Document:

ex10-2

 

Exhibit 10.2

EXECUTION

XO COMMUNICATIONS, INC.

FOREBEARANCE AGREEMENT TO

CREDIT AND GUARANTY AGREEMENT

     This FOREBEARANCE AGREEMENT TO CREDIT AND GUARANTY AGREEMENT (this
“Forebearance Agreement"), dated as of December 14, 2001, to the CREDIT AND
GUARANTY AGREEMENT, dated as of February 3, 2000 (such agreement as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement"),
is entered into by and among XO COMMUNICATIONS, INC. (formerly, NEXTLINK
Communications, Inc.), a Delaware corporation (“Company"), THE CREDIT SUPPORT
PARTIES listed on the signature pages hereto (each individually referred to
herein as a “Credit Support Party” and collectively as “Credit Support
Parties"), THE FINANCIAL INSTITUTIONS listed on the signature pages hereto
(each individually referred to herein as a “Lender” and collectively as the
“Lenders"), TORONTO DOMINION (TEXAS), INC., as Administrative Agent (in such
capacity, “Administrative Agent"), BARCLAYS BANK PLC and JPMORGAN CHASE BANK
(formerly known as The Chase Manhattan Bank), as Co-Documentation Agents (in
such capacity, each a “Co-Documentation Agent"), GOLDMAN SACHS CREDIT PARTNERS
L.P. (“GSCP”) and TD SECURITIES (USA) INC., as Co- Lead Arrangers (in such
capacity, each a “Co-Lead Arranger"), and GSCP, as Syndication Agent (in such
capacity, “Syndication Agent").

RECITALS:

     WHEREAS, capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement;

     WHEREAS, Company, the Lenders, Administrative Agent, Co-Lead Arrangers,
Syndication Agent and Co-Documentation Agents are parties to the Credit
Agreement, pursuant to which the Lenders have extended certain credit
facilities to Company;

     WHEREAS, Company (i) is in default under the Credit Agreement as a result
of its failure to make certain interest payments on certain of its outstanding
Indebtedness, which default would become an Event of Default upon the
expiration of any applicable grace period, and (ii) has informed the Lenders
that it may be in default under the Credit Agreement as a result of its failure
to have Revenues for the Fiscal Quarter ended December 31, 2001 of at least
$375,000,000 (collectively, the “Identified Events of Default");

 

 

     WHEREAS, Company has publicly announced proposed new equity investments in
Company totaling $800,000,000 (the “New Investment") and as a condition to
such new equity
investment the investors (the “Investors") have required, and Company hereby
requests, that the Administrative Agent and the Lenders agree to forebear from
exercising certain rights and remedies under the Credit Agreement subject to
certain conditions;

     WHEREAS, the Administrative Agent and the Lenders have agreed to forebear
from exercising certain rights and remedies with respect to certain defaults
under the Credit Documents, which such forebearance shall become effective upon
satisfaction of the conditions precedent set forth herein; and

     NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, the Lenders and the
Administrative Agent agree that, on the Forebearance Effective Date, the
parties shall agree as follows:

SECTION 1. FOREBEARANCE

     Subject to the terms of this Forebearance Agreement, at the request of
Company, Lenders agree to forebear from exercising their rights and remedies
under the Credit Documents in respect of the Identified Events of Default that
have occurred prior to and will continue after the Forebearance Effective Date
(as defined below), such agreement to forebear to terminate, on the earlier to
occur of (i) April 15, 2002, (ii) the occurrence of a Default or an Event of
Default after the Forebearance Effective Date (other than Identified Events of
Default), (iii) any holder or holders of any Indebtedness of Company
(including, without limitation, any Indebtedness under the Public Indentures)
or any trustee or agent on its or their behalf take any action to (a) exercise
or attempt to exercise any remedial or other rights with respect to such
Indebtedness or (b) cause or attempt to cause any Indebtedness to become due or
to require or attempt to require the prepayment, repurchase, redemption or
defeasance thereof, (iv) any material change in the terms of the New Investment
that the Lenders, in their reasonable discretion, deem adverse to the Lenders,
(v) either Company or any of the Investors publicly announcing that the New
Investment will not be made, (vi) any Material Adverse Effect since November
29, 2001, the date on which Company filed a Form 8-K with the Securities and
Exchange Commission describing the New Investment, (vii) any litigation brought
against the Lenders or the Administrative Agent by Company, any creditor
thereof or any affiliate thereof to the extent such litigation relates to this
Forebearance Agreement, any Credit Documents or any of the transactions
contemplated hereby or thereby, (viii) any additional Indebtedness of the types
set forth in Sections 6.1(c), (h), (i), (j), (k),(m), (n) or (o) of the Credit
Agreement is incurred by Company, any Restricted Subsidiary or any
Unrestricted Subsidiary or any additional Investment is made by Company, any
Restricted Subsidiary or any Unrestricted Subsidiary pursuant to (a) Section
6.5(b)(iii) or (iv) or (b) Section 6.5(h) or (i) of the Credit Agreement, (ix)
notwithstanding anything set forth in the Credit Agreement to the contrary, the
failure by Company to prepay the Loans and/or reduce the Commitments with 100%
of the Net Asset Sale Proceeds from any Asset Sale within three (3) Business
Days of receipt thereof by Company or any of its Subsidiaries, pursuant to
Section 2.13(b) of the Credit Agreement, (x) any Restricted Junior Payment is
made by

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Company, any Restricted Subsidiary or any Unrestricted Subsidiary,
other than any Restricted Junior Payments to Company or a Guarantor or
regularly scheduled payments of principal and interest on Capital Leases and
other secured Indebtedness of the Company and its Subsidiaries or (xi)
Company’s failure to have Revenues of at least $335,000,000 for the Fiscal
Quarter ended December 31, 2001 (such period of forebearance, the “Forebearance
Period”). The foregoing shall not constitute a waiver of any other rights or
remedies under the Credit Documents in respect of such breaches, violations and
defaults or any other breaches, violations and defaults and on and after the
end of the Forebearance Period, Agents and Lenders shall be entitled to
exercise all rights and remedies with respect to the Identified Events of
Default as if such forbearance had never been granted.

SECTION 2. CONDITIONS TO EFFECTIVENESS

     The effectiveness of the provisions set forth in Section 1 above are
subject to the prior or concurrent satisfaction of the following conditions
(the date of satisfaction of such conditions being referred to herein as the
“Forebearance Effective Date"):

     A.     Executed Agreement. On or before the Forebearance Effective Date
Company shall deliver or cause to be delivered to Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) executed originals of this
Forebearance Agreement, and (to the extent not previously executed and
delivered to Lenders) the other Credit Documents to which it is a party.

     B.     Representations and Warranties; Performance of Agreements. On the
Forebearance Effective Date, (i) the representations and warranties contained
in Section 4 of the Credit Agreement, are and will be true, correct and
complete in all material respects on and as of the Forebearance Effective Date
to the same extent as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all material respects on and
as of such earlier date, other than with respect to (x) those Material Adverse
Effects pursuant to Section 4.9 which have been publicly disclosed in Company’s
filings with the Securities and Exchange Commission prior to the date hereof,
(y) Section 4.23 with respect to the solvency of the Credit Parties and (z)
Section 4.16 with respect to the Identified Events of Default, and (ii) Company
shall have performed in all material respects all agreements and satisfied all
conditions which this Forebearance Agreement provides shall be performed or
satisfied by Company on or before the Forebearance Effective Date, except as
otherwise disclosed to and agreed to in writing by Administrative Agent.

     C.     Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Forebearance Agreement and the Credit Agreement and all documents incidental
thereto not previously found acceptable by Administrative Agent, acting on
behalf of Lenders, and its counsel shall be reasonably satisfactory in form and
substance to Administrative Agent and such counsel, and Administrative Agent
and such

3

 

counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.

     D.     Fees. The Agents shall have received reimbursement or other
payment of all out-of-pocket expenses required to be reimbursed or paid by
Company hereunder or under
any other Credit Document, including payment with respect to reasonable legal
and other professional fees. In addition, the Administrative Agent shall have
received $1,000,000 as a retainer to cover the ongoing fees of professionals
pursuant to a retainer agreement reasonably acceptable to the Administrative
Agent.

     E.     Necessary Consents. Each Credit Party shall have obtained all
material consents necessary or advisable in connection with the execution of
this Forebearance Agreement.

     F.     Lenders’ Consent. The Administrative Agent and the Requisite
Lenders shall have executed this Forebearance Agreement and shall have
delivered an original or facsimile copy hereof to Administrative Agent.

     G.     New Investment. Company and the Investors shall have executed and
delivered definitive documentation with respect to the New Investment which
documentation shall be reasonably satisfactory to the Administrative Agent and
the Requisite Lenders.

     H.     Other Requirements. Administrative Agent and Lenders shall have
received such other documents and information regarding the Credit Parties as
reasonably requested by the Administrative Agent.

Upon the occurrence of the Forebearance Effective Date, at the request of
Company the Administrative Agent shall provide a certificate as to the
occurrence of the Forebearance Effective Date.

SECTION 3. ADDITIONAL COVENANTS

     A.     Payment of Interest. Notwithstanding anything in the definition of
Interest Payment Date or in Section 2.6 of the Credit Agreement to the
contrary, Company hereby agrees, with respect to any Base Rate Loan, to pay
interest in arrears on the first Business Day of each calendar month for the
preceding calendar month, commencing on February 1, 2002 until the end of the
Forebearance Period.

     B.     Monthly Reports. Without limitation of the obligations of Company
under the Credit Agreement, the Company agrees to deliver to the Administrative
Agent, with a copy to each Lender, within 30 days after the end of each
calendar month (commencing with the calendar month ending November 30, 2001),
the unaudited summary consolidated balance
sheets of Company and its Subsidiaries as at the end of such calendar month and
the related summary consolidated statements of income and summary consolidated
statements of cash flows for such calendar month

4

 

and for the elapsed portion of
the fiscal year ended with the last day of such calendar month, in each case
setting forth comparative figures for the corresponding calendar month in the
prior fiscal year; all prepared in accordance with GAAP (subject to normal
adjustments necessary for a fair presentation of results for an interim period)
and in reasonable detail, together with a certification by a responsible
financial officer.

SECTION 4. CERTAIN REPRESENTATIONS AND WARRANTIES

     In order to induce Lenders to enter into this Forebearance Agreement and
to forebear from enforcing their rights and remedies under the Credit
Documents, Company represents and warrants to each Lender that the following
statements are true, correct and complete in all material respects:

     A.     Corporate Power and Authority. Each Credit Party has all requisite
corporate power and authority to enter into this Forebearance Agreement and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement, and the other Credit Documents.

     B.     Authorization of Agreements. The execution and delivery of this
Forebearance Agreement and the performance of the Credit Agreement, and the
other Credit Documents have been duly authorized by all necessary corporate
action on the part of each Credit Party.

     C.     No Conflict. The execution and delivery by each Credit Party of
this Forebearance Agreement and the performance by each Credit Party of the
Credit Agreement, and the other Credit Documents and the other transactions
consummated on the Forebearance Effective Date do not and will not (i) violate
(A) any provision of any law, statute, rule or regulation, or of the
certificate or articles of incorporation or partnership agreement, other
constitutive documents or by-laws of Company or any Subsidiary, (B) any
applicable order of any court or any rule, regulation or order of any
governmental authority or (C) any provision of any indenture, certificate of
designation for preferred stock, agreement or other instrument to which Company
or any Subsidiary is a party or by which any of them or any of their property
is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, certificate of designation for preferred stock, agreement or
other instrument, where any such conflict, violation, breach or default
referred to in clause (i) or (ii) of this Section 4.C, individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect, (iii)
result in or require the creation or imposition of any
Lien upon any of the properties or assets of each Credit Party (other than any
Liens created under any of the Credit Documents in favor of Administrative
Agent on behalf of Lenders), or (iv) require any approval of stockholders or
partners or any approval or consent of any Person under any contractual
obligation of each Credit Party, except for such approvals or consents which
will be obtained on or before the Forebearance Effective Date.

     D.     Governmental Consents. No action, consent or approval of,
registration or filing with or any other action by any governmental authority
is or will be required in connection with the

5

 

execution and delivery by each
Credit Party of this Forebearance Agreement and the performance by Company of
the Credit Agreement, and the other Credit Documents, except for such actions,
consents and approvals the failure to obtain or make which could not reasonably
be expected to result in a Material Adverse Effect or which have been obtained
and are in full force and effect.

     E.     Binding Obligation. This Forebearance Agreement and the Credit
Agreement have been duly executed and delivered by each Credit Party thereto
and each constitutes a legal, valid and binding obligation of the Credit
Parties to the extent a party thereto enforceable against the Credit Party in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors’ rights generally and except as enforceability may be
limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

     F.     Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Forebearance Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date, other than with respect to (x) those Material Adverse Effects pursuant to
Section 4.9 which have been publicly disclosed in Company’s filings with the
Securities and Exchange Commission prior to the date hereof, (y) Section 4.23
with respect to the solvency of the Credit Parties and (z) Section 4.16 with
respect to the Identified Events of Default.

     G.     Absence of Default. After giving effect to this Forebearance
Agreement, no event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Forebearance Agreement
that would constitute an Event of Default or a Default (other than Identified
Events of Default).

     H.     Offsets and Defenses; Affirmation. No Credit Party has offsets or
defenses to its obligations under the Credit Documents and no claims or
counterclaims against any of the Agents or the Lenders and each such Credit
Party hereby ratifies and affirms all of its Obligations and all liens and
security interests contemplated by the Collateral Documents.

     I.     Release by the Credit Parties. (a) As an inducement to the Lenders
to enter into this Forebearance Agreement, each Credit Party hereby releases
and discharges the Lenders and the Agents, and their respective successors and
assigns, and all officers, directors, employees, agents, representatives and
attorneys of each of them from all actions, counterclaims, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, controversies, variances, trespasses, damages, judgements,
executions, claims, and demands whatsoever, in law, admiralty or equity,
against the Lenders, the Agents and/or their successors and assigns which such
Credit Party ever had, now has or hereafter can, shall or may, have for, upon,
or by reason of any matter, cause or thing whatsoever from the beginning of the
world to the day of the date of this Forebearance Agreement that arises out of
(whether by contract or tort or otherwise) this Forebearance

6

 

Agreement, any
Credit Documents or any of the transactions contemplated hereby or thereby (the
“Released Claims”).

		
	 	     (b) In order to induce the Lenders to accept the release set
forth herein, each Credit Party represents that:

		
	 	     (i) such release constitutes a legal, valid and
binding obligation of such Credit Party, enforceable
against it in accordance with its terms. The
execution and delivery of, and the performance and
compliance by such Credit Party with such release will
not conflict with, or constitute on the part of such
Credit Party a violation or breach of, or a default
under, and will not require any authorization,
consent, approval or other action by, or any notice
to, or filing with any court or administrative body or
any other Person pursuant to, any mortgage, deed of
trust, loan agreement, trust agreement or other
agreement or instrument to which such Credit Party or
any of its property is subject or any laws and other
governmental requirements; and

		
	 	     (ii) such Credit Party (A) has not sold,
transferred, conveyed, abandoned or otherwise disposed
of any of the Released Claims, whether or not know,
suspected or claimed that such Credit Party has, had
or may have, against the Lenders, any Agent and/or any
of their successors, predecessor (including, without
limitation, all predecessors by virtue of merger) and
assigns, as the case may be and (B) has sought the
advice of counsel with respect to the execution and
delivery of this Forebearance Agreement and such
Credit Party understands the legal implications with
respect to
the release set forth herein and the other documents
executed by such Credit Party in connection herewith.

		
	 	     (c) Each Credit Party hereby acknowledges that it may
hereafter discover facts in addition to or different from those
which it now knows or believes to be true with respect to the
subject matter of the release set forth herein, but that it is
such Credit Party’s intention to, and it does, hereby fully,
finally and forever settle the Released Claims; in furtherance of
such intention, each Credit Party acknowledges that the release
set forth herein shall be and remain in effect as a full and
complete release, notwithstanding the subsequent discovery or
existence of any such additional or different facts.

7

 

SECTION 5. ACKNOWLEDGMENT AND CONSENT

          Each of the Guarantors set forth on the signature pages annexed hereto are
collectively referred to herein as the “Credit Support
Parties”.

          Each of the Credit Support Parties hereby acknowledges that it has
reviewed the terms and provisions of the Credit Agreement and this Forebearance
Agreement and consents to the amendment of the Credit Agreement affected
pursuant to the terms of this Forebearance Agreement. Each Credit Support
Party hereby confirms that each Credit Document to which it is a party or
otherwise bound and all Collateral encumbered thereby will continue to
guarantee or secure, as the case may be, in accordance with the Credit
Documents the payment and performance of all “Obligations” under each of the
Credit Documents to which it is a party (in each case as such terms are defined
in the applicable Credit Document).

     Each of the Credit Support Parties acknowledges and agrees that each of
the Credit Documents to which it is a party or otherwise bound shall continue
in full force and effect and that all of its obligations thereunder shall be
valid and enforceable and shall not be impaired or limited by the execution or
effectiveness of this Forebearance Agreement. Each Credit Support Party
represents and warrants that all representations and warranties contained in
the Credit Agreement, and the Credit Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Forebearance Effective Date to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

     Each of the Credit Support Parties acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Forebearance
Agreement, it is not required by the terms of the Credit Agreement or any other
Credit Document to consent to the terms effected pursuant to this Forebearance
Agreement and (ii) nothing in the Credit Agreement, this Forebearance Agreement
or any other Credit Document shall be deemed to require the consent of Credit
Support Parties to any future amendments to the Credit Agreement.

SECTION 6. MISCELLANEOUS

     A.     Reference to, and Effect on, the Credit Agreement and the Other
Credit Documents.

		
	 	(i) The Credit Agreement and the other Credit Documents shall remain
in full force and effect and are hereby ratified and confirmed.
	 
	 	(ii) The execution, delivery and performance of this Forebearance
Agreement shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a 

8

 

		
	 	waiver of any right, power or
remedy of any Agent or Lender under, the Credit Agreement or any of the
other Credit Documents.

     B.     Headings. Section and Subsection headings in this Forebearance
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Forebearance Agreement for any other purpose or be
given any substantive effect.

     C.     APPLICABLE LAW. THIS FOREBEARANCE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.

     D.     Counterparts. This Forebearance Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the parties hereto have caused this Forebearance
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

	 	 	 
	COMPANY:	 	
XO COMMUNICATIONS, INC.
	 
	 	 	
By: /s/ Wayne M. Rehberger

Name:  Wayne M. Rehberger

Title:    Chief Financial Officer

S-1

 

CREDIT SUPPORT

PARTIES:

	 	XO ALABAMA, INC.

XO ARIZONA, INC.

XO CALIFORNIA, INC.

XO CAPITAL, INC.

XO COLORADO, LLC

XO CONNECTICUT, INC.

XO DELAWARE, INC.

XO D.C., INC.

XO FLORIDA, INC.

XO GEORGIA, INC.

XO HAWAII, INC.

XO IDAHO, INC.

XO ILLINOIS, INC.

XO INDIANA, INC.

XO INTERCITY HOLDINGS NO. 1, LLC

XO INTERCITY HOLDINGS NO. 2, LLC

XO KANSAS, INC.

XO KENTUCKY, INC.

XO LMDS HOLDINGS NO. 1, INC.

XO LOUISIANA, INC.

XO MAINE, INC.

XO MANAGEMENT SERVICES, INC.

XO MANAGEMENT SERVICES NEVADA, INC.

XO MARYLAND, LLC

XO MASSACHUSETTS, INC.

XO MICHIGAN, INC.

XO MINNESOTA, LLC

XO MISSISSIPPI, INC.

XO MISSOURI, INC.

XO NEW HAMPSHIRE, INC.

XO NEW JERSEY, INC.

XO NEW MEXICO, INC.

XO NEW YORK, INC.

XO NORTH CAROLINA, INC.

	 	 	 
		By:	
/s/Wayne M. Rehberger

Name:  Wayne M. Rehberger

Title:    Chief Financial Officer

S-2

 

CREDIT SUPPORT

PARTIES (continued):

	 	XO OHIO, INC.

XO OREGON, INC.

XO PENNSYLVANIA, INC.

XO RHODE ISLAND, INC.

XO SOUTH CAROLINA, INC.

XO TENNESSEE, INC.

XO TEXAS, INC.

XO UTAH, INC.

XO VIRGINIA, LLC

XO WASHINGTON, INC.

XO WEST VIRGINIA, INC.

XO WISCONSIN, INC.

	 	 
		By:    /s/ Wayne M. Rehberger

Name:  Wayne M. Rehberger

Title:    Chief Financial Officer

S-3

 

	 	 	 
	AGENTSS AND LENDERS	 	
TORONTO DOMINION (TEXAS), INC,

as Administrative Agent and Lender
	 
	 	 	
By:     /s/ Lynn Chasin

Name:  Lynn Chasin

Title:    Vice President

S-4

 

	 	 
		GODMAN SACHS CREDIT PARTNERS L.P.

as Syndication Agent and Lender
	 
		By: /s/ Stephen King

Authorized Signatory

S-5

 

	 	 
		BARCLAYS BANK PLC,

as Co-Documentation Agent and Lender
	 
		By: /s/ Arthur J. Olsen

Name:  Arthur J. Olsen

Title:    Vice President

S-6

 

	 	 
		JPMORGAN CHASE BANK

(formerly known as The Chase Manhattan Bank)

(successor to Morgan Guaranty Trust Company of New York),

as Co-Documentation Agent and a Lender
	 
		By:    /s/ John Kowalezuk

Name:  John Kowalezuk

Title:    Vice President

S-7

 

	 	 
		BANK OF AMERICA, N.A.

as Managing Agent and a Lender

By: /s/ Elizabeth Borrow

Name:
		Title:

S-8

 

	 	 
		CITICORP USA, INC.

as Managing Agent and a Lender

By:                  /s/ John P. Judge

Name:  John P. Judge

Title:    Vice President

S-9

 

	 	 
		DEUTSCHE BANK, AG NEW
YORK

AND/OR CAYMAN ISLAND BRANCES

as Managing Agent and a Lender
	 
		By:                  /s/ Anca Trifan

Name:  Anca Trifan

Title:    Director

S-11

 

	 	 
		DEUTSCHE BANK, AG NEW YORK

AND/OR CAYMAN ISLAND BRANCES

as Managing Agent and a Lender
	 
		By:                  /s/ Kevin Cheng

Name:  Kevin Cheng

Title:    Associate

S-11

 

	 	 
		FLEET NATIONAL BANK,

as Managing Agent and a Lender
	 
		By:                  /s/ Kay H. Campbell

Name:  Kay H. Campbell

Title:    Vice President

S-12

 

	 	 
		BANK OF NOVA SCOTIA,

as Managing Agent and a Lender
	 
		By:                  /s/ Stephen C. Levi

Name:  Stephen C. Levi

Title:    Authorized Signatory

S-15

 

	 	 
		CREDIT LYONNAIS – NEW YORK BRANCH,

as Co-Agent and a Lender
	 
		By:                /s/ Patrick McCarthy

Name:  Patrick McCarthy

Title:    Authorized Signatory

S-16

 

	 	 
		BANK OF NEW YORK,

as a Lender
	 
		By:            /s/ Michael E. Masters

Name:  Michael E. Masters

Title:    AVP

S-17

 

	 	 	 
	XO COMMUNICATIONS

FOREBEARANCE AGREEMENT TO

CREDIT AND GUARANTY AGREEMENT	 	
AMMC CDO I, LIMITED

by: American Money Management Corp.,

As Collateral Manager
	 
	 	 	
By:     /s/ David P. Meyer

Name:  David P. Meyer

Title:    Vice President

S-20

 

	 	 	 
	XO COMMUNICATIONS

FOREBEARANCE AGREEMENT TO

CREDIT AND GUARANTY AGREEMENT	 	
NATIONAL WESTMINSTER BANK PLC

by: NatWest Capital Markets Limited, its Agent

by: Greenwich Capital Markets, Inc., its Agent
	 
	 	 	
By:  /s/ Harry Paschalidis

Name:  Harry Paschalidis

Title:    Assistant Vice President

S-20

 

	 	 
		APPEX (IDM) CDO I, LTD,

as a Lender
	 
		By:   /s/ Adrienne Musgnug

Name:  Adrienne Musgnug

Title:    Director

S-21

 

	 	 
		ELC (CAYMAN) LTD. CDO SERIES 1999-I

as a Lender
	 
		By:   /s/ Adrienne Musgnug

Name:  Adrienne Musgnug

Title:    Director

	 	 
		ELC (CAYMAN) LTD.
1999-II

as a Lender
	 
		By:   /s/ Adrienne Musgnug

Name:  Adrienne Musgnug

Title:    Director

S-22

 

	 	 
	 	Sankaty Advisors, Inc. as Collateral

Manager for Brant Point CBO

1999-1 LTD., as Term Lender
	 
	 	By:  /s/ Diane J. Exter

Name:    Diane J. Exter

Title:   Managing Director

Portfolio Manager
	 
	 	Sankaty Advisors, Inc. as Collateral

Manager for Great Point CLO 1999-1

LTD., as Term Lender
	 
	 	By:  /s/ Diane J. Exter

Name:     Diane J. Exter

Title:    Managing Director

Portfolio Manager

S-28

 

	 	 
	 	CARLYLE HIGH YIELD
PARTNERS II, LTD

a Lender
	 
	 	By:       /s/ Linda M. Pace

Name:  Linda M. Pace

Title:    Vice President

S-29

 

	 	 
	 	CYPRESSTREE INVESTMENT
PARTNERS I, LTD
	 
	 	By: CypressTree Investment Management

Company, Inc. as Portfolio Manager
	 
	 	By: /s/ Preston I. Carnes, Jr.

Name:  Preston I. Carnes, Jr.

Title:    Managing Director
	 
	 	CYPRESSTREE INVESTMENT
PARTNERS II, LTD
	 
	 	By: CypressTree Investment Management

Company, Inc. as Portfolio Manager
	 
	 	By:  /s/ Preston I. Carnes, Jr.

Name:   Preston I. Carnes, Jr.

Title:  Managing Director

S-30

 

	 	 
	 	EXPORT DEVELOPMENT

CORPORATION,

as a Lender
	 
	 	By:  /s/ Luisa Rebolledo

Name:  Luisa Rebolledo

Title:    Loan Asset Manager
	 
	 	By:  /s/ Lynda Bernst

Name:  Lynda Bernst

Title:    Loan Portfolio Manager

S-32

 

	 	 
	 	FIDELITY ADVISOR SERIES II:
	 	FIDELITY ADVISOR HIGH YIELD FUND,

as a Lender
	 
	 	By: /s/ John H. Costello

Name:  John H. Costello

Title:    Assistant Treasurer

S-33

 

	 	 
	 	PENSION INVESTMENT COMMITTEE

OF GENERAL MOTORS FOR GENERAL

EMPLOYEES DOMESTIC GROUP,

as a Lender
	 
	 	By:  /s/ John P. O’Reilly, Jr.

Name:  John P. O’Reilly, Jr.

Title:    Executive Vice President

S-34

 

	 	 
	 
	 	FIRST DOMINION FUNDING I,

as a Lender
	 
	 	By:   /s/ David H. Lerner

Name:  David H. Lerner

Title:    Authorized Signatory
	 
	 	FIRST DOMINION FUNDING II,

as a Lender
	 
	 	By:  /s/ David H. Lerner

Name:  David H. Lerner

Title:    Authorized Signatory

S-35

 

	 	 
	 
	 	FOOTHILL INCOME TRUST, L.P.,

as a Lender
	 
	 	By:  /s/ Sean T. Dixon

Name:  Sean T. Dixon

Title:    Managing Member

S-36

 

	 	 
	 
	 	FORTIS CAPITAL CORP.

as a Lender
	 
	 	By: /s/ Alan E. McLintock

Name:  Alan E. McLintock

Title:    Managing Director
	 
	 	By:  /s/ Colm Kelly

Name:  Colm Kelly

Title:    Assistant Vice President

S-37

 

	 	 
	 
	 	FRANKLIN FLOATING RATE TRUST

as a Lender
	 
	 	By:  /s/ Chauncey Lufkin

Name:  Chauncey Lufkin

Title:    Vice President
	 
	 	FRANKLIN FLOATING RATE
MASTER SERIES

as a Lender
	 
	 	By:  /s/ Chauncey Lufkin

Name:  Chauncey Lufkin

Title:    Vice President

S-38

 

	 	 
	 
	 	INDOSUEZ CAPITAL FUNDING
IIA, LIMITED,

By: Indosuez Capital as Portfolio Advisor
	 
	 	By: /s/ Jack C. Henry

Name:  Jack C. Henry

Title:    Principal
	 
	 	INDOSUEZ CAPITAL FUNDING
IV, L.P.,

By: Indosuez Capital as Portfolio Advisor
	 
	 	By:  /s/ Jack C. Henry

Name:  Jack C. Henry

Title:    Principal
	 
	 	INDOSUEZ CAPITAL FUNDING
VI, LIMITED,

By: Indosuez Capital as Portfolio Advisor
	 
	 	By:    /s/ Jack C. Henry

Name:  Jack C. Henry

Title:    Principal

S-45

 

	 	 
	 
	 	KEMPER FLOATING RATE FUND,

as a Lender
	 
	 	By:  /s/ Kenneth Weber

Name:  Kenneth Weber

Title:    Sr. Vice President

S-47

 

	 	 
	 
	 	MUIRFIELD TRADING LLC,

as a Lender
	 
	 	By:  /s/ Diana L. Mushill

Name:  Diana L. Mushill

Title:    Asst. Vice President

S-53

 

	 	 
	 
	 	OLYMPIC FUNDING TRUST, SERIES

1999-1

as a Lender
	 
	 	By:  /s/ Diana L. Mushill

Name:  Diana L. Mushill

Title:    Authorized Agent

S-55

 

	 	 
	 
	 	SEQUILS-CUMBERLAND I, LDT

as a Lender

By: Deerfield Capital Management, LLC

as its Collateral Manager
	 
	 	By:  /s/ Mark E. Wittnebel

Name:  Mark E. Wittnebel

itle:    Sr. Vice President

S-56

 

	 	 
	 
	 	North American Senior Floating Rate

Fund Inc.

By: Stanfield Capital Partners LLC

        as Subadviser

as a Lender
	 
	 	By:  /s/ Christopher A. Bondy

Name:  Christopher A. Bondy

Title:    Partner

S-57

 

	 	 
	 
	 	Stanfield Arbitrage CDO, Ltd

By: Stanfield Capital Partners LLC

        as its Collateral Manager

as a Lender
	 
	 	By:  /s/ Christopher A. Bondy

Name:  Christopher A. Bondy

Title:    Partner
	 
	 	Stanfield/RMF Transatlantic CDO, Ltd

By: Stanfield Capital Partners LLC

        as its Collateral Manager

as a Lender
	 
	 	By:  /s/ Christopher A. Bondy

Name:  Christopher A. Bondy

Title:    Partner

S-58

 

	 	 
	 
	 	Windsor Loan Funding, Limited

By: Stanfield Capital Partners LLC

        as its Investment Manager

as a Lender
	 
	 	By:  /s/ Christopher A. Bondy

Name:  Christopher A. Bondy

Title:    Partner
	 
	 	Hamilton CDO, Ltd

By: Stanfield Capital Partners LLC

        as its Collateral Manager

as a Lender
	 
	 	By:  /s/ Christopher A. Bondy

Name:  Christopher A. Bondy

Title:    Partner

S-59ex10-1

 

Exhibit 10.1

SUBSCRIPTION AGREEMENT

Helix Hearing Care of America Corp.

7100, Jean-Talon East

Bureau 610

Montreal, Quebec

H1M 3S3

Attention: Mr. Steve Forget, President and Chief Executive Officer

Dear Sirs:

	1.	 	PURCHASE
	 
	 	 	The undersigned hereby agrees to purchase from Helix Hearing Care of
America Corp. (the “Corporation”), four million eight hundred and
fifty-three thousand nine hundred and thirty-two (4,853,932) common
shares of the Corporation (the “Shares”) at a price of eighty-nine cents
($0.89) per Share, for total proceeds of four million three hundred and
twenty thousand dollars (CDN$4,320,000).
	 
	2.	 	DELIVERY AND PAYMENT
	 
	(i)	 	Subject to acceptance by you of this agreement, delivery and payment for
the Shares shall be completed (the “Closing”) at the offices of the
Corporation’s counsel, Fraser Milner Casgrain LLP, 1, Place Ville-Marie,
Suite 3900, City of Montreal, Province of Quebec at 11:00 a.m., Montreal
time, on or about January 14, 2002 (the “Time of Closing” and “Closing
Date”, respectively) against payment to the Corporation of the aggregate
purchase price of the Shares by wire transfer in U.S. funds payable to the
account of Helix Hearing Care of America Corp as such instructions appear
in Schedule “A” or in such other manner acceptable to the parties hereto.
	 
	(ii)	 	The obligation of the undersigned to complete the purchase of Shares
contemplated hereby shall be conditional upon The Toronto Stock Exchange
(the “Exchange”) conditionally accepting notice of the issuance of the
Shares at or before the Time of Closing.
	 
	3.	 	REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION
	 
	 	 	The Corporation covenants, represents and warrants to the undersigned
(which covenants, representations and warranties shall survive Closing)
that:

 

 

-2-

	(i)	 	the Corporation has been duly continued and is a validly subsisting
corporation under the laws of Canada;
	 
	(ii)	 	the Corporation has all necessary corporate power and authority to own
its assets and to carry on its business as now conducted;
	 
	(iii)	 	this agreement has been duly authorised by all necessary corporate
action on the part of the Corporation;
	 
	(iv)	 	the execution and delivery of this agreement and the fulfillment of the
terms hereof and the issue and sale of the Shares by the Corporation as
provided in this agreement do not and will not conflict with and do not
and will not result in a breach of any of the terms, conditions or
provisions of the current constating documents, by-laws and resolutions of
the Corporation or breach any material contracts or outstanding debts or
equity securities of the Corporation;
	 
	(v)	 	the Shares will, upon payment therefor, be validly issued as fully paid
and non-assessable;
	 
	(vi)	 	the Corporation is a reporting issuer in good standing under the
securities legislation of Alberta, Ontario and Quebec (collectively
referred to as the “Applicable Securities Legislation”); the issuance of
the Shares will not contravene any provisions of the Applicable Securities
Legislation, as well as the rules and policies of the Exchange and of the
other regulatory authorities having jurisdiction over the Corporation and
will be exempt from the registration and prospectus requirements of the
Applicable Securities Legislation.
	 
	(vii)	 	the Corporation will take all steps within its control to list the
Shares on the Exchange;
	 
	(viii)	 	the unaudited consolidated financial statements of the Corporation and
the report to shareholders for the period of nine months ended August 31,
2001, as provided to HEARx Ltd. (the “Purchaser”) are complete, true and
accurate and they have been prepared in accordance with Canadian generally
accepted accounting principles applied on a consistent basis with prior
periods.
	 
	(ix)	 	the Corporation has not made any private placement of shares of the same
class as the Shares or shares of other class or securities convertible or
exchangeable in shares of any class during the last six months;
	 
	(x)	 	the Corporation is unaware of any information or facts concerning its
business and its operations that has not been disclosed and released to
the public and which, if known to the Purchaser, could reasonably deter
the Purchaser from subscribing and paying for the Shares; and

 

 

-3-

	(xi)	 	all necessary corporate proceedings to authorize this agreement and the
issuance of the Shares have been taken by the Corporation and, from its
execution by the Corporation, this agreement and the private placement
shall be duly authorized and shall constitute valid and legally binding
obligations of the Corporation enforceable against the Corporation in
accordance with their respective provisions.
	 
	4.	 	PURCHASER’S COVENANTS, REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS
	 
	 	 	The undersigned covenants, represents, warrants and acknowledges to the
Corporation (which covenants, representations, warranties and
acknowledgements shall survive Closing) that:
	 
	(i)	 	the undersigned is purchasing the Shares as a principal for its own
account and not for the benefit of any other person except as otherwise
stated herein:
	 
	(ii)	 	the undersigned is purchasing the Shares under a prospectus and
registration exemption available under the Securities Act (Québec) and not
in violation of any other applicable statute in Canada or elsewhere;
	 
	(iii)	 	the current structure of this private placement is not a scheme to avoid
the registration requirements of the United States Securities Act of 1933;
	 
	(iv)	 	the undersigned will execute and deliver all documentation as may be
required by applicable Canadian securities legislation and the Exchange,
including the Private Placement Questionnaire and Undertaking attached as
Schedule “B” hereto;
	 
	(v)	 	the Shares will be held by the undersigned for investment only and not
with a view to resale or distribution;
	 
	(vi)	 	the undersigned has such knowledge in financial and business affairs as
to be capable of evaluating the merits and risks of its investment and it
is able to bear the economic risk of loss of its investment;
	 
	(vii)	 	the address set forth below is the true and correct address of a place
of business of the undersigned (or, if the undersigned is acting as agent
for a disclosed principal, of such person);
	 
	(viii)	 	the undersigned acknowledges (on its own behalf and, if applicable, on
behalf of those for whom the undersigned is contracting) that:

	 	(a)	 	it understands that the Shares will be subject to resale
restrictions set forth in the Securities Act (Quebec) or applicable
securities legislation of the jurisdiction in which the undersigned
is resident;
	 
	 	(b)	 	the distribution of the Shares is not being accompanied by an
advertisement;

 

 

-4-

	 	(c)	 	it has received no document from the Corporation relating to
the sale of the Shares other than this agreement and the Schedule
thereto;
	 
	 	(d)	 	the undersigned’s ability to transfer the Shares is limited,
inter alia, by applicable securities legislation and the Private
Placement Questionnaire and Undertaking attached hereto as Schedule
“B”; and
	 
	 	(e)	 	in executing this agreement, the Corporation is relying upon
the representations and warranties and acknowledgements of the
undersigned set out herein and, in accepting the Shares on the
Closing, the undersigned will be representing and warranting that
such are true as at the Closing with the same force and effect as if
they had been made at such time.

	5.	 	TIME OF THE ESSENCE
	 
	 	 	Time shall, in all respects, be of the essence hereof.
	 
	6.	 	CANADIAN DOLLARS
	 
	 	 	Except as otherwise indicated herein, all references herein to any money
amounts are to lawful money of Canada.
	 
	7.	 	HEADINGS AND SCHEDULES
	 
	 	 	The headings contained herein are for convenience only and shall not
affect the meaning or interpretation hereof. The Schedules hereto form an
integral part hereof.
	 
	8.	 	ENTIRE DOCUMENT
	 
	 	 	This agreement constitutes the only agreement between the parties with
respect to the subject matter hereof and shall supersede any and all
prior negotiations and understandings. This agreement may be amended or
modified in any respect by written instrument only.
	 
	9.	 	SUCCESSORS AND ASSIGNS
	 
	 	 	The terms and provisions of this agreement shall be binding upon and
enure to the benefit of the undersigned and the Corporation and their
respective successors and assigns; provided that, except as herein
provided, this agreement shall not be assignable by either party without
the written consent of the other.
	 
	10.	 	GOVERNING LAW
	 
	 	 	This agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec and the laws of Canada applicable therein.

 

 

-5-

	11.	 	LANGUAGE
	 
	 	 	The parties hereto declare that each of them has required this agreement
be drafted in the English language and each of them does hereby consent
to any documentation notices or
legal proceedings provided for herein, issued hereunder, or relating
directly or indirectly hereto, being in the English language. Chaque
partie déclare par les présentes avoir demandé que la présente convention
soit rédigée en anglais et chaque partie consent par les présentes à ce
que tout document, procédure légale ou avis prévu ou découlant des
présentes ou s’y rapportant directement ou indirectement soit rédigé en
anglais seulement.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

 

 

-6-

DATED at Montreal, Quebec, the 14th day of January, 2002.

	 	 	 
			HEARx LTD.
	 
		Per:	/s/  Stephen J. Hansbrough

	 
	 	 	
1250 Northpoint Parkway

West Palm Beach, Florida

33407

ACCEPTANCE

Accepted and approved in Montreal, Quebec on January 14, 2002.

	 	 	 
	 	Helix Hearing Care of America Corp.	

	 
	Per:	
/s/ Steve Forget

Steve Forget, President and Chief Executive Officer

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