Investment Agreement - CGX Communications Inc., CAIS Inc. and Cleartel Communications Inc.
CGXCOMMUNICATIONS
1232 22nd Street, NW
Washington, DC 20037
Phone: 202.463.8500
Fax: 202.463.7190
http://www.cgxcom.com
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April 22, 1998
Theodore Ammon
c/o Big Flower Holdings, Inc.
3 East 54/th/ Street
New York, NY 10022
Re: Investment in CGX Communications, Inc.
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Dear Mr. Ammon:
This letter confirms the agreement of Theodore Ammon to make cash investments in
each of CGX Communication, Inc., a Delaware corporation ("CGX"), CAIS, Inc., a
Virginia corporation ("CAIS"), Cleartel Communications, Inc., a corporation
incorporated in the District of Columbia ("CCI") and Cleartel Communications
Limited Partnership, a limited partnership formed in the District of Columbia
("CCI LP"). The aggregate amount of such investments will be $1 million. In
exchange for such investments, Mr. Ammon will receive a 2.439% equity interest
in each of CGX, CAIS, CCI and CCI LP. The equity interest in each
corporation/partnership shall be on the same terms and have the same rights as
all other outstanding equity of such corporation/partnership.
The investments are made on the condition that: (i) as soon as practicable after
the investments, the undersigned will cause CGX, CAIS, CCI and CCI LP to be
combined into an operating entity which will own 100% of the assets of CGX,
CAIS, CCI and CCI LP (the "CGX Group"); (ii) following such reorganization, Mr.
Ammon (or CL Investments, L.P., if Mr. Ammon shall direct) will own a 2.439%
equity interest in the CGX Group (on a fully-diluted basis); and (iii) the
proceeds of the investments will be used by CGX, CAIS, CCI and CCI LP solely for
general business purposes which will not include the repayment of existing
indebtedness or the payment of any consideration to the existing shareholders
(including dividends, redemptions or any similar actions). The investments are
based on an agreed upon valuation of CGX, CAIS, CCI and CCI LP immediately prior
to the investments of $40 million.
Following the closing of the investments, the undersigned shall cooperate with
Mr. Ammon, without any consideration, to execute, acknowledge and deliver in
proper form any further instruments, or take such other actions as Mr. Ammon may
reasonably request, to carry out effectively the intent of this Letter. In
addition, the
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parties hereby agree that, immediately following the reorganization, Mr. Ammon
may transfer his equity ownership in the CGX Group to CL Investments, L.P.
If you are in agreement with the foregoing, please indicate by signing and
returning to us a copy of this letter.
Very truly yours,
CGX Communications, Inc.
By: /s/ Ulysses G. Auger, II
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Name: Ulysses G. Auger, II
Title: President
CAIS, Inc.
By: /s/ Ulysses G. Auger, II
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Name: Ulysses G. Auger, II
Title: President
Cleartel Communications, Inc.
By: /s/ Ulysses G. Auger, II
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Name: Ulysses G. Auger, II
Title: President
Cleartel Communications Limited Partnership
By Cleartel Communications, Inc., as general partner
By: /s/ Ulysses G. Auger, II
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Name: Ulysses G. Auger, II
Title: President
Accepted and Agreed:
/s/ R. Theodore Ammon
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R. Theodore Ammon