EXHIBIT 10.6
LOAN AND SECURITY AGREEMENT
by and between
HOMETEL PROVIDERS PARTNERS, L.P.
and
ITC HOLDING COMPANY, INC.
dated as of
April 11, 1994
TABLE OF CONTENTS
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Page
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SECTION 1. GENERAL DEFINITIONS
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1.1. Defined Terms............................................... 1
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1.2. Accounting Terms............................................ 4
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1.3. Other Terms................................................. 4
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1.4. Certain Matters of Construction............................. 4
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SECTION 2. LOAN FACILITY
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2.1. Loan Facility............................................... 5
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2.2. Availability and Drawing.................................... 5
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2.3. Loan Account................................................ 5
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SECTION 3. SUBORDINATION PROVISIONS
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3.1. Agreement to Subordinate..................................... 5
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SECTION 4. INTEREST AND REPAYMENT
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4.1. Interest and Charges........................................ 6
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4.2. Repayment................................................... 6
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4.3. Prepayment.................................................. 6
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SECTION 5. COLLATERAL: GENERAL TERMS
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5.1. Security Interest in Collateral............................. 6
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5.2. Representations, Warranties and Covenants -- Collateral..... 7
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5.3. Financing Statements........................................ 8
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5.4. Insurance of Collateral..................................... 8
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SECTION 6. REPRESENTATIONS AND WARRANTIES
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6.1. Borrower's General Representations and Warranties........... 8
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6.2. Lender's Representations and Warranties..................... 10
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6.3. Survival of Representations and Warranties.................. 11
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SECTION 7. COVENANTS AND CONTINUING AGREEMENTS
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7.1. Affirmative Covenants........................................ 11
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7.2. Negative Covenants........................................... 13
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SECTION 8. CONDITIONS PRECEDENT
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8.1. Documentation............................................. 14
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8.2. Other Conditions.......................................... 15
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8.3. Conditions to Subsequent Advances......................... 15
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SECTION 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
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ON DEFAULT
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9.1. Events of Default......................................... 16
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9.2. Acceleration of the Obligations........................... 17
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9.3. Remedies.................................................. 17
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9.4. Remedies Cumulative; No Waiver............................ 18
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SECTION 10. MISCELLANEOUS
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10.1. Modification of Agreement................................. 19
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10.2. Waivers................................................... 19
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10.3. Severability.............................................. 19
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10.4. Successors and Assigns.................................... 19
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10.5. Cumulative Effect; Conflict of Terms...................... 19
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10.6. Execution in Counterparts................................. 20
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10.7. Notice.................................................... 20
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10.8. Time of Essence........................................... 20
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10.9. Entire Agreement.......................................... 20
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10.10. Governing Law............................................. 20
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SIGNATURES............................................................... 18
Exhibit A - Term Loan Note with Guarantee endorsed thereon
Exhibit B - Form of Draw Notice
Exhibit C - Principal Place of Business and Other Addresses
Exhibit D - Form of Legal Opinion
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of the 11th day of April,
1994, by and between ITC HOLDING COMPANY, INC., a corporation organized and
existing under the laws of the State of Georgia ("Lender"), and HOMETEL
PROVIDERS PARTNERS, L.P., a limited partnership organized and existing under the
laws of the State of Georgia ("Borrower").
SECTION 1. GENERAL DEFINITIONS
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1.1. DEFINED TERMS . When used herein, the following terms shall have the
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following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
ACCOUNTS - all accounts, accounts receivable for Inventory sold or
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rented or to be sold or rented or for services performed or to be
performed, contract rights, Chattel Paper, instruments and documents,
whether now owned or hereafter created or acquired by Borrower or in which
Borrower now has or hereafter acquires any interest.
ADJUSTMENT DATE - the third anniversary of the date of this Agreement.
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AGREEMENT - this Loan and Security Agreement, as the same may be
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modified or amended from time to time in accordance with its terms.
ASSIGNMENT - an Assignment of a to-be-issued Life Insurance Policy
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insuring the life of Xxxxx Xxxxxxx in the face amount of $3,500,000.
BUSINESS DAY - a day on which the Federal Reserve Bank of Atlanta is
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open for business in Atlanta, Georgia.
CHATTEL PAPER - all chattel paper, whether now owned or hereafter
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created or acquired by Borrower or in which Borrower now has or hereafter
acquires any interest.
CLOSING DATE - the date hereof.
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CODE - the Uniform Commercial Code as adopted and in force in the
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State of Georgia, as from time to time in effect.
COLLATERAL - all of the Property and interests in Property described
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in Section 5 hereof, and all other Property and interests in Property that
now or hereafter secure the payment and performance of any of the
Obligations.
1
DEFAULT - an event or condition the occurrence of which would, with
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the lapse of time or the giving of notice, or both, become an Event of
Default.
DEFAULT RATE - as defined in Section 4.1.(B) of this Agreement.
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EVENT OF DEFAULT - as defined in Section 9.1 of this Agreement.
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GAAP - generally accepted accounting principles in the United States
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of America in effect from time to time.
GUARANTOR - Xxxxx Xxxxxxx and any other Person who may hereafter
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guarantee payment or performance of the whole or any part of the
Obligations.
GUARANTEE - the Guarantee which is to be endorsed on the Term Loan
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Note by Guarantor in favor of Lender in the form appearing at the foot of
Exhibit A.
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INITIAL ADVANCE - the initial drawing in an amount equal to
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$1,000,000.
INTEREST PAYMENT DATE - the 1st day of each calendar month, commencing
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on May 1, 1994, and continuing through and including the Maturity Date.
INTEREST RATE - (i) for the period from the date hereof through and
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including the Adjustment Date, fourteen percent (14%) per annum, and (ii)
from and after the Adjustment Date through and including the Maturity Date,
an annual rate equal to the sum of (A) the Prime Rate as announced from
time to time by the Reference Bank plus (B) eight percent (8%).
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INVENTORY - all inventory owned by Borrower, including, but not
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limited to, all goods intended for sale or lease by Borrower, or for
display or demonstration; all work in process; all raw materials and other
materials and supplies of every nature and description used or which might
be used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used
or consumed in Borrower's business (including, without limitation, all of
the above which may be located on Borrower's premises or upon the premises
of any carriers, forwarding agents, truckers, warehousemen, vendors,
selling agents, or other third parties who may have possession, temporary
or otherwise, thereof); and all documents evidencing and general
intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by Borrower.
LEASES - all leases or rental contracts pursuant to which Borrower
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rents, leases or rents Inventory.
LIEN - any interest in Property securing an obligation owed to, or a
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claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including,
but not limited to, the security interest, security title or lien arising
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from a security agreement, mortgage, deed of trust, deed to secure debt,
encumbrance, pledge, hypothecation, assignment, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes.
LOAN - so much of the term loan credit facility as is drawn upon by
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Borrower from time to time pursuant to Section 2.2 of this Agreement.
LOAN ACCOUNT - the loan account established on the books of Lender
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pursuant to Section 2.3 hereof and in which Lender will record the Loan,
repayments and prepayments made on the Loan and other appropriate debits
and credits as provided by this Agreement.
LOAN DOCUMENTS - this Agreement, the Other Agreements and the Security
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Documents.
MATURITY DATE - 5:00 p.m., Atlanta time, on the day that is the fifth
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anniversary of the date of this Agreement.
OBLIGATIONS - all loans and all other advances, debts, liabilities and
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obligations arising, due or payable from Borrower to Lender in its capacity
as Lender evidenced by and arising under this Agreement or any other Loan
Document.
OTHER AGREEMENTS - any and all agreements, instruments and documents
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(other than this Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower or delivered to Lender in respect to the
transactions contemplated by this Agreement, including, without limitation,
the Assignment and the Term Loan Note.
PERSON - an individual, partnership, association, corporation, joint
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stock company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
PRIME RATE - the rate of interest announced or quoted by the Reference
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Bank from time to time as its Prime Rate, whether or not such rate is the
lowest rate charged by the Reference Bank to its most preferred borrowers;
and, if the Prime Rate is discontinued by the Reference Bank as a standard,
a comparable reference rate designated by the Reference Bank as a
substitute therefor shall be the Prime Rate. Such rate shall be increased
or decreased, as the case may be, by an amount equal to any increase or
decrease in the Reference Bank's Prime Rate, with such adjustments to be
effective as of the opening of business on the day that any such change in
the Reference Bank's Prime Rate becomes effective.
PROPERTY - any interest in any kind of property or asset, whether
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real, personal or mixed, or tangible or intangible.
REFERENCE BANK - NationsBank of Georgia, N.A., or its successor.
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SECURITY DOCUMENTS - the Guarantee and all other instruments and
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agreements now or at any time hereafter securing the whole or any part of
the Obligations.
SENIOR LENDER - any bank, savings and loan, or other financial
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institution or lender that Borrower designates in writing to Lender as a
Senior Lender and that makes available to Borrower at any time and from
time to time one or more credit facilities of any type or character, and
any renewals, modifications, replacements or extensions thereof, which
includes by way of illustration only, a revolving credit facility, a term
loan facility, an equipment purchase facility or a letter of credit
facility, evidencing the Senior Obligations.
SENIOR OBLIGATIONS - all liabilities and other obligations of
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Borrower, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, to a Senior Lender, and any
renewals, modifications, replacements or extensions thereof, in an
aggregate amount not to exceed SEVEN MILLION DOLLARS ($7,000,000).
SUBORDINATION DOCUMENT - each and every agreement, document and
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instrument which evidences the senior status of the Senior Obligations and
perfects or prioritizes the Senior Lender's rights in respect of the Senior
Obligations vis-a-vis the Obligations, which shall be on such terms and
conditions as the Senior Lender may request or require.
TERM LOAN NOTE - the Term Loan Note to be executed by Borrower on the
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Closing Date in favor of Lender to evidence the Loan, which shall be in the
form of Exhibit A attached hereto, as the same may be modified or amended
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from time to time after execution and delivery thereof.
1.2. ACCOUNTING TERMS. All accounting terms not specifically defined
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herein shall be construed in accordance with GAAP.
1.3. OTHER TERMS. All other terms contained in this Agreement shall
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have, when the context so indicates, the meanings provided for by the Code to
the extent the same are used or defined therein.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
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"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. As used herein,
the singular number shall include the plural, the plural the singular, and any
pronoun used shall be deemed to cover all genders, as the context may require.
The section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of this Agreement.
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SECTION 2. LOAN FACILITY
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2.1. LOAN FACILITY. Subject to the terms and conditions of, and in
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reliance upon the representations and warranties made by Borrower in, this
Agreement and the other Loan Documents, Lender has made a total term loan credit
facility of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000) to
Borrower, available as provided in Section 2.2.
2.2. AVAILABILITY AND DRAWING. (a) Subject to SECTION 8.3 hereof, from
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and after the date hereof through and including the first anniversary of the
date hereof, Borrower shall be entitled to draw upon the term loan credit
facility, in an amount not to exceed the difference between (A) $3,500,000 and
(B) the total amount of all amounts drawn by Borrower as of the date of such
draw notice. To draw under such term loan credit facility, at least two (2)
Business Days prior to the date of borrowing Borrower shall deliver to Lender by
facsimile transmission a draw notice in the form of that attached hereto as
Exhibit B. Upon receipt of such draw notice, Lender shall wire transfer on the
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date specified in the draw notice (and if such day is not a Business Day, on the
next succeeding Business Day) to the account specified in the draw notice the
amount drawn by Borrower pursuant thereto.
(b) If by 5:00 p.m., Atlanta time, on the first anniversary of the date
hereof, Borrower has not fully drawn all amounts available to it under the term
loan credit facility, the term loan credit facility shall be permanently reduced
by an amount equal to the difference between (A) $3,500,000 and (B) the total
amount of all amounts drawn by Borrower as of such date and time. Once so
reduced, Borrower shall have no right to borrow, and Lender shall have no
obligation to make available or lend, such amount.
2.3. LOAN ACCOUNT. Lender shall enter the Loan as debits to the Loan
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Account and shall also record in the Loan Account all payments made by Borrower
on the Loan and all proceeds of Collateral which are finally paid to Lender.
SECTION 3. SUBORDINATION PROVISIONS
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3.1. AGREEMENT TO SUBORDINATE. Lender covenants and agrees that the
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Obligations and the Liens granted to Lender pursuant to this Agreement and the
other Loan Documents, at Borrower's written request, shall be subordinated and
made inferior to the Senior Obligations, which Senior Obligations are to be
acquired in the future by Borrower from the Senior Lender(s). Promptly upon the
request of Borrower and of the Senior Lender(s), at any time and from time to
time, Lender shall execute and deliver each and every Subordination Document
required to make the Obligations and the Liens granted to Lender pursuant to
this Agreement and the other Loan Documents subordinate, inferior and subject to
the Senior Obligations. Borrower shall reimburse Lender for reasonable legal
fees and related costs and expenses incurred by Lender in connection with
Lender's execution and delivery of the Subordination Documents.
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SECTION 4. INTEREST AND REPAYMENT
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4.1. INTEREST AND CHARGES.
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(A) Interest shall accrue on the principal amount of the Loan
outstanding at the end of each day in accordance with the terms of the Term Loan
Note. Interest shall be calculated on the Loan on a daily basis (computed on
the actual number of days elapsed over a year of 360 days), commencing on the
date hereof, and shall be payable monthly, in arrears, on each Interest Payment
Date. If an Interest Payment Date occurs on a day that is not a Business Day,
the payment of interest shall be payable on the next succeeding Business Day.
(B) Upon and after the occurrence of an Event of Default, and during
the continuation thereof, the principal amount of all of the Obligations shall
bear interest, calculated daily (computed on the actual days elapsed over a year
of 360 days), at a fluctuating rate per annum equal to one percentage point
(1.00%) above the Interest Rate then in effect (the "Default Rate").
(C) In no contingency or event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under the Term Loan Note and charged or
collected pursuant to the terms of this Agreement or pursuant to the Term Loan
Note exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that such a court determines that Lender has charged or received
interest hereunder in excess of the highest applicable rate, Lender shall
promptly refund such excess interest to Borrower and such rate shall
automatically be reduced to the maximum rate permitted by such law.
4.2. REPAYMENT. Borrower shall repay the then outstanding principal
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amount of the Loan in a single payment on the Maturity Date.
4.3. PREPAYMENT. From and after the Adjustment Date, Borrower shall
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have the right to prepay the Loan in whole or in part at any time and from time
to time, without penalty, premium or notice. Prior to the Adjustment Date,
Borrower shall not have the right to prepay all or any portion of the Loan.
SECTION 5. COLLATERAL: GENERAL TERMS
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5.1. SECURITY INTEREST IN COLLATERAL. Subject to the provisions of
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Section 3.1 (and any Subordination Documents entered into by Lender), to secure
the prompt payment and performance to Lender of the Obligations Borrower hereby
grants to Lender a continuing security interest in and Lien upon all the
following Property and interests in Property of Borrower, whether now owned or
existing or hereafter created, acquired or arising and wheresoever located:
(A) Accounts;
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(B) Inventory;
(C) Chattel Paper;
(D) Leases;
(E) All accessions to, substitutions for and all replacements
(including, but not limited to, all goods returned, repossessed, or
acquired by Borrower by way of substitution or replacement), products and
cash and non-cash proceeds of any of the Collateral described in (A), (B),
(C) or (D) above, including, without limitation, proceeds of and unearned
premiums with respect to insurance policies insuring any of the Collateral;
and
(F) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of the Collateral
described in (A), (B), (C) or (D) above.
5.2. REPRESENTATIONS, WARRANTIES AND COVENANTS -- COLLATERAL. To induce
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Lender to enter into this Agreement, Borrower represents, warrants, and
covenants to Lender:
(A) Subject to Lender's obligation to subordinate the Liens granted to
Lender pursuant to Section 3.1 (and any Subordination Documents entered into by
Lender), (i) the Collateral is now, and will be so long as the Obligations are
outstanding, owned solely by Borrower, (ii) no other Person has or will have any
right, title, interest, claim, or Lien therein, thereon or thereto, other than
for the rights of rental or lease customers, and (iii) Borrower has good and
marketable title to the Collateral, other than for the rights of rental or lease
customers.
(B) Subject to Lender's obligation to subordinate the Liens granted to
Lender pursuant to Section 3.1 and the other Loan Documents and as may be
otherwise specifically consented to in writing by Lender (and any Subordination
Documents entered into by Lender), the Liens granted to Lender are now and shall
be first and prior on the Collateral. Except for the filing of appropriate
financing statements (which financing statements have been filed in the State of
Georgia), no further action need be taken to perfect the Liens granted to
Lender, other than the filing of continuation statements under the Code or other
applicable law at appropriate times and continued possession by Lender of that
portion of the Collateral constituting instruments (other than instruments which
constitute part of Chattel Paper) or documents.
(C) Borrower shall pay and discharge when due or within any period
when payment may be made without penalty all taxes, levies, and other charges
upon said Collateral and upon the goods evidenced by any documents constituting
Collateral, unless being contested by or on behalf of Borrower in good faith.
5.3. FINANCING STATEMENTS. Borrower agrees to execute and deliver,
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in form and content satisfactory to Lender, any financing, continuation,
termination or security interest filing statement, security agreement or other
document as Lender may reasonably request in order to perfect, preserve,
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maintain or continue the perfection of Lender's security interest in the
Collateral and/or its priority (subject to Section 3.1. hereof and any
Subordination Documents entered into by Lender). Borrower shall pay the costs
of filing of any such financing, continuation, termination or security interest
filing statement as well any recordation or transfer tax required by law to be
paid in connection with the filing or recording of any such statement. Unless
prohibited by applicable law, Borrower hereby authorizes Lender to execute and
file any such financing statement on Borrower's behalf. The parties agree that
a carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office
in lieu thereof.
5.4. INSURANCE OF COLLATERAL. Borrower agrees to cause to be maintained
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and paid for insurance upon all Collateral (other than for Collateral in the
possession of rental or lease customers) wherever located, in storage or in
transit in vehicles, including goods evidenced by documents, covering casualty,
hazard, public liability and such other risks and in such amounts and with such
insurance companies as is customary in Borrower's business.
SECTION 6. REPRESENTATIONS AND WARRANTIES
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6.1. BORROWER'S GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender
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to enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Lender that:
(A) Organization and Qualification. Borrower is a limited partnership
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duly organized, validly existing and in good standing under the laws of the
State of Georgia. Borrower has duly qualified and is authorized to do business
and is in good standing as a foreign limited partnership in all states and
jurisdictions where the character of its properties or the nature of its
activities make such qualification necessary and in which the failure to be so
qualified would have a material adverse affect on Borrower's business operations
or financial condition.
(B) Power and Authority. Borrower has the right and power and is duly
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authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all necessary action and do not and will
not (i) require any consent or approval of the partners of Borrower or of any
other Person which has not been obtained prior to the date hereof; (ii)
contravene Borrower's certificate of limited partnership or limited partnership
agreement; (iii) violate, or cause Borrower to be in default under, any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to Borrower; (iv)
result in a breach of or constitute a default under any material agreement,
lease or instrument to which Borrower is a party or by which it or its
Properties may be bound or affected; or (v) result in, or require, the creation
or imposition of any Lien (other than Liens arising under or pursuant to this
Agreement) upon or with respect to any of Collateral now owned or hereafter
acquired by Borrower.
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(C) Legally Enforceable Agreement. This Agreement is, and each of the
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Other Agreements when delivered under this Agreement will be, a legal, valid and
binding obligation of Borrower enforceable against it in accordance with their
respective terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally or by principles of equity pertaining to the availability of
equitable remedies.
(D) Governmental Consents. Borrower has, and is in good standing with
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respect to, all governmental consents, approvals, authorizations, permits,
certificates, inspections, and franchises necessary to continue to conduct its
business as heretofore or proposed to be conducted by it and to own or lease and
operate its Properties as now owned or leased by it.
(E) Restrictions. Borrower is not a party or subject to any contract,
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agreement, or restriction, whether oral or otherwise, which materially and
adversely affects its business or the use or ownership of any of its Properties.
Borrower has not agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its Property, whether now owned
or hereafter acquired, to be subject to a Lien other than for Liens arising
under or pursuant to, or otherwise permitted by, this Agreement.
(F) Litigation. There are no actions, suits, proceedings or
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investigations pending, or to the knowledge of Borrower, threatened, against or
affecting Borrower, or the business, operations, Properties, prospects, profits
or condition of Borrower, in any court or before any governmental authority or
arbitration board or tribunal. Borrower is not in default with respect to any
order, writ, injunction, judgement, decree or rule of any court, governmental
authority or arbitration board or tribunal which materially and adversely
affects the Properties, business, profits or condition (financial or otherwise)
of Borrower.
(G) Title to Properties. Borrower has good title to all of its
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Property, in each case, free and clear of all Liens other than for Liens arising
under or pursuant to, or otherwise permitted by, this Agreement.
(H) Compliance With Laws. Borrower has complied with, and its
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Properties, business operations and leaseholds are in compliance with, in all
material respects, the provisions of all federal, state and local laws, rules
and regulations applicable to Borrower, its Properties or the conduct of its
business, and there have been no citations, notices or orders of material
noncompliance issued to Borrower under any such law, rule or regulation.
(I) No Defaults. No event has occurred and no condition exists which
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would, upon the execution and delivery of this Agreement or Borrower's
performance hereunder, constitute a Default or an Event of Default. Borrower is
not in default, and no event has occurred and no condition exists which
constitutes, or which with the passage of time or the giving of notice or both
would constitute, a default in the payment of any indebtedness of Borrower to
any Person.
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6.2. LENDER'S REPRESENTATIONS AND WARRANTIES. To induce Borrower to
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enter into this Agreement and to deliver the Term Loan Note, Lender warrants,
represents and covenants to Borrower that:
(A) Exemptions from Registration. The Term Loan Note will be issued
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in reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act"), and the Term Loan
Note will or may also be issued in reliance upon the exemptions from
registration contained in Sections 10-5-9(13) and (14) of the Georgia Securities
Act of 1973, as amended, and/or other exemptions contained in the applicable
securities or blue sky laws of other states, and that the transfer of the Term
Loan Note may be restricted or limited as a condition to the availability of
such exemptions.
(B) Investment Intent. Lender is acquiring the Term Loan Note for
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its own account with the intent of holding the same for investment and without
the intent or a view to participating directly or indirectly in any distribution
or resale of such Term Loan Note, and it does not intend to divide its
participation with others, or to resell, assign or otherwise dispose of all or
any part of the Term Loan Note. In making such representation, Borrower
acknowledges that a purchase now with an intent to resell by reason of any
foreseeable specific contingency, some predetermined event or an anticipated
change in market value, or in the condition of Borrower, is inconsistent with
such intent.
(C) Access to Information. Lender has been supplied with, or has had
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access to, all information, including financial information, of Borrower to
which a reasonable investor would attach significance in making investment
decisions, and has had the opportunity to ask questions of, and receive answers
from, knowledgeable individuals concerning Borrower and the Term Loan Note.
(D) No Offering Materials. Other than the Newtel Systems, Inc.
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Confidential Memorandum dated November 1993 (the "Memorandum"), no offering
statement, prospectus or offering circular containing information with respect
to Borrower or the Term Loan Note has been or is to be prepared, and Lender has
made its own inquiry and analysis with respect to Borrower and the Term Loan
Note. Lender understands that the information contained in the Memorandum,
including the Projected Financial Statements of Newtel Systems, Inc. for the
three years ended January 31, 1997 contained therein (the "Projections"), were
prepared as of November 1993 and that they have not been updated since that
time. Various of the statements contained in the Memorandum and various
estimates and assumptions underlying the Projections have changed as a result of
the passage of time and the restructuring of the business transaction
contemplated by the Memorandum. Some of such changes are material and would
result in materially different disclosures if the Memorandum and the Projections
were to be updated through the date of this Agreement.
(E) Sophistication and Experience. Lender is an "accredited
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investor" as defined in Rule 501(a) of Regulation D promulgated pursuant to the
Securities Act, and that it personally, or together with its purchaser
representative, has such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of its investment in
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Borrower and the Term Loan Note. Further, it is financially able to bear the
economic risk of its investment, can afford to hold the Term Loan Note for an
indefinite period, and can afford a complete loss of its investment.
6.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower covenants,
------------------------------------------
warrants and represents to Lender that all representations and warranties of
Borrower contained in this Agreement or any of the other Loan Documents shall be
true at the time of Borrower's execution of this Agreement and the other Loan
Documents in all material respects, and shall survive the execution, delivery
and acceptance thereof by Lender and the parties thereto and the closing of the
transactions described therein or related thereto.
SECTION 7. COVENANTS AND CONTINUING AGREEMENTS
---------- -----------------------------------
7.1. AFFIRMATIVE COVENANTS. For so long as there are any Obligations to
---------------------
Lender, Borrower covenants that, unless otherwise consented to by Lender in
writing, it shall:
(A) Taxes and Liens. Pay and discharge all taxes, assessments,
---------------
levies, license fees and other impositions and governmental charges upon it, its
income and Properties as and when such taxes, assessments, levies, license fees
and other impositions and governmental charges are due and payable, or within
any period prior to the imposition of penalties, except and to the extent that
such taxes, assessments, levies, license fees and other impositions and
governmental charges are being contested in good faith. Subject to the
provisions of Section 3 (and any Subordination Documents entered into by
Lender), Borrower shall also pay and discharge any lawful claims which, if
unpaid, would materially and adversely affect the priority of the Lien granted
to Lender hereunder.
(B) Tax Returns. File all federal, state and local tax returns and
-----------
other reports Borrower is required by law to file, and maintain adequate
reserves for the payment of all taxes, assessments, governmental charges,
levies, license fees and other impositions levied upon the Collateral, Borrower,
Borrower's income or profits, or upon any Property belonging to it.
(C) Business and Existence. Preserve and maintain its existence and
----------------------
all rights, privileges, and franchises in connection therewith, and maintain its
qualification and good standing in all states in which such qualification is
necessary and in which the failure to so qualify would materially and adversely
affect its business operations or financial condition.
(D) Care of Collateral. Borrower will maintain the Collateral in its
------------------
possession in good condition (reasonable wear and tear excepted) and will not do
or permit anything to be done to the Collateral that may impair its value or
that may violate the terms of any insurance covering the Collateral or any part
thereof.
(E) Compliance with Laws. Comply with all laws, ordinances,
--------------------
governmental rules and regulations, in all material respects, to which it or its
Properties are subject, and obtain and keep in force any and all governmental
licenses, permits, franchises, or other governmental authorizations necessary to
-11-
the ownership of its Properties or to the conduct of its business, which
violation or failure to obtain might materially and adversely affect the
business, prospects, profits, Properties, or condition (financial or otherwise)
of Borrower.
(F) Further Assurances. At Lender's reasonable request, promptly
------------------
execute or cause to be executed and deliver to Lender any and all documents,
instruments and agreements deemed reasonably necessary by Lender to give effect
to or carry out the terms or intent of this Agreement or any of the other Loan
Documents. Borrower shall defend its title to the Collateral against all
Persons other than Senior Lender(s), Lender and sale or rental customers.
(G) Financial Statements, Books and Records. Borrower will: (a) at
---------------------------------------
all times maintain, in accordance with GAAP, accurate and complete books and
records pertaining to the operation, business and financial condition of
Borrower; (b) at all times maintain accurate and complete books and records
pertaining to the Collateral and any contracts and collections relating to the
Collateral; (c) furnish to Lender promptly upon request and in the form and
content and at the intervals reasonably specified by Lender, such financial
statements, reports, schedules and other information with respect to the
operation, business, affairs and financial condition of Borrower as Lender may
from time to time reasonably require and as are customarily provided to lenders;
(d) with prior notice, at all reasonable times and without hindrance and delay,
permit Lender or any person designated by Lender to enter any place of business
of Borrower or any other premises where any books, records and other data
concerning Borrower and/or the Collateral may be kept and to examine, audit,
inspect and make extracts from, and photocopies of, any such books, records and
other data; (e) furnish to Lender promptly upon request and in the form and
content reasonably specified by Lender lists of purchasers or lessees of
inventory, aging of accounts, aggregate cost or wholesale market value of
inventory and other data concerning the Collateral as Lender may from time to
time specify; and (f) xxxx its books and records in a manner reasonably
satisfactory to Lender so that Lender's rights in and to the Collateral as it
may appear from time to time will be shown.
(H) Place(s) of Business and Location of Collateral. The address of
-----------------------------------------------
Borrower's primary place of business and the address of each other place of
business of Borrower are as shown on Exhibit C attached hereto. The Collateral
---------
(other than for that in the possession of rental or lease customers) and all
books and records pertaining to the Collateral are and will be located as
specified on such Exhibit C. Borrower will immediately advise Leader in writing
---------
of the opening of any new place of business or the closing of any of its
existing places of business, and of any change in the location of the places
where the Collateral (other than for that in the possession of rental or lease
customers), or any part thereof, or the books and records concerning the
Collateral, or any part thereof, are kept.
(I) Insurance. Borrower will insure the portion of the Collateral
---------
comprising Inventory (other than that portion in a rental or lease customer's
possession) against risk of loss or damage by accident, theft and other
casualties in commercially reasonable amounts. All policies or certificates of
such insurance (or copies thereof or binders with respect thereto) shall be
furnished to Lender. Borrower will pay all premiums due or to become due for
such insurance.
-12-
(J) Performance by Lender. If Borrower fails to perform, observe, or
---------------------
comply with any of the conditions, terms or covenants contained in this
Agreement, Lender, without waiving or releasing any of the Obligations or any
default, may (but shall be under no obligation to) at any time thereafter
perform such conditions, terms or covenants for the account and at the expense
of Borrower, and may enter upon any premises of Borrower for that purpose and
take all such action thereon as Lender may consider necessary, or appropriate,
for such purpose. All sums paid or advanced by Lender in connection with the
foregoing and all court costs and costs and expenses of collection (including,
without limitation, reasonable attorney's fees and expenses) incurred in
connection therewith shall be paid by Borrower to Lender on demand and shall
constitute and become a part of the Obligations secured hereby.
(K) Relations with Third Parties. Partnership agrees to enforce its
----------------------------
rights under and otherwise to deal with the other party to both the Assignment
and Management Agreement between Partnership and HomeTel Systems, Inc. and the
Services Agreement between Partnership and Innotrac Corporation, each dated as
of April 11, 1994, in a manner which is intended to further the best interests
of Partnership and as if the other party to each such agreement were an
unaffiliated third party.
7.2. NEGATIVE COVENANTS. For so long as there are any Obligations to
------------------
Lender, Borrower covenants that, unless Lender has first consented thereto in
writing, it will not:
(A) Mergers; Consolidations; Acquisitions. Merge or consolidate with
-------------------------------------
any Person or acquire all or any substantial part of the Properties of any
Person.
(B) Loans. Make any loans or other advances of money (other than for
-----
salary, travel advances, advances against commissions and other similar advances
in the ordinary course of business) to any Person, except as otherwise permitted
herein.
(C) Partnerships or Joint Ventures. Become or agree to become a
------------------------------
general or limited partner in any general or limited partnership or a joint
venturer in any joint venture.
(D) Adverse Transactions. Subject to the provisions of Section 3 (and
--------------------
any Subordination Documents entered into by Lender), enter into any transaction
which (i) may materially and adversely affect, or (ii) materially and adversely
affects, the Collateral or Borrower's ability to repay the Obligations.
(E) Limitation on Liens. Subject to the provisions of Section 3 (and
-------------------
any Subordination Documents entered into by Lender), create or suffer to exist
any Lien upon any of its Property, income or profits, whether now owned or
hereafter acquired, except: (i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes not yet due or being contested as permitted by Section
7.1.(A) hereof; (iii) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons for labor,
materials, supplies or rentals incurred in the ordinary course of Borrower's
business, but only if the payment thereof is not at the time required (or if
payment is required, only if and for so long as the execution or other
enforcement of such Liens is and continues to be stayed and bonded, the validity
-13-
and amount of the claims secured thereby are being contested in good faith, and
such Liens do not, in the aggregate, materially detract from the value of the
Property of Borrower or materially impair the use thereof in the operation of
Borrower's business) and only if such Liens are junior to the Liens in favor of
Lender; and (iv) such other Liens as Lender may hereafter approve in writing.
(F) Change of Business. Enter into any new business or make any
------------------
material change in any of Borrower's business objectives and purposes.
(G) Disposition of Assets. Sell, lease, transfer, exchange or
---------------------
otherwise dispose of any of its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except (i) sales or leases of Inventory in the ordinary course of
Borrower's business, or (ii) dispositions expressly authorized by this
Agreement.
SECTION 8. CONDITIONS PRECEDENT
---------- --------------------
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other Sections of this Agreement, it is understood and agreed that Lender
will not make the Initial Advance unless and until each of the conditions set
forth in SECTIONS 8.1 AND 8.2 has been satisfied at the time of the Initial
Advance, all in form and substance satisfactory to Lender:
8.1. DOCUMENTATION. Lender shall have received the following documents,
-------------
each to be in form and substance satisfactory to Lender and its counsel:
(A) Copies of all filing receipts or acknowledgments issued by any
governmental authority to evidence any and all filings or recordations necessary
to perfect the Liens of Lender in the Collateral and evidence in a form
acceptable to Lender that such Liens constitute valid and perfected security
interests and Liens, having the Lien priority specified in Section 5.2.(B)
hereof;
(B) Copies of the Certificate of Limited Partnership of Borrower and
the Articles of Incorporation of HomeTel Providers Inc., each as certified by
the Secretary of State of the State of Georgia on April 7, 1994;
(C) A Draw Notice in the form of Exhibit B;
---------
(D) The Security Documents duly executed, accepted, acknowledged and
delivered by or on behalf of each of the signatories thereto;
(E) The Other Agreements (other than the Assignment) duly executed and
delivered by Borrower;
-14-
(F) The legal opinion of Xxxxxxxxxx & Cody substantially in the form
of Exhibit D attached hereto; and
---------
(G) Such other documents, instruments and agreements as Lender shall
reasonably request in connection with the foregoing matters.
8.2. OTHER CONDITIONS. The following conditions have been and shall
----------------
continue to be satisfied:
(A) No Default or Event of Default shall exist;
(B) Each of the conditions precedent set forth in the other Loan
Documents shall have been satisfied; and
(C) No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby or which,
in Lender's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
8.3. CONDITIONS TO SUBSEQUENT ADVANCES. Notwithstanding any other
---------------------------------
provision of this Agreement or any of the other Loan Documents, and without
affecting in any manner the rights of Lender under the other Sections of this
Agreement, it is understood and agreed that Lender will not make any advance or
permit any drawing under Section 2 of this Agreement, other than the Initial
Advance, unless and until each of the following conditions has been satisfied at
the time of any subsequent advance or draw, all in form and substance
satisfactory to Lender:
(A) The Assignment shall have been executed and delivered by Guarantor
to Lender and acknowledged by the company issuing such life insurance policy;
(B) Copies shall have been delivered to Lender of all filing receipts
or acknowledgments issued by any governmental authority to evidence any and all
filings or recordations necessary to perfect the Liens of Lender in the
Collateral and evidence in a form acceptable to Lender that such Liens
constitute valid and perfected security interests and Liens, having the Lien
priority specified in Section 5.2.(B) hereof;
(C) No Default or Event of Default shall exist;
(D) Each of the conditions precedent set forth in the other Loan
Documents shall have been satisfied;
-15-
(E) No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby or which,
in Lender's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents;
(F) Borrower shall have delivered evidence to Lender that Borrower has
qualified and is in good standing as a foreign limited partnership in those
states where the conduct of Borrower's business activities or the ownership of
its Properties necessitates qualification in order to avoid a material
forfeiture or liability or a material adverse consequence; and
(G) A Draw Notice in the form of Exhibit B.
---------
SECTION 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
---------- -------------------------------------------------
9.1. EVENTS OF DEFAULT. Subject to Section 3 (and any Subordination
-----------------
Documents entered into by Lender), the occurrence of any one or more of the
following events shall constitute an "Event of Default":
(A) Payment of Obligations. Borrower shall fail to pay any of the
----------------------
Obligations within five (5) days of the due date thereof (whether due at stated
maturity, on demand, upon acceleration or otherwise).
(B) Misrepresentations. Any warranty, representation, or other
------------------
statement made or furnished to Lender by or on behalf of Borrower in this
Agreement or in any instrument or certificate furnished in compliance with or in
reference to this Agreement or any of the other Loan Documents proves to have
been false or misleading in any material respect when made or furnished
(including without limitation, by omitting to state any material fact or facts
necessary to make such representation, warranty or other statement not
misleading).
(C) Breach of Covenants. Borrower shall fail or neglect to perform,
-------------------
keep or observe (i) any covenant contained in Sections 5.2, 5.3, 5.4,
7.1(F)(second sentence), 7.1(G), 7.1(H), 7.2(D)(clause (ii)), or 7.2(G) of this
Agreement or (ii) any other covenant contained in this Agreement (other than a
covenant a default in the performance or observance of which is dealt with
specifically elsewhere in this Section 9.1) and the breach of such other
covenant is not cured to Lender's reasonable satisfaction within thirty (30)
days after Borrower's receipt of notice of such breach from Lender.
(D) Default Under Other Agreements. Any event of default shall occur
------------------------------
under, or Borrower shall default in the performance or observance of any term,
-16-
covenant, condition or agreement contained in, any of the Other Agreements and
such default shall continue beyond any applicable period of grace.
(E) Default Under Senior Obligations. Senior Lender shall have
--------------------------------
declared an event of default in respect of, and shall have accelerated, the
Senior Obligations.
(F) Default Under Security Documents. Any event of default shall
--------------------------------
occur under, or Borrower shall default in the performance or observance of any
term, covenant, condition or agreement contained in, any of the Security
Documents and such default shall continue beyond any applicable period of grace.
(G) Bankruptcy. The death of, insolvency of, appointment of a
----------
receiver, trustee, custodian or similar fiduciary for any part of the Property
or property of, assignment for the benefit of creditors by, or the commencement
of any proceedings under any federal or state bankruptcy or insolvency laws by
or against (if instituted against Borrower, such proceeding shall continue for
sixty (60) days), or the making of any offer of settlement, extension or
composition to their respective unsecured creditors by, Borrower or Guarantor.
9.2. ACCELERATION OF THE OBLIGATIONS. Subject to Section 3 (and any
-------------------------------
Subordination Documents entered into by Lender), upon and after the occurrence
of an Event of Default as above provided, all or any portion of the Obligations
due or to become due from Borrower to Lender under this Agreement, or any of the
other Loan Documents, shall, at the option of Lender, become at once due and
payable and Borrower shall forthwith pay to Lender, in addition to any and all
sums and charges due, the entire principal of and interest accrued on the
Obligations.
9.3. REMEDIES. Subject to Section 3 (and any Subordination Documents
--------
entered into by Lender), upon and after the occurrence of an Event of Default,
Lender shall have and may exercise from time to time the following rights and
remedies:
(A) All of the rights and remedies of a secured party under the Code
or under other applicable law, and all other legal and equitable rights to which
Lender may be entitled, all of which rights and remedies shall be cumulative,
and none of which shall be exclusive, and shall be in addition to any other
rights or remedies contained in this Agreement or any of the other Loan
Documents.
(B) The right to take immediate possession of the Collateral (other
than that in the possession of a rental or lease customer), and (i) to require
Borrower to assemble the Collateral (other than that in the possession of a
rental or lease customer), at Borrower's expense, and make it available to
Lender at a place designated by Lender which is reasonably convenient to both
parties, and (ii) to enter any of the premises of Borrower and to keep and store
the same on said premises until sold.
(C) The right to sell or otherwise dispose of all or any of the
Collateral in its then condition at public or private sale or sales, with such
notice as may be required by law, in lots or in bulk, for cash or on credit, all
-17-
as Lender may deem advisable. Borrower agrees that ten (10) days written notice
to Borrower of any public or private sale or other disposition of such
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice; provided, however, that Lender
-------- -------
need not provide Borrower with advance notice if any portion of the Collateral
will rapidly decline in value or is of a type normally sold on a recognized
market. Lender shall have the right to sell, lease or otherwise dispose of such
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of such Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations.
(D) The proceeds realized from the sale of any Collateral may be
applied, after allowing two (2) Business Days for collection, first to the
reasonable costs, expenses and attorneys' fees and expenses actually incurred by
or on behalf of Lender for collection and for acquisition, completion,
protection, removal, storage, managing, sale and delivery of the Collateral
(including, but not limited to, any and all taxes incurred in connection with
any such sale of the Collateral); secondly, to interest due upon any of the
Obligations; and thirdly, to the principal of the Obligations. If any
deficiency shall arise, Borrower and the Guarantor shall remain liable to Lender
therefor; and any surplus shall be paid to Borrower.
9.4. REMEDIES CUMULATIVE; NO WAIVER. All covenants, conditions,
------------------------------
provisions, terms, warranties, guaranties, indemnities, agreements and other
undertakings of Borrower contained in this Agreement and the other Loan
Documents, or in any document referred to herein or contained in any agreement
supplementary hereto or in any Guarantee given to Lender, heretofore,
concurrently, or hereafter entered into, shall be deemed cumulative to and not
in derogation or substitution of any of the terms, covenants, conditions,
provisions, warranties, guaranties, indemnities, undertakings or agreements of
Borrower herein contained. Each right, power and remedy of Lender as provided
for in this Agreement or in the Loan Documents or now or hereinafter existing at
law or in equity or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power or remedy provided for in
the Agreement or in the Loan Documents or now or hereinafter existing at law or
in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Lender of any one or more of such rights, powers or remedies shall
not preclude the simultaneous or later exercise by Lender of any or all such
other rights, powers or remedies.
SECTION 10. MISCELLANEOUS
----------- -------------
10.1. MODIFICATION OF AGREEMENT. This Agreement may not be modified,
-------------------------
altered or amended, except by an agreement in writing signed by Borrower and
Lender.
10.2. WAIVERS. Lender's failure, at any time or times hereafter, to
-------
require strict performance by Borrower of any provision of this Agreement shall
not waive, affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Lender of an
Event of Default by Borrower under this Agreement or any of the other Loan
-18-
Documents shall not suspend, waive or affect any other Event of Default by
Borrower under this Agreement or any of the other Loan Documents, whether the
same is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement or any of the
other Loan Documents shall be deemed to have been suspended or waived by Lender,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Lender
and directed to Borrower. Borrower waives presentment, notice of dishonor and
notice of non-payment with respect to Accounts, contract rights and Chattel
Paper.
10.3. SEVERABILITY. Wherever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
10.4. SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements and
----------------------
the Security Documents shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of Borrower and Lender; provided,
--------
however, neither Borrower nor Lender shall sell, assign, transfer or otherwise
-------
dispose of all or any part of their respective interest in this Agreement or any
of the other Loan Documents hereunder or thereunder without the prior written
consent of the other party.
10.5. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the Other
------------------------------------
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in any of the other
Loan Documents by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in direct conflict
with, or inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.
10.6. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
10.7. NOTICE. Except as otherwise provided herein, all notices,
------
requests and demands to or upon a party hereto to be effective shall be in
writing (and, if sent by mail, shall be sent by certified or registered mail,
return receipt requested) or by telegraph or telex or telecopy and, unless
otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered when delivered against receipt or one Business Day
after deposit in the mail, postage prepaid, or, in the case of telegraphic
notice, when delivered to the telegraph company, or, in the case of telex
notice, when sent, answerback received, or, in the case of telecopy notice, when
telecopied, addressed as follows:
-19-
(A) If to Lender: ITC Holding Company, Inc.
000 Xxxxx Xxxxxx
X.X. Xxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Telecopier No.: (000) 000-0000
(B) If to Borrower: 0000 Xxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
Attn: President
Telecopier No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 10.7.
10.8. TIME OF ESSENCE. Time is of the essence of this Agreement, the
---------------
Other Agreements and the Security Documents.
10.9. ENTIRE AGREEMENT. This Agreement and the other Loan Documents,
----------------
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
10.10. GOVERNING LAW. This Agreement shall be governed by the laws of
-------------
the State of Georgia (not including choice of law rules thereof).
-20-
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning hereof.
HOMETEL PROVIDERS PARTNERS, L.P.
By:HomeTel Providers Inc., its general partner
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Xxxxx Xxxxxxx, President
[CORPORATE SEAL]
ITC HOLDING COMPANY, INC.
By: /s/ Xxxx Xxx
-------------------------------------------
Xxxx Xxx, Chief Financial Officer
[CORPORATE SEAL]
-21-
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED (THE "FEDERAL ACT"), OR UNDER OR PURSUANT TO THE SECURITIES OR BLUE SKY
LAWS (COLLECTIVELY, THE "STATE SECURITIES LAWS") OF ANY STATE. THIS NOTE HAS
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, OR SOLD,
HYPOTHECATED, PLEDGED, TRANSFERRED OR ASSIGNED, NOR WILL BORROWER RECOGNIZE ANY
ASSIGNEE OR TRANSFEREE AS HAVING AN INTEREST IN THIS NOTE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE UNDER THE FEDERAL ACT
AND/OR THE STATE SECURITIES LAWS OR AN OPINION OF LEGAL COUNSEL SATISFACTORY TO
BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED.
TERM LOAN NOTE
$3,500,000 April 11, 0000
Xxxxxxx, Xxxxxxx
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to
ITC HOLDING COMPANY, INC. ("Lender"), at Lender's office located at 000 Xxxxx
Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000, or at such other place as the holder hereof
may designate, the principal sum of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS
($3,500,000) or so much thereof as may be outstanding from time to time, as well
as all fees or expenses chargeable to Borrower under that certain Loan and
Security Agreement, dated the date hereof, between Borrower and Lender
(hereinafter, together with all supplements, riders, amendments, exhibits or
schedules thereto, referred to as the "Loan Agreement"), said principal sum to
be due and payable in a single installment due on the Maturity Date, together
with interest on the unpaid amount hereof from the date each advance of the
principal amount hereof is made until paid in full, said interest being due on
each Interest Payment Date, and on the Maturity Date, and to be calculated at
the rate (computed on the basis of a 360-day year and of the actual number of
days elapsed) of: (i) for the period from the date hereof through and including
the Adjustment Date, fourteen percent (14%) per annum, and (ii) from and after
the Adjustment Date through and in including the Maturity Date, at an annual
rate equal to the sum of (A) the Prime Rate as announced from time to time by
the Reference Bank plus (B) eight percent (8%). All payments hereunder shall be
made in lawful money of the United States.
This Term Loan Note (the "Note") is the Term Loan Note referred to in,
and is issued pursuant to, the Loan Agreement and is entitled to all of the
-22-
benefits and security of the Loan Agreement. All of the terms, covenants and
conditions of the Loan Agreement and all other instruments evidencing or
securing the indebtedness hereunder are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
This Note and all amounts due hereunder are expressly subject to the
provisions of Section 3 of the Agreement and any subordination agreement,
document or instrument which may evidence such subordination.
If any Event of Default shall occur, then, at Lender's option, the
outstanding principal balance of this Note shall bear interest from and after
the occurrence of such Event of Default at a variable rate per annum equal to
the Default Rate until either the Event of Default is cured with Lender's
permission and to Lender's satisfaction or the principal balance of this Note is
paid in full.
In no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof or otherwise, shall the amount paid or agreed
to be paid to Lender for the use, forbearance or detention of money advanced
hereunder exceed the highest lawful rate permissible under any law which a court
of competent jurisdiction may deem applicable hereto. In the event that such a
court determines that Lender has charged or received interest hereunder in
excess of the highest applicable rate, such rate shall automatically be reduced
to the maximum rate permitted by law and Lender shall promptly refund to
Borrower any interest received by it in excess of the maximum lawful rate. It
is the intent hereof that Borrower not pay or contract to pay, and that Lender
not receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by Borrower under
applicable law.
If any Event of Default occurs or exists or the Loan Agreement is
terminated, this Note may, at Lender's option, be declared by Lender to be
immediately due and payable. In addition thereto, and not in substitution
therefor, Lender shall be entitled to exercise any one or more of the other
rights and remedies exercisable by lender under the Loan Agreement or any other
agreement or instrument between Lender and Borrower, or provided by applicable
law. No failure to exercise or delay in exercising said option or to pursue
such other remedies shall constitute a waiver of such option or such other
remedies or of the right to exercise any of the same in the event of any
subsequent Event of Default. No single or partial exercise by Lender of any
right hereunder, under any other Agreement or instrument or otherwise shall
preclude any other or further exercise thereof or of any other rights. This
paragraph is in addition to and in no way a limitation upon the nature of this
Note or upon any other rights of Lender under this Note, the Loan Agreement, any
other instrument between Lender and Borrower, or under applicable law. If this
Note is collected by or through an attorney at law, then Borrower shall be
obligated to pay, in addition the principal balance and accrued interest hereof,
reasonable attorney's fees actually incurred and court costs.
Time is of the essence of this Note. To the fullest extent permitted
by applicable law, Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws, and all defenses and pleas
-23-
on the grounds of any extension or extensions of the time of payments or the due
dates of this Note, in whole or in part, before or after maturity, with or
without notice. No renewal or extension of this Note, and no delay in
enforcement of this Note or in exercising any right or power hereunder, shall
affect the liability of Borrower.
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Georgia, and is intended to take
effect as an instrument under seal.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed,
sealed and delivered in Atlanta, Georgia, on the date first above written.
HOMETEL PROVIDERS PARTNERS, L.P.
By: HomeTel Providers Inc., its general partner
By: /s/ Xxxxx Xxxxxxx
----------------------------------------------
Xxxxx Xxxxxxx, President
[CORPORATE SEAL]
[GUARANTEE OF XXXXX XXXXXXX APPEARS ON FOLLOWING PAGE]
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GUARANTEE
FOR VALUE RECEIVED, Xxxxx Xxxxxxx ("Guarantor") hereby irrevocably and
unconditionally guarantees to ITC HOLDING COMPANY, INC. ("Lender") the full and
timely payment by HomeTel Providers Partners, L.P. ("Borrower") of all
Obligations as defined in and under and pursuant to that certain Loan and
Security Agreement, of even date herewith, between Lender and Borrower, and the
Note upon which this Guarantee is endorsed, and any renewals, modifications,
replacements or extensions of the Obligations.
EXECUTED AND DELIVERED under seal this 11th day of April, 1994.
/s/ Xxxxx Xxxxxxx (SEAL)
--------------
Xxxxx Xxxxxxx
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EXHIBIT B
Form of Draw Notice
[Date]
VIA FACSIMILE
-------------
ITC Holding Company, Inc.
000 Xxxxx Xxxxxx
X.X. Xxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: [ ]
Re: Draw on Term Loan Credit Facility
---------------------------------
Dear [ ]:
Pursuant to Section 2.2 of that certain Loan and Security Agreement (the
"Agreement") dated April [ ], 1994, between ITC Holding Company, Inc. and
HomeTel Providers Partners, L.P. ("Borrower"), Borrower hereby advises you that
it is making a draw on the term loan credit facility extended by you to Borrower
under and pursuant to the Agreement in the amount of [INSERT AMOUNT]. Such
amount should be wire transferred to the account of Borrower on or before
[INSERT DATE THAT IS AT LEAST TWO BUSINESS DAYS AFTER TO DATE HEREOF], pursuant
to the following instructions:
[INSERT WIRE TRANSFER INSTRUCTIONS]
In connection with the drawing hereunder, Borrower states as follows:
(1) As of the date hereof, the total amount drawn by Borrower under
the Agreement (and not giving effect to the drawing hereunder) is $[INSERT
TOTAL DRAWINGS];
(2) As of the date hereof, the total amount available for drawing
under the Agreement is $[INSERT AVAILABLE AMOUNT]; and
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(3) Giving effect to the drawing hereunder, the remaining amount
available to be drawn by Borrower is $[INSERT REMAINING AMOUNT TO BE
DRAWN].
Borrower hereby represents and warrants to Lender as follows:
(1) The representations and warranties set forth in Sections 5.2 and
6.1 of the Agreement are true and correct on and as of the date hereof;
(2) As of the date hereof, Borrower is in compliance with all the
terms and provisions set forth in the Agreement;
(3) As of the date hereof, no Default or Event of Default under or
pursuant to the Agreement or the other Loan Documents has occurred or is
continuing; and
(4) The conditions set forth in Sections 8.2(B) and 8.2(C) have been
and continue to be satisfied as of the date hereof.
HOMETEL PROVIDERS PARTNERS, L.P.
By: HomeTel Providers Inc., its general partner
By: /s/ Xxxxx Xxxxxxx
----------------------------------------------
Xxxxx Xxxxxxx, President
[CORPORATE SEAL]
-00-
XXXXXXX X
Xxxxxxxxx Xxxxx of Business and All Other Addresses
0000 Xxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
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EXHIBIT D
[Date]
ITC Holding Company, Inc.
000 Xxxxx Xxxxxx
X.X. Xxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Mr. Xxxx Xxx, Chief Financial Officer
RE: Loan and Security Agreement, dated April [ ], 1994, between
ITC Holding Company, Inc. and HomeTel Providers Partners, L.P.
--------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to HomeTel Providers Partners, L.P., a Georgia
limited partnership ("Borrower"), and Xxxxx Xxxxxxx, an individual resident of
--------
the State of Georgia ("Guarantor"), in connection with the negotiation,
---------
execution and delivery of that certain Loan and Security Agreement (the "Loan
----
Agreement"), dated April [ ], 1994, between Borrower and ITC Holding Company,
---------
Inc., a Georgia corporation ("Lender"), and that certain Term Loan Note (the
------
"Note"), dated April [ ], 1994, in the original aggregate principal amount of
------
$3,500,000, executed and delivered by Borrower in favor of Lender. This opinion
is furnished pursuant to Section 8.1(G) of the Loan Agreement. Terms used
herein which are defined in the Loan Agreement have the respective meanings set
forth or referred to in the Loan Agreement, unless otherwise defined herein.
This opinion letter is limited by, and is in accordance with, the January
1, 1992 edition of the Interpretive Standards applicable to Legal Opinions to
Third Parties in Corporate Transactions adopted by the Legal Opinion Committee
of the Corporate and Banking Law Section of the State Bar of Georgia (the
"Interpretive Standards"), which Interpretive Standards are incorporated in this
opinion letter by this reference.
In connection with our representation, we have examined fully executed
counterparts (or copies as so executed) of the following documents (items (a)
through (d) are hereinafter referred to collectively as the "Loan Documents" and
all the items listed below are hereinafter referred to collectively as the
"Transaction Documents"):
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(a) The Loan Agreement;
(b) The Note;
(c) All Other Agreements described on Schedule I hereto;
----------
(d) Uniform Commercial Code ("UCC") financing statements naming
---
Borrower as debtor and Lender as secured party (collectively, the
"Financing Statements") to be filed in the filing offices
--------------------
indicated on Schedule II attached hereto (collectively the "Filing
----------- ------
Offices");
-------
(e) Reports ("Search Reports") dated April [ ], 1994 delivered to us
and prepared by EquiFax Business Information Services and
Information America (each an independent contractor and is not
affiliated or supervised by our firm) as to UCC-1 financing
statements on file in respect of Borrower in the offices listed on
Schedule II hereto, which Search Reports are attached hereto as
-----------
Schedule III; and
------------
(f) The certificates, instruments, documents and agreements listed on
Schedule IV (the documents listed on Schedule IV as Items 5 and 6
-----------
are collectively referred to as the "Material Contracts").
--------------------
In the capacity described above, we have also considered such matters of
law and of fact, including the examination of originals or copies, certified or
otherwise identified to our satisfaction, of the Certificate of Limited
Partnership and Limited Partnership Agreement of Borrower, the Articles of
Incorporation and Bylaws of the general partner of Borrower, written consents of
the general partner of Borrower with respect to the transactions contemplated by
the Loan Agreement, and written consents of the Board of Directors of the
general partner of Borrower with respect to the transactions contemplated by the
Loan Agreement, together with such other records and documents of Borrower, the
general partner of Borrower, certificates of officers and representatives of
Borrower and the general partner of Borrower, certificates of public officials
and such other documents as we have deemed appropriate for the opinions herein
set forth.
With your permission, in rendering this opinion, we have assumed the
following, in addition to the assumptions set forth in the Interpretive
Standards, without any investigation or inquiry:
(1) the due authorization, execution and delivery of all Loan Documents by
all parties thereto (other than Borrower and Guarantor);
(2) that the Loan Documents constitute the binding obligations of the
parties thereto other than Borrower and Guarantor, and each such other party
thereto has all requisite power and authority to perform its obligations
thereunder;
(3) that the only interest, fees and other charges contracted for or to be
reserved, charged, taken or paid in connection with the transactions
contemplated by the Transaction Documents are those set forth in the Loan
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Documents and that all such interest, fees and charges will be reserved,
charged, taken and applied by Lender solely as described therein, and that no
interest shall be reserved, charged, taken or paid under the Loan Documents or
the Transaction Documents on unpaid interest and that under no circumstances
shall the rate of interest payable (including any fees, charges, premiums or
similar amounts which may be characterized as interest) exceed 5.0% per month
(whether due to prepayment, acceleration, or otherwise);
(4) Borrower has, prior to or concurrently with the execution and delivery
of the Loan Agreement, rights in, and the unrestricted right to convey the
Collateral, including that portion of the Collateral which constitutes property
of a type (i) in which a security interest may be granted and perfected under
the provisions of Article 9 of the UCC and (ii) as to which the federal law of
the United States has not preempted the UCC with respect to the validity,
enforceability, perfection and priority of security interests therein (such
portion of the Collateral, the "UCC Collateral");
----------------
(5) The location of the principal place of business and chief executive
office of the Borrower within the State of Georgia is and will remain entirely
within the county specified on Schedule II;
-----------
(6) Each of the Financing Statements gives a correct address of the secured
party from which information concerning the security interest to be perfected
thereby may be obtained.
Based upon the foregoing, and subject to the other exceptions, assumptions
and qualifications set forth or incorporated herein by reference, it is our
opinion that:
(a) Borrower is a limited partnership duly organized and validly existing
under the laws of the State of Georgia.
(b) Borrower has the partnership power and partnership authority to execute
and deliver the Loan Agreement, the Note and each of the Material Contracts, to
perform its obligations thereunder, to own and operate its assets and to conduct
its business.
(c) The general partner of Borrower is HomeTel Providers Inc., a Georgia
corporation, holding of record and, to our knowledge, beneficially, a
partnership interest representing 90% of the total partnership interests in
Borrower.
(d) Borrower has duly authorized the execution and delivery of the Loan
Agreement, the Note, and each of the Material Contracts and performance by
Borrower thereunder and has duly executed and delivered the Loan Agreement, the
Note and the Material Contracts.
(e) The Guarantee is enforceable against Xxxxx Xxxxxxx.
(f) Each of the Loan Agreement, the Note and the Material Contracts is
enforceable against Borrower.
-31-
(g) The execution and delivery by Borrower of the Loan Documents and the
Material Contracts do not, and if Borrower were now to perform its obligations
thereunder such performance would not, result in any:
(I) violation of Borrower's Certificate of Limited Partnership or Limited
Partnership Agreement;
(II) violation of any existing federal or Georgia constitution, statute,
regulation, rule, order or law to which Borrower or its properties
are subject;
(III) violation of any judicial or administrative decree, writ, judgment
or order to which, to our knowledge, Borrower or its properties are
subject; or
(IV) to our knowledge, violation of any of the terms and conditions of the
Material Contracts.
(h) No consent, approval, authorization or other action by, or filing with,
any governmental authority of the United States or the State of Georgia is
required for Borrower's execution and delivery of the Loan Agreement and the
Note or its performance thereunder.
(i) (I) The Loan Agreement is effective to create a security interest in
the UCC Collateral;
(II) The Financing Statements are in appropriate form for filing in
the State of Georgia and no taxes or fees, other than normal filing
fees, are required to be paid in connection with such filing, and the
filing of the Financing Statements in the Filing Offices will be
effective to perfect the security interest created by the Loan
Agreement in that portion of the UCC Collateral in which a security
interest may be perfected by the filing of a UCC financing statement
in the State of Georgia (the "Security Interest"); and
-----------------
(III) Assuming that the Financing Statements are filed in the
Filing Offices, the Security Interest will have the priority accorded
to a UCC security interest perfected by the filing of a UCC financing
statement in the State of Georgia.
Our opinions and confirmations set forth above are subject to the following
exceptions and qualifications:
A. The opinions set forth herein are limited to the laws of the State of
Georgia and applicable federal laws, other than for the rules and regulations of
the Federal Communications Commission.
B. Except as expressly stated in Paragraph (j) above, we express no
opinion herein with respect to the perfection or priority of any security
interests, security titles or other liens created or granted under any of the
-32-
Loan Documents or with respect to any person's title to any collateral covered
thereby.
C. In rendering our opinions herein regarding the enforceability of the
Loan Documents, we have assumed that, to the extent that applicable law would
require the rights and remedies set forth therein to be exercised in good faith
or in a reasonable or commercially reasonable manner as a condition to the
enforceability thereof, and to the extent that any such condition cannot be
waived, such legal requirements will be observed and satisfied.
D. Notwithstanding anything herein to the contrary, we express no opinion
in this letter regarding: (i) the effect on the enforceability of any Loan
Document of any applicable laws which limit or prohibit the exercise of self-
help or other non-judicial remedies (such as any right, without judicial
process, to enter upon, to take possession of, to collect, retain, use and enjoy
rents, issues and profits from property, or to manage property); (ii) the
enforceability of any provisions in any of the Loan Documents which purport to
permit any sale or other disposition of collateral other than in compliance with
applicable law; (iii) the enforceability of any provisions in any of the Loan
Documents which purport to permit any secured party to collect a deficiency
except upon compliance with applicable law; (iv) the enforceability of any
provisions in any of the Loan Documents which purport to entitle any party, as a
matter of right and without court approval after any required showings and
hearings, to the appointment of a receiver or the issuance of a writ of
possession; (v) the enforceability of any provisions in any of the Loan
Documents which purport to provide for payment of interest on unpaid interest in
violation of Official Code of Georgia Annotated ("O.C.G.A.") (S) 7-4-17; (vi)
---------------------------------- --------
the enforceability of any provisions in any of the Loan Documents which, due to
prepayment, acceleration or otherwise, would cause the rate of interest payable
under any of the Loan Documents to exceed five percent (5.0%) per month in
violation of O.C.G.A. (S) 7-4-18; and (vii) the enforceability of any provisions
in any of the Credit Documents which purport to provide that any party shall be
deemed to have been given or to have received any notice which such party did
not actually receive.
E. The opinions expressed in Paragraph (j) above are subject to the
following additional exceptions and qualifications:
(i) The effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws affecting the rights of creditors, including the
U.S. Bankruptcy Code in its entirety and State laws regarding
fraudulent transfers, obligations and conveyances or regarding
receiverships;
(ii) In the case of proceeds, as such term is defined in the UCC,
continuation of the perfection of the Security Interest therein is
limited to the degree set forth in O.C.G.A. (S) 11-9-306;
(iii) Continuation statements relating to each Financing Statement must be
filed within six (6) months prior to the expiration of five (5) years
from the date of filing thereof or from the effectiveness of the last
continuation; and
-33-
(iv) Additional filings may be necessary with respect to the UCC
Collateral if Borrower changes its name, identity or corporate
structure or the jurisdiction in which the UCC Collateral is located
or in the event Borrower changes the location of its principal place
of business or chief executive office.
This opinion has been delivered solely for the benefit of the
addressees pursuant to the Loan Agreement and may not be relied upon by any
other person or entity for any other purpose without the express written
permission of the undersigned.
Very truly yours,
XXXXXXXXXX & CODY
By:/s/ Xxxxx X. Xxxxxxxx, a Partner
--------------------------------
Xxxxx X. Xxxxxxxx, a Partner
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SCHEDULE I
OTHER CREDIT DOCUMENTS REVIEWED
-------------------------------
1. Term Loan Note, dated April [ ], 1994, executed and delivered by Borrower
in favor of Lender;
2. Guarantee, dated April [ ], 1994, endorsed on the Term Loan Note, and
executed and delivered by Guarantor in favor of Borrower;
3. Draw Notice, dated April [ ], 1994, executed by Borrower and delivered to
Lender; and
4. Bailee Letter, dated April [ ], 1994, acknowledged by Innotrac
Corporation, and related UCC-1 Financing Statement
-35-
SCHEDULE II
FILING OFFICES
--------------
Office of the Clerk of the Superior Court of Gwinnett County, Georgia.
-36-
SCHEDULE III
UCC SEARCH REPORTS
------------------
-37-
SCHEDULE IV
OTHER DOCUMENTS REVIEWED
------------------------
1. Certificate of Limited Partnership for Borrower issued on April [ ], 1994
by the Office of the Secretary of State of Georgia;
2. Limited Partnership Agreement, dated April [ ], 1994, between HomeTel
Providers Inc. ("General Partner") and Lender, as Limited Partner;
-----------------
3. Articles of Incorporation and By-laws of General Partner;
4. Certificate of Secretary of General Partner, dated as of April [ ], 1994;
5. Assignment and Management Agreement, dated April [ ], 1994, between
Borrower and HomeTel Systems, Inc.; and
6. Services Agreement, dated April [ ], 1994, between Borrower and Innotrac
Corporation.
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