CREDIT AGREEMENT
CREDIT AGREEMENT (this "AGREEMENT") dated as of March 4, 1998, between
XXXXXXXXX & XXXXX CALIFORNIA (the "BORROWER") and SWISS BANK CORPORATION, NEW
YORK BRANCH ("SBC").
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth herein, SBC
is willing to make available to the Borrower the credit facility provided for
herein;
NOW, THEREFORE, IT IS AGREED:
1. THE FACILITY. Subject to and upon the terms and conditions set forth
herein, SBC may in its discretion make advances (the "ADVANCES") to the Borrower
as follows:
(a) At any time and from time to time prior to October 5, 1998, Advances
(the "TRANCHE A ADVANCES") in an aggregate principal amount not exceeding at
any time U.S. $9,339,210 (Nine Million Three Hundred Thirty-Nine Thousand
Two Hundred Ten U.S. Dollars);
(b) At any time and from time to time prior to October 19, 1998,
Advances (the "TRANCHE B ADVANCES") in an aggregate principal amount not
exceeding at any time U.S. $7,471,368 (Seven Million Four Hundred
Seventy-One Thousand Three Hundred Sixty-Eight U.S. Dollars); and
(c) At any time and from time to time prior to November 2, 1998,
Advances (the "TRANCHE C ADVANCES") in an aggregate principal amount not
exceeding at any time U.S. $9,897,824 (Nine Million Eight Hundred
Ninety-Seven Thousand Eight Hundred Twenty-Four U.S. Dollars).
It is understood that the aggregate principal amount of Advances outstanding
shall at no time exceed U.S. $26,708,402 (Twenty-Six Million Seven Hundred Eight
Thousand Four Hundred Two U.S. Dollars) (as such amount may decrease from time
to time as the tranches (each, a "TRANCHE") described in clauses (a) - (c) above
expire or are canceled, the "FACILITY"), and that, subject to the provisions of
Section 2 hereof, the Advances shall be secured by a pledge of certain shares
(the "Shares") of World Access, Inc. (the "ISSUER") owned by the Borrower,
described in a Representation Letter Regarding Underlying Shares delivered to
SBC dated February 25, 1998 (the "REPRESENTATION LETTER") and pledged to SBC
pursuant to that certain ISDA Credit Support Annex to the Schedule to the ISDA
Master Agreement dated as of February 26, 1998 (the "SECURITY AGREEMENT")
executed between the Borrower and SBC. Within the limits of the Facility and
otherwise as provided herein, including the parameters of each Tranche, the
Borrower may borrow, repay and reborrow.
2. ALLOCATION OF COLLATERAL. (a) The 500,000 Shares subject to that
certain put option and call option transaction entered into between Swiss Bank
Corporation, London Branch and the Borrower on March 3, 1998 (and having an
expiration date of October 5, 1998), and delivered by the Borrower to Swiss Bank
Corporation pursuant to the Security Agreement, shall primarily serve as
collateral security for the Tranche A Advances.
(b) The 400,000 Shares subject to that certain put option and call option
transaction entered into between Swiss Bank Corporation, London Branch and the
Borrower on March 3, 1998 (and having an expiration date of October 19, 1998),
and delivered by the Borrower to Swiss Bank Corporation pursuant to the Security
Agreement, shall primarily serve as collateral security for the Tranche B
Advances.
(c) The 529,907 Shares subject to that certain put option and call option
transaction entered into between Swiss Bank Corporation, London Branch and the
Borrower on March 3, 1998 (and having an expiration date of November 2, 1998),
and delivered by the Borrower to Swiss Bank Corporation pursuant to the Security
Agreement, shall primarily serve as collateral security for the Tranche C
Advances.
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All substitutions and withdrawals of collateral will be subject to the
Bank's approval and Regulation U of the Board of Governors of the Federal
Reserve System ("REG U").
Only after payment in full of all obligations of the Borrower with respect
to the Advances for which any Shares primarily serve as collateral security
shall any proceeds of such Shares be applied toward any other obligations of the
Borrower.
All Shares identified in clauses (a)-(c) above and, in addition, any other
Shares deposited with Swiss Bank Corporation shall constitute Posted Collateral
within the meaning of the Security Agreement and collateral security for the
Borrower's obligations hereunder. This Agreement is the Credit Agreement
referred to in the Security Agreement.
3. PURPOSE. The Borrower shall use the Advances for purposes other than
buying or carrying margin stock (within the meaning of Reg U). The Borrower
agrees to indemnify SBC and hold SBC harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and disbursements of counsel for SBC in
connection with any investigative, administrative or judicial proceeding,
whether or not SBC shall be designated a party thereto) which may be incurred by
SBC relating to or arising out of any actual or proposed use of Advances
hereunder; PROVIDED, HOWEVER, that the Borrower shall not be required to
indemnify SBC for any such liabilities, losses, damages, costs or expenses
incurred by SBC as a result of SBC's gross negligence or willful misconduct.
4. AVAILABILITY. Advances of durations of 3, 6, 9 or 12 months shall be
available to the Borrower hereunder; provided, however (and notwithstanding the
provisions of Sections 1 and 7 hereof), that if on the expiry date with respect
to any Tranche, as set forth or described in clauses (a)-(c) of Section 1 hereof
(its "EXPIRY DATE"), any amount shall be owing by SBC to the Borrower under the
put option transaction relating to the Shares serving primarily as security for
such Tranche, as identified or described in Section 2 hereof (a "PUT"), SBC
shall if requested by the Borrower make an Advance to the Borrower on the Expiry
Date not exceeding such amount and having an Interest Period beginning on such
Expiry Date and ending on the settlement date for such Put.
For the purposes of this Agreement, it is understood that, except as
provided in the foregoing paragraph, (i) the duration of each Advance shall be
referred to as an "INTEREST PERIOD"; (ii) the Borrower is required to repay each
Advance on the last day of the Interest Period for such Advance; (iii) each
Advance shall be in the amount of U.S. $50,000 or a greater integral multiple of
U.S. $10,000; and (iv) no Advance shall have an Interest Period which extends
beyond its Tranche's Expiry Date .
5. INTEREST. Interest shall be payable in respect of the outstanding
principal amount of each Advance at the maturity thereof and, in the case of any
Advance in excess of three months, every three months after the beginning
thereof. Advances shall bear interest at a rate per annum (fixed for the
duration of each Advance) equal to 0.50% in excess of, at the Borrower's option
(a) SBC's reserve-adjusted Eurodollar Rate or (b) LIBOR.
Any amount not paid by the Borrower when due hereunder shall, to the fullest
extent permitted by applicable law, bear interest, payable on demand, at a rate
per annum equal to 3% per annum in excess of the Base Rate.
"EURODOLLAR RATE" shall mean the rate so designated by SBC and determined in
accordance with the practice of SBC from time to time. "LIBOR" shall mean, for
any Interest Period, the offered rate for deposits in U.S. dollars for a period
equal to such Interest Period which appears on the Reuters Screen LIBO page as
of 11:00 a.m. (London time) two Business Days before the beginning of such
Interest Period (or, if at least two such rates appear, the arithmetic mean of
such rates). "BUSINESS DAY" shall mean any day on which dealings in Dollar
deposits are carried on in the London interbank market and other than a
Saturday, Sunday or other day on which banks in New York City are authorized or
required to close.
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"BASE RATE" shall mean the higher from time to time of (i) SBC's Prime Rate
and (ii) 0.50% in excess of the rate payable by SBC from time to time for
overnight Federal funds, the Base Rate to change when and as such other rates
shall change. "PRIME RATE" shall mean the rate so designated by SBC and
determined in accordance with the practice of SBC from time to time.
6. INCREASED COSTS. If at any time SBC shall have determined (which
determination shall, absent manifest error, be final, conclusive and binding on
all parties hereto) that as a result of any change in any applicable law or
governmental rule, regulation or order (including any applicable law or
governmental rule, regulation or order respecting capital adequacy), or any
interpretation thereof, including the enactment of any law or governmental rule,
regulation or order (whether or not having the force of law), the cost to SBC of
maintaining this Agreement or making, funding or maintaining any Advance shall
be materially increased or the yield to SBC on such Advance shall be materially
diminished, then SBC shall promptly notify the Borrower thereof, showing in
reasonable detail the basis for the calculation of such increased costs or
diminished yield, and the Borrower shall pay to SBC an amount sufficient to
indemnify SBC thereagainst.
7. NOTICE OF INTENTION TO BORROW. The Borrower shall give SBC prior notice
(a "NOTICE OF BORROWING") by telephone or telex (to be subsequently confirmed in
writing) or in writing (effective upon receipt) of its intention to borrow an
Advance, specifying the date, amount and tenor of the proposed Advance, such
notice to be received not later than 12:00 Noon (New York time) on a date no
later than (a) in the case of an Advance bearing interest at a rate calculated
by reference to the Eurodollar Rate, one Business Day prior to the date of the
proposed Advance and (b) in the case of an Advance bearing interest at a rate
calculated by reference to LIBOR, three Business Days prior to the date of the
proposed Advance.
8. PAYMENTS. All payments made hereunder or under the Note (as hereinafter
defined) shall be made to SBC in lawful and freely transferable money of the
United States of America in immediately available funds and shall be made
without deductions for any present or future taxes, withholdings, deductions or
any other charges (the "TAXES") imposed or required by any political or taxing
authority, it being understood that the net amount received by SBC after payment
of the Taxes by the Borrower shall not be less than the payment provided for
hereunder. All payments shall be made to Account No. 101-YR-196126 at the office
of SBC in New York City, or other such office or account of SBC as SBC shall
from time to time designate. Interest payments shall be calculated for the
actual number of days elapsed on the basis of a 360-day year.
9. FUNDING COSTS. If for any reason an Advance is prepaid, as a result of
acceleration or otherwise, or if the Borrower fails for any reason to borrow in
accordance with a Notice of Borrowing, the Borrower shall pay to SBC, on demand,
an additional amount as shall be required to compensate SBC for any loss
(including, without limitation, loss of margin) connected with its reemployment
of the amount so prepaid or of those funds acquired by SBC to fund the Advance
proposed in such Notice of Borrowing, as the case may be.
10. CONDITIONS PRECEDENT. The making of Advances by SBC to the Borrower
hereunder is subject, without limitation, to the satisfaction of the following
conditions:
(a) SBC shall have received (i) a duly executed note (the "NOTE") in the
form of EXHIBIT A hereto, (ii) a duly executed Put Payout Agreement (the
"PUT PAYOUT AGREEMENT") in the form of EXHIBIT B hereto, and (iii) a duly
executed Form or Forms U-1 ("FORMS U-1") issued by the Board of Governors of
the Federal Reserve System.
(b) The Borrower shall have executed and delivered to SBC such financing
statements on Form UCC-1 as SBC may request in connection with the
transaction evidenced hereby.
(c) All legal matters and proceedings in connection with the transaction
contemplated by this Agreement shall be satisfactory in form and substance
to SBC and its counsel, and SBC shall have
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received such documents and evidence of proceedings in connection with the
transaction as it shall reasonably request.
(d) There shall exist no Event of Default (as hereinafter defined) and
no condition, event or act which, with the giving of notice or lapse of time
or both, would constitute an Event of Default, and all representations and
warranties made by the Borrower herein shall be true and correct with the
same effect as if those representations and warranties had been made on and
as of the date of the proposed Advance.
11. REPRESENTATIONS AND WARRANTIES. The Borrower makes the following
representations and warranties, all of which shall survive the execution and
delivery of this Agreement:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of California, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
(b) The Borrower has the corporate power to execute, this Agreement, the
Security Agreement, the Put Payout Agreement, the Forms U-1, the Note, the
Representation Letter and each Supplement (the "OPERATIVE DOCUMENTS"), to
deliver the Operative Documents and to perform its obligations under the
Operative Documents and has taken all necessary corporate action to
authorize such execution, delivery and performance.
(c) Such execution, delivery and performance do not violate or conflict
with the Borrower's charter, by-laws or other constitutive documents, any
law applicable to the Borrower, any order or judgment of any court or other
agency of government applicable to the Borrower or any of its assets or any
contractual restriction binding on or affecting the Borrower or any of its
assets.
(d) All governmental and other consents that are required to have been
obtained by the Borrower with respect to the Operative Documents have been
obtained and are in full force and effect and all conditions of any such
consents have been complied with.
(e) The Borrower's obligations under the Operative Documents constitute
its legal, valid and binding obligations, enforceable in accordance with
their respective terms .
(f) There is not pending or, to the Borrower's knowledge, threatened
against it any action, suit or other proceeding at law or in equity or
before any court, tribunal, governmental body, agency or official or any
arbitrator that is likely to have a material adverse effect on the business,
operations, prospects or condition (financial or otherwise) of the Borrower
or to affect the legality, validity or enforceability against the Borrower
of any of the Operative Documents or its ability to perform its obligations
under the Operative Documents.
(g) All information furnished by or on behalf of the Borrower pursuant
to Section 12(a) hereof and in the Representation Letter is, as of the date
of such information, true, accurate and complete in every material respect .
(h) No proceeds of any Advance will be used in any manner which would
violate of cause SBC to be in violation of Regulations G, T, U, or X of the
Board of Governors of the Federal Reserve System.
(i) The address of the principal place of business of the Borrower is
set forth following its signature hereto.
(j) There exists no restriction on the Borrower's ability to pledge the
Shares in favor of SBC and no internal sales restrictions of the Issuer or
any other contractual agreement binding on the Issuer or the Borrower that
restricts SBC's right to sell the Shares upon any foreclosure thereupon,
other than the Registration Rights Agreement, dated as of February , 1998,
between the Issuer and GST USA, Inc.
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12. COVENANTS. The Borrower covenants and agrees that, until all
obligations incurred by the Borrower under the Operative Documents are paid in
full and so long as this Agreement is in effect, the Borrower will:
(a) Provide to SBC, with reasonable promptness, any public information
relating to the financial condition of the Borrower as SBC may from time to
time reasonably request.
(b) Promptly give written notice to SBC of any condition, event or act
which, with or without the giving of notice or the lapse of time, or both,
would constitute an Event of Default.
(c) Promptly execute and deliver at the Borrower's expense all further
instruments and documents (including any financing statements under the
Uniform Commercial Code as enacted in any applicable jurisdiction), and take
all further action, that may be necessary or that SBC may request in order
to perfect or protect any security interest granted or purported to be
granted under any Operative Document or to enable SBC to exercise and
enforce its rights and remedies thereunder.
(d) Promptly (and in any event within two weeks) inform SBC in writing
of any change of the address of its principal place of business from the
address set forth following its signature hereto.
(e) Not amend or modify any agreement affecting the Shares, or enter
into any agreement that would restrict the transferability of the Shares.
13. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing:
(a) The Borrower shall fail to pay when due any amount payable under any
Operative Document;
(b) The Borrower shall fail to perform or observe any term or covenant
contained in any Operative Document or an Event of Default as defined
therein shall occur under the ISDA Master Agreement dated as of February 26,
1998 between the Borrower and SBC (such agreement, together with any
confirmation thereunder, the "MASTER AGREEMENT"), or any representation or
warranty made by the Borrower in this Agreement or the Master Agreement or
in any certificate or other document or statement furnished at any time
hereunder or thereunder or in connection herewith or therewith shall prove
to have been incorrect or untrue in any material respect on the date as of
which made;
(c) A default or event of default shall occur in respect of notes, other
loans or similar evidences of indebtedness of the Borrower, the effect of
which is to cause, or to permit the holder of such indebtedness to cause,
such indebtedness to become due prior to its stated maturity, or any such
indebtedness shall not be paid within any applicable grace period after the
due date thereof;
(d) One or more judgments or decrees shall be entered against the
Borrower involving in the aggregate for the Borrower a liability (not paid
or fully covered by insurance) of $10,000,000 or more, and such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 30 days after the entry thereof;
(e) The Borrower shall make an assignment for the benefit of creditors
or a composition with creditors, shall generally fail to pay its debts as
they become due, shall file (or take any action for the purpose of filing) a
petition commencing a voluntary case concerning the Borrower under any
reorganization or bankruptcy laws, or an involuntary case under such laws
shall be commenced against the Borrower; or
(f) The Borrower shall fail to comply with any of the provisions of the
Security Agreement or the Security Agreement shall cease to be in full force
and effect;then, and in any such event, SBC may by notice to the Borrower
take the following actions: (i) terminate the Facility, whereupon the same
shall terminate forthwith, (ii) declare the Advances and all interest
accrued and unpaid thereon, and all other sums due under any Operative
Document, to be immediately due and payable without
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presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower, and/or (iii) exercise such rights
and remedies under this Agreement, the Security Agreement or under the
Uniform Commercial Code or other applicable law which it deems appropriate
under the circumstances to enforce such documents.
The Borrower agrees to provide or procure at the Borrower's expense such
documents and assistance as SBC may deem necessary or desirable in order to
effect a sale of any Shares following an Event of Default hereunder. The
Borrower hereby irrevocably appoints SBC as the Borrower's attorney-in-fact,
with effect upon the occurrence of an Event of Default, to execute and deliver
in the name of the Borrower any document necessary or desirable in connection
with such sale.
14. ASSIGNMENT. SBC shall have the right at any time (a) to transfer or
assign any of its rights or obligations hereunder or under the Note to any
office or subsidiary of SBC or to make any Advance provided hereunder through
any such office or subsidiary, and (b) to assign and pledge all or any portion
of its rights hereunder or under the Note to any Federal Reserve Bank.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns; provided that the Borrower shall not be permitted to assign any of
its rights and obligations hereunder without the prior written consent of SBC.
16. GOVERNING LAW AND JURISDICTION; WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
The Borrower hereby irrevocably submits to the jurisdiction of any court of
the State of New York or of the United States for the Southern District of New
York with respect to any action or legal proceeding arising out of or relating
to this Agreement or the Note. The Borrower hereby irrevocably agrees and
consents that any such action or legal proceeding may also be brought before the
courts of the jurisdiction of the Borrower's principal residence if SBC so
elects.
THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY.
17. EXPENSES. The Borrower agrees to reimburse SBC for any out-of-pocket
expenses, including reasonable fees and disbursements of legal counsel, incurred
in connection with (a) the enforcement of any Operative Document or the Master
Agreement, the Note or any other document submitted hereunder or in connection
herewith, or (b) the preservation of SBC's rights hereunder or thereunder.
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IN WITNESS WHEREOF, the Borrower and SBC have executed and delivered this
Agreement as of the date first above written.
SWISS BANK CORPORATION,
NEW YORK BRANCH
By:
-----------------------------------------
Title:
By:
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Title:
XXXXXXXXX & XXXXX CALIFORNIA
By: /s/ XXXXXXX X. XXXXX
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Title: Chief Financial Officer
Address: Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
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