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EXHIBIT 10.2
U.S. $3,500,000
CREDIT AGREEMENT
between
CORZON, INC.
as the Borrower,
and
▇▇▇▇▇▇▇ LLC
as the Lender
January 25, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...................................1
SECTION 1.1 Defined Terms.............................................1
SECTION 1.2 Use of Defined Terms......................................8
SECTION 1.3 Cross-References..........................................8
ARTICLE II COMMITMENT, BORROWING PROCEDURES AND NOTE.........................8
SECTION 2.1 Commitment................................................8
SECTION 2.2 Borrowing Procedure.......................................8
SECTION 2.3 Note......................................................8
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES.......................9
SECTION 3.1 Repayments and Prepayments................................9
SECTION 3.2 Interest Provisions.......................................9
ARTICLE IV TAXES, PAYMENTS AND USE OF PROCEEDS..............................10
SECTION 4.1 Taxes....................................................10
SECTION 4.2 Payments, Computations, etc..............................11
SECTION 4.3 Use of Proceeds..........................................11
ARTICLE V CONDITIONS TO BORROWING...........................................11
SECTION 5.1 Initial Borrowing........................................11
SECTION 5.2 All Borrowings...........................................12
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................14
SECTION 6.1 Organization, etc........................................14
SECTION 6.2 Due Authorization, Non-Contravention, etc................14
SECTION 6.3 Government Approval, Regulation, etc.....................14
SECTION 6.4 Validity, etc............................................15
SECTION 6.5 Financial Information....................................15
SECTION 6.6 No Material Adverse Change...............................15
SECTION 6.7 Litigation, Labor Controversies, etc.....................15
SECTION 6.8 Subsidiaries.............................................15
SECTION 6.9 Ownership of Properties..................................15
SECTION 6.10 Taxes...................................................15
SECTION 6.11 Pension and Welfare Plans...............................16
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 6.12 Environmental Warranties................................16
SECTION 6.13 Regulations G, U and X..................................18
SECTION 6.14 Accuracy of Information.................................18
ARTICLE VII COVENANTS.......................................................18
SECTION 7.1 Affirmative Covenants....................................18
SECTION 7.2 Negative Covenants.......................................20
ARTICLE VIII EVENTS OF DEFAULT..............................................24
SECTION 8.1 Listing of Events of Default.............................24
SECTION 8.2 Action if Bankruptcy.....................................26
SECTION 8.3 Action if Other Event of Default.........................27
ARTICLE IX MISCELLANEOUS PROVISIONS.........................................27
SECTION 9.1 Waivers, Amendments, etc.................................27
SECTION 9.2 Notices..................................................27
SECTION 9.3 Payment of Costs and Expenses............................28
SECTION 9.4 Indemnification..........................................29
SECTION 9.5 Survival.................................................30
SECTION 9.6 Severability.............................................30
SECTION 9.7 Headings.................................................30
SECTION 9.8 Execution in Counterparts, Effectiveness, etc............30
SECTION 9.9 Governing Law; Entire Agreement..........................30
SECTION 9.10 Successors and Assigns..................................30
SECTION 9.11 Participations..........................................30
SECTION 9.12 Confidentiality.........................................31
SECTION 9.13 Other Transactions......................................32
SECTION 9.14 Waiver of Jury Trial....................................32
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Borrowing Request
EXHIBIT B - Form of Note
EXHIBIT C - Form of Security Agreement
EXHIBIT D - Form of Guaranty
EXHIBIT E - Form of Warrant
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CREDIT AGREEMENT
This Credit Agreement is dated as of January 25, 2001, between Corzon,
Inc., a Texas corporation (the "Borrower"), and ▇▇▇▇▇▇▇ LLC, a Cayman Islands
limited liability company (the "Lender").
WITNESSETH:
WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries in the telecommunications business; and
WHEREAS, pursuant to an Agreement and Plan of Merger dated January 5,
2001 (the "Merger Agreement"), among the Borrower, a wholly-owned Subsidiary of
the Borrower, and LecStar Communications Corporation, a Delaware corporation
("LecStar"), the Borrower intends to acquire LecStar through the merger of its
wholly-owned Subsidiary with and into LecStar (the "Merger"); and
WHEREAS, in connection with the Merger, the Borrower desires to obtain
a Commitment from the Lender pursuant to which Loans, in a maximum aggregate
principal amount at any one time outstanding not to exceed $3,500,000, will be
made to the Borrower from time to time prior to the Commitment Termination Date;
and
WHEREAS, the Lender is willing, on the terms and subject to the
conditions hereinafter set forth (including ARTICLE V), to extend such
Commitment and make such Loans to the Borrower; and
WHEREAS, the proceeds of such Loans will be used for general corporate
purposes of the Borrower and its Significant Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. The following terms when used in this
Agreement, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
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(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agreement" means this Credit Agreement as originally in effect on the
Effective Date and as thereafter from time to time amended, supplemented,
amended and restated, or otherwise modified.
"Authorized Officer" means, relative to the Borrower, those of its
officers whose signatures and incumbency shall have been certified to the Lender
pursuant to SECTION 5.1.1.
"Base Rate" means, on any date and with respect to all Loans, a rate of
interest per annum equal to twenty-four percent (24%).
"Borrower" is defined in the preamble.
"Borrowing Request" means a Loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit A
hereto.
"Business Day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York, New York or Houston, Texas.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year after such time, issued or guaranteed by the United States
Government;
(b) commercial paper, maturing not more than nine months from
the date of issue, which is issued by a corporation (other than an
Affiliate of the Borrower) organized under the laws of any state of the
United States or of the District of Columbia and rated A-l by Standard
& Poor's Corporation or P-l by ▇▇▇▇▇'▇ Investors Service, Inc.; or
(c) any certificate of deposit or bankers acceptance, maturing
not more than one year after such time, which is issued by a commercial
banking institution that is a member of the Federal Reserve System and
has a combined capital and surplus and undivided profits of not less
than $500,000,000.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
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"Commitment" means the Lender's obligation to make Loans pursuant to
SECTION 2.1.1.
"Commitment Amount" means, on any date, $3,500,000.
"Commitment Termination Date" means the earliest of
(a) December 31, 2001; and
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b), the Commitment shall
terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a)
through (d) of SECTION 8.1.8; or
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of the Loans to be due and
payable pursuant to SECTION 8.3, or
(ii) in the absence of such declaration, the giving
of notice by the Lender to the Borrower that the Commitment
has been terminated.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
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"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Lender.
"Dollar" and the sign "$" mean lawful money of the United States.
"Effective Date" means the date this Agreement becomes effective
pursuant to SECTION 9.8.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in SECTION 8.1.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" means United States generally accepted accounting principles, as
applied on a consistent basis.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product (other than gasoline or oil while
used in an internal combustion engine); or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
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"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
capitalized lease liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse; and
(g) all Contingent Liabilities of such Person in respect of
any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
"Indemnified Liabilities" is defined in SECTION 9.4.
"Indemnified Parties" is defined in SECTION 9.4.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
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(c) any ownership or similar interest held by such Person in
any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Knowledge of the Borrower" means the actual knowledge, without
independent inquiry, of any of the executive officers of the Borrower, which
executive officers are hereby deemed to include, but not be limited to, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
"LecStar" is defined in the second recital.
"Lender" is defined in the preamble.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" is defined in SECTION 2.1.1.
"Loan Document" means this Agreement, the Note, each Guaranty executed
in accordance with SECTION 5.1.4 and the Security Agreement.
"Maturity Date" means June 30, 2002.
"Merger" is defined in the second recital.
"Merger Agreement" is defined in the second recital.
"Note" means a promissory note of the Borrower payable to the Lender,
in the form of Exhibit B hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to the Lender resulting from outstanding Loans, and
also means all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Note and each other Loan Document.
"Obligor" means the Borrower or any other Person (other than the
Lender) obligated under any Loan Document.
"Organic Document" means, relative to the Borrower or any Obligor, its
certificate of incorporation, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its authorized shares of
capital stock.
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"Participant" is defined in SECTION 9.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.
"Person" means any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Release" means a "release", as such term is defined in CERCLA.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as in effect from
time to time.
"Security Agreement" means the Security Agreement executed and
delivered pursuant to SECTION 5.1.3, substantially in the form of Exhibit C
hereto, as amended, supplemented, restated or otherwise modified from time to
time.
"Significant Subsidiaries" means (i) LecStar, (ii) LecStar Telecom,
Inc., a Georgia corporation and wholly-owned subsidiary of LecStar, (iii)
LecStar Datanet, Inc., a Georgia corporation and wholly-owned subsidiary of
LecStar and (iv) B4B Communications, Ltd, a company formed under the laws of the
United Kingdom.
"Subordinated Debt" means all unsecured Indebtedness of the Borrower
for money borrowed which is subordinated, upon terms satisfactory to the Lender,
in right of payment to the payment in full in cash of all Obligations.
"Subsidiary" means, with respect to any Person, any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"Taxes" is defined in SECTION 4.1.
"Welfare Plan" means a "welfare plan," as such term is defined in
section 3(1) of ERISA.
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SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and the
Note and in each Borrowing Request, Continuation/Conversion Notice, Loan
Document, notice and other communication delivered from time to time in
connection with this Agreement or any other Loan Document.
SECTION 1.3 Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
ARTICLE II
COMMITMENT, BORROWING PROCEDURES AND NOTE
SECTION 2.1 Commitment. On the terms and subject to the conditions of
this Agreement, the Lender agrees to make Loans pursuant to the Commitment
described in this SECTION 2.1.
SECTION 2.1.1 Commitment To Make Loans. From time to time on any
Business Day occurring prior to the Commitment Termination Date, the Lender will
make a loan (a "Loan") to the Borrower equal to the aggregate principal amount
requested by the Borrower to be loaned on such day. The commitment of the Lender
described in this SECTION 2.1.1 is herein referred to as its "Commitment". On
the terms and subject to the conditions hereof, the Borrower may from time to
time borrow, prepay and reborrow Loans.
SECTION 2.1.2 Lender Not Permitted or Required To Make Loans. The
Lender shall not be permitted or required to make any Loan if, after giving
effect thereto, the aggregate outstanding principal amount of all Loans would
exceed the Commitment Amount.
SECTION 2.2 Borrowing Procedure. By delivering a Borrowing Request to
the Lender on or before 10:00 a.m., New York, New York time, on a Business Day,
the Borrower may from time to time irrevocably request, on not less than three
nor more than five Business Days' notice, that a Loan be made in an integral
multiple of $25,000, or in the unused amount of the Commitment; provided,
however, that no more than an aggregate of $400,000 may be made as a Loan during
any calendar month. On the terms and subject to the conditions of this
Agreement, each Loan shall be made on the Business Day, specified in such
Borrowing Request. On or before 11:00 a.m. (New York, New York time) on such
Business Day, the Lender shall make funds in an amount equal to the requested
Loan available to the Borrower by wire transfer to the accounts the Borrower
shall have specified in its Borrowing Request.
SECTION 2.3 Note. The Lender's Loans under its Commitment shall be
evidenced by the Note payable to the order of the Lender in a maximum principal
amount equal to the original Commitment Amount. The Borrower hereby irrevocably
authorizes the Lender to make (or cause to be made) appropriate notations on the
grid attached to the Lender's Note (or on any continuation of such grid), which
notations, if made, shall evidence, inter alia, the date of, the
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outstanding principal of, and the interest rate applicable to the Loans
evidenced thereby. Such notations shall be conclusive and binding on the
Borrower absent manifest error; provided, however, that the failure of the
Lender to make any such notations shall not limit or otherwise affect any
Obligations of the Borrower.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Maturity Date. Prior
thereto, the Borrower:
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Loans; provided, however, that all such voluntary
prepayments shall require at least three but no more than five Business
Days' prior written notice to the Lender; and
(b) all such voluntary partial prepayments shall be in an
aggregate minimum amount of $10,000 and an integral multiple of $1,000
(other than any prepayment that pays all outstanding principal of any
Loan); and
(c) shall, immediately upon any acceleration of the Maturity
Date of any Loans pursuant to SECTION 8.2 or SECTION 8.3, repay all
Loans, unless, pursuant to SECTION 8.3, only a portion of all Loans is
so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty. No voluntary prepayment of principal of any Loans shall
cause a reduction in the Commitment Amount.
SECTION 3.2 Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue at the Base Rate and shall be payable in accordance
with this SECTION 3.2.
SECTION 3.2.1 Post-Maturity Rates. After the date any principal amount
of any Loan is due and payable (whether on the Maturity Date, upon acceleration
or otherwise), or after any other monetary Obligation of the Borrower shall have
become due and payable, the Borrower shall pay, but only to the extent permitted
by law, interest (after as well as before judgment) on such amounts at a rate
per annum equal to thirty percent (30%).
SECTION 3.2.2 Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Loan; and
(c) on that portion of any Loans the Maturity Date of which is
accelerated pursuant to SECTION 8.2 or SECTION 8.3, immediately upon
such acceleration.
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Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Maturity Date, upon acceleration or otherwise) shall be
payable upon demand.
SECTION 3.2.3 It is the intention of the Borrower and the Lender to
conform strictly to applicable usury laws, if any. Accordingly, notwithstanding
anything to the contrary in any of the Loan Documents, it is agreed as follows:
(a) the aggregate of all interest and any other charges constituting interest
under applicable law and contracted for, chargeable or receivable under the Note
or otherwise in connection with the Obligations evidenced by this Agreement or
any other Loan Agreement shall under no circumstances exceed the maximum amount
of interest permitted by applicable law, if any, and any excess shall be deemed
a mistake and canceled automatically and, if theretofore paid, shall, at the
option of the Lender, be refunded to the Borrower or credited on the principal
amount of the Loans as a voluntary prepayment; and (b) in the event that the
entire unpaid balance of the Note is declared due and payable by the Lender,
then earned interest may never include more than the maximum amount permitted by
applicable law, if any, and any unearned interest shall be canceled
automatically and, if theretofore paid, shall at the option of the Lender,
either be refunded to the Borrower or credited on the principal amount of the
Note.
ARTICLE IV
TAXES, PAYMENTS AND USE OF PROCEEDS
SECTION 4.1 Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or other taxes, fees, duties, withholdings or other charges of any
nature whatsoever imposed by any taxing authority, other than franchise taxes
and taxes imposed on or measured by the Lender's net income or receipts (such
non-excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Lender an official receipt or
other documentation satisfactory to the Lender evidencing such payment
to such authority; and
(c) pay to the Lender such additional amount or amounts as is
necessary to ensure that the net amount actually received by the Lender
will equal the full amount the Lender would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Lender with respect to
any payment received by the Lender hereunder, the Lender may pay such Taxes and
the Borrower will promptly pay such additional amounts (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
such person after the payment of such Taxes
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(including any Taxes on such additional amount) shall equal the amount such
person would have received had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Lender the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
incremental Taxes, interest or penalties that may become payable by the Lender
as a result of any such failure.
SECTION 4.2 Payments, Computations, etc. All payments by the Borrower
pursuant to this Agreement, the Note or any other Loan Document shall be made by
the Borrower to the Lender, without setoff, deduction or counterclaim, not later
than 11:00 a.m., New York, New York time, on the date due, in same day or
immediately available funds, to such account as the Lender shall specify from
time to time by notice to the Borrower. Funds received after that time shall be
deemed to have been received by the Lender on the next succeeding Business Day.
All interest and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring during the
period for which such interest or fee is payable over a year comprised of 365
days or, if appropriate, 366 days. Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in computing interest and fees, if any, in connection with such
payment.
SECTION 4.3 Use of Proceeds. The Borrower shall apply the proceeds of
each Loan for general corporate purposes; without limiting the foregoing, no
proceeds of any Loan will be used to acquire any equity security of a class
which is registered pursuant to Section 12 of the Securities Exchange Act of
1934 or any "margin stock", as defined in F.R.S. Board Regulation U.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1 Initial Borrowing. The obligation of the Lender to fund the
initial Loan shall be subject to the prior or concurrent satisfaction of each of
the conditions precedent set forth in this SECTION 5.1.
SECTION 5.1.1 Resolutions, etc. The Lender shall have received from the
Borrower a certificate (in form and substance satisfactory to the Lender), dated
the date of the initial Loan, of its Secretary or Assistant Secretary as to:
(a) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery and performance of this
Agreement, the Note and each other Loan Document to be executed by it;
and
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Note and each
other Loan Document executed by it,
upon which certificate the Lender may conclusively rely until it shall have
received a further certificate of the Secretary of the Borrower canceling or
amending such prior certificate.
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SECTION 5.1.2 Delivery of Note. The Lender shall have received its Note
duly executed and delivered by the Borrower.
SECTION 5.1.3 Security Agreement. The Lender shall have received
executed counterparts of the Security Agreement, dated as of the date hereof,
duly executed by the Borrower and each of the Significant Subsidiaries, together
with:
(a) acknowledgment copies of properly filed Uniform Commercial
Code financing statements (Form UCC-1), dated a date reasonably near to
the date of the initial Loan , or such other evidence of filing as may
be acceptable to the Lender, naming the Borrower and each of the
Significant Subsidiaries as the debtors and the Lender as the secured
party, or other similar instruments or documents, filed under the
Uniform Commercial Code of all jurisdictions as may be necessary or, in
the opinion of the Lender, desirable to perfect the security interest
of the Lender pursuant to the Security Agreement;
(b) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
and other rights of any Person in any collateral described in the
Security Agreement previously granted by any Person, together with such
other Uniform Commercial Code Form UCC-3 termination statements as the
Lender may reasonably request from such Obligors; and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Lender, dated a date reasonably
near to the date of the initial Loan, listing all effective financing
statements which name the Borrower and each of the Significant
Subsidiaries (under its present name and any previous names) as the
debtor and which are filed in the jurisdictions in which filings were
made pursuant to clause (a) above, together with copies of such
financing statements (none of which (other than those described in
clause (a), if such Form UCC-11 or search report, as the case may be,
is current enough to list such financing statements described in clause
(a)) shall cover any collateral described in the Security Agreement).
SECTION 5.1.4 Guaranty. The Lender shall have received executed
counterparts of a Guaranty substantially in the form of Exhibit D hereto, dated
as of the date hereof, duly executed by each of the Significant Subsidiaries.
SECTION 5.1.5 Closing Fees, Expenses, etc. The Lender shall have
received all fees, costs and expenses due and payable pursuant to SECTION 9.3,
if then invoiced.
SECTION 5.2 All Borrowings. The obligation of the Lender to fund any
Loan (including the initial Loan) shall be subject to the satisfaction of each
of the conditions precedent set forth in this SECTION 5.2.
SECTION 5.2.1 Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Loan (but, if any Default of the nature referred
to in SECTION 8.1.4 shall have occurred with respect to any other Indebtedness,
without giving effect to the
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application, directly or indirectly, of the proceeds thereof) the following
statements shall be true and correct
(a) the representations and warranties set forth in ARTICLE VI
(excluding, however, those contained in SECTION 6.7) shall be true and
correct with the same effect as if then made (unless stated to relate
solely to an early date, in which case such representations and
warranties shall be true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Lender pursuant
to SECTION 6.7
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or,
to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries which might materially
adversely affect the Borrower's consolidated business,
operations, assets, revenues, properties or prospects or which
purports to affect the legality, validity or enforceability of
this Agreement, the Note or any other Loan Document; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to SECTION 6.7
which might materially adversely affect the consolidated
businesses, operations, assets, revenues, properties or
prospects of the Borrower and its Subsidiaries; and
(c) no Default shall have then occurred and be continuing, and
neither the Borrower nor any of its Subsidiaries are in material
violation of any law or governmental regulation or court order or
decree.
SECTION 5.2.2 Borrowing Request. The Lender shall have received a
Borrowing Request for such Loan. Each of the delivery of a Borrowing Request and
the acceptance by the Borrower of the proceeds of such Loan shall constitute a
representation and warranty by the Borrower that on the date of such Loan (both
immediately before and after giving effect to such Loan and the application of
the proceeds thereof) the statements made in SECTION 5.2.1 are true and correct.
SECTION 5.2.3 Warrant. The Borrower shall have issued to the Lender a
warrant, in the form of Exhibit E attached hereto, to purchase a number of
shares of common stock of the Borrower equal to ten percent (10%) of the
principal amount of such Loan divided by the average of the closing bids for the
five trading days immediately prior to the date of the Loan, all as detailed in
the Exhibit E.
SECTION 5.2.4 Coverage. As of the date of Loan, the Borrower shall have
a growth rate of its customer base of 25% per fiscal quarter from the date of
the initial Loan under this Agreement, with evidence thereof satisfactory to the
Lender in its reasonable discretion.
SECTION 5.2.5 Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors
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shall be satisfactory in form and substance to the Lender and its counsel; the
Lender and its counsel shall have received all information, approvals, opinions,
documents or instruments as the Lender or its counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants unto the Lender as set
forth in this ARTICLE VI.
SECTION 6.1 Organization, etc. The Borrower and each of its Significant
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the State of its incorporation, is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification, and
has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Note and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it.
SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower and each applicable Subsidiary of each
Loan Document executed or to be executed by it, and the Borrower's and each
applicable Subsidiary's participation in the consummation of the Merger are
within the Borrower's and each such Subsidiary's corporate powers, have been
duly authorized by all necessary corporate action, and do not
(a) contravene the Borrower's or any such Subsidiary's Organic
Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower or any such Subsidiary; or
(c) result in, or require the creation or imposition of, any
Lien on any of the Borrower's or any Subsidiary's properties.
SECTION 6.3 Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower or any applicable Subsidiary of any Loan
Document, or for the Borrower's and each applicable Subsidiary's participation
in the consummation of the Merger, except for the filing of a Certificate of
Merger with the Secretary of State of Delaware, all of which have been duly
obtained or made and are in full force and effect. Neither the Borrower nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
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SECTION 6.4 Validity, etc. This Agreement constitutes, and the Note and
each other Loan Document executed by the Borrower will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower and each applicable Subsidiary that is a party thereto enforceable in
accordance with their respective terms.
SECTION 6.5 Financial Information. The unaudited balance sheet of each
of the Borrower and the Significant Subsidiaries other than LecStar as at
November 30, 2000, and the unaudited balance sheet of LecStar as at November 30,
2000, and the related statements of earnings and cash flow of each of the
Borrower and the Significant Subsidiaries other than LecStar, along with the
related statements of earnings and cash flow of LecStar, copies of which have
been made available to the Lender, have been prepared in accordance with GAAP
consistently applied, and present fairly the financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended.
SECTION 6.6 No Material Adverse Change. Since the date of the financial
statements described in SECTION 6.5, there has been no material adverse change
in the financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries or LecStar.
SECTION 6.7 Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action, proceeding
or labor controversy affecting the Borrower or any of its Subsidiaries, or any
of their respective properties, assets or revenues, which may materially
adversely affect the financial condition, operations, assets, business,
properties or prospects of the Borrower or any Subsidiary or which purports to
affect the legality, validity or enforceability of this Agreement, the Note or
any other Loan Document, except as disclosed in Item 6.7 ("Litigation") of the
Disclosure Schedule.
SECTION 6.8 Subsidiaries. The Borrower has no Subsidiaries, except
those Subsidiaries
(a) which are identified in Item 6.8 ("Existing Subsidiaries")
of the Disclosure Schedule; or
(b) which are permitted to have been acquired in accordance
with SECTION 7.2.4 or SECTION 7.2.6.
SECTION 6.9 Ownership of Properties. The Borrower and each of its
Subsidiaries owns good and valid title to all of its properties and assets, real
and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) except as permitted pursuant to
SECTION 7.2.3.
SECTION 6.10 Taxes. Except as set forth in the reports of the Borrower
filed with the Securities and Exchange Commission and to the Knowledge of the
Borrower, the Borrower and each of its Subsidiaries have prepared in good faith
and duly and timely filed (taking into account any extension of time within
which to file) all material tax returns required to be filed by any of them at
or before the date of this Agreement and all such filed tax returns are complete
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and accurate in all material respects. Except as set forth in the reports of the
Borrower filed with the Securities and Exchange Commission and to the Knowledge
of Borrower, the Borrower and each of its Subsidiaries as of the date of this
Agreement (x) will have paid all taxes that they are required to pay prior to
the date of this Agreement, and (y) will have withheld all federal, state and
local income taxes and other taxes required to be withheld from amounts owing to
any employee, creditor or third party, except for such amounts that, alone or in
the aggregate, are not reasonably likely to have a material adverse effect on
it. Except as set forth in the reports of the Borrower filed with the Securities
and Exchange Commission and to the Knowledge of Borrower, as of the date of this
Agreement, there are not pending or threatened in writing, any audits,
examinations, investigations or other proceedings in respect of taxes or tax
matters. Except as set forth in the reports of the Borrower filed with the
Securities and Exchange Commission and to the best of the Borrower's knowledge,
there are not, to the actual knowledge of its executive officers, any unresolved
questions, claims or outstanding proposed or assessed deficiencies concerning
the Borrower or any of its Subsidiaries' tax liability that are reasonably
likely to have a material adverse effect on it. Except as set forth in the
reports of the Borrower filed with the Securities and Exchange Commission and to
the Knowledge of the Borrower, neither the Borrower nor any of its Subsidiaries
has any liability with respect to income, franchise or similar taxes in excess
of the amounts accrued in respect thereof that are reflected in the reports of
the Borrower filed with the Securities and Exchange Commission, except such
excess liabilities as are not, individually or in the aggregate, reasonably
likely to have a material adverse effect on it. Except as set forth in the
reports of the Borrower filed with the Securities and Exchange Commission and to
the Knowledge of the Borrower, neither the Borrower nor any of its Subsidiaries
has executed any waiver of any statute of limitations on, or extended the period
for the assessment or collection of, any tax.
SECTION 6.11 Pension and Welfare Plans. To the Knowledge of the
Borrower, during the twelve-consecutive-month period prior to the date of the
execution and delivery of this Agreement and prior to the date of any Loan
hereunder, no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a Lien under section 302(f) of ERISA. To the Knowledge of the
Borrower, no condition exists or event or transaction has occurred with respect
to any Pension Plan which might result in the incurrence by the Borrower or any
member of the Controlled Group of any material liability, fine or penalty. To
the Knowledge of the Borrower, neither the Borrower nor any member of the
Controlled Group has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.12 Environmental Warranties. To the Knowledge of the
Borrower:
(a) All facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its Subsidiaries
have been, and continue to be, owned or leased by the Borrower and its
Subsidiaries in material compliance with all Environmental Laws.
(b) Except for items that would not reasonably be expected to
have a material adverse effect on the financial condition, operations,
assets, business, properties or
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prospects of the Borrower and its Subsidiaries taken as a whole, there
have been no past, and there are no pending or threatened:
(i) claims, complaints, notices or requests for
information received by the Borrower or any of its
Subsidiaries with respect to any alleged violation of any
Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower
or any of its Subsidiaries regarding potential liability under
any Environmental Law.
(c) There have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by the Borrower
or any of its Subsidiaries that, singly or in the aggregate, have, or
would reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries.
(d) The Borrower and its Subsidiaries have been issued and are
in material compliance with all permits, certificates, approvals,
licenses and other authorizations relating to environmental matters and
necessary or desirable for their businesses.
(e) No property now or previously owned or leased by the
Borrower or any of its Subsidiaries is listed or proposed for listing
(with respect to owned property only) on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list of
sites requiring investigation or clean-up.
(f) There are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower or any of its
Subsidiaries that, singly or in the aggregate, have, or would
reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries.
(g) Neither Borrower nor any Subsidiary of the Borrower has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations
which would reasonably be expected to lead to material claims against
the Borrower or such Subsidiary thereof for any remedial work, damage
to natural resources or personal injury, including claims under CERCLA.
(h) There are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the
Borrower or any Subsidiary of the Borrower that, singly or in the
aggregate, have, or would reasonably be expected to have, a material
adverse effect on the financial condition, operations, assets,
business, properties or prospects of the Borrower and its Subsidiaries.
(i) No conditions exist at, on or under any property now or
previously owned or leased by the Borrower which, with the passage of
time, or the giving of notice or
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both, would reasonably be expected to give rise to liability under any
Environmental Law.
SECTION 6.13 Regulations G, U and X. Neither the Borrower nor any of
its Subsidiaries is engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock, and no proceeds of any Loans will be
used for a purpose which violates, or would be inconsistent with, F.R.S. Board
Regulation G, U or X. Terms for which meanings are provided in F.R.S. Board
Regulation G, U or X or any regulations substituted therefor, as from time to
time in effect, are used in this Section with such meanings.
SECTION 6.14 Accuracy of Information. To the Knowledge of the Borrower,
all factual information heretofore or contemporaneously furnished by or on
behalf of the Borrower in writing to the Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all other
such factual information hereafter furnished by or on behalf of the Borrower to
the Lender will be, true and accurate in every material respect on the date as
of which such information is dated or certified and as of the date of execution
and delivery of this Agreement by the Lender, and such information is not, or
shall not be, as the case may be, incomplete by omitting to state any material
fact necessary to make such information not misleading.
ARTICLE VII
COVENANTS
SECTION 7.1 Affirmative Covenants. The Borrower agrees with the Lender
that, until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
SECTION 7.1.
SECTION 7.1.1 Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to the Lender copies of
the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year
of the Borrower, consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal quarter and
consolidated and consolidating statements of earnings and cash flow of
the Borrower and its Subsidiaries for such fiscal quarter and for the
period commencing at the end of the previous fiscal year and ending
with the end of such fiscal quarter, certified by the chief financial
Authorized Officer of the Borrower;
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the annual audit
report for such fiscal year for the Borrower and its Subsidiaries,
including therein consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal year and consolidated
statements of earnings and cash flow of the Borrower and its
Subsidiaries for such fiscal year, in each case certified in a manner
acceptable to the Lender by independent public accountants acceptable
to the Lender, and to the effect that, in making the examination
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necessary for the signing of such annual report by such accountants,
they have not become aware of any Default or Event of Default that has
occurred and is continuing, or, if they have become aware of such
Default or Event of Default, describing such Default or Event of
Default and the steps, if any, being taken to cure it;
(c) as soon as possible and in any event within three days
after the occurrence of each Default, a statement of the chief
financial Authorized Officer of the Borrower setting forth details of
such Default and the action which the Borrower has taken and proposes
to take with respect thereto;
(d) as soon as possible and in any event within three days
after (x) the occurrence of any adverse development with respect to any
litigation, action, proceeding or labor controversy described in
SECTION 6.7 or (y) the commencement of any labor controversy,
litigation, action or proceeding of the type described in SECTION 6.7,
notice thereof and copies of all documentation relating thereto;
(e) promptly after the sending or filing thereof, copies of
all reports which the Borrower sends to any of its securityholders, and
all reports and registration statements which the Borrower or any of
its Subsidiaries files with the Securities and Exchange Commission or
any national securities exchange;
(f) immediately upon becoming aware of the institution of any
steps by the Borrower or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under section
302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Borrower furnish a
bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan which could
result in the incurrence by the Borrower of any material liability,
fine or penalty, or any material increase in the contingent liability
of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating
thereto; and
(g) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as the Lender may from time to time reasonably request.
SECTION 7.1.2 Compliance with Laws, etc. The Borrower will, and will
cause each of its Significant Subsidiaries to, comply in all material respects
with all applicable laws, rules, regulations and orders, such compliance to
include (without limitation):
(a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
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SECTION 7.1.3 Maintenance of Properties. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its
properties in good repair, working order and condition, and make necessary and
proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times unless the Borrower
determines in good faith that the continued maintenance of any of its properties
is no longer economically desirable.
SECTION 7.1.4 Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will, upon request of the
Lender, furnish to the Lender at reasonable intervals a certificate of an
Authorized Officer of the Borrower setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section.
SECTION 7.1.5 Books and Records. The Borrower will, and will cause each
of its Subsidiaries to, keep books and records which accurately reflect all of
its business affairs and transactions and permit the Lender or any of its
representatives, at reasonable times and intervals, to visit all of its offices,
to discuss its financial matters with its officers and independent public
accountant (and the Borrower hereby authorizes such independent public
accountant to discuss the Borrower's financial matters with the Lender or its
representatives whether or not any representative of the Borrower is present)
and to examine (and, at the expense of the Borrower, photocopy extracts from)
any of its books or other corporate records. The Borrower shall pay any fees of
such independent public accountant incurred in connection with the Lender's
exercise of its rights pursuant to this Section.
SECTION 7.1.6 Environmental Covenant. The Borrower will, and will cause
each of its Subsidiaries to:
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Lender and provide copies upon
receipt of all written claims, complaints, notices or inquiries
relating to the condition of its facilities and properties or
compliance with Environmental Laws, and shall promptly cure and have
dismissed with prejudice to the satisfaction of the Lender any actions
and proceedings relating to compliance with Environmental Laws; and
(c) provide such information and certifications which the
Lender may reasonably request from time to time to evidence compliance
with this SECTION 7.1.6.
SECTION 7.2 Negative Covenants. The Borrower agrees with the Lender
that, until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
SECTION 7.2.
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SECTION 7.2.1 Business Activities. The Borrower will not, and will not
permit any of its Significant Subsidiaries to, engage in any business activity,
except those described in the first recital and such activities as may be
incidental or related thereto.
SECTION 7.2.2 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) Indebtedness existing as of the Effective Date which is
identified in Item 7.2.2(b) ("Ongoing Indebtedness") of the Disclosure
Schedule;
(c) Indebtedness in an aggregate principal amount not to
exceed $100,000 at any time outstanding which is incurred by the
Borrower or any of its Subsidiaries to a vendor of any assets permitted
to be acquired to finance its acquisition of such assets;
(d) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services, but excluding
Indebtedness incurred through the borrowing of money or Contingent
Liabilities);
(e) Indebtedness of the Borrower's Subsidiaries owing to the
Borrower and unsecured Indebtedness of the Borrower owing to its
Subsidiaries in an aggregate principal amount not to exceed $100,000;
and
(f) other Indebtedness of the Borrower and its Subsidiaries in
an aggregate amount not to exceed $200,000;
provided, however, that no Indebtedness otherwise permitted by clauses (c), (d)
or (e) shall be permitted if, after giving effect to the incurrence thereof, any
Default shall have occurred and be continuing.
SECTION 7.2.3 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens securing payment of the Obligations, granted
pursuant to any Loan Document;
(b) Liens granted prior to the Effective Date to secure
payment of Indebtedness of the type permitted and described in clause
(b) of SECTION 7.2.2;
(c) Liens granted to secure payment of Indebtedness of the
type permitted and described in clause (c) of SECTION 7.2.2 and
covering only those assets acquired with the proceeds of such
Indebtedness;
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(d) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(e) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(f) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds; and
(g) judgment Liens in existence less than 15 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies.
SECTION 7.2.4 Investments. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Effective Date and identified
in Item 7.2.4(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Indebtedness
pursuant to SECTION 7.2.2;
(d) in the ordinary course of business, Investments by the
Borrower in any of its Subsidiaries, or by any such Subsidiary in any
of its Subsidiaries, by way of contributions to capital or loans or
advances; and
(e) other Investments in an aggregate amount at any one time
not to exceed $100,000;
provided, however, that
(i) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such
requirements; and
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(ii) no Investment otherwise permitted by clause (d)
or (e) shall be permitted to be made if, immediately before or
after giving effect thereto, any Default shall have occurred
and be continuing.
SECTION 7.2.5 Restricted Payments, etc. On and at all times after the
Effective Date:
(a) the Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of the Borrower
or on any warrants, options or other rights with respect to any shares
of any class of capital stock (now or hereafter outstanding) of the
Borrower (other than dividends or distributions payable in its common
stock or warrants to purchase its common stock or splitups or
reclassifications of its stock into additional or other shares of its
common stock) or apply, or permit any of its Subsidiaries to apply, any
of its funds, property or assets to the purchase, redemption, sinking
fund or other retirement of, or agree or permit any of its Subsidiaries
to purchase or redeem, any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower, or warrants, options or other
rights with respect to any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower;
(b) the Borrower will not, and will not permit any of its
Subsidiaries to
(i) make any payment or prepayment of principal of,
or make any payment of interest on, any Subordinated Debt on
any day other than the stated, scheduled date for such payment
or prepayment set forth in the documents and instruments
memorializing such Subordinated Debt, or which would violate
the subordination provisions of such Subordinated Debt; or
(ii) redeem, purchase or defease, any Subordinated
Debt; and
(c) the Borrower will not, and will not permit any Subsidiary
to, make any deposit for any of the foregoing purposes.
SECTION 7.2.6 Consolidation, Merger, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate
with, or merge into or with, any other corporation, or purchase or otherwise
acquire all or substantially all of the assets of any Person (or of any division
thereof) except:
(a) pursuant to the Merger Agreement;
(b) any such Subsidiary may liquidate or dissolve voluntarily
into, and may merge with and into, the Borrower or any other
Significant Subsidiary, and the assets or stock of any Subsidiary may
be purchased or otherwise acquired by the Borrower or any other
Subsidiary; and
(c) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, the Borrower or any of its
Subsidiaries may purchase all or substantially all of the assets of any
Person, or acquire such Person by merger.
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SECTION 7.2.7 Asset Dispositions, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any substantial part of its assets (including accounts receivable and
capital stock of Subsidiaries) to any Person, unless
(a) such sale, transfer, lease, contribution or conveyance is
in the ordinary course of its business or is permitted by SECTION
7.2.6; or
(b) the net book value of such assets, together with the net
book value of all other assets sold, transferred, leased, contributed
or conveyed otherwise than in the ordinary course of business by the
Borrower or any of its Subsidiaries pursuant to this clause since the
Effective Date, does not exceed $10,000.
SECTION 7.2.8 Negative Pledges, etc. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any agreement (excluding this
Agreement, any other Loan Document and any agreement governing any Indebtedness
permitted either by clause (b) of SECTION 7.2.2 or by clause (c) of SECTION
7.2.2 as to the assets financed with the proceeds of such Indebtedness)
prohibiting:
(a) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of the Borrower or any other Obligor to amend
or otherwise modify this Agreement or any other Loan Document; or
(b) the ability or any Subsidiary to make any payments,
directly or indirectly, to the Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrower.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Listing of Events of Default. Each of the following events
or occurrences described in this SECTION 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1 Non-Payment of Obligations. The Borrower shall default in
the payment or prepayment when due of any principal of or interest on any Loan,
or the Borrower shall default (and such default shall continue unremedied for a
period of five days) in the payment when due of any other Obligation.
SECTION 8.1.2 Breach of Warranty. Any representation or warranty of the
Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to the Lender for the
purposes of or in connection with this
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Agreement or any such other Loan Document (including any certificates delivered
pursuant to ARTICLE V) is or shall be incorrect when made in any material
respect.
SECTION 8.1.3 Non-Performance of Other Covenants and Obligations. The
Borrower or any obligor shall default in the due performance and observance of
any other agreement contained herein or in any other Loan Document executed by
it, and such default shall continue unremedied for a period of 45 days after
notice thereof shall have been given to the Borrower by the Lender.
SECTION 8.1.4 Default on Other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in SECTION 8.1.1) of the Borrower or any of its Subsidiaries, or a
default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default is to
accelerate the maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit the holder or
holders of such Indebtedness, or any trustee or agent for such holders, to cause
such Indebtedness to become due and payable prior to its expressed maturity.
SECTION 8.1.5 Judgments. Any judgment or order for the payment of money
in excess of $100,000 shall be rendered against the Borrower or any of its
Significant Subsidiaries and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
SECTION 8.1.6 Pension Plans. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by the Borrower, any member
of its Controlled Group or any other Person to terminate a Pension Plan
if, as a result of such termination, the Borrower or any such member
could be required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension
Plan, in excess of $50,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 8.1.7 Control of the Borrower. Any Person, or two or more
Persons acting in concert, shall acquire beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 30% or more of the outstanding shares of
voting stock of the Borrower (other than pursuant to the Merger).
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SECTION 8.1.8 Bankruptcy, Insolvency, etc. The Borrower or any of its
Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Borrower
or any of its Significant Subsidiaries or any property of any thereof,
or make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of
its Subsidiaries or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 60 days, provided that the Borrower and
each Subsidiary hereby expressly authorizes the Lender to appear in any
court conducting any relevant proceeding during such 60-day period to
preserve, protect and defend its rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Borrower or any
of its Subsidiaries, and, if any such case or proceeding is not
commenced by the Borrower or such Subsidiary, such case or proceeding
shall be consented to or acquiesced in by the Borrower or such
Subsidiary or shall result in the entry of an order for relief or shall
remain for 60 days undismissed, provided that the Borrower and each
Subsidiary hereby expressly authorizes the Lender to appear in any
court conducting any such case or proceeding during such 60-day period
to preserve, protect and defend its rights under the Loan Documents; or
(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.
SECTION 8.1.9 Impairment of Security, etc. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; the Borrower,
any other Obligor or any other party shall, directly or indirectly, contest in
any manner such effectiveness, validity, binding nature or enforceability; or
any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first Lien, subject only to those exceptions expressly permitted by
such Loan Document.
SECTION 8.2 Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of SECTION 8.1.8 shall occur, the Commitment (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without notice or
demand.
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SECTION 8.3 Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of SECTION
8.1.8 shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Lender shall by notice to the Borrower declare all or any
portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable and/or the Commitment (if not theretofore terminated) to
be terminated, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitment shall terminate.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Lender. No failure or delay on the part of the Lender or
the holder of the Note in exercising any power or right under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Lender or the
holder of the Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 9.2 Notices. Any notice, request, instruction, correspondence
or other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
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If to Borrower, addressed to:
Corzon, Inc.
Attention: Chief Executive Officer and General Counsel
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
LecStar Communications Corporation
Attention: W. ▇▇▇▇ ▇▇▇▇▇
4501 Circle ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇ - ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: 404-659-4900
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
If to Lender, addressed to:
▇▇▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
P.O. Box 972
Road Town, Tortola
British Virgin Islands
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Notice given by personal delivery, courier service or mail shall be
effective upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. Any party may change any address to which
Notice is to be given to it by giving Notice as provided above of such change of
address.
SECTION 9.3 Payment of Costs and Expenses. The Borrower agrees to pay
on demand all expenses of the Lender (including the fees and out-of-pocket
expenses of counsel to the Lender and of local counsel, if any, who may be
retained by counsel to the Lender) in connection with:
(a) the negotiation, preparation, execution and delivery of
this Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated;
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(b) the filing, recording, refiling or rerecording of the
Security Agreement and/or any Uniform Commercial Code financing
statements relating thereto and all amendments, supplements and
modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or of the Security Agreement;
and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Lender harmless from all
liability for, any stamp or other taxes which may be payable in connection with
the execution or delivery of this Agreement, the Loans hereunder, or the
issuance of the Note or any other Loan Documents. The Borrower also agrees to
reimburse the Lender upon demand for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses) incurred by the Lender in
connection with (x) the negotiation of any restructuring or "work-out", whether
or not consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 9.4 Indemnification. In consideration of the execution and
delivery of this Agreement by the Lender and the extension of the Commitment,
the Borrower hereby indemnifies, exonerates and holds the Lender and each of its
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties (including
any action brought by or on behalf of the Borrower as the result of any
determination by the Lender pursuant to ARTICLE V not to fund any
Loan);
(c) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by the Borrower or any
of its Significant Subsidiaries of any Hazardous Material; or
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Significant
Subsidiary thereof of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law), regardless of whether caused by,
or within the control of, the Borrower or such Significant Subsidiary,
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33
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 9.5 Survival. The obligations of the Borrower under SECTION 9.3
and SECTION 9.4 shall in each case survive any termination of this Agreement,
the payment in full of all Obligations and the termination of all Commitments.
The representations and warranties made by the Borrower and each Obligor in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 9.6 Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 9.7 Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 9.8 Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower and the Lender (or
notice thereof satisfactory to the Lender) shall have been received by the
Lender and notice thereof shall have been given by the Lender to the Borrower.
SECTION 9.9 Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTE
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the
Note and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 9.10 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of the Lender.
SECTION 9.11 Participations. The Lender may at any time sell to one or
more Persons (each of such Persons being herein called a "Participant")
participating interests in any of the Loans, its Commitment, or other interests
of the Lender hereunder; provided, however, that
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(a) no participation contemplated in this SECTION 9.11 shall
relieve the Lender from its Commitment or its other obligations
hereunder or under any other Loan Document,
(b) the Lender shall remain solely responsible for the
performance of its Commitment and such other obligations,
(c) the Borrower and each other Obligor shall continue to deal
solely and directly with the Lender in connection with the Lender's
rights and obligations under this Agreement and each of the other Loan
Documents,
(d) no Participant, unless such Participant is an Affiliate of
such Lender, shall be entitled to require the Lender to take or refrain
from taking any action hereunder or under any other Loan Document,
except that the Lender may agree with any Participant that the Lender
will not, without such Participant's consent, take any of the following
actions: (i) increase the Commitment Amount, reduce any fees described
in ARTICLE III or extend the Commitment Termination Date, or (ii)
extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment of principal of or interest on any Loan (or
reduce the principal amount of or rate of interest on any Loan), and
(e) the Borrower shall not be required to pay any amount under
SECTION 4.1 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
SECTION 9.3 and SECTION 9.4, shall be considered a Lender.
SECTION 9.12 Confidentiality. The Lender shall hold all non-public
information (which has been identified as such by the Borrower) obtained
pursuant to the requirements of this Agreement in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to any of its examiners, Affiliates, outside auditors, counsel and
other professional advisors in connection with this Agreement or as reasonably
required by any bona fide transferee, participant or assignee or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process; provided, however, that
(a) unless specifically prohibited by applicable law or court
order, the Lender shall notify the Borrower of any request by any
governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
the Lender by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this SECTION
9.12, the Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non-public
information to agree in writing
(i) to be bound by this SECTION 9.12; and
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35
(ii) to require such Person to require any other
Person to whom such Person discloses such non-public
information to be similarly bound by this SECTION 9.12; and
(c) except as may be required by an order of a court of
competent jurisdiction and to the extent set forth therein, the Lender
shall not be obligated or required to return any materials furnished by
the Borrower or any Significant Subsidiary.
SECTION 9.13 Other Transactions. Nothing contained herein shall
preclude the Lender from engaging in any transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Affiliates in which the Borrower or such Affiliate is not restricted
hereby from engaging with any other Person.
SECTION 9.14 Waiver of Jury Trial. THE LENDER AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE LENDER OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CORZON, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ LLC
By: /s/ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇
Name: Navigator Management Ltd.
Title: Director
37
DISCLOSURE SCHEDULE
ITEM 6.7 Litigation.
Description of Proceeding Action or Claim Sought
ITEM 6.8 Existing Subsidiaries.
State of Ownership Business
Name Incorporation % Description
---------------------------------- ------------- --------- -----------
LecStar Communications Corporation Delaware 100
B4B Communications, Ltd UK 100
The Simple Card Limited UK 100
Harvest Restaurants, Inc. Texas
Cluckers Restaurants, Inc. Texas
Harvest Rotisserie on Tezel, Inc. Texas
Red Lion Food Court, Inc. Texas
Hartan, Inc. Texas
That Chicken Place, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇/Vinings, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ Oaks, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ Spalding, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ Mill, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇-Lawrenceville, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ ▇▇▇▇▇▇, Inc. Georgia
Northwest Store, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ Lilbum, Inc. ▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ Catering, Inc. Georgia
Central Administration, Inc. Georgia
LecStar Telecom, Inc. Georgia
LecStar Datanet, Inc. Georgia
ITEM 7.2.2(b) Ongoing Indebtedness.
Creditor Outstanding Principal Amount
-------- ----------------------------
Info Directions $ 145,600
GE Capital $1,673,900
Cisco Capital $ 90,700
▇▇▇▇▇▇▇ Drive $ 250,000
ITEM 7.2.4(a) Ongoing Investments.
Investment Type Amount
--------------- ------
ILD Common Stock (3,200 shares) $800,000
Cash Equivalent Euro Fluctuating cash balance
Deposits with Vendors and PCS $125,000
CDs serving LOCs $100,000
38
EXHIBIT A
BORROWING REQUEST
▇▇▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
P.O. Box 972
Road Town, Tortola
British Virgin Islands
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: [Name]
[Title]
CORZON, INC.
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to SECTION 2.2 of
the Credit Agreement, dated as of _____________, 200__ (together with all
amendments, if any, from time to time made thereto, the "Credit Agreement"),
between Corzon, Inc., a Texas corporation (the "Borrower"), and you. Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.
The Borrower hereby requests that a Loan be made in the aggregate
principal amount of $_____________ on ________________, 200__.
The Borrower hereby acknowledges that, pursuant to SECTION 5.2.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in SECTION 5.2.1 are true and
correct in all material respects.
The Borrower agrees that if prior to the time of the Borrowing
requested hereby any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify you. Except
to the extent, if any, that prior to the time of the Borrowing requested hereby
you shall receive written notice to the contrary from the Borrower, each matter
certified to herein shall be deemed once again to be certified as true and
correct at the date of such Borrowing as if then made.
Please wire transfer the proceeds of the Loan to the account of the
Borrower at the financial institutions indicated respectively:
Person to be Paid
Amount to be -------------------------- Name, Address, etc.
Transferred Name Account No. of Transferee Lender
------------ ------------ ----------- ---------------------------------------------
$__________ The Borrower _________ ___________________________________________
___________________________________________
Attention: ________________________________
39
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this _____ day of ________________, 200__.
CORZON, INC.
By:
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Name:
-------------------------------------
Title:
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40
EXHIBIT B
NOTE
$3,500,000 ____________________, 200__
FOR VALUE RECEIVED, the undersigned, CORZON, INC., a Texas corporation
(the "Borrower"), promises to pay to the order of ▇▇▇▇▇▇▇ LLC (the "Lender") on
__________________, 200__ the principal sum of THREE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($3,500,000) or, if less, the aggregate unpaid principal amount
of all Loans shown on the schedule attached hereto (and any continuation
thereof) made by the Lender pursuant to that certain Credit Agreement, dated as
of _________________, 200__ (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), between the Borrower and the Lender.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Lender pursuant to the Credit Agreement.
This Note is the Note referred to in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Note and on
which such Indebtedness may be declared to be immediately due and payable.
Unless otherwise defined, terms used herein have the meanings provided in the
Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN TEXAS AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS.
CORZON, INC.
By:
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Name:
-------------------------------------
Title:
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41
LOANS AND PRINCIPAL PAYMENTS
Amount of Unpaid
Principal Principal
Amount of Loan Made Repaid Balance
------------------------------- --------------- ---------------
Date Base Rate Base Rate Base Rate Total Notation Made By
------------ --------------- --------------- --------------- ---------------- ------------------------
12/22/00 $250,000
01/04/01 $250,000
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01/16/01 $200,000
01/17/01 $100,000 $800,000
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