EXHIBIT 10.23
LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT ("Agreement"), is dated as of November 22,
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1999, by and between the following parties:
LENDER: NTFC CAPITAL CORPORATION, a Delaware corporation with offices at
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxxxx 00000
and its affiliates, successors or assigns
BORROWER: PRIMUS TELECOMMUNICATIONS, INC., a Delaware corporation with its
principal office at 0000 Xxx Xxxxxx Xx., XxXxxx, XX 00000
("Borrower").
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COMMITMENT
AMOUNT: US$30,000,000.00
SUPPLIER: NORTEL NETWORKS CORP.
This Loan Agreement is entered into pursuant to that certain Proposal
Letter dated August 28, 1999, as supplemented and revised by that certain
Commitment Letter dated October 6, 1999, from Lender and accepted by Borrower as
evidenced hereby (collectively, the "Commitment Letter").
IN WITNESS WHEREOF, the parties have executed this Loan Agreement by their
duly authorized representatives:
NTFC CAPITAL CORPORATION PRIMUS TELECOMMUNICATIONS, INC.
BY:_____________________________ BY:_____________________________
TITLE:__________________________ TITLE:__________________________
TABLE OF CONTENTS
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Page
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1. Certain Definitions..................................................
2. Commitments to Lend..................................................
3. The Notes and Payment Terms..........................................
4. Procedures for Borrowing.............................................
5. Place of Payment.....................................................
6. Prepayment...........................................................
7. Mandatory Prepayment.................................................
8. Security Interest; Guaranties; Obligations Secured...................
9. Description of Collateral............................................
10. Maintenance, Use and Operation.......................................
11. Representations, Warranties and Covenants of Borrower................
12. Insurance............................................................
13. Casualty.............................................................
14. Default..............................................................
15. Rights and Remedies of Default.......................................
16. General Authority....................................................
17. Expenses.............................................................
18. Indemnity............................................................
19. Assignment...........................................................
20. Miscellaneous........................................................
21. Notices..............................................................
22. Counterparts.........................................................
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TABLE OF CONTENTS
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(continued)
Page
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23. Entire Agreement.....................................................
24. Binding Nature.......................................................
25. Conditions of Closing................................................
26. Conditions of Lending................................................
SCHEDULES TO LOAN AND SECURITY AGREEMENT
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Schedule 2.01 Borrowers' Information, Offices, etc
Schedule 8.01 Collateral Description and Locations of Collateral
Schedule 11.01 Disclosure Schedule
Schedule 11.02 Permitted Encumbrances
Schedule 11.03 Senior Note Covenants
Schedule 11.04 Schedule of Qualifying Leases and Conveyances
Schedule 24.01 Post-Closing Documents
EXHIBITS TO LOAN AND SECURITY AGREEMENT
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Exhibit A Form of Note
Exhibit B Form of Borrowing Certificate
Exhibit C Form of Borrower's Counsel Opinion
Exhibit D Form of Borrower's Regulatory Counsel Opinion
Exhibit E Form of Landlord's Consent
Exhibit F Form of Collateral Assignment of Purchase Agreement
Exhibit G-1 Form of Subsidiary Guaranty -- Australia
Exhibit H-1 Form of Deed of Charge -- Australia
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement"), is dated as of November 22,
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1999, by and between PRIMUS TELECOMMUNICATIONS, INC., a Delaware corporation
with its principal office at 0000 Xxx Xxxxxx Xx., XxXxxx, XX 00000 ("Borrower")
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and NTFC CAPITAL CORPORATION, a Delaware corporation with offices at 000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxxxx 00000 and its affiliates,
successors or assigns ("Lender").
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This Loan Agreement is entered into pursuant to the Commitment Letter from
Lender and accepted by Borrower as evidenced hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:
1. CERTAIN DEFINITIONS: In addition to other words and terms defined in
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the preamble hereof or elsewhere in this Agreement, or on the schedules hereto,
the following words and terms shall have the following meanings unless the
context otherwise clearly requires:
"Advance(s)": any advance or loan of funds made by Lender to or on behalf
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of Borrower pursuant to this Agreement.
"Amortization Schedule": a schedule described in Section 3(e) attached to a
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Note showing anticipated amortization of that Note assuming full funding
thereof.
"Assignee": an assignee described in Section 19 hereof.
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"Borrowing Certificate": a certificate substantially in the form of Exhibit
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B hereto, executed by Borrower.
"Borrowing Date": any Business Day on which an Advance is made to Borrower
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hereunder.
"Borrower": Primus Telecommunications, Inc.; its successors and assigns.
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"Borrower's Obligations": all payment obligations of Borrower owed to
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Lender hereunder, including indemnity, expense reimbursement, taxes, fee and
other obligations set forth in this Agreement, any Note and/or other Loan
Documents.
"Business Day": a day other than a Saturday, Sunday or other day on which
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commercial banks in Nashville, Tennessee, are authorized or required by law to
close.
"Change in Control": any change in the direct or indirect control of,
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or the ability or right to control, a majority of the voting shares of any class
of securities or ownership rights in Borrower or in the right and/or the power
to control the election of the board of directors of
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Borrower.
"Closing Date": as defined on Schedule 24.01 hereto.
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"Collateral": as defined and described in Sections 8 and 9 hereof.
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"Collateral Schedule": as defined and described in Section 9 hereof.
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"Commitment Letter": that certain Proposal Letter dated August 28, 1999,
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from Lender, as supplemented and revised by that certain Commitment Letter dated
October 6, 1999, from Lender and accepted by Borrower as evidenced hereby.
"Consent": a consent to a collateral assignment of the NORTEL Purchase
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Agreement, a consent to a collateral assignment of a Vendor Purchase Agreement,
a Landlord Consent, and/or a Mortgagee's Consent.
"Deed of Charge": a Deed of Charge substantially in the form of Exhibit H-1
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attached hereto, to be executed by any Australian Subsidiary acquiring rights to
Equipment and a Deed of Charge or other security agreement in form reasonably
acceptable to Lender for a Subsidiary located in a different jurisdiction
acquiring rights to Equipment other than pursuant to a Qualifying Lease.
"Default": any of the conditions or occurrences specified in Section 14,
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whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.
"Default Rate": a rate of interest equal to the lesser of (i) three
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percentage points (3%) in excess of the Interest Rate or (ii) the maximum
permissible rate under applicable law in effect at any time.
"Equipment": the equipment defined in Section 9 hereof.
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"Event of Default": any of the events specified in Section 14 hereof,
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provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, under 14 or otherwise, has been satisfied.
"Event of Loss": as defined in Section 13 hereof.
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"Financing Termination Date": December 31, 2000, the date on which Lender's
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agreement to make any further Advances to Borrower terminates.
"First Funding Date": the date of the first funding by a Lender under any
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Loan hereunder.
"GAAP": generally accepted accounting principles in the United States of
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America (as such principles may change from time to time) applied on a
consistent basis (except for changes in application in which Borrower's
independent certified public accountants concur),
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applied both to classification of items and amounts.
"Governmental Authority": the federal government, any state or
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political subdivision thereof, any city or municipal entity, any foreign
government having jurisdiction over Borrower, any of its Subsidiaries or their
respective properties, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
over or with respect to Borrower or any of its Subsidiaries or their respective
businesses or any Collateral.
"Guaranty": a Guaranty or Guaranty Agreement substantially in the form of
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Exhibit G-1 attached hereto, to be executed by any Australian Subsidiary
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acquiring rights to Equipment and a Guaranty in form reasonably acceptable to
Lender for a Subsidiary located in a different jurisdiction acquiring rights to
Equipment other than pursuant to a Qualifying Lease.
"Indebtedness": as to any Person, at a particular time, (a) indebtedness
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for borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which such Person otherwise assures a
creditor against loss; (b) obligations under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases in respect of
which obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor against loss; (c) obligations of such Person to purchase or repurchase
accounts receivable, chattel paper or other payment rights sold or assigned by
such Person; and (d) indebtedness or obligations of such Person under or with
respect to letters of credit, notes, bonds or other debt instruments.
"Installation Site(s)": any of the sites where Equipment is or is to be
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located, including those set forth on Schedule 8.01 hereto.
"Interest Only Period": as defined in Section 3(e) hereof.
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"Interest Payment Date": as defined in Section 3(e) hereof.
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"Interest Payments": as set forth in Section 3(e) hereof
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"Interest Rate": as set forth in Section 3(e) hereof.
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"Landlord Consent": a consent substantially in the form of Exhibit E hereto
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or in other form acceptable to Lender, to be executed by the owner/landlord,
sublessor and/or licensor (including carriers) of any real property where any of
the Collateral is to be located.
"Lease": a Lease of the Equipment by Borrower as lessor and a Subsidiary of
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Borrower as lessee.
"Lender": NTFC Capital Corporation; and its successors and assigns.
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"Lender's Expenses": as described in 17 hereof.
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"Lien": any mortgage, pledge, hypothecation, lien (statutory or other),
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judgment lien, security interest, security agreement, charge or other
encumbrance, or other security arrangement of any nature whatsoever, including,
without limitation, any installment contract, conditional sale or other title
retention arrangement, any sale of accounts receivable or chattel paper, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and the filing of any financing statement under the UCC or comparable
law of any jurisdiction.
"Loan": the loans and loan facilities described in Section 3 hereof and all
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Advances pursuant hereto.
"Loan Documents": a collective reference to this Agreement, each Note, any
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Guaranty Deed of Charge or assignment of Lease, and all other documents,
instruments, agreements and certificates evidencing or securing any advance
hereunder or any obligation for the payment or performance thereof and/or
executed and delivered in connection with any of the foregoing.
"Maturity Date": the date defined in each Note, which shall be the Payment
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Date sixty (60) months after the date of such Note, on which all principal,
interest, premium, expenses, fees, penalties and other amounts due under that
Note shall be finally due and payable.
"Mortgagee's consent": a consent to be executed by any Person holding a
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lien on real property leased or otherwise provided to Borrower or any of its
Subsidiaries on which any of the Equipment is located.
"Note": collectively, one or more promissory notes issued by Borrower to
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Lender pursuant to this Agreement, and all extensions, renewals, modifications,
replacements, amendments, restatements and refinancings thereof.
"Obligations": all indebtedness, liabilities and obligations of Borrower to
Lender of any class or nature, whether arising under or in connection with this
Agreement, a Note and/or the other Loan Documents or otherwise, whether now
existing or hereafter incurred, direct or indirect, absolute or contingent,
secured or unsecured, matured or unmatured, joint or several, whether for
principal, interest, fees, Lender's Expenses, lease obligations, indemnities or
otherwise, including, without limitation, future advances of any sort, all
future advances made by Lender for taxes, levies, insurance and/or repairs to or
maintenance of the Collateral, the unpaid principal amount of, and accrued
interest on, a Note, and any Lender's Expenses.
"Payment Date": the date on which any payment under any Note is due, as set
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forth in Section 3 hereof.
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"Permitted Encumbrances": the Liens permitted under Section 11(k) hereof.
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"Product Computing Loads": as defined in Section 10 hereof.
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"Purchase Agreement": individually and collectively, the Purchase Agreement
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and the Vendor Purchase Agreement.
"Qualifying Lease": a Lease to a Subsidiary of Borrower in a form
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reasonably acceptable to Lender.
"Regulatory Authorizations": all approvals, authorizations, licenses,
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filings, notices, registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings now
or hereafter made by, to or in respect of any Governmental Authority, including,
without limitation, any certificates of public convenience and all grants,
approvals, licenses, filings and registrations from or to the Federal
Communications Commission or any state Public Utilities Commission or any
foreign Governmental Authority having jurisdiction over Borrower or any of its
Subsidiaries that is necessary in order to enable Borrower or any of its
Subsidiaries to own, construct, maintain and operate the Equipment or any
System, and any authorizations specified on Schedule 11.01 hereto.
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"Required Consents": the Regulatory Authorizations or consents of other
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Persons required with respect to Borrower's execution, delivery and performance
of this Agreement and the other Loan Documents, as described in Sections 26 and
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27 hereto.
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"Software" and "Software Licenses": any software now or hereafter owned by,
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or licensed to, Borrower or any of its Subsidiaries or with respect to which
Borrower or any of its Subsidiaries has or may have license or use rights and
all licenses with respect to such rights.
"Subsidiary": as to any Person, a corporation, partnership, limited
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liability company, or other entity in which equity interests having ordinary
voting power to elect a majority of the board of directors, managers or similar
persons of the entity are at the time directly or indirectly owned or controlled
by such Person (regardless of any contingency which does or may suspend or
dilute the voting rights of such class). Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of Borrower and also to entities that are under
common control with Borrower by being Subsidiaries of Borrower's parent
corporation, Primus Telecommunications Group, Inc. Specifically, all references
to an Australian Subsidiary include any corporation in the position of a
Subsidiary of Primus Telecommunications Group, Inc., of which Borrower is also a
Subsidiary.
"Supplier": NORTEL and any other Vendor approved in writing by Lender.
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"System": Borrower's or any of its Subsidiaries' telecommunications network
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or system constructed and/or operated by Borrower or any of its Subsidiaries or
lessee of Equipment permitted hereunder (including any future development and
expansions thereof), of which any Equipment forms a part
"Taxes": as defined in Section 3(h) hereof.
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"UCC": the Uniform Commercial Code as the same may from time to time be in
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effect
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in the State of Tennessee, or the Uniform Commercial Code of another
jurisdiction, to the extent it may be required to apply to any item or items of
Collateral.
"Vendor" means any manufacturer or supplier of Equipment or licensor
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or supplier of Software approved in writing by Lender, in each case other than
NORTEL.
"Vendor Purchase Agreement": any purchase agreement, together with any
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amendments or supplements thereto, between a Vendor and Borrower or an assignor
of Borrower and all purchase orders and invoices issued pursuant thereto for the
sale of Equipment.
2. COMMITMENT TO LEND: Subject to the terms and conditions provided
in this Loan and Security Agreement ("Agreement") and so long as no Event of
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Default (as defined in Section 14 hereof) or event or condition which with
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notice or passage of time or both would constitute an Event of Default has
occurred and is continuing hereunder, Lender agrees to lend to Borrower, until
the Financing Termination Date, an amount in the aggregate not to exceed the
Commitment Amount set forth on the first page of this Agreement, which sum shall
be used solely for the purchase by Borrower of telecommunications equipment and
associated software sublicenses from the Supplier or another approved Vendor
pursuant to one or more Purchase Agreements made by and between the Supplier (or
another approved Vendor) and Borrower for installation in the United States or
Canada, Australia, Japan, Germany, the United Kingdom and other jurisdictions
approved by Lender in writing.
3. NOTES AND PAYMENT TERMS:
(a) All Advances of funds to Borrower shall be evidenced by a Note in
the form of Exhibit A executed by Borrower, which shall be in a form and
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substance satisfactory to the Lender and evidence the obligation of Borrower to
pay the Indebtedness evidenced by that Note, plus any accrued interest thereon,
and all extensions, renewals or modifications thereof including, without
limitation, any Lender's Expenses or other amounts due to Lender under the Note
or this Agreement.
(b) Each Note shall be dated the Closing Date or the First Funding
Date with respect thereto and shall mature on the Note's stated Maturity Date.
Except as otherwise provided herein, each Note shall bear interest from the
borrowing date on the outstanding unpaid Principal Amount thereof at the
Interest Rate stated below (compounded monthly and computed on the basis of a
year of 365 days for the actual days elapsed). In computing interest on the
Notes, the Borrowing Date shall be included and the Payment Date excluded.
Borrower and Lender understand that the Amortization Schedule attached to each
Note is intended to amortize fully the principal amount of that Note and any
other principal and interest amounts outstanding will be added to the final
payment on the Maturity Date. In any event, the entire outstanding principal
amount of the Note and all accrued but unpaid interest and all other outstanding
amounts due thereunder shall be paid on the Maturity Date with respect thereto.
If a Payment Date is not a Business Day, the Payment Date shall
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be on the first business day following the day which is not a Business Day, and
interest thereon shall be payable at the rate in effect during such extension.
Each payment shall be credited first to accrued and unpaid interest and the
balance to the Principal Amount (provided that in any event the entire Principal
Amount of the Notes then outstanding together with any accrued and unpaid
interest shall be paid on the Maturity Date). The Lender is authorized to
endorse the date and amount of each Advance and each payment of the Principal
Amount and interest with respect to the Notes on the Amortization Schedule
annexed to and constituting a part of the Notes, which endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed.
(c) All payments shall be made in lawful money of the United States
of America in immediately available funds and without set off or counterclaim to
the Lender or any subsequent assignee of a Note.
(d) Unless otherwise provided on a Note executed subsequent to the
Closing Date of this Agreement, the first twenty-four (24) monthly months
following the First Funding Date of each Loan shall be an Interest Only Period
during which Borrower shall make Interest Payments only at the Interest Rate.
Thereafter, beginning on first Business Day of the twenty-fifth (25th) month and
for thirty-six (36) consecutive months, Borrower shall make amortizing Payments
in accordance with the Amortization Schedule attached to the applicable Note.
(e) The "Interest Rate" on each Loan shall be equal to a rate
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determined by adding 495 basis points to the published yield on Five (5) Year
Constant Maturity United States Treasury Notes as reported in Federal Reserve
Statistical Release H.15(519), as published by the Board of Governors of the
Federal Reserve System, or any successor publication by the Board of Governors
of the Federal Reserve System, three days prior to the First Funding Date with
respect to that Loan. Beginning with the first amortizing Payment, unless
otherwise provided in the Amortization Schedule attached to a Note, each
amortizing Payment shall consist of an Interest Payment and a Principal Payment
constituting a partial repayment of the applicable Loan as set forth below:
Payment Number Percentage of Loan
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25 - 36 1.667%
37 - 48 2.500%
49 - 59 4.167%
60 All Unpaid Principal
Plus any other Obligation
(f) Whenever any Payment due under a Loan is not made within ten(10)
days after the date when due, Borrower agrees to pay on demand (as a fee to
offset Lender's Expenses), one and one-half percent (1-1/2%) per month of all
overdue amounts from the due date until paid, but not exceeding the lawful
maximum, if any.
(g) Notwithstanding any provision of this Agreement, it is the intent
of Lender and Borrower that Lender, or any subsequent holder of a Note, shall
never be entitled to
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receive, collect, reserve or apply, as interest, any amount in excess of the
maximum non-usurious lawful rate of interest permitted to be charged by
applicable law, as amended or enacted from time to time. In the event Lender, or
any subsequent holder of a Note, ever receives, collects, reserves or applies as
interest, interest in excess of the then maximum lawful rate of interest, such
amount which would be excessive interest shall be deemed a partial prepayment of
the Principal Amount and treated hereunder as such (except that no prepayment
premium otherwise applicable shall be payable thereon), or, if the Principal
Amount and all other amounts due are paid in full, any remaining excess funds
shall immediately be paid to Borrower which made the excessive payment. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the maximum lawful rate of interest, Borrower and Lender
shall, to the maximum extent permitted under applicable law, (a) exclude
voluntary prepayments and the effects thereof as it may relate to any fees
charged by the Lender, and (b) amortize, prorate, allocate and spread, in equal
parts, the total amount of interest throughout the entire term of the
Indebtedness; provided that if the Indebtedness is paid in full prior to the end
of the full contemplated term hereof, and if the interest received over the
actual period of existence hereof exceeds the maximum lawful rate of interest,
Lender or any subsequent holder of a Note shall refund to Borrower the amount of
such excess, and in such event shall not be subject to any penalties provided by
any laws for contracting for, charging, reserving, collecting or receiving
interest in excess of the maximum lawful rate of interest.
(h) Borrower agrees to pay all amounts owing by it under this
Agreement, any Note or the other Loan Documents free and clear of and without
deduction for any present or future taxes (excepting any taxes assessed on
Lender's income by the United States of America) (collectively, the "Taxes") and
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represents that it has paid, and agrees that it shall pay, when due all
applicable deductions or withholdings for or on account of any Taxes, levies,
duties, fees, deductions or withholdings, restrictions or conditions of any
nature imposed by or on behalf of any jurisdiction (other than the United States
of America) or any taxing authority (other than the United States of America)
whatsoever on the payments by Borrower to Lender under this Agreement, any Note
or the other Loan Documents and
(i) that if it is prevented by operation of law from paying any
Taxes, then the interest rate or fees required to be paid under this
Agreement, any Note or the other Loan Documents shall be increased by
the amount necessary to yield to Lender interest or fees at the rates
specified in this Agreement, any Note or the other Loan Documents
after provision for the payment of all such Taxes and without taking
into account any tax benefits accruing to Lender from such payment;
(ii) that it shall at the request of Lender execute and deliver
to Lender such further instruments as may be necessary or desirable to
effect the increase in the interest or fees as provided for in clause
(A) immediately above, including a new Note to be issued in exchange
for any Note theretofore issued;
(iii) that it shall hold Lender harmless from and against any
liabilities with respect to any Taxes (whether or not properly or
legally asserted); and
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(iv) that it shall provide Lender with the original or a
certified copy of evidence of the payment of any Taxes by it, as
Lender may reasonably request, or, if no Taxes have been paid, to
provide to Lender, at Lender's request, with a certificate from the
appropriate taxing authority or an opinion of counsel acceptable to
Lender stating that no Taxes are payable.
(i) If Lender shall receive a refund of any Taxes paid by Borrower
pursuant to this Section by reason of the fact that such Taxes were not
correctly or legally asserted, Lender shall within sixty (60) days after receipt
of such refund pay to Borrower the amount of such refund, as determined solely
by Lender; provided, however, that in no event shall the amount paid by Lender
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to Borrower pursuant to this sentence exceed the amount of Taxes originally paid
by Borrower; and further provided that Lender shall not have any obligation
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under this Agreement to claim or otherwise seek to obtain any such refund.
4. PROCEDURES FOR BORROWING: Borrower shall execute and deliver to
Lender, at least five (5) business days prior to the date of the requested
Advance (unless Lender shortens such period), a Borrowing Certificate in the
form of Exhibit B to request Advances to finance the acquisition by Borrower of
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Equipment. Each Borrowing Certificate shall be in form and substance
satisfactory to Lender, and shall specify the business day on which the
borrowing is to be made and the amount of the borrowing and have attached
thereto the applicable purchase order issued by Borrower and related invoice
from the Supplier which is to be paid by Lender with the proceeds of the Loan
and a Collateral Schedule listing and describing the Equipment and Software to
be financed. On the borrowing date specified in the Borrowing Certificate,
providing that all conditions precedent have been satisfied, Lender shall
transmit the borrowed funds to an account maintained by and in the name of
Supplier. The aggregate principal amount of each borrowing shall be not less
than $25,000. Lender shall not be required to make Advances more than twice per
calendar month.
5. PLACE OF PAYMENT: The Principal Amount, interest and fees, if
any, shall be payable at 000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxx 00000, or such other place as may be designated, from time to time in
writing, by Lender or any subsequent holder.
6. PREPAYMENT: Borrower may, at its option but subject to the
satisfaction of the requirements of the next sentence, at any time and from time
to time, prepay any Loan, in whole or in part, upon at least (30) business days
prior written notice to Lender specifying the date and amount of prepayment in a
minimum amount of $50,000. Any such prepayment occurring during the first,
second and third years following the First Funding Date of such Loan shall be
subject to a prepayment premium equal to a percentage of the amount being
prepaid as follows: three percent (3%) if the prepayment is made during the
first year following the First Funding Date; two percent (2%) if the prepayment
is made during the second year following the First Funding Date; and one percent
(1%) if the prepayment is made during the third year following the First Funding
Date. Any Loan may be prepaid without premium thereafter.
7. MANDATORY PREPAYMENT: Upon Lender's demand, if Borrower leases
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or sells or disposes of any Equipment other than pursuant to a Qualifying Lease
or secured by an appropriate Guaranty and Deed of Charge (if applicable) or upon
the written consent of Lender, or if any Lease ceases to be a Qualifying Lease,
Borrower shall prepay all Advances to the extent proceeds thereof were used to
purchase Equipment and related Software so leased or sold, pro rata to the
Lender according to their respective percentages of the aggregate Advances made
hereunder. All such prepayments shall include all principal, accrued interest,
Prepayment Premium (if any), and expenses then outstanding and due (the
"Mandatory Prepayments")
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8. SECURITY INTEREST; GUARANTIES; OBLIGATIONS SECURED:
(a) Borrower (as debtor) hereby assigns as collateral and grants to
Lender (as secured party), as security for all of the Indebtedness, a continuing
security interest and/or charge in and to, all of Borrower's (or any
Subsidiary's except an Australian Subsidiary where the Lender's right, title and
interest are secured by a Guaranty and a Deed of Charge) right, title and
interest in and to the property and the property rights described in Section 9
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hereof, whether now owned or hereafter acquired or arising, wherever located,
together with all substitutions therefor and all accessions, replacements and
renewals thereof, to the extent financed or refinanced with proceeds of an
Advance hereunder.
(b) Borrower shall cause each Subsidiary that acquires rights in any
such Collateral to execute and deliver to Lender a Guaranty substantially in the
form of Exhibit G-1 attached hereto (or such other form as Lender shall
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reasonably require on the advice of counsel) guaranteeing so much of the
Indebtedness hereunder as is represented by the purchase price and installation
costs and other associated costs of such Collateral, plus the financing costs
attributable thereto. Borrower also shall cause each such Subsidiary to grant to
Lender a security interest and/or charge in the Collateral in which it acquires
rights either directly or as security for the Subsidiary's Guaranty, at the
discretion of Lender reasonably exercised on the advice of counsel.
9. DESCRIPTION OF COLLATERAL.Borrower (as debtor) hereby assigns to
Lender as collateral, and grants to Lender (as secured party) a continuing
security interest (or in foreign jurisdictions, the equivalent) in and to, all
of Borrower's right, title and interest in and to the following kinds and types
of property, whether now owned or hereafter acquired or arising, wherever
located, together with all substitutions therefor and all accessions,
replacements and renewals thereof, to the extent financed or refinanced with
proceeds of an Advance hereunder, and in all proceeds and products thereof,
including without limitation the collateral specifically described on Schedule
--------
8.01 hereto located in the locations described on Schedule 8.01, including the
---- -------------
rights and interests of any Subsidiary acquiring rights in such collateral not
separately secured to the Lender by a Guaranty and Deed of Charge (collectively,
the "Collateral"):
----------
(a) All Equipment financed or refinanced with proceeds of an Advance
and in each case any and all additions, substitutions, and replacements to or of
any of the foregoing, together with all attachments, components, parts,
improvements, upgrades, and accessions installed thereon or affixed thereto, but
excluding such additions, attachments, components, parts, improvements,
upgrades, and accessions not financed pursuant hereto provided that the
10
removal thereof would not harm the Equipment to which it is attached. The
Equipment shall include installation services provided by NORTEL or any other
Vendor in connection therewith (collectively, "Equipment");
---------
(b) All of Borrower's right, title and interest in and to the NORTEL
Purchase Agreement, which shall be evidenced by a Collateral Assignment of
Purchase Agreement substantially in the form of Exhibit F to this Agreement,
---------
together with any future or additional purchase agreements subsequently entered
into with NORTEL or any other Supplier whose Equipment is financed pursuant
hereto, to be delivered with consents to the Lender from NORTEL or such Supplier
for those subsequent assignments within ten (10) business days after the
effective date of each subsequent purchase agreement using substantially the
same form as Exhibit F to this Agreement; .
---------
(c) All general intangibles and intangible property (including all
contracts and contract rights) constituting part of, or provided by or through
NORTEL or any Vendor in connection with the Equipment or associated with any
System which are necessary for the proper operation of the Equipment, including
without limitation insurance proceeds and amounts due under insurance policies,
licenses, license rights, rights in intellectual property, Software, Software
Licenses, computer programming (including source codes, object codes and all
other embodiments of computer programming or information), refunds, warranties
and indemnification rights, and all amounts owed at any time to Borrower by
Lender or NORTEL or by a Supplier in connection with a Purchase Agreement
relating to Equipment (collectively, "General Intangibles");
-------------------
(d) All of Borrower's right, title and interest in and to all Leases
of Equipment by Borrower as lessor, which shall be further evidenced by
assignments of Leases reasonable acceptable to Lender; and
(e) All Equipment and Software listed on a Collateral Schedule
attached to a Borrowing Certificate, each Collateral Schedule hereby being
incorporated in and made a part of this Agreement.
10. MAINTENANCE, USE AND OPERATION:
(a) At all times during the Term, Borrower or any Subsidiary that
leases or acquires an interest in any Equipment, at its sole cost and expense,
shall maintain the applicable Equipment and System in good repair, condition and
working order in accordance with established maintenance procedures such that
the System performs in accordance with published specifications, and Borrower or
the lessee of Equipment shall maintain (and upgrade if necessary) the Equipment
at all times within two of the Supplier's latest Product Computing Loads.
Borrower shall, and shall cause any Subsidiary which leases or acquires an
interest in any Equipment, to use the Equipment and all parts thereof for its
designated purpose and in compliance with all applicable laws and shall at all
time keep the Equipment in its possession and control and not permit such
Equipment to be moved from the Installation Sites, as set forth in Schedule
--------
8.01, without Lender's prior written consent.
----
(b) The Equipment is, and shall at all time be deemed to be, personal
property
11
even iF the Equipment is affixed or attached to real property or any
improvements thereon. At Lender's request, Borrower or any lessee of Equipment
shall at no charge promptly cause to be affixed to the Equipment any tags,
decals, or plates furnished by Lender indicating Lender's interest in the
Equipment, and Borrower or a lessee of Equipment shall not permit their removal
or concealment. Borrower or any lessee of Equipment shall at all times keep the
Equipment free and clear of all liens and encumbrances, except those arising
through actions of Lender or permitted in writing by Lender. Borrower or any
lessee of Equipment at its respective expense, shall otherwise cooperate to
defend the interest of Lender in the applicable Equipment and to maintain the
status of the Equipment and all parts thereof as personal property.
(c) Borrower will, at Borrower's expense, furnish a Landlord's
Consent or Mortgagee's Consent, as appropriate, from any party having an
interest in any real estate or building in which any Equipment is located or
furnish an acknowledgment satisfactory to Lender from any affiliate, landlord,
mortgagee, easement grantor, or other person who is in a position to claim
rights in property where the Equipment is located, promising to give Lender
notice of any claimed default by Borrower with respect to such property interest
and an opportunity to remove the Equipment and other elements of the System upon
commercially reasonable terms. Lender may inspect the System at any time during
normal business hours of a Borrower or lessee of Equipment subject to its normal
operational procedures.
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. Borrower
represents, warrants and covenants to Lender and, so long as this Agreement is
in effect and any part of Borrower's Obligations to Lender under any Loan remain
unfulfilled, and shall continue to warrant, represent and covenant in each
Borrowing Certificate that:
(a) Borrower and each Subsidiary which leases or acquires an interest
in Equipment is a corporation duly organized, validly existing, and in good
standing under the laws of the state or nation of its incorporation and that it
is authorized to do business and/or is in good standing as a foreign corporation
in each jurisdiction in which any System it operates is located, and each
Borrower and Subsidiary which leases or purchases Equipment is authorized and
licensed under applicable law to operate as a facilities based carrier therein,
and each Borrower and Subsidiary which leases or purchases Equipment has the
corporate power and capacity to enter into this Agreement, any Loan authorized
pursuant to this Agreement, or any Lease of Equipment, as the case may be, and
to perform all of its obligations hereunder and thereunder.
(b) This Agreement, the Schedules, the Exhibits, and all other Loan
Documents and the performance by Borrower and each Subsidiary which leases or
purchases Equipment hereunder of their respective obligations have been duly and
validly authorized and approved under all laws and regulations and procedures
applicable to Borrower or any Subsidiary which leases or acquires an interest in
Equipment hereunder, and under the terms and provisions of the resolutions of
such entity's governing body, a copy of which has been provided herewith or will
be provided in connection with any subsequent Loan; the consent of all necessary
persons or bodies has been obtained; and all of such documents executed by
Borrower or any Subsidiary which leases or acquires an interest in Equipment
hereunder
12
have been duly and validly executed and delivered by authorized representatives
of such entity and constitute valid, legal and binding obligations of such,
enforceable against such entity in accordance with their respective terms.
(c) No other approval, Consent, Regulatory Authorization, or
withholding of objection is required from any Governmental Authority with
respect to the entering into or performance by Borrower of this Agreement, or
the performance by Borrower or any Subsidiary which leases or acquires an
interest in Equipment hereunder of the transactions contemplated hereby.
(d) The entering into and performance of this Agreement and any Loan
entered into pursuant hereto will not violate any judgment, order, law or
regulation applicable to Borrower or result in any breach of, or constitute a
default under, or result in the creation of any lien, charge, security interest
or other encumbrance upon any assets of Borrower or on any Equipment pursuant to
any instrument to which Borrower is a party or by which it or its assets may be
bound, except pursuant to the transactions and documents contemplated in this
Agreement.
(e) Borrower and each of its Subsidiaries has conducted and continues
to conduct its business in all material respects in accordance with applicable
laws, and has paid or will cause to be paid all taxes, assessments and other
governmental charges as and when due except those challenged in good faith by
appropriate proceedings. Except as set forth in Schedule 11.01, Borrower and
--------------
each of its Subsidiaries has all of the Regulatory Authorizations necessary to
conduct their respective businesses in the jurisdictions were such businesses
are conducted, and Borrower covenants to obtain all Regulatory Authorizations
required for any future operations by Borrower and each of its Subsidiaries in
any jurisdiction.
(f) Except as set forth in Schedule 11.01 there are no actions, suits
--------------
or proceedings pending or, to the knowledge of Borrower's senior executive
officers, threatened against or affecting Borrower or any of its Subsidiaries in
any court or before any Governmental Authority, board or commission which, if
adversely determined, could reasonably be expected to have a material adverse
effect on the ability of Borrower and its Subsidiaries taken as a whole to
perform its obligations hereunder or under any Loan authorized pursuant hereto.
(g) Lender has a valid first perfected security interest (or in
foreign jurisdictions, the equivalent), subject only to Permitted Encumbrances,
in all Collateral pursuant hereto, or under any Loan authorized pursuant hereto,
at each Installation Site where it may be located, which secures all Obligations
of Borrower hereunder.
(h) Borrower has reviewed its operations and those of its
Subsidiaries with a view to assessing whether its business (together with the
businesses of its Subsidiaries on a consolidated basis), will be vulnerable to a
Year 2000 Problem or will be vulnerable to the effects of a Year 2000 Problem
suffered by any major commercial customers of Borrower or of any of its
Subsidiaries, and has a reasonable basis to believe that no Year 2000 Problem
could reasonably be expected to cause a material adverse effect to Borrower and
its Subsidiaries on a consolidated basis. For purposes of this Agreement, "Year
2000 Problem" means any
13
significant risk that computer hardware, software or equipment containing
embedded microchips essential to the business or operations of Borrower will
not, in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively and reliably as in the case of times or time
periods occurring before January 1, 2000, including the making of leap year
calculations. The foregoing representation with respect to Equipment financed
pursuant hereto is limited to the representations and warranties of the Supplier
with respect to such Equipment.
(i) Borrower shall take all actions necessary and commit adequate
resources to assure that computer-based and other systems of Borrower and its
Subsidiaries are able to process dates effectively, including dates before, on
and after January 1, 2000, without experiencing any Year 2000 Problem that could
reasonably be expected to cause a material adverse effect to Borrower and its
Subsidiaries taken as a whole.
(j) Borrower shall provide to Lender, at the same time it provides
them to First Union National Bank (or any other trustee with respect to its
12.75% Senior Notes described below), copies of its consolidated annual
financial statements prepared in accordance with GAAP, audited by a firm of
auditors nationally recognized or approved by Lender in writing; and, within
forty-five (45) days of the end of any quarter, unaudited quarterly consolidated
balance sheets, income statements and cash flow statements prepared in
accordance with GAAP, throughout the term of this Agreement..
(k) Neither Borrower nor any Subsidiary of Borrower shall create or
suffer to exist any Lien on the Collateral, or any part thereof, whether
superior or subordinate to the Lien of the Loan Documents, or assign, convey,
sell or otherwise dispose of or encumber its interest in the Collateral, or any
part thereof (including, without limitation, execution of any lease), nor permit
any such action to be taken, except for the following permitted dispositions and
encumbrances ("Permitted Encumbrances"): (i) the Lien created hereby or pursuant
----------------------
to the other Loan Documents; (ii) Liens for taxes not yet due, or which are
being contested in good faith and by appropriate proceedings; (iii) carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are overdue for a period not
longer than thirty (30) days or which are being contested in good faith and by
appropriate proceedings; (iv) pledges or liens in connection with workers'
compensation, unemployment insurance and other social security legislation; (v)
deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business; (vi) easements, rights-of-way, restrictions and
other similar encumbrances that are not substantial in amount, and which do not
in any case materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of Borrower; (vii) judgment
liens with respect to which execution has been stayed within ten (10) days by
appropriate judicial proceedings and the posting of adequate security which may
not be any of the Collateral; (viii) Qualifying Leases and Deeds of Charge;
(viii) a Change in Control not constituting a default pursuant to Section 14(i)
-------------
hereof; and (ix) specific liens, if any, identified on Schedule 11.02 hereto.
--------------
Any of the foregoing Liens shall remain "Permitted Encumbrances" as long as they
are being contested by Borrower in good faith.
14
(l) Borrower shall comply in all material respects with the Covenants
set forth in Schedule 11.03 attached hereto, which are derived from the
--------------
covenants of Borrower contained in the Trust Indenture between Borrower and
First Union National Bank dated October 15, 1999 pertaining to Borrower' 12.75%
Senior Notes due 2009.
(m) Borrower shall not permit or acquiesce in any change, waiver or
other alteration with respect to any Lease that could reasonably be expected to
have a material adverse effect upon it, provided, however, that Qualifying
-------- -------
Leases may be amended without Lender's consent to the extent permitted by the
terms of a previously approved form of Qualifying Lease.
(n) Borrower shall, and shall cause each Subsidiary which leases or
acquires an interest in any Equipment to, maintain its existence, good standing
and rights in full force and effect in its jurisdiction of organization.
Borrower shall, and shall cause each Subsidiary which leases or acquires an
interest in any Equipment to, qualify to do business and remain qualified and in
good standing and shall obtain all necessary authorizations to do business in
each jurisdiction in which failure to receive or retain such could reasonably be
expected to have a material adverse effect upon Borrower and its Subsidiaries
taken as a whole or upon Lender's ability to exercise its rights and remedies
with respect to the Collateral.
(o) Borrower shall, and shall cause any Subsidiary which leases or
acquires an interest in any Equipment to continue to engage solely in the
business described on Schedule 2.01 hereto; and acquire and maintain in full
-------------
force and effect all rights, privileges, franchises and licenses necessary for
the operation and maintenance of such business (including, without limitation
any license or authorization required by the FCC or any PUC or any other
Governmental Authority).
(p) Promptly upon their becoming available to Borrower, it shall
deliver to Lender copies of (i) all annual or special reports or effective
registration statements which Borrower or any of its Subsidiaries shall file
with any Governmental Authority, including the FCC or any PUC (or any successor
thereto) or any securities exchange, (ii) financial statements, material
reports, and other information distributed by Borrower to its creditors or the
financial community in general, and (iii) all press releases issued by or
concerning Borrower or its Subsidiaries.
12. INSURANCE: Borrower or any lessee of Equipment shall, at its
expense, upon delivery of each item of Equipment to its Installation Site and at
all times thereafter, cause each item of Equipment to remain insured against all
risks or loss or damage for an amount at least equal to the portion of the Loan
Amount attributable to that item of Equipment, as depreciated, or the
replacement cost, whichever is greater. All insurance polices shall name Lender
as an additional insured and loss payee, as appropriate, and shall be with an
insurer, having a "Best Policy Holders" rating of "A1" or better (or the
equivalent), and in such form, amount and deductibles as are reasonably
satisfactory to Lender. The proceeds of any such polices shall be payable to
Lender or Borrower or any lessee of Equipment, as their interests may appear.
Each such policy must state by endorsement that the insurer shall give Lender
not less than thirty (30) days prior written
15
notice of any amendment, renewal or cancellation. Borrower or any lessee of
Equipment shall upon request, furnish to Lender satisfactory evidence that such
insurance coverage is in effect. Borrower may self insure with respect to the
above coverage, with Lender's prior written consent.
13. CASUALTY: If any Equipment, in whole or in part, shall be lost or
stolen or destroyed, or damaged from any cause whatsoever, or is taken in any
condemnation or similar proceedings by a Governmental Authority (any such event
is hereafter called an "Event of Loss"), Borrower shall promptly and fully
-------------
notify Lender thereof. Borrower shall, at its option, do the following: (i)
immediately place the affected Equipment and Software in good condition and
working order, or (ii) replace the affected item with like equipment or software
in good repair, condition and working order, or (iii) to the extent not fully
covered by insurance as set forth in Section 12 above, pay to Lender, within
----------
thirty (30) days of the later of the Event of Loss or a determination of less
than full insurance coverage, an amount equal to the applicable Loan, plus any
other amounts then due and unpaid with respect to such Equipment and Software,
less applicable insurance proceeds. Upon the making of all required payments by
Borrower pursuant to (iii) Borrower shall be entitled to retain possession of
the applicable Equipment or the sublicense to the applicable Software, (with no
warranties) subject to the rights, if any, of the insurer. If Lender shall
receive any other insurance proceeds or net awards, Lender shall apply all or
part of such proceeds and awards to any Obligations of Borrower to Lender.
14. DEFAULT: Borrower shall be in default under each Loan upon the
occurrence of any of the following events ("Event of Default" or "default"):
(a) The failure of any Borrower to pay when due any Payment Amount or
any other amounts payable under this Agreement or any Note within five (5) days
of the date when due;
(b) A breach or failure in the observance or performance by any
Borrower or any of its Subsidiaries of any other material provision of this
Agreement or any other Loan Document which is not remedied within thirty (30)
days after receipt by Borrower or any of its Subsidiaries of notice of such
breach or failure;
(c) Any material representation, warranty or covenant made herein, or
in any certificate, document, financial or other statement delivered in
connection with this Agreement, or hereafter made by Borrower proves to have
been incorrect in any material adverse respect when made or given;
(d) Borrower, or any surety or guarantor of the Indebtedness
evidenced by this Agreement or a Note (i) files a petition or has a petition
filed against it under the bankruptcy code, or any proceeding for relief of
insolvent debtors; (ii) generally fails to pay its debts as such debts become
due; (iii) shall admit in writing its inability to pay its debts as they become
due; (iv) has a custodian, trustee or receiver appointed, voluntarily or
otherwise, for it or its assets; (v) benefits from, or is subject to, the entry
of an order for relief by any court of insolvency; (vi) makes an assignment for
the benefit of creditors; (vii) becomes insolvent (however otherwise evidenced);
(viii) liquidates, winds-up, dissolves or suspends business; or
16
(ix) has commenced against it any case, proceeding or other action seeking the
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets, which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within sixty (60) days from the entry thereof;
(e) Borrower shall (i) commit a default in any payment of any other
instrument or agreement (other than with Lender) that could reasonably be
expected to cause a material adverse effect to Borrower and its Subsidiaries on
a consolidated basis, or (ii) default in the observance of any other provision
of such other instrument or agreement as to cause, or permit the holder of such
instrument or agreement to cause, the obligations thereunder to become due prior
to its stated maturity;
(f) One or more judgments or decrees shall be entered against
Borrower or any of its Subsidiaries involving in the aggregate a liability (not
paid or fully covered by insurance) that could reasonably be expected to cause a
material adverse effect to Borrower and its Subsidiaries on a consolidated
basis, if such judgment or decree shall not have been vacated, discharged, or
stayed or bonded pending appeal within sixty (60) days after the entry thereof;
or
(g) Any guaranty or any subordination agreement required or delivered
in connection with this Agreement is breached or becomes ineffective, or any
guarantor, or subordinating creditor disavows its obligations under the guaranty
or subordination agreement, as the case may be; or
(h) Borrower or any of its Subsidiaries fails to perform any of its
obligations under any other agreement or lease with Lender (subject to any cure
rights or notice periods contained in such other agreement or lease); or
(i) If any Change in Control of Borrower should occur without
Lender's prior written consent if such Change in Control results or would result
upon consummation in an entity obligated hereunder that is less creditworthy
than Borrower, based upon financial information with respect to the transaction
which must be supplied by Borrower sufficiently in advance of the consummation
thereof so as to enable Lender reasonably to determine such creditworthiness; or
(j) The occurrence of a material adverse effect on, or material
adverse change in, (i) the business, operations or financial condition of
Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to
perform its obligations under this Agreement, any Note, or the other Loan
Documents, or (iii) the Lender's ability to enforce the rights and remedies
granted under this Agreement or the other Loan Documents, in all cases whether
attributable to a single circumstance or event or an aggregation of
circumstances or events.
(k) If Borrower shall grant, or suffer to exist for more than twenty
(20) days, or fail to contest immediately after discovering the same, any lien
on any Collateral hereunder in favor of any person other than Lender (except for
a purchase money security interest in favor of NORTEL or other approved
Supplier).
17
15. RIGHTS AND REMEDIES ON DEFAULT:
(a) At Lender's option, upon the occurrence of any such Event of
Default under Section 14, and at any time thereafter, at Lender's option,
----------
Lender's commitment to lend shall terminate and/or all unmatured Indebtedness
evidenced by any Note will immediately become due and payable without
presentation, demand, protest, or notice of any kind (except as expressly
provided for herein), all of which are expressly waived. Lender may exercise,
from time to time, any rights and remedies available to it under this Agreement,
any Note, the Uniform Commercial Code and other applicable law. Borrower agrees
that upon the occurrence and during the continuance of an Event of Default, to
the extent permitted by applicable law (i) any amounts payable under this
Agreement or under any Note shall thereafter bear interest at a rate per annum
equal to the Interest Rate plus three percent (3%) (in lieu of the 1-1/2% per
month referenced in Section 3(f) hereof), or the maximum rate per annum allowed
-------------
by law, whichever is less, compounded monthly and payable on demand (both before
and after judgment), until the Indebtedness is paid in full or the Event of
Default is cured, (ii) it will, at Lender's request, assemble the Collateral and
make it available to Lender at places which Lender shall reasonably select, and
(iii) Lender, by itself or its agent, may, without notice to any person and
without judicial process of any kind, enter into any premises or upon any land
owned, leased or otherwise under the real or apparent control of Borrower, or
any agent of Borrower, where the Collateral may be, or where Lender believes the
Collateral may be, and disassemble, render unusable, and/or repossess all or any
item of the Collateral, disconnecting and separating the Collateral from any
other property. Borrower expressly waives all further rights to possession of
the Collateral after the occurrence and during the continuance of an Event of
Default and all claims for injuries suffered through, or loss caused by, such
entering and/or repossession.
(b) Lender shall have the right to sell, lease or otherwise dispose
of the Collateral (or contract to do so), whether in its then condition or after
further preparation or processing, either at public or private sale, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such terms and conditions as Lender, in its sole discretion, may deem
advisable. Lender shall have the right to purchase at any such sale. Lender will
give Borrower reasonable notice of the time and place of any public sale of the
Collateral or of the time after which any private sale or other intended
disposition of the Collateral is to be made. Unless otherwise provided by law,
the requirement of reasonable notice shall be met if such notice is delivered to
the address of Borrower set forth above at least ten (10) days before the time
of the sale or disposition. Any proceeds of any disposition by Lender of any of
the Collateral may be first applied by Lender to the payment of Lender's
Expenses, incurred in connection with the repossession, care, safekeeping, sale
or otherwise of any or all of the Collateral, or in any way relating to the
rights of Lender hereunder. Any balance of such proceeds may be applied by
Lender toward the payment of the Indebtedness in such order as Lender, in its
sole discretion, shall determine. Borrower shall be liable for, and shall pay to
Lender on demand, any deficiency which may remain after such sale, lease or
other disposition, and Lender agrees to remit to Borrower any surplus resulting
therefrom.
(c) If, for the purposes of obtaining judgment in respect of any
claim under this Agreement or any other Loan Document in any court, it is
necessary to convert a sum due
18
hereunder or thereunder to the Lender in any currency (the "Original Currency")
into another currency (the "Other Currency"), the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures Lender could
purchase the Original Currency with the Other Currency on the Business Day
preceding that on which final judgment is paid or satisfied.
(d) The obligations of Borrower in respect of any sum due in the
Original Currency to the Lender under this Agreement or any other Loan Document
shall, notwithstanding any judgment in any Other Currency, be discharged only to
the extent that on the business day following receipt by Lender of any sum
adjudged to be so due in such Other Currency, Lender may in accordance with
normal banking procedures purchase the Original Currency with such Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due to the Lender in the Original Currency, Borrower shall, as a
separate obligation and notwithstanding any such judgment, jointly and
severally, indemnify Lender against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to Lender in the Original
Currency, Lender shall remit such excess to Borrower.
(e) Notwithstanding the foregoing, Lender shall not exercise any
remedy in violation of applicable law in the jurisdiction where such remedy is
exercisable.
16. GENERAL AUTHORITY: Upon the occurrence and during the continuance
of an Event of Default hereunder, Lender shall have the full power to exercise
at any time and from time to time all or any of the following powers with
respect to all or any of the Collateral:
(a) To demand, xxx for collection, receive and give acquittance for
any and all monies due or to become due upon or by virtue thereof;
(b) To receive, take, endorse, assign and deliver any and all checks,
notes, drafts, documents and other property taken or received by Lender in
connection therewith;
(c) To settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereof;
(d) To sell, transfer, assign or otherwise deal in or with the same
or the proceeds thereof, as fully and effectually as if Lender were the absolute
owner thereof; and
(e) In general, to do all things necessary to perform the terms of
this Agreement, including, without limitation, to take any action or proceedings
which Lender deems necessary or appropriate to protect and preserve the security
interest of Lender in the Collateral. In the case of failure of Borrower to
comply with any provision of this Agreement, Lender shall have the right, but
shall not be obligated, to so comply in whole or in part, and all moneys spent,
and expenses and obligations incurred or assumed by Lender in connection with
such performance or compliance, shall be payable on demand together with
interest on such amounts equal to the Interest Rate plus three percent (3%) from
the date and amount is
19
expended or advanced by the Lender until paid. Such sums plus interest shall
constitute indebtedness secured hereby. Lender's effecting such compliance shall
not be a waiver of Borrower's default. Lender shall be under no obligation or
duty to exercise any of the powers hereby conferred upon it.
17. EXPENSES: Borrower agrees (a) to pay or reimburse Lender for all
its reasonable costs, fees, charges and expenses incurred or arising in
connection with the negotiation, review, preparation and execution of this
Agreement, the Loan Documents, any commitment or proposal letter, or any
amendment, supplement, waiver, modification to, or restructuring of this
Agreement, the Indebtedness incurred hereunder, or the other Loan Documents,
including, without limitation, reasonable outside counsel legal fees and
disbursements, expenses, document charges and other charges of Lender, (b) to
pay or reimburse Lender for all its reasonable costs, fees, charges and expenses
incurred in connection with the administration of this Agreement and the other
Loan Documents or the enforcement, protection or preservation of any rights
under or in connection with this Agreement or any other Loan Documents,
including, without limitation, reasonable outside counsel legal fees and
disbursements, audit fees and charges, and all reasonable out-of-pocket
expenses, (c) to pay, indemnify, and to hold Lender harmless from, any and all
recording and filing fees and taxes and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes (excluding
income and franchise taxes and taxes of similar nature), if any, which may be
payable or determined to be payable in connection with the execution and
delivery or recordation or filing of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement and the other Loan Documents.
All of the amounts described in this Section are referred to collectively as the
"Lender's Expenses," shall be payable upon Lender's demand, and shall accrue
-----------------
interest at the Interest Rate in effect when such demand is made from five (5)
days after the date of demand until paid in full. All Lender's Expenses, and
interest thereon, shall be part of the Indebtedness and shall be secured by the
Collateral. The agreements in this Section shall survive repayment of the other
Indebtedness. All Lender's Expenses that are outstanding on any Borrowing Date
shall be paid before or with such Advance. If Borrower has not paid to Lender
the amount of all Lender's Expenses billed to Borrower before such Borrowing
Date, Lender shall be authorized to retain from any Advance on such Borrowing
Date the amount of such Lender's Expenses that remain unpaid. Borrower's
obligation to pay Lender's Expenses shall not be limited by any limitation on
the amount of the Commitment that may be designated as available for such
purposes, and any amounts so designated shall be used to pay Lender's Expenses
accrued at the time of any Advance before any of the legal fees or similar
expenses of Borrower.
18. INDEMNITY: Borrower shall indemnify Lender against and hold
Lender harmless from, and covenants to defend Lender against, any and all
losses, claims, encumbrances, actions, suits, damages, obligations, liabilities
and liens (and all Lender's Expenses) arising out of or in any way related to
each Loan including, without limitation, the selection, purchase, delivery,
ownership, licensing, possession, maintenance, condition, use, operation,
rejection or return of the Collateral, the recovery of claims under insurance
policies thereon, from Borrower's failure to commence operation of a System, or
from any misuse, breach or violation of the Software sublicense, including
without limitation, unauthorized
20
duplication of or modification to the Software, or arising by operation of law,
excluding, however, any of the foregoing which result from the sole negligence
or willful misconduct of Lender and further excluding such losses, claims,
encumbrances, actions, suits, damages, obligations, liabilities and liens
arising from the sole negligence or willful misconduct of Lender in the exercise
of its remedies hereunder. Borrower agrees that upon written notice by Lender of
the assertion of any claims, liens, encumbrances, actions, damages, obligations
or liabilities, Borrower shall assume full responsibility for, or at Borrower's
option, reimburse Lender for the defense thereof. The provisions of this Section
shall continue in full force and effect notwithstanding full payment of the
Obligations under the Loans and survive the termination of this Agreement or any
Loan for any reason, provided, however, the provisions hereof shall not survive
longer than the applicable statute of limitations.
19. ASSIGNMENT: Lender may, in whole or in part, with notice to, but
without the consent of Borrower, sell, assign all or any portion of a Loan
hereunder and any amounts due or to become due hereunder to one or more third
party assignees ("Assignee"), which interests may be reassigned in whole or in
part. No such assignment shall be effective against Borrower unless and until
Borrower shall have received a copy or written notice thereof identifying the
name and address of the Assignee. Upon receiving written notice from Lender,
Borrower shall if so directed, make all Payments and other amounts due directly
to Assignee without abatement, deduction or setoff and free from any deduction
for any other person or entity. Any Assignee shall be entitled to rely on
Borrower's agreements as stated in his Agreement, any Note or other Loan
Documents, as applicable, and shall be considered a third-party beneficiary
thereof. Borrower shall also promptly execute and deliver or cause to be
executed and delivered to Lender or any Assignee any additional documentation as
Lender or the Assignee may reasonably request to acknowledge the assignment.
Lender shall be relieved of its future obligations under the Loan as a result of
such assignment if the Assignee assumes Lender's future obligations hereunder.
WITHOUT LENDER'S PRIOR WRITTEN CONSENT, BORROWER SHALL NOT ASSIGN, LEASE,
TRANSFER, PLEDGE, MORTGAGE OR OTHERWISE ENCUMBER (COLLECTIVELY, A "TRANSFER")
ANY LOAN OR COLLATERAL HEREUNDER OR PERMIT ANY XXXX, XXXX OR ENCUMBRANCE THEREON
EXCEPT FOR QUALIFYING LEASES AND DEEDS OF CHARGE, OR A CHANGE IN CONTROL NOT
CONSTITUTING A DEFAULT PURSUANT TO SECTION 14(i) HEREOF OR AS OTHERWISE
PERMITTED HEREIN. LENDER AGREES NOT TO UNREASONABLY WITHHOLD CONSENT TO AN
ASSIGNMENT BY BORROWER TO A WHOLLY OWNED SUBSIDIARY OF BORROWER OF ITS RIGHTS
HEREIN. ANY ATTEMPTED NON-CONSENSUAL TRANSFER BY BORROWER SHALL BE VOID AB
INITIO. NO TRANSFER SHALL RELIEVE BORROWER OF ANY OF ITS OBLIGATIONS UNDER THE
LOAN UNLESS LENDER RELEASES BORROWER FROM SUCH OBLIGATIONS IN WRITING.
20. MISCELLANEOUS: (a) Any failure of Lender to require strict
performance by Borrower, or any waiver by Lender of any provision of this
Agreement or any other Loan Document shall not be construed as a consent to or
waiver of any other breach of the same or of any other provision; (b) No
obligation of the Lender hereunder shall survive the expiration or other
termination of this Agreement; (c) All of the Borrower's indemnities, waiver,
assumptions of liability and duties contained in this Agreement and all Lender's
21
disclaimers shall continue in full force and effect and survive the expiration
or other termination of this Agreement; (d) Borrower agrees to execute and
deliver or cause to be executed and delivered, upon demand, any and all other
documents necessary to evidence the intent of any Loan authorized hereunder, or
to protect Lender's interest in any Collateral, including any UCC financing
statements or other security documents or any waivers of interest or liens, and
to this end, Borrower appoints Lender as its attorney-in-fact to execute and
deliver all such financing statements or other documents and to collect
insurance proceeds. Borrower agrees to pay the costs of filing and recording
such documentation; (e) Borrower shall deliver to Lender such additional
financial information available to the public or other creditors as Lender may
reasonably request; (f) This Agreement shall be governed by the laws of the
Commonwealth of Virginia, except to the extent the internal laws of the state or
nation where the Collateral is located govern the perfection of security
interests in such property or the exercise of remedies therein; (g) If any
provision shall be held to be invalid or unenforceable, the validity and
enforceability of the remaining provisions shall not in any way be affected or
impaired; (i) In the event Borrower fails to pay or perform any obligations
under this Agreement, Lender may, at its option, pay or perform said obligation,
and any payment made or expense incurred by Lender in connection therewith shall
be due and payable by Borrower upon demand by Lender with interest thereon
accruing at the maximum rate permitted by law until paid; (h) No loan charge,
late charge fee or interest, if applicable, is intended to exceed the maximum
amount permitted to be charged or collected by applicable law. If one or more of
such charges exceed such maximum, then such charges will be reduced to the
legally permitted maximum charge and any excess charge will be used to reduce
the applicable Loan Amount or refunded; (i) Time is of the essence in this
Agreement and in each of its provisions.
21. NOTICES: Notices, demands and other communications to be
effective shall be transmitted in writing by telex, telecopy, or other facsimile
transmission, by hand delivery, or if given in the United States, by first
class, Registered or Certified Mail, return receipt requested, or by an
overnight courier service, addressed to Lender or to Borrower at the applicable
address in the preamble, or at such other address as the parties may hereinafter
substitute by written notice. Notice shall be effective in the United States
four (4) days after the date it was mailed (if mailed in the United States), or
upon receipt, which may be evidenced in electronic form, whichever is earlier.
22. COUNTERPARTS: The Loan, including the Exhibits and any Schedules
and other Loan Documents, may be executed by one or more of the parties on any
number of separate counterparts (which may be originals or copies sent by
facsimile transmission) each of which counterparts shall be an original, but all
of which taken together shall be deemed to constitute on and the same
instrument.
22
23. ENTIRE AGREEMENT: This Agreement and its Schedules and Exhibits
and other Loan Documents executed and delivered in connection herewith
constitute the entire agreement between Lender and Borrower with respect to the
subject matter hereof and supersede the Commitment Letter (except as referenced
herein), all previous negotiations, proposals, commitments, writings, and
understandings of any nature whatsoever. No agent, employee, or representative
of Lender has any authority to bind Lender to any representation or warranty
concerning the Equipment or Software and, unless such representation or warranty
is specifically included in this Agreement or other Loan Documents executed by
Lender, it shall not be enforceable by Borrower against Lender.
24. BINDING NATURE: This Agreement and each Loan shall be binding
upon and inure to the benefit of Lender and Borrower and their respective
successors and permitted assigns and/or Subsidiaries. It is acknowledged for the
purpose of this Agreement that no Australian Subsidiary is a party to this
Agreement and that obligations expressed on behalf of Subsidiaries hereunder, so
far as they could apply to an Australian Subsidiary, are obligations of Borrower
to cause that obligation to be performed. A Guaranty and Deed of Charge in favor
of Lender by an Australian Subsidiary contain the obligations of the Australian
Subsidiary to Lender.
25. CONDITIONS OF CLOSING: The Closing Date is stated on Schedule
--------
24.01 hereto. In On or before the Closing Date, the following conditions must
-----
have been satisfied:
(a) Closing Certificates. A certificate of Borrower signed by a duly
--------------------
authorized Responsible Officer, certifying as to (i) true copies of
Organizational Documents of Borrower in effect on such date; (ii) true copies of
all corporate action taken by Borrower relative to this Agreement, each Note,
and the other Loan Documents; (iii) the names, true signatures and incumbency of
the Responsible Officers of Borrower authorized to execute and deliver this
Agreement, each Note, and the other Loan Documents; (iv) a Certificate of Good
Standing (or equivalent certificate) for Borrower duly issued by the Secretary
of State of each state in which Borrower intends to do business; and (v) such
other matters as Lender shall reasonably request.
(b) Opinions of Counsel. Lender shall have received the following
-------------------
opinions, all dated as of the Closing Date and in form and substance
satisfactory to Lender:
(i) A written opinion of counsel to Borrower, substantially in
the form of Exhibit C hereto;
---------
(ii) A written opinion of regulatory counsel for Borrower,
substantially in the form of Exhibit D hereto; and
---------
(c) Closing Documents. Lender shall have received the following
------------------
documents, all in form and substance satisfactory to Lender:
(i) Agreement. This Agreement, duly executed by Borrower;
---------
23
(ii) Notes. Each Note, duly executed by Borrower;
-----
(iii) Financing Statements. All UCC-1 financing statements or
---------------------
other filings or recordations necessary to perfect the Liens granted
hereby, each duly executed by Borrower, and duly recorded in all the
offices identified on Schedule 8.01 hereto;
-------------
(iv) Collateral Assignment of Purchase Agreement. The
---------------------------------------------
Collateral Assignment of Purchase Agreement, duly executed by Borrower,
and the Consent to Collateral Assignment of Purchase Agreement, duly
executed by NORTEL;
(v) Insurance. Policies and certificates of insurance required
---------
by Section 12, accompanied by evidence of the payment of the premiums
----------
therefor;
(vi) Financial Statements. The financial statements described
--------------------
in Section 10(k) hereof;
-------------
(vii) Balance Sheet. A balance sheet of Borrower, dated as of
-------------
the end of the fiscal quarter preceding the Closing Date, certified by
a Responsible Officer as fairly presenting the financial condition of
Borrower.
(viii) Certificate of Financial Condition. A Certificate of
------------------------------------
Financial Condition, duly executed by a Responsible Officer of
Borrower.
(ix) Copies of all executed Leases, each of which must be a
Qualifying Lease, together with a duly executed assignment of lease
with respect to each Lease.
(x) Guaranties. Original executed Guaranties of any
----------
Subsidiaries to which any Collateral is conveyed or to be conveyed by
Borrower or in the case of the Australian Subsidiary in the form of
Exhibit G-1.
-----------
(xi) Deeds of Charge. Original executed Deeds of Charge of any
---------------
Subsidiaries to which any Collateral is conveyed or to be conveyed by
Borrower or in the case of the Australian Subsidiary in the form of
Exhibit H-1.
-----------
(xii) An updated Schedule 11.04, which contains an accurate list
--------------
of all executed and proposed Leases or other conveyances of Collateral,
and their status.
(xiii) Pre-Closing Lien Searches. Lien searches from all
-------------------------
jurisdictions reasonably determined by Lender to be appropriate,
effective as of a date reasonably close to the Closing Date, reflecting
no other Liens (other than Permitted Encumbrances) on any of the
Xxxxxxxxxx.
00
00. CONDITIONS OF LENDING:
(a) Conditions for First Advance. On or before the First Funding
------------------------------
Date, with respect to each Loan, the following conditions shall have been met to
Lender's satisfaction:
(i) Post-Closing Lien Searches. Lender shall have received
--------------------------
satisfactory results of Lien searches in all jurisdictions reasonably
determined by Lender to be appropriate, reflecting the filing of
financing statements in favor of Lender pursuant hereto and no other
Liens other than Permitted Encumbrances.
(ii) Required Consents. Lender shall have received satisfactory
-----------------
evidence of Borrower's obtaining the Required Consents.
(b) Conditions for All Loans and Advances. The obligation of Lender
-------------------------------------
to make any Loan or Advance hereunder is subject to Borrower's performance of
its obligations hereunder on or before the date of such Loan or Advance, and to
the satisfaction of the following further conditions on or before the Borrowing
Date for any Loan or Advance, including the first Advance:
(i) Filings, Registrations and Recordings. Any financing
-------------------------------------
statements or other recordings required hereunder shall have been
properly filed, registered or recorded in each office in each
jurisdiction required in order to create in favor of Lender a
perfected first-priority Lien on the Collateral, subject to no other
Lien; Lender shall have received acknowledgment copies of all such
filings, registrations and recordations stamped by the appropriate
filing officer; and Lender shall have received results of searches of
such filing offices, and satisfactory evidence that any other Liens
(other than Permitted Encumbrances) on the Collateral have been duly
released, that all necessary filing fees, recording fees, taxes and
other expenses related to such filings, registrations and recordings
have been paid in full.
(ii) Borrowing Certificate. Lender shall have received a duly
---------------------
executed Borrowing Certificate in the form of Exhibit B, including a
detailed Collateral Schedule listing all goods and services to be paid
with the proceeds of the Advance and accompanied by other supporting
documentation satisfactory to Lender.
(iii) Reporting Requirements. Borrower shall have provided Lender
-----------------------
with all relevant reports and information required under Section 11
----------
hereof.
(iv) No Regulatory Event. No action by any Governmental
-------------------
Authority (in either Borrower's or Lender's reasonable determination)
that could reasonably be expected to cause a material adverse effect
to Borrower and its Subsidiaries on a consolidated basis shall have
occurred and be continuing, or would exist upon the consummation of
transactions to occur on such Borrowing Date.
25
(v) No Default or Event of Default. No Default or Event of
---------------------------------
Default shall have occurred and be continuing or would exist upon the
consummation of transactions to occur on such Borrowing Date.
(vi) No Material Adverse Change. No material adverse change
--------------------------
in the financial condition of Borrower and its Subsidiaries on a
consolidated basis shall have occurred, or would occur after giving
effect to such Advance, since the date of the last financial statements
delivered to Lender pursuant hereto.
(vii) Representations and Warranties. The representations and
------------------------------
warranties contained in Section 11 hereof shall be true on and as of
----------
the date of each such Advance hereunder.
(viii) Lender's Expenses. All closing costs, and other
-----------------
Lender's Expenses shall have been paid in full.
(ix) Opinions. Lender shall have received from Borrower such
--------
opinions of counsel for Borrower or a Subsidiary of Borrower as may be
reasonably acceptable to Lender in form and substance with respect to
the perfection and priority of the Liens created by the Security
Documents in each such jurisdictional location.
(x) Details, Proceedings and Documents. All legal details
----------------------------------
and proceedings in connection with the transactions contemplated by
this Agreement shall be reasonably satisfactory to Lender and Lender
shall have received all such counterpart originals or certified or
other copies of such documents and proceedings in connection with such
transactions, in form and substance reasonably satisfactory to Lender,
as Lender may from time to time request.
(xi) Consents. Lender shall have received Required Consents
--------
duly executed by all parties and in form satisfactory to Lender.
(xii) Fees. Lender shall have received the fee(s) described
----
in Sections 3 and 17 hereof.
---------- --
(xiii) Purchase Agreements. Lender shall have received a copy
of each executed NORTEL Purchase Agreement and/or Vendor Purchase
Agreement with respect to which proceeds of an Advance shall be used to
acquire NORTEL Equipment or other Equipment, and Lender's shall have
reviewed and approved the Equipment to be acquired with proceeds of an
Advance, together with the collateral assignment and consent specified
in Section 25 of this Agreement.
----------
(xv) Lease Schedule. Lender shall have received an updated
--------------
Schedule 11.04, which contains an accurate list of all executed and
--------------
proposed Leases and their status.
26
(xvi) Post-Closing Items. The post-closing items described on
------------------
Schedule 24.01 hereto, if any, shall have been completed in the time
--------------
permitted, and Borrower shall have provided Lender with satisfactory
evidence thereof.
(c) Affirmation of Representations and Warranties. Any Borrowing
---------------------------------------------
Certificate or other request for any Advance hereunder shall constitute a
representation and warranty that (i) the representations and warranties
contained in hereof are true and correct on and as of the date of such request
with the same effect as though made on and as of the date of such request and
(ii) on the date of such request no Default or Event of Default has occurred and
is continuing or exists or will occur or exist after giving effect to such
Advance (for this purpose such Advance being deemed to have been made on the
date of such request). Failure of Lender to receive notice from a Borrower to
the contrary before such Advance is made shall constitute a further
representation and warranty by the Borrower that (x) the representations and
warranties of the Borrower contained in the first sentence of this Section 26(c)
-------------
are true and correct on and as of the date of such Advance with the same effect
as though made on and as of the date of such Advance and (y) on the date of the
Advance no Default or Event of Default has occurred and is continuing or exists
or will occur or exist after giving effect to such Advance.
(d) Deadline for Funding Conditions. Lender shall have no obligation
-------------------------------
to make any Advances hereunder if all of the conditions set forth in Sections 25
-----------
and 26 hereof have not been fully satisfied, and the first Advance made
--
hereunder, within the period of four (4) calendar months following the Closing
Date.
END OF LOAN AND SECURITY AGREEMENT
(Signatures on First Page)
27
SCHEDULE 2.01 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
Borrower Information
--------------------
1
SCHEDULE 8.01 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
Collateral Descriptions and Locations of Collateral
---------------------------------------------------
1
SCHEDULE 11.01 TO
-----------------
LOAN AND SECURITY AGREEMENT
---------------------------
Disclosure Schedule
-------------------
1
SCHEDULE 11.02 TO
-----------------
LOAN AND SECURITY AGREEMENT
---------------------------
Permitted Encumbrances
----------------------
2
SCHEDULE 11.03 TO
-----------------
LOAN AND SECURITY AGREEMENT
---------------------------
Senior Note Covenants
---------------------
1
SCHEDULE 11.04 TO
-----------------
LOAN AND SECURITY AGREEMENT
---------------------------
Qualifying Leases and Conveyances
---------------------------------
2
SCHEDULE 25.01 TO
-----------------
LOAN AND SECURITY AGREEMENT
---------------------------
Post-Closing Conditions
-----------------------
1
PROMISSORY NOTE
US $30,000,000 November 22, 1999
(or such amount as may
be advanced hereunder)
FOR VALUE RECEIVED, PRIMUS TELECOMMUNICATIONS, INC., a Delaware
corporation with its principal place of business at 0000 Xxx Xxxxxx Xxxx,
XxXxxx, XX 00000 ("Borrower") promises and agrees to pay to the order of NTFC
--------
CAPITAL CORPORATION, a Delaware corporation, its successors, assigns or any
subsequent holder of this Note (the "Lender") at its offices located at 501
------
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxx 00000, or at such other
place as may be designated in writing by Lender, in lawful money of the United
States of America in immediately available funds:
the lesser of Thirty Million Dollars and 00/100 (US$30,000,000), or all
amounts advanced hereunder pursuant to the Loan Agreement (defined below),
plus legal fees, charges and expenses,
together with interest thereon and other amounts due as provided below. The
amortization schedule attached hereto is for convenience only, and the failure
of the Lender to attach an amortization schedule, or any error or incorrect
notation by the Lender on any amortization schedule, shall not diminish the
obligations of the Borrower under this Note.
This Note shall mature November 21, 2004 (the "Maturity Date"), on which
date all then-outstanding principal, interest, premium, expenses, fees,
penalties and other amounts due under the Note shall be finally due and payable.
This Note is issued pursuant to that certain Loan and Security Agreement
dated November 22, 1999, by and between Borrower and Lender (as it may be
modified, amended or restated from time to time, the "Loan Agreement"). Any
--------------
term not otherwise defined in this Note shall have the same meaning as in the
Loan Agreement. Reference is made to the Loan Agreement, which, among other
things, permits the acceleration of the maturity hereof upon the occurrence of
certain events and for prepayments in certain circumstances and upon certain
terms and conditions. This Note is secured by, among other things, the
Collateral described in the Loan Agreement and the other Loan Documents.
All Advances hereunder shall bear interest from the date of such
Advance (the "Borrowing Date") on the outstanding unpaid Principal Amount
thereof until such amount is due and payable (whether on any Payment Date, at
the Maturity Date, by acceleration, or otherwise), for each Advance, at a fixed
rate equal to a rate determined by adding 495
basis points to the published yield on the Five (5) Year Constant Maturity
United States Treasury Notes as reported in Federal Reserve Statistical Release
H.15(519) as published by the Board of Governors of the Federal Reserve System,
or any successor publication by the Board of Governors of the Federal Reserve
System, three days prior to the First Funding Date with respect to that Loan.
The interest rate shall be expressed as an annual rate of interest, compounded
monthly, and calculated on the basis of a 365-day year.
This Note shall have an "Interest Only Period," which is the twenty-four
(24) months immediately following the date of this Note, during which only the
interest on the principal outstanding under the Loan shall be paid monthly in
arrears, together with other amounts (if any) as provided in the Loan Agreement.
Following the expiration of the Interest Only Period, all outstanding
principal amounts, together with interest, shall be paid in arrears in thirty-
six (36) monthly installments on the first day of the month (each, a "Payment
Date"). Beginning with the first amortizing Payment, unless otherwise provided
in the Amortization Schedule attached to this Note, each amortizing Payment
shall consist of an Interest Payment and a Principal Payment constituting a
partial repayment of the Principal amount due hereunder as set forth below:
Payment Number Percentage of Loan
-------------- -------------------
25 - 36 1.667%
37 - 48 2.500%
49 - 59 4.167%
60 All Unpaid Principal
Plus any other Obligation
All payments of principal will be credited to the repayment of all outstanding
Advances represented on that Schedule pro rata. The final payment shall be in an
amount equal to all outstanding principal hereunder, plus all accrued and unpaid
interest and all other unpaid charges and expenses hereunder.
In the event of any additional Advances hereunder after the initial Payment
Date on Schedule A, an additional amortization schedule (Schedule B, etc.) will
---------- ----------
be attached for each additional Advance, reflecting the amortization of the
principal amount of such Advance and the applicable Interest Rate. All such
amortization schedules shall provide for amortization of all principal and
interest through the Maturity Date. If any principal, interest, or other charge
or expense remains outstanding on the Maturity Date, such amount shall be added
to the payment due on the Maturity Date.
Borrower may, at its option but subject to the satisfaction of the
requirements of the next sentence, at any time and from time to time, prepay
this Note, in whole or in part, upon at least (30) business days prior written
notice to Lender specifying the date and amount of prepayment in a minimum
amount of $50,000. Any such prepayment
occurring during the first, second and third years following the date hereof
shall be subject to a prepayment premium equal to a percentage of the amount
being prepaid as follows: three percent (3%) if the prepayment is made during
the first year following the date hereof; two percent (2%) if the prepayment is
made during the second year following the date hereof; and one percent (1%) if
the prepayment is made during the third year following the date hereof. The Note
may be prepaid without premium thereafter.
Whenever any Payment due under a Loan is not made within ten(10) days after
the date when due, Borrower agrees to pay on demand (as a fee to offset Lender's
Expenses), one and one-half percent (1-1/2%) per month of all overdue amounts
from the due date until paid, but not exceeding the lawful maximum, if any.
Notwithstanding the foregoing, if Borrower shall fail to pay within ten
(10) days after the due date any principal amount or interest or other amount
payable under this Note, Borrower shall pay to Lender, to defray the
administrative costs of handling such late payments, an amount equal to interest
on the amount unpaid, to the extent permitted under applicable law, at a rate
equal to the lesser of three percent (3%) higher than the then applicable
interest rate or the maximum permissible interest rate under applicable law (the
"Default Rate") (instead of the Interest Rate and in lieu of the 1-1/2% per
month referenced in the immediately preceding paragraph), from the due date
until such overdue principal amount, interest or other unpaid amount is paid in
full (both before and after judgment) whether or not any notice of default in
the payment thereof has been delivered under the Loan Agreement. In addition,
but without duplication, upon the occurrence and during the continuance of an
Event of Default, all outstanding amounts hereunder shall bear interest at the
Default Rate (instead of the Interest Rate) until such amounts are paid in full
or such Event of Default is waived in writing by Lender.
Notwithstanding any provision of this Note or the Loan Agreement to the
contrary, it is the intent of the Lender and the Borrower that the Lender or any
subsequent holder of this Note shall never be entitled to receive, collect,
reserve or apply, as interest, any amount in excess of the maximum rate of
interest permitted to be charged by applicable law, as amended or enacted, from
time to time. In the event Lender, or any subsequent holder of this Note, ever
receives, collects, reserves or applies, as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial prepayment of
principal and treated as such (except that no prepayment premium will be payable
thereon), or, if the principal indebtedness and all other amounts due are paid
in full, any remaining excess funds shall immediately be paid to the Borrower.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the highest lawful rate, the Borrower and the Lender shall,
to the maximum extent permitted under applicable law, (a) exclude voluntary
prepayments and the effects thereof as it may relate to any fees charged by the
Lender, and (b) amortize, prorate, allocate, and spread, in equal parts, the
total amount of interest throughout the entire term of the indebtedness;
provided that if the indebtedness is paid and performed in full prior to the end
of the full contemplated term hereof, and if the interest received for the
actual period of existence hereof exceeds the maximum
lawful rate, the Lender or any subsequent holder of the Note shall refund to the
Borrower the amount of such excess or credit the amount of such excess against
the principal portion of the indebtedness, as of the date it was received, and,
in such event, the Lender shall not be subject to any penalties provided by any
laws for contracting for, charging, reserving or receiving interest in excess of
the maximum lawful rate.
All amounts received for payment under this Note shall at the option of
Lender be applied first to any unpaid expenses due Lender under this Note or
under any other documents evidencing or securing the obligations of Borrower to
Lender, then to any unpaid late charges, then to any unpaid interest accrued at
the Default Rate, then to all other accrued but unpaid interest due under this
Note and finally to the reduction of outstanding principal due under this Note.
Upon the occurrence of any one or more of the Events of Default specified
in the Loan Agreement (each, an "Event of Default"), all amounts then remaining
unpaid on this Note shall be, or may be declared to be, immediately due and
payable as provided in the Loan Agreement, without further notice, at the option
of the Lender. Lender may waive any Event of Default before or after the same
has been declared and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a continuing one, but
one waiver shall not imply any additional or subsequent waiver. Time is of the
essence of this Note.
Demand, presentment, notice and protest are expressly waived, except for
notices to Borrower otherwise expressly required in the Loan Agreement. Borrower
and any and all endorsers, guarantors and other parties liable on this Note, and
any and all general partners of Borrower or any endorsers, guarantors or other
parties liable on this Note (collectively, the "Obligors") jointly and severally
waive presentment for payment, protest, notice of protest, notice of nonpayment
of this Note, demand and all legal diligence in enforcing collection, and hereby
expressly consent to (i) any and all delays, extensions, renewals or other
modifications of this Note or any waivers of any term hereof, (ii) any release
or discharge by Lender of any of the Obligors, (iii) any release, substitution
or exchange of any security for the payment hereof, (iv) any failure to act on
the part of Lender, and (vi) any indulgence shown by Lender from time to time
(without notice or further assent from any of the Obligors) and hereby agree
that no such action, failure to act or failure to exercise any right or remedy
by Lender shall in any way affect or impair the obligations of any of the
Obligors.
BORROWER HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS
LOCATED IN DAVIDSON OR XXXXXXXXXX COUNTY, TENNESSEE, INCLUDING WITHOUT
LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF TENNESSEE AND THE
CHANCERY COURT FOR DAVIDSON OR XXXXXXXXXX COUNTY, TENNESSEE, FOR ANY SUIT
BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS NOTE, ANY DOCUMENTS EXECUTED
OR DELIVERED IN CONNECTION HEREWITH, INCLUDING WITHOUT LIMITATION THE LOAN
AGREEMENT, OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER, AND AGREES NOT TO
CONTEST OR CHALLENGE VENUE IN ANY SUCH COURTS.
Borrower irrevocably consents to the service of process of any such courts
in any such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, return receipt requested, to Borrower at the
address opposite its signature below or to such other address as Borrower may
have furnished to Lender in writing, and agrees that such service shall become
effective fifty (50) days after such mailing. However, nothing herein shall
affect the right of Lender or Borrower to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Lender or Borrower in any other jurisdiction.
BORROWER HEREBY KNOWINGLY, WILLINGLY AND IRREVOCABLY WAIVES ITS RIGHTS TO
DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS NOTE, ANY
DOCUMENTS EXECUTED OR DELIVERED IN CONNECTION HEREWITH INCLUDING WITHOUT
LIMITATION THE LOAN AGREEMENT OR ANY RELATIONSHIP BETWEEN BORROWER AND LENDER.
BORROWER AGREES THAT LENDER MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF BORROWER'S EXPRESS WAIVER OF ITS
RIGHT TO TRIAL BY JURY.
IN ANY ACTION TO ENFORCE THIS NOTE, BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHTS UNDER THE LAWS OF ANY STATE TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY,
PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN ACTUAL DIRECT DAMAGES.
In the event this Note is placed in the hands of one or more attorneys for
collection or enforcement or protection of the holder's rights described herein
or in the Loan Agreement or the other Loan Documents, the Borrower agrees to pay
all reasonable attorneys' fees and all court and other out-of-pocket costs
incurred by the holder hereof (as of which shall be due on demand and shall bear
interest at the rate then payable hereunder from five (5) days after such demand
is made until paid).
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Tennessee. If any provision of this Note should
for any reason be invalid or unenforceable, the remaining provisions hereof
shall remain in full force and effect.
This Note may not be changed, extended or terminated except in writing. No
waiver of any term or provision hereof shall be valid unless in writing signed
by Lender.
Executed as of November 22, 1999.
PRIMUS TELECOMMUNICATIONS, INC.
By:_______________________________
Title:____________________________
SCHEDULE A
SCHEDULE OF LOANS AND PAYMENTS
OF PRINCIPAL AND INTEREST
Principal Amount of Unpaid Amount of Unpaid
Amount Principal Interest Interest
Date of Loan Paid Balance Paid Balance
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