1
Exhibit 2.2
AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of the 13th day of
April 2001, by and among XXXXXXX XXXXXX COMSTREAM, INC., a Delaware corporation
("Lender"), XXXXXXX COMMUNICATIONS, INC., a California corporation ("Borrower")
and WESTAR CAPITAL II, LLC, a Delaware limited liability company ("Guarantor").
For present fair consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties confirm, represent, warrant and agree as follows:
1. THE LOAN AND SECURITY DOCUMENTS.
1.1 Loan. Lender, by way of assignment from VENTURE BANKING GROUP, a
division of Cupertino National Bank ("Bank") is the owner and holder of loan and
security documents, evidencing and securing a loan in the original principal
amount of $4,500,000.00 (the "Loan") pursuant to that certain Loan and Security
Agreement (the "Loan Agreement") dated as of March 27, 2000 between Bank and
Borrower. The purpose of the Loan was to provide Borrower with an operating line
of credit and a line of credit for the acquisition of equipment by Borrower. The
Loan is evidenced and secured by the following documents, each dated on or about
March 27, 2000:
(a) The Loan Agreement;
(b) The Revolving Promissory Note in the maximum principal
amount of $3,000,000.00 (the "Revolving Note")
(c) The Equipment Promissory Note in the maximum principal
amount of $1,500,000.00 (the "Equipment Note");
(d) The Guaranteed Note in the maximum principal amount of
$3,000,000.00;
(e) Warrants to Purchase Stock;
(f) Intellectual Property Security Agreement;
(g) UCC-1 Financing Statement filed with the office of the
California Secretary of State on April 24, 2000; Filing No.
0012360282; and
(h) The Unconditional Guaranty by Guarantor.
1.2 Loan and Security Documents. All the documents described in Section
1.1 of this Agreement and all other documents or instruments executed, delivered
or required by Lender in connection with the Loan or that secure payment of the
Loan are hereinafter severally and collectively referred to as the "Loan and
Security Documents."
1.3 Priority and Enforceability of Liens. Borrower confirms and agrees
that pursuant to the Loan and Security Documents, Lender holds valid,
enforceable, properly perfected liens upon, security interests in, and
assignments of, all assets of the Borrower wherever located,
1
2
including, without limitation, all assets located at Borrower's principal place
of business, 0000 Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "Premises") and
such property identified on Exhibit A attached hereto (collectively, the
"Collateral"). All provisions of the Loan and Security Documents are hereby
ratified and remain in full force and effect, except to the extent that they are
expressly modified by this Agreement. Borrower acknowledges and agrees that
there are no defenses, counterclaims, setoffs, recoupments, or other adverse
claims or causes of action of any kind existing against Lender with respect to
the Loan and Security Documents, including, without limitation, claims regarding
the validity, perfection, priority and enforceability of the lien interests held
by Lender pursuant to the Loan and Security Documents.
1.4 Amount of Indebtedness. The following amounts are due and owing to Lender
under the Loan as of April 11, 2001: (i) unpaid principal of $4,578,012.21; and
(ii) accrued and unpaid interest on the principal balance equal to $92,410.16
(at the non-default rate); and (iii) any other late charges, fees, costs and
expenses that may otherwise be due under the Loan; (iv) all other expenditures
by Lender for the maintenance and/or preservation of the Collateral; and (v)
such attorneys' fees and costs incurred by Lender in negotiating and drafting
this Agreement, together with all other documents and instruments executed in
connection herewith, and in enforcing and exercising its rights and remedies
under the Loan and Security Documents.
1.5 No Offsets. Borrower acknowledges and agrees that the sums
described in Section 1.4 are due and owing to Lender, and that there are no
defenses, counterclaims, setoffs, recoupments or other adverse claims or causes
of action of any kind existing with respect to the foregoing amounts.
1.6 Description of the Collateral. For purposes of this Agreement, the
Collateral shall be deemed to include, without limitation, all assets described
on Exhibit A and all of the following:
(a) All equipment either owned or leased by Borrower, or in
which Borrower otherwise has an interest (the "Equipment");
(b) All leases and occupancy agreements affecting Borrower or
Borrower's business (the "Leases");
(c) All management, listing, service, construction maintenance,
utility and other contracts and agreements with respect to
the development, maintenance, construction and operation of
the Collateral (the "Contracts"); and
(d) All outstanding shares of all subsidiaries of Borrower,
including, without limitation, Xxxxxxx Communications, Ltd.,
a UK corporation, and Xxxxxxx Communications, FSC, Inc., a
foreign sales company established in Barbados.
2. DEFAULTS UNDER LOAN AND SECURITY DOCUMENTS; STATUS OF LOAN.
2.1 Defaults Under Loan. Various defaults have occurred and are
continuing under the Loan and Security Documents, including, but not limited to,
the following:
2
3
(a) Failure to remit payments due and payable under the Loan;
(b) Failure to pay interest accruing on the unpaid balance of
the Loan at the default rate stated in the Loan and Security
Documents until paid in full;
(c) Failure of Borrower to maintain required financial
covenants; and
(d) Failure of Borrower to make the required payments under the
Loan pursuant to Section 2.2 of the Loan Agreement as a
result of the Loan being over advanced as a result of
Borrower's failure, among other things, to maintain the
necessary inventory and accounts receivable levels.
2.2 Rights and Remedies. Under the provisions of the Loan and Security
Documents, Lender is now entitled to exercise its rights and remedies as a
secured creditor against the Collateral and as a creditor against the Borrower,
against the Collateral and against Guarantor for the various events of default
referred to in Section 2.1. Lender is entitled to declare and has declared all
indebtedness under the Loan and Security Documents to be immediately due and
payable, Lender is entitled to accrue interest thereon at the default interest
rate provided in the Loan and Security Documents until paid in full, and Lender
is entitled to commence foreclosure proceedings against all or any portion of
the Collateral, and Lender is not obligated to advance additional funds under
the Loan and Security Documents for any purpose whatsoever. Borrower and
Guarantor hereby acknowledge that they have received written notice of the
defaults described herein in accordance with the terms of the Loan and Security
Documents and that all cure periods or grace periods provided therein have
expired, and Borrower and Guarantor, and each of them, hereby waive any further
notice with respect to such defaults.
3. PURPOSE AND SCOPE OF THIS AGREEMENT.
3.1 Purpose; Acknowledgment of Defaults. Borrower and Guarantor have
requested that Lender enter into this Agreement, and Borrower and Guarantor
acknowledges that they are receiving benefits and consideration from Lender as a
result of the provisions of this Agreement. More specifically, this Agreement
provides that: (a) Borrower and Guarantor will acknowledge, and hereby do
acknowledge, the existing defaults outstanding under the Loan and Security
Documents; (b) as provided herein, the indebtedness outstanding under the Loan
and Security Documents shall be satisfied by the orderly conveyance of the
Collateral by Borrower to Lender as provided in this Agreement; (c) Lender shall
not seek to recover on the indebtedness under the Loan and Security Documents
against the Borrower or Guarantor; and (d) Borrower and Guarantor will release
Lender from all claims, all as set forth in this Agreement. Borrower and
Guarantor acknowledge and agree that the conveyance of the Collateral provided
herein and Lender's participation in such transactions is a legitimate exercise
of Lender's participation in such transactions, is a legitimate exercise of
Lender's rights and remedies as a secured creditor, and is a legitimate exercise
of the business judgment of Borrower and Guarantor. Lender's participation in
the transaction described in this Agreement is as a secured creditor, and not as
a co-owner, partner, joint venturer, operator, insider, control entity, employer
in fact or law, or as any other equity participant with Borrower, Guarantor, or
any member, partner or shareholder thereof. Borrower and Guarantor acknowledge
and agree that the value of the Collateral held by Lender as security for the
Loan is substantially less than the amount of outstanding obligations
3
4
under the Loan and will not generate any realizable equity for Borrower or any
of Borrower's unsecured creditors. In this regard, Borrower has attempted to
develop and market the Collateral and the business operation of Borrower but has
been unable to sell the Collateral and the business operation of Borrower for an
amount equal to or greater than the indebtedness under the Loan. Consequently,
the Borrower and Guarantor have knowingly and voluntarily entered into this
Agreement and represent that the provisions hereof set forth a reasonable manner
to remedy the defaults existing under the Loan and Security Documents. Borrower
and Guarantor, and each of them, further believe that, based on their business
judgment and knowledge of and experience in Borrower's business and Borrower's
industry, the value of the Collateral, together with all other consideration
provided by the Borrower and Guarantor pursuant to this Agreement, does not
exceed the outstanding indebtedness under the Loan, and acknowledge that Lender
is entering into this Agreement in reliance upon this representation.
3.2 Scope of Agreement. This Agreement does not attempt to settle, and
will in no way affect, compromise, release, waive, settle, discharge or diminish
any of the rights or remedies (i) of any individual or entity who is not a party
to this Agreement, or (ii) involving any obligations, property, transactions or
subject matter not included within this Agreement. It is the express intent and
agreement of the parties hereto that there are no third-party beneficiaries of
this Agreement.
3.3 Execution of Agreement. This Agreement and the statements,
representations and warranties contained herein shall be binding on each party
as of the Effective Date hereof. The date first set forth in this Agreement
shall be the "Effective Date." If for any reason this Agreement is not fully
executed, made and entered into, any offer by Lender to accept a voluntary
conveyance of the Collateral, or any part thereof, in partial or full
satisfaction of Borrower's indebtedness to Lender or otherwise to forbear from
foreclosure or to make any of the financial accommodations described herein will
be terminated. Each party hereto shall at all times thereafter remain free to
proceed, without further notice, to exercise all of its legal rights and
remedies under the Loan and Security Documents, including, without limitation,
foreclosure against the Collateral and/or collection litigation against Borrower
and/or Guarantor and all other individuals or entities who may be liable for
such obligations, in such order and in such manner as the parties hereto shall
determine in their sole and absolute discretion.
3.4 Resolution of Borrower and Guarantor. In order to close the
transactions described herein, Lender requires the Borrower to agree to these
resolutions (i) ratifying the transactions contemplated in this Agreement and
(ii) Borrower's authorization of Xxxxx Xxxxxxxxxxxx (Borrower's President) and
Xxxxx Xxxxxxx (Borrower's Chief Financial Officer) and Guarantor's authorization
of Westar Capital Associates II, LLC (Guarantor's manager) (collectively and
individually, the "Authorized Officers") to execute, deliver and perform this
Agreement on behalf of the Borrower and Guarantor respectively. Therefore, it is
hereby resolved, that this Agreement and the transactions contemplated therein
are hereby ratified, approved and confirmed. Resolved, further, that the
Authorized Officers, each acting alone, is hereby authorized to execute, deliver
and perform the Agreement and the transactions contemplated therein on behalf of
the Borrower and Guarantor respectively and such other instruments and documents
as may be deemed necessary or convenient in the sole discretion of Authorized
Officers to consummate the transactions contemplated herein; and that the
authority given hereunder shall be deemed retroactive and any action authorized
hereunder and performed
4
5
prior to the passage of this resolution is hereby ratified, approved and
confirmed. Resolved, further, that the Authorized Officers, acting alone, are
each hereby authorized and empowered to execute on behalf of, and in the name
of, the Borrower and Guarantor respectively, from time to time, any and all
other instruments, documents, certificates and any additional documentation or
agreements by Borrower or Guarantor with any affiliate of Lender, at the time of
the closing or thereafter, as may be required and agreed upon between such
officers or persons and Lender or which such officers or persons may deem
expedient in carrying out the intents and purposes of the resolutions set forth
herein.
4. DELIVERY OF COLLATERAL AND SATISFACTION OF LOAN OBLIGATIONS
4.1 Delivery of Collateral. Lender is authorized pursuant to Section
9503 of the California Commercial Code (the "Code") to take possession of the
Collateral. On or before April 13, 2001, Borrower shall deliver Collateral, and
Lender shall take possession of Collateral as follows:
(a) Borrower shall assemble all of the Collateral at the
Premises;
(b) Lender is authorized to enter and take sole and exclusive
possession of Borrower's Premises and the Collateral located
at the Premises;
(c) Borrower shall, and hereby does, surrender all rights of
possession, control and occupancy of the Premises and
Collateral and consents to Lender taking exclusive
possession and control of the Premises and Collateral;
(d) Lender is authorized to use, sale or otherwise dispose of
the Collateral in any manner it deems appropriate in its
sole and absolute discretion;
(e) Lender is authorized to notify all creditors, vendors,
suppliers, customers, Lessors and any other person that it
is in possession of the Collateral and is exercising its
rights and remedies as a secured Lender with respect to the
Collateral; and
(f) Lender is authorized to take such further and other action,
and require Borrower to take such other and further action,
and execute such other and further documents or instruments
that Lender deems reasonably necessary to effect Lender
taking possession of Collateral as provided for in this
Section.
4.2 Lender's Rights and Remedies as to Collateral. Lender may, in its
sole and absolute discretion, exercise any and all of its rights with respect to
the Collateral, including without limitation:
(a) Notify any account debtor of Borrower or obligor to Borrower
on any instrument to make payment directly to Lender or its
designated representative.
(b) Take control of all "Proceeds" as that term is defined in
the Code.
5
6
(c) Sell, lease or otherwise dispose of any of the Collateral
pursuant to Section 9504 of the Code.
(d) Accept Collateral as discharge of all obligations under the
Loan and Loan and Security Documents pursuant to Section
9505 of the Code.
(e) Borrower shall execute any further documents or instruments
that Lender may deem reasonably necessary to give effect to
any of its rights and remedies provided for herein,
including without limitation, bills of sale, assignments or
other instruments of transfer required by Lender or any
third person.
4.3 Borrower and Guarantor's Acknowledgement. Borrower and Guarantor
each acknowledge and agree as follows:
(a) Lender shall be, and is hereby, deemed to have acted in good
faith and in a commercially reasonable manner with respect
to exercising its rights and remedies in connection with the
Collateral pursuant to this Agreement; and
(b) The exercise of Lender's rights and remedies with respect to
the Collateral as provided for in this Agreement or
otherwise is not, nor shall be deemed to be, nor otherwise
construed as, an assignment by Borrower or assumption by
Lender of any liability of Borrower to any third person,
including without limitation, any liability arising out of
or related to any employment, management, service, or other
contracts or agreements, equipment, vehicle, personal or
real property leases, accounts payable, loan payables or any
other debt or liability of any kind except as expressly set
froth in Section 8.2.
4.4 Borrower and Guarantor Waivers. Borrower and Guarantor each waive
and renounce any and all rights, claims or defenses either has, or may have,
known or unknown, with respect to the Collateral or Lender arising out of or
relating to Lender's exercise of its rights and remedies with respect to the
Collateral pursuant to this Agreement, including without limitation:
(a) Any right to notice, written or otherwise, of the time and
place of any public sale or of the time on or after which
any private sale or other intended use, sale or other
disposition of the Collateral is to be made, including
without limitation, any notice required by Section 9504(3)
of the Code.
(b) Any rights to require the Collateral to be disposed of by
Lender in any manner, including without limitation any right
to require Lender to dispose of the Collateral in the manner
prescribed by Section 9504 of the Code.
(c) Any right to notice, written or otherwise, of Lender's
intention to retain the Collateral, or any portion thereof,
in full satisfaction of the obligations
6
7
under the Loan and Loan and Security Documents, including
without limitation, any notice required by Section 9505(2)
of the Code.
(d) Any right to retake possession or redeem the Collateral or
any portion thereof, including without limitation, any right
to redeem pursuant to Section 9506 of the Code.
(e) Any claims, rights or defenses that it has, or may have,
against Lender, known or unknown, as a result of Lender's
failure to comply with the provisions of Article 9 of the
Code, including but not limited to, Section 9207, 9507 and
Chapter 5 (Default) of Article 9.
4.5 Full Satisfaction - Waiver of Deficiency. In consideration of
Borrower's and Guarantor's waivers, renunciations and releases provided for in
this Agreement, Lender hereby agrees to proceed against the Collateral only and
that its exercise of its rights and remedies with respect to such Collateral
shall be in full satisfaction of all of the obligations arising under the Loan
and Loan and Security Documents and Lender waives any right to a deficiency
claim against Borrower or Guarantor that it may otherwise have pursuant to the
Loan, the Loan and Security Documents or federal or state law. Lender shall
deliver to Guarantor the original Guaranty of Guarantor immediately upon the
execution and delivery of this Agreement and upon such delivery, the Guaranty
shall be deemed exonerated and of no further force or effect.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Accuracy. Subject to the exceptions set forth in the attached
Schedules, the warranties, matters and facts set forth in this Agreement, as
pertaining to each party hereto, individually and collectively, are and will be
true and correct as of the Effective Date of this Agreement and they are a
material inducement to this Agreement. In particular, but without limitation,
each and every fact herein stated relating to the defaults by Borrower, the lack
of defenses thereto, the validity, enforceability, priority and perfection of
the Loan and Security Documents and proper disbursement thereunder of the
proceeds of the Loan, the amount of debt under the Loan as set forth herein, and
each and every fact contained in any documents delivered contemporaneously with
this Agreement or in connection with this Agreement is true, correct and
complete. The representations and warranties contained in this Agreement shall
survive delivery and possession of the Collateral to Lender and Lender's
exercise of its rights and remedies with respect thereto pursuant to this
Agreement.
5.2 Specific Warranties. Borrower, and Guarantor, where applicable, but
as to Guarantor only as to (a)-(d), (h) and (s), represent, warrant and covenant
to Lender as follows:
(a) Borrower is a duly organized and validly existing
corporation under the laws of the State of California, is in
good standing under the laws of the State of California, and
Borrower and Guarantor each has the right, power and legal
capacity to enter into, and to perform all acts required by,
this Agreement.
(b) Authorized Officers, and each of them are, and have been
duly authorized by Borrower and Guarantor respectively, to
execute, deliver and perform
7
8
the Agreement and all obligations related thereto on behalf
of Borrower and Guarantor respectively, and Borrower and
Guarantor and all consents, authorizations and resolutions
required by law or Borrower's and Guarantor's articles of
incorporation, operating agreement or any other corporate or
company formation and operating agreements, to enter into,
and to perform all acts required by, this Agreement, have
been obtained.
(c) Neither Borrower nor Guarantor are prohibited or restricted
from entering into or consummating the transactions
contemplated by this Agreement by any agreement, law,
regulation, restriction, order or judgment.
(d) This Agreement and all other documents and instruments
executed and delivered by Borrower and Guarantor in
connection herewith are each valid and binding obligations
of Borrower and Guarantor and are legally enforceable
against each of them according to their terms.
(e) To the best of Borrower's knowledge, without investigation
thereof, other than as described in Schedule 5.2(e), the
Collateral is in compliance with all laws, rules,
regulations, ordinances, zoning ordinances, contingencies or
stipulations in connection with existing zoning, fire or
safety codes, life safety requirements, insurance
requirements, covenants, conditions, restrictions,
trademark, service xxxx, trade name registrations,
agreements or rights applicable to the Collateral.
(f) Other than as described in Schedule 5.2(f), no actions,
suits, proceedings or investigations are pending or, to the
best of Borrower's knowledge, threatened against or relating
to the Collateral in any court or before any federal, state,
municipal or other governmental department, agency,
commission, board or bureau and neither Borrower nor
Guarantor have any knowledge of any basis for, and have not
received any notice with respect to, any such action, suit,
proceeding or investigation.
(g) Borrower is the absolute owner of the Collateral subject
only to the Loan and Security Agreement and the equipment
financing liens identified in Exhibit B hereto.
(h) Borrower and Guarantor represent and warrant that the
Collateral is free from liens, and encumbrances, other than
the Loan and Security Documents and the equipment financing
liens identified in Exhibit B hereto.
(i) To the best of Borrower's knowledge, Borrower has complied
with all local, state and federal laws, ordinances and
regulations governing the contamination of air and water and
storage and disposal of hazardous wastes and hazardous
substances during its ownership and operation of the
Premises and the Collateral. To the best of Borrower's
knowledge, there has been no disposal on the Premises during
Borrower's ownership of
8
9
hazardous substances, wastes or materials as defined by
Section 101(14)(c) of the Comprehensive Environmental
Response Compensation and Liability Act, the Federal
Resource Conservation and Recovery Act and any other
federal, state or local law, regulation or ordinance.
(j) To the best of Borrower's knowledge, all insurance policies
insuring the Premises and Collateral are in full force and
effect and Borrower has not received any notice of
violations pertaining thereto nor notice of any requirement
that repairs by performed to the Premises and Collateral.
(k) To the best of Borrower's knowledge, all sales, transaction
privilege, public transportation, excise, personal property,
if any, ad valorem, withholding, and similar taxes, and all
local, state and/or federal income taxes due and owing as a
result of or arising out of the ownership, lease or
operation of the Collateral by Borrower have been paid in
full.
(l) To the best of Borrower's knowledge, Borrower has not
conveyed or transferred its interest or ownership in the
Contracts and Leases. The Leases and Contracts have not been
modified or supplemented in any way, and constitute the
entire agreement with the parties thereto. There are no
understandings, inducements, representations, warranties,
allowances, concessions or promises with respect to the
Leases and Contracts. There are no claims, offsets, or
rights of recoupment by any Lessor or any party under the
Leases or Contracts.
(m) To the best of Borrower's knowledge, any and all listing
agreements related to the Collateral in whole or in part
have been terminated. There are no fees, commissions or
other charges related to any sale or lease of all or any
part of the Collateral arising from any brokerage, listing
or other agreement entered into by Borrower.
(n) To the best of Borrower's knowledge, all licenses, permits
and certificates with respect the Collateral and Borrower's
right to use and operate the Collateral are in full force
and effect.
(o) To the best of Borrower's knowledge, Borrower has not
misappropriated any insurance proceeds, condemnation
proceeds, rents, security deposits or any other funds or
amounts due Lender under the Loan and Security Documents.
(p) To the best of Borrower's knowledge, there are no
attachments, executions, assignments for the benefit of
creditors, receiverships, or conservatorships which have
been filed by, or are pending against Borrower or affecting
the Collateral. There is no pending or threatened bankruptcy
against Borrower nor does Borrower intend to file a
bankruptcy proceeding in the foreseeable future.
9
10
(q) This Agreement is executed voluntarily and not pursuant to
any duress. The transfers and conveyances made to Lender
pursuant to this Agreement are not intended to hinder,
defraud, or delay any creditors of Borrower. The transfers
and conveyances made to Lender are for fair consideration
and are for reasonably equivalent and contemporaneous value.
(r) Lender is not an insider of Borrower within the meaning of
11 U.S.C.Section101(31).
(s) No matter released or discharged by this Agreement has been
previously assigned or transferred to any other person or
entity.
6. RELEASES
6.1 Full Release. Except for any obligations expressly set forth in
this Agreement, Borrower and Guarantor the parties hereby fully, finally and
completely release and discharge Lender, along with Lender's respective
representatives, agents, officers, employees, shareholders, parent companies,
affiliates, subsidiaries, partners, successors, assigns, accountants and
attorneys, from any and all claims, rights, causes of action, liens, debts,
liabilities, demands, agreements, damages or injuries of any nature or sort,
known or unknown, liquidated or unliquidated, contingent or fixed, past,
present, or future, including without limitation, those based on, arising out
of, incidental to, in connection with, or related to the Loan, the Loan and
Security Documents and the performance and administration thereof by Lender.
6.2 Intent of the Parties. It is the intention of Borrower and
Guarantor that this Agreement shall be effective as a full and final accord and
satisfactory release of each and every matter specifically and generally
referred to in the above paragraph. Borrower and Guarantor each acknowledge and
represent that they have been advised by independent legal counsel with respect
to the agreements contained herein and with respect to the provisions of
California Civil Code Section 1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED THE
SETTLEMENT WITH THE DEBTOR."
The parties, being aware of said code section, expressly waive any and all
rights they may have thereunder, as well as under any other statute or common
law principle of similar effect, with respect to any of the matters released
herein. The Agreement shall act as a release of all included claims, rights and
causes of action, whether such claims are currently known, unknown, foreseen or
unforeseen and regardless of any present lack of knowledge as to such claims.
The parties understand and acknowledge the significance and consequence of this
waiver of California Civil Code Section 1542, and hereby assume full
responsibility for any injuries, damages, losses or liabilities released herein.
6.3 Recourse Obligations. Notwithstanding any release of Borrower or
Guarantor by Lender or Lender's waiver of its deficiency rights pursuant to this
Agreement, Lender shall have
10
11
full recourse against Borrower or Guarantor for any damages suffered by Lender
as a result of (a) as to Borrower, for fraud or intentional or negligent
misrepresentation by Borrower of any material facts, representations or warranty
set forth in this Agreement upon which Lender has relied to its detriment, (b)
as to Guarantor, a breach of 5.2(a)-(d), (h) or (s), (c) as to Borrower, any
environmental liability of Lender resulting from its taking possession of the
Collateral, entering the Premises, or exercising its rights and remedies with
respect to the Collateral which is a result of an environmental or other
hazardous condition that existed as of the Effective Date, or (d) if the
Collateral, or any portion thereof, is rescinded or must otherwise be returned
by Lender for any reason, including without limitation, any transfers or
payments determined to be voidable transfers under the bankruptcy laws or under
any other state laws (with or without an interest charge). Notwithstanding the
foregoing, the maximum liability hereunder as to Guarantor is $3,000,000.00 and
all such liability expires on October 13, 2002.
7. CLOSING CONDITIONS.
Lender shall have no obligation to perform any of its obligations
hereunder unless and until the following requirements are met to Lender's
satisfaction:
7.1 Documents. Borrower and Guarantor shall have executed (or obtained
the execution of) and delivered to Lender this Agreement and such other
documents and instruments as Lender may reasonably request in connection with
this Agreement, including the Sale and Assignment of Loan Agreement and Consent
of Borrower and Guarantor.
7.2 Original Books and Records. Borrower shall have delivered to Lender
all original books and records pertaining to the development and maintenance of
the Collateral by Borrower, including, without limitation, all ledgers, account
records, tenant lists, promotional records and files, all original Leases,
Contracts, and documents evidencing or pertaining to the Collateral.
7.3 Representations and Warranties. All representations and warranties
made by Borrower and Guarantor shall be true and correct.
7.4 Performance. Borrower and Guarantor shall have performed all of
their obligations under this Agreement.
7.5 Documents. All documents and instruments executed, delivered or
required by Lender hereunder shall be in form and content acceptable to Lender.
8. MISCELLANEOUS.
8.1 Further Documents and Performance. Borrower and Guarantor promise
and agree to provide continued cooperation to Lender and each other and to cause
all entities which they control or with which they are affiliated to provide
their cooperation in effectuating the terms of this Agreement, and to execute or
cause to be executed further documents and perform or cause to be performed
acts pursuant hereto and to respond in any reasonable manner to any request by
Lender to effectuate the terms of this Agreement. Borrower and Guarantor each
agrees to do nothing to enjoin, disrupt, contest, impede or avoid the timely
performance of the terms of this Agreement.
11
12
8.2 Employees of Borrower. Borrower and Guarantor acknowledge and agree
that Lender may elect to employ any or all of the individuals who previously
were employed at, or in connection with the Borrower's business, but Lender
shall not be obligated to continue any such employment; provided, however,
Lender shall assume accrued but unpaid and earned vacation time of officers and
employees of Borrower in an amount not to exceed $220,000 in the aggregate.
8.3 Attorneys' Fees. In any action at law or other proceeding to
enforce any of the terms, covenants or conditions of this Agreement, the
prevailing party's reasonable attorneys' fees and costs shall be paid by the
non-prevailing party. The amount of reasonable attorneys' fees and costs in any
such litigation shall be determined by court and not by a jury.
8.4 Notices. All notices and communications provided for herein or
given in connection herewith shall be in writing and may be delivered in person
or sent by certified or registered United States mail, postage prepaid, by
delivery service or by facsimile transmission to:
Lender at:
0000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Fax No.: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxx L.L.P.
One Arizona Center
000 Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx Xxxxxxx, Esq.
Fax No.: 000 000 0000
Borrower:
0000 Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Fax No.: (000) 000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
12
13
Guarantor:
Westar Capital II, LLC
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxxxxx
Fax No.: (000) 000-0000
With copy to:
O'Melveny & Xxxxx, LLP
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Xxx Xxxxxx, Esq.
Fax No: (000) 000-0000
or to such other addresses as any party may from time to time designate in
writing and deliver in the manner set forth above. Notices shall become
effective upon the earliest of the following (i) actual receipt by that party;
(ii) personal delivery by delivery service to the designated address of that
party; or (iii) forty-eight (48) hours after deposit in the United States mail
addressed as set forth above.
8.5 Complete Agreement. This Agreement and the exhibits attached hereto
and the additional written agreements described herein set forth the entire and
exclusive agreement and understanding between and among the parties hereto
pertaining to the subject matter hereof and completely integrate in writing all
negotiations, discussions, understandings, and agreements of every kind and
character between and among the parties. This Agreement expressly and
unambiguously states, in its written terms and within its four corners, all of
the reasonable expectations of the parties hereto. Each party confirms and
agrees that he, she or it has executed this Agreement solely for the purposes
expressly stated herein, and not in reliance upon any other oral or written
agreement, promise, representation or warranty, or upon any belief as to any
fact not expressly recited herein. Subject to the rights of Lender as set forth
in this Agreement, this Agreement may not be rescinded, canceled, terminated,
supplemented, amended or modified in any way whatsoever without the prior
written consent of all parties to this Agreement.
8.6 Successors and Assigns. This Agreement and all of the terms and
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, assigns, devisees, personal
representatives, agents, employees and servants; provided, however, Borrower and
Guarantor shall not have the right to assign, either voluntarily or by operation
of law, all or any portion of their rights or to delegate all or any portion of
their duties under this Agreement.
8.7 Sole Discretion. All rights, powers and remedies granted to Lender
herein, or otherwise available to Lender, are for the sole benefit and
protection of Lender, and Lender may exercise any such right, power or remedy at
its option and in its sole and absolute discretion without any obligation to do
so. In addition, if, under the terms hereof, Lender is given two or
13
14
more alternative courses of action, Lender may elect any alternative or
combination of alternatives, at its option and in its sole and absolute
discretion.
8.8 Captions. The headings or captions in this Agreement are for
convenience and reference only and do not control or affect the meaning or
construction of any of the provisions hereof.
8.9 Further Documents. Lender and the members of the Borrower Group
shall execute and deliver all such documents and perform all such acts as
reasonably requested by the other party from time to time to carry out the
matters contemplated by this Agreement.
8.10 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER WILL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF CALIFORNIA.
8.11 Time of Essence; Time for Performance. Time is of the essence with
regard to each provision of this Agreement.
8.12 Power of Attorney. Borrower hereby irrevocably appoints Lender, as
the true and lawful attorney of Borrower with full power of substitution for and
on behalf of Borrower, and in its name to carry out the terms of this Agreement
and to take any action to preserve, maintain, protect or enforce the rights and
interests of Borrower with respect to the Collateral, including, without
limitation, to (a) enforce, cure any default or otherwise act with respect to
any Contracts, or any other agreements pertaining to or affecting any of the
Collateral; (b) take all such action and to execute all such documents as Lender
deems necessary or desirable to operate or preserve or protect the Collateral;
and (c) xxx for, demand or collect any sums owing to Borrower with respect to
the Collateral. The power so vested in Lender is one coupled with an interest
and will be irrevocable, except by written instrument executed Lender and
Borrower. Notwithstanding the foregoing, Lender is under no obligation to
exercise any of the foregoing rights or take any action necessary to preserve
any right in any Collateral against any other person, and Lender, to the extent
permitted herein or by applicable law, may exercise any of the foregoing rights
without incurring any responsibility or liability to Borrower or any other
person and without in any way affecting this Agreement or any other obligations
of Borrower to Lender.
8.13 JURY WAIVER. LENDER, BORROWER, AND GUARANTOR HEREBY VOLUNTARILY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) BETWEEN ANY OF THEM ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR ANY OTHER DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO
LENDER TO ENTER INTO THIS AGREEMENT.
8.14 Financial Statements. Borrower will cooperate with Lender and
provide all necessary information to Lender to enable Lender to obtain audited
financial statements in compliance with all Securities and Exchange Commission
requirements, including without limitation, Regulation S-X, within forty-five
(45) days of the Effective Date.
14
15
8.15 No Liability. Nothing herein is intended to create personal
liability on behalf of any officer, director, shareholder, or agent of Borrower
or Guarantor.
8.16 Access. Lender agrees to cooperate in all reasonable respects
subsequent to the date hereof in providing Borrower and Guarantor access to all
records of the Company; provided, that request for access is given in writing in
advance, and that such access shall be during normal business hours, without
disrupting the operations of Lender, and shall be conducted at Borrower's or
Guarantor's sole cost and expense. Such access may be supervised by Lender, no
originals are to be removed and all copies are subject to Lender's prior
approval, which approval shall not be unreasonably delayed or withheld.
8.17 Exhibits. All exhibits attached to this Agreement are incorporated
herein by this reference.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date first above mentioned.
"LENDER"
XXXXXXX XXXXXX COMSTREAM, INC., a Delaware corporation
By:
-----------------------------------------------------
Name:
-----------------------------------------------------
Title:
-----------------------------------------------------
"BORROWER"
XXXXXXX COMMUNICATIONS, INC., a California corporation
By:
-----------------------------------------------------
Name:
-----------------------------------------------------
Title:
-----------------------------------------------------
By:
-----------------------------------------------------
Name:
-----------------------------------------------------
Title:
-----------------------------------------------------
"GUARANTOR"
WESTAR CAPITAL II, LLC,
a Delaware limited liability company
By: Westar Capital Associates II, LLC,
its manager
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------------------------
17
LIST OF EXHIBITS
Exhibit "A" List of Collateral described in Loan and Security Agreements
Exhibit "B" Equipment Financing Liens
18
EXHIBIT A
COLLATERAL AS DESCRIBED IN LOAN AND SECURITY AGREEMENTS
19
EXHIBIT B
EQUIPMENT FINANCING LIENS
