BRIDGE LOAN AGREEMENT
BRIDGE LOAN AGREEMENT, dated as of August 1, 1998 between MASATEPE
COMMUNICATIONS U.S.A., L.L.C., a Delaware limited liability company (the
"Borrower"), and VDC CORPORATION LTD., a Bermuda corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender make the Bridge Loan
(as hereinafter defined) and the Lender has agreed to make the Bridge Loan on
and subject to the terms and conditions hereof;
NOW, THEREFORE, each of the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby agree as follows:
1. GENERAL DEFINITIONS
1.1. Definitions. When used herein, the following terms shall have the
following meanings:
Affiliate shall mean any person which, directly or indirectly, owns or
controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, at least ten
percent (10%) of the outstanding capital stock having ordinary voting power to
elect the Board of Directors (irrespective of whether, at the time, stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) of the Borrower, or which
otherwise controls, is controlled by or is under common control with the
Borrower, or any stockholders of the Borrower or any person which controls any
stockholder of the Borrower. For the purpose of this definition, "control" means
the possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies, whether through the ownership of voting
securities, by contract or otherwise.
Agreement shall mean this Loan Agreement as the same may be amended,
extended, supplemented, modified, restated or replaced from time to time.
Borrower shall mean Masatepe Communications U.S.A., L.L.C., a Delaware
limited liability company.
Bridge Loan shall mean the term loan made pursuant to Section 2.1.
Bridge Note shall mean the Bridge Note made by the Borrower to the
Lender pursuant to Section 2.1 in the form of Exhibit "A".
Business Day shall mean a day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of
Delaware. Unless specifically denoted "Business Days" herein, references to
"days" shall mean calendar days.
Closing Date shall mean the date hereof. The closing shall take place
on the Closing Date via telephone conference call or by such other means as the
parties may provide at such time as the parties agree.
Default Rate shall mean the rate or rates determined from time to time
pursuant to Section 3.2.
Dollars and the symbol $ shall mean lawful money of the United States
of America.
Event of Default shall mean any of the Events of Default described in
Section 9.1.
FCC Approval Date shall mean the later to occur of (A) the date on
which the FCC consents to or approves each of the FCC Filings, including any
accounting rates stated therein; or (B) sixty days after the Closing Date.
FCC Filings shall mean, collectively, the following documents filed or
to be filed by the Company with the FCC: (i) transfer of control application
with respect to the Company's Overseas Common Carrier Section 214 Certificate
authorizing the change in control of the Company resulting from the consummation
of the transactions contemplated by the Purchase Agreement; (ii) the Carrier
Service Agreement, dated as of May 12, 1998, between the Company and D-Comm,
Inc.; and (iii) an operating agreement in form and substance acceptable to Buyer
between the Company and Masatepe S.A. which shall set forth the accounting rates
charged thereunder.
Financials shall mean the unaudited financial statements of the
Borrower dated July 31, 1998.
U.S. GAAP shall mean generally accepted accounting principles as are
in effect from time to time and applied on a consistent basis (except for
changes in application in which the Borrower's independent certified public
accountants concur) both as to classification and amounts.
Guaranty shall mean the Guaranty Agreement entered into by the
Guarantor in favor of Lender in the form of Exhibit "B".
Guarantor shall mean Activated Communications Limited Partnership.
Indebtedness shall mean all of the Borrower's liabilities, obligations
and indebtedness of any and every kind and nature, including, without
limitation, the Liabilities and all obligations (including but not limited to
obligations pursuant to operating leases) to trade creditors, whether
heretofore, now or hereafter owing, due or payable from the Borrower to any
person and howsoever evidenced, created, incurred, acquired or owing, whether
primary,
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secondary, direct, contingent, fixed, matured, liquidated or otherwise. Without
in any way limiting the generality of the foregoing, Indebtedness specifically
includes (i) all indebtedness guaranteed, directly or indirectly, in any manner,
or endorsed (other than for collection or deposit in the ordinary course of
business) or discounted with recourse; (ii) all obligations or liabilities of
any person that are secured by any Lien upon property owned by the Borrower,
even though the Borrower has not assumed or become liable for the payment
thereof; (iii) all obligations or liabilities created or arising under any lease
of real or personal property or conditional sale or other title retention
agreement with respect to property used or acquired by the Borrower, even though
the rights and remedies of the lessor, seller or lender thereunder are limited
to repossession of such property; (iv) all unfunded pension fund obligations and
liabilities; and (v) deferred taxes.
Law shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any national, federal, state, local or
other government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Lender shall mean VDC Corporation Ltd., a Bermuda corporation.
Liabilities shall mean all of the Borrower's liabilities, obligations
and Indebtedness to the Lender of any and every kind and nature (including,
without limitation, interest, fees, charges, expenses, attorneys' fees,
indemnities and other sums chargeable to the Borrower by the Lender and future
advances made to or for the benefit of the Borrower), whether arising under this
Agreement or under any of the other Loan Documents or acquired by the Lender
from any other source or otherwise, whether heretofore, now or hereafter owing,
arising, due or payable from the Borrower to the Lender, whether as drawer,
maker, endorser, guarantor, surety or otherwise and howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or liquidated or otherwise, including obligations of
performance.
Lien shall mean any mortgage, pledge, security interest, encumbrance,
lien, charge, or claim upon property of any kind, whether or not voluntarily
given (including, without limitation, any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof, the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction, and the recording of or
agreement to provide any instrument for recording under the recording or other
laws of any state or other jurisdiction).
Loan Documents shall mean all agreements, instruments and documents
whether heretofore, now or hereafter executed by or on behalf of the Borrower
with respect to or in connection with this Agreement including, without
limitation, the Bridge Note, the Pledge Agreement, notes, guarantees, mortgages,
deeds of trust, chattel mortgages, pledges, powers of attorney, consents,
assignments, contracts, notices, security agreements, leases, deposit
agreements, financing statements, warehouse receipts, bills of lading, notices
of assignment of
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accounts, schedules of accounts assigned, landlord's and mortgagee's waivers,
trust account agreements and all other written matter.
Material Adverse Change shall mean any set of circumstances or events
which (a) has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document, (b) is or could reasonably be expected to be material and
adverse to the condition (financial or otherwise) or business operations of the
Borrower or to the prospects of the Borrower, (c) impairs materially or could
reasonably be expected to impair materially the ability of the Borrower to duly
and punctually pay or perform the Liabilities, or (d) materially impairs or
could reasonably be expected to materially impair the ability of the Lender to
enforce its legal remedies pursuant to this Agreement or any other Loan
Document.
Maturity Date shall mean the earlier to occur of (i) the FCC Approval
Date and (ii) October 15, 1998.
Official Body shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Person shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
Potential Default shall mean any event or condition which with notice,
passage of time, or a determination by the Lender, or any combination of the
foregoing, would constitute an Event of Default.
Solvent shall mean (i) at fair valuation thereof, the sum of all of
the Borrower's assets exceeds all Indebtedness, and (ii) the Borrower is able to
pay all of its Indebtedness as it becomes due.
Subsidiary shall mean of any person at any time (i) any corporation or
trust of which fifty percent (50%) or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such person or one or
more of such person's Subsidiaries, or any partnership of which such person is a
general partner or of which fifty percent (50%) or more of the partnership
interests is at the time directly or indirectly owned by such person or one or
more of such person's Subsidiaries, and (ii) any corporation, trust, partnership
or other entity which is controlled or capable of being controlled by such
person or one or more of such person's Subsidiaries.
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Uniform Commercial Code shall mean the Uniform Commercial Code of the
State of Delaware or any other applicable jurisdiction, as amended from time to
time.
1.2. Construction. Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular the plural
and the part the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation." References in this Agreement to "determination" of or by
the Lender shall be deemed to include good faith estimates by the Lender (in the
case of quantitative determinations) and good faith beliefs by the Lender (in
the case of qualitative determinations). Whenever the Lender is granted the
right herein to act in its sole discretion or to grant or withhold consent, such
right shall be exercised in good faith. The words "hereof," "herein,"
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. The section and
other headings contained in this Agreement and the Table of Contents preceding
this Agreement are for reference purposes only and shall not control or affect
the construction of this Agreement or the interpretation thereof in any respect.
Section, subsection, schedule and exhibit references are to this Agreement
unless otherwise specified.
1.3. Accounting Principles. Except as otherwise provided in this Agreement,
all computations and determinations as to accounting or financial matters and
all financial statements to be delivered pursuant to this Agreement shall be
made and prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by U.S. GAAP.
2. BRIDGE LOAN
2.1. Bridge Loan.
(a) Subject to the terms and conditions hereof, the Lender hereby
agrees to make a bridge loan (the "Bridge Loan") to the Borrower in such amounts
as the Lender may advance from time to time after the date of this for the
Borrower's general corporate purposes. The Lender shall have no obligation to
make advances hereunder at any time after October 15, 1998.
2.2. Repayment of Bridge Loan; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Lender
the full outstanding principal amount of the Bridge Loan, together with all
unpaid interest thereon and all other outstanding unpaid amounts owing to Lender
under or in connection with the Loan Documents, on the Maturity Date (or on such
earlier date that the Bridge Loan becomes due and payable pursuant to Section
7). The Borrower hereby agrees to pay interest on the unpaid principal amount of
the Bridge Loan and unpaid overdue interest from time to time outstanding, from
the Closing Date until payment in full thereof at the rates per annum, on the
dates, and in the form and manner set forth herein.
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(b) The Bridge Loan shall be evidenced by the Bridge Note. The Bridge
Note shall (i) be dated the Closing Date, (ii) be payable in full on the
Maturity Date (or such earlier date that the Bridge Loan becomes due and payable
pursuant to Section 7) and (iii) provide for the accrual of interest for the
period from the date thereof until paid in full on the unpaid principal amount
and on unpaid overdue interest from time to time outstanding at the rates per
annum, on the dates, and in the form and manner set forth herein.
2.3. Optional Prepayments.
(a) The Borrower, may, at its option, upon not less than three
Business Days prior, irrevocable written notice to Lender of the date and amount
of such prepayment, be permitted to prepay the Bridge Loan, in whole, without
penalty or premium.
(b) Any prepayment made pursuant to this subsection 2.3 shall be
accompanied by all accrued but unpaid interest thereon to the date of such
prepayment.
(c) Amounts paid or prepaid on account of the Bridge Loan may not be
re-borrowed.
2.4. Interest Rates.
(a) The Bridge Loan shall not bear interest.
(b) If all or a portion of the principal amount of the Bridge Loan any
other amount payable hereunder or under any other Loan Document shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall, to the fullest extent permitted by law, bear interest
at a rate per annum equal to 12% in each case from the date of such non-payment
until such amount is paid in full (as well after as before judgment and during
the pending of any bankruptcy, insolvency or similar proceeding).
(c) Interest accruing pursuant to paragraph (b) of this subsection
shall be payable from time to time on demand.
2.5. Computation of Interest.
(a) Interest shall be calculated on the basis of a 360 day year for
the actual number of days elapsed.
(b) Notwithstanding any other provisions of any of the Loan Documents,
the Borrower shall not be required to make any payments of interest or other
amounts hereunder or under any other Loan Document to the extent such payments
would cause the rate of interest charged hereunder to exceed the highest rate
permitted under applicable law. Any such payments which are received by Lender
may, at Lender's option, be applied against payment of principal of the Bridge
Loan or other obligations payable to Lender hereunder or returned to Borrower.
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2.6. Intentionally omitted.
2.7. Payments, Etc.
(a) All payments (including prepayments) to be made by the Borrower
hereunder or under any other Loan Document, whether on account of principal,
interest or otherwise, shall be made without set off or counterclaim and shall
be made prior to 12:00 Noon, New York City time, on the due date thereof to the
Lender at the following address:
VDC Corporation, Ltd.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
or such other account or place as Lender may from time to time designate, in
Dollars and in immediately available funds. If any payment hereunder becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, interest thereon shall be payable at
the then applicable rate during such extension.
(b) All amounts which are or may become payable to Lender hereunder or
under or in connection with this Agreement or any other Loan Document, other
than principal of the Bridge Loan and interest accrued thereon and not overdue,
shall be payable on demand.
(c) The Lender shall maintain, in accordance with its usual practice,
one or more accounts in which it will record the unpaid and outstanding amounts
of principal of and interest on the Bridge Loan, as well as other unpaid and
outstanding amounts owing from the Borrower to the Lender hereunder or under any
other Loan Documents and, in addition, the Lender may at any time and from time
to time record on the front or back of the Note, or on a continuation thereof,
the unpaid and outstanding principal of and interest on the Bridge Loan and any
payments made with respect thereto; provided, that neither the failure of the
Lender to maintain any such account or make any such recordation nor any error
therein shall discharge or affect in any manner the Borrower's obligations to
pay such amounts to Lender in accordance with the terms hereof or of any Loan
Document. Absent manifest error, any such account record or recordation or
notation made on the Note, shall constitute conclusive evidence of such debts
and amounts.
3. CONDITIONS OF LENDING
Notwithstanding any other provision of this Agreement or any other Loan
Document and without affecting in any manner the rights of the Lender under this
Agreement, it is understood and agreed that the Lender shall have no obligation
at any time under Article 2 of this Agreement unless and until the following
conditions have been and continue to be satisfied, all in form and substance
satisfactory to the Lender and its counsel:
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3.1. The Bridge Loan.
(A) The Lender shall have received, on or prior to the Closing Date,
the following documents:
(i) this Agreement, duly executed and delivered;
(ii) the Bridge Note in the form of Exhibit "A", duly executed
and delivered;
(iii) the Guaranty Agreement in the form of Exhibit "B", duly
executed and delivered; and
(iv) such other documents and certificates as to the transactions
contemplated by this Agreement and the other Loan Documents as the
Lender may reasonably request.
(B) The representations and warranties of the Borrower contained in
Article 5 hereof shall be true on and as of the Closing Date; the Borrower
shall have complied with all covenants and conditions hereof; there shall
exist on the Closing Date no Event of Default or Potential Default; and the
Borrower shall have delivered to the Lender a certificate of its Chief
Executive Officer, President and Chief Financial Officer dated the Closing
Date, to each such effect.
(C) All legal details and proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to the Lender
and its counsel, and the Lender and its counsel shall have received all
such counterpart originals or certified or other copies of such documents
as the Lender or its counsel may reasonably request.
4. GUARANTY
4.1. Guaranty Agreement. To secure the timely payment and performance of
Borrower of its obligations under this Agreement, the Guarantor shall guarantee
the timely payment and performance of the Company's obligations hereunder
pursuant to the Guaranty.
4.2. Further Assurances. At the Lender's request, the Borrower and/or the
Guarantor shall execute and deliver to the Lender, at any time hereafter, all
agreements, instruments or other documents that the Lender may reasonably
request to carry out the intent of this Agreement and the other Loan Documents,
in form and substance acceptable to the Lender, and pay the costs of any
recording or filing of the same.
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5. REPRESENTATIONS AND WARRANTIES
5.1. The Borrower represents and warrants that:
(A) Organization, Qualification and Capitalization; Subsidiaries.
The Borrower is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the lawful power to own or lease its properties and to engage
in the business it presently conducts and contemplates conducting; and
the Borrower is duly licensed or qualified and in good standing as a
foreign corporation in each jurisdiction wherein the property owned or
leased by it or the nature of the business transacted by it or both
makes such licensing or qualification necessary except where the
failure to be so qualified or licensed would not result in a Material
Adverse Change.
(B) Power and Authority. The Borrower has the corporate power and
authority to make and carry out this Agreement and the other Loan
Documents, to execute and deliver this Agreement and the other Loan
Documents, and to make the borrowings contemplated hereby and to
perform its obligations under this Agreement and the other Loan
Documents, all such actions have been duly authorized by all necessary
corporate proceedings on its part.
(C) Validity and Binding Effect; Consents. This Agreement and the
other Loan Documents have been duly and validly executed and delivered
by the Borrower. This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of the Borrower and
any other parties thereto, enforceable in accordance with their
respective terms, except to the extent that enforceability of the
foregoing may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of
creditors' rights generally or by laws or judicial decisions limiting
the right of specific performance. Except as set forth on Schedule
5.1(C), no authorization, approval, exemption or consent by any
governmental authority or public body or other authority is required
in connection with the authorization, execution, delivery and carrying
out of the terms of this Agreement or the other Loan Documents by the
Borrower or the Guarantor.
(D) No Conflict. Except as set forth on Schedule 5.1(D), neither
the execution and delivery of this Agreement or the other Loan
Documents nor the consummation of the transactions herein or therein
contemplated or compliance with the terms and provisions hereof or
thereof (i) will conflict with, result in any breach of, or constitute
a default under, the terms and conditions of the articles or
certificate of incorporation or bylaws of the Borrower or of any law
or any order, writ, injunction or decree of any court or governmental
instrumentality or of any agreement or instrument to which the
Borrower is a party or by which the Borrower is bound or to which it
is subject, or (ii) will result in the creation or
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enforcement of any Lien whatsoever upon any property (now or hereafter
acquired) of the Borrower (other than Liens granted under the Loan
Documents).
(E) Litigation. Except as set forth on Schedule 5.1(E), there are
no actions, suits, proceedings or investigations pending or, to the
knowledge of the Borrower, threatened against it at law or equity
before any court or before any federal, state, municipal or any
governmental department, commission, board, agency or instrumentality,
whether or not covered by insurance, which individually or in the
aggregate may result in a Material Adverse Change. The Borrower is not
in default with respect to any order, writ, injunction or any decree
of any court or any federal, state, municipal or other governmental
department, commission or bureau, agency or instrumentality applicable
to the Borrower which may result in any such Material Adverse Change.
(F) Financials. The Financials have been prepared in accordance
with U.S. GAAP applied on a consistent basis and fairly present the
assets, liabilities and financial condition and results of operations
of the Borrower at and as of the dates thereof; there are no material
liabilities, direct or indirect, fixed or contingent, of the Borrower
which are not reflected in the Financials nor omissions of other facts
or circumstances which are or may be material, and there has been no
Material Adverse Change in the Borrower since March 31, 1998; there
exists no equity or long-term investments in, or outstanding advances
to, any person not reflected in the Financials.
(G) Absence of Certain Developments. Except as disclosed in
Schedule 5.1(G), since the date of the latest Financials, (i) there
has been no material adverse change in the financial condition of
Borrower, (ii) the Borrower has not incurred any material liabilities
or material contingent liabilities, (iii) the Borrower has not
declared any dividends or purchased any of its capital stock, (iv) the
Borrower has not entered into any material transactions outside the
ordinary course of business, (v) the Borrower has not waived a
valuable right or canceled any debt or claim held by the Borrower,
(vi) the Borrower has not made a loan to any officer, director,
employee or shareholder of Borrower, or any agreement or commitment
therefor, (vii) the Borrower has not had or committed to any increase,
direct or indirect, in the compensation paid or payable to any
officer, director, employee or agent of the Borrower except as
required by written employment agreements to which the Borrower is a
party (and which such increases are described in Schedule 5.1(G),
(viii) the Borrower has not had any material loss, destruction or
damage to any property, whether or not insured, (ix) the Borrower has
not had any change in personnel or the terms and conditions of their
employment, (x) the Borrower has not had any acquisition or
disposition of any assets (or any contract or arrangement therefore),
or any other transaction otherwise than for fair value in the ordinary
course of business, and (xi) the Borrower has not committed itself to
any of (i) through (x) above.
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(H) Title to Assets; Condition of Assets. The Borrower has good,
indefeasible and marketable title in fee simple to real property
purported to be owned by it and good and marketable title to all other
property purported to be owned by it, including that reflected in the
Financials. With respect to the assets of the Borrower that are
leased, the leases are in full force and effect and the Borrower is in
compliance with all material provisions of such leases and there are
no defaults thereunder. The equipment and other tangible assets of the
Borrower are in good operating condition (except for reasonable wear
and tear), and have been reasonably maintained.
(I) Patents, Licenses, Permits, etc. The Borrower owns or
possesses no patents, trademarks, service marks, trade names,
copyrights, licenses, franchises, permits and rights.
(J) Liens, Encumbrances and Judgments. There are no Liens upon or
against real or other property owned or leased by the Borrower or any
unsatisfied judgments entered against the Borrower.
(K) Tax Returns and Taxes. The Borrower has filed all federal,
state and local tax returns and other reports required by law to be
filed and has paid, to the extent due and payable, all taxes, levies,
assessments, charges, liens, claims or encumbrances relating to
employees, payroll, income and gross receipts, ownership or use of any
of its assets, and any other aspect of its respective business or
financial affairs, as the case may be, except any of the foregoing
being contested in good faith and by appropriate proceedings; and the
accruals and reserves in the books of the Borrower in respect of
federal taxes are adequate and the Borrower has no knowledge of any
unpaid assessments for additional federal or state taxes for any
fiscal period.
(L) Compliance with Laws and Agreements. The Borrower is not in
violation of any applicable law, or of any order, writ, injunction or
decree of any court or any federal, state, municipal or other
governmental authority. The Borrower is not in default, and no event
or condition has occurred which with the giving of notice or passage
of time or both would constitute such a default, with respect to any
indenture, loan agreement, mortgage, lease, deed, any other similar
agreement relating to the borrowing of monies or any other material
agreement to which it is a party or by which it is bound. The Borrower
has all the licenses, permits, consents, approvals and rights
necessary to operate its business.
(M) Plans. The Borrower does not sponsor, maintain, or contribute
to any employee benefit plans, pension plans, profit-sharing plans, or
stock ownership plan, stock option plan or other compensatory or
benefit plans.
(N) Margin Stock. The Borrower's execution and delivery of this
Agreement or any of the other Loan Documents does not directly or
indirectly
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violate or result in a violation of Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System and the Borrower does
not own or intend to purchase or carry any "margin security," as
defined in said Regulations.
(O) Intentionally Omitted.
(P) Solvency. The Borrower has sufficient capital to carry on all
businesses and transactions in which it now engages or is about to
engage, is Solvent.
(Q) Holding Company and Investment Company Status. The Borrower
is not an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act
of 1940, as amended. Neither the Company nor any Subsidiary is a
"holding company," or a "subsidiary company" of a "holding company,"
or an "affiliate" of a "holding company," or a "public utility,"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or a "public utility" within the meaning of the Federal
Power Act, as amended.
(R) Offices of the Borrower. The address specified in Section 8.9
include and designate the Borrower's chief executive office and
principal place of business.
(S) Employment and Labor Matters. The Borrower is in compliance
with its labor contracts, if any, and all applicable federal, state
and local labor and employment laws, including but not limited, those
related to equal employment opportunity and affirmative action, labor
relations, minimum wage, overtime, child labor, medical insurance
continuation, worker adjustment and relocation notices, immigration
controls and worker and unemployment compensation, where the failure
to comply could constitute a Material Adverse Change. There are no
outstanding grievances, arbitration awards or appeals therefrom
arising out of any of the Borrower's labor contracts and there are no
current or threatened strikes, picketing, handbilling or other work
stoppages or slow downs at any facility of the Borrower which in any
case could constitute a "Material Adverse Change." The Borrower does
not have in effect, or any obligation to put into effect, any
employment agreements, deferred compensation, pension or retirement
agreements or arrangements, bonus incentive or profit-sharing plans or
arrangements, or labor or collective bargaining agreements. There are
no existing or proposed loans, leases, licenses or other such
agreements or arrangements between the Borrower, on the one hand, and
any officer, director or stockholder of the Borrower, on the other
hand.
(T) Full Disclosure. Neither this Agreement nor any of the other
Loan Documents contains any untrue statement of a material fact or
omits to state any material fact or any fact necessary in order to
make the statements contained
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herein or therein not misleading, and there are no facts known to the
Borrower which materially or adversely affect, or in the future may so
affect, its respective business, operations, properties, assets or
financial condition.
6. COVENANTS AND CONTINUING AGREEMENTS
6.1. Affirmative Covenants. From the date hereof and thereafter until the
termination of the Bridge Loan and until the Liabilities have been paid in full,
the Borrower covenants and agrees as follows:
(A) Preservation of Existence, etc. The Borrower shall maintain
its corporate existence and its license or qualification and good
standing in each jurisdiction in which its ownership or lease of
property or the nature of its business makes such license or
qualification necessary.
(B) Payment of Liabilities, Including Taxes, etc. The Borrower
shall duly pay and discharge all liabilities to which it is subject or
which are asserted against it, promptly as and when the same shall
become due and payable, including all taxes, assessments and
governmental charges upon it or any of its properties, assets, income
or profits, prior to the date on which penalties attach thereto,
except to the extent that such liabilities, including taxes,
assessments or charges, are being contested in good faith and by
appropriate and lawful proceedings diligently conducted and for which
such reserve or other appropriate provisions, if any, as shall be
required by U.S. GAAP shall have been made, but only to the extent
that failure to discharge any such liabilities would not result in any
additional liability which would result in a Material Adverse Change,
provided that the Borrower will pay all such liabilities forthwith
upon the commencement of proceedings to foreclose any Lien which may
have attached as security therefor.
(C) Maintenance of Insurance. The Borrower shall insure its
properties and assets against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including fire,
flood, extended coverage, property damage, workmen's compensation, and
public liability insurance) and against other risks (including errors
and omissions) in such amounts as similar properties and assets are
insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers,
including self-insurance to the extent customary, all as reasonably
acceptable by the Lender.
(D) Maintenance of Properties and Leases. The Borrower shall
maintain in good repair, working order and condition (ordinary wear
and tear excepted), in accordance with the general practice of other
businesses of similar character and size, all of those properties
useful or necessary to its business, and from time to time, the
Borrower will make or cause to be made all appropriate repairs,
renewals or replacements thereof.
13
(E) Maintenance of Patents, Trademarks, Permits, Licenses, etc.
The Borrower shall maintain in full force and effect all patents,
trademarks, trade names, copyrights, licenses, franchises, permits and
other authorizations necessary for the ownership and operation of its
properties and business if the failure so to maintain the same would
constitute a Material Adverse Change.
(F) Visitation Rights. The Borrower shall permit any of the
officers or authorized employees or representatives of the Lender to
visit and inspect any of its properties and to examine and make
excerpts from its books and records and discuss its business affairs,
finances and accounts with its officers, all in such detail and at
such times and as often as the Lender may reasonably request, provided
that the Lender shall provide the Borrower with reasonable notice
prior to any visit or inspection.
(G) Keeping of Records and Books of Account. The Borrower shall
maintain and keep proper books of record and account which enable the
Borrower to issue financial statements in accordance with U.S. GAAP
and as otherwise required by applicable law, and in which full, true
and correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
(H) Compliance with Laws. The Borrower shall comply with all
applicable laws, in all respects, provided that it shall not be deemed
to be a violation of this Section 6.1(H) if any failure to comply with
any law would not result in fines, penalties, other similar
liabilities or injunctive relief which in the aggregate would
constitute a Material Adverse Change.
(I) Use of Proceeds. The Borrower shall use the proceeds of the
Bridge Loan only for lawful purposes in accordance with Section 2.1
and such uses shall not contravene any applicable law or any other
provision hereof.
6.2. Negative Covenants. From the date hereof and thereafter under the
termination of the Bridge Loan and until the Liabilities have been paid in full,
and unless the Borrower shall have obtained the express prior written consent of
the Lender, the Borrower covenants and agrees as follows:
(A) Indebtedness. The Borrower shall not create, incur, assume or
suffer to exist any Indebtedness except (i) Indebtedness under the
Loan Documents and (ii) trade accounts payable and other Indebtedness
(except for money borrowed and capitalized leases) incurred in the
ordinary course of business.
(B) Contingent Indebtedness. The Borrower shall not endorse,
assume, guarantee, become surety for, or otherwise become or remain
directly or contingently liable in connection with the Indebtedness of
any other person
14
(except the Lender) except for (i) Indebtedness permitted by Section
6.2(A) and (ii) the endorsement of negotiable or other instruments for
deposit or collection or similar transactions in the ordinary course
of business.
(C) Loans and Investments. The Borrower shall not at any time
make or suffer to remain outstanding any loan or advance to, or
purchase, acquire or own any stock, bonds, notes or securities of, or
any partnership interest (whether general or limited) in, or any other
investment or interest in, or make any capital contribution to, any
other person, or agree, become or remain liable to do any of the
foregoing, except:
(i) trade credit extended on usual and customary terms in
the ordinary course of business; and
(ii) advances to employees to meet expenses incurred by such
employees in the ordinary course of business.
(D) Dividends and Related Distributions. The Borrower shall not
make or pay, or agree to become or remain liable to make or pay, any
dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its
shares of capital stock or on account of the purchase, redemption,
retirement or acquisition of its shares of capital stock (or warrants,
options or rights therefor).
(E) Liquidations, Mergers, Consolidations, Acquisitions. The
Borrower shall not dissolve, liquidate or wind-up its affairs, or
become a party to any merger or consolidation, or acquire by purchase,
lease or otherwise all or substantially all of the assets or capital
stock of any other person.
(F) Dispositions of Assets. The Borrower shall not sell, convey,
assign, lease, abandon or otherwise transfer or dispose of,
voluntarily or involuntarily, or engage in a sale leaseback
transaction with respect to, any of its properties or assets, tangible
or intangible (including but not limited to sale, assignment, discount
or other disposition of accounts, contract rights, chattel paper,
equipment or general intangibles with or without recourse or of
capital stock) except:
(i) transactions involving the sale of inventory in the
ordinary course of business;
(ii) any sale, transfer or lease of assets in the ordinary
course of business which are no longer necessary or required in
the conduct of the Borrower's business; or
15
(iii) any sale, transfer or lease of assets in the ordinary
course of business which are replaced by substitute assets
acquired or leased within the parameters of this Agreement,
including without limitation, Section 6.2(A).
(G) Affiliate Transactions. The Borrower shall not enter into or
carry out any transaction (including, without limitation, purchasing
property or services from or selling property or services with any
Affiliate) unless such transaction is not otherwise prohibited by this
Agreement, is entered into in the ordinary course of business upon
fair and reasonable arm's length terms and conditions which are fully
disclosed to the Lender and is in accordance with all applicable laws.
(H) Issuance of Interests. The Borrower shall not issue any
additional membership interests or any options, warrants, any
securities convertible into membership interests or other rights in
respect thereof.
(I) Changes in Organizational Documents. The Borrower shall not
amend in any respect its certificate of formation, operating agreement
or other organizational documents without providing at least thirty
(30) days' prior written notice to the Lender and, in the event such
change would be adverse to the Lender as determined by the Lender in
its sole discretion, obtaining the prior written consent of the
Lender.
6.3. Reporting Requirements. From the date hereof and thereafter until the
termination of the Bridge Loan and until the Liabilities have been paid in full,
the Borrower covenants and agrees that it shall deliver the following:
(A) Annual Financial Statements. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of the
Borrower (except to the extent that the Borrower files all necessary
extensions pursuant to the Securities Exchange Act of 1934, as
amended), financial statements of the Borrower consisting of a balance
sheet as of the end of such fiscal year, and related statements,
stockholders' equity and cash flows for the fiscal year then ended,
all in reasonable detail and setting forth in comparative form the
financial statements as of the end of and for the preceding fiscal
year, and certified by the Borrower's Auditors, which shall issue an
audit level opinion. The report of the Borrower's Auditors shall be
free of qualifications (other than any consistency qualification that
may result from a change in the method used to prepare the financial
statements as to which said auditors concur) and shall not indicate
the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance
of any covenant, agreement or duty of the Borrower under any of the
Loan Documents.
(B) Quarterly Financial Statements. As soon as available and in
any event within forty-five (45) days after the end of each fiscal
quarter, the
16
Borrower's financial statements, consisting of a balance sheet as of
the end of such quarter and related statements of income,
stockholders' equity and cash flows for the quarter then ended and the
fiscal year through that date, all in reasonable detail and certified
(subject to normal year-end adjustments) by the Chief Executive
Officer, President or Chief Financial Officer of the Borrower as
having been prepared in accordance with U.S. GAAP, consistently
applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the
previous fiscal year.
(C) Compliance Certificates. Concurrently with the delivery of
the financial statements and information described in subsections (A)
and (B) above, a certificate, in a form acceptable to Lender, of the
Borrower's Auditors with respect to subsection (A) and of the Chief
Executive Officer, President or Chief Financial Officer of the
Borrower with respect to subsections (B) and (C), certifying to the
Lender that such statements are true, complete and correct and that no
Event of Default or Potential Default has occurred which was
continuing at the end of the period covered by such financial
statements or on the date of such certificate, or if an Event of
Default or Potential Default has occurred and was continuing at the
end of such period or on the date of such certificate, indicating the
nature of such Event of Default or Potential Default and the action
which the Borrower proposes to take with respect thereto.
(D) Notice of Default. Promptly after any officer of the Borrower
has learned of the occurrence of an Event of Default or Potential
Default, a certificate signed by the Chief Executive Officer,
President or the Chief Financial Officer of the Borrower setting forth
the details of such Event of Default or Potential Default and the
action which the Borrower proposes to take with respect thereto.
(E) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, proceedings or investigations
before or by any court or governmental or administrative body or
agency or any other person against the Borrower which involve a claim
or series of claims in excess of Twenty-Five Thousand Dollars
($25,000) or which if adversely determined would constitute a Material
Adverse Change.
(F) Budgets, Forecasts, Other Reports and Information. Promptly
upon their becoming available to the Borrower:
(i) the annual business plan and any other forecasts or
projections of the Borrower, to be supplied not later than thirty
(30) days after the commencement of the fiscal year to which any
of the foregoing may be applicable; and
(ii) such other reports and information as the Lender may
from time to time reasonably request.
17
(G) Income Tax Returns of the Borrower. As soon as available and in no
event later than the date when due, a copy of all federal, state and local
income tax returns of the Borrower.
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
7.1. Events of Default. The occurrence or existence of any of the following
events, conditions, acts or omissions shall constitute an "Event of Default"
hereunder unless waived by the Lender pursuant to Section 8.3:
(A) The Borrower fails to pay any principal of or interest on the
Bridge Loan or any other Liability when due and payable;
(B) Any representation, warranty, statement, report, financial
statement or certificate made or delivered by the Borrower, or the
Guarantor, to the Lender shall prove to have been false or misleading in
any material respect as of the time it was made or furnished;
(C) The Borrower, or the Pledgor, fails to perform, keep or observe
any term, provision, condition or covenant contained in this Agreement or
in any other Loan Document, which is required to be performed, kept or
observed by the Borrower, or Pledgor, as applicable;
(D) The Borrower defaults in the payment when due (whether by
acceleration or otherwise) of principal of or interest or premium on any
other Indebtedness for the payment of borrowed money (whether evidenced by
a bond, note, debenture, deferred purchased price obligation, capitalized
lease, book entry or otherwise) in excess of Twenty-Five Thousand Dollars
($25,000) or the Borrower defaults in the performance of any agreement
under which any such Indebtedness is created, if the effect of such default
is to cause the holders of such Indebtedness (or any person on behalf of
such holders) to declare such Indebtedness due prior to its stated
maturity;
(E) Any of the Loan Documents shall cease to be legal, valid and
binding agreements enforceable against the party executing the same or such
party's successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof or shall in any way be
terminated (except in accordance with its terms) or become or be declared
ineffective or inoperative or shall in any way be challenged or contested
or cease to give or provide the respective Liens, interests, rights,
remedies, powers or privileges intended to be created thereby;
(F) Any judgment, decree or order for the payment of money in excess
of Twenty-Five Thousand Dollars ($25,000) shall be entered against the
Borrower
18
and such judgment, decree or order shall continue unsatisfied and in effect
for a period of thirty (30) consecutive days without being vacated,
discharged, satisfied, stayed or bonded pending appeal;
(G) A notice of lien or assessment is filed of record with respect to
all or any of the Borrower's assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including, without limitation, the
Pension Benefit Guaranty Corporation, or if any taxes or debts owing at any
time or times hereafter to any one of the foregoing becomes payable and the
same is not paid within thirty (30) days after the same becomes payable;
(H) The Borrower ceases to be Solvent or admits in writing its
inability to pay its debts as they mature;
(I) Any of the Borrower's assets are attached, seized, levied upon or
subjected to a writ or distress warrant; or such come within the possession
of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not cured within thirty (30) days thereafter; or
an application is made by any person other than the Borrower for the
appointment of a receiver, trustee or custodian for any of the Borrower's
assets and the same is not dismissed within thirty (30) days after the
application therefor;
(J) A change of control of the Borrower shall occur;
(K) An application is made by the Borrower for the appointment of a
receiver, trustee or custodian for any of the Borrower's assets; or a
petition under any section or chapter of the federal Bankruptcy Code or any
similar law shall be filed by the Borrower; or the Borrower makes an
assignment for the benefit of its creditors or any case or proceeding is
filed by the Borrower for its dissolution, liquidation or termination; or
(L) The Borrower ceases to conduct its business as now conducted; or
the Borrower is enjoined, restrained or in any way prevented by court order
from conducting all or any material part of its business affairs and such
injunction, restraint or other preventive order is not dismissed within
thirty (30) days after the entry thereof; or a petition under any section
or chapter of the federal Bankruptcy Code or any similar law is filed
against the Borrower or any case or proceeding is filed against the
Borrower for its dissolution or liquidation, and such petition, case or
proceeding is not dismissed within thirty (30) days after the filing
thereof.
7.2. Acceleration of Liabilities. Upon the occurrence and continuation of
an Event of Default mentioned in any of Sections 7.1(A) through 7.1(J), all of
the Liabilities may, at the option of the Lender and without demand, notice or
legal process of any kind, be declared, and immediately shall become, due and
payable. Upon the occurrence of an Event of Default
19
mentioned in any of Sections 7.1(K) and 7.1(L), all of the Liabilities shall
immediately and automatically become due and payable, without demand, notice or
legal process of any kind.
7.3. Remedies. Upon and after an Event of Default, the Lender shall have in
addition to all of the rights and remedies contained in this Agreement or in any
other Loan Document, all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by law.
8. MISCELLANEOUS
8.1. Modification of Agreement; Sale of Interest. This Agreement and the
other Loan Documents may not be modified, altered or amended, except by an
agreement in writing signed by the Borrower and the Lender. The Borrower may not
sell, assign or transfer this Agreement or any other Loan Document or any
portion hereof or thereof, including, without limitation, the Borrower's rights,
title, interests, remedies, powers and/or duties hereunder or thereunder. The
Borrower hereby consents to the Lender's participation, sale, assignment,
transfer or other disposition, at any time or times hereafter, of this Agreement
or the other Loan Documents or of any portion hereof or thereof, including,
without limitation, the Lender's rights, title, interests, remedies, powers
and/or duties hereunder or thereunder.
8.2. Reimbursement and Indemnification of the Lender by the Borrower. The
Borrower agrees unconditionally upon demand to pay or reimburse the Lender and
to hold the Lender harmless against (A) liability for the payment of all
reasonable out-of-pocket costs, expenses and disbursements, including but not
limited to fees and expenses of counsel, incurred by the Lender (i) relating to
any requested amendments, waivers or consents pursuant to the provisions hereof,
(ii) in connection with the enforcement of this Agreement or any other Loan
Document or collection of amounts due hereunder or thereunder or the proof and
allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and
(iii) in any workout, restructuring or in connection with the protection,
preservation, exercise or enforcement of the terms hereof or of any rights
hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings; and (B) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
upon, incurred by or asserted against the Lender in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by the Lender hereunder or thereunder, provided that the Borrower shall
not be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent the same results from the Lender's gross negligence or willful
misconduct.
All of the foregoing expenses shall be due and payable upon demand by
the Lender; any such expense not paid when due shall bear interest from the date
due until paid at the interest rate specified in subsection 2.4(a), as such
interest rate may be modified by subsection 2.4(b).
20
8.3. No Implied Waivers; Cumulative Remedies; Writing Required. No course
of dealing and no delay or failure of the Lender in exercising any right, power,
remedy or privilege under this Agreement or any other Loan Document shall affect
any other or future exercise thereof or operate as a waiver thereof; nor shall
any single or partial exercise thereof or any abandonment or discontinuance of
steps to enforce such a right, power, remedy or privilege preclude any further
exercise thereof or any other right, power, remedy or privilege. The rights and
remedies of the Lender under this Agreement and the other Loan Documents are
cumulative and not exclusive of any rights or remedies which they would
otherwise have. Any waiver, permit, consent or approval of any kind or character
on the part of the Lender of any provision of, or any breach or default under,
this Agreement or any other Loan Document must be in writing and shall be
effective only to the extent specifically set forth in such writing.
8.4. Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
8.5. Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of the successors and assigns of
the Borrower and the Lender. This provision, however, shall not be deemed to
modify Section 8.1.
8.6. Conflict of Terms. All of the other Loan Documents and all Schedules
and Exhibits referred to in this Agreement shall be and be deemed to be
incorporated herein by reference for all purposes, notwithstanding that any one
or more of such other Loan Documents, Exhibits and/or Schedules may not be
physically attached to or otherwise accompany any counterpart or copy of this
Agreement. Except as otherwise provided in this Agreement and except as
otherwise provided in the other Loan Documents by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in the other
Loan Documents, the provision contained in this Agreement shall govern and
control.
8.7. Waivers by the Borrower. Except as otherwise expressly provided for in
this Agreement, the Borrower waives (i) presentment, demand and protest and
notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guarantees
at any time held by the Lender on which the Borrower may in any way be liable
and hereby ratifies and confirms whatever the Lender may do in this regard; (ii)
all rights to notice of a hearing prior to the Lender's taking possession or
control of, or to the Lender's replevin, attachment or levy upon, the bond or
security which might be required by any court prior to allowing the Lender to
exercise any of the Lender's remedies; and (iii) the benefit of all valuation,
appraisement and exemption laws. The Borrower acknowledges that it has been
advised by counsel with respect to this Agreement and the transactions evidenced
by this Agreement.
21
8.8. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS
AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED AND ENFORCED, IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS EXECUTED, DELIVERED AND PERFORMED WITHIN SUCH STATE WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE. AS PART OF THE
CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF DELAWARE,
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON BORROWER, AND CONSENTS
THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER
AT THE ADDRESS STATED ON THE FIRST PAGE HEREOF (OR SUCH OTHER ADDRESS AS MAY BE
DULY DESIGNATED BY BORROWER PURSUANT TO SECTION 8.9 HEREOF) AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. BORROWER AGREES
THAT IF IT AT ANY TIME COMMENCES ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OF THE LIABILITIES, IT WILL COMMENCE SUCH ACTION OR PROCEEDING
ONLY IN A STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF DELAWARE. BORROWER
WAIVES ALL RIGHTS TO TRIAL BY JURY. BORROWER WAIVES ANY OBJECTION TO VENUE OF
ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
8.9. Notice. Except as otherwise provided herein, any notice or other
written communication required hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered (i) upon deposit in the
United States mail, with proper postage prepaid, (ii) by hand delivery, (iii) by
overnight express mail courier, or (iv) by telecopier, and addressed to the
party to be notified at the address set forth below or to such other address as
each party may designate for itself in writing by like notice, provided notices
to the Lender shall not be effective until received.
To the Lender:
VDC Corporation
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, Chief Executive Officer
with a copy to: Xxxxxxxx Xxxxxxxxx
Professional Corporation
Eleven Penn Center
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esquire
Telecopier: (000) 000-0000
22
To the Borrower:
Masatepe Communications U.S.A., L.L.C.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Chief Executive Officer
8.10. Section Titles. The article and section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
8.11. Prior Understanding. This Agreement supersedes all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein or therein,
including any prior proposal or commitment letters.
8.12. Duration; Survival. All representations and warranties of the
Borrower contained herein or made in connection herewith shall survive the
making of the Bridge Loan and shall not be waived by the execution and delivery
of this Agreement, any investigation by the Lender or payment in full of the
Bridge Loan. All covenants and agreements of the Borrower contained herein shall
continue in full force and effect from and after the date hereof so long as the
Borrower may borrow hereunder and until termination of this Agreement and
payment in full of the Loans. All covenants and agreements of the Borrower
contained herein relating to the payment of principal, interest, additional
compensation or expenses, fees or expenses and indemnification, including those
set forth in Article 2 and Sections 7.2 and 8.2 hereof, shall survive payment in
full of the Bridge Loan and termination of this Agreement.
8.13. Exceptions to Covenants. The representations, warranties and
covenants contained herein shall be independent of each other and no exception
to any representation, warranty or covenant shall be deemed to be an exception
to any other representation, warranty or covenant contained herein unless
expressly provided, nor shall any such exceptions be deemed to permit any action
or omission that would be in contravention of applicable law.
8.14. Holiday Payments. If any payment to be made to the Lender hereunder
shall become due on a date not a Business Day, such payment shall be made on the
next succeeding Business Day and interest shall accrue on any principal amount
of such payment until the date on which such principal amount is paid to the
Lender.
Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, and intending to be legally bound hereby, this Loan
Agreement has been duly signed, sealed and delivered by the undersigned as of
the day and year specified at the beginning hereof.
23
ATTEST: BORROWER
MASATEPE COMMUNICATIONS U.S.A., L.L.C.
By: VDC CORPORATION LTD.,
its Managing Member
__________________________ By: /s/ Xxxxxxxxx X. Xxxxx
----------------------------------
Title: Xxxxxxxxx X. Xxxxx,
Chief Executive Officer
[Corporate Seal]
LENDER
VDC CORPORATION, LTD.
By: /s/ Xxxxxxxxx X. Xxxxx
----------------------------------
Xxxxxxxxx X. Xxxxx,
Chief Executive Officer
24
TABLE OF CONTENTS
Page
----
1. GENERAL DEFINITIONS.............................................................1
1.1. Definitions.........................................................1
1.2. Construction........................................................5
1.3. Accounting Principles...............................................5
2. BRIDGE LOAN.....................................................................5
2.1. Bridge Loan.........................................................5
2.2. Repayment of Bridge Loan, Evidence of Debt..........................5
2.3. Optional Prepayments................................................6
2.4. Interest Rates......................................................6
2.5. Computation of Interest.............................................6
2.6. Fee.................................................................7
2.7. Payments, Etc.......................................................7
3. CONDITIONS OF LENDING...........................................................7
3.1. The Bridge Loan.....................................................8
4. GUARANTY........................................................................8
4.1. Guaranty; Security Interest.........................................8
4.2. Further Assurances..................................................8
5. REPRESENTATIONS AND WARRANTIES..................................................9
5.1. General Representations and Warranties..............................9
6. COVENANTS AND CONTINUING AGREEMENTS............................................13
6.1. Affirmative Covenants..............................................13
6.2. Negative Covenants.................................................14
6.3. Reporting Requirements.............................................16
7.1 EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.............................18
7.1. Events of Default..................................................18
7.2. Acceleration of Liabilities........................................20
7.3. Remedies...........................................................20
8. MISCELLANEOUS..................................................................20
8.1. Modification of Agreement; Sale of Interest........................20
8.2. Reimbursement and Indemnification of the Lender by the Borrower....20
8.3. No Implied Waivers; Cumulative Remedies; Writing Required..........21
8.4. Severability.......................................................21
8.5. Successors and Assigns.............................................21
8.6. Conflict of Terms..................................................21
8.7. Waivers by the Borrower............................................22
8.8. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial....22
8.9. Notice.............................................................22
8.10. Section Titles.....................................................23
8.11. Prior Understanding................................................23
8.12. Duration; Survival.................................................23
8.13. Exceptions to Covenants............................................24
8.14. Holiday Payments...................................................24
8.15. Counterparts.......................................................24
