Exhibit 10.1
Non-Negotiable Note
Purchase Agreement
Exhibit 10.1
EXECUTION COPY
NON-NEGOTIABLE NOTE
PURCHASE AGREEMENT
dated as of
January 6, 2002
between
GLOBALNET, INC.
and
THE TITAN CORPORATION
NON-NEGOTIABLE NOTE
PURCHASE AGREEMENT
THIS NON-NEGOTIABLE NOTE PURCHASE AGREEMENT ("Agreement") is dated as of
January 6, 2002 between GlobalNet, Inc., a Nevada corporation (the "Company"),
and The Titan Corporation, a Delaware corporation (the "Purchaser").
WHEREAS, the Company and the Purchaser have agreed that the Company
will issue and sell to the Purchaser, and Purchaser will purchase from the
Company, a note in the aggregate principal amount of up to $5,000,000.
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the Company to enter into this
Agreement, the Company and Purchaser are entering into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which a wholly-owned subsidiary of
Purchaser will merge with and into the Company (the "Merger").
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of 25% or more
of the equity of a Person shall, for the purposes of this Agreement, be deemed
to control the other Person.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the State of California are authorized by law to
close.
"Capital Lease Obligations" means all monetary obligations of a Person
under any leasing or similar arrangement which, in accordance with GAAP, is
classified as a capital lease.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured by the United States
government or any agency thereof and backed by the full faith and credit of the
United States having maturities of not more than twelve months from the date of
acquisition;
(b) certificates of deposit, time deposits, Eurodollar time deposits, or
banker's acceptances having in each case a tenor of not more than six months,
issued by any U.S. commercial bank having combined capital and surplus of not
less than $500,000,000 whose short term securities are rated both A-1 or higher
by Standard & Poor's Corporation and P-1 or higher by Xxxxx'x Investors
Services, Inc.;
(c) commercial paper of an issuer rated either at least A-1 by Standard &
Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc. and/or P-1 by Xxxxx'x
Investors Service Inc. and in either case having a tenor of not more than three
months;
(d) repurchase agreements fully collateralized by securities issued by
United States government agencies; and
(e) money market mutual funds invested in the instruments permitted by
clauses (a), (b), (c) and (d) above.
"Change In Control" means (i) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act) of more than 25% of the
outstanding capital stock of the Company, or (ii) during any period of 24
consecutive calendar months, individuals who were directors of the Company on
the first day of such period shall cease to constitute a majority of the board
of directors of the Company (ignoring for this purpose replacements of
stockholder-designated directors by successor directors designated by the same
stockholder or group of stockholders).
"Code" shall have the meaning set forth in the Merger Agreement.
"Collateral" means all property with respect to which Liens are created or
purported to be created pursuant to the Pledge Agreement.
"Company" means GlobalNet, Inc., a Nevada corporation, and its successors.
"Company Group" means the Company and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means at any date and with respect to any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including,
2
without limitation, any obligation of that Person, whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof, or
(e) to purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of any Indebtedness. For purposes of this definition, the amount
of any Contingent Obligation shall be deemed to be an amount equal to the
maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company or any of its Subsidiaries pursuant to Section 414(b), (c), (m) or (o)
of the Code.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule of even date herewith
attached hereto and hereby made part of this Agreement.
"Event of Default" has the meaning set forth in Section 6.01.
"FCC" means the Federal Communications Commission or any successor
thereto.
"FCC Licenses" means the currently effective licenses identified in the
Company's public filings with the Securities and Exchange Commission, together
with each other material FCC license hereafter obtained by the Company or any
Subsidiary of the Company.
"GAAP" shall have the meaning set forth in the Merger Agreement.
"Government Authorization" shall have the meaning set forth in the Merger
Agreement.
"Governmental Body" shall have the meaning set forth in the Merger
Agreement.
3
"Indebtedness" of any Person means without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of capital assets; (c) all reimbursement
obligations with respect to surety bonds, letters of credit, bankers'
acceptances and similar instruments (in each case, whether or not matured),
excluding performance bonds, letters of credit and similar undertakings in the
ordinary course of business of the Company, to the extent that such undertakings
do not secure an obligation for borrowed money or the deferred purchase price of
a capital asset; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, excluding performance
bonds, letters of credit and similar undertakings in the ordinary course of
business of the Company, to the extent that such undertakings do not secure an
obligation for borrowed money or the deferred purchase price of a capital asset;
(e) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to property acquired by the Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property); (f) all Capital Lease Obligations; (g)
all net obligations with respect to Rate Contracts; (h) sale-leaseback
financings; (i) all Contingent Obligations; and (j) all Indebtedness referred to
in paragraphs (a) through (i) above secured by any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness and
(k) to the extent not otherwise included in (a) through (i) above, the guarantee
by such Person of any indebtedness referred to in paragraphs (a) through (i)
above of any other Person. For purposes of this definition, (y) any Indebtedness
of the Company to a Subsidiary of the Company and (z) any Indebtedness of a
Subsidiary of the Company to or from the Company or another Subsidiary of the
Company shall be excluded.
"Indemnified Person" has the meaning set forth in Section 8.03(b).
"Investment" means any investment in any Person, whether by means of share
purchase, capital contribution, loan, Contingent Obligation, time deposit or
otherwise (but not including any demand deposit).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the UCC or any
comparable law) and any contingent or other agreement to provide any of the
foregoing.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business, properties,
condition (financial or otherwise) of the Company Group taken as a whole; (b)
the ability or prospective ability of the Company or any of its Subsidiaries to
perform under any Note Purchase Document or any material
4
Contractual Obligation; (c) the legality, validity, binding effect or
enforceability of any Note Purchase Document or (d) the perfection or priority
of any Lien granted to the Purchaser under the Pledge Agreement.
"Maturity Date" means the earliest of (a) date that is 180 days after the
date hereof or if such date is not a Business Day, the next Business Day, (b)
the Business Day following the date on which the Merger Agreement is terminated,
where such termination causes the nonrefundable fee to be payable to the
Purchaser pursuant to Section 7.3(b) of the Merger Agreement, and (c) the date
that is 30 days following the date on which the Merger Agreement is terminated,
where such termination does not cause the nonrefundable fee to be payable to
Purchaser pursuant to Section 7.3(b) of the Merger Agreement, or if such date is
not a Business Day, the next Business Day; provided that, with respect to any
portion of the principal amount of the Note to be prepaid in accordance with
Section 2.06, "Maturity Date" means, unless the context otherwise requires, the
scheduled date of such prepayment of such portion of such principal amount as
set forth in the applicable prepayment notice; provided further that the
Maturity Date may be extended by the mutual agreement of the Company and the
Purchaser, each acting in its sole discretion.
"Note" means the Note in the form of Exhibit A hereto.
"Note Purchase Documents" means this Agreement, the Pledge Agreement, the
Note and all agreements, instruments and documents executed and delivered in
connection herewith and therewith, each as amended, supplemented, waived or
otherwise modified from time to time.
"Note Amount" shall be $5,000,000, or such portion thereof as may be
advanced pursuant to this Agreement.
"Notice of Lien" means any "notice of lien" or similar document intended
to be filed or recorded with any court, registry, recorder's office, central
filing office or Governmental Body for the purpose of evidencing, creating,
perfecting or preserving the priority of a Lien securing obligations owing to a
Governmental Body.
"Obligations" means the Note and other Indebtedness, advances, debts,
liabilities, and obligations, owing by the Company to the Purchaser or any other
Person required to be indemnified under any Note Purchase Document, of any kind
or nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under this Agreement, under any other Note Purchase
Document, whether or not for the payment of money, whether arising by reason of
an extension of credit, loan, guaranty, indemnification or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired.
"Permitted Liens" has the meaning set forth in Section 5.06.
"Person" shall have the meaning set forth in the Merger Agreement.
5
"Pledge Agreement" means the Stock Pledge Agreement of even date herewith
among Xxxxxx X. Xxxxxxx, Colum X. Xxxxxxx and Xxxxx Ventures LP and the
Purchaser.
"Prepayment Date" has the meaning set forth in Section 2.06.
"Principal Subsidiary" means at any time any Subsidiary of the Company,
except Subsidiaries which at such time have been designated by the Company (by
notice to the Purchaser, which may be amended from time to time) as nonmaterial
and which, if aggregated and considered as a single subsidiary, would not meet
the definition of a "significant subsidiary" contained as of the date hereof in
Regulation S-X of the Securities and Exchange Commission.
"Purchaser" means The Titan Corporation, a Delaware corporation, and its
successors and permitted assigns.
"Rate Contracts" means interest rate and currency swap agreements, cap,
floor and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates; provided that such
agreements or arrangements are documented under master netting agreements.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Body, in each case applicable to or binding upon the Person or any
of its property or to which the Person or any of its property is subject; in any
case, non-compliance with which by the Company or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
"Responsible Officer" means, with respect to any Person, the Chief
Executive Officer, the President or a duly authorized Senior Vice President or
Vice President or, with respect to financial matters, the Chief Financial
Officer or the Treasurer, of such Person.
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction.
"United States" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
SECTION 1.02. OTHER DEFINED TERMS; ACCOUNTING. Certain other defined terms
used in this Agreement are defined in the text of this Agreement and shall have
the meanings given such terms therein. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP as in effect from
6
time to time, applied on a basis consistent (except for changes concurred in by
the Company's independent public accountants) with the most recent audited
consolidated or combined financial statements of the Company and its
Consolidated Subsidiaries, delivered to the Purchaser.
ARTICLE 2
TERMS OF THE NOTE
SECTION 2.01. PURCHASE AND SALE. (a) The Purchaser herewith purchases from
the Company and the Company herewith issues and sells to the Purchaser the Note
in accordance with the procedures specified in this Article 2.
SECTION 2.02. ADVANCES OF NOTE PROCEEDS. Upon 5 days' prior written notice
from the Company to the Purchaser, and provided that, with respect to advances
to be made subsequent to the first advance described in the next sentence, the
Purchaser, in its sole discretion, consents, the Purchaser shall advance to the
Company the sums so requested by the Purchaser provided that the sum of all
advances hereunder shall not exceed Five Million Dollars ($5,000,000). Schedule
1 attached hereto contains the amount of the first advance to the Company
pursuant to this Section 2.02 (which amount has been approved by the Purchaser
and shall be advanced to the Company on or prior to January 10, 2002) and a
description of the use of such proceeds (which shall be deemed to be an approval
of such use of proceeds for purposes of Section 3.16 hereof); provided that the
Purchaser shall have no obligation to fund the first advance unless and until
the Purchaser shall have received (i) an opinion of counsel to the Company
reasonably satisfactory to the Purchaser with respect to matters customarily
addressed by legal counsel in connection with transactions of the type
contemplated hereby and by the Pledge Agreement, and (ii) certificates
representing the Pledged Shares (as defined in the Pledge Agreement) accompanied
by stock powers duly executed in blank.
SECTION 2.03. NOTE. The Note shall be payable to the order of the
Purchaser and be in the form attached hereto as Exhibit A.
SECTION 2.04. MATURITY OF NOTE. If the Note is outstanding on the Maturity
Date, the Note (together with accrued interest thereon) shall be due and payable
on such date.
SECTION 2.05. INTEREST. The Note shall bear interest on the outstanding
principal amount thereof, for each day from the principal amount of the date
such Note is issued until it becomes due, at a rate per annum of eight percent
(8%). Interest shall be computed on the basis of a year of 360 days and 12
thirty day months, and paid for the actual number of days elapsed (including the
first day but excluding the last day). Any overdue principal of or interest on
the Note shall bear interest, payable on demand, for each day until paid at a
rate per annum of 14%.
SECTION 2.06. OPTIONAL PREPAYMENTS. The Company may, upon at least 15 days
notice to the Purchaser, prepay the Note in whole at any time, or from time to
time in part in amounts aggregating $500,000, by paying the principal amount to
be prepaid together with
7
accrued interest thereon to the date of prepayment, at any time prior to the
close of business on the day immediately preceding the date of prepayment. The
date of such prepayment shall be referred to herein as the "Prepayment Date".
SECTION 2.07. GENERAL PROVISIONS AS TO PAYMENTS. The Company shall make
any cash payment of principal of and interest on the Note not later than 12:00
Noon (Central Standard Time) on the date when due, in cash by wire transfer of
immediately available in funds to the Purchaser at its address referred to in
Section 8.01. Whenever any payment of principal of, or interest on the Note
shall be due on a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to the Purchaser that, except as set
forth in the section (if any) of the Disclosure Schedule corresponding to the
Section heading below:
SECTION 3.01. CORPORATE EXISTENCE AND POWER. Each of the Company and its
Principal Subsidiaries (a) is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted; (c) is duly qualified as a foreign corporation, licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification; and (d) is in compliance with all Requirements of Law except, in
the case of clauses (c) and (d), where the failure to be so qualified or in
compliance could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.02. CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by each of the Company and its Subsidiaries of any Note
Purchase Document to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) contravene the terms of
such Person's certificate of incorporation, bylaws or other organizational
document; (b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any indenture, agreement, lease, instrument,
Contractual Obligation, injunction, order, decree or undertaking to which such
Person is a party; or (c) violate any Requirement of Law.
SECTION 3.03. GOVERNMENT AUTHORIZATION. All material Government
Authorization heretofore required to be obtained have been duly obtained, were
validly issued, are in full force and effect, are not subject to appeal and are
held in the name of, or for the benefit of, the appropriate Persons. There is no
proceeding pending or, to the best knowledge of the Company,
8
threatened against the Company or any of its Subsidiaries, or any property of
the Company or any of its Subsidiaries, which seeks, or may reasonably be
expected, to rescind, terminate, materially adversely modify or suspend any of
the FCC Licenses. There has not occurred any event that would make unlikely the
delivery or issuance as anticipated of, and when and as needed all such
Government Authorizations. No such Government Approval already obtained is
subject to any restriction, condition, limitation or other provision that would
have a Material Adverse Effect. The information set forth in each application
submitted by the Company or any of its Subsidiaries in connection with each such
Government Approval is accurate and complete in all material respects taken as a
whole, except for statements or omissions which could not reasonably be expected
to affect adversely the validity of such Government Authorization. No other
material consent, approval or authorization of, or declaration or filing with,
any other Person is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or any other Note
Purchase Document.
SECTION 3.04. BINDING EFFECT. This Agreement and each other Note Purchase
Document to which the Company or any of its Subsidiaries is a party constitute
the legal, valid and binding obligations of such Person, enforceable against
such Person in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
SECTION 3.05. LITIGATION. Except for matters arising after the date hereof
which could not reasonably be expected to have a Material Adverse Effect, there
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company, threatened or contemplated at law, in equity, in
arbitration or before any Governmental Body, against the Company or any of its
Subsidiaries or any of their respective properties which: (a) purport to affect
or pertain to this Agreement, or any Note Purchase Document, or any of the
transactions contemplated hereby or thereby; or (b) if determined adversely to
the Company or any of its Subsidiaries, could have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Body purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Note Purchase Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.
SECTION 3.06. NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of Obligations by the Company or any of its
Subsidiaries under any Note Purchase Document. Neither the Company nor any of
its Subsidiaries is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, could have a Material Adverse Effect.
SECTION 3.07. TITLE TO PROPERTY. Each of the Company and its Subsidiaries
has good record and marketable title in fee simple to or valid leasehold
interests in all real property used in its business, except for such defects in
title as could not, individually or in the aggregate, have a
9
Material Adverse Effect. Such real property is free and clear of all Liens or
rights of others, except Permitted Liens.
SECTION 3.08. TAXES. Each of the Company and its Subsidiaries has filed
all Federal and other material tax returns and reports required to be filed and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no Notice of Lien has been filed or
recorded. There is no proposed tax assessment against the Company or any of its
Subsidiaries which would, if the assessment were made, have a Material Adverse
Effect.
SECTION 3.09. FINANCIAL CONDITION.
(a) (b) The financial statements (including related notes, if any)
contained in the SEC Reports (the "Company Financial Statements"): (i) complied
as to form in all material respects with the published rules and regulations of
the SEC applicable thereto; (ii) were prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered (except as may be indicated
in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not have contained footnotes and were subject to normal
and recurring year-end adjustments which were not, or were not reasonably
expected to be, individually or in the aggregate, material in amount), and (iii)
fairly presented (subject in the case of the unaudited interim financial
statements, to normal, recurring, year-end audit adjustments) in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the respective dates thereof and the consolidated results of
operations and cash flows of the Company and its consolidated subsidiaries for
the periods covered thereby. For purposes of this Agreement, "Company Balance
Sheet" means that certain consolidated balance sheet of the Company and its
consolidated subsidiaries as of December 31, 2000 set forth in the Company's
Annual Report on Form 10-K/A filed with the SEC and the "Company Balance Sheet
Date" means December 31, 2000.
(b) Since December 31, 2000, there has been no Material Adverse Effect.
(c) None of the Company or its Subsidiaries has any accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements prepared in accordance with
GAAP and whether due or to become due), except for: (a) liabilities that are
reflected in the "liabilities" column of the Company Financial Statements, and
(b) normal and recurring liabilities that have been incurred by the Acquired
Corporations since the Company Balance Sheet Date in the ordinary course of
business and consistent with past practices that, individually or in the
aggregate, are not in excess of $75,000.
SECTION 3.10. REGULATED ENTITIES. None of the Company, any Person
controlling the Company, or any Subsidiary thereof, is (a) an "Investment
Company" within the meaning of the
10
Investment Company Act of 1940; or (b) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
SECTION 3.11. SUBSIDIARIES. Except as disclosed in Company's reports filed
with the Securities and Exchange Commission since January 1, 2000 (the "SEC
Reports"), the Company does not have any Subsidiaries and has no equity
investments in any other corporation or entity.
SECTION 3.12. INSURANCE. The properties of the Company and its
Subsidiaries are insured with financially sound and reputable insurance
companies, in such amounts, with such deductibles and covering such risks as is
customarily carried on by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.
SECTION 3.13. BUSINESS. The Company and its Subsidiaries have not
conducted any business other than as described in the SEC Reports. Neither the
business nor the properties of the Company and its Subsidiaries are or have been
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance) which has had a
Material Adverse Effect.
SECTION 3.14. COLLATERAL; PROPERTY. All contracts and all property now
owned by the Company are held by it free and clear of all Liens other than
Permitted Liens. The Pledgors under the Pledge Agreement have good, marketable
and valid title in and to all of the Collateral now owned by them, in each case
free and clear of all Liens other than Permitted Liens.
SECTION 3.15. PLEDGE AGREEMENT. The Pledge Agreement creates in favor of
the Purchaser, for the benefit of the Purchaser, legal, valid and enforceable
Liens on or in all of the Collateral to the extent provided in the Pledge
Agreement. All filings, recordations, registrations and other actions necessary
to perfect such Liens have been duly effected, and, to the extent that such
Liens may legally be given and be effective and enforceable, each Lien created
by the Pledge Agreement constitutes a perfected Lien on or in all right, title,
estate and interest of the Pledgors under the Pledge Agreement in the Collateral
covered thereby, prior and superior to all other Liens except Permitted Liens
arising by operation of law, and all necessary and appropriate consents to the
creation and perfection of such Liens have been obtained.
SECTION 3.16. USE OF PROCEEDS. The proceeds to be received by the Company
upon the issuance and sale of the Note shall be used by the Company for such
general corporate purposes as the Purchaser may approve at the time such
proceeds are advanced to the Company. The Company shall not use any portion of
the proceeds of the Note for the purpose of purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the
11
Federal Reserve System) or for any other purpose in violation of any applicable
statute or regulation, or of the terms and conditions of this Agreement.
SECTION 3.17. DISCLOSURE. The information (including, without limitation,
the information in the SEC Reports) furnished in writing at or prior to the date
hereof by the Company to the Purchaser in connection with this Agreement and the
transactions contemplated hereby is true, complete and accurate in every
material respect or based on reasonable estimates on the date as of which such
information is stated or certified and is not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading in light of the circumstances under which such information was made.
There is no fact known to the Company on the date as of which this
representation and warranty is made that has not been disclosed in writing to
the Purchaser which could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.18. TAKEOVER STATUTE. The Company has taken all actions required
to be taken by it so that the restrictions of Sections 78.378 through 78.3793
and 78.411 through 78.444 of the Nevada Revised Statutes do not apply to this
Agreement or the Pledge Agreement (including the acquisition by Parent or any of
its Affiliates of shares of Company Common Stock (as defined in the Merger
Agreement) under the Pledge Agreement and applicable Legal Requirements (as
defined in the Merger Agreement) upon the occurrence of an Event of Default
hereunder) and the transactions contemplated hereby and thereby. No Takeover
Laws (including those described in the immediately preceding sentence) are
applicable to this Agreement or the Pledge Agreement and the transactions
contemplated hereby and thereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Purchaser (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; and (b) is in compliance with all
Requirements of Law except, in the case of clause (b) where the failure to be so
qualified or in compliance could not reasonably be expected to have a Material
Adverse Effect.
SECTION 4.02. CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Purchaser of any Note Purchase Document to which
it is a party have been duly authorized by all necessary corporate action and do
not and will not: (a) contravene the terms of the Purchaser's certificate of
incorporation or bylaws; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any indenture, agreement,
lease, instrument, Contractual Obligation, injunction, order, decree or
undertaking to which the Purchaser is a party; or (c) violate any Requirement of
Law.
12
SECTION 4.03. GOVERNMENT AUTHORIZATION. All material Government
Authorization required for the execution, delivery and performance by the
Purchaser of the Note Purchase Documents have been duly obtained, were validly
issued, are in full force and effect, are not subject to appeal and are held in
the name of, or for the benefit of, the appropriate Persons. No other material
consent, approval or authorization of, or declaration or filing with, any other
Person is required to be made or obtained by the Purchaser in connection with
the execution, delivery or performance by the Purchaser of this Agreement, the
validity or enforceability as to the Purchaser of this Agreement or any other
Note Purchase Document.
SECTION 4.04. BINDING EFFECT. This Agreement and each other Note Purchase
Document to which the Purchaser is a party constitute the legal, valid and
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
SECTION 4.05. ACQUISITION FOR INVESTMENT. The Purchaser is acquiring the
Note for its own account, for investment and not with a view to, or for sale in
connection with, the distribution thereof in a manner which would violate the
Securities Act of 1933, as amended (the "Securities Act").
SECTION 4.06. ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited
investor," as that term is as defined in Rule 501(a) of Regulation D under the
Securities Act. The Purchaser has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Note and is capable of bearing the economic risks
of such investment. The Purchaser understands that its investment in the Note
involves a significant degree of risk.
SECTION 4.07. INFORMATION. The Purchaser and its advisors have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Note which
have been requested by the Purchaser or its advisors. The Purchaser and its
advisors have been afforded the opportunity to ask questions of the Company's
management concerning the Company and the Note.
SECTION 4.08. SALE OR TRANSFER. The Purchaser understands that (i) the
sale or re-sale of the Note has not been and is not being registered under the
Securities Act or any applicable state securities laws, and the Note may not be
sold or otherwise transferred except in a transaction not requiring registration
under, or not subject to, Section 5 of the Securities Act; and (ii) neither the
Company nor any other Person is under any obligation to register the Note under
the Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
SECTION 4.09. RESIDENCY. The Purchaser maintains its principal executive
offices in the State of California.
13
ARTICLE 5
COVENANTS
The Company agrees that, so long as the Purchaser has any commitment to
make advances hereunder or any amount payable hereunder or under the Note
remains unpaid:
SECTION 5.01. CONDUCT OF BUSINESS; PRESERVATION OF CORPORATE EXISTENCE.
The Company shall, and shall cause each of its Subsidiaries: (a) to engage in
business of the same general type as now conducted by the Company and its
Subsidiaries; (b) to preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its State or
jurisdiction of incorporation; (c) to preserve and maintain in full force and
effect all rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the normal conduct of its business; (d) to use its
reasonable efforts, in the ordinary course and consistent with past practice, to
preserve its business organization and preserve the goodwill and business of the
customers, suppliers and others having business relations with it; and (e) to
preserve or renew all of its registered trademarks, trade names and service
marks, the non-preservation of which could have a Material Adverse Effect.
SECTION 5.02. MAINTENANCE OF PROPERTY. The Company shall maintain, and
shall cause each of its Principal Subsidiaries and Subsidiaries, respectively,
to maintain, and preserve all its property which is used or useful in its
business in good working order and condition, ordinary wear and tear excepted.
SECTION 5.03. COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Body having jurisdiction over it or its
business (including the Federal Fair Labor Standards Act and ERISA), except such
as may be contested in good faith or as to which a bona fide dispute may exist.
SECTION 5.04. PLEDGE AGREEMENT. The Company shall at all times ensure that
(i) the Pledge Agreement creates in favor of the Purchaser, as the secured party
thereunder, legal, valid and enforceable Liens on or in all Collateral covered
thereby; (ii) all filings, recordations, registrations and other actions
necessary or desirable to perfect the Liens created or purported to be created
by the Pledge Agreement have been duly effected; (iii) each Lien created by the
Pledge Agreement constitutes a perfected Lien on or in all right, title, estate
and interest of the Pledgors under the Pledge Agreement, as applicable, in the
Collateral, prior and superior to all Liens other than Permitted Liens arising
by operation of law; and (iv) all necessary and appropriate consents to the
creation and perfection of the Liens created or purported to be created by the
Pledge Agreement have been obtained.
SECTION 5.05. GOVERNMENT AUTHORIZATION. The Company shall, and shall cause
each of its Subsidiaries to, comply with the terms of and maintain in full force
and effect all material FCC Licenses, and all amendments thereto, and shall, and
shall cause each of its Subsidiaries to,
14
obtain, maintain and comply with the terms of all other Government Authorization
which are necessary under applicable laws and regulations in connection with the
Company's or such Subsidiary's business. No such Government Approval shall be
subject to any restriction, condition, limitation or other provision that would
have a Material Adverse Effect.
SECTION 5.06. LIMITATION ON LIENS. The Company shall not, and shall not
permit any other member of the Company Group to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its property or assets, whether now owned or hereafter acquired, or
offer or agree to do so, other than the following ("Permitted Liens"):
(a) any Lien securing Indebtedness identified in Schedule 2 hereto;
(b) any Lien in favor of the Purchaser created under any Note Purchase
Document;
(c) Liens for taxes, fees, assessments or other governmental charges which
are not delinquent or remain payable without penalty, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are maintained, provided that no Notice of Lien has been
filed or recorded;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which do not secure Indebtedness and are not delinquent or remain payable
without penalty;
(e) Liens (other than any Lien imposed by ERISA) on the property of any
member of the Company Group incurred, or pledges or deposits required, in
connection with workmen's compensation, unemployment insurance and other social
security legislation;
(f) Liens on the property of any member of the Company Group securing (i)
the performance of bids, trade contracts (other than for borrowed money),
leases, statutory obligations, and (ii) obligations on surety and appeal bonds,
and (iii) other obligations of a like nature incurred in the ordinary course of
business which do not secure Indebtedness, provided that all such Liens in the
aggregate could not cause a Material Adverse Effect;
(g) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the businesses of the Company Group; and
(h) Liens on any asset which is the subject of a capital lease securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such asset, provided that (x) such Lien attaches
concurrently with or within 30 days after the acquisition thereof, and (y) the
sum of the aggregate principal amount of such Indebtedness secured by such Liens
shall not exceed $200,000.
15
SECTION 5.07. DISPOSITION OF ASSETS, CONSOLIDATIONS AND MERGERS. The
Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, (i) sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any of its assets, business or
property (including accounts and notes receivable (with or without recourse) or
equipment sale-leaseback transactions or (ii) merge or consolidate with any
other Person, or enter into any agreement to do any of the foregoing described
in clauses (i) or (ii) except for the following; provided that immediately after
giving effect to any of the following, no Default or Event of Default would
exist:
(a) sales, transfers, or other dispositions of inventory, or used,
worn-out or surplus property, or property of no further use to the Company and
its Subsidiaries, all in the ordinary course of business;
(b) sales, transfers, or other dispositions of equipment in the ordinary
course of business to the extent that such equipment is exchanged for credit
against the purchase price of similar replacement equipment or the proceeds of
such sale are reasonably promptly applied to the purchase price of such
replacement equipment;
(c) sales, transfers or other dispositions pursuant to bona fide
sale-leaseback financings in which the lease gives rise solely to Capital Lease
Obligations; provided, however, that the aggregate amount of all liabilities in
respect of all such Capital Lease Obligations arising out of bona fide
sale-leaseback transactions, as determined in accordance with GAAP, shall not
exceed $200,000 at any one time outstanding;
(d) sales, transfers, or other dispositions of assets not in the ordinary
course of business having a fair market value not exceeding $200,000 in the
aggregate in any fiscal year (excluding sales, transfers and dispositions
theretofore approved in accordance with the terms hereof in such fiscal year);
and
(e) any Subsidiary of the Company may merge, consolidate or combine with
or into, or transfer (for no consideration) assets to the Company; provided that
the Company shall be the continuing or surviving corporation.
SECTION 5.08. INVESTMENTS. Neither the Company nor any other member of the
Company Group will make or acquire any Investment in any Person other than:
(a) Investments in Persons which are Subsidiaries on the date hereof; and
(b) Cash Equivalents.
SECTION 5.09. TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any Subsidiary to, directly or indirectly, (i) pay any funds to or
for the account of any Affiliate, (ii) make any investment in any Affiliate
(whether by acquisition of stock or indebtedness, by loan, advance, transfer of
property, guarantee or other agreement to pay,
16
purchase or service, directly or indirectly, any Indebtedness, or otherwise),
(iii) lease, sell, transfer or otherwise dispose of any assets, tangible or
intangible, to any Affiliate, or (iv) except in the ordinary course of business
consistent with past practice, participate in, or effect, any other transaction
with any Affiliate, except in each case on an arm's-length basis on terms at
least as favorable to the Company or such Subsidiary as could have been obtained
from a third party that was not an Affiliate or as otherwise expressly approved
in writing by the Purchaser.
SECTION 5.10. RESTRICTED PAYMENTS. The Company will not declare or make
any dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its capital
stock or purchase, redeem or otherwise acquire for value (or permit any member
of the Company Group to do so) any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding.
SECTION 5.11. LIMITATION ON INDEBTEDNESS. The Company shall not, and shall
not permit any Subsidiary to, create, incur, assume, guaranty, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except for:
(a) accounts payable to trade creditors for goods and services and current
operating liabilities (not the result of the borrowing of money) incurred in the
ordinary course of the Company's or the Subsidiary's business, as the case may
be, in accordance with customary terms and paid within the specified time,
unless contested in good faith by appropriate proceedings and reserved for in
accordance with GAAP;
(b) income taxes payable and deferred taxes;
(c) accrued expenses and deferred income;
(d) Indebtedness outstanding on the date hereof and identified on the
Company Financial Statements; and
(e) Indebtedness represented by Rate Contracts.
ARTICLE 6
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Company shall fail to pay any principal of the Note when due or
any interest, any fees or any other amount payable hereunder on the date when
due;
(b) the Company shall fail to observe or perform any covenant contained in
Article 5;
17
(c) the Company shall fail to observe or perform any covenant or agreement
contained in this Agreement (other than those covered by clause (a) or (b)
above) for 20 days after notice thereof has been given to the Company by the
Purchaser;
(d) any representation, warranty, certification or statement made by the
Company or a Subsidiary of the Company in this Agreement or any other Note
Purchase Document or in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Company or any Subsidiary of the Company shall fail to make any
payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal and face amount of more than $200,000, in each case when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure continues after the applicable grace period or
notice period, if any, specified in the document relating thereto;
(f) any event or condition shall occur which results in the acceleration
of the maturity of any Indebtedness or Contingent Obligation any Indebtedness or
Contingent Obligation of the Company or any Subsidiary of the Company having an
aggregate principal or face amount of more than $200,000 or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder of any
such Indebtedness or Contingent Obligation or any Person acting on such holder's
behalf to accelerate the maturity thereof;
(g) the Company or any Principal Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced against the
Company or any Principal Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Company or any Principal Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;
(i) one or more final judgments, orders or decrees shall be entered
against the Company or any member of the Company Group involving in the
aggregate a liability (not fully covered by insurance and as to which the
insurer has not acknowledged liability) more than an
18
amount equal to $200,000, and the same shall remain unvacated, undischarged,
unstayed or unbonded pending appeal for a period of 60 days after the entry
thereof;
(j) any non-monetary judgment, order or decree shall be rendered against
the Company or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect, and enforcement proceedings shall have been
commenced by any Person upon such judgment or order which shall remain unstayed
for any period of 10 consecutive days or more;
(k) (i) any provision of the Pledge Agreement shall for any reason cease
to be valid and binding on or enforceable against the Pledgors under the Pledge
Agreement, if the effect thereof may materially deprive the Purchaser of the
benefits of the Collateral covered thereby, or the Pledgors under the Pledge
Agreement shall so state in writing or bring an action to limit its obligations
or liabilities thereunder;
(ii) the Pledge Agreement shall for any reason (other than pursuant
to, or contemplated by, the terms thereof) cease to create a valid security
interest in the Collateral purported to be covered thereby or such security
interest shall for any reason cease to be a perfected and (except for Permitted
Liens arising by operation of law) first priority security interest; (iii) any
of the outstanding Obligations of the Company hereunder shall not be Secured
Obligations (as defined in the Pledge Agreement); or (iv) there shall occur an
event of loss which, together with all other events of loss since the date
hereof, results in a reduction in the value (as determined in the reasonable
opinion of the Purchaser) of the Collateral of $200,000 net of any cash proceeds
received by the Pledgors under the Pledge Agreement in respect of such event or
events of loss;
(l) the FCC or any other Governmental Body shall revoke or fail to renew
any material FCC License or any other material license, permit or franchise of
the Company or any of its Subsidiaries; the Company or any Subsidiary shall for
any reason lose any material FCC License or any other material license, permit
or franchise; or the Company or any Subsidiary shall suffer the imposition of
any restraining order, escrow, suspension or impound of funds in connection with
any proceeding (judicial or administrative) with respect to any material FCC
License or any other material license, permit or franchise;
(m) there shall occur and be continuing a Material Adverse Effect; or
(n) there shall occur a Change in Control;
then, and in every such event, the Purchaser may by notice to the Company
declare the Note (together with accrued interest thereon) to be, and the Note
shall thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company; provided that in the case of any of the Events of Default specified in
clause (g) or (h) above with respect to the Company, without any notice to the
Company or any other act by the Company or any other person, the Note (together
with accrued
19
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company.
SECTION 6.02. NOTICE OF DEFAULT. The Company shall give notice to the
Purchaser promptly upon becoming aware of any Event of Default.
ARTICLE 7
TAXES
SECTION 7.01. TAXES. (a) For the purposes of this Section 7.01, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Company, as the case may be, pursuant to this Agreement or under the Note, and
all liabilities with respect thereto, excluding (i) in the case of the
Purchaser, taxes imposed on its income, and franchise or similar taxes imposed
on it, by a jurisdiction under the laws of which the Purchaser is organized or
in which its principal executive office is located and (ii) any United States
withholding tax imposed on such payments but only to the extent that the
Purchaser is subject to United States withholding tax at the time the Purchaser
first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under the Note or from the
execution or delivery of, or otherwise with respect to, this Agreement or the
Note.
(b) Any and all payments by the Company to or for the account of the
Purchaser hereunder or under the Note shall be made without deduction for any
Taxes or Other Taxes; provided that, if the Company shall be required by law to
deduct any Taxes or Other Taxes from any such payments, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Purchaser (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Company shall make such
deductions, (iii) the Company shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law and (iv)
the Company shall furnish to the Purchaser, at its address referred to in
Section 8.01 , the original or a certified copy of a receipt evidencing payment
thereof.
(c) The Company agrees to indemnify the Purchaser for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section)
paid by the Purchaser and any liability (including penalties, interest and
expenses, other than those resulting from any act or failure to act by the
Purchaser) arising therefrom or with respect thereto. This indemnification shall
be paid within 15 days after the Purchaser makes demand therefor.
20
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth on the signature pages hereof. Each such notice,
request or other communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Purchaser
under Article 2 or Article 8 shall not be effective until received.
SECTION 8.02. NO WAIVERS. No failure or delay by Purchaser in exercising
any right, power or privilege hereunder or under the Note shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 8.03. EXPENSES; INDEMNIFICATION. (a) The Company shall pay (i)
out-of-pocket expenses of the Purchaser, including reasonable fees and
disbursements of counsel for the Purchaser, in connection with the preparation,
negotiation and administration of any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all reasonable out-of-pocket expenses incurred by the
Purchaser, including (without duplication) the reasonable fees and disbursements
of outside counsel, in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Purchaser, its respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an "Indemnified Person" and in the aggregate, "Indemnified
Persons") and hold each Indemnified Person harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be
incurred by such Indemnified Person in connection with any investigative,
administrative or judicial proceeding (whether or not such Indemnified Person
shall be designated a party thereto) brought or threatened relating to or
arising out of this Agreement or any actual or proposed use of proceeds of the
issuance and sale of the Note hereunder; provided that no Indemnified Person
shall have the right to be indemnified hereunder for such Indemnified Person's
own gross negligence or willful misconduct as determined by a court of competent
jurisdiction.
21
SECTION 8.04. AMENDMENTS AND WAIVERS. Any provision of this Agreement or
the Note may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Company and the Purchaser.
SECTION 8.05. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of the Purchaser.
SECTION 8.06. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
and the Note shall be governed by and construed in accordance with the laws of
the State of New York. The Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in Manhattan for purposes of
all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 8.07. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 8.08. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE PURCHASER
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 8.09. SURVIVAL. It is the express intention and agreement of the
parties hereto that all covenants, agreements, statements, representations,
warranties and indemnities made by the Company herein shall survive the
execution and delivery of this Agreement.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GLOBALNET, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman & Chief Executive Officer
Address: GlobalNet, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxx 000-X
Xxxxxxx, Xxxxxxxx 00000
Attention:
Facsimile:
THE TITAN CORPORATION
By: /s/ Xxxx X. XxXxxxx
-------------------------------------
Name: Xxxx X. XxXxxxx
Title: Exec. VP & COO
Address: The Titan Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
LIST OF EXHIBITS
EXHIBIT A - FORM OF NOTE
EXHIBIT A
FORM OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS. EXCEPT AS OTHERWISE SET FORTH
HEREIN OR IN THE NOTE PURCHASE AGREEMENT, DATED AS OF JANUARY 6, 2002 (THE "NOTE
PURCHASE AGREEMENT"), BETWEEN THE CORPORATION AND THE PURCHASER PARTY THERETO,
THIS NOTE MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH NOTE UNDER THE
ACT OR SUCH LAWS OR IN A TRANSACTION EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION REQUIREMENTS IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
NOTE PURCHASE AGREEMENT. A COPY OF THE NOTE PURCHASE AGREEMENT IS AVAILABLE UPON
REQUEST TO THE SECRETARY OF THE CORPORATION FOR INSPECTION AT THE OFFICES OF THE
CORPORATION.
TERM NOTE
JANUARY 6, 2002
For value received, GlobalNet, Inc., a Nevada corporation (the "Company"),
promises to pay to the order of The Titan Corporation or its assigns (the
"Purchaser"), the principal sum of $5,000,000, or so much as may have been
advanced by the Purchaser and be outstanding, pursuant to the Note Purchase
Agreement referred to below on the Maturity Date provided for in the Note
Purchase Agreement. The Company promises to pay interest on the unpaid principal
amount of such Note on the dates and at the rate or rates provided for in the
Note Purchase Agreement referred to below. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Purchaser, at 0000 Xxxxxxx Xxxx
Xxxx, Xxx Xxxxx, XX 00000.
This note is the Note referred to in the Non-Negotiable Note Purchase
Agreement dated as of January 6, 2002 between GlobalNet, Inc. and The Titan
Corporation (as the same may be amended from time to time, the "Note Purchase
Agreement"). Terms defined in the Note Purchase Agreement are used herein with
the same meanings. Reference is made to the Note Purchase Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
Each of the Company and any guarantors, endorsers, and other persons
assuming obligations pursuant to this Note (each an "Obligor") hereby waives
presentment, protest, demand, notice of dishonor, and all other notices, and all
defenses and pleas on the grounds of any extension or extensions of the time of
payments or the due dates of this Note, in whole or in part, before or after
maturity, with or without notice. No renewal or extension of this Note, no
release or surrender of any collateral given as security for this Note, no
release of any Obligor, and no delay in enforcement of this Note or in
exercising any right or power hereunder, shall affect the liability of any
Obligor.
GlobalNet, Inc.
By
-------------------------------------
Name:
Title:
COMPANY DISCLOSURE SCHEDULE
SCHEDULE 1
$3 million to be used for the following purposes:
- an amount not to exceed $1.5 million for accounts payable and
accrued expenses.
- an amount not to exceed $0.5 million for advance deposits with
vendors (to increase terminating capacity and reduce overflow).
- an amount not to exceed $0.5 million for partial payment of
transaction expenses (including fees of legal and financial
advisors).
- an amount not to exceed $2.5 million to carry accounts receivable
with Tier 1 carriers.
