EXHIBIT 10.3
--------------------------------------------------------------------------------
AMENDMENT NO. 3 TO WORKOUT AGREEMENT
--------------------------------------------------------------------------------
THIS AMENDMENT NO. 3 TO WORKOUT AGREEMENT (this "AMENDMENT NO. 3") is entered
into as of this 25th day of January, 2001, between and among STAR
TELECOMMUNICATIONS, INC., a Delaware corporation ("DEBTOR"), PT-1
COMMUNICATIONS, INC. ("PT-1"), ▇▇▇▇▇▇ COM, LLC ("▇▇▇▇▇▇"), CEO CALIFORNIA
TELECOMMUNICATIONS, INC., CEO TELECOMMUNICATIONS, INC., LUCIUS ENTERPRISES,
INC., AS TELECOMMUNICATIONS, INC.; PT-1 LONG DISTANCE, INC., PT-1 HOLDINGS I,
INC., PHONETIME TECHNOLOGIES, INC., PT-1 HOLDINGS II, INC., NATIONWIDE
DISTRIBUTORS, INC., TECHNOLOGY LEASING, INC., INVESTMENT SERVICES, INC., and
PT-1 COMMUNICATIONS PUERTO RICO, INC. (together with Debtor, PT-1, and ▇▇▇▇▇▇,
collectively referred to as the "DEBTOR ENTITIES" and each individual as a
"DEBTOR ENTITY") and MCI WORLDCOM NETWORK SERVICES, INC., a Delaware corporation
having a place of business located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D. 5.2-510,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("WORLDCOM").
WHEREAS, the parties entered into a Workout Agreement dated as of the 12th day
of April 2000, as amended by that certain Amendment No. 1 to Workout Agreement
dated as of June 30, 2000 and by that certain Amendment No. 2 to Workout
Agreement dated as of August 18, 2000 (the "WORKOUT AGREEMENT") providing for,
INTER ALIA, the restructuring of certain past due indebtedness of the Debtor
Entities to WorldCom; and
WHEREAS, the parties entered into other agreements incident and related to the
Workout Agreement which are included within the meaning of the term "WorldCom
Documents" as that term is defined in the Workout Agreement; and
WHEREAS, Debtor and WorldCom have entered into a Standby Term Loan Note dated as
of June 30, 2000 in the original principal amount of $30,000,000 as amended
through the date hereof (the "TERM NOTE"), and a Promissory Note dated April 12,
2000 in the original principal amount of $56,017,698.87 as amended through the
date hereof (the "PROMISSORY NOTE"), each given by Debtor for the purpose of,
INTER ALIA, providing or memorializing certain credit given to the Debtor
Entities to be used for payment of fees, charges and other amounts owed by the
Debtor Entities to WorldCom under the Service Agreements, as that term is
defined in the Workout Agreement; and
WHEREAS, Debtor and WorldCom have entered into that certain Amended and Restated
Demand Note of even date herewith, in the original principal amount of
$97,434,710.13 (the "AMENDED AND RESTATED NOTE") given by Debtor for the purpose
of, INTER ALIA, affirming and consolidating the Debtor's obligations under the
Term Note and the Promissory Note, and affirming the agreements and
understandings of the parties hereto under the WorldCom Documents (as that term
is defined in the Workout Agreement).
1
WHEREAS, the parties are entering into this Amendment No. 3 for the purpose of
amending the Workout Agreement to reflect certain further agreements and
understandings of the parties hereto, and for the purpose of memorializing their
agreement and understanding that the Workout Agreement and the security,
guarantees and collateral provided by the other WorldCom Documents shall be
applicable to the Amended and Restated Note without amendment or modification
(except as expressly stated in the Amended and Restated Note and this Amendment
No. 3).
NOW THEREFORE, the parties hereto, in consideration of the promises contained
herein and intending to be legally bound hereby, agree as follows:
1. INCORPORATION OF RECITALS. The parties affirm and acknowledge that
the recitals herein set forth are true and correct and are
incorporated into this Amendment No. 3 by reference.
2. AMENDMENT OF THE WORKOUT AGREEMENT.
(A) AMENDMENT TO SECTION 14. Section 14 of the Workout Agreement is
hereby amended and restated as follows:
"14. CONSENT BY WORLDCOM TO SALE OF ASSETS; RIGHTS OF
FIRST REFUSAL.
(a) During the Investigation Period, as defined below,
the Debtor Entities shall not agree to or effect the
sale of, and shall not permit the sale of, any equity
interest in any one or more of the Debtor Entities,
except as set forth in Section 7(B)(ii) below, or any
material portion of the assets of any one or more of
the Debtor Entities without the prior, written
consent of WorldCom (other than in the ordinary
course of any such Debtor Entity's business,
consistent with past practices).
(b) In the event that, during the Investigation Period,
any Debtor Entity shall initiate, receive or
negotiate any offer to sell any equity interest in,
or any of the assets of any one or more of the Debtor
Entities, the Debtor shall provide prompt written
notice to WorldCom of such offer (hereinafter
referred to as a "SALE NOTICE"). The Sale Notice
shall include the material terms of the offer, a
description of the equity interest or assets to which
such offer applies, copies of all agreements between
and among the parties to the transaction proposed by
such offer (including copies of any letters of
intent, written proposals, valuations, appraisals,
asset purchase or sale agreements or similar
documents, whether executed, proposed or in draft
form for negotiation) (collectively,
2
the "PROPOSED TRANSACTION DOCUMENTS"). The Debtor and
the Debtor Entities shall not enter into any binding
agreement or otherwise effect any sale or other
transaction as contemplated in the Sale Notice
(collectively referred to as a "SALE TRANSACTION")
unless and until WorldCom shall have consented to
such transaction as provided in this Agreement.
(c) The Debtor and the Debtor Entities shall promptly
advise WorldCom of any actual or proposed amendments,
alterations, or other changes or supplements to the
terms of the Proposed Transaction Documents which may
occur from and after the date of the Sale Notice.
Upon the determination that a Sale Transaction has
been negotiated and may occur upon terms which the
Debtor or other Debtor Entities deems acceptable, and
prior to consummating such Sale Transaction, the
Debtor shall deliver to WorldCom a written notice to
such effect (a "CLOSING NOTICE") including a copy of
the definitive agreement to be executed with respect
to such Sale Transaction, a description of the equity
interest or assets subject to such Sale Transaction,
and any other Proposed Transaction Documents.
(d) During the Investigation Period, the Debtor Entities
each agree that WorldCom shall have the irrevocable
right for a period equal to
two (2) business days from and after the
date of WorldCom's receipt of the Sale
Notice, provided that, in the event that the
Closing Notice is on materially different
terms than the Sale Notice, then WorldCom
shall have an additional two (2) business
days from and after the date of WorldCom's
receipt of the Closing Notice
to acquire the equity interest or assets
that are the subject of the Sale Transaction
on the same terms and conditions as
presented in the Closing Notice, or, in the
event that a Closing Notice has not yet been
delivered to WorldCom, upon the same terms
and conditions as presented in the Sale
Notice.
(e) Notwithstanding any provision in the WorldCom
Documents to the contrary, WorldCom shall not be
deemed to have consented to any sale of stock or all
or substantially all of any one or more of the Debtor
Entities' assets during the Investigation Period
unless
3
WorldCom shall have provided such consent pursuant to
a written instrument executed by WorldCom and dated
after the date hereof. WorldCom reserves any and all
rights it may have to the proceeds of any such sale.
The Debtor Entities agree that an aggregate amount of
such proceeds equal to the lesser of:
(i) the Obligations evidenced by the
Notes, or
(ii) fifty percent (50%) of the net
consideration received or
receivable by Debtor or any Debtor
Entity pursuant to any such Sale
Transaction involving the sale of
assets by any Debtor Entity
(exclusive of the value of any
assumption of debt of any one or
more of the Debtor Entities by any
party to such transaction),
shall be paid directly to WorldCom at the
closing of such transaction without
disbursement of such amount to Debtor or any
other Debtor Entity, provided that such
payment shall reduce the outstanding balance
of the Obligations on a dollar for dollar
basis, upon receipt of cash proceeds by
WorldCom.
(f) The Debtor Entities covenant and agree that: (i) they
shall immediately advise any third-party to any
Proposed Sale Transaction of WorldCom's rights and
the restrictions imposed upon the Debtor Entities
pursuant to this Agreement; and (ii) WorldCom's
consent to any Sale Transaction and waiver of its
rights under this Section shall be a condition
precedent to consummation of any Sale Transaction. In
addition to, and not to the exclusion of, any other
rights or remedies which WorldCom may have under this
Agreement or any other WorldCom Documents, WorldCom
shall have the right to seek specific performance of
the obligations of Debtor and the Debtor Entities
pursuant to this Section.
(B) AMENDMENT TO SECTION 30. Section 30 of the Workout Agreement is
hereby amended in the following manner:
(i) The following definition is added, in proper
alphabetical order, as follows:
4
"AMENDED AND RESTATED NOTE" means that certain
Amended and Restated Demand Note in the original
principal amount of $97,434,710.13 dated January 25,
2001, executed and delivered by Debtor to WorldCom,
as the same may be amended, modified, or supplemented
from time to time, together with any extensions,
renewals or refinancings thereof, in whole or in
part.
(ii) The definition of the term "Note" as set forth in Section
30 of the Workout Agreement, shall be amended and
restated as follows:
"NOTE" means the Promissory Note in the principal
amount of $56,017,698.87 dated April 12, 2000,
executed and delivered by Debtor to WorldCom, as the
same may be amended, modified, or supplemented from
time to time, together with any extensions, renewals
or refinancings thereof, in whole or in part,
including (without limitation) the Amended and
Restated Note.
(iii) The definition of the term "Notes" as set forth in
Section 30 of the Workout Agreement, shall be amended
and restated as follows:
"NOTES" means the Note, the Term Note, the Amended
and Restated Note, and any other note evidencing the
obligations of any Debtor Entity to WorldCom, as the
same may be amended, modified, or supplemented from
time to time, together with any extensions, renewals
or refinancings thereof, in whole or in part.
(iv) The definition of the term "Term Note" as set forth in
Section 30 of the Workout Agreement, shall be amended and
restated as follows:
"TERM NOTE" means the Standby Term Loan Note in the
principal amount of $30,000,000.00 dated June 30,
2000, executed and delivered by Debtor to WorldCom,
as the same may be amended, modified, or supplemented
from time to time, together with any extensions,
renewals or refinancings thereof, in whole or in part
including (without limitation) the Amended and
Restated Note.
(v) The definition of the term "WorldCom Documents" as set
forth in Section 30 of the Workout Agreement, shall be
amended and restated as follows:
"WORLDCOM DOCUMENTS" means, as each such document may
be amended, revised, renewed, extended, substituted,
or replaced from time to time: this Agreement, the
Service Agreement, the Note, the Security Agreement,
the Pledge Agreement, the Term Note, the
5
Amended and Restated Note all other guarantees
executed by any Person guaranteeing payment of any
portion of the Obligations; all security agreements
and pledge agreements granting any interest in any of
the Collateral, stock certificates and partnership
agreements constituting part of the Collateral;
mortgages, deeds of trust, financing statements,
collateral assignments, and other documents and
instruments granting WorldCom an interest in any
portion of the Collateral or related to the
perfection of WorldCom's interest in any portion of
the Collateral and/or the transfer to WorldCom of an
interest in any portion of the Collateral; all
collateral assignments or other agreements granting
to WorldCom a lien on any intercompany note,
including without limitation, all other documents,
instruments, agreements, or certificates executed or
delivered by Debtor or any other Obligor as security
for Debtor's obligations under this Agreement, the
Note, the Term Note, the Amended and Restated Note,
the Service Agreements, or otherwise.
3. AMENDMENT OF THE PLEDGE AGREEMENTS. Section 4.04 of the Pledge
Agreements by and between (a) STAR Telecommunications, Inc., and MCI
WorldCom Network Services, Inc., dated as of April 12, 2000; and (b)
PT-1 Communications, Inc., and MCI WorldCom Network Services, Inc.,
dated as of April 12, 2000, shall be amended and restated as follows:
4.04. VOTING RIGHTS. It is expressly understood and agreed
that Pledgor shall retain all voting or management rights to
the Capital Stock Collateral unless an Event of Default shall
occur, at which time such voting rights shall transfer to or
be exercised as directed by Agent, at its sole discretion;
PROVIDED, however, that no voting or management rights shall
be exercised, vote cast, consent, waiver, or ratification
given, or action taken by Pledgor which would be inconsistent
with or violate any provision of this Agreement or any other
WorldCom Document.
4. AGREEMENT REGARDING THIS AMENDMENT NO. 3. The parties hereto understand
and agree that:
(A) The amendment of the term "WorldCom Documents" pursuant to
Section 2 hereof shall not limit the definition of that term
in any way nor shall such amendment be construed to mean or
imply that Section 30 of the Workout Agreement, or the
definition of the term "WorldCom Documents" or any other
definition contained within Section 30 of the Workout
Agreement, must later be amended or replaced to include any
agreement, contract, document or instrument not specifically
identified therein whether presently existing or entered into
or arising hereafter.
6
(B) The Amended and Restated Note and the Debtor's obligations
thereunder shall be considered a part of the "Obligations" as
that term is defined in Section 30 of the Workout Agreement.
5. COOPERATION. The parties hereto acknowledge and agree that in
furtherance of WorldCom's rights, and the obligations of Debtor and
Debtor Entities under and pursuant to the WorldCom Documents, WorldCom
shall be permitted to immediately commence a review and analysis of the
Debtor and Debtor Entities for the purposes of:
(a) determining the "creditworthiness" of the Debtor Entities,
including, without limitation, the ability of the Debtor
Entities to pay their projected business debts and obligations
(including the Obligations) on a current basis, and, if
applicable, the ability of the Debtor Entities to pay WorldCom
for any accrued and unpaid invoices or other amounts due to
WorldCom;
(b) collecting the Obligations or enforcing the rights of WorldCom
under and pursuant to the WorldCom Documents;
(c) analyzing the collectibility and value of any outstanding
accounts or obligations of the Debtor Entities owed to
WorldCom;
(d) the liquidation, disposition or enforcement of any obligations
or accounts of the Debtor Entities owed to WorldCom;
(e) determining the value of any proposed Sale Transaction, and
whether WorldCom, its subsidiaries, affiliates or contacts in
the industry are interested in purchasing the object of any
such Sale Transaction; and
(f) the furtherance of WorldCom's rights pursuant to the WorldCom
Documents and for making any necessary judgments with respect
thereto.
For purposes of conducting this review and analysis WorldCom shall be
permitted to employ such professional advisors, accountants, attorneys,
consultants and agents or other representatives (collectively,
"CONSULTANTS") to assist WorldCom in the review and analysis
contemplated hereunder. WorldCom shall from time to time notify Debtor
Entities of the Consultants engaged by WorldCom. The Debtor Entities
shall immediately provide WorldCom and all Consultants with the Debtor
Entities' full cooperation and access to all of their books, records
and personnel, including, without limitation, the work product or
analyses of the Debtor Entities' professionals, including without
limitation their accountants, to the extent necessary for WorldCom and
Consultants to conduct the review and analysis as WorldCom deems
necessary for the furtherance, enforcement and protection of its rights
under the WorldCom Documents.
7
The Debtor Entities acknowledge that Consultants are reviewing the
books, records and personnel of the Debtor Entities on behalf of
WorldCom, and that Consultants may be called as witnesses, and
Consultants' analyses, reports and work product may be used in any
collection or other proceeding brought by WorldCom against one or more
of the Debtor Entities. The Debtor Entities waive any right they each
may have to object to use of Consultants (or any of their respective
employees, contractors or agents) as a witness or the use of
Consultants' analyses, reports or work product in any such proceeding
on the basis that such testimony, analyses, reports or work product are
based upon information obtained from the Debtor Entities, or that any
one or more of the Consultants have been or are currently engaged by
one or more of the Debtor Entities. Furthermore, each of the Debtor
Entities acknowledges that the Debtor Entities are not entitled to and
shall have no right to receive any of Consultants' analyses, reports or
work product, absent WorldCom's prior written consent thereto, and that
such analyses, reports and work product are being delivered to WorldCom
and its counsel in preparation for potential collection or other
proceedings against the Debtor Entities. Notwithstanding the foregoing,
the Debtor Entities may request that any such testimony, analyses,
reports or work product, and any pleadings be filed under seal and
neither Consultants nor WorldCom will object to any such motion. The
parties hereto agree that WorldCom's review of the matters set forth in
this Section 5 and the Consultants' access to the Debtor Entities shall
continue only to, and shall be concluded by no later than, February 16,
2001, as such period may be extended upon the mutual, express agreement
of WorldCom and the Debtor Entities (the "Investigation Period").
6. AGREEMENTS OF DEBTOR AND DEBTOR ENTITIES WITH RESPECT TO CERTAIN
ACTIVITIES. The Debtor and the Debtor Entities shall as soon as is
reasonably practicable following the execution of this Amendment No. 3
take, and cause to be taken, all action necessary and desirable (in the
determination of WorldCom) to effect the following:
(A) With respect to each Debtor Entity which is a corporation
(each referred to as a "DEBTOR CORPORATION"), establish a
special class of corporate director (the "SPECIAL DIRECTOR")
pursuant to the by-laws, articles of incorporation,
certificate of incorporation or other corporate charter or
governance documents of such Debtor Corporation, which will
have all rights and authority as each other member of the
board of directors of such corporation, except that the
Special Director shall not have the right to vote on any
matters that may be presented to the Board of Directors of
such corporation;
(B) With respect to each Debtor Entity which is a limited
liability company (each referred to as a "DEBTOR LLC"),
establish a special class of manager or member (the "SPECIAL
MANAGER") pursuant to the operating agreement, articles of
association, certificate of organization, or other formation
documents, charter or governance documents of such Debtor LLC,
which Special Manager will have all
8
rights and authority as each other manager or member of such
Debtor LLC, except that the Special Manager shall not have the
right to vote on any matters that may be presented to the
managers or members of such Debtor LLC or to receive any
interest in the assets, profits, losses or liabilities of such
Debtor LLC;
(C) Adopt all necessary amendments to the organizational
documents, governance documents, by-laws, or other similar
agreements or documents related to the operation and
governance of each Debtor Entity to provide that:
(i) no meeting of the Board of Directors of any
Debtor Corporation may be called for any
purposes without providing Advance Written
Notice, as defined below, of such meeting to
the Special Director, unless otherwise
waived prior to such meeting by such Special
Director;
(ii) no meeting of the managers or members of any
Debtor LLC may be called for any purposes
without providing Advance Written Notice of
such meeting to the Special Manager, unless
otherwise waived prior to such meeting by
such Special Manager;
(iii) no business may be conducted at any meeting
of the Board of Directors of any Debtor
Corporation unless the Special Director is
present and is provided with all
information, agendas, reports or other
materials related to the matters to be
discussed at such meeting at the same time
and manner in which such information is
provided to each other director of the
Debtor Corporation;
(iv) no business may be conducted at any meeting
of the managers or the members of any Debtor
LLC unless the Special Manager is present
and is provided with all information,
agendas, reports or other materials related
to the matters to be discussed at such
meeting at the same time and manner in which
such information is provided to each other
manager and/or member of the Debtor LLC;
(v) the Board of Directors of any Debtor
Corporation, and the managers and members of
any Debtor LLC, may not act on any matters
by written consent in lieu of a meeting,
unless such written consent has been
submitted to the Special Director at least
forty-eight (48) hours prior to submission
to such Board
9
of Directors and such Special Director does
not object to the matters set forth therein;
(vi) the managers of any Debtor LLC may not take
any action without calling a meeting of the
managers and/or members at which the Special
Manager is present for the purpose of
approving such action , unless such written
consent has been submitted to the Special
Manager at least forty-eight (48) hours
prior to submission to such meeting of the
managers and/or members and such Special
Manager does not object to the matters set
forth therein
(vii) each direct (including the Special Director)
of each Debtor Corporation) and each manager
and member (including the Special Manager)
of each Debtor LLC shall be permitted to
attend any meeting of the Board of Directors
or the managers or member of any Debtor
Entity (as applicable) with such director's,
manager's or member's legal counsel;
(viii) appoint as the Special Manager of each
Debtor LLC and Special Director of each
Debtor Corporation an individual or entity
designated by WorldCom; and
(ix) "Advance Written Notice" shall mean (a) 48
hours advance written notice to the Special
Director or Special Manager, as the case may
be, and his or her counsel, of any
telephonic meeting; and (b) four (4) days
advance written notice to the Special
Director or Special Manager, as the case may
be, and his or her counsel, of any
non-telephonic meeting.
(D) Each Debtor Corporation and Debtor LLC shall take such other
actions as necessary in WorldCom's sole determination to
provide to each Special Director and each Special Manager all
legal protections of indemnification and other rights under
the law of the jurisdiction of formation of each Debtor
Corporation and each Debtor LLC with respect to such Special
Director's or Special Manager's performance and exercise of
his, her or its duties and rights in such capacity, including
without limitation the adoption of necessary or desirable
by-law provisions, amendments to articles of association,
formation or incorporation, and the purchase of insurance
coverages deemed necessary by the Special Manager or Special
Director.
(E) All transactions and relationships between or among any of the
Debtor Entities shall be conducted only pursuant to written
agreements and understandings in the
10
normal course of business. All intercompany service
arrangements, guaranties or other agreements with respect to
the purchase, sale lease, rental, or use of any asset, or the
provision of any service, shall be: (i) entered into only in
the normal course of business of the Debtor Entities; (ii)
documented or invoiced between the parties to such
arrangement; and (iii) shall not be subject to any rights of
set-off by the parties to such arrangement. To the extent that
intercompany service agreements do not currently exist, the
Debtor Entities shall execute such agreements promptly, and in
no event later than Friday, January 26, 2001, 2001, and shall
provide copies of such agreements to WorldCom and its
Consultants. The Debtor Entities agree that all matters
related to the Debtor Entities' performance of their
respective obligations under this Section, and all legal
details and proceedings in connection with such obligations
contemplated hereunder shall be satisfactory to WorldCom and
its legal counsel, and WorldCom shall have received all such
counterpart originals or certified or other copies of all
documents and proceedings in connection with the Debtor
Entities performance of their respective obligations
hereunder, in form and substance satisfactory to WorldCom and
its counsel, as WorldCom may from time to time request.
7. ADDITIONAL COVENANTS AND AGREEMENTS.
(A) During the term of this Amendment No. 3, each of the Debtor
Entities represents, warrants, covenants and agrees that on or
before January 29, 2001, the Debtor Entities will provide
WorldCom with a written representation by each of Gotel
Investments Limited, Global Investment Trust, and Intertrust
(Guernsey) Limited that upon investigation, none of
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ nor any of their
respective family members or affiliates is the "beneficial
owner" of any interest in or to Gotel Investments Limited,
Global Investment Trust, or Intertrust (Guernsey) Limited.
(B) Each of the Debtor Entities represents, warrants, covenants
and agrees that there shall not occur any "material change" of
any Debtor Entity during the Investigation Period. For
purposes of this covenant only, unless the prior, written
consent of WorldCom is received by the Debtor Entities, a
"material change" shall include, but not be limited to:
(i) the grant or pledge by any one or more of
the Debtor Entities at any time from and
after the date of this Amendment No. 3 of
any lien or other encumbrance on any of its
assets,
(ii) the acceptance by any one or more of the
Debtor Entities of any equity investment,
other than (a) the twenty five million
dollar ($25,000,000) equity investment by
Gotel Investments Limited that was announced
by Star's press release dated
11
January 17, 2001 and (b) the equity
investment by IDT Investments, Inc. in
Debtor, as outlined in that certain letter
agreement between such parties dated January
21, 2001, PROVIDED THAT, WorldCom consents
to such transaction; and
(iii) the sale of any one or more of the Debtor
Entities' assets, other than in the ordinary
course of business, other than the sale of
the pre-paid/debit card assets of PT-1 to
IDT Corporation ("IDT"), as outlined in that
certain letter agreement between Debtor,
PT-1 and IDT dated January 21, 2001,
PROVIDED THAT, WorldCom consents to such
transaction.
(C) During the Investigation Period, each of the Debtor Entities
will deliver to WorldCom immediately upon WorldCom's request a
certificate of the Chief Executive Officer (or Managers, as
the case may be) (an "OFFICER'S CERTIFICATE") certifying that
as of the date of WorldCom's request for such Officer's
Certificate that:
(i) all of the representations and warranties of
such Debtor Entity contained in the WorldCom
Documents continue to be true and correct;
(ii) such Debtor Entity is in compliance with all
the applicable terms and provisions of the
WorldCom Documents to be observed and
performed by it, and no Event of Default, or
any event which, upon notice or lapse of
time, or both, would constitute an Event of
Default, has occurred and is continuing,
other than has been disclosed by such Debtor
Entity in writing to WorldCom;
(iii) such Debtor Entity has performed all
obligations and taken all actions to be
performed or taken by it under the WorldCom
Documents on or prior to the date of the
Officer's Certificate; and
(iv) there has been no "material change" of the
Debtor or other material change in the
financial condition of such other Debtor
Entity since January 25, 2001.
(D) The Debtor Entities shall deliver to WorldCom:
(i) copies of resolutions duly adopted by the
directors of each Debtor Corporation
authorizing and effecting the actions to be
12
taken, and the execution and delivery of all
agreements, documents and/or instruments to
be executed and/or delivered, by such Debtor
Corporation pursuant to or in connection
with this Amendment No. 3 and the taking of
any actions necessary to consummate the
transactions contemplated by such
agreements, documents and/or instruments or
this Amendment No. 3; and
(ii) copies of resolutions, amendments or
authorizations duly adopted and agreed to by
the managers and members of each Debtor LLC
authorizing and effecting the actions to be
taken, and the execution and delivery of all
agreements, documents and/or instruments to
be executed and/or delivered, by such Debtor
LLC pursuant to or in connection with this
Amendment No. 3 and the taking of any
actions necessary to consummate the
transactions contemplated by the such
agreements, documents and/or instruments or
this Amendment No. 3.
8. REPRESENTATIONS AND WARRANTIES. Each of the Debtor Entities hereby
represents and warrants as follows:
(i) The Board of Directors of any Debtor Corporation, or in the
case of any Debtor LLC its managers or members, has not
approved any resolution (i) authorizing the filing of a
petition pursuant to the United States Bankruptcy Code, (ii)
consenting to the appointment of a receiver, or (iii)
authorizing the commencement of any insolvency or
reorganization proceeding.
(ii) None of its officers, managers or members has the authority to
(i) authorize the filing of a petition pursuant to the United
States Bankruptcy Code, (ii) consent to the appointment of a
receiver, or (iii) authorize the commencement of any
insolvency or reorganization proceeding.
(iii) After investigation, each of the Debtor Entities hereby
represent as follows:
(a) none of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ nor any of their respective family
members or affiliates is the "beneficial
owner" of any interest in or to Gotel
Investments Limited, Global Investment
Trust, or Intertrust (Guernsey) Limited;
(b) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ is the sole decision maker
and controlling person of Gotel Investments
Limited; and
13
(c) each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
Investments Limited were investors in Debtor
and in InterPacket Networks, Inc.
For purposes of this Agreement, the term "beneficial owner"
shall have the meaning ascribed thereto under Rule 13d-3 (17
CFR 240.13d-3) promulgated pursuant to the Securities Exchange
Act of 1934, as in effect on the date hereof (the "EXCHANGE
ACT"), without giving effect to the rights to disclaim
beneficial ownership as permitted by Rule 13d-4 (17 CFR
240.13d-4) promulgated under the Exchange Act.
(iv) After investigation, none of the Debtor Entities is aware of
any relationship, contract, arrangement, or understanding,
between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and any one or more of the Debtor
Entities which has not been previously disclosed to WCOM in
writing by each such Debtor Entity which is a party to such
relationship, contract, arrangement or understanding.
(v) Notwithstanding the amendment and restatement of the
Promissory Note and the Term Note, the Debtor Entities remain
in default of the WorldCom Documents.
9. RELEASE OF WORLDCOM.
(A) Each of the Debtor Entities forever releases and discharges
WorldCom, its agents, consultants, employees, directors,
officers, attorneys, branches, parent, affiliates,
subsidiaries, successors and assigns and all persons, firms,
corporations, and organizations acting on WorldCom's behalf
(collectively referred to as the "WORLDCOM RELEASED ENTITIES")
of and from any and all losses, damages, claims, demands,
liabilities, obligations, actions and causes of action, of any
nature whatsoever in law or in equity, including, without
limitation, any claims or joinders for sole liability,
contribution or indemnity (collectively, the "CLAIMS"), which
one or more of the Debtor Entities may have or claim to have
against WorldCom or any one or more of the WorldCom Released
Entities, as of the date of this Amendment No. 3, whether
presently known or unknown, and of every nature and extent
whatsoever, on account of or in any way touching, concerning,
arising out of, founded upon or relating to (i) the WorldCom
Documents, (ii) the obligations of one or more the Debtor
Entities under the WorldCom Documents, (iii) this Amendment
No. 3, (iv) enforcement or negotiation of this Amendment No. 3
or any of the WorldCom Documents, and (v) the dealings of the
parties to this Amendment No. 3 with respect to the
obligations of the Debtor Entities to WorldCom under the
WorldCom Documents or one or more of them.
14
(B) Each of the Debtor Entities agrees to execute all appropriate
and necessary documents to enable WorldCom or any of the
WorldCom Entities, to plead the effect of the releases
contained in this Section in any lawsuit.
(C) The releases contained in this Amendment No. 3 shall be
binding upon each of the Debtor Entities and shall inure to
the benefit of WorldCom and the WorldCom Released Entities,
and any of their respective successors and assigns.
10. RESERVATION OF RIGHTS. No delay, or inaction by WorldCom in exercising
its rights and remedies under any of the WorldCom Documents, and no
continuing performance by WorldCom thereunder (a) shall constitute (i)
a modification or an alteration of the terms, conditions or covenants
of any of the WorldCom Documents or (ii) a waiver release or limitation
upon WorldCom's exercise of any of its rights and remedies thereunder,
all of which are hereby expressly reserved, or (b) shall relieve or
release any of the Debtor Entities in any way from any of its
respective duties, obligations, covenants or agreements under the
WorldCom Documents or from the consequences of any Event of Default
described above or any other Event of Default thereunder.
11. CUMULATIVE NATURE OF RELEASE. Nothing contained in this Amendment No. 3
shall impair or be construed to impair the security of WorldCom or any
of the WorldCom Released Entities under the WorldCom Documents, nor
affect nor impair any rights or powers that WorldCom or any of the
WorldCom Released Entities may have under the WorldCom Documents for
the recovery of the indebtedness of the Debtor Entities to WorldCom in
case of breach of the terms, provisions and releases contained in this
Amendment No. 3 or breach or nonfulfillment of the terms, agreements
and covenants set forth in the WorldCom Documents. All rights, powers
and remedies of WorldCom or any of the WorldCom Released Entities under
any other agreement or release now or at any time in the future in
force between WorldCom and the Debtor with respect to the Obligations
shall be cumulative and not alternative and shall be in addition to all
rights, powers and remedies given to WorldCom or any of the WorldCom
Released Entities by law.
12. ACKNOWLEDGMENT AND AFFIRMATION. Each of the undersigned hereby
unconditionally consents to all of the provisions of the Workout
Agreement, as amended by this Amendment No. 3, and acknowledges receipt
of a copy of this Amendment No. 3 and the Notes, including, without
limitation, all amendments, supplements, modifications restatements,
and extensions thereof which have been effected through the date
hereof. Except as expressly amended by this Amendment No. 3 and the
Amended and Restated Note (which has been executed and delivered by
Debtor contemporaneously herewith), the Workout Agreement and the other
WorldCom Documents, and each and every representation, warranty,
covenant term and condition therein remains in full force and effect.
On and after the effectiveness of this Amendment No. 3, all references
to the Workout Agreement in the WorldCom Documents and in any
agreements, documents
15
and/or instruments executed and/or delivered in connection with the
WorldCom Documents shall mean the Workout Agreement as amended
(including as further amended by this Amendment No. 3) and as may be
further amended from time to time hereafter.
13. CONFIRMATION AND RATIFICATION. Each of the undersigned hereby confirms
and ratifies their respective Security Agreements, Pledge Agreements,
Guaranties, and any other WorldCom Documents to which it is a party, in
their respective entirety and further agrees that the liabilities and
obligations evidenced by the Notes, shall be considered as part of the
Obligations, for all purposes, including without limitation, the
guaranty of such Obligations under each of the Guarantys of PT-1 and
▇▇▇▇▇▇, each dated as of April 12, 2000, as the same may be amended,
modified or supplemented from time to time, and the security provided
therefor under the respective Security Agreements and Pledge Agreements
of the Debtor, PT-1 and ▇▇▇▇▇▇, each dated as of April 12, 2000, as the
same may be amended, modified or supplemented from time to time.
14. SEVERABILITY. The provisions of this Amendment No. 3 are intended to be
severable. If any provision of this Amendment No. 3 shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without in any manner affecting
the validity or enforceability of such provision in any other
jurisdiction or the remaining provisions of this Amendment No. 3 in any
jurisdiction.
15. GOVERNING LAW, ETC. This Amendment No. 3 shall be governed by Oklahoma
law, without giving effect to principles of conflicts of laws.
16. CHOICE OF VENUE AND WAIVER OF JURY TRIAL. THE PARTIES AGREE THAT ALL
DISPUTES OF EVERY KIND AND NATURE ARISING UNDER OR IN CONNECTION WITH
THIS AMENDMENT NO. 3 MAY BE RESOLVED IN THE STATE OR FEDERAL COURTS
LOCATED IN TULSA, OKLAHOMA. THE PARTIES EACH WAIVE THEIR RIGHTS TO A
JURY TRIAL WITH RESPECT TO ANY SUCH DISPUTE AND CONSENT TO THOSE COURTS
EXERCISING SUBJECT MATTER AND PERSONAL JURISDICTION WITH RESPECT TO ANY
SUCH DISPUTE.
17. EXECUTION OF RELEASE AND WAIVER. EACH OF THE PARTIES REPRESENTS AND
WARRANTS TO THE OTHER THAT IT HAS CAREFULLY READ THE FOREGOING TERMS
AND CONDITIONS OF THIS AMENDMENT NO. 3, THAT IT KNOWS AND UNDERSTANDS
THE CONTENTS AND EFFECT OF THIS AMENDMENT NO. 3, THAT THE LEGAL EFFECT
OF THIS AMENDMENT NO. 3, INCLUDING, WITHOUT LIMITATION, THE RELEASE AND
WAIVER OF JURY TRIAL PROVISIONS CONTAINED IN THIS AMENDMENT NO. 3, HAVE
BEEN FULLY EXPLAINED TO ITS SATISFACTION BY ITS COUNSEL, AND EXECUTION
OF THIS AMENDMENT NO. 3 IS A VOLUNTARY ACT.
16
18. INTERPRETATION. Terms not defined herein shall have the meaning as set
forth in the Workout Agreement. Unless the context of this Amendment
No. 3 clearly requires otherwise, references to the plural include the
singular, the singular includes the plural, the part includes the
whole, "including" is not limiting, and "or" has the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Amendment No. 3 refer
to this Amendment No. 3 as a whole and not to any particular provision
of this Amendment No. 3.
19. TERM OF AMENDMENT. This Amendment No. 3 will terminate upon termination
of the Workout Agreement.
20. HEADINGS. The headings of the sections in this Amendment No. 3 are for
purposes of reference only, and shall not limit or affect the meaning
of such section.
21. NO PARTNERSHIP OR JOINT VENTURE. It is understood by the parties that
this Amendment No. 3 shall not in any way be construed as an agreement
of partnership, general or limited, or of creating a joint venture
between WorldCom and any other party to this Agreement, or any one or
more of them, or of creating any relationship other than that of debtor
and creditor.
22. COUNTERPARTS. This Amendment No. 3 may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same Amendment.
23. JOINT PREPARATION. The preparation of this Amendment No. 3 has been a
joint effort of the parties and the resulting document shall not,
solely as a matter of judicial construction, be construed more severely
against one of the parties than the other.
24. THIRD PARTY BENEFICIARIES. The terms and conditions of this Amendment
No. 3 are not intended to affect or benefit in any way any third
parties other than the WorldCom Entities, all of which are explicitly
intended to be third party beneficiaries under this Amendment No. 3.
25. SUCCESSORS AND ASSIGNS. This Amendment No. 3 will be binding upon and
inure to the benefit of the respective parties, and their respective
successors and assigns, including any bankruptcy trustee, except that
neither party may assign or transfer any of its rights or delegate any
of its duties under this Amendment No. 3 without the prior written
consent of the other party.
--------------------------------------
SIGNATURES APPEAR ON NEXT PAGE.
17
IN WITNESS WHEREOF, the parties hereto by their authorized representatives have
executed this Amendment No. 3 to Workout Agreement, as of the day and year first
above written.
STAR TELECOMMUNICATIONS, INC. PT-1 COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Executive Vice President & Title: Executive Vice President &
General Counsel General Counsel
------------------------------ ------------------------------
▇▇▇▇▇▇ COM, LLC CEO TELECOMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Executive Vice President & Title: Executive Vice President &
General Counsel General Counsel
------------------------------ ------------------------------
CEO CALIFORNIA TELECOMMUNICATIONS, INC. LUCIUS ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Executive Vice President & Title: Executive Vice President &
General Counsel General Counsel
------------------------------ ------------------------------
AS TELECOMMUNICATIONS, INC. PT-1 LONG DISTANCE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Executive Vice President & Title: Executive Vice President &
General Counsel General Counsel
------------------------------ ------------------------------
PT-1 HOLDINGS I, INC. PT-1 HOLDINGS II, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Executive Vice President & Title: Executive Vice President &
General Counsel General Counsel
------------------------------ ------------------------------
NATIONWIDE DISTRIBUTORS, INC. INVESTMENT SERVICES, INC.
TECHNOLOGY LEASING, INC.
18
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Executive Vice President & Title: Executive Vice President &
General Counsel General Counsel
------------------------------ ------------------------------
PT-1 COMMUNICATIONS PUERTO RICO, INC. PHONETIME TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Executive Vice President & Title: Executive Vice President &
General Counsel General Counsel
------------------------------ ------------------------------
MCI WORLDCOM NETWORK SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
19
