exv10w59



 








Exhibit 10.59




	 		
	
	 	COLLATERAL INSTALLMENT NOTE






			
	$ 4,474,588.64
	 	November 30, 2005






FOR VALUE RECEIVED, PAC-WEST TELECOMM, INC., a corporation organized and existing under the laws of
the State of California (“Customer”) hereby promises to pay to the order of MERRILL LYNCH CAPITAL,
a division of MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., a corporation organized and existing
under the laws of the State of Delaware (“MLC”), in lawful money of the United States, the
principal sum of four million, four hundred seventy four thousand, five hundred eighty eight
dollars and 64 /100 ($4,474,588.64 ) or if more or less, the aggregate amount advanced by MLC to
Customer pursuant to the Loan Agreement (the “Loan Amount”); together with interest on the unpaid
balance of the Loan Amount, from the Closing Date until payment, at the Interest Rate, as follows:



1. DEFINITIONS.




(a) In addition to terms defined elsewhere in this Note, as used herein, the following terms shall
have the following meanings:




	(i)	 	“Closing Date” shall mean the date of advance of funds hereunder.






	(ii)	 	“Excess Interest” shall mean any amount or rate of interest (including the Default Rate and,
to the extent that they may be deemed to constitute interest, any prepayment fees, late
charges and other fees and charges) payable, charged or received in connection with any of the
Loan Documents which exceeds the maximum amount or rate of interest permitted under applicable
law.






	(iii)	 	“Interest Rate” shall mean a rate equal to the sum of (A) the Swap Rate plus (B) (4.50%).
“Swap Rate” shall mean the three-year Swap Rate as published on Bloomberg Professional Servies
screen “USSW”, determined as of the closing swap rate two business days prior to the Closing
Date.






	(iv)	 	“Loan Agreement” shall mean that certain TERM LOAN AND SECURITY AGREEMENT dated as of the
date hereof between Customer and MLC, as the same may have been or may hereafter be amended or
supplemented.






	(v)	 	“Note” shall mean this COLLATERAL INSTALLMENT NOTE.





(b) Capitalized terms used herein and not defined herein shall have the meaning set forth in the
Loan Agreement. Without limiting the foregoing, the terms “Loan Documents”, “Bankruptcy Event” and
“Event of Default” shall have the respective meanings set forth in the Loan Agreement.



2. PAYMENT AND OTHER TERMS. Customer shall pay the indebtedness under this Note in 36 consecutive
monthly installments commencing on the first day of the second calendar month following the Closing
Date and continuing on the first day of each calendar month thereafter until this Note shall be
paid in full. Each such installment shall be in the amount which will fully amortize the Loan
Amount with accrued interest in equal monthly installments over a term of 36 months (except that
there shall be added to the first such installment an additional amount equal to accrued interest
at the Interest Rate from the date of funding to the last day of the calendar month in which
funding occurs).



Each payment received hereunder shall be applied first to any fees and expenses of MLC payable by
Customer under the terms of the Loan Agreement (including, without limitation, late charges), next
to accrued interest at the Interest Rate, with the balance applied on account of the unpaid
principal hereof or in such other manner as the holder hereof may from time to time hereinafter
determine for the allocation of such payments thereof. Any part of the principal hereof or
interest hereon or other sums payable hereunder or under the Loan Agreement not paid within five
(5) days of the applicable due date shall be subject to a late charge equal to the lesser of (i) 5%
of the overdue amount, or (ii) the maximum amount permitted by law. All interest shall be computed
on the basis of actual days elapsed over a 360-day year.



Customer may not prepay this Note during the first eighteen (18) months following the Closing Date,
except that in the event of a Corporate Transaction Event, Customer may prepay this Note, in whole,
but not in part, during such eighteen (18) month period, and such prepayment shall be accompanied
by a premium equal to four percent (4%) of the amount prepaid. Customer may for any reason
whatsoever, prepay this Note at any time on or after such eighteen (18) month period following the
Closing Date, in whole but not in part, upon 30 days prior written notice to MLC, and such
prepayment shall, if made on or after the eighteenth (18th) month but prior to twenty-fourth (24th)
month anniversary of the Closing Date, be accompanied by a premium equal to three percent (3%) of
the amount prepaid, and if made any time thereafter, be accompanied by a premium equal to one
percent (1%) of the amount so prepaid. Except as set forth above, there shall be no other premium,
penalties or fees payable in connection with any prepayments of the Loans, including without
limitation, any breakage, make-whole or similar premiums, penalties or fees. Notwithstanding



-1-









 







anything contained herein to the contrary, the prepayment premiums set forth above shall not be
payable in connection with any mandatory prepayment of the Loans, including, without limitation,
upon the acceleration of the Loans following an Event of Default, ,
or upon the permanent prepayment of Customer’s obligations pursuant to Section 3.4(k) of the Loan
Agreement. For purposes of this definition, (i) a “year” means the 365 or 366-day, as applicable,
commencing on the Closing Date or any anniversary of the Closing Date and (ii) a “Corporate
Transaction Event” means any transaction by the Company of the type described in Sections 3.5(k) or
3.3(g) of the Loan Agreement, and shall include the transfer by the Company of all or substantially
all of its assets into a joint venture.



This Note is the Collateral Installment Note referred to in, and is entitled to all of the benefits
of the Loan Agreement and any Loan Documents. If Customer shall fail to pay when due any
installment or other sum due hereunder, and any such failure shall continue for more than five (5)
Business Days from the due date, or if any other Event of Default shall have occurred and be
continuing, then at the option of the holder hereof (or, upon the occurrence of any Bankruptcy
Event, automatically, without any action on the part of the holder hereof), and in addition to all
other rights and remedies available to such holder under the Loan Agreement, any Loan Documents,
and otherwise, the entire Loan Amount at such time remaining unpaid, together with accrued interest
thereon and all other sums then owing by Customer under the Loan Agreement, may be declared to be
and thereby become immediately due and payable.



It is expressly understood, however, that nothing contained in the Loan Agreement, any other
agreement, instrument or document executed by Customer, or otherwise, shall affect or impair the
right, which is unconditional and absolute, of the holder hereof to enforce payment of all sums due
under this Note at or after maturity, whether by acceleration or otherwise, or shall affect the
obligation of Customer, which is also unconditional and absolute, to pay the sums payable under
this Note in accordance with its terms. Except as otherwise expressly set forth herein or in the
Loan Agreement, Customer hereby waives presentment, demand for payment, protest and notice of
protest, notice of dishonor, notice of acceleration, notice of intent to accelerate and all other
notices and formalities in connection with this Note.



Wherever possible each provision of this Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Note shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining provisions of this
Note. Notwithstanding any provision to the contrary in this Note, the Loan Agreement or any of the
Loan Documents, no provision of this Note, the Loan Agreement or any of the Loan Documents shall
require the payment or permit the collection of any Excess Interest. If any Excess Interest is
provided for, or is adjudicated as being provided for, in this Note, the Loan Agreement or any of
the Loan Documents, then: (a) Customer shall not be obligated to pay any Excess Interest; and (b)
If any Excess Interest is provided for, or is adjudicated as being provided for, in, then: (i)
Customer shall not be obligated to pay any Excess Interest; and (ii) any Excess Interest that MLC
may have received under any of the Loan Documents shall, at the option of MLC, be applied as a
credit against the then unpaid principal balance of this Note, or accrued interest hereon not to
exceed the maximum amount permitted by law or refunded to the payor thereof.



Upon the occurrence and during the continuance of any Event of Default, but without limiting the
rights and remedies otherwise available to MLC hereunder or waiving such Event of Default, the
interest payable by Customer hereunder shall at the option of MLC accrue and be payable at the
Default Rate. The Default Rate, once implemented, shall continue to apply to the Obligations under
this Note, the Loan Agreement or any of the Loan Documents and be payable by Customer until the
date MLC gives written notice (which shall not be unreasonably delayed or withheld) that such Event
of Default has been cured to the satisfaction of MLC.

This Note shall be construed in accordance with the laws of the State of Illinois and may be
enforced by the holder hereof in any jurisdiction in which the Loan Agreement may be enforced.



[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]




-2-









 








IN WITNESS WHEREOF, this Note has been executed by Customer as of the day and year first above
written.



PAC-WEST TELECOMM, INC.




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Signature
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Printed Name	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Title	 	 







-3-