EXHIBIT 10.60
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STARTEC GLOBAL OPERATING COMPANY
STARTEC GLOBAL LICENSING COMPANY
$10,000,000
LOAN AGREEMENT
(UNSECURED)
APRIL 13, 2001
FINANCING PROVIDED BY
ALLIED CAPITAL CORPORATION
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TABLE OF CONTENTS
PREAMBLE
Parties
Recitals
ARTICLE 1 - Loan..................................................................................................1
Section 1.1 Funding........................................................................................1
Section 1.2 Intercreditor and Subordination Agreement......................................................2
ARTICLE 2 - Representations and Warranties........................................................................2
Section 2.1 Due Organization; Authority; Binding Obligation................................................2
Section 2.2 Principal Business; Title to Assets............................................................3
Section 2.3 Litigation.....................................................................................3
Section 2.4 Taxes..........................................................................................3
(a) Generally..............................................................................3
(b) No Open Returns........................................................................3
Section 2.5 Financial Statements...........................................................................4
Section 2.6 Leases; Material Contracts.....................................................................4
(a) Leases.................................................................................4
(b) Material Contracts.....................................................................4
Section 2.7 Disclosure.....................................................................................4
Section 2.8 Management History.............................................................................5
Section 2.9 Subsidiaries and Affiliates....................................................................5
Section 2.10 Incumbency....................................................................................5
Section 2.11 No Material Adverse Change....................................................................5
Section 2.12 Non-Contravention.............................................................................5
Section 2.13 Permits and Consents..........................................................................6
Section 2.14 Fees & Brokerage..............................................................................6
Section 2.15 Other Debts...................................................................................6
Section 2.16 Solvency......................................................................................6
Section 2.17 Investment Company Act Representations........................................................6
Section 2.18 Regulatory Compliance.........................................................................6
Section 2.19 Employee Benefit Matters......................................................................7
Section 2.20 Collective Bargaining.........................................................................7
Section 2.21 Employment Related Agreements.................................................................7
Section 2.22 Related-Party Transactions....................................................................7
Section 2.23 No Competing Business Interests...............................................................8
Section 2.24 No Conflicting Non-Competition Agreements.....................................................8
Section 2.25 Government Authorizations.....................................................................8
Section 2.26 FCC Proceedings...............................................................................9
Section 2.27 Adverse Foreign Laws..........................................................................9
Section 2.28 Use of Proceeds...............................................................................9
ARTICLE 3 - Affirmative Covenants.................................................................................9
Section 3.1 Quarterly Financials...........................................................................9
Section 3.2 Year-end Financials; Annual Audit..............................................................9
Section 3.3 Business Models................................................................................9
Section 3.4 Certification of Non-Default...................................................................9
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Section 3.5 Regulatory Filings............................................................................10
Section 3.6 Notice of Litigation..........................................................................10
Section 3.7 Notice of Defaults or Judgments...............................................................10
Section 3.8 Access to Records.............................................................................10
Section 3.9 Information Requests..........................................................................11
Section 3.10 Insurance....................................................................................11
Section 3.11 Use of Proceeds..............................................................................11
Section 3.12 Financial Covenants..........................................................................11
Section 3.13 Payments.....................................................................................12
Section 3.14 Compliance With Applicable Law...............................................................12
Section 3.15 Further Assurance............................................................................12
Section 3.16 Maintain Copies..............................................................................12
Section 3.17 Weekly Meetings..............................................................................12
ARTICLE 4 - Negative Covenants...................................................................................12
Section 4.1 Restricted Payments...........................................................................13
Section 4.2 Limitation on Issuances of Guarantees of Indebtedness by Restricted Subsidiaries..............13
Section 4.3 Limitation on Investments in Unrestricted Subsidiaries........................................14
Section 4.4 Employee Loans................................................................................14
Section 4.5 Cross-Acceleration............................................................................15
Section 4.6 Changes to Indenture..........................................................................15
Section 4.6 Liens.........................................................................................15
ARTICLE 5 - Additional Negative Covenants........................................................................15
Section 5.1 Limitation on Indebtedness and Preferred Stock of Restricted Subsidiaries.....................15
Section 5.2 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.......18
Section 5.3 Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries...............19
Section 5.4 Limitation on Transactions with Stockholders and Affiliates...................................20
Section 5.5 Intentionally Left Blank......................................................................21
Section 5.6 Limitation on Asset Sales.....................................................................21
Section 5.7 Business of the Company; Restriction on Transfers of Existing Business........................22
Section 5.8 Limitation on Sale-Leaseback Transactions.....................................................22
Section 5.9 Consolidation, Merger, Conveyance, Transfer or Lease..........................................23
ARTICLE 6 - Default..............................................................................................24
Section 6.1 Events of Default.............................................................................24
(a) Principal and Interest Payments.......................................................24
(b) Representations and Warranties........................................................24
(c) Covenants.............................................................................24
(d) Loan Documents........................................................................24
(f) Involuntary Bankruptcy or Receivership Proceedings....................................25
(g) Voluntary Petitions...................................................................25
(h) Assignments for Benefit of Creditors..................................................25
(i) Undischarged Judgments................................................................25
(j) Attachment............................................................................25
(k) Receivables Purchase Agreement........................................................25
Section 6.2 Remedies......................................................................................25
(a) Default Rate of Interest..............................................................25
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(b) Acceleration..........................................................................26
ARTICLE 7 - Conditions to Closing...............................................................................26
Section 7.1 Closing.......................................................................................26
(a) Issuance of Note......................................................................26
(b) Transaction Documents.................................................................26
(c) Certified Documents...................................................................26
(d) Representations and Warranties; No Default; No Adverse Change.........................27
(e) Transaction Permitted by Applicable Laws; No Injunction...............................27
(f) Compliance with Securities Laws.......................................................27
(g) Approvals and Consents................................................................27
(h) Expenses..............................................................................27
(i) Insurance.............................................................................27
(j) Due Diligence.........................................................................27
(k) Secured 2001 Loan Documents...........................................................27
(l) Opinion of General Counsel............................................................27
(n) Waivers and Consents..................................................................28
ARTICLE 8 - Redemption or Defeasance.............................................................................28
Section 8.1 Maturity of Note upon Change of Control.......................................................28
Section 8.2 Defeasance and Discharge......................................................................28
Section 8.3 Covenant Defeasance...........................................................................29
Section 8.4 Conditions to Defeasance or Covenant Defeasance...............................................30
Section 8.5 Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous
Provisions..............................................................................30
Section 8.6 Reinstatement.................................................................................31
Section 8.7 Appointment of Trustee........................................................................31
Section 8.8 Section 8.1 Not Applicable....................................................................31
ARTICLE 9 - Termination of Covenants/Removal of Covenants........................................................31
ARTICLE 10 - Fees and Costs; Deposit.............................................................................31
Section 10.1 Fees and Costs...............................................................................31
ARTICLE 11 - Indemnification.....................................................................................32
ARTICLE 12 - Remedies............................................................................................33
Section 12.1 Cumulation...................................................................................33
Section 12.2 No Implied Waiver............................................................................33
ARTICLE 13 - Parties.............................................................................................33
ARTICLE 14 - Notice..............................................................................................33
ARTICLE 15 - Relationship of the Parties.........................................................................34
ARTICLE 16 - Controlling Law; Venue and Non-Exclusive Jurisdiction; Service of Process...........................35
ARTICLE 17 - Waiver of Trial by Jury.............................................................................35
ARTICLE 18 - Captions; Severance.................................................................................35
ARTICLE 19 - Counterparts; Entire Agreement......................................................................36
ARTICLE 20 - Definitions and Rules of Construction...............................................................36
Section 20.1 Definitions..................................................................................36
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Section 20.2 Rules of Construction........................................................................53
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EXHIBIT 10.60
THIS LOAN AGREEMENT is made as of April 13, 2001 by and among
(i) Startec Global Operating Company, a Delaware corporation (collectively with
successors and assigns "Startec"), (ii) Startec Global Licensing Company, a
Delaware corporation (collectively with successors and assigns, "Startec
Licensing", Startec and Startec Licensing being collectively referred to herein
as the "Company"), and (iii) Allied Capital Corporation, a Maryland corporation
(collectively with successors and assigns, "Holder"). Capitalized terms not
otherwise defined herein shall have the meanings set out in the definition
section hereof, which is Section 20.1.
RECITALS
A. Under terms of an Investment and Loan Agreement (the "2000 Loan Agreement"),
dated June 30, 2000, Startec Global Communications Corporation, a Delaware
corporation and the parent of the Company (collectively with successors and
assigns, "Holdings") issued to Holder certain debt instruments and certain
warrants to purchase shares of the Company's Common Stock in consideration for a
loan in the aggregate principal amount of Twenty Million Dollars ($20,000,000)
(the "2000 Loan"), to be used for general corporate purposes including (without
limitation) the acquisition of Telecommunication Assets.
B. On the date hereof pursuant to a Loan Agreement (the "2001 Secured Loan
Agreement"), the Company has committed to issue certain debt instruments for a
loan in the aggregate principal amount of Ten Million Dollars ($10,000,000)
(collectively, with all modifications, renewals, extensions and replacements
thereof and therefor, the "Secured 2001 Loan"), to be used to pay a dividend to
Holdings for the purpose of retiring Ten Million Dollars in principal of the
2000 Loan and which will be secured by certain accounts of the Company.
C. The Company has committed to issue certain debt instruments for a loan in the
aggregate principal amount of Ten Million Dollars ($10,000,000) (collectively,
with all modifications, renewals, extensions and replacements thereof and
therefor, the "Loan"), to be used to pay a dividend to Holdings for the purpose
of retiring Ten Million Dollars in principal of the 2000 Loan.
PROVISIONS
In consideration of the premises and the covenants herein, Holder
and the Company agree as set forth below.
ARTICLE 1
LOAN
SECTION 1.1 FUNDING. At Closing, Holder will fund the Loan to the Company. The
Loan will be evidenced by, and repaid according to the terms of, a promissory
note (collectively, with all modifications, extensions, renewals and
replacements thereof and therefor, the "Note"), which will be issued by the
Company to Holder at Closing. This Agreement and the Note, collectively with all
modifications, extensions, renewals and replacements thereof and therefor, are
sometimes hereinafter referred to as the "Loan Documents."
SECTION 1.2 INTERCREDITOR AND SUBORDINATION AGREEMENT. This Agreement is subject
to the terms of that certain Intercreditor and Subordination Agreement among
NTFC Capital Corporation, Holder and Startec.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
To induce Holder to enter the transactions contemplated herein and
purchase the Note, the Company represents and warrants as set out below. All
representations and warranties in this Article shall refer to facts as they
exist at Closing and shall survive the Closing.
SECTION 2.1 DUE ORGANIZATION; AUTHORITY; BINDING OBLIGATION.
(a) The Company is duly incorporated, validly existing and in good
standing under the laws of the state of Delaware having a Certificate of
Incorporation, as amended, and Bylaws, (all terms of which are in full force and
effect) as previously furnished to Holder, and true copies of which, together
with all other material constituent documents of the Company, are attached
hereto as part of EXHIBIT 2.01(a); and each of the Company's Subsidiaries is
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation;
(b) Each of the Company and its Subsidiaries is duly qualified to
conduct business as proposed and is in good standing as a foreign corporation
in all jurisdictions in which the nature of its business or location of its
properties require such qualification and a list of such jurisdictions is
attached hereto as EXHIBIT 2.01(b); except where the failure to so qualify
would not have a Material Adverse Effect on the Company or its Subsidiaries;
(c) The Company has full power and authority to enter into this
Agreement, to borrow money as contemplated hereby, and to carry out the
provisions hereof; the Company has taken all corporate action necessary for
the execution and performance of this Agreement as evidenced by the
resolutions set forth as EXHIBIT 2.01(c);
(d) This Agreement and each document to be executed by the
Company herewith will constitute a valid and binding obligation of the
Company, enforceable in accordance with their respective terms when executed
and delivered, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and similar laws of general application
relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law); and
(e) The Company has caused its counsel to deliver a letter
opining as to such authority and related matters in substantially the form
set forth on EXHIBIT 2.01(d).
SECTION 2.2 PRINCIPAL BUSINESS; TITLE TO ASSETS.
(a) The Company and its Subsidiaries are primarily engaged in
business as integrated communications providers of Internet Protocol services,
including voice over internet protocol, data and internet services to ethnic
communities and businesses and other telecommunications services (the
"Business");
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(b) The Company and each of its Subsidiaries has good and
marketable title to and ownership of all real and personal property it
purports to own free and clear of all liens, claims, security interests and
encumbrances except for Permitted Liens and impairments that flow from the
failure to make certain payments as set forth on EXHIBIT 2.12.
SECTION 2.3 LITIGATION. There is no suit, action, claim, proceeding or
investigation by or before any governmental body, agency, commission, Regulatory
Agency, arbitrator or other similar public or private decisionmaker or other
tribunal now pending or, to the Knowledge of the Company, threatened against or
affecting the Company, any of its Subsidiaries, the Indian Partner, or any of
their respective Executive Officers or directors, or any property services,
Regulatory Authorizations or rights of the Company which could have a Material
Adverse Effect on the Company or its Subsidiaries, except as set out in the
litigation schedule attached hereto as EXHIBIT 2.03 (hereinafter "Litigation
Schedule"); to the Knowledge of the Company, there is no basis or grounds for
any such suit or proceeding and there are no outstanding orders, judgments,
writs, injunctions or decrees or any court, government agency or arbitrational
tribunal against or affecting the Company or any of its Subsidiaries or the
property, assets or business of the Company or which could have a Material
Adverse Effect on the Company, its Subsidiaries, or its Indian Partner.
SECTION 2.4 TAXES.
(a) GENERALLY. The Company and each of its Subsidiaries has filed or
caused to be filed all federal, state, local and foreign tax returns, which are
required to be filed on or before the Closing Date, or has filed extensions
therefor, except for returns in state and local jurisdictions wherein the
Company or its relevant Subsidiaries (as applicable) had revenues less than
$1,000 in the applicable tax period and all such returns were correct and
complete in all material respects. The Company and its Subsidiaries have paid in
full or made adequate provisions for all taxes shown to be due on such returns
and otherwise has fully reserved for or paid all taxes due for all periods or
portions thereof ending prior to or on the Closing Date except taxes that are
being contested in good faith by appropriate proceedings and for which the
Company shall have set aside on its books adequate reserves in accordance with
GAAP.
(b) NO OPEN RETURNS. No federal, state, local, foreign or other
return of the Company or any of its Subsidiaries for tax years that remain open
under any applicable statute of limitations, has been examined by the Internal
Revenue Service or other tax authorities; or if so examined no deficiencies have
been asserted or assessments made as a result of such examinations (including
all penalties and interest); there are no waivers, agreements or other
arrangements providing for any extension of time with respect to the assessment
or collection of any unpaid tax, interest or penalties relating to the Company
or any of its Subsidiaries; no issues have been raised by (or are currently
pending before) the Internal Revenue Service or any other taxing authority in
connection with any return of the Company or any of its Subsidiaries, which
could reasonably be expected to have a Material Adverse Effect on the Company or
its Subsidiaries if decided adversely to the Company or its Subsidiaries, nor
are there any such issues which have not been so raised but if so raised by the
Internal Revenue Service, or any other taxing authority, could, in the
aggregate, reasonably be expected to have such a Material Adverse Effect.
SECTION 2.5 FINANCIAL STATEMENTS. The audited financial statements for the
twelve (12) month period ending December 31, 1999 and unaudited financial
statements for the nine (9) month
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period ending September 30, 2000, previously provided to Holder (collectively,
the "Financial Statements") are prepared in accordance with GAAP, are true and
correct in all material respects, and fairly state the results of Holdings'
(including the Company and its Subsidiaries on a consolidated basis) operations
and its financial position at such dates and for the periods stated, subject, in
the case of such unaudited financial statements, to normal year-end adjustments
which, in the aggregate, are not material.
SECTION 2.6 LEASES; MATERIAL CONTRACTS.
(a) LEASES. A copy of all material real property leases to which the
Company and its Subsidiaries are a party have been provided to Holder, and a
list of such leases is attached hereto as EXHIBIT 2.06(a); the Company's and
each Subsidiary's possession of its material leased property has not been
disturbed, and to the Knowledge of the Company and except as set forth on
EXHIBIT 2.06(a) no claim has been asserted against the Company or any Subsidiary
adverse to its material leasehold interests. All lease obligations of the
Company and its Subsidiaries are current in all material respects.
(b) MATERIAL CONTRACTS. All material contracts to which the Company
and its Subsidiaries are a party are valid and binding agreements, enforceable
according to their terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws of general
application relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), to the Knowledge of the Company and except as
set forth on EXHIBIT 2.06(b), no party is in default thereunder; the Company's
and each Subsidiary's rights thereunder are not subject to any offset (other
than standard offsetting provisions in the industry with regard to carrier
contracts whereby parties make payments net of receipts due to them from another
contract party pursuant to the same or another contract) or counterclaim; and
all such contracts are listed in EXHIBIT 2.06(b) attached hereto. Except as set
forth on EXHIBIT 2.13, all material debts and material accounts payable of the
Company and its Subsidiaries are current in all material respects, except with
respect to accounts payable where failure to be current would not have a
Material Adverse Effect on the Company or its Subsidiaries.
SECTION 2.7 DISCLOSURE.
(a) Neither the statements made in this Agreement, the Due Diligence
Certificate and the Officers' Certificates delivered herewith, nor any other
written statement or document furnished by or on behalf of the Company and its
Subsidiaries, to Holder in connection with the Loan contained, as of its
respective date, or now contain (except as disclosed to the Holder in writing),
any untrue statement of a material fact or as of any such date omitted, or now
omit (except as disclosed to the Holder in writing), a material fact necessary
to make the statements contained herein and therein not misleading.
(b) The forecasts contained in the business model previously
provided to Holder and attached hereto as EXHIBIT 2.07(b) were based upon
reasonable assumptions and represent the Company's good faith expectation of the
actual results the Company and its Subsidiaries are expected to achieve. To the
Knowledge of the Company, and except as otherwise provided herein, no facts
exist which would require a material change in any such forecasts. However, the
parties hereto acknowledge that forecasts as to future events are not
represented or warranted as
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fact, actual results during future periods may differ from forecasts, and such
differences may be material.
SECTION 2.8 MANAGEMENT HISTORY. During the past ten (10) years, none of the
current directors or Executive Officers of the Company or its Subsidiaries has
been arrested for or convicted of any criminal offense (excluding minor traffic
and parking violations), petitioned or been granted any relief in bankruptcy, or
served as an officer or director of any company or other entity which has
petitioned or been granted such relief, except as set forth on EXHIBIT 2.08
attached hereto.
SECTION 2.9 SUBSIDIARIES AND AFFILIATES. The Company has no Subsidiaries,
partners, commonly controlled or related entities or other Affiliates, except as
set out on EXHIBIT 2.09 hereof.
SECTION 2.10 INCUMBENCY. Attached hereto as EXHIBIT 2.10 is a true and complete
list of the Executive Officers and directors of the Company.
SECTION 2.11 NO MATERIAL ADVERSE CHANGE. Except as set forth on EXHIBIT 2.11
hereto, since September 30, 2000, neither the Company nor any Subsidiary has
suffered any Material Adverse Effect in its condition (financial or otherwise),
Business, operations, properties or its overall earnings prospects, or sustained
any material loss or damage to its property, whether or not insured except as
proposed herein, or suffered any material interference with its business or
operations, present or proposed, or entered into any material transactions
(other than as described on EXHIBIT 2.06(b)), or incurred since September 30,
2000, any material debt, obligation or liability, absolute or contingent. There
has been no sale, lease, abandonment or other disposition by the Company or any
of its Subsidiaries of any of their property, real or personal, or any interest
therein or relating thereto, that could likely result in a Material Adverse
Effect on the Company and its Subsidiaries.
SECTION 2.12 NON-CONTRAVENTION.
(a) Except as set forth on EXHIBIT 2.12, neither the Company nor any
of its Subsidiaries is in breach of, default under, or in violation of (i) any
applicable law, decree, order, rule or regulation, including the Communications
Act of 1934, and the rules and regulations of the FCC or (ii) any indenture,
contract, agreement, deed, lease, loan agreement, commitment, bond, note, deed
of trust, restrictive covenant, license or other instrument or obligation or
amendments thereof, to which it is a party, or by which it is bound, or to which
any of its assets are subject, in each case the noncompliance with which would
be likely to result in a Material Adverse Effect on the Company or its
Subsidiaries;
(b) The execution, delivery and performance of this Agreement and
the other documents mentioned herein will not constitute by the Company or any
of its Subsidiaries any such breach, default or violation, or require consent or
approval of any court, governmental agency or body, except as expressly provided
herein.
SECTION 2.13 PERMITS AND CONSENTS. The Company and each Subsidiary has
all permits, licenses, consents and any similar authority from any governmental
body or other party necessary for the conduct of the Business (collectively, the
"Permits"), except where the lack of which Permits could likely result in a
Material Adverse Effect on the Company or its
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Subsidiaries. To the Company's Knowledge, neither the Company nor any of its
Subsidiaries is in default in any respect under any of such Permits.
SECTION 2.14 FEES & BROKERAGE. No agent, broker, investment banker, Person or
firm acting on behalf of the Company or under the authority of the Company is or
will be entitled to any broker's or finder's fee or other commission or similar
fee directly or indirectly from any party hereto in respect to the transactions
contemplated herein.
SECTION 2.15 OTHER DEBTS . Except for debts of the types and in the amounts
described in the Financial Statements described in Section 2.5 herein, the
Company and its Subsidiaries have no material Indebtedness; the Company and each
Subsidiary has no Knowledge of any basis for any claim against it as of the date
of this Agreement, or of any material Indebtedness other than as mentioned
herein.
SECTION 2.16 SOLVENCY. As of the date hereof, and giving effect to the
transactions contemplated by this Agreement, (i) the present fair saleable value
of the Company's assets is greater than the amount required to pay the Company's
total indebtedness (including contingent liabilities which are reasonably likely
to become due), as it matures and as it becomes absolute and matured; (ii) the
transactions contemplated hereby are being effectuated without intent to hinder,
delay or defraud present or future creditors of the Company; (iii) it is the
Company's intention that it will maintain the above-referenced solvent financial
condition, after giving effect to the debt incurred hereunder, as long as the
Company is obligated to Holder under this Agreement or in any other manner
whatsoever; and (iv) the Company has sufficient capital to carry on its previous
operations and the Business as they are now conducted, and to consummate the
transactions contemplated herein.
SECTION 2.17 INVESTMENT COMPANY ACT REPRESENTATIONS. The Company is not, and
does not intend to become, an Investment Company and neither the Company nor any
of its officers, directors, partners or controlling Persons is an Affiliated
Person of Holder.
SECTION 2.18 REGULATORY COMPLIANCE. The Company and each of its Subsidiaries has
complied in all material respects with all laws, ordinances and regulations
applicable to it or to the Business, including without limitation laws,
ordinances and regulations relating to securities, zoning, labor, the
Communications Act of 1934, the Telecommunications Act of 1996, the Exchange
Act, the Occupational Safety & Health Act, ERISA, all regulations promulgated
under such acts, and all federal and state environmental laws and regulations
(in each case, as amended) and the FCC, except where the failure to do so is not
likely to have a Material Adverse Effect on the Company or its Subsidiaries.
SECTION 2.19 EMPLOYEE BENEFIT MATTERS. There is no existing single-employer plan
defined in Section 4021(a) of ERISA and covered under Title IV of ERISA in
respect of which the Company or any of its Subsidiaries is or will be, an
"employer" or a "substantial employer" as defined in Sections 3(5) and
4001(a)(2) of ERISA, respectively; and at no time since the effective date of
ERISA has the Company or any of its Subsidiaries maintained, contributed to, or
been required to contribute to any such Plan; the Company and each of its
Subsidiaries has not participated in, and the purchase of the Note by the Holder
will not involve, any "prohibited transaction" (as defined in Section 4975 of
the Code) that could subject the Company, any of its Subsidiaries, or Holder to
any tax or penalty imposed by said Section 4975; since the effective date of
ERISA, the Company and each of its Subsidiaries has not incurred any
"accumulated
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funding deficiency", as such term is defined in Section 302 of ERISA, to which
the Company or any of its Subsidiaries could be subject or for which it might be
liable; the Company and each of its Subsidiaries is not, and immediately after
the Closing, will not be, a party to, and none of the operations of the Company
and each of its Subsidiaries is or after the Closing, will be covered by, a
multi-employer plan, as defined in Section 3(37) of ERISA; no condition exists
or event or transaction has occurred or failed to occur in connection with any
employee benefit plan maintained or contributed to by any Affiliate of the
Company that has resulted or is reasonably likely to result in a Material
Adverse Effect on the Company and its Subsidiaries.
SECTION 2.20 COLLECTIVE BARGAINING. Neither the Company nor any of its
Subsidiaries is a party to or subject to any collective bargaining agreements or
union contracts. There are no labor disputes pending or to the Company's
Knowledge threatened against the Company or any of its Subsidiaries which have
resulted in or so far as the Company can reasonably foresee, may result in a
Material Adverse Effect on the Company and its Subsidiaries.
SECTION 2.21 EMPLOYMENT RELATED AGREEMENTS. The Company has delivered to Holder
copies of all employment, compensation, non-competition and non-disclosure
agreements and contracts, including all retirement benefit agreements and union
contracts, between it and the Executive Officers of the Company and its
Subsidiaries, and all such documents are listed on EXHIBIT 2.21; neither the
Company nor any Subsidiary party thereto and (to the Knowledge of the Company)
any other party or parties thereto is in breach under any such contract or
agreement; all such contracts and agreements are in full force and effect and
are the legal, valid and binding obligation of each party thereto, except as
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws or equitable principles relating to creditors' rights generally; no
Executive Officer of the Company or any of its Subsidiaries has advised the
Company or any of its Subsidiaries (orally or in writing) that he or she intends
to terminate employment with the Company.
SECTION 2.22 RELATED-PARTY TRANSACTIONS. Except as set forth in EXHIBIT 2.22
hereto, no Executive Officer or director of the Company or any of its
Subsidiaries or member of his or her immediate family is indebted to the Company
or any of its Subsidiaries, nor is the Company or any of its Subsidiaries
indebted (or committed to make loans or extend or guarantee credit) to any of
them; to the Company's Knowledge, no such person, directly or indirectly,
transacts any business with the Company or any of its Subsidiaries or has an
interest in any material contract of the Company or its Subsidiaries (except for
compensation arrangements relating to such person's employment with the
Company).
SECTION 2.23 NO COMPETING BUSINESS INTERESTS. None of the Company's or any of
its Subsidiaries' respective Executive Officers has any direct or indirect
interest, including, but not limited to, the ownership of stock in any
corporation (except as the holder of not more than five percent (5%) of the
outstanding shares of a corporation whose stock is listed on any national or
regional securities exchange or reported by the Nasdaq or any successor
thereto), in any business, that is involved in any way with, competes with, or
conducts any business similar to the Business conducted by the Company and its
Subsidiaries.
SECTION 2.24 NO CONFLICTING NON-COMPETITION AGREEMENTS. Neither the Company, any
of its Subsidiaries, nor any of their Executive Officers are subject to any
contract or agreement purporting to limit their rights to compete in any market
in which the Company and its
7
Subsidiaries presently provide, or propose to provide, goods or services; or
purporting to restrict their rights to disclose information in respect to such
competition.
SECTION 2.25 GOVERNMENT AUTHORIZATIONS. Except as set forth in EXHIBIT 2.25A,
the Company and its Subsidiaries (and in the case of India, the Company's Indian
joint venture partner (the "Indian Partner")) possess all licenses,
certificates, permits, authorizations, approvals, franchises ("Authorizations")
and have made all declarations and filings (including but not limited to
tariffs, fees, and periodic filings, with the appropriate federal state, local
and/or foreign regulatory authorities (including without limitation the FCC, the
state public utility commissions ("PUCs"), the telecommunications licensing and
regulatory government agencies of the United Kingdom, France, Germany and India
("Regulatory Agencies")) necessary to conduct their respective businesses as
presently conducted by them in all respects except where failure to obtain such
Authorization or make such declaration or filing could not be expected to have a
Material Adverse Effect on the Business or financial condition of the Company,
its Subsidiaries, or the Indian Partner and neither the Company, any such
Subsidiary, nor the Indian Partner has any reason to believe that any Regulatory
Agency is considering limiting, modifying, suspending, or revoking any such
Authorization. The list of Authorizations in EXHIBIT 2.25B is a complete and
accurate list of the Authorizations held by the Company, the Subsidiaries and
the Indian Partner and any applications by the Company, its Subsidiaries and/or
the Indian Partner for new Authorizations pending before the Regulatory
Agencies. All such Authorizations are in full force and effect, and each of the
Company, its Subsidiaries, and the Indian Partner is in compliance with the
terms and conditions thereof and with the Communications Act of 1934, as
amended, the state statutes governing telecommunications, the laws of the United
Kingdom, France, Germany and India governing telecommunications and the rules,
regulations, and orders of the Regulatory Agencies or court having jurisdiction
with respect thereto except where such failure to be in full force and effect or
noncompliance that could not be expected to have a Material Adverse Effect. None
of the Authorizations is subject to any condition other than (a) conditions
generally applicable to the industry (b) conditions expressly set forth in such
licenses, and (c) conditions imposed by an applicable statute, or regulation
thereunder.
SECTION 2.26 FCC PROCEEDINGS. To the Company's Knowledge, there is no
investigation, notice of apparent liability, order for forfeiture, complaint,
petition to deny or other proceeding against the Company or any Subsidiary
pending before the FCC which if resolved adversely would not likely result in a
Material Adverse Effect.
SECTION 2.27 ADVERSE FOREIGN LAWS. Except as stated on EXHIBIT 2.27, no local,
state, federal, statute, ordinance, regulation, requirement, judgment, or court
decree of the United Kingdom, France, Germany or India that has been adopted,
enacted or issued by any governmental agency or body, or to the Company's
Knowledge proposed by any governmental body that (a) could reasonably be
expected to have a Material Adverse Effect on the performance by the Company of
this Agreement or the consummation by the Company of any of the transactions
contemplated hereby or (b) could reasonably be expected to have a Material
Adverse Effect on the Authorizations, the Company, its Subsidiaries, or the
Indian Partner.
SECTION 2.28 USE OF PROCEEDS. EXHIBIT 2.28 attached hereto is a true and
accurate statement of the use of proceeds of the 2000 Loan and the loan pursuant
to that certain Loan and Security Agreement dated as of December 31, 1998, as
amended, between Holdings and NTFC Capital Corporation.
8
ARTICLE 3
AFFIRMATIVE COVENANTS
Until the Note is repaid in full or the Holder waives compliance
in writing:
SECTION 3.1 QUARTERLY FINANCIALS .
(a) The Company will and will cause its Subsidiaries to maintain a
system of accounting in accordance with GAAP; make full, true and correct
entries in such system of all dealings and transactions in relation to its
business and affairs; forward, or cause to be forwarded to Holder Holdings'
quarterly year-to-date financial statements (on a consolidated basis) prepared
in accordance with GAAP (including a quarterly and year-to-date balance sheet,
profit and loss statement and cash flow statement), promptly upon filing such
financial statements with the Commission, together with a quarterly management
summary description of operations;
SECTION 3.2 YEAR-END FINANCIALS; ANNUAL AUDIT. The Company will provide to
Holder Holdings year-end financial statements (on a consolidated basis and
including statements of cash flow) and the written opinion of the Company's
independent public accountants (currently, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP) that such
statements fairly present the Holdings' and the Company's financial position and
the results of its operations at the stated dates and for the stated periods
according to GAAP, promptly upon filing such financial statements with the
Commission;
SECTION 3.3 BUSINESS MODELS. Prior to each accounting year-end, the Company will
provide Holder with business models for the coming two (2) years and monthly
forecasts for the coming year, in the same format as used for Section 3.1;
SECTION 3.4 CERTIFICATION OF NON-DEFAULT. The Company will provide to Holder
each quarter a written certification of an Executive Officer of the Company,
that no default has occurred under the Loan Documents, the Secured 2001 Loan,
the Indenture or any other material agreement where such default would likely
have a Material Adverse Effect on the Company or its Subsidiaries; or if any
such default exists, stating the nature of such default;
SECTION 3.5 REGULATORY FILINGS. The Company will, and will cause each Subsidiary
to, (i) timely file all returns and other documents required to be provided by
the Company, Holdings or such Subsidiary to any federal, state, local or foreign
governmental agency, including without limitation the FCC, the Internal Revenue
Service, the Environmental Protection Agency, the Occupational Safety and Health
Administration and the Commission except where failure to file such returns or
other documents could not be expected to have a Material Adverse Effect; and
(ii) within thirty (30) days of Holder's request, provide Holder a copy thereof;
routine payroll tax withholding items and returns for state and local
jurisdictions wherein the Company's, Holdings' or Subsidiary's income (as
applicable) is less than $1,000 in the relevant tax period shall be excluded
from this covenant;
SECTION 3.6 NOTICE OF LITIGATION. The Company will notify Holder of any
litigation to which the Company, Holdings or any Subsidiary is a party, or
litigation to which the Company, Holdings and their respective Subsidiaries are
not a party but of which the Company has Knowledge which could be expected to
have a Material Adverse Effect on the Company, Holdings, any Subsidiary or the
Business wherein the sums at issue exceed One Million Dollars ($1,000,000), and
all such litigation during periods when the total sums at issue in all the
9
Company's, Holdings' and their respective Subsidiaries' litigation are in excess
of Five Million Dollars ($5,000,000) (all such litigation, collectively,
"Material Litigation") and provide to Holder upon its written request within
thirty (30) days of receipt thereof, a copy of the complaint, motion for
judgment or other such pleadings served on or by the Company, Holdings or such
Subsidiary, or if no pleadings are obtained, a letter setting out the facts
known about the litigation; the Company shall not be obliged by this paragraph
to give notice of suits wherein the Company, Holdings or a Subsidiary is a
creditor seeking collection of account debts;
SECTION 3.7 NOTICE OF DEFAULTS OR JUDGMENTS. The Company will, and will cause
each of its Subsidiaries to, give Holder copies of written notices of default
received in regard to any material loan or lease of the Company, Holdings or
such Subsidiary in cases where acceleration of maturity of the relevant loan or
termination of the relevant lease would have a Material Adverse Effect on the
Company, Holdings or the Subsidiary, and any judgment entered against the
Company, Holdings or such Subsidiary, by mailing a copy to Holder within thirty
(30) days of receipt thereof;
SECTION 3.8 ACCESS TO RECORDS. The Company will and will cause each of its
Subsidiaries to (i) permit from time-to-time any authorized agent of Holder to
obtain credit and other background information on the Company, Holdings and any
of its Subsidiaries; (ii) inspect, examine and make copies and abstracts of the
books of account and records of the Company, Holdings and any of their
respective Subsidiaries at reasonable times during normal business hours upon
reasonable notice; and (iii) allow Holder's agents to interview the Company's
outside accountants who are by this covenant irrevocably instructed to respond
to such inquiries as fully as if the inquiries were made by the Company,
Holdings or such Subsidiary itself; provided, however, Holder shall not disclose
any proprietary or confidential information obtained hereby except where Holder
in its sole discretion determines that such disclosure will assist Holder's
exercise of another right or remedy available to it upon an Event of Default;
SECTION 3.9 INFORMATION REQUESTS. The Company will and will cause each
Subsidiary to furnish from time to time to Holder, at the Company's expense, all
information Holder may reasonably request to enable Holder to prepare and file
any report or form required of Holder by the Commission or any other regulatory
authority;
SECTION 3.10 INSURANCE. The Company will and will cause each of its
Subsidiaries to (i) maintain adequate hazard and business interruption insurance
on their assets to the extent obtainable at commercially reasonable rates and
(ii) supply Holder annually with a certification of such insurance from the
relevant insurers in the form set forth as EXHIBIT 3.10;
SECTION 3.11 USE OF PROCEEDS. The Company will use the proceeds of the Loan to
pay a dividend to Holdings for the purpose of retiring Ten Million Dollars in
principal ($10,000,000) of the 2000 Loan;
SECTION 3.12 FINANCIAL COVENANTS. The Company will maintain with respect to its
earnings and financial condition in accordance with GAAP:
(a) A ratio of Total Liabilities to Total Revenue which ratio shall
be determined as of the last day of each fiscal quarter beginning with the
quarter ended March 31, 2002, by comparing (i) the Total Liabilities on such day
to (ii) the Total Revenue for the quarter ended on such day multiplied by four
(4), such ratio to be no greater than 1.25 to 1.00;
10
(b) A ratio of Total Liabilities to Net Property, Plant and
Equipment as of the last day of each fiscal quarter beginning with the quarter
ended March 31, 2001, such ratio to be no greater than 4.00 to 1.00;
(c) A ratio of Total Liabilities to EBITDA which ratio shall be
determined as of the last day of each fiscal quarter, determined by comparing
(i) the Total Liabilities on such day to (ii) the EBITDA for the quarter ended
on such day multiplied by four (4), such ratio to be no greater than the ratio
for each period as follows:
PERIOD RATIO
3/31/02--12/31/02 11.0 to 1.00
1/1/03--12/31/03 8.7 to 1.00
1/1/04--12/31/04 7.5 to 1.00
1/1/05--12/31/05 7.0 to 1.00
(d) EBITDA during each of the following periods, no less than the
amount indicated in the following table for such period:
Quarter ending September 30, 2001 $0 (but not negative)
Quarter ending December 31, 2001 $0 (but not negative)
Quarter ending March 31, 2002 $2,900,000
Quarter ending June 30, 2002 $3,500,000
Quarter ending September 30, 2002 $5,000,000
Quarter ending December 31, 2002 $6,000,000
Quarter ending March 31, 2003 $6,000,000
SECTION 3.13 PAYMENTS. The Company will make all payments of principal, interest
and expenses as and when due under the Note, without setoff and regardless of
any claim the Company may have against Holder;
SECTION 3.14 COMPLIANCE WITH APPLICABLE LAW. The Company will and will cause
each Subsidiary to conduct its business and operations in conformity with the
terms of all licenses and other permits, certificates, consents, approvals,
authorizations, and agreements granted by the FCC or any other governmental
agency, whether presently existing or hereinafter granted to or obtained by the
Company, Holdings or such Subsidiary, and otherwise comply in all material
respects with all laws, regulations and other requirements of law imposed by all
governmental authorities and agencies having jurisdiction over the Company,
Holdings and their respective Subsidiaries, or any material part of their
assets, business or operations, except where failure to comply could not be
expected to result in a Material Adverse Effect on the Company, Holdings and
their respective Subsidiaries;
SECTION 3.15 FURTHER ASSURANCE. The Company will from time to time promptly
execute and deliver to Holder such additional documents, and take such other
reasonable steps, as Holder
11
may reasonably require to carry out the purposes hereof and of the other Loan
Documents, or to protect Holder's rights thereunder;
SECTION 3.16 MAINTAIN COPIES. Maintain an original or a true copy of
this Agreement and any modifications hereof, which shall be available for
inspection as called for herein or in the Note; and
SECTION 3.17 WEEKLY MEETINGS. The Company shall cause its CFO or CEO to attend a
weekly meeting with a representative of Holder, which shall initially be ▇▇▇▇▇
▇. ▇▇▇▇▇▇, to discuss the business of the Company at a reasonably convenient
location specified by Holder at least three (3) days prior to each such meeting.
ARTICLE 4
NEGATIVE COVENANTS
Subject to the terms of Article 9, until the Note is indefeasibly
repaid in full, and Holder waives compliance in writing:
SECTION 4.1 RESTRICTED PAYMENTS. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, (a)(i) declare or pay any
dividend or make any distribution in respect of Holdings' Capital Stock to the
holders thereof (other than stock splits, dividends or distributions payable
solely in shares of Capital Stock (other than Redeemable Stock) of Holdings or
in options, warrants or other rights to acquire such shares of Capital Stock) or
(ii) declare or pay any dividend or make any distribution in respect of the
Capital Stock of any Restricted Subsidiary to any Person other than dividends
and distributions payable to the Company or any Restricted Subsidiary or to all
holders of Capital Stock of such Restricted Subsidiary on a pro rata basis; (b)
purchase, redeem, retire or otherwise acquire for value any shares of Capital
Stock of the Company or Holdings (including options, warrants or other rights to
acquire such shares of Capital Stock), held by any Person or any shares of
Capital Stock of any Restricted Subsidiary (including options, warrants and
other rights to acquire such shares of Capital Stock) held by any Affiliate of
the Company or Holdings (other than a wholly-owned Restricted Subsidiary) or any
holder (or any Affiliate thereof) of five percent (5%) or more of Holdings'
Capital Stock; (c) make any voluntary or optional principal payment, or
voluntary or optional redemption, repurchase, defeasance, or other acquisition
or retirement for value, of Indebtedness of the Company or Holdings that is
subordinated in right of payment to the Loan, the Note, the Secured 2001 Loan or
the High-Yield/Public Debt; or (d) make any Investment, other than a Permitted
Investment, in any Person (such payments or any other actions described in
clauses (a) through (d) being collectively referred to as "Restricted
Payments").
The foregoing provision of this Section 4.1 shall not be violated by reason of
(i) the redemption, repurchase, defeasance or other acquisition or retirement
for value of Indebtedness that is subordinated in right of payment to the Note
and the High Yield Debt including a premium, if any, and accrued and unpaid
interest and liquidated damages called for in the Indenture, if any, with the
net proceeds of, or in exchange for, Indebtedness Incurred under item (B) of
clause (viii) of paragraph (b) of Section 5.1 hereof; (ii) the acquisition of
Indebtedness of the Company or Holdings which is subordinated in right of
payment to the Note or the Secured 2001 Loan or High Yield/ Public Debt in
exchange for, or out of the proceeds of, a substantially concurrent (A) capital
contribution to the Company or Holdings or (B) issuance and sale of shares of
the Capital Stock of Holdings (other than Redeemable Stock) (except to the
extent such proceeds are used to
12
incur new Indebtedness outstanding pursuant to clause (viii) of paragraph (b) of
Section 5.1 hereof); (iii) payments or distributions to dissenting stockholders
of Persons other than Holdings in accordance with applicable law, pursuant to or
in connection with a consolidation, merger or transfer of assets that complies
with the terms of Section 5.9 hereof; (iv) other Restricted Payments not to
exceed $2.0 million; and (v) investments in any Telecommunications Assets
acquired in exchange for Capital Stock of Holdings (other than Redeemable Stock)
issued after May 28, 1998 or with the Net Cash Proceeds from the concurrent
issuance and sale of Capital Stock of Holdings (other than Redeemable Stock);
PROVIDED THAT, no Default or Event of Default shall have occurred and be
continuing or occur as a consequence of the actions or payments set forth
therein.
SECTION 4.2 LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY RESTRICTED
SUBSIDIARIES.
(a) The Company shall not permit any Restricted Subsidiary,
directly or indirectly, to Guarantee, assume or in any other manner become
liable with respect to any Indebtedness of the Company or Holdings, other
than Indebtedness under Credit Facilities incurred under clause (iii) of
paragraph (b) of Section 5.1 unless (i) such Restricted Subsidiary
simultaneously executes and delivers an amendment to this Agreement providing
for a Guarantee of the Note and the Secured 2001 Loan and guarantees the High
Yield/Public Debt on terms substantially similar to the Guarantee of such
Indebtedness, except that if such Indebtedness is by its express terms
subordinated in right of payment to the Note, the Secured 2001 Loan and the
High Yield/Public Debt, any such assumption, Guarantee or other liability of
such Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Restricted Subsidiary's assumption,
Guarantee or other liability with respect to the Note, the Secured 2001 Loan
and the High Yield/Public Debt substantially to the same extent as such
Indebtedness is subordinated to the Note, the Secured 2001 Loan and the High
Yield Public Debt and (ii) such Restricted Subsidiary waives, and shall not
in any manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other rights against
the Company, Holdings or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Guarantee.
(b) Notwithstanding the foregoing, any Guarantee by a Restricted
Subsidiary required by the foregoing sentence may provide by its terms that
it will be automatically and unconditionally released and discharged upon (i)
any sale, exchange or transfer, to any Person not an Affiliate of the Company
or Holdings, of all of the Company's, Holdings' and each Restricted
Subsidiary's Capital Stock in, or all or substantially all of the assets of,
such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Agreement) or (ii) the release or discharge of the
guarantee which resulted in the creation of the Guarantee in question, except
a discharge or release by or as a result of payment under such Guarantee.
SECTION 4.3 LIMITATION ON INVESTMENTS IN UNRESTRICTED SUBSIDIARIES. The Company
shall not make, and shall not permit any of its Restricted Subsidiaries to make,
any Investments in Holdings or any Unrestricted Subsidiaries if, at the time
thereof, the aggregate amount of such Investments together with any other
Restricted Payments made after May 28, 1998 would exceed the sum of (a)
Cumulative Consolidated Cash Flow minus two hundred percent (200%) of Cumulative
Consolidated Fixed Charges; (b) one hundred percent (100%) of the aggregate Net
Cash Proceeds from the issue or sale to a Person, which is not a Subsidiary of
the Company, of Capital Stock of Holdings (other than Redeemable Stock) or of
debt securities of the Company or Holdings which have been converted into or
exchanged for such Capital Stock (except to the
13
extent such Net Cash Proceeds are used to incur new Indebtedness outstanding
pursuant to paragraph (b) of Section 5.1); and (c) to the extent any Permitted
Investment that was made after the Closing Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (i) the cash return of capital with
respect to such Permitted Investment (less the cost of disposition, if any) and
(ii) the initial amount of such Permitted Investment. Any Investments in
Holdings or any Unrestricted Subsidiaries permitted to be made pursuant to this
covenant (i) shall be treated as the making of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company, Holdings or a
Subsidiary and (ii) may be made in cash or property (if made in property, the
Fair Market Value thereof as determined by the Board of Directors (whose
determination shall be conclusive and evidenced by a Board resolution) shall be
deemed to be the amount of such Investment for the purpose of this Section 4.3).
SECTION 4.4 EMPLOYEE LOANS. Unless permitted under the Indenture, the Company
shall not, and shall not permit its Subsidiaries to, loan or advance to its
employees in excess of One Million Five Hundred Thousand Dollars ($1,500,000) in
the aggregate per year; PROVIDED, HOWEVER, that the aggregate amount of advances
and loans outstanding to employees shall not exceed One Million Five Hundred
Thousand Dollars ($1,500,000) at any one time.
SECTION 4.5 CROSS-ACCELERATION. The Company shall not incur, and shall not
permit any Subsidiary to incur, any default under any material loan, material
lease or other material agreement pertaining to another debt or material
obligation of the Company, Holdings or any Subsidiary which results (a) in the
case of material loans, in the acceleration of the maturity thereof or (b) in
the case of material leases and other material agreements, in the termination of
the Company's, Holdings' or the Subsidiary's rights thereunder.
SECTION 4.6 CHANGES TO INDENTURE. The Company will not without the prior written
consent of Holder, which consent shall not be unreasonably withheld or delayed:
(i) agree to any change in the payment priority of the Indenture Notes which
would result in the subordination of the Indenture Notes; (ii) grant or obtain
additional collateral to secure the Indenture Notes without providing the same
collateral on a pro rata basis to Holder; and (iii) materially modify, or agree
to any material change in the terms and conditions of or the expiration of, the
negative covenants in Sections 801, 1010-1022 of the Indenture.
SECTION 4.7 LIENS. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien (other than Permitted Liens) on any of its assets or properties of any
character (including, without limitation, licenses and trademarks), or any
shares of Capital Stock or Indebtedness of any Restricted Subsidiary, whether
owned at the date of this Agreement or thereafter acquired, or any income,
profits or proceeds therefrom, or assign or otherwise convey any right to
receive income thereof.
ARTICLE 5
ADDITIONAL NEGATIVE COVENANTS
Subject to the terms of Article 9, until the Note is indefeasibly
repaid in full, and Holder waives compliance in writing:
14
SECTION 5.1 LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF RESTRICTED
SUBSIDIARIES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness or, in the case of Restricted
Subsidiaries, issue or have outstanding Preferred Stock (other than Acquired
Preferred Stock); provided, however, that the Company may Incur Indebtedness if,
immediately thereafter, the ratio of (i) the aggregate principal amount (or
accreted value, as the case may be) of Indebtedness of the Company, Holdings and
their respective Restricted Subsidiaries on a consolidated basis outstanding as
of the Transaction Date to (ii) the Pro Forma Consolidated Cash Flow for the
preceding two full fiscal quarters multiplied by two, determined on a pro forma
basis as if any such Indebtedness had been Incurred and the proceeds thereof had
been applied at the beginning of such two fiscal quarters, would be greater than
zero and less than 5.0 to 1.
(b) The foregoing limitations of paragraph (a) of this covenant will
not apply to any of the following Indebtedness ("Permitted Indebtedness"), each
of which shall be given independent effect:
(i) Indebtedness of the Company evidenced by the Note;
(ii) Indebtedness of the Company or any Restricted
Subsidiary outstanding on the Closing Date;
(iii) Indebtedness of the Company or any of its Restricted
Subsidiaries in an aggregate principal amount at any one time outstanding not to
exceed Five Million Dollars ($5,000,000) that is unsecured and convertible into
equity securities of Holdings;
(iv) Indebtedness of the Company or any Restricted
Subsidiary incurred to finance the cost (including the cost of design,
development, construction, acquisition, licensing, installation or integration)
of Telecommunications Assets;
(v) Indebtedness of a Restricted Subsidiary owed to and held
by the Company or another Restricted Subsidiary, except that (A) any transfer of
such Indebtedness by the Company or a Restricted Subsidiary (other than to the
Company or another Restricted Subsidiary) and (B) the sale, transfer or other
disposition by the Company or any Restricted Subsidiary of Capital Stock of a
Restricted Subsidiary which is owed Indebtedness by another Restricted
Subsidiary shall, in each case, be an Incurrence of Indebtedness by such
Restricted Subsidiary, subject to the other provisions of this Agreement;
(vi) Indebtedness of the Company owed to and held by a
Restricted Subsidiary which is unsecured and subordinated in right to the
payment and performance of the obligations of the Company under this Agreement
and the Note, except that the limitations of paragraph (a) of this Section 5.1
shall apply to such Indebtedness at such time as (A) any transfer of such
Indebtedness by a Restricted Subsidiary (other than to another Restricted
Subsidiary) and (B) the sale, transfer or other disposition by the Company,
Holdings or any Restricted Subsidiary of Capital Stock of a Restricted
Subsidiary which is owed such Indebtedness by the Company or Holdings, subject
to other provisions of this Agreement;
(vii) Indebtedness of the Company or a Restricted Subsidiary
issued in exchange for, or the net proceeds of which are used to refinance
(whether by amendment,
15
renewal, extension or refunding), then outstanding Indebtedness of the
Company or a Restricted Subsidiary, other than Indebtedness Incurred under
clauses (iii), (v), (vi), (viii), (ix), (xi) and (xii) of this Section
5.1(b), and any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest and reasonable fees
and expenses) , except in the case of Indebtedness senior to the Note being
refinanced and in such case in an amount not to exceed the principal amount
of such senior Indebtedness outstanding on the Closing Date (plus premiums,
accrued interest and reasonable fees and expenses); provided that such new
Indebtedness shall only be permitted under this clause (vii) if: (A) in case
the Note is refinanced in part or the Indebtedness to be refinanced is pari
passu with the Note, such new Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such new Indebtedness is issued
or remains outstanding, is expressly made pari passu with, or subordinate in
right of payment to, the remaining Note, and (B) in case the Indebtedness to
be refinanced is subordinated in right of payment to the Note, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is issued or remains outstanding, is
expressly made subordinate in right of payment to the Note at least to the
extent that the Indebtedness to be refinanced is subordinated to the Note;
(viii) Indebtedness of (A) the Company not to exceed, at
any one time outstanding, 2.00 times the Net Cash Proceeds from the issuance
and sale, other than to a Subsidiary, of Common Stock (other than Redeemable
Stock) of Holdings (less the amount of such proceeds used to make Restricted
Payments as provided in clause (c) or (d) of Section 5.1) and (B) the Company
or Holdings not to exceed, at one time outstanding, the fair market value of
any Telecommunications Assets acquired by the Company or Holdings in exchange
for Common Stock of Holdings issued after May 28, 1998; provided, however,
that in determining the fair market value of any such Telecommunications
Assets so acquired, if the estimated fair market value of such
Telecommunications Assets exceeds (x) $2 million (as estimated in good faith
by the Board of Directors), then the fair market value of such
Telecommunications Assets will be determined by a majority of the Board of
Directors of Holdings, which determination will be evidenced by a resolution
thereof, and (y) $10 million (as estimated in good faith by the Board of
Directors), then the Company shall deliver to the Holder a written appraisal
as to the fair market value of such Telecommunications Assets prepared by a
nationally recognized investment banking or public accounting firm (or, if no
such investment banking or public accounting firm is qualified to prepare
such an appraisal, by a nationally recognized appraisal firm); and provided
further that, except with respect to Acquired Indebtedness, such Indebtedness
does not mature prior to the Stated Maturity of the Note and the Average Life
of such Indebtedness is longer than that of the Note;
(ix) Indebtedness of the Company or any Restricted
Subsidiary (A) in respect of performance, surety or appeal bonds or letters of
credit supporting trade payables, in each case provided in the ordinary course
of business, (B) under Currency Agreements and Interest Rate Agreements covering
Indebtedness of the Company; provided that such agreements do not increase the
Indebtedness of the obligor outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable thereunder and (C) arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted Subsidiary
of the Company (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of
16
such business, assets or Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds actually
received by the Company or any Restricted Subsidiary in connection with such
disposition;
(x) Indebtedness of the Company, to the extent that the net
proceeds thereof are promptly (A) used to repay the Note upon the acceleration
of the maturity thereof upon a Change of Control or (B) deposited to defease all
of the Note pursuant to Article 8; and
(xi) Indebtedness of a Restricted Subsidiary represented by
a Guarantee of the Note permitted by and made in accordance with Section 4.2.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 5.1, Guarantees, Liens or obligations with
respect to letters of credit and other credit enhancements supporting
Indebtedness otherwise included in the determination of such particular amount
shall not be included; provided, however, that the foregoing shall not in any
way be deemed to limit the provisions of Section 4.2. For purposes of
determining compliance with this Section 5.1, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, the Company, in its sole discretion may, at the
time of such Incurrence, (i) classify such item of Indebtedness under and comply
with either of paragraph (a) or (b) of this covenant (or any of such
definitions), as applicable, (ii) classify and divide such item of Indebtedness
into more than one of such paragraphs (or definitions), as applicable and (iii)
elect to comply with such paragraphs (or definitions), as applicable in any
order.
SECTION 5.2 LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.
(a) Until the Loan has been fully and indefeasibly paid as and when
due, the Company shall not, and shall not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to do any one of the following:
(i) pay dividends or make any other distributions on any
Capital Stock of such Restricted Subsidiary owned by the Company or any other
Restricted Subsidiary;
(ii) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary;
(iii) make loans or advances to the Company or any other
Restricted Subsidiary; or
(iv) transfer any of its property or assets to the Company
or any other Restricted Subsidiary.
(b) The foregoing negative covenants shall not restrict any
encumbrances or restrictions:
(i) existing on the Closing Date , in this Agreement or any
other agreements or instruments in effect on the Closing Date and any
extensions, refinancings,
17
renewals or replacements of such agreements; provided that the encumbrances
and restrictions in any such extensions, refinancings, renewals or
replacements are no less favorable in any material respect to Holder than
those encumbrances or restrictions that are then in effect and that are being
extended, refinanced, renewed or replaced;
(ii) contained in the terms of any Indebtedness or any
agreement pursuant to which such Indebtedness was issued (or, in the case of
Acquired Preferred Stock, terms of such Acquired Preferred Stock) if the
encumbrance or restriction applies only in the event of a default with respect
to a financial covenant contained in such Indebtedness or agreement (or, in the
case of Acquired Preferred Stock, upon the default in the payment of dividends
upon such Acquired Preferred Stock) and such encumbrance or restriction is not
materially more disadvantageous to Holder than is customary in comparable
financings (as determined by the Company) and the Company determines that any
such encumbrance or restriction will not materially affect the Company's ability
to make principal or interest payments on the Note;
(iii) existing under or by reason of applicable law;
(iv) existing with respect to any Person or the property or
assets of such Person acquired by the Company or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any Person or
the property or assets of any Person other than such Person or the property or
assets of such Person so acquired;
(v) in the case of clause (iv) of sub-Section 5.2(a),
(A) that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is, or is subject to, a lease,
purchase mortgage obligation, license, conveyance or contract or similar
property or asset, (B) existing by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any property or assets
of the Company or any Restricted Subsidiary not otherwise prohibited by this
Agreement or (C) arising or agreed to in the ordinary course of business, not
relating to any Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of the Company or any
Restricted Subsidiaries in any manner material to the Company or any
Restricted Subsidiary; or
(vi) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock of, or property and assets of,
such Restricted Subsidiary.
(c) Nothing contained in this Section 5.2 shall prevent the Company
or any Restricted Subsidiary from (i) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted in Section 4.7 or (ii) restricting the
sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 5.3 LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue, transfer, convey, sell, lease or
otherwise dispose of any shares of Capital Stock (including options, warrants or
other rights to purchase shares of such Capital Stock) of such or any other
Restricted Subsidiary (other than to the Company or a wholly-owned Restricted
Subsidiary or in
18
respect of any director's qualifying shares or sales of shares of Capital Stock
to foreign nationals mandated by applicable law) to any Person unless (a) the
Net Cash Proceeds from such issuance, transfer, conveyance, sale, lease or other
disposition are applied in accordance with Section 5.6, (b) immediately after
giving effect to such issuance, transfer, conveyance, sale, lease or other
disposition, such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary of the Company and (c) any Investment in such Person remaining after
giving effect to such issuance, transfer, conveyance, sale, lease or other
disposition would have been permitted to be made under Section 4.1 if made on
the date of such issuance, transfer, conveyance, sale, lease or other
disposition (valued as provided in the definition of "Investment"); PROVIDED,
HOWEVER, that notwithstanding the foregoing, the Company may, and may permit its
Restricted Subsidiaries to, issue, transfer, convey, sell or otherwise dispose
of Capital Stock (other than Redeemable Stock) (including options, warrants or
other rights to purchase shares of such Capital Stock) of such or any Restricted
Cable Subsidiary so long as (x) immediately after such transaction, the Company
and/or its Restricted Subsidiaries continue to beneficially own at least a
majority of the Voting Stock of such Restricted Cable Subsidiary and (y) the Net
Cash Proceeds from such transaction are applied in accordance with the
provisions of Section 5.6. For purposes of the foregoing, a "Restricted Cable
Subsidiary" shall mean any Restricted Subsidiary of the Company organized after
the May 28, 1998 for the purpose of designing, developing, constructing,
acquiring, licensing, owning and/or operating fiber optic cable or similar
transmission systems used in the telecommunications business.
SECTION 5.4 LIMITATION ON TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES. The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
ten percent (10%) or more of any class of Capital Stock of the Company, Holdings
or any Restricted Subsidiary or with any Affiliate of Holdings or any Restricted
Subsidiary, unless the following conditions have been met:
(a) such transaction or series of transactions is on terms no less
favorable to the Company or such Restricted Subsidiary than those that could be
obtained in a comparable arm's-length transaction with a Person that is not such
a holder or an Affiliate;
(b) if such transaction or series of transactions involves aggregate
consideration in excess of $2 million, then such transaction or series of
transactions is approved by a majority of the Board of Directors (including a
majority of the disinterested members thereof, if any) and is evidenced by a
resolution thereof; and
(c) if such transaction or series of transactions involves aggregate
consideration in excess of $10 million, then the Company or such Restricted
Subsidiary shall deliver to Holder a written opinion as to the fairness to the
Company or such Restricted Subsidiary of such transaction from a financial point
of view from a nationally recognized investment banking firm (or, if an
investment banking firm is generally not qualified to give such an opinion, by a
nationally recognized appraisal firm or accounting firm).
The foregoing limitation does not limit, and will not apply to (i)
any transaction between the Company and any of its Restricted Subsidiaries or
between or among Restricted Subsidiaries; (ii) the payment or reimbursement of
reasonable and customary regular fees and expenses to directors of Holdings who
are not employees of Holdings or the Company; (iii) any
19
Restricted Payments not prohibited by Section 5.2; (iv) loans and advances to
officers or employees of Holdings or the Company and their respective
Subsidiaries not exceeding at any one time outstanding $1.5 million in the
aggregate; (v) employment and similar agreements entered into between the
Company or any of its Restricted Subsidiaries with their respective employees in
the ordinary course of business; and (vi) operating and similar agreements
entered into in the ordinary course of the Company's business.
SECTION 5.5 INTENTIONALLY LEFT BLANK.
SECTION 5.6 LIMITATION ON ASSET SALES.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or the Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or disposed of
as determined by the good faith judgment of the Board of Directors evidenced by
a resolution thereof and (ii) at least seventy-five percent (75%) of the
consideration received for such Asset Sale consists of cash or cash equivalents
or the assumption of unsubordinated Indebtedness.
(b) The Company shall, or shall cause the relevant Restricted
Subsidiary to, within 360 days after the date of receipt of the Net Cash
Proceeds from an Asset Sale, (i) (A) apply an amount equal to such Net Cash
Proceeds to permanently repay unsubordinated Indebtedness of the Company or
Indebtedness of any Restricted Subsidiary, in each case, owing to a Person other
than the Company or any of its Restricted Subsidiaries or (B) invest an equal
amount, or the amount not so applied pursuant to clause (A), in property or
assets of a nature or type or that are used in a business (or in a Person having
property and assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the business of,
the Company, Holdings and their respective Restricted Subsidiaries existing on
the date of such investment (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a resolution
thereof) and (ii) apply (no later than the end of the 360-day period referred to
above) such excess Net Cash Proceeds (to the extent not applied pursuant to
clause (i)) as provided in the following paragraphs of this Section 5.6. The
amount of such Net Cash Proceeds required to be applied (or to be committed to
be applied) during such 360-day period referred to above in the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
(c) If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Excess Proceeds Offer
(as defined below) totals at least $10 million, the Company must, not later than
the 30th Business Day thereafter, make an offer (an "Excess Proceeds Offer") to
purchase from Holder on a pro rata basis an aggregate principal amount of the
Note equal to the Excess Proceeds on such date, at a purchase price equal to one
hundred percent (100%) of the principal amount of the Note, plus, in each case,
accrued and unpaid interest to the date of purchase (the "Excess Proceeds
Payment").
(d) The Company shall commence an Excess Proceeds Offer by mailing a
notice to Holder stating: (i) that the Excess Proceeds Offer is being made
pursuant to this Section 5.6 and that the Note validly tendered will be accepted
for payment on a pro rata basis; (ii) the purchase price and the date of
purchase (which shall be a Business Day no earlier than 30 days nor later than
60 days from the date such notice is mailed) (the "Excess Proceeds Payment
20
Date"); (iii) that any Note not tendered will continue to accrue interest
pursuant to its terms; (iv) that, unless the Company defaults in the payment of
the Excess Proceeds Payment, any Note accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accrue interest on and after the Excess
Proceeds Payment Date; (v) that Holder electing to have a Note purchased
pursuant to the Excess Proceeds Offer will be required to surrender the Note,
together with the form entitled "Option of the Holder to Elect Purchase" on the
reverse side of the Note completed, to the Paying Agent at the address specified
in the notice prior to the close of business on the Business Day immediately
preceding the Excess Proceeds Payment Date; (vi) that Holder shall be entitled
to withdraw their election if the Paying Agent receives, not later than the
close of business on the third Business Day immediately preceding the Excess
Proceeds Payment Date, a telegram, facsimile transmission or letter setting
forth the name of Holder, the principal amount of the Note delivered for
purchase and a statement that Holder is withdrawing his election to have the
Note purchased; and (vii) that Holder whose Note is being purchased only in part
will be issued a new Note equal in principal amount to the unpurchased portion
of the Note surrendered; provided that each Note purchased and each new Note
issued shall be in a principal amount of One Thousand Dollars ($1,000) or
integral multiples thereof.
(e) On the Excess Proceeds Payment Date, the Company shall (i)
accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to the Excess Proceeds Offer; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Note or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Holder the Note or
portions thereof so accepted together with an Officer's Certificate specifying
the Note or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail to Holder of the Note so accepted payment in an amount
equal to the purchase price, and shall promptly authenticate and mail to Holder
a new Note equal in principal amount to any unpurchased portion of the Note
surrendered; provided that each Note purchased and each new Note issued shall be
in a principal amount of One Thousand Dollars ($1,000) or integral multiples
thereof. To the extent that the aggregate principal amount of Note tendered is
less than the Excess Proceeds, the Company may use any remaining Excess Proceeds
for general corporate purposes. The Company shall publicly announce the results
of the Excess Proceeds Offer as soon as practicable after the Excess Proceeds
Payment Date. For purposes of this Section 5.6, the Company shall act as the
Paying Agent.
(f) The Company shall comply with Rule 14e-1 under the Exchange Act
and any other rules and regulations thereunder to the extent such rules and
regulations are applicable, in the event that such Excess Proceeds are received
by the Company under this Section 5.6 and the Company is required to repurchase
the Note as described above.
SECTION 5.7 BUSINESS OF THE COMPANY; RESTRICTION ON TRANSFERS OF EXISTING
BUSINESS. The Company shall not, and shall not permit any Restricted Subsidiary
to, be principally engaged in any business or activity other than a Permitted
Business. In addition, the Company and any Restricted Subsidiary shall not be
permitted to, directly or indirectly, transfer to any Unrestricted Subsidiary
(i) any of the material licenses, agreements or instruments, permits or
authorizations used in the Business of the Company, Holdings and any Restricted
Subsidiary on the Closing Date or (ii) any material portion of the "property and
equipment" (as such term is used in the Company's consolidated financial
statements) of the Company or any Significant Subsidiary used in the licensed
service areas of the Company and any Restricted Subsidiary as they exist on the
Closing Date.
21
SECTION 5.8 LIMITATION ON SALE-LEASEBACK TRANSACTIONS. The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, enter
into any Sale-Leaseback Transaction with respect to any property of the Company
or any of its Restricted Subsidiaries.
Notwithstanding the foregoing, the Company may enter into
Sale-Leaseback Transactions; provided, however, that (a) the Attributable Value
of such Sale-Leaseback Transaction shall be deemed to be Indebtedness of the
Company and (b) after giving pro forma effect to any such Sale-Leaseback
Transaction and the foregoing clause (a), the Company would be able to incur One
Dollar ($1.00) of additional Indebtedness (other than Permitted Indebtedness)
pursuant to paragraph (a) of Section 5.1.
SECTION 5.9 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE. The Company
shall not consolidate with, or merge with or into, or sell, convey, transfer,
lease or otherwise dispose of all or substantially all of its property and
assets (as an entirety or substantially as an entirety in one transaction or
series of related transactions) to, any Person or permit any Person to merge
with or into the Company and the Company shall not permit any of its Restricted
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in
the sale, assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company or the Company and
its Restricted Subsidiaries, taken as a whole, to any other Person or Persons,
unless:
(a) either (i) the Company shall be the continuing Person or (ii)
the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or that acquired or leased such property and assets
of the Company (A) shall be a corporation organized and validly existing under
the laws of the United States of America or any jurisdiction thereof and (B)
shall expressly assume, by an amendment to this Agreement, duly executed and
delivered to the Holder, all of the obligations of the Company with respect to
the Note and under this Agreement;
(b) immediately after giving effect to such transaction on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing;
(c) immediately after giving effect to such transaction on a pro
forma basis, the Company, or any Person becoming the successor obligor of the
Note, shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction;
(d) immediately after giving effect to such transaction on a pro
forma basis, the Company, or any Person becoming the successor obligor of the
Note, as the case may be, could Incur at least One Dollar ($1.00) of
Indebtedness under paragraph (a) of Section 5.1;
(e) the Person formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of the
Company is not Holdings; and
(f) the Company delivers to the Holder an Officer's Certificate
(attaching the arithmetic computations to demonstrate compliance with clauses
(c) and (d) above) and an opinion of counsel, each stating that such
consolidation, merger or transfer and such amendment to the Agreement complies
with this Section 5.9 and that all conditions precedent herein provided for
relating to such transaction have been complied with;
22
provided, however, that clauses (c) and (d) above shall not apply if, in the
good faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a Board resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company;
provided further that any such transaction shall not have as one of its purposes
the evasion of the foregoing limitations.
ARTICLE 6
DEFAULT
SECTION 6.1 EVENTS OF DEFAULT. Any of the following events shall be an "Event of
Default" as that term is used herein:
(a) PRINCIPAL AND INTEREST PAYMENTS. The Company fails to make
payment within thirty (30) days of the due date of any principal or interest
installment on the Note;
(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made by the Company proves to have been incorrect in any respect as of the date
thereof and such false or inaccurate representation or warranty could reasonably
be expected to have a Material Adverse Effect on the Company, Holdings or their
respective Subsidiaries;
(c) COVENANTS.
(i) the Company defaults in the observance or performance
of any of the covenants or agreements contained in Sections 3.6, 3.7, 3.12,
3.13 or 4.5 or any other subsection of this Section 6.1 of this Agreement,
except in the case of breaches of Sections 3.6 and 3.7, with respect to
litigation, defaults and judgments which are not reasonably likely to result
in a Material Adverse Effect or prejudice of any rights of the Holder; or
(ii) the Company defaults in the observance or
performance of any of the covenants herein (except Sections 3.6, 3.7, 3.12,
3.13 or 4.5) and such default continues unremedied for a period of thirty
(30) days after notice thereof being given by Holder to the Company, unless
if such default cannot reasonably be remedied within thirty (30) days, the
Company commences efforts to remedy such default within thirty (30) days
after notice thereof is given to the Company and such default is remedied
within forty-five (45) days after notice of such default is given to the
Company;
(d) LOAN DOCUMENTS. The Company defaults in the observance or
performance of any of the covenants or agreements contained in any Loan Document
to which it is a party which continues beyond the expiration of any notice and
cure period pertaining thereto;
(e) INVOLUNTARY BANKRUPTCY OR RECEIVERSHIP PROCEEDINGS. A receiver,
conservator, liquidator or trustee of the Company, Holdings, any Restricted
Subsidiary or of their property is appointed by order or decree of any court or
agency or supervisory authority having jurisdiction; or an order for relief is
entered against the Company or Holdings under the U.S. Bankruptcy Code; or the
Company, Holdings or any Restricted Subsidiary is adjudicated bankrupt or
insolvent; or any material portion of the properties of the Company, Holdings or
any Restricted Subsidiary is sequestered by court order and such order remains
in effect for more
23
than sixty (60) days after the Company obtains Knowledge thereof; or a petition
is filed against the Company, Holdings or any Restricted Subsidiary under any
state, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or receivership law of any jurisdiction, whether now or
hereafter in effect, and such petition is not dismissed within sixty (60) days;
(f) VOLUNTARY PETITIONS. The Company, Holdings or any Restricted
Subsidiary files a petition under the U.S. Bankruptcy Code or seeks relief under
any provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, or consents to the filing of any case or
petition against it under any such law;
(g) ASSIGNMENTS FOR BENEFIT OF CREDITORS. The Company, Holdings or
any Restricted Subsidiary makes a general assignment for the benefit of its
creditors, or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee or liquidator
of all or any part of its property;
(h) UNDISCHARGED JUDGMENTS. Judgment for the payment of money for an
amount in any individual case in excess of $1,000,000 or for any amount when the
aggregate amount of all judgements against the Company exceeds $5,000,000
(excluding any portion thereof that an insurance company has agreed in a writing
to Holder to pay) is rendered against the Company, Holdings or any Restricted
Subsidiary, and the same shall remain undischarged for a period of thirty (30)
consecutive days during which execution is not effectively stayed, or any action
is legally taken by a judgment creditor to levy upon assets or properties of the
Company, Holdings or any Restricted Subsidiary to enforce such judgment; or
(i) ATTACHMENT. A writ or warrant of attachment, seizure or any
similar process involving an amount in any individual case in excess of
$1,000,000 or for any amount when the aggregate amounts involved in all such
process pending against the Company, Holdings and the Restricted Subsidiaries
exceeds $5,000,000, shall be issued by any court against all or any material
portion of the property of the Company, Holdings or any Restricted Subsidiary,
and such writ or warrant of attachment or any similar process is not released or
bonded within thirty (30) days after its entry or
(j) RECEIVABLES PURCHASE AGREEMENT. An Amortization Event (as
defined in the Receivables Purchase Agreement) occurs under the Receivables
Purchase Agreement.
(k) SECURED 2001 LOAN DOCUMENTS. An Event of Default (as defined in
the Secured 2001 Loan Agreement) occurs under the Secured 2001 Loan Documents.
SECTION 6.2 REMEDIES.
(a) DEFAULT RATE OF INTEREST. If (i) the Company fails to make
payment on the due date of any principal or interest installment on the Note or
(ii) an uncured Event of Default shall occur and be continuing, interest shall
accrue in respect of the Loan at the Default Rate, according to the terms of the
Note until such payment is made or such Event of Default is cured.
(b) ACCELERATION. Upon the occurrence of any Event of Default,
Holder may:
24
(i) by written notice to the Company, declare the entire
principal amount of the Loan then outstanding, including interest accrued
thereon, together with all other fees and charges payable in connection with the
Loan, to be immediately due and payable without presentment, demand, protest,
notice of protest or dishonor or other notice of default of any kind, all of
which are hereby expressly waived by the Company;
(ii) avail themselves of any other rights or remedies
provided by applicable law; and (iii) set-off any funds of the Company in the
possession of Holder against any amounts then due by the Company to Holder
pursuant to this Agreement.
ARTICLE 7
CONDITIONS TO CLOSING
SECTION 7.1 CLOSING. The obligation of Holder to fund the Loan at Closing
shall be subject to the satisfaction, prior to or at Closing, of the
following conditions:
(a) ISSUANCE OF NOTE . The Company shall have issued to Holder the
Note to be issued and sold to Holder hereunder.
(b) TRANSACTION DOCUMENTS. The Holder shall have received, in form
and substance satisfactory to it and its counsel, this Agreement, the other Loan
Documents, duly executed, and each such document shall be in full force and
effect.
(c) CERTIFIED DOCUMENTS. The Company shall have delivered or caused
to be delivered to Holder copies of the following documents or certificates,
duly certified:
(i) Certificates, signed by the Secretary or an Assistant
Secretary of the Company, dated as of the Closing Date, as to (x) the
incumbency, and containing the specimen signatures of the Persons authorized to
execute on behalf of the Company the Loan Documents, together with evidence of
the incumbency of such Secretary or Assistant Secretary, and (y) the
authenticity of the Company's Certificate of Incorporation and Bylaws.
(ii) A certificate of status or good standing of the Company
from the jurisdiction of its incorporation, in each case, dated within thirty
(30) days of the Closing Date.
(d) REPRESENTATIONS AND WARRANTIES; NO DEFAULT; NO ADVERSE CHANGE.
The representations and warranties of the Company contained in this Agreement
shall be true in all material respects on the Closing Date except as affected by
the consummation of the subject transactions, and there shall exist on such date
and after giving effect to such transactions, no Event of Default or breach of
any Loan Document. The Company shall have delivered to Holder an Officer's
Certificate, dated the Closing Date, to all such effects.
(e) TRANSACTION PERMITTED BY APPLICABLE LAWS; NO INJUNCTION. The
entry into the Loan hereunder shall not be prohibited by any applicable law or
governmental regulation. No preliminary, temporary or permanent injunction or
restraining order or other binding order, decree or ruling issued by a court or
governmental agency, shall be in effect or be pending which
25
shall or would have the effect of preventing the consummation of the
transactions contemplated by this Agreement.
(f) COMPLIANCE WITH SECURITIES LAWS. The offering, issuance, and
sale by the Company of the Note shall have complied with all applicable
requirements of federal and state securities laws, and the Holder shall have
received evidence of such compliance in form and substance satisfactory to it.
(g) APPROVALS AND CONSENTS. The Holder shall have received evidence
reasonably satisfactory to it that the Company has received all material
authorizations, consents, approvals, licenses, permits, and certificates by or
of all governmental bodies in each case, necessary for the issuance of the Note,
and the execution and delivery of the Loan Documents, and all of the foregoing
shall be in full force and effect on the Closing Date.
(h) EXPENSES. The Company shall have paid all of the reasonable
fees, costs, and expenses (including all out-of-pocket due diligence costs and
expenses) incurred by the Holder, including the fees and expenses of Holder's
counsel ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
(i) INSURANCE. The Company shall have furnished evidence
satisfactory to the Holder that it has the insurance required
by Section 3.10.
(j) DUE DILIGENCE. The Holder shall have completed their financial
and legal due diligence with the respect to the Company its management and its
industry, the results of which shall be satisfactory to the Holder.
(k) SECURED 2001 LOAN DOCUMENTS. The Holder shall have received, in
form and substance satisfactory to it and its counsel, the Secured 2001 Loan
Documents, duly executed, and in full force and effect.
(l) OPINION OF COUNSEL. The Holder shall have received the opinion
or opinions of counsel to the Company addressed to Holder and dated the Closing
Date and satisfactory in form and substance to Holder and its counsel.
(m) WAIVERS AND CONSENTS. The Holder shall have received evidence,
satisfactory in form and substance to it in its sole discretion, that the
Company shall (a) not be in breach of any document set forth on EXHIBIT 2.06(b)
as a result of the funding of the Loan, and (ii) have obtained any and all
waivers and consents required pursuant to any such documents set forth on
EXHIBIT 2.06(b), in form and substance satisfactory to Holder, required for
Holder to fund the Loan.
ARTICLE 8
REDEMPTION OR DEFEASANCE
SECTION 8.1 MATURITY OF NOTE UPON CHANGE OF CONTROL.
Subject to the Company's rights of defeasance and covenant
defeasance under this Article:
26
(a) Upon the occurrence of a Change of Control and the written
demand of the Holder of the Note, the unpaid principal balance of the Note, and
all accrued and unpaid interest thereon shall become due and payable.
(b) The Company shall comply with Rule 14e-1 under the Exchange Act
and any rules and regulations thereunder to the extent such rules and
regulations are applicable in the event that a Change of Control occurs and the
Company is required to repay the Note under this Section 8.1.
SECTION 8.2 DEFEASANCE AND DISCHARGE. Upon meeting the conditions set forth in
Section 8.4 hereof, the Company may, by written notice to Holder, exercise the
right to be deemed to have been discharged from its obligations with respect to
the Note on the date the conditions set forth in Section 8.4 are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Note, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 and the other Sections of this Agreement
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Note and this Agreement insofar as the Note are concerned
(and Holder, at the expense of the Company, shall execute proper instruments
acknowledging same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of the Holder of
the Note to receive payments (solely from monies deposited in trust) in respect
of the principal of, premium, if any, and accrued interest on the Note when such
payments are due, and (B) this Article 8. Subject to compliance with this
Article 8, the Company may exercise its rights under this Section 8.2
notwithstanding the prior exercise of its rights under Section 8.3 with respect
to the Note.
SECTION 8.3 COVENANT DEFEASANCE. Upon meeting the conditions set
forth in Section 8.4 hereof, the Company may, by written notice to Holder,
exercise the right to be released from its obligations under any covenant
contained in Sections 3.10, 3.4, 3.2, 3.12, and Articles 4 and 5 (other than
Section 5.9(a), (b) and (e) with respect to the Note (hereinafter, "covenant
defeasance"), and the Note shall thereafter be deemed not to be "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holder (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with respect to the Note,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default, but, except as specified above, the
remainder of this Agreement and such Note shall be unaffected thereby.
SECTION 8.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The following shall
be the conditions to application of either Section 8.2 or Section 8.3 to
the Note:
(1) The Company shall irrevocably have deposited or caused to be
deposited with a trustee (who shall agree to comply with the provisions of this
Article 8 applicable to it) as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holder of the Note, (A) cash in United States
dollars, (B) U.S. Government Obligations or (C) a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants
27
expressed in a written certification thereof delivered to the trustee, to pay
and discharge, and which shall be applied by the trustee (or other qualifying
trustee) to pay and discharge, the principal of (and premium, if any), and
accrued interest on the Note on the Stated Maturity (or redemption date, if
applicable) of such principal (and premium, if any) or installment of interest;
provided that the trustee shall have been irrevocably instructed to apply such
money or the proceeds of such U.S. Government Obligations to said payments with
respect to the Note. Before such a deposit, the Company may give to the trustee
a notice of its election to redeem all of the Note at a future date, which
notice shall be irrevocable. Such irrevocable redemption notice, if given, shall
be given effect in applying the foregoing. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations of the United
States for the timely payment of which its full faith and credit is pledged or
(y) obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a
"bank" (as defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
(2) No Default or Event of Default with respect to the Note shall
have occurred and be continuing on the date of such deposit or, insofar as an
event of bankruptcy under paragraph (e) or (f) of Section 6.1 hereof is
concerned, at any time during the period ending on the 123rd day after the date
of such deposit.
(3) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than this Agreement) to which the Company is a party or by
which it is bound.
(4) In the case of an election under Section 8.2, the Company shall
have delivered to the trustee an opinion of counsel stating that (x) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (y) since May 28, 1998, there has been a change in the applicable
federal income tax law, in either case to the effect, and based thereon such
opinion shall confirm, that Holder will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred.
(5) In the case of an election under Section 8.3, the Company shall
have delivered to the trustee an opinion of counsel to the effect that the
Holder will not recognize income, gain or loss for federal income tax purposes
as a result of such covenant defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(6) The Company shall have delivered to the trustee an Officer's
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to either the
28
defeasance under Section 8.2 or the covenant defeasance under Section 8.3 (as
the case may be) have been complied with.
SECTION 8.5 DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
(a) All money and U.S. Government Obligations (including the
proceeds thereof) deposited with a trustee pursuant to Section 8.4 in respect of
the Note shall be held in trust and applied by such trustee, in accordance with
the provisions of the Note and this Agreement, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the trustee may determine, to the Holder of the Note of all sums due
and to become due thereon in respect of principal (and premium, if any) and
interest, but such money need not be segregated from other funds except to the
extent required by law.
(b) The Company shall pay and indemnify the trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Governmental
Obligations deposited pursuant to Section 8.4 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holder.
(c) Anything in this Article 8 to the contrary notwithstanding, the
trustee shall deliver or pay to the Company from time to time upon its request
any money or U.S. Government Obligations held by it as provided in Section 8.4
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance, as
applicable, in accordance with this Article.
SECTION 8.6 REINSTATEMENT. If the trustee or any Paying Agent is unable to apply
any money in accordance with Section 8.5 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Agreement and the Note shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.2 or 8.3, as the case may be, until such time as
the trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.5; provided, however, that if the Company makes any payment of
principal of (or premium, if any) or interest on the Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holder of the Note to receive such payment from the money held by the
trustee or Paying Agent.
SECTION 8.7 APPOINTMENT OF TRUSTEE. At the time Company exercises its rights
under Sections 8.2 or 8.3 hereof, Holder shall appoint a trustee satisfactory to
Company or appoint a trustee upon Company's request (the "Trustee"), with full
power and authority (including power of substitution), except as otherwise
expressly provided in this Agreement, in the name of and for and on behalf of
Holder, or in its own name as the Trustee, to take all actions required or
permitted under Sections 8.2-8.6 hereof (including giving and receiving all
accountings, reports, notices and consents). The authority conferred under this
Section 8.7 shall be an agency coupled with an interest, and all authority
conferred hereby is irrevocable and not subject to termination by the Holder or
any of them, or by operation of law, whether by the dissolution or termination
of any Holder or the occurrence of any other event. If the Trustee resigns or is
otherwise unable to serve as the Trustee, the successor Trustee shall be
designated in writing by Holder. If Holder
29
should dissolve or terminate or if any other such event should occur, any action
taken by the Trustee pursuant to this Section 8.7 shall be as valid as if such
dissolution, termination or other event had not occurred, regardless of whether
or not the Trustee or the Company shall have received notice of such
dissolution, termination or other event.
SECTION 8.8 SECTION 8.1 NOT APPLICABLE. Upon the Company meeting the conditions
of Section 8.4 hereof and exercising its right of defeasance or covenant
defeasance under Section 8.2 or 8.3 hereof, Section 8.1 shall no longer be
applicable to the Company.
ARTICLE 9
TERMINATION OF COVENANTS/REMOVAL OF COVENANTS
All covenants herein shall cease to be in effect upon repayment of
the Note, provided, however, such covenants shall be in effect if Holder is
required to disgorge any previous repayments.
ARTICLE 10
FEES AND COSTS; DEPOSIT
SECTION 10.1 FEES AND COSTS. The Company shall pay:
(a) All costs, brokerage and other commissions, due diligence costs,
reasonable legal fees and other fees and expenses actually incurred by the
Company or the Holder in connection with the execution of the Loan Documents and
the transactions contemplated by this Agreement;
(b) All of Holder's reasonable expenses of any nature actually
incurred, which may be reasonably necessary, either before or after a Default or
an Event of Default hereunder, for the enforcement or preservation of Holder's
rights under this Agreement, the Note, or any other agreement between the Holder
and the Company as mentioned herein, including but not limited to reasonable
attorneys' fees, appellate costs and fees, and costs incurred by Holder as a
participant in any bankruptcy proceeding, workout, debt restructuring, extension
of maturity or document amendment, involving the Company or any other obligor
under the Note;
(c) All costs and fees, including reasonable attorneys' fees and
expenses, incurred by Holder or its Affiliates in connection with:
(i) any suit, action or claim of Holder to enforce the
provisions of the Loan Documents or any other document in connection with the
transactions contemplated by this Agreement; and
(ii) any suit, action, claim or other liability asserted
against Holder or its Affiliates by the Company in which the Company does not
prevail with respect to substantially all of its claims.
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ARTICLE 11
INDEMNIFICATION
The Company will indemnify Holder and its directors, officers,
employees, agents and controlling Persons (hereinafter collectively,
"Indemnitees") against, and hold each such Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including attorneys'
fees and expenses) incurred by or asserted against Holder or any such Indemnitee
arising out of, in any way connected with, or resulting from the following:
(a) this Agreement, the other documents contemplated hereby, the
performance by the parties hereto and thereto of their respective obligations
hereunder and thereunder, or consummation of the transactions contemplated
hereby and thereby;
(b) any and all liability and loss with respect to or resulting from
any and all claims for or on account of any broker's finder's fees or
commissions with respect to this transaction as may have been created by the
Company or its officers, partners, employees or agents, together with any stamp
or excise taxes which may become payable in connection with this transaction or
the issuance of stock hereunder; and
(c) any claim, litigation investigation or proceeding relating to
any of the foregoing, whether or not Holder or any such person is a party
thereto;
PROVIDED, HOWEVER, that any such indemnity shall not apply to any
such losses, claims, damages, liabilities or related expenses arising from
Holder's gross negligence or willful misconduct. THIS SECTION IS INTENDED TO
INDEMNIFY THE INDEMNITEES FROM THE RESULTS OF THEIR OWN ORDINARY NEGLIGENCE.
The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of the Note,
the invalidity or unenforceability of any term or provision of this Agreement or
any Loan Documents, or any investigation made by or on behalf of Holder. All
amounts due under this Article shall be payable on written demand therefor.
ARTICLE 12
REMEDIES
SECTION 12.1 CUMULATION. None of the rights or remedies of the Holder provided
herein shall be exclusive, but each shall be cumulative with and in addition to
every other right or remedy of Holder, now or hereafter existing, at law or in
equity, by statute, agreement or otherwise.
SECTION 12.2 NO IMPLIED WAIVER. No course of dealing between Holder and any
other party hereto, or any failure or delay on the part of Holder in exercising
any rights or remedies hereunder, shall operate as a waiver of any rights or
remedies of Holder under this or any other applicable agreement. No single or
partial exercise of any rights or remedies hereunder shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder.
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ARTICLE 13
PARTIES
This Agreement will bind and accrue to the benefit of the Company,
the Holder, any holders of the Note, and their successors and assigns. Any
purchaser, assignee, transferee or pledgee of the Note, or any document arising
in connection with the transaction subject to this Agreement (or any of them),
sold, assigned, transferred, pledged or repledged by Holder shall forthwith
become vested with and entitled to exercise all rights and remedies provided
herein to Holder, as if said purchaser, assignee, transferee or pledgee were
originally named in this Agreement in place of Holder.
ARTICLE 14
NOTICE
All notices or communications under this Agreement or the Note
shall be in writing and mailed, postage prepaid, or delivered as follows:
To Holder: Allied Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Director
and to
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
To the Company: Startec Global Operating Company
Startec Global Licensing Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Ram ▇▇▇▇▇▇▇, President
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
or, to such subsequent addresses as may hereafter be specified by the parties.
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which no notice was given, shall not affect the date of such
notice sent in accordance with the foregoing provisions. Each such notice,
request or other communication shall be deemed sufficiently given, served, sent
and received for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of the messenger
or the answer back being deemed conclusive evidence of such delivery).
ARTICLE 15
RELATIONSHIP OF THE PARTIES
This Agreement provides, among other things, for the making of
loans by Holder, in its capacity as a lender, to the Company, in its capacity as
a borrower, and for the payment of
32
interest and repayment of principal by the Company to Holder. The provisions
herein requiring compliance with financial covenants and delivery of financial
statements are intended solely for the benefit of Holder to protect its
interests as a lender in assuring payments of interest and repayment of
principal, and as warrant or stockholders in preserving their equity stake in
the Company. Nothing contained in this Agreement shall be construed as
permitting or obligating Holder to act as financial or business advisors or
consultants to the Company, as permitting or obligating Holder to control the
Company or to conduct the Company's operations, as creating any fiduciary
obligation on the part of Holder to the Company, or as creating any joint
venture, agency or other relationship between the parties, other than as
explicitly and specifically stated in this Agreement. Holder is not, and shall
not be construed as, a partner, joint venturer, alter-ego, manager, controlling
person, operator or other business participant of any kind of the Company;
neither Holder nor the Company intend Holder to assume such status, and,
accordingly, Holder shall not be deemed responsible for or a participant in any
acts or omissions of the Company. The Company represents that it has the advice
of experienced counsel of its own choosing in connection with the negotiation
and execution of this Agreement and with respect to all matters contained
herein.
ARTICLE 16
CONTROLLING LAW; VENUE AND NON-EXCLUSIVE JURISDICTION; SERVICE OF PROCESS
This Agreement shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of the
District of Columbia, without regard to its principles of conflicts of law.
Venue for any adjudication hereof may be in the courts of the District of
Columbia or the federal courts in the District of Columbia, to the jurisdiction
of which courts all undersigned parties hereby submit as the agreement of such
parties, as not inconvenient, and as not subject to review by any court other
than such courts in the District of Columbia. All parties intend and agree that
the courts of jurisdictions in which the Company is incorporated and conducts
its business shall afford full faith and credit to any judgment rendered by a
court of the District of Columbia against the Company or other obligees
hereunder, and that such District of Columbia and federal courts shall have IN
PERSONAM jurisdiction to enter a valid judgment against the Company or other
obligees hereunder. Service of any summons and/or complaint and any other
process which may be served on the Company in any action in respect hereto, may
be made by mailing via registered mail, or delivering a copy of such process to
the Company at its address specified above. The parties hereto agree that this
submission to jurisdiction and consent to service of process are reasonable and
made for the express benefit of Holder.
ARTICLE 17
WAIVER OF TRIAL BY JURY
EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO TRIAL BY JURY OF
ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATING TO THIS AGREEMENT, THE LOAN, THE LOAN DOCUMENTS OR THE
DEALINGS OF THE PARTIES IN RESPECT THERETO. THE PARTIES HERETO ACKNOWLEDGE AND
AGREE THAT THIS ARTICLE IS A MATERIAL TERM OF THIS AGREEMENT AND THAT THE HOLDER
WOULD NOT EXTEND ANY FUNDS HEREUNDER IF THIS WAIVER OF JURY TRIAL WERE NOT A
PART OF THIS AGREEMENT. EACH PARTY HERETO ACKNOWLEDGES THAT THIS IS A WAIVER OF
A LEGAL RIGHT AND THAT IT
33
MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE
OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. EACH PARTY HERETO AGREES
THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A
JUDGE OF COMPETENT JURISDICTION, WITHOUT A JURY.
ARTICLE 18
CAPTIONS; SEVERANCE
The captions in this Agreement and the Note are inserted for
convenience of reference only and shall be construed neither to limit nor
amplify the meaning of the other text of such documents. To the extent any
provision herein violates any applicable law, such provision shall be void and
the balance of this Agreement shall remain unchanged.
ARTICLE 19
COUNTERPARTS; ENTIRE AGREEMENT
This Agreement may be executed in as many counterpart copies and
with as many counterpart signature pages as may be convenient. It shall not be
necessary that the signature of, or on behalf of, each party appear on each
counterpart, but it shall be sufficient that the signature of, or on behalf of,
each party appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement; it shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties. This Agreement, the Note, the Exhibits hereto and the documents
mentioned herein set forth the entire agreements and understandings of the
parties hereto in respect of this transaction. Any verbal agreements in respect
of this transaction are hereby terminated. The terms herein may not be changed
verbally but only by a writing signed by the party against which enforcement of
the change is sought.
ARTICLE 20
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 20.1 DEFINITIONS. As used in this Agreement, and unless the context
requires a different meaning, the following terms shall have the meanings as
follow:
(a) "2000 LOAN" shall have the meaning set forth in Recital A.
(b) "2000 LOAN AGREEMENT" shall have the meaning set forth in
Recital A.
(c) "2000 LOAN DOCUMENTS" shall mean, collectively with all
modifications, extensions, renewals and replacements thereof and therefor, the
2000 Loan Agreement and the note and warrants issued thereunder.
(d) "ACQUIRED INDEBTEDNESS" or "ACQUIRED PREFERRED STOCK" means
Indebtedness or Preferred Stock, as the case may be, of a Person existing at the
time such Person becomes a Restricted Subsidiary or Indebtedness assumed in
connection with an Asset Acquisition by the Company or a Restricted Subsidiary
and not incurred in connection with, or in anticipation of, such Person becoming
a Restricted Subsidiary or such Asset Acquisition; provided that Indebtedness or
Preferred Stock, as the case may be, of such Person which is redeemed,
34
defeased, retired or otherwise repaid in full at the time of or immediately
upon the consummation of the transactions by which such Person becomes a
Restricted Subsidiary or such Asset Acquisition shall not be considered as
Indebtedness or Preferred Stock.
(e) "AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
(f) "AFFILIATED PERSON" shall have the definition for such term set
forth in Section 2(a)(3) of the Investment Company Act of 1940, as amended.
(g) "AGREEMENT" is defined as this Investment and Loan Agreement and
the exhibits and schedules hereto, as the same may be amended, supplemented,
extended, modified or replaced in accordance with the terms hereof.
(h) "ASSET ACQUISITION" means (i) an investment by the Company or
any of its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or shall be merged
into or consolidated with the Company or any of its Restricted Subsidiaries or
(ii) an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person (other than the Company or any of its
Restricted Subsidiaries) that constitute substantially all of a division or line
of business of such Person.
(i) "ASSET DISPOSITION" means the sale or other disposition by the
Company or any of its Restricted Subsidiaries (other than to the Company or
another Restricted Subsidiary of the Company) of (i) all or substantially all of
the Capital Stock of any Restricted Subsidiary of the Company or (ii) all or
substantially all of the assets that constitute a division or line of business
of the Company or any of its Restricted Subsidiaries.
(j) "ASSET SALE" means any sale, transfer or other disposition
(including by way of merger, consolidation or Sale-Leaseback Transactions) in
one transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person (other than the Company or any of its
Restricted Subsidiaries) of (i) all or any of the Capital Stock of any
Restricted Subsidiary (other than in respect of any director's qualifying shares
or investments by foreign nationals mandated by applicable law), (ii) all or
substantially all of the property and assets of an operating unit or business of
the Company or any of its Restricted Subsidiaries or (iii) any other property
and assets of the Company or any of its Restricted Subsidiaries outside the
ordinary course of business of the Company or such Restricted Subsidiary and, in
each case, that is not governed by Section 5.9 and which, in the case of any of
clause (i), (ii) or (iii) above, whether in one transaction or a series of
related transactions, (a) have a fair market value in excess of One Million
Dollars ($1,000,000) or (b) are for net proceeds in excess of One Million
Dollars ($1,000,000); provided that sales or other dispositions of inventory,
receivables and other current assets in the ordinary course of business shall
not be included within the meaning of "Asset Sale."
35
(k) "ATTRIBUTABLE VALUE" means, as to any particular lease under
which any Person is at the time liable, other than a Capitalized Lease
Obligation, and at any date as of which the amount thereof is to be determined,
the total net amount of rent required to be paid by such Person under such lease
during the remaining term thereof (whether or not such lease is terminable at
the option of the lessee prior to the end of such term), including any period
for which such lease has been, or may, at the option of the lessor, be extended,
discounted from the last date of such term to the date of determination at a
rate per annum equal to the discount rate which would be applicable to a
Capitalized Lease Obligation with like term in accordance with GAAP. The net
amount of rent required to be paid under any lease for any such period shall be
the aggregate amount of rent payable by the lessee with respect to such period
after excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges.
"Attributable Value" means, as to a Capitalized Lease Obligation under which any
Person is at the time liable and at any date as of which the amount thereof is
to be determined, the capitalized amount thereof that would appear on the face
of a balance sheet of such Person in accordance with GAAP.
(l) "AUTHORIZATION" shall have the meaning set forth in
Section 2.25.
(m) "AVERAGE LIFE" means, with respect to any Indebtedness, as at
any date of determination, the quotient obtained by dividing (i) the sum of the
products of (A) the number of years from such date to the date or dates of each
successive scheduled principal payment (including, without limitation, any
sinking fund requirements) of such Indebtedness and (B) the amount of each such
principal payment by (ii) the sum of all such principal payments.
(n) "BOARD OF DIRECTORS" means the boards of directors of the
Company or its equivalent, including managers or members of a limited liability
company, general partners of a partnership, limited partnership or limited
liability partnership or trustees of a business trust, or any duly authorized
committee thereof.
(o) "BUSINESS" shall have the meaning set forth in Section 2.2(a).
(p) "BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close.
(q) "CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated, whether voting or non-voting) in equity of such Person, whether now
outstanding or issued after the date of this Agreement, including, without
limitation, all Common Stock and Preferred Stock.
(r) "CAPITALIZED LEASE OBLIGATION" means any obligation under a
lease of (or other agreement conveying the right to use) any property (whether
real, personal or mixed) that is required to be classified and accounted for as
a capital lease obligation under GAAP, and, for the purpose of this Agreement,
the amount of such obligation at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP.
(s) "CHANGE OF CONTROL" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes
the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) of more than 50.0% of the total
36
voting power of the then outstanding Voting Stock of the Company, Holdings or
Subsidiary Holdings; (ii) individuals who at the beginning of any period of two
consecutive calendar years constituted the Board of Directors of either the
Company or Holdings (together with any directors who are members of the Board of
Directors on the date hereof and any new directors whose election by the Board
of Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the members of the Board of
Directors then still in office who either were members of the Board of Directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of such Board of Directors then in office; (iii) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company, Holdings and their respective
Subsidiaries, taken as a whole, to any such "person" or "group" (other than to
the Company, Holdings or a Restricted Subsidiary); (iv) the merger or
consolidation of the Company or Holdings with or into another corporation or the
merger of another corporation with or into the Company or Holdings in one or a
series of related transactions with the effect that, immediately after such
transaction, any such "person" or "group" of persons or entities shall have
become the beneficial owner of securities of the surviving corporation of such
merger or consolidation representing a majority of the total voting power of the
then outstanding Voting Stock of the surviving corporation; or (v) the adoption
of a plan relating to the liquidation or dissolution of the Company or Holdings.
(t) "CLOSING" is defined as the consummation of this Agreement.
(u) "CLOSING DATE" shall mean the day on which the Closing occurs.
(v) "COMMON STOCK" means, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however,
designated, whether voting or non-voting) of such Person's common stock, whether
our outstanding or issued after the date of this Agreement, including, without
limitation, all series and classes of such common stock.
(w) "COMMUNICATIONS ACT OF 1934" shall mean the Communications Act
of 1934, as amended.
(x) "COMPANY" shall have the meaning set forth in the preamble
hereof.
(y) "CONSOLIDATED CASH FLOW" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) income taxes, to the extent such amount was deducted in
calculating Consolidated Net Income (other than income taxes (either positive or
negative) attributable to extraordinary and non-recurring gains or losses or
sales of assets), (iv) depreciation expense, to the extent such amount was
deducted in calculating Consolidated Net Income, (v) amortization expense, to
the extent such amount was deducted in calculating Consolidated Net Income, and
(vi) all other non-cash items reducing Consolidated Net Income (excluding any
non-cash charge to the extent that it represents an accrual of or reserve for
cash charges in any future period), less all non-cash items increasing
Consolidated Net Income, all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in conformity with GAAP.
(z) "CONSOLIDATED INTEREST EXPENSE" means, for any period, the
aggregate amount of interest in respect of Indebtedness (including capitalized
interest, amortization of original
37
issue discount on any Indebtedness and the interest portion of any deferred
payment obligation, calculated in accordance with the effective interest method
of accounting; all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing; the net costs
associated with Interest Rate Agreements; and interest on Indebtedness that is
Guaranteed or secured by the Company, Holdings or any of their respective
Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company, Holding and their respective Restricted
Subsidiaries during such period.
(aa) "CONSOLIDATED NET INCOME" means, with respect to any Person,
for any period, the consolidated net income (or loss) of such Person and its
Restricted Subsidiaries for such period as determined in accordance with GAAP,
adjusted, to the extent included in calculating such net income, by excluding,
without duplication, (i) all extraordinary gains or losses, (ii) net income (or
loss) of any Person combined in such Person or one of its Restricted
Subsidiaries on a "pooling of interests" basis attributable to any period prior
to the date of combination, (iii) gains or losses (on an after-tax basis) in
respect of any Asset Sales by such Person or one of its Restricted Subsidiaries,
(iv) the net income of any Restricted Subsidiary of such Person to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulations applicable to that
Restricted Subsidiary or its stockholders, (v) any gain or loss realized as a
result of the cumulative effect of a change in accounting principles, (vi) any
amount paid or accrued as dividends on preferred stock of Holdings or preferred
stock of any Restricted Subsidiary owned by Persons other than Holdings and any
of its Restricted Subsidiaries, (vii) restructuring charges, (viii) charges
relating to the write-off of acquired in-process research and development
expenses and other intangible assets of a Person in connection with the
application of the purchase method of accounting and (ix) the net income (or
loss) of any Person (other than net income (or loss) attributable to a
Restricted Subsidiary) in which any Person (other than the Company, Holdings or
any of their respective Restricted Subsidiaries) has a joint interest, except to
the extent of the amount of dividends or other distributions actually paid to
the Company, Holdings or any of their respective Restricted Subsidiaries by such
other Person during such period.
(bb) "CONSOLIDATED NET WORTH" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company, Holdings and their respective
Subsidiaries (which shall be as of a date not more than 90 days prior to the
date of such computation), less any amounts attributable to Redeemable Stock or
any equity security convertible into or exchangeable for Indebtedness, the cost
of treasury stock and the principal amount of any promissory notes receivable
from the sale of the Capital Stock of the Company, Holdings or any of their
respective Subsidiaries, each item to be determined in conformity with GAAP
(excluding the effects of foreign currency exchange adjustments under Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 52).
(cc) "CREDIT FACILITIES" means one or more debt facilities or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing or securitizations
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such
38
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time
to time.
(dd) "CUMULATIVE CONSOLIDATED CASH FLOW" means, for the period
beginning on May 28, 1998 through and including the end of the last fiscal
quarter (taken as one accounting period) preceding the date of any proposed
Restricted Payment, Consolidated Cash Flow of the Company, Holdings and their
respective Restricted Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.
(ee) "CUMULATIVE CONSOLIDATED FIXED CHARGES" means the Consolidated
Interest Expense plus dividends declared and payable on Preferred Stock of the
Company, Holdings and their respective Restricted Subsidiaries for the period
beginning on May 28, 1998 through and including the end of the last fiscal
quarter (taken as one accounting period) preceding the date of any proposed
Restricted Payment, determined on a consolidated basis in accordance with GAAP.
(ff) "CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement and any other arrangement and agreement designed to
provide protection against fluctuations in currency (or currency unit) values.
(gg) "DEFAULT" is defined as any Event of Default, and any event or
circumstance which, upon notice and/or the lapse of time, will constitute an
Event of Default.
(hh) "DEFAULT RATE" is defined as an eighteen percent (18%) rate of
interest.
(ii) "DEFEASANCE" shall have the meaning set forth in Section 8.2.
(jj) "DUE DILIGENCE CERTIFICATE" shall have the meaning set forth in
Section 2.7(a).
(kk) "EBITDA" is defined as (i) net income; plus, (ii) in each case,
to the extent deducted in determining net income for the relevant period (A)
taxes, (B) interest expenses and (c) amortization, depreciation and similar non
cash charges; and minus (iii) to the extent included in determining net income
for such period, extraordinary gains; all calculated in accordance with GAAP.
(ll) "ELIGIBLE ACCOUNTS RECEIVABLE" means the accounts receivable
(net of any reserves and allowances for doubtful accounts in accordance with
GAAP) of any Person arising in the ordinary course of business that are not more
than sixty (60) days past their due date, as shown on the most recent
consolidated balance sheet of such Person filed with the Commission, all in
accordance with GAAP.
(mm) "ELIGIBLE INSTITUTION" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, and has outstanding debt with a rating of "A-3"
or higher according to ▇▇▇▇▇'▇ Investors Service, Inc., or "A-" or higher
according to Standard & Poor's Ratings Services (or such similar equivalent
rating by at least one "nationally recognized statistical rating organization"
(as defined in Rule 436 under the Securities Act)), at the time as of which any
investment or rollover therein is made.
39
(nn) "ERISA" is defined as the Employee Retirement Income Security
Act of 1974.
(oo) "EVENT OF DEFAULT" shall have the meaning set forth in
Section 6.1.
(pp) "EXCESS PROCEEDS OFFER" shall have the meaning set forth in
Section 5.6(c).
(qq) "EXCESS PROCEEDS PAYMENT" shall have the meaning set forth in
Section 5.6(c).
(rr) "EXCESS PROCEEDS PAYMENT DATE" shall have the meaning set forth
in Section 5.6(d).
(ss) "EXCHANGE ACT" is defined as the SECURITIES EXCHANGE ACT OF
1934, as amended.
(tt) "EXECUTIVE OFFICERS" is defined, with respect to a Person as of
a particular date, as the individuals serving as the Person's chief executive
officer, president, chairman of the board of directors, chief financial officer,
and chief operating officers, collectively, on the relevant date.
(uu) "FAIR MARKET VALUE" means, with respect to any asset or
property, the sale value that would be obtained in an arm's length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy.
(vv) "FCC" shall mean the Federal Communications Commission.
(ww) "FINANCIAL STATEMENTS" shall have meaning set forth in Section
2.5.
(xx) "FULLY DILUTED BASIS" is defined as the convention whereby, for
the purpose of calculating and expressing relative ownership rights of a
corporation or other legal entity, all outstanding options, warrants,
convertible obligations, and other securities of such entity which are
exercisable or exchangeable for common stock or other corresponding
participating equity interests in the entity, are presumed to have been
exercised, converted or exchanged (as the case may be) for such stock or
interests in full.
(yy) "GAAP" is defined as United States generally accepted
accounting principles as established from time-to-time by the Financial
Accounting Standards Board, consistently applied and maintained throughout the
period indicated.
(zz) "GUARANTEE" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness
40
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
(aaa) "HIGH-YIELD/PUBLIC DEBT" means Holding's payment obligations
under the Indenture and the Indenture Notes.
(bbb) "HOLDER" shall have the meaning set forth in the preamble
hereof.
(ccc) "HOLDINGS" shall have the meaning set forth in the preamble
hereof.
(ddd) "INCUR" or "INCURRENCE" means, with respect to any
Indebtedness, to incur, create, issue, assume, Guarantee or otherwise become
liable for or with respect to, or become responsible for, the payment of,
contingently or otherwise, such Indebtedness, including an Incurrence of
Indebtedness by reason of the acquisition of more than fifty percent (50%) of
the Capital Stock of any Person; provided that neither the accrual of interest
nor the accretion of original issue discount shall be considered an Incurrence
of Indebtedness.
(eee) "INDEBTEDNESS" means, with respect to any Person at any date
of determination (without duplication), (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto); (iv) except with respect to
Trade Payables, all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more than
six months after the date of placing such property in service or taking delivery
and title thereto or the completion of such services; (v) all obligations of
such Person as lessee under Capitalized Lease Obligations and the Attributable
Value under any Sale-Leaseback Transaction of such Person; (vi) all indebtedness
of other Persons secured by a Lien on any asset of such Person, whether or not
such indebtedness is assumed by such Person; provided that the amount of such
indebtedness shall be the lesser of (A) the fair market value of such asset at
such date of determination or (B) the amount of such indebtedness; (vii) all
Indebtedness of other Persons Guaranteed by such Person to the extent such
Indebtedness is Guaranteed by such Person; (viii) the maximum fixed redemption
or repurchase price of Redeemable Stock of Holdings or Preferred Stock of the
Company or any Subsidiary at the time of determination; and (ix) to the extent
not otherwise included in this definition, obligations under Currency Agreements
and Interest Rate Agreements. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent obligations, the
maximum liability upon the occurrence of the contingency giving rise to the
obligation; provided (x) that the amount outstanding at any time of any
indebtedness issued with original issue discount is the face amount of such
indebtedness less the remaining unamortized portion of the original issue
discount of such indebtedness at such time as determined in conformity with GAAP
and (y) that indebtedness shall not include any liability for federal, state,
local, foreign or other taxes.
(fff) "INDEMNITEES" shall have the meaning set forth in Article 11.
41
(ggg) "INDENTURE" means that certain Indenture dated as of May 21,
1998 between Startec Global Communications Corporation, a Maryland corporation,
and First Union National Bank, Trustee, regarding 12% Senior Notes due 2008 (the
"Initial Notes"), and 12% Series A Senior Notes due 2008 (the "Exchange Notes"),
in aggregate principal amount of $160,000,000, as amended by that certain First
Supplemental Indenture dated as of February 28, 1999 made by and among Startec
Global Communications Corporation, a Maryland corporation, Startec Global
Holding Corporation, a Delaware corporation, and First Union National Bank,
Trustee ("First Supplement"), which First Supplement was amended and restated by
that certain Amended and Restated First Supplement Indenture dated as of
February 28, 1999 made by Startec Global Communications Corporation, a Delaware
corporation, and First Union National Bank, Trustee, and by that certain Second
Supplemental Indenture dated as of August 20, 1999 made by Startec Global
Communications Corporation, a Delaware corporation, and First Union National
Bank, Trustee, and as it may be further amended and supplemented from time to
time.
(hhh) "INDENTURE NOTES" means the Initial Notes and the Exchange
Notes under the Indenture and as described in the definition of "Indenture."
(iii) "INDIAN PARTNER" shall have the meaning set forth in
Section 2.25 hereof.
(jjj) "INTEREST RATE AGREEMENT" means any interest rate swap
agreements, interest rate cap agreements, interest rate insurance, and other
arrangements and agreements designed to provide protection against fluctuations
in interest rates.
(kkk) "INVESTMENT" in any Person means any direct or indirect
advance, loan or other extension of credit (including, without limitation, by
way of Guarantee or similar arrangement; but excluding advances to customers in
the ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of the Company or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, bonds,
notes, debentures or other similar instruments issued by, such Person. For
purposes of the definition of "Unrestricted Subsidiary," and Sections 4.1 and
5.3, (i) "Investment" shall include (a) the fair market value of the assets (net
of liabilities) of any Restricted Subsidiary of the Company at the time that
such Restricted Subsidiary of the Company is designated an Unrestricted
Subsidiary and shall exclude the fair market value of the assets (net of
liabilities) of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary of the Company and (b) the fair
market value, in the case of a sale of Capital Stock in accordance with Section
5.3 such that a Person no longer constitutes a Restricted Subsidiary, of the
remaining assets (net of liabilities) of such Person after such sale, and shall
exclude the fair market value of the assets (net of liabilities) of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary of the Company and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined by the
Board of Directors in good faith.
(lll) "INVESTMENT COMPANY" shall have the definition for such term
set out in the Investment Company Act of 1940, as amended.
42
(mmm) "KNOWLEDGE" is defined as the actual knowledge of any of the
Executive Officers or the general counsel of the Company or Holdings, after due
inquiry with respect to the relevant subject.
(nnn) "LIENS" means any mortgage, charge, pledge, security interest,
encumbrance, lien (statutory or other), hypothecation, assignment for security
or other encumbrance upon or with respect to any property of any kind
(including, without limitation, any conditional sale or other title retention
agreement or lease in the nature thereof, any sale with recourse against the
seller or any Affiliate of the seller, or any agreement to give any security
interest).
(ooo) "LITIGATION SCHEDULE" shall have the meaning set forth in
Section 2.3 hereof.
(ppp) "LOAN" shall have the meaning set forth in Recital C hereof.
(qqq) "LOAN DOCUMENTS" is defined as this Agreement, the Note, and
each agreement, certificate or instrument delivered by the Company or its
Subsidiaries pursuant to the terms of any of the foregoing, collectively with
all modifications, extensions, renewals and replacements thereof and therefor.
(rrr) "MARKETABLE SECURITIES" means: (i) U.S. Government Obligations
which have a remaining weighted average life to maturity of not more than one
year from the date of Investment therein; (ii) any time deposit account, money
market deposit and certificate of deposit maturing not more than 180 days after
the date of acquisition issued by, or time deposit of, an Eligible Institution;
(iii) certificates of deposit, Eurodollar time deposits and bankers' acceptances
with maturity of 90 days or less and overnight bank deposits of any financial
institution that is organized under the laws of the United States of America or
any state hereof, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $300 million (or, to the extent
non-United States dollar denominated, the United States Dollar Equivalent of
such amount) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the Securities Act);
(iv) commercial paper maturing not more than 180 days after the date of
acquisition issued by a corporation (other than an Affiliate of the Company)
with a rating, at the time as of which any investment therein is made, of "P-1"
or higher according to ▇▇▇▇▇'▇ Investors Service, Inc., or "A-1" or higher
according to Standard & Poor's Ratings Services (or such similar equivalent
rating by at least one "nationally recognized statistical rating organization"
(as defined in Rule 436 under the Securities Act)); (v) auction rate preferred
securities whose rates are reset based on market levels for a par security not
more than 90 days after the date of acquisition with a rating, at the time as of
which any investment therein is made, of "A-3" or higher according to ▇▇▇▇▇'▇
Investors Service, Inc., or "A-" or higher according to Standard & Poor's
Ratings Services (or such similar equivalent rating by at least one "nationally
recognized statistical rating organization" (as defined in Rule 436 under the
Securities Act)) and issued by a corporation that is not an Affiliate of the
Company; (vi) any banker's acceptance or money market deposit accounts issued or
offered by an Eligible Institution; (vii) repurchase obligations with a term of
not more than seven days for U.S. Government Obligations entered into with an
Eligible Institution; and (viii) any fund investing exclusively in investments
of the types described in clauses (i) through (vii) above.
43
(sss) "MATERIAL ADVERSE EFFECT" is defined as (i) a material adverse
effect on the Business, operations, earnings prospects condition, financial or
otherwise, assets or properties of the Company, Holdings and their respective
Subsidiaries, taken as a whole, or (ii) material impairment of the ability of
the Company, Holdings and their respective Subsidiaries to perform any of its
obligations under any Loan Document, or (iii) material impairment of the rights
of or benefits available to Holder under any Loan Document, or (iv) material
impairment of the validity or enforceability of any Loan Document.
(ttt) "MATERIAL LITIGATION" shall have the meaning set forth in
Section 3.6.
(uuu) "NASDAQ" is defined as the automated quotation system for
securities prices maintained by the National Association of Securities Dealers,
or any subsequent arrangement established for such purpose by such organization
or any successor thereto.
(vvv) "NET CASH PROCEEDS" means, (a) with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary of the Company) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of: (i) brokerage
commissions, finders' fees and other fees and expenses (including fees and
expenses of counsel, accountants and investment bankers and other advisors)
related to such Asset Sale, (ii) provisions for all taxes payable as a result of
such Asset Sale without regard to the consolidated results of operations of the
Company and its Restricted Subsidiaries, taken as a whole (after taking into
account any available offsetting tax credits or deductions and any tax sharing
arrangements), (iii) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured by a Lien
on the property or assets sold or (B) is required to be paid as a result of such
sale and (iv) appropriate amounts to be provided by the Company or any
Restricted Subsidiary of the Company as a reserve against any contingent
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP, and
(b) with respect to any issuance or sale of Capital Stock, the proceeds of such
issuance or sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary of the Company)
and proceeds from the conversion of other property received when converted to
cash or cash equivalents, net of attorneys' fees, finders' fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof.
(www) "NET PROPERTY, PLANT, AND EQUIPMENT" means the total cost of
all property, plant, and equipment for the Company[, Holdings and their
respective] Subsidiaries on a consolidated basis net of accumulated depreciation
and amortization determined in accordance with GAAP.
(xxx) "NOTE" shall have the meaning set forth in Section 1.1 hereof.
44
(yyy) "OCCUPATIONAL SAFETY & HEALTH ACT" shall mean the Occupational
Safety & Health Act, as amended.
(zzz) "OFFICER'S CERTIFICATE" means a certificate signed by the
Chairman, the President, a Vice President, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Holder or such other party as required by this Agreement.
(aaaa) "PAYING AGENT" means any Person (including the Company acting
as Paying Agent) authorized by the Company to pay the principal of (and premium,
if any) or interest on the Note on behalf of the Company.
(bbbb) "PERMITS" shall have the meaning set forth in Section 2.13.
(cccc) "PERMITTED BUSINESS" means any business involving voice, data
and other telecommunications services.
(dddd) "PERMITTED INDEBTEDNESS" shall have the meaning set forth in
Section 5.1(b).
(eeee) "PERMITTED INVESTMENT" means (i) an Investment in a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, the Company
or a Restricted Subsidiary; (ii) any Investment in Marketable Securities or
Pledged Securities; (iii) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses in accordance with GAAP; (iv) loans or advances to officers and
employees that do not in the aggregate exceed $1.5 million at any time
outstanding; (v) stock, obligations or securities received in satisfaction of
judgments; (vi) Investments in any Person received as consideration for Asset
Sales to the extent permitted under Section 5.6; (vii) Investments in any Person
at any one time outstanding (measured on the date each such Investment was made
without giving effect to subsequent changes in value) in an aggregate amount not
to exceed the greater of (A) Thirty-Five Million ($35 million) or (B) Fifteen
percent (15%) of the Company's total consolidated assets; (viii) Investments in
deposits with respect to leases or utilities provided to third parties in the
ordinary course of business; (ix) Investments in Currency Agreements and
Interest Rate Agreements on commercially reasonable terms entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business
in connection with the operation of the business of the Company or its
Restricted Subsidiaries; provided that such agreements do not increase the
Indebtedness of the obligor outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable thereunder; (x) repurchases or
redemptions by the Company of Capital Stock from officers and other employees of
the Company or any of its Subsidiaries or their authorized representatives upon
the death, disability or termination of employment of such individuals, in an
aggregate amount not exceeding One Million Dollars ($1 million) in any calendar
year and Three Million Dollars ($3 million) from May 28, 1998; and
(xi) Investments in evidences of Indebtedness, securities or other property
received from another Person by the Company or any of its Restricted
Subsidiaries in connection with any bankruptcy proceeding or by reason of a
composition or readjustment of debt or a reorganization of such Person or as a
result of foreclosure, perfection or enforcement of any Lien in exchange for
evidences of Indebtedness, securities or other property
45
of such Person held by the Company or any of its Subsidiaries, or for other
liabilities or obligations of such Person to the Company or any of its
Subsidiaries that were created, in accordance with the terms of this Agreement.
(ffff) "PERMITTED LIENS" means (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made; (ii) statutory Liens of landlords
and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or
other similar Liens arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
legal proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; (iii) Liens incurred or deposits made
in the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (iv) Liens incurred
or deposits made to secure the performance of tenders, bids, leases, statutory
or regulatory obligations, bankers' acceptances, surety and appeal bonds,
government or other contracts, performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company, Holdings or any
of their respective Restricted Subsidiaries; (vi) Liens (including extensions
and renewals thereof) upon real or personal property purchased or leased after
the Closing Date; provided that (a) such Lien is created solely for the purpose
of securing Indebtedness Incurred in compliance with Section 5.1 (1) to finance
the cost (including the cost of design, development, construction, acquisition,
installation or integration) of the item of property or assets subject thereto
and such Lien is created prior to, at the time of or within six months after the
later of the acquisition, the completion of construction or the commencement of
full operation of such property or (2) to refinance any Indebtedness previously
so secured, (b) the principal amount of the Indebtedness secured by such Lien
does not exceed one hundred percent (100%) of such cost and (c) any such Lien
shall not extend to or cover any property or assets other than such item of
property or assets and any improvements on such item; (vii) leases or subleases
granted to others that do not materially interfere with the ordinary course of
business of the Company and its Restricted Subsidiaries, taken as a whole;
(viii) Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of the Company or its Restricted
Subsidiaries relating to such property or assets; (ix) any interest or title of
a lessor in the property subject to any Capitalized Lease Obligation or
operating lease; (x) Liens arising from filing Uniform Commercial Code financing
statements regarding leases; (xi) Liens on property of, or on shares of stock or
Indebtedness of, any corporation existing at the time such corporation becomes,
or becomes a part of, any Restricted Subsidiary; provided that such Liens do not
extend to or cover any property or assets of the Company, Holdings or any
Restricted Subsidiary other than the property or assets acquired and were not
created in contemplation of such transaction; (xii) Liens in favor of the
Company or any Restricted Subsidiary; (xiii) Liens arising from the rendering of
a final judgment or order against the Company or any Restricted Subsidiary of
the Company or Holdings that does not give rise to an Event of Default;
(xiv) Liens securing reimbursement obligations with respect to letters of credit
that encumber documents and other property relating to such letters of credit
and the products and proceeds thereof; (xv) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (xvi)
46
Liens encumbering customary initial deposits and margin deposits and other Liens
that are either within the general parameters customary in the industry or
incurred in the ordinary course of business, in each case, securing Indebtedness
under Interest Rate Agreements and Currency Agreements; (xvii) Liens arising out
of conditional sale, title retention, consignment or similar arrangements for
the sale of goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business in accordance with the past
practices of the Company and its Restricted Subsidiaries prior to the Closing
Date; (xviii) Liens existing on the Closing Date or securing the Note or any
Guarantee of the Note; (xix) Liens granted after the Closing Date on any assets
or Capital Stock of the Company or its Restricted Subsidiaries created in favor
of Holder (xx) Liens securing Indebtedness incurred as a result of a refinancing
permitted under Section 5.1(b)(vii), provided that any such new lender shall
have entered into an intercreditor and subordination agreement reasonably
satisfactory to Holder and such intercreditor and subordination agreement
establishes relative priority equivalent to that of Indebtedness being
refinanced and shall not in any case require the postponement of any principal
payment date as set forth in the Note, except after an event of default under
such senior Indebtedness; and (xxi) leasehold mortgages in favor of NTFC Capital
Corporation.
(gggg) "PERSON" is defined as any natural person, partnership,
corporation, limited liability company, nation, state, government, union,
association, governmental agency, tribunal, board, bureau and any other form of
business or legal entity.
(hhhh) "PLEDGED SECURITIES" means the securities purchased by
Holdings with a portion of the net proceeds from the High Yield/Public Debt.
(iiii) "PREFERRED STOCK" means, with respect to any Person, any and
all shares, interests, participations, rights or other equivalents (however
designated, whether voting or non-voting) of such Person's preferred or
preference stock, whether now outstanding or issued after the date of the
Indenture, including, without limitation, all series and classes of such
preferred or preference stock.
(jjjj) "PRO FORMA CONSOLIDATED CASH FLOW" means, for any period, the
Consolidated Cash Flow of the Company for such period calculated on a pro forma
basis to give effect to any Asset Disposition or Asset Acquisition not in the
ordinary course of business (including acquisitions of other Persons by merger,
consolidation or purchase of Capital Stock) during such period as if such Asset
Disposition or Asset Acquisition had taken place on the first day of such
period, including any related financing transactions and also giving pro forma
effect to any other Indebtedness repaid or discharged during such period other
than with respect to working capital borrowings.
(kkkk) "PUCS" has the meaning set forth in Section 2.25.
(llll) "RECEIVABLES PURCHASE AGREEMENT" means that certain
Receivables Purchase Agreement dated the date hereof by and among the Company
and Holder.
(mmmm) "REDEEMABLE STOCK" means any class or series of Capital Stock
of any Person that by its terms (or by the terms of any security into which it
is exchangeable) or otherwise is (i) required to be redeemed on or prior to the
date that is 123 days after the date of the Stated Maturity of the Note,
(ii) redeemable at the option of the holder of such class or series of Capital
Stock at any time on or prior to the date that is 123 days after the date of the
Stated
47
Maturity of the Note or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity on or prior to the date that is 123 days after the date of the Stated
Maturity of the Note; provided that any Capital Stock that would not constitute
Redeemable Stock but for provisions thereof giving holders thereof the right to
require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring on or prior to
the date that is 123 days after the date of the Stated Maturity of the Note
shall not constitute Redeemable Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Sections 5.6 and 8.1 and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provisions on or prior to the date that
is 123 days after the date of the Company's repurchase of such Note as are
required to be repurchased pursuant to Sections 5.6 and 8.1.
(nnnn) "REGULATORY AGENCY" shall have the meaning set forth in
Section 2.25.
(oooo) "RESTRICTED CABLE SUBSIDIARY" shall have the meaning set
forth in Section 5.3.
(pppp) "RESTRICTED PAYMENTS" shall have the meaning set forth in
Section 4.1 hereof.
(qqqq) "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
(rrrr) "SALE-LEASEBACK TRANSACTION" of any person means an
arrangement with any lender, investor or other Person ("Investor") or to which
such Investor is a party providing for the lease by such Person of any property
or asset of such Person which has been or is being sold or transferred by such
Person after the acquisition thereof or the completion of construction or
commencement of operation thereof to such Investor or to any Person to whom
funds have been or are to be advanced by such Investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangements may be terminated by the lessee
without payment of a penalty.
(ssss) "SECURED 2001 LOAN" shall have the meaning set forth in
Recital B.
(tttt) "SECURED 2001 LOAN AGREEMENT" shall have the meaning set
forth in Recital B.
(uuuu) "SECURED 2001 LOAN DOCUMENTS" shall mean, collectively with
all modifications, extensions, renewals, and replacements thereof and therefor,
the Secured 2001 Loan Agreement, the note issued thereunder and the collateral
documents entered into in connection therewith.
(vvvv) "SECURITIES ACT" is defined as the Securities Act of 1933, as
amended.
48
(wwww) "SIGNIFICANT SUBSIDIARY" means a Restricted Subsidiary that
is a "significant subsidiary" as defined in Rule 1-02(w) of Regulations S-X
under the Securities Act and the Exchange Act.
(xxxx) "STARTEC" shall have the meaning set forth in the preamble
hereof.
(yyyy) "STARTEC LICENSING" shall have the meaning set forth in the
preamble hereof.
(zzzz) "STATED MATURITY" means, (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled installment of principal of or interest on
any debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
(aaaaa) "SUBSIDIARY" means, with respect to any Person, any
corporation, association or other business entity of which more than 50.0% of
the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
(bbbbb) "SUBSIDIARY HOLDINGS" means Startec Global Holding
Corporation, a Delaware corporation all the outstanding capital stock of which
is owned by Holdings.
(ccccc) "TELECOMMUNICATIONS ACT OF 1996" shall mean the
Telecommunications Act of 1996, as amended.
(ddddd) "TELECOMMUNICATIONS ASSETS" means, with respect to any
Person, equipment and other properties or assets (whether tangible or
intangible) used in the telecommunications business including, without
limitation, rights with respect to IRUs, MAOUs or minimum investment units (or
similar interests) in fiber optic cable and international or domestic
telecommunications switches or other transmission facilities, including
monitoring and related administrative support facilities (or Common Stock of a
Person that becomes a Restricted Subsidiary, the assets of which consist
primarily of any such Telecommunications Assets), in each case purchased, or
acquired through a Capitalized Lease Obligation, by the Company or a Restricted
Subsidiary after May 28, 1998. "IRU" means Indefeasible Right of Use, which is
the right to use a telecommunications system, usually an undersea cable, with
most of the rights and duties of ownership, but without the right to control or
manage the facility and, depending upon the particular agreement, without any
right to salvage or duty to dispose of the system's cable at the end of its
useful life. "MAOU" means Minimum Assignable Ownership Units which is capacity
on a telecommunications system, usually an undersea fiber optic cable, acquired
on an ownership basis.
(eeeee) "TOTAL LIABILITIES" means the aggregate obligations, both
current and long-term, for the payment or re-payment of money of the Company,
Holdings and their respective Subsidiaries in the aggregate; all calculated in
accordance with GAAP.
(fffff) "TOTAL REVENUE" means all revenue of the Company, Holdings
and their respective Subsidiaries on a consolidated basis, all calculated in
accordance with GAAP.
49
(ggggg) "TRADE PAYABLES" means any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by the Company or any of its Restricted Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods and
services.
(hhhhh) "TRANSACTION DATE" means, with respect to the Incurrence of
any Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and with respect to any Restricted Payment,
the date such Restricted Payment is to be made.
(iiiii) "TRUSTEE" shall have the meaning set forth in Section 8.7.
(jjjjj) "UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code
as in effect in the state of New York.
(kkkkk) "UNITED STATES DOLLAR EQUIVALENT" means, with respect to any
monetary amount in a currency other than the United States dollar, at any time
for the determination thereof, the amount of United States dollars obtained by
converting such foreign currency involved in such computation into United States
dollars at the spot rate for the purchase of United States dollars with the
applicable foreign currency as quoted by Reuters at approximately 11:00 a.m.
(New York City time) on the date not more than two business days prior to such
determination. For purposes of determining whether any Indebtedness can be
incurred (including Permitted Indebtedness), any Investment can be made and any
transaction described in Section 5.4 can be undertaken (a "Tested Transaction"),
the United States Dollar Equivalent of such Indebtedness, Investment or
transaction described in Section 5.4 will be determined on the date Incurred,
made or undertaken and no subsequent change in the United States Dollar
Equivalent shall cause such Tested Transaction to have been Incurred, made or
undertaken in violation of this Agreement.
(lllll) "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Restricted Subsidiary of the Company (including any newly acquired or newly
formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, the Company or any Restricted Subsidiary; provided that (A) that the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, that such designation would be
permitted under Section 4.1, and such Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary
Indebtedness. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary of the Company; provided that immediately after
giving effect to such designation (x) the Company could Incur $1.00 of
additional Indebtedness under the first paragraph of Section 5.1 and (y) no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to Holder by promptly
filing with Holder a copy of the Board resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
(mmmmm) "UNRESTRICTED SUBSIDIARY INDEBTEDNESS" means Indebtedness of
any Unrestricted Subsidiary (i) as to which neither the Company nor any
Restricted Subsidiary is
50
directly or indirectly liable (by virtue of the Company or any such Restricted
Subsidiary being the primary obligor on, guarantor of, or otherwise liable in
any respect to, such Indebtedness) and (ii) which, upon the occurrence of a
default with respect thereto, does not result in, or permit any holder of any
Indebtedness of the Company or any Restricted Subsidiary to declare, a default
on such Indebtedness of the Company or any Restricted Subsidiary or cause the
payment thereof to be accelerated or payable prior to its Stated Maturity.
(nnnnn) "U.S. GOVERNMENT OBLIGATIONS" shall have the meaning set
forth in Section 8.4.
(ooooo) "VOTING STOCK" means with respect to any Person, Capital
Stock of any class or kind ordinarily having the power to vote for the election
of directors, managers or other voting members of the governing body of such
Person.
SECTION 20.2 RULES OF CONSTRUCTION. The rule of EJUSDEM GENERIS shall
not be applicable herein to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned. Unless the context otherwise requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Provisions apply to successive events and transactions;
(d) "Herein," "Hereof," "Hereto," "Hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision unless otherwise so provided;
(e) All words or terms used in this Agreement, regardless of the
number or gender in which they are used, shall be deemed to include any other
number and any other gender; and
(f) All financial terms used herein and not capitalized shall have
the meaning accorded them under GAAP, and when used in respect of the Company,
shall mean the Company and its Subsidiaries on a consolidated basis.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
Company:
[Seal] STARTEC GLOBAL OPERATING COMPANY
Attest: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ -----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Assistant ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary Vice President and Secretary
[Seal] STARTEC GLOBAL LICENSING COMPANY
Attest: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ -----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Assistant ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Secretary and Secretary
Holder: ALLIED CAPITAL CORPORATION
[Seal]
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Director
EXHIBITS
DOCUMENT NUMBER
-------- ------
Organizational Documents 2.01(a)
Jurisdictions of Authority as Foreign Corporation 2.01(b)
Resolutions of Company's Board of Directors 2.01(c)
Form of Opinion of Counsel 2.01(d)
Schedule of Litigation 2.03
Schedule of Real Property Leases 2.06(a)
Schedule of Material Agreements 2.06(b)
Business Model 2.07(b)
Management History 2.08
Schedule of Subsidiaries and Other Affiliates 2.09
Schedule of Executive Officers and Directors 2.10
Non-contravention 2.12
Schedule of Employment-Related Agreements 2.21
Schedule of Related-Party Transactions 2.22
Schedule of Regulatory Licenses Exceptions 2.25A
Schedule of Authorization 2.25B
Schedule of Regulatory Proceedings 2.26
Use of Proceeds 2.28
Insurance Certificate 3.10