Exhibit 10.13
EXECUTION COPY
--------------
Amended and Restated
Loan Agreement
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement"), is entered
into as of February 1, 2000 (the "Closing Date"), by and between ITXC Corp., a
Delaware corporation (the "Borrower"), and PNC Bank, National Association, (the
"Bank").
This Agreement amends and restates in its entirety the Loan Agreement
between the Borrower and the Bank dated as of August 20, 1998 (the "Original
Loan Agreement") as amended November ___, 1998 ("Amendment No. 1 to the Original
Loan Agreement").
The Borrower and the Bank, with the intent to be legally bound, agree as
follows:
1. Loan. The following loan and credit facilities (collectively referred to as
----
the "Loan"), shall be subject to and governed by this Agreement:
$10,000,000 Secured Revolving Credit (less advances made under the
Equipment Line) ("Revolving Credit")
$10,000,000 Equipment Line of Credit ("Equipment Line")
The aggregate maximum availability of the Loan shall be $10,000,000. The
proceeds of the Revolving Credit shall be used for general corporate and working
capital purposes except as otherwise set forth herein. The proceeds of the
Equipment Line shall be used only for the purpose of purchasing personal
computers for employees, servers, ERP software and other equipment and related
software necessary to build IP telephony facilities.
2. Terms and Conditions. Subject to the terms and conditions hereof and
--------------------
relying upon the representations and warranties herein set forth, the Bank
agrees to make the Loan available to the Borrower at any time or from time to
time on or after the date hereof in accordance with the terms of this Agreement.
The credit facility shall consist of the components set forth in Section 1
hereof in accordance with the following terms:
2.1 Expiration Date.
---------------
(a) Revolving Credit. Twelve (12) months from the date of the closing
----------------
of this Agreement ("Closing Date"), or on such subsequent anniversary
of the Closing Date as the parties hereto may agree (the "Revolving
Credit Expiration Date").
(b) Equipment Line. Thirty-six (36) months from the date of the final
--------------
draw under the Equipment Line. Borrower shall make no more than five
(5) draws under the Equipment Line, which draws must be requested and
made within the twelve (12) month period immediately following the
Closing Date (the "Equipment Line Expiration Date").
2.2 Interest Rates. Interest shall be calculated on the basis of a 360-
--------------
day year for the actual number of days elapsed. The interest rate
applicable to the Obligations shall change on each date there is a
change in the Base Rate (as defined below).
(a) Revolving Credit and Equipment Line. The Revolving Credit and
--------------------------------------
Equipment Line Base Rate shall equal the greater of (i) the Prime Rate
and (ii) the Federal Funds Rate plus .5% ("Base Rate"). "Prime Rate"
means the rate announced from time to time by Bank as its "prime
rate;" it is a base rate upon which other rates charged by the Bank
are based, and it is not necessarily the best rate offered by the
Bank. "Federal Funds Rate" means the weighted average of the federal
funds effective rate available to the Bank.
2.3 Facility Fee. The Borrower shall pay to the Bank during the twelve
------------
(12) month period beginning on the Closing Date a facility fee at a
rate of 0.5% per annum on the daily average amount of the unused
balance of the Revolving Credit and Equipment Line, payable quarterly
in arrears.
2.4 Borrowing Base/Availability.
---------------------------
(a) Revolving Credit. The Revolving Credit shall be available in
----------------
amounts determined in accordance with the Borrowing Base Rider in the
form attached hereto as Exhibit A.
---------
(b) Equipment Line. The Equipment Line shall be available at the
--------------
Closing Date in such amounts as determined pursuant to the Borrowing
Base Rider. Advances under the Equipment Line shall be limited to 90%
of the face amount of equipment invoice (excluding taxes, shipping and
installation) submitted with any Advance Request (as provided below in
2.5).
2.5 Requests. Except as otherwise provided herein, the Borrower may from
--------
time to time prior to the applicable Expiration Date request the Bank
to make a Loan under the Revolving Credit or Equipment Line by
delivering to the Bank, not later than 12:00 Noon, Eastern Standard
time a request by telephone immediately confirmed in writing by
letter, facsimile or telex in such form (a "Loan Request"), it being
understood that the Bank may rely on the authority of any individual
making such a telephonic request without the necessity of receipt of
such written confirmation. Each Loan Request shall be irrevocable and
shall
2
specify (a) the proposed borrowing date; and (b) the aggregate amount
of the proposed borrowing hereunder.
2.6 Promissory Note. The Obligation of the Borrower to repay the
---------------
aggregate unpaid principal amount of the Revolving Credit and the
Equipment Line, together with interest thereon, shall be evidenced by
a promissory note of the Borrower ("Note") payable to the order of the
Bank in a face amount equal to the maximum amount of the Revolving
Credit.
2.7 Lockbox. If an Event of Default has occurred and remains uncured
-------
after ninety (90) days, the Bank, in its discretion, may establish a
lockbox at the Bank to which account debtors of the Borrower will
submit all payments in respect of the Borrower's accounts receivable,
provided, however, that any notices directing the Borrower's customers
to pay to the lockbox shall, in the absence of any fraud or cessation
of business by the Borrower be sent in the name of the Borrower, shall
indicate only that the Borrower has a new post office box and shall
not indicate that the lockbox is under the Bank's control.
2.8 Additional EXIM Terms. In the event that the Borrower elects to
---------------------
pursue financing through the Export-Import Bank of the United States
("EXIM Bank"), the additional terms related to such financing shall be
set forth in an Agreement (the "EXIM Borrower Agreement") in the form
of agreement customarily used by EXIM Bank in such financings.
2.9 Letter of Credit Subfacility.
----------------------------
(a) Issuance of Letters of Credit. The Borrower may request the
-----------------------------
issuance of a letter of credit (each a "Letter of Credit") by
delivering to the Bank a completed application and agreement for
standby letters of credit in such form as the Bank may specify from
time to time by no later than 10:00 a.m., Eastern time, at least three
(3) business days, or such shorter period as may be agreed to by the
Bank, in advance of the proposed date of issuance. Subject to the
terms and conditions hereof, the Bank will issue a Letter of Credit
provided that each Letter of Credit shall have a maximum maturity date
of December __, 2000, and providing that in no event shall the
aggregate amount of all Letters of Credit outstanding exceed, at any
one time, One Million Dollars ($1,000,000).
(b) Letter of Credit Fees. The Borrowers shall pay to the Bank, with
---------------------
respect to any Letter of Credit, a flat fee of 2% on the daily average
undrawn face amount of such standby Letter of Credit for the period
from and including the date of issuance of such Letter of Credit,
payable quarterly in arrears commencing with the last business day of
each March, June, September and December following issuance of each
Letter of Credit. The Borrower shall also pay to the Bank then in
effect customary fees and administrative expenses payable with respect
to the
3
Letters of Credit as the Bank may generally charge or incur from time
to time in connection with the issuance, maintenance, modification (if
any), assignment or transfer (if any), negotiation, and administration
of Letters of Credit.
(c) Reimbursement. In the event of any request for a drawing under a
-------------
Letter of Credit by the beneficiary or transferee thereof, the Bank
will promptly notify the Borrower. Provided that it shall have
received such notice, the Borrower shall reimburse (such obligation to
reimburse the Bank shall sometimes be referred to as a "Reimbursement
Obligation") the Bank prior to 12:00 noon, Eastern time on each date
that an amount is paid by the Bank under any Letter of Credit (each
such date, an "Drawing Date") in an amount equal to the amount so paid
by the Bank. Any notice given by the Bank pursuant to this Section
2.9(c) may be oral if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
With respect to any unreimbursed drawing, the Borrower shall be
deemed to have incurred from the Bank a Letter of Credit Borrowing in
the amount of such drawing. Such Letter of Credit Borrowing shall be
due and payable on demand (together with interest) and shall bear
interest at the rate per annum applicable to the Revolving Credit.
(d) Determinations to Honor Drawing Requests. In determining whether
----------------------------------------
to honor any request for drawing under any Letter of Credit by the
beneficiary thereof, the Bank shall be responsible only to determine
that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on
their face with the requirements of such Letter of Credit.
(e) Nature of Reimbursement Obligations. The Obligations of the
-----------------------------------
Borrower to reimburse the Bank upon a draw under a Letter of Credit,
shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Section 2.9
under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other
right which the Bank may have against the Borrower or any other
Person for any reason whatsoever;
(ii) any lack of validity or enforceability of any Letter of
Credit;
(iii) the existence of any claim, set-off, defense or other
right which the Bank may have at any time against a beneficiary
or any transferee of any Letter of Credit (or any Persons for
whom any such
4
transferee may be acting), the Bank or any other Person or,
whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between the Borrower or and the
beneficiary for which any Letter of Credit was procured);
(iv) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect even
if the Bank has been notified thereof;
(v) payment by the Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit;
(vi) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of the Borrower;
(vii) any breach of this Agreement or any other Loan
Document by any party thereto;
(viii) the occurrence or continuance of any bankruptcy or
insolvency proceeding as described in Section 7.5 with respect to
any Borrower;
(ix) the fact that an Event of Default shall have occurred
and be continuing; and
(x) the fact that the Revolving Credit Expiration Date shall
have passed or this Agreement shall have been terminated.
(f) Indemnity. In addition to amounts payable as provided in Section
---------
9, the Borrower shall protect, indemnify, pay and save harmless the
Bank from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of
internal counsel) which the Bank may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of
Credit, other than as a result of (A) the gross negligence or willful
misconduct of the Bank as determined by a final judgment of a court of
competent jurisdiction or (B) subject to the following clause (ii),
the wrongful dishonor by the Bank of a proper demand for payment made
under any Letter of Credit, or (ii) the failure of the Bank to honor a
drawing under any such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts
or omissions herein called "Governmental Acts").
5
(g) Liability for Acts and Omissions. As between the Borrower and the
--------------------------------
Bank, the Borrower assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the
foregoing, the Bank shall not be responsible (except to the extent
that such acts and omissions are attributable to or result from the
gross negligence or willful misconduct of the Bank as determined by a
final judgment of a court of competent jurisdiction) for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application
for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged (even if the Bank shall have been
notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of
Credit may be transferred, to comply fully with any conditions
required in order to draw upon such Letter of Credit or any other
claim of the Borrower against any beneficiary of such Letter of
Credit, or any such transferee, or any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any such
transferee; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, telecopy or
otherwise; (v) errors in interpretation of technical terms; (vi) any
loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary
of any such Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or (viii) any consequences arising from causes
beyond the control of the Bank or any issuing bank, including any
Governmental Acts, and none of the above shall affect or impair, or
prevent the vesting of, any of the Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by
the Bank or any issuing Bank under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put the Bank
under any resulting liability to the Borrower.
3. Security. The security for repayment of the Loan shall be as set forth in
--------
the Security Agreement dated as of August 20, 1998 by and between the Borrower
and the Bank (the "Security Agreement") and documents heretofore,
contemporaneously or hereafter executed and delivered to the Bank (the "Security
Documents"), which shall secure
6
repayment of the Loan and the Note and any amendments, extensions, renewals or
increases and all costs and expenses of the Bank incurred in the documentation,
negotiation, modification, enforcement, collection or otherwise in connection
with any of the foregoing, including but not limited to reasonable attorneys'
fees and expenses (hereinafter referred to collectively as the "Obligations").
This Agreement (including the Addendum and any Riders thereto), the Note and the
Security Documents are collectively referred to as the "Loan Documents".
4. Representations and Warranties. The Borrower makes the following
------------------------------
representations and warranties to the Bank which shall be true and correct as of
the date of this Agreement and the date of the making of a Loan, and which shall
be true and correct except as otherwise set forth on the Addendum attached
hereto and incorporated herein by reference (the "Addendum").
4.1. Existence, Power and Authority. The Borrower is duly organized, validly
------------------------------
existing and in good standing under the laws of the State of its
incorporation or organization and has the power and authority to own
and operate its assets and to conduct its business as now or proposed
to be carried on, and is duly qualified, licensed and in good standing
to do business in all jurisdictions where its ownership of property or
the nature of its business requires such qualification or licensing,
except where the failure to be so qualified or licensed would not have
a material adverse effect on the business, operations or financial
condition of the Borrower. The Borrower is duly authorized to execute
and deliver the Loan Documents, all necessary action to authorize the
execution and delivery of the Loan Documents has been properly taken,
and the Borrower is and will continue to be duly authorized to borrow
under this Agreement and to perform all of the other terms and
provisions of the Loan Documents.
4.2. Financial Statements.
--------------------
(a) The Borrower has delivered or caused to be delivered to the Bank
its consolidated balance sheet and income statement for the three month
period ended September 30, 1999 (the "Historical Financial
Statements"). The Historical Financial Statements are true, complete
and accurate in all material respects and fairly present the
consolidated financial condition, assets and liabilities, whether
accrued, absolute, contingent or otherwise and the result of Borrower's
operations for the period specified therein. The Historical Financial
Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied from period to
period subject in the case of interim statements to normal year-end
adjustments and to any comments and notes acceptable to the Bank.
7
(b) The Borrower has delivered to the Bank projections of its
anticipated financial performance for a thirty-six (36) month period
reflecting, among other things, the Initial Public Offering proceeds
(the "Financial Projections").
4.3. No Material Adverse Change. Since the date of the Historical Financial
--------------------------
Statements, the Borrower has not suffered any material damage,
destruction or loss to its assets, and no event or condition has
occurred or exists, which has resulted or could reasonably be expected
to result in a material adverse change in its business, assets,
operations, financial condition or results of operation. Since the
preparation of the Financial Projections, there has been no material
adverse change as against such Financial Projections.
4.4. Binding Obligations. The Borrower has full power and authority to
-------------------
enter into the transactions provided for in this Agreement and has been
duly authorized to do so by appropriate action of its Board of
Directors; and the Loan Documents, when executed and delivered by such
Borrower, will constitute the legal, valid and binding obligations of
such Borrower enforceable in accordance with their terms.
4.5. No Defaults or Violations. There does not exist any Event of Default
-------------------------
under this Agreement or any material default or violation by the
Borrower of or under any of the terms, conditions or obligations of:
(i) its articles or certificate of incorporation, regulations or bylaws
and the articles or certificate of incorporation and bylaws of the
Borrower delivered to the Bank on the Closing Date have not been
amended, revised, supplemented, restated or changed in any way and are
still in full force and effect; (ii) any material indenture, mortgage,
deed of trust, franchise, permit, contract, agreement, or other
instrument to which it is a party or by which it is bound; or (iii) any
material law, regulation, ruling, order, injunction, decree, condition
or other requirement applicable to or imposed upon it by any law, the
action by any court or any governmental authority or agency; and the
consummation of this Agreement and the transactions set forth herein
will not result in any such default or violation.
4.6. Title to Assets. The Borrower has valid title to its assets reflected
---------------
on the Historical Financial Statements, free and clear of all liens and
encumbrances, except for (i) current taxes and assessments not yet due
and payable, (ii) liens and encumbrances, if any, reflected or noted in
the Historical Financial Statements, (iii) assets disposed of by such
Borrower in the ordinary course of business since the date of the
Historical Financial Statements, and (iv) those liens or encumbrances
specified on the Addendum.
4.7. Litigation. There are no actions, suits, proceedings or governmental
----------
investigations pending or, to the Borrower's knowledge, threatened
against the Borrower, which could reasonably be expected to result in a
material adverse
8
change in its business, assets, operations, financial condition or
results of operations and there is no basis known to the Borrower for
any action, suit, proceedings or investigation which could reasonably
be expected to result in such a material adverse change. All pending
or threatened litigation against the Borrower of which the Borrower
has knowledge is listed on the Addendum.
4.8. Tax Returns. The Borrower has filed all returns and reports that are
-----------
required to be filed in connection with any federal, state or local
tax, duty or charge levied, assessed or imposed upon it or its
property or withheld by it, including unemployment, social security
and similar taxes and all of such taxes, have been either paid or
adequate reserves or other provisions have been made.
4.9. Employee Benefit Plans. Each employee benefit plan as to which the
----------------------
Borrower may have any liability complies in all material respects with
all applicable provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"), including minimum funding requirements, and (i)
no Prohibited Transaction (as defined under ERISA) has occurred with
respect to any such plan, (ii) no Reportable Event (as defined under
Section 4043 of ERISA) has occurred with respect to any such plan
which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Section 4042 of ERISA, (iii) the Borrower
has not withdrawn from any such plan or initiated steps to do so, and
(iv) no steps have been taken to terminate any such plan.
4.10. Environmental Matters. The Borrower is in compliance, in all material
---------------------
respects, with all Environmental Laws, including, without limitation,
all Environmental Laws in jurisdictions in which the Borrower owns or
operates, or has owned or operated, a facility or site, stores
Collateral, arranges or has arranged for disposal or treatment of
hazardous substances, solid waste or other waste, accepts or has
accepted for transport any hazardous substances, solid waste or other
wastes or holds or has held any interest in real property or
otherwise. Except as otherwise disclosed on the Addendum, no
litigation or proceeding arising under, relating to or in connection
with any Environmental Law is pending or, to the best of the
Borrower's knowledge, threatened against the Borrower, any real
property which the Borrower holds or has held an interest or any past
or present operation of the Borrower. No release, threatened release
or disposal of hazardous waste, solid waste or other wastes is
occurring, or to the best of the Borrower's knowledge has occurred,
on, under or to any real property in which the Borrower holds any
interest or performs any of its operations, in material violation of
any Environmental Law. As used in this Section, "litigation or
proceeding" means any demand, claim notice, suit, suit in equity,
action, administrative action, investigation or inquiry whether
brought by a governmental authority or other person, and
"Environmental Laws" means all provisions of laws, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by any
governmental authority
9
concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
4.11. Intellectual Property. The Borrower owns or, to the best of
---------------------
Borrower's knowledge, has the right to use all patents, patent
rights, trademarks, trade names, service marks, copyrights,
intellectual property, technology, know-how and processes necessary
for the conduct of its business as currently conducted that are
material to the condition (financial or otherwise), business or
operations of the Borrower.
4.12. Regulatory Matters. No part of the proceeds of the Loan will be use
------------------
for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from
time to time in effect or for any purpose which violates the
provisions of the Regulations of such Board of Governors.
4.13. Solvency. As of the date hereof and after giving effect to the
--------
transactions contemplated by the Loan Documents, the Borrower will
have sufficient cash flow to enable it to pay its debts as they
mature.
4.14. Disclosure. None of the Loan Documents contains or will contain any
----------
untrue statement of material fact or omits or will omit to state a
material fact necessary in order to make the statements contained in
this Agreement or the Loan Documents not misleading. There is no fact
known to the Borrower which materially adversely affects or, to the
best knowledge of the Borrower, might materially adversely affect the
business, assets, operations, financial condition or results of
operation of the Borrower and which has not otherwise been fully set
forth in this Agreement or in the Loan Documents.
4.15. Year 2000. The Borrower has reviewed the areas within its business
---------
and operations which could be adversely affected by, and has
developed or is developing a program to address on a timely basis the
risk that certain computer applications used by the Borrower may be
unable to recognize and perform properly date-sensitive functions
involving dates prior to and after December 31, 1999 (the "Year 2000
Problem"). The Year 2000 Problem will not have, and is not reasonably
expected to have, a material adverse effect on the business, assets,
operations or financial conditions of the Borrower.
5. Affirmative Covenants. The Borrower agrees that from the date of execution
---------------------
of this Agreement until all Obligations have been fully paid and any
commitments of the Bank to the Borrower have been terminated, the Borrower
will:
5.1. Books and Records. Maintain books and records in accordance with GAAP
-----------------
and give representatives of the Bank access thereto at all reasonable
times following notice from the Bank, including permission to examine,
copy and make abstracts
10
from any of such books and records and such other information as the
Bank may from time to time reasonably request, and the Borrower will
make available to the Bank for examination copies of any reports,
statements or returns which the Borrower may make to or file with any
governmental department, bureau or agency, federal or state.
5.2. Interim Financial Statements; Certificate of No Default; Accounts
-----------------------------------------------------------------
Receivable. Furnish the Bank within 15 days after the end of each month
----------
a detailed report on its accounts receivable in such reasonable detail
consistent with the form currently used by the Borrower's management. A
copy of the most recently prepared form is attached hereto as Exhibit
-------
B. The Borrower shall also provide within 30 days of the end
-
of each month its Financial Statements (as defined hereinafter) for
such period, in reasonable detail, certified by the president, chief
executive officer or chief financial officer of the Borrower and
prepared in accordance with GAAP applied from period to period. The
Borrower shall also deliver, within 30 days of the end of each quarter,
a certificate signed by such officer which verifies compliance with
applicable financial covenants for the period then ended and whether
any Event of Default exists, and, if so, the nature thereof and the
corrective measures the Borrower proposes to take. "Financial
Statements" means the Borrower's consolidated and, if required by the
Bank in its reasonable discretion, consolidating balance sheets, income
statements and statements of cash flows for the year, month or
(excepting statements of cash flows) quarter together with year-to-date
figures and comparative figures for the corresponding periods of the
prior year. The Borrower shall be deemed to have satisfied the
reporting requirements of this Section 5.2 with respect to quarterly
Financial Statements to the extent that each such Financial Statement
is included among the Form 10Q filings made to the Securities and
Exchange Commission ("SEC") via the Electronic Data Gathering, Analysis
and Retrieval System ("XXXXX").
5.3. Annual Financial Statements. Furnish the Borrower's Financial
---------------------------
Statements to the Bank within 90 days after the end of each fiscal
year. Those Financial Statements will be prepared in accordance with
GAAP and audited by an independent certified public accountant selected
by the Borrower and reasonably satisfactory to the Bank. Audited
Financial Statements shall contain the unqualified opinion of an
independent certified public accountant and its examination shall have
been made in accordance with GAAP consistently applied from period to
period. The Borrower will also provide filings made with any regulatory
authority, to the extent requested by the Bank, and such other
information reasonably requested by the Bank, from time to time. The
Borrower shall be deemed to have satisfied the reporting requirements
of this Section 5.3 with respect to annual Financial Statements to the
extent that each such Financial Statement is included among the Form
10K filings made to the SEC via XXXXX.
11
5.4. Payment of Taxes and Other Charges. Pay and discharge in accordance
----------------------------------
with past practice all indebtedness and pay when due all taxes,
assessments, charges, levies and other liabilities imposed by
government authorities upon the Borrower, its income, profits,
property or business, except those which currently are being contested
in good faith by appropriate proceedings and for which the Borrower
shall have set aside adequate reserves in accordance with GAAP or made
other adequate provision with respect thereto acceptable to the Bank.
5.5. Maintenance of Existence, Operation and Assets. Do all things
----------------------------------------------
necessary to maintain, renew and keep in full force and effect its
organizational existence and all rights, permits and franchises
necessary to enable it to continue its business; continue in operation
in substantially the same manner as at present; keep its properties in
good operating condition and repair; and make all necessary and proper
repairs, renewals, replacements, additions and improvements thereto.
5.6. Insurance. Maintain with financially sound and reputable insurers,
---------
insurance with respect to its property and business against such
casualties and contingencies, of such types and in such amounts as is
customary for established companies engaged in the same or similar
business and similarly situated. In the event of a conflict between
the provisions of this Section and the terms of any Security Documents
relating to insurance, the provisions in the Security Documents will
control.
5.7. Compliance with Laws. Comply in all material respects with all laws
--------------------
applicable to the Borrower and to the operation of its business
(including any statute, rule or regulation relating to employment
practices and pension benefits or to environmental, occupational and
health standards and controls).
5.8. Operating Account. Maintain the Borrower's main operating account at
-----------------
the Bank or at an affiliate of the Bank.
5.9. Financial Covenants. Comply with all of the financial and other
-------------------
covenants, if any, set forth on the Addendum, subject to all
applicable cure periods set forth herein.
5.10. Additional Reports. Provide prompt written notice to the Bank of the
------------------
occurrence of any of the following of which the Borrower obtains
knowledge (together with a description of the action which the
Borrower proposes to take with respect thereto): (i) any Event of
Default or any Event of Default that the Borrower reasonably
determines is likely to occur, (ii) any litigation filed by or against
the Borrower to the extent and if the Borrower reasonably determines
that such litigation would be required to be reported in the
Borrower's SEC filings, (iii) any Reportable Event or Prohibited
Transaction with respect to any Employee Benefit Plan(s) (as defined
in ERISA), or (iv) any event which might reasonably be
12
expected to result in a material adverse change in the business,
assets, operations, financial condition or results of operation of the
Borrower.
5.11. Notice of Certain Transactions. Provide a Transaction Notice (defined
------------------------------
below) to the Bank at least five (5) days prior to the proposed
consummation, directly or indirectly, of (a) any merger or
consolidation, or acquisition by purchase, lease or otherwise, all or
substantially all of the assets or capital stock of any other person,
firm or corporation (each a "Person"), or (b) the lease sale, transfer
or other disposition of the Borrower's property or assets (excluding
the sale of inventory in the ordinary course of business); provided,
--------
however, that the forgoing five (5) day notice requirement
-------
shall not apply to any of the events described in the preceding
clauses (a) and (b) above (each a "Transaction") with respect to
which:
(i) the consideration to be paid or received by the Borrower (or
any subsidiary through which such Transaction is completed)
is, or has a value of, less than Ten Million Dollars
($10,000,000) (in which case no such Transaction Notice shall
be required); or
(ii) the agreement between the parties to such Transaction is not
executed more than five (5) days in advance of consummation
of the Transaction (in which case the Borrower shall provide
a Transaction Notice to the Bank immediately upon execution
of such agreement).
For purposes of this Agreement, a "Transaction Notice" shall mean a
written notice in which the Borrower (A) describes in reasonable
detail the proposed Transaction, (B) identifies any information
which must be amended or updated in order to make the
representations and warranties of the Borrower true and correct on
the date on which the Transaction is consummated (except
representations and warranties which expressly relate solely to an
earlier date and time, which representations and warranties shall
be true and correct on and as of the specific dates and times
referred to therein), (C) demonstrates compliance with all
covenants under this Agreement immediately prior to the
consummation of the proposed Transaction with after giving pro
forma effect to such Transaction, and (D) represents and warrants
that it has, and will continue to have, after giving effect to the
Transaction, cash or cash equivalents in an amount sufficient to
satisfy all the Borrower's Obligations under this Agreement.
At any time within fifteen (15) days after consummation of any
Transaction with respect to which the Bank has, or should have,
received a Transaction Notice pursuant to this Section 5.11, the
Bank may, in its sole discretion, without regard to whether an
Event of Default or potential Event of Default has occurred or is
continuing, terminate all of its commitments under this Agreement
and declare all Obligations under this Agreement due and payable,
such termination and
13
acceleration to be effective forty five (45) days after receipt by
the Borrower of written notice from the Bank of such intention to
terminate.
6. Negative Covenants. The Borrower covenants and agrees that from the date of
------------------
execution of this Agreement until all Obligations have been fully paid and any
commitments of the Bank to the Borrower have been terminated, the Borrower will
not, except as set forth in the Addendum, without the prior written consent of
the Bank, which will not be unreasonably withheld or delayed:
6.1. Indebtedness. Incur any indebtedness for borrowed money other than: (i)
------------
the Loan and any subsequent indebtedness to the Bank; (ii) existing
indebtedness disclosed on the Borrower's Historical Financial
Statements; (iii) additional indebtedness (including capital leases)
for any equipment or furniture used in the ordinary course of the
Borrower's business in an amount not to exceed in the aggregate at any
time Fifteen Million Dollars ($15,000,000); or (iv) such payables
incurred in the ordinary course of business.
6.2. Liens and Encumbrances. Except as provided in Section 4.6, create,
----------------------
assume or permit to exist any mortgage, pledge, encumbrance or other
security interest or lien upon any assets now owned or hereafter
acquired or enter into any lease or any arrangement for the acquisition
of property subject to any conditional sales agreement, other than
purchase money security interests ("PMSIs") (in respect of which the
Bank will provide to the vendor of property subject to a PMSI and
acknowledgment of such vendor's prior security interest) or capital
leases permitted under Section 6.1.
6.3. Guarantees. Guarantee, endorse or voluntarily become contingently
----------
liable for the obligations of any person, firm or corporation, except
in connection with the endorsement and deposit of checks in the
ordinary course of business for collection and letters of credit issued
for the account of the Borrower in the ordinary course of business and
except for wholly-owned subsidiaries of the Borrower.
6.4. Loans or Investments. Purchase or hold beneficially any stock, other
--------------------
securities or evidences of indebtedness of any loans (except trade
credit on usual and customary business terms incurred in the ordinary
course of business and loans to employees of up to $100,000 in the
aggregate at any one time outstanding) or advances to, or make any
investment or acquire any interest whatsoever in, any other person,
firm or corporation, except for (i) ownership of the stock of wholly
owned subsidiaries, (ii) stock or other securities purchased or held by
the Borrower in exchange for other equity interests or (iii) transfers
to subsidiaries or affiliates consistent with the Borrower's past
business practice or investments disclosed on the Historical Financial
Statements or acceptable to the Bank.
14
6.5. Line of Business. Acquire, directly or indirectly, any business, or
----------------
ownership interest in any Person whose business, is not similar,
complementary or related to the line or lines of business of the
Borrower as of the date of this Agreement.
6.6. Dividends. Declare or pay any dividends on or make any distribution
---------
with respect to any class of its equity or ownership interest, or
purchase, redeem, retire or otherwise acquire any of its equity other
than the repurchase of shares from employees acquired through stock
option plans and repurchase of shares pursuant to the exercise of
contractual rights of first refusal to repurchase its shares.
7. Events of Default. The occurrence of any of the following will be deemed to
-----------------
be an "Event of Default":
7.1. Payment Default. The Borrower shall fail to pay any payment of
---------------
principal when due or any payment of interest within ten (10) business
days following the date when due, in respect of the Obligations.
7.2. Material Adverse Change. There shall be a material adverse change in
-----------------------
the business, operations, assets, financial condition or results of
operations of the Borrower.
7.3. Covenant Default. The Borrower shall default in the performance of, or
----------------
violate any of, the covenants or agreements contained in this
Agreement, which default shall not have been cured within thirty (30)
business days after the occurrence thereof.
7.4. Breach of Warranty. Any Financial Statement, representation, warranty
------------------
or certificate made or furnished by the Borrower to the Bank in
connection with this Agreement shall be false, incorrect or incomplete
when made.
7.5. Bankruptcy or Insolvency. A proceeding shall have been instituted in a
------------------------
court having jurisdiction over the Borrower seeking a decree or order
for relief in respect of the Borrower in an involuntary case under any
applicable bankruptcy, insolvency reorganization or other similar law
and such involuntary case shall remain undismissed or unstayed and in
effect for a period of sixty (60) consecutive days, or the Borrower
shall commence a voluntary case under any such law or consent to the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or other similar official).
7.6. Other Default. The occurrence of an Event of Default as defined in the
-------------
Note or any of the Security Documents, or a violation of any of the
requirements set forth in the Borrowing Base Rider.
Upon the occurrence of an Event of Default, and at any time thereafter, the Bank
may declare all Obligations hereunder immediately due and payable will have all
rights and remedies (which are
15
cumulative and not exclusive) specified in the Note and the Security Documents
and available under applicable law or in equity upon the delivery of prior
written notice to the Borrower.
8. Conditions. The Bank's obligation to make any advance under the Loan shall
----------
be subject to the following conditions being satisfied as of the date of the
advance:
8.1. No Event of Default. No Event of Default or material event which with
-------------------
the passage of time, provision of notice or both would constitute an
Event of Default shall have occurred and be continuing.
8.2. Authorization Documents. The Borrower shall have furnished to the Bank
-----------------------
certified copies of resolutions of the board of directors authorizing
the execution of this Agreement, the Note, and the Security Documents;
or other proof of authorization satisfactory to the Bank.
8.3. Delivery of Loan Documents. The Borrower shall have delivered to the
--------------------------
Bank the Loan Documents and such other instruments and documents which
the Bank may reasonably request in connection with the transactions
provided for in this Agreement, including without limitation, a
subsidiary guaranty and security agreement executed by ITXC Data
Transport LLC..
8.4. Opinion of Counsel. Counsel for the Borrower shall have delivered a
------------------
written opinion, dated the Closing Date and in form and substance
satisfactory to the Bank and its counsel, as to matters incident to the
transactions contemplated herein as the Bank may reasonably request.
8.5. Representations and Warranties. The representations and warranties of
------------------------------
the Borrower to the Bank shall be true and correct in all material
respects.
8.6. Opening Balance Sheet. The Borrower shall furnish to the Bank its
---------------------
balance sheet dated September 30, 1999.
9. Expenses. The Borrower agrees to pay the Bank, upon the closing of this
--------
Agreement, and otherwise on demand, all reasonable and necessary costs and
expenses incurred by the Bank in connection with the (i) preparation,
negotiation and delivery of this Agreement and the other Loan Documents, and
any modifications thereto, and (ii) collection of the loan or instituting,
maintaining, preserving, enforcing and foreclosing the security interest in
any of the collateral securing the Loan, whether through judicial proceedings
or otherwise, or in defending or prosecuting any actions or proceedings
arising out of or relating to this Agreement, including reasonable fees and
expenses of counsel, expenses for auditors, appraisers and environmental
consultants, lien searches, recording and filing fees and taxes. In addition,
the Borrower agrees to pay to the Bank (for the account of the EXIM Bank) all
fees imposed by the EXIM Bank with respect to its export support programs.
16
10. Increased Costs. Within twenty (20) days following written demand,
---------------
together with the written evidence of the justification therefor, the
Borrower agrees to pay the Bank all direct costs incurred and any losses
suffered or payments made by the Bank as a consequence of making the Loan by
reason of any change in law or regulation or its interpretation imposing any
reserve, deposit, allocation of capital or similar requirement (including
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System) on the Bank, its holding company or any of their respective
assets; provided, however, that the Bank shall make no such written demand
-------- -------
on the Borrower unless similar demands have been made against all other
similarly situated customers of the Bank.
11. Miscellaneous.
--------------
11.1. Notices. All notices, demands, requests, consents, approvals and other
-------
communications required or permitted hereunder must be in writing and
will be effective upon receipt if delivered personally to such party,
or if sent by facsimile transmission with confirmation of delivery, or
by nationally recognized overnight courier service, to the address set
forth below or to such other address as any party may give to the
other in writing for such purpose:
To the Bank: To the Borrower:
PNC Bank, National Association ITXC Corp.
0000 Xxxxxxxxx Xxxxxx 000 Xxxxxxx Xxxx Xxxx
Xxxxx 000 Xxxxxxxxx, Xxx Xxxxxx 00000
Xxxxxx, XX 00000 Attention: Xx Xxxxxx
Attention: Xxxx X. Xxxxxxx Facsimile No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
11.2. Preservation of Rights. No delay or omission on the part of the Bank
----------------------
to exercise any right or power arising hereunder will impair any such
right or power or be considered a waiver of any such right or power or
any acquiescence therein, nor will the action or inaction of the Bank
impair any right or power arising hereunder. The rights and remedies
hereunder of the Bank are cumulative and not exclusive of any other
rights or remedies which the Bank may have under other agreements, at
law or in equity.
17
11.3. Illegality. In case any one or more of the provisions contained in
----------
this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
11.4. Changes in Writing. No modification, amendment or waiver of any
------------------
provision of this Agreement will in any event be effective unless the
same is in writing and signed by the Bank and then such waiver or
consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Borrower in any
case will entitle the Borrower to any other or further notice or
demand in the same, similar or other circumstance.
11.5. Entire Agreement. This Agreement (including the documents and
----------------
instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter
hereof.
11.6. Counterparts. This Agreement may be signed in any number of
------------
counterpart copies and by the parties hereto on separate counterparts,
but all such copies shall constitute one and the same instrument.
11.7. Successors and Assigns. This Agreement will be binding upon and inure
----------------------
to the benefit of the Borrower and the Bank and their respective,
successors and assigns; provided, however, that the Borrower may not
-------- -------
assign this Agreement in whole or in part without the prior written
consent of the Bank and the Bank at any time may assign this Agreement
to a recognized institutional lender who agrees in writing to be bound
to all confidentiality obligations of the Bank in connection with any
Loan Documents, in whole or in part, upon prior written notice to the
Borrower.
11.8. Interpretation. In this Agreement, unless the Bank and the Borrower
--------------
otherwise agree in writing, the singular includes the plural and the
plural the singular; words importing any gender include the other
genders; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute
referred to; the word "or" shall be deemed to include "and/or", the
words "including", "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to articles,
sections (or subdivisions of sections) or exhibits are to those of
this Agreement unless otherwise indicated; and references to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to such
instruments, but only to the extent such amendments and other
modifications are not prohibited by the terms of this Agreement.
Section headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for
any other purpose. Unless
18
otherwise specified in this Agreement, all accounting terms shall be
interpreted and all accounting determinations shall be made in
accordance with GAAP. If this Agreement is executed by more than one
party as Borrower, the obligations of such persons or entities will be
joint and several.
11.9. Assignments and Participation. Notwithstanding any other provisions
-----------------------------
of this Agreement, the Bank may, at any time in its sole discretion,
without any notice to the Borrower, sell, assign, transfer,
negotiate, grant participation in, or otherwise dispose of all or any
part of the Bank's interest in the Loan to a recognized institutional
lender organized under the laws of the United States of America who
agrees in writing to be bound to all confidentiality obligations of
the Bank in connection with any Loan Documents. The Borrower hereby
authorizes the Bank to provide, without any notice to the Borrower,
any information concerning the Borrower to recognize institutional
lenders, including information pertaining to the Borrower's financial
condition, business operations or general creditworthiness, to any
person or entity which may succeed to or participate in all or any
part of the Bank's interest in the Loan, provided that such person or
entity agrees to maintain the confidentiality of such information and
be bound by all the Bank's confidentiality obligations to the
Borrower.
11.10. Governing Law and Jurisdiction. This Agreement has been delivered to
------------------------------
and accepted by the Bank and will be deemed to be made in the
Commonwealth of Pennsylvania. THIS AGREEMENT WILL BE INTERPRETED AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
EXCLUDING ITS CONFLICT OF LAWS RULES. The Borrower hereby irrevocably
consents to the exclusive jurisdiction of any state or federal court
seated in Allegheny County, Pennsylvania, and consents that all
service of process be sent by nationally recognized overnight courier
service directed to the Borrower at the Borrower's address set forth
herein and service so made will be deemed to be completed on the
business day after deposit with such courier; provided that nothing
contained in this Agreement will prevent the Bank from bringing any
action, enforcing any award or judgment or exercising any rights
against the Borrower, against any security or against any property of
the Borrower within any other county, state or other foreign or
domestic jurisdiction. The Bank and the Borrower agree that the venue
provided above is the most convenient forum for both the Bank and the
Borrower. The Borrower waives any objection to venue and any
objection based on a more convenient forum in any action instituted
under this Agreement.
11.11. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK IRREVOCABLY WAIVES
--------------------
ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY
DOCUMENTS
19
EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER AND THE BANK
ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Borrower acknowledges that it has read and understood all the provisions of
this Agreement, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.
20
WITNESS the due execution of this Loan Agreement as a
document under seal, as of the date first written above.
ATTEST: ITXC CORP.
By: By: /s/ Xxxxxx X. Xxxxxx
----------------------------- -----------------------------------
Print Name: Print Name: Xxxxxx X.Xxxxxx
-------------------- ---------------------------
Title: Title: Executive Vice President and CFO
------------------------- --------------------------------
PNC BANK,
NATIONAL ASSOCIATION
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Print Name: Xxxx Xxxxxxxx
---------------------------
Title: Vice President
--------------------------------
21
ADDENDUM to that certain Loan Agreement dated February 1, 2000 between ITXC
Corp., as the Borrower, and PNC Bank, National Association.
I. FINANCIAL COVENANTS
-------------------
1. The Borrower will not permit its Tangible Net Worth to be less than
$50,000,000; provided, that if at any time after the date of this Agreement
--------
the Borrower raises additional equity in excess of $75,000,000, then the
foregoing minimum Tangible Net Worth level shall be increased to
$80,000,000.
2. The Borrower shall have a minimum Quick Ratio of Current Assets to Current
Liabilities by the end of each fiscal quarter as specified below:
Quarter Ending Quick Ratio
-------------- -----------------
March 31, 2000 2.0:1.0
June 30, 2000 2.0:1.0
September 30, 2000 1.5:1.0
December 31, 2000 1.2:1.0
March 31, 2001 1.0:1.0
June 30, 2001 1.0:1.0
September 30, 2001 1.0:1.0
December 31, 2001 1.0:1.0
March 31, 2002 0.75:1.0
22
Quarter Ending Quick Ratio
-------------- -----------------
June 30, 2002 0.75:1.0
September 30, 2002 0.6:1.0
December 31, 2002 0.6:1.0
March 31, 2003 0.6:1.0
June 30, 2003 0.6:1.0
September 30, 2003 0.6:1.0
December 31, 2003 0.6:1.0
3. The Borrower shall not experience two consecutive quarters of Negative Net
Operating Income after June 30, 2001.
4. The Borrower shall maintain a minimum Fixed Charge Coverage Ratio of
1.0:1.0 after September 30, 2000 (to be tested quarterly).
5. The Borrower shall maintain a minimum ratio of total Debt to Tangible Net
Worth of 0.4:1.0 (to be tested quarterly).
Definitions:
-----------
"Current Assets" means the sum of cash, accounts receivable and marketable
securities.
"Current Liabilities" means the sum of all current liabilities other than
deferred revenue plus amounts outstanding under the Revolving Credit not
classified as current liabilities.
"Debt" means the maximum combined debt outstanding under the Revolving
Credit, any equipment leases, or any other debt arrangements maturing
within one year.
"Fixed Charge Coverage Ratio" means EBITDA plus rent divided by interest
plus principal plus rent.
"Negative Net Operating Income" means earnings before interest, taxes,
depreciation and amortization (or "EBITDA") less than zero calculated in
accordance with generally accepted accounting principles.
"Tangible Net Worth" means shareholders' equity less intangible assets
(calculated in accordance with generally accepted accounting principles),
plus any equity or subordinated and/or convertible debt investments created
after the date of this Agreement.
"Quick Ratio" means Current Assets divided by Current Liabilities.
23
II. PERMITTED ENCUMBRANCES
----------------------
1. Purchase money security interests.
2. Capital Leases permitted under Section 6.1 hereto.
III. ENVIRONMENTAL MATTERS
---------------------
None
AMENDED AND RESTATED
BORROWING BASE RIDER
THIS AMENDED AND RESTATED BORROWING BASE RIDER ("Rider") is executed
this 1st day of February, 2000, by and between ITXC CORP., a Delaware
corporation (the "Borrower"), and PNC BANK, N.A. (the "Bank"). This Rider is
incorporated into and made part of that certain Amended and Restated Loan
Agreement dated February 1, 2000 (the "Loan Agreement"), and also into such
other financing documents and security agreements as may be executed and
delivered pursuant to said Loan Agreement (all such documents including this
Rider are collectively referred to as the "Loan Documents"). All initially
capitalized terms not otherwise defined in this Rider shall have the same
meanings ascribed to such terms in the other Loan Documents.
Pursuant to the Loan Documents, the Bank has extended a "Loan" to the
Borrower which includes a "Revolving Credit Facility" under which the Borrower
may borrow, repay and reborrow funds at any time prior to the Revolving Credit
Expiration Date and an "Equipment Line of Credit" (collectively, the
"Facility"). As a condition to the Bank's willingness to extend the Facility to
the Borrower, the Bank and the Borrower are entering into this Rider in order to
set forth their agreement regarding the maximum amount which may be outstanding
under the Facility at any time, and for the other purposes set forth below:
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound, the parties hereto covenant and agree as follows:
1. Limitations on Borrowings Under Facility. Notwithstanding any provisions to
----------------------------------------
the contrary in any of the other Loan Documents, at no time shall the aggregate
principal amounts of indebtedness outstanding at any one time under the Facility
exceed the Borrowing
24
Base (as defined hereinafter) at such time. If at any time the aggregate
principal amount of indebtedness outstanding under the Facility exceeds the
limitation set forth in this Section 1 for any reason, then the Borrower shall
immediately repay the amount of such excess to the Bank in immediately available
funds.
2. Borrowing Base Certificates. The Borrower shall deliver an updated
---------------------------
Borrowing Base Certificate upon the Bank's request and in no event later than on
or before the 15th day of each month or the first business day thereafter if
such day falls on a weekend or holiday, if no new advances have been requested
by the Borrower under the Facility since the date of the preceding Borrowing
Base Certificate.
3. Certain Defined Terms. In addition to the words and terms defined elsewhere
---------------------
in this Rider or in the other Loan Documents, as used in this Rider, the
following words and terms shall have the following meanings:
"Account" shall mean an "account" or a "general intangible" as defined
in the Uniform Commercial Code as in effect in the jurisdiction whose Law
governs the perfection of the Bank's security interest therein, whether now
owned or hereafter acquired or arising.
"Account Debtor" shall mean, with respect to any Account, each Person
who is obligated to make payments to either of the Borrower on such Account.
"Affiliate" of the Borrower or any Account Debtor shall mean (a) any
Person who (either alone or with a group of Persons, and either directly or
indirectly through one or more intermediaries) is in control of, is controlled
by or is under common control with the Borrower or such Account Debtor, (b) any
director, officer, partner, employee or agent of the Borrower or such Account
Debtor, and (c) any member of the immediate family of any natural person
described in the preceding clauses (a) and (b). A Person or group of Persons
shall be deemed to be in control of the Borrower or an Account Debtor when such
Person or group of Persons possesses, directly or indirectly, the power to
direct or cause the direction of the management or policies of the Borrower or
such Account Debtor, whether through the ownership of voting securities, by
contract or otherwise.
"Borrowing Base" shall mean for the Revolving Credit, at any time
through the Revolving Credit Expiration Date, the lesser of (a) $10,000,000 (the
maximum principal amount of the Facility) and (b) the sum of (i) 80% of
Qualified Accounts at such time, (ii) 100% of foreign receivables qualified
under the Credit Insurance Agreement entered into pursuant to Section 2.9 of the
Loan Agreement and (iii) 100% of Cash Collateral Balance.
The value at any time of the collateral described in this definition shall be
determined by reference to the most recent Borrowing Base Certificate delivered
by the Borrower to the Bank.
"Borrowing Base Certificate" shall mean each Borrowing Base
Certificate to be delivered by the Borrower to the Bank pursuant to Section 2 of
this Rider, in substantially the
25
form attached as Exhibit A to this Rider, with blanks appropriately completed,
---------
as amended, supplemented or otherwise modified from time to time. References in
the Borrowing Base Certificate to the "Credit and Security Agreement" shall be
deemed to be references to this Rider and the other Loan Documents.
"Cash Collateral Balance" shall mean all certificates of deposit
maintained by the Bank as security for Reimbursement Obligations of the Borrower
to the Bank with respect to Letters of Credit; provided, that the rights of the
--------
Bank to foreclose on such certificates of deposit shall supplement and not limit
any general rights of offset or recoupment which the Bank may have under the
Loan Documents.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"Lien" shall mean any mortgage, pledge, security interest, bailment,
encumbrance, claim, lien or charge of any kind, including any agreement to give
any of the foregoing, any conditional sale or other title retention agreement
and any lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code.
"Official Body" shall mean any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Person" shall mean an individual, sole proprietorship, corporation,
partnership (general or limited), trust, business trust, limited liability
company, unincorporated organization or association, joint venture, joint-stock
company, Official Body, or any other entity of whatever nature.
"Qualified Accounts" shall mean Accounts which are and at all times
continue to meet the following conditions:
(a) The Account duly complies with all applicable Laws, whether
Federal, state or local, including but not limited to usury Laws,
the Federal Truth in Lending Act, the Federal Consumer Credit
Protection Act, the Fair Credit Billing Act, and Regulation Z of
the Board of Governors of the Federal Reserve Systems;
(b) The Account was not originated in or subject to the Laws of a
jurisdiction whose Laws would make the account or the grant of
the security interest in the Account to the Bank unlawful,
invalid or unenforceable;
26
(c) The Account was originated by the Borrower in connection with the
sale of goods or the rendering of services by the Borrower in the
ordinary course of business under an enforceable contract, and
such sale has been consummated and such goods have been delivered
or such services have been rendered so that the performance of
such contracts has been completed by such Borrower and by all
parties other than the Account Debtor;
(d) The Account is evidenced by a written invoice or other
documentation and arises from a contract, all of which are in
form and substance satisfactory to the Bank;
(e) The Account does not arise out of a contract with, or order from,
an Account Debtor that, by its terms, forbids or makes void or
unenforceable the grant of the security interest by the Borrower
to the Bank in and to the Account arising with respect thereto;
(f) The title of the Borrower to the Account and, except as to the
Account Debtor, to any related goods is absolute and is not
subject to any Lien except Liens in favor of the Bank;
(g) The Account provides for payment in United States Dollars by the
Account Debtor;
(h) The Account shall have amounts owing that are not less than the
amounts represented by the Borrower;
(i) The portion of the Account for which income has not yet been
earned or which constitutes unearned discount, services charges
or deferred interest shall be ineligible;
(j) The Account shall be eligible only to the extent that it is not
subject to any defense, claim of reduction, counterclaim,
set-off, recoupment, or any dispute or claim for credits,
allowances or adjustments by the Account Debtor because of
returned, inferior, damaged goods or unsatisfactory service, or
for any other reason;
(k) The goods the sale of which gave rise to the Account were shipped
or delivered or provided to the Account Debtor on an absolute
sale basis and not on a xxxx and hold sale basis, a consignment
sale basis, a guaranteed sale basis, a sale or return basis or on
the basis of any other similar terms making the Account Debtor's
payment obligations conditional;
27
(l) The Account Debtor has not returned, rejected or refused to
retain, or otherwise notified the Borrower of any dispute
concerning, or claimed nonconformity of, any of the goods from
the sale of which the Account arose;
(m) No default exists under the Account by any party thereto, and all
rights and remedies of the Borrower under the Account are freely
assignable by the Borrower;
(n) The Account has not been outstanding for more than ninety (90)
days past the invoice date and is not subject to "dating" terms;
(o) The Account shall be ineligible to the extent that the aggregate
amount of all the Accounts of the Account Debtor and its
Affiliates exceed 20% of all of the Borrower's Accounts;
(p) The Borrower has not received any note, trade acceptance, draft,
chattel paper or other instrument with respect to, or in payment
of, the Account, unless, if any such instrument has been
received, the Borrower immediately notifies the Bank and, at the
Bank's request, endorses or assigns and delivers such instrument
to the Bank;
(q) The Borrower has not received any notice of (i) the filing by or
against the Account Debtor of any proceeding in bankruptcy,
receivership, insolvency, reorganization, liquidation,
conservatorship or any similar proceeding, or (ii) any assignment
by the Account Debtor for the benefit of creditors. Upon receipt
by the Borrower of any such notice, it will give the Bank prompt
written notice thereof;
(r) The Account Debtor is not an Affiliate of the Borrower;
(s) The Account shall be ineligible if the Account Debtor is an
Official Body, unless the Borrower shall have taken all actions
deemed necessary by the Bank in order to perfect the Bank's
security interest therein, including but not limited to any
notices or filings required under the Assignment of Claims Act of
1940, as amended, or other applicable Laws; and
(t) The Bank has not deemed such Account ineligible because of
uncertainty about the creditworthiness of the Account Debtor
(including, without limitation, unsatisfactory past experiences
of the Borrower or the Bank with the Account Debtor) or because
the Bank otherwise makes a reasonable determination that the
collateral value of the Account to the Bank is impaired or that
the Bank's ability to realize such value is insecure.
28
Standards of acceptability shall be fixed and may be revised from time to time
by mutual agreement of Bank and the Borrower. In the case of any dispute about
whether an Account is or has ceased to be a Qualified Account, the decision of
the Bank shall be final.
4. Governing Law. This Rider will be interpreted and the rights and
-------------
liabilities of the parties hereto determined in accordance with the laws of the
commonwealth of pennsylvania, excluding its conflicts of law rules.
5. Counterparts. This Rider may be signed in any number of counterpart
------------
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument.
[Signature Page to Follow]
29
WITNESS the due execution of this Borrowing Base Rider as a document
under seal, as of the date first written above.
ATTEST: ITXC CORP.
By: By: /s/ Xxxxxx X. Xxxxxx
---------------------------- -----------------------------(SEAL)
Print Name: Print Name: Xxxxxx X. Xxxxxx
------------------- ---------------------------
Title: Title: Executive Vice President and CFO
-------------------------- ----------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: Xxxx Xxxxxxx
----------------------------(SEAL)
Print Name: Xxxx Xxxxxxx
----------------------------
Title: Vice President
--------------------------------
30
