EXHIBIT 10.11
Loan #: 0000-0-00000
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement"), dated as of April 14, 1997,
is between TELECAPITAL, L.P. ("TeleCapital"), a Delaware limited partnership,
with offices at 0000 X. Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 and
METROPHONE TELECOMMUNICATIONS, INC. ("Borrower"), a Washington corporation,
having its principal place of business at 00000 XX 00xx Xxxxxx, #000, Xxxxxxx,
XX 00000.
INTRODUCTION. TeleCapital has agreed to provide loans ("Loans") to
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Borrower to finance certain telephone equipment, and Borrower has agreed, in
part, to grant to TeleCapital certain collateral including first security
interests in and an option to purchase that equipment and certain pledges and
assignments of revenue and location rights relating to that equipment.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, TeleCapital and Borrower agree as follows:
SECTION 1. LOANS
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Subject to the terms and conditions of this Agreement, TeleCapital agrees
to make loans ("Loans") to the Borrower up to the aggregate amount of Fifty-five
Thousand and 00/100 Dollars ($55,000.00) (the "Commitment") as follows:
1.1 Interest Rate. The interest rate shall be Fourteen and Ninety
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Hundredths percent (14.90%) per annum calculated on the basis of a 360 day year
of 12 30-day months.
1.2 Repayment. Each Loan shall be repaid in Sixty (60) equal monthly
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payments of principal plus accrued interest beginning on the 15th day of the
first full month after that Loan is made. If any Loan is made on any day other
than the 15th day of any month, Borrower shall, on the day that Loan is made,
pay interest for that month in advance. Payments shall be applied first to
accrued interest and then principal.
1.3 Commitment Period. TeleCapital's Commitment to make Loans under
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this Agreement shall expire automatically on ____________, 19__, unless extended
in writing by TeleCapital, in its absolute discretion.
1.4 The Notes. Each Loan shall be evidenced by a note ("Note") in the
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form annexed as Exhibit A, which contains other terms and conditions of each
Loan and is hereby incorporated into this Agreement.
1.5 Limitation on Each Loan. Each Loan shall be in amount not to
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exceed the loan value ("Loan Value") of each item of Equipment (as defined in
Section 3.1) being financed by that Loan as indicated on Schedule 1. Loans shall
be minimum amounts of $50,000.00.
1.6 Payment. Borrower shall make payments to TeleCapital at the
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address set forth in the caption of this Agreement or at such other location as
TeleCapital shall designate in writing.
1.7 Use of Proceeds; Direct Payment to Vendor. Except as may
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otherwise be agreed by TeleCapital in its absolute discretion, all Loans shall
be advanced by TeleCapital directly (x) to the vendor of the Equipment, in the
case of purchase money financing or (y) to holders of liens on the Equipment, in
the case of a refinancing; and the balance, if any, shall be remitted to
Borrower.
1.8 Not a Revolving Loan. This is not a facility for a revolving
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loan. The Commitment represents the aggregate amount of Loans that TeleCapital
is obligated to make.
1.9 Interest Limits. If the fulfillment of any provision in this
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Agreement, any Note or any other Operative Document (as defined in Section 3.2
below) relating to the rate of interest is prohibited by, or in violation of,
any applicable law in effect at the time payment is due, the interest rate shall
be automatically reduced to the maximum rate then permitted by law. If for any
reason TeleCapital should receive as interest an amount that would exceed the
highest applicable lawful rate of interest, that amount in excess of the lawful
rate shall be deemed to have been credited against principal and not against
interest. This provision shall control every other provision in any Operative
Document that is applicable to the calculation of interest.
SECTION 2 - CONDITIONS PRECEDENT
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TeleCapital will have no duty to make any Loan unless all conditions in
this Agreement have been, and continue to be, met including each of the
following:
2.1 Loans. TeleCapital shall have received each of the following to
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TeleCapital's satisfaction:
(i) All times that TeleCapital has required in its letter to
Borrower ("Approval Letter") dated ____________, 19__,
approving the Loans;
(ii) Duly executed copies of all Operative Documents including, as
to each Loan, a duly completed and executed Note;
(iii) A true copy of all documents relating to the purchase of the
Equipment from the vendor including any purchase agreement,
purchase order or invoice (the "Equipment Purchase Documents");
(iv) UCC-1 financing statements and any other documents that may be
required to give TeleCapital a duly perfected first priority
security interest in all Collateral (as defined in Section 3.1
below));
(v) A true copy of Borrower's agreements (the "Revenue
Agreements") with the provider of operator assisted long
distance telephone, dial around and any other revenue
producing service for all of the Equipment, in form acceptable
to TeleCapital;
(vi) An Acceptance and Delivery Certificate from Borrower
acknowledging receipt of the Equipment, unless determined by
TeleCapital to be inapplicable;
(vii) All executed originals of each location, license, lease or
other agreement ("Location Agreement") for each actual and
proposed Equipment location; and
(viii) Any other documents that may be reasonably required by
TeleCapital.
2.2 No Default or Event of Default (as defined below) has occurred
and is continuing.
2.3 All representations and warranties in this Agreement and any
other Operative Document are, and continue to be, true and complete, as to
conditions and circumstances as of the date of each Loan.
2.4 There has been no material adverse change in the financial
condition of the Borrower or any guarantor in the value of any Collateral.
SECTION 3 - COLLATERAL; SECURED OBLIGATIONS
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3.1 Granting Clause. To secure the payment, observance and
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performance of all Obligations (as defined in Section 3.2), Borrower hereby
grants to TeleCapital a security interest in, and assigns to TeleCapital all of
Borrower's present or future interest in the following (collectively, the
"Collateral"): (A) All phones and other items listed on Schedule 1 to this
Agreement [and, in the case of purchase money financing, any other equipment
purchased (or to be purchased) by Borrower pursuant to any Equipment Purchase
Documents], together with all pedestals, enclosures, accessories, parts,
components, additions, improvements, substitutions or replacements thereto and
thereof (collectively, "Equipment", and all records, warranties, maintenance
agreements, licenses and permits relating to the foregoing, and all proceeds and
products of an substitutions for, the foregoing (collectively, the "Equipment
Collateral"); (B) all existing and future Revenue Agreements (including all
commissions for all phones payable thereunder) and Location Agreements, all
existing and future accounts, general intangibles, chattel paper, cash and other
revenues from the use of Equipment, all books, data bases and other records
relating to the foregoing and all proceeds of, and substitutions for, the
foregoing (collectively, the "Intangible Collateral"); (C) the Deposit (as
defined below); (D) all Borrower's other existing and future "accounts",
"general intangibles", "chattel paper", "equipment", "inventory" and "goods" (as
those terms are defined in the Uniform Commercial Code) and all other property
of any kind; and all proceeds and products of, and substitutions for, all of the
foregoing.
3.2 Secured Obligations. The term "Obligations" means all existing
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and future indebtedness, obligations, liabilities and duties of all kinds
(including principal, interest and expenses) owing from Borrower to TeleCapital,
whether direct or indirect, contingent or non-contingent, secured or unsecured,
liquidated or unliquidated, matured or unmatured or due or to become due,
including those arising under this Agreement, any Note, Revenue Assignment (as
defined below), Location Assignment (as defined below) or any other agreement,
note guaranty or other document executed in connection with this Agreement
(collectively, the "Operative Documents" and any other existing or future loan
from TeleCapital to Borrower.
3.3 Location of Equipment Collateral. All of the Equipment
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Collateral shall be kept at Borrower's premises identified in the caption of
this Agreement ("Borrower's Premises"), or at the locations listed on Schedule 1
to this Agreement, provided that the Equipment at each such location is the
subject of a Location Agreement in accordance with the requirements of the
Location Assignment. Borrower shall advise TeleCapital in writing of the
specific location of each item of the Equipment Collateral at least ten days
before the date such items are to be moved from Borrower's Premises to the
address for that Equipment Collateral specified on Schedule 1. No item of
Equipment Collateral shall thereafter be relocated unless TeleCapital shall have
received at least ten days prior written notice from Borrower of the new
location, duly executed USS financing statements for that location, executed
originals of a LA in accordance with the requirements of the Location
Assignment, and, if required by TeleCapital, and, if required by TeleCapital,
lien searches for that location. Notwithstanding the foregoing, Borrower may not
move any Equipment Collateral if, in the judgment of TeleCapital, that move will
materially effect its liens, rights or interests in that Equipment Collateral.
3.4 Perfection of Liens. Borrower shall (i) execute such financing
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statements (including amendments, continuation statements and other documents,
in form reasonably satisfactory to TeleCapital as TeleCapital may specify; (ii)
pay or reimburse TeleCapital for all UCC-1 filing fees or other recording fees
and search fees and search fees; and (iii) take those other steps as TeleCapital
may reasonably direct from time to time, including the noting of TeleCapital's
lien on the Collateral and delivering all originals of each Location Agreement
to TeleCapital, all to perfect TeleCapital's security interest in the
Collateral. Borrower hereby irrevocably authorizes TeleCapital to execute on
behalf of Borrower and to file those financing and continuation statements and
to take those other actions as TeleCapital deems appropriate from time to time
at Borrower's expense to perfect and continue TeleCapital's security interest in
the Collateral, and if an Event of Default shall occur and be continuing to
notify Borrower's creditors and others of TeleCapital's security interest and
the exercise of its rights and remedies.
3.5 Assignment of Location. Pursuant to TeleCapital's form of
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Assignment of Location Agreement ("Location Assignment"), Borrower shall assign
to TeleCapital, and grant a security interest to TeleCapital in, each Location
Agreement.
3.6 Assignment of Revenue Agreement. (a) Pursuant to TeleCapital's
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form of Assignment of Revenue Commissions ("Revenue Assignment"), Borrower shall
assign to TeleCapital and grant a security interest to TeleCapital in all
Borrower's right, title and interest in and to existing and future agreements
("Revenue Agreements") with operator service, dial around and other revenue
service providers pursuant to which commissions, fees, surcharges and other
revenue is to be paid to Borrower relating to any Equipment including any
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Revenue Agreement referenced in any Revenue Assignment, and provide irrevocable
instructions to the provider or other payor under the Revenue Agreement to make
payments to TeleCapital in the amount, and at the times, that payments are due
under each Note, prior to making payments to the Borrower, and the provider or
payor shall execute and deliver to TeleCapital the consent to assignment and
payment instructions annexed thereto, and (b) as provided in the Revenue
Assignment, Borrower shall not change the service provided for any phones that
is subject to an Revenue Agreement or remove any phone from the coverage of an
Revenue Agreement, whether or not that phone is part of the Equipment, unless
Borrower has complied with the requirements of the Revenue Assignment in
connection therewith, to TeleCapital's reasonable satisfaction.
3.7 Labeling and Legending. Borrower shall affix a sticker or other
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form of notice as may be acceptable to TeleCapital, noting Borrower's ownership
and, if requested by TeleCapital, TeleCapital's security interest, on prominent
place on each pay telephone cabinet which is part of the Equipment Collateral.
If requested by TeleCapital, Borrower shall also xxxx any other Collateral and
its books and records in a manner satisfactory to TeleCapital to show
TeleCapital's security interest.
SECTION 4 - WARRANTIES; COVENANTS
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Borrower represents and warrants as follows:
4.1 Organization and Authority. It is a corporation duly organized,
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validly existing, and in good standing, under the laws of the State of
Washington, has the authority and power necessary to own its assets and to
transact the business in which it is engaged, and is duly qualified and in good
standing to do business, in each jurisdiction in which the conduct of its
business or the ownership of its assets so requires.
4.2 Authority. It has the absolute and unrestricted right, power,
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authority and capacity to execute and deliver this Agreement and each of the
other Operative Document, and to perform its obligations hereunder and
thereunder. The signatory below is duly authorized to execute and deliver this
Agreement.
4.3 No Conflict. Its execution and delivery of this Agreement and of
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the other Operative Documents, and the consummation and performance of any of
the transactions contemplated hereby or thereby, do not and will not (a)(i)
violate any applicable law or any judgment, order, or decree of any court or
other governmental authority, or (ii) violate any provision of its charter or
bylaws; (b) violate any provision of, or cause a default under, any mortgage,
indenture, agreement or other undertaking to which it is a party or by which it
is bound; or (c) result in the creation or imposition of any lien on any of its
assets.
4.4 Enforceability. It has duly authorized, executed, and delivered
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this Agreement and the other Operative Documents. This Agreement and the other
Operative Documents constitute the legal, valid, and binding obligations of
Borrower, enforceable against it in accordance with their respective terms.
4.5 Consents and Permits. No consent of any other person (including
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such person's shareholders) and no consent, license, approval, or exemption by,
or authorization of, or registration or declaration with, any governmental
authority, is necessary to (a) its execution, delivery or performance of this
Agreement or of any other Operative Document, or (b) the validity or
enforceability of this Agreement or of any other Operative Document.
4.6 No Defaults. It is not in default, and no event or condition
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exists that after the giving of notice or lapse of time or both, would
constitute an event of default under any mortgage, indenture, agreement,
judgement, or other undertaking, to which it is a party or by which it is bound.
4.7 No Litigation. There is no action, suit, investigation, or
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proceeding pending, or the best of its knowledge threatened, against or
affecting it or any of its assets that, if adversely determined, is reasonably
likely to result in a material adverse effect on Borrower.
4.8 Title; Liens. Borrower holds good title to the Collateral, free
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of all liens, restrictions, taxes and encumbrances (collectively "Liens"). Upon
the filing of the UCC-1 financing statements executed by Borrower describing the
Collateral in the UCC-1 filing offices described therein, TeleCapital will have
a duly perfected first priority security interest in all Collateral, free of all
other Liens. Borrower hereby warrants and will forever defend that title and the
enforceability and priority of liens created by this Agreement or any other
Operative Document at Borrower's expense.
4.9 Name and History. Borrower has not (a) had, used or operated
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under any other name or trade name, (b) acquired no other organization or
entity or a substantial portion of the assets of any individual or other
organization or entity, or (c) merged, or been merged into, no other
organization or entity, except as has been disclosed in writing to TeleCapital.
If Borrower is purchasing, or has purchased, any Equipment from anyone other
than the manufacturer or a dealer of that Equipment in the ordinary course of
that dealer's business, or if Borrower is purchasing or has purchased any
Location Agreements, the full name and address of any such seller of any
Equipment or Location Agreement, and any other names used by that seller in the
five years prior to the Borrower's acquisition, are set forth on the annexed
Schedule 4.9.
4.10 Financial Disclosures. All financial information of Borrower
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which Borrower has disclosed to TeleCapital has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis and fully
and fairly represent the financial condition and results of operations of
Borrower and there have been no material adverse changes in the financial
condition and results of operations of Borrower.
4.11 Solvency. Borrower is solvent and shall so remain during the
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term hereof; no receiver, liquidator or trustee has been appointed for Borrower
or any of its properties; Borrower has not been adjudged bankrupt or insolvent;
Borrower is not affected by any voluntary or involuntary bankruptcy petitions or
arrangement of reorganization or by any assignment for the benefit of creditors
or by any proceeding of dissolution or liquidation, and none of such actions are
contemplated or threatened by or against Borrower.
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4.12 Survival. All representations, warranties and agreements
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contained in this Agreement or in any other Operative Documents shall survive
the consummation of the transactions contemplated by this Agreement
notwithstanding any investigation conducted, or knowledge acquired, with respect
thereto.
SECTION 5 - AFFIRMATIVE COVENANTS
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Borrower shall do each of the following:
5.1 Obligations. Pay all indebtedness, and abide by all terms and
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conditions, under each Note, this Agreement, all other Operative Documents and
all other Obligations when due.
5.2 Financial Reporting. Deliver to TeleCapital financial information
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and documents as follows:
(a) within ninety days after the close of each fiscal year end
financial statements as of the close of such fiscal period including a balance
sheet and with the related statements of operations, retained earnings and
changes in cash flows for such fiscal period, prepared on a reviewed basis in
accordance with generally accepted accounting principles by a CPA; and
(b) simultaneously with the submission of each financial
statement described above, a personal certification of an offer of Borrower (i)
that each such financial statement is true and complete, and (ii) that there
exists no condition or event that constitutes, or with notice or lapse of time
or both would constitute a default under this Agreement or any other
Obligations, and if any such condition or event existed or exists, specifying
the nature and period of existence and what action, if any, is being taken to
remedy each such condition or event; and
(c) such other information including books, records, expense
ledgers, tax filings, phone bills, canceled checks and all other reports and
statements respecting the business and properties or the condition or
operations, financial or otherwise, of Borrower and the Collateral in form, and
at intervals, as TeleCapital may from time to time reasonably request.
5.3 Condition of Property. Keep the Equipment Collateral in good and
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clean condition and make all repairs that are required in the ordinary course of
business to operate the Equipment Collateral.
5.4 Inspections. At any time during the regular business hours after
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at least one business day's notice and as often as requested, permit TeleCapital
and its agents and employees to inspect the Collateral and examine, audit and
make copies and abstracts from any and all of Borrower's books and records
relating to the Collateral or Borrower's financial condition as TeleCapital may
reasonably request, including OSP, dial around and other commission or revenue
statements, phone bills and canceled checks for payments on Location Agreements.
5.5 Compliance With Laws. Comply with all laws, ordinances,
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regulations and restrictions affecting the Equipment Collateral, and pay all
taxes on the Equipment Collateral when due.
5.6 Preservation of Existence. Preserve and maintain its existence,
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licenses, qualifications and good standing in its jurisdiction of formation and
all authorizations, consents, licenses, permits, registrations and
qualifications that are necessary for the transaction of business and the
operation of the Equipment Collateral.
5.7 Indemnity. Indemnify, defend (with counsel reasonably acceptable
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to TeleCapital) and hold harmless TeleCapital (including TeleCapital's agents,
employees, officers and directors) against all losses, claims, suits, fines,
damages and expenses, including reasonable attorney's fees and disbursements,
incurred by reason of, or in connection with, this Agreement, any other
Operative Document or any Collateral, any loan or accommodation to Borrower or
in connection with maintaining TeleCapital's interest in any of the foregoing,
except to the extent caused by TeleCapital's willful misconduct or gross
negligence.
5.8 Insurance Coverage. Borrower shall keep the Equipment Collateral
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insured as follows:
(a) Physical Damage Insurance. Maintain extended coverage
physical damage insurance written in the name of Borrower covering all Equipment
Collateral that is in Borrower's possession or control, reasonably satisfactory
to TeleCapital.
(b) Liability Insurance. Maintain broad form comprehensive
general liability insurance, reasonably satisfactory to TeleCapital.
(c) Policy Terms. All policies shall meet the requirements that
TeleCapital in its reasonably discretion establishes from time to time for its
customers in Borrower's industry including the following (i) all policies shall
name TeleCapital "and its successors and assigns" as "additional insured" as to
all liability insurance and "'loss payee" as to all physical loss insurance; and
(ii) if requested by TeleCapital, Borrower shall provide to TeleCapital current
certificates of insurance confirming all of the above coverage and, thereafter,
at least ten days prior to the expiration date of any insurance listed on any
insurance certificate previously given to TeleCapital certificates evidencing
that the insurance has been renewed.
(d) Insurance Proceeds. TeleCapital shall have the exclusive
authority to receive directly all insurance proceeds relating to any Equipment
Collateral, settle or compromise all claims relating to such proceeds and
determine whether to apply such proceeds to reduce any Note or any other
Obligations or to repair or replace any Equipment Collateral, provided that so
long as no Event of Default has occurred and is continuing, TeleCapital shall
settle or compromise any claim only with the consent of Borrower and TeleCapital
shall release such proceeds for the purchase of Equipment of like or greater
value that will serve as replacement Collateral, to TeleCapital's reasonable
satisfaction.
5.9 Use of Equipment. Borrower may, in any lawful manner not
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inconsistent with this Agreement, use the Collateral to the extent that is
ordinary and necessary in the carrying on of Borrower's primary
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business, provided that Borrower shall not sell, exchange, lease or otherwise
dispose of any Collateral or any of Borrower's rights therein without the prior
written consent of TeleCapital.
5.10 Title; Liens. Borrower shall maintain exclusive ownership of all
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Collateral, free of all Liens, except in favor of TeleCapital.
5.11 Maintenance of Records. Borrower shall maintain accurate,
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complete and detailed books and records pertaining to the Collateral, including
itemized records as to all collections from each item of Equipment Collateral
subject to the Revenue Agreement or any Location Agreements.
5.12 Notices to TeleCapital. Borrower shall notify TeleCapital
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immediately in writing if any of the following shall occur. (a) Borrower becomes
aware of the occurrence of any Event of Default or of any fact, condition or
event that with the giving of notice or passage of time or both, could become an
Event of Default ("Default"); (b) any change in the location of any of
Borrower's places of business or of establishment of any new, or the
discontinuance of any existing place of business or location of any of
Borrower's books and records, and with respect to those new places of business
and locations, comply with Section 3.3 and (c) (i) the institution of any
litigation in which Borrower is a party if an adverse decision there would
require Borrower to pay more than $100,000 or deliver assets the value of which
exceeds that sum; (ii) the institution of any other suit or any administrative
proceeding involving Borrower that might materially and adversely affect
Borrower's operations, financial condition, property or business; (iii) any
material adverse change in Borrower's business or financial condition or in the
value of any of the Collateral.
SECTION 6 - EVENTS OF DEFAULT
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Any of the following events or conditions shall constitute an "Event
of Default" under this Agreement and the other Operative Document and
Obligations if not cured within the applicable cure period, if any, set forth
below:
6.1 Payments. Any failure to make any payment required in any Note,
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this Agreement, any other Operative Document or any other Obligation when due
provided, however, that the Borrower shall have the right to cure that default
within three days of notice of default, which cure right may not be exercised
more than one time in any consecutive six month period; or
6.2 Other Terms. Any failure to perform or observe any term or
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condition contained in this Agreement, any Note or any other Operative Document
when due provided, however, that Borrower may effect a complete cure of any non-
monetary covenant in this Agreement, except for any Event of Default referred to
in any other subsection of this Section 6, within 30 days of notice of default;
or
6.3 Representations. Any representation, statement or warranty made
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by or on behalf of Borrower (or any guarantor) in this Agreement, any other
Operative Document, or certificate or otherwise made or given to Agreement at
any time shall be incorrect, incomplete or misleading when made in any material
respect; or
6.4 Financial Information and Inspections. Any failure to furnish
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financial information or to permit inspection of the Collateral in any records
as required under this Agreement or any other loan Document, provided that
Borrower shall have ten days after notices to cure any default of Section 5.2;
or
6.5 Lien Defaults or Foreclosures. Proceedings shall have been
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instituted or actions take for the foreclosure or enforcement of any security
interest, judgement, assignment or other lien or encumbrance affecting the
Collateral; or
6.6 Judgments. Any judgment shall be entered against Borrower or any
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guarantor (collectively "Obligor") in excess of $25,000.00, that is not within
30 days of entry, discharged, or stayed and bonded, to the reasonably
satisfaction of TeleCapital; or
6.7 Insolvency. Any filing of a petition by or against any Obligor
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under any bankruptcy or insolvency law or an assignment by any Obligor of any
property or assets for the benefit of creditors, provided, however, that any
Obligor shall have 30 days to obtain a court order dismissing any bankruptcy or
insolvency proceeding that is filed without consent of the Obligor; or
6.8 Liens. Any Lien shall encumber any Collateral other than
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TeleCapital's liens; or
6.9 Good Standing. The failure of Borrower or any corporate guarantor
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to remain in good standing in its state of incorporation.
6.10 Changes of Locations or Providers. Any violation of Section 3.3
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or 3.6(b).
6.11 Change in Control. Any change in the ownership, capitalization
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or organizational structure of Borrower that, in Lender's judgment, results in a
change in control of Borrower.
SECTION 7 - TELECAPITAL'S REMEDIES UPON DEFAULT
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On the occurrence of any Event of Default (after the expiration of any
applicable cure period), and at any later time, TeleCapital may in its
discretion, do any of the following in any order and in any combination:
a. Declare all Obligations to be due and payable immediately and
proceed to enforce payment and exercise any and all of the rights and remedies
provided by the Uniform Commercial Code as well as other rights and remedies
provided to TeleCapital either at law or in equity; and
b. Require Borrower to assemble the Collateral and make it available
to TeleCapital at any place to be designated by TeleCapital that is reasonably
convenient to TeleCapital. TeleCapital will give borrower
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reasonable notice of the time and place of any public sale or of the time after
which any private sale or any other intended disposition of the Collateral is to
be made. The requirements of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the address of Borrower shown at the beginning of
this Agreement at least ten (10) days before the time of the sale or
disposition. Expenses of retaking, holding, preparing for sale, selling, or the
like, including TeleCapital's reasonable attorneys' fees and legal expenses,
auctioneer's, storage and other charges, shall be satisfied from the proceeds of
any such sale; and
c. As to any Collateral that involves obligations of third parties to
Borrower, including the Intangible Collateral, notify those obligors of the
interest granted to TeleCapital under this Agreement and direct those obligors
to make payments directly to TeleCapital or to any designee; and
d. Exercise all other rights and remedies under any Operative
Documents, or any other agreement to which Borrower is bound; and
e. Apply proceeds of any sale or other disposition of Collateral first
to costs and expenses of sale or collection or any other expense to which it is
entitled under any Operative Documents, and then to payment of any Obligation in
whatever order Bank may elect; and
f. Institute suit directly against Borrower or any other Obligor
without first foreclosing or liquidating any Collateral or without suing any
other Obligor.
SECTION 8 - TELECAPITAL'S EXPENSES
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Should TeleCapital employ counsel for advice or representation
relating to the collection or enforcement of this Agreement after an event of
default (whether or not suit is actually instituted), TeleCapital may collect
from any Obligor all TeleCapital's reasonable expenses and fees including (a)
all reasonable fees and disbursements of TeleCapital's counsel and (b) all
reasonable expenses of, or in anticipation of, litigation. All of those
collection fees and expenses shall be due and payable upon demand, shall bear
interest at the default rate in effect from time to time under this Agreement
and shall deemed to be Obligations secured by all Collateral.
SECTION 9 - PERFORMANCE OF BORROWER'S DUTIES
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Should Borrower fail to perform any duty or obligation imposed upon
Borrower under this Agreement or any other Operative Document when due (and any
applicable cure period shall have expired), TeleCapital may, at its option,
perform any such duty or obligation. The expenses incurred by TeleCapital in
performing any of TeleCapital's duties or obligations shall be with interest at
the default rate in effect from time to time under the Agreement, and shall be
secured by this Agreement and by all other Collateral given to secure any
Obligations. Any action take by TeleCapital pursuant to this Section shall not
constitute a waiver of any Event of Default or an undertaking to perform, or
complete, any of Borrower's duties, nor shall it impose any responsibility on
TeleCapital to perform any of Borrower's duties in the future.
SECTION 10 PURCHASE OPTION; BORROWER'S OPTION
---------------------------------------------
10.1 TeleCapital's Purchase Option. TeleCapital shall have the option
-----------------------------
("TeleCapital's Option") to acquire all of Equipment financed, in whole or in
part, by a Loan and all initial Location Agreements relating to that Equipment,
(collectively, "Option property" on the maturity date or the date of any earlier
satisfaction of the Note evidencing that Loan, at an option price of One Dollar
($1.00) if, but only if, Borrower does not exercise the Borrower's option
(defined in Section 10.2). TeleCapital may exercise TeleCapital's Option by
giving Borrower notice of its exercise not later than ten days after the
maturity date or any earlier date of satisfaction of that Note. If TeleCapital's
Option is exercised, on the notice date or the date of maturity or satisfaction,
whichever is later, TeleCapital shall pay Borrower the option price and Borrower
shall assign to TeleCapital good title to, and all of its right, title and
interest in and to, that "Option Property" free and clear of all Liens. In that
event, Borrower shall execute a warranty xxxx of sale and those other documents
that TeleCapital may require to obtain good and clear title to the "Option
Property" as described above.
10.2 Borrower's Option. So long as no Event of Default has occurred
-----------------
and is continuing, Borrower shall have the option ("Borrower's Option") to
cancel TeleCapital's option at an option price equal to ten percent (10%) of the
Note evidencing the Loan. Borrower may exercise this option at any time on or
prior to the maturity date or the date of any earlier satisfaction of the Note
evidencing that Loan by paying that option price to TeleCapital. Borrower's
payment of that option price shall be in addition to, and not in lieu of, any
interest, principal or other payments due under any Note, this Agreement or any
other Operative Document.
SECTION 11 - DEPOSIT
--------------------
Borrower shall deliver to TeleCapital ______________________________
and 00/100 ($_________.00) (the "Deposit"), representing an amount equal to the
scheduled monthly installments on the Loan that are due on June 15, 2002, and
July 15, 2002, (the "Due Dates"). The Deposit shall be deemed to be part of the
Collateral for the Obligations. So long as no Event of Default has occurred and
is continuing, TeleCapital shall apply the Deposit t the monthly installments on
their respective due dates; otherwise, TeleCapital shall apply the Deposit in
accordance with Section 7(e). TeleCapital shall not be required to segregate the
Deposit from TeleCapital's funds or to pay interest on the deposit.
SECTION 12 - MISCELLANEOUS
--------------------------
12.1 Construction. In this Agreement, unless specified otherwise:
------------
"any" means "any one or more"; "including" means "including without limitation";
"day" means "calendar day," singular words include plural, and vice versa.
Headings are for convenience only, and do not affect the meaning of any
provision; reference to an agreement includes reference to its permitted
supplements, amendments and other modifications; and reference to a person
includes reference to an individual or an entity and to its or their permitted
successors and assigns in the
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applicable capacity; and titles, headings and subheadings are for organizational
purposes only and neither to add to, nor limit, the meaning of any provision.
12.2 Term. This agreement shall remain in full force and effect until
----
Borrower shall have indefeasibly paid and performed all of the Obligations.
12.3 Notices. All notices, consents, requests, and other
-------
communications under this Agreement shall be in writing and shall be effective:
(a) upon delivery by hand; (b) one day after being deposited with a recognized
overnight delivery service; or (c) three days after being deposited in the
United States mail, first-class, postage prepaid, registered or certified,
return receipt requested, in each case addressed to such party at its address
set forth in the caption of this Agreement (or to such other address as
hereafter may be designated in writing by such party to the other party).
12.4 No Waiver, Remedies Cumulative. No failure or delay by
------------------------------
TeleCapital in exercising any right or remedy hereunder operates as a waiver
thereof. No single or partial exercise of any right or remedy hereunder by
TeleCapital precludes any other or further exercise of any right or remedy
hereunder. Except as expressly provided herein, the exercise of any right or
remedy hereunder does not preclude the simultaneous or later exercise of any
other rights or remedies available at law or in equity.
12.5 Governing Law; Jurisdiction; Service of Process. THE PARTIES
-----------------------------------------------
HEREBY IRREVOCABLY DECLARE AND AGREE AS FOLLOWS: This Agreement shall be
governed by and construed in accordance with the laws of the State of Colorado,
regardless of the conflict of laws principles thereof. Any legal action, suit or
other proceeding arising out of or in any way connected with, this Agreement may
be brought in the courts of the State of Colorado, or in the United States
courts for the District of Colorado. With respect to any such proceeding in any
such court: (a) Each party generally and unconditionally submits itself and its
property to the nonexclusive jurisdiction of such court, (b) Each party waives,
to the fullest extent permitted by law, any objection it has or hereafter may
have to the venue of such proceeding, as well as any claim it has or may have
that such proceeding is in an inconvenient forum, (c) process may be served on a
party anywhere in the world, by the same methods as are required for notice
under this Agreement.
12.6 Successors or assigns; No Third Party Rights. This Agreement is
--------------------------------------------
binding upon and inures to the benefit of the parties and their permitted
successors and assigns. Borrower may not assign any of its rights or obligations
under this Agreement without the prior written consent of TeleCapital, in its
absolute discretion. If TeleCapital (or any assignee of TeleCapital) shall
assign its rights under the Operative Documents, all terms and conditions of the
Operative Documents shall remain in full force and effect and any such assignees
shall succeed to the rights and remedies of TeleCapital. Nothing in this
Agreement confers, or is intended to confer, expressly or by implication, any
rights or remedies upon any person, other than Borrower or TeleCapital (and its
assignees).
12.7 Complete Agreement; Modifications. This Agreement, together with
---------------------------------
the other Operative Documents, constitutes the entire agreement between the
parties with respect to the transaction contemplated hereby and supersedes all
prior agreements and understandings with respect to the subject matter hereof
and thereof. This Agreement may not be amended or modified in any way, nor may
noncompliance with is terms be waived, except pursuant to a written instrument
signed by the party to be charged.
12.8 Severability. Any provision of this Agreement that 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; any such prohibition or
unenforceability shall not invalidate or render unenforceable such provision in
any other jurisdiction.
12.9 Counterparts. This Agreement may be executed by the parties in
------------
separate counterparts, each of which when so executed and delivered is deemed an
original. All such counterparts together constitute but one and the same
instrument.
SECTION 13 - NO JURY TRIAL
--------------------------
EACH OF BORROWER AND TELECAPITAL HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL
BY JURY IN ANY LITIGATION WITH RESPECT TO ANY ASPECT OF THIS AGREEMENT OR ANY
OTHER OPERATIVE DOCUMENT AND REPRESENTS THAT IT HAS CONSULTED WITH COUNSEL
SPECIFICALLY WITH RESPECT TO THIS WAIVER.
IN WITNESS WHEREOF, Borrower and TeleCapital have executed this
Agreement as of the date first above written.
BORROWER:
METROPHONE TELECOMMUNICATIONS, INC.
By: /s/
-----------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
TELECAPITAL, L.P.
By:
----------------------------
Name: Xxxxxxxx Xxxxxx
Title: Managing Director
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Loan #: 0000-0-00000
NOTE
$55,000.00
Date: April 14, 1997
Place: Redmond, Washington
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to
the order of TeleCapital, L.P. ("TeleCapital"), a Delaware limited partnership,
at its offices at 0000 X. Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, or
such other address as TeleCapital shall advise Borrower in writing, on or before
July 15, 2002, ("Maturity Date"), the principal sum of Fifty-five Thousand and
00/100 dollars ($55,000.00 U.S.) together with interest from the date hereof at
the rate of Fourteen and Ninety Hundredths percent (14.90%) per annum, on the
outstanding principal balance, due and payable in Sixty (60) equal consecutive
monthly installments, as described each month thereafter until July 15, 2002,
when all outstanding principal and accrued interest are due and payable in full.
Payments shall be applied first to interest due and the balance shall be applied
to principal. In addition, if any monthly installment is not paid within ten
days of its due date, Borrower agrees to pay a late charge equal to five percent
(5%) of any such overdue monthly installment.
This Note is executed and delivered pursuant to a certain Loan and
Security Agreement dated April 14, 1997, as may be amended ("Loan Agreement")
between TeleCapital and Borrower, is subject to all the terms and provisions
thereof, including, provisions for the prepayment and the acceleration of the
maturity hereof. Capitalized terms in this Note that are defined in the Loan
Agreement and not otherwise defined in this Note shall be defined as in this
Note. This Note is secured by all Collateral including, without limitation, a
security interest in the Equipment Collateral and the security provided for in
the Assignment of Location Agreements and Assignment of OSP Commissions. In
addition, this Note is secured by all other "Collateral" and other security
under any other existing or future loan and security agreement, assignment,
mortgage or other security agreement, assignment, mortgage or other security
agreement given by Borrower [or any guarantor] to secure any indebtedness owing
by Borrower to TeleCapital.
At the option of TeleCapital or any holder of this Note, the whole
unpaid balance of the principal indebtedness, together with all interest thereon
and all other sums due hereunder or otherwise owing by the Borrower to
TeleCapital, shall become immediately due and payable upon the occurrence of any
"Event of Default" (as defined in the Loan Agreement) including, without
limitation, any failure to make any payment under this Note within 10 days of
notice of default or (ii) any breach by Borrower of its obligations under, or
failure to perform any provision of, this Note, the Loan, Agreement, or any
other Operative Document, Commissions or any other existing or future agreement
between the Borrower and TeleCapital or any other holder of this Note, subject
to any cure period in any such agreement.
No delay on the part of TeleCapital in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. All rights and remedies of
TeleCapital whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singly or concurrently.
If any term, condition or provision of this Note is determined to be
invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other term, condition or provision of this Note.
Except as provided herein, Borrower hereby waives demand, grace,
presentment, protest, notice of dishonor or nonpayment and notice of the
exercise of any option hereunder, notice of the acceleration of maturity or due
date, and any and all other notices and demands whatsoever.
This Note may be prepaid in whole or in part, without penalty or
premium, from time to time at the option of Borrower, provided that any partial
prepayment shall not relieve Borrower or the obligation to continue making its
regularly scheduled payments or principal and interest hereunder. All
prepayments including payment of the last month's installment required
hereunder, shall be applied first to the payment of interest due and any
remainder shall be applied to the principal balance.
The obligations of Borrower hereunder are absolute and unconditional
and are not subject to setoff or delay for any reason or for any cause
whatsoever.
The obligations of Borrower hereunder shall bind Borrower and its
successors and assigns, and shall accrue to the benefit of TeleCapital or any
holder of this Note and their respective successors and assigns.
Borrower agrees to pay in addition to all other sums due and payable
hereunder all costs and expenses, including attorneys fees, incurred by
TeleCapital in enforcing this Note and the collection of all amounts due
hereunder.
This Note shall be construed and enforced in accordance with the laws
of the State of Colorado without regard to principles of conflicts of laws.
Borrower consents to the jurisdiction of the federal and state courts located in
Colorado, and consents to service of process by regular mail at borrower's
address specified below.
BORROWER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
PROCEEDING RELATING TO THIS NOTE AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY
TO CONSULT WITH COUNSEL AS TO, AND TO CAREFULLY CONSIDER, THIS WAIVER. BY
ACCEPTING THIS NOTE, TELECAPITAL ALSO WAIVES ITS RIGHT TO REQUEST A TRIAL BY
JURY.
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the
date first above written.
BORROWER:
METROPHONE TELECOMMUNICATIONS, INC.
By:
----------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
BORROWER'S ACKNOWLEDGEMENT
STATE OF
COUNTY OF
On this ___ day of __________, 19__, the undersigned officer, Xxxx X.
Xxxxxxxxxxx, personally appeared before me, who acknowledged himself to be the
President of METROPHONE TELECOMMUNICATIONS, INC., the Borrower named in this
Agreement and that he, as such officer, being duly authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of said Corporation as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
--------------------------------
Notary Public
MY COMMISSION EXPIRES:
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