POINTE COMMUNICATIONS CORPORATION
NOTE AND WARRANT
PURCHASE AGREEMENT
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THIS AGREEMENT is made as of February 2, 1999, between Pointe
Communications Corporation, a Nevada corporation (the "Company") and Gibralt US,
Inc., a Colorado corporation (the "Purchaser"). Except as otherwise indicated
herein, capitalized terms used herein are defined in Section 4 hereof.
On the date hereof, the Purchaser has loaned the Company $2 million (the
"Loan") for which the Company issued a note ("Note") and granted a security
interest to the Purchaser. The Note is secured by all the assets of the
company. It is also secured by a third party pledge of shares of the Companys
common stock. In connection therewith and in partial consideration therefor,
the parties are entering into this Agreement.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
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1A. Authorization of the Note and Warrant. The Company shall authorize
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the issuance of the Note and the warrant to the Purchaser (the "Warrant") to
purchase 760,000 shares of its Common Stock, par value $.00001 per share (the
"Common Stock").
1B. Issuance of the Note and the Warrant; Fee. At the Closing, the
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Company shall issue to Purchaser and, subject to the terms and conditions set
forth herein, the Purchaser shall purchase from the Company the Note and Warrant
in consideration of Purchaser's agreement to make the Loan to the Company
pursuant to the Note. The Company shall pay Purchaser at Closing a Loan fee in
the amount of $80,000.00.
1C. The Closing. The closing of the Loan and the issuance of the Note
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and Warrant (the "Closing") shall take place at the offices of Cushing, Morris,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP at 10:00 a.m. on the date hereof, or at such other place
or on such other date as may be mutually agreeable to the Company and each
Purchaser. At the Closing, the Company shall deliver to Purchaser the Note and
Warrant to be issued to such Purchaser, registered in such Purchaser's or its
nominee's name, and Purchaser shall make the Loan.
Section 2. Covenants.
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2A. Financial Statements and Other Information. The Company shall
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deliver to Purchaser so long as such Purchaser holds the Note, any Underlying
Common Stock or any other security of the Company:
(i) as soon as available but in any event within 30 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated state-ments of income and cash flows of the
Company and its Subsid-iaries for such monthly period and for the period from
the beginning of the fiscal year to the end of such month, and unaudited
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such monthly period, setting forth in each case
comparisons to the Com-pany's annual budget and to the corresponding period in
the preceding fiscal year, and all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
subject to the absence of footnote disclosures and to normal year-end
adjustments for recurring accruals and shall be certified by the Com-pany's
chief financial officer;
(ii) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general written
communications which the Company sends to its stockholders and copies of all
registration statements and all regular, special or periodic reports which it
files, or any of its officers or direc-tors file with respect to the Company,
with the Securi-ties and Exchange Commission or with any securities exchange on
which any of its securities are then listed, and copies of all press releases
and other statements made available gen-erally by the Company to the public
concerning material developments in the Company's and its Subsidiaries'
businesses; and
(iii) with reasonable promptness, such other infor-mation and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this paragraph 2A may reasonably request.
Each of the financial statements referred to above shall be true and correct in
all material respects as of the dates and for the periods stated therein,
subject in the case of the unaudited financial statements to changes resulting
from normal year-end adjustments for recurring accruals none of which would,
alone or in the aggregate, be materially adverse to the financial condition,
operating results, assets, operations or business prospects of the Company and
its Subsidiaries taken as a whole.
2B. Inspection of Property. The Company shall permit any
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representatives designated by Purchaser (so long as such Purchaser holds any
Underlying Common Stock), upon reasonable notice and during normal business
hours, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and (iii)
dis-cuss the affairs, finances and accounts of any such corpora-tions with the
directors, officers, key employees and inde-pen-dent accountants of the Company
and its Subsidiaries. The presentation of an executed copy of this Agreement by
Purchaser or any holder of Underlying Common Stock to the Company's independent
accountants shall constitute the Company's permission to its independent
accountants to participate in discussions with such Persons.
2C. Attendance at Board Meetings. The Company shall give Purchaser (so
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long as such Purchaser holds any Underlying Common Stock) written notice of each
quarterly meeting of its board of directors and each regularly scheduled
committee meeting thereof at the same time and in the same manner as notice is
given to the directors (which notice shall be promptly confirmed in writing to
each such Person), and the Company shall permit a representative of each such
Person to attend as an observer all quarterly meetings of its board of directors
and all committees thereof; provided, however, that in the event the board of
directors or any committee thereof reasonably determines that an executive
session is appropriate under the circumstances, the board of directors or such
committee may excuse the observer from any such executive session. Each
representative shall be entitled to receive all written materials and other
information (including, without limitation, copies of meeting minutes) given to
directors in connection with such meetings at the same time such materials and
information are given to the direc-tors. If the Company pro-poses to take any
action by written consent in lieu of a meeting of its board of directors or of
any committee thereof, the Company shall give written notice thereof to each
such Person prior to the effective date of such consent describing in reasonable
detail the nature and substance of such action.
2D. Current Public Information. The Company shall file all reports
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required to be filed by it under the Securities Act and the Securities Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder and shall take such further action as any holder or
holders of Restricted Securities may reasonably request, all to the extent
required to enable such holders to sell Restricted Securities pursuant to Rule
144 adopted by the Securities and Exchange Commission under the Securities Act
(as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission. Upon
request, the Company shall deliver to any holder of Restricted Securities a
written statement as to whether it has complied with such requirements.
2E. SBIC Regulatory Provisions.
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(i) Within 75 days after the date hereof and at the end of each month
thereafter until all of the proceeds from the Loan and the exercise of the
Warrants have been used by the Company and its Subsidiaries, the Company shall
deliver to Purchaser a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the loan reflected by the Note by the Company and its Subsidiaries. In
addition to any other rights granted hereunder, the Company shall grant
Purchaser and the United States Small Business Administration (the "SBA") access
to the Company's records for the purpose of verifying the use of such proceeds.
(ii) Upon the occurrence of a Regulatory Violation or in the event
that Purchaser determines in its reasonable good faith judgment that a
Regulatory Violation has occurred, in addition to any other rights and remedies
to which it may be entitled as a holder of the Note or the Underlying Common
Stock (whether under this Agreement, the Certificate of Incorporation or
otherwise), Purchaser shall have the right to the extent required under the SBIC
Regulations to demand the immediate repayment of the Loan and repurchase of all
Underlying Common Stock owned by Purchaser at a price equal to the purchase
price paid for such securities hereunder (plus accrued but unpaid interest on
the Note) by delivering written notice of such demand to the Company. The
Company shall pay the purchase price for such stock by a cashier's or certified
check or by wire transfer of immediately available funds to Purchaser demanding
repurchase within 30 days after the Company's receipt of the demand notice, and
upon such payment, Purchaser shall deliver the certificates evidencing the
Underlying Common Stock to be repurchased duly endorsed for transfer or
accompanied by duly executed forms of assignment.
(iii) For purposes of this paragraph, "Regulatory Violation" means,
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with respect to Purchaser providing Financing under this Agreement, (a) a
diversion of the proceeds of such Financing from the reported use thereof on the
use of proceeds statement delivered by the Company on SBA Form 1031 delivered at
the Closing, if such diversion was effected without obtaining the prior written
consent of Purchaser (which may be withheld in its sole discretion) or (b) a
change in the principal business activity of the Company and its Subsidiaries to
an ineligible business activity (within the meaning of the SBIC Regulations) if
such change occurs within one year after the date of the initial Financing
hereunder; "SBIC Regulations" means the Small business Investment Act of 1958
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and the regulations issued thereunder as set forth in 13 CFR 107 and 121, as
amended; and the term "Financing" shall have the meaning set forth in the SBIC
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Regulations.
2F. Piggyback Registrations.
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(a) Right to Piggyback. Whenever the Company proposes to
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register any of its securities (either as a primary issuance or an S-3 or
similar secondary offering) under the Securities Act and the registration form
to be used may be used for the registration of Registrable Securities (a
"Piggyback Registration"), the Company shall give prompt written notice to all
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holders of Registrable Securities of its intention to effect such a registration
and shall include in such registration all Registrable Securities with respect
to which the Company has received written requests for inclusion therein within
20 days after the receipt of the Companys notice.
(b) Piggyback Expenses. The registration expenses of the
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holders of Registrable Securities (not including brokers commissions) shall be
paid by the Company in all Piggyback Registrations.
(c) Priority on Registrations. If a Piggyback Registration
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is an underwritten registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their reasonable opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
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Registrable Securities and other securities held by other third parties
requested to be included in such registration, pro rata among the holders
thereof on the basis of the number of shares owned by each such holder, and
(iii) third, other securities requested to be included in such registration.
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(d) Other Registrations. If the Company has previously filed
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a registration statement with respect to Registrable Securities pursuant to this
paragraph 2, and if such previous registration has not been withdrawn or
abandoned, the Company shall not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-8 or any successor form), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of at
least 180 days have elapsed from the effective date of such previous
registration.
2G. Reservation of Common Stock. The Company shall at all times
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reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of issuance upon exercise of the Warrant, such
number of shares of Common Stock issuable upon the exercise of all outstanding
Warrants. All shares of Common Stock which are so issuable shall, when issued,
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges. The Company shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately transmitted by the Company upon issuance).
2H. Public Disclosures. The Company shall not, nor shall it permit any
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Subsidiary to, disclose Purchaser's name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written consent
of such Purchaser, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent juris-diction, in
which case prior to making such disclosure the Company shall give written notice
to such Purchaser describing in reason-able detail the proposed content of such
disclosure and shall permit the Purchaser to review and comment upon the form
and substance of such disclosure.
2I. Preemptive Rights.
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(a) Until the Note is paid in full, Purchaser shall have the following
preemptive rights: except for issuances of Common Stock (i) to the Company's
employees pursuant to existing options or warrants, (ii) upon the conversion of
the Warrant or other warrants or options outstanding as of the date hereof, or
granted within the next 90 days or as a part of the contemplated CS First
Boston/Breckenridge financing, (iii) in connection with the acquisition of
another company or business, (iv) pursuant to a public offering registered under
the Securities Act, if the Company authorizes the issuance or sale of any shares
of Common Stock, preferred stock or any securities (other than those described
in (i) through (iii) above) containing options or rights to acquire any shares
of Common Stock or preferred stock (other than as a dividend on the outstanding
Common Stock), the Company shall first offer to sell to each holder of
Underlying Common Stock a portion of such stock or securities equal to the
quotient determined by dividing (1) the number of shares of Under-lying Common
Stock held by such holder by (2) the sum of the total number of shares of
Underlying Common Stock and the number of shares of Common Stock outstanding
which are not shares of Under-lying Common Stock. Each holder of Underlying
Common Stock shall be entitled to purchase such stock or securities at the most
favorable price and on the most favorable terms as such stock or securities are
to be offered to any other Persons. The purchase price for all stock and
securities offered to the holders of the Underlying Common Stock shall be
payable in cash or, to the extent otherwise required hereunder, notes issued by
such holders.
(b) In order to exercise its purchase rights hereunder, a holder of
Underlying Common Stock must within 15 days after receipt of written notice from
the Company describing in reasonable detail the stock or securities being
offered, the purchase price thereof, the payment terms and such holder's
percentage allotment deliver a written notice to the Company describing its
election hereunder, together with payment of the purchase price therefor and
such subscription and other documents as are a part of such offering.
(c) Upon the expiration of the offering period described above, the
Company shall be entitled to sell such stock or securities which the holders of
Underlying Common Stock have not elected to purchase during the 90 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or securities
offered or sold by the Company after such 90-day period must be reoffered to the
holders of Underlying Common Stock pursuant to the terms of this paragraph.
Section 3 Representations and Warranties of the Company. As a material
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inducement to the Purchaser to enter into this Agreement to make the loan
reflected by the Note and purchase the Warrant hereunder, the Company hereby
represents and warrants that:
3A. Organization, Corporate Power and Licenses. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of Nevada and is qualified to do business in every jurisdiction in which the
failure to so qualify has had or would reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets, operations
or business prospects of the Company and its Subsidiaries taken as a whole. The
Company possesses all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted and to issue the Note and carry out the other transactions
contemplated by this Agreement. The copies of the Company's and each
Subsidiary's charter documents and bylaws which have been furnished to the
Purchasers' special counsel reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
3B. Authorization; No Breach. The execution, delivery and performance
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of this Agreement, the Warrant, the Note, the Security Agreement and all other
agree-ments contemplated hereby to which the Company is a party, have been duly
authorized by the Company. This Agreement, the Warrant, the Note, the Security
Agreement and all other agreements contemplated hereby to which the Company is a
party each constitutes a valid and binding obliga-tion of the Company,
enforceable in accordance with its terms. The execution and delivery by the
Company of this Agreement, the Warrant, the Note, the Security Agreement and all
other agreements contemplated hereby to which the Company is a party, the
offering, sale and issuance of the Note and the Warrant hereunder, the issuance
of the Common Stock upon exer-cise of Warrant, and the fulfillment of and
compliance with the respective terms hereof and thereof by the Company, do not
and shall not (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) result in the creation
of any lien, security interest, charge or encumbrance upon the Company's or any
Subsidi-ary's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authoriza-tion, consent, approval, exemption
or other action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, the charter or bylaws
of the Company or any Subsidiary, or any law, statute, rule or regulation to
which the Company or any Subsidiary is sub-ject, or any agreement, instrument,
order, judgment or decree to which the Company or any Subsidiary is subject.
3C. No Material Adverse Change. Since the date of the Company's last
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Form 10-Q filed with the SEC, there has been no material adverse change in the
financial condition, operating results, assets, operations, business prospects,
value, employee relations or customer or supplier relations of the Company and
its Subsidiaries taken as a whole. The financial statements included with the
Company's last Form 10-Q filed with the SEC are true and correct in all material
respects and have been prepared in accordance with generally accepted accounting
principles consistently applied and, except as set forth or reflected in such
financial statements, the Company has no other liabilities of any material
nature, except those incurred since the date of such financial statements in the
normal course of the Company's business and except as otherwise disclosed to
Purchaser in writing.
3D. Small Business Matters. [Intentionally Omitted].
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3E. Disclosure. There is no fact which the Company has not disclosed
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to the Purchaser in writing and of which any of its officers, directors or
executive employees is aware and which has had or would reasonably be expected
to have a material adverse effect upon the existing or expected financial
condition, operating results, assets, customer or supplier relations, employee
relations or business prospects of the Company and its Subsidiaries taken as a
whole.
3F. Reports with the Securities and Exchange Com-mis-sion. The Company
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has furnished the Purchaser with complete and accurate copies of its annual
report on Form 10-K for its most recent fiscal year, all other reports or
documents required to be filed by the Company pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act since the filing of the most recent annual report
on Form 10-K and its most recent annual report to its stockholders. Such
reports and filings do not contain any material false statements or any
misstatement of any material fact and do not omit to state any fact necessary to
make the statements set forth therein not misleading. The Company has made all
filings with the Securities and Exchange Commission which it is required to
make, and the Company has not received any request from the Securities and
Exchange Commission to file any amendment or supplement to any of the reports
described in this paragraph. The Company currently meets and shall continue to
meet all SEC and other regulatory requirements necessary in order to register
the Registrable Securities using Form S-3.
Section 4 Definitions.
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4A. Definitions. For the purposes of this Agreement, the
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following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person controlling,
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controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, contract or otherwise.
"Registrable Securities" means (i) any Common Stock issued upon the
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exercise of any Warrants issued pursuant to this Agreement and any shares of the
Company's common stock which the Purchaser instructs to be sold as a result of
foreclosure or other enforcement remedies pursuant to the Securities Pledge
Agreement between Star Insurance Company (Cayman) Limited and Purchaser of even
date herewith, (ii) any Common Stock issued or issuable with respect to the
securities referred to in clause (i) above by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to particular Registrable Securities,
such securities shall cease to be Registrable Securities when they have been
distributed to the public pursuant to a offering registered under the Securities
Act or sold to the public through a broker, dealer or market maker in compliance
with Rule 144 under the Securities Act (or any similar rule then in force) or
repurchased by the Company. For the purposes of this Agreement, a Person shall
be deemed a holder of Registrable Securities, and the Registrable Securities
shall be deemed to be in existence, whenever such Person has the right to
acquire directly or indirectly such Registrable Securities (upon conversion or
exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected, and such Person
shall be entitled to exercise the rights of a holder of Registrable Securities
hereunder.
"Securities Act" means the Securities Act of 1933, as amended, or any
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similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
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agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
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amended, or any similar federal law then in force.
"Underlying Common Stock" means (i) the Common Stock issued or issuable
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upon exercise of the Warrants and (ii) any Common Stock issued or issuable with
respect to the securities referred to in clause (i) above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes
of this Agreement, any Person who holds the Warrant shall be deemed to be the
holder of the Underlying Common Stock obtainable upon exercise of the Warrants
in connection with the transfer thereof or otherwise regardless of any
restric-tion or limitation on the exercise of the Warrant, such Underlying
Common Stock shall be deemed to be in existence, and such Person shall be
entitled to exercise the rights of a holder of Underlying Common Stock
here-under. As to any particular shares of Underlying Common Stock, such shares
shall cease to be Underlying Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registra-tion statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) or (c) repurchased by the Company or any
Subsidiary.
5 Miscellaneous.
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5A. Expenses. The Company shall pay, and hold Purchaser and
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all holders of Under-lying Common Stock harmless against liability for the
payment of, (i) the reasonable fees and expenses of their special counsel
arising in connection with the negotiation and execution of this Agreement and
the consummation of the transac-tions contemplated by this Agreement which shall
be payable at the Closing or, if the Closing does not occur, payable upon
demand, (ii) the reasonable fees and expenses incurred with respect to any
amendments or waivers (whether or not the same become effec-tive) under or in
respect of this Agreement, the agreements contemplated hereby, (iii) stamp and
other taxes which may be payable in respect of the execution and delivery of
this Agreement or the issuance, delivery or acquisition of any shares of Common
Stock issuable upon exercise of the Warrants, (iv) the reason-able fees and
expenses incurred with respect to the enforcement of the rights granted under
this Agreement, the agreements contem-plated hereby, and the Warrants and (v)
the reasonable fees and expenses incurred by each such Person in any filing with
any governmental agency with respect to its investment in the Company or in any
other filing with any governmental agency with respect to the Company which
mentions such Person, and (vi) the reasonable fees and expenses incurred by any
such Person in connection with any transaction, claim or event which such Person
believes affects the Company and as to which such Person seeks advice of
coun-sel.
5B. Remedies. Each holder of the Note or the Under-lying Common Stock
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shall have all rights and remedies set forth in this Agreement, and all rights
and remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall
be entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
5C. Survival of Representations and Warranties. All repre-sentations
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and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Purchaser or on its behalf.
5D. Successors and Assigns. Except as otherwise expressly provided
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herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Purchaser's bene-fit as a
purchaser or holder of the Note, the Warrants or Underlying Common Stock are
also for the benefit of, and enforceable by, any subsequent holder of such Note,
Warrants or such Underlying Common Stock.
5E. Severability. Whenever possible, each provision of this Agreement
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shall be interpreted in such manner as to be effec-tive and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
5F. Counterparts. This Agreement may be executed simul-tane-ously in
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two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counter-parts taken together shall constitute
one and the same Agreement.
5G. Descriptive Headings; Interpretation. The descrip-tive headings of
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this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
5H Registration of Pledged Shares. The Company agrees that, as soon as
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reasonably possible after written demand by Purchaser, the Company shall file an
S-3 registration statement for any shares of Company common stock which
Purchaser may sell or acquire title to resulting from a foreclosure or other
enforcement of that Securities Pledge Agreement of even date herewith between
Purchaser and Star Insurance Company (Cayman) Limited, such S-3 registration to
be in compliance with the Securities Act of 1933, as amended, and the rules and
regulations promulgated pursuant thereto, and the Company shall take such steps
to maintain the effectiveness of such registration for a period of six months.
Purchaser shall cooperate with the Company in providing all information
necessary for such registration and shall indemnify the Company and its
affiliates for any losses, claims, damages or liabilities arising out of or
relating to any false or misleading information furnished by Purchaser for use
in connection with such registration. All expenses incurred by the Company in
connection with such registration including, without limitation, all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and expenses of any special audits
incidental to or required hereby shall be borne by the Company, but Purchaser
shall pay any and all bankers', brokers' or underwriters' discounts, fees,
commissions and stock transfer taxes in connection with such transaction, as
well as all fees and disbursements of counsel and other professionals retained
by Purchaser.
5I Waivers, Amendments, Applicable Law. None of the terms or
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provisions of this Agreement may be waived, altered, modified or amended except
by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Company hereunder shall together with the
rights and remedies of Purchaser hereunder, inure to the benefit of Purchaser
and its successors and assigns. This Agreement shall be governed by, and be
construed and interpreted in accordance with, the laws of the State of Georgia,
without giving effect to any applicable principles of conflicts of laws. THE
COMPANY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT THE COMPANY MAY HAVE UNDER ANY APPLICABLE LAW TO A TRIAL BY JURY WITH
RESPECT TO ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED BY OR AGAINST THE
COMPANY CONCERNING THE INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT OR
PERFORMANCE OF THIS AGREEMENT. THE COMPANY HEREBY EXPRESSLY AGREES, CONSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN
▇▇▇▇▇▇ COUNTY, GEORGIA, WITH RESPECT TO ANY SUIT OR LEGAL ACTION WHICH MAY BE
COMMENCED BY OR AGAINST THE COMPANY CONCERNING THE INTERPRETATION, CONSTRUCTION,
VALIDITY OR ENFORCEMENT OR PERFORMANCE OF THIS AGREEMENT, AND THE COMPANY ALSO
EXPRESSLY CONSENTS AND SUBMITS TO AND AGREES THAT VENUE IN ANY SUCH SUIT OR
LEGAL ACTION IS PROPER IN SAID COURTS AND COUNTY AND HEREBY EXPRESSLY WAIVES ANY
AND ALL PERSONAL RIGHTS UNDER APPLICABLE LAW OR IN EQUITY TO OBJECT TO THE
JURISDICTION AND VENUE IN SAID COURTS AND COUNTY. THE JURISDICTION AND VENUE OF
THE COURTS CONSENTED AND SUBMITTED TO AND AGREED TO IN THIS PARAGRAPH ARE NOT
EXCLUSIVE, BUT ARE CUMULATIVE AND IN ADDITION TO THE JURISDICTION AND VENUE OF
ANY OTHER COURT UNDER ANY APPLICABLE LAWS OR IN EQUITY.
5J. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF NEVADA SHALL
--------------
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND OBLIGATIONS
OF THE COMPANY AND ITS STOCK-HOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING
THE CONSTRUC-TION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
AND THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
GEORGIA OR ANY OTHER JURIS-DICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF GEORGIA.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
POINTE COMMUNICATIONS CORPORATION
By
Its
GIBRALT US, INC.
By
Its
PROMISSORY NOTE
---------------
$2,000,000.00 February 2, 1999
For value received, Pointe Communications Corporation, a Nevada
corporation (the "Maker") promises to pay to the order of Gibralt US, Inc., a
-----
Colorado corporation ("Gibralt US") at such place as is designated in writing by
the holder of this Note, the aggregate principal sum of Two Million Dollars and
no cents ($2,000,000.00) together with interest thereon calculated from the date
hereof in accordance with the provisions of this Note. The Maker's obligations
under this Note shall be senior to all of Maker's obligations under any of its
unsecured indebtedness (or guarantees of indebtedness).
1. Payment of Interest. Interest shall accrue on the outstanding
--------------------
principal amount of this Note at a rate equal to 10%. All accrued interest
shall be due and payable on the date on which the final principal amount on this
Note is payable. Interest will accrue on any principal payment due under this
Note and, to the extent permitted by applicable law, on any interest which has
not been paid on the date on which it is payable until such time as payment
therefor is actually delivered to the holder hereof.
2. Payment of Principal. The Maker shall repay the principal
----------------------
amount of $2,000,000.00 (or such lesser amount as may then be outstanding),
together with all accrued and unpaid interest thereon, to the holder hereof on
the earlier of (i) May 29, 1999, or (ii) the date on which the Maker obtains
permanent (i.e. repayment or redemption of which is not required within one
year) equity (or debt convertible into equity) financing of at least Five
Million Dollars ($5,000,000.00) ("Permanent Financing") or (iii) the date on
which an Event of Default occurs, as defined in the security Agreement or
securities pledge agreement, both dated as of the date hereof, between the
Maker, Gibralt US and a third party with respect to the securities pledge
agreement (the "Security Agreement" and "Securities Pledge Agreement,"
respectively). The Maker shall give the holder written notice ten (10) business
days prior to consummating such Permanent Financing.
3. Prepayments. The Maker may, at any time and from time to time
-----------
without premium or penalty, prepay all or any portion of the outstanding
principal amount of this Note; provided that the Maker simultaneously pays all
interest on this Note accrued and unpaid through the date of such prepayment.
4. Security. This Note and any renewals and extensions hereof and
--------
any other liabilities and obligations of the Maker to Gibralt US are secured
pursuant to the Securities Pledge Agreement and the Security Agreement, as
such agreements may be amended, modified or restated from time to time
hereafter.
5. Option. Upon receiving notice of the Permanent Financing,
------
Gibralt US can elect by delivery of written notice to the Maker to convert all
or any portion of the principal or accrued but unpaid interest of this Note into
securities issued in connection with a Permanent Financing or an independent
equity financing by Gibralt US; it being understood that Gibralt US shall have
the right to participate in any such Permanent Financing and shall have the
right to purchase each class of securities offered in such Permanent Financing
pro rata according to the amount converted by other debt holders.
6. Default Interest Rate. If the Maker fails to repay the
-----------------------
principal amount, and accrued but unpaid interest thereon, due hereunder in
accordance with the terms hereof, in addition to all of Gibralt US's rights and
remedies under the Security Agreement, the Securities Pledge Agreement or under
applicable law, the interest rate on the Note shall increase immediately by an
increment of two (2) percentage points.
7. Cancellation. After all principal and accrued interest at any
------------
time owed on this Note has been paid in full, this Note shall be surrendered to
the Maker for cancellation and shall not be reissued.
8. Costs of Collection. In the event the Maker fails to pay any
---------------------
amounts due hereunder when due, the Maker shall pay to the holder hereof, in
addition to such amounts due, all costs of collection, including reasonable
attorneys' fees.
9. Event of Default. The occurrence of any one or more of the following
------------------
events will constitute a default by Maker hereunder (hereinafter referred to as
an "Event of Default": (i) Maker fails to pay when due any amount payable under
this Note or otherwise fails to perform or breaches a covenant in this
Note; (ii) any statement, representation, or warranty made by Maker, any
guarantor of this Note or any other person directly or indirectly liable for the
repayment of this Note (Maker and all such guarantors and other persons are
herein collectively called the "Obligors") or on any Obligor's behalf in
connection with this Note proves to have been untrue, incorrect, misleading or
incomplete in any material respect as of the date made; (iii) any Obligor is in
default under any other agreement to which Lender (or any of its affiliates) and
such Obligor are parties or under any other instrument executed by any Obligor
in favor of Lender (or any of its affiliates), including without limitation any
loan agreement, lease agreement, security agreement, security deed, pledge
agreement, assignment, note or guaranty; (iv) any Obligor shall fail to pay when
due any other indebtedness for borrowed money owed by it to any other person and
such default shall continue beyond any applicable grace period; (v) any Obligor
becomes insolvent as defined in the Georgia Uniform Commercial Code or makes an
assignment for the benefit of creditors, or an action is brought by any Obligor
seeking such person's dissolution or liquidation of such person's assets or
seeking the appointment of a trustee, interim, trustee, receiver or other
custodian for any of such person's property, or any Obligor commences a
voluntary case under the Federal Bankruptcy Code, or a reorganization or
arrangement proceeding is instituted by any Obligor for the settlement,
readjustment, composition or extension of any of such person's debts upon any
terms, or an action or petition is otherwise brought by any Obligor seeking
similar relief or alleging that such person is insolvent or unable to pay such
person's debts as they mature; (vi) an action is brought against any Obligor
seeking such persons' dissolution or liquidation of any of such person's assets
or seeking the appointment of a trustee, interim trustee, receiver or other
custodian for any of such person's property, and such action is consented to or
acquiesced in by any Obligor or is not dismissed within sixty (60) days of the
date upon which it was instituted, or a proceeding under the Federal Bankruptcy
Code is instituted against any Obligor and an order for relief is entered in
such proceeding or such proceeding is consented to or acquiesced in by such
Obligor or is not dismissed within sixty (60) days of the date upon which it was
instituted, or a reorganization or arrangement proceeding is instituted against
any Obligor for the settlement, readjustment, composition or extension of any of
such person's debts upon any terms and such proceeding is consented to or
acquiesced in by such Obligor or is not dismissed within sixty (60) days of the
date upon which it was instituted, or an action or petition is otherwise brought
against any Obligor seeking similar relief or alleging that such person is
insolvent, unable to pay his debts as they mature or generally not paying his
debts as they become due and such action or petition is consented to or
acquiesced in by such Obligor or is not dismissed within sixty (60) days of the
date upon which it was brought; (vii) any guarantor of this Note terminates or
attempts to terminate such guaranty; (viii) any material adverse change occurs
in Maker's financial condition or means or ability to pay this Note. Upon the
occurrence of an Event of Default, the entire principal amount of this Note, and
all accrued interest thereon, shall without notice be due and payable.
10. Waivers. The Maker, or its successors and assigns,
-------
hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Maker hereunder. In any
action on this Note, the holder hereof need not produce or file the original of
this Note, but need only file a photocopy of this Note certified by the holder
hereof to be a true and correct copy of this Note.
11. Remedies. All rights and remedies of Gibralt US, whether
--------
provided for herein or conferred by law, are cumulative and concurrent and the
exercise of any one or more of them shall not preclude the simultaneous or later
exercise by Gibralt US of any or all other rights, powers or remedies.
12. Notice. All notices, demands or other communications to be
------
given or delivered under or by reason of the provisions of this Note shall be in
writing and shall be deemed to have been given if (i) delivered personally to
the recipient, (ii) mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid or (iii) sent to the recipient by
reputable overnight courier services (charges prepaid).
If to Gibralt US:
-------------------
Gibralt Capital Corp.
#2000 - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇-▇▇▇
If to Pointe Communications Corporation:
-
Pointe Communications Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
All such notices, request, demands, waivers and other communications shall be
deemed to have been received (i) if by personal delivery on the date after such
delivery, (ii) if by certified or registered mail, on the seventh business day
after the mailing thereof and (iii) if by next-day or overnight mail or
delivery, on the day delivered.
13. Usury Laws. It is the intention of the Maker and the holder
-----------
of this Note to conform strictly to all applicable usury laws now or hereafter
in force, and any interest payable under this Note shall be subject to reduction
to the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated or
this Note is prepaid, whether by reason of failure of timely payment or an Event
of Default as defined in the Security Agreement or Securities Pledge Agreement,
voluntary prepayment by the Maker or otherwise, then earned interest may never
include more than the maximum amount permitted by law, computed from the date
hereof until payment. If such interest does exceed the maximum legal rate, it
shall be deemed a mistake and such excess shall be canceled automatically and,
if theretofore paid, rebated to the Maker or credited on the principal amount of
this Note, or if this Note has been repaid, then such excess shall be rebated to
the Maker.
14. Governing Law. All questions concerning the construction,
--------------
validity and interpretation of this Note will be governed by and construed in
accordance with the domestic laws of the State of Georgia, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Georgia or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Georgia.
MAKER HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT MAKER MAY HAVE UNDER ANY APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT TO
ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED BY OR AGAINST MAKER CONCERNING
THE INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT OR PERFORMANCE OF THIS
AGREEMENT. MAKER HEREBY EXPRESSLY AGREES, CONSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN ▇▇▇▇▇▇ COUNTY, GEORGIA,
WITH RESPECT TO ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED BY OR AGAINST
MAKER CONCERNING THE INTERPRETATION, CONSTRUCTION, VALIDITY OR ENFORCEMENT OR
PERFORMANCE OF THIS AGREEMENT, AND MAKER AND GIBRALT US ALSO EXPRESSLY CONSENT
AND SUBMIT TO AND AGREE THAT VENUE IN ANY SUCH SUIT OR LEGAL ACTION IS PROPER IN
SAID COURTS AND COUNTY AND HEREBY EXPRESSLY WAIVE ANY AND ALL PERSONAL RIGHTS
UNDER APPLICABLE LAW OR IN EQUITY TO OBJECT TO THE JURISDICTION AND VENUE IN
SAID COURTS AND COUNTY. THE JURISDICTION AND VENUE OF THE COURTS CONSENTED AND
SUBMITTED TO AND AGREED TO IN THIS PARAGRAPH ARE NOT EXCLUSIVE BUT ARE
CUMULATIVE AND IN ADDITION TO THE JURISDICTION AND VENUE OF ANY OTHER COURT
UNDER ANY APPLICABLE LAWS OR IN EQUITY.
IN WITNESS WHEREOF, this Note is executed as of the date first written
above.
POINTE COMMUNICATIONS
CORPORATION
By:_________________________
Its:_________________________
This Warrant was originally issued on February 2, 1999 and such issuance was not
registered under the Securities Act of 1933, as amended, or the securities laws
of any state. If reasonably requested by Company counsel, no transfer of this
Warrant shall be made except in connection with an opinion from Registered
Holder's counsel, reasonably acceptable to counsel for the Company, that such
transfer is exempt from federal and state registration.
POINTE COMMUNICATIONS CORPORATION
STOCK PURCHASE WARRANT
----------------------
Date of Issuance: February 2, 1999 Certificate No. W-1
FOR VALUE RECEIVED, Pointe Communications Corporation, a Nevada corporation
(the "Company"), hereby grants to Gibralt US, Inc., a Colorado corporation, or
its registered assigns (the "Registered Holder") the right to purchase from the
Company 760,000 shares of the Company's Common Stock at a price per share of
$1.00 (as adjusted from time to time hereunder, the "Exercise Price"). This
Warrant is being granted to the Registered Holder in connection with and in
consideration for the $2 million loan the Registered Holder is making to the
Company contemporaneously with the issuance of this Warrant. Certain
capitalized terms used herein are defined in Section 5 hereof. The amount and
kind of securities obtainable pursuant to the rights granted hereunder and the
purchase price for such securities are subject to adjustment pursuant to the
provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
---------------------
1A. Exercise Period; Registration. The Registered Holder may exercise,
-----------------------------
in whole or in part (but not as to a fractional share of Common Stock), the
purchase rights represented by this Warrant at any time and from time to time
until the third anniversary of the Date of Issuance (the "Exercise Period").
The Company agrees that, within thirty (30) days of written demand by Registered
Holder, the Company shall file an S-3 registration statement for the Common
Stock to be purchased by Registered Holder pursuant to this Warrant, such S-3
registration to be in compliance with the Securities Act of 1933, as amended,
and the rules and regulations promulgated pursuant thereto, and the Company
shall take such steps to maintain the effectiveness of such registration for a
period of six months; provided, however, in the case of a good faith
determination by the Company that circumstances or market conditions mandate a
delay of registration, the Company will be permitted to delay such registration
for such time period as the Company reasonably determines as appropriate.
Registered Holder shall cooperate with the Company in providing all information
necessary for such registration and shall indemnify the Company and its
affiliates for any losses, claims, damages or liabilities arising out of or
relating to any false or misleading information furnished by Registered Holder
for use in connection with such registration. All expenses incurred by the
Company in connection with such registration including, without limitation, all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and expenses of any special audits
incidental to or required hereby shall be borne by the Registered Holder, and
Registered Holder shall pay any and all underwriters', bankers' and brokers'
discounts, fees, commissions and stock transfer taxes in connection with such
transaction, as well as all fees and disbursements of counsel and other
professionals retained by Registered Holder.
1B. Exercise Procedure.
-------------------
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C below,
executed by the Person exercising all or part of the purchase rights represented
by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit II hereto evidencing
----------
the assignment of this Warrant to the Purchaser, in which case the Registered
Holder shall have complied with the provisions set forth in Section 7 hereof;
and
(d) either (1) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price"), (2) the
surrender to the Company of debt or equity securities of the Company or any of
its wholly-owned Subsidiaries having a Market Price equal to the Aggregate
Exercise Price of the Common Stock being purchased upon such exercise (provided
that for purposes of this subparagraph, the Market Price of any note or other
debt security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus all
accrued and unpaid interest thereon or accrued or declared and unpaid dividends
thereon) or (3) a written notice to the Company that the Purchaser is exercising
the Warrant (or a portion thereof) by authorizing the Company to withhold from
issuance a number of shares of Common Stock issuable upon such exercise of the
Warrant which when multiplied by the Market Price of the Common Stock is equal
to the Aggregate Exercise Price (and such withheld shares shall no longer be
issuable under this Warrant).
(ii) Certificates for shares of Common Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within five business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall within such five-day period, deliver
such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock. Each share of Common Stock issuable upon exercise of
this Warrant shall upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued Common
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof, be conditioned upon the
consummation of the public offering or sale of the Company in which case such
exercise shall not be deemed to be effective until the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange (except for "restricted stock" rules and requirements) upon which
shares of Common Stock may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).
The Company shall not take any action which would cause the number of
autho-rized but unissued shares of Common Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon exercise of the
Warrants.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
-------------------
Exercise Agreement shall be substantially in the form set forth in Exhibit I
---------
hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued, and if the number of shares of
Common Stock to be issued does not include all the shares of Common Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
1D. Fractional Shares. If a fractional share of Common Stock would,
------------------
but for the provisions of paragraph 1A, be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within five business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the Exercise
Time and the Exercise Price of such fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
-------------------------------------------------
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of
-------------------------------------------------------------------
Common Stock. If and whenever the Company issues or sells (except pursuant to
-------------
exercised options, warrants or similar instruments outstanding as of the date
hereof), or in accordance with paragraph 2B is deemed to have issued or sold,
any share of Common Stock for a consideration per share less than the Exercise
Price in effect immediately prior to such time, then immediately upon such issue
or sale the Exercise Price shall be reduced to the lowest net price per share at
which such share of Common Stock has been issued or sold or is deemed to have
been issued or sold. Upon each such adjustment of the Exercise Price hereunder,
the number of shares of Common Stock acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------------
determining the adjusted Exercise Price under paragraph 2A, the following shall
be applicable:
(i) Issuance of Rights or Options. If subsequent to the date
---------------------------------
hereof the Company in any manner grants or sells any Options and the lowest
price per share for which any one share of Common Stock is issuable upon the
exercise of any such Option, or upon conversion or exchange of any Convertible
Security issuable upon exercise of such Option, is less than the Exercise Price
in effect immediately prior to the time of the granting or sale of such Option,
then such share of Common Stock shall be deemed to have been issued and sold by
the Company at such time for such price per share. For purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option and upon conversion or exchange of the Convertible Security. No further
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Security upon the exercise of such Options
or upon the actual issue of such Common Stock upon conversion or exchange of
such Convertible Security.
(ii) Issuance of Convertible Securities. If subsequent to the
-------------------------------------
date hereof the Company in any manner issues or sells any Convertible Security
and the lowest price per share for which any one share of Common Stock is
issuable upon conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then such share or
shares of Common Stock shall be deemed to have been issued and sold by the
Company at such time for such price per share. For the purposes of this
paragraph, the "lowest price per share for which any one share of Common Stock
is issuable" shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance of the Convertible Security and upon the
conversion or exchange of such Convertible Security. No further adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of any Convertible Security, and if any such issue or
sale of such Convertible Security is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to other
provisions of this Section 2, no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
------------------------------------------
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock changes at any time, the Exercise Price in effect at the time
of such change shall be adjusted immediately to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of Common Stock
issuable hereunder shall be correspondingly adjusted. For purposes of this
paragraph 2B, if the terms of any Option or Convertible Security which was
outstanding as of the date of issuance of this Warrant are changed in the manner
described in the immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such
change; provided that no such change shall at any time cause the Exercise Price
hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
-------------------------------------------------------------
Securities. Upon the expiration of any Option or the termination of any right
----------
to convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect shall be adjusted immediately
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that no such change shall at any time cause the Exercise
Price hereunder to be increased.
(v) Calculation of Consideration Received. If any Common Stock,
---------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities shall be determined jointly by the
Company and the Registered Holders of Warrants representing a majority of the
shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an appraiser jointly selected by the Company
and the Registered Holders of Warrants representing a majority of the shares of
Common Stock obtainable upon exercise of such Warrants. The determination of
such appraiser shall be final and binding on the Company and the Registered
Holders of the Warrants, and the fees and expenses of such appraiser shall be
paid by the Company.
(vi) Treasury Shares. The number of shares of Common Stock
----------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(vii) Record Date. If the Company takes a record of the holders
------------
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
2C. Subdivision or Combination of Common Stock. If the Company at any
-------------------------------------------
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2D. Reorganization, Reclassification, Consolidation, Merger or Sale.
------------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic Change." Prior to the consummation of any Organic Change,
the Company shall make appropriate provision to insure that each of the
Registered Holders of the Warrants shall thereafter have the right to acquire
and receive, in lieu of or addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the exercise of
such holder's Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
such holder's Warrant had such Organic Change not taken place. In any such
case, the Company shall make appropriate provision with respect to such holders'
rights and interests to insure that the provisions of this Section 2 and
Sections 3 and 4 hereof shall thereafter be applicable to the Warrants. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets
assumes by appropriate written instrument the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
2E. Certain Events. If any event occurs of the type contemplated by
---------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided that no such adjustment shall increase the Exercise Price or decrease
the number of shares of Common Stock obtainable as otherwise determined pursuant
to this Section 2.
2F. Notices.
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(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
Section 3. Purchase Rights. If at any time the Company grants, issues or
---------------
sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights"), then the Registered holder of this Warrant
shall be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set forth
-----------
below:
"Common Stock" means the Company's Common Stock, .00001 par value, and
-------------
except for purposes of the shares obtainable upon exercise of this Warrant, any
capital stock of any class of the Company hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon any liquidation, dissolution or winding up of the Company.
"Convertible Securities" means any stock or securities (directly or
-----------------------
indirectly) convertible into or exchangeable for Common Stock.
"Market Price" means as to any security the average of the closing prices
-------------
of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the Company
and the Registered Holders of Warrants representing a majority of the Common
Stock purchasable upon exercise of all the Warrants then outstanding; provided
that if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined by an appraiser jointly selected by
the Company and the Registered Holders of Warrants representing a majority of
the Common Stock purchasable upon exercise of all the Warrants then outstanding.
The determination of such appraiser shall be final and binding on the Company
and the Registered Holders of the Warrants, and the fees and expenses of such
appraiser shall be paid by the Company.
"Options" means any rights or options to subscribe for or purchase Common
-------
Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
------
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"The Warrant" means this Warrant and any other warrants exchanged directly
------------
or indirectly for all or a portion of this Warrant.
Other capitalized terms used in this Warrant but not defined herein shall
have the meanings set forth in the Purchase Agreement, dated of even date
herewith, between the Company and the Registered Holder.
Section 5. No Voting Rights; Limitations of Liability. This Warrant shall
------------------------------------------
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 6. Warrant Transferable. Subject to the transfer conditions
---------------------
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) at the principal office of the Company.
-----------
Section 7. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
Section 8. Replacement. Upon receipt of evidence reasonably satisfactory
-----------
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 9. Notices. Except as otherwise expressly provided herein, all
-------
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered, sent or deposited in
the U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by any such holder).
Section 10. Amendment and Waiver. Except as otherwise provided herein,
----------------------
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants; provided that no such action may
change the Exercise Price of the Warrants or the number of shares or class of
stock obtainable upon exercise of each Warrant without the written consent of
the Registered Holders of the Warrants.
Section 11. Descriptive Headings; Governing Law. The descriptive headings
-----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and its Stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Georgia without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Georgia or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of Georgia.
Section 12. Waivers, Amendments, Applicable Law. None of the terms or
--------------------------------------
provisions of this Stock Purchase Warrant may be waived, altered, modified or
amended except by an instrument in writing, duly executed by the parties hereto.
This Stock Purchase Warrant and all obligations of the Company hereunder shall
together with the rights and remedies of Registered Holder hereunder, inure to
the benefit of Registered Holder and its successors and assigns. This Stock
Purchase Warrant shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of Georgia, without giving effect to any
applicable principles of conflicts of laws. THE COMPANY HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THE COMPANY MAY HAVE UNDER
ANY APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT TO ANY SUIT OR LEGAL ACTION
WHICH MAY BE COMMENCED BY OR AGAINST THE COMPANY CONCERNING THE INTERPRETATION,
CONSTRUCTION, VALIDITY, ENFORCEMENT OR PERFORMANCE OF THIS STOCK PURCHASE
WARRANT. THE COMPANY HEREBY EXPRESSLY AGREES, CONSENTS AND SUBMITS TO THE
PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN ▇▇▇▇▇▇ COUNTY,
GEORGIA, WITH RESPECT TO ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED BY OR
AGAINST THE COMPANY CONCERNING THE INTERPRETATION, CONSTRUCTION, VALIDITY OR
ENFORCEMENT OR PERFORMANCE OF THIS STOCK PURCHASE WARRANT, AND THE COMPANY ALSO
EXPRESSLY CONSENTS AND SUBMITS TO AND AGREES THAT VENUE IN ANY SUCH SUIT OR
LEGAL ACTION IS PROPER IN SAID COURTS AND COUNTY AND HEREBY EXPRESSLY WAIVES ANY
AND ALL PERSONAL RIGHTS UNDER APPLICABLE LAW OR IN EQUITY TO OBJECT TO THE
JURISDICTION AND VENUE IN SAID COURTS AND COUNTY. THE JURISDICTION AND VENUE OF
THE COURTS CONSENTED AND SUBMITTED TO AND AGREED TO IN THIS PARAGRAPH ARE NOT
EXCLUSIVE, BUT ARE CUMULATIVE AND IN ADDITION TO THE JURISDICTION AND VENUE OF
ANY OTHER COURT UNDER ANY APPLICABLE LAWS OR IN EQUITY.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
POINTE COMMUNICATIONS
CORPORATION
By:
Its:
[CORPORATE SEAL]
Attest: ________________________
Title: ________________________
EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Signature
Address
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, ______________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Signature
Witness
SECURITIES PLEDGE AGREEMENT
---------------------------
THIS PLEDGE AGREEMENT is made as of _____________, 1999, between Star
Insurance Company (Cayman) Limited ("Pledgor") and Gibralt US, Inc. ("Gibralt
US").
Pointe Communications Corporation ("Pointe") has entered into a Note and
Warrant Purchase Agreement with Gibralt US (the "Purchase Agreement") has issued
a promissory note payable to the order of Gibralt US for the sum of $2,000,000
(the "Note"), has issued a Stock Purchase Warrant to Gibralt US (the "Warrant")
and has granted a security interest in its assets pursuant to a Security
Agreement (the "Security Agreement"), each dated as of the date hereof. Gibralt
US and Pledgor are parties to a non-recourse Guaranty Agreement (the
"Guaranty"), dated as of the date hereof, pursuant to which Pledgor guaranteed,
to the extent of the Pledged Interests only, the Guaranteed Obligations as
defined in the Guaranty; it being understood that this Pledge Agreement is meant
to secure the Guaranty and is the sole recourse for Gibralt US under the
Guaranty. The Pledgor has pledged 2,000,000 shares of Pointe's Common Stock
pursuant to this Agreement, together with any and all certificates, instruments,
documents or general intangibles which may be now or hereafter issued with
respect thereto or which may now or hereafter exist or arise therefrom and all
other now existing or hereafter arising rights of Pledgor as the holder of such
shares, including, without limitation, any voting rights and rights to and
interests in all cash and non-cash dividends on or other distributions with
respect to any of the foregoing, including further, without limitation, any and
all rights of Pledgor under any shareholder, voting trust, registration rights,
sale or other agreement which may now or hereafter exist with respect to any of
the foregoing shares (the "Pledged Interests").
NOW, THEREFORE, in consideration of the premises contained herein and other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Gibralt US to extend credit to Pointe and
Pledgor and Gibralt US hereby agree as follows:
1. Pledge. Pledgor hereby pledges to Gibralt US, and grants to Gibralt US a
------
security interest in, the Pledged Interests as security for the prompt and
complete payment when due of the unpaid principal of and interest on the Note
and full payment and performance of the obligations and liabilities of Pledgor
hereunder and under the Guaranty and the Guaranteed Obligations as defined in
the Security Agreement between Gibralt US and Pointe of even date herewith.
2. Delivery of Pledged Securities. Upon the execution of this
---------------------------------
Pledge Agreement, Pledgor shall deliver to Gibralt US or its agent the
certificate(s) representing the Pledged Interests, together with duly executed
forms of assignment sufficient to transfer title thereto to Gibralt US. Gibralt
US or its agent shall hold such Pledged Interests for itself as a security for
the obligations referenced in paragraph 1 above. Pledgor agrees that such care
as Gibralt US gives to the safekeeping of its own property of like kind shall
constitute reasonable care of such Pledged Interests when it may be in Gibralt
US's possession.
3. Voting Rights; Cash Distribution. Notwithstanding anything to
---------------------------------
the contrary contained herein, during the term of this Pledge Agreement until
such time as there exists an Event of Default as defined below, Pledgor shall be
entitled to all voting rights with respect to the Pledged Interests, but shall
not be entitled to receive any cash distributions paid in respect of the Pledged
Interests, which distributions shall be held by Gibralt US as additional
security hereunder. Upon the occurrence of and during the continuance of any
such Event of Default, Pledgor shall no longer be able to vote the Pledged
Interests, such voting rights with respect thereto shall be exercisable by
Gibralt US at is option and Gibralt US shall take title to all such cash
distributions payable on the Pledged Interests as additional security hereunder.
In furtherance of Gibralt US's rights under this Section, the Pledgor shall
execute and deliver to Gibralt US, or cause to be executed and delivered to
Gibralt US, all such proxies, powers of attorney, and other instruments as
Gibralt US may reasonably request for the purpose of enabling Gibralt US to
exercise the voting rights which it is entitled to exercise or refrain from
exercising pursuant to this Section.
4. Other Distributions, etc. If, while this Pledge Agreement is
---------------------------
in effect, Pledgor becomes entitled to receive or receives any securities or
other property in addition to, in substitution of, or in exchange for any of the
Pledged Interests (whether as a distribution in connection with any
recapitalization, reorganization or reclassification), Pledgor shall accept such
securities or other property on behalf of and for the benefit of Gibralt US as
additional security for Pledgor's obligations under the Note and shall promptly
deliver such additional security to Gibralt US together with duly executed forms
of assignment, and such additional security shall be deemed to be part of the
Pledged Interests hereunder.
5. Power of Attorney. Pledgor hereby agrees that from time to
-------------------
time, so long as an Event of Default exists, without presentment, notice or
demand, and without affecting or impairing in any way the rights of Gilbralt US
with respect to the Pledged Interests, the obligations of Pledgor hereunder or
the other Guaranteed Obligations, Gibralt US may, but shall not be obligated to
and shall incur no liability to Pledgor or any third party for failing to, take
any action which Pledgor is obligated by this Agreement to take, and Pledgor
also hereby appoints (which appointment is coupled with an interest and shall be
irrevocable so long as this Agreement is in effect) Gibralt US as its
attorney-in-fact with full power and authority at any time to take any of the
following actions during the existence of any Event of Default hereunder in
either Pledgor's or Gibralt US's name (but Gilbralt US shall have no obligation
to and shall incur no liability to Pledgor or any third party for failing to
exercise any such power or authority): (a) to collect by legal proceedings or
otherwise and indorse, receive and receipt for all dividends, interest,
payments, proceeds, and other sums and property now or hereafter payable on or
on account of any of the Pledged Interests; (b) to enter into any extension,
reorganization, deposit, merger, consolidation, or other agreement pertaining
to, or deposit, surrender, accept, hold or apply other property in exchange for,
any of the Pledged Interests; (c) to insure, process, and preserve any of the
Pledged Interests or to take any other action which Pledgor is obligated by this
Agreement to take; (d) to transfer any of the Pledged Interests to its own or
its nominee's name, (e) to make any compromise or settlement, and take any
action it deems advisable, with respect to any of the Pledged Interests; (f) to
prepare, file and sign Pledgor's name to any proof of claim in bankruptcy (or
any similar document) against any account debtor on any of the Pledged
Interests; (g) to receive, open and dispose of Pledgor's mail pertaining to any
of the Pledged Interests consisting of accounts receivables and notify postal
authorities to deliver such mail to such address as Gibralt US may designate;
(h) to indorse Pledgor's name upon any checks or other proceeds of any Pledged
Interests and deposit same to any account of Gibralt US; (i) to indorse
Pledgor's name on any other document, instrument or other agreement relating to
any of the Pledged Interests in connection with a foreclosure or otherwise; (j)
to send verifications of accounts receivable to account debtors thereunder; (k)
to use the software relating to any Pledged Interests; (l) to make, adjust or
enforce claims under any insurance policy relating to any Pledged Interests; (m)
to do all other acts and things necessary, in Gibralt US's judgment, to fulfill
Pledgor's obligations under this Agreement; and (n) to pay any and all taxes,
assessments, charges, encumbrances or liens now or hereafter imposed upon or
affecting any of the Pledged Interests. The foregoing power of attorney may be
exercised by Gilbralt US in its discretion, in its name or Pledgor's name, and
without prior notice to or demand upon Pledgor. Pledgor agrees to reimburse
Gibralt US on demand for any sums advanced or expenses incurred by Gibralt US in
exercising any of the foregoing rights and powers together with interest
accruing thereon daily at the highest rate Pledgor has contracted to pay on any
of the Guaranteed Obligations. Pledgor's reimbursement obligations under this
Section shall constitute part of the Guaranteed Obligations secured hereunder.
6. Events of Default. An event of default under this Agreement shall be
-------------------
deemed to exist upon the occurrence of any of the following event (each such
event being herein called an "Event of Default"):
(a) Failure of Pointe or Pledgor punctually to make payment of any amount
payable, whether principal, interest or otherwise, on any of the Guaranteed
Obligations when and as the same becomes due and payable, whether at maturity,
or at a date fixed for any prepayment or partial prepayment, or by acceleration,
on demand or otherwise.
(b) If any statement, representation, or warranty of Pointe, Pledgor or any
guarantor or any other person liable on any of the Guaranteed Obligations
(Pointe, Pledgor and all such other persons being herein collectively referred
to as the "Obligors") made in this Agreement or in any other document furnished
in connection herewith to Gibralt US proves to have been untrue, incorrect,
misleading or incomplete in any material respect as of the date made or deemed
made;
(c) Failure of Pledgor punctually and fully to perform, observe, discharge
or comply with any of the covenants set forth in this Agreement, which failure
is not cured within thirty (30) days of the giving by Gibralt US to Pledgor of
written notice of same;
(d) Failure of Pledgor punctually or fully to perform, observe, discharge or
comply with any of the other covenants set forth in this Agreement.
(e) The occurrence of any other default, event of default or an Event of
Default under (and after giving effect to any applicable notice and/or cure
rights expressly provided in) any other agreement between Gibralt US and any
Obligor relating to any of the Guaranteed Obligations;
(f) If any Obligor becomes insolvent as defined in the Uniform Commercial
Code as in effect in the State of Georgia or makes an assignment for the benefit
of creditors, or if any action is brought by an Obligor seeking its
dissolution or liquidation of its assets or seeking the appointment of a
trustee, interim trustee, receiver, conservator or other custodian for any of
its property, or if any Obligor commences a voluntary case under the U.S.
Bankruptcy Code, or if any reorganization or arrangement proceeding is
instituted by any Obligor for the settlement, readjustment, composition or
extension of any of its debts upon any terms, or if any action or petition is
otherwise brought by any Obligor seeking similar relief or alleging that it is
insolvent or unable to pay its debts as they mature.
(g) If any action is brought against any Obligor seeking its dissolution or
liquidation of any of its assets or seeking the appointment of a trustee,
interim trustee, receiver, conservator, or other custodian for any of its
property, and such action is consented to or acquiesced in by such Obligor or is
not dismissed within sixty (60) days of the date upon which it was
instituted, or if any proceeding under the U.S. Bankruptcy Code is instituted
against any Obligor, and an order for relief is entered in such proceeding or
such proceeding is consented to or acquiesced in by such Obligor or is not
dismissed within sixty (60) days of the date upon which it was instituted; or if
any reorganization or arrangement proceeding is instituted against any Obligor
for the settlement, readjustment, composition or extension of any of its debts
upon any terms, and such proceeding is consented to or acquiesced in by such
Obligor or is not dismissed within sixty (60) days of the date upon which it was
instituted; or if any action or petition is otherwise brought against any
Obligor seeking similar relief or alleging that it is insolvent, unable to pay
its debts as they mature or generally not paying its debts as they become due,
and such action or petition is consented to or acquiesced in by such Obligor or
is not dismissed within sixty (60) days of the date upon which it was brought.
(h) If Pledgor or any other guarantor of any of the Guaranteed Obligations
terminates or attempts to terminate such guaranty;
(i) If all or any material portion of the Pledged Interests is seized or
levied upon or a receiver or other custodian is appointed for it;
(j) If any material adverse change occurs in Pointe's financial condition or
means or ability to pay the Guaranteed Obligations; or
(k) The occurrence of any other event as a result of which Gibralt US in
good faith believes that the prospect of payment of the Guaranteed Obligations
is impaired.
7. Gilbralt US's Remedies. Upon the occurrence and during the continuation
-----------------------
of any one or more of the foregoing Events of Default, Gibralt US may, at its
option, and without notice to or demand on Pledgor and in addition to all rights
and remedies available to Gibralt US under any other agreement, at law, in
equity, or otherwise, do any one or more of the following:
(a) Gibralt may declare any or all of the Guaranteed Obligations to be
immediately due and payable and foreclose or otherwise enforce Gibralt's
security interest in or other lien hereunder on any or all of the Pledged
Interests in any manner permitted by law or provided for in this Agreement.
(b) Secured Party may vote all or any of the Pledged Interests (and in
connection therewith Pledgor hereby grants to Gibralt US a proxy to vote the
Pledged Interests which proxy shall be irrevocable so long as this Agreement is
in effect); provided, however, that unless and until an Event of Default has
occurred hereunder and Gilbralt US has elected as a result thereof to exercise
its voting right and proxy under this subsection, Pledgor shall be entitled to
vote the Pledged Interests but no vote may be cast by Pledgor which would
violate or be inconsistent with any of the terms of this Agreement or any other
agreement between any of the Obligors and Gibralt US relating to the Pledged
Interests or the Guaranteed Obligations.
(c) Gibralt US may transfer any of the Pledged Interests into its name,
notify any account debtor under or other person obligated on any Pledged
Interests to make payments thereunder directly to Gibralt US, and otherwise
collect or enforce payment of any of the Pledged Interests (but Gilbralt US
shall have no obligation to do any of the foregoing).
(d) Without limiting the foregoing, Gibralt US is authorized to retain,
sell, assign and deliver at its discretion, from time to time, all or any part
of the Pledged Interests on the open market or at any private sale or public
auction, on not less than two (2) business days written notice to Pledgor, at
such price or prices and upon such terms as Gibralt US may deem advisable.
Pledgor shall have no right to redeem the Pledged Interests after any such sale
or assignment. At any such sale or auction, Gibralt US may bid for, and become
the purchaser of, the whole or any part of the Pledged Interests offered for
sale. So long as Pointe is public, Gibralt US shall be able to retain all or
any portion of the Pledged Interests the Market Price of which is sufficient to
satisfy Pledgor's obligations under the Guaranty. "Market Price" of any
security means the average of the closing prices of such security's sales on all
securities as changes on which such security may at the time be listed, or, if
there has been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 p.m.,
New York time, or, if on any day such security is not quoted in the NASDAQ
System, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which "Market
Price" is being determined and the 20 consecutive business days prior to such
day. If at any time such security is not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, the "Market Price"
shall be the fair value thereof, determined jointly by Gibralt US and the holder
of the Note. If such parties are unable to reach agreement within a reasonable
period of time, such fair value shall be determined by an appraiser jointly
selected by Gibralt US and the holder of the Note. The determination of such
appraiser shall be final and binding upon the parties, and the fees and expenses
of such appraiser shall be borne by Gibralt US.
(e) Gibralt US may restrict the prospective bidders or purchasers of such
Pledged Interests to those persons or entities (if any) who (i) will represent
and agree that they are purchasing such Pledged Interests for their own account,
for investment, and not with a view to the distribution or sale of any of such
Pledged Interests; and (ii) satisfy the offeree and purchaser requirements for a
valid private placement transaction exempt from registration under the
Securities Act of 1933, as amended (the "Act"), or under any similar federal,
state or other statute, rule or regulation. Pledgor agrees that disposition of
such Pledged Interests pursuant to any private sale made as provided above may
be at prices and on other terms less favorable than if such Pledged Interests
were sold at public sale, and that Gilbralt US has no obligation to delay the
sale of such Pledged Interests for public sale under the Act. Pledgor also
agrees that a private sale or sales made under the forgoing circumstances shall
be deemed to have been made in a commercially reasonable manner. In the event
that Gilbralt US elects to sell such Pledged Interests, or part of them, in a
public sale, Pledgor shall use its best efforts to register and qualify the
securities pursuant to federal and state securities laws required by the
proposed terms of sale, and all expenses thereof shall be payable by Pledgor,
including, but not limited to, all costs of (i) registration or qualification of
any such Pledged Interests under the Act or any state "Blue Sky" or securities
laws or pursuant to any applicable rule or regulation issued pursuant thereto,
and (ii) sale of such Pledged Interests, including, but not limited to, brokers'
or underwriters' commissions, fees or discounts, accounting and legal fees and
disbursements, costs of printing and other expenses of transfer and sale. If
any consent, approval, or authority shall be necessary to effectuate any sale or
other disposition of any such Pledged Interests, or any part thereof, Pledgor
will execute such applications and other instruments as may be required in
connection with securing any such consent, approval, or authorization, and will
otherwise use its best efforts to secure the same, all as Gilbralt US may
require.
8. Application of Proceeds. All monies and other proceeds received by
-------------------------
Gilbralt US upon any collection, sale or other disposition of any Pledged
Interests, together with all other monies and other proceeds received by
Gilbralt US hereunder, shall be applied as follows:
First, to the payment of the reasonable costs and expenses of such sale,
-----
collection or other disposition which may have been incurred by Gibralt US,
including without limitation attorneys' fees as provided in Section 10 and all
other reasonable expenses, liabilities and advances made or incurred by Gilbralt
US in connection therewith;
Second, to the payment of all other Guaranteed Obligations then due in such
------
order as Gilbralt US may elect; and
Third, after payment in full of all Guaranteed Obligations then due, any
-----
surplus then remaining from such proceeds shall be paid to Pledgor.
9. Indemnity. Pledgor hereby agrees to indemnify Gilbralt US and hold
---------
Gibralt US harmless from and against any claim, liability, loss, damage,
expense, suit, action or proceeding which may now or hereafter be suffered or
incurred by Gibralt US as a result of Pledgor's failure to observe, perform or
discharge Pledgor's duties or obligations hereunder or Gilbralt US's holding or
administering this Agreement or any Pledged Interests unless with respect to any
of the above Gibralt US is finally determined to have acted with gross
negligence or to have engaged in willful misconduct. Without limiting the
generality of the foregoing, this indemnity shall extend to any claims asserted
against Gibralt US by any person under any environmental, occupational safety
and hazard, or other similar laws, rules or regulations by reason of Pledgor's
or any other person's failure to comply with any such laws, rules or
regulations. The indemnity obligations of Pledgor under this Section shall
constitute a part of the Guaranteed Obligations secured hereunder and shall
survive the termination of this Agreement.
10. Costs and Attorneys' Fees. All costs and expenses (including
--------------------------
reasonable attorneys' fees) incurred in exercising any right, power or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor or
repaid from the proceeds of the sale of the Pledged Interests hereunder.
11. Payment of Indebtedness and Release of Pledged Interests.
-------------------------------------------------------------
Upon payment in full of the indebtedness evidenced by the Note, Gibralt US shall
take all necessary action to release any security interests Gibralt US has with
respect to the Pledged Interests together with all forms of assignment to
Pledgor.
12. No Other Liens; No Sales or Transfers; Authority. Pledgor
----------------------------------------------------
hereby represents and warrants that it has good and valid title to all of the
Pledged Interests, free and clear of all liens, security interests and other
encumbrances, and Pledgor hereby covenants that, until such time as all of the
outstanding principal of and interest on the Note has been repaid, Pledgor shall
not (i) create, incur, assume or suffer to exist any pledge, security interest,
encumbrance, lien or charge of any kind against the Pledged Interests or
Pledgor's rights or a holder thereof, other than pursuant to this Agreement, or
(ii) sell or otherwise transfer any Pledged Interests or any interest therein.
Pledgor has full power and authority to execute and deliver this Agreement and
to perform its obligations hereunder, and this Agreement has been duly executed
and delivered by Pledgor. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of its
obligations hereunder by Pledgor will not conflict with or result in any
violation of or any default under any provision of any governing instrument
applicable to Pledgor or any agreement or other instrument to which Pledgor is a
party or by which Pledgor or any of its properties are bound, or any decree,
order, statute, rule or regulation applicable to Pledgor or its business or
properties. This Agreement constitutes a valid and binding obligation of
Pledgor, enforceable in accordance with its terms.
13. Further Assurances. Pledgor agrees that at any time and from
-------------------
time to time upon the written request of Gibralt US, Pledgor shall execute and
deliver such further documents (including UCC financing statements) and do such
further acts and things as Gibralt US may reasonably request in order to effect
the purposes of this Pledge Agreement.
14. Severability. Any provision of this Pledge Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15. No Waiver; Cumulative Remedies. Gibralt US shall not by any
--------------------------------
act, delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
Gibralt US, and then only to the extent therein set forth. A waiver by Gibralt
US of any right or remedy hereunder on any one occasion shall not be construed
as a bar to any rights or remedies provided by law.
16. Waivers, Amendments, Applicable Law. None of the terms or provisions of
-----------------------------------
this Pledge Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the parties hereto. This Agreement and
all obligations of the Pledgor hereunder shall together with the rights and
remedies of Gibralt US hereunder, inure to the benefit of Gibralt US and its
successors and assigns. This Pledge Agreement shall be governed by, and be
construed and interpreted in accordance with, the laws of the State of Georgia,
without giving effect to any applicable principles of conflicts of laws.
PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT PLEDGOR MAY HAVE UNDER ANY APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT
TO ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED BY OR AGAINST PLEDGOR
CONCERNING THE INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT OR
PERFORMANCE OF THIS AGREEMENT. PLEDGOR HEREBY EXPRESSLY AGREES, CONSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN
▇▇▇▇▇▇ COUNTY, GEORGIA, WITH RESPECT TO ANY SUIT OR LEGAL ACTION WHICH MAY BE
COMMENCED BY OR AGAINST PLEDGOR CONCERNING THE INTERPRETATION, CONSTRUCTION,
VALIDITY OR ENFORCEMENT OR PERFORMANCE OF THIS AGREEMENT, AND PLEDGOR ALSO
EXPRESSLY CONSENTS AND SUBMITS TO AND AGREES THAT VENUE IN ANY SUCH SUIT OR
LEGAL ACTION IS PROPER IN SAID COURTS AND COUNTY AND HEREBY EXPRESSLY WAIVES ANY
AND ALL PERSONAL RIGHTS UNDER APPLICABLE LAW OR IN EQUITY TO OBJECT TO THE
JURISDICTION AND VENUE IN SAID COURTS AND COUNTY. THE JURISDICTION AND VENUE OF
THE COURTS CONSENTED AND SUBMITTED TO AND AGREED TO IN THIS PARAGRAPH ARE NOT
EXCLUSIVE, BUT ARE CUMULATIVE AND IN ADDITION TO THE JURISDICTION AND VENUE OF
ANY OTHER COURT UNDER ANY APPLICABLE LAWS OR IN EQUITY.
IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the date
first above written.
GIBRALT US, INC.
By:__________________________
Its:___________________________
[CORPORATE SEAL]
STAR INSURANCE COMPANY
(CAYMAN) LIMITED
By:___________________________
Its:___________________________
[CORPORATE SEAL]
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT is made February 2, 1999, by and between
Pointe Communications Corporation (the "Borrower"), a Nevada corporation, and
--------
Gibralt US, Inc., a Colorado corporation (the "Secured Party").
--------------
On the date hereof, the Secured Party has loaned $2 million for which
the Borrower has issued a note ("Note"). This Note is secured by a third party
pledge of shares of Borrower's common stock as well as the security interest
granted herein. It was a condition of the Secured Party's $2 million loan that
the Borrower enter into this Security Agreement and grant to the Secured Party
the security interests described below.
NOW, THEREFORE, in consideration of the premises herein contained, and
certain other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower and the Secured Party hereby agree
as follows:
1. Grant of Security Interest. As security for the payment and
-----------------------------
performance of the Secured Obligations (as defined in Section 9(g)), the
Borrower hereby gives, grants and assigns to the Secured Party a lien and
security interest in and against (i) those items described in Exhibit A attached
---------
hereto and incorporated herein and (ii) any and all additions and accessions to,
and substitutions, replacements and exchanges for, any and all of the foregoing
items in each case whether now owned, hereafter acquired and wherever located,
and all proceeds thereof (all of the foregoing being hereinafter referred to as
the "Collateral"). The Collateral is located as set forth on Exhibit A.
----------
2. Representations of the Borrower. The Borrower hereby represents and
-------------------------------
warrants as follows:
(a) The Borrower is the owner of all of the Collateral and,
except to the extent described on the Security Interests Schedule attached
hereto, there is no lien or security interest in or against any of such
Collateral except the lien of the Secured Party pursuant to this Security
Agreement.
(b) The Borrower presently has in effect, or will have in
effect as each item of Collateral is acquired, all insurance required hereunder.
(c) The Borrower has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and this
Agreement has been duly executed and delivered by the Borrower.
(d) The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of its
obligations hereunder by the Borrower will not conflict with, or result in any
violation of or default under, any provision of any governing instrument
applicable to the Borrower, or any agreement or other instrument to which the
Borrower is a party or by which the Borrower or any of its properties are bound,
or any decree, order, statute, rule or regulation applicable to the Borrower or
its business or properties. This Agreement constitutes a valid and binding
obligation of the Borrower, enforceable in accordance with its terms.
3. Covenants of the Borrower. The Borrower covenants and agrees as
----------------------------
follows:
(a) (i) The Borrower shall keep the Collateral hereunder
insured for full replacement value against fire, theft, casualty and other loss
and extended coverage at all times throughout the term of this Security
Agreement and furnish to the Secured Party evidence of such insurance for the
full replacement cost of such Collateral. Secured Party shall be named as a
loss payee, as its interests may appear, on each such policy of insurance.
(ii) The Borrower shall provide and keep in full force
and effect, or cause to be provided and kept in full force and effect, during
the term of this Security Agreement, for its benefit and for the benefit of the
Secured Party, as an additional insured, comprehensive general liability
insurance. Such insurance shall include at least the hazards arising from the
ownership and possession of the Collateral hereunder and the hazards of any
operations being carried on by the Borrower with respect to such Collateral.
(iii) All policies of insurance required under this
Security Agreement shall contain provisions complying with the requirements
hereof and shall be issued by a nationally recognized insurance company or
companies qualified to write such policies under the laws of the State of
Georgia. All insurance as to form, amount, coverage and insurance companies
shall be satisfactory to the Secured Party. All policies shall require that no
less than thirty (30) days written notice of cancellation will be given to the
Secured Party. All costs of insurance shall be borne by the Borrower. Renewal
binders, certificates or policies, together with evidence of payment of
premiums, shall be deposited with the Secured Party at least fifteen (15) days
before the expiration of the prior existing policies. All insurance is required
commencing from the date hereof and is to be continued throughout the term of
the Security Agreement. The Borrower shall not violate or cause to be violated
any of the conditions of the policies of insurance to be maintained hereunder.
(b) The Borrower shall, at the Borrower's cost and upon
request of the Secured Party, furnish to the Secured Party such further
information, execute and deliver to the Secured Party such documents showing the
Secured Party as having a security interest in the Collateral, and do such other
acts and things, all as the Secured Party may at any time reasonably request
relating to the perfection or protection of the security interests created by
this Security Agreement or for the purpose of carrying out the intent of this
Security Agreement. Without limiting the generality of the foregoing, Borrower
shall promptly notify Secured Party in writing if the location of any item of
Collateral changes and will in a timely manner execute and convey to Secured
Party any forms necessary to assure Secured Party's security interest in the
Collateral remains at all times, perfected.
(c) The Borrower agrees to pay promptly when due all taxes,
assessments or governmental charges with respect to the Collateral hereunder or
operations of the Borrower with respect to such Collateral, in each case before
the same become delinquent and before penalties accrue thereon.
(d) The Borrower will maintain, protect, preserve and repair
the Collateral and keep the same in good working order, subject only to normal
wear and tear. The Borrower will make the Collateral hereunder available to the
Secured Party for its inspection at any time during the term of this Security
Agreement.
(e) Without the Secured Party's prior written consent, the
Borrower will not create or permit any other lien on, or security interest in,
any portion of the Collateral hereunder other than liens in favor of the Secured
Party and other liens referenced herein or on schedules hereto.
(f) The Borrower shall pay all Secured Obligations when due.
Without limiting the foregoing, the Borrower shall immediately and without
demand (i) pay all amounts due under the Note when due and (ii) reimburse
Secured Party for all amounts incurred and described in the following clause
3(g), incurred by Secured Party in enforcing the Securities Pledge Agreement
between Star Insurance Company (Cayman) Limited and Secured Party of even date
herewith, or in clauses (ii) and (iii) of the definition of Secured Obligations.
Any amounts not so repaid, and all other Secured Obligations not repaid when due
(including, to the extent permitted by applicable law, unpaid interest) shall
bear interest from the date due until repaid at the rate of interest then
applicable under the Note, but in no event greater than the maximum rate
permitted by applicable law.
(g) If the Borrower fails to maintain any required insurance or to maintain,
protect, preserve and repair the Collateral, or pay the amounts
contemplated in preceding clause 3(c), or otherwise perform its obligations
hereunder, Secured Party may (but shall have no obligation to) take any and all
such actions, and all amounts incurred by Secured Party in doing so shall
constitute additional Secured Obligations.
(h) Borrower agrees that such care as Gilbralt US gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
such Pledged Interest when it may be in Gibralt US's possession.
4. Events of Default. An event of default under this Agreement shall
-------------------
be deemed to exist upon the occurrence of any of the following event (each such
event being herein called an "Event of Default"):
(a) Failure of Borrower punctually to make payment of any amount payable,
whether principal, interest or otherwise, on any of the Secured Obligations when
and as the same becomes due and payable, whether at maturity, or at a date
fixed for any prepayment or partial prepayment, or by acceleration, on demand or
otherwise.
(b) If any statement, representation, or warranty of Borrower or any
guarantor or other person liable on any of the Secured Obligations (Borrower and
all such other persons being herein collectively referred to as the
"Obligors") made in this Agreement or in any other document furnished in
connection herewith to Secured Party proves to have been untrue, incorrect,
misleading or incomplete in any material respect as of the date made or deemed
made;
(c) Failure of Borrower punctually and fully to perform, observe, discharge
or comply with any of the covenants set forth this Agreement, which failure is
not cured within thirty (30) days of the giving by Secured Party to Borrower of
written notice of same;
(d) Failure of Borrower punctually or fully to perform, observe, discharge
or comply with any of the other covenants set forth in this Agreement.
(e) The occurrence of any other default, event of default or an Event of
Default under (and after giving effect to any applicable notice and/or cure
rights expressly provided in) any other agreement between Secured Party and any
Obligor relating to any of the Secured Obligations;
(f) If any Obligor becomes insolvent as defined in the Uniform Commercial
Code as in effect in the State of Georgia or makes an assignment for the benefit
of creditors, or if any action is brought by an Obligor seeking its
dissolution or liquidation of its assets or seeking the appointment of a
trustee, interim trustee, receiver, conservator or other custodian for any of
its property, or if any Obligor commences a voluntary case under the U.S.
Bankruptcy Code, or if any reorganization or arrangement proceeding is
instituted by any Obligor for the settlement, readjustment, composition or
extension of any of its debts upon any terms, or if any action or petition is
otherwise brought by any Obligor seeking similar relief or alleging that it is
insolvent or unable to pay its debts as they mature.
(g) If any action is brought against any Obligor seeking its dissolution or
liquidation of any of its assets or seeking the appointment of a trustee,
interim trustee, receiver, conservator, or other custodian for any of its
property, and such action is consented to or acquiesced in by such Obligor or is
not dismissed within sixty (60) days of the date upon which it was
instituted, or if any proceeding under the U.S. Bankruptcy Code is instituted
against any Obligor, and an order for relief is entered in such proceeding or
such proceeding is consented to or acquiesced in by such Obligor or is not
dismissed within sixty (60) days of the date upon which it was instituted; or if
any reorganization or arrangement proceeding is instituted against any Obligor
for the settlement, readjustment, composition or extension of any of its debts
upon any terms, and such proceeding is consented to or acquiesced in by such
Obligor or is not dismissed within sixty (60) days of the date upon which it was
instituted; or if any action or petition is otherwise brought against any
Obligor seeking similar relief or alleging that it is insolvent, unable to pay
its debts as they mature or generally not paying its debts as they become due,
and such action or petition is consented to or acquiesced in by such Obligor or
is not dismissed within sixty (60) days of the date upon which it was brought.
(h) If any guarantor of any of the Secured Obligations terminates or
attempts to terminate such guaranty;
(i) If all or any material portion of the Collateral is seized or levied
upon or a receiver or other custodian is appointed for it;
(j) Any material adverse change occurs in Borrower's financial condition or
means or ability to pay the Secured Obligations; or
(k) The occurrence of any other event as a result of which Secured Party in
good faith believes that the prospect of payment of the Secured Obligations is
impaired.
5. Remedies on Default. Upon the occurrence of any Event of Default, the
---------------------
Secured Party shall have all of the rights and remedies of a secured party under
the Georgia Uniform Commercial Code and under any other applicable law, as the
same may from time to time be in effect. Upon demand of the Secured Party after
the occurrence of any Event of Default, the Borrower shall deliver, or cause to
be delivered, all Collateral covered hereby to the Secured Party at the
Borrower's expense, and upon such demand, the Borrower shall deliver, or cause
to be delivered, the Collateral covered hereby to the Secured Party. Any notice
which the Secured Party is required to give to the Borrower under the Georgia
Uniform Commercial Code of a time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral hereunder is
to be made shall be deemed to constitute reasonable notice if such notice is
mailed by registered or certified mail at least five (5) days prior to such
action.
6. Power of Attorney. Borrower hereby agrees that from time to time, so
-------------------
long as an Event of Default exists, without presentment, notice or demand, and
without affecting or impairing in any way the rights of Secured Party with
respect to the Collateral, the obligations of Borrower hereunder or the other
Secured Obligations, Secured Party may, but shall not be obligated to and shall
incur no liability to Borrower or any third party for failing to, take any
action which Borrower is obligated by this Agreement to take, and Borrower also
hereby appoints (which appointment is coupled with an interest and shall be
irrevocable so long as this Agreement is in effect) Secured Party as its
attorney-in-fact with full power and authority at any time to take any of the
following actions during the existence of any Event of Default hereunder in
either Borrower's or Secured Party's name (but Secured Party shall have no
obligation to and shall incur no liability to Borrower or any third party for
failing to exercise any such power or authority): (a) to collect by legal
proceedings or otherwise and indorse, receive and receipt for all dividends,
interest, payments, proceeds, and other sums and property now or hereafter
payable on or on account of any of the Collateral; (b) to enter into any
extension, reorganization, deposit merger, consolidation, or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for, any of the Collateral; (c) to insure, process, and preserve any of
the Collateral or to take any other action which Borrower is obligated by
this Agreement to take; (d) to transfer any of the Collateral to its own or its
nominee's name, (e) to make any compromise or settlement, and take any action it
deems advisable, with respect to any of the Collateral; (f) to prepare, file and
sign Borrower's name to any proof of claim in bankruptcy (or any similar
document) against any account debtor on any of the Collateral; (g) to receive,
open and dispose of Borrower's mail pertaining to any of the Collateral
consisting of Accounts Receivables and notify postal authorities to deliver such
mail to such address as Secured Party may designate; (h) to indorse Borrower's
name upon any checks or other proceeds of any Collateral and deposit same to any
account of Secured Party; (i) to indorse Borrower's name on any other document,
instrument or other agreement relating to any of the Collateral; (j) to send
verifications of Accounts Receivable to account debtors thereunder; (k) to use
the software relating to any Collateral; (l) to make, adjust or enforce claims
under any insurance policy relating to any Collateral; (m) to do all other acts
and things necessary, in Secured Party's judgment, to fulfill Borrower's
obligations under this Agreement; and (n) to pay any and all taxes, assessments,
charges, encumbrances or liens now or hereafter imposed upon or affecting any of
the Collateral. The foregoing power of attorney may be exercised by Secured
Party in its discretion, in its name or Borrower's name, and without prior
notice to or demand upon Borrower. Borrower agrees to reimburse Secured Party
on demand for any sums advanced or expenses incurred by Secured Party in
exercising any of the foregoing rights and powers together with interest
accruing thereon daily at the highest rate Borrower has contracted to pay on any
of the Secured Obligations. Borrower's reimbursement obligations under this
Section shall constitute part of the Secured Obligations secured hereunder.
7. Application of Proceeds. (a) All monies and other proceeds received by
-------------------------
Secured Party upon any collection, sale or other disposition of any Collateral,
together with all other monies and other proceeds received by Secured Party
hereunder, shall be applied as follows:
First, to the payment of the reasonable costs and expenses of such sale,
-----
collection or other disposition which may have been incurred by Secured Party,
including without limitation attorneys' fees and all other reasonable expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith;
Second, to the payment of all other Secured Obligations then due in such
------
order as Secured Party may elect; and
Third, after payment in full of all Secured Obligations then due, any
-----
surplus then remaining from such proceeds shall be paid to Debtor; and
(a) Borrower shall remain liable to Secured Party for any deficiency owing
on the Secured Obligations after the application of the proceeds of the
Collateral as provided above.
8. Indemnity. Borrower hereby agrees to indemnify Secured Party and hold
---------
Secured Party harmless from and against any claim, liability, loss, damage,
expense, suit, action or proceeding which may now or hereafter be suffered or
incurred by Secured Party as a result of Borrower's failure to observe, perform
or discharge Borrower's duties or obligations hereunder or Secured Party's
holding or administering this Agreement or any Collateral unless with respect to
any of the above Secured Party is finally determined to have acted with
gross negligence or to have engaged in willful misconduct. Without limiting the
generality of the foregoing, this indemnity shall extend to any claims asserted
against Secured Party by any person under any environmental, occupational safety
and hazard, or other similar laws, rules or regulations by reason of Borrower's
or any other person's failure to comply with any such laws, rules or
regulations. The indemnity obligations of Borrower under this Section shall
constitute a part of the Secured Obligations secured hereunder and shall survive
the termination of this Agreement.
9. Miscellaneous Provisions.
-------------------------
(a) The Secured Party's rights and remedies hereunder are
cumulative. Neither the failure nor the delay on the part of the Secured Party
to exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
(b) All notices given pursuant to any provision of this
Security Agreement shall be in writing and hand delivered, with a receipt being
obtained therefor, or sent by United States registered or certified mail, return
receipt requested, postage prepaid, at the following address or such other
address as to which the parties hereto may be notified in writing from time to
time:
Borrower:
Pointe Communications Corporation
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax Number
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
and
Secured Party:
Gibralt US, Inc.
#2000 - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Copy to:
W. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
All such notices shall be deemed to have been given when received (if hand
delivered) or two (2) days after deposit in the mails (if mailed).
(c) All amendments and modifications of this Security
Agreement or any schedules hereto must be in writing and signed by the party
against whom the same is sought to be enforced.
(d) If any term or provision of this Security Agreement or
the application thereof shall, to any extent, be invalid or unenforceable, the
remainder of this Security Agreement, or the application of such term or
provision, shall be valid and may be enforced to the fullest extent permitted by
law.
(e) This Security Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia, all rights and
remedies being governed by such laws.
(f) This Security Agreement secures not only Secured Obligations that are
presently outstanding but also Secured Obligations that may arise in the future,
and there may be times during the term of this Security Agreement when no
Secured Obligations are actually outstanding. Nevertheless, this Security
Agreement shall continue in full force and effect until terminated in writing by
Borrower and Secured Party.
(g) The "Secured Obligations", as defined herein, shall mean,
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collectively, (i) all liabilities, obligations and indebtedness (whether actual
or contingent, whether owed jointly or severally, whether for the payment of
money or for the performance of obligations, and if for the payment of money,
whether for principal, interest, fees, expenses or otherwise, and including
without limitation interest accruing after the maturity of such principal and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) of Borrower to Secured Party now existing or
hereafter arising, including without limitation (but not limited to) those
incurred under or in connection with the Note, this Security Agreement, or the
Note and Warrant Purchase Agreement or Promissory Note executed by Borrower in
favor of Secured Party of even date herewith as all of the foregoing may be
amended, modified or supplemented from time to time, together with any and all
extensions, renewals, refinancings or refundings thereof in whole or in part,
(ii) all costs and expenses (including, without limitation, to the extent
permitted by law, reasonable attorneys' fees and other legal expenses) incurred
by Secured Party in the enforcement and collection of any of the liabilities,
obligations and indebtedness referred to in clause (i) above, and (iii) all
payments and advances made by Secured Party for the maintenance, preservation,
protection or enforcement of, or realization upon, any property or assets now or
hereafter made subject to any lien granted pursuant to this Security Agreement
or pursuant to any other agreement, instrument or note relating to the Secured
Obligations (including, without limitation, advances for taxes, insurance,
storage, transportation, repairs and the like).
(h) Promptly upon satisfaction of the Secured Obligations,
Secured Party shall execute and deliver to Borrower such evidence of termination
of Secured Party's security interest in the collateral as Borrower may
reasonably request.
(i) None of the terms or provisions of this Agreement may be
waived, altered, modified or amended except by an instrument in writing, duly
executed by the parties hereto. This Agreement and all obligations of the
Borrower hereunder shall together with the rights and remedies of Secured Party
hereunder, inure to the benefit of Secured Party and its successors and assigns.
This Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of Georgia, without giving effect to any
applicable principles of conflicts of laws. BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT BORROWER MAY HAVE UNDER
ANY APPLICABLE LAW TO A TRIAL BY JURY WITH RESPECT TO ANY SUIT OR LEGAL ACTION
WHICH MAY BE COMMENCED BY OR AGAINST BORROWER CONCERNING THE INTERPRETATION,
CONSTRUCTION, VALIDITY, ENFORCEMENT OR PERFORMANCE OF THIS AGREEMENT. BORROWER
HEREBY EXPRESSLY AGREES, CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF
ANY STATE OR FEDERAL COURT SITTING IN ▇▇▇▇▇▇ COUNTY, GEORGIA, WITH RESPECT TO
ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED BY OR AGAINST BORROWER
CONCERNING THE INTERPRETATION, CONSTRUCTION, VALIDITY OR ENFORCEMENT OR
PERFORMANCE OF THIS AGREEMENT, AND BORROWER ALSO EXPRESSLY CONSENTS AND SUBMITS
TO AND AGREES THAT VENUE IN ANY SUCH SUIT OR LEGAL ACTION IS PROPER IN SAID
COURTS AND COUNTY AND HEREBY EXPRESSLY WAIVES ANY AND ALL PERSONAL RIGHTS UNDER
APPLICABLE LAW OR IN EQUITY TO OBJECT TO THE JURISDICTION AND VENUE IN SAID
COURTS AND COUNTY. THE JURISDICTION AND VENUE OF THE COURTS CONSENTED AND
SUBMITTED TO AND AGREED TO IN THIS PARAGRAPH ARE NOT EXCLUSIVE, BUT ARE
CUMULATIVE AND IN ADDITION TO THE JURISDICTION AND VENUE OF ANY OTHER COURT
UNDER ANY APPLICABLE LAWS OR IN EQUITY.
IN WITNESS WHEREOF, the Borrower and the Secured Party, intending to
be legally bound hereby, have duly executed this Security Agreement under seal
and caused it to be dated the day and year first above written.
POINTE COMMUNICATIONS
CORPORATION
By:__________________________
Title:________________________
[CORPORATE SEAL]
GIBRALT US, INC.
By:__________________________
Title:_________________________
[CORPORATE SEAL]
EXHIBIT A TO SECURITY AGREEMENT
DESCRIPTION OF COLLATERAL
"Collateral" means all personal property wherever located, in which
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the Borrower now has or hereafter acquires any right or interest (including,
without limitation, all Accounts, Chattel Paper, Contract Rights, Documents,
Equipment, Fixtures, General Intangibles, Instruments, Inventory, Stock Rights,
cash, bank accounts, special collateral accounts, "uncertificated securities"
and "securities entitlements" and other "investment property" (each as defined
in the Code), insurance policies and all books and records (in whatever form or
medium), customer lists, credit files, computer files, programs, printouts,
source codes, software and other computer materials (and records related to any
of the foregoing), and the proceeds (including, without limitation, all
"proceeds" as defined in the Code), insurance proceeds, unearned premiums, tax
refunds, rents, profits, offspring and products thereof (all of the foregoing is
collectively referred to as the "Collateral").
As used herein the following capitalized terms shall have the
following meanings:
"Accounts" shall mean all accounts as that term is defined in the UCC
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and all rights of Borrower now existing and hereafter acquired to payment for
goods sold or leased or for services rendered which are not evidenced by an
Instrument or Chattel Paper, whether or not earned by performance, together with
(i) all security interests or other security held by or granted to Borrower to
secure such rights to payment, (ii) all other rights related thereto (including
rights of stoppage in transit) and (iii) all rights in any of such sold or
leased goods which are returned or repossessed.
"Chattel Paper" shall mean all chattel paper as that term is defined
--------------
in the UCC and any document or documents which evidence both a monetary
obligation and a security interest in, or a lease or consignment of, specific
goods; provided that when a transaction is evidenced both by a security
agreement or a lease and by an Instrument or series of Instruments, the group of
documents taken together constitute Chattel Paper.
"Contract Rights" shall mean any right to payment under a contract not
---------------
yet earned by performance and not evidenced by an Instrument or Chattel Paper.
"Documents" shall mean all documents as that term is defined in the
---------
UCC and all documents of title and goods evidenced thereby (including, without
limitation, all bills of lading, dock warrants, dock receipts, warehouse
receipts and orders for the delivery of goods), together with any other document
which in the regular course of business or financing is treated as adequately
evidencing that the Person in possession of it is entitled to receive, hold and
dispose of such document and the goods it covers.
"Equipment" shall mean all equipment as that term is defined in the
---------
UCC and all equipment (including, without limitation, all machinery, vehicles,
tractors, trailers, office equipment, communications systems, computers,
furniture, tools, molds and goods) owned, used or bought for use in Borrower's
business whether now owned, used or bought for use or hereafter acquired, used
or bought for use and wherever located, together with all accessories,
accessions, attachments, parts and appurtenances thereto.
"Fixtures" shall mean all fixtures as that term is defined in the UCC
--------
and all goods which are or are to be attached to real property in such a manner
that their removal would cause damage to the real property and which have
therefore taken on the character of real property.
"General Intangibles" shall mean all general intangibles as that term
--------------------
is defined in the UCC and all intangible personal property of every kind and
nature other than Accounts (including, without limitation, all Contract Rights,
other rights to receive payments of money, choses in action, security interests,
indemnification claims, judgments, tax refunds and tax refund claims, royalty
and product rights, inventions, work in progress, patents, patent applications,
trademarks, trademark applications, trade names, copyrights, copyright
applications, permits, licenses, franchises, leasehold interests in real or
personal property, rights to receive rentals of real or personal property or
payments under letters of credit, insurance proceeds, know-how, trade secrets,
other items of Intellectual Property and proprietary rights, goodwill (whether
or not associated with any of the foregoing), computer software and guarantee
claims).
"Instruments" shall mean all negotiable instruments (as that term is
-----------
defined in the UCC), certificated securities (as that term is defined in the
UCC) and any replacements therefor and Stock Rights related thereto, and other
writings which evidence rights to the payment of money (whether absolute or
contingent) and which are not themselves security agreements or leases and are
of a type which in the ordinary course of business are transferred by delivery
with any necessary endorsement or assignment (including, without limitation, all
checks, drafts, notes, bonds, debentures, government securities, certificates of
deposit, letters of credit, preferred and common stocks, options and warrants).
"Intellectual Property" means all (i) patents, patent applications,
----------------------
patent disclosures and inventions, (ii) trademarks, service marks, trade dress,
trade names, logos and company and corporate names and registrations and
applications for registration thereof, together with the goodwill of the
business connected with the use of, and symbolized by, the foregoing of this
term, (iii) copyrights and registrations and applications for registration
thereof, (iv) mask works and registrations and applications for registration
thereof, (v) computer software, data, data bases and documentation, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Inventory" shall mean all inventory as that term is defined in the
---------
UCC and all goods (as that term is defined in the UCC) other than Equipment and
Fixtures (including, without limitation, goods in transit, goods held for sale
or lease or furnished or to be furnished under contracts for service, raw
materials, work in process and materials used or consumed in the Borrower's
business, finished goods, returned or repossessed goods and goods released to
the Borrower or to third parties under trust receipts or similar Documents).
"Proceeds" shall mean all proceeds (as that term is defined in the
--------
UCC) and any and all amounts or items of property received when any Collateral
or proceeds thereof are sold, exchanged, collected or otherwise disposed of,
both cash and non-cash, including proceeds of insurance, indemnity, warranty or
guarantee paid or payable on or in connection with any Collateral.
"Receivables" shall mean all Accounts, Chattel Paper and Contract
-----------
Rights and all Instruments representing rights to receive payments.
"Stock Rights" shall mean all "investment property" as that term is
-------------
defined in the UCC, and including, without limitation, any stock, security
(whether certificated or uncertificated) or securities entitlement, any dividend
or other distribution and any other right or property which Borrower shall
receive or shall become entitled to receive for any reason whatsoever with
respect to, in substitution for or in exchange for any and all shares of stock
and other Instruments and certificated or uncertificated securities or
securities entitlement, any right to receive or acquire any Instrument and
certificated or uncertificated security or securities entitlement and any right
to receive earnings, in which Borrower now has or hereafter acquires any right.
"UCC" shall mean the Uniform Commercial Code as in effect in any
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applicable jurisdiction.