CREDIT AGREEMENT
This Credit Agreement is entered into this 24th day of January, 2000 by
and between TELESOURCE CNMI, INC. ("Borrower") and THE HONGKONG AND SHANGHAI
BANKING CORPORATION, LIMITED, ("Bank") with reference to that commitment letter
entered into between Bank and Borrower dated 21 JANUARY 2000 (the "commitment
letter").
Borrower desires Bank to extend credit facilities to Borrower
referenced in the Commitment Letter, subject to the conditions set forth in this
Credit Agreement.
In consideration of the premises and the mutual promises hereinafter
contained, and in consideration of Bank granting the financial accommodations
described hereunder. Borrower hereby warrants, represents, and agrees as
follows: -
ARTICLE I
DEFINITIONS
Section 1.01. Certain Definitions. As used in this Agreement, the
following terms have the following respective meanings (such meanings to be
equally applicable to both the singular and plural of the terms defined unless
otherwise indicated):
"Affiliate" means any Person, directly or indirectly controlling,
controlled by, or under common control with, any other Person.
"Applicable Interest Rate" means the rate of interest set forth in
Section 2.01 (c) hereof.
"Banking Day" means days on which dealings in Dollar deposits arc
carried on in the London and New York Intrabank Markets and on which commercial
banks are open for business in Saipan. Commonwealth of the Northern Mariana
Islands.
"Base Lending Rate" means the base index rate of interest established
by the New York office of the Bank from time to time in good faith in its
discretion for general pricing of its short term loans to ordinary commercial
borrowers, which rate may be established and changed from time to time.
"Documentary Credit Instruments" means the letters of credit, drafts,
short term notes and any other standard instruments issued in connection with
the Line of Credit as provided for in Section 2.01 below.
`Encumbrance" means any mortgage, lien, security interest, pledge,
charge, encumbrance or other type of preferential arrangement.
"Event of Default" has the meaning attributed thereto in Section ~JM
hereof.
"Governmental Agency" means any agency, department, ministry,
authority, statutory corporation or other statutory body, political subdivision
or judicial entity of the Commonwealth of the Northern Mariana Islands now
existing or hereafter created, acid any corporation or other legal entity the
majority of whose capital or voting stock is now or hereafter owned or
controlled directly or indirectly by the Commonwealth of the Northern Mariana
Islands or any corporation or other legal entity otherwise controlled directly
or indirectly by the Commonwealth of the Northern Mariana Islands.
"Governmental Approval" means any consent, license, approval,
authorization, exemption, registration, filing, opinion or declaration from or
with, as the case may be, the Commonwealth of the Northern Mariana Islands or
any Governmental Agency.
"Guarantor" means any and all persons executing guaranties of the
obligations of Borrower required under Section 3.04 hereof. "Guaranty"
means the guaranty or guaranties of the obligations of Borrower
required under Section 3.04 hereof.
"Interest Period" means the period of months as specified in Section
2.01(c) hereof.
"Libor" means, in respect of any Interest Period an interest rate per
annum equal to the average rate of interest per annum offered in the London
interbank Market to Lender by reference banks in the London Interbank Market at
approximately I 1:00 am. (London time) on the date which is two (2) Banking Days
prior to the first day of such interest Period for a period of time
comparable.1o,thc.nammber of days in such Interest.. Period and in an amount
substantially equal the principal amount of the note scheduled to be outstanding
for such Interest Period.
"Loan Documents" means any and all instruments and documents, the
execution of which is contemplated herein including, without limitation, any an
all Security Agreements, Guaranty, the Note, any Documentary Credit Instruments,
and this Credit Agreement. All Loan Documents shall be in form and substance
satisfactory to the Bank.
"Loan" means collectively, the credit facilities extended hereunder.
"New York" means New York, New York, United States.
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"Note" means the promissory notes and any renewals, extensions or
replacement notes evidencing the advances provided for in this Agreement.
"Person" means an individual, corporation. partnership, joint venture,
trust, unincorporated organization or any judicial entity or a national state or
any agency or political subdivision thereof.
"Security Agreements" mean all of the documents and instruments
provided for herein as support and security for the Loan.
Section 1.02. Section Headlines. The section headings used herein
are for reference and for convenience only and shall not enter into the
interpretations hereof.
ARTICLE II
LOANS
Section 2.01. Line of Credit. Subject to the conditions and upon the
terms herein provided, Bank will make available to Borrower an amount not to
exceed a total amount of USD TWO MILLION AND NO/l00 DOLLARS ($USD2,000,000. 00)
on a line of credit basis (the "Line of Credit" or "Credit Line") to be extended
for the purposes as set forth in the Bank's commitment letter. The Line of
Credit facilities expire 31 JANUARY 2001.
(a) Type and Amount of Facilities. The Line of Credit may be
allocated among any of the following types of facilities as marked, up to the
aggregate maximum amount set forth above:
[ ] Documentary credits/bills receivable due at
sight up to an aggregate amount of Not Applicable.
[ ] Trust receipts/clean import loans of a duration
up to but not exceeding _______ (___) days up to an aggregate amount of $ Not
Applicable.
[ ] Promissory note advances of a duration up to.
but not exceeding _______ (____) days up to an aggregate amount of $ Not
Applicable.
[ ] Standby letters of credit up to an aggregate
amount of $ Not Applicable.
[X] Revolving line evidenced by an OPTIONAL TIME OR
DEMAND GRID NOTE DATED up to an aggregate amount of $
USD TWO MILLION DOLLARS ($USD 2,000,000.00)
------------------------ -----------------
Foreign exchange contracts up to an aggregate
amount of $ Not Applicable
and
[X] Overdraft line not to exceed an aggregate amount
as specified in the overdraft agreement entitled "Credit Agreement (Overdraft
Facility)."
Provided however, that the total amount outstanding at any one time
under the above Line of Credit shall in all events not exceed a total aggregate
principal amount for all credit facilities of USD TWO MILLION AND NO/100 DOLLARS
($ USD2,000,000. 00).
As to any overdraft agreement, letter of credit agreement, or similar
credit agreement executed by Borrower in connection with the Line of Credit.
such agreements are hereby made subject to all conditions, agreements and
covenants contained herein to the same extent as if they were fully set forth in
and made a part of this Agreement. In the event of a conflict between the terms
hereof and the terms of such agreements, the terms hereof shall control.
(b) Documentary Credit Instruments. All credit documents
under the Line of Credit (including, without limitation, all letters of credit
and the short term promissory notes) shall be on standard instruments in form
and content satisfactory to the Bank. For each and every letter of credit
requested by Borrower an application and agreement in form and content
satisfactory to Bank, containing such standard commercial provisions as Bank may
require (including, without limitation, the commitment by Borrower to pay all
drafts, commissions, charges and expenses and the recognition of Bank's security
interest and right to possession of the shipping documents and property shipped
in connection with the letter of credit) will be executed by Borrower. All such
standard documentary credit instruments, plus any short term promissory notes
issued pursuant to Section 2.01(a) are herein sometimes referred to as the
"Documentary Credit Instruments." Borrower will provide Bank with signature
cards and corporate resolutions designating what persons shall, from time to
time, be authorized to execute Documentary Credit Instruments.
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(c) Applicable Interest Rate. Interest on the various
Documentary Credit Instruments and facilities under the Line of Credit shall be
payable:
(i) at rate per annum equal to the following as marked:
[X] Bank's Base Lending Rate plus ONE AND ONE HALF OF
ONE (1.50%) percent per annum, adjusted from time to time as to all note
drawings;
[ ] Libor Plus Not Applicable ( %) adjusted at
the commencement of each Interest Period as to all drawings for Interest
Periods of________ months;
[ ] Libor Plus Not Applicable ( %), adjusted
_____________ as to all note drawings;
[3] The rate of interest paid by Bank on time
certificate(s) of deposit with a maturity of Not Applicable ( ),
months ___________, adjusted ____________as to all note drawings.
(ii) as provided in Bank's commitment letter as to all
other extensions of credit.
(d) Review Date. The Line of Credit shall mature as of the
close of business on 31 JANUARY 2002, and no Documentary Credit Instrument shall
be issued or accepted which expires or matures beyond the maturity date of the
Line of Credit, Bank shall have no obligation to extend any advances or
facilities under the Line of Credit from and after the maturity date. Provided,
however, the Bank may from time to time, upon request of Borrower and at the
sole option of Bank, renew and extend the credit facilities under the Line of
Credit for additional periods of such duration as the Bank may from time to time
fix. In all events, and not withstanding the above, the Bank retains the right
to terminate the Credit Line at any time upon notice to Borrower and cease to
permit any further drawings thereunder.
(e) Availability. The Line of Credit shall be available to
Borrower only so long as Borrower shall not he in default hereunder or under any
of its other obligations to Bank, the Bank has not exercised its right to demand
repayment, and only prior to the maturity date provided in Section 2,02(d) and
any extensions or renewals thereof.
(f) Renewal. The terms and conditions of this Agreement shall
continue to apply as to any renewal or extension hereof notwithstanding the
issuance of a new commitment letter by Bank. Upon any renewal and issuance of a,
new commitment letter accepted by Borrower, the terms of the commitment letter
as to she review date, applicable interest rate, types and amount of credit
facilities and security shall be incorporated herein as fully as if originally
contained herein and shall supersede any conflicting terms hereof Upon request
of Bank. Borrower shall execute an amendment so this Agreement confirming the
amendment of this Agreement by the new commitment letter.
Section 2.02. Repayment. The principal amount of the Line of Credit
and interest thereon shall be paid as specified in the promissory notes as to
note drawings and at sight for Documentary Credits other than TR/CIL which
mature on a Not Applicable ( ) day basis.
ARTICLE III
SECURITY/SUPPORT
Section 3.01. Security. Borrower shall deliver to the Bank the
following as marked as security for the credit facilities extended to Batik
hereunder.
[ ] Security Interest. Borrower shall execute and
deliver to Bank security agreements granting to Bank a first security interest
in Borrower's receivables, inventory, stock in trade, furniture and
fixtures and equipment. Borrower shall also execute and deliver to Bank for
filing one or more financing statements in form and content
satisfactory to Bank relative to the security interest granted under the
security agreement.
[ ] Real Estate Mortgages. Borrower will duly execute
and deliver or cause to he executed and delivered in form satisfactory to Bank
a mortgage or mortgages granting and conveying to Bank as mortgagee a lien on
all the right, title and interest of Borrower and or Guarantor in various
fee simple/leasehold properties as described in Bank's commitment letter to
Borrower, including also all buildings now and hereafter constructed on said
properties and any fixtures and equipment therein.
[ ] Assignment of Rental income, Borrower will duly
execute and deliver or cause to be executed and delivered in form satisfactory
to Bank an assignment of rental income from the mortgaged property.
[X] Other. ASSIGNMENT OF RECEIVABLES/PROMISSORY NOTES.
Borrower will duly execute and deliver or cause to be executed and delivered
in form and content satisfactory to Bank a pledge and assignment of
Borrower's accounts receivables and/or promissory notes from Common wealth
Utilities Corporation.
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The value of the security to be a minimum of 125% of the total facility amount.
Original promissory notes under pledge to be held under lien at the Bank.
Section 3.02. Additional Documents. Borrower and any mortgagor at any
time or times that it is requested to do so by Bank, will execute and deliver or
provide to Bank in recordable form, if appropriate, such other documents as Bank
may reasonable request to effectuate and protect its security for the Loan
provided for herein including without limitation estoppel certificates,
non-disturbance agreements and financing statements.
Section 3.03. Security Agreements. All -the Security Agreements shall
be in form and content satisfactory to Bank and shall constitute valid first
liens upon the respective real property, buildings, receivables, equipment,
furniture and fixtures to which the respective Security Agreements relate
(provided, however, that Bank may, in writing, consent to specific liens or
exceptions as to specific properties). All Security Agreements shall be duly and
properly recorded or filed as necessary to protect and preserve the priority of
the Bank's liens thereunder
Section 3.04. Guaranty. Borrower will-cause to be provided the
guarantee of TELESOURCE INTERNATIONAL, INC. guarantying to Bank repayment by
Borrower of the Loan, which Guaranty shall be in form and content satisfactory
to Bank.
ARTICLE IV
CONDITIONS OF LOAN/WARRANTIES
Section 4.01. Conditions of Loan. The obligation of the Bank to extend
the Loan, including all future advances, is subject to: (i) the condition
precedent that Borrower shall be in full compliance with all the terms and
conditions of this Agreement to be performed or observed by Borrower, and (ii)
the condition precedent that the Bank shall have received the following (each of
which shall be in form and substance satisfactory to the Bank):
(a) Insurance. Evidence of the insurance required by
the terms of this Agreement.
(b) Collateral. The Security Agreement required under
Article ill.
(c) Guaranty. The Guaranty required tinder Section 3.04.
(d) Borrowing Resolutions. Certified copies of resolutions of
the board of directors of Borrower and any corporate Guarantor approving each
Loan Document to which the Borrower or Guarantor is a party and of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to each such Loan Document.
(e) Opinion or Counsel. The opinion of the Borrower's counsel
required under Section 4.03 and certificates of good standing for Borrower
required under Section 4.04.
(I) Additional Documents. Such additional documents as.
may. be specifically required hereunder or as the Bank may from time to time
otherwise reasonably require.
(g) Evidence of Compliance. Such evidence as Bank may
require that Borrower is in compliance with all the terms and conditions of this
Agreement.
(h) Appraisals. Prior to disbursement of any funds, and from
time to time thereafter (but in no event less than every two years), such
appraisals as Bank may request in the Bank's reasonable discretion, and at
Borrower's cost, which appraisals shall be done by an appraiser who shall who
shall be satisfactory to Bank.
Section 4.02. Warranties. The Loan and the accommodations given
hereunder to Borrower by Bank are specifically made upon the following
representations and warranties by Borrower and each Guarantor executing this
Agreement, each of which shall constitute a continuing covenant hereunder:
(a) Compliance wish Loan Documents. The Borrower and
Guarantor have fully complied with all of the provisions of this Agreement, the
Notes, and any Documentary Credit Instruments and Security Agreements and
Borrower is entitled to disbursement, it being understood that the making of
such disbursement when Borrower is not so entitled will not constitute a waiver
of such compliance.
(b) Documents Authorized and Valid. The Notes, any
Documentary Credit Instruments, the Security Agreements, the Guaranty, this
Agreement, and all other documents contemplated to be executed and delivered
hereby have been fully authori2ed and executed and constitute valid obligations
of the obligors or persons executing such documents and are enforceable in
accordance with their respective terms.
(c) Security Agreements. The Security Agreements
provided herein create valid liens upon the secured property, free and clear of
all encumbrances except as may be expressly waived by Bank and except as
provided for herein; and has full, valid and complete
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title to all secured property, except as to those properties held in leasehold,
as to which properties has full and valid leasehold title.
(d) Corporate Resolutions. Bank has been furnished with
proper corporate resolutions of Borrower and any corporate Guarantor authorizing
all the transactions contemplated in this Agreement and With such documents,
reports, certificates, affidavits and other information (including, without
limitation, an opinion of Borrower's counsel) in form and substance satisfactory
to Bank, as the Bank may reasonably require to evidence compliance by Borrower
with all of the provisions of this Agreement, and such documents, reports,
certifications, and other information are true and correct.
(e) No Pending Litigation. There are no actions, suits or
proceedings pending or, to Borrower's or Guarantor's knowledge, threatened
against or affecting the Borrower or Guarantor or any secured property, at law
or in equity, or before or by any Governmental Agency, which, if adversely
determined, would impair the ability of Borrower and/or Guarantor to continue
its business in the ordinary course or to pay when due any amounts which may
become payable on the Notes. Borrower shall furnish to the Bank satisfactory
evidence of compliance with this subparagraph upon request by Bank.
(I) Licenses. Borrower possess all trade names, franchises,
licenses and certificates and other rights, free from burdensome restrictions
that are necessary in tiny material respect for the ownership, maintenance and
operation of its. properties and assets, and Borrower is not in violation
thereof.
Section 4.03. Opinion of Counsel. As a condition precedent to
obtaining the Loan, Borrower shall deliver to Bank an opinion of counsel of
Borrower and any corporate Guarantor (which counsel shall be satisfactory to
Bank) addressed to Bank stating that:
(i) The Borrower and said Guarantor are corporations duly
incorporated according the laws of the Commonwealth of the Northern Mariana
Islands and are in good standing therein, and are duly authorized, respectively,
to transact business in the Commonwealth of the Northern Mariana Islands;
(ii) The documents required hereunder to be executed by the
Borrower and/or Guarantor, including the Notes, and Documentary Credit
Instruments, the Security Agreements and this Agreement have been duly
authorized, executed and delivered by Borrower and/or Guarantor and constitute
valid, enforceable and binding obligations of the respective obligors in
accordance with their respective terms;
(iii) The execution and delivery of this Agreement and the
Notes, the Documentary Credit Instruments and the security Agreements and the
doing and performance of all acts herein and in said documents provided to be
done by the respective obligors do not and will not violate any provision of the
Articles of Incorporation or By-Laws of the Borrower or Guarantor and will not
result in the breach of, or constitute a default under, or require any consent
under, any indenture, bank loan or credit agreement, mortgage or other agreement
or instrument to which Borrower, or any corporation of which Borrower is a
subsidiary, or Guarantor is a party or by which Borrower, any such corporation
or their respective properties may be bound or affected, to the extent that
counsel is aware of the existence of any such agreement or instrument;
(iv) No license, authorization. consent or approval of any
governmental authority is required for the Borrower and/or Guarantor to perform
its agreements contained in said documents, Or if any such license,
authorization, consent or approval is required, the same has been obtained;
(v)That to she best knowledge, information and belief of
counsel all representations contained in this Agreement or made to Bank on the
part of Borrower or Guarantor are true and correct.
Section 4.04. Certificates of Good Standing. Upon request of Bank
from time to time, Borrower shall provide to Bank certificates of good standing
for itself and the corporate Guarantor.
ARTICLE V
FINANCIAL STATEMENTS AND RECORDS
Section 5.01. Maintenance of Records. Borrower and Guarantor shall
maintain complete and accurate books of account and business and accounting
records in accordance with generally accepted accounting principles as
recogniled by the American Institute of Certified Public Accountants. Borrower
shall provide to Bank from time to time upon requesL by Bank such records,
financial information and business information as Bank may reasonably require.
Section 5.02. Annual Statements. (If checked here [X ]) Borrower and
the corporate Guarantor shall furnish to Bank within ONE HUNDRED TWENTY (120)
days after the end of each annual fiscal period of Borrower or said Guarantor,
audited financial statements of the Borrower for such fiscal period, including a
balance sheet and a statement of net worth, all prepared in accordance with
generally accepted principles of accounting practices currently employed by
Borrower or Guarantor and all certified by an independent certified public
accountant acceptable to Bank.
Section 5.03. Quarterly Statements. (If checked here [ ]) Borrower and
Guarantor shall furnish to Bank within_Not Applicable (___) days after the end
of each quarterly fiscal period of Borrower and Guarantor unaudited financial
statements for such quarter, including a balance sheet and a statement of net
worth, all prepared in accordance with generally accepted principles of
accounting practices currently employed by Borrower and certified by a financial
officer of Borrower or Guarantor.
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Section 5.04. Individual Guarantors. (If checked here [ ]) each
individual Guarantor shall provide to Bank prior to closing of the Loan,
personal net worth statements in form and content satisfactory to Bank, which
statements shall be updated annually and submitted prior to any designated
review date of the credit facilities.
Section 5.05. OTHER. Not Applicable.
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ARTICLE VI
INSURANCE
Section 6.01. Insurance. Borrower will maintain or cause to be
maintained the insurance set forth below in a company or companies satisfactory
to Bank. The property damage policy or policies shall name the Bank as loss
payee and shall provide that there shall be no termination or reduction in
coverage without prior notice to the Bank.
Section 6.02. Insurance on improvements. (If checked here [ ])
Borrower will maintain or cause to be maintained fire, typhoon, earthquake and
extended coverage on all improvements constructed upon the properties which are
mortgaged to secure the Loan to Borrower hereunder. Such insurance policy or
policies shall be in an amount equal to replacement cost or appraised value
(whichever is less) or in such other amount as the parties may agree.
Section 6.03. General Insurance Requirements. Without limitation of
the foregoing, and without reducing the insurance required above, Borrower shall
in all events maintain commercially adequate insurance in such amounts and
covering such risks as is usually carried by prudent companies engaged in
similar businesses and owning similar properties as does Borrower. Such
insurance shall include, without limitation, the following as marked:
[__] workmen's compensation;
[__] public third-party liability;
[__] property damage insurance;
[__] Keyman life insurance on __________________
_________ assigned to Bank;
[__] business interruption; and
[--] -----------------------------------------------
Borrower shall annually review all insurance coverage to insure that
the dollar amount of its insurance coverage is maintained at a proper level,
taking into account, but without limitation, inflation, any increases in risks
and any changes in circumstances.
Section 6.04. Title Insurance. To the extent that a mortgage or
mortgages are to be given as security fur the Loan and as a condition of
disbursement of the Loan, Borrower will deliver to Bank ALTA mortgagee's
policies of title insurance (mortgagee's coverage) which shall be in form and
content satisfactory to Bank insuring that title to all of the real property
mortgaged to secure the Loan is valid and marketable and that the mortgage(s) is
a valid first lien on the mortgaged property, subject to no encumbrances other
than those specifically acceptable t~ the Bank in writing and the lien of
current real estate taxes, if applicable, not delinquent and any normal
easements shown of record.
ARTICLE VII
COVENANTS
Section 7.01. Affirmative Covenants. As a condition of the Loans and
so long as the Notes and all other obligations remain unpaid, the Borrower and
the Guarantor shall (unless Bank shall otherwise waive `n writing any other
requirements contained herein as marked):
[X ]Litigation. Promptly advise Bank in writing of all
litigation (including threatened litigation and any matter which may become the
subject of litigation) involving the Borrower or Guarantor or their business or
any of their property, and of all complaints and charges made by any
Governmental Agency which may have any substantial effect on Borrower or
Guarantor or their business or their property.
[X ] Compliance with Law. Comply promptly with all laws and
regulations of the federal government and the Government of the Commonwealth of
the Northern Mariana Islands and any Governmental Agency affecting Borrower or
Guarantor, their business and properties.
[X ] Payment of Taxes. Pay when due all taxes, assessments
and governmental charges levied or assessed upon it and levied or assessed upon
their operations and against any of their properties as they become due and
payable.
[X }] Corporate Existence. At all times do or cause to be
done all things necessary to maintain, preserve and renew their
6
corporate existence and their rights, patents and franchises.
[X ] Propertv. Insofar as it is not prevented by
causes beyond its control, at all times maintain, preserve, protect
and keep, or cause to be maintained, preserved protected and kept,
its property in good repair, working order and condition and from
time to time make or cause to be made all repairs, renewals,
replacements, additions, betterments and improvements to their
property as are needful and proper so that the business carried on in
connection therewith may be conducted properly and efficiently at all
times.
[ ] Maintenance of Working Capital and Net Worth.
Maintain at all times during the term of the Loans a positive working
capital (an excess of current assets over current liabilities) and a
positive net worth Not Applicable ,all as determined in accordance
with generally acceptable accounting standards consistently applied,
on all consolidated financial statements.
[ ] Subordination of Inter-Company Debts. Obtain
subordination as to any and all inter-company debts and payments of
any kind whereby such debts and payments shall be subordinated to
the loans provided for in this Agreement. The term "inter-company
debts or payments" shall mean any debts or payments owed by Borrower
to any corporation which Borrower or Guarantors own stock or to any
corporation which owns any interest in Borrower.
[ ] Other. Not Applicable
Section 7.02. Negative Covenants. During the term of
the Loan, the Borrower and Guarantor will not, without the written
consent of the Bank, do or attempt to do any of the following as
marked:
[X ] Liens. Create, incur or suffer to exist any
Encumbrance of any kind upon any of the property or assets of the
Borrower and Guarantor which are subject to the Security Agreements
provided for herein, except liens or encumbrances expressly
authorized by Bank in writing and liens for current real estate
taxes, if applicable.
[ ] Corporate Change. Merge or consolidate with
any other corporation or dissolve or enter into any dissolution
proceedings.
[ ] Dispose of Assets. Sell, encumber, lease,
transfer or otherwise dispose of any substantial portion of their
property or assets other than in the ordinary course of business. -
[ ] Loans. Make any advances or loans to any
person, firm or corporation other than in the ordinary course of
business, except loans to stockholders or affiliates or related
companies which (i) shall not in any event exceed in the aggregate
the amount of Not Applicable AND___ /100 DOLLARS ($__________)
annually, and (ii) shall not exceed in the aggregate a total
outstanding amount at any one time in excess of _____________ AND
/100 DOLLARS ($------------------).
I X] Adverse Action. Take any action that would
adversely affect their financial condition or impair their ability
to repay their obligations to the Bank under this Agreement or the
Notes or the Guarantee.
[ ]Other. Not Applicable
ARTICLE VII
DEFAULT
Section 8.01. Default. The Bank may. at its option, declare
immediately due and payable without presentation, protest or notice
of any kind, all of which are hereby waived, the balance remaining
unpaid on any Loan and/or Note or any other sums payable pursuant
hereto or pursuant to any other Loan Document and to cease to make
any further advances, upon the happening of any of the following
events of default:
(a) Monetary Default. Any default (by failure
to make payment on or before the due date) in the payment of
principal or interest on the Notes or any Documentary Credit
Instrument or in the payment of any other sums now or hereafter owned
to Bank by Borrower pursuant hereto or to any other Loan Agreement or
transaction: or
(b) Performance of Agreements. Any event specified
in any Note or Documentary Credit Instrument or in an Security
Agreement which would permit the Bank to cause the indebtedness
evidenced or secured thereby to become due prior to its stated
maturity or to foreclose the Security Agreement(s); or
(c) Loan Agreement Default. Any default in any
representations made or in the observance of any obligation
undertaken by Borrower or Guarantor pursuant to this Agreement or any
other loan agreement with Bank; or
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(d) Third Party Default. Any default by
Borrower or Guarantor in the payment of any sums due to any third
parties; or
(e) Representations/Warranties. Any representation
or warranty made or deemed to have been made by the Borrower or the
Guarantor under or in connection with this Agreement or any other
Loan Document (including without limitation any certificate,
notification or report furnished tinder this Agreement) shall prove
to have been incorrect, incomplete or misleading in any material
respect when made or when deemed to have been made; or
(I) Enforceability of Loan Documents. Any Loan
Document to which the Borrower or the Guarantor shall be a party
shall for any reason cease to be binding upon and enforceable against
the Borrower or the Guarantor, as the case may be, in accordance with
its terms or the binding effect or enforceability hereof shall be
contested by the Borrower or the Guarantor, as the case may be, or
the Borrower or the Guarantor shall deny that it has any further
liability or obligation under any such Loan Document; or
(g) Adverse Chance in Financial Condition. There
shall occur any substantial adverse change in the overall financial
condition of the Borrower or the Guarantor, or any Governmental
Agency or court shall take any action which adversely affects the
financial condition of the Borrower or the Guarantor or the ability
of either thereof to fulfill its obligations under any Loan
Document; or
(h) Validity of Loan Documents. Any of the
loan Documents shall be terminated or any provision of any of the
Loan Documents shall become illegal, invalid, void or unenforceable;
or
(i) Other Demand by the Bank. If for any
reason not otherwise specified in this Section 8.01 the Bank shall
demand repayment of the Loan.
Section 8.02. Indemnification Costs. The parties hereto
shall indemnify an hold Bank harmless from any liability, cost or
damage arising out of the parties breach hereof Bank may appear in
and defend any action or proceeding purporting to affect the rights
or duties of the parties hereunder or any security given for the
Loans, and Borrower shall pay all of Bank's costs and expenses.
ARTICLE IX
TAXES, INCREASED COSTS
Section 9.01. Taxes. The Borrower warrants that all payments
or reimbursements required to be made under this Agreement, the
Notes or any other document required hereunder are exempt from the
payment of any and all taxes, duties, fees, withholdings, deductions
or other charges of any nature whatsoever (collectively, `Taxes")
levied or imposed by any taxing authority, other than Taxes on the
overall net income of the Bank imposed by the jurisdictions. or any
political subdivision thereof in which the Bank's principal office
or actual lending office is located.
Section 9.02. Taxes for the Account of the Borrower. If any
Taxes (other than taxes on net income) are at any time on any
payments made on or in respect of the Loan (including, but not
limited to, payments made pursuant to this paragraph), the Borrower
shall pay such taxes and shall also pay to the Bank. at she time
interest is paid, all additional amounts which the Bank specifies as
necessary to preserve the after-tax yield the Bank would have
received if such taxes had not been imposed.
Section 9.03. Necessary Increases in Payments. tf any Taxes
are imposed on any payments made on or in respect of the Loan
(including, without limitation, payments made pursuant to this
Paragraph), and if the Borrower is prohibited by operation of law
from (i) making payments without deduction us provided in Section
9.02. or (ii) paying, causing to be paid, or reimbursing the Bank for
the cost of, any and all Taxes as provided in Section 9.02, then the
amounts payable so the Bank under this Agreement and the Note and
Documentary Credit Instruments shall be increased to such amounts
which, after provision for such Taxes, shall be necessary to yield
and remit to the Bank payments of the amounts that would have been
required to be paid hereunder if no such Taxes had been imposed.
Section 9.04. Evidence of Tax Payment. The Borrower will
provide the Bank with original tax receipts. notarized copies of tax
receipts. or other documentation as will prove payment of tax, for
all taxes paid by the Borrower pursuant to this Agreement. The
Borrower will deliver receipts to the Bank within 30 days after the
doe date for the related tax.
Section 9.05. Survival. The obligations of the Borrower
under this Article IX are independent of and additional to the other
obligations of the Borrower under this Agreement and the Note and
Documentary Credit Instruments, and shall survive the payment of such
obligations.
Section 9.06. Increased Costs. Without limiting she
foregoing provisions of this Article IX, if after the date of this
Agreement any law, rule or regulation, or any interpretation thereof
by any governmental authority charged with the interpretation or
administration thereof, or any request of directive by any
governmental authority (whether or not having the force of law)
either (i) subjects the Bank to any tax, duty or other charge of any
jurisdiction with respect to this Agreement or the Note or
Documentary Credit Instruments. or changes the basis of taxation of
payments to the Bank, of the principal of or interest on the Note or
in respect of any other amount due hereunder or under the Note or
Documentary Credit Instruments (except any change in the rate of tax
on the overall income of the Bank), or (ii) imposes, modifies or
deems applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, the Bank. and the result of any of the foregoing is so
increase the cost to the Bank of making or maintaining the Loan, or
to reduce the amount of any payment received or receivable by the
Bank, or to impose on the Bank an obligation to make any payment to
any fiscal, monetary, regulatory or
8
other authority calculated on or by reference so any amount received or
receivable by it under this Agreement or the Note, by an amount deemed by the
Bank so be material, then the Borrower shall pay so the Bank, promptly upon
demand, such additional amount or amounts as will compensate the Bank for such
increased cost or reduction in the amount received or receivable. The Bank shall
notify she Borrower of any event which will entitle the Bank to such additional
amount or amounts pursuant to this Section as promptly as practicable after
becoming aware of such event. A certificate of the Bank setting forth the basis
for the determination of such additional amount or amounts necessary to
compensate the Bank as provided herein shall be conclusive and binding, absent
manifest error.
ARTICLE X
MISCELLANEOUS
Section 10.01. Continuance of Agreement, Waiver. This Agreement shall
continue as long as any obligations of the Borrower contemplated herein or any
part thereof or renewal or extension thereof remain unpaid. No consent or waiver
under this Agreement shall be effective unless in writing. No waiver of any
breach or default shall be deemed a waiver of any breach or default thereafter
occurring.
Section 10.02. Fees and Costs. Borrower shall pay all fees and charges
in connection with this transaction, including any charges for title insurance,
appraisal fees, recording fees, preparation of documents, service fees,
attorneys' fees and any other fees which maybe incurred by Bank in connection
with the preparation of this Agreement and of any Loan Documents and which maybe
incurred by Bank in exercising any right, power or remedy provided for herein or
in any Loan Document.
Section 10.03. Survival of Covenants. All representations and
covenants of Borrower or Guarantor herein shall survive the making of all
disbursements. The Note, the Security Agreements, Documentary Credit
Instruments, and the Guaranty are hereby made subject so all conditions,
agreements and covenants contained herein to the same extent as if they were
fully set forth in and made a part of said Note, Security Agreements,
Documentary Credit Instruments, and Guaranty.
Section 10.04. Remedies Cumulative. All rights, powers and remedies
given to Bank herein or in any other Loan Document are cumulative and are not
alternative, and are in addition to all statutes or rules of law; and partial
exercise or forbearance or delay by Bank in exercising the same shall not
operate as any waiver thereof or of any other power or rights hereunder are
granted by law, and the same shall continue in full force and effect until
specifically waived by an instrument in writing executed by Bank.
Section 10.05. Third Parties. Nothing herein contained shall be deemed
to establish any trust fund for the benefit of any person or persons, nor to
impose any liability upon Bank to pay or be chargeable with any claims of third
persons against the Borrower.
Section 10.06. Counterparts. This Agreement may he executed in as many
counterparts as may be deemed necessary or convenient, and each counterpart
shall be deemed an original.
Section 10.07. Partial Invalidity,. In the event any one or more of
the provisions contained in this Agreement or in any other Loan Document shall
for any reason be held to be invalid, illegal or unenforceable in any respect in
any jurisdiction, such invalidity, unenforceability or illegality shall not
affect any other provision of this Agreement and/or of such other Loan Document,
and this Agreement and such Loan Document shall be construed as if such
provision had never been contained herein or therein and shall not affect the
validity or enforceability of such provision in any other jurisdiction.
Section 10.08. Extensions. Bank may at any time extend the time of
payment of the principal and/or interest under the Nose and any extension so
granted shall be deemed made in pursuance of this Agreement and not in
modification hereof.
Section 10.09. Governing Law. This Agreement and the Note shall be
governed by and construed and interpreted in accordance with the law of the
commonwealth of the Northern Mariana Islands.
Section 10.10. Notices, Etc. Any notices and other communications
hereunder shall be in writing and mailed or delivered, if to the Borrower:
TELESOURCE CNMI, INC.
BOX 100001 PPP 402 PMB
SAIPAN, MP 96950
Attn.: X. X. XXXXXXXX
----------------------
if to any corporate Guarantors:
TELESOURCE INTERNATIONAL, INC.
000 XXXXXXXX XXXXXXXXX
XXXXXXX, XX 00000
Attn.: XXXX XXXXXXXXXX
9
if to any of the individual Guarantors:
**Not Applicable**
and if to Bank:: THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED
HSBC XXX 00000 XXX
XXXXXX, XXX 00000
Attn.: Branch Manager
or as to each party, at such other address be designated by such party in a
written notice to the other party. All such notices and communications to the
Borrower shall be effective, when deposited in the mail addressed to the
aforesaid, or upon personal delivery of such notices to the respective offices
as above-described.
Section 10.11. Successors and Assi~n5. This Agreement shall be binding
upon and inure to the benefit of each parry hereto and its respective successors
and assigns, except the Borrower shall not have the right to assign its rights
hereunder or any interest herein.
Section 10.12. Effectiveness. This Agreement shall be effective upon
execution and delivery thereof by the Borrower and the Bank.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and date first above written.
BORROWER: BANK:
TELESOURCE CNMII INC. THE HONGKONG SHANGHAI BANKING
CORPORATION LIMITED
/s/ Xxxxxxxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxx
By: Xxxxxxxxx Xxxxxxxx By: Xxxxxx X. Xxxxx
Its: President Its: Duly Authorized Representative
GUARANTOR ACKNOWLEDGEMENT:
TELESOURCE INTERNATIONAL, INC.
/s/ Xxxxxxx Xxxxxxxxxx
By: Xxxxxxx Xxxxxxxxxx
Its: Secretary
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