TO: Globaltron Communications Corporation ("Globaltron")
FROM: Lucent Technologies Inc., InterNetworking Systems ("Lucent")
DATE: August 23, 1999
RE: Equipment Financing Proposal
1. Equipment Financing. Lucent will provide equipment financing in the
amount of $10,000,000 for the acquisition of equipment and professional
services from Lucent Technologies Inc., InterNetworking Systems,
segregated into three tranches. Tranche I, in the amount of $1,750,000
shall be available for Lucent equipment that will be located outside of
the US. Tranche II, in the amount of $6,750,000, shall be available for
Lucent equipment that will be located within the USA. Tranche III, in
the amount of $1,5000,000, shall be available for professional services
provided by Lucent and soft costs such as taxes and shipping charges on
the equipment purchased from Lucent. Advances under each Tranche shall
be subject to the terms and conditions of the facility and the
milestones listed below.
2. Interest, Payments, Milestones, and Conditions:
A) Interest: Tranche I: 12.25% per annum
Tranche II: 11.5% per annum
Tranche III: 12.25% per annum
B) Payments: Tranche I:
Tranche I advances shall be documented using
a Conditional Sale Agreement. Interest only
payments shall be due on amounts advanced
from the date of advance through March 31,
2000. Thereafter, 24 equal monthly payments
of principal and interest payable in arrears
shall begin April 1, 2000 and end March 1,
2002, at which time a final payment of $1.00
shall be due and payable. Upon payment in
full, title shall transfer to Globaltron.
Tranche II:
Tranche II advances shall be documented
using a Term Loan Agreement. Interest only
payments shall be due on amounts advanced
from the date of advance through the earlier
of the date of payment in full of the
Tranche I and Tranche III amounts, or March
1, 2002. Thereafter, 30 equal monthly
payments of principal and interest payable
in arrears shall begin April 1, 2002 and end
March 1, 2005.
Tranche III:
Tranche III advances shall be documented
using a Term Loan Agreement. Interest only
payments shall be due on amounts advanced
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from the date of advance through March 31,
2000. Thereafter, 24 equal monthly payments
of principal and interest payable in arrears
shall begin April 1, 2000 and end March 1,
2002.
C) Last Draw: March 31, 2000 for Tranche One.
September 30, 2000 for Tranche Two and
Three.
D) Milestones
Subject to the conditions to advances listed
in paragraph 2 (E):
(i) Up to $3,000,000 in aggregate for all
Tranche shall be available immediately
(ii) An additional $2,000,000 (aggregate amount)
will be available when Globaltron (a)
provides to Lucent copies of fully executed
documentation from Bridge Pointe Capital
showing equity or subordinated debt
commitments of at least $800,000, and (b)
provides evidence of funding of such
commitment.
(iii) The remaining $4,000,000 (aggregate amount
will be available when Globaltron (a)
provides to Lucent copies of fully executed
documentation from Bridge Pointe Capital
showing equity or subordinated debt
commitments of at least $5,000,000, and (b)
provides evidence of the funding of such
commitments ( which amounts shall be in
aggregate from August 1, 1999 forward,
inclusive of the $800,000 discussed above).
E) Conditions to Advances
Lucent reserves the right to refuse shipment under
this facility to any countries outside the United
States which, in the opinion of Lucent have an
unsatisfactory business or political climate, unless
substitute collateral is available in form and
substance acceptable to Lucent. If a country is
approved by Lucent, then, prior to shipment to such
foreign country:
(a) Globaltron shall provide a signed contract
from the local PTT or other applicable
business partner evidencing agreement to pay
for minutes originated or terminated in the
specific country where equipment will be
located.
<PAGE>
(b) Lucent shall sell equipment under the terms
of a Conditional Sale Agreement, and shall
retain title to such equipment. Globaltron
shall permit its direct or indirect wholly
owned subsidiaries to use such equipment
under the terms of an operating lease, the
form of which shall be acceptable to Lucent.
Upon payment in full of amounts owed under
the Conditional Sale Agreement, title shall
transfer to Globaltron.
(c) Globaltron shall provide copies of documents
evidencing the legal formation of the
company in each foreign country that will
hold the equipment prior to Lucent's
shipment of the equipment, and the same
documents for each parent of such company,
if the parent is not Globaltron
Communications Equipment.
(d) Globaltron shall provide upstream
guarantees of the Tranche I advances from
its applicable direct of indirect
subsidiaries, and such guarantees shall be
secured by a pledge of stock of the foreign
company holding the equipment provided in
conjunction with Tranche I advances.
(e) Globaltron shall provide evidence of
insurance with acceptable insurers covering
all commercially standard risks of loss
(including property and boiler/machinery
coverage) naming Lucent as Loss Payee and
Additional Insured.
3. Security Interest. Advances under Tranche I and III will be secured by
all assets of Globaltron, including a first lien position on accounts
receivable and contract rights. Lucent shall perfect its security
interest in each foreign location when possible, with the cost of such
fillings and legal work needed to enact such filings to be reimbursed
by Globaltron. Tranche II will be secured by a first position security
interest evidenced by a UCC 1 filing in the specific equipment
purchased with the proceeds of this facility.
4. Warrants. Globaltron shall issue to Lucent warrants at a strike price
of $5.oo per share in an amount equal to 50% of the aggregate amount of
advances drawn under Tranche I, and such warrants shall remain
outstanding for five years, regardless of whether the advances are
subsequently repaid.
5. Review of Financial Performance. Globaltron shall provide CPA audited
financial statements within 90 days after the close of each fiscal year
end and company, prepared monthly financials within 30 days of the
close of each month end, commencing after the execution of the master
lease.
<PAGE>
6. Additional Information. Globaltron shall provide additional information
regarding operating performance or projected performance upon request.
7. Acceleration. The principal indebtedness and all accrued but unpaid
interest on Tranche I advances will become immediately due and payable
in the event of and upon the date of an IPO or a change of control.
Both sides recognize that this term sheet is not a definitive agreement or a
commitment to provide financing of any type. The terms of this proposal will be
set forth in the lease agreement and other documentation to be provided to the
company, with both parties agreeing upon the terms and provisions thereof. If
Lucent does not receive an executed copy of this term sheet by August 31, 1999,
this proposal shall become null and void.
Signed and Accepted:
/s/ illegible /s/ illegible
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Globaltron Communications Corporation Lucent Technologies Inc.,
InterNetworking Systems
Date: 8/22/99 Date: 8/24/99
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