NOTE AND WARRANT
PURCHASE AGREEMENT
DATED DECEMBER 17, 1998
BETWEEN
▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P. - ENHANCED APPRECIATION
AND POINTE COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
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Page
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1. Authorization and Closing 1
1A. Authorization of the Note and Warrant 1
1B. Issuance of the Note and the Warrant 1
1C. The Closing 1
2. Covenants 1
2A. Financial Statements and Other Information 1
2B. Inspection of Property 2
2C. Attendance at Board Meetings 2
2D. Current Public Information 3
2E. SBIC Regulatory Provisions 3
2F. Piggyback Registrations 4
2G. Reservation of Common Stock 5
2H. Public Disclosures 5
3. Representations and Warranties of the Company 6
3A. Organization, Corporate Power and Licenses 6
3B. Authorization; No Breach 6
3C. No Material Adverse Change 7
3D. Small Business Matters 7
3E. Disclosure 7
4. Definitions 8
4A. Definitions 8
5. Miscellaneous 9
5A. Expenses 9
5B. Remedies 9
5C. Survival of Representations and Warranties 9
5D. Successors and Assigns 10
5E. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. Counterparts 10
5G. Descriptive Headings; Interpretation 10
5H. Governing Law 10
Schedules and Exhibits
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Schedule of Purchasers
List of Exhibits
List of Disclosure Schedules
POINTE COMMUNICATIONS CORPORATION
PURCHASE AGREEMENT
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THIS AGREEMENT is made as of December 17, 1998, between Pointe
Communications Corporation, a Nevada corporation (the "Company"), ▇▇▇▇▇▇▇
CAPITAL PARTNERS, L.P. - ENHANCED APPRECIATION, a Georgia limited partnership
(the "Purchaser"). Except as otherwise indicated herein, capitalized terms used
herein are defined in Section 4 hereof.
On the date hereof, the Company has loaned $1 million (the "Loan") for
which the Company issued a note ("Note") and granted a security interest to the
Purchaser. The Note is secured by all the assets of the Company. It is also
guaranteed by a non-recourse Guaranty of Star Insurance Company, secured by a
pledge of his stock. In connection therewith and in partial consideration
therefor, the parties are entering into this Agreement.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
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1A. Authorization of the Note and Warrant. The Company shall authorize
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the issuance of the Note and the warrant to the Purchaser (the "Warrant") to
purchase 380,000 shares of its Common Stock, par value $.00001 per share (the
"Common Stock").
1B. Issuance of the Note and the Warrant. At the Closing, the Company
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shall issue to Purchaser and, subject to the terms and conditions set forth
herein, each Purchaser shall purchase from the Company the Note and Warrant in
consideration of Purchaser's agreement to make the Loan to the Company pursuant
to the Note.
1C. The Closing. The closing of the Loan and the issuance of the Note
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and Warrant (the "Closing") shall take place at the offices of the Purchaser at
2:00 p.m. on December 17, 1998, or at such other place or on such other date as
may be mutually agreeable to the Company and each Purchaser. At the Closing,
the Company shall deliver to Purchaser the Note and Warrant to be issued to such
Purchaser, registered in such Purchaser's or its nominee's name, and Purchaser
shall make the Loan.
1D. Payments at Closing. At the Closing, the Company shall pay to
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▇▇▇▇▇▇▇ Capital II, LLC, the general partner of Purchaser, by check payable to
the order of ▇▇▇▇▇▇▇ Capital, II, LLC, a transaction fee in the amount of Ten
Thousand Dollars ($10,000.00) and shall also pay to counsel for Purchaser the
legal expenses of the Purchaser in connection with the closing of the
transactions contemplated by this Agreement.
Section 2. Covenants.
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2A. Financial Statements and Other Information. The Company shall
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deliver to Purchaser so long as such Purchaser holds the Note, any Underlying
Common Stock or any other security of the Company:
(i) as soon as available but in any event within 30 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated state-ments of income and cash flows of the
Company and its Subsid-iaries for such monthly period and for the period from
the beginning of the fiscal year to the end of such month, and unaudited
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such monthly period, setting forth in each case
comparisons to the Com-pany's annual budget and to the corresponding period in
the preceding fiscal year, and all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
subject to the absence of footnote disclosures and to normal year-end
adjustments for recurring accruals and shall be certified by the Com-pany's
chief financial officer;
(ii) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general written
communications which the Company sends to its stockholders and copies of all
registration statements and all regular, special or periodic reports which it
files, or (to its knowledge) any of its officers or direc-tors file with respect
to the Company, with the Securi-ties and Exchange Commission or with any
securities exchange on which any of its securities are then listed, and copies
of all press releases and other statements made available gen-erally by the
Company to the public concerning material developments in the Company's and its
Subsidiaries' businesses; and
(iii) with reasonable promptness, such other infor-mation and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this paragraph 3A may reasonably request.
To the best of the Company's knowledge, each of the financial statements
referred to in subparagraph (i) shall be true and correct in all material
respects as of the dates and for the periods stated therein, subject in the case
of the unaudited financial statements to changes resulting from normal year-end
adjustments for recurring accruals none of which would, alone or in the
aggregate, be materially adverse to the financial condition, operating results,
assets, operations or business prospects of the Company and its Subsidiaries
taken as a whole.
2B. Inspection of Property. The Company shall permit any
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representatives designated by Purchaser (so long as such Purchaser holds any
Underlying Common Stock), upon reasonable notice and during normal business
hours, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and (iii)
dis-cuss the affairs, finances and accounts of any such corpora-tions with the
directors, officers, key employees and inde-pen-dent accountants of the Company
and its Subsidiaries. The presentation of an executed copy of this Agreement by
Purchaser or any holder of Underlying Common Stock to the Company's independent
accountants shall constitute the Company's permission to its independent
accountants to participate in discussions with such Persons.
2C. Attendance at Board Meetings. The Company shall give Purchaser (so
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long as such Purchaser holds any Underlying Common Stock) written notice of each
quarterly meeting of its board of directors and each regularly scheduled
committee meeting thereof at the same time and in the same manner as notice is
given to the directors (which notice shall be promptly confirmed in writing to
each such Person), and the Company shall permit a representative of each such
Person to attend as an observer all quarterly meetings of its board of directors
and all committees thereof; provided, however, that in the event the board of
directors or any committee thereof reasonably determines that an executive
session is appropriate under the circumstances, the board of directors or such
committee may excuse the observer from any such executive session. Each
representative shall be entitled to receive all written materials and other
information (including, without limitation, copies of meeting minutes) given to
directors in connection with such meetings at the same time such materials and
information are given to the direc-tors. If the Company pro-poses to take any
action by written consent in lieu of a meeting of its board of directors or of
any committee thereof, the Company shall give written notice thereof to each
such Person prior to the effective date of such consent describing in reasonable
detail the nature and substance of such action.
2D. Current Public Information. The Company shall file all reports
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required to be filed by it under the Securities Act and the Securities Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder and shall take such further action as any holder or
holders of Restricted Securities may reasonably request, all to the extent
required to enable such holders to sell Restricted Securities pursuant to Rule
144 adopted by the Securities and Exchange Commission under the Securities Act
(as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission. Upon
request, the Company shall deliver to any holder of Restricted Securities a
written statement as to whether it has complied with such requirements.
2E. SBIC Regulatory Provisions.
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(i) Within 75 days after the Closing and each subsequent Financing
hereunder by each holder of the Note or Underlying Common Stock which is an SBIC
(an "SBIC Holder") and at the end of each month thereafter until all of the
proceeds from the Loan and the exercise of the Warrants have been used by the
Company and its Subsidiaries, the Company shall deliver to each SBIC Holder a
written statement certified by the Company's president or chief financial
officer describing in reasonable detail the use of the proceeds of the loan
reflected by the Note by the Company and its Subsidiaries. In addition to any
other rights granted hereunder, the Company shall grant each SBIC Holder and the
United States Small Business Administration (the "SBA") access to the Company's
records for the purpose of verifying the use of such proceeds.
(ii) Upon the occurrence of a Regulatory Violation or in the event
that any SBIC Holder determines in its reasonable good faith judgment that a
Regulatory Violation has occurred, in addition to any other rights and remedies
to which it may be entitled as a holder of the Note or the Underlying Common
Stock (whether under this Agreement, the Certificate of Incorporation or
otherwise), each SBIC Holder shall have the right to the extent required under
the SBIC Regulations to demand the immediate repayment of the Loan and
repurchase of all Underlying Common Stock owned by such SBIC Holder at a price
equal to the purchase price paid for such securities hereunder (plus accrued but
unpaid interest on the Note) by delivering written notice of such demand to the
Company. The Company shall pay the purchase price for such stock by a cashier's
or certified check or by wire transfer of immediately available funds to each
SBIC Holder demanding repurchase within 30 days after the Company's receipt of
the demand notice, and upon such payment, each such SBIC Holder shall deliver
the certificates evidencing the Underlying Common Stock to be repurchased duly
endorsed for transfer or accompanied by duly executed forms of assignment.
(iii) For purposes of this paragraph, "Regulatory Violation"
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means, with respect to any SBIC Holder providing Financing under this Agreement,
(a) a diversion of the proceeds of such Financing from the reported use thereof
on the use of proceeds statement delivered by the Company on SBA Form 1031
delivered at the Closing, if such diversion was effected without obtaining the
prior written consent of the SBIC Holders (which may be withheld in their sole
discretion) or (b) a change in the principal business activity of the Company
and its Subsidiaries to an ineligible business activity (within the meaning of
the SBIC Regulations) if such change occurs within one year after the date of
the initial Financing hereunder; "SBIC Regulations" means the Small Business
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Investment Act of 1958 and the regulations issued thereunder as set forth in 13
CFR 107 and 121, as amended; and the term "Financing" shall have the meaning set
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forth in the SBIC Regulations.
2F. Piggyback Registrations.
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(a) Right to Piggyback. Whenever the Company proposes to
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register any of its securities under the Securities Act and the registration
form to be used may be used for the registration of Registrable Securities (a
"Piggyback Registration"), the Company shall give prompt written notice to all
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holders of Registrable Securities of its intention to effect such a registration
and shall include in such registration all Registrable Securities with respect
to which the Company has received written requests for inclusion therein within
20 days after the receipt of the Company=s notice.
(b) Piggyback Expenses. The registration expenses of the
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holders of Registrable Securities (not including broker=s commissions) shall be
paid by the Company in all Piggyback Registrations.
(c) Priority on Registrations. If a Piggyback Registration
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is an underwritten registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company shall include in such registration (i) first, the
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securities the Company proposes to sell, (ii) second, the Registrable Securities
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and other securities held by other third parties requested to be included in
such registration, pro rata among the holders thereof on the basis of the number
of shares owned by each such holder, and (iii) third, other securities requested
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to be included in such registration.
(d) Other Registrations. If the Company has previously filed
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a registration statement with respect to Registrable Securities pursuant to this
paragraph 2, and if such previous registration has not been withdrawn or
abandoned, the Company shall not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-8 or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of at
least 180 days have elapsed from the effective date of such previous
registration.
2G. Reservation of Common Stock. The Company shall at all times
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reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of issuance upon exercise of the Warrant, such
number of shares of Common Stock issuable upon the exercise of all outstanding
Warrants. All shares of Common Stock which are so issuable shall, when issued,
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges. The Company shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately transmitted by the Company upon issuance).
2H. Public Disclosures. The Company shall not, nor shall it permit any
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Subsidiary to, disclose Purchaser's name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written consent
of such Purchaser, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent juris-diction, in
which case prior to making such disclosure the Company shall give written notice
to such Purchaser describing in reason-able detail the proposed content of such
disclosure and shall permit the Purchaser to review and comment upon the form
and substance of such disclosure.
2I. Preemptive Rights.
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(a) Until the Note is paid in full, Purchaser shall have the following
preemptive rights: except for issuances of Common Stock (i) to the Company's
employees, (ii) upon the conversion of the Warrant or other warrants or options
outstanding as of the date hereof, or granted within the next 90 days as a part
of similar bridge financings or as a part of the contemplated CS First
Boston/Breckenridge financing, (iii) in connection with the acquisition of
another company or business, (iv) pursuant to a public offering registered under
the Securities Act, if the Company authorizes the issuance or sale of any shares
of Common Stock, preferred stock or any securities (other than those described
in (i) through (iv) above) containing options or rights to acquire any shares of
Common Stock or preferred stock (other than as a dividend on the outstanding
Common Stock), the Company shall first offer to sell to each holder of
Underlying Common Stock a portion of such stock or securities equal to the
quotient determined by dividing (1) the number of shares of Under-lying Common
Stock held by such holder by (2) the sum of the total number of shares of
Underlying Common Stock and the number of shares of Common Stock outstanding
which are not shares of Under-lying Common Stock. Each holder of Underlying
Common Stock shall be entitled to purchase such stock or securities at the most
favorable price and on the most favorable terms as such stock or securities are
to be offered to any other Persons The purchase price for all stock and
securities offered to the holders of the Underlying Common Stock shall be
payable in cash or, to the extent otherwise required hereunder, notes issued by
such holders.
(b) In order to exercise its purchase rights hereunder, a holder of
Underlying Common Stock must within 15 days after receipt of written notice from
the Company describing in reasonable detail the stock or securities being
offered, the purchase price thereof, the payment terms and such holder's
percentage allotment deliver a written notice to the Company describing its
election hereunder, together with payment of the purchase price therefor and
such subscription and other documents as are a part of such offering.
(c) Upon the expiration of the offering period described above, the
Company shall be entitled to sell such stock or securities which the holders of
Underlying Common Stock have not elected to purchase during the 90 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or securities
offered or sold by the Company after such 90-day period must be reoffered to the
holders of Underlying Common Stock pursuant to the terms of this paragraph.
Section 3A Representations and Warranties of the Company. As a
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material inducement to the Purchaser to enter into this Agreement to make the
loan reflected by the Note and purchase the Warrant hereunder, the Company
hereby represents and warrants that:
3A. Organization, Corporate Power and Licenses. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of Nevada and is qualified to do business in every jurisdiction in which the
failure to so qualify has had or would reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets, operations
or business prospects of the Company and its Subsidiaries taken as a whole. The
Company possesses all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted and to issue the Note and carry out the other transactions
contemplated by this Agreement. The copies of the Company's and each
Subsidiary's charter documents and bylaws which have been furnished to the
Purchasers' special counsel reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
3B. Authorization; No Breach. The execution, delivery and performance
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of this Agreement, the Warrant, the Note, the Security Agreement and all other
agree-ments contemplated hereby to which the Company is a party, have been duly
authorized by the Company. This Agreement, the Warrant, the Note, the Security
Agreement and all other agreements contemplated hereby to which the Company is a
party each constitutes a valid and binding obliga-tion of the Company,
enforceable in accordance with its terms. The execution and delivery by the
Company of this Agreement, the Warrant, the Note, the Security Agreement and all
other agreements contemplated hereby to which the Company is a party, the
offering, sale and issuance of the Note and the Warrant hereunder, the issuance
of the Common Stock upon exer-cise of Warrant, and the fulfillment of and
compliance with the respective terms hereof and thereof by the Company, do not
and shall not (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) result in the creation
of any lien, security interest, charge or encumbrance upon the Company's or any
Subsidi-ary's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authoriza-tion, consent, approval, exemption
or other action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, the charter or bylaws
of the Company or any Subsidiary, or any law, statute, rule or regulation to
which the Company or any Subsidiary is sub-ject, or any agreement, instrument,
order, judgment or decree to which the Company or any Subsidiary is subject.
3C. No Material Adverse Change. Since the date of the Company's last
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Form 10-Q filed with the SEC, there has been no material adverse change in the
financial condition, operating results, assets, operations, business prospects,
value, employee relations or customer or supplier relations of the Company and
its Subsidiaries taken as a whole.
3D. Small Business Matters. The Company, together with its
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"affiliates" (as that term is defined in Title 13, Code of Federal Regulations,
'121.103), is a "small busi-ness concern" within the meaning of the Small
Business Investment Act of 1958 and the regulations thereunder, including Title
13, Code of Federal Regulations, '121.105. The information regarding the
Company and its affiliates set forth in the Small Business Administration Form
480, Form 652 and Part A of Form 1031 delivered at the Closing is accurate and
complete. Copies of such forms shall have been completed and executed by the
Company and delivered to Purchaser at the Closing together with a written
statement of the Company regarding its planned use of the proceeds from the loan
made by Purchaser reflected by the Note and the Warrants. Neither the Company
nor any Subsidiary presently engages in, and it shall not hereafter engage in,
any activities, nor shall the Company or any Subsidiary use directly or
indirectly the proceeds from the loan made by Purchaser reflected by the Note or
the exercise of Warrant hereunder for any purpose, for which a Small Business
Investment Company is prohibited from providing funds by the Small Business
Investment Act of 1958 and the regulations thereunder (including Title 13, Code
of Federal Regulations, '107.720).
3E. Disclosure. There is no fact which the Company has not disclosed
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to the Purchaser in writing and of which any of its officers, directors or
executive employees is aware and which has had or would reasonably be expected
to have a material adverse effect upon the existing or expected financial
condition, operating results, assets, customer or supplier relations, employee
relations or business prospects of the Company and its Subsidiaries taken as a
whole.
3F. Reports with the Securities and Exchange Commission. The Company
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has furnished the Purchaser with complete and accurate copies of its annual
report on Form 10-K for its most recent fiscal year, all other reports or
documents required to be filed by the Company pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act since the filing of the most recent annual report
on Form 10-K and its most recent annual report to its stockholders. Such
reports and filings do not contain any material false statements or any
misstatement of any material fact and do not omit to state any fact necessary to
make the statements set forth therein not misleading. The Company has made all
filings with the Securities and Exchange Commission which it is required to
make, and the Company has not received any request from the Securities and
Exchange Commission to file any amendment or supplement to any of the reports
described in this paragraph.
Section 4A Definitions.
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4A. Definitions. For the purposes of this Agreement, the
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following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person controlling,
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controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, contract or otherwise.
"Registrable Securities" means (i) any Common Stock issued upon the
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exercise of any Warrants issued pursuant to this Agreement, (ii) any Common
-
Stock pledged pursuant to the Securities Pledge Agreement between the Company
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and (iii) any Common Stock issued or issuable with
respect to the securities referred to in clauses (i) and (ii) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to
particular Registrable Securities, such securities shall cease to be Registrable
Securities when they have been distributed to the public pursuant to a offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the Securities Act (or
any similar rule then in force) or repurchased by the Company. For the purposes
of this Agreement, a Person shall be deemed a holder of Registrable Securities,
and the Registrable Securities shall be deemed to be in existence, whenever such
Person has the right to acquire directly or indirectly such Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected, and such Person shall be entitled to exercise the rights of a holder
of Registrable Securities hereunder.
"SBIC" means a small business investment company licensed under the Small
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Business Investment Act of 1958, as amended.
"SBIC Regulations" means the Small Business Investment Company Act of 1958,
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as amended, and the regulations issued by the Small Business Administration
thereunder, 13 CFR 107 and 121, as amended.
"Securities Act" means the Securities Act of 1933, as amended, or any
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similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
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agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
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amended, or any similar federal law then in force.
"Underlying Common Stock" means (i) the Common Stock issued or issuable
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upon exercise of the Warrants and (ii) any Common Stock issued or issuable with
respect to the securities referred to in clause (i) above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes
of this Agreement, any Person who holds the Warrant shall be deemed to be the
holder of the Underlying Common Stock obtainable upon exercise of the Warrants
in connection with the transfer thereof or otherwise regardless of any
restric-tion or limitation on the exercise of the Warrant, such Underlying
Common Stock shall be deemed to be in existence, and such Person shall be
entitled to exercise the rights of a holder of Underlying Common Stock
here-under. As to any particular shares of Underlying Common Stock, such shares
shall cease to be Underlying Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registra-tion statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) or (c) repurchased by the Company or any
Subsidiary.
Section 5A Miscellaneous.
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5A. Expenses. The Company shall pay, and hold Purchaser and all
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holders of Under-lying Common Stock harmless against liability for the payment
of, (i) the reasonable fees and expenses of their special counsel arising in
connection with the negotiation and execution of this Agreement and the
consummation of the transac-tions contemplated by this Agreement which shall be
payable at the Closing or, if the Closing does not occur, payable upon demand,
(ii) the reasonable fees and expenses incurred with respect to any amendments or
waivers (whether or not the same become effec-tive) under or in respect of this
Agreement, the agreements contemplated hereby or the warrants, (iii) stamp and
other taxes which may be payable in respect of the execution and delivery of
this Agreement or the issuance, delivery or acquisition of any shares of Common
Stock issuable upon exercise of the Warrants, (iv) the reason-able fees and
expenses incurred with respect to the enforcement of the rights granted under
this Agreement, the agreements contem-plated hereby or the Warrants and (v) the
reasonable fees and expenses incurred by each such Person in any filing with any
governmental agency with respect to its investment in the Company or in any
other filing with any governmental agency with respect to the Company which
mentions such Person, and (vi) the reasonable fees and expenses incurred by any
such Person in connection with any transaction, claim or event which such Person
believes affects the Company and as to which such Person seeks advice of
coun-sel.
5B. Remedies. Each holder of Under-lying Common Stock shall have all
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rights and remedies set forth in this Agreement, and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law. Any
Person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law.
5C. Survival of Representations and Warranties. All repre-sentations
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and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Purchaser or on its behalf.
5D. Successors and Assigns. Except as otherwise expressly provided
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herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Purchaser's bene-fit as a
purchaser or holder of the Warrants or Underlying Common Stock are also for the
benefit of, and enforceable by, any subsequent holder of such Warrants or such
Underlying Common Stock.
5E. Severability. Whenever possible, each provision of this Agreement
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shall be interpreted in such manner as to be effec-tive and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
5F. Counterparts. This Agreement may be executed simul-tane-ously in
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two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counter-parts taken together shall constitute
one and the same Agreement.
5G. Descriptive Headings; Interpretation. The descrip-tive headings of
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this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
5H. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF NEVADA SHALL
--------------
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND OBLIGATIONS
OF THE COMPANY AND ITS STOCK-HOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING
THE CONSTRUC-TION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
AND THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
GEORGIA OR ANY OTHER JURIS-DICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF GEORGIA.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.
POINTE COMMUNICATIONS CORPORATION
By
Its
▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P. -
ENHANCED APPRECIATION
By
Its
PROMISSORY NOTE
---------------
$1,000,000.00 December 17, 1998
For value received, Pointe Communications Corporation, a Nevada corporation
(the "Maker") promises to pay to the order of ▇▇▇▇▇▇▇ Capital Partners, L.P. -
-----
Enhanced Appreciation, a Georgia limited partnership ("▇▇▇▇▇▇▇") at such place
-------
as is designated in writing by the holder of this Note, the aggregate principal
sum of One Million Dollars and no cents ($1,000,000.00) together with interest
thereon calculated from the date hereof in accordance with the provisions of
this Note. The Maker=s obligations under this Note shall be senior to all of
Maker=s obligations under any of its unsecured indebtedness (or guarantees of
indebtedness).
1. Payment of Interest. Interest shall accrue on the outstanding
---------------------
principal amount of this Note at a rate equal to 10%. All accrued interest
shall be due and payable on the date on which the final principal amount on this
Note is payable. Interest will accrue on any principal payment due under this
Note and, to the extent permitted by applicable law, on any interest which has
not been paid on the date on which it is payable until such time as payment
therefor is actually delivered to the holder hereof.
2. Payment of Principal. The Maker shall repay the principal amount of
--------------------
$1,000,000.00 (or such lesser amount as may then be outstanding), together with
all accrued and unpaid interest thereon, to the holder hereof on the earliest of
(i) April 16, 1999, or (ii) the date on which the Maker obtains permanent (i.e.
repayment or redemption of which is not required within one year) equity
financing of at least Five Million Dollars ($5,000,000.00) ("Permanent
---------
Financing") or (iii) the date on which an Event of Default occurs, as defined in
the Security Agreement, dated as of December 18, 1998, between the Maker and
▇▇▇▇▇▇▇ (the ASecurity Agreement@). The Maker shall give written notice ten
-------------------
(10) business days prior to consummating such Permanent Financing.
3. Prepayments. The Maker may, at any time and from time to time
-----------
without premium or penalty, prepay all or any portion of the outstanding
principal amount of this Note; provided that the Maker simultaneously pays all
interest on this Note accrued and unpaid through the date of such prepayment.
4. Security. This note and any renewals and extensions hereof and any
--------
other liabilities and obligations of the undersigned to ▇▇▇▇▇▇▇ are guaranteed
pursuant to a certain non-recourse Guaranty of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dated as of
the date hereof, and Securities Pledge Agreement relating thereto, also dated as
of the date hereof, as such agreement may be amended, modified or restated from
time to time hereafter, and are secured pursuant to a certain Security
Agreement, between the Maker and ▇▇▇▇▇▇▇, as such agreement may be amended,
modified or restated from time to time hereafter.
5. Option. Upon receiving notice, ▇▇▇▇▇▇▇ can elect by delivery of
------
written notice to the Maker to convert all or any portion of the principal or
accrued but unpaid interest of this Note into securities issued in connection
with a Permanent Financing or an independent equity financing by Maker; it being
understood that ▇▇▇▇▇▇▇ shall have the right to participate in any such
Permanent Financing and shall have the right to purchase each class of
securities offered in such Permanent Financing pro rata according to the amount
invested in each such class.
6. Default Interest Rate. If the Maker fails to repay the principal
-----------------------
amount, and accrued but unpaid interest thereon, due hereunder in accordance
with the terms hereof, in addition to all of ▇▇▇▇▇▇▇=s rights and remedies under
the Security Agreement, the Securities Pledge Agreement or under applicable
law, the interest rate on the Note shall increase immediately by an increment of
two (2) percentage points.
7. Cancellation. After all principal and accrued interest at any time
------------
owed on this Note has been paid in full, this Note shall be surrendered to the
Maker for cancellation and shall not be reissued.
8. Costs of Collection. In the event the Maker fails to pay any
---------------------
amounts due hereunder when due, the Maker shall pay to the holder hereof, in
addition to such amounts due, all costs of collection, including reasonable
attorneys' fees.
9. Waivers. The Maker, or its successors and assigns, hereby waives
-------
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Maker hereunder. In any
action on this Note, the holder hereof need not produce or file the original of
this Note, but need only file a photocopy of this Note certified by the holder
hereof to be a true and correct copy of this Note.
10. Remedies. All rights and remedies of ▇▇▇▇▇▇▇, whether provided for
--------
herein or conferred by law, are cumulative and concurrent and the exercise of
any one or more of them shall not preclude the simultaneous or later exercise by
▇▇▇▇▇▇▇ of any or all other rights, powers or remedies.
11. Notice. All notices, demands or other communications to be given
------
or delivered under or by reason of the provisions of this Note shall be in
writing and shall be deemed to have been given if (i) delivered personally to
the recipient, (ii) mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid or (iii) sent to the recipient by
reputable overnight courier services (charges prepaid).
If to ▇▇▇▇▇▇▇:
---------------
▇▇▇▇▇▇▇ Capital Partners, L.P. - Enhanced Appreciation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
with a copy, which will not constitute notice to ▇▇▇▇▇▇▇, to:
-----------------------------------------------------------------------
Ellis, Funk, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Dokson, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
If to Pointe Communications Corporation:
--------------------------------------------
Pointe Communications Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax Number
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
-----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
All such notices, request, demands, waivers and other communications shall be
deemed to have been received (i) if by personal delivery on the date after such
delivery, (ii) if by certified or registered mail, on the seventh business day
after the mailing thereof and (iii) if by next-day or overnight mail or
delivery, on the day delivered.
12. Usury Laws. It is the intention of the Maker and the holder of
-----------
this Note to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated or
this Note is prepaid, whether by reason of an Event of Default as defined in
paragraph 4 of the Security Agreement, voluntary prepayment by the Maker or
otherwise, then earned interest may never include more than the maximum amount
permitted by law, computed from the date hereof until payment. If such interest
does exceed the maximum legal rate, it shall be deemed a mistake and such excess
shall be canceled automatically and, if theretofore paid, rebated to the Maker
or credited on the principal amount of this Note, or if this Note has been
repaid, then such excess shall be rebated to the Maker.
13. Governing Law. All questions concerning the construction, validity
-------------
and interpretation of this Note will be governed by and construed in accordance
with the domestic laws of the State of Georgia, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Georgia or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Georgia.
IN WITNESS WHEREOF, this Note is executed as of the date first written
above.
POINTE COMMUNICATIONS CORPORATION
By:_________________________
Its:_________________________
This Warrant was originally issued on December 17, 1998 and such issuance was
not registered under the Securities Act of 1933, as amended, or the securities
laws of any state. If reasonably requested by Company counsel, no transfer of
this Warrant shall be made except in connection with an opinion from Registered
Holder=s counsel, acceptable to counsel for the Company, that such transfer is
exempt from federal and state registration.
POINTE COMMUNICATIONS CORPORATION
STOCK PURCHASE WARRANT
----------------------
Date of Issuance: December 17, 1998 Certificate No. W-2
FOR VALUE RECEIVED, Pointe Communications Corporation, a Nevada corporation
(the "Company"), hereby grants to ▇▇▇▇▇▇▇ Capital Partners, L.P. - Enhanced
Appreciation, a Georgia limited partnership, or its registered assigns (the
"Registered Holder") the right to purchase from the Company 380,000 shares of
the Company's Common Stock at a price per share of $1.00 (as adjusted from time
to time hereunder, the "Exercise Price"). This Warrant is being granted to the
Registered Holder in connection with and, in consideration for the $1 million
loan the Registered Holder is making to the Company contemporaneously with the
issuance of this Warrant. Certain capitalized terms used herein are defined in
Section 5 hereof. The amount and kind of securities obtainable pursuant to the
rights granted hereunder and the purchase price for such securities are subject
to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
---------------------
1A. Exercise Period. The Registered Holder may exercise, in whole or
----------------
in part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time until the third
anniversary of the Date of Issuance (the "Exercise Period").
1B. Exercise Procedure.
-------------------
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C below,
executed by the Person exercising all or part of the purchase rights represented
by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit II hereto evidencing
----------
the assignment of this Warrant to the Purchaser, in which case the Registered
Holder shall have complied with the provisions set forth in Section 7 hereof;
and
(d) either (1) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price"), (2) the
surrender to the Company of debt or equity securities of the Company or any of
its wholly-owned Subsidiaries having a Market Price equal to the Aggregate
Exercise Price of the Common Stock being purchased upon such exercise (provided
that for purposes of this subparagraph, the Market Price of any note or other
debt security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus all
accrued and unpaid interest thereon or accrued or declared and unpaid dividends
thereon) or (3) a written notice to the Company that the Purchaser is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold from
issuance a number of shares of Common Stock issuable upon such exercise of the
Warrant which when multiplied by the Market Price of the Common Stock is equal
to the Aggregate Exercise Price (and such withheld shares shall no longer be
issuable under this Warrant).
(ii) Certificates for shares of Common Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within five business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall within such five-day period, deliver
such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock. Each share of Common Stock issuable upon exercise of
this Warrant shall upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued Common
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof, be conditioned upon the
consummation of the public offering or sale of the Company in which case such
exercise shall not be deemed to be effective until the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange (except for Arestricted stock@ rules and requirements) upon which
shares of Common Stock may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).
The Company shall not take any action which would cause the number of
autho-rized but unissued shares of Common Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon exercise of the
Warrants.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
-------------------
Exercise Agreement shall be substantially in the form set forth in Exhibit I
---------
hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
1D. Fractional Shares. If a fractional share of Common Stock would,
------------------
but for the provisions of paragraph 1A, be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within five business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the Market
Price of such fractional share as of the date of the Exercise Time .
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
-------------------------------------------------
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of
-------------------------------------------------------------------
Common Stock. If and whenever the Company issues or sells (except pursuant to
-------------
exercised options, warrants or similar instruments outstanding as of the date
hereof), or in accordance with paragraph 2B is deemed to have issued or sold,
any share of Common Stock for a consideration per share less than the Exercise
Price in effect immediately prior to such time, then immediately upon such issue
or sale the Exercise Price shall be reduced to the lowest net price per share at
which such share of Common Stock has been issued or sold or is deemed to have
been issued or sold. Upon each such adjustment of the Exercise Price hereunder,
the number of shares of Common Stock acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------------
determining the adjusted Exercise Price under paragraph 2A, the following shall
be applicable:
(i) Issuance of Rights or Options. If subsequent to the date
---------------------------------
hereof the Company in any manner grants or sells any Options and the lowest
price per share for which any one share of Common Stock is issuable upon the
exercise of any such Option, or upon conversion or exchange of any Convertible
Security issuable upon exercise of such Option, is less than the Exercise Price
in effect immediately prior to the time of the granting or sale of such Option,
then such share of Common Stock shall be deemed to have been issued and sold by
the Company at such time for such price per share. For purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option and upon conversion or exchange of the Convertible Security. No further
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Security upon the exercise of such Options
or upon the actual issue of such Common Stock upon conversion or exchange of
such Convertible Security.
(ii) Issuance of Convertible Securities. If subsequent to the
-------------------------------------
date hereof the Company in any manner issues or sells any Convertible Security
and the lowest price per share for which any one share of Common Stock is
issuable upon conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then such share or
shares of Common Stock shall be deemed to have been issued and sold by the
Company at such time for such price per share. For the purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance of the Convertible Security and upon the
conversion or exchange of such Convertible Security. No further adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of any Convertible Security, and if any such issue or
sale of such Convertible Security is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to other
provisions of this Section 2, no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
------------------------------------------
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock changes at any time, the Exercise Price in effect at the time
of such change shall be adjusted immediately to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of Common Stock
issuable hereunder shall be correspondingly adjusted. For purposes of this
paragraph 2B, if the terms of any Option or Convertible Security which was
outstanding as of the date of issuance of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change; provided that no such change shall at any time cause the Exercise Price
hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
-------------------------------------------------------------
Securities. Upon the expiration of any Option or the termination of any right
----------
to convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect shall be adjusted immediately
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that no such change shall at any time cause the Exercise
Price hereunder to be increased.
(v) Calculation of Consideration Received. If any Common Stock,
---------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined jointly by the
Company and the Registered Holders of Warrants representing a majority of the
shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an appraiser jointly selected by the Company
and the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of such Warrants. The determination of
such appraiser shall be final and binding on the Company and the Registered
Holders of the Warrants, and the fees and expenses of such appraiser shall be
paid by the Company.
(vi) Treasury Shares. The number of shares of Common Stock
----------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(vii) Record Date. If the Company takes a record of the holders
------------
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
2C. Subdivision or Combination of Common Stock. If the Company at any
-------------------------------------------
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2D. Reorganization, Reclassification, Consolidation, Merger or Sale.
------------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic Change." Prior to the consummation of any Organic Change,
the Company shall make appropriate provision to insure that each of the
Registered Holders of the Warrants shall thereafter have the right to acquire
and receive, in lieu of or addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the exercise of
such holder's Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
such holder's Warrant had such Organic Change not taken place. In any such
case, the Company shall make appropriate provision with respect to such holders=
rights and interests to insure that the provisions of this Section 2 and
Sections 3 and 4 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by appropriate written instrument the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2E. Certain Events. If any event occurs of the type contemplated by
---------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided that no such adjustment shall increase the Exercise Price or decrease
the number of shares of Common Stock obtainable as otherwise determined pursuant
to this Section 2.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
Section 3. Purchase Rights. If at any time the Company grants, issues or
---------------
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then the Registered Holder of this Warrant
=
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set forth
-----------
below:
"Common Stock" means the Company's Common Stock, .00001 par value, and
-------------
except for purposes of the shares obtainable upon exercise of this Warrant, any
capital stock of any class of the Company hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon any liquidation, dissolution or winding up of the Company.
"Convertible Securities" means any stock or securities (directly or
-----------------------
indirectly) convertible into or exchangeable for Common Stock.
-
"Market Price" means as to any security the average of the closing prices
-------------
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the Company
and the Registered Holders of Warrants representing a majority of the Common
Stock purchasable upon exercise of all the Warrants then outstanding; provided
that if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined by an appraiser jointly selected by
the Company and the Registered Holders of Warrants representing a majority of
the Common Stock purchasable upon exercise of all the Warrants then outstanding.
The determination of such appraiser shall be final and binding on the Company
and the Registered Holders of the Warrants, and the fees and expenses of such
appraiser shall be paid by the Company.
"Options" means any rights or options to subscribe for or purchase Common
-------
Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
------
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"The Warrant" means this Warrant and any other warrants exchanged directly
------------
or indirectly for all or a portion of this Warrant.
Other capitalized terms used in this Warrant but not defined herein shall
have the meanings set forth in the Purchase Agreement, dated December 18, 1998,
between the Company and the Registered Holder.
Section 5. No Voting Rights; Limitations of Liability. This Warrant shall
------------------------------------------
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 6. Warrant Transferable. Subject to the transfer conditions
---------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) at the principal office of the Company.
-----------
Section 7. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
Section 8. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 9. Notices. Except as otherwise expressly provided herein, all
-------
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered, sent or deposited in
the U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by any such holder).
Section 10. Amendment and Waiver. Except as otherwise provided herein,
----------------------
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants; provided that no such action may
change the Exercise Price of the Warrants or the number of shares or class of
stock obtainable upon exercise of each Warrant without the written consent of
the Registered Holders of the Warrants.
Section 11. Descriptive Headings; Governing Law. The descriptive headings
-----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its Stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Georgia without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Georgia or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of Georgia.
* * * * * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
POINTE COMMUNICATIONS CORPORATION
By:
Its:
[Corporate Seal]
Attest:
______________________________
Title: ________________________
EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Signature
Address
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Signature
Witness
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT is made the December 17, 1998, by Pointe
Communications Corporation (the "Borrower"), a Nevada corporation, and ▇▇▇▇▇▇▇
--------
Capital Partners, L.P. - Enhanced Appreciation, (the "Secured Party").
--------------
On the date hereof, the Secured Party has loaned $1 million for which the
Borrower has issued a note ("Note"). This Note is guaranteed by a non-recourse
Guaranty of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, (the "Guarantor") (who together with the
Borrower are the "Loan Party"), secured by a pledge of his stock. It was a
condition of the Secured Party's $1 million loan that the Borrower enter into
this Security Agreement and grant to the Secured Party the security interests
described below.
NOW, THEREFORE, in consideration of the premises herein contained, and
certain other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower and the Secured Party hereby agree
as follows:
1. Grant of Security Interest. As security for the payment and
-----------------------------
performance of the Secured Obligations (as defined in Section 6(g)), the
Borrower hereby gives, grants and assigns to the Secured Party a lien and
security interest in and against (i) those items described in Exhibit A attached
---------
hereto and incorporated herein and (ii) any and all additions and accessions to,
and substitutions, replacements and exchanges for, any and all of the foregoing
items in each case whether now owned, hereafter acquired and wherever located,
and all proceeds thereof (all of the foregoing being hereinafter referred to as
the "Collateral").
----------
2. Representations of the Borrower. The Borrower hereby represents and
-------------------------------
warrants as follows:
(a) The Borrower is the owner of all of the Collateral and, except to
the extent described on the Security Interests Schedule attached hereto, there
is no lien or security interest in or against any of such Collateral except the
lien of the Secured Party pursuant to this Security Agreement.
(b) The Borrower presently has in effect, or will have in effect as
each item of Collateral is acquired, all insurance required hereunder.
(c) The Borrower has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and this Agreement has
been duly executed and delivered by the Borrower.
(d) The execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the performance of its obligations
hereunder by the Borrower will not conflict with, or result in any violation of
or default under, any provision of any governing instrument applicable to the
Borrower, or any agreement or other instrument to which the Borrower is a party
or by which the Borrower or any of its properties are bound, or any decree,
order, statute, rule or regulation applicable to the Borrower or its business or
properties. This Agreement constitutes a valid and binding obligation of the
Borrower, enforceable in accordance with its terms.
3. Covenants of the Borrower. The Borrower covenants and agrees as
----------------------------
follows:
(a) (i) The Borrower shall keep the Collateral hereunder insured for
full replacement value against fire, theft, casualty and other loss and extended
coverage at all times throughout the term of this Security Agreement and furnish
to the Secured Party evidence of such insurance for the full replacement cost of
such Collateral. Secured Party shall be named as a loss payee, as its interests
may appear, on each such policy of insurance.
(ii) The Borrower shall provide and keep in full force and effect, or
cause to be provided and kept in full force and effect, during the term of this
Security Agreement, for its benefit and for the benefit of the Secured Party, as
an additional insured, comprehensive general liability insurance. Such
insurance shall include at least the hazards arising from the ownership and
possession of the Collateral hereunder and the hazards of any operations being
carried on by the Borrower with respect to such Collateral.
(iii) All policies of insurance required under this Security Agreement
shall contain provisions complying with the requirements hereof and shall be
issued by a nationally recognized insurance company or companies qualified to
write such policies under the laws of the State of Georgia. All insurance as to
form, amount, coverage and insurance companies shall be satisfactory to the
Secured Party. All policies shall require that no less than thirty (30) days
written notice of cancellation will be given to the Secured Party. All costs of
insurance shall be borne by the Borrower. Renewal binders, certificates or
policies, together with evidence of payment of premiums, shall be deposited with
the Secured Party at least fifteen (15) days before the expiration of the prior
existing policies. All insurance is required commencing from the date hereof
and is to be continued throughout the term of the Security Agreement. The
Borrower shall not violate or cause to be violated any of the conditions of the
policies of insurance to be maintained hereunder.
(b) The Borrower shall, at the Borrower's cost and upon request of the
Secured Party, furnish to the Secured Party such further information, execute
and deliver to the Secured Party such documents showing the Secured Party as
having a security interest in the Collateral, and do such other acts and things,
all as the Secured Party may at any time reasonably request relating to the
perfection or protection of the security interests created by this Security
Agreement or for the purpose of carrying out the intent of this Security
Agreement. Without limiting the generality of the foregoing, Borrower shall
promptly notify Secured Party in writing if the location of any item of
Collateral changes and will in a timely manner execute and convey to Secured
Party any forms necessary to assure Secured Party's security interest in the
Collateral remains at all times, perfected.
(c) The Borrower agrees to pay promptly when due all taxes, assessments
or governmental charges with respect to the Collateral hereunder or operations
of the Borrower with respect to such Collateral, in each case before the same
become delinquent and before penalties accrue thereon.
(d) The Borrower will maintain, protect, preserve and repair the
Collateral and keep the same in good working order, subject only to normal wear
and tear. The Borrower will make the Collateral hereunder available to the
Secured Party for its inspection at any time during the term of this Security
Agreement.
(e) Without the Secured Party's prior written consent, the Borrower
will not create or permit any other lien on, or security interest in, any
portion of the Collateral hereunder other than liens in favor of the Secured
Party and other liens referenced herein or on schedules hereto.
(f) The Borrower shall pay all Secured Obligations when due. Without
limiting the foregoing, the Borrower shall immediately and without demand (i)
pay all amounts due under the Note when due and (ii) reimburse Secured Party for
all amounts incurred and described in the following clause 3(g) or in clauses
(ii) and (iii) of the definition of Secured Obligations. Any amounts not so
repaid, and all other Secured Obligations not repaid when due (including, to the
extent permitted by applicable law, unpaid interest) shall bear interest from
the date due until repaid at the rate of interest then applicable under the
Note, but in no event greater than the maximum rate permitted by applicable law.
(g) If the Borrower fails to maintain any required insurance or to
maintain, protect, preserve and repair the Collateral, or pay the amounts
contemplated in preceding clause 3(c), or otherwise perform its obligations
hereunder, Secured Party may (but shall have no obligation to) take any and all
such actions, and all amounts incurred by Secured Party in doing so shall
constitute additional Secured Obligations.
4. Events of Default. It shall be an "Event of Default" (herein so
------------------- ----------------
called) if the Loan Party shall (i) fail to repay when due any of the Secured
Obligations or shall otherwise breach any of its obligations under the Note, the
Security Agreement or under any other document, instrument or agreement
evidencing, documenting or securing any of the Secured Obligations (collectively
the "Loan Documents") or if any representation of warranty made by or on behalf
of the Loan Party in the Loan Documents shall have been false in any material
respect when made, (ii) if the Loan Party shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it bankrupt or insolvent , or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Loan Party shall make a
general assignment for the benefit of its creditors, (iii) there shall be
commenced against the Loan Party any case, proceeding or other action of a
nature referred to in clause (ii) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 15 days, (iv) there shall
be commenced against the Loan Party any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 15 days from entry thereof, (v) the Loan
Party shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (ii), (iii)
or (iv) above, or (vi) the Loan Party shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they become
due.
5. Remedies on Default. Upon the occurrence of any Event of Default,
---------------------
the Secured Party shall have all of the rights and remedies of a secured party
under the Georgia Uniform Commercial Code and under any other applicable law, as
the same may from time to time be in effect. Upon demand of the Secured Party
after the occurrence of any Event of Default, the Borrower shall deliver, or
cause to be delivered, all Collateral covered hereby to the Secured Party at the
Borrower's expense. Any notice which the Secured Party is required to give to
the Borrower under the Georgia Uniform Commercial Code of a time and place of
any public sale or the time after which any private sale or other intended
disposition of collateral hereunder is to be made shall be deemed to constitute
reasonable notice if such notice is mailed by registered or certified mail at
least five (5) days prior to such action.
6. Miscellaneous Provisions.
-------------------------
(a) The Secured Party's rights and remedies hereunder are cumulative.
Neither the failure nor the delay on the part of the Secured Party to exercise
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(b) All notices given pursuant to any provision of this Security
Agreement shall be in writing and hand delivered, with a receipt being obtained
therefor, or sent by United States registered or certified mail, return receipt
requested, postage prepaid, at the following address or such other address as to
which the parties hereto may be notified in writing from time to time:
Borrower:
Pointe Communications Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax Number
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
and
Secured Party:
▇▇▇▇▇▇▇ Capital Partners, L.P. - Enhanced Appreciation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
with a copy, which will not constitute notice to the Secured Party, to:
---------------------------------------------------------------------------
Ellis, Funk, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Dokson, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
All such notices shall be deemed to have been given when received (if hand
delivered) or two (2) days after deposit in the mails (if mailed).
(c) All amendments and modifications of this Security Agreement or any
schedules hereto must be in writing and signed by the party against whom the
same is sought to be enforced.
(d) If any term or provision of this Security Agreement or the
application thereof shall, to any extent, be invalid or unenforceable, the
remainder of this Security Agreement, or the application of such term or
provision, shall be valid and may be enforced to the fullest extent permitted by
law.
(e) This Security Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, all rights and remedies being
governed by such laws.
(f) This Security Agreement secures not only Secured Obligations that
are presently outstanding but also Secured Obligations that may arise in the
future, and there may be times during the term of this Security Agreement when
no Secured Obligations are actually outstanding. Nevertheless, this Security
Agreement shall continue in full force and effect until terminated in writing by
Borrower and Secured Party.
(g) The "Secured Obligations", as defined herein, shall mean,
--------------------
collectively, (i) all liabilities, obligations and indebtedness (whether actual
or contingent, whether owed jointly or severally, whether for the payment of
money, and if for the payment of money, whether for principal, interest, fees,
expenses or otherwise, and including without limitation interest accruing after
the maturity of such principal and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) of Borrower
to Secured Party now existing or hereafter arising, including without limitation
(but not limited to) those incurred under or in connection with the Note or this
Security Agreement, as all of the foregoing may be amended, modified or
supplemented from time to time, together with any and all extensions, renewals,
refinancings or refundings thereof in whole or in part, (ii) all costs and
expenses (including, without limitation, to the extent permitted by law,
reasonable attorneys' fees and other legal expenses) incurred by Secured Party
in the enforcement and collection of any of the liabilities, obligations and
indebtedness referred to in clause (i) above, and (iii) all payments and
advances made by Secured Party for the maintenance, preservation, protection or
enforcement of, or realization upon, any property or assets now or hereafter
made subject to any lien granted pursuant to this Security Agreement or pursuant
to any other agreement, instrument or note relating to the Secured Obligations
(including, without limitation, advances for taxes, insurance, storage,
transportation, repairs and the like).
(h) Promptly upon satisfaction of the Secured Obligations, Secured
Party shall execute and deliver to Borrower such evidence of termination of
Secured Party's security interest in the collateral as Borrower may reasonably
request.
IN WITNESS WHEREOF, the Borrower and the Secured Party, intending to be
legally bound hereby, have duly executed this Security Agreement under seal and
caused it to be dated the day and year first above written.
POINTE COMMUNICATIONS CORPORATION
By:________________________________
Title:_______________________________
▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P.
- ENHANCED APPRECIATION
By:_________________________________
Title:_______________________________
EXHIBIT A TO SECURITY AGREEMENT
DESCRIPTION OF COLLATERAL
"Collateral" means all personal property wherever located, in which the
----------
Borrower now has or hereafter acquires any right or interest (including, without
limitation, all Accounts, Chattel Paper, Contract Rights, Documents, Equipment,
Fixtures, General Intangibles, Instruments, Inventory, Stock Rights, cash, bank
accounts, special collateral accounts, "uncertificated securities" and
"securities entitlements" and other "investment property" (each as defined in
the Code), insurance policies and all books and records (in whatever form or
medium), customer lists, credit files, computer files, programs, printouts,
source codes, software and other computer materials (and records related to any
of the foregoing), and the proceeds (including, without limitation, all
"proceeds" as defined in the Code), insurance proceeds, unearned premiums, tax
refunds, rents, profits, offspring and products thereof (all of the foregoing is
collectively referred to as the "Collateral").
As used herein the following capitalized terms shall have the following
meanings:
"Accounts" shall mean all accounts as that term is defined in the UCC and
--------
all rights of Borrower now existing and hereafter acquired to payment for goods
sold or leased or for services rendered which are not evidenced by an Instrument
or Chattel Paper, whether or not earned by performance, together with (i) all
security interests or other security held by or granted to Borrower to secure
such rights to payment, (ii) all other rights related thereto (including rights
of stoppage in transit) and (iii) all rights in any of such sold or leased goods
which are returned or repossessed.
"Chattel Paper" shall mean all chattel paper as that term is defined in the
-------------
UCC and any document or documents which evidence both a monetary obligation and
a security interest in, or a lease or consignment of, specific goods; provided
that when a transaction is evidenced both by a security agreement or a lease and
by an Instrument or series of Instruments, the group of documents taken together
constitute Chattel Paper.
"Contract Rights" shall mean any right to payment under a contract not yet
----------------
earned by performance and not evidenced by an Instrument or Chattel Paper.
"Documents" shall mean all documents as that term is defined in the UCC and
---------
all documents of title and goods evidenced thereby (including, without
limitation, all bills of lading, dock warrants, dock receipts, warehouse
receipts and orders for the delivery of goods), together with any other document
which in the regular course of business or financing is treated as adequately
evidencing that the Person in possession of it is entitled to receive, hold and
dispose of such document and the goods it covers.
"Equipment" shall mean all equipment as that term is defined in the UCC and
---------
all equipment (including, without limitation, all machinery, vehicles, tractors,
trailers, office equipment, communications systems, computers, furniture, tools,
molds and goods) owned, used or bought for use in Borrower's business whether
now owned, used or bought for use or hereafter acquired, used or bought for use
and wherever located, together with all accessories, accessions, attachments,
parts and appurtenances thereto.
"Fixtures" shall mean all fixtures as that term is defined in the UCC and
--------
all goods which are or are to be attached to real property in such a manner that
their removal would cause damage to the real property and which have therefore
taken on the character of real property.
"General Intangibles" shall mean all general intangibles as that term is
--------------------
defined in the UCC and all intangible personal property of every kind and nature
other than Accounts (including, without limitation, all Contract Rights, other
rights to receive payments of money, choses in action, security interests,
indemnification claims, judgments, tax refunds and tax refund claims, royalty
and product rights, inventions, work in progress, patents, patent applications,
trademarks, trademark applications, trade names, copyrights, copyright
applications, permits, licenses, franchises, leasehold interests in real or
personal property, rights to receive rentals of real or personal property or
payments under letters of credit, insurance proceeds, know-how, trade secrets,
other items of Intellectual Property and proprietary rights, goodwill (whether
or not associated with any of the foregoing), computer software and guarantee
claims).
"Instruments" shall mean all negotiable instruments (as that term is
-----------
defined in the UCC), certificated securities (as that term is defined in the
UCC) and any replacements therefor and Stock Rights related thereto, and other
writings which evidence rights to the payment of money (whether absolute or
contingent) and which are not themselves security agreements or leases and are
of a type which in the ordinary course of business are transferred by delivery
with any necessary endorsement or assignment (including, without limitation, all
checks, drafts, notes, bonds, debentures, government securities, certificates of
deposit, letters of credit, preferred and common stocks, options and warrants).
"Intellectual Property" means all (i) patents, patent applications, patent
----------------------
disclosures and inventions, (ii) trademarks, service marks, trade dress, trade
names, logos and company and corporate names and registrations and applications
for registration thereof, together with the goodwill of the business connected
with the use of, and symbolized by, the foregoing of this term, (iii) copyrights
and registrations and applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer software,
data, data bases and documentation, (vi) trade secrets and other confidential
information (including, without limitation, ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial and marketing plans
and customer and supplier lists and information), (vii) other intellectual
property rights and (viii) copies and tangible embodiments thereof (in whatever
form or medium).
"Inventory" shall mean all inventory as that term is defined in the UCC and
---------
all goods (as that term is defined in the UCC) other than Equipment and Fixtures
(including, without limitation, goods in transit, goods held for sale or lease
or furnished or to be furnished under contracts for service, raw materials, work
in process and materials used or consumed in the Borrower's business, finished
goods, returned or repossessed goods and goods released to the Borrower or to
third parties under trust receipts or similar Documents).
"Proceeds" shall mean all proceeds (as that term is defined in the UCC) and
--------
any and all amounts or items of property received when any Collateral or
proceeds thereof are sold, exchanged, collected or otherwise disposed of, both
cash and non-cash, including proceeds of insurance, indemnity, warranty or
guarantee paid or payable on or in connection with any Collateral.
"Receivables" shall mean all Accounts, Chattel Paper and Contract Rights
-----------
and all Instruments representing rights to receive payments.
"Stock Rights" shall mean all "investment property" as that term is defined
------------
in the UCC, and including, without limitation, any stock, security (whether
certificated or uncertificated) or securities entitlement, any dividend or other
distribution and any other right or property which Borrower shall receive or
shall become entitled to receive for any reason whatsoever with respect to, in
substitution for or in exchange for any and all shares of stock and other
Instruments and certificated or uncertificated securities or securities
entitlement, any right to receive or acquire any Instrument and certificated or
uncertificated security or securities entitlement and any right to receive
earnings, in which Borrower now has or hereafter acquires any right.
"UCC" shall mean the Uniform Commercial Code as in effect in any applicable
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jurisdiction.
