXX by: /s/ XXXX X. XXXXXXXXX
----------------------------- -----------------------------
Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxxxx,
Vice President Chief Financial Officer
8
SECOND AMENDMENT ("AMENDMENT")
TO THE
BUSINESS LOAN AGREEMENT ("AGREEMENT") DATED JUNE 19, 0000
XXXXXXX
XXXX XX XXXXXXX NT & SA dba SEAFIRST BANK
AND TELEDESIC L.L.C. ("BORROWER")
The above-referenced loan agreement is hereby amended as follows:
o Quarterly financial reporting requirement included in Section 4.3 is
amended from 30 days following the end of each quarter to 60 days
following the end of each quarter.
This Amendment is executed by the parties on 1/27/ , 1999.
Bank of America NT&SA Teledesic L.L.C. by
Teledesic Corporation, Managing Member
By: /s/ XXXXXXX X. XXXXXXX by: /s/ XXXX X. XXXXXXXXX
----------------------------------- --------------------------------
Xxxxxxx X. Xxxxxxx, Vice President Xxxx X. Xxxxxxxxx, Chief Financial
Officer
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DUE: JUNE 30, 2000
PROMISSORY NOTE
TELEDESIC L.L.C.
$9,960,000.00 Dated: JUNE 19, 0000
Xxxxxxx, Xxxxxxxxxx
TELEDESIC L.L.C., a DELAWARE limited liability company ("Maker")
unconditionally promises to pay to the order of Bank of America National Trust
and Savings Association, doing business as SEAFIRST BANK ("Bank"), at its
WESTERN WHOLESALE BANKING TEAM 2 office, 00000 XX 0XX, XXXXX 000, XXXXXXXX,
XXXXXXXXXX 00000 on or before JUNE 30, 2000, in immediately available funds,
the principal sum of NINE MILLION NINE HUNDRED SIXTY THOUSAND Dollars and
no/100's ($9,960,000.00), or such lesser sum as may be advanced hereunder.
Maker further agrees to pay interest on the daily unpaid principal balance, in
arrears on the last day of each quarter, beginning the 30th day of September,
1998, in accordance with the terms, conditions, and definitions of Exhibit A
attached, which are incorporated herein. Also incorporated herein is Exhibit 1
attached hereto, regarding prepayment fees.
All advances under this Note, all conversions between the interest rate
options, and all payments of principal and interest may be reflected on a
schedule or a computer-generated statement which shall become a part hereof.
All unpaid principal and accrued but unpaid interest under this Note shall be
paid in full on JUNE 30, 2000.
If all or any portion of the principal amount or any installment of
interest is not paid when due, interest shall accrue, at the option of the
holder of this Note, from the date of default at a floating rate per annum one
and one half percent (1.50%) above the Reference Rate, as the Reference Rate
may vary from time to time, and the entire unpaid principal amount of this
Note, together with all accrued interest, shall become immediately due and
payable at the option of the holder hereof.
Advances under this Note may be made by Bank at the oral or written
request of XXXXX XXXXXX and XXXX X. XXXXXXXXX, any one acting alone, who are
authorized to request advances and direct the disposition of any such advances
until written notice of the revocation of such authority is received by Bank at
its office indicated above. Any such advance shall be conclusively presumed to
have been made to or for the benefit of Maker when made in accordance with such
requests and directions, or when said advances are deposited to the credit of
an account of Maker with Bank, regardless of the fact that persons other than
those authorized under this paragraph may have authority to draw against such
account.
Maker hereby waives presentment, demand, protest, and notice of dishonor
hereof. Each party signing or endorsing this Note signs as maker and principal,
and not as guarantor, surety, or accommodation party; and is estopped from
asserting any defense based on any capacity other than maker or principal.
This Note shall be governed by and construed in accordance with the laws
of the State of Washington.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
TELEDESIC L.L.C.
BY: TELEDESIC CORPORATION, MANAGING
MEMBER
By: /s/ XXXX X. XXXXXXXXX
----------------------------
XXXX X. XXXXXXXXX
Its:
---------------------------
Chief Financial Officer
Page 1
10
EXHIBIT A
INTEREST PROVISIONS
ARTICLE 1
DEFINITIONS
All terms defined below shall have the meaning indicated:
1.1 Adjusted LIBOR Rate shall mean for any day that per annum rate equal
to the sum of (a) a margin of 2.25%, (b) the quotient of (i) the LIBOR Rate as
determined for such day, divided by (ii) the Reserve Adjustment. The Adjusted
LIBOR Rate shall change with any change in the LIBOR Rate on the first day of
each Interest Period and on the effective date of any change in the Reserve
Adjustment.
1.2 Advances shall mean the disbursement of loan proceeds under the Note.
1.3 Available Amounts shall mean the lesser of $9,960,000.00 or 80% of
the total project cost.
1.4 Bank shall mean the holder of the Note.
1.5 Borrower shall mean the maker of the Note.
1.6 Business Day shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Seattle, Washington, are authorized or
required by law to close.
1.7 Commencement Date shall mean the first day of any Interest Period as
requested by Borrower.
1.8 Floating Rate Loans shall mean those portions of principal of the
Note accruing interest at the Floating Rate.
1.9 Floating Rate shall mean the Reference Rate plus 0% per annum.
1.10 Interest Period shall mean the period commencing on the date of any
advance at or conversion to an Adjusted LIBOR Rate and ending on any date
thereafter as selected by Borrower, subject to the restrictions of Section 2.3.
If any Interest Period would end on a day which is not a Business Day, the
Interest Period shall be extended to the next succeeding Business Day.
1.11 LIBOR Rate shall mean for any Interest Period the per annum rate,
calculated on the basis of actual number of days elapsed over a year of 360
days, for U.S. Dollar deposits for a period equal to the Interest Period
appearing on the display designated as "Page 3750" on the Telerate Service (or
such other page on that service or such other service designated by the British
Banker's Association for the display of that Association's Interest Settlement
Rates for U.S. Dollar deposits) as of 11:00 a.m., London time, on the day which
is two London Banking Days prior to the first day of the Interest Period. If
there is no period equal to the Interest Period on the display, the LIBOR Rate
shall be determined by straight-line interpolation to the nearest month (or
week or day if expressed in weeks or days) corresponding to the Interest Period
between the two nearest neighboring periods on the display.
1.12 LIBOR Rate Loans shall mean those portions of principal of the Note
accruing interest at the Adjusted LIBOR Rate.
1.13 London Banking Day shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks in London, England, are authorized or
required by law to close.
1.14 Note shall mean the promissory note to which this exhibit is
attached.
1.15 Reference Rate shall mean the rate of interest publicly announced
from time to time by Bank in San Francisco, California, as its "Reference
Rate." The Reference Rate is set based on various factors, including Bank's
costs and desired return, general economic conditions, and other factors, and
is used as a reference point for pricing some loans. Bank may price loans to
its customers at, above, or below the Reference Rate. Any change in the
Reference Rate shall take effect at the opening of business on the day
specified in the public announcement of a change in the Reference Rate.
1.16 Reserve Adjustment shall mean as of any day the remainder of one
minus that percentage (expressed as a decimal) which is the highest of any such
percentages established by the Board of Governors of the Federal Reserve System
(or any successor) for required reserves (including any emergency, marginal, or
supplemental reserve requirement) regardless of the aggregate amount of
deposits with said member bank and without benefit of any possible credit,
proration, exemptions, or offsets for time deposits established at offices of
member banks located outside of the United States or for eurocurrency
liabilities, if any.
1.17 Termination Date shall mean JUNE 30, 2000, or such earlier date upon
which Bank makes demand for payment in full under the Note based on an Event of
Default as defined in the Business Loan Agreement dated June 17, 1998.
Page A-2
11
ARTICLE 2
INTEREST RATE OPTIONS
2.1 Interest Rates and Payment Date. The Note shall bear interest from the
date of Advance on the unpaid principal balance outstanding from time to time at
the Floating Rate or Adjusted LIBOR Rate as selected by Borrower and all accrued
interest shall be payable in arrears as provided in the Note.
2.2 Procedure. Borrower may, on any London Banking Day two London Banking
Days before a Commencement Date, request Bank to give an Adjusted LIBOR Rate
quote for a specified loan amount and Interest Period. Bank will then quote to
Borrower the available Adjusted LIBOR Rate. Borrower shall have two hours from
the time of the quote to elect an Adjusted LIBOR Rate by giving Bank
irrevocable notice of such election.
2.3 Restrictions. Each Interest Period shall be one month or two months or
three months or any other term acceptable to Bank in its sole discretion. In no
event shall an Interest Period extend beyond the Termination Date. The minimum
amount of a LIBOR Rate Loan shall be $250,000.
2.4 Prepayments. If Borrower prepays all or any portion of a LIBOR Rate
Loan prior to the end of an Interest Period, there shall be due at the time of
any such prepayment the Prepayment Fee, determined in accordance with Form
51-6325 which is attached as Exhibit 1 to the Note. In all other cases no
prepayment fee shall be payable.
2.5 Reversion to Floating. The Note shall bear interest at the Floating
Rate unless an Adjusted LIBOR Rate is specifically selected. At the termination
of any Interest Period each LIBOR Rate Loan shall revert to a Floating Rate Loan
unless Borrower directs otherwise pursuant to Section 2.2.
2.6 Inability to Participate in Market. If Bank in good faith cannot
participate in the Eurodollar market for legal or practical reasons, the
Adjusted LIBOR Rate shall cease to be an interest rate option. Bank shall notify
Borrower of and when it again becomes legal or practical to participate in the
Eurodollar market, at which time the Adjusted LIBOR Rate shall resume being an
interest rate option.
2.7 Basis of Quotes. Borrower acknowledges that Bank may or may not in any
particular case actually match-fund a LIBOR Rate Loan. FDIC assessments, and
Federal Reserve Board reserve requirements, if any are assessed, will be based
on Bank's best estimates of its marginal cost for each of these items. Whether
such estimates in fact represent the actual cost to Bank for any particular
dollar or Eurodollar deposit or any LIBOR Rate Loan will depend upon how Bank
actually chooses to fund the LIBOR Rate Loan. By electing an Adjusted LIBOR
Rate, Borrower waives any right to object to Bank's means of calculating the
Adjusted LIBOR Rate quote accepted by Borrower.
ARTICLE 3
ADVANCES
3.1 Revolving Loan Facility. Bank shall until the earlier of demand or
the Termination Date make Advances to Borrower from time to time, to the extent
of the Available Amounts, with the aggregate principal amount at any one time
outstanding not to exceed $9,960,000.00. Borrower may borrow, prepay, and
reborrow the principal of the Note in whole or in part.
3.2 Procedure for Advances. Borrower may borrow on any Business Day.
Borrower shall give Bank irrevocable notice (written or oral) specifying the
amount to be borrowed and the requested borrowing date. Bank must receive such
notice on or before 11:30 a.m., Seattle time, on the day borrowing is requested.
All Advances shall be discretionary to the extent notification by Borrower is
given subsequent to that time.
Page A-1
12
Exhibit 1 -- PREPAYMENT FEES
If the principal balance of this note is prepaid (only under this LIBOR
loan) in whole or in part, whether by voluntary prepayment, operation of law,
acceleration or otherwise, a prepayment fee, in addition to any interest
earned, will be immediately payable to the holder of this note.
The amount of the prepayment fee depends on the following:
(1) The amount by which interest reference rates as defined below have changed
between the time the loan is prepaid and either a) the time the loan was
made for fixed rate loans, or b) the time the interest rate last changed
(repriced) for variable rate loans.
(2) A prepayment fee factor (see "Prepayment Fee Factor Schedule" on reverse).
(3) The amount of principal prepaid.
If the proceeds from a CD or time deposit pledged to secure the loan are used
to prepay the loan resulting in payment of an early withdrawal penalty for the
CD, a prepayment fee will not also be charged under the loan.
DEFINITION OF REFERENCE RATE FOR VARIABLE RATE LOANS
The "Reference Rate" used to represent interest rate levels for variable rate
loans shall be the index rate used to determine the rate on this loan having
maturities equivalent to the remaining period to interest rate change date
(repricing) of this loan rounded upward to the nearest month. The "Initial
Reference Rate" shall be the Reference Rate at the time of last repricing and a
new Initial Reference Rate shall be assigned at each subsequent repricing. The
"Final Reference Rate" shall be the Reference Rate at the time of prepayment.
CALCULATION OF PREPAYMENT FEE
If the Initial Reference Rate is less than or equal to the Final Reference
Rate, there is no prepayment fee.
If the Initial Reference Rate is greater than the Final Reference Rate, the
prepayment fee shall be equal to the difference between the Initial and Final
Reference Rates (expressed as a decimal), multiplied by the appropriate factor
from the Prepayment Fee Factor Schedule, multiplied by the principal amount of
the loan being prepaid.
EXAMPLE OF PREPAYMENT FEE CALCULATION
VARIABLE RATE LOAN: A non-amortizing 6-month LIBOR based loan with principal of
$250,000 is fully prepaid with 3 months remaining until next interest rate
change date (repricing). An Initial Reference Rate of 7.0% was assigned to the
loan at last repricing. The Final Reference Rate (as determined by the 3-month
LIBOR index) is 6.5%. Rates therefore have dropped 0.5% since last repricing
and a prepayment fee applies. A prepayment fee factor of 0.31 is determined
from Table 3 below and the prepayment fee is computed as follows:
Prepayment Fee = (0.07 - 0.065) x (0.31) x ($250,000) = $387.50
TABLE III: NONAMORTIZING (INTEREST ONLY) LOANS
Proportion of Remaining Principal Amount Being Prepaid Months Remaining To Maturity/Repricing(1)
0 3 6 9 12 24 36 48 60 84 120 240 360
0-100% 0 .31 .61 .91 1.21 2.3 3.4 4.4 5.3 6.9 8.9 13.0 14.8
(1) For the remaining period to maturity/repricing between any two
maturities/repricings shown in the above schedules, interpolate between the
corresponding factors to the closest month.
The holder of this note is not required to actually reinvest the prepaid
principal in any U.S. Government Treasury Obligations, or otherwise prove its
actual loss, as a condition to receiving a prepayment fee as calculated above.
Page 2 of 2
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[SEAFIRST BANK LOGO] LOAN MODIFICATION
AGREEMENT
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This agreement amends the Promissory Note dated June 19, 1998 ("Note")
executed by TELEDESIC L.L.C. ("Borrower") in favor of Bank of America National
Trust & Savings Association, doing business as Seafirst Bank, successor by name
change to Seattle-First National Bank ("Bank"), regarding a loan in the maximum
principal amount of $9,960,000.00 (the "Loan"). For mutual consideration,
Borrower and Bank agree to amend the above loan documents as follows:
1. Credit Limit. The maximum principal amount of Borrower's line of
credit is hereby changed to $11,275,000.00, and Borrower's maximum liability
for principal under the Note is also changed to $11,275,000.00.
2. Other Terms. Except as specifically amended by this agreement or
any prior amendment, all other terms, conditions, and definitions of the Note
and all other security agreements, guaranties, deeds of trust, mortgages, and
other instruments or agreements entered into with regard to the Loan shall
remain in full force and effect.
DATED August 4, 1998
Bank: Borrower:
SEAFIRST BANK TELEDESIC L.L.C.
BY: TELEDESIC CORPORATION MANAGING MEMBER
By: [SIGNATURE ILLEGIBLE] By: /s/ XXXX X. XXXXXXXXX
----------------------------- ------------------------------------------
XXXX X. XXXXXXXXX, CHIEF FINANCIAL OFFICER
Title: Vice President
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