EXHIBIT 10.2
CREDIT AGREEMENT
This CREDIT AGREEMENT (the "Credit Agreement") is entered into as of
September 4, 1998, by and among, jointly and severally and together with their
successors and assigns, CGX Communications, Inc., a Delaware corporation
("CGX"), CAIS, Inc., a Virginia corporation ("CAIS"), Cleartel Communications,
Inc., a District of Columbia corporation ("Cleartel"), Cleartel Communications
Limited Partnership, a District of Columbia limited partnership ("Cleartel LP"),
CAIS Limited Partnership, a Virginia limited partnership ("CAIS LP"), (CGX,
CAIS, Cleartel, Cleartel LP and CAIS LP being jointly and severally and together
with their successors and assigns, the "Borrowers") and the shareholders,
partners and other owners thereof, as applicable, listed in Schedule A hereto
(the "Owners"), the lenders named on the signature pages to this Agreement (the
"Lenders"), and ING (U.S.) Capital Corporation, New York, New York, as agent for
the Lenders (together with its successors and assigns in that capacity, the
"Agent").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized defined terms used in this Agreement and not otherwise
defined in this Agreement have the meanings given to those terms in Schedule X
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hereto, and the rules of construction set forth in Schedule X govern this
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Agreement.
ARTICLE 2
THE CREDITS
2.1 Commitments.
(a) Loan Commitments. Subject to and upon the terms and conditions of
this Agreement and in reliance upon the representations, warranties and
covenants contained herein, each Lender severally agrees to make Loans to the
Borrowers during the Availability Period in an aggregate amount not to exceed
its Pro Rata Share of the Aggregate Commitment, to be used in accordance with
this Agreement.
(b) Separate Loan Obligations. Each Lender will fund its Pro Rata
Share of each Loan simultaneously with the other Lenders at the time designated
by the Agent pursuant to Section 2.2(c), provided that the failure of any Lender
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to fund its Pro Rata Share of a Loan shall not affect the obligation of any
other Lender to fund its Pro Rata Share of such Loan. No Lender
will be responsible for a default by any other Lender in funding its Pro Rata
Share of a Loan nor shall any Commitment of any Lender be increased or decreased
by reason of any such default.
2.2 Funding of Loans.
(a) Loans.
(i) From time to time during the Availability Period, but not
more frequently than once during each calendar month, the Borrowers (as a group)
may request a Loan by delivering a Notice of Borrowing to the Agent no later
than 11:00 a.m., New York time, at least three (3) LIBOR Business Days prior to
the proposed Funding Date. The Notice of Borrowing shall specify (A) the
proposed Funding Date, (B) the amount of the requested Loan and (C) the Interest
Period.
(ii) All Loans shall mature on the Maturity Date, unless payment
thereof is due prior to such date by acceleration, by mandatory prepayment or
otherwise. The minimum amount of each Loan pursuant to this Section 2.2(a) shall
be $1,000,000 and, in each case, integral multiples of $100,000 in excess of
such amount (or if less, the remaining Commitment).
(b) Loans to Pay Interest, Fees and Expenses. On each LIBOR Business
Day during the Availability Period on which interest, fees or expenses are due
and payable hereunder and are not otherwise paid or provided for, the Borrowers
may request the Lenders to make, a Loan to the Borrowers in the aggregate amount
of all interest, fees and expenses then due and payable and hereby irrevocably
authorize the Agent to apply the proceeds of such Loan to the payment of such
interest, fees and expenses. The Lenders shall have no obligation to make any
Loan pursuant to this Section 2.2(b).
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(c) Loan Funding Procedure.
(i) Promptly after receipt of a Notice of Borrowing, the Agent
will notify each Lender of the proposed Loans and of such Lender's Pro Rata
Share thereof, and each Lender will make available to the Agent at the Agent's
main office in New York such Lender's Pro Rata Share of the proposed Loans in
immediately available funds no later than 10:00 a.m., New York time, on the
Funding Date. Upon satisfaction or waiver of the applicable conditions precedent
set forth in Article 3, the Agent will disburse all such amounts made available
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to it by the Lenders to the Borrowers by wire transfer of such amounts to
account no. 000-00000-00000 of the Borrower at First Union Bank of Washington,
D.C., ABA #054-001220.
(ii) Unless a Lender has notified the Agent prior to the Funding
Date of a Loan that such Lender does not intend to make available its Pro Rata
Share of such Loan, the Agent may assume that such Lender has made such amount
available to the Agent on the Funding Date and the Agent may, in its sole
discretion, make available to the Borrowers a corresponding amount on the
Funding Date, provided that the Agent shall have no obligation to make available
to the Borrowers any amount not actually received from the Lenders. If the Agent
makes available to the Borrowers any Loan amount not received from a Lender, the
Agent shall be entitled to recover such amount on demand from such Lender,
together with interest thereon for each day from the Funding Date that such
amount remains unpaid. Interest on such amount shall be payable at the Base
Rate. If the defaulting Lender does not pay such amount forthwith upon
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demand by the Agent, the Agent shall promptly notify the Borrowers and the
Borrowers shall immediately pay such amount to the Agent, together with interest
on such amount at a rate per annum equal to LIBOR plus the Applicable Margin for
each day from the Funding Date that such amount remains unpaid. Any such
payment by the Borrowers shall not be deemed a prepayment for purposes of
Section 2.9, no Breakage Costs shall be payable by the Borrowers in respect
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thereof and the Borrowers shall not be obligated to pay interest at the Default
Rate in respect thereof. Each Lender agrees that if it fails to make available
to or to reimburse the Agent for any amount made available by the Agent on its
behalf, it will have no interest in such amount and hereby assigns all of its
right, title and interest in such amount to the Agent or any assignee designated
by the Agent. Nothing in this paragraph shall be deemed to relieve any Lender
of its obligation to fulfill its Commitments hereunder or shall prejudice any
rights the Borrowers may have against any Lender as a result of any default by
such Lender.
(d) Notices.
Each Notice of Borrowing shall be irrevocable on and after the related
Interest Rate Determination Date.
2.3 Interest.
(a) Interest Rates.
(i) The Loans shall bear interest on the unpaid principal amount
thereof from the date made to but excluding maturity (whether at the Maturity
Date, by acceleration, because of mandatory prepayment or otherwise) during each
Interest Period applicable thereto at a rate per annum equal to LIBOR as
determined for such Interest Period plus the Applicable Margin, computed on the
basis of a year of 360 days for the actual number of days elapsed.
(ii) LIBOR applicable to a Loan during a particular Interest
Period shall be determined by the Agent on the Interest Rate Determination Date
with respect to such Loan on the basis of the duration of such Interest Period
and the amount of such Loan. Each such determination shall be conclusive and
binding on the parties, absent manifest error.
(b) Interest Periods. Subject to Schedule X, each Interest Period:
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(i) in respect of a Loan and a Note converted pursuant to
Article 2A, respectively, which would otherwise end on a day that is not a
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LIBOR Business Day or Business Day, respectively, shall end on the next
succeeding LIBOR Business Day or Business Day, respectively, unless such day
falls in the next calendar month, in which case such Interest Period shall end
on the next preceding LIBOR Business Day or Business Day, respectively; and
(ii) in respect of a Loan, which begins on the last LIBOR
Business Day of a calendar month or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period,
shall end on the last LIBOR Business Day of the calendar month at the end of
such Interest Period.
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(c) Maximum Number of Loans Outstanding. There shall be a maximum of
three (3) Loans outstanding at any one time and for this purpose all Loans with
the same Interest Period shall be considered a single Loan.
(d) Interest Payment Dates. Interest shall be payable as follows:
(i) interest shall be payable in arrears on the last day of each
Interest Period;
(ii) all accrued and unpaid interest shall be payable in full
upon the maturity (whether at the Maturity Date, by acceleration, because of
mandatory prepayment (subject to clause (iii) below) or otherwise);
(iii) upon prepayment of principal, in whole or in part, interest
shall be payable on the date of such payment on the principal amount prepaid;
and
(iv) after maturity (whether at the Maturity Date, by
acceleration, because of mandatory prepayment or otherwise), interest shall be
payable upon demand.
(e) Default Interest. Overdue principal and, to the extent permitted
by Applicable Law, overdue interest in respect of any amount payable by a
Borrower hereunder that is overdue shall bear interest at a rate per annum (the
"Default Rate") equal to two percent (2%) in excess of the rate of interest
otherwise applicable to such outstanding amounts, provided that with respect to
such overdue amounts, the Agent in its sole discretion shall select Interest
Periods of one month or less. Upon the occurrence and during the continuance of
an Event of Default, all amounts owing by the Borrowers hereunder shall bear
interest at the Default Rate.
(f) Limitation. Notwithstanding any other provision of the Credit
Documents, if the rate of interest on any Obligation of the Borrowers (or
Guarantors) under any Credit Document shall at any time exceed the highest rate
permitted by Applicable Law, the rate of interest on such Obligation shall be
equal to the highest rate permitted by Applicable Law.
2.4 Notes. The Borrowers shall each execute and deliver to each
Lender on the Closing Date a Note or Notes substantially in the form of Exhibit
A . The Notes shall be dated the Closing Date, shall be in the aggregate
principal amount of such Lender's Commitment and shall evidence such Lender's
Pro Rata Share of the Loans made hereunder. Each Note shall have other
appropriate insertions and shall be subject to and entitled to the benefits of
the Credit Documents. At the time a Loan is made, each Lender is authorized to
make a notation on the schedule attached to the relevant Note indicating the
date, the amount of such Lender's Pro Rata Share and the interest rate of such
Loan. Absent manifest error, the information set forth in such schedule shall
be prima facie evidence of the outstanding principal amount of such Note and of
the interest due thereon. Failure to make any such notation shall not limit or
affect the obligations of the Borrowers under the Loans or any other Credit
Document.
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2.5 Fees.
(a) Closing and Funding Fees. On the earlier of the Closing Date or
the last day of the Availability Period, the Borrowers shall pay to the Agent a
non-refundable acceptance fee in the amount of 3.50% of the Aggregate
Commitment.
(b) Commitment Fees. On the earlier of the Closing Date or September
21, 1998, the Borrowers shall pay to the Agent a non-refundable commitment fee
of $100,000.
2.6 Security. The Loans and all other amounts payable by the
Borrowers under this Agreement and the other Credit Documents are secured by the
Collateral and are entitled to the benefits of the Security Documents. On and
after the Restructuring Date, the Guaranty by CGX (and all other Guarantors) of
all other amounts payable by the Borrowers under this Agreement and the other
Credit Documents shall be in full force and effect and enforceable in accordance
with its terms.
2.7 Use of Proceeds. The proceeds of the Loans will be used
exclusively to (a) prepay and fully discharge all outstanding obligations of the
Borrowers (as defined therein) under the First Union Loan Agreement, (b) to
provide financing for capital expenditures incurred (or to be incurred),
directly or indirectly in connection with the rollout of the "OverVoice"
product, and (c) for general working capital purposes.
2.8 Reductions of Commitments. The Borrowers shall have the right,
upon at least five (5) LIBOR Business Days' notice to the Agent, to terminate,
or to reduce in part, the unused portion of the Aggregate Commitment, provided
that (a) each partial reduction shall be in the amount of $500,000 or an
integral multiple of $100,000 in excess thereof and (b) the Borrowers shall
certify in writing to the Lenders that such termination or reduction will not
have a Material Adverse Effect on the Borrowers.
2.9 Repayment of Principal.
(a) General. The Loans are not revolving in nature, and any amounts
repaid or prepaid may not be reborrowed and shall reduce the amount of the
Aggregate Commitment.
(b) Mandatory Repayments. The entire unpaid principal amount of the
Loans shall be due and payable on the Maturity Date.
(c) Optional Prepayments. The Borrowers shall have the right to
prepay at any time any Loan or Loans, in whole or in part, provided that (i) the
Borrowers must give the Agent at least five (5) LIBOR Business Days' prior
irrevocable notice of any such prepayment specifying the date of prepayment, the
aggregate principal amount being prepaid and the specific Loan or Loans being
prepaid and in what principal amounts, (ii) the Borrowers shall also pay all
accrued interest on the principal amount being prepaid through the date of
payment together with Breakage Costs, (iii) any partial prepayment of a Loan
must be in a minimum principal amount of $500,000 and integral multiples of
$100,000 in excess of such amount and (iv) after such prepayment, all Loans must
remain in compliance with the second sentence of Section 2.2(a)(ii).
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(d) Mandatory Prepayments.
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(i) In the event of the sale or issuance by any Borrower or any
of its Subsidiaries of any Capital Stock (or any similar related instrument)
(other than in connection with the Restructuring so long as shares of Capital
Stock are issued only to Owners or Borrowers existing on the date of this
Agreement) or the incurrence of any Indebtedness by any Borrower or any of its
Subsidiaries (other than the Loans hereunder), immediately thereupon the
Borrowers shall prepay the Loans in an amount equal to the proceeds (net of
expenses of sale, issuance or incurrence) of such sale, issuance or incurrence,
together with all accrued and unpaid interest on the principal amount on the
Loans being repaid through the date of prepayment and any Breakage Costs
applicable thereto.
(ii) In the event of the occurrence of an Asset Sale,
immediately thereupon the Borrowers shall prepay the Loans in an amount equal to
the Net Cash Proceeds of such Asset Sale, together with all accrued and unpaid
interest on the principal amount on the Loans being repaid through the date of
prepayment and any Breakage Costs applicable thereto; provided, however, that
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such prepayment shall be required only if Net Cash Proceeds from any Asset Sale
exceed $250,000 (it being understood that if Net Cash Proceeds exceed $250,000,
the entire amount thereof must be used to prepay the Loans, not just the amount
in excess of $250,000) when aggregated with Net Cash Proceeds from other Asset
Sales since the date of this Agreement.
(iii) If the Borrowers are required to prepay the Loans on a day
other than on the last day of the applicable Interest Period, the Borrowers
shall not be obligated for any Breakage Costs in connection therewith if (x) the
Borrowers irrevocably deposit in escrow with the Agent cash or securities issued
by the United States or a combination thereof in amounts (including interest,
but without consideration of any reinvestment of such interest) and with
maturities sufficient to pay and discharge on such last day of an applicable
Interest Period the principal of and interest on such Loans, (y) (to the extent
that the Borrowers deposit securities) the Borrowers deliver to the Agent a
certificate from a nationally recognized firm of independent accountants
expressing its opinion that such deposited cash and/or securities will provide
cash at such times and in such amounts as will be sufficient to pay the
principal of and interest on such Loans due on such last day of the applicable
Interest Period, and (z) on such last day of the applicable Interest Period such
cash and/or securities have a value sufficient to pay in full the principal of
and interest on such Loans. The Agent shall apply all amounts so deposited with
it, as appropriate, to such prepayment and payment on the last day of the
applicable Interest Period. The Borrowers will cause the Agent to have (for the
benefit of the Lenders) a First Priority Lien on any such cash and securities.
(e) Termination of Commitments; Payment of Other Obligations. Upon
the earlier of (i) any prepayment in full, or (ii) the occurrence of any event
that would require the prepayment in full of the outstanding principal and
interest on the Loans, all Commitments of the Lenders shall forthwith terminate
without the need for further action by the parties hereto, and the Borrowers
shall pay all other Obligations then due and payable hereunder and under the
other Credit Documents.
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2.10 Payments.
(a) Method of Payment. All payments by the Borrowers hereunder or
under any other Credit Document shall be made in immediately available funds in
U.S. Dollars to the Agent at its main office in New York for its account or for
the accounts of the respective Lenders, as the case may be. All such payments
must be received no later than 3:00 p.m. on the date due and shall be made in
full without defense, set-off or counterclaim of any kind and without the
requirement of presentment, notice or demand. Subject to the requirements of
Section 2.3(b), whenever any payment to be made hereunder or under any other
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Credit Document is stated to be due on a day which is not a LIBOR Business Day
(Business Day, in the case of a converted Note), the due date of such payment
shall be extended to the next succeeding LIBOR Business Day (Business Day, in
the case of a converted Note) and such extension of time shall be included in
the computation of such payment.
(b) Currency of Payment. All payments under the Credit Documents must
be made in U.S. Dollars, and no payment obligation shall be deemed to have been
novated, satisfied or discharged by the tender of any currency other than U.S.
Dollars or recovery under a judgment expressed in a currency other than U.S.
Dollars, unless such tender or recovery shall result in the effective payment in
full of such obligation in U.S. Dollars at the place indicated in Section
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2.10(a). The amount, if any, by which any tender or recovery fails to result in
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such payment in full shall remain due and payable hereunder as a separate
obligation of the Borrowers, unaffected by any action of the Borrowers or
judgment obtained.
(c) Application of Payments. Except to the extent expressly provided
otherwise herein or in the other Credit Documents, all payments received by the
Agent or the Lenders hereunder shall be applied in the following order of
priority:
(i) to the payment or reimbursement of all costs, expenses,
Taxes and other amounts payable under Sections 2.11, 8.11 or 8.12;
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(ii) to the payment of all fees payable under Section 2.5;
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(iii) to the payment of all accrued interest on the Loans;
(iv) to the payment of the principal of the Loans; and
(v) to the payment or reimbursement of any other amounts due to
the Agent or any Lender hereunder or under any other Credit Document.
All payments applied to interest on or principal of any Loan shall be
paid to the Lenders in proportion to their respective Pro Rata Shares of such
Loan. All payments applied to any other category of obligation set forth above
shall be paid to the various payees within such category in proportion to the
respective amounts due to them.
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2.11 Increased Costs and Unavailability.
(a) Taxes.
(i) All payments made by the Borrowers under any Credit
Document shall be made free and clear of, and without deduction or withholding
for, any present or future Taxes (1) excluding (A) Lender Income Taxes and (B)
Taxes applicable on the Initial Date, but (2) not excluding Taxes which arise as
a result of a change in law, (including any change in the interpretation or
administration of any law) after the Initial Date (such non-excluded Taxes being
"Reimbursable Taxes"), and the Borrowers shall pay all Reimbursable Taxes in
respect of payments under the Credit Documents. The Borrowers hereby indemnify
the Agent and each Lender (each, an "Affected Party") for all Reimbursable Taxes
and all costs and liabilities incurred by such Affected Party in connection
therewith. The Borrowers will reimburse each Affected Party, on demand, for any
Reimbursable Taxes paid by such Affected Party on an after-tax basis so that
such Affected Party (A) receives the full amount payable to it under the Credit
Documents and (B) is made whole after taking into account all income taxes it
will owe on the reimbursement payment (assuming that such payment is subject to
taxation at the highest marginal rates applicable to such Affected Party). Each
Affected Party shall have the absolute right to arrange its tax affairs in
whatever manner it deems appropriate, and no Affected Party shall be obligated
to claim any particular deduction, credit or other benefit.
(ii) If the Borrowers are prohibited or prevented (by Law or
otherwise) from making any payment to an Affected Party required under Section
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2.11(a)(i), then the amount of the payments due to such Affected Party under the
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Credit Documents shall be increased by the amount necessary to insure that such
Affected Party will receive the full amount payable to it under the Credit
Documents.
(iii) Within 30 days after the date on which any Reimbursable Tax
is due, the Borrowers will furnish to the Agent and the Lenders official
receipts or notarized copies thereof evidencing payment of such Reimbursable
Tax.
(iv) The Agent and each Lender agree to deliver to the Borrowers
all forms and documents necessary to establish any exemption from withholding
for Taxes to which they are entitled. Any Person that becomes the successor
holder of a Note shall deliver the forms and documents required under this
Section 2.11(a)(iv).
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(b) Capital Adequacy. In the event that the adoption after the date
hereof of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender or any corporation
controlling such Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of imposing or increasing the amount
of capital, reserves or other funds required to be maintained by such Lender or
any corporation controlling such Lender and thereby reducing the rate of return
on such Lender's or such corporation's capital as a consequence of its
obligations hereunder, then the Borrowers shall from time to time within fifteen
(15) days after notice and demand from such
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Lender (which demand shall be made as promptly as practicable after such Lender
obtains knowledge that such law, treaty, governmental rule, regulation, order or
requirement exists and such Lender determines to make such demand and shall be
accompanied by the certificate referred to in the next sentence and with a copy
to the Agent) pay to the Agent, for the account of such Lender, additional
amounts sufficient to compensate such Lender for such reduction. A certificate
as to the amount of such cost and showing the basis of the computation of such
cost submitted by such Lender to the Borrowers and the Agent, shall, absent
manifest error, be final, conclusive and binding for all purposes.
(c) Reserve Requirements. The Borrowers shall pay to each Lender,
upon demand, such amounts as such Lender from time to time determines to be
necessary to compensate such Lender for any costs incurred by such Lender or any
reduction in the amount received or receivable by such Lender under the Credit
Documents, resulting from, any change in Law, any change in the interpretation
or administration of any Law or compliance with any directive, guideline or
request from any Government Instrumentality (whether or not having the force of
Law) which:
(i) imposes or modifies any reserve, special deposit, compulsory
loan or similar requirements relating to any loans, extensions of credit or
other assets of, or any deposits with or other liabilities of, such Lender
(including any Loans or any deposits referred to in the definition of LIBOR); or
(ii) imposes any other cost or condition affecting any Credit
Document, any Loan, any obligation to make any Loan, the London interbank market
or the certificate of deposit market.
(d) Funding Losses. The Borrowers shall compensate each Lender, upon
demand, for any loss, cost or liability (including interest paid by such Lender
on funds borrowed to make or continue a Loan and losses sustained in liquidating
deposits and in the re-employment of funds) incurred as a result of:
(i) repayment (including repayment due to acceleration) or
prepayment on a date other than the last day of an Interest Period for such Loan
to the extent set forth in the definition of Breakage Costs;
(ii) failure of the Borrowers to borrow a Loan on the Funding
Date therefor; or
(iii) failure of the Borrowers to repay a Loan when due (whether
at the Maturity Date, by acceleration, because of mandatory prepayment or
otherwise) or on the date specified therefor in a notice delivered pursuant to
Section 2.9(c).
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(e) Unavailability. In the event that on or before any Interest Rate
Determination Date a Lender determines that:
(i) U.S. Dollar deposits are not being generally offered in the
London interbank market;
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(ii) adequate and fair means (as set forth in the definition of
LIBOR) do not exist for ascertaining interest rates by reference to LIBOR; or
(iii) LIBOR does not represent the cost to such Lender of funding
or maintaining a requested Loan or effective pricing to such Lender for a
requested Loan, such Lender shall give prompt notice of such fact to the
Borrowers and the Agent, and, at the election of such Lender, such Lender's
obligation to make or maintain Loans based on LIBOR shall be immediately
suspended and such Lender's portion of all outstanding Loans shall be converted
to Loans which, on and after the date of such notice, bear interest at a rate
per annum equal to the Base Rate plus 3.25%.
(f) Illegality. If a Lender determines that any Law, any change in
Law, any change in the interpretation or administration of any Law or compliance
by such Lender with any directive, guideline or request (whether or not having
the force of Law) of any Government Instrumentality makes it unlawful or
impossible for such Lender to fund or maintain Loans based on LIBOR, then upon
notice of such fact to the Borrowers and the Agent by such Lender, the
obligation of such Lender to fund or maintain Loans shall be immediately
suspended. In addition, the outstanding principal amount of such Lender's
portion of all outstanding Loans shall be converted to Loans which, on and after
the date of such notice, bear interest at a rate per annum equal to the Base
Rate plus 3.25%, or, if such Lender determines that immediate conversion is not
required, at the end of the respective Interest Periods of such Loans. In the
event of repayment of a Loan pursuant to this Section 2.11(f) prior to the end
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of its Interest Period, the Borrowers shall compensate such Lender for all
losses, costs and liabilities described in Section 2.11(d).
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(g) Notice and Mitigation.
(i) Upon the occurrence of an event that will entitle the Agent
or any Lender (each, an "Affected Party") to compensation, reimbursement or
indemnification pursuant to this Section 2.11, such Affected Party will give the
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Borrowers notice of such event as promptly as practicable.
(ii) Each Affected Party will take reasonable measures to avoid
the need for, or reduce the amount of, compensation, reimbursement or
indemnification pursuant to this Section 2.11, provided that no Affected Party
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shall be required to take any measure that, in its judgment, would be
disadvantageous to it, contrary to its policies or inconsistent with its legal
and regulatory position. For such purpose and subject to the limitation set
forth in the foregoing proviso the Affected Party may designate a different
lending office in respect of its portion of an affected Loan.
(iii) If any Tax or other charge is imposed on payments to any
Lender and the Borrowers are obligated hereunder to compensate such Lender for
such Tax or other charge, the Borrowers may, within 30 days after receipt of
notice of such Tax or other charge, request that such Lender assign its portion
of the affected Loan or Loans to another Person chosen by the Borrowers, and
such Lender will use reasonable efforts to negotiate such an assignment.
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(h) Determinations. A determination by any Lender or by the Agent
under this Section 2.11 shall be conclusive and binding on the parties, absent
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manifest error.
ARTICLE 2A
CONVERSIONS OF LOANS
2A.1. Conversion Event. If any of the principal, premium or interest
on any outstanding Loan is not paid on the Maturity Date (March 4, 1999) for
such Loan, the principal amount of each Note representing such unpaid amounts
shall thereupon be amended to represent such aggregate unpaid amount together
with all other amounts then due under the other Credit Documents. Subject to
the terms and conditions of this Article 2A and so long as the holding of such
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Notes by the Lenders is permitted under applicable law and will not subject them
to any tax, penalty or liability, upon such event, the Notes representing Loans
shall be automatically converted into Notes containing the terms and subject to
the conditions set forth in this Article 2A, the Borrowers shall continue to be
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obligated thereon as "Issuers" and the Guaranty shall continue in full force and
effect with respect to the converted Notes.
2A.2 Interest.
(i) On and after the Conversion the Notes shall bear interest on the
unpaid principal amount thereof from the Conversion Date to but excluding the
maturity date thereof, (whether at the Maturity Date, by acceleration, because
of mandatory prepayment or otherwise) at a rate per annum equal to the rate on
5-year U.S. Treasury Securities plus 5.0%.
(ii) The applicable rate of interest shall be determined on the
Interest Rate Determination Date for converted Notes.
(iii) The provisions of Section 2.3 (b), (c), (d) and (e) shall apply
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to the converted Notes.
2A.3 Notes.
(i) The Issuers shall execute and deliver to each holder of Notes
upon request a new converted Note or Notes of appropriate denominations to
replace the Notes representing Loans converted pursuant to this Article.
(ii) The Issuers shall maintain at their principal executive offices
a register in which the Issuers shall provide for the registration, exchange and
transfer of Notes.
(iii) The converted Notes shall mature on the Maturity Date for such
Notes unless payment thereof is due prior to such date by acceleration,
prepayment, redemption or otherwise.
2A.4. Redemption.
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(i) The converted Notes may be redeemed in whole at the option of
the Issuers at any time at a redemption price of 100% of the principal amount
thereof, plus accrued and unpaid interest thereon to the redemption date.
(ii) The Issuers shall, not less than 10 and not more than 60 days
prior to the redemption date fixed by the Issuers, notify the Noteholders in
writing of such redemption date.
2A.5 Exchange Fee. A Conversion pursuant to this Article 2A shall
----------
not be effected unless the Issuers shall have paid on the scheduled Conversion
Date (the Maturity Date of the Loans to be converted) to the Lenders a fee in an
amount equal to three (3.0)% of the principal amount (as converted) of the
converted Notes. Upon any failure to make such payments on such due date an
Event of Default of the type referred to in Section 6.1(a) hereunder shall be
deemed to have occurred on and as of such due date.
2A.6 Ranking. The converted Notes shall be senior secured
obligations of the Issuers and shall continue to be secured and guaranteed as
contemplated in Section 2.6.
-----------
2A.7 Repayment. The provisions of Section 2.9 (a), (b) and (d) shall
----------------------------
apply to the converted Notes, with the exception of references to Breakage
Costs.
2A.8 Method of Payment. The provisions of Section 2.10 (a), (b) and
(c) (with the exception of (c) (ii)) shall apply to the converted Notes.
2A.9 Conditions Precedent. A Conversion pursuant to this Article 2A
shall not be effected unless the fee payable under Section 2A.5 shall have been
------------
paid in full and the following conditions have been fulfilled on or prior to the
Conversion Date to the satisfaction of the Lenders and the Agent:
(i) the Credit Documents, Warrant Agreement and Warrant Registration
Rights Agreement will continue to be in full force and effect with respect to
the converted Notes without any further action required;
(ii) all Liens in the Collateral shall continue to be perfected of
the type and priority in favor of the Noteholders as was required to be in favor
of the Lenders pursuant to Article 3 hereof;
---------
(iii) all representations and warranties of the Issuers, Guarantors
and Obligors contained in the Credit Documents shall be true, correct and
complete in all material respects on and as of the Conversion Date (and after
giving effect to the Conversion) to the same extent as though made on and as of
such date;
(iv) no act, event or circumstance shall have occurred with respect
to the Issuers, Guarantors, Obligors or their Subsidiaries or otherwise which
has or could reasonably be expected to have a Material Adverse Effect;
(v) the Issuers, Guarantors and Obligors shall be in compliance with
all covenants and agreements in the Credit Documents on the Conversion Date and
after giving effect to the Conversion (other than the payment default giving
rise to a Conversion Event);
12
(vi) there shall be no pending or, to the knowledge of the Issuers,
Guarantors and Obligors, threatened litigation, investigation or other
proceeding which could reasonably be expected to have a Material Adverse Effect;
(vii) the Agent shall have received an Officer's Certificate from
each Issuer, Guarantor and Obligor to the foregoing effect;
(viii) the Issuers, Guarantors and Obligors shall have executed and
delivered to the Agent and the Noteholders, upon request, such documents,
instruments and opinions of counsel and shall do or cause to be done all things
that may be necessary in the view of the Agent and the Noteholders, provided,
however that the Agent and the Noteholders shall not require the revision of
Section 8.10(c) hereof;
(ix) a private placement number issued by S&P's CUSIP Service
Bureau shall have been obtained for the converted Notes;
(x) the aggregate principal amount of converted Notes shall be in
an amount no less than $1,000,000;
(xi) all proceedings in connection with the Conversion and all
documents and instruments incident to such Conversion shall be satisfactory to
the Agent and Noteholders provided, however that the Agent and the Noteholders
shall not require the revision of Section 8.10(c) hereof; and
(XII) Xxx Xxxxx shall have duly and validly pledged under the Pledge
and Security Agreement all shares of Capital Stock of all Borrowers which shall
be owned by him and shall have executed all Credit Documents to which the
Pledgors are subject.
2A.10 No Waiver. The failure of the Agent or any Noteholders to
require satisfaction of any condition precedent set forth above shall not
constitute a waiver of such condition precedent unless the Noteholders shall so
state in writing.
2A.11 Covenants. The provisions of Article 5 shall apply in full to
the Issuers, Guarantors and Obligors from and after the Conversion Date until
all converted Notes and other Obligations under the Credit Documents have to be
paid and satisfied in full.
2A.12 Events of Default. The provisions of Article 6 shall apply in
full to the Issuers, Guarantors and Obligors in respect of converted Notes.
2A.13 Registration; Exchange; Substitution of Converted Notes.
(i) Registration of Notes. The Issuers shall keep at their
principal executive office a register for the registration, exchange and
registration of transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Issuers shall not be affected by any notice or
knowledge to the contrary. The Issuers shall give to
13
any holder of a Note that is an institutional investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
(ii) Transfer and Exchange of Notes. Upon surrender of any Note at
the principal executive office of the Issuers for registration of transfer or
exchange (and in case of a surrender for registration of transfer, duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or his attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Issuers shall execute and deliver, at the Issuers' expense (except
as provided below), one or more new Notes (as requested by the holder thereof)
in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
substantially in the form of Exhibit A and shall be payable to such Person as
such holder may request. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered Note or
dated the date of the Surrendered Note if no interest shall have been paid
thereon. The Issuers may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer or exchange
of Notes. Any transferee, by its acceptance of a Note registered in its name
(or the name of its nominee), shall be deemed to have agreed to be bound by all
of the provisions of this Agreement applicable to the holder of any Note.
(iii) Replacement Notes. Upon receipt by the Issuers of evidence
reasonably satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an institutional investor, notice from such institutional investor of such
ownership and such loss, theft, destruction or mutilation); and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the issuers (provided that if the holder of such Note
is, or is a nominee for, an original purchaser or an institutional investor,
such Person's own unsecured agreement of indemnity, reasonably satisfactory to
the Issuers, shall be deemed to be satisfactory),
(b) in the case of mutilation, upon surrender and cancellation
thereof, the Issuers at their own expense shall execute and deliver, on lieu
thereof, a new Note, dated and bearing interest, from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
2A.14 Use of Proceeds. The provisions of Section 2.7 shall apply to
-----------
the converted Notes.
2A.15 Increased Costs. The provisions of Section 2.11(a) shall apply
---------------
to the converted Notes.
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ARTICLE 3
CONDITIONS PRECEDENT
3.1. Conditions Precedent to Initial Loans. The obligation of the
Lenders to fund the initial Loans shall be subject to the satisfaction of each
of the following conditions precedent on or prior to the Closing Date:
(a) The Lenders and the Agent shall have received each of the
following, in each case in form and substance satisfactory to the Agent and the
Lenders:
(i) the Credit Documents, duly authorized, executed and
delivered by each of the parties thereto; (including the Guaranty);
(ii) judgment lien and UCC searches, and such other searches of
the records of Government Instrumentalities as the Agent shall require,
performed with respect to the Borrowers, the Obligors and each of their
Subsidiaries in all relevant jurisdictions;
(iii) the legal opinion of Borrowers' Counsel in the form of
Exhibit B;
(iv) such other legal opinions as the Lenders may reasonably
request;
(v) certified copies of:
(A) the articles of incorporation and by-laws (or other
organizational documents) of each of the Borrowers and each
Obligor (that is not an individual);
(B) good standing certificates with respect to the
Borrowers and each Obligor (that is not an individual or a trust)
issued by the appropriate authority in the applicable
jurisdiction of organization;
(C) incumbency certificates for the signatories of the
Borrowers and each Obligor (that is not an individual), and
resolutions of the Borrowers and each Obligor (that is not an
individual) approving the Credit Documents to which it is a party
and the transactions contemplated thereby; and
(D) a Budget for calendar years 1998-2002 and all combined
financial statements of the Borrowers and their combined
Subsidiaries requested by the Lenders; provided, that the
Borrowers must deliver a Budget to the Lenders and the Agent on a
quarterly basis for so long as any Loan is outstanding.
(vi) certificates of each of the Borrowers and Obligors
certifying that:
(A) all Credit Documents executed by the Borrowers and
Obligors on or prior to the Closing Date are in full force and
effect, the Borrowers and
15
the Obligors are in compliance with all covenants and provisions
thereof, and no breach or event of default (or any event which
would become a breach or event of default with the giving of
notice or passage of time or both) has occurred and is continuing
under any such Credit Document;
(B) all representations and warranties of the Borrowers and
the Obligors contained in the Credit Documents are true, correct
and complete in all material respects;
(C) all financial statements and information provided to the
Lenders are true, correct and complete in all material respects;
each balance sheet fairly presents the consolidated financial
position of the Borrowers, the Guarantors, CGX and their
Subsidiaries as at the date indicated and was prepared in
accordance with GAAP except as specifically noted therein; there
has occurred no material adverse change in the financial position
of the Borrowers, the Guarantors, CGX and their Subsidiaries
since the date of the most recent balance sheet provided to the
Lenders; and the financial statements (or the footnotes thereto)
provided to the Lenders disclose all liabilities, contingent or
otherwise, of the Borrowers, the Guarantors, CGX and their
Subsidiaries required to be disclosed in accordance with GAAP;
the Borrowers are currently in discussions with their accounting
firms with respect to the proper accounting treatment of certain
options and other non-cash compensation arrangements that have
been or may be entered into with certain management employees,
the results of which will result in additional non-cash charges
to income for fiscal 1997 and subsequent years; and
(D) no act, event or circumstance has occurred with respect
to the Borrowers, the Obligors or any of their Subsidiaries or
otherwise which has had or could have a Material Adverse Effect;
(b) The Warrant Agreement and the Warrant Registration Rights
Agreement shall have been duly authorized, executed and delivered by the parties
thereto and Warrants representing 3.0% of the fully diluted common stock of the
Warrant Issuers shall have been duly authorized, executed and delivered to the
Lenders.
(c) All Taxes, fees and expenses required to be paid by the Borrowers
on or before the Closing Date shall have been paid.
(d) All conditions precedent set forth in Section 3.2 shall have been
-----------
satisfied.
(e) The Borrowers and Obligors shall have obtained all Required
Approvals, except for those which are obtainable only at a later stage and which
the Lenders are satisfied, on the basis of evidence provided by the Borrowers,
will be obtainable in the ordinary course prior to the time required, and all
Required Approvals obtained shall be final, nonappealable and not subject to any
onerous or unusual conditions.
16
(f) A First-Priority security interest in the Collateral existing on
the Closing Date shall have been created and perfected (provided, however, that
a second-priority security interest in the RFC Collateral may be created and
perfected), and shall continue to be perfected, in favor of the Agent on behalf
of the Lenders in all relevant jurisdictions, and there shall be no other Liens
on the Collateral (other than on the RFC Collateral and other than Permitted
Liens).
(g) A duly executed satisfaction and release of all liens created
under the First Union Loan Agreement, satisfactory in form and substance to the
Agent, shall be delivered to the Agent and a duly executed Form UCC-3 shall be
delivered to the Agent or a nominee thereof for filing in all appropriate
places.
3.2 Conditions Precedent to All Other Loans.
(a) The Agent shall have received a Notice of Borrowing in the form
attached hereto as Exhibit C, with all attachments thereto, sent in compliance
with Section 2.2(a)(i).
-----------------
(b) No event shall have occurred and be continuing or would result
from the making of the Loan requested that would constitute a Default or an
Event of Default.
(c) All representations and warranties of the Borrowers, Guarantors
and the Obligors contained in the Credit Documents shall be true, correct and
complete in all material respects on and as of the date of such Loan (and after
giving effect thereto) to the same extent as though made on and as of such date.
(d) Except as otherwise disclosed in the Information Memorandum, no
act, event or circumstance shall have occurred with respect to the Borrowers,
the Guarantors, the Obligors or their Subsidiaries or otherwise which has had or
could have a Material Adverse Effect.
(e) There shall be no pending or, to the knowledge of the Borrowers,
the Guarantors and Obligors threatened litigation, investigation or other
proceeding which could reasonably be expected to have a Material Adverse Effect.
(f) The Borrowers, Guarantors and Obligors shall be in compliance with
all covenants and agreements in the Credit Documents on and as of the date of
such Loan and after giving effect thereto.
(g) The Agent shall have received an Officer's Certificate from each
Borrower to the effect of (b), (c), (d), (e) and (f) above.
(h) On and after the Restructuring Date, the duly executed Guaranty
shall be in full force and effect and enforceable in accordance with its terms
in favor of the Agent and the Lenders.
3.3 No Waiver. The failure of the Agent or any Lender to require
satisfaction of any condition precedent set forth in Article 3, or the funding
---------
of any Loan despite the failure of the Borrowers, Guarantors or Obligors to
satisfy any such condition precedent, shall not constitute a waiver of such
condition precedent, unless the Lenders shall so state in writing. The
17
waiver by the Lenders of any condition precedent in connection with the funding
of any Loan shall not affect the applicability of such condition precedent to
the funding of subsequent Loans.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties. The Borrowers, Guarantors and
Obligors each represent and warrant to the Agent and the Lenders as of the date
of this Agreement, on the Closing Date and on each Funding Date as follows:
(a) Existence; Authority of Borrowers and Guarantors. Each of the
Borrowers and Guarantors is duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of organization and duly
qualified to do business and in good standing in each jurisdiction in which such
qualification is necessary to carry on its current or proposed business and
operations or the ownership of its properties, except whether the failure to be
so qualified and in good standing would not have a Material Adverse Effect. The
Borrowers and Guarantors each have all necessary rights, franchises and
privileges and full power and authority to execute, deliver and perform the
Credit Documents to which it is a party, the Warrant Agreement and the Warrant
Registration Rights Agreement and to conduct its business as currently conducted
and as proposed to be conducted. The Borrowers and Guarantors have taken all
necessary action to execute, deliver and perform the Credit Documents, the
Warrant Agreement and the Warrant Registration Rights Agreement to which it is a
party, and such Credit Documents, the Warrant Agreement and the Warrant
Registration Rights Agreement have been duly executed and delivered by the
Borrowers and Guarantors, as the case may be, and constitute the legally valid
and binding obligations of the Borrowers and Guarantors, as the case may be,
enforceable in accordance with their respective terms.
(b) Existence; Authority of Obligors. Each Obligor (that is not an
individual) is duly organized, validly existing and in good standing under the
Laws of its respective jurisdiction of organization. Each Obligor that is not
an individual is duly qualified to do business and in good standing in each
jurisdiction in which such qualification is necessary to carry on its current or
proposed business and operations or the ownership of its properties, except
where the failure to be so qualified and in good standing would not have a
Material Adverse Effect. Each Obligor has all necessary rights, franchises and
privileges and full power and authority to execute, deliver and perform the
Credit Documents to which it is a party and to conduct its business as currently
conducted and as proposed to be conducted. Each Obligor has taken all necessary
action to execute, deliver and perform the Credit Documents to which it is a
party, and such Credit Documents have been duly executed and delivered by such
Obligor and constitute the legally valid and binding obligations of such
Obligor, enforceable in accordance with their respective terms.
(c) Name, Address and Records. The names of the Borrowers, Guarantors
and Obligors set forth in the first paragraph of this Agreement and on the
signature pages hereto are true, correct and complete names of the Borrowers,
Guarantors and Obligors, and the Borrowers and Obligors do not conduct business
under any other name or tradestyle, except as
18
set forth on Schedule B hereto. The legal address of the Borrowers, Guarantors
----------
and Obligors and the address of the principal place of business and chief
executive office of the Borrowers, Guarantors and Obligors is set forth in
Schedule C hereto.
----------
(d) No Violations, Defaults or Liens.
(i) None of the Borrowers, the Guarantors nor any of their
Subsidiaries (A) is in violation of any Law (including Environmental Laws),
except such violations that could not reasonably be expected to have a Material
Adverse Effect, (B) is in violation of or default under the charter, bylaws,
partnership agreement or other constituent documents of the Borrowers, the
Guarantors or such Subsidiary or (C) is in violation of or default under any
Credit Document, the Warrant Agreement or the Warrant Registration Rights
Agreement or (to the extent it could reasonably be expected to have a Material
Adverse Effect) any other Contractual Obligation (considered individually or in
the aggregate).
(ii) No Event of Default has occurred and is continuing.
(iii) Each of the Borrowers and Guarantors and the applicable
Obligors, with respect to the Collateral provided by such Person, is the legal
and beneficial owner of, and has good, marketable and valid title to, the
Collateral, and none of the Collateral nor any other property of the Borrowers,
Guarantors or Obligors is subject to any Lien other than Permitted Liens (and
other than in respect of RFC Collateral). No effective mortgage, deed of trust,
financing statement, security agreement or other instrument similar in effect
which is not a Security Document is on file or of record in the office of any
Government Instrumentality with respect to any Collateral (other than (A) in
respect of RFC Collateral and (B) in respect of the First Union Loan Agreement,
which Lien, in the case of (B), shall be released on the Closing Date).
(iv) The execution, delivery and performance by the Borrowers,
Guarantors or any Obligor of the Credit Documents to which it is a party do not
and will not (A) violate any Law (including Environmental Laws), (B) violate, or
result in a default under, the charter, bylaws, partnership agreement or other
constituent documents of the Borrowers, Guarantors or any Obligor, (C) violate,
or result in a default under, any Contractual Obligation of any of the Borrowers
or Obligors, other than such defaults as would not, individually or in the
aggregate, have a Material Adverse Effect, (D) result in or require the creation
or imposition of any Lien on (x) the Collateral or (y) other property of the
Borrowers, Guarantors or any Obligor other than Liens created under the Security
Documents and other than in respect of RFC Collateral or (E) give rise to the
need to obtain any Required Approval from any Person that has not been obtained.
(e) Required Approvals. The Borrowers, Guarantors and Obligors have
obtained all Required Approvals required to be obtained at or prior to the time
of this representation and warranty in order for the Borrowers, Guarantors,
Obligors, the Agent and the Lenders and their respective activities to be in
compliance with Applicable Law, and the Borrowers, Guarantors and Obligors have
no reason to believe that any of the Required Approvals not yet obtained cannot
or will not be obtained in the normal course of business as and when required
and without significant expense.
19
(f) Taxes.
(i) There is and will be no Tax payable or imposed on or by
virtue of the execution, delivery, performance or enforcement of the Credit
Documents or on any payment to be made by the Borrowers, Guarantors or any
Obligor thereunder, other than Lender Income Taxes and normal and customary
income taxes payable by the Borrowers, Guarantors and the Obligors upon their
income in the jurisdictions in which such income is earned.
(ii) The Borrowers, Guarantors, Obligors and each of their
Subsidiaries have filed in a timely manner all Tax returns required by Law and
have paid all Taxes shown to be due and payable on such returns and all other
Taxes and assessments levied upon them or their properties, assets, income or
franchises, to the extent such Taxes and assessments have become due and payable
and before they have become delinquent, except for any Taxes and assessments (i)
the amount of which is not individually or in the aggregate material or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Borrowers,
Guarantors, Obligors or Subsidiaries, as the case may be, has established
adequate reserves in accordance with GAAP. The Borrowers and Guarantors know of
no basis for any other tax or assessment that could be expected to have a
Material Adverse Effect. The charges, accruals and reserves on the books of the
Borrowers, Guarantors and Subsidiaries in respect of Federal, state or other
Taxes for all fiscal periods are adequate.
(g) Financial Statements.
(i) Subject to the next sentence, all the financial statements
of the Borrowers, Guarantors and their Subsidiaries (as well as all notes and
schedules thereto) furnished to the Agent by the Borrowers, Guarantors or their
representatives, are true, complete and correct in all material respects
(subject, as to interim statements, to changes resulting from audits and year-
end adjustments), have been prepared in accordance with GAAP (except as
otherwise stated therein) and show all liabilities, direct and contingent, of
the Borrowers and their Subsidiaries required to be shown under GAAP. Such
financial statements (or drafts thereof) furnished to the Agent on or prior to
the date of this Agreement are true and correct in all material respects and
have been prepared in accordance with GAAP (other than in respect of required
notes and schedules). Subject, as to interim statements, to changes resulting
from audits and year-end adjustments, each balance sheet fairly presents the
consolidated financial condition of the Borrowers, Guarantors and their
Subsidiaries as at the dates thereof, and each profit and loss and surplus
(deficit) statement fairly presents the results of the operations of the
Borrowers, Guarantors and their Subsidiaries for the periods indicated. There
has been no material adverse change in the business, condition or operations
(financial or otherwise) of the Borrowers or any of their Subsidiaries since
June 30, 1998, and the Borrowers and Guarantors do not know of any reasonable
basis for the assertion against the Borrowers, Guarantors or any of their
Subsidiaries of any obligation or liability that (A) is not fully reflected in
the financial statements furnished to the Agent and (B) is not otherwise
permitted by the terms of this Agreement.
(ii) The Budgets, including all financial projections contained
therein, prepared by or on behalf of the Borrowers and delivered by or on behalf
of the Borrowers to the Lenders, the Agent or their representatives are based on
the assumptions set forth therein, which
20
assumptions were reasonable at the time indicated in such Budgets to have been
made (it being understood that the Budgets and any projections or other future
events assumed therein are not to be viewed as facts, that actual results may
differ from projected or estimated results, and that none of the Borrowers or
its officers, directors, advisors or employees shall be liable for the accuracy
of the Budgets or such projections or future events). None of the Borrowers,
Guarantors or any of their Subsidiaries has any material liability, contingent
or otherwise, including any liability for Taxes, or any unusual forward or long
term commitments which are not disclosed by, or reserved against in, the Budgets
which under GAAP are of a nature and an amount required to be so disclosed or
reserved. There are no unrealized or anticipated losses from any unfavorable
commitments of any of the Borrowers, Guarantors or any of their Subsidiaries
which could reasonably be expected to have a Material Adverse Effect.
(h) No Proceedings. There is no pending or, to the knowledge of the
Borrowers or Guarantors, threatened action, suit, litigation, investigation,
arbitration or other proceeding involving or affecting the Borrowers,
Guarantors, any of their Subsidiaries or any of their respective properties or
assets before any Government Instrumentality, which could reasonably be expected
to have a Material Adverse Effect. None of the Borrowers, Guarantors, the
Obligors or any of their Subsidiaries or any of their respective properties or
assets is subject to any order, writ or injunction which prohibits, enjoins or
limits any aspect of the transactions contemplated by the Credit Documents or
which could reasonably be expected to have a Material Adverse Effect.
(i) No Broker's Fees. The Borrowers have no obligation (direct,
indirect, contingent or otherwise) to pay any fee, commission or compensation to
any broker, finder or intermediary with respect to or as a result of any
transaction contemplated by the Credit Documents.
(j) Environmental Matters. The Borrowers, Guarantors and their
Subsidiaries are in compliance with all Environmental Laws. There are no past,
current, pending or threatened Environmental Claims in any way relating to the
Borrowers, Guarantors or their Subsidiaries.
(k) ERISA. None of the Borrowers, Guarantors or any ERISA Affiliate
of the same sponsors, maintains, administers, contributes to, participates in,
or has any obligation to contribute to or any liability under, any Plan, except
for the CGX Communications, Inc. 401(k) Retirement Savings Plan.
(l) Investment Company Act. None of the Borrowers or any of their
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(m) Use of Proceeds.
(i) The proceeds of the Loans have been and will be used only
for the purposes described in Section 2.7 and in accordance with the
-----------
requirements and conditions of this Agreement.
21
(ii) The Borrowers and Guarantors are not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation G, T, U or X issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Loan will be used, directly or
indirectly, in violation of such regulations.
(iii) No proceeds of any Loan will be used to acquire any security in
any transaction which is subject to Section 13 or 14 of the Securities Exchange
Act of 1934, as amended.
(n) Collateral.
(i) The descriptions of the Collateral existing as of the date on
which this representation is deemed made contained in the Security Documents are
true, correct and complete and are sufficient to describe the Collateral and to
create, attach and perfect the Liens intended to be created in such Collateral
by the Security Documents.
(ii) As of the Closing Date, all necessary and appropriate deliveries,
notices, recordings, filings and registrations have been effected to perfect
First Priority Liens (or, for as long as the obligations under the Receivables
Sale Agreement are outstanding, second priority Liens in respect of the RFC
Collateral) on the Collateral in favor of the Agent as agent for the Lenders in
all relevant jurisdictions, and the Agent as agent for the Lenders has as of the
Closing Date, and will continue to have until the Lenders and Noteholders have
been repaid in full and released their Liens, subject to the filing of any UCC
continuation statements, duly and validly created, attached, perfected and
enforceable First Priority Liens (or, for as long as the obligations under the
Receivables Sale Agreement are outstanding, second priority Liens in respect of
the RFC Collateral) on such Collateral in all relevant jurisdictions.
(o) Full Disclosure. No representation or warranty of the Borrowers,
Guarantors or any Obligor contained in any Credit Document, the Warrant
Agreement or the Warrant Registration Rights Agreement or any other document,
certificate or written statement furnished to the Agent or any Lender or their
representatives by or on behalf of any such person for use in connection with
the Credit Documents and such other agreements contains any untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements contained therein not misleading.
4.2 Survival. The representations and warranties of the Borrowers,
Guarantors and Obligors contained in the Credit Documents, the Warrant Agreement
and the Warrant Registration Rights Agreement, or made by the Borrowers,
Guarantors or any Obligor in any certificate, notice or report delivered
pursuant to any such document shall survive the Closing Date, the making and
repayment of the Loans, the Restructuring Date, the Conversion Date and any
transfer or assignment of Notes and converted Notes.
22
ARTICLE 5
COVENANTS
5.1 Affirmative Covenants. Each of the Borrowers, Guarantors and
Obligors covenant and agree that until the Credit Agreement Termination Date, it
will perform and observe each of the following covenants, unless (and then only
to the extent) compliance with such covenant has been waived pursuant to Section
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8.5:
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(a) Existence. Other than as a result of the Restructuring, each of
the Borrowers, Guarantors and Obligors shall preserve and maintain their
existence, rights, franchises and privileges and remain in good standing in the
jurisdiction of its organization, and qualify and remain qualified in good
standing in each jurisdiction in which such qualification is necessary to carry
on its current or proposed business and operations or the ownership of its
properties except where the failure to be so qualified and in good standing
could not reasonably be expected to have a Material Adverse Effect.
(b) Subsidiaries. Other than as a result of the Restructuring, each
of the Borrowers, Guarantors and Obligors shall cause each of their Subsidiaries
to preserve and maintain its respective existence, and its material rights,
franchises and privileges and to remain in good standing in the jurisdiction of
its formation, and to qualify and remain qualified in good standing in each
jurisdiction in which such qualification is necessary to carry on its current or
proposed business and operations or the ownership of its properties except,
where the failure to be so qualified and in good standing could not reasonably
be expected to have a Material Adverse Effect.
(c) Compliance with Laws, Approvals and Obligations. Each of the
Borrowers, Guarantors and Obligors shall comply with, and shall cause each of
their Subsidiaries to comply in all material respects with, all Applicable Laws,
all Required Approvals, the Credit Documents, the Warrant Agreement and the
Warrant Registration Rights Agreement and its other Contractual Obligations.
Each of the Borrowers, Guarantors and Obligors shall satisfy before the same
become delinquent all Claims other than Claims being contested in good faith by
appropriate proceedings with proper reserves established which do not result in
the imposition of a Lien prohibited by Section 5.2(c). Each of the Borrowers,
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Guarantors and Obligors shall obtain and maintain in full force and effect all
Required Approvals required from time to time except at any time for those
obtainable only at a later stage and which will be obtainable in the ordinary
course of business prior to the time required.
(d) Title. Each of the Borrowers and the Obligors shall maintain good
and marketable title to the Collateral and shall at all times warrant and defend
the title to the Collateral against all Claims.
(e) Collateral. The Borrowers and Obligors shall take all actions
necessary to insure that the Lenders have and continue to have in all relevant
jurisdictions until payment in full of all Obligations hereunder, duly and
validly created, attached, perfected and enforceable First-Priority Liens in
favor of the Agent on behalf of the Lenders on the Collateral (other than, for
as long as the obligations under the Receivables Sale Agreement are outstanding,
the RFC
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Collateral, as to which a second-priority Lien shall be created, attached,
perfected and enforceable) (including after-acquired Collateral). The Borrowers
and Obligors shall deliver possession of any Collateral to the Agent or its
designated agent, immediately upon acquiring rights therein, to the extent the
Agent is required to perfect its interest in such Collateral by taking
possession thereof.
(f) Maintenance of Property; Insurance.
(i) The Borrowers and Guarantors shall maintain and preserve, and
cause their Subsidiaries to maintain and preserve, all of their respective
material properties in good working order and condition, ordinary wear and tear
excepted and all licenses and permits necessary for the proper conduct of its
business as conducted and proposed to be conducted, including, without
limitation, the Overvoice License.
(ii) Each of the Borrowers and Guarantors will, and will cause each
of their Subsidiaries to, maintain (either in the name of such Borrower or
Guarantor or in such Subsidiary's own name) with financially sound and
responsible insurance companies, insurance of such types, in at least such
amounts and against at least such risks (and with such risk retention) as are
usually insured against in similar circumstances in the same general area by
companies of established repute engaged in the same or a similar business; and
will furnish to the Agent upon request information presented in reasonable
detail as to the insurance so carried.
(g) Taxes. The Borrowers and Guarantors shall file, and shall cause each of
their Subsidiaries to file, all Tax returns required by Law in a timely manner
and shall pay, and shall cause each of their Subsidiaries to pay, before the
same become delinquent all Taxes imposed upon them or upon their respective
properties, other than Taxes being contested in good faith by appropriate
proceedings with proper reserves established which do not result in the
imposition of a Lien prohibited by Section 5.2(e).
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(h) Records and Inspection Rights. The Borrowers and Guarantors shall keep
and maintain true, correct and complete records and books of account, in which
complete entries will be made in accordance with GAAP and Applicable Law,
reflecting all financial transactions of such Borrower or Guarantor and their
Subsidiaries. The Borrowers and Guarantors shall also keep and maintain, and
shall cause each Obligor to keep and maintain, true, correct and complete
inventories of all Collateral and records of all transactions relating thereto.
At any reasonable time and from time to time, the Borrowers, Guarantors and
Obligors agree to permit, and shall cause each Subsidiary to permit, the Agent
and any agents or representatives thereof, to examine and make copies of and
abstracts from such records, books of account and inventories, to visit the
properties of the Borrowers and Guarantors and their Subsidiaries and to discuss
the affairs, finances and accounts of the Borrowers and Guarantors and their
Subsidiaries directly with the Borrowers', Guarantors' and Subsidiaries'
auditors and with any of the officers or managers of the Borrowers and
Guarantors and their Subsidiaries.
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(i) Reporting Requirements. The Borrowers and Guarantors shall furnish to
the Agent:
(i) as soon as available and in any event within 10 days of the date
of this Agreement, financial statements of the Borrowers, Guarantors and their
Subsidiaries (as well as all notes and schedules thereto) covering each of three
full fiscal years of such Persons ending on December 31, 1997 and the six month
period ending on June 30, 1998, that have been prepared in accordance with GAAP
(except as otherwise stated therein) and showing all liabilities, direct and
contingent, of the Borrowers, Guarantors and their Subsidiaries required to be
shown under GAAP.
(ii) as soon as available (meaning the first date on which such
information is provided to any shareholder or creditor of the Borrowers or
Guarantors) and in any event within 45 days after the end of each of the first
three quarters of each fiscal year of the Borrowers and Guarantors, complete
unaudited consolidated financial statements of the Borrowers, the Guarantors and
their Subsidiaries, including the balance sheet as of the end of such quarter,
and profit and loss statements, statements of shareholders' capital (or retained
earnings, if appropriate) and statements of cash flows for such quarter and for
the elapsed portion of such fiscal year, in each case prepared in accordance
with GAAP consistently applied (subject to normal year-end audit adjustments and
the absence of footnote disclosures) and setting forth in comparative form the
figures for the corresponding period of the previous fiscal year, certified to
the Lenders by the chief financial officer of each of the Borrowers and
Guarantors;
(iii) as soon as available (meaning the first date on which such
information is provided to any shareholder or creditor of the Borrowers or
Guarantors) and in any event within 90 days after the end of each fiscal year of
such Borrower or Guarantor, complete audited consolidated financial statements
of such Borrower or Guarantor and its Subsidiaries, including the balance sheet
as of the end of such fiscal year, and a profit and loss statement, a statement
of shareholders' capital (or retained earnings, if appropriate) and a statement
of cash flows for such fiscal year, in each case prepared in accordance with
GAAP consistently applied and setting forth in comparative form the figures for
the previous fiscal year, certified, without material qualifications or
limitations as to the scope of the audit by Xxxxxx Xxxxxxxx LLP or by other
independent certified public accountants acceptable to the Lenders;
(iv) promptly after the sending, filing or receipt thereof, a copy of
each material report, notice, certificate, application, demand, request or other
communication which the Borrowers or Guarantors or their Subsidiaries send to,
file with or receive from any Government Instrumentality;
(v) such other information respecting the condition, operations or
condition (financial or otherwise) of the Borrowers, the Guarantors or of any
Subsidiary as the Lenders may from time to time reasonably request; and
(vi) on or before a date not more than 120 days after the end of each
fiscal year of each of the Borrowers and Guarantors ending after the date
hereof, and 60 days after the end of each fiscal quarter ending after the date
hereof, a written statement signed by the principal executive officer, principal
financial officer or principal accounting officer of each Borrower and
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Guarantor in his/her capacity as an officer of such Borrower and Guarantor, as
to compliance herewith, including whether or not, after a review of the
activities of each Borrower and Guarantor during such year and of such
Borrower's and Guarantor's performance under this Credit Agreement, to the best
knowledge, based on such review, of the signers thereof, such Borrower and
Guarantor have fulfilled all of their respective obligations and are in
compliance with all conditions and covenants under this Agreement and the other
Credit Documents throughout such year and, if there has been a Default or Event
of Default specifying each Default or Event of Default and the nature and status
thereof and any actions being taken by the Borrowers or Guarantors with respect
thereto.
Notwithstanding the foregoing, after the Restructuring Date, only financial
statements of CGX as parent holding company shall be required to be delivered
hereunder, provided that this exception shall not apply to other Borrowers or
Guarantors added other than in connection with the Restructuring.
(j) Notice Requirements. The Borrowers and Guarantors shall give the
Agent prompt notice of the occurrence of any of the following events:
(i) any Default or Event of Default;
(ii) any default, breach or violation or any potential default,
breach or violation under any Contractual Obligation of the Borrowers or
Guarantors or any of their Subsidiaries which could reasonably by expected to
have a Material Adverse Effect;
(iii) any other event having a Material Adverse Effect or any
event or circumstance which could reasonably be expected to have a Material
Adverse Effect;
(iv) any pending or, to the knowledge of such Borrower or
Guarantor, threatened Claim, action, attachment, proceeding, suit, litigation,
investigation or arbitration involving or affecting such Borrower or Guarantor
or any of its Subsidiaries or any of their respective properties or assets by
any Person or before any Government Instrumentality which could reasonably be
expected to have a Material Adverse Effect;
(v) any termination, revocation, suspension or modification of
any Required Approval, or any action or proceeding which could reasonably be
expected to result in any of the events specified in clauses (i) - (iv) above;
(vi) the receipt of any management letter or similar
communication from such Borrower's or Guarantor's or Subsidiaries' auditors, or
the resignation, discharge or change of the Borrower's or Guarantor's or
Subsidiaries' auditors;
(vii) any Environmental Claim or any fact, circumstance or
condition (including any release or spill of any Hazardous Substance) that could
form the basis of an Environmental Claim with respect to such Borrower or
Guarantor or any of its Subsidiaries;
(viii) any material dispute involving such Borrower or Guarantor
or any of its Subsidiaries on the one hand and any Government Instrumentality on
the other hand; and
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(ix) such Borrower's or Guarantor's or Subsidiaries' or any
ERISA Affiliate's adoption of or participation in any Plan, or intention to
adopt or participate in any Plan.
In each notice delivered pursuant to this Section 5.1(j), such
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Borrower and Guarantor shall include reasonable details concerning the
occurrence that is the subject of such notice as well as such Borrower's or
Guarantor's proposed course of action, if any. Delivery of a notice pursuant to
this Section 5.1(j) shall not affect such Borrower's or Guarantor's Obligations
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under any other provision of the Credit Documents.
(k) Long-term Financing. The Borrowers shall use commercially
reasonable efforts to obtain long-term financing, whether through the offering
or placement of debt or equity securities or otherwise, in order to effect the
prepayment of all outstanding Loans and the termination of any unused portion of
the Aggregate Commitment, in each case prior to the Maturity Date.
(l) Costs. The Borrowers and Guarantors shall bear all costs and
expenses involved in complying with their obligations under Article 5.
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(m) Pay Obligations to Lenders and Perform Other Covenants. The
Borrowers and Guarantors shall make full and timely payment of the Obligations,
whether now existing or hereafter arising, (b) duly comply with all the terms
and covenants contained in this Agreement and in each of the Credit Documents,
the Warrant Agreement and the Warrant Registration Rights Agreement, all at the
times and places and in the manner set forth therein, and (c) except for the
filing of the continuation statements and the making of other filings by the
Agent as secured party or assignee, at all times take all action necessary to
maintain the Liens and security interests provided for under or pursuant to this
Agreement and the Security Documents as valid and perfected Liens on the
property intended to be covered thereby and having the priority required under
this Agreement (subject only to Liens expressly permitted hereunder) and supply
all information to the Agent necessary for such maintenance.
(n) Restructuring. Within 30 days after the Closing Date, the
Borrowers shall have effected a reorganization whereby CGX shall be a parent
holding company of all of the outstanding Capital Stock of Cleartel (which shall
have succeeded to all the assets of Cleartel LP) (from and after the
Restructuring Date, the term "Cleartel" shall be deemed to refer to Cleartel and
Cleartel LP considered as one enterprise), and CAIS (which shall have succeeded
to all the assets of CAIS LP) (from and after the Restructuring Date the term
"CAIS" shall be deemed to refer to CAIS and CAIS LP considered as one
enterprise) (the "Restructuring"). On the Restructuring Date, the Guaranty
shall commence to be in full force and effect and enforceable in accordance with
its terms, CGX's role shall be that of Guarantor hereunder and under the other
Credit Documents, Cleartel and CAIS shall be deemed to be the "Borrowers" and
each of CGX, Cleartel and CAIS and their Owners (as defined in the Pledge and
Security Agreement) shall execute and deliver to the Agent such documents and
instruments as the Agent shall in its sole discretion require to evidence, among
other things, the continuing liability for and assumption by Cleartel and CAIS
of all of the Borrowers' Obligations in effect prior to the Restructuring and
the continuing pledge by CGX and its Owners of all the Capital Stock of CGX,
Cleartel and CAIS (provided, however, that revision of Section 8.10(c) shall not
be so
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required). In addition, on the Restructuring Date, there shall be delivered to
the Agent all documents evidencing the dissolution (by merger or otherwise) of
CAIS LP and Cleartel LP. Upon the effectiveness of the Restructuring none of the
Borrowers, Guarantors and other Obligors shall be in breach, violation or
default under any of its respective representations, warranties and covenants
contained in the Credit Documents. Upon the effectiveness of the Restructuring,
all warrants previously issued by Borrowers shall automatically convert into
Warrants for shares of common stock of CGX in accordance with the Warrant
Agreement.
(o) Additional Obligors and Guarantors. The Borrowers shall cause
each direct or indirect Wholly-Owned Subsidiary not in existence on the date
hereof to execute this Agreement as a Borrower, and cause the direct parent of
each such Subsidiary to pledge all of the Capital Stock of such Subsidiary
pursuant to the Pledge and Security Agreement. From and after the Closing Date,
the Borrowers shall cause every holder of its Capital Stock not referenced on
the Schedules hereto, except for those holders that own less than 1% of the
Capital Stock of such Borrower, to pledge all of such Capital Stock (when and as
issued to such holder) pursuant to the Pledge and Security Agreement, except
that in the case of Xx. Xxxxx, such pledge shall occur on or before the
Restructuring Date. Each of the Guarantors shall cause any future direct parent
of such Guarantor (which is not an individual) to execute the Guaranty as a
Guarantor.
(p) The Borrowers shall cause a Form UCC-3, satisfactory in form and
substance to the Agent, by First Union National Bank of Virginia to be filed in
all appropriate places.
5.2 Negative Covenants. The Borrowers, Obligors and Guarantors
covenant and agree that, so long as any Lender shall have any Commitment
hereunder and until payment in full of all Loans, Notes and other Obligations,
it will perform and observe each of the following covenants, unless (and then
only to the extent) compliance with such covenant has been waived pursuant to
Section 8.5:
(a) Business. Neither the Borrowers, Guarantors nor any of their
Subsidiaries shall engage in a business which is not substantially the
Telecommunications Business. Without the prior written consent of the Lenders,
which shall not be unreasonably withheld, (i) none of the Borrowers or
Guarantors shall change its name, its legal address, the address of its
principal place of business or chief executive office or the location of its
books, records and contracts, (ii) the Borrowers and Guarantors shall not adopt
or change any trade name or fictitious business name and (iii) none of the
Borrowers and Guarantors shall amend any material Contractual Obligation to
which it is a party without the prior approval of the Lenders.
(b) Mergers and Sales of Assets.
(i) The Borrowers and Guarantors will not and will not permit any of
their Subsidiaries, in a single transaction or through a series of related
transactions, to consolidate with or merge with or into any other Person or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any other Person or group of
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Persons (other than to effect the imposition of Liens under the Credit
Documents), unless at the time and after giving effect thereto:
(1) either (A) the Borrowers and Guarantors or such Subsidiary will be
the continuing corporation in the case of a consolidation or merger involving a
Borrower, Guarantor or such Subsidiary, as the case may be, or (B) the Person
(if other than a Borrower or Guarantor) formed by such consolidation or into
which such Borrower, Guarantor or Subsidiary is merged or the Person which
acquires by sale, assignment, conveyance, transfer, lease or disposition all or
substantially all of the properties and assets of such Borrower, Guarantor or
Subsidiary (the "Surviving Entity") will be a corporation duly organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and such Person expressly assumes, by all
relevant documentation in form and substance reasonably satisfactory to the
Agent, all the Obligations of such Borrower, Guarantor or Subsidiary, as the
case may be, under this Agreement, the Loans and the Notes, the Guaranty, the
other Credit Documents and the Warrant Agreement and Warrant Registration Rights
Agreement, as the case may be, and the Loans and the Notes, the Guaranty, the
other Credit Documents, the Warrant Agreement and the Warrant Registration
Rights Agreement as applicable will remain in full force and effect as so
supplemented; provided, however, that the exceptions permitted by this clause
(1) shall not apply to any transaction referred to therein whereby prior to the
Restructuring any assets are sold, assigned, conveyed, transferred, or otherwise
disposed of to CGX or a consolidation or merger is effected whereby CGX is the
surviving corporation;
(2) immediately before and immediately after giving effect to such
transaction on a pro forma basis (and treating any Indebtedness not previously
an Obligation of a Borrower or Guarantor or any of their Subsidiaries which
becomes the obligation of such Borrower or Guarantor or any of their
Subsidiaries as a result of such transaction as having been incurred at the time
of such transaction), no Default or Event of Default will have occurred and be
continuing;
(3) immediately after giving effect to such transaction on a pro forma
basis (including any Indebtedness incurred or anticipated to be incurred in
connection with such transaction), the Consolidated Net Worth of such Borrower
or Guarantor or the Surviving Entity, as the case may be, is at least equal to
the Consolidated Net Worth of such Borrower or Guarantor immediately prior to
such transaction;
(4) at the time of the transaction, each Guarantor, if any, unless it
is the other party to the transactions described above, will have confirmed to
the Agent's satisfaction that its Guaranty shall apply to such Person's
Obligations under the Credit Documents;
(5) at the time of the transaction if any of the property or assets
of the Borrowers, Guarantors or any of their Subsidiaries would thereupon become
subject to any Lien, such Lien is a Permitted Lien hereunder;
(6) such transaction would not result in the loss, material impairment
or adverse modification or amendment of any authorization or license of a
Borrower or Guarantor or any of their Subsidiaries that could have a Material
Adverse Effect; and
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(7) at the time of the transaction such Borrower, Guarantor or
the Surviving Entity will have delivered, or caused to be delivered, to the
Agent, in form and substance reasonably satisfactory to the Agent, an Officers'
Certificate and an Opinion of Counsel, each to the effect that such
consolidation, merger, transfer, sale, assignment, conveyance, transfer, lease
or other transaction comply with this Agreement and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
(ii) Notwithstanding the foregoing, the provisions of (i) (3) shall
not apply to (1) a merger or consolidation between a Borrower or a Guarantor and
any of its Subsidiaries or between one or more of its Subsidiaries, and (2) a
merger or consolidation of a Borrower or a Guarantor into any Person in a
transaction designed solely for the purpose of effecting a change in the
jurisdiction of incorporation of such Borrower or Guarantor within the United
States of America.
(iii) In the event of any transaction (other than a lease) described
in and complying with the conditions listed in (i) in which a Borrower or
Guarantor is not the surviving Person, such surviving Person shall succeed to,
and be substituted for, and may exercise every right and power of such Borrower
or Guarantor and such Borrower or Guarantor shall be discharged from all of its
Obligations and covenants under this Agreement, the Loans, the Notes, the
Guaranty, the Pledge and Security Agreement, the other Credit Documents, the
Warrant Agreement and the Warrant Registration Rights Agreement, as the case may
be.
(iv) The Borrowers and Guarantors will not, and will not permit any
Subsidiary, directly or indirectly, whether in a single transaction or a series
of related transactions, to consummate an Asset Sale unless (1) no Default or
Event of Default has occurred or would occur as a result thereof, (2) at least
75% of the consideration from such Asset Sale is received in cash or other
comparable consideration (as described below), and (3) the Borrowers and
Guarantors or such Subsidiary receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the shares or assets subject to
such Asset Sale. Such determination of Fair Market Value shall be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if such Fair Market Value exceeds $1.0 million. No
later than the date of such Asset Sale, the Borrowers and Guarantors shall
deliver to the Agent an Officer's Certificate stating that such Asset Sale is
permitted hereby and setting forth the basis upon which the calculations
required above were computed, together with a copy of any fairness opinion or
appraisal required hereby. The following types of consideration shall be deemed
"comparable consideration" for the purposes of this covenant: (A) Cash
Equivalents, (B) liabilities (contingent or otherwise) of such Borrower,
Guarantor or Subsidiary assumed by the transferee (or its designee) such that
such Borrower, Guarantor or Subsidiary has no further liability therefor, and
(C) any securities, notes or other obligations received by such Borrower,
Guarantor or Subsidiary from such transferee that are immediately converted by
such Borrower, Guarantor or Subsidiary into cash. Such Borrowers, Guarantors or
Subsidiaries shall within 180 days of the Asset Sale use the Net Cash Proceeds
to invest in property and other assets that will be used only in the
Telecommunications Business or to permanently repay the Loans or Notes, as the
case may be. The amount of such Net Cash Proceeds required to be so applied or
invested during such 180 day period and not so applied or invested constitutes
"Excess Proceeds". When the aggregate amount of Excess Proceeds equals or
exceeds $1.5 million, such Borrower or Guarantor, as the case may be, will apply
the Excess Proceeds to the repayment of the Loans or
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Notes as the case may be as follows: The Borrowers or Guarantors, as the case
may be, will make an offer to purchase (an "Offer") on a pro rata basis, from
all Lenders or Noteholders, in accordance with the procedures set forth herein,
in the aggregate maximum principal amount (expressed as a multiple of $1,000) of
Loans or Notes plus accrued and unpaid interest, that may be purchased out of
such Excess Proceeds. The offer price for the Loans or Notes will be payable in
cash in an amount equal to 100% of the principal amount of the Loans or Notes
plus accrued and unpaid interest, if any, to the date such Offer is consummated
(the "Offered Price"). If the aggregate principal amount of Loans or Notes
surrendered by holders thereof exceeds the amount of Excess Proceeds, the Loans
or Notes to be purchased shall be purchased on a pro rata basis. Upon the
completion of the purchase of all the Loans or Notes tendered pursuant to an
Offer the amount of Excess Proceeds, if any, shall be reset at zero. If a
Borrower or Guarantor becomes obligated to make an Offer pursuant hereto, the
Loans or Notes shall be purchased by the Borrowers or Guarantors, at the option
of the holders thereof, in whole or in part in integral multiples of $1,000, on
a date that is not earlier than 30 days and not later than 60 days from the date
the notice of the Offer is given to holders, or such later date as may be
necessary for the Borrowers or Guarantors to comply with the applicable
requirements under the Exchange Act. The Borrowers and Guarantors will comply
with the applicable tender offer rules, including Rule 14e-1 under the Exchange
Act, and any other applicable securities laws or regulations in connection with
an Offer.
(c) Liens. The Borrowers, Obligors and Guarantors shall not, and
shall not permit any of their Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist, any Lien upon or with respect to any tangible
or intangible property or asset of the Borrowers and Guarantors, or such
Subsidiary now owned or hereafter acquired, or any income or profits therefrom,
or assign or convey any right to receive income therefrom, except that the
foregoing restrictions shall not apply to the following ("Permitted Liens"):
(i) the Security Document Liens;
(ii) Liens for Taxes, if such Taxes (1) are not at the time
delinquent and thereafter can be paid without penalty, or (2) are being
contested in good faith by appropriate proceedings promptly initiated and
diligently pursued with proper reserves established and such Liens have been
bonded over and do not involve any risk that a significant interest in or right
to the Collateral may be sold, lost or forfeited or that any Security Document
Lien may be impaired;
(iii) carriers', warehousemen's, materialmen's and mechanics'
Liens and other similar Liens imposed by Law and arising in the ordinary course
of the Borrowers', Guarantors' or such Subsidiary's business, if such Liens have
been bonded over and either (1) are not filed of record and are not delinquent
or (2) are being contested in good faith by appropriate proceedings with proper
reserves established and have not proceeded to judgment and do not involve any
risk that a significant interest in or right to the Collateral may be sold, lost
or forfeited or that any Security Document Lien may be impaired;
(iv) Liens arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits or similar legislation (other than Liens imposed
by ERISA);
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(v) Liens with respect to which (1) the aggregate principal amount of
the Indebtedness (not constituting Capital Lease Obligations) at any one time
outstanding and secured by Liens permitted by this clause shall not exceed
$200,000, (2) the aggregate amount of the Indebtedness (constituting Capital
Lease Obligations) at any one time outstanding and secured by Liens permitted by
this clause shall not exceed $1,500,000, so long as in either case of clauses
(1) or (2) such Indebtedness shall not otherwise be prohibited by the terms of
this Agreement; and
(vi) Liens arising under the Receivables Sale Agreement; and
(vii) Liens in favor of a Borrower or Guarantor.
If foreclosure or enforcement of any Lien upon the Collateral or any part
thereof is at any time initiated, the Agent shall have the right, but not the
obligation, to take any action it shall deem appropriate, including payment of
the obligation secured by such Lien, and the Borrowers shall immediately upon
demand reimburse the Agent for all sums expended by the Agent in taking any such
action. Any amounts not reimbursed upon demand shall bear interest at the
Default Rate and shall be obligations secured by the Security Document Liens.
(d) Indebtedness. The Borrowers and Guarantors shall not, and shall not
permit any of their Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Indebtedness, except:
(i) Indebtedness of the Borrowers under the Loans, Notes and
the other Credit Documents;
(ii) Capital Lease Obligations;
(iii) Indebtedness that is incurred to immediately repay all
outstanding Indebtedness and other Obligations under the Credit Documents and to
reduce the Commitment of the Lenders hereunder to $0;
(iv) Indebtedness permitted under the Receivables Sale Agreement
pursuant to Section 5.2(k);
(v) Indebtedness of the Borrowers under the Shareholder Promissory
Notes; and
(vi) Subordinated Indebtedness of (A) any Subsidiary owed to and held
by a Borrower, a Guarantor or one of their Subsidiaries; or (B) a Borrower or
Guarantor owed to and held by one of their Subsidiaries.
(e) Lease Obligations. The Borrowers and Guarantors will not create
or suffer to exist any obligations for the payment of rent for any property
under operating leases or agreements to lease having a term of one year or more
other than (i) such operating leases (and agreements) existing on the date of
this Agreement (including any extensions, amendments, supplements or renewals
thereof) and (ii) additional such operating leases and agreements so long as the
direct or contingent liabilities of the Borrowers and Guarantors and in respect
of all
32
such obligations created after the date of this Agreement in accordance with
this clause (ii) and payable in any calendar year will not exceed $1,000,000.
(f) Distributions. The Borrowers and Guarantors shall not, and shall
not permit any of their Subsidiaries to, directly or indirectly, make, declare
or pay any distributions, dividends or returns of capital in respect of, or
purchase, retire, redeem or otherwise acquire for value any of their Capital
Stock now or hereafter outstanding, or make any distribution of assets or
property to their shareholders as such. The Borrowers and Guarantors shall not
make any principal payment on, or repurchase, redeem, defease, retire or
otherwise acquire for value, prior to any scheduled principal payment, sinking
fund payment, mandatory redemption payment or other stated maturity, any
Indebtedness of such Borrowers, Guarantors or their Subsidiaries that is
subordinate or junior in right of payment (whether pursuant to its terms or by
operation of law) to the Loans, Notes or the Guaranty, as the case may be.
(g) Transactions with Affiliates and Third Parties. Without the
consent of the Lenders, the Borrowers and Guarantors shall not, and shall not
permit any of their Subsidiaries to, directly or indirectly, enter into or
suffer to exist any transaction or series of related transactions (including,
without limitation, the sale, transfer, disposition, purchase, exchange or lease
of assets, property or services) with, or for the benefit of, any Affiliate of
such Borrower, Guarantor or Subsidiary or any beneficial owner of 5 percent or
more of the Capital Stock or other ownership interest of any of the foregoing
entities at any time outstanding (each of the foregoing being "Interested
Persons"), unless (a) such transaction or series of related transactions is
entered into in good faith and on terms that are no less favorable to such
Borrower, Guarantor or Subsidiary, as the case may be, than those which could
have been obtained in a comparable transaction at such time from persons who are
not Affiliates or Interested Persons, (b) with respect to a transaction or
series of transactions involving aggregate payments or value equal to or greater
than $1,000,000, other than in connection with the Restructuring, such Borrower,
Guarantor or Subsidiary has obtained an opinion from an independent financial
advisor stating that the terms of such transaction or series of transactions are
fair to such Borrower, Guarantor or Subsidiary, as the case may be, from a
financial point of view and (c) with respect to a transaction or series of
transactions involving aggregate payments or value equal to or greater than
$2,000,000, such Borrower, Guarantor or Subsidiary, as the case may be, shall
have delivered an Officer's Certificate to the Agent certifying that such
transaction or series of transactions complies with the preceding clause (a)
and, if applicable, certifying that the opinion referred to in the preceding
clause (b) has been delivered and that such transaction or series of
transactions has been approved by a majority of the disinterested members of the
Board of Directors of such Borrower, Guarantor or Subsidiary.
(h) Use of Proceeds. The Borrowers will use the proceeds of the Loans
only for the purposes described in Section 2.7 and in accordance with the
-----------
requirements and conditions of the Credit Documents.
(i) Auditors. The Borrowers and Guarantors shall not discharge or
change their auditors without the prior written consent of the Lenders, which
consent shall not be unreasonably withheld. The Borrowers and Guarantors shall
not change their fiscal years.
33
(j) Publicity. The Borrowers and Guarantors shall not issue, or
consent to the issuance of, any press release, announcement or advertisement
that refers to the financing contemplated by the Credit Documents without the
prior written consent of the Agent.
(k) The Receivables Sale Agreement. The Receivables Sale Agreement
shall not be amended, outstanding Indebtedness thereunder shall not exceed
$5,500,000, and the obligations thereunder shall not be prepaid, without the
prior written consent of the Lenders and Noteholders, as the case may be.
(l) Perfection. The Borrowers, Obligors and Guarantors shall not
change their name or address or do any other act in such a manner that would
adversely affect the Liens or the perfection of the Liens in favor of the Agent
under the Security Documents without the prior written consent of the Lenders,
which shall not be unreasonably withheld.
ARTICLE 6
EVENTS OF DEFAULT
6.1 Events of Default. Each of the following shall constitute an
"Event of Default" under this Agreement:
(a) Any principal of any Loan or Note shall not be paid when due.
(b) Any interest on any Loan or Note or any fee or other amount
(including premiums and make-whole amounts) payable under any Credit Document
(other than amounts described in clause (a) above) shall not be paid within five
days after such interest, fee, or other amount is due.
(c) Any representation or warranty made by or on behalf of a
Borrower, Guarantor or any other Obligor (or any of their respective officers or
representatives) in any Credit Document, the Warrant Agreement or the Warrant
Registration Rights Agreement or in any certificate, financial statement, or
other document furnished pursuant to or in connection with any such document or
the transactions contemplated hereby shall prove to have been incorrect in any
material respect at the time it was made, deemed to have been made, or
confirmed.
(d) A Borrower, Guarantor or any other Obligor shall fail to perform
or observe (i) any term or covenant contained in Sections 5.1(e), 5.1(j), 5.1(n)
-------------------------------
or 5.2 of this Agreement or the Guaranty or (ii) any other covenant, agreement
------
or other obligation contained in this Agreement, any other Credit Document, the
Warrant Agreement or the Warrant Registration Rights Agreement (other than those
contained in paragraphs (a), (b) or (c) above) to be performed or observed by
it, and, in the case of clause (ii) only, such failure shall remain unremedied
for 10 days after written notice thereof has been given to such Person by the
Agent or any Lender or Noteholder.
34
(e) The Security Documents shall for any reason cease to create
perfected, valid and enforceable First-Priority Liens on the Collateral (or
second-priority Liens in respect of the RFC Collateral), or a Borrower,
Guarantor or any other Obligor shall so state in writing.
(f) The Guaranty or any material provision of any Credit Document,
the Warrant Agreement or the Warrant Registration Rights Agreement shall (i) be
terminated, repudiated, or declared to be invalid by a Borrower, Guarantor or
any other Obligor, as applicable, (ii) be declared by a court or Government
Instrumentality of competent jurisdiction to be void, voidable or unenforceable,
or (iii) for any reason cease to be valid and binding and of full force and
effect.
(g) A Borrower, Guarantor, or a Subsidiary thereof shall fail to pay
any Indebtedness (other than Indebtedness evidenced by the Loans, Notes,
Guaranty or arising under the other Credit Documents), or any interest or
premium thereon, when due (after giving effect to any applicable grace periods),
or any other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness or to permit the exercise of
any remedies against such Person or any of their respective properties, whether
or not such default or event shall be waived by the holders or trustees for such
Indebtedness; or any such Indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof.
(h) A final judgment or order for the payment of money in excess of
$500,000 shall be rendered against a Borrower, Guarantor, or a Subsidiary
thereof and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect for any period of 60 days.
(i) A Bankruptcy Event shall occur with respect to a Borrower,
Guarantor, an Obligor owning more than 10% of the Capital Stock of a Borrower or
a Guarantor, or a Subsidiary thereof.
(j) Excluding the events described in paragraph (i) above, any
seizure, compulsory acquisition, expropriation or nationalization of any assets
of a Borrower, Guarantor, or any Subsidiary thereof for which there is not paid
Fair Market Value and where the seizure, compulsory acquisition, expropriation
or nationalization (whether by an outright taking or by confiscatory tax or
other policies), individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(k) A Change of Control shall have occurred.
6.2 Remedies. (a) Acceleration. Upon the occurrence of an Event of
Default described in Section 6.1(i), the Commitments of the Lenders shall
--------------
forthwith terminate, the Loans (and the converted Notes, as applicable), all
interest thereon and all other amounts payable under the Guaranty and the other
Credit Documents shall become and be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which
35
are hereby expressly waived by the Borrowers. Upon the occurrence and during the
continuance of any other Event of Default other than an Event of Default in
respect of the Loans described in Section 6.1(a) or (b) as to which a Conversion
shall have been effected contemporaneously therewith (and as to clause (b) only
in respect of non-payment of interest due on the Maturity Date of the Loans on
March 4, 1999), the Agent shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrowers, (i) declare the Commitments of
each Lender to be terminated, whereupon the same shall forthwith terminate, and
(ii) declare the converted Loans and Notes, as applicable, all interest thereon
and all other amounts payable under the Credit Documents to be forthwith due and
payable, whereupon such Loans and Notes, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrowers.
(b) Conversion Event. Upon the occurrence of an Event of Default
described in Section 6.1(a) or (b) (as to clause (b) only in respect of accrued
and unpaid interest as of the Maturity Date of the Loans on March 4, 1999), a
Conversion Event shall be deemed to have occurred whereby the outstanding unpaid
principal, interest, premium and all other amounts due on the Loans or under the
Credit Documents shall be converted into the principal amount of converted Notes
in accordance with Section 2A.1.
(c) Other Remedies. If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Loans or Notes have become or
have been declared immediately due and payable under Section 6.2, the Lenders or
Noteholders may proceed to protect and enforce their rights by any action at
law, suit in equity or other appropriate Loan or Note, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.
(d) Rescission. At any time after any Loans or Notes have been
declared due and payable pursuant to clause (a) or clause (c) of Section 6.2,
the Majority Lenders by written notice to the Borrowers (Issuers), may rescind
and annul any such declaration and its consequences if (a) the Borrowers
(Issuers) have paid all overdue interest on the Loans and Notes, all principal
of and premium, if any, due and payable on any Loans and Notes other than by
reason of such declaration, and all interest on such overdue principal and
premium, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Loans and Notes, at the Default Rate, (b) all Events
of Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived under
this Agreement, and (c) no judgment or decree has been entered for the payment
of any monies due pursuant hereto or to the Loans or Notes. No recission and
annulment under the Section 6.2(d) will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
(e) No Waivers or Election of Remedies, Expenses, etc. No course of
dealing and no delay on the party of any Lender or Noteholder in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred
by this Agreement or by any Lender or Noteholder upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or
36
otherwise. Without limiting the obligations of the Borrowers elsewhere in this
Agreement, the Borrowers (Issuers) will pay to the Lenders and Noteholders on
demand such further amount as shall be sufficient to cover all reasonable costs
and expenses of such Lender or Noteholder incurred in any enforcement or
collection under this Article 6, including, without limitation, reasonable
---------
attorneys' fees, expenses and disbursements.
ARTICLE 7
THE AGENT
7.1 Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Credit Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. The Agent shall have no duties,
responsibilities, obligations or liabilities other than those expressly set
forth in the Credit Documents, and no additional duties, responsibilities,
obligations or liabilities shall be inferred from the provisions of the Credit
Documents or imposed on the Agent. As to matters not expressly provided for by
this Agreement or the other Credit Documents (including enforcement or
collection of the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions shall be
binding upon all the Lenders and all Noteholders, provided that the Agent shall
in no event be required to take any action which exposes the Agent to personal
liability, which is contrary to the Credit Documents or Law or with respect to
which the Agent does not receive adequate instructions or full indemnification
from the Lenders or Noteholders. The provisions of this Article 7 are solely
---------
for the benefit of the Agent, its agents and their respective Affiliates and the
Lenders and Noteholders. The Agent has no duties or relationship of trust or
agency with or to the Borrowers, the Guarantors, Obligors, their Subsidiaries or
their respective Affiliates.
7.2 Delegation of Duties. The Agent may delegate any of its
responsibilities or duties under the Credit Documents to one or more agents and
shall not be liable for the negligence or misconduct of any agent selected by it
with reasonable care.
7.3 Agent's Reliance. None of the Agent, its agents or any of their
respective Affiliates shall be liable for any action taken or omitted to be
taken by any of them under or in connection with the Credit Documents, except
that each shall be liable for its own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Without limiting the
generality of the foregoing, the Agent: (a) may treat the payee of any Note as
the holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent; (b)
may consult with legal counsel (including counsel for the Borrowers),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
representation or warranty to any Lender and shall not be responsible to any
Lender for any statements,
37
representations or warranties made in or in connection with the Credit
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the
Credit Documents or to inspect the books and records or any other property of
the Borrowers, Guarantors or their Subsidiaries; (e) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Credit Document or any other document
or instrument furnished pursuant thereto, or for the failure of any Person to
perform its obligations under any Credit Document; and (f) shall incur no
liability under or in respect of this Agreement or any other Credit Document or
otherwise by acting upon any notice, consent, waiver, certificate or other
writing or instrument (including facsimiles, telexes, telegrams and cables)
believed by it to be genuine and signed or sent by the proper Person or Persons.
7.4 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of any Default or Event of Default unless and until it has
received written notice from a Lender or a Borrower referring to this Agreement,
describing the Default or Event of Default and stating that such notice is a
"notice of default".
7.5 Agent as Lender. With respect to its Commitments, the Loans
funded by it and the Notes issued to it, ING (U.S.) Capital Corporation shall
have the same rights and powers under the Credit Documents as any other Lender
and may exercise the same as though it were not the Agent; and, unless otherwise
expressly indicated, the term "Lender" or "Lenders" shall include ING (U.S.)
Capital Corporation in its individual capacity. ING (U.S.) Capital Corporation
and its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of and generally engage in any kind of business with the Borrowers,
the Guarantors and their Affiliates, and any Person who may do business with or
own securities of the Borrowers, the Guarantors or any of their Affiliates, all
as if ING (U.S.) Capital Corporation were not the Agent and without any duty to
account therefor to the Lenders.
7.6 Credit Decisions. Each Lender acknowledges that neither the
Agent nor any of its Affiliates has made any representations or warranties with
respect to the Borrowers or any other matter, and agrees that no review or other
action by the Agent or any of its Affiliates shall be deemed to constitute any
such representation or warranty. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
on the financial statements referred to in Section 4.1(g) and such other
--------------
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Credit
Documents to which it is party. Each Lender also acknowledges and agrees that
it will, independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents. The Agent shall have no obligation to provide to
any Lender any information or documents concerning the Borrowers or any other
Person or matter that may come into the Agent's possession or to obtain any such
information or documents, provided that the Agent shall deliver to the Lenders
information and documents actually received by the Agent from the Borrowers
pursuant to the Credit Documents for distribution to the Lenders.
7.7 Indemnification. The Lenders agree to indemnify the Agent, its
agents and their respective Affiliates (to the extent not reimbursed by the
Borrowers), ratably according
38
to the respective principal amounts of the Notes then held by each of the
Lenders (or if no Notes are at the time outstanding, ratably according to the
respective amounts of the Lenders' Commitments), from and against any and all
Claims, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent,
its agents or their respective Affiliates by any Person (including any Lender)
in any way relating to or arising out of (a) any Credit Document, (b) any action
taken or omitted by the Agent or any Lender, (c) any claim for brokerage fees or
commissions in connection with any transaction contemplated by the Credit
Documents, (d) any Claim based on any misstatement or inaccuracy in or omission
from any disclosure provided by the Borrowers, the Guarantors or their
representatives in connection with the syndication of the Loans or the resale of
the Notes, (e) the existence, use, generation, manufacture, handling,
processing, storage, release, transportation, removal, disposal or clean-up
thereof of any Hazardous Substance by the Borrowers, the Guarantors, any of
their Subsidiaries or any of their respective Affiliates or (f) any
Environmental Claim asserted against or relating to the Borrowers, the
Guarantors, any of their Subsidiaries or any of their respective Affiliates or
any actual or alleged violation of any Environmental Law by any of such Persons,
provided that no Lender shall be liable to any Person for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Person's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction. Without limiting the generality of the foregoing, each Lender
agrees to reimburse the Agent promptly upon demand for such Lender's ratable
share of any cost, expense or Tax described in Section 8.11 incurred by or
------------
imposed on the Agent for which the Agent does not receive reimbursement from the
Borrowers or Guarantors. Payment by an indemnified party shall not be a
condition precedent to the obligations of the Lenders under this indemnity.
This Section 7.7 shall survive the Closing Date, the making and repayment of the
-----------
Loans and any transfer or assignment of Notes.
7.8 Successor Agent. The Agent may resign at any time by giving at
least 30 days' prior written notice thereof to the Lenders and the Borrowers and
may be removed at any time with or without cause by the Majority Lenders. Upon
any such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Majority Lenders and shall have accepted its appointment within 30 days
after the resignation or removal of the retiring Agent, the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a commercial
bank organized under the Laws of the United States or of any State thereof and
shall have a combined capital and surplus of at least $500,000,000. Upon the
acceptance of its appointment as Agent, the successor Agent shall thereupon
succeed to and be vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under the Credit Documents. After any retiring Agent's
resignation or removal, the provisions of this Article 7 shall inure to its
---------
benefit as to any actions taken or omitted to be taken by it while it was Agent.
39
ARTICLE 8
GENERAL PROVISIONS
8.1 Counterparts. Each of the Credit Documents may be executed in
any number of counterparts and by the different parties thereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
8.2 Integration. The Credit Documents, the Warrant Agreement and the
Warrant Registration Rights Agreement contain the complete agreement among the
Borrowers, the Guarantors, the Obligors, the Lenders, the Noteholders and the
Agent with respect to the matters contained therein and supersede, except with
respect to a commitment letter agreement between ING (U.S.) Capital Corporation
and the Borrowers, all prior commitments, agreements and understandings, whether
written or oral, with respect to the matters contained therein.
8.3 Severability. Any provision of any Credit Document which is
invalid or prohibited in any jurisdiction shall, as to such jurisdiction, be
ineffective and severable from the rest of such Credit Document to the extent of
such invalidity or prohibition, without impairing or affecting in any way the
validity of any other provision of such Credit Document or of any other Credit
Document, or of such provision in other jurisdictions. The parties agree to
replace any provision which is ineffective by operative of this Section 8.3 with
-----------
an effective provision which as closely as possible corresponds to the spirit
and purpose of such ineffective provision and the affected Credit Document as a
whole.
8.4 Further Assurances. At any time and from time to time upon the
request of the Agent, the Borrowers, the Guarantors and Obligors shall execute
and deliver such further documents and instruments and do such other acts as the
Agent may reasonably request in order to effect fully the purposes of the Credit
Documents, to create, perfect, maintain and preserve Liens of the priority
required herein on the Collateral in favor of the Agent, and to provide for the
payment of the Loans, Notes and the other Obligations of the Borrowers,
Guarantors and Obligors in accordance with the terms of the Credit Documents
(provided, however, that revision of Section 8.10(c) hereof shall not be
required by the Agent hereby). The Borrowers and Guarantors irrevocably
------------- -----------
constitute and appoint the Agent, with full power of substitution, as the
-------------------------------------------------------------------------
Borrowers', Obligors' and Guarantors' true and lawful attorney-in-fact, in the
---------- ----------------------------------------
name and on behalf of the Borrowers, Obligors and Guarantors and at the
-----------------------------------
Borrowers', Obligors' and Guarantors' expense, to execute and deliver any
---------- -----------------------------------
documents and instruments and to do and to perform any acts such as are referred
--------------------------------------------------------------------------------
to in this Section 8.4, whether or not an Event of Default has occurred and
---------------------------------------------------------------------------
without notice to or the consent of the Borrowers, Obligors or Guarantors. This
------------------------------------------------- ----
power of attorney is coupled with an interest and is not revocable.
------------------------------------------------------------------
8.5 Amendments and Waivers. No amendment or waiver of any provision
of any Credit Document, the Warrant Agreement or the Warrant Registration Rights
Agreement, or consent to any departure by the Borrowers or Guarantors or
Obligors therefrom, shall be effective unless it is in writing and signed by the
Majority Lenders, provided that no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders, do any of the following:
40
(a) increase any Commitment or subject the Lenders to any additional obligation,
(b) reduce the principal of, or interest on, the Loans or any fees payable under
the Credit Documents, (c) postpone any date fixed for the payment of principal
of, or interest on, the Loans or any fees payable under the Credit Documents,
(d) release a material portion of the Collateral, (e) amend or waive the
provisions of Sections 8.5 or 8.7(b) or (f) change the definition of "Majority
------------- ------
Lenders". A waiver or consent granted pursuant to this Section 8.5 shall be
-----------
effective only in the specific instance and for the specific purpose for which
it is given.
8.6 No Waiver; Remedies Cumulative. The waiver of any right, breach
or default under any Credit Document by the Agent or any Lender must be made
specifically and in writing. No failure on the part of the Agent or any Lender
to exercise, and no forbearance or delay in exercising, any right under any
Credit Document shall operate as a waiver thereof; no single or partial exercise
of any right under any Credit Document shall preclude any other or further
exercise thereof or the exercise of any other right; and no waiver of any breach
of or default under any provision of any Credit Document shall constitute or be
construed as a waiver of any subsequent breach of or default under that or any
other provision of any Credit Document. No notice to or demand upon the
Borrowers shall entitle the Borrowers to any further, subsequent or other notice
or demand in similar or any other circumstances. Each of the rights and
remedies of the Agent and the Lenders under the Credit Documents is cumulative
and not exclusive of any other right or remedy provided or existing by agreement
or under Law.
8.7 Successors and Assigns.
(a) Each Credit Document shall be binding upon and inure to the
benefit of the parties thereto and all future holders of Notes and their
respective successors and permitted assigns.
(b) Other than in connection with effectuating the Restructuring, the
Borrowers shall not have the right to assign their respective rights or
interests, or delegate their respective duties or obligations, under any Credit
Document without the prior written consent of all the Lenders.
(c) The Lenders shall have the right to syndicate or transfer all or
any part of their respective Commitments to other financial institutions only
upon receipt of (except if the transfer is to another existing Lender hereunder)
the prior written consent of the Agent and the prior written consent, (such
consent not to be unreasonably withheld) of the Borrowers. In connection with
each such transfer, the transferring Lender and its transferee shall execute and
deliver a supplement to this Agreement in a form acceptable to the parties.
Upon delivery of such supplement to the Borrowers and the Agent, the transferee
shall become a "Lender" under the Credit Documents with all of the attendant
rights, benefits and obligations; the respective Pro Rata Share of the
transferring Lender and its transferee shall be appropriately adjusted; and the
Borrowers shall execute and deliver to the transferring Lender and its
transferee replacement Notes reflecting their respective Pro Rata Share. The
Note or Notes being replaced shall be canceled and returned to the Borrowers.
Each replacement Note shall have endorsed thereon the disbursements, payments
and amount outstanding thereunder. After any such transfer, the transferring
Lender shall have no obligations with respect to the portion of its Commitments
transferred. The transferring Lender shall pay to the Agent a processing and
recording fee of
41
$3,000. Notwithstanding the foregoing, transfers and exchanges of converted
Notes shall be governed by Section 2A.12 and not by this clause (c).
-------------
(d) The holder of any Note or Commitment shall have the right to grant
participations in such Note or Commitment to any Person on such terms and
conditions as shall be determined by such holder in its sole and absolute
discretion, provided that no such grant of participations shall release any
Lender from its obligations hereunder.
(e) Each Lender shall have the right to assign and pledge all or any
portion of the obligations owing to it under the Credit Documents to any Federal
Reserve Bank or to the United States Department of the Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by the Federal Reserve System,
provided that no such collateral assignment shall release any Lender from its
obligations hereunder.
(f) Each Lender represents and warrants to the Agent, each other
Lender and the Borrowers that in making Loans hereunder such Lender will be
acquiring the Notes issued to it for the purpose of investment and not with the
view to, or for sale in connection with, any distribution in violation of the
Securities Act of 1933, as amended.
8.8 No Agency. The Borrowers are not agents or representatives of
the Agent or any Lender and are not authorized to act on behalf of or bind the
Agent or any Lender in any way.
8.9 No Third Party Beneficiaries. Except as otherwise expressly
stated therein, each Credit Document is intended to be solely for the benefit of
the parties thereto and their respective successors and permitted assigns and is
not intended to and will not confer any rights or benefits on any third party.
8.10 Nonrecourse. The Loans are the obligations solely of the
Borrowers, and the Lenders will have (a) access only to the Collateral and the
----
assets of the Borrowers for repayment, (b) recourse against the Guarantors only
----
to the extent of their obligations under the Guaranty and any other Document to
which they are a party and with respect to any Collateral pledged by them and
(c) recourse to each other Obligor only with respect to any Collateral required
----
to be pledged by it and no claim shall be otherwise made against such other
Obligor under this Agreement.
8.11 Costs, Expenses and Taxes. The Borrowers agree to pay to the
Agent and (as to enforcement only) the Lenders on demand all costs, expenses and
Taxes (other than withholding Taxes (which will be governed by Section 2.11(a),
or Lender Income Taxes) incurred or arising in connection with the preparation,
documentation, negotiation, execution, delivery, funding, syndication,
administration or enforcement of the Credit Documents or the transactions
contemplated thereby or effected pursuant thereto. Such costs, expenses and
Taxes shall include (a) all fees, costs and expenses arising or incurred in
connection with the syndication of the Loans, up to an aggregate of $10,000, (b)
all fees of, and expenses incurred by, Lenders' Counsel and all other advisers
and consultants engaged pursuant to the Credit Documents, (c) all Taxes and all
filing and recordation fees and expenses payable in order to
42
create, attach, perfect, continue and enforce the Liens of the Security
Documents, (d) all fees, costs, expenses, Taxes and insurance premiums incurred
in connection the protection, maintenance, preservation, collection, liquidation
or sale of, or foreclosure or realization upon, any Collateral or RFC
Collateral, and (e) all attorneys' fees and expenses and other costs incurred in
connection with (i) complying with any subpoena or similar legal process
relating in any way to any Credit Document, the Borrowers, the Guarantors,
Obligors or any Subsidiaries thereof, (ii) determining the rights and
responsibilities of the Agent or the Lenders under the Credit Documents, (iii)
any enforcement, amendment or restructuring of, or waiver or consent under,
under any Credit Document, (iv) foreclosure or realization upon any Collateral
or RFC Collateral or (v) any bankruptcy, insolvency, receivership,
reorganization, liquidation or similar proceeding or any appellate proceeding
involving, the Borrowers, the Guarantors, Obligors or any Subsidiaries thereof.
The Borrowers agree to make the payments required under this Section 8.11
------------
regardless of whether the transactions contemplated by the Credit Documents are
consummated and hereby indemnify the Agent and the Lenders for all liabilities
resulting from any failure or delay in making any payment required under this
Section 8.11. The Borrowers' obligations under this Section 8.11 will constitute
------------ ------------
Obligations secured by the Security Document Liens.
8.12 Indemnity. The Borrowers agree to indemnify the Lenders, the
Agent and their respective Affiliates from and against any and all Claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against them or any one or more of them by
any Person (including any Lender) in any way relating to or arising out of (a)
any Credit Document, (b) any action taken or omitted by them or any one or more
of them pursuant to any Credit Document, (c) any claim for brokerage fees or
commissions in connection with any transaction contemplated by the Credit
Documents, (d) any claim based on any misstatement or inaccuracy in or omission
from any disclosure provided by the Borrowers or their representatives in
connection with the syndication of the Loans, (e) the existence, use,
generation, manufacture, handling, processing, storage, release, transportation,
removal, disposal or clean-up thereof of any Hazardous Substance by the
Borrowers, any of their Subsidiaries or any of their respective Affiliates or
(g) any Environmental Claim asserted against or relating to the Borrowers, any
of their Subsidiaries or any of their respective Affiliates or any actual or
alleged violation of any Environmental Law by any of such Persons, provided that
the Borrowers shall not be liable to any Person for any portion of such Claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Person's gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction. Payment by an indemnified party shall not be a condition
precedent to the obligations of the Borrowers under this indemnity. This
Section 8.12 shall survive the Closing Date, the making and repayment of the
------------
Loans and any transfer or assignment of Notes.
8.13 Right of Set-off. Upon the occurrence and during the
continuance of an Event of Default, each Lender is hereby authorized at any time
and from time to time, without notice to the Borrowers or Guarantors, as the
case may be (any such notice being expressly waived by the Borrowers or
Guarantors), to set off and apply any and all deposits (general or special, time
or demand) at any time held and other indebtedness at any time owing by such
Lender (at any of its offices, branches or agencies, wherever located) to or for
the credit or the account of the Borrowers or Guarantors against any and all of
the Obligations, irrespective of
43
whether or not such Lender or the Agent shall have made any demand under any
Note or any other Credit Document, and although such obligations may be
continuing or unmatured. Each Lender agrees to notify the Borrowers and
Guarantors promptly after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lenders under this Section 8.13 are in addition
------------
to all other rights and remedies (including other rights of set-off) which the
Lenders may have.
8.14 Sharing of Payments. Each Lender agrees that if as of any date
it obtains any payment (whether by voluntary payment, realization upon security,
exercise of the right of set-off or banker's lien, counterclaim or cross action
or otherwise) on account of the Note or Notes held by it in excess of its Pro
Rata Share of all payments on account of the Notes obtained by the Lenders, it
will purchase for cash without recourse or warranty from the other Lenders
interests in their Notes in such amounts as shall result in a proportional
participation by all of the Lenders in such excess payment. If any of such
excess payment is subsequently recovered from such purchasing Lender, any
purchases of interests in Notes shall be rescinded and the purchase prices
restored to the extent of such recovery, in each case without interest. The
Borrowers agree that any Lender purchasing an interest in a Note pursuant to
this Section 8.14 may exercise all its rights of payment (including the right of
------------
set-off) with respect to such interest as fully as if such Lender were the
direct creditor of the Borrowers in the amount of such interest. This Section
-------
8.14 is for the sole benefit of the Lenders and shall not confer any rights upon
----
the Borrowers.
8.15 Governing Law. Each Credit Document, except to the extent
provided otherwise therein, will be governed by, and construed in accordance
with, the Laws of the State of New York, other (to the greatest extent
permissible by law) conflict of laws principles that would apply the Laws of
another jurisdiction.
8.16 Waiver of Presentment, Demand, Protest and Notice. The
Borrowers, Guarantors and other Obligors irrevocably waive presentment, demand,
protest, and, to the extent permitted by Applicable Law, notice of any kind in
connection with any Credit Document or any Collateral.
8.17 (Intentionally omitted.)
8.18 Waiver of Jury Trial. THE BORROWERS, GUARANTORS, OBLIGORS, THE
AGENT AND THE LENDERS WAIVE ANY RIGHTS THEY MAY HAVE TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM ANY CREDIT DOCUMENT, ANY
TRANSACTION CONTEMPLATED THEREBY OR EFFECTED PURSUANT THERETO, ANY DEALINGS OR
COURSE OF DEALING BETWEEN OR AMONG THEM RELATING IN ANY WAY TO THE SUBJECT
MATTER OF THE CREDIT DOCUMENTS OR ANY STATEMENTS OR ACTIONS OF ANY OF THEM OR
THEIR AFFILIATES. Each of the parties acknowledges and agrees that this waiver
is a material inducement to enter into the business relationship contemplated by
the Credit Documents and that each has relied on this waiver in entering into
the Credit Documents to which it is a party and will continue to rely on this
waiver in its future dealings with the other parties. The scope of this waiver
is intended to be all-encompassing, and this waiver shall apply to all Claims,
of any nature whatsoever, whether deriving from contract, arising by law, based
on tort or otherwise. THE BORROWERS, GUARANTORS, OBLIGORS, THE AGENT AND
44
THE LENDERS HAVE MADE THIS WAIVER KNOWINGLY AND VOLUNTARILY, AND THIS WAIVER
SHALL BE IRREVOCABLE. THIS WAIVER SHALL ALSO APPLY TO ALL AMENDMENTS,
SUPPLEMENTS, RESTATEMENTS, EXTENSIONS AND MODIFICATIONS OF ANY CREDIT DOCUMENT
AS WELL AS TO ANY CREDIT DOCUMENT ENTERED INTO AFTER THE DATE OF THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
8.19 Consent to Jurisdiction. The Borrowers, Obligors and Guarantors
hereby irrevocably submit to the jurisdiction of any New York state or (to the
extent that such court would have subject matter jurisdiction) United States
federal court sitting in New York City over any action or proceeding arising out
of or relating to any Claim, and the Borrowers, Obligors and Guarantors hereby
irrevocably agrees that all Claims in respect of such action or proceeding may
be heard and determined in such New York state or United States federal court.
The Borrowers, Obligors and Guarantors irrevocably waive any objection which
they may now or hereafter have to the laying of venue in such forums and agrees
not to plead or claim that any such action or proceeding brought in any such New
York state or United States federal court has been brought in an inconvenient
forum. The Borrowers, Obligors and Guarantors irrevocably consent to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to the Borrowers, Obligors and Guarantors at the
respective addresses set forth on the signature pages to this Agreement. The
Borrowers, Obligors and Guarantors agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
Nothing in this Section 8.19 shall affect the right of the Agent and the Lenders
------------
to serve legal process in any other manner permitted by Law or affect the right
of the Agent and the Lenders to bring any action or proceeding against the
Borrowers and Guarantors or their property in the courts of any other
jurisdiction.
8.20 Confidentiality. The Borrowers, Obligors and Guarantors, the
Agent and the Lenders agree to use reasonable efforts to keep confidential the
Credit Documents and each document and all information which is delivered to
them by another party to this Agreement and marked "confidential".
Notwithstanding the foregoing, each party shall be permitted to disclose
confidential documents and information (a) to another party, (b) to its
Affiliates, advisers and consultants, (c) to prospective participants or
prospective purchasers or transferees of interests in Notes and their respective
Affiliates, advisers and consultants, (d) to any Government Instrumentality
having jurisdiction over such party, (e) in response to any subpoena or other
legal process or to comply with Law, (f) to the extent reasonably required in
connection with any litigation to which such party is a party, (g) to the extent
reasonably required in connection with the exercise of its rights or remedies
under any Credit Document, (h) to the extent such documents or information
already have been publicly disclosed by another Person and (i) and in any public
or private offering of debt or equity securities where disclosure is required by
law or is deemed by the Borrowers to be material to the offerees. Each
prospective participant, purchaser and transferee and each adviser and
consultant to which confidential documents or information is disclosed shall be
required to execute a confidentiality agreement containing the provisions of
this Section 8.20.
------------
8.21 Notices. All notices, consents, certificates, waivers, documents
and other communications required or permitted to be delivered to any party
under the terms of any Credit
45
Document (a) must be in writing, (b) must be personally delivered, transmitted
by an internationally recognized courier service or transmitted by facsimile,
and (c) must be directed to such party at its address or facsimile number set
forth on the signature pages to this Agreement. All notices will be deemed to
have been duly given and received on the date of delivery if delivered
personally, three days after delivery to the courier if transmitted by courier,
or the date of transmission with confirmation if transmitted by facsimile,
whichever occurs first, provided that notices to the Agent pursuant to Article 2
---------
or 7 shall not be effective until actually received by the Agent. Any party may
-
change its address or facsimile number for purposes hereof by notice to all
other parties.
46
IN WITNESS WHEREOF, the parties, intending to be legally bound, have
caused this Agreement to be signed on the date first above written.
BORROWERS:
CGX Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxx, XX
--------------------------
Name: Xxxxxxx X. Xxxxx, XX
Title: President
Address:
0000 00xx Xx. XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxx, XX
Facsimile No.: (000) 000-0000
CAIS, Inc.
By: /s/ Xxxxxxx X. Xxxxx, XX
------------------------
Name: Xxxxxxx X. Xxxxx, XX
Title: President
Address:
0000 Xxx Xxxxxx
XxXxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, XX
Facsimile No.: (000) 000-0000
47
Cleartel Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxx, XX
------------------------
Name: Xxxxxxx X. Xxxxx, XX
Title: President
Address:
0000 00xx Xx. XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxx, XX
Facsimile No.: (000) 000-0000
Cleartel Communications Limited Partnership
By: Cleartel Communications, Inc., Its General Partner
By: /s/ Xxxxxxx X. Xxxxx, XX
------------------------
Name: Xxxxxxx X. Xxxxx, XX
Title: President
Address:
0000 00xx Xx. XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxx, XX
Facsimile No.: (000) 000-0000
48
CAIS Limited Partnership
By: CAIS, Inc., Its General Partner
By: /s/ Xxxxxxx X. Xxxxx, XX
------------------------
Name: Xxxxxxx X. Xxxxx, XX
Title: President
Address:
0000 Xxx Xxxxxx
XxXxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, XX
Facsimile No.: (000) 000-0000
LENDERS:
ING (U.S.) Capital Corporation
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: Managing Director
Pro Rata Share of the Aggregate Commitment: 100%
Address:
000 Xxxx 00xx Xxxxxx
--------------------------------------
Xxx Xxxx, XX 00000
--------------------------------------
Attention: Xxxx Xxxxxxxx
--------------
Facsimile No.: (000) 000-0000
--------------
49
AGENT:
ING (U.S.) Capital Corporation
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: Managing Director
Address:
000 Xxxx 00xx Xxxxxx
------------------------------
Xxx Xxxx, XX 00000
------------------------------
Attention: Xxxx Xxxxxxxx
-------------------
Facsimile No.: (000) 000-0000
---------------
OWNERS:
XXXXXXX X. XXXXX, XX.
/s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------
XXXXXXX X. XXXXX, XX
/s/ Xxxxxxx X. Xxxxx, XX
------------------------
XXXXXXX X. XXXXXXXX, XX
/s/ Xxxxxxx X. Xxxxxxxx, XX
---------------------------
XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
------------------
50
XXXXXX XXXX
/s/ Xxxxxx Xxxx
---------------
THE XXXXXXXXX XXXXXXX XXXXX
TRUST
THE XXXXXXX XXXXXXX XXXXX, III
TRUST
THE ALEXANDER XXXXXX XXXXX TRUST
THE XXXXXXX XXXXXX XXXXXXXXX
AUGER, III TRUST
THE XXXXXXXX XXXXXXX XXXXXXXX
XXXXX TRUST
THE XXXXX XXXXXXXXX XXXXX TRUST
THE XXXXXXX-XXXX XXXXX TRUST
THE CONSTANDINOS XXXXXXX
FRANCISCOS AUGER ECONOMIDES
TRUST
THE XXXXXXXXX XXXXXX XXXXX
ECONOMIDES TRUST
THE CONSTANDINA XXXXXXXXX XXXXX
ECONOMIDES TRUST
By: /s/ Xxxxx Xxxxx
-----------------
Xxxxx Xxxxx, Trustee
(As to each Trust)
51
SCHEDULE A
Owners
Xxxxxxx X. Xxxxx, XX
Xxxxxxx X. Xxxxx, Xx.
Xxxxxxxxx Xxxxxxx Xxxxx Trust
Xxxxxxx Xxxxxxx Xxxxx III Trust
Alexander Xxxxxx Xxxxx Trust
Xxxxxxx Xxxxxx Xxxxxxxxx Auger III Trust
Xxxxxxxx Xxxxxxx Xxxxxxxx Xxxxx Trust
Xxxxx Xxxxxxxxx Xxxxx Trust
Xxxxxxx-Xxxx Xxxxx Trust
Constandinos Xxxxxxx Franciscos Auger Economides Trust
Xxxxxxxxx Xxxxxx Xxxxx Xxxxxxxxxx Trust
Constandina Xxxxxxxxx Xxxxx Economides Trust
SCHEDULE B
CGX
CGX Communications
CGX Telecom
Cleartel
Cleartel Communications
CAIS
CAIS Internet
OverVoice
SCHEDULE C
Legal Address and Address of the
Principal Place of Business and
Chief Executive Office of the Borrowers,
Guarantors and Obligors
CAIS, Inc.
0000 Xxx Xxxxxx
XxXxxx, XX 00000
CAIS, LP
0000 Xxx Xxxxxx
XxXxxx, XX 00000
Cleartel Communications, Inc
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Cleartel Communications, LP
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
CGX Communications, Inc.
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx, XX
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx, Xx.
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Auger Trusts
c/o
Xxxxx Xxxxx
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
SCHEDULE X
I. Definitions.
When used in the Credit Documents, the following capitalized defined
terms shall have the respective meanings set forth below:
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing; provided that beneficial ownership of 10% or more
of the Voting Stock of a Person shall be deemed to be control over such Person.
"Agent" means ING (U.S.) Capital Corporation, New York, New York, as
agent for the Lenders, or any successor thereto appointed by the Lenders
pursuant to Section 7.8 of the Credit Agreement.
"Aggregate Commitment" means $7,000,000.00. The Aggregate Commitment
is subject to reduction under Sections 2.8 and 2.9 of the Credit Agreement.
"Applicable Law" means all Laws governing, applicable to, or in any
way related to the execution, delivery, performance or enforcement of the Credit
Documents, the Warrant Agreement or the Warrant Registration Rights Agreement,
or the existence or activities of the Agent, the Lenders, the Noteholders, an
Obligor, a Borrower or a Guarantor.
"Applicable Margin" means five percent (5.00%) per annum.
"Approvals" means any and all approvals, permits, permissions,
licenses, authorizations, consents, certifications, actions, orders, waivers,
exemptions, variances, franchises, filings, declarations, rulings,
registrations, applications and notices to, from or issued by any Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including by way of merger, consolidation or sale/leaseback
transaction), directly or indirectly, in one or a series of related
transactions, to any Person other than a Borrower or Guarantor or a Wholly-Owned
Subsidiary of a Borrower or Guarantor, of (a) any Capital Stock of any
Subsidiary, (b) all or substantially all of the properties and assets of any
division or line of business of a Borrower, Guarantor or any Subsidiary of the
same; or (c) any other properties or assets of a Borrower, Guarantor or any such
Subsidiary, other than in the ordinary course of business. For the purposes of
this definition, the term "Asset Sale" shall not include any transfer of
properties and assets (A) in connection with the Restructuring, (B) the Fair
Market Value of which in the aggregate does not exceed $100,000 in any
transaction or series of related transactions, or (C) which constitutes the
granting of any Permitted Lien.
"Auger Trusts" means each of the Xxxxxxxxx Xxxxxxx Xxxxx Trust, the
Xxxxxxx Xxxxxxx Xxxxx, III Trust, the Alexander Xxxxxx Xxxxx Trust, the Xxxxxxx
Xxxxxx Xxxxxxxxx Auger, III Trust, the Xxxxxxxx Xxxxxxx Xxxxxxxx Xxxxx Trust,
the Xxxxx Xxxxxxxxx Xxxxx Trust, the Xxxxxxx-Xxxx Xxxxx Trust, the Constandinos
Xxxxxxx Franciscos Auger Economides Trust, the Xxxxxxxxx Xxxxxx Xxxxx Xxxxxxxxxx
Trust and the Constandina Xxxxxxxxx Xxxxx Economides Trust.
"Availability Period" means the period beginning on the Closing Date
and ending on the earliest to occur of (i) the date which is 90 days after the
Closing Date or (ii) termination of the entire Aggregate Commitment pursuant to
Section 2.8, 2.9(e) or 6.2 of the Credit Agreement.
"Bankruptcy Event" means, with respect to a Person, (a) the insolvency
of such Person, the inability of such Person to pay its debts as they become
due, or the admission by such Person in writing of its inability to pay its
debts as they become due, (b) a general assignment by such Person for the
benefit of its creditors, (c) any action taken or initiated by such Person for
its winding-up or liquidation or for the appointment of a receiver, trustee,
custodian, or similar officer for it or for any of its assets or revenues, (d)
the commencement by such Person of any bankruptcy, insolvency, reorganization,
or liquidation case, action, or proceeding or any other proceeding for relief
under any bankruptcy Law or any other Law for the relief of debtors or affecting
the rights of creditors generally, (e) the commencement by any Person against
such Person of any case, action, or proceeding described in clause (c) or (d) or
similar in effect which remains undismissed or undischarged for a period of 60
days, (f) any court takes jurisdiction of such Person's assets or revenues and
such action remains undismissed or undischarged for a period of 60 days, or (g)
any corporate, partnership, or other action taken or initiated by such Person
authorizing, approving, consenting to, or indicating acquiescence in any case,
action, or proceeding described in clause (b), (c), (d), (e), or (f).
"Base Rate", on any day, means a rate of interest per annum equal to
the greater of (i) the rate of interest per annum announced from time to time by
the Agent as its base lending rate for U.S. domestic commercial loans, as in
effect on such day, or (ii) the Federal Funds Rate in effect on such day plus
0.5%. The rate announced by the Agent as its base lending rate for U.S.
domestic commercial loans is a reference rate and is not necessarily the lowest
or best rate actually charged by the Agent to any borrower. The Agent may make
loans at rates of interest at, below or above such base lending rate.
"Borrowers" means each of the Persons listed in the first paragraph of
the Credit Agreement as such, and on and after the date of the Restructuring
means, Cleartel and CAIS, successors to Cleartel and CAIS. On and after the
occurrence of the Conversion, the Borrowers shall be deemed to be the "Issuers"
of the Notes.
"Borrower's Counsel" means Xxxxxxx Berlin Shereff Xxxxxxxx, LLP.
"Breakage Costs" means, as to any payment of principal of any Loan
made other than on the last day of the then applicable Interest Period for such
Loan, as a result of prepayment, acceleration of the Loan or for any other
reason, any amounts required to compensate the Lenders for any additional
losses, costs or expenses which any of the Lenders
2
may incur as a result of such payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or redeployment of
deposits or other funds acquired by any such Lender to fund or maintain such
Loans.
"Budget" means, for the period, a budget for the Borrowers and
Guarantors with respect to such period prepared by the Borrowers and Guarantors
in good faith and with due care which sets forth in reasonable detail (i) the
projected revenues and expenses of each of the Borrowers and Guarantors on a
monthly basis, (ii) the amount and timing of expected capital expenditures,
(iii) cash flow projections and working capital needs and (iv) such other
information as the Lenders shall reasonably request.
"Business Day" means any day other than a Saturday, Sunday or day on
which commercial banks in New York City are required or authorized to be closed.
"Capital Lease Obligation" of any Person means any obligation of such
Person and its subsidiaries on a consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as a
capital lease obligation.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) in such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person, together in each case with
any rights (other than Indebtedness convertible into an equity interest),
warrants or options to subscribe for or acquire an equity interest in such
Person.
"Cash Equivalents" means, (i) any evidence of Indebtedness with a
maturity of 180 days or less issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptances with a
maturity of 180 days or less of any U.S. financial institution that is a member
of the Federal Reserve System having combined capital and surplus and undivided
profits of not less than U.S.$500,000,000 and whose short-term debt has a
rating, at the time as of which any investment therein is made, of at least "A-
1" by Standard & Poor's Corporation ("S&P") or at least "P-1" by Xxxxx'x
Investors Service, Inc. ("Moody's") or at least an equivalent rating category of
another nationally recognized securities rating agency; (iv) commercial paper,
maturing not more than 180 days after the date of acquisition, issued by a
corporation (other than a Borrower or Guarantor or an Affiliate or Subsidiary of
a Borrower or Guarantor) organized and existing under the laws of the United
States of America with a rating, at the time as of which any investment therein
is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P and (v) any money market deposit accounts issued or offered by
a U.S. commercial bank having capital and surplus in excess of $500,000,000;
provided that the short term debt of such commercial bank has a rating, at the
time of investment, of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P.
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange
3
Act), other than the Permitted Holders, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time, upon the happening of an event or otherwise),
directly or indirectly, of more than 35% of the total outstanding Voting Stock
of any Borrower or Guarantor or Subsidiary thereof; (b) the Permitted Holders
shall at any time beneficially own less than 90% in the aggregate of the Voting
Stock of the Borrowers and Guarantors in the aggregate held by them on the
Closing Date; (c) other than in connection with the Restructuring, any Borrower
or Guarantor is liquidated or dissolved or adopts a plan of liquidation, (d)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of any Borrower or Guarantor
(together with any new directors whose election to such board or whose
nomination for election by the stockholders of such Borrower or Guarantor was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved), cease for any reason to constitute a
majority of such Board of Directors then in office; (e) any Borrower or
Guarantor consolidates with or merges with or into any Person or sells, conveys,
transfers or leases all or substantially all of its assets (on a consolidated
basis) to any Person, other than in connection with the Restructuring; or (f)
any corporation consolidates with or merges into or with any Borrower or
Guarantor, in any such event, pursuant to a transaction in which the outstanding
Voting Stock of such Borrower or Guarantor is changed into or exchanged for
cash, securities or other property, other than in connection with the
Restructuring and other than any such transaction where the outstanding Voting
Stock of such Borrower or Guarantor is not changed or exchanged at all (except
to the extent necessary to reflect a change in the jurisdiction of incorporation
of such Borrower or Guarantor or where no "person" or "group", other than a
Permitted Holder, owns, immediately after such transaction, directly or
indirectly, more than 35% of the total outstanding Voting Stock of the surviving
corporation).
"Claim" means any claim, suit, demand, proceeding, complaint,
assessment, lien, injunction, order, judgment, notice of non-compliance or
violation, investigation or other action by or before any Government
Instrumentality or any other Person.
"Closing Date" means the date on which the conditions precedent set
forth in Section 3.1 of the Credit Agreement are satisfied and the initial Loan
or Loans are funded.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means the Pledged Shares and all other property, rights
and interests from time to time subject, or purported to be subject, to the
Security Document Liens.
"Commitment" means the commitment of each Lender to make Loans set
forth in Section 2.1(a) of the Credit Agreement.
"Consolidated Net Worth" means with respect to any Person at any date,
the consolidated stockholders' equity of such Person less the amount of such
stockholders' equity attributable to Redeemable Capital Stock of such Person and
its subsidiaries, determined in accordance with GAAP.
4
"Contractual Obligation," as applied to any Person, means any
provision of any security issued by such Person or of any indenture, mortgage,
deed of trust, lease, contract, undertaking, agreement or instrument to which
such Person is a party or by which it or any of its property is bound or to
which it or any of its property is subject.
"Conversion" means the conversion of Loans into Notes pursuant to
Article 2A of the Credit Agreement.
"Conversion Date" means March 4, 1999.
"Credit Agreement" means the Credit Agreement dated September 4, 1998,
by and among the Borrowers and the Owners referred to therein and the Lenders,
Noteholders and Agent, as it may be amended, supplemented or otherwise modified
from time to time.
"Credit Agreement Termination Date" means the first date on which (i)
no Lender shall have any Commitment under the Credit Agreement, (ii) no
principal of or interest on any Loan or Note, and no fee payable pursuant to
Section 2.5 of the Credit Agreement, shall be unpaid and (iii) no other
Obligations shall be due and payable.
"Credit Documents" means the Credit Agreement (including this Schedule
X), the Loans, the Notes, the Security Documents, the Guaranty, the
Subordination Agreement, and all other agreements, guaranties and instruments
evidencing, securing or relating to the Loans, the Notes or the Collateral.
"Default" means any event which, with the passage of time or the
giving of notice or both, would be an Event of Default.
"Default Rate" is defined in Section 2.3(d) of the Credit Agreement.
"Environmental Claim" means any Claim in any way relating to any
Hazardous Substance or Environmental Law and includes any Claim asserted by a
Government Instrumentality or any other Person for damages, injury, clean-up,
remediation, contribution or indemnity.
"Environmental Laws" means all Laws and Approvals in any way relating
to the protection of human health or safety, the environment or natural
resources or to any Hazardous Substance or the existence, use, generation,
manufacture, handling, processing, storage, release, transportation, removal,
disposal or clean-up thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate", with respect to any Person, means any member
(whether or not incorporated) of a group which is under common control (within
the meaning of the regulations under Section 414 of the Code, and of which such
Person is a member.
"Estimated Balance Sheets" means, as of any date, the estimated
consolidated balance sheets of each of the Borrowers and Guarantors.
5
"Event of Default" means an event described in Section 6.1 of the
Credit Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any properties or assets,
the sale value, as determined by the applicable Board of Directors of the
Borrowers and Guarantors, acting in good faith, which would reasonably be
expected to be obtained in an arm's-length transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided, however, that, with respect to
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any transaction or related series of transactions which involves an asset or
assets in excess of $250,000 in the aggregate, such determination shall be
evidenced by resolutions of the majority of disinterested members of the Boards
of Directors of the respective Borrowers and Guarantors delivered to the Agent.
"Federal Funds Rate", on any day, means a rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers as
published for such day (or if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
federal funds brokers of recognized standing selected by the Agent.
"Financing Statements" means all financing statements on Form UCC-1
and all similar documents and instruments executed, filed or recorded for the
purpose of perfecting Liens on the Collateral.
"First-Priority" when used with respect to any Security Document Lien
on any Collateral, means that, under Applicable Law, such Security Document Lien
on such Collateral is subordinate to no Liens.
"First Union Loan Agreement" means the Business Loan and Security
Agreement dated as of May 10, 1996 among CAIS, Inc., Capital Area Internet
Service, Inc., Xxxxxxx X. Xxxxx, XX and First Union National Bank of Virginia.
"Funding Date" means the LIBOR Business Day on which a Loan is funded,
the Restructuring Date and the Conversion Date in the event of a Conversion
pursuant to the Credit Agreement.
"GAAP" means generally accepted accounting principles, consistently
applied, as in effect from time to time in the United States.
"Government Instrumentality" means any nation, government, province,
state, or any political subdivision, instrumentality, ministry, department,
agency, court, tribunal, authority, corporation, commission or other body or
entity of, or under the direct or indirect control of, any of the foregoing,
including any central bank or other fiscal, monetary or other authority.
6
"Guarantor" means, on and after the Restructuring Date, CGX
Communications, Inc. and any other Person that becomes a party to the Guaranty.
"Guaranty" means the Guaranty dated as of the Restructuring Date made
by the Guarantors to the Agent for the benefit of the Lenders.
"Hazardous Substance" means any hazardous substance or material, toxic
substance or material, pollutant, waste, chemical, contaminant, degradation by-
product, asbestos, petroleum, hydrocarbon or petroleum or hydrocarbon product,
including any "hazardous substance", "hazardous material", "toxic substance",
"toxic material", "hazardous waste" or "toxic pollutant", as such terms are
defined or identified in any Environmental Law.
"Indebtedness" means with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities arising in the ordinary course of business, (ii) all
obligations of such Person evidenced by bonds, notes, debentures, guarantees,
letters of credit or other similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (unless the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables arising in
the ordinary course of business, (iv) all obligations under Interest Rate
Agreements of such Person, (v) all Capital Lease Obligations of such Person or
the balance deferred and unpaid of the purchase price of any property, (vi) all
Indebtedness referred to in clauses (i) through (v) above of other Persons and
all dividends of other Persons, the payment of which is secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien, upon or with respect to property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
(vii) all Redeemable Capital Stock issued by such Person valued at the greater
of its voluntary or involuntary maximum fixed repurchase price plus accrued and
unpaid dividends, (viii) any amendment, supplement, modification, deferral,
renewal, extension, refunding or refinancing of any liability of the types
referred to in clauses (i) through (vii) above. and (ix) liabilities in respect
of unfunded vested benefits under Plans covered by Title IV of ERISA. For
purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the Fair Market Value of such Stock, such Fair Market Value to be
determined in good faith by the board of directors of the issuer of such Stock.
In no event shall "Indebtedness" include any trade payable or other current
liabilities arising in the ordinary course of business excluding the current
maturity of any obligation which would otherwise constitute Indebtedness. The
amount of any item of Indebtedness shall be the amount of such Indebtedness
properly classified as a liability on a balance sheet prepared in accordance
with GAAP.
7
"Information Memorandum" means the Information Memorandum dated July,
1998 relating to the proposed issuance by one or more of the Borrowers of
$20,000,000 in equity.
"Initial Date" means, in the case of a Lender, the date hereof, and,
in the case of a successive holder of a Note, the date on which such holder
becomes a holder of a Note.
"Interest Payment Date" means any date on which interest is payable on
the Loans pursuant to Section 2.3(c) of the Credit Agreement and on the Notes
pursuant to Section 2A.2 of the Credit Agreement.
"Interest Period" means, (a) as to any Loan, subject to Section 2.3(b)
of the Credit Agreement, the period commencing on the date of the funding of
such Loan and ending on the numerically corresponding day in the calendar month
that is one, two or three months thereafter, as so elected by the Borrower in
the Notice of Borrowing in respect of such Loan, and each period thereafter
commencing on the last day of the then current Interest Period and having a
duration of one, two or three months, as applicable (except that each Interest
Period that commences on the last day of a calendar month (or on any day for
which there is no numerically corresponding day for the appropriate subsequent
calendar month) shall end on the last day of the appropriate subsequent calendar
month), and (b) as to any Note converted pursuant to Article 2A of the Credit
Agreement, subject to Section 2.3(b) of the Credit Agreement, the quarterly
periods ending on May 31, August 31, November 30 and February 28 in each year,
commencing on the Conversion Date, provided that:
(i) the first Interest Period with respect to each Loan other than
the initial Loan shall commence on the Funding Date of such subsequent Loan and
shall end on the last day of the Interest Period as established above;
(ii) the last Interest Period for a Loan or converted Note commencing
prior to a Maturity Date shall end on the Maturity Date; and
(iii) with respect to interest accrued on any overdue amounts,
Interest Period means such period as the Agent shall determine pursuant to
Section 2.3(d).
"Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Interest Rate Determination Date" means the date for calculating
LIBOR for purposes of determining the interest rate applicable to a Loan during
a particular Interest Period. The Interest Rate Determination Date shall be the
second LIBOR Business Day prior to the first day of the related Interest Period
for a Loan. In respect of converted Notes, the Interest Rate Determination Date
shall be the second Business Day prior to the Conversion Date.
"Internet Service Business" means any business whose principal
business is operating an Internet connectivity or Internet enhancement service
as it exists from time to time, including, without limitation, dial up or
dedicated Internet service, web hosting or co-location
8
services, security solutions, the provision and development (including the
intellectual property related thereto) of software in connection therewith,
configuration services, electronic commerce, intranet solutions, data backup and
restoration, business content and collaboration, communications tools or network
equipment products or services (including without limitation, any business
conducted by the Borrowers or any Subsidiary on the date of the Credit
Agreement), and any business reasonably related to the foregoing. A good faith
determination by a majority of the Boards of Directors of the Borrowers as to
whether a business meets the requirements of this definition shall be
conclusive, absent manifest error.
"Issuer" means, on and after the occurrence of the Conversion,
Cleartel, CAIS and each of their successors and assigns.
"Law" means any law, statute, act, legislation, xxxx, enactment,
policy, treaty, international agreement, ordinance, judgment, injunction, award,
decree, rule, regulation, interpretation, determination, requirement, writ or
order of any Government Instrumentality.
"Lender Income Taxes" means all normal and customary net income taxes
and franchise taxes imposed on the Agent or any Lender by (i) the United States,
(ii) any jurisdiction in which the Agent or such Lender is organized or has its
principal office or is otherwise resident for tax purposes, (iii) the
jurisdiction in which the Agent performs its services hereunder or in which such
Lender books or funds its portion of the Loans or (iv) a political subdivision
of any of the foregoing.
"Lenders" means the lenders named on the signature pages to the Credit
Agreement and any successors, assigns and transferees thereof. On and after the
occurrence of the Conversion, the term "Lenders" shall be deemed to refer to
Noteholders.
"LIBOR", with respect to an Interest Period, means the rate of
interest per annum equal to (i) the arithmetic mean (rounded upward, if
necessary, to the nearest 1/16 of 1%) of the offered rates for deposits in U.S.
Dollars, for a period approximately equal to such Interest Period and in an
amount approximately equal to the average principal amount of the applicable
Loans, quoted on the second LIBOR Business Day prior to the first day of such
Interest Period as such rate appears on the display designated as page "3750" on
the Telerate Service (or such other page as may replace page "3750" on the
Telerate Service or such other service as may be nominated by the British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits)
("Telerate Page 3750") as of 11:00 a.m. (London time) on such date or (ii) if,
as of 11:00 a.m. (London time) on any such date fewer than two such rates appear
on Telerate Page 3750, the arithmetic mean (calculated as mentioned above) of
the respective rates per annum at which deposits in U.S. Dollars are offered by
leading banks in the London interbank market at approximately 11:00 a.m. (London
time) on the second LIBOR Business Day prior to the first day of such Interest
Period in an amount approximately equal to the principal amount of the Loans to
which such Interest Period applies and with a maturity comparable to such
Interest Period.
"LIBOR Business Day" means any Business Day which is also a day for
trading by and between banks in U.S. Dollar deposits in the London interbank
market.
9
"Lien" means any mortgage or deed of trust, pledge, lien (statutory or
otherwise), security interest, easement, hypothecation, or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired. A Person shall be deemed to own
subject to a Lien any property which such Person has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement, other than any lease properly
classified as an operating lease under GAAP and intellectual property licensing
arrangements.
"Loan" means a loan made to the Borrowers pursuant to Section 2.2(a)
or 2.2(b) of the Credit Agreement and upon the occurrence of the Conversion,
shall be deemed to be the Notes referred to in Article 2A of the Credit
Agreement.
"Majority Lenders" means, at any time, the holders of at least a
majority of the unpaid principal amount of the Loans then outstanding, or if no
Loans are then outstanding, Lenders having at least a majority of the Aggregate
Commitment and, on and after the occurrence of the Conversion means the holders
of at least a majority of the unpaid principal amount of Notes then outstanding.
Notes held by the Borrowers, Guarantors or Obligors shall not be counted in the
determination of a majority of unpaid principal.
"Material Adverse Effect" means a material adverse effect on or
affecting (i) the business (including, without limitation, the ability to
generate cash flow in an amount sufficient to repay the Loans, the Notes, the
Guaranty and other amounts due under the Credit Documents on or before the
applicable Maturity Date), the condition (financial or other), prospects,
management, property, assets, stockholders' equity or results of operations of
the Borrowers and Guarantors (on a combined basis) or on the value of the
Collateral, (ii) the ability of the Borrowers or Guarantors, or any other
Obligor to observe the provisions of, and to perform its Obligations under, any
Credit Document to which it is a party, (iii) the rights or interests of the
Agent or any Lender under any Credit Document, or (iv) the validity, attachment,
perfection, priority or enforceability of any Lien granted or purported to be
granted under any Security Document.
"Maturity Date" means, with respect to a Loan, March 4, 1999 and
(after the occurrence of the Conversion) with respect to the converted Notes,
the date which numerically corresponds to the Conversion Date and which falls in
the sixtieth (60) month subsequent to such Conversion Date.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof (without duplication in respect of all Asset Sales)
in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or Cash Equivalents (except to the extent that
such obligations are financed or sold with recourse to a Borrower, Guarantor or
any Subsidiary) net of (i) brokerage commissions and other reasonable fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale, (ii) provisions for all taxes payable as a result of such
Asset Sale, (iii) payments made to retire Indebtedness where payment of such
Indebtedness is secured by the assets or properties that are the subject of such
Asset Sale, (iv) amounts required to be paid to any Person (other than a
Borrower, Guarantor or any Subsidiary) owning a beneficial interest in the
assets subject to the
10
Asset Sale and (v) appropriate amounts to be provided by a Borrower, Guarantor
or any Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset Sale and retained by a
Borrower, Guarantor or any Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Agent. "Net Cash
Proceeds" shall not include any proceeds of an Asset Sale to the extent that
reinvestment of such proceeds in assets useful in the business conducted by the
selling entity is contemplated by the Budget.
"Note" means a promissory note, in the form of Exhibit A to the Credit
Agreement, executed and delivered by the Borrowers, payable to the order of,
prior to the Conversion Date, a Lender and, payable to the order of, on and
after the Conversion Date, a Noteholder, or Noteholders, as applicable.
"Noteholder" means the Person in whose name a Note is registered in
the registers maintained by the Issuers pursuant to the Credit Agreement.
"Notice of Borrowing" means a notice in the form of Exhibit C to the
Credit Agreement.
"Obligations" means all principal, premium, interest (including
interest which would accrue but for the filing of a petition in bankruptcy),
fees, expenses, and liabilities, guarantees and obligations of any kind, whether
monetary or nonmonetary, owing from the Borrowers, the Issuers, the Guarantors
or the other Obligors to the Agent or any Lender or Noteholder or due to be
performed by the Borrowers, the Issuers, the Guarantors or the other Obligors
for the benefit of the Agent or any Lender or Noteholder under or in connection
with any Credit Document.
"Obligor" means each Person providing Collateral under the Security
Documents or having any other Obligations.
"Officer's Certificate" means a certificate signed by the President,
the Chief Executive Officer, the Chief Financial Officer or a Vice President
(regardless of Vice Presidential designation), and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of a Borrower or
any Guarantor, as the case may be, and in form and substance reasonably
satisfactory to, and delivered to, the Agent.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for a Borrower, a Guarantor or the Agent, and which opinion shall be in
form and substance reasonably satisfactory to the Agent.
"OverVoice" means the patented and patent pending proprietary
technology called OverVoice, which enables the transmission of voice, data and
video simultaneously over traditional copper wires.
"OverVoice License" means the license granted to CAIS by Inline
Connection Corporation in connection with the "OverVoice" technology.
11
"Owners" means the parties listed on Schedule I to the Pledge and
Security Agreement.
"Permitted Holder" means Xxxxxxx X. Xxxxx, Xx., Xxxxxxx G; Xxxxx, II,
the Auger Trusts and any entity controlled by either of them.
"Permitted Liens" is defined in Section 5.2(c) of the Credit
Agreement.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, limited liability partnerships,
general partnerships, joint-stock companies, joint ventures, associations,
companies, trusts, banks, trust companies and other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof.
"Plan" means a pension plan subject to the provisions of Title IV of
ERISA and in respect of which the Borrower or any ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Pledge and Security Agreement" means the Pledge and Security
Agreement dated as of the Closing Date, by and among the Borrowers, the
Guarantors, the other Obligors and the Agent, as it may be amended, supplemented
or otherwise modified from time to time.
"Pledged Shares" means the shares of stock of, and other equity
interests in, the Borrowers and Guarantors that are pledged to the Agent for the
benefit of the Lenders and the Noteholders, as the case may be, pursuant to the
Pledge and Security Agreement.
"Pro Rata Share" means with respect to each Lender, such Lender's pro
rata share (expressed as a percentage) of the Aggregate Commitment as set forth
on the signature pages to the Loan Agreement (as such may be amended or deemed
amended).
"Receivables Sale Agreement" means the Receivables Sale Agreement
dated as of June 26, 1997, by and between Cleartel Communications, Inc.,
Cleartel Communications Limited Partnership and RFC.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed prior to the Maturity Date of the
principal of the Loans or Notes, as applicable, or is redeemable at the option
of the holder thereof at any time prior to such Maturity Date, or is convertible
into or exchangeable for debt securities at any time prior to any such Maturity
Date at the option of the holder thereof.
"Required Approvals" means all Approvals required in connection with
the execution, delivery, performance admission into evidence or enforcement of
the Credit Documents.
12
"Restructuring" has the meaning ascribed thereto in Section 5.1(n) of
the Credit Agreement.
"Restructuring Date" means the date the Restructuring becomes
effective.
"RFC" means Receivables Funding Corporation.
"RFC Collateral" means the property and assets that are subject to a
Lien created under the Receivables Sale Agreement.
"Security Document Liens" means the Liens created, or purported to be
created, under the Security Documents.
"Security Documents" means the Pledge and Security Agreement, the
Trademark Security Agreement, the Financing Statements and all other agreements
and instruments referred to therein or executed by the Borrowers, the
Guarantors, the other Obligors or any other Person to provide security for the
Loans, the Notes and the other Obligations under the Credit Documents.
"Shareholder Promissory Notes" means the following promissory notes:
(i) Promissory Note dated August 1, 1996 from Cleartel LP to Xxxxxxx X. Xxxxx,
Xx. in the original principal amount of $2,100,000 of which an aggregate of
$2,100,000 remains outstanding as of August 31, 1998; (ii) Promissory Note dated
May 8, 1996 from CAIS to Xxxxxxx X. Xxxxx, Xx. in the original principal amount
of $1,000,000 of which an aggregate of $633,026 remains outstanding as of August
31, 1998; (iii) Promissory Note dated February 27, 1998 from CGX to Xxxxxxx X.
Xxxxx, Xx. in the original principal amount of $500,000 of which an aggregate of
$500,000 remains outstanding as of August 31, 1998; (iv) Promissory Note dated
July 9, 1998 from CGX to Xxxxxxx X. Xxxxx, Xx. in the original principal amount
of $500,000 of which an aggregate of $500,000 remains outstanding as of August
31, 1998; (v) Promissory Note dated March 15, 1996 from CAIS to Xxxxxxx X.
Xxxxx, XX in the original principal amount of $100,000 of which an aggregate of
$100,000 remains outstanding as of August 31, 1998; and (vi) Promissory Note
dated October 31, 1997 from CAIS to Xxxxxxx X. Xxxxx, XX in the original
principal amount of $250,000 of which an aggregate of $250,000 remains
outstanding as of August 31, 1998.
"Short Term Indebtedness" means Indebtedness with a maturity,
determined as of its date of issuance or incurrence, of 12 months or less.
"Subordination Agreement" means the Subordination Agreement dated
September 4, 1998 by and among CGX , CAIS, Cleartel LP, Xxxxxxx X. Xxxxx XX and
Xxxxxxx Xxxxx, Xx.
"Subsidiary" means, with respect to any Person, (A)(i) any
corporation, association or other business entity of which outstanding Capital
Stock having at least the majority of the votes entitled to be cast in the
election of directors is owned, directly or indirectly, by such Person and/or
any one or more Subsidiaries of such Person, or (ii) of which at least a
majority of voting interest is owned, directly or indirectly, by such Person
and/or one or more Subsidiaries of such Person; (B) any general partnership,
joint venture or similar entity, of
13
which at least a majority of voting interest is owned, directly or indirectly,
by such Person and/or any one or more other Subsidiaries of such Person or; and
(C) any limited partnership of which such Person or any Subsidiary of such
Person is a general partner.
"Tax" means any tax, levy, imposition, impost, fee, assessment,
deduction, charge or withholding imposed by any Government Instrumentality, as
well as any interest, penalty or assessment payable or imposed with respect to
any of the foregoing.
"Telecommunications Business" means any business whose principal
business is (i) transmitting, providing services relating to or developing
applications for the transmission of, voice, video or data through owned or
leased wireline or wireless transmission facilities, (ii) creating, developing,
constructing, installing, repairing, maintaining or marketing communications-
related systems, network equipment and facilities, software and other products,
(iii) creating, developing, producing or marketing audiotext or videotext, (iv)
marketing (including direct marketing and telemarketing), (v) an Internet
Service Business, (vi) evaluating, participating in or pursuing any other
business that is primarily related to those identified in the foregoing clauses
(i), (ii), (iii), (iv) or (v) above (in the case of clauses (iii) and (iv),
however, in a manner consistent with the Borrowers' manner of business on the
date of the Credit Agreement), and shall, in any event, include all businesses
in which the Borrowers or any of their Subsidiaries is engaged on the date of
the Credit Agreement; provided that the determination of what constitutes a
Telecommunications Business shall be made in good faith by the Boards of
Directors of the Borrowers.
"Termination Event" means (i) a Reportable Event described in Section
4043 of ERISA and the regulations issued there under (other than a Reportable
Event not subject to the provision for 30-day notice to the Pension Benefit
Guaranty Corporation under such regulations), or (ii) the withdrawal of a Person
from a Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, or (iii) 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 (iv) the institution of proceedings to terminate
a Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA,
or (v) 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.
"Trademark Security Agreement" means the Trademark Security Agreement
dated as of the Closing Date among the Shareholders, the Owners, the Lenders and
the Agent.
"UCC" means the Uniform Commercial Code in effect in the State of New
York, as amended.
"Voting Stock" means Capital Stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of a corporation (irrespective of whether or not at the time Capital
Stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
14
"Warrant Agreement" means the Warrant Agreement dated as of the
Closing Date among CGX Communications, Inc., Cleartel Communications, Inc.,
CAIS, Inc. and the Agent.
"Warrant Issuers" has the meaning ascribed thereto in the Warrant
Agreement.
"Warrant Registration Rights Agreement" means the Warrant Registration
Rights Agreement dated as of the Closing Date among CGX Communications, Inc.,
Cleartel Communications, Inc., CAIS, Inc. and the Agent.
"Warrants" means the Warrants issued to the Lenders and Noteholders,
as the case may be, pursuant to the Warrant Agreement dated as of September 4,
1998.
"Wholly-Owned Subsidiary" means any Subsidiary of a Person of which
100% of the outstanding Capital Stock is owned by such Person or by one or more
Wholly-Owned Subsidiaries of such Person or by such Person and one or more
Wholly-Owned Subsidiaries of such Person.
II. Rules of Construction.
The following rules of construction shall apply in the Credit
Documents:
(i) titles and headings are for convenience only and will not be
deemed part of the Credit Documents for purposes of interpretation;
(ii) unless otherwise stated, references in a Credit Document to
"Sections", "Exhibits" and "Appendices" refer, respectively, to Sections of, and
Exhibits and Appendices to, such Credit Document;
(iii) including" means "including, but not limited to", and "include"
or "includes" means "include, without limitation" or "includes, without
limitation";
(iv) "month" means "calendar month";
(v) "hereunder", "herein", "hereto" and "hereof", when used in a
Credit Document, refer to such Credit Document and not to a particular Section
or clause of such Credit Document;
(vi) in the case of defined terms, the singular includes the plural
and vice versa;
(vii) unless otherwise indicated, all accounting terms not
specifically defined shall be construed in accordance with U.S. GAAP;
(viii) unless otherwise indicated, each reference to a particular Law
is a reference to such Law it may be amended, modified, extended, restated or
supplemented from time to time, as well as to any successor Law thereto; and
15
(ix) unless otherwise indicated, each reference to a particular
agreement is a reference to such agreement it may be amended, modified,
extended, restated or supplemented from time to time, as well as to any
successor agreement thereto.
16
EXHIBIT A
SENIOR SECURED NOTE
-------------------
U.S.$[ ] New York, New York
[ ], 1998
FOR VALUE RECEIVED, the undersigned CGX COMMUNICATIONS, INC., a
Delaware corporation ("CGX"), CLEARTEL COMMUNICATIONS, INC., a District of
Columbia corporation ("Cleartel"), CLEARTEL LIMITED PARTNERSHIP, a District of
Columbia limited partnership ("Cleartel LP"), CAIS, INC., a Virginia corporation
("CAIS"), CAIS LIMITED PARTNERSHIP, a Virginia limited partnership ("CAIS LP",
CGX, Cleartel, Cleartel LP, CAIS and CAIS LP are referred to, individually and
collectively, as the "Borrowers"), jointly and severally hereby promise to pay
to the order of [ ], with a place of business at [ ] (hereinafter,
together with any other holder hereof, referred to as the "Lender"), by wire
transfer to the Account of ING (U.S.) CAPITAL CORPORATION, NEW YORK, NEW YORK,
as Agent (as defined in the Credit Agreement referred to below), ABA No. [ ],
attention: [ ], Reference: [ ], or at such other place or places
and to such other account or accounts as the Agent may direct from time to time
by notice to the Borrowers in accordance with the Credit Agreement (as
hereinafter defined), in lawful money of the United States in immediately
available funds, the principal amount equal to [ ] UNITED STATES DOLLARS
(U.S.$[ ]) or, if less, the actual outstanding principal amount of
advances under the Loans (as defined in the Credit Agreement) advanced or issued
for the account of the Borrowers by the Lender pursuant to the Credit Agreement,
payable, subject to the fourth paragraph hereof, on the Maturity Date, as
provided in Section 2.9 of the Credit Agreement.
Interest shall accrue on the outstanding principal of the amount
hereof in accordance with the Credit Agreement and shall be payable on such
dates and in such amounts as determined in accordance with the Credit Agreement.
Notwithstanding any other provision of the Credit Documents (as defined in the
Credit Agreement) to the contrary, if the rate of interest on the obligation of
the Borrowers under this Note shall at any time exceed the highest rate
permitted by Applicable Law (as defined in the Credit Agreement), the rate of
interest on such obligation shall be equal to the highest rate permitted under
Applicable Law.
At the time a Loan is made, the Lender is authorized to make a
notation on the schedule attached hereto indicating the date, the amount of the
Lender's Pro Rata Share (as defined in the Credit Agreement) and the interest
rate of such Loan. Absent manifest error, the information set forth in such
schedule shall be prima facie evidence of the outstanding principal amount of
this Note and of the interest due thereon. Failure to
make any such notation shall not limit or affect the obligations of the
Borrowers under this Note or any other Credit Document.
This Note is issued to evidence Loans made by the Lender to the
Borrowers pursuant to Article 2 of the Credit Agreement dated as of August ___,
1998 (as the same may be amended, supplemented or otherwise modified from time
to time, the "Credit Agreement") by and among the Borrowers, the Owners listed
on Schedule A thereto, the Lender, the other financial institutions party
thereto as the Lenders and the Agent, as to which reference is hereby made for a
statement of the terms , conditions and covenants under which the indebtedness
evidenced hereby was and will be made and is to be repaid, including, without
limitation, those related to the acceleration of the indebtedness represented
hereby upon the occurrence and during the continuation of an Event of Default
(as defined in the Credit Agreement). Loans evidenced by this Note and repaid
(mandatory and voluntary) may not be reborrowed. This Note is subject to
prepayment as provided in the Credit Agreement. Payment of this Note is secured
by the Collateral (as defined in the Credit Agreement), including all Pledged
Shares (as defined in the Credit Agreement) and other property pledged pursuant
to the Security and Pledge Agreement (as defined in the Credit Agreement), the
Trademark Security Agreement (as defined in the Credit Agreement) and by the
Guaranty (as defined in the Credit Agreement).
On and after the Conversion Date (as defined in the Credit Agreement),
this Note shall be automatically converted into a Note containing the terms and
subject to the conditions set forth in Article 2A of the Credit Agreement, the
Borrowers shall continue to be obligated hereon as "Issuers" and the Guaranty
shall continue in full force and effect with respect hereto.
The Lender shall not be required to look to the Collateral for payment
of this Note, but may proceed against the Borrowers, in such manner as it deems
desirable. None of the rights or remedies of the Lender hereunder are to be
deemed waived or affected by failure or delay on the part of the Lender to
exercise the same. All remedies conferred upon the Lender by this Note or any
other Credit Document shall be cumulative and none is exclusive, and such
remedies may be exercised concurrently or consecutively at the Lender's option.
The Borrowers hereby waive presentment, demand for payment, protest
and notice of protest, notice of dishonor and all other notices in connection
with this Note.
This Note will be governed by, and construed in accordance with, the
Laws of the State of New York, other than (to the greatest extent permissible by
Law) any rule of Law that would cause the application of the Laws of another
jurisdiction.
WITNESS the hand of the Borrowers.
CGX COMMUNICATIONS, INC.
By:_________________________________
Name:
Title:
CLEARTEL COMMUNICATIONS, INC.
By:_________________________________
Name:
Title:
CLEARTEL COMMUNICATIONS LIMITED PARTNERSHIP
By: Cleartel Communications, Inc.
By:_________________________________
Name:
Title:
CAIS, INC.
By:_________________________________
Name:
Title:
CAIS LIMITED PARTNERSHIP
By: CAIS, Inc.
By:_________________________________
Name:
Title:
EXHIBIT A
SCHEDULE
--------
Date of Loan or Repayment Amount of Loan Amount of Repayment Balance
------------------------- --------------- -------------------- -------
