LOAN AGREEMENT
LOAN Agreement (the "Agreement") dated as of 15 May, 1996 by and between Virtual
Telecom SA (the "Borrower") and New Capital Investment Fund, a Cayman Islands
corporation (the "Lender").
RECITALS:
A. The Borrower desires to borrow from the Lender an amount of up to three
hundred thousand U.S. DOLLARS (USD $300,000) upon the terms and
conditions set forth herein, and
B. The Lender is willing, subject to and upon the terms and conditions
herein set forth, to lend this amount to the Borrower.
AGREEMENT:
NOW, THEREFORE in consideration of the foregoing recitals and of the mutual
undertakings set forth herein, it is hereby agreed as follows:
1. AMOUNT AND TERMS OF LOAN
1.1 LOAN AND CLOSING DATE. Subject to the terms and conditions herein set
forth, the Lender shall land to the Borrower three hundred thousand U.S.
DOLLARS (USD $300,000). The loan is being made simultaneously with the
execution of this Agreement (the "Closing Date") at the offices of the \
Borrower.
1.2 INTEREST. The loan shall bear interest from the Closing Date to
maturity on the unpaid principal balance at an annual rate equal to
twelve percent (12%) and, after maturity, whether by acceleration or
otherwise, at an annual rate of fifteen percent (15%), or the highest
rate allowed by law, whichever is less. Interest shall be accrued
monthly from the Closing Date until the entire loan amount (principal
and interest) is paid in full. Interest shall be payable in full at the
maturity date of the loan. Therefore, interest shall be accrued during
the term of the loan and payable at the maturity of the loan.
1.3 MATURITY AND REPAYMENT. Maturity is defined as 366 days from the day
and year first above written, on which day the entire principal amount
of three hundred thousand (USD $300,000) and all unpaid interest
(accrued and other) shall be due and payable in full.
(a) At the sole discretion of the Borrower, the loan principal shall be
payable In cash or In the common stock of Virtual Telecom SA (or any
successor company or corporation), or a combination thereof. If the
Borrower elect to pay in the common stock of Virtual Telecom SA (or any
successor company or corporation), the common will be valued at
seventy-five percent (75%) of the average public market price for the
immediate 90 days preceding the repayment date.
(b) At the sole discretion of the Borrower, the loan interest (accrued and
other) will be payable in cash or in the common stock of Virtual Telecom
SA (or any successor company or corporation), or a combination thereof.
If the Borrower elects to pay in the common stock of Virtual Telecom SA
(or any successor company or corporation), the common stock will be
valued at seventy-five percent (75%) of the average public market price
for a 90 day period preceding the repayment date.
1.4 ORIGINATION FEE. Lender will receive a non refundable payment
consideration of one and one quarter percent (1.25%) of the principal
loan amount as an origination and processing fee. The origination Fee
will be deducted from the loan proceeds.
1.5 EQUITY INCENTIVE. Lender will receive one half of one percent (0.5%)
of the outstanding common stock of Virtual Telecom SA as an incentive to
make the loan to the Borrower. The outstanding common stock" is
determined as the amount of common stock issued and outstanding in the
30 day period immediately after Virtual Telecom SA becomes a US public
corporation, either through the acquisition of, or merger with, a Us
public corporation or through a Public Offering or Registration of its
shares under the laws of the US Securities and Exchange Commission
(SEC).
2. USE OF PROCEEDS
2.1 The proceeds from this loan shall be used exclusively for the
expenditure categories listed in Appendix "A" to the agreement. Any
change in the actual use of proceeds must be approved, in writing by the
Lender, prior to the expenditure of funds by the Borrower.
3. REPAYMENTS
3.1 REQUIRED PREPAYMENTS. The Borrower shall not be required to @e any
prepayment of principal prior to the maturity thereof, except in the
Event of Default as defined herein.
3.2 OPTIONAL PREPAYMENT. The Borrower shall have the absolute right from
time-to-time and at any time to pay the outstanding balance, in whole or
in part, provided that, in no event, shall the total interest payment
payable by the Borrower to the Lender be less than the amount of
interest which would have accrued if the Total Loan Amount were
outstanding in full on the Closing Date and for a continuous period of
three (3) months thereafter: a minimum of three months interest is Due
and payable at the time of any prepayment.
4. CONDITIONS
4.1 CORRECTNESS OF WARRANTIES. All representations and warranties
contained herein or otherwise made by the Borrower to the Lender in
connection herein shall be true and correct.
4.2 PROCEEDINGS; RECEIPT OF DOCUMENTS. All corporate and legal proceedings
and all documents and instruments in connection with the borrowing under
this Agreement shall be satisfactory in form and substance to the Lender
and Xxxxxxx and Xxxxxx, counsel to the Lender. The Lender shall have
received all information and copies of all documents, including records
of corporate proceedings which the Lender has reasonably requested. Such
documents where requested by the Lender shall be certified by
appropriate corporate or governmental authorities.
5. COVENANTS
The Borrower covenants and agrees that, until the entire principal
balance together with interest thereon and all its other indebtedness to
the Lender under this Agreement are paid in full, unless specifically
waived by the Lender in writing.
5.1 TAXES AND CLAIMS. The Borrower shall duly Pay and discharge and shall
cause each of its subsidiaries to pay and discharge:
(a) All taxes, assessments and governmental charges upon or against the
Borrower or its subsidiaries or their respective properties or assets
prior to the date of which penalties attach thereto, unless and to the
extent that such appropriate proceedings and appropriate reserves
thereof have been established and (b all lawful claims, whether for tort
damages, labor, materials, supplies, services, repairs, wages or
otherwise, which might or could if unpaid, become a lien or charge upon
the properties or assets of the Borrower or its subsidiaries, unless and
to the extent only that the same are being diligently contested on good
faith and by appropriate proceedings and appropriate reserves thereof
have been established.
6. OTHER REQUIREMENTS
6.3 INSPECTION BY LENDER. The Borrower shall allow any representative of
the Lender to visit and inspect any of the properties of the Borrower,
to examine the books of account and other records and files of the
Borrower, to make copies thereof and to discuss the affairs, business,
finances and accounts of the Borrower with its officers and employees,
all at such reasonable times and as often as the Lender may request.
6.4 BUSINESS OF THE BORROWER. The Borrower shall only conduct those
businesses and activities in which it is presently engaged, except for
now activities related to the Use of Proceeds.
6.5 PAY INDEBTEDNESS AND PERFORM COVENANTS. The Borrower shall:
(a) Make full and timely payment of the principal and interest of
indebtedness of the Borrower to the Lender, whether now existing of
hereafter arising.
(b) Duly comply with all terms and pursuant with or pursuant to this
Agreement, all at the times and places and in the manner set forth
therein.
7. EVENTS OF DEFAULT AND REMEDIATION
The following shall constitute events of defaults:
(a) Failure to pay interest or principal within ten (10) days of due dates,
(b) Failure to provide accounting of Use of Proceeds,
(c) Failure to use proceeds in accordance with provisions of Section 2 of
the Agreement,
(d) Failure to comply with covenants and other requirements contained in
Section3 5 and 6 of this Agreement,
(e) Upon discovery of any misrepresentations made by the Borrower in
connection with this Agreement. Upon any default, the principal and
unpaid interest shall become due and payable from the Borrower on demand
by the Lender.
8. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the loan
as herein provided for, the Borrower makes the following representations
and warranties to the Lender, which shall survive the execution and
delivery of this Agreement and any inspection or examination at any time
made by or an behalf of the Lender.
8.1 CORPORATE STATUS. The Borrower has the corporate power and authority to
own its properties and to transact the business in which it is engaged
or presently proposes to engage in. The Borrower is duly qualified as a
business organization under the laws of Switzerland and is in good
standing in all legal entities in which its business or the ownership
and use of its properties requires such qualification.
8.2. NO VIOLATION OF AGREEMENT. Neither the Borrower nor any subsidiary is
in default under any indenture, mortgage, deed of trust, agreement, or
other instruments to which it in a party or by which it may be bound.
Neither the execution and delivery of this Agreement, or any of the
instruments and documents to be delivered pursuant to this Agreement,
nor the consummation of the transactions herein or therein contemplated,
nor compliance with the provisions thereof or thereof will violate any
law or regulation or any order or decree or any court of governmental
instrumentality, or will conflict with, or result in the breach of, or
constitute a default under, any indenture, mortgage, deed of trust,
agreement or other instrument to which the Borrower or any subsidiary is
a party or by which any of them may be bound, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the
property of the Borrower, or any subsidiary thereunder, or violate any
provision of the Articles or Certificate of Incorporation or Bylaws of
the Borrower or any subsidiary.
9. MISCELLANEOUS
9.1 COLLECTION COST. In the event that the Lender shall retain or engage
an attorney or attorneys to collect, enforce or protect its interests
with respect to this Agreement or any Instrument or document delivered
pursuant to this Agreement, the Borrower shall pay all of the costs and
expenses or such collection, enforcement or protection, including,
without limitation, reasonable attorneys 1 fees and court costs, and the
lender may take judgement for all such amounts, in addition to the
unpaid principal and accrued interest.
9.2 MODIFICATION AND WAIVER. No modification or waiver of this Agreement
and no consent by the Lender to any departure therefrom by the Borrower
shall be effective unless such modification or waiver shall be in
writing and signed by the duly authorized officer of the Lender, and the
same shall then be effective only for the period, on conditions and for
specific instances an purposes specified in such writing. No notice to
or demand
on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar circumstances.
9.3 LAW. This Agreement shall be construed to be in accordance with and
governed by the laws of Switzerland.
9.4 NOTICES. All notices, requests, demands or other communications
provided for herein shall be in the written English language and shall
be deemed to have been given when sent by registered or certified mail,
return receipt requested, addressed, as the case may be to:
The Lender Xxxx Xxxxxx, Director
New Capital Investment Fund
Georgetown, Grand Cayman
Cayman Islands, British West Indies
With a copy to Xxxxxxx and Xxxxxx
Attn: Xxx Xxxxxxx
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx XX 00000 XXX
The Borrower Virtual Telecom SA
Attn: Xxxx Xxxxxxx 00, xxx xx Xxxxx
XX 0000, XX-0000 Xxxxxx, Xxxxxxxxxxx
9.5 WAIVER OF JURY TRIAL AND SETOFF. The Borrower hereby waives trial by
jury in any litigation in any court with respect to, in connection with,
or arising out of this Agreement or any other instrument or document
delivered pursuant to this Agreement or the validity, protection,
interpretation, collection or enforcement thereof or any other claim or
dispute however arising between the Borrower and the Lender; and the
Borrower hereby waives the right to interpose any setoff, counterclaim
or cross-claim in connection with any such litigation, irrespective of
the nature of such setoff, counterclaim or cross-claim. Borrower and
Lender agree to use a Swiss mediator of mutual choice.
9.6 U.S. CURRENCY. All dollar amounts set forth in the Agreement shall be
designated and payable in the currency of the United States of America
(USD $).
9.7 ENGLISH. All communications, letters and documents related to any and
all aspects of this Agreement shall be made in the English language.
9.8 COUNTERPART EXECUTION. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original out all of which
together shall constitute a single original Agreement.
IN WITNESS WHEREOF, the Borrower and the Lender have caused this Agreement
consisting of seven (7) pages, including a one page Appendix "All, to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
THE BORROWER,. Virtual Telecom SA, Geneva
BY: Xxxx Xxxxxxx, Chief Executive Officer
/s/ Xxxx Xxxxxxx
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THE LENDER,. NEW CAPITAL INVESTMENT FUND
Cayman Islands Corporation
BY: Xxxx Xxxxxx, Director
/s/ Xxxx Xxxxxx
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