Contract
Exhibit
4.1
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
THIS
NOTE IS REGISTERED WITH THE AGENT. TRANSFER OF ALL OR ANY PORTION OF
THIS NOTE IS PERMITTED SUBJECT TO THE PROVISIONS SET FORTH HEREIN WHICH REQUIRE,
AMONG OTHER THINGS, THAT NO TRANSFER IS EFFECTIVE UNTIL THE TRANSFEREE IS
REFLECTED AS SUCH ON THE REGISTRY MAINTAINED WITH THE AGENT
FOR VALUE
RECEIVED, the companies listed on Exhibit A attached
hereto (each a “Company”
and collectively, the “Companies”), hereby, jointly
and severally, promises to pay to the holders identified on Exhibit B attached
hereto (each, a Holder”
and collectively the “Holders”) or their registered
assigns or successors in interest, such Holder’s Term Loan Commitment Percentage
(as hereafter defined) of the sum of One Million Two Hundred and Fifty Thousand
Dollars ($1,250,000), together with any accrued and unpaid interest hereon
together with all other amounts payable hereunder on February 28, 2013 or
earlier upon acceleration following the occurrence of an Event of Default (as
hereafter defined) (the “Maturity
Date”). For purposes hereof, the term “Term Loan Commitment
Percentage” means, as to any Holder, the percentage set forth such Holder’s name
on Exhibit B
attached hereto.
Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in that certain Master Security Agreement dated as of the date hereof (as
amended, restated, modified and/or supplemented from time to time, the “Security Agreement”) among the
applicable Company, Mr. Prepaid, Inc., each Holder and LV Administrative
Services, Inc., as administrative and collateral agent for the Holders (the
“Agent” together with
the Holders, collectively, the “Creditor
Parties”).
The
following terms shall apply to this Secured Term Note (this “Note”):
ARTICLE
I
CONTRACT
RATE AND AMORTIZATION
1.1 Contract
Rate. Subject to Sections 2.2 and 3.9, interest payable on the
outstanding principal amount of this Note (the “Principal Amount”) shall
accrue at a rate per annum equal to eight percent (8%) (the “Contract
Rate”). Interest shall be (i) calculated on the basis of a 360
day year, and (ii) payable monthly, in arrears, commencing on March 1, 2010, and
on the first business day of each consecutive calendar month thereafter until
paid in full, whether by acceleration following demand or
otherwise.
1.2 Principal
Payments. The entire outstanding Principal Amount together
with any accrued and unpaid interest thereon plus any and all other unpaid
amounts which are then owing to each Holder under this Note, and/or the Master
Security Agreement shall be due and payable on the Maturity Date.
1.3 Optional Redemption in
Cash. The Companies may prepay this Note, in whole or in part,
at any time without premium or penalty.
ARTICLE
II
EVENTS
OF DEFAULT
2.1 Events of
Default. The occurrence of any Event of Default under the
Master Security Agreement shall constitute an event of default (“Event of Default”)
hereunder.
2.2 Default
Interest. Following the occurrence and during the continuance
of an Event of Default, each Company shall, jointly and severally, pay interest
on the outstanding principal balance of this Note in an amount equal to twenty
four percent (24%) per annum beginning on the first date of the occurrence of
such Event of Default, and all outstanding obligations under this Note and the
Master Security Agreement, including unpaid interest, shall continue to accrue
interest at such interest rate from the date of such Event of Default until the
date such Event of Default is cured or waived.
ARTICLE
III
MISCELLANEOUS
3.1 Cumulative
Remedies. The remedies under this Note shall be
cumulative.
3.2 Failure or Indulgence Not
Waiver. No failure or delay on the part of Agent and/or any
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
3.3 Notices. Any
notice herein required or permitted to be given shall be given in writing in
accordance with the terms of the Master Security Agreement.
3.4 Amendment
Provision. The term “Note” and all references
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as such successor instrument may be
amended or supplemented.
3.5 Assignability. This
Note shall be binding upon each Company and its successors and assigns, and
shall inure to the benefit of each Holder and its successors and assigns, and
may be assigned by any Holder in accordance with the requirements of the
Security Agreement. No Company may assign any of its obligations
under this Note without the prior written consent of the Holders, any such
purported assignment without such consent being null and void.
2
3.6 Cost of
Collection. In case of the occurrence of an Event of Default
under this Note, the Companies shall, jointly and severally, pay the Creditor
Parties’ reasonable costs of collection, including reasonable attorneys’
fees.
3.7 Governing Law, Jurisdiction
and Waiver of Jury Trial.
(a) THIS NOTE
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.
(b) EACH
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE AND/OR FEDERAL COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE
HAND, AND ANY HOLDER AND/OR ANY OTHER CREDITOR PARTY, ON THE OTHER HAND,
PERTAINING TO THIS NOTE OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR ANY OF THE ANCILLARY
AGREEMENTS; PROVIDED, THAT EACH
COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT
NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY HOLDER AND/OR
ANY OTHER CREDITOR PARTY FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF ANY HOLDER AND/OR ANY OTHER CREDITOR PARTY. EACH
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON
CONVENIENS. EACH COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AGENT AT THE ADDRESS SET
FORTH IN THE SECURITY AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF THE PARENT’S ACTUAL RECEIPT THEREOF OR THREE (3)
DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(c) EACH
COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND/OR OF ARBITRATION, EACH COMPANY HERETO
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY
HOLDER AND/OR ANY OTHER CREDITOR PARTY, ON THE ONE HAND, AND ANY COMPANY, ON THE
OTHER HAND, ON THE ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
3
3.8 Severability. In
the event that any provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of this
Note.
3.9 Maximum
Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the
maximum rate permitted by such law, any payments in excess of such maximum rate
shall be credited against amounts owed by the Companies to the Holders and thus
refunded to the Companies.
3.10 Security
Interest. The Agent, for the ratable benefit of the Creditor
Parties, has been granted a security interest in certain assets of the Companies
and Mr. Prepaid, Inc. as more fully described in the Master Security
Agreement.
3.11 Construction;
Counterparts. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other. This Note may be executed by the parties hereto in
one or more counterparts, each of which shall be deemed an original and all of
which when taken together shall constitute one and the same
instrument. Any signature delivered by a party by facsimile or
electronic transmission shall be deemed to be an original signature
hereto.
3.12 Registered
Obligation. This Note shall be registered (and such registration shall
thereafter be maintained) as hereafter set forth. Notwithstanding any
document, instrument or agreement relating to this Note to the contrary,
transfer of this Note (or the right to any payments of principal or stated
interest thereunder) may only be effected by (i) surrender of this Note and
either the reissuance by the Companies of this Note to the new holder or the
issuance by the Companies of a new instrument to the new holder or (ii)
registration of such holder as an assignee as hereafter set
forth. The Agent shall maintain, or cause to be maintained, for this
purpose only as agent for each Company, (i) a copy of each agreement under which
any Holder may assign any or all of the obligations and liabilities owing to it
hereunder to any person or entity (an “Assignment Agreement”) delivered to it
and (ii) a book entry system, within the meaning of U.S. Treasury Regulation
Sections 5f.103-1(c) and 1.871-14(c) (the “Register”), in which
it will register the name and address of each Holder and the name and address of
each assignee of each Holder under this Note, and the principal amount of, and
stated interest on, loan evidenced hereby to each such Lender and assignee
pursuant to the terms hereof and each Assignment Agreement. The
right, title and interest of the Holders and their assignees in and to such
loans shall be transferable only upon notation of such transfer in the Register,
and no assignment thereof shall be effective until recorded
therein. The Companies and each Creditor Party shall treat each
person and/or entity whose name is recorded in the Register as a Holder pursuant
to the terms hereof as a Holder and owner of an interest in the obligations and
liabilities hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary or any notation of ownership or other writing or any promissory
note. The Register shall be available for inspection by any Company
or Holder, at any reasonable time and from time to time, upon reasonable prior
notice
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3.13 Amendment and
Restatement. This Note constitutes one of two promissory notes
which together amend, restate and consolidate in their entirety, and is given in
substitution for and not in satisfaction of, the following promissory
notes: (a) the Secured Term A Note in the original principal amount
of $1,800,000 effective as of March 31, 2008 made by Rapid Link, Incorporated,
Telenational Communications, Inc. and One Ring Networks, Inc. (collectively, the
“Original Borrower” in favor of Valens Offshore SPV II, Corp. (“Valens
Offshore”), (b) the Secured Term B Note in the original principal amount of
$1,500,000 effective as of July 11, 2008 made by the Original Borrowers in favor
of Valens U.S. SPV I, LLC (“Valens U.S.”), (c) the Amended and Restated Deferred
Purchase Price Note in the original principal amount of $2,290,450.56 effective
as of July 11, 2008 made by the Original Borrowers in favor of Laurus Master
Fund, Ltd. (In Liquidation) (“Laurus”) and (d) the Amended and Restated Deferred
Purchase Price Note in the original principal amount of $292,709.40 effective as
of July 11, 2008 made by the Original Borrowers in favor of Valens
U.S.
[Balance
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5
IN WITNESS WHEREOF, each
Company has caused this Secured Term Note to be signed in its name effective as
of this 24th day
of February, 2010.
| RAPID LINK, INCORPORATED | |
| By: | |
| Name: | |
| Title: |
WITNESS:
EXHIBIT A
COMPANIES
Rapid
Link, Incorporated
|
|
EXHIBIT
B
HOLDERS AND TERM LOAN
COMMITMENT PERCENTAGES
|
Holder’s Name
|
Term Loan Commitment Amount / Term Loan
Percentage
|
|
Valens
Offshore SPV II, Corp.
|
$463,042
/ 33.85%
|
|
Valens
U.S. SPV I, LLC
|
$423,066
/ 29.11%
|
|
Laurus
Master Fund, Ltd. (In Liquidation)
|
$363,892
/ 37.04%
|
|
Total
|
$1,250,000
/ 100%
|
