LOAN AND SECURITY AGREEMENT
by and between
RAM XXXXXXX
("Borrower")
and
STARTEC GLOBAL COMMUNICATIONS CORPORATION
("Lender")
25 October 2000
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "Agreement")
is made as of October 25, 2000 by and between Ram Xxxxxxx ("Borrower"), and
Startec Global Communications Corporation, a Delaware corporation ("Lender").
R E C I T A L S
A. Whereas, Borrower and Lender executed that certain Loan and Security
Agreement dated October 8, 1998 (the "Original Agreement"), whereby
Borrower borrowed certain funds from Lender (the "Original Borrowed
Money");
B. Whereas, Borrower and Lender desire to amend and restate the Original
Agreement to provide for an increase in the loan amount;
C. Whereas, the parties desire to define the terms and conditions of their
relationship and to reduce their arrangements to writing.
NOW, THEREFORE, in consideration of the promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
SECTION 1.1. AGREEMENT. "Agreement" means this Amended and Restated
Loan and Security Agreement, as it may be amended or supplemented from time to
time.
SECTION 1.2. APPLICABLE INTEREST RATE. "Applicable Interest Rate" means
7.87% per annum for all amounts due and owing to the Lender hereunder.
SECTION 1.3. BORROWED MONEY. "Borrowed Money," means any obligation to
repay money, any indebtedness evidenced by this Loan and Security Agreement and
shall include the Original Borrowed Money.
SECTION 1.4. BORROWER. "Borrower" has the meaning set forth in the
Preamble.
SECTION 1.5. BUSINESS DAY. "Business Day" means any day on which
financial institutions are open for business in the State of Maryland, excluding
Saturdays and Sundays.
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SECTION 1.6. CLOSING DATE. "Closing" and "Closing Date" mean the date
on which this Agreement is executed by and between the Borrower and the Lender.
SECTION 1.7. LENDER. "Lender" has the meaning set forth in the
Preamble,
SECTION 1.8. LOAN. "Loan" has the meaning set forth in Section 2.1(a).
SECTION 1.9. LOAN DOCUMENTS. "Loan Documents" means and includes this
Agreement the final, executed Escrow Agreement and each and every other document
now or hereafter delivered in connection therewith, as any of them may be
amended, modified, or supplemented from time to time.
SECTION 1.10. PERSON. "Person" means an individual, partnership,
corporation, trust, joint venture, joint stock company, limited liability
company, association, unincorporated organization, Governmental Authority, or
any other entity.
SECTION 1.11. TERMS. "Term" has the meaning set forth in Section 2.3.
ARTICLE II
LOAN
SECTION 2.1. TERMS.
(a) Borrower and Lender agree that the additional loan advanced by Lender
to Borrower hereunder (the "Additional Borrowed Money") will be Five Hundred
Five Thousand and No Dollars ($561,000). The aggregate Borrowed Money
outstanding as of the date hereof is Nine Hundred Thousand and No/100 Dollars
($961,000) (such aggregate Borrowed Money being referred to herein as the
"Loan").
(b) Borrower hereby agrees to repay Lender the principal amount of the Loan
pursuant to the terms and conditions set forth herein.
(c) Applicable Interest Rate. Borrower further agrees to pay the Lender
interest on the Loan from the date hereof until repaid, at a rate per
annum in arrears (on the basis of the actual number of days elapsed
over a year of 360 days) equal to the Applicable Interest Rate.
SECTION 2.2. PAYMENTS. Principal payable on account of this Loan shall
be due and payable by Borrower to Lender immediately upon the earliest of (i)
September 30, 2001; or (ii) the termination of this Agreement pursuant to
Section 2.3(b) hereof. Interest shall be due and payable at the time that
principal amounts are fully paid. Pursuant to Section 2.3(b), the Loan may be
prepaid in whole or in part at any time or from time to time without premium or
penalty.
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SECTION 2.3. TERM.
(a) This Agreement shall be in effect from the Closing Date until September
30, 2001 ("the Term"), unless terminated as provided in subsection (b) of this
Section, and this Agreement may be renewed for one-year periods thereafter upon
the mutual written agreement of the parties.
(b) Borrower may terminate this Agreement at any time, provided that as of
the effective date of such termination, Borrower shall pay to Lender the full
amount of any outstanding principal and interest then due and owing on the Loan.
SECTION 2.4. SECURITY.
Borrower and Lender agree that this Loan shall be secured by, and the
Lender shall have legal recourse to, the Stock placed in escrow as set forth in
Section 2.5. Lender's right of recourse to the security described herein shall
be secondary to any pre-existing security interests in such property held by any
other Persons.
SECTION 2.5. ESTABLISHMENT OF ESCROW SECURITY.
As security for payments hereunder the Borrower has placed in escrow
certain securities of Startec Global Communications Corporation (the "Original
Stock") owned by Borrower, valued at an amount equal to five hundred thousand
dollars ($500,000), as more fully set forth in the Original Loan Agreement.
As security for payments hereunder for the Additional Borrowed Money,
Borrower agrees to place in escrow additional securities of Startec Global
Communications Corporation (the "Additional Stock") valued at an amount equal to
one million dollars ($1,000,000). The Additional Stock shall be valued at the
Fair Market Valuation as of the date the escrow agreement for the Additional
Stock (the "Additional Escrow Agreement") is executed by and among the parties.
For the purpose of this paragraph, a Fair Market Valuation for the Additional
Stock on any given day shall be equal to the closing price reported for the
Stock on the National Association of Securities Dealers Automated Quotation
System (NASDAQ) two business days prior to the date of the Escrow Agreement.
The Original Stock and the Additional Stock (collectively, the "Stock")
shall be placed in a segregated account to be held by an escrow agent for the
purpose of securing payment of the Loan. Following the execution and delivery of
this Agreement, the parties shall enter into the Additional Escrow Agreement
with the escrow agent set forth in the Original Escrow Agreement, a copy of the
Additional Escrow Agreement is attached hereto as Exhibit A. Simultaneously with
the execution and delivery of the Additional Escrow Agreement, the Borrower
shall deliver the Additional Stock to the Escrow Agent.
SECTION 2.6. ENTITLEMENT TO ESCROW SECURITY. In the event that Borrower
fails to satisfy his obligations hereunder in accordance with the payment terms
of Section 2.2 and fails to make interest and principal payments required
hereunder by September 30, 2001,
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1999, Lender shall, in addition to all other legal and equitable remedies, have
recourse to the Stock but only in amounts equal to the principal and interest
amounts remaining due and unpaid. Within thirty days following the last day of
the Term, Lender shall provide Borrower and Escrow Agent with notice ("Notice to
Recover") of its intention to recover amounts due and outstanding out of the
escrowed Stock. If Borrower fails to satisfy his obligations under Section 2.2
within 15 days of his receipt of Notice to Recover, the Escrow Agent shall
release and provide to Lender escrowed Stock equal to the amount due and
outstanding from Borrower to Lender. The value of the Stock at the time that
Lender shall be entitled to recourse thereto (i.e., in the event borrower fails
to satisfy his obligations hereunder) shall be determined by a Fair Market
Valuation. For the purpose of this paragraph, a Fair Market Valuation on any
given day shall be equal to the closing price reported for the Stock on the
National Association of Securities Dealers Automated Quotation System (NASDAQ)
for the 30 business days prior to the date of this Agreement.
SECTION 2.7. RELEASE OF ESCROW SECURITIES TO BORROWER. Upon the earlier
of (1) notice jointly provided to the Escrow Agent that the interest and
principal amounts due hereunder have been paid; or (2) September 30, 2002, all
Stock remaining in escrow shall be released and returned to Borrower.
SECTION 2.8. FURTHER SECURITY. Borrower and Lender agree that this Loan
shall be secured by, and Lender shall have legal recourse to, all of Borrower's
personal estate, including, but not limited to, all now-owed and hereafter
acquired real or personal property, deposit accounts, money, insurance proceeds,
securities and rights to payment of every kind and description, and all of
Borrower's contract rights, and all of Borrower's rights, remedies, interest,
security and liens, in any real or personal property. Lender's right of recourse
to the security described herein shall be secondary to any pre-existing security
interests in such property held by any other Persons.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the full and entire understanding and agreement among the parties with regard to
their subject matter and supersedes all prior written or oral agreements,
understandings, representations and warranties made with respect thereto. No
amendment, supplement or modification of this Agreement nor any waiver of any
provision thereof shall be made except in writing executed by the party against
whom enforcement is sought.
SECTION 3.2. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and personally delivered, mailed by
registered or certified mail (return receipt requested and postage paid), sent
by telecopier (with a confirming copy sent by regular mail), or sent by prepaid
overnight courier service, and addressed to the relevant
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party at its address set forth below, or at such address as such party may, by
written notice, designate as its address for purposes of notice hereunder.
(a) If to Lender at:
Startec Global Communications Corporation
00000 Xxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxx, Senior Vice President and Controller
Telephone: (000) 000-0000
(b) If to Borrower, at:
Mr. Ram Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
If mailed, notice shall be deemed to be given five (5) days after being
sent, if sent by personal delivery or telecopier, notice shall be deemed to be
given when delivered, and if sent by prepaid courier, notice shall be deemed to
be given on the next Business Day following deposit with the courier.
SECTION 3.3. SEVERABILITY. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law. Upon determination that any
such term, covenant or condition is invalid, illegal or unenforceable, the
parties hereto shall amend this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner.
SECTION 3.4. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.
SECTION 3.5. INTERPRETATION. No provision of this Agreement or any
other Loan Document shall be interpreted or construed against any party because
that party or its legal representative drafted that provision. The titles of the
paragraphs of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. Any pronoun used in this
Agreement shall be deemed to include singular and plural and masculine, feminine
and neuter gender as the case may be. The words "herein," "hereof," and
"hereunder" shall be deemed to refer to this entire Agreement, except as the
context otherwise requires.
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SECTION 3.6. THIRD PARTIES. No rights are intended to be created
hereunder for the benefit of any third party donee, creditor, or incidental
beneficiary of Borrower. Nothing contained in this Agreement shall be construed
as a delegation to Lender of Borrower's duty of performance, including, without
limitation, Borrower's duties under any account or contract in which Lender has
a security interest.
SECTION 3.7. CONSTRUCTION. The validity and construction of this
Agreement and all matters pertaining hereto shall be determined in accordance
with the laws of the State of Maryland.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
LENDER:
ATTEST: STARTEC GLOBAL COMMUNICATIONS
CORPORATION
A Delaware Corporation
By: By:
------------------------ ---------------------------------
Name: Xxxxxxx Xxx Name: Xxxxxxx Xxxxxxx
Title: Senior Vice President and Title: Corporate Vice President .
Controller and Chief Financial Officer
ATTEST: BORROWER:
RAM XXXXXXX
By: By:
------------------------ ---------------------------------
Name: Xxxxxxx Xxx Ram Xxxxxxx
Title: Senior Vice President and
Controller
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