EXHIBIT 10.32
EXHIBIT I
AMENDED AND RESTATED DEMAND PROMISSORY NOTE
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$ 20,000,000 New York, New York
as of December 31, 1998
FOR VALUE RECEIVED, Mtel Latin America, Inc., a Delaware corporation (the
"Borrower"), DOES HEREBY PROMISE TO PAY to the order of CREDIT LYONNAIS NEW YORK
BRANCH (the "Lender") at its office at 1301 Avenue of the Americas, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the holder hereof may designate in
writing, in lawful money of the United States of America in immediately
available funds, ON DEMAND (or if no demand has been made, then on a date
determined pursuant to Section 3 below), the principal amount of twenty million
United States Dollars ($20,000,000), or the principal balance outstanding
hereunder pursuant to the terms of a certain Letter Agreement referred to below,
and on each Interest Payment Date (as hereinafter defined) interest from the
date of first disbursement hereunder on the balance of principal remaining from
time to time outstanding at the rate ("Interest Rate") defined in this Note.
1. Definitions. For the purposes hereof, the following terms shall have the
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meanings accorded to them therein:
"Alternate Base Rate" shall mean for any day, a rate per annum (rounded
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upwards to the nearest 1/16 of 1% if not already an integral multiple of 1/16 of
1%) equal to the greatest of (a) the Prime Rate in effect for such day, (b) the
Federal Funds Effective Rate in effect for such day plus 1/2 of 1% or (c) the
Base CD Rate in effect for such day plus 1%. For purposes hereof, "Prime Rate"
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shall mean the rate of interest per annum announced by the Lender from time to
time as its stated rate. For purposes of this Note, any change in the Alternate
Base Rate due to a change in the Prime Rate shall be effective on the date such
change in the Prime Rate is effective. "Federal Funds Effective Rate" shall
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mean, for any period, a fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it. "Base CD Rate" shall mean the sum of (a)
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the product of (i) the Average Weekly Three-Month Secondary CD Rate times (ii)
Statutory Reserves and (b) the Assessment Rate. "Average Weekly Three-Month
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Secondary CD Rate" shall mean the three-month secondary certificate of deposit
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("CD") rate for the most recent weekly period covered therein in the Federal
Reserve Statistical release entitled "Weekly Summary of Lending and Credit
Measures (Averages of daily figures)" released in the
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week during which occurs the day for which the CD rate is being determined. The
CD rate so reported shall be in effect, for the purposes of this definition, for
each day of the week in which the release date of such publication occurs. If
such publication or a substitute containing the foregoing rate information is
not published by the Federal Reserve for any week, such average rate shall be
determined by the Lender on the basis of quotations received by it from three
New York City negotiable certificate of deposit dealers of recognized standing
on the first Business Day of the week succeeding such week for which such rate
information is not published. "Statutory Reserves" shall mean a fraction
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(expressed as a decimal) the numerator of which is the number one and the
denominator of which is the number one minus the aggregate rates (expressed as a
decimal) of (A) basic and supplemental reserve requirements in effect on the
date of ef fectiveness of such Average Weekly Three-Month Secondary CD Rate, as
set forth above under Regulation D of the Board of Governors of the Federal
Reserve System applicable to certificates of deposit in units of $100,000 or
more issued by a "member bank" located in a "reserve city" (as such terms are
used in Regulation D) and (B) marginal reserve requirements in effect on such
date of effectiveness under Regulation D applicable to time deposits of a
"member bank". If for any reason the Lender shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or Federal Funds Effective Rate, or both, for any
reason, including, without limitation, the inability or failure of the Lender to
obtain sufficient bids or publications in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Average Weekly Three-Month Secondary
CD Rate shall be effective on the effective date of such change in the CD Rate.
Any change in the Alternate Base Rate due to a change in the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Federal Funds Effective Rate.
"Alternate Base Rate Loan" shall mean a Loan based on the Alternate Base Rate in
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accordance with this Note.
"Basis Point" shall mean 1/100th of 1%.
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"Business Day" shall mean any day other than a Saturday, Sunday or other day on
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which banks in the State of New York are permitted to close; provided, however,
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that when used in connection with a Eurodollar Loan, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in Dollar
deposits on the London Interbank Market.
"Capital Expenditures" shall mean, with respect to any Person for any period,
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the sum of (i) the aggregate of all expenditures (whether paid in cash or
accrued as a liability) by such Person during that period which, in accordance
with GAAP, are or should be included in "additions to property, plant or
equipment" or similar items reflected in the statement of cash flows of such
Person and (ii) to the extent not covered by clause (i)
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hereof, the aggregate of all expenditures by such Person to acquire by purchase
or otherwise the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any other Person (other than the portion of
such expenditures allocable in accordance with GAAP to net current assets).
"Capital Lease" shall mean, as applied to any Person, any lease of any property
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(whether real, personal or mixed) by that Person as lessee which, in accordance
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
"Eurodollar Loan" shall mean a loan based on the LIBO Rate in accordance with
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this Note.
"Event of Default" shall having the meaning given such term in Section 12
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hereof.
"Governmental Authority" shall mean any federal, state, municipal or other
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governmental department, commission, board, bureau, agency or instrumentality,
or any court or arbitrator, in each case whether of the United States or a
foreign jurisdiction.
"Indebtedness" shall mean, at any time and with respect to any Person, (i)
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indebtedness of such Person for borrowed money (whether by loan or the issuance
and sale of debt securities) or for the deferred purchase price of property or
services purchased (other than amounts constituting accrued expenses and trade
payables (payable within 90 days) arising in the ordinary course of business);
(ii) obligations of such Person in respect of letters of credit, acceptance
facilities, or drafts or similar instruments issued or accepted by banks and
other financial institutions for the account of such Person; (iii) obligations
of such Person under capital leases; (iv) deferred payment obligations of such
Person resulting from the adjudication or settlement of any claim or litigation
and (v) indebtedness of others of the type described in clauses (i), (ii), (iii)
and (iv) hereof which such Person has (a) directly or indirectly assumed or
guaranteed in connection with a guaranty or (b) secured by a Lien on the assets
of such Person, whether or not such Person has assumed such indebtedness.
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan having an
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Interest Period of one, two or three months, the last day of such Interest
Period, and (ii) with respect to any Alternate Base Rate Loan, the last Business
Day of each March and June, commencing on the last Business Day of March 1999.
"Interest Period" shall mean as to any Eurodollar Loan, the period commencing on
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the date of such Loan or the last day of the preceding Interest Period and
ending on the numerically corresponding day (or if there is no corresponding
day, the last day) in the calendar month that is one, two or three months
thereafter as the Borrower may elect; provided, however, that (i) if any
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Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day, unless
such next succeeding Business Day would fall in the next calendar month, in
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which case, such Interest Period shall end on the next preceding Business Day,
and (ii) no Interest Period may be selected which would end later than the
Outside Maturity Date.
"LIBO Rate" shall mean, with respect to any Interest Period for a Eurodollar
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Loan, an interest rate per annum equal to the quotient (rounded upwards to the
next 1/100 of 1%) of (A) the average of the rates at which Dollar deposits
approximately equal in principal amount to the Lender's portion of such
Eurodollar Loan and for a maturity equal to the applicable Interest Period are
offered to the Lending Office of the Lender in immediately available funds in
the London Interbank Market for Eurodollars at approximately 11:00 a.m., London
time, two (2) Business Days prior to the commencement of such Interest Period
divided by (B) one minus the applicable statutory reserve requirements of the
Lender, expressed as a decimal (including without duplication or limitation,
basic, supplemental, marginal and emergency reserves), from time to time in
effect under Regulation D or similar regulations of the Board of Governors of
the Federal Reserve System. It is agreed that for purposes of this definition,
Eurodollar Loans made hereunder shall be deemed to constitute Eurocurrency
Liabilities as defined in Regulation D and to be subject to the reserve
requirements of Regulation D.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien or
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charge of any kind whatsoever (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
similar law of any jurisdiction).
"Loans" shall be loans to the Borrower on any Business Day and from time to time
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on or after the date hereof and prior to the Maturity Date, whether by demand
or otherwise, in an aggregate principal amount at any one time outstanding for
the Lender which will not exceed U$20,000,000.
"Margin" shall mean in the case of Alternate Base Rate Loans, 5.00% per annum
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and, in the case of Eurodollar Loans, 6.00% per annum, increasing in each case
by 50 Basis Points on June 30, 1999 and September 30, 1999.
"Material Adverse Effect" shall mean any event or condition that (a) has a
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material adverse effect on the business, assets, properties, operations,
condition (financial or otherwise) or prospects of the Borrower or the Borrower
and its Consolidated Subsidiaries taken as a whole, (b) materially impairs the
ability of the Borrower, to perform any of its respective obligations under this
Note or any Loan Document, or (c) materially impairs the validity or
enforceability of, or materially impairs the rights or remedies available to the
Lender under, this Note or any Loan Document; provided, however, that any event
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or condition will be deemed to have a "Material Adverse Effect", if such event
or condition when taken together with all other events or conditions occurring
or in existence at such time with respect to the Borrower or any of its
Subsidiaries (including all other events and conditions which, but for the fact
that any representation or warranty contained herein is subject to a "Material
Adverse Effect" exception, would cause such representation or warranty to be
untrue) would result in a
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"Material Adverse Effect", even though, individually, such event or condition
would not do so.
"Net Cash Proceeds" shall mean cash payments received (including any cash
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payments received by way of repayment of intercompany Indebtedness, special
dividend or deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received) from any sale, lease,
transfer or other disposition or issuance of Indebtedness, equity securities or
other ownership interests of the Borrower, a Subsidiary of the Borrower or a
Joint Venture or any property or other assets of the Borrower or a Subsidiary of
the Borrower in each case net of (A) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, (B) any taxes
payable and reasonably estimated income taxes as a consequence of such sale,
lease, transfer or other disposition and (C) all distributions and other
payments made to holders of interests in the Borrower, Subsidiary or Joint
Venture owned by Persons other than the Borrower as a result of such sale,
lease, transfer or other disposition.
"Outside Maturity Date" shall be December 31, 1999.
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"Permitted Encumbrances" shall mean Liens permitted under Section 11.2 hereof.
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"Person" shall mean any natural person, corporation, division of a corporation,
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partnership, limited liability company, trust, joint venture, association,
company, estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Pledged Joint Venture" shall mean Communicaciones Mtel S.A. de C.V.
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"Pledged Subsidiary" shall mean Mtel Argentina Radiomensaje S.A., Mtel Colombia
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S.A., and Telecommunicaciones SkyTel S.A.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation
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(whether now existing or hereafter organized) of which at least a majority of
the voting stock having ordinary voting power for the election of directors is,
at the time as of which any determination is being made, directly or indirectly
owned or controlled by such Person and (ii) any partnership, joint venture,
association or other business entity (whether now existing or hereafter
organized) of which more than 50% of the equity interest is, at the time as of
which any determination is being made, directly or indirectly owned or
controlled by such Person.
2. Demand Note.
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This Amended and Restated Demand Note (this "Note") is the Demand Note referred
to in that certain Amended and Restated Letter Agreement of even date between
the Borrower and the Lender (the "Letter Agreement") to which reference is
hereby made for
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the terms and provisions thereof and for additional rights and limitations of
such rights of the Borrower and Lender thereunder. The payment of this Note is
also secured by other documents, including (i) the pledge agreements executed by
the Borrower to pledge to the Lender its shares of each of its Pledged
Subsidiaries and Pledged Joint Ventures, (ii) the Letter Agreement, and (iii)
said other documents whether now or hereafter executed and delivered to the
Lender, together herein referred to as the "Loan Documents". All of the
agreements, conditions, covenants, provisions and stipulations contained in the
Loan Documents which are to be kept and performed by the Borrower are hereby
made a part of this Note to the same extent and with the same force and effect
as if they were fully set forth herein, and the Borrower covenants and agrees to
keep and perform them or cause them to be kept and performed, strictly in
accordance with their terms.
3. Maturity Date.
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The final payment of interest and all principal under this Note, if not sooner
paid, shall be paid the earlier of (i) ON DEMAND, (ii) January 29, 1999 if (a)
Newbridge Partners, LLP (or some other investor satisfactory to the Lender) has
not funded a minimum of $10 million for the purchase of the Borrower's PIK
preferred securities, (b) a warrant agreement in form and substance satisfactory
to the Lender has not been executed or (c) the Borrower has not established a
segregated account at the Lender for the payments to be made under Section 7(c)
of this Note, or (iii) at the Outside Maturity Date.
4. Interest.
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(a) In the case of a Eurodollar Loan, interest shall be payable at a rate per
annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the LIBO Rate plus the Margin applicable to
Eurodollar Loans as in effect from time to time. Interest shall be payable
on each Eurodollar Loan on each applicable Interest Payment Date, on the
date of any prepayment thereof, at the Maturity Date and on the date of a
conversion of such Eurodollar Loan to an Alternate Base Rate Loan. The
Lender shall determine the applicable LIBO Rate for each Interest Period as
soon as practicable on the date when such determination is to be made in
respect of such Interest Period and shall notify the Borrower of the
applicable interest rate so determined. Such determination shall be
conclusive absent manifest error.
(b) In the case of an Alternate Base Rate Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed
over a year of 365/366 days, as the case may be, during such times as the
Alternate Base Rate is based upon the Prime Rate, and over a year of 360
days at all other times) equal to the Alternate Base Rate plus the Margin
applicable to Alternate Base Rate Loans. Interest shall be pay able on
each Alternate Base Rate Loan on each applicable Interest Payment Date, on
the date of any prepayment thereof and at the Maturity Date.
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(c) Interest in respect of any Loan hereunder shall accrue from and including
the date of such Loan to but excluding the date on which such Loan is paid
or if applicable, converted to a Loan of a different type.
5. Default Interest.
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From and after (i) the occurrence of any failure of the Borrower to pay
principal, interest, or both when due hereunder, or under the Letter Agreement,
or (ii) any default or Event of Default hereunder or under any of the Loan
Document, or (iii) the Maturity Date, whether by demand or otherwise, interest
shall accrue on the amount of principal due and outstanding hereunder at the
following rates per annum: (i) for the remainder of the then current Interest
Period for each Eurodollar Loan, at 3% in excess of the LIBO Rate plus the
Margin otherwise then in effect and (ii) for all periods subsequent to the then
current Interest Period for each Eurodollar Loan, for all Alternate Base Rate
Loans and for all other overdue amounts hereunder, at 3% in excess of the
Alternate Base Rate plus the Margin otherwise then in effect.
6. Continuation and Conversion of Loans.
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The Borrower shall have the right, at any time, to convert any Loan or portion
thereof to a successive Loan of a different interest rate type or to continue
any Eurodollar Loan for a successive Interest Period, subject to the following:
(a) the Borrower shall give the Lender prior notice of each continuation or
conversion hereunder, of at least three (3) Business Days for continuation
as, or conversion to, a Eurodollar Loan and one (1) Business Day for
conversion to an Alternate Base Rate Loan; such notice shall be irrevocable
and to be effective, must be received by the Lender no later than 11:00
a.m., New York City time on the day required;
(b) no Alternate Base Rate Loan (or portion thereof) may be converted to a
Eurodollar Loan and no Eurodollar Loan may be continued as a Eurodollar
Loan if, after such conversion or continuation, and after giving effect to
any concurrent prepayment of Loans, more than ten (10) separate Eurodollar
Loans would be outstanding hereunder with respect to the Lender (for
purposes of determining the number of such Loans outstanding, Loans with
different Interest Periods commencing or ending on different dates shall be
counted as different Loans);
(c) the aggregate principal amount of Loans continued as, or converted to,
Eurodollar Loans as part of the same continuation or conversion, shall be
$1,000,000 or such greater amount which is an integral multiple of
$500,000;
(d) accrued interest on a Eurodollar Loan (or portion thereof) being converted
to an Alternate Base Rate Loan shall be paid by the Borrower at the time of
conversion;
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(e) the Interest Period with respect to a new Eurodollar Loan effected by a
continuation or conversion shall commence on the date of continuation or
conversion;
(f) if a Eurodollar Loan is converted to an Alternate Base Rate Loan other than
on the last day of the Interest Period with respect thereto, the amounts
required by Section 8 hereunder shall be paid upon such conversion; and
(g) each request for a continuation as, or conversion to, a Eurodollar Loan
which fails to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of one month.
Subject to the foregoing, in the event that the Borrower shall not give notice
to continue or convert any Eurodollar Loan as provided above, such Loan (unless
repaid) shall automatically be converted to an Alternate Base Rate Loan at the
expiration of the then current Interest Period.
7. Mandatory Termination or Reduction of Commitments; Prepayment of Loans.
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(a) The total commitment shall be automatically and permanently reduced by an
amount equal to one hundred percent (100%) of the Net Cash Proceeds from
the issuance by the Borrower of any equity securities or additional
Indebtedness, except for the PIK preferred securities to be subscribed by
Newbridge Partners, LLP, or such other investors satisfactory to the Lender
in its discretion, which proceeds will be used within 29 days of the date
hereof to reduce the outstanding Loans. Any reduction of the total
commitment pursuant to this Section 7(a) shall occur substantially
simultaneously with the receipt by the Borrower of such proceeds.
(b) The total commitment shall be automatically and permanently reduced by an
amount equal to one hundred percent (100%) of the Net Cash Proceeds from
any asset sale permitted hereunder or otherwise consented to by the Lender,
except for the first $1 million of Net Cash Proceeds which will be used to
reduce the outstanding Loans but not reduce total commitment. Any
reduction in the total commitment pursuant to this Section 7(b) shall occur
substantially simultaneously with the receipt by the Borrower of the
applicable Net Cash Proceeds.
(c) Any and all distributions, interest, management fees or similar fees paid
in cash with respect to the shares of the Pledged Joint Venture or the
issuer thereof will be paid directly to a segregated account maintained by
the Borrower at the Lender. So long as the Loans have not matured, either
by demand or otherwise, the Borrower shall have free access to said
segregated account.
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8. Reimbursement of Lender.
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The Borrower shall reimburse the Lender on demand for any loss incurred or to be
incurred by it in the reemployment of the funds released (i) by any prepayment
or conversion (for any reason) of any Eurodollar Loan required or permitted
under this Note, if such Loan is prepaid or converted other than on the last day
of the Interest Period for such Loan or (ii) in the event that after the
Borrower delivers a notice under Section 6 (a) in respect of Eurodollar Loans,
such Loan is not made on the first day of the Interest Period specified in such
notice for any reason other than (I) a suspension or limitation of the right of
the Borrower to select a Eurodollar Loan or (II) a breach by the Lender of its
obligation hereunder. Such loss shall be the amount as reasonably determined by
the Lender as the excess, if any, of (A) the amount of interest which would have
accrued to the Lender on the amount so paid or not borrowed, continued or
converted at a rate of interest equal to the interest rate applicable to such
Loan pursuant to this Note, excluding the Margin, for the period from the date
of such payment or failure to borrow, continue or convert to the last day (x) in
the case of a payment other than on the last day of the Interest Period for such
Loan, of the then current Interest Period for such Loan, or (y) in the case of
such failure to borrow, continue or convert, of the Interest Period for such
Loan which would have commenced on the date of such failure to borrow, continue
or convert, over (B) the amount realized by the Lender in reemploying the funds
not advanced or the funds received in prepayment or realized from the Loan so
continued or converted during the period referred to above. The Lender shall
deliver to the Borrower from time to time one or more certificates setting forth
the amount of such loss (and in reasonable detail the manner of computation
thereof) as determined by the Lender, which certificates shall be conclusive
absent manifest error.
All payments on account of the indebtedness evidenced by this Note shall be
applied first to the payment of all fees and expenses, including collections
costs, and then to the payment of any fees or sums due to the Lender under any
of the other Loan Documents, next toward payment of interest due on the unpaid
principal balance hereof and the remainder, if any, to the principal due
hereunder.
9. Payment On Demand.
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(a) IT IS HEREBY EXPRESSLY AGREED by the Borrower that time is of the essence
hereof, and should any default be made by the Borrower in the payment of any
amounts due and payable under the terms of this Note or any of the other Loan
Documents or in the performance or observance of non-monetary obligations under
the terms of any of the Loan Documents after the expiration of any applicable
notice or grace period, then at the option of the Lender or the holder hereof,
and without notice, the entire unpaid balance of said sums due by the Borrower
hereunder or under the provisions of any of the other Loan Documents shall,
without further notice to the Borrower, become due and payable within two days.
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(b) NOTWITHSTANDING anything in this Note to the contrary, it is expressly
understood and agreed by the Borrower that Lender, at any time and without
reason may demand that this Note be immediately paid in full. The demand nature
of this Note shall not be deemed modified by reference herein or in the Letter
Agreement to a default or an Event of Default. It is expressly agreed by the
Borrower that Lender may exercise its demand rights hereunder whether or not an
Event of Default has occurred hereunder or under any of the other Loan
Documents.
10. Affirmative Covenants.
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The Borrower hereby covenants that so long as any amount shall remain
outstanding under this Note, the Borrower will:
10.1 Financial Statements and Reports.
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Deliver to the Lender:
(a) As soon as is practicable, but in any event within ninety (90) days after
the end of each fiscal year of the Borrower, (i) the audited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end
of, and the related statements of operations, changes in stockholders'
investment and cash flows for, such year, and the comparable financial
statements as at the end of, and for, the preceding fiscal year;
(b) As soon as is practicable, but in any event within sixty (60) days after
the end of each of the first three fiscal quarters of each fiscal year, the
unaudited consolidated and consolidating balance sheets of the Borrower and its
Consolidated Subsidiaries as at the end of, and the related unaudited statements
of operations, changes in stockholders' investment and cash flows for, such
quarter and for the period from the beginning of the then current fiscal year to
the end of such fiscal quarter and the comparable financial statements as at the
end of, and for, the corresponding periods in the preceding fiscal year;
(c) Within forty (40) days after the end of each month, a copy of the Monthly
Operating Statement of the Borrower and its Consolidated Subsidiaries in a form
mutually agreed upon by the Borrower and the Lender (a "Monthly Operating
Statement");
(d) Promptly upon any executive officer of the Borrower obtaining knowledge
(i) of any default or (ii) that any Person has given any notice to the Borrower
or any Subsidiary of the Borrower or taken any other action with respect to a
claimed default or event or condition of the type referred to in paragraph (c)
of Article 12, a certificate of the president or Chief Financial Officer of the
Borrower specifying the nature and period of existence of any such condition or
event, or specifying the notice given or action taken by such holder or Person
and the nature of such default or claimed Event of Default and what action the
Borrower have taken, are taking and propose to take with respect thereto;
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(e) Promptly upon any executive officer of the Borrower obtaining knowledge of
(i) the institution of, or threat of, any action, suit, proceeding,
investigation or arbitration by any Governmental Authority or other Person
against or affecting the Borrower, any Subsidiary of the Borrower or any of
their respective property or assets, including, without limitation, any such
action, suit, proceeding, investigation or arbitration relating to any material
paging license or concessions or any notice, oral or written, of the intention
of any issuing agency to revoke, suspend, cancel, amend or not renew for any
reason any material paging license or concession or (ii) any material
development in any such action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to the Lender), which might reasonably be
expected to have a Material Adverse Effect, the Borrower shall promptly give
notice thereof to the Lender and provide such other information as may be
reasonably available to it (without waiver of any applicable evidentiary
privilege) to enable the Lender to evaluate such matters; and, in addition to
the requirements set forth in clauses (i) and (ii) of this Section 10.1(e), the
Borrower upon request shall promptly give to the Lender notice of the status of
any action, suit, proceeding, investigation or arbitration covered by a report
delivered to the Lender pursuant to clause (i) or (ii) above to the Lender and
provide such other information as may be reasonably available to it (without
waiver of any applicable evidentiary privilege) to enable the Lender to evaluate
such matters;
(f) With reasonable promptness, such other information and data with respect to
the Borrower or any Subsidiary of the Borrower or any Joint Venture as from time
to time may be reasonably requested by the Lender.
10.2 Corporate Existence; Compliance with Statutes; Maintenance of
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Properties.
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(a) Do or cause to be done all things necessary to (i) preserve, renew and keep
in full force and effect its corporate existence, material rights, permits and
franchises, including without limitation, the paging licenses and (ii) comply in
all material respects with all provisions of applicable law, and all applicable
restrictions imposed by, any Governmental Authority (including without
limitation, all state laws and regulations).
(b) Keep its properties which are material to its business in good repair,
working order and condition consistent with industry practice and, from time to
time (i) make all appropriate repairs, renewals, replacements, additions and
improvements thereto and (ii) comply at all times in all material respects with
the provisions of all material leases and other material agreements to which it
is a party so as to prevent any loss or forfeiture thereof or thereunder.
10.3 Taxes and Charges; Indebtedness in Ordinary Course of Business.
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(a) Duly pay and discharge, or cause to be paid and discharged, before the same
shall become delinquent, all federal, state or local taxes, assessments, levies
and other governmental charges, imposed upon the Borrower or any of its
respective properties, sales and activities, or any part thereof, or upon the
income or profits therefrom, the
11
failure to make payment of which could have a Material Adverse Effect, as well
as all claims for labor, materials, or supplies which if unpaid might by law
become a Lien upon any of the property of the Borrower; provided, however, that
-------- -------
any such tax, assessment, charge, levy or claim need not be paid if the validity
or amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Borrower shall have set aside on its books proper
reserves (the presentation of which is segregated to the extent required by
GAAP) adequate with respect thereto if reserves shall be deemed necessary by the
Borrower in accordance with GAAP; and provided, further, that the Borrower will
-------- -------
pay all such taxes, assessments, levies, other governmental charges or claims
forthwith upon the commencement of proceedings to foreclose any Lien which may
have attached as security therefor (unless the same is fully bonded or otherwise
effectively stayed). The Borrower will promptly pay when due, or in conformance
with customary trade terms, all other indebtedness incident to its operations,
except (i) any such indebtedness the validity or amount of which shall currently
be contested in good faith by appropriate proceedings and if the Borrower shall
have set aside on their books proper reserves (the presentation of which is
segregated to the extent required by GAAP) adequate with respect thereto if
reserves shall be deemed necessary by the Borrower in accordance with GAAP,
provided, that the Borrower will pay all such indebtedness which, if unpaid,
--------
might result in a Lien on its properties or the property of any of its
Subsidiaries, except Permitted Encumbrances and (ii) any such indebtedness the
failure to make payment of which could not have a Material Adverse Effect.
(b) With reasonable promptness, such other information and data with respect
to the Borrower or any Subsidiary of the Borrower or any Joint Venture as from
time to time may be reasonably requested by the Lender.
10.4 Access to Books and Records; Examinations.
-----------------------------------------
Maintain or cause to be maintained at all times true and complete books and
records of its financial operations (in accordance with GAAP) and provide each
of the Lender and their designated representatives access to all such books and
records and to any of its proper ties or assets during regular business hours
and after reasonable notice, in order that the Lender may make such audits and
examinations and make abstracts from such books, accounts, records and other
related papers and may discuss the affairs, finances and accounts with, and be
advised as to the same by, officers and independent accountants, all as the
Lender may deem appropriate for the purpose of verifying the various reports
delivered to the Lender pursuant to this Note or for otherwise ascertaining
compliance with this Note.
10.5 Issuance of Warrants.
--------------------
The Borrower shall execute a warrant agreement, in form and substance
satisfactory to the Lender, by January 29, 1999, pursuant to which the Borrower
will issue warrants to the Lender, or its designee, for up to 5% of the
Borrower's currently issued
12
and outstanding stock. When exercised, the warrant holders will receive shares
of the Borrower's common stock. The warrants will vest in accordance with the
following schedule, but only if this Note remains in effect at each such date:
Date Percent Interest
---- ----------------
at the date hereof 2.0%
6/30/99 0.5%
9/30/99 0.5%
12/31/99 2.0%
If the Loans are prepaid in full, the commitments terminated, and this Note is
terminated prior to December 31, 1999, warrants which have vested prior to such
termination shall remain vested, however, warrants with a scheduled vesting date
-------
after such termination shall automatically be canceled.
10.6 Capital Market Transactions.
---------------------------
(a) The Borrower will use commercially reasonable efforts to proceed with a
capital markets transaction as soon as market conditions permit such an
offering.
(b) The Borrower will use commercially reasonable efforts to afford the Lender
and the Toronto-Dominion Bank ("TD") the opportunity to provide any new bank
financing and will afford the securities affiliates of the Lender and TD the
opportunity to act as exclusive underwriters/placement agents with a third
institution of the Borrower's choice for any public offering or private
placement of its debt, provided that the Lender, TD and the other
underwriter/placement agent have equal standing and equal economics, and co-
manager for any public offering or private placement of equity securities
occurring within one year after the date hereof, provided, however, that neither
-------- -------
the Lender, TD nor their affiliates shall have any obligation to provide any
such financing or to place any such securities.
11. Negative Covenants.
-------------------
The Borrower hereby covenants that so long as any amount shall remain
outstanding under this Note, the Borrower will not, and will not permit any of
its Subsidiaries, directly or indirectly, to:
11.1 Limitation on Indebtedness.
--------------------------
Incur, assume or suffer to exist any Indebtedness except:
(a) Indebtedness hereunder;
13
(b) Indebtedness of the Borrower and any of the Borrower's Subsidiaries, which
Indebtedness is in existence on the date hereof and listed on Schedule 1 hereto,
but not any extensions or renewals thereof, unless effected on substantially the
same terms;
(c) purchase money Indebtedness (including Capital Leases) not exceeding
$1,000,000 in aggregate and at any one time outstanding;
(d) intercompany loans and advances from the Borrower to its Subsidiaries; and
(e) short-term local currency borrowings by the Borrower or Subsidiaries of the
Borrower for working capital needs, on terms and conditions acceptable to the
Lender, in an aggregate outstanding at any one time not to exceed an amount to
be determined by the Lender.
11.2 Limitations on Liens.
--------------------
Suffer any Lien on its property, except:
(a) deposits under worker's compensation, unemployment insurance and social
security laws or to secure statutory obligations or surety or appeal bonds or
performance or other similar bonds in the ordinary course of business, or
statutory Liens of landlords, carriers, warehousemen, mechanics and material men
and other similar Liens, in respect of liabilities which are not yet due or
which are being contested in good faith, Liens for taxes not yet due and
payable, and Liens for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate proceedings and as to
which foreclosure and other enforcement proceedings shall not have been
commenced (unless fully bonded or otherwise effectively stayed);
(b) purchase money Liens granted in connection with the incurrence of
Indebtedness permitted by Section 11.1(c), to the vendor or Person financing the
acquisition of property, plant or equipment if (i) such Lien is limited to the
specific assets acquired or, in the case of tangible assets, other property
which is an improvement to or is acquired for specific use in connection with
such acquired property or which is real property being improved by such acquired
property; (ii) the debt secured by the Lien is the unpaid balance of the
acquisition cost of the specific assets on which the Lien is granted; and (iii)
such transaction does not otherwise violate this Note;
(c) Liens arising out of attachments, judgments or awards as to which an appeal
or other appropriate proceedings for contest or review are promptly commenced
(and as to which foreclosure and other enforcement proceedings (i) shall not
have been commenced (unless fully bonded or otherwise effectively stayed) or
(ii) in any event shall be promptly fully bonded or otherwise effectively
stayed);
(d) Liens securing the Indebtedness evidenced hereby or other Indebtedness
owing to the Lender.
14
(e) rights of first offer or similar rights granted in connection with the
equity interests of a Subsidiary or a Joint Venture.
11.3 Changes in Business.
-------------------
Engage in any line of business other than (i) those lines of business in
existence on the date hereof and (ii) other lines of business for the delivery
of advanced messaging services, or other messaging products that are integrally
related to such lines of business.
11.4 Limitations on Sale of Assets.
-----------------------------
Enter into any transactions out of the ordinary course of business, whether in
one transaction or a series of transactions, that wind up, liquidate or dissolve
its affairs, or merge or consolidate, or sell or otherwise dispose of all or any
part of its property or assets, or purchase, lease or otherwise acquire all or
any part of the property or assets of any Person, or a majority of the capital
stock of any Subsidiary, or agree to do or suffer any of the foregoing.
11.5 Dividends and other Restricted Payments.
---------------------------------------
Declare, make or incur any liability to make any cash distribution or cash
dividend on account of shares of any class of stock of the Borrower or any
Subsidiary of the Borrower now or hereafter outstanding.
11.6 Intercompany Investment.
-----------------------
(a) Make capital contributions to non-consolidated operations/affiliates in
excess of $550,000.
(b) To the maximum extent permitted by applicable law, any investment made by
the Borrower in any of its Subsidiaries after the date hereof shall be made in
the form of an intercompany loan or advance.
11.7 Limitations on Capital Expenditures.
-----------------------------------
Make or incur any obligation to make Capital Expenditures (including obligations
under Capital Leases) in the aggregate for the Borrower and its Subsidiaries in
excess of $4,000,000.
11.8 Prohibition of Change in Control.
---------------------------------
Agree to, or permit any change of control provision in any contract or a
material change in the management services agreement with SkyTel Communications,
Inc. without the Lender's prior approval.
15
12. Events of Default
-----------------
In the case of the happening and during the continuance of any of the
following events (herein called "Events of Default"):
-----------------
(a) any representation or warranty made by the Borrower in this Note or any
representation and warranty made at any time after the date hereof by the
Borrower in connection with this Note, or any statement or representation made
at any time after the date hereof, in any report, financial statement,
certificate or other document furnished by or on behalf of the Borrower or any
Subsidiary of the Borrower to the Lender under or in connection with this Note,
shall prove to have been, or to be, taken together with all such other
representations and warranties, false or misleading in any material respect when
made or delivered; provided, however, that no Event of Default shall occur
-------- -------
hereunder based on the inaccuracy of any financial projections unless such
financial projections were not prepared in good faith or when made, did not
represent the reasonable, good faith opinion of the Borrower or Subsidiary of
the Borrower of the most probable course of its business;
(b) default shall be made by the Borrower in the due observance or performance
of any covenant, condition or agreement to be observed or performed pursuant to
the terms of this Note;
(c) default in payment shall be made with respect to any Indebtedness (other
than the Indebtedness incurred by the Borrower hereunder) of the Borrower or any
Subsidiary of the Borrower in an amount or amounts in excess of $2,000,000 in
the aggregate, or any other default shall occur with respect to the performance
of any other obligation incurred in connection with any such Indebtedness, if
the effect of such other default is, or with the giving of notice or passage of
time or both would be, to accelerate the maturity, of such Indebtedness or to
permit the holder thereof (after giving effect to any applicable grace periods)
to cause such Indebtedness to become due prior to its stated maturity, or any
such Indebtedness shall not be paid when due, whether at the due date thereof or
at acceleration thereof or otherwise, or any other circumstance shall arise
(other than the mere passage of time) by reason of which the Borrower or any
Subsidiary of the Borrower is required (prior to any scheduled redemption or
repurchase) to redeem or repurchase, or offer to holders the opportunity to have
redeemed or repurchased, any such Indebtedness;
(d) the Borrower or any Subsidiary of the Borrower shall generally not pay its
debts as they become due or shall admit in writing its inability to pay its
debts, or shall make a general assignment for the benefit of creditors; or the
Borrower or any Subsidiary of the Borrower shall commence any case, proceeding
or other action seeking to have an order for relief entered on its behalf as
debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, or seeking appointment of a receiver, administrative receiver,
trustee,
16
custodian or other similar official for it or for all or any substantial part of
its property, or shall file an answer or other pleading in any such case,
proceeding or other action admitting the material allegations of any petition,
complaint or similar pleading filed against it or consenting to the relief
sought therein; or the Borrower or any Subsidiary of the Borrower shall take any
action to authorize any of the foregoing;
(e) any involuntary case, proceeding or other action against any the Borrower
or any Subsidiary of the Borrower shall be commenced seeking to have an order
for relief entered against it as debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, administrative receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property, and
such case, proceeding or other action (i) results in the entry of any order for
relief against it or (ii) shall remain undismissed for a period of sixty (60)
days;
(f) final judgment(s) for the payment of money in excess of $2,000,000, in the
aggregate, shall be rendered in the aggregate, against the Borrower or any
Subsidiary of the Borrower and within thirty (30) days from the entry of such
judgment(s), it shall not have been discharged or stayed pending appeal or shall
not have been discharged within thirty (30) days from the entry of a final order
of affirmance on appeal;
(g) a "change in management" shall occur; for purposes hereof, a "change in
---------
management" shall mean the failure of the then-current CEO of SkyTel
----------
Communications, Inc. to continue his/her services as the CEO of the Borrower for
any reason, including, without limitation, termination of employment, death or
disability (the term "disability" as used herein meaning an inability continuing
for one hundred and eighty (180) consecutive days); or
(h) SkyTel Communications, Inc. fails to guarantee the Borrower's obligation
(i) when the Credit, Security, Guaranty and Pledge Agreement dated as of
December 21, 1995 among SkyTel Corp., SkyTel Communications, Inc., the
subsidiaries referred to therein, the Lender referred to therein, The Chase
Manhattan Bank as Administrative Agent, Credit Lyonnais New York Branch as
Documentation Agent and ▇.▇. ▇▇▇▇▇▇ Securities, Inc. and CIBC, Inc. as Co-
Syndication Agents (the "SkyTel Credit Agreement") is replaced or substantially
amended or (ii) if and when SkyTel Communications, Inc. seeks a waiver or
amendment under the SkyTel Credit Agreement to authorize SkyTel to repurchase
any of its 13- 1/2% Senior Notes due 2002, in each case to the extent permitted
by the indenture relating to such Notes.
13. Remedies.
---------
The remedies of the Lender or the holder hereof as provided in this Note, the
Letter Agreement, and any of the other Loan Documents shall be cumulative and
concurrent,
17
and may be pursued singly, successively, or together against the Borrower, or
any other security at the sole discretion of the Lender or the holder hereof.
14. Change in Circumstances.
------------------------
In the event that after the date hereof any change in any applicable law or in
the interpretation or administration thereof (including, without limitation, any
request, guideline or policy not having the force of law) by any governmental
authority charged with the administration or interpretation thereof or, with
respect to clause (ii), (iii) or (iv) below any change in conditions, shall
occur which shall:
(i) subject the Lender to, or increase the net amount of, any tax, levy,
impost, duty, charge, fee, deduction or withholding with respect to any
Eurodollar Loan (other than withholding tax imposed by the United States of
America or any political subdivision or taxing authority thereof or therein or
any other tax, levy, impost, duty, charge, fee, deduction or withholding (A)
that is measured with respect to the overall net income of the Lender, and that
is imposed by the United States of America, or by the jurisdiction in which the
Lender is incorporated, in which the Lender is located, managed or controlled or
in which the Lender has its principal office (or any political subdivision or
taxing authority thereof or therein), or (B) that is imposed solely by reason of
the Lender failing to make a declaration of, or otherwise to establish,
nonresidence, or to make any other claim for exemption, or otherwise to comply
with any certification, identification, information, documentation or reporting
requirements prescribed under the laws of the relevant jurisdiction, in those
cases where the Lender may properly make such declaration or claim or so
establish nonresidence or otherwise comply); or
(ii) except as expressly provided in (i) above, change the basis of
taxation of any payment to the Lender of principal of, or any interest on, any
Eurodollar Loan; or
(iii) impose, modify or deem applicable any reserve, deposit or similar
requirement against any assets held by, deposits with or for the account of, or
loans or commitments by, an office of the Lender with respect to any Eurodollar
Loan; or
(iv) except as expressly provided in (i) above, impose upon the Lender or
the London Interbank Market any other condition with respect to any Eurodollar
Loan or this Note;
and the result of any of the foregoing shall be to increase the actual cost to
the Lender of making or maintaining any Eurodollar Loan hereunder or to reduce
the amount of any payment (whether of principal, interest or otherwise) received
or receivable by the Lender, or to require the Lender to make any payment in
connection with any Eurodollar Loan, in each case by or in an amount which the
Lender in its sole judgment shall deem material, then and in each case the
Borrower shall pay to the Lender, such amounts as shall be necessary to
compensate the Lender for such cost, reduction or payment.
18
15. Waiver.
------
(a) The Borrower hereby waives presentment for payment, demand, notice of
nonpayment, notice of dishonor, protest of any dishonor, notice of protest, and
protest of this Note and all other notices in connection with the delivery,
acceptance, performance, default, or enforcement of the payment of this Note,
and agrees that its liability shall be unconditional without regard to the
liability of any other party and shall not in any manner be affected by any
indulgence, extension of time, renewal, waiver or modification, granted or
consented to by the Lender or holder hereof.
(b) The Lender or any holder hereof shall not by any act or omission or
commission be deemed to waive any of its rights or remedies hereunder unless
such waiver is in writing and signed by the holder hereof, and then only to the
extent specifically set forth therein; a waiver of one event shall not be
construed as continuing or as a bar to or waiver of such right or remedy on a
subsequent event.
16. Assignments.
-----------
In order to facilitate partial assignments of the indebtedness evidenced hereby,
the Lender may exchange this Promissory Note for, and the Borrower will, upon
request of the Lender, issue one or more promissory notes in an aggregate
principal amount equal to the stated principal amount hereof and in the same
form as this Note with such modifications as the Lender may reasonably request
in order to reflect the fact of such assignment.
17. Costs.
-----
If at any time or times hereafter Lender or the holder of this Note employs
counsel for advice with respect to this Note or to intervene, file a petition,
answer, motion or other pleading in any suit or proceeding relating to this
Note, or attempt to collect this Note from or to enforce this Note against the
Borrower, then, in any of such events, all of the reasonable attorneys' fees
arising from such services, and any expenses, costs and charges relating
thereto, shall be an additional liability owing hereunder by the Borrower to
Lender or the holder of this Note and shall be payable on demand and shall bear
interest at the default interest rate set forth hereunder from the date of such
demand.
18. GOVERNING LAW.
-------------
THE VALIDITY OF THIS NOTE, ITS CONSTRUCTION, INTERPRETATION AND ENFORCEMENT, AND
THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPALS OF CONFLICTS OF LAW. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDING ARISING IN CONNECTION WITH THIS NOTE SHALL BE TRIED AND LITIGATED
ONLY IN THE ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ AND THE UNITED
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ FOR THE SOUTHERN DISTRICT OF NEW YORK OR, AT THE SOLE
OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS, AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. THE BORROWER AND LENDER EACH WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
--------------------
ACCORDANCE WITH THIS PROVISION. THE BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. THE BORROWER AND LENDER REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
20
IN WITNESS WHEREOF, this Note has been executed as of the day and year
first above written.
MTEL LATIN AMERICA, INC.
By: _______________________
Name:
Title:
AGREED AND CONSENTED TO:
CREDIT LYONNAIS NEW YORK BRANCH
By:________________________
Name:
Title:
21
Schedule 1
[to be completed by the Borrower]
22
