Attached files
| file | filename |
|---|---|
| 8-K - NTS, INC. | xfone8k.htm |
LOAN
AGREEMENT
LOAN
AGREEMENT, dated as of December 10, 2009, between Swiftnet Limited (company
number 02469394) whose registered office is at Britannia House 960 High Road,
London N12 9RY (the "Borrower"), Xfone, Inc. whose
principal executive offices are at 5307 W Loop 289, Lubbock, TX 79414 US (the
“Guarantor”) and certain
subsidiaries of either the Borrower or the Guarantor each of which is registered
in England & Wales being Auracall Limited (company number 04308459, “Auracall”), Equitalk.co.uk
Limited (company number 03894765, “Equitalk”) and Story Telecom
Limited (company number 04551415) (the “UK Subsidiaries” and “UK Subsidiary” means any of
them as may be appropriate), and Iddo Keinan whose address is at Flat 2, 62
Fitzjohns avenue, Hampstead, London NW3 5LT, UK (the "Lender").
RECITALS
WHEREAS,
the Lender is willing to extend to the Borrower a loan in an amount of
£860,044.58 (Eight Hundred and Sixty Thousand and Forty Four Pounds Sterling and
Fifty Eight Pence Only) on the terms and conditions set forth in this Loan
Agreement (“this Agreement”); and
WHEREAS,
for the purpose of performance of his undertakings under this Agreement, the
Lender has obtained the funds for the Loan (as that term is defined below) in
the sum of £1,252,500 (the “Lender’s Loan”) from the Lender’s bank
and has and/or shall bear certain costs and expenses as specified in the
schedule of expenses attached to this Agreement as “Schedule A” (the “Lender’s Expenses”) in
connection with the Loan.
NOW,
THEREFORE, the parties hereto agree as follows:
|
1.
|
THE
LOAN
|
|
(a)
|
Subject
to the terms and conditions set forth below, the Lender shall lend to the
Borrower an amount of £860,044.58 (Eight Hundred and Sixty Thousand and
Forty Four Pounds Sterling and Fifty Eight Pence) (the "Loan"), no later than
December 10, 2009 (the "Drawdown Date"). The
Loan shall be advanced by the Borrower to the Guarantor for the bridge
funding of the payment of amounts due from the Guarantor under its Series
A Bonds.
|
|
(b)
|
Provided
no event of default occurs as specified in Clause (k), the Loan shall be
repaid to the Lender in full no later than May 30,
2010.
|
|
(c)
|
The
Borrower shall pay to the Lender the following
amounts:
|
|
(i)
|
interest
at an interest rate of 1.3% (One Point Three Per Cent) per month charged
on the total amount of the Lender’s Loan, to be paid by the Borrower by
way of standing order, less a monthly amount of £1,000 (One Thousand
Pounds Sterling); and
|
|
(ii)
|
the
Lender’s Expenses; and
|
|
(iii)
|
any
costs that may arise in respect of the Loan either as a result of putting
the Loan in place, during its tenor or in order to obtain repayment of the
Loan.
|
|
(d)
|
All
payments are to be made by the Borrower without set off or counterclaim
and free and clear of any and all deductions, including (without
limitation) withholding taxes except to the extent required by
law. If the Borrower is compelled by law or regulations to
deduct any such amount the amount payable will be automatically increased
so that the net amount after allowing for such deduction would be equal to
the amount which would have been payable if no such deduction had
arisen.
|
|
(e)
|
All
payments are to be made by the Borrower to the Lender in Pounds Sterling
for value on their due date. If any payment is made by the
Borrower to the Lender in any currency other than Pounds Sterling then the
Borrower will indemnify the Lender for any shortfall that may occur as a
result of the Lender having to convert such payment to Pounds
Sterling.
|
-1-
|
(f)
|
The
Loan will not be made available by the Lender to the Borrower until the
following conditions are satisfied:
|
|
(i)
|
the
Borrower confirms that the existing debentures granted by the Borrower
and Equitalk.co.uk Limited in favour of Barclays Bank PLC have
been released;
|
|
(ii)
|
a
legal opinion from a lawyer in the same jurisdiction as the jurisdiction
of incorporation of the Guarantor or any other party providing security in
favour of the Lender but not incorporated in England & Wales
confirming their good standing and power and authority to enter into this
Agreement and any other documents specified
herein;
|
|
(iii)
|
this
Agreement and the security documents specified at Clause (h) duly
executed;
|
|
(iv)
|
certified
copies of board resolutions of the Borrower, the Guarantor and any
security provider under this Agreement together with shareholder
resolutions of the Borrower and the UK Subsidiaries in relation to the
entering into of this Agreement and any other documents specified
herein;
|
|
(g)
|
Borrower
shall have the right upon two (2) Business Days' prior written notice to
Lender, to make a voluntary prepayment of the Loan, in whole or in part.
If the Borrower elects to prepay the Loan, in whole or in part, pursuant
to this Clause, no prepayment fees shall apply. Provided that, should the
Borrower choose to prepay the Loan at any time within the first month
following the Drawdown Date then an early repayment charge equal to the
balance of the first month’s interest shall
apply.
|
|
(h)
|
For
good consideration and
as an inducement for the Lender, on the Drawdown Date and so long as
Borrower’s obligations and undertaking under this Agreement are
outstanding, the following shall be granted as security in favour of the
Lender for the Borrower’s obligations under this Agreement (the “Security
Documents”):
|
|
(a)
|
A
charge over 51% (Fifty One Per Cent) of the issued Class A shares of the
Borrower and a charge over 51% (Fifty One Per Cent) of the issued Class B
shares of the Borrower, a charge over 51% (Fifty One Per Cent) of the
issued share capital of Equitalk and a charge over the entire issued share
capital of the UK Subsidiaries (except Equitalk) together with (1) undated
stock transfer forms in respect of the Borrower and each UK Subsidiary
executed by the relevant shareholder with the identity of the Lender as
the transferee (the “Stock Transfer Forms”);
and (2) the original share certificates representing each shareholder’s
holding in the Borrower and the relevant UK Subsidiary (the “Certificates”).
|
Borrower
and Guarantor shall deliver to the person identified by both the Lender and
Guarantor as an agreed escrow agent for the Lender, Borrower and Guarantor (the
“Escrow Agent”) the
Stock Transfer Forms and the Certificates to be held by the Escrow
Agent until the earlier of (1) the Borrower has repaid the Loan in full, in
which case the Escrow Agent shall deliver the Stock Transfer Forms and the
Certificates to
Guarantor; or (2) the Lender exercises its rights pursuant to Clause (k) in
respect of the Borrower and the UK Subsidiaries in which case the Escrow Agent
shall deliver the Stock Transfer Forms and the Certificates to the
Lender.
Should
the Loan not be repaid in full then the other security granted in favour of the
Lender pursuant to this Clause (h) shall continue in full force and effect until
all amounts due under this Agreement are repaid in full.
In order
to grant and perfect the Lender’s security in respect of the shares in the
Borrower and the UK Subsidiaries the Borrower shall or shall procure that
appropriate UCC-1 Forms, together with any supporting documentation as may be
necessary, are filed with the Nevada Secretary of State.
|
(b)
|
An
intercompany guarantee between the Borrower, the Guarantor, the UK
Subsidiaries and NTS Communications, Inc. (“NTS”), a company
incorporated in Texas, US whose principal executive offices are at 5307 W
Loop 289, Lubbock, TX 79414 US;
|
|
(c)
|
Debentures
over the entire assets of each of the Borrower and each UK
Subsidiary.
|
-2-
|
(i)
|
For
the duration of the Loan the Guarantor
shall:
|
|
(a)
|
Preserve
Mr. Abraham Keinan’s (“Mr. Keinan”) current
positions in each of the Borrower and each UK Subsidiary (together the
“Group”) and grant
Mr. Keinan a veto right on any resolution in the board of directors of
each member of the Group; and appoint Mr. Keinan as a signatory of each
member of the Group, thereby Mr. Keinan’s signature shall be required for
the undertaking of any payment and/or obligation in any amount. Without
derogating from the generality of the above, Mr. Keinan shall not abuse
his rights and/or positions as a director of any member of the Group and
the Group’s affiliates in a manner that may hinder or prevent the Borrower
from performing the Borrower’s obligations and undertakings under this
Agreement; In the event Mr. Keinan abuses his foregoing veto right and/or
positions as a director of any member of the Group and the Group’s
affiliates in a manner that may hinder or prevent the Borrower from
performing the Borrower’s obligations and undertakings under this
Agreement, Mr. Keinan’s aforementioned veto right shall terminate and
become void.
|
|
(b)
|
Provide
sufficient funds to Lender on a monthly basis to ensure the timely
payments of Borrower’s monthly interest payments on the Loan, in
full.
|
|
(j)
|
The
Guarantor covenants that it will appoint an additional director to its
Board of Directors no later than January 15 2010 and that such appointee
shall be acceptable to Mr. Keinan. Until such time as such an
individual is appointed or until the Loan is repaid in full, Mr. Keinan
shall have a veto right on any resolution put forth before the Guarantor’s
Board of Directors. Mr. Keinan shall recommend an appropriate candidate
(an “Appropriate Candidate”) for such appointment no later than January 2
2010. Without derogating from the generality of the above, Mr.
Keinan shall not abuse his foregoing veto right and/or position as a
director of the Guarantor in a manner that may hinder or prevent such an
appointment. In the event Mr. Keinan fails to recommend an Appropriate
Candidate until January 2 2010, Mr. Keinan’s aforementioned veto right
shall terminate and become void on January 2 2010. In the event Mr. Keinan
abuses his foregoing veto right and/or position as a director of the
Guarantor in a manner that may hinder or prevent such an appointment, Mr.
Keinan’s aforementioned veto right shall terminate and become void on
January 15 2010.
|
|
(k)
|
The
occurrence of any of the following events shall constitute an event of
default under this Agreement ("Event of
Default"):
|
|
(a)
|
the
Borrower fails to pay on the due date the principal of the Loan (the
“Principal”);
or
|
|
(b)
|
the
Borrower fails to pay on the due date any amount, including interest but
excluding the Principal, payable under this Agreement or the Security
Documents, and such failure is not remedied to the reasonable satisfaction
of the Lender within 5 Business Days;
or
|
|
|
(iii)
|
the
Group, Guarantor or NTS (together the “Obligors”) fails to
comply with any provision of this Agreement or the Security Documents and
where capable of remedy, such failure is not remedied to the reasonable
satisfaction of the Lender within 10 Business Days of the Lender giving
written notice to the applicable Obligor requiring such Obligor to remedy
the same; or
|
|
|
(iv)
|
Borrower,
Auracall, Guarantor or NTS become insolvent;
or
|
|
|
(v)
|
an
administrative or other receiver, administrator, manager or similar
officer is appointed for the Borrower, Auracall, Guarantor or
NTS;
|
|
|
(vi)
|
any
order is made or any effective resolution is passed
for:
|
|
|
(a)
|
the
winding up, dissolution or liquidation of the Borrower, Auracall,
Guarantor or NTS other than for the purpose of a reconstruction or
amalgamation the terms of which have previously been approved by the
Lender in writing provided that the Lender’s consent will not be required
should such a reconstruction or amalgamation be taking place in a
non-insolvent situation; or
|
|
|
(b)
|
the
making of an administration order against the Borrower, Auracall,
Guarantor or NTS; or
|
|
|
(c)
|
the
notice of the appointment of an administrator in respect of the Borrower,
Auracall, Guarantor or NTS;
|
-3-
|
|
(vii)
|
analogous
legal or statutory proceedings to those matters specified in Clauses (j)
(iv) to (vi) (inclusive) under any applicable law in any other
jurisdiction;
|
Then in
any such case and at any time thereafter while such event is continuing the
Lender may by written notice to the Borrower with a copy to the Guarantor
declare the Loan, all interest accrued and all other sums payable by the
Borrower to the Lender under this Agreement to be immediately due and payable
and/or terminate the obligations of the Lender under this
Agreement.
Upon the
occurrence of an Event of Default, Lender may exercise his rights under the
Security Documents with respect to any Obligor at the Lender’s sole
discretion.
|
(l)
|
In
the event Lender becomes a shareholder of the Borrower or any UK
Subsidiary, (the “Exercised
Subsidiaries” and “Exercised Subsidiary”
means any of them as may be appropriate), then for a period of 3 (Three)
months (the “Buy Back
Period”), the Guarantor shall have an irrevocable right to purchase
back the shares of the Exercised Subsidiaries from the Lender at a
purchase price equal to the aggregate amount of the outstanding principal,
interest and any other expenses and costs born by Lender in connection
with the Loan. During the Buy Back Period the Lender shall operate the
business of the Exercised Subsidiary in such manner as is consistent with
its current operations and shall not, without the consent of the Borrower,
take any extraordinary actions which could reasonably be expected to have
a materially adverse effect on the business or value of the Exercised
Subsidiaries.
|
|
(m)
|
Once
the Buy Back Period has ended without the Guarantor exercising his right
to buy back the shares of the Exercised Subsidiaries, (i) the legal and
beneficial ownership in the shares of the Exercised Subsidiaries shall
pass to the Lender and such shares/stock shall be transferred to the
Lender with full title guarantee (and any rights of pre-emption in respect
of such shares/stock are hereby waived by the Borrower); (ii) the Lender
shall be entitled to date and otherwise complete the Stock Transfer Forms
and take any steps necessary to perfect his title to the shares in the
relevant Exercised Subsidiary; and (iii) the Guarantor and the Lender
shall appoint an agreed independent appraiser to perform a valuation of
the Exercised Subsidies (the “Valuation”). Any
positive balance between the value of Lender's shares of the Exercised
Subsidiaries (to be calculated and determined in accordance with the
Valuation) and amounts unpaid to the Lender under this Agreement, shall,
if the relevant Exercised Subsidiary is able do so by way of declaration
of dividend, be paid to the Borrower annually out of the Exercised
Subsidiary’s net annual profits. Such annual payments to the
Borrower shall not exceed 50% of the Exercised Subsidiary’s net profits
for that applicable year. The obligation of the Lender to repay
any such positive balance shall be reflected by an eight year promissory
note bearing interest at the London Interbank Offer Rate plus 1% (One Per
Cent) (the “Promissory
Note”). Such Promissory Note shall be pre-payable out of any sale
of the Exercised Subsidiaries or in the event that the Exercised
Subsidiaries sell any equity to an outside party. Upon the execution of
the Promissory Note, any obligations that the Lender has to the Borrower
whether under or in connection with, this Agreement, or the Security
Documents in respect of amounts over and above amounts due to the Lender
under this Agreement shall no longer apply and instead be replaced by the
obligations of the Lender to the Borrower as specified in the Promissory
Note.
|
|
(n)
|
In
consideration of the Lender entering in to this Agreement at the request
of the Guarantor, and without derogating from the Borrower’s rights under
the Promissory Note, the Guarantor hereby grants the Lender an option to
purchase its entire holding of shares or stock in the Exercised
Subsidiaries on the following terms (“
Option”):
|
|
(a)
|
Exercisable
at any time after the Buy Back Period and for a period of 24 months
thereafter;
|
|
(b)
|
by
notice in writing , electronic means or fax to the Guarantor with copy to
Guarantor's General Counsel;
|
|
(c)
|
at
a purchase price to be calculated and determined in accordance with the
Valuation which shall apply to the Option mutatis
mutandis;
|
|
(d)
|
subject
to regulatory and legal requirement under the laws of Nevada, the laws of
England & Wales and any other applicable law (including, if
applicable, obtaining the approval of the shareholders of the Guarantor,
which approval the Guarantor shall use its best endeavors to obtain as
soon as possible following exercise of the
Option);
|
|
(e)
|
may
be exercised in respect of some or all of the Exercised Subsidiaries, at
Lender’s sole discretion;
|
|
(f)
|
completion
of any purchase under the Option shall take place within 48 hours of the
satisfaction of Clause 1(n)(d) above, on which date the Guarantor shall
deliver to the Lender duly executed stock transfer forms, or their
equivalent in the relevant jurisdiction, of the shares the subject of the
Option, in favour of the Lender or as he may direct, together with the
relevant share certificates; and the Lender shall deliver to the Guarantor
the full payment in respect of the purchase of the same calculated as
specified in Clause 1(n)(c) above.
|
-4-
|
(o)
|
Following
repayment of the liabilities of the Borrower under this Agreement to the
Lender in full then the Lender shall, at the request and cost of the
Borrower execute any such documents as may be necessary for the release or
reassignment as may be appropriate of any security granted in favour of
the Lender by any Obligor.
|
|
(p)
|
The
Guarantor confirms that it has obtained a credit facility from Bank Leumi
(UK) Plc of up to £150,000 (One Hundred and Fifty Thousand Pounds
Sterling), for general working capital purposes (the “Credit
Facility”). The Credit Facility is secured by a bank
guarantee given to Bank Leumi (UK) by FIBI London. The guarantee has been
issued by FIBI London on the basis of a deposit in an equivalent amount
lodged by the Lender with FIBI London (“Lender’s
Deposit”). The Guarantor covenants with the Lender to
repay the Credit Facility no later than May 30 2010 so that the Lender’s
Deposit can be released to the Lender. A failure to comply with
this Clause (po) will constitute an event of
default.
|
|
(q)
|
The
Guarantor hereby grants the Lender a security interest in the proceeds of
any sale of its working interest in the capital stock of Xfone 018 Ltd
(“Xfone 018”) in
an amount at least equal to the Loan. The Guarantor agrees to file a UCC-1
Form together with any supporting documentation as may be necessary, in
favour of the Lender to secure such interest. In addition, Guarantor shall
or shall procure that appropriate UCC-1 Form, together with any supporting
documentation as may be necessary, covering any such proceeds, will be
filed with the Nevada Secretary of State within 3 (Three) days of such
sale. The Guarantor further agrees to immediately notify the
Lender in the event of the sale of its interest in Xfone
018.
|
|
2.
|
MISCELLANEOUS
|
|
(a)
|
This
Agreement shall be binding upon and inure to the benefit of the Borrower
and the Lender and their respective successors and assigns, except that
neither party may assign any of its rights or obligations hereunder
without the prior written consent of the other
party.
|
|
(b)
|
Any
provision of this Agreement may be amended or waived only if such
amendment or waiver is in writing and is signed by all
parties.
|
|
(c)
|
No
failure on the part of the Lender to exercise, and no delay in exercising,
any right will be deemed as a waiver thereof, nor will any single or
partial exercise by the Lender of any right preclude any other or future
exercise thereof or the exercise of any other
right.
|
|
(d)
|
In
case any of the provisions contained in this Agreement shall be
found to be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
|
|
(e)
|
This
Agreement is governed by the laws of the England & Wales and the
parties submit to the exclusive jurisdiction of the High Court of England
& Wales.
|
-5-
IN
WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly
executed as of the date first above written.
Xfone,
Inc.
By: /s/ Itzhak Almog,
Director
Swiftnet
Limited
By: /s/ John Burton,
Director
Auracall
Limited.
By: /s/ John Burton,
Director
Equitalk.co.uk
Limited.
By: /s/ John Burton,
Director
Story
Telecom Limited.
By: /s/ John Burton,
Director
Iddo
Keinan
By: /s/ Iddo
Keinan
I hereby
confirm my obligations pursuant to Clauses (i) and (j) of this
Agreement.
Abraham
Keinan
By: /s/ Abraham
Keinan
-6-