Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Digerati Technologies, Inc. | v194621_8k.htm |
| EX-4.2 - EX-4.2 - Digerati Technologies, Inc. | v194621_ex4-2.htm |
LOAN
AND SECURITY AGREEMENT
THIS LOAN AND SECURITY
AGREEMENT (as amended, modified or restated from time to time, this
“Agreement”)
dated as of August
2, 2010 (the
“Closing
Date”), will serve to set forth the terms of the Credit Facility by and
among THERMO CREDIT,
LLC, a Colorado limited liability company (together with its successors
and assigns, “Lender”),
and ATSI COMMUNICATIONS,
INC., a Nevada corporation (“Parent”),
DIGERATI NETWORKS, INC.,
a Texas corporation (“DNI”),
and DIGERATI BROADBAND,
INC., a Texas corporation (“DBI”,
and together with DNI, “Subsidiary”,
and Subsidiary, together with Parent, jointly and severally, “Debtor”).
RECITALS
WHEREAS, Parent and Subsidiary
desire to establish their borrowing potential on a consolidated basis to the
same extent possible if they were merged into a single entity and this Agreement
reflects the establishment of a credit facility which would not otherwise be
available to Parent and Subsidiary if they were not jointly and severally liable
for payment and performance of the Indebtedness under the Loan Documents;
and
WHEREAS, Parent and Subsidiary
have (1) determined that each will benefit specifically and materially from
the Credit Facility contemplated by this Agreement, and (2) have requested
and bargained for the structure, terms and obligations set forth in the Loan
Documents; and
WHEREAS, Parent and Subsidiary
have requested that Lender extend the Credit Facility on the terms described in
this Agreement; and
WHEREAS, Lender is willing to
make the Credit Facility available to Parent and Subsidiary upon and subject to
the provisions, terms and conditions set forth in the Loan
Documents;
NOW THEREFORE, the parties
hereto, intending to be legally bound, agree as follows:
1. Definitions. As
used in this Agreement, the following terms will have the meanings given such
terms in this Section 1 or in
the provisions, sections or recitals herein:
(a) “Account
Debtor” means any Person who is or who may become obligated under, with
respect to, or on account of, an account, chattel paper, or a general
intangible.
(b) “Affiliate”
means, with respect to a specified Person, another Person that directly or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.
(c) “Benefit
Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Debtor or an ERISA Affiliate of Debtor has been an “employer”
(as defined in Section 3(5) of ERISA) within the past six
years.
(d) “Borrowing
Base” means a sum equal to the amount that Lender determines from time to
time in its sole discretion that is available for loans available under the
Credit Facility based on Debtor’s accounts.
(e) “Business
Day” means any day other than a Saturday, Sunday, or any other day on
which the banks in New Orleans, Louisiana are authorized or required to
close.
(f)
“Code”
means the Uniform Commercial Code as the same may, from time to time, be enacted
and in effect in the State of Louisiana; provided, however, that to
the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different articles or divisions
of the Code, the definition of such term contained in Article 9 shall
govern; provided
further, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Lender’s lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of Louisiana, the term “Code” shall mean the Uniform Commercial Code
as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.
LOAN AND
SECURITY AGREEMENT – PAGE 1
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(g) “Collateral”
means:
(i) All
present and future accounts, carrier contracts and chattel paper (including
electronic chattel paper), now or hereafter owned, held, or acquired;
and
(ii) All
of Debtor’s books, records, data, plans, manuals, computer disks, and object
codes containing any information, pertaining directly or indirectly to the
Collateral described in subsection (i) above, and all rights of Debtor to
retrieve data and other information pertaining directly or indirectly to the
Collateral described in subsection (i) above from third parties, whether
now existing or hereafter arising; and all returned, refused, stopped in
transit, or repossessed goods relating to the Collateral described in
subsection (i) above, any of which, if received by Debtor, upon request
shall be delivered immediately to Lender.
The term
“Collateral,”
as used herein, shall also include all SUPPORTING OBLIGATIONS,
PRODUCTS and PROCEEDS of all of the
foregoing (including without limitation, insurance payable by reason of
loss).
(h) “Constituent
Documents” means (i) in the case of a corporation, its articles or
certificate of incorporation and bylaws; (ii) in the case of a general
partnership, its partnership agreement; (iii) in the case of a limited
partnership, its certificate of limited partnership and partnership agreement;
(iv) in the case of a trust, its trust agreement; (v) in the case of a
joint venture, its joint venture agreement; (vi) in the case of a limited
liability company, its articles of organization or certificate of formation and
operating agreement or regulations; and (vii) in the case of any other
entity, its organizational and governance documents and agreements.
(i)
“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling”
and “Controlled”
have meanings correlative thereto.
(j)
“Debt”
means as to any Person at any time (without duplication) all items of
indebtedness, obligation or liability of a Person, whether mature or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, that should be classified as liabilities in accordance with
GAAP.
(k) “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute thereto.
(l)
“ERISA
Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Debtor under IRC
Section 414(b), (b) any trade or business subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Debtor under IRC Section 414(c), (c) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any organization
subject to ERISA that is a member of an affiliated service group of which Debtor
is a member under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any Person subject to
ERISA that is a party to an arrangement with Debtor and whose employees are
aggregated with the employees of Debtor under IRC
Section 414(o).
(m) “GAAP”
means generally accepted accounting principles, applied on a consistent basis,
as set forth in Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or in statements of the Financial
Accounting Standards Board and/or their respective successors and which are
applicable in the circumstances as of the date in
question. Accounting principles are applied on a “consistent basis”
when the accounting principles applied in a current period are comparable in all
material respects to those accounting principles applied in a preceding
period.
LOAN AND
SECURITY AGREEMENT – PAGE 2
THERMO CREDIT, LLC – ATSI COMMUNICATIONS, INC.
THERMO CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(n) “Governmental
Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
(o) “Indebtedness”
means (i) all indebtedness, obligations and liabilities of Debtor to Lender
of any kind or character, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several or joint and several, and regardless of whether such
indebtedness, obligations and liabilities may, prior to their acquisition by
Lender, be or have been payable to or in favor of a third party and subsequently
acquired by Lender (it being contemplated that Lender may make such acquisitions
from third parties), including without limitation all indebtedness, obligations
and liabilities of Debtor to Lender now existing or hereafter arising under the
Note, this Agreement, the other Loan Documents or any draft, acceptance,
guaranty, endorsement, letter of credit, assignment, purchase, overdraft,
discount, indemnity agreement or otherwise, (ii) all accrued but unpaid
interest on any of the indebtedness described in (i) above, (iii) all
obligations of Debtor to Lender under the Loan Documents, (iv) all costs
and expenses incurred by Lender in connection with the collection and
administration of all or any part of the indebtedness and obligations described
in (i), (ii) and (iii) above or the protection or preservation of, or
realization upon, the collateral securing all or any part of such indebtedness
and obligations, including without limitation all reasonable attorneys’ fees,
and (v) all renewals, extensions, modifications and rearrangements of the
indebtedness and obligations described in (i), (ii), (iii) and (iv)
above.
(p) “IRC”
means the Internal Revenue Code of 1986, as in effect from time to
time.
(q) “Loan
Documents” means this Agreement, the Note and the other agreements,
instruments and documents evidencing, securing, governing, guaranteeing or
pertaining to the loans under the Credit Facility.
(r) “Material
Adverse Effect” means a material adverse effect on (i) the business,
assets, property, operations, condition (financial or otherwise), or prospects,
of Debtor, (ii) the ability of Debtor to pay or perform the Indebtedness,
(iii) any of the rights of or benefits available to Lender under the Loan
Documents, or (iv) the validity or enforceability of the Loan
Documents.
(s) “Permitted
Encumbrances” means the following encumbrances: (i) liens for taxes,
assessments or governmental charges or levies not yet due and payable or liens
for taxes, assessments or governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP; (ii) liens in respect of property or
assets of a Person imposed by law which were incurred in the ordinary course of
business and which have not arisen to secure Debt for borrowed money, such as
carriers’, materialmen’s, warehousemen’s and mechanics’ liens, statutory and
common law landlord’s liens, and other similar liens arising in the ordinary
course of business, and which either (1) do not in the aggregate materially
detract from the value of such property or materially impair the use thereof in
the operation of the business of a Person, or (2) are being contested in
good faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to such
lien; (iii) liens created by or pursuant to the Loan Documents;
(iv) liens in existence on the Closing Date which are listed, and the
property or assets subject thereto described, on Schedule 1(s);
(v) liens arising from judgments, decrees, awards or attachments in
circumstances not constituting an Event of Default; (vi) liens
(1) incurred or deposits made in the ordinary course of business in
connection with general insurance maintained by a Person, (2) incurred or
deposits made in the ordinary course of business of a Person in connection with
workers’ compensation, unemployment insurance and other types of social
security, (3) to secure the performance by any Person of tenders, statutory
obligations (other than excise taxes), surety, stay, customs and appeal bonds,
statutory bonds, bids, leases, government contracts, trade contracts,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money) to the extent incurred in the
ordinary course of business, and (4) to secure the performance by a Person
of leases of real property, to the extent incurred or made in the ordinary
course of business consistent with past practices; (vii) licenses,
sublicenses, leases or subleases granted to third Persons in the ordinary course
of business not interfering in any material respect with the business of a
Person; (viii) liens arising from precautionary Code financing statements
regarding operating leases; (ix) liens created pursuant to or in connection
with capital leases permitted pursuant to this Agreement; provided, however, that
(1) such liens only serve to secure the payment of rent or indebtedness
arising under such capital leases, and (2) the liens encumbering the assets
leased or purported to be leased under such capital leases do not encumber any
other assets of a Person; and (x) liens in equipment and fixtures arising
pursuant to purchase money security interests securing indebtedness representing
the purchase price of assets acquired after the Closing Date; provided, however, that
(1) any such liens attach only to the assets so purchased, upgrades thereon
and, if the asset so purchased is an upgrade, the original asset itself (and
such other assets financed by the same financing source), (2) the
indebtedness secured by any such lien does not exceed the purchase price of the
property being purchased at the time of the incurrence of such indebtedness, and
(3) the indebtedness secured thereby is permitted to be incurred pursuant
to this Agreement.
LOAN AND
SECURITY AGREEMENT – PAGE 3
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(t) “Person”
means any individual, corporation, limited liability company, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity, and shall include such Person’s heirs, administrators, personal
representatives, executors, successors and assigns.
(u) “Termination
Event” means (a) a Reportable Event with respect to any Benefit Plan
or Multiemployer Plan; (b) the withdrawal of Debtor or any ERISA Affiliate
from a Benefit Plan during a plan year in which such entity was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA; (c) the providing
of notice of intent by Debtor or any of ERISA Affiliate to terminate a Benefit
Plan pursuant to Section 4041 of ERISA; (d) the institution by the
PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan;
(e) any event or condition (i) that might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Benefit Plan or Multiemployer Plan, or (ii) that
may result in termination of a Multiemployer Plan pursuant to Section 4041A
of ERISA; or (f) the partial or complete withdrawal, within the meaning of
Sections 4203 and 4205 of ERISA, of Debtor or any of ERISA Affiliate from a
Multiemployer Plan.
All words
and phrases used herein shall have the meaning specified in the Code except to
the extent such meaning is inconsistent with this Agreement. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words “hereof”, “herein” and
“hereunder” and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement. Any accounting term used in the Loan Documents shall have,
unless otherwise specifically provided therein, the meaning customarily given
such term in accordance with GAAP, and all financial computations thereunder
shall be computed, unless otherwise specifically provided therein, in accordance
with GAAP consistently applied; provided, however,
that all financial covenants and calculations in the Loan Documents shall be
made in accordance with GAAP as in effect on the Closing Date unless Debtor and
Lender shall otherwise specifically agree in writing. That certain
items or computations are explicitly modified by the phrase “in accordance with
GAAP” shall in no way be construed to limit the foregoing.
2. Credit
Facility.
(a) Joint and
Several Liability. Parent, Subsidiary and any other Person
named or identified as a Debtor under the Loan Documents from time to time
hereby irrevocably and unconditionally: (i) agree that each is JOINTLY and SEVERALLY liable to Lender for
the full and prompt payment and performance of the Indebtedness under the Loan
Documents in accordance with the terms thereof; (ii) agree to fully and
promptly perform all of their obligations hereunder and the other Loan Documents
with respect to each loan hereunder as if such loan had been made directly to
it; and (iii) agree as a primary obligation to indemnify Lender on demand
for and against any loss incurred by Lender as a result of any of the
Indebtedness of Debtor being or becoming void, voidable, unenforceable or
ineffective for any reason whatsoever, whether or not known to Lender or any
person, the amount of such loss being the amount which Lender would otherwise
have been entitled to recover from any one or more of Parent, Subsidiary and any
other Person named as a Debtor under the Loan Documents from time to
time. Debtor hereby designates Parent as its representative and agent
on its behalf for the purposes of giving instructions with respect to the
disbursement of the proceeds of the loans, selecting interest rate options,
giving and receiving all other notices and consents hereunder or under any of
the other Loan Documents and taking all other actions (including in respect of
compliance with covenants) on behalf of Debtor under the Loan
Documents. Parent hereby accepts such appointment. Lender
may regard any notice or other communication pursuant to any Loan Document from
Parent as a notice or communication from Debtor. Each warranty,
covenant, agreement and undertaking made on behalf of Debtor by Parent shall be
deemed for all purposes to have been made by Debtor and shall be binding upon
and enforceable against Debtor to the same extent as it if the same had been
made directly by Debtor.
LOAN AND
SECURITY AGREEMENT – PAGE 4
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(b) Cross-Guaranty. Debtor
hereby agrees that Debtor is JOINTLY and SEVERALLY liable for, and
hereby absolutely and unconditionally guarantees to Lender and its successors
and assigns, the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Indebtedness owed or
hereafter owing to Lender by Debtor. Debtor agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 2(b)
shall not be discharged until indefeasible payment and performance, in full, of
the Indebtedness has occurred, and that its obligations under this Section 2(b)
shall be absolute and unconditional, irrespective of, and unaffected
by:
(i) the
genuineness, validity, regularity, enforceability or any future amendment of, or
change in, this Agreement, any other Loan Document or any other agreement,
document or instrument to which any Debtor is or may become a
party;
(ii) the
absence of any action to enforce this Agreement, including this Section 2(b), or
any other Loan Document or the waiver or consent by Lender with respect to any
of the provisions thereof;
(iii) the
existence, value or condition of, or failure to perfect its lien against, any
security for the Indebtedness or any action, or the absence of any action, by
Lender in respect thereof (including the release of any such
security);
(iv)
the insolvency of Parent or Subsidiary; or
(v)
any other action or circumstance that might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor.
Debtor
shall be regarded, and shall be in the same position, as principal debtor with
respect to the Indebtedness guaranteed hereunder. Notwithstanding any provision
herein contained to the contrary, Debtor’s liability under this Section 2(b), which
liability is in addition to amounts for which such Debtor is liable under Section 2(a),
shall be limited to an amount not to exceed as of any date of determination the
greater of: (i) the net amount of all loans advanced to any
Debtor under this Agreement and then re-loaned or otherwise transferred to, or
for the benefit of, Debtor; and (ii) the amount that could be claimed by
Lender from Debtor under this Section 2(b)
without rendering such claim voidable or avoidable under Section 548 of
Chapter 11 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law after taking into account, among other things, Debtor’s right of
contribution and indemnification from each other Debtor. To the
extent that Debtor shall make a payment under this Section 2(b) of
all or any of the Indebtedness (other than loans made to Debtor for which it is
primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments then
previously or concurrently made by any Debtor, exceeds the amount that such
Debtor would otherwise have paid if each Debtor had paid the aggregate
Indebtedness satisfied by such Guarantor Payment in the same proportion that
such Debtor’s Allocable Amount (as defined below) (as determined immediately
prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each
of Debtor as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the
Indebtedness, such Debtor shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Debtor for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment. As of any date of
determination, the “Allocable
Amount” of any Debtor shall be equal to the maximum amount of the claim
that could then be recovered from such Debtor under this Section 2(b)
without rendering such claim voidable or avoidable under Section 548 of
Chapter 11 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law. This Section 2(b) is
intended only to define the relative rights of Debtor and nothing set forth
herein is intended to or shall impair the obligations of Debtor, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Agreement. Nothing contained in
this Section 2(b)
shall limit the liability of any Debtor to pay the loans made directly or
indirectly to that Debtor and accrued interest, fees and expenses with respect
thereto for which such Debtor shall be primarily liable. The
liability of Debtor under this Section 2(b) is
in addition to and shall be cumulative with all liabilities of each Debtor to
Lender under the Loan Documents to which such Debtor is a party or in respect of
any Indebtedness of any other Debtor, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
LOAN AND
SECURITY AGREEMENT – PAGE 5
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(c) Revolving
Credit Facility. Subject to the terms and conditions set forth
in this Agreement and the other Loan Documents, Lender hereby agrees to lend to
Debtor an aggregate sum not to exceed the lesser
of (i) an amount equal to the Borrowing Base, or (ii) SEVEN HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($750,000.00) (the “Credit
Facility”), on a revolving basis from time to time during the period
commencing on the Closing Date and continuing until the earlier of: (i) the
acceleration of the Indebtedness pursuant to the terms of the Loan Documents;
(ii) AUGUST 2,
2012; or (iii) such other date as may be established by a written
instrument between Debtor and Lender from time to time (the “Maturity
Date”). If at any time the sum of the aggregate principal
amount of loans outstanding hereunder exceeds the lesser of the Credit
Facility or the Borrowing Base, such amount shall be deemed an “Overadvance.” Debtor
shall immediately repay the amount of such Overadvance plus all accrued and
unpaid interest thereon upon written demand from
Lender. Notwithstanding anything contained herein to the contrary, an
Overadvance shall be considered a loan and shall bear interest at the Rate as
set forth in the Note and be secured by this Agreement. Subject to
the terms and conditions hereof, Debtor may borrow, repay and reborrow funds
under the Credit Facility.
(d) Funding. Lender
reserves the right to require not less than ONE (1) Business Day prior
notice of each loan under the Credit Facility, specifying the aggregate amount
of such loan together with any documentation relating thereto as Lender may
reasonably request; such request to be submitted no later than 1:00 p.m. (New
Orleans, Louisiana time) on the date provided herein. Lender at its
option may accept telephonic requests for such loan; provided, however, that such
acceptance shall not constitute a waiver of Lender’s right to require delivery
of a written request in connection with subsequent loans. Lender
shall have no liability to Debtor for any loss or damage suffered by Debtor as a
result of Lender’s honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically, by facsimile or electronically and purporting to have been sent
to Lender by Debtor and Lender shall have no duty to verify the origin of any
such communication or the identity or authority of the Person sending
it. Subject to the terms and conditions of this Agreement, each loan
under this Section shall be made available to Debtor by depositing the same, in
immediately available funds, in an account of Debtor designated by Debtor or by
paying the proceeds of such loan to a third party designated by
Debtor.
(e) Use of
Proceeds. The loans under the Credit Facility shall be used by
Debtor for working capital in the ordinary course of business.
(f) Fees. Debtor
agrees to pay to Lender:
(i) A
commitment fee equal to TWO PERCENT (2.00%) of the amount
of the Credit Facility as of the Closing Date; which commitment fee shall be due
and payable in THREE (3)
installments, the first in the amount of ONE HALF OF ONE PERCENT
(0.50%) of the Commitment Amount (as defined in the Note) which shall be
payable out of proceeds of the initial funding, the second in the amount of
ONE HALF OF ONE PERCENT
(0.50%) of the Commitment Amount which shall be payable THIRTY (30) days after initial
funding and the third in the amount of ONE PERCENT (1.00%) of the
Commitment Amount of which shall be payable on the FIRST (1st) anniversary of the Closing
Date (the entire commitment fee shall be deemed fully earned as of the Closing
Date); and
LOAN AND
SECURITY AGREEMENT – PAGE 6
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(ii) A
monitoring fee for the period from and after the Closing Date to and including
the Maturity Date, in an amount equal to ONE TWENTIETH OF ONE PERCENT
(0.05%) of the Credit Facility per week or portion thereof (each week
being deemed to have commenced on a Sunday). The accrued monitoring fee shall be
payable in arrears on each interest payment date under the Note and on the
Maturity Date.
The
commitment fee and monitoring fee shall be to compensate Lender for its costs
and expenses in the structuring of the Credit Facility, monitoring the
Collateral, and for the commitment of funds hereunder and (to the maximum extent
permitted by applicable law) shall not be deemed interest. In
addition to the foregoing, Debtor shall pay to Lender an origination fee in an
amount equal to the GREATER
of (a) FIVE THOUSAND AND
NO/100 DOLLARS ($5,000.00), or (b) the actual costs, fees and
expenses incurred in the due diligence relating to the transactions contemplated
by this Agreement, the drafting and execution of the Loan Documents and closing
costs relating to the Loan Documents, of which Debtor has made a deposit equal
to FIVE THOUSAND AND NO/100
DOLLARS ($5,000.00), as reimbursement for the cost and expenses incurred
by Lender in the establishment of the Credit Facility.
3. Note,
Rate and Computation of Interest. The Credit Facility shall be
evidenced by a promissory note (together with any amendments, modifications,
replacements, substitutions, restatements, renewals, extensions and increases
thereof, the “Note”)
duly executed by Debtor and payable to the order of Lender, in form and
substance acceptable to Lender. Interest on the Note shall accrue at
the rates set forth therein. The principal of and interest on the
Note shall be due and payable in accordance with the terms and conditions set
forth in the Note and in this Agreement.
4. Collateral.
(a) Grant of
Security Interest. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Indebtedness, Debtor hereby pledges to and grants Lender, a
security interest in, all of Debtor’s right, title and interest in the
Collateral, whether now owned by Debtor or hereafter acquired and whether now
existing or hereafter coming into existence.
(b) Additional
Documents. To secure full and complete payment and performance
of the Indebtedness, Debtor shall execute and deliver or cause to be executed
and delivered all of the Loan Documents reasonably required by Lender covering
the Collateral. Debtor shall execute and cause to be executed such
further documents and instruments, as Lender, in its reasonable discretion,
deems necessary or desirable to create, evidence, preserve, and perfect its
liens and security interests in the Collateral. In the event any of
the Loan Documents evidencing or securing the Indebtedness misrepresents or
inaccurately reflects the correct terms and/or provisions of the Indebtedness,
Debtor shall upon request by Lender and in order to correct such mistake,
execute such new documents or initial corrected, original documents as Lender
may deem reasonably necessary to remedy said errors or
mistakes. Debtor shall execute such other documents as Lender shall
deem reasonably necessary to correct any defects or deficiencies in the Loan
Documents. Debtor’s failure to execute such documents as requested
shall constitute an Event of Default under this Agreement.
(c) Setoff. If
an Event of Default shall have occurred and be continuing, Lender shall have the
right to set off and apply against the Indebtedness in such manner as Lender may
determine, at any time and without notice to Debtor, any and all deposits
(general or special, time or demand, provisional or final) or other sums at any
time credited by or owing from Lender to Debtor whether or not the Indebtedness
is then due. The rights and remedies of Lender hereunder are in
addition to any other rights and remedies (including, without limitation, other
rights of setoff) which Lender may have.
(d) Satisfaction
of Indebtedness. Until the Indebtedness has been indefeasibly
paid and fully satisfied (other than contingent indemnification obligations to
the extent no unsatisfied claim has been asserted) and the commitments of Lender
under the Credit Facility have been terminated, Lender shall be entitled to
retain the security interests in the Collateral granted under the Loan Documents
and the ability to exercise all rights and remedies available to Lender under
the Loan Documents and applicable laws.
LOAN AND
SECURITY AGREEMENT – PAGE 7
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
5. Conditions
Precedent.
(a) Initial
Loan. The obligation of Lender to make the initial loan under
the Credit Facility, is subject to the condition precedent that Lender shall
have received on or before the day of such loan all of the following, each dated
(unless otherwise indicated) as of the Closing Date, in form and substance
satisfactory to Lender:
(i) Resolutions. Resolutions
of the governing body of Debtor certified by an authorized officer or
representative of Debtor which authorize the execution, delivery, and
performance of the Loan Documents that Debtor is a party to;
(ii) Incumbency
Certificate. A certificate of incumbency certified by an
authorized officer or representative of Debtor certifying the names of the
individuals or other Persons authorized to sign the Loan Documents to which
Debtor is to be a party (including the certificates contemplated herein)
together with specimen signatures of such Persons;
(iii) Constituent
Documents. The Constituent Documents of Debtor certified to
Lender as being true and correct as of the Closing Date;
(iv) Governmental
Certificates. Certificates of the appropriate government
officials of the state of organization of Debtor and any state Debtor is
currently doing business in where the failure to be so qualified reasonably
could be expected to have a Material Adverse Effect, as to the existence,
qualification and good standing of Debtor, dated within TEN (10) days of the Closing
Date;
(v)
Loan
Documents. The Loan Documents executed by Debtor;
(vi) Financing
Statements. Code financing statements covering the Collateral
shall have been filed with such filing officers as Lender may
request;
(vii) Uniform
Commercial Code Search. The
results of a Code search showing all financing statements and other documents or
instruments on file against Debtor in such locations as Lender may reasonably
request, such search to be as of a date no more than TEN (10) days prior the
Closing Date;
(viii) Fees and
Expenses. Evidence that the costs and expenses of Lender
(including reasonable attorneys’ fees) and all fees owing to Lender, shall have
been paid in full by Debtor;
(ix) Opinion
of Debtor’s Counsel. The opinion of Debtor’s counsel as to
(1) the existence and due organization of Debtor, (2) the due
authorization and execution of the Loan Documents, (3) the enforceability
of the Loan Documents, (4) the perfection of Lender’s security interest in
the Collateral, (5) such other matters as may be reasonably requested by
Lender and its counsel;
(x) Other
Matters. Such other documents and agreements as may be
required by Lender in its reasonable discretion.
(b) All
Loans. The obligation of Lender to make any loan shall be
subject to the following additional conditions precedent:
(i)
Request
for Loan. Lender shall have received in accordance with this
Agreement, a request for a loan in form and content satisfactory to Lender in
its reasonable discretion dated as of the date of request and executed by an
authorized officer of Debtor;
LOAN AND
SECURITY AGREEMENT – PAGE 8
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(ii) No Event
of Default, Etc. No Event of Default, event which with the
passage of time and/or notice would be an Event of Default, or event which could
have a Material Adverse Effect shall have occurred and be continuing, or would
result from or after giving effect to such loan; and
(iii) Representations
and Warranties. All of the representations and warranties
contained in the Loan Documents shall be true and correct in material respects
on and as of the date of such loan with the same force and effect as if such
representations and warranties had been made on and as of such
date.
6. Representations
and Warranties. Debtor hereby represents and warrants, and
upon each request for a loan represents and warrants to Lender as
follows:
(a) Existence. Debtor
(i) is duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its organization; (ii) has all requisite power and authority
to own its assets and carry on its business as now being or as proposed to be
conducted; and (iii) is qualified to do business in all jurisdictions in which
the nature of its business makes such qualification necessary and where failure
to so qualify would have a Material Adverse Effect. Debtor has the power and
authority to execute, deliver, and perform its obligations under the Loan
Documents to which it is or may become a party. The federal tax
identification number and state organizational number for Debtor are set forth
below:
|
Debtor
|
Federal Tax Identification Number
|
State Filing Number
|
||
|
Parent
|
74-2849995
|
NV20031513336
|
||
|
DNI
|
20-2886673
|
800494691
|
||
|
DBI
|
|
27-0525945
|
|
801145174
|
(b) Binding
Obligations. The execution, delivery, and performance of the
Loan Documents by Debtor have been duly authorized by all necessary action by
Debtor, and constitute legal, valid and binding obligations of Debtor,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors’ rights and except to the extent specific remedies may
generally be limited by equitable principles.
(c) No
Consent. The execution, delivery and performance of the Loan
Documents, and the consummation of the transactions contemplated thereby, do not
(i) conflict with, result in a violation of, or constitute a default under
(1) any provision of the Constituent Documents (if any) or other instrument
binding upon Debtor, (2) any law, governmental regulation, court decree or
order applicable to Debtor, or (3) any contractual obligation, agreement,
judgment, license, order or permit applicable to or binding upon Debtor,
(ii) require the consent, approval or authorization of any third party, or
(iii) result in or require the creation of any lien, charge or encumbrance
upon any property of Debtor except as may be expressly contemplated in the Loan
Documents.
(d) Financial
Condition. Debtor has delivered to Lender an audited balance
sheet of Debtor as of JULY 31, 2009 (such
balance sheet of Debtor being referred to herein as the “Balance
Sheet”), and the related audited statement of income, changes in
stockholders’ equity, and cash flow for the fiscal year then ended, including
the notes thereto. In addition, as to Debtor’s knowledge, such
financial statements and notes fairly present the financial condition and the
results of operations, changes in stockholders’ equity, and cash flow of Debtor
as at the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those
included in the Balance Sheet); the financial statements referred to in this
Section reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements.
LOAN AND
SECURITY AGREEMENT – PAGE 9
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(e) No
Material Adverse
Effect. No event has occurred which could reasonably be
expected to have a Material Adverse Effect since the date of the latest
financial statements submitted to Lender on or before the Closing
Date.
(f) Operation
of Business. Debtor possesses all contracts, licenses,
permits, franchises, patents, copyrights, trademarks, and tradenames, or rights
thereto, necessary to conduct its businesses substantially as now conducted and
as presently proposed to be conducted, and Debtor is not in violation of any
valid rights of others with respect to any of the foregoing, except any
violations that could not reasonably be expected to have a Material Adverse
Effect.
(g) Litigation
and Judgments. There is no action, suit, investigation, or
proceeding before or by any Governmental Authority or arbitrator pending, or to
the knowledge of Debtor, threatened against or affecting Debtor that could, if
adversely determined, have a Material Adverse Effect. There are no
outstanding judgments against Debtor.
(h) Rights in
Properties; Liens. Debtor has good and indefeasible title to
or valid leasehold interests in its properties, including the properties
reflected in the financial statements provided to Lender, and none of the
properties of Debtor is subject to any lien, except Permitted
Encumbrances.
(i)
Disclosure. No
statement, information, report, representation, or warranty made by Debtor in
the Loan Documents or furnished to Lender in connection with the Loan Documents
or any of the transactions contemplated hereby contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Debtor to
Lender will be, true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting to
state any fact necessary to make such information (taken as a whole) not
misleading in any material respect in light of the circumstances under which
such information was provided. There is no fact known to Debtor which
could reasonably be expected to have a Material Adverse Effect that has not been
disclosed in writing to Lender.
(j)
Agreements. Debtor
is not a party to any indenture, loan, or credit agreement, or to any lease or
other agreement or instrument, or subject to any charter or corporate or other
organizational restriction which could reasonably be expected to have a Material
Adverse Effect. Debtor is not in default in any material respect in
the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business.
(k) Compliance
with Laws. Debtor is not in violation of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator, the
violation of which could reasonably be expected to have a Material Adverse
Effect.
(l)
Taxes;
Governmental Charges. Debtor has filed all federal, state and
local tax reports and returns required by any law or regulation to be filed by
it and has either duly paid all taxes, duties and charges indicated due on the
basis of such returns and reports, or made adequate provision for the payment
thereof, and the assessment of any material amount of additional taxes in excess
of those paid and reported is not reasonably expected.
(m) Security
Interest. Debtor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to Lender in
the manner provided herein, free and clear of any lien, security interest or
other charge or encumbrance other than for the Permitted
Encumbrances. This Agreement creates a legal, valid and binding first
priority security interest (subject to Permitted Encumbrances) in favor of
Lender in the Collateral securing the Indebtedness. Possession by
Lender of certain types of Collateral from time to time or the filing of the
financing statements delivered prior hereto or concurrently herewith by Debtor
to Lender will perfect and establish the first priority of Lender’s security
interest hereunder in the Collateral (to the extent that perfection can be
accomplished through the filing of a financing statement or the possession of
such Collateral) other than for the Permitted Encumbrances.
LOAN AND
SECURITY AGREEMENT – PAGE 10
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(n) Employee
Benefits. None of Debtor or any ERISA Affiliate maintains or
contributes to any Benefit Plan or Retiree Health Plan other than those listed
on Schedule 6(n).
Each such Benefit Plan has been and is being maintained and funded in accordance
with its terms and in compliance in all material respects with all provisions of
ERISA and the IRC applicable thereto. Debtor and each ERISA Affiliate
has fulfilled all obligations related to the minimum funding standards of ERISA
and the IRC for each Benefit Plan, is in compliance in all material respects
with the currently applicable provisions of ERISA and of the IRC and has not
incurred any liability (other than routine liabilities for premiums) under
Title IV of ERISA. No Termination Event has occurred nor, to
Debtor’s knowledge, has any other event occurred that may result in such a
Termination Event that could reasonably be expected to result in a Material
Adverse Effect. To Debtor’s knowledge, no event or events have
occurred in connection with which Debtor or any ERISA Affiliate, any fiduciary
of a Benefit Plan or any Benefit Plan, directly or indirectly, would be subject
to any liability, individually or in the aggregate, under ERISA, the IRC or any
other law, regulation, or governmental order or under any agreement, instrument,
statute, rule of law, or regulation pursuant to or under which any such entity
has agreed to indemnify or is required to indemnify any person against liability
incurred under, or for a violation or failure to satisfy the requirements of,
any such statute, regulation, or order that could reasonably be expected to
result in a Material Adverse Effect. No ERISA Affiliate has incurred,
or could reasonably be expected to incur, any liability under ERISA, the IRC, or
any other applicable law that has had or could reasonably be expected to result
in a Material Adverse Effect.
(o) No
Employee Disputes; Labor Matters. There are no
controversies pending or, to the best of Debtor’s knowledge after diligent
inquiry, threatened between Debtor and any of its employees, other than those
arising in the ordinary course of business that could not reasonably be expected
to result in a Material Adverse Effect. There is (a) no unfair
labor practice complaint pending against Debtor or, to the best knowledge of
Debtor, threatened against Debtor, before the National Labor Relations Board,
and no grievance or arbitration proceeding arising out of or under collective
bargaining agreements that has or could reasonably be expected to result in a
Material Adverse Effect is so pending against Debtor or, to the best knowledge
of Debtor, threatened against Debtor, (b) no strike, labor dispute,
slowdown, or stoppage pending against Debtor or, to the best knowledge of
Debtor, threatened against Debtor, and (c) no union representation or
question of union representation with respect to the employees of Debtor and no
union organizing activity involving Debtor or its employees.
7. Affirmative
Covenants. Until all Indebtedness of Debtor under the Loan
Documents is indefeasibly paid or performed, and Lender has no further
commitment to lend under the Credit Facility, Debtor agrees and covenants as
follows:
(a) Compliance
with Laws. Debtor will conduct its business in an orderly and
efficient manner consistent with good business practices, and perform and comply
with all applicable statutes, rules, regulations or ordinances imposed by any
Governmental Authority upon Debtor and its businesses, operations and properties
(including without limitation, all applicable environmental statutes, rules,
regulations and ordinances) where the failure to perform or comply could have a
Material Adverse Effect on the business, operations or properties of
Debtor.
(b) Payment
of Obligations. Debtor will pay its obligations, including tax
liabilities, that, if not paid, could become a lien on any of its property,
before the same shall become delinquent or in default, except where (i) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, and (ii) Debtor has set aside on its books adequate reserves
with respect thereto in accordance with GAAP.
(c) Maintenance
and Conduct of Business. Debtor will (i) keep, maintain
and preserve all property (tangible and intangible) material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted, (ii) do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges, agreements and franchises material to the conduct
of its business, and (iii) engage in an efficient and economical manner in
a business of the same general type and within Debtor’s powers under its
Constituent Documents.
LOAN AND
SECURITY AGREEMENT – PAGE 11
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(d) Books and
Records; Inspection Rights. Debtor will keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and
activities. Debtor will permit any representatives designated by
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
(e) Insurance. Debtor
will maintain insurance, including but not limited to, fire insurance,
comprehensive property damage, public liability, worker’s compensation, business
interruption and other insurance deemed reasonably necessary. Debtor
will deliver to Lender original or duplicate policies of such
insurance.
(f) Compliance
with Agreements. Debtor will comply, in all material respects
with all material agreements, contracts, and instruments binding on it or
affecting its properties or business.
(g) Notice of
Indebtedness. Debtor will promptly inform Lender of the
creation, incurrence or assumption by Debtor of any actual or contingent
liabilities not permitted under this Agreement.
(h) Notices
of Material Events. Debtor will furnish to Lender prompt
written notice of the following:
(i)
the occurrence of any Event of Default;
(ii) the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting Debtor that, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect;
(iii)
any and all material adverse changes in Debtor’s financial
condition and all claims made against Debtor that could materially affect the
financial condition of Debtor or the value of the Collateral.
Each
notice delivered under this Section shall be accompanied by a statement of an
executive officer of Debtor setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
(i) Ownership
and Liens. Debtor will maintain good and indefeasible title to
the Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for Permitted Encumbrances. Debtor will cause
any financing statement or other security instrument with respect to the
Collateral to be terminated, except for Permitted
Encumbrances. Debtor will defend at its expense Lender’s right, title
and security interest in and to the Collateral against the claims of any third
party.
(j) Accounts. Debtor
will, except as otherwise provided herein, collect, at Debtor’s own expense, all
amounts due or to become due under each of the accounts. In
connection with such collections, Debtor may and, at Lender’s direction, will
take such action not otherwise forbidden herein as Debtor or Lender may deem
reasonably necessary or advisable to enforce collection or performance of each
of the accounts. Debtor will also duly perform and cause to be
performed all of its material obligations with respect to the goods or services,
the sale or lease or rendition of which gave rise or will give rise to each
account. Debtor also covenants and agrees to take any action and/or
execute any documents that Lender may reasonably request in order to comply with
law relating to the assignment of the accounts.
LOAN AND
SECURITY AGREEMENT – PAGE 12
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(k) Chattel
Paper and Instruments. Debtor will take such action as may be
reasonably requested by Lender in order to cause any chattel paper or
instruments to be valid and enforceable and will cause all chattel paper and
instruments to have only one original counterpart. Upon request by
Lender, Debtor will deliver to Lender all originals of chattel paper or
instruments and unless such request is made, Debtor will not deliver possession
of such chattel paper or instruments to any Person and will mark all chattel
paper or instruments with a legend indicating that such chattel paper or
instrument is subject to the security interest granted
hereunder. Prior to any written request for the delivery of such
chattel paper and instruments constituting Collateral, Debtor shall cause such
chattel paper and instruments constituting Collateral to be marked with the
following legend: THIS INSTRUMENT AND ALL RIGHTS
HEREUNDER HAVE BEEN PLEDGED TO THERMO CREDIT, LLC UNDER A LOAN AND SECURITY
AGREEMENT DATED AS OF AUGUST 2, 2010 (AS THE SAME MAY BE AMENDED, MODIFIED OR
RESTATED FROM TIME TO TIME).
8. Negative
Covenants. Until all Indebtedness of Debtor under the Loan
Documents is indefeasibly paid or performed, and Lender has no further
commitment to lend under the Credit Facility, Debtor agrees and covenants as
follows:
(a) Loans. Debtor
will not make loans or guarantee any obligation of any other Person or entity
other (i) than loans or advances to employees of Debtor not to exceed FIVE THOUSAND AND NO/100 DOLLARS
($5,000.00) in the aggregate outstanding at any time, including such
loans and advances outstanding on the Closing Date, (ii) accounts
receivable for sales of inventory and other products and services provided by
Debtor to its respective customers in the ordinary course of business of Debtor,
and (iii) intercompany indebtedness between Parent and
Subsidiary.
(b) Transactions
With Affiliates. Debtor will not enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate of Debtor, except in the ordinary
course of and pursuant to the reasonable requirements of Debtor’s business (upon
prior written notice to Lender) and upon fair and reasonable terms no less
favorable to Debtor than would be obtained in a comparable arm’s-length
transaction with a Person or entity not an Affiliate of Debtor.
(c) Dividends
or Distribution. Debtor will not declare or pay any dividends
or distributions on any equity interest of Debtor to any Person, unless any such
amounts are directly utilized for the payment of (i) principal or interest
on Indebtedness owing from time to time by Debtor to Lender, or (ii) taxes
owing by an equity holder of Debtor to the extent that such taxes are incurred
as a result of the business operations of Debtor, so long as no Event of Default
or event which with notice and/or the passage of time would be an Event of
Default exists immediately prior to or after giving effect to such
dividends.
(d) Transfer
or Encumbrance. Debtor will not (i) sell, assign (by
operation of law or otherwise), transfer, exchange, lease or otherwise dispose
of any of the Collateral, (ii) grant a lien or security interest in or
execute, file or record any financing statement or other security instrument
with respect to the Collateral other than the Permitted Encumbrances, or
(iii) deliver actual or constructive possession of any of the Collateral to
any party other than Lender.
(e) Impairment
of Security Interest. Debtor will not take any action that
would in any manner impair the enforceability of Lender’s security interest in
any Collateral.
(f) Compromise
of Collateral. Debtor will not adjust, settle, compromise,
amend or modify any Collateral, except an adjustment, settlement, compromise,
amendment or modification in good faith and in the ordinary course of business;
provided,
however, this exception shall terminate following written notice from
Lender upon the occurrence and during the continuation of an Event of
Default. Debtor shall provide to Lender such information concerning
(i) any adjustment, settlement, compromise, amendment or modification of
any Collateral, and (ii) any claim asserted by any Account Debtor for
credit, allowance, adjustment, dispute, setoff or counterclaim, as Lender may
reasonably request from time to time.
(g) Financing
Statement Filings. Debtor will not cause or permit any change
(i) in the location of any Collateral, (ii) in the location of any
records concerning any Collateral, (iii) Debtor’s legal name, or
(iv) the state of Debtor’s organization to a jurisdiction other than as
represented herein unless Debtor shall have notified Lender in writing of such
change at least THIRTY
(30) days prior to the effective date of such change, and shall have
first taken all action required by Lender for the purpose of further perfecting
or protecting the security interest in favor of Lender in the
Collateral.
LOAN AND
SECURITY AGREEMENT – PAGE 13
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
9. Financial
Covenants. Until all Indebtedness of Debtor under the Loan
Documents is paid or satisfied in full and Lender has no further commitment to
lend under the Credit Facility, Debtor agrees and covenants that it will, unless
Lender shall otherwise consent in writing:
(a) Debt
Service Coverage. Maintain, as at the last day of each Fiscal
Quarter of Parent, a consolidated Debt Service Coverage ratio for the TWELVE (12) month period then
ended of not less than 1.0 to 1.0, measured on a quarterly basis.
(b) Operating
Income. Maintain, as of the last day of each fiscal year of
Parent, consolidated Operating Income for the TWELVE (12) month period then
ended of not less than zero, measured on a quarterly basis.
(c) Defined
Terms.
(i)
“Adjusted
EBITDA” means, for any period, the sum of (a) consolidated net
income of Debtor for such period (using an accrual
method of accounting consistently applied during such period); excluding
(b) the sum of (i) interest expense and fees and charges in connection
with any Debt or Indebtedness (including the Note), (ii) federal, state and
local income tax expense, (iii) depreciation expense and amortization
expense and (iv) write-off of goodwill, impairment charges, stock-based
compensation expense, and any other non-cash charges, expenses and losses
(including non-cash charges resulting from any accounting changes) which would
be classified as non-cash expenses in accordance GAAP (to the extent items (i),
(ii), (iii) and (iv) are deducted in determining Operating Income for the
same period).
(ii) “Debt
Service” means, for any period, the sum of (a) total cash interest
expense on indebtedness for borrowed money of Debtor paid during such period on a consolidated
basis, plus (b)
total scheduled principal payments on indebtedness for borrowed money of Debtor
made during such period on a consolidated basis.
(iii) “Debt
Service Coverage” means the ratio of
Adjusted EBITDA to Debt Service.
(iv) “Fiscal
Quarter” means, with respect to Debtor, any consecutive period of THREE (3) calendar months
ending on the last day of APRIL, JULY, OCTOBER or JANUARY of each calendar
year.
(v) “Operating
Income” shall have the meaning
specified under, GAAP, and shall be calculated by Debtor on a consolidated basis
in accordance with GAAP consistently applied.
10. Reporting
Requirements. Until all Indebtedness of Debtor under the Loan
Documents is indefeasibly paid and satisfied, and Lender has no further
commitment to lend under the Credit Facility, Debtor agrees and covenants that
it will furnish or cause to be furnished the following:
(a) Interim
Financial Statements. As soon as available, and in any event
within FORTY-FIVE
(45) days after
the end of each Fiscal Quarter, financial statements to include a balance sheet,
income statement and cash flow statement of Parent, on a consolidated basis as
of the end of such Fiscal Quarter and for the fiscal quarter then ended, all in
form and substance and in reasonable detail satisfactory to Lender and duly
certified (subject to year-end review adjustments) by an appropriate officer of
Debtor (i) as being true and correct in all material aspects to the best of
such officer’s knowledge (subject to year end adjustments), and (ii) as
having been prepared in accordance with GAAP.
LOAN AND
SECURITY AGREEMENT – PAGE 14
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(b) Annual
Financial Statements and Tax Returns. As soon as available and
in any event (i) within NINETY (90) days after the end
of each fiscal year, financials statement to include a balance sheet, income
statement and cash flow statement of Parent, on a consolidated basis, as of the
end of such fiscal year and for the period then ended, audited by independent
certified public accountants of recognized standing satisfactory to Lender, and
(ii) within THIRTY
(30) days of filing, annual income tax returns for Parent.
(c) Compliance
Certificate. Concurrently with the delivery of each of the
financial statements referred to in Sections 10 (a) and
(b), a certificate of an officer of Parent stating that to such officer’s
knowledge, no Event of Default has occurred and is continuing, or if an Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action which is proposed to be taken with respect thereto.
(d) Notice of
Default and Events of Default. As soon as possible and in any
event within FIVE (5)
Business Days after the occurrence of each Event of Default, a written notice
setting forth the details of such Event of Default and the action which is
proposed to be taken by Debtor with respect thereto.
(e) General
Information. Debtor shall promptly deliver such other
information concerning Debtor as Lender may request.
11. Rights of
Lender. Lender shall have the rights contained in this Section
at all times that this Agreement is effective.
(a) Financing
Statements. Debtor hereby authorizes Lender to file, without
the signature of Debtor, one or more financing or continuation statements, and
amendments thereto, relating to the Collateral. Debtor hereby
irrevocably authorizes Lender at any time and from time to time to file in any
Code jurisdiction any initial financing statements and amendments thereto that
(i) indicate the Collateral, and (ii) contain any other information
required by Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment.
(b) Power of
Attorney. Debtor hereby irrevocably appoints Lender as
Debtor’s attorney-in-fact, such power of attorney being coupled with an
interest, with full authority in the place and stead of Debtor and in the name
of Debtor or otherwise, from time to time following the occurrence and during
the continuation of an Event of Default in Lender’s reasonable discretion, to
take any action and to execute any instrument which Lender may deem necessary or
appropriate to accomplish the purposes of this Agreement.
(c) Performance
by Lender. If Debtor fails to perform any agreement or
obligation provided for in any Loan Document, Lender may itself perform, or
cause performance of, such agreement or obligation, and the expenses of Lender
incurred in connection therewith shall be a part of the Indebtedness, secured by
the Collateral and payable by Debtor on demand.
(d) Debtor’s
Receipt of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, all amounts and proceeds (including
instruments and writings) received by Debtor in respect of the Collateral shall
be received in trust for the benefit of Lender hereunder and, upon the written
request of Lender, shall be segregated from other property of Debtor and shall
be forthwith delivered to Lender in the same form as so received (with any
necessary endorsement) and applied to the Indebtedness in accordance with the
Loan Documents.
(e) Actions
with Respect to Accounts; Notification of Account Debtors. If
an Event of Default shall have occurred, and without limiting any other rights
and remedies provided herein or otherwise available to Lender, Lender may
exercise one or more of the rights and remedies provided in this
Section. Debtor irrevocably makes, constitutes and appoints Lender
(and any of Lender’s designated officers, employees or agents) as its true and
lawful attorney in fact with power to sign its name and to take any of the
following actions, in its name or in the name of Lender, as Lender may determine
at any time (except as expressly limited in this Section 11(e))
without notice to such Debtor and at such Debtor’s expense:
LOAN AND
SECURITY AGREEMENT – PAGE 15
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(i)
Verify the validity and amount of, or any other matter
relating to, the accounts by mail, telephone, telegraph or
otherwise;
(ii) Notify
all Account Debtors that the accounts have been assigned to Lender and that
Lender has a security interest in the accounts;
(iii) Direct
all Account Debtors to make payment of all accounts directly to
Lender;
(iv)
Take control in any manner of any cash or non cash items of payment or
proceeds of accounts;
(v) In
any case and for any reason, notify the United States Postal Service to change
the addresses for delivery of mail addressed to Debtor to such address as Lender
may designate;
(vi) In
any case and for any reason, receive, open and dispose of all mail addressed to
Debtor;
(vii) Take
control in any manner of any rejected, returned, stopped in transit or
repossessed goods relating to accounts; or
(viii) Enforce payment of and collect any accounts, by legal
proceedings or otherwise, and for such purpose Lender may
(A) demand payment of any accounts or direct
any Account Debtors to make payment of accounts directly to Lender;
(B) receive and collect all monies due or to
become due to Debtor; (C) exercise all
of Debtor’s rights and remedies with respect to the collection of
accounts; (D) settle, adjust,
compromise, extend, renew, discharge or release accounts, for amounts and upon
terms which Lender considers advisable; (E) sell or assign accounts on such terms, for such amounts and
at such times as Lender deems advisable; (F) prepare, file and sign Debtor’s name on any Proof of Claim or
similar documents in any proceeding filed under federal or state bankruptcy,
insolvency, reorganization or other similar law as to any Account Debtor;
(G) prepare, file and sign Debtor’s name on
any Notice of Lien, or similar document in connection with the
Collateral; (H) endorse the name of Debtor upon any chattel papers,
documents, instruments, invoices, freight bills, bills of lading, or similar
documents or agreements relating to accounts or goods pertaining to accounts or
upon any checks or other medium of payment or evidence of security interest that
may come into Lender’s possession; (I) sign the name of Debtor to
verifications of accounts and notices of accounts sent by Account Debtors to
Debtor; and (J) take all other actions necessary or desirable to protect
Debtor’s interest(s) in the accounts.
Debtor
ratifies and approves all acts of said attorneys and agrees that said attorneys
shall not be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law. This power, being coupled with an
interest, is irrevocable until the Indebtedness is paid in full and Debtor shall
have performed all of its obligations under this Agreement. Debtor
further agrees to use its best efforts to assist Lender in the collection and
enforcement of the accounts and will not hinder, delay or impede Lender in any
manner in its collection and enforcement of the accounts.
12. Events of
Default. Each of the following shall constitute an “Event of
Default” under this Agreement:
(a) Payment
Default. The failure, refusal or neglect of Debtor to pay when
due any part of the principal of, fees or interest on the Indebtedness owing to
Lender by Debtor from time to time and such failure, refusal or neglect shall
continue unremedied for a period of FIVE (5) Business Days from
the date such payment is due.
(b) Performance
or Warranty Default. The failure of Debtor to timely and
properly observe, keep or perform any covenant, agreement, warranty or condition
required herein or in any of the other Loan Documents which, if capable of cure,
is not cured within FIVE
(5) Business Days following written notice from Lender to Debtor; provided, however,
that the notice and cure periods in this Section 12(b)
shall not apply to a payment default as set forth in Section 12(a).
LOAN AND
SECURITY AGREEMENT – PAGE 16
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(c) Representations. Any
representation contained herein or in any of the other Loan Documents made by
Debtor is false or misleading in any material respect as of the date made or
deemed made.
(d) Default
Under Other Indebtedness. The occurrence of any event which
results in the acceleration of the maturity of any indebtedness for borrowed
money in an aggregate principal amount in excess of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) owing by Debtor to any third party under any agreement or
understanding.
(e) Insolvency. If
Debtor (i) becomes insolvent, or makes a transfer in fraud of creditors, or
makes an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally is not paying
its debts as such debts become due; (iii) has a receiver, trustee or
custodian appointed for, or take possession of, all or substantially all of its
assets, either in a proceeding brought by it or in a proceeding brought against
it and such appointment is not discharged or such possession is not terminated
within FORTY-FIVE (45)
days after the effective date thereof or it consents to or acquiesces in such
appointment or possession; (iv) files a petition for relief under the
United States Bankruptcy Code or any other present or future federal or state
insolvency, Bankruptcy or similar laws (all of the foregoing hereinafter
collectively called “Applicable
Bankruptcy Law”) or an involuntary petition for relief is filed against
it under any Applicable Bankruptcy Law and such involuntary petition is not
dismissed within FORTY-FIVE
(45) days after the filing thereof, or an order for relief naming it is
entered under any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter existing
is requested or consented to by it; or (v) fails to have discharged within
a period of FORTY-FIVE
(45) days any attachment, sequestration or similar writ levied upon any
property of it.
(f) Judgment. The
entry of any judgment against Debtor or the issuance or entry of any attachments
or other liens against any of the property or assets of Debtor for an amount in
excess of FIFTY THOUSAND AND
NO/100 DOLLARS ($50,000.00) (individually or in the aggregate) if
uninsured, undischarged, unbonded or undismissed on the date on which such
judgment could be executed upon.
(g) Action
Against Collateral. The Collateral or any portion thereof is
taken on execution or other process of law in any action.
(h) Action of
Lien Holder. The holder of any lien or security interest on
any of the assets of Debtor, including without limitation, the Collateral
(without hereby implying the consent of Lender to the existence or creation of
any such lien or security interest on the Collateral), declares a default
thereunder or institutes foreclosure or other proceedings for the enforcement of
its remedies thereunder.
(i) Material
Adverse Effect. Any event shall have occurred or is continuing
which shall have had a Material Adverse Effect.
Nothing
contained in this Agreement shall be construed to limit the events of default
enumerated in any of the other Loan Documents and all such events of default
shall be cumulative.
13. Remedies
and Related Rights. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the Loan Documents or otherwise available to Lender, Lender may
exercise one or more of the rights and remedies provided in this
Section.
LOAN AND
SECURITY AGREEMENT – PAGE 17
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(a) Remedies. Upon
the occurrence of any one or more of the foregoing Events of Default, (i) the
entire unpaid balance of principal of the Note, together with all accrued but
unpaid interest thereon, and all other Indebtedness owing to Lender by Debtor at
such time shall, at the option of Lender, become immediately due and payable
without further notice, demand, presentation, notice of dishonor, notice of
intent to accelerate, notice of acceleration, protest or notice of protest of
any kind, all of which are expressly waived by Debtor, provided, however,
that in the case of an Event of Default under Section 12(e)
such acceleration shall be automatic and (ii) Lender may, at its option,
cease further advances under the Note and this Agreement; provided, however,
concurrently and automatically with the occurrence of an Event of Default under
Section 12(e)
further advances under the Loan Documents shall automatically cease, the
Indebtedness at such time shall, without any action by Lender, become due and
payable, without further notice, demand, presentation, notice of dishonor,
notice of acceleration, notice of intent to accelerate, protest or notice of
protest of any kind, all of which are expressly waived by Debtor. All
rights and remedies of Lender set forth in this Agreement and in any of the
other Loan Documents may also be exercised by Lender, at its option to be
exercised in its sole discretion, upon the occurrence of an Event of Default,
and not in substitution or diminution of any rights now or hereafter held by
Lender under the terms of any other agreement. If an Event of Default
occurs, Lender shall also have all the rights of a secured party under the
Louisiana Commercial Laws (La. R. S. 10:1 101, et seq.). In addition, and
without limitation, Lender shall be entitled to foreclose upon its security
interests granted under this Agreement under ordinary or executory process and
to cause the Collateral to be immediately seized wherever found and sold with or
without appraisal, in regular session of court or in vacation, in accordance
with applicable Louisiana law, without the necessity of further demanding
payment from Debtor or of notifying Debtor or placing Debtor in default. For
purposes of foreclosure under Louisiana executory process procedures, Debtor
confesses judgment and acknowledges to be indebted to Lender up to the full
amount of the Indebtedness in principal, interest, late charges, costs,
attorneys’ fees and other fees and charges, and all other amounts secured under
this Agreement. To the extent permitted under applicable Louisiana law, Debtor
additionally waives: (i) the benefit of appraisal as provided in
Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and
all other laws with regard to appraisal upon judicial sale; (ii) the three
days delay as provided under Article 2721 of the Louisiana Code of Civil
Procedure; (iii) the notice of seizure as provided under Articles 2293
and 2721 of the Louisiana Code of Civil Procedure; (iv) the THREE (3) days delay provided
under Articles 2331 and 2722 of the Louisiana Code of Civil Procedure and
(v) all other benefits provided under Articles 2331, 2722 and 2723 of the
Louisiana Code of Civil Procedure and all other Articles not specifically
mentioned above. Debtor further agrees that Lender may appoint a
keeper of the Collateral in the event of foreclosure in accordance with LA. R.S.
9:5136-5140.2.
(b) Other
Remedies. Lender may from time to time at its discretion,
without limitation and without notice except as expressly provided in any of the
Loan Documents:
(i)
Exercise in respect of the Collateral all the rights and remedies of a secured
party under the Code (whether or not the Code applies to the affected
Collateral);
(ii) Require
Debtor to, and Debtor hereby agrees that it will at its expense and upon request
of Lender, assemble the Collateral as directed by Lender and make it available
to Lender at a place to be designated by Lender which is reasonably convenient
to both parties;
(iii) Reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest granted hereunder by any available judicial
procedure;
(iv) Hold
and exercise any rights Debtor may have in respect of the Collateral and require
that Debtor take no action as to such rights other than as directed by Lender
and hold, as cash collateral, any and all balances and deposits of Debtor held
by Lender, to secure the full and final repayment of all of the Indebtedness and
to take all other action that Lender deems necessary to ensure that it receives
payment of the Indebtedness;
(v)
Sell or otherwise dispose of, at its office, on the premises
of Debtor or elsewhere, the Collateral, as a unit or in parcels, by public or
private proceedings, and by way of one or more contracts (it being agreed that
the sale or other disposition of any part of the Collateral shall not exhaust
Lender’s power of sale, but sales or other dispositions may be made from time to
time until all of the Collateral has been sold or disposed of or until the
Indebtedness has been paid and performed in full), and at any such sale or other
disposition it shall not be necessary to exhibit any of the
Collateral;
(vi) Buy
the Collateral, or any portion thereof, at any public sale;
LOAN AND
SECURITY AGREEMENT – PAGE 18
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(vii) Buy
the Collateral, or any portion thereof, at any private sale if the Collateral is
of a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(viii) Apply
for the appointment of a receiver for the Collateral, and Debtor hereby consents
to any such appointment; and
(ix) At
its option, retain the Collateral in satisfaction of the Indebtedness whenever
the circumstances are such that Lender is entitled to do so under the Code or
otherwise.
Debtor
agrees that in the event Debtor is entitled to receive any notice under the
Code, as it exists in the state governing any such notice, of the sale or other
disposition of any Collateral, reasonable notice shall be deemed given when such
notice is deposited in a depository receptacle under the care and custody of the
United States Postal Service, postage prepaid, at Debtor’s address set forth on
the signature page hereof, TEN
(10) days prior to the date of any public sale, or after which a private
sale, of any of such Collateral is to be held. Lender shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Lender may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(c) Application
of Proceeds. If any Event of Default shall have occurred,
Lender may at its discretion apply or use any cash held by Lender as Collateral,
and any cash proceeds received by Lender in respect of any sale or other
disposition of, collection from, or other realization upon, all or any part of
the Collateral as follows in such order and manner as Lender may
elect:
(i)
to the repayment or reimbursement of the reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses)
incurred by Lender in connection with (1) the administration of the Loan
Documents, (2) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, the Collateral, and (3) the
exercise or enforcement of any of the rights and remedies of Lender
hereunder;
(ii) to
the payment or other satisfaction of any liens and other encumbrances upon the
Collateral;
(iii) to
the satisfaction of the Indebtedness;
(iv)
by holding such cash and proceeds as Collateral;
(v) to
the payment of any other amounts required by applicable law; and
(vi)
by delivery to Debtor or any other party lawfully entitled to receive such cash
or proceeds whether by direction of a court of competent jurisdiction or
otherwise.
(d) License. Lender
is hereby granted a license or other right to use, following the occurrence and
during the continuance of an Event of Default, without charge, Debtor’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, customer lists and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral, and, following
the occurrence and during the continuance of an Event of Default, Debtor’s
rights under all licenses and all franchise agreements shall inure to Lender’s
benefit.
(e) Deficiency. In
the event that the proceeds of any sale of, collection from, or other
realization upon, all or any part of the Collateral by Lender are insufficient
to pay all amounts to which Lender is legally entitled, Debtor (unless otherwise
provided) shall be liable for the deficiency, together with interest thereon as
provided in the Loan Documents.
LOAN AND
SECURITY AGREEMENT – PAGE 19
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
(f) Non-Judicial
Remedies. In granting to Lender the power to enforce its
rights hereunder without prior judicial process or judicial hearing, Debtor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Lender to enforce its rights by judicial
process. Debtor recognizes and concedes that non-judicial remedies
are consistent with the usage of trade, are responsive to commercial necessity
and are the result of a bargain at arm’s length. Nothing herein is
intended to prevent Lender or Debtor from resorting to judicial process at
either party’s option.
(g) Other
Recourse. Debtor waives any right to require Lender to proceed
against any third party, exhaust any Collateral or other security for the
Indebtedness, or to have any third party joined with Debtor in any suit arising
out of the Indebtedness or any of the Loan Documents, or pursue any other remedy
available to Lender. Debtor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension of the Indebtedness. Debtor further waives any
defense arising by reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of the liability of any
third party. Until all of the Indebtedness shall have been paid in
full, Debtor shall not have any right of subrogation. Debtor waives
the right to enforce any remedy which Lender has or may hereafter have against
any third party, and waives any benefit of and any right to participate in any
other security whatsoever now or hereafter held by Lender. Debtor
authorizes Lender, and without notice or demand and without any reservation of
rights against Debtor and without affecting Debtor’s liability hereunder or on
the Indebtedness to (i) take or hold any other property of any type from
any third party as security for the Indebtedness, and exchange, enforce, waive
and release any or all of such other property, (ii) apply such other
property and direct the order or manner of sale thereof as Lender may in its
discretion determine, (iii) renew, extend, accelerate, modify, compromise,
settle or release any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any provision of any Loan
Document executed by any third party, and (v) release or substitute any
third party.
(h) No
Waiver; Cumulative Remedies. No failure on the part of Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power, or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power, or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
(i) Equitable
Relief. Debtor recognizes that in the event Debtor fails to
pay, perform, observe, or discharge any or all of the Indebtedness, any remedy
at law may prove to be inadequate relief to Lender. Debtor therefore
agrees that Lender, if Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
14. Indemnity. Debtor
hereby indemnifies and agrees to hold harmless Lender, and its officers,
directors, employees, agents and representatives (each an “Indemnified
Person”) from and against any and all liabilities, obligations, claims,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature (collectively, the “Claims”)
which may be imposed on, incurred by, or asserted against, any Indemnified
Person arising in connection with the Loan Documents, the Indebtedness or the
Collateral (including without limitation, the enforcement of the Loan Documents
and the defense of any Indemnified Person’s actions and/or inactions in
connection with the Loan Documents). Except to the limited extent the
Claims against an Indemnified Person are proximately caused by such Indemnified
Person’s gross negligence or willful misconduct, WITHOUT LIMITATION, THE FOREGOING
INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS
WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
AND/OR ANY OTHER INDEMNIFIED PERSON. If Debtor or any third
party ever alleges such gross negligence or willful misconduct by any
Indemnified Person, the indemnification provided for in this Section shall
nonetheless be paid upon demand, subject to later adjustment or reimbursement,
until such time as (a) a court of competent jurisdiction enters a final
judgment as to the extent and effect of the alleged gross negligence or willful
misconduct, or (b) Lender has expressly agreed in writing with Debtor that
such Claim is proximately caused by such Indemnified Person’s gross negligence
or willful misconduct. The indemnification provided for in this
Section shall survive the termination of this Agreement and shall extend and
continue to benefit each individual or entity that is or has at any time been an
Indemnified Person hereunder.
LOAN AND
SECURITY AGREEMENT – PAGE 20
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
15. No
Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to Debtor or any of Debtor’s equity holders or any other
Person. Documents in connection with the transactions contemplated
hereunder have been prepared by GARDERE WYNNE SEWELL LLP
(“Lender’s
Counsel”). Debtor acknowledges and understands that Lender’s
Counsel is acting solely as counsel to Lender in connection with the transaction
contemplated herein, is not representing Debtor in connection therewith, and has
not, in any manner, undertaken to assist or render legal advice to Debtor with
respect to this transaction. Debtor has been advised to seek other
legal counsel to represent each of their interests in connection with the
transactions contemplated herein.
16. Lender
Not Fiduciary. The relationship between Debtor and Lender is
solely that of debtor and creditor, and Lender has no fiduciary or other special
relationship with Debtor, and no term or condition of any of the Loan Documents
shall be construed so as to deem the relationship between Debtor and Lender to
be other than that of debtor and creditor.
17. Waiver
and Agreement. Neither the failure nor any delay on the part
of Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. No waiver of any provision in this Agreement or in any of
the other Loan Documents and no departure by Debtor therefrom shall be effective
unless the same shall be in writing and signed by Lender, and then shall be
effective only in the specific instance and for the purpose for which given and
to the extent specified in such writing. No modification or amendment
to this Agreement or to any of the other Loan Documents shall be valid or
effective unless the same is signed by the party against whom it is sought to be
enforced.
18. Benefits. This
Agreement shall be binding upon and inure to the benefit of Lender and Debtor,
and their respective successors and assigns, provided, however,
that Debtor may not, without the prior written consent of Lender, assign any
rights, powers, duties or obligations under this Agreement or any of the other
Loan Documents.
19. Notices. All
notices, requests, demands or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and given by
(a) personal delivery, (b) expedited delivery service with proof of
delivery, or (c) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the signature page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time of personal
delivery, in the case of expedited delivery service, as of the time of the
expedited delivery and in the manner provided herein, or in the case of mail,
upon the THIRD (3rd) day after deposit in a
depository receptacle under the care and custody of the United States Postal
Service. Any party shall have the right to change its address for
notice hereunder to any other location within the continental United States by
notice to the other party of such new address. Copies of notices
provided by Debtor to Lender under this
Agreement shall be simultaneously provided to Lender’s Counsel at the address
specified in the signature page hereof.
20. Construction;
Venue; Service of Process. The Loan Documents have been
executed and delivered in the State of Texas, shall be governed by and construed
in accordance with the laws of the State of Louisiana (without giving effect to
its choice of laws provisions), and shall be performable by the parties hereto
in the parish in Louisiana where Lender’s address set forth on the signature
page hereof is located (the “Venue
Site”). Any action or proceeding against Debtor under or in
connection with any of the Loan Documents may be brought in any state or federal
court within the Venue Site. Debtor hereby irrevocably
(a) submits to the nonexclusive jurisdiction of such courts, and
(b) waives any objection it may now or hereafter have as to the venue of
any such action or proceeding brought in any such court or that any such court
is an inconvenient forum. Debtor agrees that service of process upon
it may be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions this
Agreement. Nothing in any of the other Loan Documents shall affect
the right of Lender to serve process in any other manner permitted by law or
shall limit the right of Lender to bring any action or proceeding against Debtor
or with respect to any of its property in courts in other
jurisdictions. Any action or proceeding by Debtor against Lender
shall be brought only in a court located in the Venue Site.
LOAN AND
SECURITY AGREEMENT – PAGE 21
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
21. Invalid
Provisions. If any provision of the Loan Documents are held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and the remaining provisions of the Loan
Documents shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance.
22. Expenses. Debtor
shall pay all reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees) in connection with (a) any action (including,
without limitation, any inspections) required in the course of administration of
the indebtedness and obligations evidenced by the Loan Documents (provided, however,
that Debtor shall not be responsible for the costs of more than one inspection
every three months as long as no Event of Default has occurred and is
continuing), and (b) any action in the enforcement of Lender’s rights upon
the occurrence of an Event of Default.
23. Conflicts. Except
as otherwise expressly provided in the Note, in the event any term or provision
of this Agreement is inconsistent with or conflicts with any provision of the
other Loan Documents, the terms and provisions contained in this Agreement shall
be controlling.
24. Counterparts. The
Loan Documents may be separately executed in any number of counterparts, each of
which shall be an original, but all of which, taken together, shall be deemed to
constitute one and the same instrument.
25. Survival. All
representations and warranties made in the Loan Documents or in any document,
statement, or certificate furnished in connection with this Agreement shall
survive the execution and delivery of the Loan Documents, and no investigation
by Lender or any closing shall affect the representations and warranties or the
right of Lender to rely upon them.
26. Certain
Acknowledgements. Debtor hereby acknowledges and agrees that
there are no defenses, counterclaims, offsets, cross-complaints, claims or
demands of any kind or nature whatsoever to or against Lender or the terms and
provisions of or the obligations of Debtor under this Agreement and the other
agreements, instruments and documents evidencing, securing, governing,
guaranteeing or pertaining thereto, and that Debtor has no right to seek
affirmative relief or damages of any kind or nature from Lender. To
the extent any such defenses, counterclaims, offsets, cross-complaints, claims,
demands or rights exist, Debtor hereby waives, and hereby knowingly and
voluntarily releases and forever discharges Lender and its predecessors,
officers, directors, agents, attorneys, employees, successors and assigns, from
all possible claims, demands, actions, causes of action, defenses,
counterclaims, offsets, cross-complaints, damages, costs, expenses and
liabilities whatsoever, whether known or unknown, such waiver and release being
with full knowledge and understanding of the circumstances and effects of such
waiver and release and after having consulted legal counsel with respect
thereto.
27. Waiver of
Right to Trial by Jury. THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THE LOAN
DOCUMENTS OR THE ACTS OR FAILURE TO ACT OF OR BY LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THE LOAN DOCUMENTS.
28. Patriot
Act Notice. Lender hereby notifies Debtor that pursuant to the
requirements of Section 326 of the USA Patriot Act of 2001, 31 U.S.C. §
5318 (the “Act”),
that Lender is required to obtain, verify and record information that identifies
Debtor, which information includes the name and address of Debtor and other
information that will allow such Lender to identify Debtor in accordance with
the Act.
29. Notice of
Final Agreement. It is the intention of Debtor and Lender that
the following NOTICE OF FINAL
AGREEMENT be incorporated by reference into each of the Loan Documents
(as the same may be amended, modified or restated from time to
time). Debtor and Lender warrant and represent that the entire
agreement made and existing by or among Debtor and Lender with respect to the
loans is and shall be contained within the Loan Documents, and that no
agreements or promises exist or shall exist by or among, Debtor and Lender that
are not reflected in the Loan Documents.
LOAN AND
SECURITY AGREEMENT – PAGE 22
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
NOTICE OF FINAL
AGREEMENT
THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK
LOAN AND
SECURITY AGREEMENT – PAGE 23
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
AGREED as of the date first
written above.
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LENDER:
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ADDRESS:
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THERMO
CREDIT, LLC
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639
Loyola Avenue
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Suite
2565
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By:
/s/
Jack V. Eumont,
Jr.
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New Orleans, LA 70113 | |
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Name:
Jack V. Eumont,
Jr.
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Title: EVP
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With
copies of notices to:
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Gardere
Wynne Sewell LLP
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1601
Elm Street, Suite 3000
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Dallas,
TX 75201-4761
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Attention: Steven
S. Camp
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DEBTOR:
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ADDRESS:
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ATSI
COMMUNICATIONS, INC.
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3201
Cherry Ridge St.
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San
Antonio, TX 78230
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By: /s/ Authur L.
Smith
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Name:
Arthur L.
Smith
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Title:
CEO
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DIGERATI
NETWORKS, INC.
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3201
Cherry Ridge St.
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San
Antonio, TX 78230
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By: /s/ Antonio Estrada,
Jr.
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Name:
Antonio Estrada,
Jr.
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Title:
Sr. VP of
Finance and Corporate Controller
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DIGERATI
BROADBAND, INC.
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3201
Cherry Ridge St.
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San
Antonio, TX 78230
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By: /s/ Antonio Estrada,
Jr.
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Name: Antonio
Estrada,
Jr.
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Title: Sr. VP of Finance and
Corporate Controller
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Documents
Prepared By:
Steven S.
Camp
Gardere
Wynne Sewell LLP
1601 Elm
Street, Suite 3000
Dallas,
TX 75201
214-999-4354
LOAN AND
SECURITY AGREEMENT – PAGE 24
THERMO
CREDIT, LLC – ATSI COMMUNICATIONS, INC.
SCHEDULE
1(s)
Permitted
Liens
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A.
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Liens
securing obligations of ATSI Communications, Inc. to CCA Financial
Services, Inc., assigned to San Antonio National Bank, as set forth in the
financing statement filed with the Texas Secretary of State under File No.
06-0035932795, relating to all accounts receivable, inventory and
equipment, and all proceeds of or substitutions for any of the
foregoing.
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B.
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Liens
securing obligations of ATSI Communications, Inc. to Vencore Solutions,
LLC, as set forth in the financing statement filed with the Texas
Secretary of State under File No. 08-0031576151, relating to all accounts
receivables other than accounts that have been sold to Wells Fargo,
Certificate of Deposit at Wells Fargo for $100,000.00, and ownership
interests in ATSICOM.
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SCHEDULE
6(n)
Employee
Benefit Plans
401K
PROFIT SHARING PLAN from ATSI Communications, Inc.