Exhibit 10.9
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Lender: Loan and Security Agreement
NTFC CAPITAL CORPORATION, a subsidiary of GE CAPITAL CORPORATION
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BORROWER INFORMATION
BORROWER: AMERICAN TELESOURCE INTERNATIONAL, INC. ("ATII"), and each Subsidiary
of ATII on a joint and several basis
Person to contact/Title: Doug Saathoff, CFO
Address: 12500 Network Blvd., Suite 407
City: San Antonio
County:
State: Texas
Zip Code: 78249
Telephone Number: 210-558-6090
Facsimile Number: 210-558-6095
_X_ Corporation
___ Partnership
___ Cooperative
AGREEMENT TERMS AND CONDITIONS SET FORTH BELOW AND ON FOLLOWING PAGES
Fees:
Borrowers shall pay to Lender an Origination Fee equal to one percent (1%) of
the Commitment Amount (20,000) on the closing date. Borrower also shall pay at
closing the expenses of Lender's counsel incurred in the preparation,
negotiation and finalization of this Agreement and all attendant documentation
and on the date of each subsequent Advance such expenses incurred since the
closing date.
Interest Rate:
A fixed rate per annum of interest equal to the five year bank swap rate as
reported on the First Borrowing Date on Telerate, plus 495 basis points. If
Telerate should cease publication or cease publishing such rate, Lender shall
designate a comparable reference rate for use in determining the Interest Rate
hereunder.
Agreement Date: June______, 1999
Financing Termination Date: ___________, 1999
Commitment Amount (US) $2,000,000
No. Of Payments: 20 payments after the expiration of the Capitalized Interest
Period
Supplier: NORTEL and any other vendor approved by Lender
Initial Payment Date: The first day of the first calendar quarter following the
Conversion Date
Interest Payment Date: The Initial Payment Date and the first day of each
subsequent calendar quarter.
Payment Date: The Initial Payment Date and first day of each subsequent calendar
quarter.
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Payment Schedule:
All amounts borrowed and outstanding hereunder shall be amortized and repaid
quarterly, in arrears, in 20 equal payments of principal and interest sufficient
to pay the Note in full, commencing on the Initial Payment Date, and on each
Payment Date thereafter through and including the Maturity Date, provided,
however, in any event 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 hereunder.
Capitalized Interest Period:
The period of six full calendar months following the First Borrowing Date.
During the Capitalized Interest Period, interest shall accrue on all principal
amounts outstanding under the Note at the Interest Rate, and up to an aggregate
of the maximum amount of Capitalized Interest shall be capitalized, monthly in
arrears, and added to the principal amount of the Note by Lender, on behalf of
Borrower, on the first day of each calendar month, thereby increasing the
principal amount of the Note. The Lender may also evidence such increase by
noting the date and amount of each such addition on a schedule to the Note.
Interest accruing during the Capitalized Interest hereto shall be paid by
Borrower monthly in arrears, on the first day of each calendar month, commencing
on the first day of the month after the month in which such limit is exceeded.
Interest Only Period: N/A
Collateral Location Schedule: San Antonio, Texas
First Borrowing Date: The date of the first borrowing hereunder by a Borrower
Maximum Amount of Capitalized Interest: N/A
Conversion Date: The last day of the capitalized Interest Period
Maturity Date: The twentieth Payment Date
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1. COMMITMENT TO LEND: (a) Subject to the terms and conditions provided
in this Loan and Security Agreement ("Agreement") and so long as no Event of
Default (as defined in Section 14 hereof) or event or condition which with
notice or passage of time or both would constitute an Event of Default has
occurred and is continuing hereunder, Lender agrees to lend to AMERICAN
TELESOURCE INTERNATIONAL, INC., a Delaware corporation ("ATII"), to the Domestic
and/or Foreign Subsidiaries of ATII which are signatories to this Agreement, and
to such additional Domestic and/or Foreign Subsidiaries of ATII which hereafter
may become a party hereto pursuant to Section 1(b) hereof (ATII, Domestic and/or
Foreign Subsidiaries of ATII which are signatories to this Agreement, and such
additional Domestic and/or Foreign Subsidiaries of ATII which may hereafter
become a party hereto pursuant to Section 1(b) of this Agreement are
individually referred to as a "Borrower" and collectively as the "Borrowers"),
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until the Termination Date set forth above, an amount in the aggregate not to
exceed the Commitment Amount set forth above, which sum shall be used solely for
the purchase by a Borrower of telecommunications equipment and associated
software sublicenses from the Supplier pursuant to one or more Purchase
Agreements (individually, a "Purchase Agreement" and collectively, the
"Purchase Agreements") made by and between the Supplier and such Borrower for
installation, if such Borrower is a Domestic Borrower, in the United States,
Mexico and other Latin American jurisdictions, and if such Borrower is a Foreign
Borrower, in Mexico and other Latin American jurisdictions. "Subsidiary" means,
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as to any person, a corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership, limited
liability company, or other entity, are at the time owned, or the management of
which is otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by such person. "Domestic Subsidiary" means a
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Subsidiary incorporated under the laws of the United States, one of the states
of the United States, the District of Columbia, or any territory, possession or
protectorate of the United States. "Foreign Subsidiary" means a Subsidiary
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incorporated under the laws of any jurisdiction other than the laws of the
United States, one of the states of the United States, the District of Columbia,
or any territory, possession or protectorate of the United States. "Domestic
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Borrower" means ATII or a Borrower which is a Domestic Subsidiary of ATII, and
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"Foreign Borrower" means a Borrower which is a Foreign Subsidiary of ATII.
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Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
ATII.
(b) Lender and each Borrower acknowledge and agree that subject to the
terms and conditions of this Agreement, ATII shall cause Domestic and/or Foreign
Subsidiaries of ATII formed or acquired hereafter to become a Borrower hereunder
(without the consent of any other Borrower) by executing a form of the annex to
this Agreement set forth as Exhibit A and such additional Domestic Subsidiaries
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may thereafter borrow amounts hereunder to finance the acquisition of equipment
which is, or is to be placed, in the United States, Mexico and other Latin
American jurisdictions, and such additional Foreign Subsidiaries of ATII may
thereafter borrow amounts hereunder to finance the acquisition of equipment
which is, or is to be placed, in Mexico and other Latin American jurisdictions.
ATII and the other Borrowers agree that, prior to any additional Subsidiary of
ATII becoming a Borrower hereunder, such Subsidiary and ATII shall execute and
deliver to Lender a form of the annex to this Agreement set forth as Exhibit A,
and if required by Lender cause the delivery of an opinion of legal counsel to
ATII and such additional Subsidiary dated the date of the execution of the form
of the annex to this Agreement set forth as Exhibit A in form and substance
satisfactory to Lender and such other documents as the Lender may request,
including but not limited to a certificate of a responsible officer of such
additional Subsidiary as to the authority of such additional Subsidiary to
execute, deliver and perform this Agreement and the Notes and as to the
incumbency and signature of the officer or officers signing Borrowing
Certificates and Notes.
(c) The obligations of each Domestic Borrower hereunder and under each
Note evidencing amounts from time to time advanced hereunder to a Borrower shall
be joint and several obligations of ATII and all other Domestic Borrowers. The
obligations of each Foreign Borrower hereunder and under each Note evidencing
amounts from time to time advanced hereunder to a Foreign Borrower shall be
joint and several obligations of ATII and all other Borrowers.
2. THE NOTES AND PAYMENT TERMS: All advances of funds to a Foreign
Borrower (a "Foreign Borrower Advance") shall be evidenced by a single
promissory note in the form of Exhibit B-1 executed by the Borrowers (the
"Foreign Borrowing Note"), which shall be in a form and substance satisfactory
to the Lender and
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represent the joint and several obligations of the Borrowers to pay the
aggregate unpaid advances on the Foreign Borrowing Note (the "Foreign Principal
Amount"), plus any accrued interest thereon, and all extensions, renewals or
modifications thereof including, without limitation, any expenses of Lender or
other amounts due to Lender under the Foreign Borrowing Note or this Agreement.
All advances of funds to a Domestic Borrower (a "Domestic Borrower Advance," and
together with a Foreign Borrower Advance, an "Advance") shall be evidenced by a
single promissory note in the form of Exhibit B-2 executed by the Domestic
Borrowers (the "Domestic Borrowing Note," and together with the Foreign
Borrowing Note, the "Note(s)"), which shall be in a form and substance
satisfactory to the Lender and represent the joint and several obligations of
the Domestic Borrowers to pay the aggregate unpaid advances on the Domestic
Borrowing Note (the "Domestic Principal Amount," and together with the Foreign
Principal Amount, the "Principal Amount"), plus any accrued interest thereon,
and all extensions, renewals or modifications thereof including, without
limitation, any expenses of Lender or other amounts due to Lender under the
Domestic Borrowing Note or this Agreement. Each Note shall be dated the Closing
Date and shall mature on the 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 above (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
date of payment excluded. Each Borrower and Lender understand that the Payment
Schedule is intended to amortize fully the principal amount of the Notes 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 Notes and all accrued but unpaid interest and all other
outstanding amounts due thereunder shall be paid on the Maturity Date. If a
Payment Date is not a business day, the Payment Date shall be on the first
business day following the nonbusiness 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 schedule annexed to and constituting a part of the Notes, which
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed.
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.
Each 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 has paid or 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 Borrowers to Lender under this
Agreement, any Note or the other Loan Documents and
(A) 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;
(B) 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;
(C) that it shall hold Lender harmless from and against any
liabilities with respect to any Taxes (whether or not properly or legally
asserted); and
(D) 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
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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.
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,
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however, that in no event shall the amount paid by Lender to Borrower pursuant
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to this sentence exceed the amount of Taxes originally paid by Borrower; and
further provided that Lender shall not have any obligation under this Agreement
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to claim or otherwise seek to obtain any such refund.
Notwithstanding the foregoing, if the Borrowers shall fail to pay within
five (5) days after when due any part of the Principal Amount, interest or any
other amount payable hereunder or under a Note, such amount shall bear interest
at a rate per annum that is three percent (3%) higher than the Interest Rate
from the due date until such overdue Principal Amount, interest, or other
amounts are paid in full (before and after judgment) whether or not any notice
of default in the payment thereof has been delivered.
Notwithstanding any provision of this Agreement, it is the intent of the
Lender and the Borrowers that the Lender, or any subsequent holder of a Note,
shall never be entitled to receive, collect, reserve or apply, as interest, any
amount in excess of the maximum lawful rate of interest permitted to be charged
by applicable law, as amended or enacted from time to time. In the event the
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, or, if
the Principal Amount and all other amounts due are paid in full, any remaining
excess funds shall immediately be paid to the Borrowers. In determining whether
or not the interest paid or payable, under any specific contingency, exceeds the
maximum lawful rate of interest, the Borrowers 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 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, the Lender or any subsequent holder
of a Note shall refund to the Borrowers 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.
3. PROCEDURES FOR BORROWING: ATII (and if a Borrower other than ATII is
acquiring the equipment to be financed thereby, such other Borrower) shall
execute and deliver to Lender, at least five (5) business days prior to the date
of the requested Advance, a Borrowing Certificate in the form of Exhibit C-1 (a
"Domestic Advance Borrowing Certificate") to request Advances to finance the
acquisition by ATII or such other Domestic Borrower of equipment which is, or is
to be placed, in jurisdictions within the United States, and at least thirty
(30) business days prior to the date of the requested Advance, a Borrowing
Certificate in the form of Exhibit C-2 (a "Foreign Advance Borrowing
Certificate" and together with a Domestic Advance Borrowing Certificate, a
"Borrowing Certificate") to request Advances to finance the acquisition by ATII
or such other Borrower of equipment which is, or is to be placed, in Mexico or
another Latin American jurisdiction. 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 such Borrower and
related invoice from the Supplier which is to be paid by Lender with the
proceeds of the loan. 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.
4. PLACE OF PAYMENT: The Principal Amount, interest and fees, if any,
shall be payable at 501 Corporate Centre Drive, Suite 600, Franklin, Tennessee
37067, or such other place as may be designated, from time to time in writing,
by Lender or any subsequent holder.
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5. PREPAYMENT: The Borrowers may, at their option but subject to the
satisfaction of the requirements of the next sentence, at any time and from time
to time, prepay any Advance, 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 of such Advance 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 of such Advance; two percent (2%) if the prepayment is made during the
second year following the date of such Advance; and one percent (1%) if the
prepayment is made during the third year following the date of such Advance.
6. SECURITY INTEREST: OBLIGATIONS SECURED: Each Domestic Borrower (as
debtor) hereby assigns as collateral and grants to Lender (as secured party), as
security for all of the Indebtedness, and each Foreign Borrower (as debtor)
hereby assigns as collateral and grants to Lender (as secured party), as
security for the Foreign Borrower Indebtedness, a continuing security interest
in and to, all of such Borrower's right, title and interest in and to the
property and the property rights described in Section 7 hereof, whether now
owned or hereafter acquired or arising, wherever located, together with all
substitutions therefor and all accessions, replacements and renewals thereof,
and in all proceeds and products thereof (collectively, the "Collateral").
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"Indebtedness" means all Domestic Borrower Indebtedness and Foreign Borrower
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Indebtedness. "Foreign Borrower Indebtedness" means all indebtedness,
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liabilities and obligations to Lender of all Foreign Borrowers, of any class or
nature, whether arising under or in connection with this Agreement, 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, expenses,
lease obligations, indemnities or otherwise, including, without limitation,
future advances of any sort, including 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 owed by the Foreign Borrowers
on the Notes, and any expenses of collection or protection of Lender's rights,
including reasonable attorneys' fees. "Domestic Borrower Indebtedness" means
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all indebtedness, liabilities and obligations to Lender of ATII or any other
Domestic Borrower, of any class or nature, whether arising under or in
connection with this Agreement and/or 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 (the "Loan Documents") or otherwise,
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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, 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 owed by the Domestic Borrowers on the Notes, and any expenses of
collection or protection of Lender's rights, including reasonable attorneys'
fees.
7. DESCRIPTION OF COLLATERAL: The Collateral includes, and each Borrower
hereby grants Lender a security interest in, all such Borrower's presently
existing or hereafter acquired right, title and interest in, and to (i) the
equipment, fixtures, and other property identified in a Borrowing Certificate
pursuant to which Lender advances funds hereunder (Borrowing Certificates are
collectively referred to as the "Collateral Schedule") or otherwise acquired or
financed directly or indirectly with loan proceeds from Lender, including,
without limitation, hardware and software, components, wiring, cabling and
associated electronics and any and all replacements, additions, substitutions to
or of any of the foregoing, together with all attachments, components, parts,
accessions, improvements, upgrades, all accessories installed thereon or affixed
thereto and all of the foregoing forming an integral part thereof; and (ii) to
the extent not otherwise included, all proceeds of the foregoing, including
without limitation, (A) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to a Borrower from time to time with respect to any
of the Collateral; (B) any and all payments (in any form whatsoever) made or due
and payable to a Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority); (C) any and all other amounts
from time to time paid or payable under or in connection with any of the
Collateral; and (D) any and all cash proceeds and non-cash proceeds in the form
of equipment, inventory, accounts, general intangibles, chattel paper or other
proceeds (collectively, "Proceeds"). The Collateral Schedule is incorporated in
and made a part of this Agreement.
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8. REPRESENTATIONS AND WARRANTIES: In order to induce the Lender to
enter into this Agreement and to make the loans contemplated herein, each
Borrower represents and warrants that on the date of each Note's execution and
until payment in full of the indebtedness:
(a) Each Borrower (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was formed; (ii) has the
power and legal authority to own or lease and operate its property and to carry
on its business as now being conducted; (iii) is properly licensed, in good
standing and duly qualified to do business in every jurisdiction where
necessary; (iv) has the power and authority and the legal right to make, deliver
and perform this Agreement and each Note to which it is a party and to borrow
hereunder and has received all necessary authorization from its directors or
partners, as applicable, to execute, deliver and perform this Agreement, the
Notes to which it is a party and any related documents to be delivered pursuant
to this Agreement, and (v) the Borrowers other than ATII are, and will remain,
Subsidiaries of ATII for so long as such Subsidiary remains obligated to Lender
hereunder.
(b) The person executing this Agreement and each Note on behalf of each
Borrower has been given the authority to bind each Borrower, and this Agreement
and the Notes to which it is a party constitute legally binding and enforceable
obligations of each Borrower.
(c) The execution, delivery and performance of this Agreement and any Note
will not violate any Borrower's charter, bylaws, partnership agreement or other
organizational papers, or any law, agreement or undertaking to which any
Borrower is a party, or by which any Borrower is bound or affected.
(d) All required consents relative to the execution, delivery, and
performance of this Agreement and the Notes have been obtained, including any
required of the Federal Communications Commission, the Commerce Commission for
any state or other jurisdiction in which any Borrower is operating ("PUC") or
any other governmental authority.
(e) All information, reports and other papers and data with respect to
each Borrower (other than projections) furnished to the Lender by a Borrower at
any time prior to the date hereof, were, to the best knowledge of each Borrower
at the time the same were furnished, true and correct in all material respects,
or have been subsequently supplemented by other information, reports or other
papers or data, to the extent necessary to give the Lender a true and accurate
knowledge of the subject matter thereof in all material respects; and all
projections with respect to each Borrower furnished by a Borrower, as
supplemented, were prepared or presented in good faith by such Borrower and had
a reasonable basis. No fact is known to any Borrower which materially and
adversely affects the business, operations, assets (taken as a whole), or
financial condition of ATII or any Borrower which has not been set forth in the
financial statements provided to Lender in connection with this Agreement or in
such information, reports, papers and data, or otherwise disclosed in writing to
the Lender prior to the first borrowing date relative to the initial loan made
hereunder. All financial statements have been prepared in accordance with GAAP
applied consistently throughout the period involved.
(f) There have been no material adverse changes in ATII's consolidated
financial position since the date of the financial statements provided to Lender
in connection with the credit approval of ATII relative to this Agreement.
(g) There is no litigation, investigation or proceeding threatened or
pending against any Borrower or against any of its assets or revenues which, if
decided adversely, would have a material adverse effect upon ATII's consolidated
financial condition or its business, operations or assets (taken as a whole).
(h) The Borrower requesting the Advance is the sole owner of and has good
and marketable title to each item of Collateral acquired with proceeds of an
Advance (or will have at the time such Borrower acquires rights in the
Collateral hereafter arising), free and clear of all security interests, claims,
liens, and encumbrances except as granted to Lender. Lender has a fully-
perfected first priority lien on, and security interest in, all right, title and
interest of each Borrower in the Perfected Collateral enforceable against such
Borrower and third parties.
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(i) Neither ATII nor any other Borrower is in default under any agreement,
mortgage, note, security agreement or other documents to which it is a party or
by which it, or any of its property, is bound in any respect which could be
materially adverse to the business, operations, assets or financial condition of
ATII on a consolidated basis, or which could materially adversely affect the
ability of any Borrower to perform its obligations under this Agreement.
(j) Each of ATII and each other Borrower has paid all taxes due, except
such taxes as are being contested in good faith and against which ATII or such
other Borrower has set up reserves satisfactory to the Lender.
(k) No Borrower is engaged nor will any engage principally, or as one of
its important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meaning of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now, and from time to time, hereafter in effect. No
part of the proceeds of any loan will be used for "purchasing" or "carrying"
"margin stock" as so defined or for any purpose which violates, or which would
be inconsistent with, the provisions of the regulations of such Board of
Governors.
(l) No Borrower is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940 as amended.
(m) Neither ATII nor any other Borrower is in violation of any federal or
state law, rule or regulation or determination of an arbitrator, court or other
governmental authority, in each case applicable or binding upon ATII or any
other Borrower or any of its properties or to which ATII or any other Borrower
or any of its properties are subject, in each case which individually or in the
aggregate would have a material adverse effect on the rights of the Borrower or
the security interest of Lender in the Collateral or ATII's consolidated
financial condition or operations or assets taken as a whole.
(n) There is no event which is, or with notice or lapse of time, or both,
would be an Event of Default as defined in Section 14 of this Agreement.
(o) A Purchase Agreement has been duly executed and delivered by the
Borrower and the Supplier with respect to the Collateral for which proceeds of
an Advance are being requested by such Borrower and will be in full force and
effect on the date of such Note.
(p) ATII 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 ATII or of any of its Subsidiaries, and has a
reasonable basis to believe that no Year 2000 Problem will cause a material
adverse effect to ATII on a consolidated basis. For purposes of this Agreement,
"Year 2000 Problem" means any significant risk that computer hardware, software
or equipment containing embedded microchips essential to the business or
operations of ATII or any other 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.
(q) Each Subsidiary of ATII is a signatory to this Agreement.
9. CONDITIONS PRECEDENT:
(a) Initial Loan. The obligation of the Lender to make the initial loan on
the first borrowing date shall be subject to the fulfillment prior to or
contemporaneously with the making of such loan of the following conditions
precedent:
(i) The Lender shall have received an opinion of legal counsel to
ATII and each other Borrower as of such date, dated the first borrowing date, in
a form and substance satisfactory to Lender.
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(ii) Lender shall have received a certificate of a responsible
officer of ATII and each other Borrower as of such date, dated the first
borrowing date, as to the authority of such Borrower(s) to execute, deliver and
perform this Agreement and all Notes.
(iii) The Lender shall have received a certificate of a responsible
officer of ATII and each other Borrower as of such date, dated the first
borrowing date, as to the incumbency and signature of the officer or officers
signing the Agreement, the Notes and any other certificate or other documents to
be delivered pursuant thereto, together with evidence of the incumbency of such
responsible officer.
(iv) The Lender shall have received copies of all consolidated
financial statements of ATII as required by Lender.
(v) The Lender shall have received copies, certified by a
responsible officer of ATII to the satisfaction of Lender, of contracts in
effect between one or more Borrowers and Qwest and Vartec containing such terms
as are customary for such business (including but not limited to pricing) in
form and substance satisfactory to Lender.
(vi) The Lender shall have received copies, certified by a
responsible officer of ATII to the satisfaction of Lender, of a copy of a vendor
financing facility in effect between one or more Borrowers and Network Equipment
Technologies, Inc. providing at least $1,000,000 of unrestricted borrowing
availability and containing such terms as are customary (including but not
limited to interest rates) in form and substance satisfactory to Lender.
(vii) The Lender shall have received copies, certified by a
responsible officer of ATII to the satisfaction of Lender, of a copy of a senior
secured loan facility of ATII with Coast Business Credit the "SENIOR SECURED
FACILITY" providing a credit line of at least $5,000,000 and containing such
terms as are customary (including but not limited to interest rates) in form and
substance satisfactory to Lender.
(b) All Loans. The obligation of the Lender to make any loan (including
the initial loan) to be made by it on any borrowing date is subject to the
satisfaction of the following conditions precedent:
(i) The Lender shall have received a Note conforming to the
requirements hereof, and fully executed by each Borrower.
(ii) The representations and warranties made by ATII and each other
Borrower in this Agreement and in each Borrowing Certificate shall be correct in
all material respects on and as of such borrowing date and after giving effect
to the loan to be made on such borrowing date.
(iii) No Event of Default or event or condition which with notice or
passage of time or both would constitute an Event of Default shall have occurred
and be continuing on such borrowing date or after giving effect to the loan to
be made on such borrowing date.
(iv) The Lender shall have received a Borrowing Certificate, dated
such borrowing date for such loan, satisfying the requirements of Section 3.
(v) Except where waived by Lender in the exercise of its reasonable
discretion, the Lender shall have received the waiver of liens and consent of
the real estate lessors of the Borrower, and of such other persons as the Lender
shall deem desirable, to facilitate the removal by the Lender, upon the
occurrence of an Event of Default, of all items of US Collateral which are or
were personalty where first located on any real property that is subject to any
real estate leases and/or mortgages, such waivers of liens and consents to be in
form and substance satisfactory to the Lender and its counsel.
(vi) The Borrowers shall have (1) executed and delivered to Lender
all documents (including, without limitation, financing statements) necessary to
create in favor of Lender a first-priority perfected security interest in, and
lien on, Collateral located in the United States ("US Collateral") with evidence
of any necessary filing,
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registration or recordation of such documents, the payment of recording, stamp
or other taxes measured by indebtedness or otherwise required as a result of
filing, registration or recordation of such documents and searches confirming
the absence of any other liens or security interests thereon, and (2) with
respect to jurisdictions in the United States for which Lender has not
previously received an opinion of counsel covering its security interests in the
US Collateral, delivered an opinion of counsel to the applicable Borrower(s),
dated the date of such Advance, in form and substance satisfactory to Lender to
the effect that the lien and security interest of Lender on such US Collateral
constitutes a perfected security interest in favor of Lender.
(vii) the applicable Borrower(s) shall have (1) executed and
delivered to Lender all documents necessary to create in favor of Lender a
first-priority perfected security interest in, lien on, or trust or comparable
security ownership interest in, Collateral located in Mexico ("Foreign
Collateral," and together with US Collateral, the "Perfected Collateral"),
together with evidence of (x) any necessary filing, registration or recordation
of such documents, (y) the payment of recording, stamp or other taxes measured
by indebtedness or otherwise required as a result of filing, registration or
recordation of such documents and (z) the absence of any other liens or security
interests on such Foreign Collateral, and (2) delivered an opinion of counsel to
the applicable Borrower(s), dated the date of such advance, in form and
substance satisfactory to Lender to the effect that (y) the documents have been
validly executed and delivered by, and are binding and enforceable upon, the
applicable Borrower(s) and do not conflict with the applicable Borrower's
organizational documents, material contracts or applicable law, and (z) the
security interest in, lien on, or trust or comparable security ownership
interest of Lender on such Foreign Collateral is "perfected" or otherwise
enforceable against such Borrower and third parties in favor of Lender under the
laws of such foreign jurisdiction.
(viii) No event of default, or event which with the giving of notice
or the passage of time, or both, would constitute an event of default under the
Senior Secured Facility shall have occurred and be continuing, the Senior
Secured Facility must provide a credit line of at least $5,000,000, and, no
Borrower shall have any past due accounts payables.
(ix) All proceedings and all other documents and legal matters in
connection with the transactions contemplated by the Agreement shall be
satisfactory in form and substance to the Lender and its counsel.
10. INTENTIONALLY DELETED.
11. AFFIRMATIVE COVENANTS: Each Borrower (with respect to itself and its
business, property and Collateral) warrants, covenants and agrees that from the
Agreement date and until performance and payment in full of the Indebtedness, it
will:
(a) Furnish to Lender as soon as available, but in any event within one
hundred and twenty (120) days after the end of each fiscal year of ATII, a copy
of the consolidated balance sheet of ATII as of the end of such year and the
related statements of earnings and changes in financial position for such year,
setting forth in each case in comparative form, the figures for the previous
year audited by independent certified public accountants. The financial
statements shall be complete and correct in all material respects, and be
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein (except as approved by such accountants
or a responsible officer, as the case may be, and disclosed therein).
(b) Furnish to Lender, concurrently with the delivery of the financial
statements referred to in subsection (a) hereof, a certificate of a responsible
officer of ATII and each other Borrower stating that, to the best of such
officer's knowledge, ATII and each other Borrower, during such period, has
observed or performed all of its covenants and other agreements, and satisfied
every condition contained in this Agreement and in the Notes to be observed,
performed or satisfied by it, and that such officer has obtained no knowledge of
any Event of Default except as specified in such certificate.
(c) Promptly upon receipt thereof, furnish to Lender one copy of each
written financial audit report submitted to ATII by independent accountants
resulting from any annual, interim or special audits made by them of ATII's
books.
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(d) Furnish to Lender copies of all financial statements and material
reports which ATII or any other Borrower may make to, or file with, the
Securities and Exchange Commission or any successor.
(e) Pay promptly when due all taxes, assessments, governmental charges,
claims for labor, supplies, rent and other obligations, which, if unpaid, might
become a lien against the Perfected Collateral or any Borrower's other assets,
except liabilities (i) being contested in good faith and by appropriate
proceedings, which proceedings do not involve any danger of the sale, forfeiture
or loss of the Perfected Collateral or any interest therein or a material part
of ATII's or such Borrower's other assets, and (ii) against which ATII has set
up reserves satisfactory to the Lender.
(f) Comply with all applicable laws, statutes, orders, rules, regulations,
and directions applicable to each Borrower and the Perfected Collateral or any
part thereof or operation of any Borrower's business, except where the failure
to comply will not have a material adverse effect on the value of the Perfected
Collateral or the operations of ATII on a consolidated basis; provided that ATII
or such Borrower may contest any such statutes, orders, rules, regulations, and
directions in any reasonable manner which will not, in Lender's opinion,
adversely affect Lender's rights or ATII's or such Borrower's financial
condition, business or operations taken as a whole or the priority of the lien
or security interest in the Perfected Collateral.
(g) Maintain and preserve in full force and effect all rights, privileges,
licenses, and franchises applicable to each Borrower necessary for the orderly
and efficient conduct of each Borrower's business as is now conducted including,
without limitation, any licenses or authorizations required by the FCC or any
other public utility commission or comparable regulatory agency (a "PUC") for
the operation and maintenance of its present systems.
(h) Perform and comply in all material respects with all obligations under
the contracts and all other agreements to which it is a party or by which it is
bound relating to the Collateral except where the failure to do so would not
materially and adversely affect the value of the Collateral taken as a whole.
(i) Advise Lender promptly, in reasonable detail (i) of any lien, security
interest, encumbrance or claim made or asserted against any of the Collateral,
(ii) of any material change in the composition of the Collateral, and (iii) of
the occurrence of any other event which would have a material adverse effect on
the aggregate value of the Collateral, the security interest created hereunder,
or on any Borrower's financial condition, business, or operations.
(j) (1) Maintain books, records and accounts which, in reasonable detail,
accurately and fairly reflect its transactions and dispositions of its assets
and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are recorded as
necessary (x) to permit preparation of financial statements in conformity with
GAAP and (y) to maintain accountability for assets, (C) access to assets is
permitted only in accordance with management's general or specific authorization
and (D) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences, and (2) prepare all financial statements required hereunder in
accordance with GAAP consistently applied and in compliance with the regulations
of any governmental regulatory body having jurisdiction over any Borrower or any
Borrower's business and keep such books and records pertaining to its financial
affairs and to the Collateral at ATII's address set forth above.
(k) Permit Lender or its representatives, at all reasonable times, to
inspect and copy each Borrower's books and records pertaining to its financial
affairs and to the Collateral;
(l) Keep the Collateral at the original location set forth in the
Collateral Schedule and such principal place of business at the address set
forth above and not move any of the Collateral from such locations, or change
the location of ATII's or any other Borrower's principal place of business
without giving Lender at least thirty (30) days advance written notice of such
change or move, and in connection with any change in location of Collateral or
of the principal place of business of ATII or any other Borrower, at its cost
and expense, from time to time, at the written request of Lender, execute,
deliver, file or record documents, agreements and instruments (in such manner
and form as Lender may reasonably require) in order to create, preserve,
perfect, validate or satisfy the first priority security interest
15
in, lien on, or trust or comparable security ownership interest in the
Collateral as a result of the move of the Collateral or of the change of ATII's
or such other Borrower's principal place of business.
(m) Keep the Collateral in good repair and operating condition, ordinary
wear and tear excepted, and maintain the Collateral owned or used by that
Borrower in good working order in accordance with established maintenance
procedures such that the Collateral performs to published specifications and
shall maintain the equipment within two of the latest Product Computing Loads of
the Supplier, and permit Lender or its representatives at all times, upon
reasonable notice, to enter into and upon any premises where any of the
Collateral is located for the purpose of inspecting it, observing its use or
otherwise protecting its interest therein.
(n) If any Collateral, in whole or in part, shall be lost, stolen or
destroyed or damaged, or is taken in any condemnation or similar proceeding by a
governmental authority (any such Collateral is referred to as the "Affected
Collateral"), promptly and fully notify Lender and (i) immediately place the
Affected Collateral in good condition and working order, or (ii) replace the
Affected Collateral with one of like value which is in good repair, condition,
and working order, and grant a first priority perfected security interest in,
lien on, or trust or comparable security ownership interest in such substitution
to the same extent that Lender had (or was required to have) in the Affected
Collateral, or (iii) prepay Lender, without prepayment premium, loans in an
amount equal to the value of such Affected Collateral.
(o) At its cost and expense, from time to time, at the written request of
Lender, execute, deliver, file or record documents, agreements and instruments
(in such manner and form as Lender may reasonably require) in compliance with or
to accomplish the covenants and agreements of each Borrower in this Agreement;
in order to create, preserve, perfect, validate or satisfy the security interest
in, lien on, or trust or comparable security ownership interest in the
Collateral granted or required hereby; or to enable Lender to exercise and
enforce its rights hereunder. Each Borrower also hereby authorizes Lender to
file any such financing statement or amendment thereto, without the signature of
the Borrower, or with a copy or telecopy of the Borrower's signature, to the
extent permitted by applicable law, or during upon the occurrence and during the
continuance of an Event of Default hereunder to execute any financing statement
or amendment thereof on behalf of each Borrower as each Borrower's attorney-in-
fact. Lender will promptly provide such Borrower with copies of any such
financing continuation statements.
(p) ATII shall take all actions necessary and commit adequate resources to
assure that computer-based and other systems of ATII 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 cause a material
adverse effect to ATII. At the request of Lender, ATII will provide Lender with
assurances and substantiations (including but not limited to the results of
internal and external audit reports prepared in the ordinary course of business)
reasonably acceptable to Lender as to the capability of ATII and its
Subsidiaries to conduct its and their businesses and operations before, on and
after January 1, 2000 without experiencing a Year 2000 Problem causing a
material adverse effect.
(q) Cause each Subsidiary of ATII formed or acquired after the date hereof
to become a Borrower hereunder in conformity with the terms and conditions of
Section 1(b).
(r) Obtain Lender's prior written consent before using or generating any
press release, advertisement, publicity materials or other publication in which
the name or logo of Lender or any of its affiliates is used or may be reasonably
inferred, and will not distribute any such materials in the absence of such
prior written approval.
(s) Comply with the financial covenants set forth on Exhibit C.
(t) Furnish to Lender such additional information or documents,
certificates, reports and agreements regarding ATII or any other Borrower, its
financial condition or the Collateral, as Lender may reasonably request.
12. NEGATIVE COVENANTS: Until payment in full of the indebtedness, each
Borrower covenants that it will not directly or indirectly;
16
(a) Sell, lease, assign, transfer, pledge, create, or permit a security
interest in, or otherwise encumber any of the Perfected Collateral, or any of
its rights therein, or permit any levy, lien or encumbrance thereon in favor of
anyone other than Lender.
(b) Use, or permit the Collateral to be used, for any unlawful purpose or
in violation of any law, statue or ordinance.
(c) Permit the Collateral to become part of, or be affixed to, any real
property without first assuring, to the reasonable satisfaction of Lender, that
Lender's security interest will be prior and senior to any interest or lien then
held, or thereafter acquired, by any mortgagee of such real property or the
owner or purchaser of any interest therein.
(d) Permit the Collateral to comprise a part of any Borrower's inventory.
(e) Permit anything to be done that may impair the value of any of the
Perfected Collateral or the security intended to be afforded by this Agreement.
(f) Dispose of any part of the Collateral without the express prior
written consent of Lender.
(g) Change its name or change its corporate structure in any material way
without giving Lender at least thirty (30) days advance written notice thereof,
and ensuring that any steps that Lender may deem desirable to continue the
perfection and priority of Lender's security interests in the Collateral shall
have been taken.
(h) Engage in any business activities or operations substantially
different from or unrelated to the present business activities and operations of
ATII and its current Subsidiaries.
(i) Enter into, become the subject of or effect any transaction of merger,
acquisition or consolidation or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of any Borrower's business or assets, whether now owned or
hereafter acquired.
(j) Change the fiscal year end of ATII from December 31, except with the
prior written consent of Lender, which consent shall not be unreasonably
withheld.
(k) Permit Borrowers which are Foreign Subsidiaries to acquire title to
Collateral to be located in the United States.
13. RISK OF LOSS AND INSURANCE: All risk of loss of, damage to, or
destruction of the Collateral shall, at all times, be with each Borrower. Each
Borrower shall procure and maintain with financially sound and reputable
companies, insurance policies (i) insuring the Collateral against loss by fire,
explosion, theft and such other casualties as are usually insured against by
companies engaged in the same or similar business, and (ii) insuring such
Borrower and the Lender against liability for personal injury and property
damage relating to the Collateral. The policies shall be in such form and in
such amounts and coverage as may be reasonably satisfactory to the Lender, with
losses payable to such Borrower and the Lender as their respective interest may
appear. Each Borrower shall, if requested by Lender, deliver to the Lender
evidence that such insurance coverage is in effect. All insurance shall (i)
contain a breach of warranty clause in favor of the Lender, (ii) provide that no
cancellation, reduction in amount or change in coverage thereof shall be
effective until at least thirty (30) days after receipt by the Lender of written
notice thereof, and (iii) be reasonably satisfactory in all respects to the
Lender. If any Borrower fails to furnish such insurance or fails to pay the
premiums therefor, Lender may do so or may obtain insurance of its interest only
and add the amount of any such premium thereof to the other amounts secured
hereby. Lender is under no obligation nor duty, however, to pay such premiums
or obtain such insurance.
14. DEFAULT: The occurrence of any one or more of the following will
constitute an "Event of Default" under this Agreement:
17
(a) The failure of any Borrower to pay when due any Payment Amount or
any other amounts payable under this Agreement or any Note;
(b) A breach or failure in the observance or performance by any
Borrower of any other material provision of this Agreement or any other Loan
Document which is not remedied within thirty (30) days after receipt by any
Borrower 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 any Borrower proves to have
been incorrect in any material adverse respect when made or given;
(d) Any 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 (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) Any Borrower shall (i) default in any payment of any other
instrument or agreement (other than with Lender) with an outstanding principal
amount in excess of $10,000 beyond the period of grace, if any, provided in the
applicable instrument or agreement, 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 any
Borrower involving in the aggregate a liability (not paid or fully covered by
insurance) of $10,000 or more, and any of such judgments or decrees 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) Any Borrower fails to perform any of its obligations under any
other agreement or lease with Lender; or
(i) At any time a Borrower other than ATII ceases to be a Subsidiary
of ATII; or
(j) If any Change in Control should occur without Lender's prior
written consent. A "Change in Control" of ATII shall be deemed to have occurred
upon any change in the direct or indirect control of, or the ability or right to
control, a majority of the voting shares of any class of securities or ownership
rights in any ATII or any other Borrower or in the right and/or the power to
control the election of the board of directors of ATII or any other Borrower; or
(k) The occurrence of a material adverse effect on, or material
adverse change in, (i) the business, operations or financial condition of ATII
or any other Borrower, (ii) the ability of ATII or any other 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.
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15. RIGHTS AND REMEDIES ON DEFAULT: 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 the Note will immediately become
due and payable without presentation, demand, protest, or notice of any kind,
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. Each 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%), 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 any Borrower,
or any agent of any 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. Each 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.
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 the applicable 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 such 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 expenses, including reasonable attorneys' fees and legal
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. The Borrowers 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 the Borrowers any surplus
resulting therefrom.
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, sue 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 ATII or any
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
19
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 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 any
Borrower's default. Lender shall be under no obligation or duty to exercise any
of the powers hereby conferred upon it.
17. EXPENSES: Each 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 and expenses 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 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 17 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 a Borrower has not paid to
Lender the amount of all Lender's Expenses billed to ATII 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. Each 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 the Borrowers.
18. NOTICES: Notices, demands and other communications required to be
given hereunder to be effective shall be transmitted in writing by telex,
telecopy, or facsimile transmission and confirmed by a similar mailed writing,
by hand delivery, by first class, registered or certified mail, return receipt
requested, or an overnight courier service, addressed to Lender at 501 Corporate
Centre Drive, Suite 600, Franklin, TN 37067 (Attention: Director Operations &
Administration), with a copy to TFS Portfolio Management, 10 Riverview Drive,
Danbury, CT 06810, or to the applicable as the case may be, at the address set
forth above or at such other address as any party may hereinafter substitute by
written notice. Notice shall be effective four (4) days after the date it was
mailed or upon receipt, whichever is earlier.
19. INDEMNIFICATION: Each Borrower shall indemnify Lender against and
hold Lender harmless from any and all claims, actions, suits, damages,
allegations, liabilities, and liens and all costs and expenses, including,
without limitation, reasonable attorneys' fees incurred by Lender, arising out
of or in any way related to a Borrower's ownership or use of the Collateral, or
in connection with the transactions contemplated by this Agreement, including
without limitation, the granting and perfection of the security interest and
lien described herein.
20. FCC AND PUC APPROVALS; NOTIFICATION: The exercise of any rights
hereunder by the Lender that may require FCC or PUC approval shall be subject to
obtaining such approval. Pending obtaining any such FCC or PUC approval, each
Borrower will refrain from taking or permitting any action to be taken which is
contrary to the interest of the Lender. In accordance with the requirements of
47 C.F.R. Section 22.917 (1984), or any successor provision, the Lender agrees
to notify the applicable Borrower and the FCC (if required) in writing at least
ten (10)
20
days prior to the repossession, in accordance with the Agreement, of all or any
part of the Collateral which is subject to the regulation.
21. ASSIGNMENT: Lender may, in whole or in part, without notice to, or
the consent of any Borrower, sell, assign, grant a security interest in or
pledge its interest in the Collateral and/or a Note and any amounts due or to
become due hereunder to any third party ("Assignee"). Upon receiving written
notice from Lender, a Borrower shall, if so directed, pay the amounts due
hereunder, directly to Assignee. Any Assignee shall be entitled to rely on the
agreements, representations, warranties, and covenants of ATII and each Borrower
contained herein, as applicable, and shall be considered a third-party
beneficiary thereof. Each Borrower shall also execute and deliver to Lender, or
any Assignee, any additional documentation as Lender or Assignee may reasonably
request. Without Lender's prior written consent, no Borrower shall assign or
transfer its obligations hereunder. Any attempted transfer by any Borrower shall
be void ab initio.
22. MISCELLANEOUS:
(a) No failure or delay by the Lender to exercise any right, power or
privilege hereunder shall operate as a waiver of any such right, power or
privilege, nor shall any single or partial exercise of any right, power or
privilege preclude any other or future exercise thereof. The Lender may waive
any default before or after the same has been declared and restore this
Agreement to full force without impairing any rights hereunder, such right of
waiver being a continuing one. The waiver of any provision hereunder will not be
effective unless in writing signed by the Lender.
(b) If any provision in this Agreement or a Note shall be prohibited or
unenforceable, such provision shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions.
(c) To the extent that the Indebtedness is now or hereafter secured by
property other than the Collateral, or by the guaranty, endorsement or property
of any other person, corporation or entity, then Lender shall have the right, in
its sole discretion, to determine which rights, security, liens, security
interest or remedies it shall, at any time, pursue, relinquish, subordinate,
modify, or take any other action with respect thereto without, in any way,
modifying or affecting any of them or any of its rights hereunder.
(d) Lender's duty of care (as imposed by law) with respect to the
Collateral in its possession shall be deemed fulfilled if Lender exercises
reasonable care in physically safekeeping such Collateral, or in the case of
Collateral in the custody or possession of a bailee or other third person,
exercises reasonable care in the selection of the bailee or other third person,
and Lender need not otherwise preserve, protect, insure, or care for any
Collateral.
(e) No right or remedy is exclusive of any other provided under this
Agreement or permitted by law or equity. All such rights and remedies shall be
cumulative and may be exercised singularly or concurrently at Lender's option.
The exercise or enforcement of any one such right or remedy shall neither be a
condition to, nor bar the exercise or enforcement of any other.
(f) All representations and warranties made herein or in any document,
certificate or statement delivered pursuant thereto, or in connection therewith,
shall survive the execution and delivery of this Agreement and the Notes.
(g) ATII and each Borrower waive presentment, demand, protest and notice
to the extent permitted by applicable law.
(h) Time is of the essence with regard to each and every provision of this
Agreement and each Note.
(i) This Agreement may be executed in more than one counterpart, all of
which taken together, shall constitute one agreement.
(j) Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), consistently applied,
21
and all accounting or financial terms shall have the meanings ascribed to such
terms by GAAP. At such time that ATII has any Subsidiaries, all accounting and
financial terms herein shall be deemed to include references to consolidated and
consolidating principles, and covenants, representations and agreements with
respect to ATII and its properties and activities shall be deemed to refer to
ATII and its consolidated Subsidiaries collectively.
23. SUCCESSORS AND ASSIGNS: This Agreement shall be binding on the parties
and inure to the benefit of Lender and each Borrower and their successors and
permitted assigns.
24. GOVERNING LAW, JURISDICTION AND VENUE: (a) This Agreement and the
Notes are being delivered to Lender in the State of New York and shall be
construed in accordance with and governed by the laws of such state, except to
the extent the internal laws of another jurisdiction are required to be applied
in connection with the exercise of rights pertaining to Collateral in that
jurisdiction.
(b) EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS LOCATED IN WILLIAMSON COUNTY, TENNESSEE AND DAVIDSON
COUNTY, TENNESSEE, INCLUDING WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE
MIDDLE DISTRICT OF TENNESSEE, THE CHANCERY COURT FOR WILLIAMSON COUNTY,
TENNESSEE, AND THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE, FOR ANY SUIT
BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE NOTES, THE
OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND AGREES NOT TO CONTEST VENUE OR
JURISDICTION IN ANY SUCH COURTS. The choice of forum set forth herein shall not
be deemed to preclude the enforcement of any judgment obtained in such forum or
the taking of any action under this Agreement to enforce the same in any
appropriate jurisdiction.
25. WAIVERS AND LIMITATIONS OF LIABILITY: (a) EACH BORROWER AND LENDER
HEREBY KNOWINGLY AND WILLINGLY WAIVE THEIR RESPECTIVE RIGHTS TO DEMAND A JURY
TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS AGREEMENT, THE NOTES ANY OTHER
LOAN DOCUMENT, THE OBLIGATIONS, OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER.
EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(b) LENDER SHALL HAVE NO LIABILITY UNDER OR IN CONNECTION WITH THIS
AGREEMENT THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS FOR SPECIAL, EXEMPLARY,
PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT IN ANY SUIT
BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE NOTES THE
OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND, EXCEPT TO THE EXTENT PROHIBITED
BY LAW, EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES OF ANY SORT OTHER THAN ACTUAL DAMAGES.
(c) To the fullest extent permitted by law, except as otherwise expressly
provided herein, each Borrower hereby waives (i) presentment, demand and protest
and notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which any Borrower may in any way be liable and
hereby ratifies and confirms whatever Lender may do in this regard; (ii) notice
prior to taking possession or control of the Collateral or any bond or security
which might be required by any court prior to allowing Lender to exercise any of
Lender's remedies, including the issuance of an immediate writ of possession,
except as expressly required in any of the Loan Documents; (iii) any marshalling
of assets, or any right to compel Lender to resort first to any Collateral or
other persons before pursuing any Borrower for payment of the Indebtedness and
any defenses based on suretyship or impairment of Collateral; (iv) the benefit
of all valuation, appraisement and exemption laws; (v) any right to require
Lender to terminate its security interest in the Collateral or in any other
property of any
22
Borrower until termination of this Agreement and the execution by each Borrower
and by any person whose loans to a Borrower are used in whole or in part to
satisfy the Obligations, of an agreement indemnifying Lender from any loss or
damage Lender may incur as the result of dishonored or unsatisfied items of any
account debtor applied to the Indebtedness; and (vi) notice of acceptance
hereof. Each Borrower acknowledges that the foregoing waivers are a material
inducement to Lender's entering into this Agreement and that Lender is relying
upon the foregoing waivers in its future dealings with each Borrower.
26. ENTIRE AGREEMENT: This Agreement constitutes the entire agreement
between Lender and each Borrower with respect to the subject matter hereof and
supersedes all previous negotiations, proposals, commitments, writings, and
understandings of any nature whatsoever.
IN WITNESS WHEREOF, the parties have executed this Loan and Security
Agreement by their duly authorized representatives:
BORROWERS:
---------
AMERICAN TELESOURCE INTERNATIONAL, INC.
BY:_____________________________________
______________
TITLE:__________________________________
______________
[ADDITIONAL SIGNATURES FOR SUBSIDIARIES
OF ATII]
BY:__________________________________
______________
TITLE:_______________________________
______________
[ADDITIONAL SIGNATURES FOR SUBSIDIARIES
OF ATII]
BY:__________________________________
______________
TITLE:_______________________________
______________
[ADDITIONAL SIGNATURES FOR SUBSIDIARIES
OF ATII]
BY:__________________________________
______________
23
TITLE:_______________________________
______________
[ADDITIONAL SIGNATURES FOR SUBSIDIARIES
OF ATII]
BY:__________________________________
______________
TITLE:_______________________________
______________
[ADDITIONAL SIGNATURES FOR SUBSIDIARIES
OF ATII]
BY:__________________________________
______________
TITLE:_______________________________
______________
[ADDITIONAL SIGNATURES FOR SUBSIDIARIES
OF ATII]
BY:__________________________________
______________
TITLE:_______________________________
______________
LENDER:
------
NTFC CAPITAL CORPORATION
BY:__________________________________
______________
TITLE:_______________________________
______________
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EXHIBIT A
---------
FORM OF ANNEX TO LOAN AND SECURITY AGREEMENT
--------------------------------------------
By executing this Annex to Loan and Security Agreement attached to and
forming a part of the Loan and Security Agreement dated as of June __________,
1999, (the "Loan Agreement"), between and among AMERICAN TELESOURCE
INTERNATIONAL, INC., a _______________________ corporation ("ATII"), NTFC
Capital Corporation (the "Lender"), Domestic and/or Foreign Subsidiaries of ATII
which are signatories to the Loan Agreement, and such additional Domestic and/or
Foreign Subsidiaries of ATII which may become a party to the Loan Agreement
pursuant to Section 1(b) thereof, _____________________________ represents and
warrants that it is a [FOREIGN or DOMESTIC] Subsidiary of ATII, joins as a party
---------------------
to the Loan Agreement, assumes the obligations of a Borrower under the Loan
Agreement, and confirms that it is bound by the terms and conditions of the Loan
Agreement, including but not limited to the grant to Lender of a security
interest in all its right, title and interest in and to the Collateral as
provided in the Loan Agreement. _________________________________________
acknowledges and agrees that one or more other Subsidiaries of ATII may become
additional Borrowers under the Loan Agreement without the consent of any other
Borrower by execution of a form of the Annex to the Loan Agreement by ATII, the
Subsidiary and the Lender. ______________________________ acknowledges and
agrees that (i) other Subsidiaries of ATII may become additional Borrowers under
the Loan Agreement without the consent of any other Borrower by execution of a
form of the Annex to the Loan Agreement by ATII, the Subsidiary and the Lender;
(ii) the Lender is willing to extend certain credit to the Borrowers, subject to
the terms and conditions set forth in the Loan Agreement, including the
condition that all Borrowers will be jointly and severally liable for all
amounts owed by any Borrower under the Loan Agreement to Lender; (iii) without
this joint and several liability for all Indebtedness owed by any Borrower to
Lender under the Loan Agreement, Lender would not be willing to extend credit to
any Borrower; and (iv) __________________________________________, the existing
Borrowers and other Subsidiaries of ATII which may become additional Borrowers
under the Loan Agreement are related entities, and ________________________
expects to increase its business, and to benefit directly and indirectly,
through the use of the equipment to be acquired by it and the other Borrowers
with the proceeds of the loans to be made pursuant to the Loan Agreement.
_______________________ authorizes the Lender to attach this Annex to the
Loan and Security Agreement, which shall be deemed a part of, and incorporated
by reference in, the Loan Agreement. This Annex to the Loan and Security
Agreement is being delivered to Lender in the State of Tennessee and shall be
construed in accordance with and governed by the laws of such state, except to
the extent the internal laws of another jurisdiction are required to be applied
in connection with the exercise of rights pertaining to Collateral in that
jurisdiction. Capitalized terms used in this Annex to the Loan Agreement without
definition shall have the meanings set forth in the Loan Agreement to which this
Annex is attached and form a part.
This Annex may be executed in any number of counterparts (by facsimile
transmission or otherwise) and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same document.
IN WITNESS WHEREOF, the parties have executed this Annex to Loan and
Security Agreement by their duly authorized representatives:
ATII:
----
AMERICAN TELESOURCE INTERNATIONAL, INC.
25
BY:__________________________________
______________
TITLE:_______________________________
______________
BORROWER:
--------
BY:__________________________________
TITLE:_______________________________
LENDER:
------
NTFC CAPITAL CORPORATION
BY:__________________________________
TITLE:_______________________________
Exhibit B
---------
Exhibit C
---------
26