EXECUTION COPY
GUARANTY
THIS GUARANTY ("Guaranty"), dated as of June 30, 1999 is made by CAIS INTERNET,
INC., a Delaware corporation ("Guarantor"), in favor of CISCO SYSTEMS CAPITAL
CORPORATION, a Nevada corporation ("Lender").
CAIS, Inc., a corporation organized and existing under the laws of the state of
Virginia ("Company"), and Lender are parties to that certain Agreement dated as
of June 30, 1999 (as amended, modified, renewed or extended from time to time,
the "Agreement"). Guarantor has agreed to guarantee the indebtedness and other
obligations of Company to Lender under or in connection with the Agreement as
set forth herein. Guarantor will derive substantial direct and indirect benefits
from the extension of credit to Company (which benefits are hereby acknowledged
by the Guarantor). All capitalized terms not defined herein shall have the
meanings assigned to them in the Agreement. Accordingly, to induce Lender to
extend credit to Company, and in consideration thereof, Guarantor hereby agrees
as follows:
1. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to
Lender the full and prompt payment when due (whether at stated maturity,
declaration, acceleration, demand or otherwise) and performance of the
indebtedness, liabilities and other obligations of Company to Lender under or in
connection with the Agreement and any and all other documents and instruments
executed or delivered in connection therewith (each a "Document" and,
collectively, the "Documents"), including all unpaid principal, all interest
accrued thereon, all fees due to Lender and all other amounts payable by Company
to Lender thereunder or in connection therewith. The terms "indebtedness,"
"liabilities" and "obligations" are used herein in their most comprehensive
sense and include any and all advances, debts, obligations and liabilities, now
existing or hereafter arising, regardless of by what instrument, agreement,
contract or entry in Lender's accounts they may be evidenced, or whether
evidenced by any instrument, agreement, contract or entry in Lender's accounts,
whether voluntary or involuntary and whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
recovery upon such indebtedness, liabilities and obligations may be or hereafter
become unenforceable under the Bankruptcy Reform Act of 1978 (the "Bankruptcy
Code") or other applicable law. The foregoing indebtedness, liabilities and
other obligations of Company, and all other indebtedness, liabilities and
obligations to be paid or performed by Guarantor in connection with this
Guaranty (including any and all amounts due under Section 12 hereof), shall
hereinafter be collectively referred to as the "Obligations."
2. Liability of Guarantor. The liability of Guarantor under this Guaranty
shall be irrevocable, absolute, independent and unconditional, and shall not be
affected by any circumstance which might constitute a discharge of a surety or
guarantor other than the indefeasible payment and performance in full of all
Obligations. In furtherance of the foregoing and without limiting the generality
thereof, Guarantor agrees as follows: (i) Guarantor's liability hereunder shall
be the immediate, direct, and primary obligation of Guarantor and shall not be
contingent upon Lender's exercise or enforcement of any remedy it may have
against Company or any other person or entity ("Person"), or against any
collateral for any Obligations; (ii) this Guaranty is a guaranty of payment when
due and not of collectibility; (iii) Guarantor's payment of a portion, but not
all, of the Obligations shall in no way limit, affect, modify or abridge
Guarantor's liability for any portion of the Obligations remaining unsatisfied;
and (iv) Guarantor's liability with respect to the Obligations shall remain in
full force and effect without regard to, and shall not be impaired or affected
by, nor shall Guarantor be exonerated or discharged by, (A) any insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition, assignment for
the benefit of creditors, liquidation, winding up or dissolution of Company,
Guarantor, any other guarantor or any other Person; (B) any limitation,
discharge, or cessation of the liability of Company, any other guarantor or any
other Person for any Obligations due to any statute, regulation or rule of law,
or any invalidity or unenforceability in whole or in part of any of the
Obligations; (C) any merger, acquisition, consolidation or change in structure
of Company, Guarantor or any other guarantor or Person, or any sale, lease,
transfer or other disposition of any or all of the assets or shares of Company,
Guarantor, any other guarantor or other Person; (D) any assignment or other
transfer, in whole or in part, of Lender's interests in and rights under this
Guaranty; (E) any claim, defense, counterclaim or setoff, other than that of
prior performance, that Company, Guarantor, any other guarantor or other Person
may have or assert, including any defense of incapacity or lack of corporate or
other authority to execute or deliver any Document or this Guaranty or any other
document related thereto; (F) any direction of application of payment to
Company, Guarantor, any other guarantor or other Person; and (G) Lender's vote,
claim, distribution, election, acceptance, action or inaction in any bankruptcy
case related to the Obligations.
3. Consents. Guarantor hereby consents and agrees that, without notice to or
further assent from Guarantor: (i) the time, manner, place or terms of any
payment under any Document may be extended or changed, by a modification or
renewal of any Document or otherwise; (ii) the time for Company's performance of
or compliance with any term, covenant or agreement on its part to be performed
or observed under any Document may be extended, or such performance or
compliance waived, or failure in or departure from such performance or
compliance consented to, all in such manner and upon such terms as Lender may
deem proper; (iii) Lender may discharge or release, in whole or in part, any
other guarantor or any other Person liable for the payment and performance of
all or any part of the Obligations, and may permit or consent to any such action
or any result of such action, and Lender shall not be liable to Guarantor for
any failure to collect or enforce payment of the Obligations; (iv) Lender may
take and hold security of any kind, at any time, as collateral for the
Obligations, may request and accept other guaranties and may, from time to time,
in whole or in part, exchange, sell, surrender, release, subordinate, modify,
waive, rescind, compromise or extend such security or guaranties; and (v) Lender
may exercise, or waive or otherwise refrain from exercising, any other right,
remedy, power or privilege granted by any Document, or otherwise available to
Lender, with respect to the Obligations and any collateral therefor, even if the
exercise of such right, remedy, power or privilege affects or eliminates any
right of subrogation or any other right of Guarantor against Company; all as
Lender may deem advisable, and all without impairing, abridging, releasing or
affecting this Guaranty.
4. Waivers. (a) Guarantor waives and agrees not to assert: (i) any right
to require Lender to proceed against Company, any other guarantor or any other
Person, to proceed against or exhaust any collateral or other security held for
the Obligations (except to the extent required by applicable law), to give
notice of or institute any public or private sale, foreclosure, or other
disposition of any collateral or security for the Obligations, including,
without limitation, to comply with applicable provisions of the New York Uniform
Commercial Code or any equivalent provision of any other applicable law in
connection with the sale, foreclosure, or other disposition of any collateral or
to pursue any other right, remedy, power or privilege of Lender whatsoever, or
give Guarantor any other notice with respect to the foregoing; (ii) the defense
of the statute of limitations in any action hereunder or for the collection or
performance of the Obligations; and (iii) to the fullest extent permitted by
law, any other defenses or benefits that may be derived from or afforded by
applicable law limiting the liability of or exonerating guarantors or sureties,
or which may conflict with the terms of this Guaranty. (b) Guarantor waives any
and all notice of the acceptance of this Guaranty, and any and all notice of the
creation, renewal, modification, extension or accrual of the Obligations. The
Obligations shall conclusively be deemed to have been created, contracted,
incurred and permitted to exist in reliance upon this Guaranty. Guarantor waives
promptness, diligence, presentment, protest, demand for payment, notice of
default, dishonor or nonpayment and all other notices to or upon Company,
Guarantor or any other Person with respect to the Obligations other than such
notices as may be provided for in the Agreement or any of the Documents. (c) The
obligations of Guarantor hereunder are independent of and separate from the
obligations of Company and any other guarantor and upon the occurrence and
during the continuance of any Default, a separate action or actions may be
brought against Guarantor, whether or not Company or any such other guarantor is
joined therein or a separate action or actions are brought against Company or
any such other guarantor.
5. Subrogation. Until the Obligations shall be satisfied in full, Guarantor
shall not have, and shall not directly or indirectly exercise, (i) any rights
that it may acquire by way of subrogation under this Guaranty, by any payment
hereunder or otherwise, (ii) any rights of contribution, indemnification,
reimbursement or similar suretyship claims arising out of this Guaranty, or
(iii) any other right which it might otherwise have or acquire (in any way
whatsoever) which could entitle it at any time to share or participate in any
right, remedy or security of the Lender as against Company or other guarantors,
whether in connection with this Guaranty or otherwise. If any amount shall be
paid to Guarantor on account of the foregoing rights at any time when any
Obligations are outstanding, such amount shall be held in trust for the benefit
of Lender and shall forthwith be paid to Lender to be credited and applied to
the Obligations.
6. Continuing Guaranty. Guarantor agrees that this Guaranty is a
continuing guaranty relating to any Obligations, including Obligations which may
exist continuously or which may arise from time to time under successive
transactions, and Guarantor expressly acknowledges that this Guaranty shall
remain in full force and effect until all such Obligations are discharged in
full and all commitments are terminated, notwithstanding that there may be
periods in which no Obligations exist. This Guaranty shall continue to be
effective or shall be reinstated and revived, as the case may be, if, for any
reason, any payment of the Obligations by
or on behalf of Company shall be rescinded or must otherwise be restored by
Lender, whether as a result of proceedings in bankruptcy or reorganization or
otherwise. To the extent any payment is rescinded or restored, the Obligations
shall be revived in full force and effect without reduction or discharge for
such payment.
7. Payments. Guarantor hereby agrees, in furtherance of the foregoing
provisions of this Guaranty and not in limitation of any other right which
Lender or any other Person may have against Guarantor by virtue hereof, that
upon any Default Guarantor shall forthwith pay, or cause to be paid, in cash, to
Lender an amount equal to the amount of the Obligations then due and unpaid
(including interest which, but for the filing of a petition in bankruptcy with
respect to Company, would have accrued on such Obligations, whether or not a
claim is allowed against Company for such interest in any such bankruptcy
proceeding). All payments made by Guarantor hereunder may be applied in such
order as Lender shall elect. Guarantor shall make each payment hereunder,
without deduction (whether for taxes or otherwise), set-off or counterclaim, on
the day when due in same day or immediately available funds, and in U.S.
dollars. As used herein, "Default" means any of the following: (i) Company shall
fail to pay when due and shall remain unremedied within any applicable cure
period (whether at stated maturity, declaration, acceleration, demand or
otherwise) any of the Obligations; (ii) Guarantor shall fail to perform or
observe any term, covenant or agreement contained in subsections (a)(i) or (f)
through (r) of Section 9 hereto or in any other term, covenant or agreement
contained in this Guaranty on its part to be performed or observed and any such
failure shall remain unremedied for a period of 20 days from the occurrence
thereof (unless Lender reasonably determines that such failure is not capable of
remedy); or (iii) (A) Company or Guarantor shall admit in writing its inability
to, or shall fail generally or be generally unable to, pay its debts as they
become due, or shall make a general assignment for the benefit of creditors, or
shall file a voluntary petition in bankruptcy or a petition or answer seeking
reorganization, to effect a plan or other arrangement with creditors or any
other relief under the Bankruptcy Code or under any other state or federal law
relating to bankruptcy or reorganization granting relief to debtors, whether now
or hereafter in effect (collectively, "Bankruptcy Laws"), (B) Company or
Guarantor shall be adjudicated a bankrupt, or shall make an assignment for the
benefit of creditors, or shall apply for or consent to the appointment of any
custodian, receiver or trustee for all or any substantial part of Company's or
Guarantor's property, or shall take any action to authorize any of the actions
set forth above in this clause, or (C) an involuntary petition seeking any of
the relief specified in this clause shall be filed against Company or guarantor,
or any order for relief shall be entered against Company or guarantor in any
involuntary proceeding under any Bankruptcy Laws, unless dismissed, vacated,
released or stayed within 60 days.
8. Representations.
(a) Guarantor (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, (ii) has
all requisite power and authority to own its assets and carry on its business
and to execute, deliver and perform its obligations hereunder and under any
other documents and agreements executed and delivered to lender in connection
with the Agreement (the "Guarantor Documents"), as applicable, (iii) is
qualified to do business and is in good standing in each jurisdiction in which
the failure so to
qualify or be in good standing would result in a Material Adverse Change, and
(iv) is in compliance with all Requirements of Law, except to the extent that
such noncompliance could not reasonably be expected to result in a Material
Adverse Change.
(b) The execution, delivery and performance by Guarantor of the Guarantor
Documents, have been duly authorized by all necessary corporate action of
Guarantor and do not and will not (i) contravene the terms of the articles or
certificate of incorporation, or bylaws, of Guarantor; or (ii) result in a
breach of or constitute a default under any material lease, instrument, contract
or other agreement to which Guarantor is a party or by which it or its
properties may be bound or affected; or (iii) violate any provision of any law,
rule, regulation, order, judgment, decree or the like binding on or affecting
Guarantor except as to clauses (ii) and (iii), to the extent any such breach,
default or violation could not reasonably be expected to result in a Material
Adverse Change.
(c) The Guarantor Documents constitute, or when delivered under the
Agreement will constitute, legal, valid and binding obligations of Guarantor,
enforceable against Guarantor in accordance with their respective terms except
as may be limited by bankruptcy, insolvency, fraudulent conveyances,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
(d) No authorization, consent, approval, license, exemption of, or filing
or registration with, any Governmental Authority, or approval or consent of any
other Person, is required for the due execution, delivery or performance by
Guarantor of any of the Guarantor Documents, except (1) as may be set forth in
the Schedule or (2) where the failure to obtain the foregoing could not
reasonably be expected to result in a Material Adverse Change. (e) There are no
actions, suits or proceedings pending or, to the best of Guarantor's knowledge,
threatened against or affecting Guarantor or any of its Subsidiaries before any
Governmental Authority or arbitrator which if determined adversely to Guarantor
or any such Subsidiary would result in a Material Adverse Change.
(f) All financial statements of Guarantor and its Subsidiaries delivered to
Lender are complete and correct and fairly present the financial condition of
Guarantor and its Subsidiaries as at the times and for the periods covered by
such statements, in each case in accordance with GAAP, consistently applied,
subject, in the case of any unaudited financial statements, to normal year-end
adjustments and any absence of notes. Since the date of the most recent
financial statements furnished to Lender prior to the Closing Date, there has
not been, nor is it reasonably likely that there will be, any Material Adverse
Change.
(g) Each of Guarantor and its Subsidiaries possesses all approvals,
authorizations, permits, franchises, licenses, patents, trademarks, trade names,
service marks, copyrights, leases and all rights with respect thereto, free from
burdensome restrictions, that are reasonably necessary for the ownership,
maintenance and operation of its business, except to the extent the
failure to possess the foregoing could not reasonably be expected to result in a
Material Adverse Change, and neither Guarantor nor any such Subsidiary is in
material violation of any rights of others with respect to the foregoing except
for violations which could not reasonably be expected to result in a Material
Adverse Change.
(h) The properties of Guarantor and its Subsidiaries are insured, with
financially sound and reputable insurance companies, in such amounts, with such
deductibles and covering such risks as is customarily carried by companies
engaged in similar businesses and owning similar properties in the localities
where Guarantor or such Subsidiary operates.
(i) On the basis of a comprehensive review and assessment of Guarantor's
and its Subsidiaries' systems and equipment and inquiry made of Guarantor's and
its Subsidiaries' material suppliers, vendors and customers, Guarantor
reasonably believes that the "Year 2000 problem" (that is, the inability of
computers, as well as embedded microchips in non-computing devices, to perform
properly date-sensitive functions with respect to certain dates prior to and
after December 31, 1999), including costs of remediation, will not result in a
Material Adverse Change.
(j) None of the representations or warranties made by Guarantor or
Company in the Loan Documents as of the date of such representations and
warranties, and none of the statements contained in any other information with
respect to Guarantor and its Subsidiaries, including each exhibit or report,
furnished by or on behalf of Guarantor or Company to Lender in connection with
the Loan Documents, contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading.
9. Covenants.
(a) Guarantor shall, and shall cause each of its Subsidiaries to,
maintain and preserve (i) its corporate existence, and (ii) all material
copyrights, patents, trademarks, trade names and service marks and other
intellectual property rights, and all other material rights, qualifications,
permits, licenses, franchises and privileges, necessary or desirable in the
normal course of its business and operations and the ownership of its
properties, except in connection with any transactions expressly permitted by
this Section 9.
(b) Guarantor shall, and shall cause each of its Subsidiaries to, obtain
and maintain all licenses, authorizations, consents, filings, exemptions,
registrations and other governmental approvals of any Government Authority
necessary or desirable (i) in connection with the execution, delivery and
performance of the Loan Documents, the purchase of the Cisco Products or the
consummation of the transactions therein contemplated, or (ii) in the normal
course of its business and operations and the ownership of its properties,
except, in the case of this clause (ii), to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Change.
(c) Guarantor shall comply, and shall cause each Subsidiary to comply, in
all material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it
or its business, except such as may be contested in good faith or as to which a
bona fide dispute may exist or where noncompliance could not reasonably be
expected to result in a Material Adverse Change.
(d) Guarantor shall, and shall cause each of its Subsidiaries to, carry
and maintain in full force and effect, at its own expense and with financially
sound and reputable insurance companies, insurance in such amounts, with such
deductibles and covering such risks as is customarily carried by companies
engaged in the same or similar businesses and owning similar properties in the
localities where Guarantor or such Subsidiary operates. Without limiting the
generality of the foregoing, Guarantor shall, and shall cause each of its
Subsidiaries to, comply with all requirements of the Collateral Documents
pertaining to maintenance of insurance.
(e) Guarantor shall not engage in any material line of business
substantially different from those lines of business carried on by it at the
date hereof; provided however that any of the Subsidiaries of Guarantor shall be
permitted to engage in a line of business that is reasonably related to its
lines of business on the date hereof including internet content solutions and
voice communications.
(f) Guarantor shall not, and shall not suffer or permit any Subsidiary
to, merge, consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person), except:
(i) any of Guarantor's Subsidiaries may merge with, consolidate into
or transfer all or substantially all of its assets to any Subsidiary of
Guarantor (provided that the surviving or transferee entity is the
Company (in the case of a transaction involving the Company) or a
Wholly-Owned Subsidiary of Guarantor) and in connection therewith such
Subsidiary may be liquidated or dissolved, provided that no Material
Adverse Change would result therefrom;
(ii) Guarantor or any of its Subsidiaries may sell or dispose of
assets in accordance with the provisions of Section 9(g);
(iii) Guarantor or any of its Subsidiaries may make any investment
permitted by Section 9(j);
(iv) any Subsidiary of Guarantor may merge with or consolidate into
any other Person, provided that (i) in the case of the Company, the
Company is the surviving Person, (ii) no such merger or consolidation
shall be made while there exists a Default or if a Default would occur
as a result thereof; and (iii) all actions have been taken (to the
satisfaction of the Lender) to protect and continue perfected the Liens
of the Lender under Section 5.1(n) of the Agreement; and
(v) Guarantor may merge with or consolidate into any other Person
(other than the Company) provided that (i) Guarantor is the surviving
Person, (ii) no such merger or consolidation shall be made while there
exists a Default or if a Default would
occur as a result thereof and (iii) all actions have been taken (to the
satisfaction of the Lender) to protect and continue perfected the Liens
of the Lender under Section 5.1(n) of the Agreement.
(g) Except as provided in the Agreement, Guarantor shall not, and shall
not permit any of its Subsidiaries to, sell, lease, transfer, or otherwise
dispose of, or part with control of (whether in one transaction or a series of
transactions) any assets (including any shares of stock in any Subsidiary or
other Person) outside the ordinary course of business (each a "Transfer") or
enter into or consummate any transfer: (i) involving Financed Products, (other
than in the ordinary course of business to a Wholly-Owned Subsidiary that is a
Guarantor), (ii) that could reasonably be expected to result in a Material
Adverse Change or (iii) that would violate the terms of any other Loan Document,
provided that as a condition to consummating any Transfer to any such Wholly-
Owned Subsidiary of Financed Products, Borrower shall provide ten Banking Days'
prior written notice to Lender of the proposed Transfer. Notwithstanding the
foregoing, Guarantor and/or any of its Subsidiaries may effect a Transfer of any
assets other than the Financed Products provided that all such Transfers, in the
aggregate, do not have a fair market value greater than $10,000,000.
(h) Except as provided in the Agreement, Guarantor shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon or with respect to any of its properties, revenues or assets,
whether now owned or hereafter acquired, other than Permitted Liens.
(i) Except as provided in the Agreement, Guarantor shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or otherwise become
liable for or suffer to exist any Indebtedness, other than: (i) Indebtedness of
Guarantor to Lender hereunder; (ii) Indebtedness of Guarantor existing on the
date hereof and disclosed to Lender or extensions, renewals and refinancings of
such Indebtedness, provided that the principal amount of such Indebtedness being
extended, renewed or refinanced does not increase; (iii) accounts payable to
trade creditors for goods and services and current operating liabilities (not
the result of the borrowing of money) incurred in the ordinary course of
Guarantor's or such Subsidiary's business in accordance with customary terms and
paid within the specified time, unless contested in good faith by appropriate
proceedings and reserved for in accordance with GAAP; (iv) Indebtedness
consisting of guarantees resulting from endorsement of negotiable instruments
for collection by Guarantor or any of its Subsidiaries in the ordinary course of
business; (v) Indebtedness of Guarantor and its Subsidiaries under capital
leases or otherwise incurred under or in connection with any Liens of the type
referred to in clause (vi) or (viii) (or any extension, refinancing or
replacement thereof) of the definition of Permitted Liens in Section 1.1 of the
Agreement, provided that the aggregate principal amount outstanding of
Indebtedness under the Nortel Credit Agreement does not exceed $30,000,000; (vi)
Indebtedness of Guarantor to any other Person subordinated to the payment of the
Obligations of Guarantor on terms satisfactory to Lender; (vii) Indebtedness of
Guarantor to any of its Wholly-Owned Subsidiaries or of any of its Wholly-Owned
Subsidiaries to another of its Wholly-Owned Subsidiaries; and (viii)
Indebtedness incurred under any Swap Agreements or under one or more secured or
unsecured term loans and/or revolving credit facilities (including any letter of
credit subfacility),
and any refinancing, replacement renewals or extensions thereof, in an aggregate
principal amount not to exceed 200% of paid in equity capital of Guarantor minus
the sum of (x) Indebtedness of Company to Lender under the Agreement and (y) the
purchase money Indebtedness described in clause (v) of this paragraph.
(j) Except as provided in the Agreement, Guarantor shall not, and shall
not permit any of its Subsidiaries to, purchase or otherwise acquire the capital
stock, assets (constituting a business unit), obligations or other securities of
or any interest in any Person, or otherwise extend any credit to or make any
additional investments in any Person (an "Investment"), other than in connection
with: (i) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sales of goods or services in the ordinary course of
business; (ii) equity investments by Guarantor in any Wholly-Owned Subsidiary,
or extensions of credit by Guarantor to any of its Wholly-Owned Subsidiaries or
by any of its Wholly-Owned Subsidiaries to another of its Wholly-Owned
Subsidiaries; (iii) short term, investment grade money market instruments, in
accordance with Guarantor's usual and customary treasury management policies
(including, without limitation, the Investments described in Section 9.5 (c)
through (f) of the Nortel Credit Agreement). Notwithstanding the foregoing,
Guarantor shall be permitted to engage in one or more Permitted Acquisitions
provided that any such Permitted Acquisition is funded by the proceeds from any
equity offering of Guarantor or Company in excess of $68,000,000, in the
aggregate, and provided further that the amount of such proceeds resulting in
any Permitted Acquisition that is not a Wholly-Owned Subsidiary shall not be, in
the aggregate, in excess of $20,000,000 of such proceeds. (k) On a consolidated
basis, Guarantor and its Subsidiaries shall maintain total revenues of the
Guarantor and its subsidiaries for each quarterly period set forth below of not
less than the correlative amount indicated:
Quarterly Period Ending Required Amount
June 30, 1999 $ 1,655,890
September 30, 1999 $ 2,595,646
December 31, 1999 $ 4,100,145
March 31, 2000 $ 6,191,705
June 30, 2000 $ 7,989,340
September 30, 2000 $10,200,671
December 31, 2000 $12,729,166
March 31, 2001 $19,259,094
June 30, 2001 $18,598,631
September 30, 2001 $21,499,863
December 31, 2001 $25,061,558
March 31, 2002 $29,026,614
June 30, 2002 $32,700,266
September 30, 2002 $34,429,544
December 31, 2002 $39,271,302
(l) On a consolidated basis, Guarantor and its Subsidiaries shall
maintain EBITDA for each quarterly period set forth below of not less than the
correlative amount indicated (bracketed amounts ( ) are negative):
Quarterly Period Ending Required Amount
June 30, 1999 ($ 3,490,788)
September 30, 1999 ($ 4,499,198)
December 31, 1999 ($ 5,480,403)
March 31, 2000 ($ 4,339,424)
June 30, 2000 ($ 4,284,588)
September 30, 2000 ($ 3,727,553)
December 31, 2000 ($ 3,479,121)
March 31, 2001 ($ 1,035,000)
June 30, 2001 ($ 1,232,500
September 30, 2001 $ 2,975,000
December 31, 2001 $ 3,751,796
March 31, 2002 $ 6,035,000
June 30, 2002 $ 7,565,000
September 30, 2002 $10,200,000
December 31, 2002 $11,684,334
"EBITDA" shall mean with respect to any fiscal period of a Person, such
Person's earnings (excluding extraordinary items (determined in accordance with
GAAP)), plus (except to the extent attributable to extraordinary items
(determined in accordance with GAAP)) the amount of any interest, taxes,
depreciation, amortization deducted in arriving at such earnings, and, without
duplication, plus losses and less gains upon dispositions of properties added or
deducted in arriving at such earnings.
(m) On a consolidated basis, the Guarantor and its Subsidiaries shall
not permit the ratio of Consolidated Funded Debt to Capitalization to exceed 75%
at any time. As used in this subsection (m), the following terms shall have the
following meanings:
(i) "Consolidated Funded Debt" means, as of any date of
determination, all Indebtedness of Guarantor and its Subsidiaries on
such date, on a consolidated basis and as determined in accordance
with GAAP.
(ii) "Capitalization" means, on any date, the sum of (x)
Consolidated Funded Debt, plus (y) the sum of capital stock plus paid
in capital of Guarantor and its Subsidiaries on such date, on a
consolidated basis and as determined in accordance with GAAP.
(n) The Guarantor shall at all times be the beneficial and record
owner of 100% of the capital stock (including all warrants, options or other
rights to acquire capital stock of any class) of the Company.
(o) Guarantor shall, and shall cause each of its Subsidiaries to,
keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP. Guarantor shall provide Lender and its agents
access to the premises of Guarantor and its Subsidiaries at any time and from
time to time, during normal business hours and upon reasonable notice under the
circumstances, and at any time on and after the occurrence of a Default or Event
of Default, for the purposes of (i) inspecting and verifying the Collateral,
(ii) inspecting and copying any and all records pertaining thereto, and (iii)
discussing the affairs, finances and business of Guarantor and its Subsidiaries
with any officer, employee or director of Guarantor or with its accountants.
(p) Guarantor shall not declare or pay any dividends in respect of
Guarantor's capital stock, or purchase, redeem, retire or otherwise acquire for
value any of its capital stock now or hereafter outstanding, return any capital
to its shareholders as such, or make any distribution of assets to its
shareholders as such, or permit any of its Subsidiaries to purchase, redeem,
retire, or otherwise acquire for value any stock of Guarantor, except that
Guarantor may: (A) declare and deliver dividends and distributions payable only
in common stock of Guarantor; and (B) purchase, redeem, retire, or otherwise
acquire shares of its capital stock from officers, directors and employees upon
termination or cessation of employment with Guarantor or with the proceeds
received from a substantially concurrent issue of new shares of its capital
stock.
(q) (A) If Guarantor proposes to incorporate, create or acquire any
additional Wholly-Owned Subsidiary, Guarantor shall notify Lender thereof, and,
if required hereby, obtain Lender's consent thereto. After the incorporation,
creation or acquisition of any such Wholly-Owned Subsidiary (subject to
obtaining any necessary Lender consent), within five Banking Days following
receipt by Guarantor from Lender of a security agreement, in form and substance
satisfactory to Lender, and a guaranty of the Obligations in form and substance
satisfactory to Lender, Guarantor shall cause such Wholly-Owned Subsidiary to
execute and deliver such guaranty and security agreement to Lender. Lender may
elect in its sole discretion to waive any such requirement in the case of any
non-U.S. Wholly-Owned Subsidiary and any Wholly-Owned Subsidiary that will
remain a dormant or shell Wholly-Owned Subsidiary. (B) Within five Banking Days
after receipt from Lender of any request to do so, Guarantor shall cause such
Wholly-Owned Subsidiary to have executed and filed any UCC-1 financing
statements furnished by Lender in each jurisdiction in which such filing is
necessary to perfect the security interest of Lender in the Collateral of such
Wholly-Owned Subsidiary and in which Lender requests that such filing be made.
(C) Additionally, Guarantor and such Wholly-Owned Subsidiary shall have executed
and delivered to Lender such other items as reasonably requested by Lender in
connection with the foregoing, including resolutions, incumbency and officers'
certificates, opinions of counsel, search reports and other certificates and
documents.
(r) Guarantor shall not locate, and shall not permit any of its
Subsidiaries to locate, any Financed Products on the same premises where Nortel
Networks Equipment and/or Nortel Networks Software are located.
10. Notices. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including by facsimile)
and shall be mailed, sent or delivered (i) if to Lender, to Cisco Systems, Inc.,
Worldwide Financial Services, Mailstop SJC2-3rd Floor, 000 Xxxx Xxxxxx Xxxxx,
Xxx Xxxx, XX 00000-0000, attn. Loan Administration, fax (000) 000-0000; and (ii)
if to Guarantor, at or to its address or facsimile number set forth below its
name on the signature page hereof, or at or to such other address or facsimile
number as such party shall have designated in a written notice to the other
party. All such notices and communications shall be effective upon receipt.
11. No Waiver. No failure on the part of Lender to exercise, and no
delay in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights and remedies under this Guaranty are cumulative and not exclusive of
any rights, remedies, powers and privileges that may otherwise be available to
Lender.
12. Costs and Expenses. Guarantor agrees to pay on demand all
reasonable costs and expenses of Lender and reasonable fees and disbursements of
counsel in connection with the enforcement, or preservation of any rights under,
this Guaranty.
13. Binding Effect; Entire Agreement; Amendments. This Guaranty shall
be binding upon Guarantor and its successors and assigns, and inure to the
benefit of and be enforceable by Lender and its successors, endorsees,
transferees and assigns; provided that Guarantor shall not have the right to
assign or transfer its rights and obligations hereunder without the prior
written consent of Lender. Any such purported assignment or transfer by
Guarantor without the prior express written consent of Lender shall be void.
Guarantor acknowledges and agrees that in connection with an assignment of, or
grant of a participation in, the Obligations, Lender may assign, or grant
participations in, all or a portion of its rights and obligations hereunder,
including the benefit of Section 12. Upon any assignment of Lender's rights
hereunder, such assignee shall have, to the extent of such assignment, all
rights of Lender hereunder and may in turn assign such rights. Guarantor agrees
that, upon any such assignment, such assignee may enforce directly, without
joinder of Lender, the rights of Lender set forth in this Guaranty.
Any such assignee shall be entitled to enforce Lender's rights and remedies
under this Guaranty to the same extent as if it were the "Lender" party hereto.
This Guaranty constitutes the entire agreement of Guarantor with respect to the
matters set forth herein and supersedes any prior agreements, commitments,
discussions and understandings, oral or written, with respect thereto. This
Guaranty may not be amended except by a writing signed by Guarantor and Lender.
No waiver of any rights of Lender under any provision of this Guaranty or
consent to any departure by Guarantor therefrom shall be effective unless in
writing and signed by Lender. Any such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
14. Severability. Whenever possible, each provision of the Guaranty shall
be interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Guaranty shall be
prohibited by or invalid under any such law or regulation, it shall be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of this Guaranty.
15. Law; Submission to Jurisdiction. This Guaranty shall be governed by
and construed in accordance with New York law. Guarantor hereby (i) submits to
the non-exclusive jurisdiction of the courts of the State of New York and the
Federal courts of the United States sitting in the State of New York and the
Federal courts of the United States sitting in the Borough of Manhattan for the
purpose of any action or proceeding arising out of or relating to this Guaranty,
(ii) agrees that all claims in respect of any such action or proceeding may be
heard and determined in such courts, (iii) irrevocably waives (to the extent
permitted by applicable law) any objection which it now or hereafter may have to
the laying of venue of any such action or proceeding brought in any of the
foregoing courts in and of the State of New York, and any objection on the
ground that any such action or proceeding in any such court has been brought in
an inconvenient forum, and (iv) agrees 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 permitted by law.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty, as
of the date first above written.
CAIS Internet, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx, XX
---------------------------
Title: President
Address:
CAIS Internet, Inc.
0000 00xx Xxxxxx, XX
Xxxxxxxxxx X.X. 00000
Attn: Xxxxxxx X. Xxxxx, XX
Fax: (000) 000-0000
