Page 16 of 108 Pages
CONFORMED COPY
CREDIT AGREEMENT
dated as of June 29, 1998
between
GEOTEK COMMUNICATIONS, INC.
and GEOTEK USA, INC., as
Debtors and Debtors-in-Possession
and
S-C RIG INVESTMENTS III, L.P.
Page 17 of 108 Pages
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS; ACCOUNTING TERMS......................................1
1.1 Definitions..........................................................1
1.2 Accounting Principles................................................9
ARTICLE 2 THE CREDITS........................................................9
2.1 The Commitments.....................................................9
2.2 Borrowings..........................................................9
2.3 Changes of Commitments.............................................10
2.4 Fees...............................................................10
2.5 Use of Proceeds....................................................10
2.6 Notes..............................................................11
2.7 Optional Prepayments...............................................11
2.8 Mandatory Prepayments and Reductions of Commitments................11
ARTICLE 3 PAYMENTS OF PRINCIPAL AND INTEREST................................12
3.1 Amortization.......................................................12
3.2 Interest...........................................................12
ARTICLE 4 PAYMENTS; COMPUTATIONS; ETC. .....................................13
4.1 Payments...........................................................13
4.2 Computations.......................................................13
4.3 Minimum Amounts....................................................13
4.4 Certain Notices....................................................13
ARTICLE 5 SECURITY: ADMINISTRATION PRIORITY ...............................14
5.1 Grant of Lien and Security Interest................................14
5.2 Administrative Priority............................................15
5.3 Grants, Rights and Remedies Cumulative.............................15
5.4 No Filings Required................................................16
5.5 Survival...........................................................16
ARTICLE 6 CONDITIONS PRECEDENT .............................................17
6.1 Conditions Precedent...............................................17
6.2 Additional Conditions Precedent....................................21
6.3 Certification......................................................22
ARTICLE 7 REPRESENTATIONS AND WARRANTIES ...................................22
7.1 Incorporation, Good Standing and Due Qualification.................22
7.2 Corporate Power and Authority; No Conflicts........................22
7.3 Legally Enforceable Agreements.....................................23
7.4 Litigation.........................................................23
i
Page 18 of 108 Pages
Page
7.5 True and Complete Disclosure.......................................23
7.6 Ownership and Liens................................................24
7.7 Taxes..............................................................24
7.8 ERISA..............................................................24
7.9 Subsidiaries.......................................................24
7.10 Credit Arrangements...............................................25
7.11 Licenses and Permits..............................................25
7.12 No Default on Outstanding Judgments or Orders.....................25
7.13 Labor Disputes and Acts of God....................................25
7.14 Insurance.........................................................25
7.15 Governmental Regulation...........................................25
7.16 Administrative Priority; Lien Priority............................26
7.17 Bankruptcy Court Orders...........................................26
ARTICLE 8 AFFIRMATIVE COVENANTS ............................................26
8.1 Maintenance of Existence...........................................26
8.2 Conduct of Business................................................26
8.3 Maintenance of Properties and Executory Contracts and Leases.......27
8.4 Maintenance of Records.............................................27
8.5 Maintenance of Insurance...........................................27
8.6 Compliance with Laws...............................................27
8.7 Right of Inspection................................................27
8.8 Reporting Requirements.............................................28
8.9 Further Assurances.................................................29
8.10 Due Diligence......................................................30
8.11 Fiduciary Out......................................................30
8.12 Chapter 11 Plan Process............................................30
ARTICLE 9 NEGATIVE COVENANTS ...............................................30
9.1 Debt...............................................................30
9.2 Liens..............................................................30
9.3 Bankruptcy Court Orders; Administrative Priority;
Lien Priority; Payment of Claims................................31
9.4 Dividends..........................................................32
9.5 Mergers, Etc.......................................................32
9.6 Sale of Assets.....................................................32
9.7 Investments and Acquisitions.......................................32
9.8 Other Payments.....................................................33
9.9 Fiscal Year........................................................33
9.10 Press Releases.....................................................33
ARTICLE 10 EVENTS OF DEFAULT ...............................................33
10.1 Events of Default.................................................33
10.2 Consequences of an Event of Default...............................35
10.3 Certain Remedies..................................................36
ii
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Page
ARTICLE 11 MISCELLANEOUS ..................................................37
11.1 Amendments and Waivers............................................37
11.2 Binding Effect....................................................37
11.3 The Lender as Party in Interest...................................37
11.4 Expenses and Indemnities..........................................37
11.5 Assignment; Participation.........................................38
11.6 Notices...........................................................39
11.7 Table of Contents; Headings.......................................39
11.8 Severability......................................................39
11.9 Counterparts......................................................39
11.10 Integration......................................................39
11.11 Governing Law....................................................39
11.12 Waiver of Jury Trial.............................................39
EXHIBITS
Exhibit A-1 - Tranche A Note
Exhibit A-2 - Tranche B Note
Exhibit B - Security and Pledge Agreement
Exhibit C - Budget
Exhibit D - Final Order
Exhibit E - Term Sheet
SCHEDULES
Schedule I - Subsidiaries and Investments
Schedule II - Credit Arrangements
Schedule III - Licenses and Consents
Schedule IV - Insurance
Schedule V - Out-of-the-Ordinary-Course Subsidiaries
Schedule VI - Liens
Schedule VII - Litigation
iii
Page 20 of 108 Pages
CREDIT AGREEMENT dated as of June 29, 1998 by and between GEOTEK
COMMUNICATIONS, INC., a corporation organized under the laws of Delaware and a
debtor and debtor-in-possession, and GEOTEK USA, INC., a corporation organized
under the laws of Delaware and a debtor and debtor-in- possession (together, the
"Borrowers"), and S-C RIG INVESTMENTS III, L.P., a Delaware limited partnership
(the "Lender").
The Borrowers filed voluntary petitions for relief under chapter 11 of
title 11 of the United States Code on June 29, 1998 (the "Petition Date"). The
Borrowers have requested the Lender to provide the Borrowers with a $10,000,000
loan facility available in two tranches to facilitate the prompt documentation
and confirmation of a plan of reorganization and to provide working capital to
fund the Borrowers' business operations in accordance with the Budget (defined
below), and, subject to the terms and conditions set forth herein, the Lender
has agreed to provide such facility.
NOW THEREFORE, the parties hereto hereby agree, effective upon the
Effective Date (as hereinafter defined), as follows:
ARTICLE 1
DEFINITIONS; ACCOUNTING TERMS
1.1 Definitions. As used in this Agreement the following terms have
the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated after the date of this Agreement, by which any of the
Borrowers and/or any of their Subsidiaries (in one transaction or as the most
recent transaction in a series of transactions) directly or indirectly acquires
(a) the business of, or all or substantially all of the assets of, any firm,
corporation or division thereof, whether through purchase of assets, merger or
otherwise, or (b) ownership or control of any corporation, partnership, joint
venture or joint adventure.
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time. References to Articles, Sections, Exhibits, Schedules and the
like refer to the Articles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
"Banking Day" means any day other than a day on which commercial banks
are not authorized or required to close in New York City.
Page 21 of 108 Pages
"Bankruptcy Code" shall mean title 11 of the United States Code, as
amended.
"Bankruptcy Court" shall mean the United States Bankruptcy Court for
the District of Delaware or such other court having original jurisdiction over
the Chapter 11 Cases.
"Borrowers" shall have the meaning assigned to such term in the
preamble hereto.
"Borrowing" means a borrowing hereunder of a Loan.
"Breakup Fee" shall have the meaning given such term in the Term
Sheet.
"Budget" shall mean the itemized budget for the Borrowers attached
hereto as Exhibit C for the period commencing on or about the Effective Date and
ending on or about the Termination Date, as the same may be amended, modified or
supplemented from time to time with the Lender's consent.
"Capital Expenditures" means, for any period, the Dollar amount of
gross expenditures (including Capital Lease Obligations) made for fixed assets,
real property, plant and equipment, and all renewals, improvements and
replacements thereto (but not repairs thereof) incurred during such period.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Carve-Out Expenses" shall mean (i) amounts payable pursuant to 28
U.S.C. ss. 1930(a)(6) and (ii) allowed fees and expenses of professionals
retained in the Chapter 11 Cases pursuant to sections 327 and 1103 of the
Bankruptcy Code up to but not exceeding $500,000 in the aggregate (inclusive of
any holdbacks, but excluding any unused retainers established prior to the date
hereof); provided, that such amounts shall not be used for attacking Lender, its
claims or interests, the Loans or the Chapter 11 Plan.
"Chapter 11 Cases" shall mean the Borrowers' cases under chapter 11 of
the Bankruptcy Code pending in the Bankruptcy Court.
Page 22 of 108 Pages
"Chapter 11 Plan" means the chapter 11 plan of reorganization for the
Borrowers as described in the Term Sheet.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall have the meaning assigned to such term in the
Security and Pledge Agreement and in Section 5.1 of this Agreement.
"Commitments" shall mean the Tranche A Commitment and the Tranche B
Commitment.
"Consolidated Subsidiary" means any Subsidiary, whose accounts are or
are required to be consolidated with the accounts of the Borrowers in accordance
with GAAP.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrowers, are treated as a single
employer under section 414(b) or 414(c) of the Code.
"Crisis Manager" shall have the meaning set forth in Section
6.1(a)(xi) hereof.
"Debt" of any Person shall mean, at any date (without duplication):
(a) all obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments; (b) all obligations of such
Person to pay the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business of such Person,
provided the same are not overdue in a material amount or are being contested in
good faith; (c) all Capital Lease Obligations of such Person; (d) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Persons; (e) all Debt of others Guaranteed by such person;
(f) all obligations of such Person in respect of letters of credit, acceptances
or surety or other similar bonds, whether contingent or otherwise; and (g)
obligations in respect of any Interest Rate Protection Agreement.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Definitive Plan Documents" shall mean the definitive documentation
with respect to the operative documents contemplated by the Chapter 11 Plan,
including, without limitation, the documentation pertaining to the proposed
rights offering in connection therewith and the new securities to be issued on
the effective date thereunder.
Page 23 of 108 Pages
"Disclosure Statement" means the disclosure statement for the Chapter
11 Plan under section 1125 of the Bankruptcy Code.
"Disposition" means any sale, assignment, lease, transfer or other
disposition of any Collateral (whether now owned or hereafter acquired),
including under a Plan of Reorganization and the PageNet Agreement, by the
Borrowers or any of their Subsidiaries to any Person.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Due Diligence" shall mean the financial, business, operational and
legal due diligence (a) of Lender and its advisors of the Borrowers and their
Subsidiaries for purposes of the Loans, including with respect to the
Collateral, and (b) of Lender and their respective advisors with respect to
Borrowers' business plan and the Chapter 11 Plan.
"Effective Date" shall have the meaning attributed thereto in Section
6.1 hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
section 414(b) of the Code) as the Borrowers or is under common control (within
the meaning of section 414(c) of the Code) with the Borrowers.
"Event of Default" has the meaning given such term in Section 10.1
hereof.
"Facility Documents" means this Agreement, the Notes and the Security
Documents.
"Fiduciary Out" shall have the meaning given such term in the Term
Sheet.
"Final Order" shall mean an order of the Bankruptcy Court, in form and
substance satisfactory to the Lender and its counsel, finally approving this
Agreement and the extensions of credit made and to be made by the Lender in
accordance with this Agreement in substantially the form of Exhibit D hereto, as
the same may be amended, modified or supplemented from time to time with the
express written joinder or consent of the Lender.
Page 24 of 108 Pages
"Foreign Collateral" shall have the meaning attributed thereto in
Section 5.5(c) hereof.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"HNS" means Xxxxxx Network Systems, Inc. and its affiliates.
"Industrial Wireless Agreement" shall have the meaning assigned to
such term in Section 5.1 hereof.
"Interest Rate Protection Agreement" shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
"Interim Order" shall mean an order of the Bankruptcy Court, in form
and substance satisfactory to the Lender and its counsel, approving this
Agreement and all or a portion of the extension of credit to be made by the
Lender in accordance with this Agreement on an interim basis, and finding, among
other things, that the applicable Loans are in good faith and otherwise satisfy
section 364(e) of the Bankruptcy Code as the same may be amended, modified or
supplemented from time to time with the express written joinder or consent of
the Lender.
"Investment" in any Person shall mean: (a) the acquisition (whether
for cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of such Person; and (b) any deposit with, or advance, loan or other
extension of credit to, such Person (but excluding any advance, loan or
extension of credit having a term not exceeding 90 days representing the
purchase price of inventory or supplies sold by such Person or the cost of
services provided by such Person in the ordinary course of business, or any
deposit made prior to the Petition Date).
"Lender" shall have the meaning assigned to such term in the preamble
hereto.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loans" means the Tranche A Loans and the Tranche B Loans.
"May Industrial Wireless Agreement" shall have the meaning assigned to
such term in Section 5.1 hereof.
Page 25 of 108 Pages
"Multiemployer Plan" means a Plan defined as such in section 3(37) of
ERISA to which contributions have been made by the Borrowers or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Notes" shall mean, collectively, the Tranche A Note and the Tranche B
Note.
"Obligations" shall mean all indebtedness, obligations and liabilities
of the Borrowers to the Lender incurred under or related to this Agreement, the
Notes or any other Facility Document, whether such indebtedness, obligations or
liabilities are direct or indirect, secured or unsecured, joint or several,
absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising, including the principal amount
of Loans outstanding, together with interest thereon, and all expenses, fees and
indemnities hereunder or under any other Facility Document, including amounts
due under Section 11.4 hereof and similar agreements contained in the other
Facility Documents, from time to time arising under or in connection with or
evidenced or secured by this Agreement, the Notes, or any other Facility
Document.
"PageNet Agreement" has the meaning given such term in Section 5.1
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" of any Person shall mean: (a) direct
obligations of the United States of America, or of any agency thereof, or
obligations guaranteed as to principal and interest by the United States of
America or any agency thereof, in either case maturing not more than 90 days
from the date of acquisition thereof; (b) certificates of deposit issued by any
Lender or trust company organized under the laws of the United States of America
or any state and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; (c) commercial paper rated A-1 or better or P-1 by Standard & Poor's
Corporation or Xxxxx'x Investors Services, Inc., respectively, maturing not more
than 90 days from the date of acquisition thereof; (d) post-petition deposits
under section 366 of the Bankruptcy Code; and (e) Investments outstanding on the
Petition Date and listed on Schedule I hereto.
"Permitted Liens" shall mean the Liens described in clause (b) of
Section 9.2 hereof.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
Page 26 of 108 Pages
"Petition Date" shall have the meaning assigned to such term in the
preamble hereto.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrowers or any
ERISA Affiliate and which is covered by Title IV of ERISA or to which section
412 of the Code applies.
"Plan of Reorganization" shall mean any chapter 11 plan for the
Borrowers.
"Pledged Interests" shall have the meaning assigned to such term in
the Security and Pledge Agreement.
"Post-Default Rate" shall mean, in respect of any principal of any
Obligation or any other amount under this Agreement or any Note that is not paid
when due (whether at stated maturity, by acceleration, by optional or mandatory
prepayment or otherwise), a rate per annum during the period from and including
the due date to but excluding the date on which such amount is paid in full
equal to 14%.
"Security and Pledge Agreement" shall mean a Security and Pledge
Agreement executed by the Borrowers and any wholly-owned direct or indirect
Subsidiary of the Borrowers that is granting Lender a Lien on any Collateral
thereunder, in favor of the Lender, substantially in the form of Exhibit B
hereto and covering the Collateral as identified therein, as the same shall be
amended, modified and supplemented and in effect from time to time.
"Security Documents" shall mean, collectively, the Security and Pledge
Agreement, all Uniform Commercial Code financing statements required by this
Agreement or the Security and Pledge Agreement which have been or will be filed
with respect to the security interests in personal property and fixtures created
pursuant thereto, and all additional security agreements, mortgages or Uniform
Commercial Code financing statements heretofore or hereafter delivered or filed,
as the case may be, by the Borrowers and any direct or indirect Subsidiary of
the Borrowers that is granting Lender a Lien on any of the Collateral pursuant
to the terms of this Agreement or the Security and Pledge Agreement.
"Subsequent Advance Date" shall have the meaning assigned to such term
in Section 6.1(b) hereof.
"Subsidiary" means, as to any Person, any corporation or other entity
of which at least a majority of the securities or other ownership interests
having ordinary voting power (absolutely or contingently) for the election of
directors or other persons performing similar functions are at the time owned
directly or indirectly by such Person.
Page 27 of 108 Pages
"Term Sheet" shall mean a term sheet in substantially the form of
Exhibit E hereto setting forth the terms and conditions of the Chapter 11 Plan,
as the same may be amended, modified and supplemented from time to time with the
express written consent of the Lender.
"Termination Date" shall mean the earlier of (a) October 15, 1998, (b)
the effective date of a Plan of Reorganization, and (c) the occurrence of an
Event of Default.
"Termination Event" shall mean (a) a "Reportable Event" described in
section 4043 of ERISA and the regulations issued thereunder (other than a
"Reportable Event" not subject to the provision for 30-day notice to the PBGC
under such regulations), or (b) the withdrawal of the Borrowers or any member of
the Controlled Group from a Plan during a plan year in which it was a
"substantial employer" as defined in section 4001(a)(2) of ERISA, or (c) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under section 4041 of ERISA, or (d) the institution
of proceedings to terminate a Plan by the PBGC, or (e) any other event or
condition which might constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"Third Party Transaction" shall have the meaning given such term in
the Term Sheet.
"Tranche A Commitment" shall mean the obligation of the Lender to make
Loans to the Borrowers in an aggregate principal amount not to exceed
$7,000,000.
"Tranche A Loans" shall mean the Loans provided for in Section 2.1(a)
hereof.
"Tranche A Note" shall mean the promissory grid note provided for by
Section 2.6(a) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case, as the same shall be modified and supplemented
and in effect from time to time.
"Tranche B Commitment" shall mean the obligation of the Lender to make
Loans to the Borrowers in an aggregate principal amount not to exceed
$10,000,000 minus the amount of any Tranche A Loans actually extended to the
Borrowers.
"Tranche B Loans" shall mean the Loans provided for in Section 2.1(b)
hereof.
Page 28 of 108 Pages
"Tranche B Note" shall mean the promissory grid note provided for in
Section 2.6(b) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case, as the same shall be modified and supplemented
and in effect from time to time.
"Unfunded Vested Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all vested benefits under the Plan
exceeds the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrowers
or any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA.
1.2 Accounting Principles. Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered hereunder shall be made and
prepared in accordance with GAAP and all accounting and financial terms shall
have the meanings ascribed to such terms by GAAP.
ARTICLE 2
THE CREDITS
2.1 The Commitments.
(a) Subject to the terms and conditions set forth herein, the
Lender agrees to make one or more multiple draw Tranche A Loans to the Borrowers
from time to time during the period from June 29, 1998 in an aggregate principal
amount not to exceed the Tranche A Commitment. Tranche A Loans once repaid or
prepaid may not be reborrowed.
(b) Subject to the terms and conditions set forth herein, the
Lender agrees to make one or more multiple draw Tranche B Loans to the Borrowers
from time to time during the period from the Subsequent Advance Date through the
Termination Date in an aggregate principal amount not to exceed the Tranche B
Commitment. Tranche B Loans once repaid or prepaid may not be reborrowed.
(c) Notwithstanding anything herein to the contrary, the Lender
shall have no obligation to make Loans hereunder in excess of the amounts
authorized by the Interim Order or the Final Order, as the case may be, in the
Chapter 11 Cases, and any reference herein to the amount of any Commitments
shall be automatically reduced to the amounts so authorized.
2.2 Borrowings. The Borrowers shall give the Lender notice of each
Page 29 of 108 Pages
Borrowing of Loans hereunder as provided in Section 4.4 hereof. On the date
specified for each Borrowing hereunder, the Lender shall, subject to the terms
and conditions of this Agreement, make available the amount of such Borrowing to
the Borrowers by depositing the same, in immediately available funds, in an
account of the Borrowers designated for such purpose from time to time by the
Borrowers.
2.3 Changes of Commitments.
(a) The Commitments shall be automatically reduced to zero on the
Termination Date.
(b) The Borrowers shall have the right at any time or from time
to time (i) so long as no Loans are outstanding, to terminate the Commitments
and (ii) to reduce the unused amount of the Commitments; provided that (x) the
Borrowers shall give notice of each such termination or reduction as provided in
Section 4.4 hereof and (y) each partial reduction shall be in an amount at least
equal to $100,000 or in multiples of $10,000 in excess thereof.
(c) The Commitments once terminated or reduced may not be
reinstated.
2.4 Fees. In addition to the amounts provided in Section 11.4 hereof
and any similar provisions in the other Facility Documents, the Borrowers shall
be obligated to pay Lender a facility fee of $150,000, which amount shall be
paid by means of Lender's deduction thereof from the first Tranche A Loan.
2.5 Use of Proceeds. The Borrowers hereby covenant, represent and
warrant that the proceeds of the Loans made to them will be used solely to fund
the Borrowers' continued ordinary course operations and working capital needs,
in each case solely in accordance with the Budget (without limitation, in
Permitted Investments) and to facilitate, among other things, the conduct and
completion of Due Diligence and the prompt documentation, filing and approval or
confirmation, as the case may be, of the Disclosure Statement, the Chapter 11
Plan and the Definitive Plan Documents within the times specified in this
Agreement. Without limiting the foregoing, the Borrowers may not, and shall not
permit any of their Subsidiaries to, use the Proceeds of any Loan to make
Acquisitions or Investments, including any partnership or joint venture payment,
or for attacking the Lender, its claims or interests, the Loans or the Chapter
11 Plan; provided that the proceeds of the Loans may be used to make ordinary
course payments (as provided in the Budget) in respect of Anam
Telecommunications, Geotek Argentina, S.A., GMSI, Inc. and Geotek Technologies
Israel (1992) Ltd.
Page 30 of 108 Pages
2.6 Notes.
(a) The Tranche A Loans made by the Lender hereunder shall be
evidenced by a single promissory note of the Borrowers in substantially the form
of Exhibit A-1 hereto, dated as of the date hereof, payable to the Lender in a
principal amount equal to the amount of the Tranche A Commitment as originally
in effect and otherwise duly completed. The date and amount of each Tranche A
Loan made by the Lender to the Borrowers, and all payments and prepayments made
on account of the principal thereof, shall be recorded by the Lender on its
books and, prior to any transfer of the Tranche A Note, endorsed by the Lender
on the schedule attached to such Tranche A Note or any continuation thereof;
provided, however, that any failure by the Lender to make any such notation
shall not affect the obligations of the Borrowers hereunder or under such
Tranche A Note in respect of such obligations.
(b) The Tranche B Loans made by the Lender hereunder shall be
evidenced by a single promissory note of the Borrowers in substantially the form
of Exhibit A-2 hereto, dated as of the date hereof, payable to the Lender in a
principal amount equal to the amount of the Tranche B Commitment as originally
in effect and otherwise duly completed. The date and amount of each Tranche B
Loan made by the Lender to the Borrowers, and all payments and prepayments made
on account of the principal thereof, shall be recorded by the Lender on its
books and, prior to any transfer of the Tranche B Note, endorsed by the Lender
on the schedule attached to such Tranche B Note or any continuation thereof;
provided, however, that any failure by the Lender to make any such notation
shall not affect the obligations of the Borrowers hereunder or under such
Tranche B Note in respect of such obligations.
2.7 Optional Prepayments. Subject to Section 4.3 hereof, the Borrowers
shall have the right to prepay the Obligations, at any time or from time to
time, provided the Borrowers shall give the Lender notice of each such
prepayment as provided in Section 4.4 hereof (and, upon the date specified in
any such notice of prepayment, the amount to be prepaid shall become due and
payable hereunder).
2.8 Mandatory Prepayments and Reductions of Commitments.
(a) Sale of Assets, Etc.. Without limiting the obligation of the
Borrowers to obtain the consent of the Lender pursuant to Section 9.6 hereof to
any Disposition not otherwise permitted hereunder, the Borrowers will prepay, to
the extent of such Disposition proceeds, the Obligations outstanding, and the
Commitments shall be automatically reduced, upon the closing of any Disposition
to the extent of such Disposition proceeds, including, without limitation, in
the case of each of the following Dispositions: the PageNet Agreement.
Page 31 of 108 Pages
(b) Exceeding Commitments. If at any time the Loans outstanding
hereunder exceed the Commitments then available, then the Borrowers shall
immediately repay the Loans in the amount of such excess.
ARTICLE 3
PAYMENTS OF PRINCIPAL AND INTEREST
3.1 Amortization.
(a) To the extent not due and payable earlier pursuant to the
terms of this Agreement, the entire unpaid principal amount of each of the Loans
shall be due and payable on the Termination Date.
3.2 Interest.
(a) The Borrowers hereby promise to pay to the Lender interest on
the unpaid principal amount of each Loan, for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
a rate per annum equal to 12%.
(b) Notwithstanding the foregoing, the Borrowers hereby promise
to pay to the Lender interest on the Loans at the Post-Default Rate (i) upon the
occurrence and during the continuance of an Event of Default hereunder and (ii)
on any principal of any Loan and on any other Obligation of the Borrowers which
shall not be paid in full when due (whether at stated maturity, by acceleration,
by mandatory prepayment or otherwise), for the period from and including the due
date thereof to but excluding the date the same is paid in full.
(c) Accrued interest on the Loans shall be payable monthly on
last Banking Day of each calendar month.
(d) Notwithstanding anything herein to the contrary, interest
payable at the Post-Default Rate shall be payable in cash from time to time on
demand.
Page 32 of 108 Pages
ARTICLE 4
PAYMENTS; COMPUTATIONS; ETC.
4.1 Payments.
(a) Except to the extent otherwise provided herein, all payments
of principal, interest and other amounts to be made by the Borrowers to the
Lender under this Agreement, the Notes and the other Facility Documents shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, into an account in accordance with the following wire
instructions: Bank of New York, aba #000000000 credit to Xxxxxxx & X.
Xxxxxxxxxxxx Account #8540905100, for further credit to Account # 33-00713, S-C
Rig Investments III, L.P. (or such other account designated by the Lender from
time to time) not later than 1:00 p.m. New York time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Banking Day).
(b) The Borrowers shall, at the time of making any payment or
prepayment under this Agreement or any Note, specify to the Lender the
Obligations or other amounts payable by the Borrowers hereunder to which such
payment is to be applied (and in the event that the Borrowers fail to so
specify, or if an Event of Default has occurred and is continuing, the Lender
may apply the amount of such payment received by it in such manner as it may
determine to be appropriate).
(c) If the due date of any payment under this Agreement or any
Note would otherwise fall on a day that is not a Banking Day, such date shall be
extended to the next succeeding Banking Day, and interest shall be payable for
any principal so extended for the period of such extension.
4.2 Computations. Interest hereunder shall be computed on the basis of
a year of 360 days.
4.3 Minimum Amounts. Each Borrowing hereunder or optional partial
prepayment of principal of the Loans shall be in an amount at least equal to
$100,000 or in multiples of $10,000 in excess thereof.
4.4 Certain Notices. Notices by the Borrowers to the Lender of
terminations or reductions of the Commitments, of Borrowings and of optional
prepayments of the Obligations shall be irrevocable and shall be effective only
if received by the Lender not later than 12:00 noon New York time (or, in the
Page 33 of 108 Pages
case of the Tranche A Loan, 5:00 p.m. New York time) on the number of Banking
Days prior to the date of the relevant termination, reduction, borrowing or
prepayment specified below:
Number of
Banking-Days
Notice Prior
------------------------------ -------------------
Termination or reduction of 2
Commitments
Borrowing or prepayment of Loans 1
Each such notice of termination or reduction shall specify the amount and type
of the Commitment to be terminated or reduced. Each notice of optional
prepayment shall specify the amount and type of Loan to be prepaid, and each
such notice of Borrowing shall specify the type of Loan to be borrowed (subject
to Section 4.3 hereof) and the date of borrowing or optional prepayment (which
shall be a Banking Day).
ARTICLE 5
SECURITY: ADMINISTRATION PRIORITY
5.1 Grant of Lien and Security Interest.
(a) Pursuant to this Agreement and the Security Documents, the
Borrowers hereby assign, pledge, transfer, grant, confirm and set over unto the
Lender, and hereby grant and create in favor of the Lender, and shall cause each
of their wholly-owned, direct and indirect Subsidiaries simultaneously to
assign, pledge, transfer, grant, confirm and set over unto the Lender, and
simultaneously grant and create in favor of the Lender, a security interest in
and to, the Collateral, consisting of all assets not subject to any existing
Lien that is not a Permitted Lien of the Borrowers and their wholly-owned,
direct and indirect Subsidiaries (without limitation excluding any licenses
owned by or stock of Geotek U.S. Networks, Inc., Geotek License Holdings, Inc.
and XxxXxxxxxx Communications, Inc.), including, without limitation, (i) to the
extent grantable, the rights in respect of each of the Borrowers' Subsidiaries'
68 Special Mobile Radio licenses described on Annex 1 to the Security and Pledge
Agreement (as to such 68 licenses, the "Pledged SMR Licenses"), (ii) the
Borrowers' interest in and claims against each of Anam Telecommunications,
Geotek Argentina, S.A., and, to the extent grantable, GMSI, Inc., and any direct
or indirect wholly-owned Subsidiary of a Borrower that holds a Pledged SMR
License, (iii) all rights of the Borrowers to receive the consideration under
and/or to the proceeds of (x) that certain SMR Frequency Exchange Agreement with
Page 34 of 108 Pages
Paging Network of America, Inc. ("PageNet") dated March 14, 1997 (the "PageNet
Agreement"), with the exception of the New York MTA license assigned by PageNet
to Geotek U.S. Networks, Inc., and (y) that certain Purchase Agreement dated
April 3, 1998 by and between Geotek Communications, Inc., Gelico, Inc. and
Industrial Wireless Technologies, Inc. ("Industrial Wireless Agreement"), and
(iv) to the extent grantable, all unencumbered accounts, chattel paper,
contracts, documents, equipment, general intangibles, instruments and equipment
of the Borrowers and their wholly- owned, direct and indirect Subsidiaries, with
the exception of the Purchase Agreement among Geotek Communications, Inc.,
Geotek US Networks, Inc. and Industrial Wireless Technologies, Inc., dated May
26, 1998 (the "May Industrial Wireless Agreement") and in each case, not
constituting "Excluded Property" under the Security and Pledge Agreement and
subject to any existing Liens with the exception of Permitted Liens, together
with (v) all proceeds, rents, products and profits of any and all of the
foregoing, all as described in the Security Documents.
(b) The liens and security interests in favor of the Lender
referred to in Section 5.1(a) hereof and under the Security Documents shall be
valid and perfected liens and security interests, prior to all other Liens and
interests, other than Permitted Liens, and shall have a second priority, with
respect to such Collateral, junior only to the Permitted Liens thereon; provided
that the liens and security interests in favor of the Lender referred to in
Section 5.1(a) hereof and under the Security Documents shall be subject to the
Carve-Out Expenses. All liens and security interests in favor of the Lender
hereunder and under the Security Agreements and their priority shall remain in
effect until the Commitments have been terminated and all Obligations have been
irrevocably repaid in cash in full.
5.2 Administrative Priority. The Borrowers hereby agree that the
Obligations of the Borrowers shall constitute allowed administrative expenses in
the Chapter 11 Cases having super-priority status under section 364(c)(1) of the
Bankruptcy Code over all other administrative expenses and unsecured claims
against the Borrowers now existing or hereafter arising of any kind or nature
whatsoever, including without limitation all administrative expenses, charges
and claims of the kind specified in sections 503(b), 506(c), 726(b) and 507(b)
of the Bankruptcy Code, subject, as to priority, only to Carve-Out Expenses.
5.3 Grants, Rights and Remedies Cumulative. The liens and security
interests granted pursuant to Section 5.1(a) hereof and the Security Documents
and the administrative priority granted pursuant to Section 5.2 hereof may be
independently granted by the Facility Documents, the Interim Order, the Final
Order and by other agreements hereafter entered into. This Agreement, the other
Facility Documents, the Interim Order, the Final Order and such other agreements
hereinafter entered into supplement each other, and the grants, priorities,
rights and remedies of the Lender hereunder and thereunder are cumulative.
Page 35 of 108 Pages
5.4 No Filings Required. The liens and security interests referred to
in Section 5.1(a) hereof and in the other Facility Documents shall be deemed
valid and perfected by entry of the Interim Order or the Final Order, as the
case may be, whichever occurs first. The Lender shall not be required to file
any financing statements, notices of Lien, mortgages or similar instruments in
any jurisdiction or filing office, or to take possession of any Collateral or to
take any other action in order to validate or perfect the liens and security
interests granted by or pursuant to this Agreement, the Interim Order or the
Final Order, as the case may be, or any other Facility Document. If the Lender
shall, in its sole discretion, from time to time choose to file such financing
statements, notices of Lien, mortgages or similar instruments, take possession
of any Collateral, or take any other action to validate or perfect any such
security interests or liens, all such documents shall be deemed to have been
filed or recorded at the time and on the date of entry of the Interim Order or,
if no Interim Order is obtained, the Final Order, and the Borrowers consent to
the modification of the automatic stay under section 362 of the Bankruptcy Code
to permit the Lender to file such financing statements, notices of Lien or
similar instruments, take possession of any collateral, or take any other action
to validate or perfect any such security interests or Liens.
5.5 Survival. The liens, security interests, lien priorities,
administrative priorities and other rights and remedies granted to the Lender
pursuant to this Agreement and the other Facility Documents (specifically
including but not limited to the existence, perfection and priority of the liens
and security interests provided herein and therein, and the administrative
priority provided above and therein) shall not be modified, altered, primed or
impaired (including by the grant of a junior Lien on any Collateral) in any
manner by any other financing or extension of credit or incurrence of Debt by
the Borrowers (pursuant to section 364 of the Bankruptcy Code or otherwise), or
by any dismissal or conversion of the Chapter 11 Cases, or, with respect to any
Loans then outstanding, any modification, amendment or reversal or stay of the
Interim Order or the Final Order, as the case may be, or by any other act or
omission whatsoever. Without limitation, notwithstanding any such order,
financing, extension, incurrence, dismissal, conversion, act of omission:
(a) except for the Carve-Out Expenses, no costs or expenses of
administration which have been or may be incurred in the Chapter 11 Cases or any
conversion of the same or in any other proceedings related thereto, and no
priority claims, are or will be prior to or on a parity with any claim of the
Lender against the Borrowers in respect of any Obligation;
(b) the liens and security interests in favor of the Lender set
forth in Section 5.1(a) hereof and in the Facility Documents shall constitute
valid and perfected first priority Liens and security interests, subject only to
the Permitted Liens to which such liens and security interests hereunder shall
be subordinate and junior, and shall be prior to all other Liens and security
interests, now existing or hereafter arising, in favor of any other creditor or
Page 36 of 108 Pages
any other Person whatsoever; provided that all such liens and security interests
of the Lender set forth in Section 5.1(a) hereof any in the Facility Documents
shall be subject to the Carve-Out Expenses; and
(c) the liens and security interests in favor of the Lender set
forth in Section 5.1(a) hereof and in the Facility Documents shall be valid and
perfected without the necessity that the Lender file financing statements,
notices of lien, mortgages or otherwise perfect its Liens and security interests
under applicable nonbankruptcy law except for such Collateral as is or may
hereafter be located outside of the territorial limits of the United States of
America ("Foreign Collateral") to the extent that the same may not be subject to
the jurisdiction of the Bankruptcy Court. Borrowers shall take all steps
required to perfect Lender's security interest in the Foreign Collateral under
applicable non-bankruptcy law as promptly as practicable, but in no event later
than July 8, 1998.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions Precedent.
(a) Tranche A Loans. The obligation of the Lender to make Tranche
A Loans available hereunder shall occur on the date (the "Effective Date") on or
after June 29, 1998 that the Lender shall have received each of the following,
in form and substance satisfactory to the Lender and its counsel:
(i) the Notes duly executed by the Borrowers;
(ii) the Security and Pledge Agreement duly executed by the
Borrowers and any Subsidiary of the Borrowers with an interest in the
Collateral, together with such financing statements executed by the Borrowers
and such Subsidiaries which in the opinion of the Lender are desirable to
perfect the liens and security interests created hereby and by the Security and
Pledge Agreement;
(iii) the stock certificates evidencing the Pledged
Interests, accompanied by undated stock powers duly executed in blank; provided
that stock certificates evidencing Foreign Collateral shall be received by
Lender as promptly as practicable;
(iv) evidence that either the Interim Order or the Final
Order, as the case may be, shall have been entered by the Bankruptcy Court
approving the Commitments (or such lesser amount as shall be acceptable to the
Lender in its sole discretion), and each such Order shall be in full force and
effect and shall not have been reversed, stayed, modified or amended;
Page 37 of 108 Pages
(v) a copy of the charter, as amended and in effect, of each
of the Borrowers and of each of the "Domestic Issuers" under Annex 2A of the
Security and Pledge Agreement, certified as of recent date by the Secretary of
State of the State of Delaware, or, in the case of each Domestic Issuer which is
not a Delaware entity, by an officer of the state of such Subsidiary's
incorporation or organization, and a certificate from such Secretary of State or
officer dated as of recent date as to the good standing of and charter documents
filed by the Borrowers and such Subsidiary;
(vi) a certificate from the Secretary of each of the
Borrowers and of any Subsidiary of the Borrowers that is a party to any Facility
Document, dated the Effective Date, certifying (A) that the attached are true
and complete copies of the by-laws of the Borrowers and such Subsidiary as
amended and in effect at all times from the date on which the resolutions
referred to in clause (B) were adopted to and including the date of such
certificate, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of each of the Borrowers and
of any Subsidiary of the Borrowers that is a party to any Facility Document,
authorizing the execution, delivery and performance of this Agreement and the
other Facility Documents to which the Borrowers or such Subsidiary is a party
and the extensions of credit hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C) that the
charter of each of the Borrowers and such Subsidiary that is a party to any
Facility Document has not been amended since the date of the certification
thereto furnished pursuant to clause (v) above, and (D) as to the incumbency and
specimen signature of each officer of the Borrowers and Subsidiary executing the
Facility Documents;
(vii) a certificate of an officer of each of the Borrowers
and of any Subsidiary of the Borrowers that is a party to a Facility Document as
to the incumbency and specimen signature of the Secretary of the Borrowers and
such Subsidiary;
(viii) a certificate of a duly authorized officer of each of
the Borrowers, dated the Effective Date, stating that (A) the representations
and warranties in Article 7 of this Agreement and in the other Facility
Documents are true and correct on such date as though made on and as of such
date as to such entity, (B) no event has occurred and is continuing which
constitutes a Default or an Event of Default hereunder and (C) from the date of
execution of the Term Sheet through the Effective Date, no material adverse
change in the assets, business, operations or financial condition of the
Borrowers has occurred or become known since the Petition Date, except as
disclosed in writing by the Borrowers to the Lender prior to the Effective Date,
except as resulting from the commencement of the Chapter 11 Cases, and a
Page 38 of 108 Pages
certificate of a duly authorized officer of any Subsidiary of the Borrowers that
is a party to a Facility Document, dated the Effective Date, stating that (A)
the representations and warranties in the Security and Pledge Agreement are true
and correct on such date as though made on and as of such date as to such entity
and (B) from the date of execution of the Term Sheet through the Effective Date,
no material adverse change in the assets, business, operations or financial
condition of any Subsidiary of the Borrowers has occurred or become known since
the Petition Date, except as disclosed in writing by such Subsidiary of the
Borrowers to the Lender prior to the Effective Date, except as resulting from
the commencement of the Chapter 11 Cases;
(ix) the liens and security interests in favor of the Lender
pursuant hereto and the Security and Pledge Agreement shall be valid and
perfected first priority liens prior (except for Permitted Liens to which such
Liens and security interests are subordinate and junior) to all other Liens in
or on the Collateral intended to be subject thereto, subject to the Carve-Out
Expenses;
(x) the Term Sheet executed and delivered by the Borrowers
and the Borrowers' active pursuit of confirmation of the Chapter 11 Plan;
(xi) on or before June 29, 1998, the Borrowers and Lender
shall have agreed upon the identity of, and the Borrowers shall have agreed to
retain a crisis manager and a restructuring and reorganization financial advisor
and/or other consultants to the Borrowers (collectively, "Crisis Manager") to
perform, subject to applicable fiduciary duties and the boards of directors of
the Borrowers, all postpetition functions of the Borrowers' chief executive
officer, adherence to the Budget, consolidation of operations, facilitation of
Due Diligence in respect of the Chapter 11 Plan and the business plan, and
preparation of a revised business plan (the parties agree (A) upon Zolfo Xxxxxx
Management, LLC (per Xxxxxxx XxXxxxxx and Xxxxxx Xxxxxxx), assisted with respect
to the Business Plan by Renaissance Worldwide, Inc., as Crisis Manager and (B)
that the Borrowers shall not dismiss or replace the Crisis Manager without
obtaining Bankruptcy Court approval and, if terminated without cause, without
having agreed with the Lender on a replacement Crisis Manager; provided,
however, that if the Borrowers dismiss the Crisis Manager for cause, they agree
to replace the Crisis Manager as soon as reasonably practicable with another
Crisis Manager acceptable to the Lender);
(xii) commencing on June 26, 1998, the Borrowers shall
facilitate and cooperate with the Due Diligence of Lender in respect of the
Chapter 11 Plan and the business plan;
Page 39 of 108 Pages
(xiii) evidence that all fees, retainers and expenses
required by this Agreement to be paid on or before the Effective Date shall have
been paid in full (or shall have been authorized by the Interim Order or the
Final Order, as the case may be);
(xiv) the Lender shall otherwise be satisfied in all
material respects (in its sole determination) with the results of its Due
Diligence, which Due Diligence shall be completed on or before June 29, 1998;
and
(xv) such other approvals, opinions or documents as the
Lender may reasonably request.
(b) Tranche B Loans. The obligation of the Lender to make Tranche
B Loans available hereunder shall occur on the date (the "Subsequent Advance
Date") on or after August 10, 1998 that the Lender shall have received each of
the following, in form and substance satisfactory to the Lender and its counsel:
(i) evidence that the Effective Date shall have occurred;
(ii) evidence that the Final Order shall be in full force
and effect approving the Commitments (or such lesser amount as shall be
acceptable to the Lender in its sole discretion) and shall not have been
reversed, stayed, modified or amended;
(iii) the Bankruptcy Court shall have scheduled the hearing
on approval of the Disclosure Statement under section 1125 of the Bankruptcy
Code to occur no later than August 15, 1998;
(iv) the Borrowers shall be actively pursuing Bankruptcy
Court approval of the Disclosure Statement and confirmation of the Chapter 11
Plan on or before September 22, 1998;
(v) certificates from a duly authorized officer of each of
the Borrowers and any of the Borrowers' Subsidiaries, as applicable, of the type
referred to in clauses (a)(viii) and (a)(ix) above, dated the Subsequent Advance
Date and such certificates are true and accurate in all material respects; and
(vi) the Borrowers shall be continuing to facilitate and
cooperate with the Due Diligence described in clause (a)(xii) above; and
Page 40 of 108 Pages
(vii) the Borrowers shall not have dismissed or replaced the
Crisis Manager referred to in clause (a)(xi) above without obtaining Bankruptcy
Court approval and, if terminated without cause, without having agreed with the
Lender on a replacement Crisis Manager; provided, however, that if the Borrowers
dismiss the Crisis Manager for cause, they agree to replace the Crisis Manager
as soon as reasonably practicable with another Crisis Manager acceptable to the
Lender.
6.2 Additional Conditions Precedent. The obligation of the Lender to
make any Loan hereunder is subject to the further conditions precedent that on
the date of any Borrowing of a Loan the following statements shall be true:
(a) the representations and warranties made by the Borrowers in
Article 7 hereunder and in each of the other Facility Documents are true and
correct in all material respects on and as of the date of such Borrowing as
though made on and as of such date;
(b) No Default or Event of Default has occurred and is
continuing, or would result from such Borrowing;
(c) On the date of such Borrowing, the Interim Order or the Final
Order, as the case may be, shall be in full force and effect and shall not have
been reversed, stayed, modified or amended. Unless the Lender shall have joined
in or expressly consented in writing to the same, there shall be no motion of
the Borrowers pending: (i) to reverse, modify or amend the Interim Order or the
Final Order, as the case may be, or (ii) to permit any administrative expense or
unsecured claim against the Borrowers, now existing or hereafter arising, of any
kind or nature whatsoever, to have administrative priority equal or superior to
the priority of the Lender in respect of the Obligations, except for Carve-Out
Expenses, or (iii) to grant or permit the granting of a Lien on any Collateral;
(d) The aggregate unpaid principal amount of the Loans shall not
exceed, and after giving effect to the requested Borrowing will not exceed, the
Commitments then available; and
(e) Up to fourteen days in advance of the date of a Borrowing,
the Borrower may request a Borrowing, the amount of which shall not exceed the
Borrowers' anticipated ordinary course expenses as set forth in the Budget for
the fourteen day period following the date of such Borrowing (i.e. two weeks in
advance). In the event there is a dispute between the parties as to whether the
Borrowers are in compliance with the Budget, the Lender shall continue to fund
Loans into a segregated account of the Borrowers that may not be drawn upon
except pursuant to an order of the Bankruptcy Court or an agreement of the
parties hereto. Without limiting any other provision of this Agreement, Lender
shall inform the Borrower, either orally or in writing within 3 business days of
a request for Borrowing whether the Borrowers are in compliance with the Budget.
Page 41 of 108 Pages
6.3 Certification. Each notice of a Borrowing shall be accompanied by
a certificate of a duly authorized officer of each of the Borrowers certifying
that the statements contained in Section 6.2 are true and correct both on the
date of such notice and, unless the Borrowers otherwise notify the Lender prior
to such Borrowing, as of the date of such Borrowing.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
The Borrowers hereby represent and warrant that upon the occurrence of
the Effective Date (in each case where there is a reference to a Subsidiary in
this Article 7, such reference shall be limited to the Borrowers' direct and
indirect wholly-owned Subsidiaries):
7.1 Incorporation, Good Standing and Due Qualification. Each of the
Borrowers and their Subsidiaries (a) except as disclosed in Schedule III, is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization; (b) has the requisite corporate power
and has all material governmental licenses, authorizations, consents and
approval necessary to own its assets, except as disclosed in Schedule III
hereto, and carry on the business in which it is now engaged or proposed to be
engaged; and (c) except as disclosed in Schedule III hereto is duly qualified to
do business in all jurisdictions in which the nature of the business conducted
by the Borrowers and their Subsidiaries makes such qualification necessary and
where failure to so qualify would have a material adverse effect on its
business, financial condition or operations.
7.2 Corporate Power and Authority; No Conflicts. The execution,
delivery and performance by the Borrowers (and their Subsidiaries, as
applicable) of the Facility Documents to which they are a party, the grant by
the Borrowers (and their Subsidiaries, as applicable) and the perfection of the
security interests purported to be granted in favor of the Lender hereunder and
under the Security Documents, and the exercise by the Lender of any rights and
remedies hereunder or under the other Facility Documents have been duly
authorized by all necessary corporate action and do not and will not: (a)
contravene any provision of its (or their) charter or by laws; (b) violate any
provision of, or require any filing, registration, consent or approval under,
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrowers
or any of their Subsidiaries or affiliates (other than entry of the Interim
Order or the Final Order, as the case may be, and as otherwise provided under
Section 10.3 hereof); (c) result in a breach of or constitute a default or
require any consent under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which the Borrowers are a party or by which
they or their properties may be bound or affected except as provided by the
Page 42 of 108 Pages
Bankruptcy Code and the Interim Order or Final Order; (d) result in, or require,
the creation or imposition of any Lien (other than as provided hereunder and
under the Security Documents), upon or with respect to any of the properties now
owned or hereafter acquired by the Borrowers except as provided by the
Bankruptcy Code and the Interim Order or the Final Order; or (e) cause the
Borrowers (or any Subsidiary or affiliate, as the case may be, of the Borrowers)
to be in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument except as provided by the Bankruptcy Code and the Interim
Order and Final Order.
7.3 Legally Enforceable Agreements. Each Facility Document is, or when
delivered under this Agreement will be, a legal, valid and binding obligation of
the Borrowers (and is Subsidiaries, as applicable) enforceable against the
Borrowers, and such Subsidiaries, in accordance with its terms.
7.4 Litigation. Other than the Chapter 11 Cases and as set forth in
Schedule VII hereto, there are no actions, suits or proceedings pending or, to
the knowledge of the Borrowers, threatened, against or affecting the Borrowers
or any of their Subsidiaries or any of their respective properties before any
court, governmental agency or arbitrator, which may, in any one case or in the
aggregate, materially adversely affect the financial condition, operations,
properties or business of the Borrowers or any such Subsidiary or the ability of
the Borrowers to perform their obligations under the Facility Documents.
7.5 True and Complete Disclosure. No financial statement, information,
exhibit or report furnished by the Borrowers to the Lender in connection with
this Agreement, including the audited financial statements of the Borrowers for
the fiscal year ended December 31, 1997, contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading. All written information
furnished heretofore or hereafter by the Borrowers to the Lender in connection
with this Agreement or the other Facility Documents and the transactions
contemplated hereby and thereby shall not contain a material misstatement of
fact or omit to state a material fact or any fact necessary to make such
information not materially misleading, shall or will be prepared in accordance
with GAAP and do or will present fairly the financial condition of the entities
covered thereby and the results of operations ended thereby, or (in the case of
projections or pro forma financial information) based on reasonable estimates,
on the date as of which such information is stated or certified. Since the
Petition Date, there has been no material adverse change in the condition
(financial or otherwise), business, operations or prospects of the Borrowers or
any of their Subsidiaries, except as disclosed in writing to the Lender prior to
the date hereof, other than as caused by the commencement of the Chapter 11
Cases.
Page 43 of 108 Pages
7.6 Ownership and Liens. Each of the Borrowers and its Subsidiaries
has title to, or valid leasehold interests in, all of its properties and assets,
real and personal, including the properties, assets and leasehold interests
reflected in the financial statements referred to in Section 7.5 hereof (other
than any properties or assets disposed of in the ordinary course of business),
and none of the properties and assets owned by the Borrowers or any of its
Subsidiaries and none of its leasehold interests is subject to any Lien, except
as permitted under Section 9.2 hereof.
7.7 Taxes. Each of the Borrowers and its Subsidiaries has filed all
tax returns (federal, state and local) required to be filed and has paid all
taxes, assessments and governmental charges and levies thereon to be due,
including interest and penalties, except as prohibited by the Bankruptcy Code.
7.8 ERISA. Neither the Borrowers nor any ERISA Affiliate maintains or
has an obligation to contribute to any Plan or any Multiemployer Plan. Neither
of the Borrowers nor any ERISA Affiliate nor any fiduciary of any Plan which is
not a Multiemployer Plan (i) has engaged in a nonexempt prohibited transaction
described in section 406 of ERISA or 4975 of the Code or (ii) has taken or
failed to take any action which would constitute or result in a Termination
Event which in each case would have a material adverse effect on the condition
(financial or otherwise), business, operation or prospects of the Borrowers or
any of their Subsidiaries. Neither of the Borrowers nor any ERISA Affiliate has
engaged in a transaction within the meaning of Section 4069 of ERISA which would
have a material adverse effect on the condition (financial or otherwise),
business, operation or prospects of the Borrowers or any of their Subsidiaries.
Neither of the Borrowers nor any ERISA Affiliate has incurred any liability to
the PBGC which remains outstanding other than the payments of premiums, and
there are no premium payments which have become due which are unpaid. Neither of
the Borrowers nor any ERISA Affiliate has made a complete or partial withdrawal
under Section 4203 or 4205 of ERISA from a Multiemployer Plan in either case
which would have a material adverse effect on the condition (financial or
otherwise), business, operation or prospects of the Borrowers or any of their
Subsidiaries. There are no pending, or to the knowledge of the Borrowers or any
ERISA Affiliate, threatened claims, actions, proceedings or lawsuits (other than
claims for benefits in the normal course) asserted or instituted against (i) any
Plan or its assets, (ii) any fiduciary with respect to any Plan, or (iii) the
Borrowers or any ERISA Affiliate with respect to any Plan.
7.9 Subsidiaries. Schedule I hereto is a complete and correct
description of the name, jurisdiction of incorporation and ownership of the
outstanding capital stock of each Subsidiary of the Borrowers or any of their
Subsidiaries and any Investments of the Borrowers or any of their Subsidiaries
in existence on the date hereof. All shares of such stock or other equity or
ownership interests owned by the Borrowers or one or more of their Subsidiaries,
as indicated in such Schedule, are, except as indicated on the attachment to
such Schedule, owned free and clear of all Liens, security interests and other
charges and encumbrances.
Page 44 of 108 Pages
7.10 Credit Arrangements. Schedule II hereto contains a complete and
correct list of all material credit agreements, indentures, purchase agreements,
guaranties, Capital Lease Obligations and other investments, agreements and
arrangements providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrowers or any of their
Subsidiaries is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, and the amount
outstanding thereunder, are correctly stated as at the Petition Date, and all
Liens of any nature given or agreed to be given as security therefor are
correctly described or indicated in such Schedule.
7.11 Licenses and Permits. Except as disclosed in Schedule III, the
Borrowers and each of their Subsidiaries have obtained all material licenses,
permits, authorizations or other forms of permission which under federal, state
and local laws are necessary or advisable to operate its businesses (including,
without limitation, copyrights, trademarks, patents, the SMR Licenses and other
licenses to use tangible or intangible property and similar rights) in the
manner contemplated by the Borrowers or such Subsidiary as of the date of this
Agreement, and neither the Borrowers nor any of its Subsidiaries is in violation
of any valid rights of others with respect to any of the foregoing, other than
as of a result of the Chapter 11 Cases.
7.12 No Default on Outstanding Judgments or Orders. Each of the
Borrowers has satisfied all judgments against it and neither the Borrowers nor
any of their Subsidiaries is in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any court, arbitrator or federal,
state, municipal or other governmental authority, commission, board, bureau,
agency or instrumentality, domestic or foreign, other than as of a result of the
Chapter 11 Cases.
7.13 Labor Disputes and Acts of God. Neither the business nor the
properties of the Borrowers or of any of their Subsidiaries have been affected
by any fire, explosion, accident, strike, lockout or other labor dispute, storm,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which has had or could have a material
adverse affect on the business, properties or operations of the Borrowers or any
such Subsidiary.
7.14 Insurance. The Borrowers maintain with financially sound and
reputable insurers adequate insurance with respect to its property and business
and those of its Subsidiaries. Schedule IV hereto sets forth a list of all
insurance currently maintained by the Borrowers and its Subsidiaries.
7.15 Governmental Regulation. Neither the Borrowers nor any of their
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Investment Company Act of 1940, the Federal Power Act or any
statute or regulation limiting its ability to incur indebtedness for money
borrowed as contemplated hereby.
Page 45 of 108 Pages
7.16 Administrative Priority; Lien Priority.
(a) The Obligations of the Borrowers will constitute allowed
administrative expenses in the Chapter 11 Cases having priority over all other
administrative expenses and unsecured claims against the Borrowers, now existing
or hereafter arising, of any kind or nature whatsoever, including without
limitation all other administrative expenses, charges or claims of the kind
specified in sections 503(b), 506(c), 507(b) and 723(b) of the Bankruptcy Code,
subject, as to priority, only to Carve-Out Expenses.
(b) The Obligations of the Borrowers will be secured by a valid
and perfected first Lien on and security interest in all of the Collateral,
subject only to the Permitted Liens to which such Liens and security interests
shall be junior and subordinate, and subject further to the Carve-Out Expenses.
7.17 Bankruptcy Court Orders. Each of the Interim Order or the Final
Order and any other order approving the Fiduciary Out, as the case may be, is in
full force and effect, and has not been reversed, stayed, modified or amended.
ARTICLE 8
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid, each of the Borrowers and any
Subsidiary granting Lender a Lien on Collateral shall:
8.1 Maintenance of Existence. Except for the Subsidiaries identified
on Schedule III and Schedule V, preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its corporate existence and good standing
in the jurisdiction of its organization, and qualify and remain qualified, and
cause each of its Subsidiaries to qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification is required.
8.2 Conduct of Business. (a) Except for the Subsidiaries identified on
Schedule V, continue, and cause each of its Subsidiaries to continue, to engage
in an efficient and economical manner in a business of the same general type as
conducted by it on the date of this Agreement, (b) except as disclosed on
Schedule III, obtain, and cause each of its Subsidiaries to obtain, from time to
time all licenses, permits, authorizations or other forms of permission which
under federal, state and local laws are necessary or advisable for operating and
maintaining the conduct of the business of the Borrowers and their Subsidiaries
(including, without limitation, copyrights, trademarks, patents and licenses to
use tangible or intangible property and similar rights, and (c) use its best
Page 46 of 108 Pages
efforts, and cause each of its Subsidiaries to use its best efforts, in each
case consistent with the Budget to preserve and protect the value of the
Collateral.
8.3 Maintenance of Properties and Executory Contracts and Leases.
Except for the Subsidiaries identified on Schedule V, maintain, keep and
preserve, and cause each of its Subsidiaries to maintain, keep and preserve, all
of its properties (tangible and intangible) including leased property, necessary
or useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted, and shall use its best efforts to
ensure that all leases and executory contracts necessary or useful in the
Borrowers' or any of such Subsidiaries' business or operations remain in full
force and effect (without, however, the assumption thereof under section 365 of
the Bankruptcy Code), except to the extent otherwise consented to by the Lender.
8.4 Maintenance of Records. Keep, and cause each of its Subsidiaries
to keep, adequate records and books of account, in which complete entries will
be made in accordance with GAAP, reflecting all financial transactions of the
Borrowers and its Subsidiaries.
8.5 Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance including insurance against bodily injury
and property damage with respect to the Collateral with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof. As soon as practicable following the
Effective Date and from time to time thereafter, the Borrowers shall cause the
Lender to be named as loss payee as its interests may appear under any such
insurance policies respecting the Collateral in effect from time to time.
8.6 Compliance with Laws. Comply, and cause each of its Subsidiaries
to comply, in all respects with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, subject to the limitations and requirements of the
Bankruptcy Code.
8.7 Right of Inspection. At any reasonable time and from time to time,
and without undue disruption to the Borrowers' business, permit the Lender or
any agent or representative thereof, to examine and make copies and abstracts
from the records and books of account of, and visit the properties of, the
Borrowers and any of their Subsidiaries, and to discuss the affairs, finances
and accounts of the Borrowers and any such Subsidiary with any of their
respective officers and directors and the Borrowers' independent accountants.
Page 47 of 108 Pages
8.8 Reporting Requirements. Furnish to the Lender:
(a) (i) as soon as available and in any event within 60 days
after the end of each fiscal year of the Borrowers, the following financial
statements and (ii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrowers, the following financial statements
accompanied by an opinion thereon acceptable to the Lender by an independent
accountant of national standing selected by the Borrowers and acceptable to the
Lender: a consolidated balance sheet of the Borrowers and their Consolidated
Subsidiaries as of the end of such fiscal year and a consolidated income
statement and statement of cash flow and statement of changes in stockholders'
equity of the Borrowers and their Consolidated Subsidiaries for such fiscal
year, all in reasonable detail and stating in comparative form the respective
consolidated figures for the corresponding date and period in the prior fiscal
year and all prepared in accordance with GAAP;
(b) as soon as available and in any event within 7 days after the
end of each month of each fiscal year of the Borrowers, a consolidated balance
sheet of the Borrowers and their Consolidated Subsidiaries as of the end of such
month and a consolidated income statement and statement of cash flow and
statement of changes in stockholders' equity, of the Borrowers and their
Consolidated Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such month, all in reasonable detail and
stating in comparative form the respective consolidated figures for the
corresponding date and period in the previous fiscal year and all prepared in
accordance with GAAP and certified by either the chief financial officer or the
chief accounting officer of the Borrowers (subject to year-end adjustments);
(c) on or before June 26, 1998, financial and cash flow
projections, in form and substance satisfactory to the Lender, which may be the
Budget, for the period ending September 25, 1998, with weekly (provided by the
close of business each Monday) compliance updates showing actual sources and
uses and line item and backup compliance with the Budget for the prior week;
(d) promptly upon receipt by Borrowers, but in any event no later
than 24 hours thereafter, copies of all consultants' reports, investment
bankers' reports, accountants' management letters, business plans and similar
documents. The Borrowers shall not be obligated to provide copies of any such
documents, however, which are subject to any privilege and as to which
disclosure to the Lender would cause such privilege to be waived, but if the
Borrowers claim that any document is so privileged, they shall promptly provide
the Lender with a letter describing the document and stating the basis for such
claim of privilege;
(e) copies of all proposed pleadings, motions, applications,
financial information and other papers and documents to be filed or received by
Page 48 of 108 Pages
the Borrowers in the Chapter 11 Cases pertaining to the Loans, the Disclosure
Statement or the Chapter 11 Plan, with sufficient time to permit review by
Lender;
(f) promptly upon their becoming available, but in any event no
later than 24 hours thereafter, copies of all (i) reports, financial statements
or other information delivered by the Borrowers to their shareholders generally
or to the members of any creditors' committee appointed in the Chapter 11 Cases,
(ii) reports, proxy statements, financial statements and other information
generally distributed by the Borrowers to their creditors or the financial
community in general and (iii) audit or other reports submitted to the Borrowers
by independent accountants in connection with any annual, interim or special
audit of the Borrowers;
(g) promptly upon becoming aware of any Event of Default or
Default, notice thereof, together with a written statement of the chief
financial officer or the chief accounting officer of the Borrowers setting forth
the details thereof and any action with respect thereto taken or contemplated to
be taken by the Borrowers;
(h) promptly upon becoming aware thereof, but in any event no
later than 24 hours after Borrowers learn of such event, notice of any event
which the Borrowers believe in good faith is reasonably likely to have, or
actually has had, a material effect on the condition (financial or otherwise),
business, operation or prospects of the Borrowers or any of their Subsidiaries;
(i) promptly upon Borrowers becoming aware of such proceedings,
notice of all legal and arbitral proceedings, and of all proceedings by or
before any governmental or regulatory authority or agency, and any material
development in respect of such legal or other proceedings, against or affecting
the Borrowers or any of their Subsidiaries; and
(j) such other information and in such form as the Lender may
reasonably request, such as ad hoc intra-week or daily requests for the
Borrowers' line item cash position, cash flow forecasts or current payables or
balance sheet information from time to time.
8.9 Further Assurances. Execute, acknowledge, deliver, record, file,
register, perform and do any and all such further acts, deeds, conveyances,
security agreements, assignments, estoppel certificates, financing statements,
assurances and other instruments as the Lender may reasonably request from time
to time in order (a) to carry out more effectively the purposes of this
Agreement or any other Facility Document, (b) to subject to valid and perfected
first priority liens and security interests all Collateral (subject, as to
priority, to the Permitted Liens), (c) to perfect and maintain the validity,
effectiveness and priority of any of the Facility Documents and the Liens and
security interests intended to be created thereby, and (d) to better assure,
convey, grant, assign, transfer, preserve, protect and confirm unto the Lender
Page 49 of 108 Pages
the rights granted or now or hereafter intended to be granted to the Lender
under any Facility Document. The assurances contemplated by this Section 8.9
shall be given under applicable nonbankruptcy law as well as the Bankruptcy
Code, it being the intention of the parties that the Lender may request
assurances under applicable nonbankruptcy law, and such request shall be
complied with (if otherwise made in good faith by the Lender) whether or not the
Interim Order or the Final Order is in force and whether or not dismissal of the
Chapter 11 Cases or any other action by the Bankruptcy Court is imminent, likely
or threatened.
8.10 Due Diligence. Reasonably facilitate and cooperate with all Due
Diligence, commencing June 26, 1998.
8.11 Fiduciary Out. On or before July 10, 1998, the Borrowers shall
have filed an application for approval of the Fiduciary Out.
8.12 Chapter 11 Plan Process. Prepare and file the Chapter 11 Plan and
Disclosure Statement on or before July 15, 1998, schedule the hearing on the
Disclosure Statement under section 1125 of the Bankruptcy Code and on the
Fiduciary Out to occur on or before August 15, 1998 and actively pursue
Bankruptcy Court approval of the Disclosure Statement and the Fiduciary Out, and
actively pursue and obtain confirmation of the Chapter 11 Plan on or before
September 22, 1998.
ARTICLE 9
NEGATIVE COVENANTS
So long as any Note shall remain unpaid, each of the Borrowers shall
not:
9.1 Debt. Create, incur, assume or suffer to exist, or permit any of
its direct or indirect wholly-owned Subsidiaries to create, incur, assume or
suffer to exist any Debt, except (a) Debt of the Borrowers under this Agreement
and the Notes; and (b) Debt of the Borrowers existing as of the Petition Date.
9.2 Liens. Create, incur, assume or suffer to exist, or permit any of
its direct or indirect wholly-owned Subsidiaries to create, incur, assume or
suffer to exist, any Lien, upon or with respect to any of its properties, now
owned or hereafter acquired, except:
(a) Liens provided for under the Security Documents and as set
forth on Schedule VI hereto;
(b) Liens for taxes or assessments or other government charges or
Page 50 of 108 Pages
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(c) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established, or which are effectively stayed;
(d) Liens under workmen's compensation, unemployment insurance,
social security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges or liens granted to secure the
Borrowers' obligations under letters of credit issued to secure the performance
of bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of business;
(f) judgment and other similar Liens arising in connection with
court proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings and for which appropriate
reserves have been established;
(g) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrowers or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto; and
(h) Non-avoidable Liens in existence on the Petition Date.
9.3 Bankruptcy Court Orders; Administrative Priority; Lien Priority;
Payment of Claims.
(a) Seek, consent to or suffer to exist any modification, stay,
vacation or amendment of the Interim Order or the Final Order, as the case may
be, except for modifications and amendments agreed to by the Lender.
(b) Seek, consent to or suffer to exist a priority for any
administrative expense or unsecured claim against the Borrowers (now existing or
hereafter arising of any kind or nature whatsoever, including without limitation
any administrative expenses, charges or claims of the kind specified in sections
Page 51 of 108 Pages
503(b), 506(c), 507(b) and 723(b) of the Bankruptcy Code) equal or superior to
the priority of the Lender in respect of the Obligations, except for the
Carve-Out Expenses.
(c) Suffer to exist any Lien on the Collateral having a priority
equal or superior to the Liens and security interests in favor of the Lender in
respect of the Obligations, except for Permitted Liens, and subject to the
Carve-Out Expenses.
9.4 Dividends. Declare or pay any dividends, purchase, redeem, retire
or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of the Borrowers, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or otherwise in
respect of any of its shares of its capital stock or permit any of its
Subsidiaries to purchase or otherwise acquire for value any shares of its
capital stock or stock of the Borrowers or another such Subsidiary.
9.5 Mergers, Etc. Subject to the Fiduciary Out, merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to, any Person, or acquire all or substantially
all of the assets or the business of any Person (or enter into any agreement to
do any of the foregoing), or permit any of its Subsidiaries to do so, except
that: (a) any such Subsidiary may merge into or transfer assets to the Borrowers
and (b) any Subsidiary may merge into or consolidate with or transfer assets to
any other Subsidiary.
9.6 Sale of Assets. Subject to the Fiduciary Out, convey, sell, lease,
transfer or otherwise dispose of, or permit any of its direct or indirect
wholly-owned or controlled Subsidiaries to do the foregoing (other than to the
Borrowers), in one transaction or a series of transactions, whether voluntarily
or involuntarily, any part of its business or property, whether now owned or
hereafter acquired except (a) property disposed of in the ordinary course of
business and on ordinary business terms, (b) (so long as no Default or Event of
Default has occurred and is continuing) the Disposition of assets or property no
longer used or useful in the conduct of its business, (c) property disposed of
in accordance with, and as specifically contemplated by, the Budget, or (d)
pursuant to the PageNet Agreement, the Industrial Wireless Agreement, and the
May Industrial Wireless Agreement.
9.7 Investments and Acquisitions. Make any Acquisition or make or
permit to remain outstanding any Investments, or permit any of its direct or
indirect wholly-owned Subsidiaries to do the foregoing, other than Permitted
Investments.
Page 52 of 108 Pages
9.8 Other Payments. Make any payment of principal or interest or
otherwise on account of any Debt or trade payable incurred by it prior to the
Petition Date, provided that such payments may be made if contained in the
Budget and, if necessary, approved by the Bankruptcy Court, or as required by
the Bankruptcy Court upon motion by a third party.
9.9 Fiscal Year. Permit its fiscal year to end on a day other than
December 31, (or if such day is not a Banking Day, the next preceding Banking
Day) or apply to the Bankruptcy Court for authority to do so.
9.10 Press Releases. Without the Lender's prior approval, (not to be
in unreasonably withheld) issue any press release or similar public announcement
in which the Lender or any affiliate of the Lender is mentioned, except as
required by law or regulation or pursuant to an order of any court, governmental
authority or official.
ARTICLE 10
EVENTS OF DEFAULT
10.1 Events of Default. Any of the following events shall be an "Event
of Default":
(a) the Borrowers shall: (i) fail to pay the principal of any
Note as and when due and payable; or (ii) fail to pay interest on the Notes or
any fee or other amount due hereunder as and when due and payable and such
failure shall continue unremedied for three Banking Days; or
(b) any representation or warranty made or deemed made by any of
the Borrowers or a Subsidiary of Borrowers in this Agreement or in any other
Facility Document to which it is a party or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with any Facility Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made; or
(c) an order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court, or any of the Borrowers shall file an
application for an order with respect to the Chapter 11 Cases (i) appointing a
trustee in any such Chapter 11 Cases or (ii) appointing an examiner in any such
Chapter 11 Cases with the authority to perform duties of a trustee (other than
the duties solely of an examiner) in respect of any of the estates of the
Page 53 of 108 Pages
Borrowers or the operation of the business of the Borrowers; or
(d) an order with respect to the Chapter 11 Cases shall be
entered by the Bankruptcy Court dismissing any of the Chapter 11 Cases or
converting any of the Chapter 11 Cases to a chapter 7 case; or
(e) an order shall be entered by the Bankruptcy Court confirming
a Plan of Reorganization in the Chapter 11 Cases, or a Plan of Reorganization
shall be filed which does not contain a provision for termination of the
Commitments and payment in full in cash of all Obligations of the Borrowers
hereunder and under the other Facility Documents on or before the effective date
of such plan or which is not otherwise satisfactory in all material respects to
the Lender; or
(f) an order with respect to any of the Chapter 11 Cases shall be
entered by the Bankruptcy Court without the express prior written consent of the
Lender (i) to revoke, reverse, stay, modify, supplement or amend the Interim
Order or the Final Order or any of the Facility Documents, (ii) approving the
incurrence by any of the Borrowers of any Debt not contemplated hereunder, (iii)
to permit any administrative expense or any claim (now existing or hereafter
arising, of any kind or nature whatsoever) to have administrative priority equal
or superior to the priority of the Lender in respect of the Obligations, except
for Carve-Out Expenses, (iv) to grant or permit the grant of a Lien on the
Collateral or (v) which terminates or results in the rejection of any material
lease or executory contract used or useful in the operation of the Borrowers'
business or operations; or
(g) an order shall be entered by the Bankruptcy Court that is not
stayed pending appeal granting relief from the automatic stay to any creditor of
any of the Borrowers with respect to any claim secured by any asset or assets of
the Borrowers having book value equal to or exceeding $100,000 in the aggregate;
provided, however, that it shall not be an Event of Default if relief from the
automatic stay is lifted solely for the purpose of allowing such creditor to
determine the liquidated amount of its claim against any of the Borrowers; or
(h) an application for any of the orders described in clauses
(c), (d), (e), (f) or (g) above shall be made (i) by a Person other than any of
the Borrowers and such application is not contested by the Borrowers in good
faith or the relief requested is granted in an order that is not stayed pending
appeal or (ii) by any of the Borrowers; or
(i) any judgment or order shall be entered against any of the
Borrowers or any of their direct or indirect wholly-owned Subsidiaries or any
other event shall occur or condition exist which does or could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business, operation or prospects of any of the Borrowers or any of
their direct or indirect wholly-owned Subsidiaries, and there shall be a period
of ten consecutive days during which a stay or enforcement of such judgment or
order shall not be in effect; or
Page 54 of 108 Pages
(j) the Security Documents shall at any time after their
execution and delivery and for any reason cease: (A) to create a valid and
perfected security interest and Lien in and to the property purported to be
subject thereto having the priority specified in the Security Documents; or (B)
to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any of the Borrowers,
or any of the Borrowers shall deny it has any further liability or obligation
under any such agreement, or any of the Borrowers shall fail to perform any of
its obligations thereunder; or
(k) any material license, permit or other authorization by any
federal, state or local government or any lease relating to the Collateral
which, in each case, is necessary for the use or operation (whether or not
leased or owned by any of the Borrowers or any of their direct or indirect
wholly-owned Subsidiaries on the date hereof) in the conduct of the businesses
engaged in by any of the Borrowers or any of their direct or indirect
wholly-owned Subsidiaries on the date hereof shall be revoked or canceled or
otherwise terminated; or
(l) the later of the date (i) any of the Borrowers shall cease to
have the exclusive right to file a Plan of Reorganization in the Chapter 11
Cases; or (ii) a third party shall file a competing Plan of Reorganization; or
(m) any Termination Event with respect to a Plan shall have
occurred, and, 5 days after notice thereof shall have been given to any of the
Borrowers by the Lender, (i) such Termination Event (if correctable) shall not
have been corrected and (ii) the then Unfunded Vested Liabilities of such Plan
exceed $100,000 (or in the case of a Termination Event involving the withdrawal
of a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), the
withdrawing employer's proportionate share of such excess shall exceed such
amount), or any of the Borrowers or any member of the Controlled Group as
employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the Plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an amount exceeding $100,000; or
(n) any of the Borrowers shall: (i) fail to perform or observe
any other term, covenant or agreement on its part to be performed or observed in
any business Facility Document and such failure shall continue unremedied for 5
Banking Days after notice thereof; or (ii) fail to comply with any of the terms
or provisions of the Interim Order or the Final Order.
10.2 Consequences of an Event of Default. If an Event of Default shall
occur and so long as it shall continue or, the Lender may, without further
Page 55 of 108 Pages
application to the Bankruptcy Court, by notice to the Borrowers,
(a) declare the Commitments terminated, whereupon the Commitments
will terminate immediately and any fees hereunder shall be immediately due and
payable without further order of or application to the Bankruptcy Court,
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue; or
(b) declare the unpaid principal amount of the Notes, interest
accrued thereon, and all other amounts owing by the Borrowers hereunder or under
the Notes to be immediately due and payable without further order of or
application to the Bankruptcy Court, presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived, and an action
therefor shall immediately accrue.
10.3 Certain Remedies. If an Event of Default has occurred and is
continuing, the Lender may, on seven Banking Days' prior notice to the Borrowers
and any official committee appointed in the Chapter 11 Cases, exercise all
rights and remedies which the Lender may have hereunder or under any other
Facility Document, the Interim Order, the Final Order or at law (including but
not limited to the Bankruptcy Code and the Uniform Commercial Code) or in equity
or otherwise, without regard to the automatic stay provided for in section 362
of the Bankruptcy Code with respect to the Borrowers or any of its property or
any of the Collateral. Within such seven Banking Days, the Borrowers or any
other party-in-interest may seek a hearing before the Bankruptcy Court on the
sole issue of whether an Event of Default has, in fact, occurred, and the Lender
shall refrain from enforcing any of its remedies hereunder until the Bankruptcy
Court has ruled in respect thereof or an agreement has otherwise been reached.
Unless the Bankruptcy Court shall order that no Event of Default has occurred,
the automatic stay under section 362 of the Bankruptcy Code shall be vacated
with respect to the Collateral, and the Lender shall be free to exercise all of
its rights with respect to the Collateral, subject to the rights of the holders
of Permitted Liens, without further approval of the Bankruptcy Court. All
proceeds in respect thereof shall be applied by the Lender to reduce the
Obligations in the Lender's sole discretion, and the Borrowers shall remain
liable for any deficiencies. With respect to any lease or executory contract
constituting part of the Collateral, the Lender shall have the right to cause
the Borrowers to assume and assign such lease or executory contract to the
Lender or its designee, although nothing herein shall be construed to limit the
rights of the counter-party to such lease or executory contract to adequate
assurance and cure payments under section 365 of the Bankruptcy Code or to
impose any obligation on the Lender to make any such adequate assurance or cure
payments. Any proceeds received by the Borrowers in connection with the
assumption and assignment of any executory contract or lease shall be proceeds
of the Collateral and immediately remitted to the Lender to reduce the
Obligations then outstanding. All such remedies shall be cumulative and not
exclusive. No failure on the part of the Lender to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
Page 56 of 108 Pages
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
ARTICLE 11
MISCELLANEOUS
11.1 Amendments and Waivers. The Borrowers and the Lender may from
time to time enter into agreements amending, modifying or supplementing this
Agreement, the Notes or any other Facility Documents, and the Lender may from
time to time grant waivers or consents to a departure from the due performance
of the obligations of the Borrowers hereunder or thereunder. Any such agreement,
waiver or consent must be in writing and shall be effective only to the extent
specifically set forth in such writing. In the case of any such waiver or
consent relating to any provision hereof, any Event of Default so waived or
consented to shall be deemed to be cured and not continuing, but no such waiver
or consent shall extend to any other or subsequent Event of Default or impair
any right consequent thereto.
11.2 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Lender, the Borrowers and their respective successors and
assigns (including, except for the right to request Loans, any trustee or
examiner or other person with expanded powers succeeding to the rights of the
Borrowers or pursuant to any conversion to a case under chapter 7 of the
Bankruptcy Code).
11.3 The Lender as Party in Interest. The Borrowers hereby stipulate
and agree that the Lender is and shall remain a party in interest in the Chapter
11 Cases and shall have the right to participate, object and be heard in any
motion or proceeding in connection therewith (including but not limited to
objections to use of proceeds of the Loans, to the payment of professional fees
and expenses or the amount thereof, to sales or other transactions outside the
ordinary course of business or to assumption or rejection of any executory
contract or lease).
11.4 Expenses and Indemnities.
(a) The Borrowers shall reimburse the Lender on demand for all
reasonable costs, expenses, and charges (including, without limitation, fees and
charges of external consultants to and legal counsel for the Lender and
specifically attributable internal legal and consultant expenses) incurred by
the Lender in connection with (i) the negotiation, preparation, performance or
enforcement of this Agreement, any term sheet or commitment letter related
thereto, the Notes and the other Facility Documents, and (ii) the Due Diligence
of Lender; provided, however, that such reimbursable sum shall not exceed
$250,000 in the aggregate. The Lender shall provide the Bankruptcy Court, the
Borrowers, the United States Trustee and any official committee appointed in the
Page 57 of 108 Pages
Chapter 11 Cases with periodic statements (as frequently as monthly) showing the
nature, amount and any balance due in respect of any such fees and expenses
incurred by the Lender in accordance herewith. The balance of any such fees and
expenses shall be paid by the Borrowers within thirty days after receipt unless
a party in interest shall have filed a formal objection thereto with the
Bankruptcy Court within such thirty day period. Thereafter, if the parties are
unable to reach agreement in respect thereof, a hearing before the Bankruptcy
Court solely on the issue of the reasonableness of such fees and expenses will
be held.
(b) The Borrowers agree to indemnify the Lender and its
directors, officers, partners, employees, representatives, attorneys and agents
from, and hold each of them harmless against, any and all losses, liabilities,
claims, damages or expenses incurred by any of them arising out of or by reason
of any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to any
actual or proposed use by the Borrowers or any Subsidiary of the proceeds of the
Loans, or its role with respect to the Chapter 11 Plan, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
(c) The obligations of the Borrowers under this Section 11.4
shall survive the repayment of the Obligations and the termination of the
Commitments.
11.5 Assignment; Participation. This Agreement shall be binding upon,
and shall inure to the benefit of, the Borrowers and the Lender and their
respective successors and assigns, except that the Borrowers may not assign or
transfer its rights or obligations hereunder. The Lender may assign, or sell
participations in, all or any part of the Obligations (including all or a
portion of its Commitment) owing to the Lender to another Lender or other
entity, in which event (a) in the case of an assignment, upon notice thereof by
the Lender to the Borrowers, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, benefits and
obligations as it would have if it were the Lender hereunder; and (b) in the
case of a participation, the participant shall have no rights under the Facility
Documents. The agreement executed by the Lender in favor of the participant
shall not give the participant the right to require the Lender to take or omit
to take any action hereunder except action directly relating to (i) the
extension of a payment date with respect to any portion of the principal of or
interest on any amount outstanding hereunder allocated to such participant, (ii)
the reduction of the principal amount outstanding hereunder or (iii) the
reduction of the rate of interest payable on such amount or any amount of fees
payable hereunder to a rate or amount, as the case may be, below that which the
participant is entitled to receive under its agreement with the Lender. The
Lender may furnish any information concerning the Borrowers in the possession of
Page 58 of 108 Pages
the Lender from time to time to assignees and participants (including
prospective assignees and participants); provided that the Lender shall require
any such prospective assignee or such participant (prospective or otherwise) to
agree in writing to maintain the confidentiality of such information.
11.6 Notices. Unless the party to be notified otherwise notifies the
other party in writing as provided in this Section, and except as otherwise
provided in this Agreement, notices shall be given to the Lender and to the
Borrowers by telecopier or by overnight courier or by personal delivery
addressed to such party at its address on the signature page of this Agreement.
11.7 Table of Contents; Headings. Any table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
11.8 Severability. The provisions of this Agreement are intended to be
severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
11.10 Integration. The Facility Documents set forth the entire
agreement between the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
11.11 Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the internal laws of the State of
New York applicable to contracts made and performed entirely within the State of
New York, except to the extent governed by the Bankruptcy Code.
11.12 Waiver of Jury Trial. BY ITS EXECUTION AND DELIVERY OF THIS
AGREEMENT THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION AGAINST
THE LENDER, ANY PARTICIPANT, ASSIGNEE OR INDEMNIFIED PARTY, BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OTHER FACILITY DOCUMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
Page 59 of 108 Pages
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWERS IN CONNECTION HEREWITH OR
THEREWITH. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER INTO
THIS AGREEMENT.
Page 60 of 108 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
GEOTEK COMMUNICATIONS, INC.
By /s/ Xxxx X. Xxxxxx
-----------------------------
Title: CFO
Address for Notices:
Geotek Communications, Inc.
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000)000-0000
Telecopy No.:(000)000-0000
Attn: General Counsel
GEOTEK USA, INC.
By /s/ Xxxx X. Xxxxxx
-----------------------------
Title: CFO
Address for Notices:
Geotek USA, Inc.
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attn: General Counsel
With a copy to:
Xxxx, Scholer, Fierman, Xxxx
& Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Page 61 of 108 Pages
S-C RIG INVESTMENTS III, L.P., by
S-C Rig Co., its general partner
By /s/ Xxxxx Xxxxxxx
-----------------------------
Title: Vice President
Address for Notices:
S-C Rig Investments III, L.P.
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
With a copy to:
Xxxxx Fund Management LLC
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
-and-
Xxxx, Weiss, Rifkind, Xxxxxxx
& Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Drain, Esq.
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Page 62 of 108 Pages
EXHIBIT E
CONFORMED COPY
Summary Term Sheet for
Debtor in Possession Financing Agreement
and Plan of Reorganization
The following is a summary of terms, subject to the negotiation and execution of
definitive documentation and the other conditions set forth herein, for a $10
million debtor in possession financing facility and a related chapter 11 plan of
reorganization for the Debtors (defined below), proposed by S-C Rig Investments
III, L.P. and the Debtors. It is for discussion purposes only and does not
constitute a commitment to lend or otherwise alter any agreements or rights of
S-C Rig Investments III, L.P. or any of its affiliates with or against Geotek
Communications, Inc., Geotek USA, Inc. or any other person or entity, all of
which rights and agreements are expressly reserved.
Borrower: Geotek Communications, Inc. ("Geotek") and Geotek USA, Inc.
(together, the "Debtors")
Lender: S-C Rig Investments III, L.P. and/or an affiliate or
assignee thereof (the "Lender" or "S-C Rig III")
DIP Facility: Working capital facility to provide requirements for
Debtors' continued operations (as provided in Budget
(defined below) and certified to Lender, in advance of
making loans, by a responsible officer of Geotek), with the
goal of funding such operations through the confirmation of
the Chapter 11 Plan, defined below ("DIP Facility")
Page 63 of 108 Pages
Amount of DIP Up to $10,000,000 available as follows: $7,000,000 initial
Facility: availability to be made on or before June 29, 1998 ("Initial
DIP Facility"), provided Debtors shall have filed this Term
Sheet with the Bankruptcy Court and be actively pursuing
confirmation of the Chapter 11 Plan (defined below), and up
to $3,000,000 to be made on or after August 10, 1998,
provided Debtors shall have filed the Chapter 11 Plan and
related disclosure statement, the hearing on such disclosure
statement is scheduled for on or before August 15, 1998 and
the Debtors are actively pursuing approval of the Fiduciary
Out, as defined below, and confirmation of the Plan, subject
in each case to such conditions precedent to advances and
subsequent advances as are customarily found in DIP
facilities, including absence of an event of default or
termination event, including as described herein.
Interest: 12 percent per annum; after an event of default, 14 percent
per annum. Interest shall be payable monthly in arrears,
based on a 360 day year.
Fees: Facility fee of $150,000, plus reimbursement of all of
Lender's expenses (including, without limitation, expenses
of counsel and other consultants retained by Lender and
allocable portion of in-house personnel) attributable to
negotiation, documentation and monitoring and enforcement of
DIP Facility, to be paid from DIP Facility proceeds or
otherwise as provided herein.
Maturity: Borrowings under the DIP Facility are to be repaid in full
on the date which is the earlier of (a) October 15, 1998,
(b) the occurrence of an event of default, or (c) the
effective date of a chapter 11 plan for the Debtors.
Page 64 of 108 Pages
Collateral and All amounts outstanding under DIP Facility, including all
Superpriority fees in respect thereof, shall be secured by first lien
Claim: (subject to the Carve Out, defined below) on all
unencumbered assets of the Debtors and their wholly-owned
direct and indirect subsidiaries under section 364(d) of the
Bankruptcy Code (without limitation, excluding any licenses
owned by or stock of Geotek U.S. Networks, Inc., Geotek
License Holdings, Inc. and XxxXxxxxxx Communications, Inc.),
including assignable rights in respect of 68 SMR licenses
(and stock in subsidiary(ies) holding licenses), rights
under SMR Frequency Exchange Agreement with Paging Network
of America, Inc. ("PageNet Agreement"), rights under April
3, 1998 Purchase Agreement with Industrial Wireless
Technologies, Inc., interests in Anam Telecommunications,
Geotek Argentina, S.A., and, to the extent grantable, GMSI,
Inc., inventory and equipment of the Debtors' subsidiaries,
and proceeds of each of the foregoing. Upon either (a) event
of default or (b) termination of the DIP Facility, the
automatic stay shall be lifted without further action on the
part of Lender (other than seven days' prior notice to the
Debtors and any official committee) to permit Lender to
foreclose on or take other action with respect to the
collateral; provided that the Debtors and any official
committee shall have such seven days to attempt to prevent
such lifting of the automatic stay on the sole basis that
such event of default or termination event has not occurred.
All liens shall be automatically perfected pursuant to
bankruptcy court order; however, the automatic stay shall be
modified to permit other perfection at Lender's option.
In addition, Lender shall have an allowed superpriority
claim for such amounts under sections 364(c)(1) and 503(b)
of the Bankruptcy Code over expenses of the kind specified
in sections 503(b), 506(c), 507(b) and 726(b) of the
Bankruptcy Code, other than with respect to fees of U.S.
trustee and bankruptcy court-approved professional fees, not
to exceed $500,000 ("Carve Out").
Page 65 of 108 Pages
Conditions of DIP Entry by Lender and Debtors on or before June 29, 1998 into
Facility Including definitive documentation in form and substance satisfactory
Interim DIP to Lender and its counsel ("Definitive DIP Documentation"),
Facility: including a form of budget (the "Budget") acceptable to the
Lender for Debtors' operations during the term of the DIP
Facility. The Definitive DIP Documentation shall contain
such conditions, representations and warranties and
covenants as are customarily found in DIP facilities and
additional provisions appropriate in Lender's judgment for
this transaction, including:
1. Satisfactory completion (in Lender's sole
determination) on or before June 29, 1998 of financial,
business, operational and legal due diligence in
Debtors with respect to DIP Facility), including as to
collateral.
2. Entry on or before June 29, 1998 of an order of the
bankruptcy court ("Interim Order") in form and
substance satisfactory to Lender and its counsel,
including a finding that Interim DIP Facility is in
good faith and otherwise complies with section 364(e)
of the Bankruptcy Code, authorizing and approving:
(a) Interim DIP Facility
(b) Reimbursement of all of Lender's fees and
expenses, as described above.
(c) Debtors' agreement to provide Lender with notice
of any event or occurrence having a material
effect on the business, conditions or prospects,
financial or otherwise, of the Debtors' business,
as promptly as practicable, but in any event
within 24 hours of the Debtors' receipt of such
information
(d) The date of the final hearing on the DIP Facility
Page 66 of 108 Pages
3. Entry on or before July 13, 1998, of an order of
the bankruptcy court ("Final Order") in form and
substance satisfactory to Lender and its counsel,
including (a) a finding that DIP Facility is in
good faith and otherwise complies with section
364(e) of the Bankruptcy Code, authorizing and
approving the DIP Facility.
4. On or before June 29, 1998, Geotek shall have
retained a crisis manager, restructuring and
reorganization financial advisor and/or other
consultants to the Debtors, from alternatives
agreed upon by the Lender and Geotek, to perform,
among other duties, all postpetition CEO
functions, adherence to Budget, consolidation of
operations, facilitation of Lender's due diligence
for Chapter 11 Plan, described herein, and
preparation of revised Business Plan
(collectively, "Crisis Manager"). The parties
agree upon Zolfo Xxxxxx Management, LLC (per
Xxxxxxx XxXxxxxx and Xxxxxx Xxxxxxx), assisted
with respect to development of the Business Plan
by Renaissance Worldwide, Inc., as Crisis Manager.
5. Commencing on or before June 26, 1998, Debtor
shall facilitate and cooperate with financial,
business, operational and legal due diligence by
Lender and its advisors in the Debtors.
6. Debtors shall provide Lender and its counsel with
copies of all proposed pleadings and orders in the
bankruptcy case(s) pertaining to the DIP Facility
and/or the Chapter 11 Plan, with sufficient time
to permit review and comment by Lender. The
Debtors shall not issue any press release in which
Lender or any affiliate or agent of Lender is
mentioned without Lender's prior review and
approval.
Page 67 of 108 Pages
Events of Default/ Such events of default as are customarily found in DIP
Termination Events: facilities and others appropriate in Lender's judgment,
including:
7. Non-payment when due of amounts due under DIP Facility.
8. Material breach of any covenant contained in Definitive
DIP Documentation, including material breach of Budget.
9. Dismissal of bankruptcy case, any conversion to chapter
7, appointment of a bankruptcy trustee or an examiner
or other person with expanded powers (with the
exception of the Crisis Manager), termination of the
Debtors' exclusive right to file a plan or
reorganization, or the incurrence of other indebtedness
under section 364 of the Bankruptcy Code.
10. Any stay or modification of the Interim Order or the
Final Order.
11. Debtors' failure to prepare a chapter 11 plan in
substantial conformity with Chapter 11 Plan described
below (preferably with key creditors' agreement) or to
file such plan and related disclosure statement on or
before July 15, 1998.
12. Failure to schedule hearing on bankruptcy court
approval of disclosure statement for Chapter 11 Plan on
or before August 15, 1998.
13. Chapter 11 Plan not confirmed by September 22, 1998.
14. The filing of a chapter 11 plan or a motion for
approval of an agreement that does not provide for the
payment of the DIP Facility or that is otherwise not in
substantial conformity with Chapter 11 Plan.
Governing Law: Internal law of the State of New York
Page 68 of 108 Pages
Chapter 11 Plan To be proposed by Geotek and S-C Rig III for Geotek, and
("Chapter 11 Plan") subsidiaries to the extent the addition of such subsidiaries
is mutually agreed to by S-C Rig III and Geotek (together,
the "Debtors").1/
Classes and Administrative Expenses (including DIP Facility) and
Proposed Priority Claims: Payment in full in cash on effective date
Treatment or as otherwise permitted by Bankruptcy Code.
Senior Secured Bonds: ($150 million plus accrued interest):
New Senior Secured Notes, due January 1, 2007. Interest at
12%, PIK to January 1, 2003; thereafter current pay.
Collateral: current collateral plus currently unencumbered
SMR licenses not subject to PageNet Agreement and exclusive
of cash receivable under PageNet Agreement (provided further
that Reorganized Geotek may use up to $26 million of
restricted cash collateral for working capital purposes). In
addition, holders of New Senior Secured Notes shall receive
1% of the New Common Stock of Reorganized Geotek.
HNS Obligations: ($24.6 million plus accrued interest on
Convertible Secured Note and $15.4 million line of credit):
New $24.6 million Secured Note, due January 1, 2007. Use of
$11 million of prior Advances under PSU Agreement to be
discussed. Interest at 12%, PIK to January 1, 2003;
thereafter, current pay. Collateral: current collateral. Any
remaining obligations under $15.4 million line of credit:
New Secured Note, due January 1, 2008. Interest, 13% PIK to
January 1, 2004; thereafter current pay. Collateral: current
collateral, subject to adjustment upon release of $26
million restricted New Senior Secured Notes' cash
collateral.
--------
1/ Rather than reorganize certain subsidiaries, assets of such
subsidiaries in S-C Rig III's discretion that are necessary to the
continued operation of the Debtors' business as a going concern may be
purchased by Reorganized Geotek.
Page 69 of 108 Pages
S-C Rig III ($40 million): New Senior Notes, due January 1,
2008. Interest, 13% PIK to January 1, 2004; thereafter,
current pay. Negative pledge on all assets; first lien on
unencumbered former DIP Facility collateral and "passive"
second lien on New Senior Secured Notes collateral.
Raphael: Reorganized Geotek to assume Technology Agreements
with such modifications as are reasonably acceptable to S-C
Rig III. In addition, Raphael shall receive 3.3% of the New
Common Stock of Reorganized Geotek.
Other Non-subordinated Geotek Unsecured Claims: ($20
million):
Senior Subordinated Convertible Notes and Other Subordinated
Claims ($75 million):
All Other Unsecured Claims (Non-Geotek Obligations) ($54
million):
In the case of each of the foregoing, a package of New Notes
and Reorganized Geotek Common Stock, reasonably reflecting
the rights of each class, to be discussed.
Preferred Stock: 4.5% of the New Common Stock of Reorganized
Geotek, as follows:
Series H: 2.4%
All Junior Series: 2.1%
Geotek Common Stock: 0.5% of the New Common Stock of
Reorganized Geotek.
Non-consensual The Chapter 11 Plan proponents also reserve the
Confirmation: right to modify the Chapter 11 Plan to permit confirmation
under section 1129(b) of the Bankruptcy Code.
Page 70 of 108 Pages
Rights Offering: S-C Rig III or an affiliate shall underwrite a $20 million
rights offering, effective upon the Chapter 11 Plan's
effective date, for 80% of the New Common Stock of
Reorganized Geotek.2/ S-C Rig III - or such affiliate shall
have the right to purchase up to $10 million of such shares
on the same terms and conditions as the other participants
in the rights offering. Eligible participants in rights
offering (on pro rata basis of amount subscribed, if
offering is oversubscribed) shall be all creditors and
shareholders of Geotek as of Chapter 11 Plan record date.
S-C Rig III or such affiliate shall have the right to
nominate a majority of the board of directors of Reorganized
Geotek until the earlier of the date that it owns less than
40% of the New Common Stock and the third anniversary of the
completion of the rights offering. Each participant in the
rights offering shall receive its pro rata share of warrants
to purchase, at the rights offering price (a) up to $20
million of additional shares of Reorganized Geotek Common
Stock within two years after the conclusion of the rights
offering and (b) up to an additional $20 million shares of
Reorganized Geotek Common Stock up to four years after the
conclusion of the rights offering.
Filing and Hearing Chapter 11 Plan and related disclosure statement to be filed
Dates: on or before July 15, 1998. Disclosure Statement hearing to
be scheduled for on or before August 15, 1998. Chapter 11
Plan to be confirmed on or before September 22, 1998.
Conditions to Satisfactory completion by S-C Rig III (in its sole
Rights Offering: determination) on or before September 15, 1998 of due
diligence with respect to Debtors' financial, business,
operational and legal condition and prospects, including,
without limitation:
1. Reasonably allowable non-subordinated claims against
Geotek not in excess of $265,000,000.
2. Title to license, intellectual property, etc.,
including with respect to Raphael.
--------
2/ Subject to tax analysis regarding preservation of any necessary net
operating loss carryforwards.
Page 71 of 108 Pages
3. Satisfactory ongoing relationships of Reorganized
Debtors with HNS, IBM and Raphael.
4. Registration rights agreement for New Common Stock of
Reorganized Geotek on reasonable terms and conditions.
5. Debtors' projected cash needs and uses, after extension
of DIP Facility, and without application of any
encumbered cash, shall not exceed $10,000,000 through
October 2, 1998.
6. Satisfactory means to assume executory contracts that
are reasonably necessary for Reorganized Debtors.
7. Going concern valuation of Debtors under Chapter 11
Plan exceeds (in reasonable determination of S-C Rig
III) liquidation value of Debtors.
Completion by Geotek on or before August 3, 1998 of revised
going-concern Business Plan reasonably satisfactory to S-C
Rig III.
No material averse change in Debtors' business, financial
condition, operations or property from and after June 29,
1998.
Adherence by Debtors to DIP Facility Budget and otherwise no
event of default/termination event under DIP Facility.
Page 72 of 108 Pages
Fiduciary Out Geotek acknowledges that Lender is committing substantial
and Breakup Fee time and resources to the Chapter 11 Plan process, which
will be proceeding over a short period. Lender acknowledges
Geotek's fiduciary duties in connection therewith. In
furtherance of the foregoing, the parties agree that the
Debtors shall be free to respond to (including assisting in
due diligence, subject to appropriate confidentiality
restrictions), inquiries or offers by third parties, and to
negotiate and accept such offers, to acquire all or a
substantial portion of the Debtors' assets or businesses
and/or to finance a chapter 11 plan, and to provide prompt
notice of the proposed Chapter 11 Plan and this Term Sheet
to all parties previously contacted by the Debtors or their
advisors or who had previously expressed an interest in such
a transaction ("Third Party Transaction"); provided that (a)
S-C Rig III shall be paid $600,000 from the proceeds of any
Third Party Transaction upon the closing thereof unless S-C
Rig III shall have materially breached this Term Sheet
("Breakup Fee") and (b) the Debtors shall not accept a Third
Party Transaction that results in an investment to acquire
equity in Reorganized Debtors that is less than $20 million
plus 7.5% of the enterprise value for reorganized Debtors,
or a comparable purchase price, under the Chapter 11 Plan.
Nothing in the foregoing sentence shall preclude the Debtors
from engaging in negotiations with any party in interest
regarding the terms and conditions of any Chapter 11 Plan.
The foregoing in its totality shall be referred to as the
"Fiduciary Out."
Page 73 of 108 Pages
For the avoidance of doubt, assuming the following
hypothetical facts, a Third Party Transaction would have to
exceed the amounts of the second two columns in the
following example to meet the Fiduciary Out.
Court determined "Reorganized"
Enterprise Value Lender Debt Equity Investment 7.5%
---------------- ------------- ----------------- ----
$330M $275M $20M 24.75M
Agreed to as of the
29th day of June, 1998
S-C Rig Investments III, L.P., by Geotek Communications, Inc.
S-C Rig Co., its general partner
/s/ Xxxxx Xxxxxxx /s/ Xxxx X. Xxxxxx
----------------------------------- --------------------------
Name: Xxxxx Xxxxxxx Name: Xxxx X. Xxxxxx
Title: Vice President Title: CFO
Geotek USA, Inc.
/s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: CFO
