EXHIBIT 10.28
================================================================================
PURCHASE AGREEMENT
among
TERREMARK WORLDWIDE, INC., as Issuer,
The Guarantors named herein,
The Agent named herein
and
The Purchasers named herein
Dated as of December 31,2004
Relating to:
$30,000,000 Aggregate Principal Amount of
Senior Secured Notes due 2009
3,060,444 Shares of Common Stock, $.001 Par Value
Warrants for 15,000,000 (Subject to Adjustment)
Shares of Common Stock, $.001 Par Value
================================================================================
TABLE OF CONTENTS
PAGE
----
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Definitions..............................................................................2
SECTION 1.02. Computation of Time Periods.............................................................27
SECTION 1.03. Accounting Terms........................................................................27
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES
SECTION 2.01. Authorization of Issue..................................................................27
SECTION 2.02. Sale....................................................................................27
SECTION 2.03. Closing.................................................................................27
SECTION 3
CONDITIONS TO CLOSING
SECTION 3.01. Representations and Warranties..........................................................28
SECTION 3.02. Performance; No Default Under Other Agreements..........................................28
SECTION 3.03. Compliance Certificates.................................................................28
SECTION 3.04. Opinions of Counsel.....................................................................29
SECTION 3.05. Changes in Corporate Structure..........................................................29
SECTION 3.06. No Adverse Events.......................................................................29
SECTION 3.07. Financial Information; Capital Structure................................................29
SECTION 3.08. Proceedings and Documents...............................................................29
SECTION 3.09. Purchase Permitted by Applicable Law, etc...............................................30
SECTION 3.10. Transaction Documents in Force and Effect; Information..................................30
SECTION 3.11. No Violation; No Legal Constraints; Consents, Authorizations and
Filings, etc.........................................................................30
SECTION 3.12. Consummation of the Transactions........................................................31
SECTION 3.13. Fees....................................................................................31
SECTION 3.14. Private Placement Numbers...............................................................31
SECTION 3.15. Simultaneous Purchase...................................................................31
SECTION 3.16. Delivery of Documents...................................................................31
SECTION 3.17. Personal Property Requirements..........................................................31
SECTION 3.18. Insurance...............................................................................32
-i-
PAGE
----
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE ISSUERS
SECTION 4.01. Due Incorporation; Power and Authority..................................................33
SECTION 4.02. Capitalization..........................................................................33
SECTION 4.03. Equity Interests and Subsidiaries.......................................................34
SECTION 4.04. Due Authorization, Execution and Delivery...............................................34
SECTION 4.05. Non-Contravention; Authorizations and Approvals.........................................35
SECTION 4.06. Company Financial Statements; Company Reports...........................................36
SECTION 4.07. Absence of Undisclosed Liabilities or Events............................................37
SECTION 4.08. No Actions or Proceedings...............................................................37
SECTION 4.09. Properties..............................................................................38
SECTION 4.10. Intellectual Property...................................................................39
SECTION 4.11. Taxes...................................................................................39
SECTION 4.12. Employee Benefit Plans..................................................................41
SECTION 4.13. Private Offering; No Integration or General Solicitation................................42
SECTION 4.14. Eligibility for Resale Under Rule 144A..................................................42
SECTION 4.15. Status Under Certain Statutes...........................................................42
SECTION 4.16. Insurance...............................................................................42
SECTION 4.17. Use of Proceeds; Margin Regulations.....................................................43
SECTION 4.18. Existing Indebtedness; Future Liens.....................................................43
SECTION 4.19. Compliance with Laws; Permits; Environmental Matters....................................43
SECTION 4.20. Solvency................................................................................44
SECTION 4.21. Affiliate Transactions..................................................................44
SECTION 4.22. Material Contracts......................................................................44
SECTION 4.23. No Changes to Applicable Law............................................................45
SECTION 4.24. Indebtedness............................................................................45
SECTION 4.25. Fees....................................................................................45
SECTION 4.26. Brokerage Fees..........................................................................45
SECTION 4.27. Documents and Procedures................................................................45
SECTION 4.28. Absence of Labor Dispute................................................................45
SECTION 4.29. No Unrelated Liabilities................................................................45
SECTION 4.30. Full Disclosure.........................................................................45
SECTION 4.31. Assets Control Regulations and Anti-Money Laundering....................................46
SECTION 4.32. Certain Other Representations and Warranties; Consummation of
Transactions.........................................................................46
SECTION 4.33. Security Documents......................................................................47
SECTION 4.34. Real Property Holding Corporation.......................................................47
SECTION 4.35. Activities of Certain Subsidiaries......................................................48
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
SECTION 5.01. Purchase for Investment.................................................................48
-ii-
PAGE
----
SECTION 6
COVENANTS TO PROVIDE INFORMATION
SECTION 6.01. Future Reports to Holders...............................................................49
SECTION 7
OTHER AFFIRMATIVE COVENANTS
SECTION 7.01. Payment of Principal, Premium and Interest..............................................54
SECTION 7.02. Preservation of Corporate Existence and Franchises......................................54
SECTION 7.03. Maintenance of Properties...............................................................55
SECTION 7.04. Taxes...................................................................................55
SECTION 7.05. Books, Records and Access...............................................................55
SECTION 7.06. Compliance with Law.....................................................................56
SECTION 7.07. Insurance...............................................................................56
SECTION 7.08. Offer to Repurchase upon Change of Control..............................................57
SECTION 7.09. Offer to Purchase by Application of Excess Proceeds.....................................59
SECTION 7.10. Affirmative Covenants with Respect to Leases............................................60
SECTION 7.11. [RESERVED]..............................................................................60
SECTION 7.12. Further Assurances......................................................................60
SECTION 7.13. Additional Collateral; Additional Guarantors............................................60
SECTION 7.14. Security Interests; Further Assurances..................................................62
SECTION 7.15. Information Regarding Collateral........................................................62
SECTION 7.16. Designations of Unrestricted Subsidiaries...............................................63
SECTION 7.17. Post-Closing Collateral Matters.........................................................64
SECTION 7.18. Casualty Event..........................................................................67
SECTION 7.19. NAP Madrid Post Closing Matters.........................................................67
SECTION 7.20. Receivables Account.....................................................................67
SECTION 8
NEGATIVE COVENANTS
SECTION 8.01. Stay, Extension and Usury Laws..........................................................68
SECTION 8.02. Restricted Payments.....................................................................68
SECTION 8.03. Dividend and Other Payment Restrictions Affecting Subsidiaries..........................69
SECTION 8.04. Incurrence of Indebtedness and Issuance of Preferred Stock..............................70
SECTION 8.05. Asset Sales.............................................................................73
SECTION 8.06. Transactions with Affiliates............................................................74
SECTION 8.07. Limitation on Liens.....................................................................75
SECTION 8.08. Limitation on Issuances and Sales of Capital Stock of Subsidiaries......................78
SECTION 8.09. Payments for Consents...................................................................78
-iii-
PAGE
----
SECTION 8.10. Merger, Consolidation, or Sale of Assets................................................78
SECTION 8.11. Conduct of Business.....................................................................79
SECTION 8.12. Limitation on Tax Consolidation.........................................................79
SECTION 8.13. Public Disclosures......................................................................79
SECTION 8.14. Limitation on Repurchases and other Repayments of Notes.................................80
SECTION 8.15. Limitation on Activities................................................................80
SECTION 8.16. Limitation on Accounting Changes........................................................80
SECTION 8.17. Fiscal Year.............................................................................80
SECTION 8.18. Amendments or Waivers of Certain Documents..............................................80
SECTION 8.19. Amendments to Charter Documents.........................................................80
SECTION 8.20. No Integration..........................................................................80
SECTION 9
THE NOTES
SECTION 9.01. Form and Execution......................................................................81
SECTION 9.02. Terms of the Notes......................................................................81
SECTION 9.03. Denominations...........................................................................81
SECTION 9.04. Form of Legend for the Notes............................................................81
SECTION 9.05. Payments and Computations...............................................................82
SECTION 9.06. Registration; Registration of Transfer and Exchange.....................................82
SECTION 9.07. Transfer Restrictions...................................................................83
SECTION 9.08. Mutilated, Destroyed, Lost and Stolen Notes.............................................84
SECTION 9.09. Persons Deemed Owners...................................................................85
SECTION 9.10. Cancellation............................................................................85
SECTION 9.11. Home Office Payment.....................................................................85
SECTION 10
EVENTS OF DEFAULT
SECTION 10.01. Events of Default.......................................................................86
SECTION 10.02. Remedies................................................................................88
SECTION 10.03. Waiver of Past Defaults.................................................................89
SECTION 11
REDEMPTION
SECTION 11.01. Right of Redemption.....................................................................90
SECTION 11.02. Partial Redemptions.....................................................................90
SECTION 11.03. Notice of Redemption....................................................................90
-iv-
PAGE
----
SECTION 11.04. Notes Payable on Redemption Date........................................................91
SECTION 11.05. Notes Redeemed in Part..................................................................91
SECTION 12
SUBSIDIARY GUARANTEES
SECTION 12.01. Subsidiary Guarantees...................................................................91
SECTION 12.02. Execution and Delivery of Subsidiary Guarantees.........................................92
SECTION 12.03. Guarantors May Consolidate, Etc. on Certain Terms.......................................93
SECTION 12.04. Releases of Subsidiary Guarantees.......................................................93
SECTION 12.05. Limitation on Guarantor Liability.......................................................94
SECTION 13
EXPENSES, INDEMNIFICATION AND CONTRIBUTION, AND TERMINATION
SECTION 13.01. Expenses................................................................................94
SECTION 13.02. Indemnification.........................................................................95
SECTION 13.03. Contribution............................................................................96
SECTION 13.04. Survival................................................................................97
SECTION 13.05. Termination.............................................................................97
SECTION 14
AGENT
SECTION 14.01. Appointment.............................................................................98
SECTION 14.02. Nature of Duties........................................................................98
SECTION 14.03. Rights, Exculpation, Etc................................................................98
SECTION 14.04. Reliance................................................................................99
SECTION 14.05. Indemnification.........................................................................99
SECTION 14.06. FMP Agency Services, LLC Individually..................................................100
SECTION 14.07. Successor Agent........................................................................100
SECTION 14.08. Collateral Matters.....................................................................100
SECTION 14.09. Agency for Perfection..................................................................101
SECTION 14.10. Notice of Default......................................................................102
SECTION 14.11. Noteholder Actions Against Collateral..................................................102
SECTION 14.12. Setoff and Sharing of Payments.........................................................102
SECTION 15
MISCELLANEOUS
SECTION 15.01. Notices................................................................................103
SECTION 15.02. Benefit of Agreement; Assignments and Participations...................................103
SECTION 15.03. No Waiver; Remedies Cumulative.........................................................104
SECTION 15.04. Amendments, Waivers and Consents.......................................................104
SECTION 15.05. Counterparts...........................................................................105
SECTION 15.06. Reproduction...........................................................................105
-v-
PAGE
----
SECTION 15.07. Headings...............................................................................105
SECTION 15.08. Governing Law; Submission to Jurisdiction; Venue.......................................105
SECTION 15.09. Severability...........................................................................106
SECTION 15.10. Entirety...............................................................................106
SECTION 15.11. Survival of Representations and Warranties.............................................107
SECTION 15.12. Incorporation..........................................................................107
SECTION 15.13. Certain Rights and Obligations Among Noteholders.......................................107
-vi-
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Subsidiary Guarantee
Exhibit C - Form of Supplemental Agreement
Exhibit D - Form of Warrant Certificate
Exhibit E - Form of Registration Rights
Exhibit F - Form of Compliance Certificate
Exhibit G - Form of Intercompany Note
Exhibit H - Form of Landlord Access Agreement(1)
Exhibit I - Form of Management Rights Letter
Exhibit J - Form of Mortgage
Exhibit K-1 - Form of Perfection Certificate
Exhibit K-2 - Form of Perfection Certificate Supplement
Exhibit L - Form of Security Agreement
Exhibit M - Form of Confidentiality Agreement
Exhibit N - Subordination Provisions
Exhibit 3.03(a) - Form of Officers' Certificate
Exhibit 3.03(b) - Form of Secretary's Certificate
Exhibit 3.04(a)(i) - Form of Company Counsel Opinion
Exhibit 3.04(a)(ii) - Form of Local Counsel Opinion
SCHEDULES
Schedule A - Information Relating to Purchasers
Schedule B - Assets to be Transferred to NAP Madrid
Schedule 3.04 - Local Counsel
Schedule 3.06 - Adverse Events
Schedule 4.02 - Capitalization
Schedule 4.03(a) - Equity Interests
Schedule 4.03(b) - Consents
Schedule 4.05 - Authorizations and Approvals
Schedule 4.06 - Financial Statements
Schedule 4.07(a) - Liabilities
Schedule 4.07(b) - Changes in Business
Schedule 4.08 - Legal and Governmental Actions
Schedule 4.09(c) - Special Flood Hazards
Schedule 4.10(a) - Intellectual Property-- Claims
Schedule 4.10(c) - Intellectual Property-- Violations
Schedule 4.11 - Taxes
---------
(1) If there is a leasehold mortgage, use landlord lien waiver, access
agreement and consent.
-vii-
Schedule 4.12 - Retiree Health and Life Benefits
Schedule 4.18 - Indebtedness
Schedule 4.19 - Compliance with Laws; Permits; Environmental Matters
Schedule 4.21(a) - Affiliate Transactions
Schedule 4.22 - Material Contracts
Schedule 4.25 - Transaction Fees
Schedule 4.26 - Brokerage Fees
Schedule 4.27 - Documents and Procedures
Schedule 4.28 - Labor Disputes
Schedule 7.17(a) - Mortgaged Properties
Schedule 7.17(a)(3) - Fair Market Value of Fixtures
Schedule 7.17(b) - Locations-- Landlord Access Agreements/Bailee Letters
Schedule 8.07(c) - Liens
-viii-
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of December 31, 2004, by and
among TERREMARK WORLDWIDE, INC., a Delaware corporation (the "COMPANY"), the
guarantors listed on the signature pages hereto (each a "GUARANTOR" and,
collectively, the "GUARANTORS," and together with the Company, the "ISSUERS"),
Agent (defined below) and each of the purchasers listed on SCHEDULE A hereto
(each a "PURCHASER" and, collectively, the "PURCHASERS").
RECITALS
WHEREAS the Company and LA Ref II Telecom Miami, LLC, LA Ref
III Telecom Miami, LLC, LA Parallel II Telecom Miami, LLC, LA Parallel III
Telecom Miami, LLC, LA Capital II Telecom Miami, LLC LA Equity III Telecom
Miami, LLC, Xxxxxx Street Tecota, LP and MHLP, LLC (formerly known as Calor
Development, Ltd) (collectively, "SELLER") have entered into an Acquisition
Agreement (the "ACQUISITION AGREEMENT") pursuant to which the Company or a
Subsidiary (as hereinafter defined) shall acquire (the "ACQUISITION") all of the
outstanding Capital Stock of Technology Center of the Americas, LLC (the "SPV")
not currently owned by the Company or any of its Subsidiaries for an aggregate
purchase price of $39,664,000 (subject to adjustment as set forth therein);
WHEREAS, in connection with the Acquisition, the SPV will
enter into a financing agreement, dated as of the date hereof (the "SPV
FINANCING AGREEMENT"), by and among the SPV and Citigroup Global Markets Realty
Corp. ("CITIGROUP"), as administrative agent for the lenders named therein, and
the lenders named therein, which will provide for a mortgage loan to the Company
of $49.0 million;
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the Company has agreed to sell to the Purchasers, and
the Purchasers, acting severally and not jointly, have agreed to purchase from
the Company, an aggregate of (i) $30.0 million aggregate principal amount of the
Company's Senior Secured Notes due 2009 in the form of EXHIBIT A hereto (the
"NOTES"), (ii) 3,060,444 shares (the "SHARES") of the Company's Common Stock,
$.001 par value per share, and (iii) 15 million stock purchase warrants (the
"WARRANTS") evidencing rights to purchase initially 15 million shares of the
Company's Common Stock, $.001 par value per share (the "COMMON STOCK"), which
Warrants shall be in four different classes in the forms of EXHIBIT D hereto;
WHEREAS the obligations of the Company under this Agreement
and the Notes will be guaranteed (the "SUBSIDIARY GUARANTEES") by the
Guarantors, such Subsidiary Guarantees to be in the form of EXHIBIT B hereto;
WHEREAS the Company desires to secure all of its obligations
under the Basic Documents (as hereinafter defined) by granting to Agent, for the
benefit of Agent and the Noteholders, a security interest in and lien upon
substantially all of its personal and real property (including a pledge of all
of the Capital Stock (as hereinafter defined) of its Subsidiaries (as
hereinafter defined)) other than the Excluded Property (as defined in the
Security Agreement);
WHEREAS each of the Guarantors (which excludes the SPV) is
willing to grant to Agent, for the benefit of Agent and the Noteholders, a
security interest in and lien upon substantially all of its personal and real
property to secure such guaranty other than the Excluded Property (as defined in
the Security Agreement);
WHEREAS the holders of Shares and Warrants from time to time
will be entitled to the benefits of the Registration Rights Agreement, dated the
date hereof (the "REGISTRATION RIGHTS AGREEMENT"), by and among the Company and
the Purchasers in the form of EXHIBIT E hereto;
WHEREAS the Issuers have duly authorized the creation and
issuance of the Notes, the Subsidiary Guarantees, the Shares and the Warrants,
as applicable, and the execution and delivery of this Agreement and the other
Transaction Documents; and
WHEREAS all things necessary to make this Agreement, the Notes
(when issued and delivered hereunder), the Subsidiary Guarantees (when validly
endorsed on the Notes), the Warrants and each other Basic Document valid and
binding obligations of each applicable Issuer in accordance with their
respective terms have been done;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINITIONS. As used herein, the following terms
shall have the meanings specified herein unless the context otherwise requires:
"ACCREDITED INVESTOR" means any Person that is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (i)
assumed in connection with an Asset Acquisition from such Person or (ii)
existing at the time such Person becomes a Subsidiary of any other Person (other
than any Indebtedness incurred in connection with, or in contemplation of, such
Asset Acquisition or such Person becoming such a Subsidiary). Acquired
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Subsidiary, as the case may be.
"ACQUISITION" has the meaning specified in the first recital
to this Agreement.
"ACQUISITION AGREEMENT" has the meaning specified in the first
recital to this Agreement.
"AFFILIATE" means with respect to any specified Person: (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; (ii) any other
Person that owns, directly or indirectly, 5% or more of such specified Person's
-2-
Capital Stock or any officer or director of any such specified Person or other
Person or, with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption no more remote than first
cousin; or (iii) any other Person 5% or more of the Voting Stock of which is
beneficially owned or held directly or indirectly by such specified Person. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"AGENT" means FMP Agency Services, LLC in its capacity as
Agent for the Noteholders or its successor appointed pursuant to Section 14.07.
"AGREEMENT" is defined in Section 15.04.
"APPLICABLE LAW" means all applicable laws, statutes,
treaties, rules, codes (including building codes), ordinances, regulations,
certificates, orders and licenses of, and interpretations by, any Governmental
Authority and judgments, decrees, injunctions, writs, permits, orders or like
governmental action of any Governmental Authority (including any Environmental
Law and any laws pertaining to health or safety) applicable to the Company, any
of its Subsidiaries or any of their property or operations.
"APPLICABLE PREMIUM" means, as of any date indicated below, a
premium to principal amount based on the percentage of the principal amount of
Notes to be redeemed as follows:
PERIOD COMMENCING: APPLICABLE PREMIUM:
----------------- ------------------
Closing Time 13.5%
December 31, 2005 13.5% (except as set forth
below)
December 31, 2006 7.5%
June 30, 2007 5.0%
December 31, 2007 2.25%
June 30, 2008 0.0%
Notwithstanding the foregoing, if a Change of Control Payment
Date occurs during the period commencing December 31, 2005 and ending December
31, 2006 and if as a result of the announcement of such Change of Control the
closing price of the Company's Common Stock on the date of the consummation of
the Change of Control shall exceed $1.00 (after giving effect to any stock
splits, reverse stock splits, stock dividends or similar events) then the
Applicable Premium for such period shall be 10.0%.
"APPLICABLE RATE" is defined in EXHIBIT A.
"ASSET ACQUISITION" means (i) an Investment by the Company or
any Subsidiary in any other Person pursuant to which such Person will become a
Subsidiary or will be merged or consolidated with or into the Company or any
Subsidiary or (ii) the acquisition by the Company or any Subsidiary of the
-3-
Company or any Subsidiary of the assets of any Person which constitute
substantially all of the assets of any Person which constitute substantially all
of the assets of such Person, or any division or line of business of such
Person, or which is otherwise outside of the ordinary course of business.
"ASSET SALE" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or Sale and Lease-back Transaction) (collectively, a "TRANSFER"),
directly or indirectly, in one or a series of related transactions, of: (i) any
Capital Stock of any Subsidiary; (ii) all or substantially all of the properties
and assets of any division or line of business of the Company or its
Subsidiaries; or (iii) any other properties or assets of the Company or any
Subsidiary other than in the ordinary course of business. For the purposes of
this definition, the term "Asset Sale" shall not include any transfer of
properties and assets (a) that is governed by the provisions described under
Section 8.10; PROVIDED, HOWEVER, that any transaction consummated in compliance
with Section 8.10 involving a transfer of less than all of the properties or
assets of the Company shall be deemed to be an Asset Sale with respect to the
properties or assets of the Company that are not so transferred in such
transaction, (b) that is by the Company to any Wholly Owned Subsidiary that is a
Guarantor, or by any Subsidiary to the Company or any Wholly Owned Subsidiary
that is a Guarantor in accordance with the terms of this Agreement, (c) that is
of obsolete equipment in the ordinary course of business, (d) the Fair Market
Value of which in the aggregate does not exceed $1,000,000 or (e) with respect
to the sale of 8,652,016 shares of the Company's Capital Stock owned by NAP
Madrid, to the extent such proceeds are used as set forth in Section 7.19.
"ASSET SALE OFFER" is defined in Section 7.09(a).
"ASSET SALE OFFER PAYMENT DATE" is defined in Section 7.09(b).
"AUDIT DATE" is defined in Section 4.06(b).
"AVERAGE LIFE TO STATED MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"BAILEE LETTER" shall have the meaning assigned thereto in the
Security Agreement.
"BANKRUPTCY LAW" means Title 11 of the United States Code or
any similar federal, state or foreign bankruptcy, insolvency, reorganization or
other law for the relief of debtors.
"BASIC DOCUMENTS" means, collectively, this Agreement, the
Notes, the Guarantees, the Security Documents, the Warrants, the Intercreditor
-4-
Agreement, the Registration Rights Agreement, the Management Rights Letter and
all certificates, instruments, financial and other statements and other
documents made or delivered in connection herewith and therewith.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company or a Subsidiary of the Company, as the case may be, or any authorized
committee of such Board of Directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of common stock and preferred stock of such Person; (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person; and (iii) any rights, warrants or options
exchangeable for or convertible into any of the foregoing.
"CAPITALIZED LEASE OBLIGATION" means any obligation under a
lease of (or other agreement conveying the right to use) any property (whether
real, personal or mixed) that is required to be classified and accounted for as
a capital lease obligation under GAAP, and, for the purpose of this Agreement,
the amount of such obligation at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP consistently applied.
"CASH EQUIVALENTS" means, at any time, (i) any evidence of
Indebtedness with a maturity of not more than one year issued or directly and
fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof); (ii) certificates of deposit or
acceptances with a maturity of not more than one year of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000; (iii)
commercial paper with a maturity of not more than one year issued by a
corporation that is not an Affiliate of the Company organized under the laws of
any state of the United States or the District of Columbia and rated at least
A-1 by Standard & Poor's Corporation or at least P-1 by Xxxxx'x Investors
Service, Inc.; and (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (i) and
(ii) above entered into with any financial institution meeting the
qualifications specified in clause (ii) above.
"CASUALTY EVENT" shall mean any loss of title or any loss of
or damage to or destruction of, or any condemnation or other taking (including
by any Governmental Authority) of, any property of the Company or any of its
Subsidiaries. "Casualty Event" shall include but not be limited to any taking of
all or any part of any Real Property of any person or any part thereof, in or by
condemnation or other eminent domain proceedings pursuant to any Requirement of
Law, or by reason of the temporary requisition of the use or occupancy of all or
any part of any Real Property of any person or any part thereof by any
Governmental Authority, civil or military, or any settlement in lieu thereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, 42 U.S.C.
ss. 9601 ET SEQ.
-5-
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"CHANGE OF CONTROL" means the occurrence of any of the
following events (whether or not approved by the Board of Directors of the
Company): (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of 33-1/3% or more of the total voting or economic power
of the Voting Stock of the Company; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election to such
board or whose nomination for election by the stockholders of the Company was
approved by a vote of 66-2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of such Board of Directors then in office; (iii) the Company
consolidates with or merges with or into any Person or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any corporation consolidates with or merges into or
with the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction where the
outstanding Voting Stock of the Company is not changed or exchanged at all
(except to the extent necessary solely to reflect a change in the jurisdiction
of incorporation of the Company or where (A) no "person" or "group," other than
Permitted Holders, owns immediately after such transaction, directly or
indirectly, 33-1/3% or more of the total voting or economic power of the Voting
Stock of the surviving corporation and (B) the holders of the Voting Stock of
the Company immediately prior to such transaction own, directly or indirectly,
not less than a majority of the total voting and economic power of the Voting
Stock of the surviving or transferee corporation immediately after such
transaction); or (iv) any order, judgment or decree shall be entered against the
Company decreeing the dissolution or split up of the Company and such order
shall remain undischarged or unstayed for a period in excess of sixty days.
"CHANGE OF CONTROL OFFER" is defined in Section 7.08(a).
"CHANGE OF CONTROL PAYMENT" is defined in Section 7.08(a).
"CHANGE OF CONTROL PAYMENT DATE" is defined in Section
7.08(b)(ii).
"CLOSING TIME" is defined in Section 2.03.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"COLLATERAL" shall mean, collectively, all of the Security
Agreement Collateral, the Mortgaged Property and all other property of whatever
kind and nature subject or purported to be subject from time to time to a Lien
under any Security Document.
-6-
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Agreement such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the body
performing such duties at such time.
"COMMON STOCK" has the meaning specified in the third recital
to this Agreement.
"COMPANY" shall have the meaning assigned to such term in the
preamble to this Agreement and its successors and permitted assigns.
"COMPANY FINANCIAL STATEMENTS" is defined in Section 4.06(a).
"COMPANY PARTY" is defined in Section 4.04(e).
"COMPANY REPORTS" is defined in Section 4.06(b).
"COMPLIANCE CERTIFICATE" is defined in Section 6.01(f).
"CONSOLIDATED" or "CONSOLIDATED" (including the correlative
term "CONSOLIDATING") or on a "CONSOLIDATED BASIS," when used with reference to
any financial term in this Agreement (but not when used with respect to any Tax
Return or Tax liability), means the aggregate for two or more Persons of the
amounts signified by such term for all such Persons, with intercompany items
eliminated and, with respect to net income or earnings, after eliminating the
portion of net income or earnings properly attributable to minority interests,
if any, in the capital stock of any such Person or attributable to shares of
preferred stock of any such Person not owned by any other such Person, in
accordance with GAAP.
"CONSOLIDATED EBITDA" means, for any period, (i) the sum of,
without duplication, the amounts for such period, taken as a single accounting
period, of (a) Consolidated Net Income, (b) to the extent reducing Consolidated
Net Income, Consolidated Non-cash Charges, (c) to the extent reducing
Consolidated Net Income, Consolidated Interest Expense, and (d) to the extent
reducing Consolidated Net Income, Consolidated Income Tax Expense less (ii)
other non-cash items increasing Consolidated Net Income for such period.
"CONSOLIDATED INCOME TAX EXPENSE" means, for any period, the
provision for federal, state, local and foreign income taxes payable by the
Company and the Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, without
duplication, the sum of (a) the interest expense of the Company and the
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i) any amortization of debt discount
attributable to such period, (ii) the net cost under or otherwise associated
with Hedging Obligations (in each case, including any amortization of
-7-
discounts), (iii) the interest portion of any deferred payment obligation, (iv)
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and (v) all capitalized
interest and all accrued interest, and (b) all but the principal component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by the Company and the Subsidiaries during such period and as determined
on a consolidated basis. Consolidated Interest Expense shall be calculated on a
Pro Forma Basis to give effect to any Indebtedness incurred, assumed or
permanently repaid or extinguished during the relevant Test Period in connection
with the Acquisition, any Asset Acquisitions and Asset Sales as if such
incurrence, assumption, repayment or extinguishing had been effected on the
first day of such period.
"CONSOLIDATED NET INCOME" means, for any period, the
consolidated net income (or loss) of the Company and its Subsidiaries for such
period on a consolidated basis, adjusted, to the extent included in calculating
such net income (or loss), by excluding, without duplication, (i) all
extraordinary gains or losses (net of all fees and expenses relating thereto),
(ii) the portion of net income (or loss) of the Company and its Subsidiaries on
a consolidated basis allocable to minority interests in unconsolidated Persons,
except to the extent that cash dividends or distributions are actually received
by the Company or a Subsidiary, (iii) income of the Company and the Subsidiaries
derived from or in respect of Investments in Persons other than Subsidiaries,
except to the extent that cash dividends or distributions are actually received
by the Company or a Subsidiary, (iv) net income (or loss) of any Person combined
with the Company or any of the Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination, (v) any gain or
loss realized upon the termination of any employee pension benefit plan, (vi)
gains (but not losses), net of all fees and expenses relating thereto, in
respect of any Asset Sales by the Company or a Subsidiary, (vii) the net income
of any Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders, (viii) any
restoration to income of any contingency reserve except to the extent provision
for such reserve was made out of income accrued at any time following the
Closing Time, (ix) any gain, arising from the acquisition of any securities, or
the extinguishment, under GAAP, of any Indebtedness of the Company and (x) the
net gain resulting from any prepayment or redemption premiums incurred with
respect to Indebtedness repaid with the proceeds of the issuance of the Notes in
accordance with this Agreement.
"CONSOLIDATED NON-CASH CHARGES" means, for any period, the
aggregate depreciation, amortization and other non-cash expenses of the Company
and the Subsidiaries reducing Consolidated Net Income for such period (other
than any non-cash item requiring an accrual or reserve for cash disbursements in
any future period), determined on a consolidated basis.
"CONTESTED COLLATERAL LIEN CONDITIONS" shall mean, with
respect to any Permitted Lien of the type described in clauses (a), (b), (e) and
(f) of Section 8.07, the following conditions:
(a) the Company shall cause any proceeding instituted
contesting such Lien to stay the sale or forfeiture of any portion of
the Collateral on account of such Lien;
(b) at the option and at the request of the Agent or the
Required Holders, to the extent such Lien is in an amount in excess of
$500,000, the appropriate Issuer shall maintain cash reserves in an
-8-
amount sufficient to pay and discharge such Lien or obtain a bond over
such Lien and, in either case, the Issuer's reasonable estimate of all
interest and penalties related thereto; and
(c) such Lien shall in all respects be subject and subordinate
in priority to the Lien and security interest created and evidenced by
the Security Documents, except if and to the extent that the
Requirement of Law creating, permitting or authorizing such Lien
provides that such Lien is or must be superior to the Lien and security
interest created and evidenced by the Security Documents.
"CONTRACT" is defined in Section 4.05.
"CONTROL AGREEMENT" shall have the meaning assigned to such
term in the Security Agreement.
"CONTROLLING PERSON" is defined in Section 13.02(a).
"CUSTODIAN" is defined in Section 10.01.
"DEFAULT" means any event, act or condition that is, or with
the giving of notice, lapse of time or both would constitute an Event of
Default.
"DESIGNATION" has the meaning assigned to such term in Section
7.16.
"DESIGNATION AMOUNT" has the meaning assigned to such term in
Section 7.16.
"DISCLOSURE SCHEDULE" means all numbered Schedules to this
Agreement.
"DISINTERESTED DIRECTOR" means, with respect to any
transaction or series of related transactions, a member of the Board of
Directors of the Company who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of related
transactions.
"ENFORCEABILITY EXCEPTIONS" means, with respect to any
specified obligation, any limitations on the enforceability of such obligation
due to bankruptcy, insolvency, reorganization, moratorium, and other similar
laws of general applicability relating to or affecting creditors' rights or
general equity principles (other than, in any such case, any Federal or state
laws relating to fraudulent transfers).
"ENVIRONMENT" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, natural resources, the workplace or as otherwise
defined in any Environmental Law.
"ENVIRONMENTAL ACTION" means (a) any action, suit, written
demand, written claim, written notice of non-compliance or violation, written
notice of liability or potential liability, investigation, proceeding, consent
order or consent agreement relating to any Environmental Law, any Permit or
Hazardous Material, including, without limitation, (i) by any Governmental
Authority for enforcement, cleanup, removal, response, remedial or other actions
-9-
or damages and (ii) by any Governmental Authority or third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
and (b) any investigation, monitoring, removal or remediation activities
undertaken by or on behalf of the Company or any of its Subsidiaries, whether or
not such activities are carried out voluntarily.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or written agency interpretation, policy or
guidance that has the force and effect of law relating to pollution or
protection of the environment, public health and safety or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials, including, without limitation, CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 X.X.X.xx. 1251 ET SEQ.; the Toxic Substances Control
Act, 15 X.X.X.xx. 2601 ET SEQ.; the Clean Air Act, 42 X.X.X.xx. 7401 ET SEQ.;
the Safe Drinking Water Act, 42 X.X.X.xx. 3803 ET SEQ.; the Oil Pollution Act of
1990, 33 X.X.X.xx. 2701 ET SEQ.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 X.X.X.xx. 11001 ET SEQ.; the Hazardous Material
Transportation Act, 49 X.X.X.xx. 1801 ET SEQ.; and the Occupational Safety and
Health Act, 29 X.X.X.xx. 651 ET SEQ.; and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"ERISA" is defined in Section 4.12(a).
"ERISA AFFILIATE" is defined in Section 4.12(b).
"EVENT OF DEFAULT" is defined in Section 10.01.
"EXCESS PROCEEDS" is defined in Section 8.05(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission thereunder.
"EXISTING CONVERTIBLE NOTES" means the convertible debt
securities of the Company which are outstanding at the Closing Time.
"EXISTING LIEN" is defined in Section 8.07(c).
"FACILITY" means the 750,000 square foot telecommunications
building in which NAP of the Americas, Inc., a Wholly Owned Subsidiary, is
housed as one of the tenants in Miami, Florida.
"FAIR MARKET VALUE" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length transaction,
for cash, between an informed and willing seller under no compulsion to sell and
an informed and willing buyer under no compulsion to buy. Fair Market Value
shall be determined by the Board of Directors of the Company or the applicable
Subsidiary of the Company acting in good faith evidenced by a board resolution
thereof delivered to the Noteholders.
-10-
"FISCAL YEAR" means the Fiscal Year of the Company and its
Subsidiaries ending on March 31 of each calendar year, except with respect to
NAP Madrid and Terremark Latin America (Brasil) Ltda., for which "Fiscal Year"
means the Fiscal Year ending on December 31 of each calendar year unless and
until such Subsidiary adopts March 31 of each calendar year as its Fiscal Year.
"FOREIGN SUBSIDIARY" means, with respect to any Person, any
Restricted Subsidiary of such Person that is not organized or existing under the
laws of the United States, any state thereof, the District of Columbia, or any
territory thereof.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"GOVERNMENTAL AUTHORITY" means (a) the government of the
United States or any State or other political subdivision thereof, (b) any
government or political subdivision of any other jurisdiction in which the
Company or any Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any Subsidiary or (c)
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to, any such government.
"GOVERNMENTAL REAL PROPERTY DISCLOSURE REQUIREMENTS" shall
mean any Requirement of Law of any Governmental Authority requiring notification
of the buyer, lessee, mortgagee, assignee or other transferee of any Real
Property, facility, establishment or business, or notification, registration or
filing to or with any Governmental Authority, in connection with the sale,
lease, mortgage, assignment or other transfer (including any transfer of
control) of any Real Property, facility, establishment or business, of the
actual or threatened presence or Release in or into the Environment, or the use,
disposal or handling of Hazardous Material on, at, under or near the Real
Property, facility, establishment or business to be sold, leased, mortgaged,
assigned or transferred.
"GUARANTEE" means, as applied to any obligation, (i) a
guarantee (other than by endorsement of negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any manner, of any part
or all of such obligation and (ii) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A guarantee shall include,
without limitation, any agreement to maintain or preserve any other Person's
financial condition or to cause any other Person to achieve certain levels of
operating results.
"GUARANTORS" means the Subsidiaries listed on the signature
pages hereto as guarantors to this Agreement and any other Subsidiary which is a
guarantor of the Notes, including any Person that executes or is required after
the Closing Time to execute a guarantee of the Notes pursuant to the covenant
described under Section 7.13 until a successor replaces such party pursuant to
the applicable provisions of this Agreement and, thereafter, shall mean such
successor.
-11-
"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or is reasonably
expected to become friable, urea formaldehyde foam insulation, dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials," "extremely
hazardous substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import, under
any applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority under Environmental Laws.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
net payment obligations of such Person under (a) Interest Rate Agreements and
(b) other agreements or arrangements entered into in order to protect such
Person against fluctuations in commodity prices, interest rates or currency
exchange rates.
"HOLDER" means any Noteholder, any Shareholder or any
Warrantholder.
"INCUR" is defined in Section 8.04(a).
"INCURRENCE RATIO" means, with respect to any Person, the
ratio of
(x) the sum of the aggregate outstanding amount of
Indebtedness and liquidation value of Preferred Stock of such Person
and its Subsidiaries as of the date of calculation (the "TRANSACTION
Date") on a Consolidated basis to
(y) such Person's Consolidated EBITDA for the two full fiscal
quarters (the "APPLICABLE PERIOD") ending on or prior to the date of
determination for which financial statements are available multiplied
by two (2).
For purposes of this definition, clauses (x) and (y) above
will be calculated after giving effect on a Pro Forma Basis to
1. the incurrence or repayment of any Indebtedness or
Preferred Stock of such Person or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make
such calculation and any incurrence or repayment of other Indebtedness
or Preferred Stock (and the application of the proceeds thereof), other
than the incurrence or repayment of Indebtedness in the ordinary course
of business for working capital purposes pursuant to working capital
facilities, occurring during the Applicable Period or at any time
subsequent to the last day of the Applicable Period and on or prior to
the Transaction Date, as if such incurrence or repayment or issuance or
redemption or other repayment, as the case may be (and the application
of the proceeds thereof), occurred on the first day of the Applicable
Period; and
2. any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (PROVIDED that
such Consolidated EBITDA will be included only to the extent that
Consolidated Net Income would be includable pursuant to the definition
of "Consolidated Net Income") (including any PRO FORMA expense and cost
-12-
reductions calculated on a basis consistent with Regulation S-X of the
Exchange Act) attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Applicable Period) occurring
during the Applicable Period or at any time subsequent to the last day
of the Applicable Period and on or prior to the Transaction Date, as if
such Asset Sale or Asset Acquisition (including the incurrence,
assumption or liability for any such Acquired Indebtedness) occurred on
the first day of the Applicable Period.
If such Person or any of its Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence will give effect to the
incurrence of such guaranteed Indebtedness as if such Person or any Subsidiary
or such Person had directly incurred or otherwise assumed such guaranteed
Indebtedness.
"INDEBTEDNESS" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities incurred or arising in the ordinary course
of business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit, bankers
acceptance or other similar credit transaction and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock of such Person, or any warrants, rights or options to acquire
such Capital Stock, now or hereafter outstanding, (ii) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments, (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
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), but
excluding trade payables arising in the ordinary course of business, (iv) all
Capitalized Lease Obligations of such Person, (v) all Indebtedness referred to
in clauses (i) through (iv) above of other Persons and all dividends of other
Persons, the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (vi) all
guarantees of Indebtedness by such Person, (vii) all Redeemable Capital Stock
issued by such Person (valued at the greater of its voluntary or involuntary
maximum fixed repurchase price plus accrued and unpaid dividends), (viii) all
Hedging obligations of such Person, and (ix) any amendment, supplement,
modification, deferral, renewal, extension, refunding or refinancing of any
liability of the types referred to in clauses (i) through (viii) above. For
purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such Fair
Market Value to be determined in good faith by the Board of Directors of the
issuer of such Redeemable Capital Stock.
-13-
"INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal
or investment banking firm which is nationally recognized within the United
States of America (i) which does not, and whose directors, officers and
employees or Affiliates do not, have a direct or indirect financial interest in
the Company or any of its Subsidiaries or Affiliates and (ii) which, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"INSTITUTIONAL INVESTOR" means (a) any original Purchaser of a
Note and any transferee that is an Affiliate of any original Purchaser, (b) any
holder of a Note holding more than 25% of the aggregate principal amount of the
Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company or investment fund, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form
organized under the laws of the United States or a State thereof, with capital
and surplus in excess of $50,000,000.
"INSURANCE POLICIES" means the insurance policies and
coverages required to be maintained by each Issuer which is an owner of
Mortgaged Property with respect to the applicable Mortgaged Property pursuant to
Section 7.07 and all renewals and extensions thereof.
"INSURANCE REQUIREMENTS" means, collectively, all provisions
of the Insurance Policies, all requirements of the issuer of any of the
Insurance Policies and all orders, rules, regulations and any other requirements
of the National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon each Issuer which is an owner of Mortgaged Property and
applicable to the Mortgaged Property or any use or condition thereof.
"INTELLECTUAL PROPERTY" means (a) all inventions and
discoveries (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, (c) all copyrightable
works, all copyrights and all applications, registrations and renewals in
connection therewith, (d) all broadcast rights, (e) all mask works and all
applications, registrations and renewals in connection therewith, (f) all
know-how, trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice (including
ideas, research and development, know-how, formulas, compositions and
manufacturing and production process and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (g) all computer
software (including data and related documentation), (h) all other proprietary
rights, (i) all copies and tangible embodiments thereof (in whatever form or
medium) and (j) all licenses and agreements in connection therewith.
"INTERCOMPANY NOTE" means a promissory note substantially in
the form of EXHIBIT G.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
dated as of the date hereof by and between Citigroup and Agent.
-14-
"INTEREST PAYMENT DATE" is defined in EXHIBIT A.
"INTEREST RATE AGREEMENTS" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
obligations of any Person pursuant to any arrangement with any other Person
whereby, directly or indirectly, such Person is entitled to receive from time to
time periodic payments calculated by applying either a floating or a fixed rate
of interest on a stated notional amount in exchange for periodic payments made
by such Person calculated by applying a fixed or a floating rate of interest on
the same notional amount or any other arrangement involving payments by or to
such Person based upon fluctuations in interest rates (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements)
and/or other types of interest rate hedging agreements from time to time.
"INVESTMENT" means, with respect to any Person, any direct or
indirect advance, loan or other extension of credit (including by means of a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others or otherwise), or any purchase or acquisition by such Person of
any Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by any other Person and all other items that would be
classified as investments on a balance sheet prepared in accordance with GAAP.
Investments shall exclude extensions of trade credit on commercially reasonable
terms in accordance with normal trade practices. In addition to the foregoing,
any Hedging Obligation or similar agreement shall constitute an Investment. If
the Company or any Subsidiary of the Company sells or otherwise disposes of any
Capital Stock of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, 100% of the outstanding Capital Stock of such
Subsidiary, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the Fair Market Value of the Capital
Stock of such Subsidiary not sold or disposed of.
"ISSUERS" shall have the meaning assigned to such term in the
preamble of this Agreement and their successors and assigns.
"LANDLORD ACCESS AGREEMENT" shall mean a Landlord Access
Agreement, substantially in the form of EXHIBIT H, or such other form as may
reasonably be acceptable to the Agent and the Required Holders.
"LEASES" shall mean any and all leases, subleases, tenancies,
options, concession agreements, rental agreements, occupancy agreements,
franchise agreements, access agreements and any other agreements (including all
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any portion of any Real
Property.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If any
payment date in respect of the Notes is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
-15-
"LIEN" means any mortgage or deed of trust, charge, pledge,
lien (statutory or other), privilege, security interest, hypothecation,
cessation and transfer, lease of real property, assignment for security, claim,
deposit arrangement, or preference or priority or other encumbrance upon or with
respect to any property of any kind (including any conditional sale, capital
lease or other title retention agreement, any leases in the nature thereof, and
any agreement to give any security interest), whether real, personal or mixed,
movable or immovable, now owned or hereafter acquired. A Person shall be deemed
to own subject to a Lien any property which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"MANAGEMENT RIGHTS LETTER" means the Management Rights Letter
dated as of the date hereof among Falcon Mezzanine Partners, LP and the Company
substantially in the form of EXHIBIT I hereto.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, management, operations, affairs, condition (financial or
otherwise), assets, property, prospects or results of operations of the Company
and its Subsidiaries taken as a whole, (b) the ability of the Company or any
Subsidiary to perform any of its material obligations under any of the
Transaction Documents, or (c) the validity or enforceability of any Transaction
Document.
"MATERIAL CONTRACTS" means any agreements, contracts or
arrangements between the Company or its Subsidiaries, on the one hand, and any
third parties, on the other, that are material to the business, management,
operations, affairs, condition (financial or otherwise), properties, assets,
prospects or results of operations of the Company and its Subsidiaries, taken as
a whole.
"MATURITY," when used with respect to any Note, means the date
on which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise (including in connection with any offer to purchase
that this Agreement requires the Company to make).
"MORTGAGE" shall mean an agreement, including, but not limited
to, a mortgage, deed of trust or any other document, creating and evidencing a
Lien on a Mortgaged Property, which shall be substantially in the form of
EXHIBIT J or other form reasonably satisfactory to the Agent and the Required
Holders, in each case, with such schedules and including such provisions as
shall be necessary to conform such document to applicable local or foreign law
or as shall be customary under applicable local or foreign law.
"MORTGAGED PROPERTY" shall mean (a) each Real Property
identified as a Mortgaged Property on SCHEDULE 8(A) to the Perfection
Certificate dated the Closing Time to the extent that such landlord consents to
such Mortgage and (b) each Real Property, if any, which shall be subject to a
Mortgage delivered after the Closing Time pursuant to Section 7.13(c) and
Section 7.17.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
-16-
"NAP MADRID" means NAP de las Americas Madrid S.A.
"NET CASH PROCEEDS" means
(a) with respect to any Asset Sale by any Person, the proceeds
thereof (without duplication in respect of all Asset Sales) in the form
of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Subsidiary) net of (i)
brokerage commissions and other reasonable fees and expenses (including
fees and expenses of legal counsel and investment bankers) related to
such Asset Sale, (ii) provisions for all taxes payable as a result of
such Asset Sale, (iii) payments made to retire Indebtedness where
payment of such Indebtedness is secured by the assets or properties the
subject of such Asset Sale, (iv) amounts required to be paid to any
Person (other than the Company or any Subsidiary) owning a beneficial
interest in or having a Lien on the assets subject to the Asset Sale
and (v) appropriate amounts to be provided by the Company or any
Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset Sale and retained by
the Company or any Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other postemployment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such
Asset Sale (PROVIDED that the amount of any such reserves shall be
deemed to constitute Net Cash Proceeds at the time such reserves shall
have been released or are not otherwise required to be retained as a
reserve); and
(b) with respect to any Casualty Event, the cash insurance
proceeds, condemnation awards and other compensation received in
respect thereof, net of all reasonable costs, expenses and taxes
incurred in connection with the collection of such proceeds, awards or
other compensation in respect of such Casualty Event.
"NOTEHOLDER" means a Person in whose name a Note is registered
on the Security Register from time to time.
"NOTES" has the meaning specified in the third recital to this
Agreement.
"NPL" means the National Priorities List under CERCLA.
"OBLIGATIONS" means (i) any principal, premium and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Notes, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) all other monetary obligations, including fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Company and the other
Issuers under this Agreement and the other Basic Documents pertaining to the
Notes, Subsidiary Guarantees or Security Documents and other documents related
-17-
thereto executed in connection therewith and (iii) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Company and the other Issuers under or pursuant to this Agreement and the other
Basic Documents pertaining to the Notes, Subsidiary Guarantees or Security
Documents and other documents related thereto executed in connection therewith.
"OFFER AMOUNT" is defined in Section 7.09(b)(ii).
"OFFERING EXCESS PROCEEDS ACCOUNT" is defined in Section 4.17.
"OFFICER" means, with respect to any Person, the President,
Chief Executive Officer or the Chief Financial Officer of such Person.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Officers of such Person; PROVIDED, HOWEVER, that every
Officers' Certificate with respect to compliance with a covenant or condition
provided for in this Agreement shall include (i) a statement that the Officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto and
(ii) a statement at to whether, in the opinion of the signers, such condition
has been complied with.
"OPERATING LEASE" means all leases other than Capitalized
Lease Obligations.
"OUTSTANDING," when used with respect to the Notes, means, as
of the date of determination, all Notes theretofore executed and delivered under
this Agreement, EXCEPT:
(i) Notes theretofore cancelled by the Company or delivered to
the Company for cancellation;
(ii) Notes for whose payment or redemption money in the
necessary amount has been theretofore set aside by the Company with a
third party in trust for the holders of such Notes; PROVIDED that if
such Notes are to be redeemed, notice of such redemption has been duly
given as provided in this Agreement; and
(iii) Notes which have been paid pursuant to Section 9.08 or in
exchange for or in lieu of which other Notes have been executed and
delivered pursuant to this Agreement, other than any such Notes in
respect of which there shall have been presented to the Company proof
satisfactory to it that such Notes are held by a bona fide purchaser in
whose hands such Notes are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Noteholders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be outstanding.
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Required
Holders the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
-18-
"PATRIOT ACT" means the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, P.L. 107-56, as amended.
"PAYMENT DEFAULT" is defined in Section 10.01(f).
"PENSION PLAN" is defined in Section 4.12(b).
"PERFECTION CERTIFICATE" shall mean a certificate in the form
of EXHIBIT K-1 or any other form approved by the Agent and the Required Holders,
as the same shall be supplemented from time to time by a Perfection Certificate
Supplement or otherwise.
"PERFECTION CERTIFICATE SUPPLEMENT" shall mean a certificate
supplement in the form of EXHIBIT K-2 or any other form approved by the Agent
and the Required Holders.
"PERMITS" means all licenses, permits, certificates of need,
approvals and authorizations from all Governmental Authorities required to
lawfully conduct a business as presently conducted.
"PERMITTED COLLATERAL LIENS" means (i) Contested Liens (as
defined in the Security Agreement), (ii) the Liens described in clauses (a),
(b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (p) and
(q) of Section 8.07 and (iii) in the case of Mortgaged Property, "Permitted
Collateral Liens" shall mean the Liens described in clauses (a), (b), (d), (e),
(g) and (l) of Section 8.07; PROVIDED, HOWEVER, on the Closing Time or upon the
date of delivery of each additional Mortgage under Section 7.13 or 7.14,
Permitted Collateral Liens shall mean only those Liens set forth in SCHEDULE B
to the applicable Mortgage.
"PERMITTED HOLDER" means (i) Xxxxxx X. Xxxxxx, (ii) Xxxxxxx
Xxx and (iii) any "controlled" (as such term is defined in the definition of
Affiliate) Affiliate of Xxxxxx X. Xxxxxx and/or Xxxxxxx Xxx.
"PERMITTED INVESTMENTS" means (a) any Investment by the
Company or any Subsidiary of the Company in the Company, a Wholly Owned
Subsidiary that is a Guarantor or, to the extent no Default or Event of Default
shall have occurred and be continuing at such time and after giving effect to
such Investment, Terremark Latin America (Brasil) Ltda. or any future Wholly
Owned Subsidiary that is a Foreign Subsidiary; (b) any Investment in cash and
Cash Equivalents; (c) subject to the proviso in clause (a) above, any Investment
by the Company or any Subsidiary of the Company in a Person, if as a result of
such Investment (i) such Person becomes a Wholly Owned Subsidiary and a
Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys all or substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary that is a Guarantor;
(d) any Investment made as a result of the receipt of non-cash consideration
-19-
from an Asset Sale that was made pursuant to and in compliance with the
provisions of Section 8.05 hereof; (e) other Investments in any Person (other
than a Wholly Owned Subsidiary that is a Guarantor or, to the extent no Default
or Event of Default shall have occurred and be continuing at such time and after
giving effect to such Investment, Terremark Latin America (Brasil) Ltda. or any
future Wholly Owned Subsidiary that is a Foreign Subsidiary) having an aggregate
Fair Market Value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (e) that are at the time
outstanding, not to exceed $10.0 million excluding the Fair Market Value of any
Common Stock used as consideration for such Investments; PROVIDED that to the
extent such Investments are made in a non-Wholly Owned Subsidiary or
Unrestricted Subsidiary of the Company, the Capital Stock of such non-Wholly
Owned Subsidiary or Unrestricted Subsidiary owned directly or indirectly by the
Company shall become Collateral contemporaneously with the Investment in
accordance with the requirements of Section 7.13(b) to the extent required by
Section 7.13(b); (f) investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (g) Investments
represented by Hedging Obligations; PROVIDED that such Hedging Obligations are
otherwise incurred in compliance with the terms of this Agreement; (h)
Investments existing at the Closing Time after giving effect to the Transaction;
and (i) the transfer by TerreNAP Data Centers, Inc. of the assets listed on
Schedule B to NAP Madrid in exchange for Preferred Stock of NAP Madrid in
accordance with Section 7.19.
"PERMITTED LIENS" is defined in Section 8.07.
"PERMITTED PAYMENT" is defined in Section 8.02(b).
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PLAN" is defined in Section 4.12(a).
"PREDECESSOR NOTE" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"PREFERRED STOCK" means, with respect to any Person, Capital
Stock of any class or classes (however designated) of such Person which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Capital Stock of any other class of such
Person.
"PRINCIPAL AMOUNT" means, when used with respect to any
particular Note, the principal amount of such Note at its Stated Maturity.
"PRO FORMA BASIS" shall mean on a basis in accordance with
GAAP and Regulation S-X.
"PRO RATA SHARE" means with respect to all payments,
computations and other matters, the percentage obtained by dividing (a) the
aggregate principal amount of the Notes held by that Noteholder by (b) the
aggregate outstanding principal amount of all Notes held by the Noteholders.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
-20-
"PROPERTY MATERIAL ADVERSE EFFECT" shall have the meaning
assigned thereto in the Mortgage.
"PUHCA" is defined in Section 4.15(a).
"PURCHASE MONEY OBLIGATION" means Indebtedness of a Person
incurred in the normal course of business of such Person for the purpose of
financing all or any part of the purchase price, or the cost of installation,
construction or improvement of any property.
"PURCHASE PRICE" is defined in Section 2.02.
"PURCHASED SECURITY" means, individually, any of the Notes,
Subsidiary Guarantees, Shares or Warrants; "PURCHASED SECURITIES" means,
collectively, the Notes, Subsidiary Guarantees, Shares and Warrants.
"PURCHASER INDEMNIFIED PERSON" is defined in Section 13.02(a).
"PURCHASERS" is defined in the preamble to this Agreement.
"QUALIFIED CAPITAL STOCK" of any Person means any and all
Capital Stock of such Person other than Redeemable Capital Stock.
"QUALIFIED INSTITUTIONAL BUYER" means any Person that is a
"qualified institutional buyer" within the meaning of Rule 144A.
"REAL PROPERTY" shall mean, collectively, all right, title and
interest (including any leasehold, mineral or other estate) in and to any and
all parcels of or interests in real property owned, leased or operated by any
person, whether by lease, license or other means, together with, in each case,
all easements, hereditaments and appurtenances relating thereto, all
improvements and appurtenant fixtures and equipment, all general intangibles and
contract rights and other property and rights incidental to the ownership, lease
or operation thereof.
"REDEEMABLE CAPITAL STOCK" means any class or series of
Capital Stock to the extent that, either by its terms, by the terms of any
security into which it is convertible or exchangeable, or by contract or
otherwise, is or upon the happening of an event or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Notes or is redeemable at the option of the holder thereof at any time prior to
such Stated Maturity, or is convertible into or exchangeable for debt securities
at any time prior to such Stated Maturity.
"REDEMPTION DATE," when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to this
Agreement.
"REDEMPTION PRICE," when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Agreement.
"REDUCED RATE" is defined in EXHIBIT A.
"REFINANCING" is defined in Section 8.04(a)(ix).
-21-
"REGISTRATION RIGHTS AGREEMENT" has the meaning specified in
the seventh recital to this Agreement.
"REGULAR RECORD DATE" is defined in Section 9.05.
-------------------
"REGULATION S" means Regulation S under the Securities Act (or
any successor provision), as it may be amended from time to time.
"RELEASE" shall mean any spilling, leaking, seepage, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing, depositing, dispersing, emanating or migrating of any
Hazardous Material in, into or through the Environment.
"REQUIRED HOLDERS" means Noteholders holding more than 50% of
the aggregate principal amount of outstanding Notes.
"REQUIREMENTS OF LAW" shall mean, collectively, any and all
requirements of any Governmental Authority including any and all laws,
judgments, orders, decrees, ordinances, rules, regulations, statutes or case
law.
"RESTRICTED PAYMENTS" is defined in Section 8.02(a).
"REVOCATION" has the meaning assigned to such term in Section
7.16.
"RIGHT OF FIRST OFFER NOTICE" is defined in Section
8.04(c)(i).
"RULE 144" means Rule 144 under the Securities Act (or any
successor provision), as it may be amended from time to time.
"RULE 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"SALE" is defined in Section 9.07(a).
"SALE AND LEASE-BACK TRANSACTION" means any arrangement with
any Person providing for the leasing by the Company or any Restricted Subsidiary
of the Company of any real or tangible personal property, which property has
been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person in contemplation of such leasing.
"SECURED OBLIGATIONS" shall mean the Obligations.
"SECURED PARTIES" shall mean, collectively, the Agent and the
Noteholders.
"SECURITIES ACT" mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the Commission thereunder.
"SECURITIES COLLATERAL" shall have the meaning assigned to
such term in the Security Agreement.
-22-
"SECURITY" means any of the Notes, the Warrants or the Warrant
Shares.
"SECURITY AGREEMENT" shall mean a Security Agreement
substantially in the form of EXHIBIT L among the Issuers and Agent for the
benefit of the Secured Parties.
"SECURITY AGREEMENT COLLATERAL" shall mean all property
pledged or granted as collateral pursuant to the Security Agreement delivered
(a) on the Closing Time or (b) thereafter pursuant to Section 7.13.
"SECURITY DOCUMENTS" shall mean the Security Agreement, the
Mortgages and each other security document or pledge agreement delivered in
accordance with applicable local or foreign law to grant a valid, perfected
security interest in any property as collateral for the Secured Obligations, and
all UCC or other financing statements or instruments of perfection required by
this Agreement, the Security Agreement, any Mortgage or any other such security
document or pledge agreement to be filed with respect to the security interests
in property and fixtures created pursuant to the Security Agreement or any
Mortgage and any other document or instrument utilized to pledge or grant or
purport to pledge or grant a security interest or lien on any property as
collateral for the Secured Obligations.
"SECURITY REGISTER" has the meaning given to such term in
Section 9.06(a).
"SELLER" has the meaning specified in the first recital to
this Agreement.
"SHARES" has the meaning specified in the third recital to
this Agreement.
"SHAREHOLDER" means a Person in whose name a Share is
registered.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"SOLVENT" means, with respect to any Person as of the date of
any determination, that on such date (a) the fair value of such Person's assets
is greater than the amount of its liabilities (including contingent and
unliquidated liabilities), (b) the present fair saleable value of such Person's
assets is not less than the amount that will be required to pay the probable
liability on such Person's debts as they become absolute and matured, (c) such
Person is able to pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business, (d) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in a business or a transaction, and
is not about to engage in a business or a transaction, for which such Person's
property would constitute unreasonably small capital after giving due
consideration to current and anticipated future capital requirements and current
and anticipated future business conduct and the prevailing practice in the
industry in which such Person is engaged. In computing the amount of contingent
liabilities at any time, such liabilities shall be computed as the amount which,
in light of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
-23-
"SPV" has the meaning specified in the first recital to this
Agreement.
"SPV FINANCING AGREEMENT" means the SPV Financing Agreement as
defined in the second recital to this Agreement, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, restated, renewed,
refunded, replaced or refinanced from time to time.
"STANDARD RATE" is defined in EXHIBIT A.
"STATED MATURITY" means, with respect to any Note or any
installment of interest thereon, the dates specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness or any installment of interest is
due and payable.
"SUBORDINATED INDEBTEDNESS" means, with respect to the
Company, Indebtedness of the Company which is expressly subordinated in right of
payment to the Notes or, with respect to any Guarantor, Indebtedness of such
Guarantor which is expressly subordinated in right of payment to the Subsidiary
Guarantee of such Guarantor and which is subject to a subordination agreement
which contains subordination provisions substantially similar to those set forth
in EXHIBIT N.
"SUBSIDIARY" means, with respect to any Person, (a) any
corporation of which the outstanding shares of Voting Stock having at least a
majority of the votes entitled to be cast in the election of directors shall at
the time be owned, directly or indirectly, by such Person, or (b) any other
Person of which at least a majority of the shares of Voting Stock are at the
time, directly or indirectly, owned by such first named Person. For purposes of
this Agreement, an "Unrestricted Subsidiary" of the Company shall be deemed not
to be a "Subsidiary" of the Company.
"SUBSIDIARY GUARANTEES" is defined in the fourth recital to
this Agreement.
"SURVEY" shall mean a survey of any Mortgaged Property (and
all improvements thereon) which is (a) (i) prepared by a surveyor or engineer
licensed to perform surveys in the jurisdiction where such Mortgaged Property is
located, (ii) dated (or redated) not earlier than six months prior to the date
of delivery thereof unless there shall have occurred within six months prior to
such date of delivery any exterior construction on the site of such Mortgaged
Property or any easement, right of way or other interest in the Mortgaged
Property has been granted or become effective through operation of law or
otherwise with respect to such Mortgaged Property which, in either case, can be
depicted on a survey, in which events, as applicable, such survey shall be dated
(or redated) after the completion of such construction or if such construction
shall not have been completed as of such date of delivery, not earlier than 20
days prior to such date of delivery, or after the grant or effectiveness of any
such easement, right of way or other interest in the Mortgaged Property, (iii)
certified by the surveyor (in a manner reasonably acceptable to the Agent) to
the Agent and the Title Company, (iv) complying in all respects with the minimum
-24-
detail requirements of the American Land Title Association as such requirements
are in effect on the date of preparation of such survey and (v) sufficient for
the Title Company to remove all standard survey exceptions from the title
insurance policy (or commitment) relating to such Mortgaged Property and issue
the endorsements of the type required by Section 3.19(c) or (b) otherwise
acceptable to the Agent.
"TAX RETURNS" means all original, amended and estimated
reports, returns, information statements and related documentation required to
be filed with respect to the Taxes of the Company or its Subsidiaries including,
without limitation, consolidated federal income tax returns of the Company and
its Subsidiaries.
"TAXES" means (i) all federal, state, local or foreign income,
gross receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, withholding, estimated or other taxes
imposed on the income, properties or operations of the Company and its
Subsidiaries, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties and (ii) all
transferee, successor, joint and several (including pursuant to Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or foreign
law), contractual or other liability for any item described in clause (i) above.
"TITLE COMPANY" shall mean any title insurance company as
shall be retained by the Company and reasonably acceptable to the Agent and the
Required Holders.
"TITLE POLICY" shall have the meaning assigned to such term in
Section 3.19(c).
"TOTAL LEVERAGE RATIO" means, with respect to any Person, the
ratio of
(x) the aggregate outstanding amount of Indebtedness (other
than the Existing Convertible Notes) less cash on hand of such Person
and its Subsidiaries as of the date of calculation (the "TRANSACTION
DATE") on a Consolidated basis to
(y) such Person's Consolidated EBITDA for the two full fiscal
quarters (the "APPLICABLE PERIOD") ending on or prior to the date of
determination for which financial statements are available multiplied
by two (2).
For purposes of this definition, clauses (x) and (y) above
will be calculated after giving effect on a Pro Forma Basis to
1. the incurrence or repayment of any Indebtedness of such
Person or any of its Subsidiaries (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of
the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital
purposes pursuant to working capital facilities, occurring during the
Applicable Period or at any time subsequent to the last day of the
Applicable Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Applicable Period;
and
-25-
2. any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (PROVIDED that
such Consolidated EBITDA will be included only to the extent that
Consolidated Net Income would be includable pursuant to the definition
of "Consolidated Net Income") (including any PRO FORMA expense and cost
reductions calculated on a basis consistent with Regulation S-X of the
Exchange Act) attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Applicable Period) occurring
during the Applicable Period or at any time subsequent to the last day
of the Applicable Period and on or prior to the Transaction Date, as if
such Asset Sale or Asset Acquisition (including the incurrence,
assumption or liability for any such Acquired Indebtedness) occurred on
the first day of the Applicable Period.
If such Person or any of its Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence will give effect to the
incurrence of such guaranteed Indebtedness as if such Person or any Subsidiary
or such Person had directly incurred or otherwise assumed such guaranteed
Indebtedness.
"TRANSACTION DOCUMENTS" means collectively (a) the Basic
Documents, (b) the Acquisition Agreement and (c) the SPV Financing Agreement and
all certificates, instruments, financial and other statements and other
documents made or delivered in connection therewith.
"TRANSACTIONS" means the transactions provided for in, or
contemplated by, the Transaction Documents.
"UNITED STATES" shall have the meaning assigned to such term
in Regulation S.
"UNRESTRICTED SUBSIDIARY" means each Subsidiary of the Company
designated as such pursuant to and in compliance with Section 7.16. Any such
designation may be revoked by a resolution of the Board of Directors of the
Company delivered to the Noteholders, subject to the provisions of such Section
7.16.
"VOTING STOCK" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors,
managers or trustees of any Person (irrespective of whether or not, at the time,
stock of any other class or classes shall have, or might have, voting power by
reason of the happening of any contingency).
"WARRANT SHARES" means a share of the Common Stock of the
Company issuable upon exercise of a Warrant.
"WARRANTHOLDER" means a Person in whose name a Warrant or
Warrant Share is registered.
"WARRANTS" has the meaning specified in the third recital to
this Agreement.
-26-
"WHOLLY OWNED SUBSIDIARY" means any Subsidiary of which 100%
of the outstanding Capital Stock is owned by the Company and/or another Wholly
Owned Subsidiary. For purposes of this definition, any directors' qualifying
shares shall be disregarded in determining the ownership of a Subsidiary.
SECTION 1.02. COMPUTATION OF TIME PERIODS. For purposes of
computation of periods of time hereunder, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
SECTION 1.03. ACCOUNTING TERMS. Accounting terms used but not
otherwise defined herein shall have the meanings provided by, and be construed
in accordance with, GAAP.
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES
SECTION 2.01. AUTHORIZATION OF ISSUE. The Company has
authorized the issue and sale of (i) $30.0 million aggregate principal amount of
the Notes, each Note to be in the form of EXHIBIT A hereto, (ii) 3,060,444
Shares and (iii) 15 million Warrants to purchase initially 15 million shares of
Common Stock, each Warrant to be in the form of EXHIBIT D hereto. Each Guarantor
has authorized the issue of its Subsidiary Guarantee of the Notes, each such
Subsidiary Guarantee to be in the form of EXHIBIT B hereto.
SECTION 2.02. SALE. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Purchaser, and each Purchaser, acting
severally and not jointly, agrees to purchase from the Company, the aggregate
principal amount of Notes, the aggregate number of Shares and the aggregate
number of Warrants, in each case, set forth in SCHEDULE A opposite the name of
such Purchaser (i) at 100% of the principal amount thereof in the case of the
Notes, (ii) at $0.6535 per Share in the case of the Shares and (iii) at no
additional consideration in the case of the Warrants (the "PURCHASE PRICE").
-27-
Unless otherwise required by Applicable Law, the parties shall not take any
position inconsistent with the foregoing allocation for any income tax purposes.
SECTION 2.03. CLOSING. The purchase and sale of the Purchased
Securities pursuant to this Agreement shall occur at the offices of Xxxxxx
Xxxxxx & Xxxxxxx LLP, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, at 9:00
a.m., New York City time, on December 31, 2004, or such other time as shall be
agreed upon by the Purchasers and the Company (such time and date of payment and
delivery being herein called the "CLOSING Time"). At the Closing Time, the
Company will deliver to each Purchaser certificates for the Purchased Securities
to be purchased by such Purchaser at the Closing Time, in such denominations (in
the case of the Notes any integral multiple of $1,000 principal amount) as such
Purchaser may request at least two Business Days prior to the Closing Time,
dated the Closing Time and registered in such Purchaser's name, against payment
by such Purchaser to the Company or to its order by wire transfer of immediately
available funds in the amount of the Purchase Price to be paid by such Purchaser
therefor to such bank account or accounts as the Company may request in writing
at least two Business Days prior to the Closing Time.
SECTION 3
CONDITIONS TO CLOSING
Each Purchaser's several obligation to purchase and pay for
the Purchased Securities to be purchased by it at the Closing Time is subject to
the satisfaction or waiver by each Purchaser prior to or at the Closing Time of
each of the conditions specified below in this Section 3:
SECTION 3.01. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Issuers in this Agreement and in each of
the other Transaction Documents shall be true and correct in all material
respects (except that any representations and warranties that are qualified as
to "materiality" or "Material Adverse Effect" shall be true and correct) when
made and at and as of the Closing Time as if made at and as of the Closing Time
(unless expressly stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects (except that any representations and warranties that are qualified as
to "materiality" or "Material Adverse Effect" shall be true and correct) as of
such earlier date).
SECTION 3.02. PERFORMANCE; NO DEFAULT UNDER OTHER AGREEMENTS.
The Issuers and each of their respective Subsidiaries, to the extent parties
hereto or thereto, shall have performed and complied in all material respects
with all agreements and conditions contained in this Agreement and each of the
other Transaction Documents required to be performed or complied with by any of
them prior to or at the Closing Time and, after giving effect to the issue and
sale of the Purchased Securities and the other Transactions (and the application
of the proceeds thereof as contemplated by Section 4.17 hereof and the other
Transaction Documents), no Default or Event of Default shall have occurred and
be continuing and no default or event of default shall have occurred and be
continuing under any of the other Transaction Documents.
SECTION 3.03. COMPLIANCE CERTIFICATES.
(a) OFFICERS' CERTIFICATE. Each of the Issuers shall have
delivered to the Purchasers an Officers' Certificate, dated the Closing Time, in
the form of EXHIBIT 3.03(A) hereto, certifying that the conditions specified in
Sections 3.01, 3.02, 3.05, 3.06 and 3.07 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. Each of the Issuers shall have
delivered to the Purchasers a certificate in the form of EXHIBIT 3.03(B) hereto
certifying as to such Issuer's certificate of incorporation, bylaws and
resolutions attached thereto, the incumbency and signatures of certain officers
of such Issuer, and other corporate proceedings of such Issuer relating to the
authorization, execution and delivery of the Purchased Securities, as applicable
to such Issuer, this Agreement and the other Transaction Documents to which such
Issuer is a party.
-28-
SECTION 3.04. OPINIONS OF COUNSEL. Such Purchaser shall have
received the favorable opinions in form and substance satisfactory to it, dated
the Closing Time, from Xxxxxxxxx Traurig LLP, counsel for the Issuers,
substantially in the form set forth in EXHIBIT 3.04(A)(I) and as to such other
matters as such Purchaser may reasonably request.
SECTION 3.05. CHANGES IN CORPORATE STRUCTURE. None of the
Issuers nor any of their respective Subsidiaries shall have changed their
respective jurisdiction of incorporation or been a party to any merger or
consolidation or succeeded to all or any substantial part of the liabilities of
any other Person at any time following the Audit Date and there shall have
occurred no event which constitutes a Change of Control of the Company and the
Company shall not have entered into any agreement or understanding which, if
consummated, would constitute a Change of Control of the Company.
SECTION 3.06. NO ADVERSE EVENTS. (i) None of the Issuers nor
any of their respective Subsidiaries shall have sustained since the Audit Date
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, and (ii) except as set forth in
the Company Reports or in SCHEDULE 3.06, since the Audit Date there shall not
have been any change in the capital stock or long-term debt of any Issuer or any
of their Subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, management, operations, affairs, condition
(financial or otherwise), assets, property, prospects or results of operations
of the Company and its Subsidiaries, in the case of clauses (i) and (ii) above,
which, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.
SECTION 3.07. FINANCIAL INFORMATION; CAPITAL STRUCTURE. Such
Purchaser shall have received (i) a PRO FORMA consolidated balance sheet for the
Company and its Subsidiaries as of the Closing Time after giving effect to the
Transactions, including the issuance of the Purchased Securities and the use of
the proceeds thereof, which have been certified by the Chief Financial Officer
of the Company and which are in form and substance satisfactory to such
Purchaser and (ii) each of the consolidated financial projections (including an
operating budget and a cash flow budget) of the Company pursuant to Section
4.06, each of which is in form and substance satisfactory to such Purchaser. The
PRO FORMA consolidated capital structure of the Company, after giving effect to
the Transactions (including all adjustments permitted by Regulation S-X under
the Securities Act), shall be consistent in all material respects with the
projections provided to such Purchaser prior to the Closing Time and the capital
structure contemplated herein, except as to the value of the Warrants issued to
the Purchasers and the lenders under the SPV Financing Agreement.
SECTION 3.08. PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings in connection with the Transactions and the other transactions
contemplated by this Agreement and the other Transaction Documents, and all
documents and instruments incident to such transactions and the terms thereof,
shall be reasonably satisfactory to such Purchaser and the Purchaser's special
counsel, and such Purchaser and the Purchaser's special counsel shall have
received all such counterpart originals or certified or other copies of such
-29-
documents (other than those that are not required to be delivered by the Closing
Time pursuant to Section 7.17) as it or they may reasonably request.
SECTION 3.09. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. At
the Closing Time, such Purchaser's purchase of the Purchased Securities shall
(a) be permitted by the laws and regulations of each jurisdiction to which it is
subject, (b) not violate any Applicable Law (including, without limitation,
Regulation U, T or X of the Board of Governors of the Federal Reserve System)
and (c) not subject such Purchaser to any tax, penalty or liability under or
pursuant to any Applicable Law, which Applicable Law was not in effect on the
date hereof.
SECTION 3.10. TRANSACTION DOCUMENTS IN FORCE AND EFFECT;
INFORMATION.
(a) TRANSACTION DOCUMENTS. The Purchasers shall have received
true and correct copies of all Transaction Documents (other than those that are
not required to be delivered by the Closing Time pursuant to Section 7.17) and
(i) such documents (A) shall have been duly executed and delivered by the
parties thereto, (B) shall be in form and substance reasonably satisfactory to
the Purchasers and (C) shall be valid and legally binding obligations of the
parties thereto enforceable against each of them in accordance with its
respective terms, subject to the Enforceability Exceptions, and (ii) there shall
have been no material amendments, alterations, modifications or waivers of any
provision thereof since the date of this Agreement.
(b) ACCURACY OF INFORMATION. All written information (other
than projections) furnished by the Issuers and their respective representatives
to the Purchasers on or prior to the Closing Time with respect to the business,
management, operations, affairs, condition (financial or otherwise), assets,
property, prospects or results of operations of the Issuers and their respective
Subsidiaries shall be accurate and complete in all material respects.
SECTION 3.11. NO VIOLATION; NO LEGAL CONSTRAINTS; CONSENTS,
AUTHORIZATIONS AND FILINGS, ETC.
(a) The consummation by the Issuers and their respective
Subsidiaries of the Transactions shall not contravene, violate or conflict with
any Applicable Law, except for violations which, individually or in the
aggregate, do not and would not have a Material Adverse Effect.
(b) All consents, authorizations and filings, if any, required
in connection with the execution, delivery and performance by each of the
Issuers and their respective Subsidiaries of the Transaction Documents (other
than those that are not required to be delivered by the Closing Time pursuant to
Section 7.17) to which it is a party shall have been obtained or made and shall
be in full force and effect, except for such consents, authorizations and
filings the failure of which to obtain or make, individually or in the
aggregate, does not and would not have a Material Adverse Effect.
(c) There shall be no inquiry, injunction, restraining order,
action, suit or proceeding pending or entered or any statute or rule proposed,
enacted or promulgated by any Governmental Authority or any other Person which,
in the opinion of the Purchasers, (i) individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect or which seeks
-30-
to enjoin or seek damages against any Issuer or any of its Subsidiaries or any
of the Purchasers as a result of the Transactions, including the issuance of the
Notes, or (ii) relates to any of the Transactions and has or will have a
material adverse effect on any Purchaser or (iii) alleges liability on the part
of any Purchaser in connection with this Agreement, any other Transaction
Documents or the Transactions or any of the other transactions contemplated
hereby or thereby or (iv) would bar the issuance of the Purchased Securities or
the use of the proceeds thereof in accordance with the terms of this Agreement
and the other Transaction Documents.
SECTION 3.12. CONSUMMATION OF THE TRANSACTIONS.
(a) Prior to or at the Closing Time, a mortgage loan in an
aggregate principal amount of $49.0 million shall be provided to the Company
pursuant to the SPV Financing Agreement.
(b) The Transactions shall be consummated concurrently with
the issuance and sale by the Company of the Purchased Securities hereunder, in
each case in accordance with the terms of the applicable Transaction Documents
(without any amendment thereto or waiver thereunder unless consented to by each
Purchaser).
SECTION 3.13. FEES. The Company shall have paid all fees,
costs and expenses (including, without limitation, legal fees and expenses and
the fees and expenses of appraisers, consultants and other advisors) and other
compensation due and payable to each Purchaser at the Closing Time.
SECTION 3.14. PRIVATE PLACEMENT NUMBERS. At or prior to the
Closing Time, the Company shall have requested and received from S&P a private
placement number for each of the Notes and Warrants.
SECTION 3.15. SIMULTANEOUS PURCHASE. Each of the Purchasers
shall have simultaneously purchased the Purchased Securities to be purchased by
such Purchaser.
SECTION 3.16. DELIVERY OF DOCUMENTS. The Company shall have
delivered to each Purchaser such other certificates, documents and agreements as
the Purchasers may reasonably request.
SECTION 3.17. PERSONAL PROPERTY REQUIREMENTS. The Agent shall
have received:
(a) all certificates, agreements or instruments representing
or evidencing the Securities Collateral (other than those that are not
required to be delivered by the Closing Time pursuant to Section 7.17)
accompanied by instruments of transfer and stock powers undated and
endorsed in blank;
(b) the Intercompany Note executed by and among the Company
and each of its Subsidiaries (except the SPV), accompanied by
instruments of transfer undated and endorsed in blank;
-31-
(c) all other certificates, agreements, including control
agreements, or instruments necessary to perfect the Agent's security
interest in all Chattel Paper, all Instruments, all Deposit Accounts
and all Investment Property of each Issuer (as each such term is
defined in the Security Agreement and to the extent required by the
Security Agreement);
(d) UCC financing statements in appropriate form for filing
under the UCC, filings in appropriate form for filing with the United
States Patent and Trademark Office and United States Copyright Office
and such other documents under applicable Requirements of Law in each
jurisdiction as may be necessary or appropriate or, in the opinion of
the Agent, desirable to perfect the Liens created, or purported to be
created, by the Security Documents (other than those that are not
required to be delivered by the Closing Time pursuant to Section 7.17);
(e) certified copies of UCC, United States Patent and
Trademark Office and United States Copyright Office, tax and judgment
lien searches, bankruptcy and pending lawsuit searches or equivalent
reports or searches, each of a recent date listing all effective
financing statements, lien notices or comparable documents that name
any Issuer as debtor and that are filed in those state and county
jurisdictions in which any property of any Issuer is located and the
state and county jurisdictions in which any Issuer is organized or
maintains its principal place of business and such other searches that
the Agent or the Required Holders deem necessary or appropriate, none
of which encumber the Collateral covered or intended to be covered by
the Security Documents (other than Permitted Collateral Liens or any
other Liens acceptable to the Agent); and
(f) evidence acceptable to the Agent of payment or
arrangements for payment by the Issuers of all applicable recording
taxes, fees, charges, costs and expenses required for the recording of
the Security Documents (other than those that are not required to be
delivered by the Closing Time pursuant to Section 7.17).
SECTION 3.18. INSURANCE. The Agent shall have received a copy
of, or a certificate as to coverage under, the insurance policies required by
Section 7.07 and the applicable provisions of the Security Documents (other than
those that are not required to be delivered by the Closing Time pursuant to
Section 7.17), each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable or mortgagee endorsement (as
applicable) and shall name the Agent, on behalf of the Secured Parties, as
additional insured, in form and substance satisfactory to the Agent and the
Required Holders.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE ISSUERS
Each Issuer, acting jointly and severally, represents and
warrants to each Purchaser as of the date hereof and as of the Closing Time
that:
-32-
SECTION 4.01. DUE INCORPORATION; POWER AND AUTHORITY. Each of
the Company and each of its Subsidiaries (a) is a corporation or limited
liability company duly incorporated or formed, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, other than any
failures to so qualify or to be in good standing which, individually or in the
aggregate, have not had and would not have a Material Adverse Effect, (c) has
all requisite corporate power and authority to own, lease and operate its
properties and to conduct its businesses as they are currently conducted, and
(d) has all requisite corporate power and authority to enter into and perform
its obligations under each of the Transaction Documents to which it is a party.
SECTION 4.02. CAPITALIZATION. As of the date of this Agreement
the authorized Capital Stock of the Company consists solely of 600,000,000
shares of its Common Stock, of which 351,394,737 shares were issued and
outstanding, 20 shares of its Series G Preferred Stock, all of which were issued
and outstanding, 5,882 shares of its Series H Preferred Stock, all of which were
issued and outstanding, and 600 shares of its Series I Preferred Stock, all of
which were issued and outstanding. Except as provided on SCHEDULE 4.02, no
shares of the Common Stock of the Company were held by the Company in its
treasury or by the Company's Subsidiaries. Except as set forth on SCHEDULE 4.02,
since the Audit Date, the Company (i) has not issued any shares of any class of
its Capital Stock and (ii) has not split, combined or reclassified any of its
shares of any class of its Capital Stock. All the issued and outstanding shares
of Common Stock (including the Shares and all shares of Common Stock to be
issued upon exercise of the Warrants) have been duly authorized and are (or in
the case of the Shares and Common Stock issued upon exercise of the Warrants,
will be) validly issued, fully paid and nonassessable and are (or in the case of
the Shares and Common Stock issued upon exercise of the Warrants, will be) free
of preemptive rights. The Company has duly reserved for issuance a sufficient
number of shares of Common Stock for issuance upon exercise of the Warrants at
the initial exercise rate thereof. Except as set forth on SCHEDULE 4.02, there
are no securities of the Company or any of its Subsidiaries that are convertible
into or exchangeable for shares of any Capital Stock of the Company or any of
its Subsidiaries, and no options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
Capital Stock of, or other interests in, the Company or any of its Subsidiaries.
Except as set forth on SCHEDULE 4.02, there are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of Capital Stock of the Company or any of its Subsidiaries
and neither the Company nor any of its Subsidiaries has any awards or options
outstanding under any stock option plans or agreements or any other outstanding
stock-related awards. Except as set forth on SCHEDULE 4.02, after the Closing
Time, neither the Company nor any of its Subsidiaries will have any obligation
to issue, transfer or sell any shares of Capital Stock of the Company or its
Subsidiaries. Except as set forth on SCHEDULE 4.02, there are no voting trusts
or other agreements or understandings to which the Company or any of its
Subsidiaries is a party with respect to the holding, voting or disposing of
Capital Stock of the Company or any of its Subsidiaries. Except as set forth on
SCHEDULE 4.02, as of the date hereof, neither the Company nor any of its
Subsidiaries has any outstanding bonds, debentures, notes or other obligations
or other securities (other than the Common Stock) that entitle the holders
-33-
thereof to vote with the stockholders of the Company or any of its Subsidiaries
on any matter or which are convertible into or exercisable for securities having
such a right to vote.
SECTION 4.03. EQUITY INTERESTS AND SUBSIDIARIES.
(a) EQUITY INTERESTS. SCHEDULES 1(A) and 10(A) to the
Perfection Certificate dated the Closing Time set forth a list of (i) all the
Subsidiaries of the Company and their jurisdictions of organization as of the
Closing Time and (ii) the number of each class of its Capital Stock authorized,
and the number outstanding, at the Closing Time and the number of shares covered
by all outstanding options, warrants, rights of conversion or purchase and
similar rights at the Closing Time. Except as set forth on SCHEDULE 4.03(A), all
outstanding shares of Capital Stock of each Subsidiary of the Company are duly
and validly issued and are fully paid and non-assessable, and are owned by the
Company, directly or indirectly through Wholly Owned Subsidiaries. Except as set
forth on SCHEDULE 4.03(A), each Issuer is the record and beneficial owner of,
and has good and marketable title to, the Capital Stock pledged by it under the
Security Agreement, free of any and all Liens, rights or claims of other
persons, except the security interest created by the Security Agreement, and
there are no outstanding warrants, options or other rights to purchase, or
shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of, any
such Capital Stock.
(b) NO CONSENT OF THIRD PARTIES REQUIRED. Except as set forth
on SCHEDULE 4.03(B), no consent of any person including any other general or
limited partner, any other member of a limited liability company, any other
shareholder or any other trust beneficiary is necessary (from the perspective of
a secured party) in connection with the creation, perfection or first priority
status of the security interest of the Agent in any Capital Stock pledged to the
Agent for the benefit of the Secured Parties under the Security Agreement or the
exercise by the Agent of the voting or other rights provided for in the Security
Agreement or the exercise of remedies in respect thereof.
SECTION 4.04. DUE AUTHORIZATION, EXECUTION AND DELIVERY.
(a) AGREEMENT. This Agreement has been duly authorized,
executed and delivered by each Issuer and constitutes a valid and legally
binding obligation of each Issuer, enforceable against such Issuer in accordance
with its terms, subject to the Enforceability Exceptions.
(b) NOTES AND SUBSIDIARY GUARANTEES. The Notes to be purchased
by the Purchasers from the Company are in the form contemplated by this
Agreement, have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company at the Closing Time as
provided herein, will have been duly executed, issued and delivered by the
Company, and will constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to the Enforceability Exceptions. The Subsidiary Guarantees endorsed on the
Notes are in the form contemplated by this Agreement, have each been duly
authorized for issuance pursuant to this Agreement by each of the Guarantors
and, when the Notes are executed by the Company, and delivered to the Purchasers
as provided for herein, will have been duly executed, issued and delivered and
will constitute valid and legally binding obligations of the Guarantors,
-34-
enforceable against the Guarantors in accordance with their terms, subject to
the Enforceability Exceptions.
(c) WARRANTS. The Warrants to be purchased by the Purchasers
from the Company are in the form contemplated by this Agreement, have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company at the Closing Time as provided herein, will have been
duly executed, issued and delivered by the Company, and will constitute valid
and legally binding obligations of the Company, enforceable against the Company
it in accordance with their terms, subject to the Enforceability Exceptions.
(d) REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to the Enforceability
Exceptions.
(e) OTHER TRANSACTION DOCUMENTS. Each Transaction Document
(other than those referred to in paragraphs (a) through (d) of this Section 4.04
and other than those that are not required to be delivered by the Closing Time
pursuant to Section 7.17) to which any Issuer or any of its respective
Subsidiaries is a party (each such party, a "COMPANY PARTY") (i) has been duly
authorized, executed and delivered by each Company Party and (ii) constitutes a
valid and legally binding obligation of each Company Party, enforceable against
such Company Party in accordance with its terms, subject to the Enforceability
Exceptions.
SECTION 4.05. NON-CONTRAVENTION; AUTHORIZATIONS AND APPROVALS.
Except as set forth on SCHEDULE 4.05, neither the Company nor any of its
Subsidiaries is (i) in violation of its certificate of incorporation or bylaws
(or comparable constituent or governing documents) or (ii) in default (or, with
the giving of notice, lapse of time or both, would be in default) under any
note, bond, mortgage, indenture, deed of trust, loan or credit agreement,
license, franchise, Permit, lease, contract or other agreement, instrument,
commitment or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of its
properties or assets is bound (including, without limitation, the SPV Financing
Agreement), or under which the Company or any of its Subsidiaries or any of its
properties or assets is entitled to a benefit (each, a "Contract"), except for
any such defaults that, individually or in the aggregate, have not had and would
not have a Material Adverse Effect. Except as set forth on SCHEDULE 4.05, none
of (a) the execution and delivery by the Company or any of its Subsidiaries of
any of the Transaction Documents to which it is a party, (b) the performance by
any of them of their respective obligations thereunder, (c) the consummation of
the transactions contemplated thereby or (d) the issuance and delivery of the
Purchased Securities hereunder will: (i) violate, conflict with or result in a
breach of any provisions of the certificate of incorporation or bylaws (or
comparable constituent or governing documents) of the Company or any of its
Subsidiaries; (ii) violate, conflict with, result in a breach of any provision
of, constitute a default (or an event which, with notice, lapse of time or both,
would constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment or other obligations (including
any repurchase or repayment obligations) pursuant to, result in the creation of
any Lien upon any of the properties of the Company or any of its Subsidiaries
under, or result in their being declared void, voidable, subject to withdrawal,
or without further binding effect, any of the terms, conditions or provisions of
any Contract, except for any such violations, conflicts, breaches, defaults,
accelerations, terminations or other matters which, individually or in the
-35-
aggregate, have not had and would not have a Material Adverse Effect; (iii)
require any consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Authority, except for those consents,
approvals, authorizations, declarations, filings or registrations which have
been obtained or made or the failure of which to obtain or make, individually or
in the aggregate, have not had and would not have a Material Adverse Effect; or
(iv) violate any Applicable Laws applicable to the Company, any of its
Subsidiaries or any of their respective properties or assets, except for
violations which, individually or in the aggregate, have not had and would not
have a Material Adverse Effect.
SECTION 4.06. COMPANY FINANCIAL STATEMENTS; COMPANY REPORTS.
(a) COMPANY FINANCIAL STATEMENTS. The Company has delivered to
the Purchasers (collectively, the "COMPANY FINANCIAL STATEMENTS") (i) complete
and correct copies of the audited consolidated balance sheets of the Company and
its Subsidiaries as of March 31, 2004, 2003 and 2002 and the related audited
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended, including the footnotes thereto, certified by the
Company's independent certified public accountants, (ii) complete and correct
copies of the unaudited consolidated balance sheets of the Company and its
Subsidiaries as of June 30, 2004 and September 30, 2004 and the related
unaudited consolidated statements of operations, stockholders' equity and cash
flows for the quarter then ended, and (iii) complete and correct copies of the
unaudited consolidated PRO FORMA balance sheet of the Company and its
Subsidiaries as of September 30, 2004, and the unaudited PRO FORMA consolidated
statements of operations for the year ended March 31, 2004 and the six months
ended September 30, 2004. Each of the consolidated balance sheets contained in
the Company Financial Statements fairly presents the consolidated financial
position of the Company and its Subsidiaries as of its date and each of the
consolidated statements of operations, stockholders' equity and cash flows
included in the Company Financial Statements fairly presents the consolidated
results of operations and income, retained earnings and stockholders' equity or
cash flows, as the case may be, of the Company and its Subsidiaries for the
periods to which they relate (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments that will not be material
in amount or effect), in each case in accordance with GAAP applied on a
consistent basis during the periods involved, except as noted therein. The PRO
FORMA financial statements of the Company and its Subsidiaries contained in the
Company Financial Statements have been prepared in accordance with the
Commission's rules and guidelines with respect to PRO FORMA financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the Transactions. All projections
provided by the Company to the Purchasers in connection with the Transactions
have been prepared in good faith based on assumptions believed by management of
the Company to be reasonable and subject to the reservations stated therein.
Attached hereto as SCHEDULE 4.06 are true, correct and complete copies of the
Company Financial Statements and all projections delivered to the Purchasers at
or prior to the Closing Time.
-36-
(b) COMPANY REPORTS. The Company has made available (including
being made available on XXXXX) to the Purchasers each registration statement,
report or information statement prepared by the Company since March 31, 2004
(the "AUDIT DATE"), including (i) the Company's Annual Report on Form 10-K for
the year ended Xxxxx 00, 0000, (xx) the Company's Quarterly Reports on Form 10-Q
for the quarters ended June 30, 2004 and September 30, 2004, and (iii) the
Registration Statement on Form S-1 declared effective on December 21, 2004, each
in the form (including exhibits, annexes and any amendments thereto) filed with
the Commission (collectively, including any such reports filed subsequent to the
date hereof and as amended, the "COMPANY REPORTS"). As of their respective dates
(or, if amended, as of the date of such amendment) the Company Reports did not,
and any Company Reports filed with the Commission subsequent to the date hereof
will not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or incorporated
by reference into the Company Reports (including the related notes and
schedules) fairly presents, or will fairly present, the consolidated financial
position of the Company and its Subsidiaries as of its date and each of the
consolidated statements of operations, stockholders' equity or cash flows
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents, or will fairly present, the
results of operations and income, retained earnings and stockholders' equity or
cash flows, as the case may be, of the Company and its Subsidiaries for the
periods to which they relate (subject, in the case of unaudited statements, to
normal year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein.
SECTION 4.07. ABSENCE OF UNDISCLOSED LIABILITIES OR EVENTS.
(a) Except as set forth in SCHEDULE 4.07(A), neither the
Company nor any of its Subsidiaries has any liabilities or obligations, whether
accrued, contingent or otherwise, except for (i) liabilities and obligations in
the respective amounts reflected or reserved against in the consolidated balance
sheet as of the Audit Date included in the Company Financial Statements or
liabilities and obligations not required to be disclosed in the consolidated
balance sheet in accordance with GAAP, (ii) the Existing Convertible Notes or
(iii) liabilities and obligations incurred in the ordinary course of business
since the Audit Date which, individually or in the aggregate, have not had and
would not have a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 4.07(B), (i) since the
Audit Date there has been no change in the business, management, operations,
affairs, condition (financial or otherwise), assets, property, prospects or
results of operations of the Company or its Subsidiaries except for changes
that, individually or in the aggregate, have not had or would not have a
Material Adverse Effect and (ii) there are no facts known to the Company that
have had or would have a Material Adverse Effect that have not been set forth
herein or in the Disclosure Schedule.
SECTION 4.08. NO ACTIONS OR PROCEEDINGS. Except as set forth
in SCHEDULE 4.08, there are no legal or governmental actions, suits or
proceedings pending or, to the best of each Issuer's knowledge, threatened
against or affecting the Company, any of its Subsidiaries, any of their
-37-
respective directors or officers (in their capacities as such) or any of their
respective properties or assets which, individually or in the aggregate, have
had or would have a Material Adverse Effect or prohibit, delay or materially
restrict the consummation of any of the Transactions or the other transactions
contemplated by this Agreement and the other Transaction Documents. To the
knowledge of each Issuer, no Governmental Authority has notified the Company or
any of its Subsidiaries of an intention to conduct any audit, investigation or
other review with respect to the Company or any of its Subsidiaries, except for
those investigations or reviews which, individually or in the aggregate, have
not had or would not have a Material Adverse Effect.
SECTION 4.09. PROPERTIES.
(a) GENERALLY. Each of the Company and its Subsidiaries has
good title to, or valid leasehold interests in, all its property material to its
business, free and clear of all Liens except for, in the case of Collateral,
Permitted Collateral Liens and, in the case of all other material property,
Permitted Liens and minor irregularities or deficiencies in title that,
individually or in the aggregate, do not interfere with its ability to conduct
its business as currently conducted or to utilize such property for its intended
purpose. The property of the Company and its Subsidiaries, taken as a whole, (i)
is in good operating order, condition and repair (ordinary wear and tear
excepted) and (ii) constitutes all the property which is required for the
business and operations of the Company and its Subsidiaries as presently
conducted.(a)
(b) REAL PROPERTY. SCHEDULES 8(A) and 8(B) to the Perfection
Certificate dated the Closing Time contain a true and complete list of each
interest in Real Property (i) owned by the Company or any of its Subsidiaries
(except the SPV) as of the date hereof and describe the type of interest therein
held by the Company or such Subsidiary and whether owned Real Property is leased
and if leased whether the underlying Lease contains any option to purchase all
or any portion of such Real Property or any interest therein or contains any
right of first refusal relating to any sale of such Real Property or any portion
thereof or interest therein and (ii) leased, subleased or otherwise occupied or
utilized by the Company or such Subsidiary, as lessee, sublessee, franchisee or
licensee, as of the date hereof and describe the type of interest therein held
by the Company or such Subsidiary and whether any Lease requires the consent of
the landlord or tenant thereunder, or other party thereto, to the Transactions.
(c) NO CASUALTY EVENT. Neither the Company nor any of its
Subsidiaries has received any notice of, nor has any knowledge of, the
occurrence or pendency or contemplation of any Casualty Event affecting all or
any portion of its property. Except as noted on SCHEDULE 4.09(C), no Mortgage
encumbers improved Real Property that is located in an area that has been
identified by the Secretary of Housing and Urban Development as an area having
special flood hazards within the meaning of the National Flood Insurance Act of
1968 unless flood insurance available under such Act has been obtained in
accordance with Section 7.07.
(d) COLLATERAL. The Company and each of its Subsidiaries owns
or has rights to use all of the Collateral and all rights with respect to any of
the foregoing used in, necessary for or material to the Company's or such
Subsidiary's business as currently conducted. The use by the Company and each of
its Subsidiaries of such Collateral and all such rights with respect to the
-38-
foregoing do not infringe on the rights of any Person other than such
infringement which could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. No claim has been made and
remains outstanding that the Company's or any Subsidiary's use of any Collateral
does or may violate the rights of any third party that could, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
SECTION 4.10. INTELLECTUAL PROPERTY.
(a) OWNERSHIP/NO CLAIMS. Each of the Company and its
Subsidiaries owns, or is licensed to use, all patents, patent applications,
trademarks, trade names, servicemarks, copyrights, technology, trade secrets,
proprietary information, domain names, know-how and processes necessary for the
conduct of its business as currently conducted (the "INTELLECTUAL PROPERTY"),
except for those the failure to own or license which, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Except as set forth on SCHEDULE 4.10(A), no claim has been asserted and
is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Company or any of the other Issuers know of any valid
basis for any such claim. The use of such Intellectual Property by the Company
or any of its Subsidiaries does not to the knowledge of the Company and its
Subsidiaries infringe the rights of any Person, except for such claims and
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(b) REGISTRATIONS. Except pursuant to licenses and other user
agreements entered into by the Company or any of its Subsidiaries in the
ordinary course of business that are listed in SCHEDULE 12(A) or 12(B) to the
Perfection Certificate, on and as of the date hereof (i) each of the Company and
its Subsidiaries owns and possesses the right to use, and has done nothing to
authorize or enable any other person to use, any copyright, patent or trademark
(as such terms are defined in the Security Agreement) listed in SCHEDULE 12(A)
or 12(B) to the Perfection Certificate and (ii) all registrations listed in
SCHEDULE 12(A) or 12(B) to the Perfection Certificate are valid and in full
force and effect.
(c) NO VIOLATIONS OR PROCEEDINGS. To each of the Issuers'
knowledge, on and as of the date hereof, there is no material violation by
others of any right of the Company or any of its Subsidiaries with respect to
any copyright, patent or trademark listed in SCHEDULE 12(A) or 12(B) to the
Perfection Certificate, pledged by it under the name of such Issuer except as
may be set forth on SCHEDULE 4.10(C).
SECTION 4.11. TAXES. Except as set forth in SCHEDULE 4.11:
(a) all Tax Returns that are required to be filed at or before
the Closing Time by or with respect to the Company or any of its
Subsidiaries, have been or will be timely filed at or before the
Closing Time, and all such Tax Returns are or will be true and complete
in all material respects;
(b) all Taxes shown to be due on the Tax Returns referred to
in clause (a) and all other material Taxes due and payable through the
Closing Time have been or will be timely paid in full;
-39-
(c) adequate provision has been made (or prior to the Closing
Time will be made) for the payment of Taxes for which the Company or
any of its Subsidiaries may be liable that are due and payable after
the Closing Time and which relate to periods (or portions thereof)
ending prior to the Closing Time;
(d) no examination or audit of any Tax Return is ongoing. No
legal proceeding relating to such Tax Returns is pending or, to the
knowledge of the Company, is being threatened by any relevant taxing
authority against the Company or any Subsidiary in respect of any
material Tax. There are no material unsatisfied liabilities for Taxes
with respect to any notice of deficiency or similar document received
by the Company or any Subsidiary with respect to any material Tax
(other than liabilities for Taxes asserted under any such notice of
deficiency or similar documents which are being contested in good faith
and with respect to which adequate reserves for payment have been
established in accordance with GAAP);
(e) no waivers of statutes of limitation have been given by or
requested with respect to any Taxes of the Company or any of its
Subsidiaries;
(f) none of the Company or any of its Subsidiaries will be
required, as a result of (i) a change in accounting method to include
any adjustment under Section 481 of the Code (or any similar provision
of state, local or foreign law) in taxable income for any Tax period
ending at or after the Closing Time, (ii) any "closing agreement" as
described in Section 7121 of the Code (or any similar provision of
state, local or foreign Tax law) or (iii) any installment sale, receipt
of prepaid income or open transaction, to include any item of income in
or exclude any item of deduction from any Tax period ending at or after
the Closing Time;
(g) there are no Liens on any of the assets of the Company or
any of its Subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Tax;
(h) neither the Company nor any of its Subsidiaries has ever
been a member of an affiliated, combined, consolidated or unitary Tax
group for purposes of filing any Tax Return, other than a group of
which the Company or one of its Subsidiaries is or was the common
parent;
(i) no closing agreements, private letter rulings, technical
advance memoranda or similar agreement or rulings have been entered
into or issued by any taxing authority with respect to the Company or
any of its Subsidiaries;
(j) neither the Company nor any of its Subsidiaries or any
predecessors to any of such entities has made any consent under Section
341 of the Code with respect to such Issuer or any such Subsidiary;
(k) the Company and each of its Subsidiaries has complied in
all material respects with its withholding obligations in respect of
Taxes; and
-40-
(l) neither the Company nor any of its Subsidiaries has
participated in any "reportable transaction" within the meaning of
Treasury Regulation Section 1.6011-4 (or any predecessor regulation) or
any "confidential corporate tax shelter" within the meaning of Treasury
Regulation Section 301.6111-2 (or any predecessor regulation).
SECTION 4.12. EMPLOYEE BENEFIT PLANS. Except as set forth on
SCHEDULE 4.12,
(a) there has been no failure by any employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which is maintained by the
Company or any of its Subsidiaries or to which the Company or any of
its Subsidiaries contributes (each a "PLAN") to comply with the
applicable requirements of ERISA and the Code other than any such
failures that, individually or in the aggregate, have not had and would
not have a Material Adverse Effect. There is no material pending or, to
the knowledge of any Issuer threatened, litigation relating to the
Plans. Neither the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any Plan that, assuming the taxable period
of such transaction expired as of the date hereof, could subject the
Company or any of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA other than
those that, individually or in the aggregate, have not had and would
not have a Material Adverse Effect;
(b) no liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001 (a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA AFFILIATE"). Neither the Company, any of its Subsidiaries
nor an ERISA Affiliate has contributed to a Multiemployer Plan, at any
time on or after September 26, 1980. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be
filed for any Plan which is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA ("PENSION PLAN") or by any ERISA
Affiliate within the 12-month period ending on the date hereof;
(c) neither any Pension Plan nor any single-employer plan of
an ERISA Affiliate has an "accumulated funding deficiency" (whether or
not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA and no ERISA Affiliate has an outstanding funding waiver.
Neither the Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code;
(d) under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
-41-
determined on the basis of the actuarial assumptions contained in the
Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such Plan, and there has been no
material change in the financial condition of such Plan since the last
day of the most recent plan year; and
(e) neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Plan, except
as required by applicable law. The Company or the Subsidiaries, as
applicable, may amend or terminate any such Plan at any time without
incurring any liability thereunder.
SECTION 4.13. PRIVATE OFFERING; NO INTEGRATION OR GENERAL SOLICITATION.
(a) Subject to compliance by the Purchasers with the
representations and warranties set forth in Section 5 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Purchased Securities to the Purchasers in the manner contemplated by
this Agreement to register the Securities under the Securities Act.
(b) No Issuer has, directly or indirectly, offered, sold or
solicited any offer to buy, and no Issuer will, directly or indirectly,
offer, sell or solicit any offer to buy, any security of a type or in a
manner which would be integrated with the sale of the Securities and
require the Securities to be registered under the Securities Act. None
of the Company, its Affiliates or any person acting on its or any of
their behalf (other than the Purchasers, as to whom the Issuers make no
representation or warranty) has engaged or will engage in any form of
general solicitation or general advertising (within the meaning of Rule
502(c) under the Securities Act) in connection with the offering of the
Purchased Securities.
SECTION 4.14. ELIGIBILITY FOR RESALE UNDER RULE 144A. The
Notes are eligible for resale pursuant to Rule 144A and will not, at the Closing
Time, be of the same class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted on a U.S.
automated interdealer quotation system.
SECTION 4.15. STATUS UNDER CERTAIN STATUTES. Neither the
Company nor any of its Subsidiaries is or, after receipt of payment for the
Securities and the consummation of the other transactions contemplated by the
Transaction Documents, will be (a) subject to regulation under the Public
Utility Holding Company Act of 1935, as amended ("PUHCA"), the Federal Power Act
or the Interstate Commerce Act, each as amended, (b) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, or controlled by such a company, or (c) a "holding company,"
or a "subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company," within the
meaning of PUHCA.
SECTION 4.16. INSURANCE. Each of the Company and its
Subsidiaries is insured by financially sound institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate for their businesses including, but not limited to, policies
covering real and personal property owned or leased by the Company and its
Subsidiaries against theft, damage, destruction and acts of vandalism.
-42-
SECTION 4.17. USE OF PROCEEDS; MARGIN REGULATIONS. The Company
will apply approximately $30.4 million of proceeds from the sale of the
Purchased Securities to the purchase price for the Acquisition, approximately
$1.6 million to pay fees and expenses relating to the Transactions and will at
the Closing Time deposit approximately $9.5 million into an account for which a
Control Agreement (as defined in the Security Agreement) has been delivered to
the Agent in accordance with the Security Agreement which funds will be
available for general working capital purposes. No part of the proceeds from the
sale of the Purchased Securities hereunder will be used, directly or indirectly,
for the purpose of buying or carrying any margin stock within the meaning of
Regulation U, or for the purpose of buying or carrying or trading in any
securities. Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company has no
present intention that margin stock will constitute more than 5% of the value of
such assets. As used in this Section, the terms "margin stock" and "purpose of
buying or carrying" shall have the meanings assigned to them in Regulation U.
SECTION 4.18. EXISTING INDEBTEDNESS; FUTURE LIENS. SCHEDULE
4.18 sets forth a complete and correct list of all Indebtedness of the Company
and its Subsidiaries that will be outstanding immediately after the consummation
of the Transactions except for any such Indebtedness not so scheduled which, in
the aggregate, does not exceed $50,000. Neither the Company nor any Subsidiary
of the Company is in default, and no waiver of default is currently in effect,
in the payment of the principal of or interest on any Indebtedness of the
Company or such Subsidiary and no event or condition exists with respect to any
Indebtedness of the Company or any Subsidiary of the Company that would permit
(or that with notice, lapse of time or both, would permit) any Person to cause
such Indebtedness to become due and payable before its Stated Maturity or before
its regularly scheduled dates of payment. Neither the Company nor any of its
Subsidiaries has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property or assets, whether
now owned or hereafter acquired, to be subject to a Lien that would be
prohibited by this Agreement if incurred after the first issuance of Notes.
SECTION 4.19. COMPLIANCE WITH LAWS; PERMITS; ENVIRONMENTAL
MATTERS. Except as provided in SCHEDULE 4.19, (a) each of the Company and each
of its Subsidiaries has complied, and is in compliance, in all material respects
with all Applicable Laws and has all Permits material to, and necessary in, the
conduct of its business as currently conducted and all such Permits are in full
force and effect, (b) no violations have been recorded in respect of any such
Permits, and no proceeding is pending or, to the best knowledge of the Issuers,
threatened to revoke or limit any Permit, except for violations and proceedings
which, individually or in the aggregate, have not and would not have a Material
Adverse Effect, (c) all past Environmental Actions against the Company or any of
its Subsidiaries or any of their properties have been resolved without ongoing
obligations or costs, and no circumstances exist that could (i) form the basis
of an Environmental Action against the Company or any of its Subsidiaries or any
of their properties or (ii) cause any such properties to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law, (d) (i) none of the properties currently or, to the knowledge
of the Issuers without inquiry, formerly owned or operated by the Company or any
of its Subsidiaries is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any such
property, (ii) there are no and, to the knowledge of the Issuers without
inquiry, never have been any underground or aboveground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Materials are being or have been treated, stored or disposed of on any property
-43-
currently owned or operated by the Company or any of its Subsidiaries or, to the
best knowledge of the Issuers without inquiry, on any property formerly owned or
operated by the Company or any of its Subsidiaries, (iii) to the best knowledge
of the Issuers without inquiry, there is no asbestos or asbestos-containing
material on any property currently owned or operated by the Company or any of
its Subsidiaries, and (iv) Hazardous Materials have not been released,
discharged or disposed of on any property currently or, to the best knowledge of
the Issuers without inquiry, formerly owned or operated by the Company or any of
its Subsidiaries, and (e) all Hazardous Materials transported to or from any
property currently or, to the best knowledge of the Issuers without inquiry,
formerly owned or operated by the Company or any of its Subsidiaries have been
disposed of in a manner not expected to result in any liability to the Company
or any of its Subsidiaries. SCHEDULE 4.19 sets forth a list of all such Permits
and the expiration dates thereof.
SECTION 4.20. SOLVENCY. The Company and its Subsidiaries are,
and after giving effect to the Transactions will be, Solvent.
SECTION 4.21. AFFILIATE TRANSACTIONS. Except as disclosed in
SCHEDULE 4.21(A) or, with respect to transactions occurring at or after the
Closing Time, as permitted by Section 8.06 hereof: (a) there is no Indebtedness
between the Company or any of its Subsidiaries, on the one hand, and any
officer, stockholder, director or Affiliate (other than the Company or any of
its Subsidiaries) of the Company, on the other, (b) no such officer,
stockholder, director or Affiliate provides or causes to be provided any assets,
services or facilities to the Company or any of its Subsidiaries which,
individually or in the aggregate, are material to the business, management,
operations, affairs, condition (financial or otherwise), assets, property,
prospects or results of operations of the Company and its Subsidiaries, (c)
neither the Company nor any of its Subsidiaries provides or causes to be
provided any assets, services, or facilities to any such officer, stockholder,
director or Affiliate which, individually or in the aggregate, are material to
the business, management, operations, affairs, condition (financial or
otherwise), assets, property, prospects or results of operations of the Company
and its Subsidiaries, (d) neither the Company nor any Subsidiary beneficially
owns, directly or indirectly, any investment in or issued by any such officer,
director or Affiliate, and (e) no such officer, stockholder, director or
Affiliate has any direct or indirect ownership interest in any Person with which
the Company or any of its Subsidiaries competes or has a business relationship.
SECTION 4.22. MATERIAL CONTRACTS. SCHEDULE 4.22 contains a
true, correct and complete list of all Material Contracts in effect at the
Closing Time. Except as described on SCHEDULE 4.22, as of the Closing Time (a)
each Material Contract is in full force and effect and no material defaults
enforceable against the Company or any of its Subsidiaries currently exist
thereunder and (b) neither the Company nor any of its Subsidiaries has received
any written notice or other communication regarding any actual or possible
violation or breach of, or default under, any Material Contract. To the best
knowledge of the Company and its Subsidiaries, no party to any Material Contract
is currently in default under, or intends to terminate, such Material Contract.
-44-
SECTION 4.23. NO CHANGES TO APPLICABLE LAW. To the best
knowledge of the Issuers, no changes to Applicable Law affecting the Company or
any of its Subsidiaries have occurred since the Audit Date or are currently
pending or threatened, in each case other than those which have not had and
would not reasonably be expected to have a Material Adverse Effect and other
than the currently proposed changes to GAAP for accounting of employee stock
option consideration.
SECTION 4.24. INDEBTEDNESS. At the Closing Time, after
consummation of the Transactions, the consolidated Indebtedness of the Company
and its Subsidiaries will not exceed $140.0 million.
SECTION 4.25. FEES. All fees and other expenses payable in
connection with the consummation of the Transactions by the Company or any of
its Subsidiaries are disclosed in SCHEDULE 4.25.
SECTION 4.26. BROKERAGE FEES. Except as disclosed in SCHEDULE
4.26, neither the Company nor any of its Subsidiaries has paid, or is obligated
to pay, to any Person any brokerage or finder's fees in connection with the
transactions contemplated hereby or by any other Transaction Documents.
SECTION 4.27. DOCUMENTS AND PROCEDURES. Except as disclosed on
SCHEDULE 4.27, the agreements, instruments and documents used and the procedures
followed by the Company and its Subsidiaries in the conduct of their business
are sufficient to effect the transactions purported to be effected by such
agreements, instruments and documents and to perfect the Liens or security
interests purported to be created by such agreements, instruments and documents,
except for failures to effect such transactions or perfect such security
interests which, individually or in the aggregate, would not have a Material
Adverse Effect.
SECTION 4.28. ABSENCE OF LABOR DISPUTE. Except as disclosed on
SCHEDULE 4.28, no labor dispute with the employees of the Company or any of its
Subsidiaries exists or, to the best knowledge of the Issuers, is imminent, and
no Issuer is aware of any existing or imminent labor disturbance by the
employees, principal suppliers, manufacturers, customers or contractors of the
Company or any of its Subsidiaries, which, in any case, would have a Material
Adverse Effect.
SECTION 4.29. NO UNRELATED LIABILITIES. As of the Closing
Time, neither the Company nor any of its Subsidiaries will have any liability
unrelated to the business or operations conducted by the Company and its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has made, or will prior
to the Closing Time make, any payment with respect to any such liability.
SECTION 4.30. FULL DISCLOSURE. Each Issuer has disclosed to
the Purchasers all agreements, instruments and corporate or other restrictions
to which it is subject, and all other matters known to it, that, individually or
in the aggregate, could result in a Material Adverse Effect. None of the
representations or warranties made by any Issuer or any of its Affiliates in any
Transaction Document, and none of the statements contained in each exhibit,
report, statement, certificate or other information furnished by or on behalf of
any Issuer or any of its Affiliates to the Purchasers in connection with the
-45-
purchase by the Purchasers of the Purchased Securities (including, without
limitation, any offering and disclosure materials delivered by or on behalf of
any Issuer to any Purchaser prior to the Closing Time) or delivered hereunder
(as modified or supplemented by other information so furnished) contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 4.31. ASSETS CONTROL REGULATIONS AND ANTI-MONEY
LAUNDERING.
(a) OFAC. None of the Company or any of its Subsidiaries (i)
is a person whose property or interest in property is blocked or
subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg. 49079 (2001)), (ii) engages in any dealings or transactions
prohibited by Section 2 of such executive order, or is otherwise
associated with any such person in any manner violative of Section 2,
or (iii) is a person on the list of Specially Designated Nationals and
Blocked Persons or subject to the limitations or prohibitions under any
other U.S. Department of Treasury's Office of Foreign Assets Control
regulation or executive order.
(b) PATRIOT ACT; FOREIGN CORRUPT PRACTICES ACT. The Company
and each of its Subsidiaries is in compliance, in all material
respects, with the Patriot Act. No part of the proceeds of the Notes
will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a
political party, candidate for political office, or anyone else acting
in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.
SECTION 4.32. CERTAIN OTHER REPRESENTATIONS AND WARRANTIES;
CONSUMMATION OF TRANSACTIONS.
(a) (i) Each of the representations and warranties contained
in each of the other Transaction Documents made by the Issuers and
their respective Affiliates is true and correct in all material
respects (except that any representations and warranties that are
qualified as to "materiality" or "Material Adverse Effect" shall be
true and correct) when made and at and as of the Closing Time as if
made at and as of the Closing Time (unless expressly stated to relate
to a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects (except
that any representations and warranties that are qualified as to
"materiality" or "Material Adverse Effect" shall be true and correct)
as of such earlier date) and (ii) to the knowledge of the Issuers
without obligation for inquiry, each of the representations and
warranties contained in the other Transaction Agreements made by
Persons other than the Issuers and their Affiliates is true and correct
in all material respects (except that any representations and
warranties that are qualified as to "materiality" or "Material Adverse
Effect" shall be true and correct). The Issuers agree that, by this
reference, such representations and warranties contained in the other
Transaction Documents delivered by any Issuer, without limiting any of
the representations and warranties otherwise contained herein, hereby
are incorporated herein, MUTATIS MUTANDIS, for the benefit of the
Purchasers.
-46-
(b) All conditions precedent to the other Transaction
Documents other than those that are not required to be delivered by the
Closing Time pursuant to Section 7.17 (other than conditions related to
this Agreement) have been fulfilled or (with the prior written consent
of the Purchasers) waived, the other Transaction Documents have not
been amended or otherwise modified from the executed copies (or latest
drafts received by the Purchasers in the case of draft documents), and
there has been no breach of any material term or condition of the other
Transaction Documents.
SECTION 4.33. SECURITY DOCUMENTS.
(a) SECURITY AGREEMENT. The Security Agreement is effective to
create in favor of the Agent for the benefit of the Secured Parties,
legal, valid and enforceable Liens on, and security interests in, the
Security Agreement Collateral and, when (i) financing statements and
other filings in appropriate form are filed in the offices specified on
SCHEDULE 7 to the Perfection Certificate and (ii) upon the taking of
possession or control by the Agent of the Security Agreement Collateral
with respect to which a security interest may be perfected only by
possession or control (which possession or control shall be given to
the Agent to the extent possession or control by the Agent is required
by each Security Agreement), the Liens created by the Security
Agreement shall constitute fully perfected Liens on, and security
interests in, all right, title and interest of the grantors thereunder
in the Security Agreement Collateral (other than such Security
Agreement Collateral in which a security interest cannot be perfected
under the UCC as in effect at the relevant time in the relevant
jurisdiction), in each case subject to no Liens other than Permitted
Collateral Liens.
(b) COPYRIGHT OFFICE FILING. When the Security Agreement or a
short form thereof is filed in the United States Copyright Office, the
Liens created by such Security Agreement shall constitute fully
perfected Liens on, and security interests in, all right, title and
interest of the grantors thereunder in the Registered Copyrights and
Registered Copyright Licenses (each as defined in such Security
Agreement), in each case subject to no Liens other than Permitted
Collateral Liens.
(c) VALID LIENS. Each Security Document delivered pursuant to
Sections 7.13 and 7.14 will, upon execution and delivery thereof, be
effective to create in favor of the Agent, for the benefit of the
Secured Parties, legal, valid and enforceable Liens on, and security
interests in, all of the Issuers' right, title and interest in and to
the Collateral thereunder, and when all appropriate filings or
recordings are made in the appropriate offices as may be required under
applicable law, such Security Document will constitute fully perfected
Liens on, and security interests in, all right, title and interest of
the Issuers in such Collateral, in each case subject to no Liens other
than the applicable Permitted Collateral Liens.
SECTION 4.34. REAL PROPERTY HOLDING CORPORATION. The Company
is not and after giving effect to the application of the proceeds from the sale
of the Purchased Securities and the Transactions will not be a United States
Real Property Holding Corporation (a "USRPHC") within the meaning of Section
897(c)(2) the Code, and does not currently expect to become a USRPHC for the
foreseeable future.
-47-
SECTION 4.35. ACTIVITIES OF CERTAIN SUBSIDIARIES. None of
Terremark Asia Company, Ltd., Terremark Latin America de Mexico or Terremark
Latin America de Argentina, SA is engaged in any business or business activity
other than the activities related to its existence. None of Terremark Asia
Company, Ltd., Terremark Latin America de Mexico or Terremark Latin America de
Argentina, SA has any assets, liabilities or obligations (other than the
liabilities imposed by law, including Tax and other liabilities related to its
existence).
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
Each Purchaser severally and not jointly represents and
warrants to the Issuers as of the date hereof and as of the Closing Time as
follows:
SECTION 5.01. PURCHASE FOR INVESTMENT.
(a) Such Purchaser is acquiring the Securities for its own
account, for investment and not with a view to any distribution thereof
within the meaning of the Securities Act.
(b) Such Purchaser understands that (i) the Securities have
not been registered under the Securities Act and are being issued by
the Company in transactions exempt from the registration requirements
of the Securities Act and (ii) the Securities may not be offered or
sold except pursuant to an effective registration statement under the
Securities Act or pursuant to an applicable exemption from registration
under the Securities Act.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 promulgated under the Securities Act
depends on the satisfaction of various conditions, and that, if
applicable, Rule 144 may afford the basis for sales only in limited
amounts.
(d) Such Purchaser did not employ any broker or finder in
connection with the transactions contemplated in this Agreement.
(e) Such Purchaser is an Accredited Investor.
(f) Such Purchaser has been given the opportunity to ask
questions of and receive answers from the Company concerning the terms
and conditions of the Purchased Securities, and has been given the
opportunity to obtain additional information necessary to verify the
accuracy of the information contained in the Company Reports or such
other information as it desired in order to evaluate its investment.
-48-
SECTION 6
COVENANTS TO PROVIDE INFORMATION
Each Issuer covenants and agrees with each Holder that until
the principal amount of (and premium, if any, on) all the Notes, and all
interest and other obligations hereunder in respect thereof, shall have been
paid in full, and while any Warrants shall remain outstanding:
SECTION 6.01. FUTURE REPORTS TO HOLDERS.
(a) MONTHLY STATEMENTS. As soon as available but in any event
within thirty (30) days after the end of each month (except for any
month that ends a quarter, in which case, the Company will have
forty-five (45) days after the end of such month), the Company shall
deliver to each Noteholder and holder of Warrants (unless with respect
to any Noteholder or holder of Warrants such Noteholder or holder of
Warrants has requested that it not receive) duplicate copies of:
(i) consolidated and consolidating balance sheets of
the Company and its Subsidiaries as at the end of such month,
and
(ii) consolidated and consolidating statement of
income, consolidated statements of stockholders' equity and
cash flows and consolidating schedule of investment activities
for purchases of property and equipment of the Company and its
Subsidiaries for such month and for the portion of the Fiscal
Year ending with such month,
in each case setting forth in comparative form the figures for the
corresponding periods in the prior Fiscal Year and the corresponding
figures for the consolidated plan and financial forecast to the current
Fiscal Year delivered pursuant to Section 6.01(d), all in reasonable
detail, prepared in accordance with GAAP (except with respect to the
related footnotes), and fairly presenting, in all material respects,
the financial position of the Persons being reported on and their
results of operations and cash flows, subject to changes resulting from
normal year-end adjustments that will not be material in amount or
effect, and accompanied by a certificate of the Chief Financial Officer
of the Company to the foregoing effect.
(b) QUARTERLY STATEMENTS. As soon as available, but in any
event within forty-five (45) days after the end of each quarter, the
Company shall deliver to each Noteholder and holder of Warrants
duplicate copies of:
(i) consolidated and consolidating balance sheets of
the Company and its Subsidiaries as at the end of such
quarter, and
(ii) consolidated and consolidating statement of
income, consolidated statements of stockholders' equity and
cash flows and consolidating schedule of investment activities
for purchases of property and equipment of the Company and its
-49-
Subsidiaries, for such quarter and for the portion of the
Fiscal Year ending with such quarter,
in each case setting forth in comparative form the figures for the
corresponding periods in the prior Fiscal Year and the corresponding
figures for the consolidated plan and financial forecast for the
current Fiscal Year delivered pursuant to Section 6.01(d), all in
reasonable detail, prepared in accordance with GAAP applicable to
periodic financial statements generally, and fairly presenting, in all
material respects, the financial position of the Persons being reported
on and their results of operations and cash flows, subject to changes
resulting from normal year-end adjustments that will not be material in
amount or effect, and accompanied by (x) a certificate of the Chief
Financial Officer of the Company to the foregoing effect and (y) a
narrative report (in the form of management's discussion and analysis
of such operations which would comply with the disclosure requirements
of the Exchange Act with respect to management's discussion and
analysis set forth in quarterly reports on Form 10-Q) describing in
reasonable detail the operations, cash flows and financial condition of
the Company and its Subsidiaries prepared for such quarter and for the
period from the beginning of the then current Fiscal Year to the end of
such quarter; PROVIDED, HOWEVER, that if the Company is then subject to
the reporting requirements under Section 13 or Section 15(d) of the
Exchange Act, the delivery by the Company to such Purchaser and such
Holder of a Quarterly Report on Form 10-Q or any successor form within
the time periods above described shall satisfy the requirements of this
Section 6.01(b). The consolidating balance sheet and statements of
income, stockholders' equity and cash flows and consolidating schedule
of investment activities for purchases of property and equipment
required by this paragraph may be in the form contained in the notes to
the financial statements included in the Company's Form 10-Q.
(c) ANNUAL STATEMENTS. As soon as available, but in any event
within ninety (90) days after the end of each Fiscal Year of the
Company, the Company shall deliver to each Noteholder and holder of
Warrants duplicate copies of:
(i) consolidated and consolidating balance sheets of
the Company and its Subsidiaries as at the end of such year,
and
(ii) consolidated and consolidating statement of
income, consolidated statements of stockholders' equity and
cash flows and consolidating schedule of investment activities
for purchases of property and equipment of the Company and its
Subsidiaries for such year,
in each case setting forth in comparative form the figures for the
prior Fiscal Year and, commencing with Fiscal Year 2005, the
corresponding figures from the consolidated plan and financial forecast
for the current Fiscal Year delivered pursuant to Section 6.01(d), all
in reasonable detail, prepared in accordance with GAAP, fairly
presenting, in all material respects, the financial position of the
Persons being reported on and their results of operations and cash
flows, and accompanied by:
(A) an opinion thereon of independent certified
public accountants of recognized national standing, which
opinion (i) shall state that such financial statements (other
than consolidating statements) present fairly, in all material
-50-
respects, the financial position of the Persons being reported
upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements (other than consolidating statements) has
been made in accordance with generally accepted auditing
standards in the United States, and that such audit provides a
reasonable basis for such opinion in the circumstances, and
(ii) shall not at any time following the second anniversary of
the Closing Time contain a "going concern" or like
qualification, or any exception or other qualification arising
out of the scope of the audit,
(B) a certificate of the Chief Financial Officer of
the Company stating that such financial statements have been
prepared in accordance with GAAP applicable to periodic
financial statements generally and fairly present, in all
material respects, the financial position of the Persons being
reported on and their results of operations and cash flows,
and
(C) a narrative report (in the form of management's
discussion and analysis of such operations which would comply
with the disclosure requirements of the Exchange Act with
respect to management's discussion and analysis set forth in
quarterly reports on Form 10-Q) describing in reasonable
detail the operations, cash flows and financial condition of
the Company and its Subsidiaries prepared for such Fiscal
Year,
PROVIDED, HOWEVER, that if the Company is then subject to the reporting
requirements under Section 13 or Section 15(d) of the Exchange Act, the delivery
by the Company to such Purchaser and such Holder of an Annual Report on Form
10-K or any successor form within the time periods above described shall satisfy
the requirements of this Section 6.01(c). The consolidating balance sheet and
statements of income, stockholders' equity and cash flows and consolidating
schedule of investment activities for purchases of property and equipment
required by this paragraph may be in the form contained in the notes to the
financial statements included in Company's Form 10-K.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by clauses (b) and (c) above will include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company; PROVIDED HOWEVER that it is expressly understood that in order to
comply with the requirements of this paragraph the Company need only provide a
supplemental schedule to such Purchaser or Holder, as applicable, with this
information and need not actually include such information in any form filed
with the Commission.
(d) FORECASTS. As soon as practicable but in any event no
later than the last day of each Fiscal Year a forecast for each of the next
succeeding twelve months of the consolidated balance sheet and the consolidated
statements of income, cash flows and stockholders' equity of the Company and its
Subsidiaries and the consolidating balance sheet and the consolidating
-51-
statements of income and cash flows of each of the Company and its Subsidiaries,
together with an outline of the major assumptions upon which the forecast is
based.
(e) TELEPHONIC CONFERENCE. Within five Business Days after the
delivery of the financial statements referred to in paragraphs (a), (b), (c) and
(d) above, the Chief Financial Officer of the Company shall participate in a
telephonic conference upon the request of either (x) Noteholders holding not
less than 25% of the then outstanding Notes or (y) Warrantholders holding not
less than 25% of the then outstanding Warrants.
(f) CHIEF FINANCIAL OFFICER CERTIFICATES. Concurrently with
the delivery of the financial statements referred to in subsections (a) through
(c) of this Section 6.01, the Company shall deliver to each Noteholder and
holder of Warrants a compliance certificate ("COMPLIANCE CERTIFICATE") in the
form of EXHIBIT E hereto and signed by the Chief Financial Officer of the
Company stating that, to the best of such Chief Financial Officer's knowledge
after due inquiry, each of the Company and its Subsidiaries has observed or
performed all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other Transaction Documents to be
observed, performed or satisfied by it, and in the case of the certificate
delivered to the Noteholders, that such Chief Financial Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
Compliance Certificate.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, the
Company shall deliver to each Noteholder and holder of Warrants copies of all
final reports submitted to the Company or to any of its Subsidiaries by
independent certified public accountants in connection with each annual, interim
or special audit of the books of the Company or any of its Subsidiaries made by
such accountants, including, without limitation, any final comment letter
submitted by such accountants to management in connection with their annual
audit.
(h) OTHER INFORMATION. Promptly upon their becoming available,
the Company shall deliver or make available to each Noteholder and holder of
Warrants (including by being made available on XXXXX; PROVIDED that the Company
gives prompt notice of such filing with XXXXX to each such Noteholders and
holders of Warrants) copies of all financial statements, reports, notices and
proxy statements sent to its securityholders or made available generally by the
Company or any of its Subsidiaries and all regular and periodic reports and all
registration statements and final prospectuses, if any, filed by the Company or
any of its Subsidiaries with any securities exchange or with the Commission or
any Governmental Authority succeeding to any of its functions and, promptly upon
request, such additional financial and other information as any Noteholder and
holder of Warrants may from time to time reasonably request. For the benefit of
Noteholders, holders of Warrants and beneficial owners from time to time of any
Note or Warrant, the Issuers shall, upon the request of any such Noteholder or
holder of Warrants, furnish, at the Issuers' expense, to Noteholders, holders of
Warrants and beneficial owners of any Note or Warrant and prospective purchasers
of such securities information satisfying the requirements of subsection (d)(4)
of Rule 144A under the Securities Act.
(i) NOTICE OF DEFAULT OR EVENT OF DEFAULT. Promptly, but in
any event within three (3) Business Days, after any officer of the Company
becomes aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any other action with respect to a claimed
-52-
Default or Event of Default, the Company shall deliver a written notice thereof
to the Noteholders specifying the nature and existence thereof and what action
the Company is taking or proposes to take with respect thereto.
(j) ADDITIONAL INFORMATION TO HOLDERS OF OTHER INDEBTEDNESS.
Simultaneously with the furnishing of such information to any other holder of
Indebtedness of the Company or any of its Subsidiaries, the Company shall
deliver to each Noteholder (i) copies of all other financial statements, reports
or projections with respect to the Company or its Subsidiaries which are broader
in scope or on a more frequent basis than the Company is required to provide
under this Agreement and (ii) copies of all studies, reviews, reports or
assessments relating to environmental matters that reveal circumstances, events
or other matters that would reasonably be expected to have a Material Adverse
Effect.
(k) CHANGES TO INDEBTEDNESS. At least 10 days prior thereto,
written notice to the Noteholders of any proposed extension, renewal,
refinancing or modification of any indebtedness exceeding $500,000 of the
Company or any of its Subsidiaries.
(l) ERISA MATTERS. (a) As soon as possible and in any event
within ten (10) days after any Issuer or any ERISA Affiliate thereof knows or
has reason to know that (A) any Reportable Event with respect to any Employee
Plan has occurred, (B) any other termination event with respect to any Employee
Plan has occurred, or (C) an accumulated funding deficiency has been incurred or
an application has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including installment payments) or
an extension of any amortization period under Section 412 of the Code with
respect to an Employee Plan, an Officers' Certificate of the Company setting
forth the details of such occurrence and the action, if any, which such Issuer
or such ERISA Affiliate proposes to take with respect thereto, (b) promptly and
in any event within three (3) Business Days after receipt thereof by any Issuer
or any ERISA Affiliate thereof from the PBGC, copies of each notice received by
any Issuer or any ERISA Affiliate thereof of the PBGC's intention to terminate
any Plan or to have a trustee appointed to administer any Plan, (c) promptly and
in any event within 10 days after any Issuer or any ERISA Affiliate thereof
knows or has reason to know that a required installment within the meaning of
Section 412 of the Code has not been made when due with respect to an Employee
Benefit Plan, (d) promptly and in any event within three (3) Business Days after
receipt thereof by any Issuer or any ERISA Affiliate thereof from a sponsor of a
Multiemployer Plan or from the PBGC, a copy of each notice received by any
Issuer or any ERISA Affiliate thereof concerning the imposition or amount of
withdrawal liability under Section 4202 of ERISA or indicating that such
Multiemployer Plan may enter reorganization status under Section 4241 of ERISA,
and (e) promptly and in any event within 10 days after any Issuer sends notice
of a plant closing or mass layoff (as defined in WARN) to employees, copies of
each such notice sent by such Issuer.
(m) MANAGEMENT REPORT. Promptly upon receipt thereof, each
Issuer shall deliver to each Noteholder and holder of Warrants copies of all
detailed financial and management reports submitted to the Company or any of its
Subsidiaries by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company or such Subsidiary.
-53-
(n) LITIGATION AND OTHER MATERIAL EVENTS. Promptly after the
commencement thereof, the Company shall deliver to each Noteholder and holder of
Warrants notice of (i) all actions, suits, investigations, litigation,
arbitrations and proceedings known to the Issuers against or affecting the
Company or any of its Subsidiaries or any of the property or assets thereof in
any court or before any arbitrator or by or before any Governmental Authority or
court of any kind not previously disclosed by the Company or any of its
Subsidiaries that either individually or in the aggregate, would have a Material
Adverse Effect, (ii) the occurrence of a Casualty Event; and (iii) (x) the
incurrence of any material Lien (other than Permitted Collateral Liens) on, or
claim asserted against any of the Collateral or (y) the occurrence of any other
event which could materially affect the value of the Collateral.
(o) ORIGINAL ISSUE DISCOUNT INFORMATION. The Company shall
deliver to each Noteholder all original issue discount information and other tax
reporting information relating to the Notes as may be required by Applicable
Law.
SECTION 7
OTHER AFFIRMATIVE COVENANTS
Each Issuer further covenants and agrees with each Purchaser
and each Noteholder that until the principal amount of (and premium, if any, on)
all the Notes, and all interest and other obligations (other than contingent
indemnification obligations to the extent no claim has been asserted) hereunder
in respect thereof, shall have been paid in full.
SECTION 7.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Company shall duly and punctually pay the principal of (and premium, if any, on)
and all interest on the Notes in accordance with the terms of the Notes and this
Agreement.
The Company shall pay interest on overdue principal (including
post-petition interest on a proceeding under any Bankruptcy Law), and interest
on overdue interest, to the extent lawful, at the rate specified in the Notes.
SECTION 7.02. PRESERVATION OF CORPORATE EXISTENCE AND
FRANCHISES. Subject to Section 8.05 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (a) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (b) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; PROVIDED, HOWEVER, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries if (i) the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and (ii) the loss thereof would not result in a Material
Adverse Effect.
-54-
SECTION 7.03. MAINTENANCE OF PROPERTIES. The Company shall
cause all properties used or useful in the conduct of its business or the
business of any of its Subsidiaries to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; PROVIDED, HOWEVER, that the foregoing
shall not prevent the Company from discontinuing the operation or maintenance of
any of such properties if (i) the Board of Directors determines that such
discontinuance is desirable in the conduct of its business or the business of
any Subsidiary and (ii) such discontinuance would not result in a Material
Adverse Effect and would not be adverse in any material respect to any
Noteholder.
SECTION 7.04. TAXES.
(a) PAYMENT OF TAXES. The Company shall pay or discharge or
cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied
or imposed upon the Company or any of its Subsidiaries or upon the
income, profits or property of the Company or any of its Subsidiaries,
and (ii) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon the property of the Company or
any of its Subsidiaries; PROVIDED, HOWEVER, that the Company shall not
be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings
provided that appropriate reserves therefor are established in the
Company's consolidated financial statements in accordance with GAAP.
(b) TAX RETURNS. The Company and its Subsidiaries shall timely
file or cause to be filed when due all Tax Returns that are required to
be filed by or with respect to the Company for taxable years ending
after the Closing Time and shall pay any Taxes due in respect of such
Tax Returns.
(c) CONTEST PROVISIONS. The Company shall promptly notify the
Noteholders in writing upon receipt by the Company or any of its
Subsidiaries or any of their Affiliates of notice of any pending or
threatened federal, state, local or foreign income or franchise tax
audits or assessments which may materially affect the tax liabilities
of the Company.
SECTION 7.05. BOOKS, RECORDS AND ACCESS. The Company, both
with respect to itself and with respect to the Company and its Subsidiaries on a
consolidated basis, and each Subsidiary shall keep complete and accurate books
and records of their transactions in accordance with good accounting practices
on the basis of GAAP applied on a consistent basis (including the establishment
and maintenance of appropriate reserves); PROVIDED that with respect to any
Foreign Subsidiary, the immediately preceding reference to GAAP shall be deemed
to be to generally accepted accounting principles in effect in such Foreign
Subsidiary's jurisdiction. To the extent reasonably required in connection with
any resale of any of the Securities and upon reasonable notice, the Company
shall, and shall cause its Subsidiaries to, subject to compliance with
Applicable Laws, the execution of a confidentiality agreement substantially in
the form set forth in EXHIBIT M or as otherwise mutually acceptable to the
Company and each such Noteholder and confidentiality obligations to third
parties, give each Noteholder that is not a competitor of the Company or any of
its Subsidiaries in any material respect (and, in each case, any sales or
placement agent or underwriter participating in such resale) and their
authorized representatives reasonable access during normal business hours to all
contracts, books, records, personnel, offices and other facilities and
properties of the Company and its Subsidiaries and their legal advisors,
-55-
accountants and, to the extent available to the Company after the Company uses
reasonable efforts to obtain them, the accountants' work papers, permit each
Purchaser and such Noteholder (and any such sales or placement agent or
underwriter) to make such copies and inspections thereof as such Noteholder may
reasonably request and furnish such Noteholder (and any such sales or placement
agent or underwriter) with such financial and operating data and other
information with respect to the business and properties of the Company and its
Subsidiaries as such Noteholder (and any such sales or placement agent or
underwriter) may from time to time reasonably request. Any such visits will be
at the expense of such Noteholder.
SECTION 7.06. COMPLIANCE WITH LAW. The Company shall, and
shall cause each of its Subsidiaries to, comply with all Applicable Laws and
shall obtain and maintain, and shall cause each of its Subsidiaries to obtain
and maintain, all Permits necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that any such non-compliance with Applicable Law or
any failure to obtain or maintain such Permits, individually or in the
aggregate, would not have a Material Adverse Effect.
SECTION 7.07. INSURANCE.
(a) GENERALLY. The Company shall, and shall cause its
Subsidiaries to, keep its insurable property adequately insured at all
times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks as is customary with
companies in the same or similar businesses operating in the same or
similar locations, including insurance with respect to Mortgaged
Properties and other properties material to the business of the Company
and its Subsidiaries against such casualties and contingencies and of
such types and in such amounts with such deductibles as is customary in
the case of similar businesses operating in the same or similar
locations, including (i) physical hazard insurance on an "all risk"
basis, (ii) commercial general liability against claims for bodily
injury, death or property damage covering any and all insurable claims,
(iii) explosion insurance in respect of any boilers, machinery or
similar apparatus constituting Collateral, (iv) business interruption
insurance, (v) worker's compensation insurance and such other insurance
as may be required by any Requirement of Law and (vi) such other
insurance against risks as the Noteholders may from time to time
require (such policies to be in such form and amounts and having such
coverage as may be reasonably satisfactory to the Required Holders and
the Agent); PROVIDED that with respect to physical hazard insurance,
neither the Agent nor the Company or such Subsidiary shall agree to the
adjustment of any claim thereunder without the consent of the other
(such consent not to be unreasonably withheld or delayed); PROVIDED,
FURTHER, that no consent of the Company or any Subsidiary shall be
required during an Event of Default.
(b) REQUIREMENTS OF INSURANCE. All such insurance in the name
of any Issuer shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be
-56-
effective until at least 30 days after receipt by the Agent of written
notice thereof, (ii) name the Agent as mortgagee (in the case of
property insurance for Mortgaged Property) or additional insured on
behalf of the Secured Parties (in the case of liability insurance) or
loss payee (in the case of property insurance for Mortgaged Property),
as applicable, (iii) if reasonably requested by the Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all
other respects to the Agent.
(c) NOTICE TO AGENTS. The Company shall notify the Noteholders
and the Agent immediately whenever any separate insurance concurrent in
form or contributing in the event of loss with that required to be
maintained under this Section 7.07 is taken out by the Company or any
of its subsidiaries; and promptly deliver to the Noteholders and the
Agent a duplicate original copy of such policy or policies.
(d) FLOOD INSURANCE. The Company shall, and shall cause its
Subsidiaries to, with respect to each Mortgaged Property, obtain flood
insurance in such total amount as the Required Holders may from time to
time require, if at any time the area in which any improvements located
on any Mortgaged Property is designated a "flood hazard area" in any
Flood Insurance Rate Map published by the Federal Emergency Management
Agency (or any successor agency), and otherwise comply with the
National Flood Insurance Program as set forth in the Flood Disaster
Protection Act of 1973, as amended from time to time.
(e) BROKER'S REPORT. The Company shall deliver to the Agent
and the Noteholders a report of a reputable insurance broker with
respect to such insurance and such supplemental reports with respect
thereto as the Required Holders or the Agent may from time to time
reasonably request.
(f) MORTGAGED PROPERTIES. No Issuer that is an owner of
Mortgaged Property shall take any action that is reasonably likely to
be the basis for termination, revocation or denial of any insurance
coverage required to be maintained under such Issuer's respective
Mortgage or that could be the basis for a defense to any claim under
any Insurance Policy maintained in respect of the Premises, and each
Issuer shall otherwise comply in all material respects with all
Insurance Requirements in respect of the Premises; PROVIDED, HOWEVER,
that each Issuer may, at its own expense and after written notice to
the Noteholders, (i) contest the applicability or enforceability of any
such Insurance Requirements by appropriate legal proceedings, the
prosecution of which does not constitute a basis for cancellation or
revocation of any insurance coverage required under this Section 7.07
or (ii) cause the Insurance Policy containing any such Insurance
Requirement to be replaced by a new policy complying with the
provisions of this Section 7.07.
SECTION 7.08. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company
shall make an offer (a "CHANGE OF CONTROL Offer") to each Noteholder to
repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Noteholder's Notes at an offer price in cash equal to
100% of the principal amount thereof as of the Change of Control
Payment Date plus the Applicable Premium, plus accrued and unpaid
interest, if any, thereon to the Change of Control Payment Date (the
"CHANGE OF CONTROL PAYMENT"). The Company shall comply with the
-57-
requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control, and the Company shall not be
in violation of this Agreement by reason of any act required by such
rule or other Applicable Law.
(b) Within five (5) Business Days following any Change of
Control, the Company shall send, by first-class mail, a notice to each
Noteholder stating:
(i) that the Change of Control Offer is being made
pursuant to this Section 7.08 and that all Notes tendered will
be accepted for payment;
(ii) the purchase price and the purchase date, the
latter of which shall be at least 30 but no more than 45 days
from the date on which the Company mails notice of the Change
of Control (the "CHANGE OF CONTROL PAYMENT DATE");
(iii) that any Notes not tendered will continue to
accrue interest;
(iv) that, unless the Company defaults in the payment
of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date;
(v) that Noteholders electing to have any Notes
purchased pursuant to a Change of Control Offer shall be
required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Company or its designated agent for
such purpose at the address specified in the notice prior to
5:00 p.m. Eastern Time on the third Business Day preceding the
Change of Control Payment Date;
(vi) that Noteholders will be entitled to withdraw
their election if the Company or its designated agent for such
purpose receives, not later than 5:00 p.m. Eastern Time on the
second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Noteholder, the principal amount
of Notes delivered for purchase, and a statement that such
Noteholder is withdrawing his election to have the Notes
purchased; and
(vii) that Noteholders whose Notes are being
purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000
in principal amount or an integral multiple thereof.
(c) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (i) accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (ii)
mail to each Noteholder so tendered the Change of Control Payment for
such Notes plus all accrued and unpaid interest to the Change of
Control Payment Date, and (iii) execute and mail to each Noteholder a
new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; PROVIDED, HOWEVER, that each such new Note
-58-
shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall inform the Noteholders in writing of the
results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
SECTION 7.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
(a) In the event that, pursuant to Section 8.05 hereof, the
Company shall be required to commence an offer to all Noteholders to
purchase Notes (an "ASSET SALE OFFER"), it shall follow the procedures
specified in this Section 7.09. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the
Notes pursuant to an Asset Sale Offer, and the Company shall not be in
violation of this Agreement by reason of any act required by such rule
or other Applicable Law.
(b) Within five (5) Business Days following each date on which
the Company's obligation to make an Asset Sale Offer is triggered, the
Company shall send, by first-class mail, a notice to each Noteholder
stating:
(i) that the Asset Sale Offer is being made pursuant
to this Section 7.09 and Section 8.05;
(ii) that the Company shall purchase the principal
amount of Notes required to be purchased pursuant to Section
8.05 (the "OFFER AMOUNT"), the purchase price per Note and the
purchase date, which shall be at least 30 but no more than 45
days from the date on which the Company mails notice of the
Asset Sale Offer (the "ASSET SALE OFFER PAYMENT DATE");
(iii) that any Notes not tendered will continue to
accrue interest;
(iv) that, unless the Company defaults in payment of
the Offer Amount on the Asset Sale Offer Payment Date, all
Notes accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest after the Asset Sale Offer
Payment Date;
(v) that Noteholders electing to have any Notes
purchased pursuant to an Asset Sale Offer shall be required to
surrender the Notes, with the form entitled "Option of Holder
to Elect Purchase" on the reverse of the Notes completed, to
the Company or its designated agent for such purpose at the
address specified in the notice prior to 5:00 p.m. Eastern
Time on the third Business Day preceding the Asset Sale Offer
Payment Date;
(vi) that Noteholders will be entitled to withdraw
their election if the Company or its designated agent for such
purpose receives, not later than 5:00 p.m. Eastern Time on the
second Business Day preceding the Asset Sale Offer Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Noteholder, the principal amount
of Notes delivered for purchase, and a statement that such
Noteholder is withdrawing his election to have the Notes
purchased;
-59-
(vii) that, if the aggregate principal amount of
Notes surrendered by Noteholders exceeds the Offer Amount, the
Company shall select the Notes to be purchased on a PRO RATA
basis (with such adjustments as may be deemed appropriate by
the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(viii) that Noteholders whose Notes are being
purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000
in principal amount or an integral multiple thereof.
On the Asset Sale Offer Payment Date, the Company shall, to
the extent lawful, (i) accept for payment, on a PRO RATA basis to the extent
necessary, all Notes or portions thereof properly tendered pursuant to the Asset
Sale Offer up to the principal amount of Notes equal to the Offer Amount, or, if
less than the Offer Amount has been tendered, all Notes tendered, (ii) mail to
each holder of a Note so tendered the purchase price for such Notes, plus all
accrued and unpaid interest to the Asset Sale Offer Payment Date, (iii) execute
and mail to each Noteholder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any, and (iv) deliver to the
Noteholders an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 7.09. The Company shall inform the Noteholders in writing of the results
of the Asset Sale Offer on or as soon as practicable after the Asset Sale Offer
Payment Date.
SECTION 7.10. AFFIRMATIVE COVENANTS WITH RESPECT TO LEASES.
With respect to each Lease entered into by an Issuer relating to Real Property
owned in fee by such Issuer, the respective Issuer shall perform all the
obligations imposed upon the landlord under such Lease and enforce all of the
tenant's obligations thereunder, except where the failure to so perform or
enforce could not reasonably be expected to result in a Property Material
Adverse Effect.
SECTION 7.11. [RESERVED]
SECTION 7.12. FURTHER ASSURANCES. The Company shall, upon the
request of any Holder, execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the provisions of this Agreement.
SECTION 7.13. ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS.
(a) Subject to this Section 7.13 and Section 7.16, with
respect to any property acquired after the Closing Time by any Issuer
that is intended to be subject to the Lien created by any of the
Security Documents but is not so subject, such Issuer shall promptly
(and in any event within 30 Business Days after the acquisition
thereof) (i) execute and deliver to the Noteholders and the Agent such
amendments or supplements to the relevant Security Documents or such
other documents as the Required Holders or the Agent shall deem
-60-
necessary or advisable to grant to the Agent, for its benefit and for
the benefit of the other Secured Parties, a Lien on such property
subject to no Liens other than Permitted Collateral Liens, and (ii)
take all actions necessary to cause such Lien to be duly perfected to
the extent required by such Security Document in accordance with all
applicable Requirements of Law, including the filing of financing
statements in such jurisdictions as may be reasonably requested by the
Required Holders. Borrower shall otherwise take such actions and
execute and/or deliver to the Agent such documents as the Required
Holders or the Agent shall require to confirm the validity, perfection
and priority of the Lien of the Security Documents against such
after-acquired properties.
(b) With respect to any person that is or becomes a Wholly
Owned Subsidiary after the Closing Time (and in any event within 30
Business Days after such person becomes a Wholly Owned Subsidiary), the
Company shall and shall cause its Subsidiaries to promptly (i) deliver
to the Agent the certificates, if any, representing all of the Capital
Stock of such Subsidiary, together with undated stock powers or other
appropriate instruments of transfer executed and delivered in blank by
a duly authorized officer of the holder(s) of such Capital Stock, and
all intercompany notes owing from such Subsidiary to any Issuer
together with instruments of transfer executed and delivered in blank
by a duly authorized officer of such Issuer and (ii) cause such new
Subsidiary (A) to execute and deliver to the Noteholders a Subsidiary
Guarantee of the Notes in the form of EXHIBIT B hereto and a
supplemental agreement substantially in the form of EXHIBIT C hereto
pursuant to which such Subsidiary shall unconditionally guarantee all
of the Company's obligations under the Notes on the terms set forth in
such supplemental agreement and a joinder agreement to the applicable
Security Agreement, substantially in the form annexed thereto, or, in
the case of a Foreign Subsidiary, execute a security agreement
compatible with the laws of such Foreign Subsidiary's jurisdiction in
form and substance reasonably satisfactory to the Agent, and (B) to
take all actions necessary or advisable in the opinion of the Required
Holders or the Agent to cause the Lien created by the applicable
Security Agreement to be duly perfected to the extent required by such
agreement in accordance with all applicable Requirements of Law,
including the filing of financing statements in such jurisdictions as
may be reasonably requested by the Required Holders or the Agent.
(c) Each Issuer shall use its commercially reasonable efforts
to promptly grant to the Agent, within 60 days of the acquisition
thereof, a security interest in and Mortgage on (i) each Real Property
owned in fee by such Issuer as is acquired by such Issuer after the
Closing Time and that, together with any improvements thereon,
individually has a fair market value based on the good faith estimate
of the Company of at least $500,000, and (ii) unless the Required
Holders otherwise consent, each leased Real Property of such Issuer
which lease individually has a fair market value based on the good
faith estimate of the Company of at least $500,000,(2) in each case, as
additional security for the Secured Obligations (unless the subject
property is already mortgaged to a third party to the extent permitted
by Section 8.07). Such Mortgages shall be granted pursuant to
documentation reasonably satisfactory in form and substance to the
Required Holders and the Agent and shall constitute valid and
---------
(2) If a leasehold mortgage is obtained, must use form of landlord lien waiver,
access agreement and consent, rather than landlord access agreement.
-61-
enforceable perfected Liens subject only to Permitted Collateral Liens
or other Liens acceptable to the Agent. The Mortgages or instruments
related thereto shall be duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and
protect the Liens in favor of the Agent required to be granted pursuant
to the Mortgages and all taxes, fees and other charges payable in
connection therewith shall be paid in full. Such Issuer shall otherwise
use its commercially reasonable efforts to take such actions and
execute and/or deliver to the Agent such documents as the Required
Holders or the Agent shall require to confirm the validity, perfection
and priority of the Lien of any existing Mortgage or new Mortgage
against such after-acquired Real Property (including a Title Policy, a
Survey and local counsel opinion (in form and substance reasonably
satisfactory to the Required Holders and the Agent) in respect of such
Mortgage).
SECTION 7.14. SECURITY INTERESTS; FURTHER ASSURANCES(a) .
Promptly, upon the reasonable request of the Agent or any Required Holders, at
the Company's expense, execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents or otherwise deemed by the Required Holders or the Agent
reasonably necessary or desirable for the continued validity, perfection and
priority of the Liens on the Collateral covered thereby subject to no other
Liens except as permitted by the applicable Security Document, or obtain any
consents or waivers as may be necessary or appropriate in connection therewith.
Deliver or cause to be delivered to the Noteholders and the Agent from time to
time such other documentation, consents, authorizations, approvals and orders in
form and substance reasonably satisfactory to the Required Holders and the Agent
as the Required Holders and the Agent shall reasonably deem necessary to perfect
or maintain the Liens on the Collateral pursuant to the Security Documents. Upon
the exercise by the Agent or any Holder of any power, right, privilege or remedy
pursuant to any Basic Document which requires any consent, approval,
registration, qualification or authorization of any Governmental Authority
execute and deliver all applications, certifications, instruments and other
documents and papers that the Agent or such Holder may require. If the Agent or
the Required Holders determine that they are required by a Requirement of Law to
have appraisals prepared in respect of the Real Property of any Issuer
constituting Collateral, the Company shall provide to the Agent appraisals that
satisfy the applicable requirements of the Real Estate Appraisal Reform
Amendments of FIRREA and are otherwise in form and substance satisfactory to the
Required Holders and the Agent.
SECTION 7.15. INFORMATION REGARDING COLLATERAL.
(a) The Company shall not and shall not permit any of its
Subsidiaries to effect any change (i) in any Issuer's legal name, (ii)
in the location of any Issuer's chief executive office, (iii) in any
Issuer's identity or organizational structure, (iv) in any Issuer's
Federal Taxpayer Identification Number or organizational identification
number, if any, or (v) in any Issuer's jurisdiction of organization (in
each case, including by merging with or into any other entity,
reorganizing, dissolving, liquidating, reorganizing or organizing in
any other jurisdiction), until (A) it shall have given the Agent and
the Holders not less than 30 days' prior written notice (in the form of
an Officers' Certificate), or such lesser notice period agreed to by
the Agent, of its intention so to do, clearly describing such change
and providing such other information in connection therewith as the
Agent or the Required Holders may reasonably request and (B) it shall
have taken all action reasonably satisfactory to the Agent to maintain
the perfection and priority of the security interest of the Agent for
the benefit of the Secured Parties in the Collateral, if applicable.
-62-
Each Issuer agrees to promptly provide the Agent with certified
Organizational Documents reflecting any of the changes described in the
preceding sentence. Each Issuer also agrees to promptly notify the
Agent of any change in the location of any office in which it maintains
books or records relating to Collateral owned by it or any office or
facility at which Collateral is located (including the establishment of
any such new office or facility), other than changes in location to a
Mortgaged Property or a leased property subject to a Landlord Access
Agreement.
(b) Concurrently with the delivery of financial statements
pursuant to Section 6.01(c), deliver to the Noteholders and the Agent a
Perfection Certificate Supplement.
SECTION 7.16. DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES. The Company
may designate after the Closing Time any Subsidiary created or acquired after
the Closing Time (other than a Guarantor) as an "Unrestricted Subsidiary" under
this Agreement (a "DESIGNATION") only if
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
and
(ii) the Company would be permitted to make an Investment at
the time of Designation (assuming the effectiveness of such
Designation) pursuant to clause (e) of the definition of "Permitted
Investments" in an amount (the "DESIGNATION AMOUNT") equal to the Fair
Market Value of the Company's interest in such Subsidiary on such date.
The Company shall not, and shall not cause or permit any
Subsidiary to, at any time (x) provide credit support (other than any such
support which is Subordinated Indebtedness and not prohibited under the terms of
this Agreement (including without limitation Section 8.04(a)(ii))) for or
subject any of its property or assets (other than the Capital Stock of any
Unrestricted Subsidiary) to the satisfaction of any Indebtedness of any
Unrestricted Subsidiary (including any undertaking, agreement or instrument
evidencing such Indebtedness), (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary or (z) be directly or indirectly
liable for any Indebtedness which provides that the holder thereof may (upon
notice, lapse of time or both) declare a default thereon or cause the payment
thereof to be accelerated or payable prior to its final scheduled maturity upon
the occurrence of a default with respect to any Indebtedness of any Unrestricted
Subsidiary (including any right to take enforcement action against such
Unrestricted Subsidiary). All Subsidiaries of Unrestricted Subsidiaries shall
automatically be deemed to be Unrestricted Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "REVOCATION") if
(iii) no Default or Event of Default shall have occurred and
be continuing at the time of and after giving effect to such
Revocation;
-63-
(iv) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if
incurred at such time, have been permitted to be incurred for all
purposes of this Agreement; and
(v) any transaction (or series of related transactions)
between such Subsidiary and any of its Affiliates that is still
outstanding, or otherwise could have a future adverse effect on such
Subsidiary, at the time of Revocation, would be permitted by Section
8.06 hereof as if such transaction (or series of related transactions)
had occurred at the time of such Revocation.
All Designations and Revocations must be evidenced by
resolutions of the Board of Directors of the Company delivered to each
Noteholder certifying compliance with the foregoing provisions.
Notwithstanding anything to the contrary herein, the Company
may not designate any given Subsidiary as an Unrestricted Subsidiary more than
once.
SECTION 7.17. POST-CLOSING COLLATERAL MATTERS.
(a) The Company shall use its commercially reasonable efforts
to obtain and deliver to the Agent, within the time periods set forth below
(unless waived or extended by the Agent in its discretion), to the extent such
items have not been delivered as of the Closing Time, or delivery has not been
waived by the Agent in its discretion, the following:
(i) the property owners' consent to leasehold mortgage
financing, on terms and conditions reasonably satisfactory to the
Agent, with respect to the Mortgaged Property set forth on SCHEDULE
7.17(A) within sixty (60) days after the Closing Time, and if such
consent is obtained, the applicable Issuer(s) will deliver to the
Agent, within ninety (90) days after the Closing Time, the following:
(1) a Mortgage encumbering the Mortgaged Property in
favor of the Agent, for the benefit of the Secured Parties,
duly executed and acknowledged by the Issuer that is the owner
of or holder of any interest in such Mortgaged Property, and
otherwise in form for recording in the recording office of the
applicable political subdivision where such Mortgaged Property
is situated, together with such certificates, affidavits,
questionnaires or returns as shall be required in connection
with the recording or filing thereof to create a lien under
applicable Requirements of Law, and such financing statements
and any other instruments necessary to grant a mortgage lien
under the laws of any applicable jurisdiction, all of which
shall be in form and substance reasonably satisfactory to
Agent and the Required Holders;
(2) with respect to the Mortgaged Property, such
consents, approvals, amendments, supplements, estoppels and
tenant subordination agreements in order for the owner or
holder of the leasehold interest constituting such Mortgaged
Property to grant the Lien contemplated by the Mortgage with
respect to such Mortgaged Property;
-64-
(3) with respect to the Mortgaged Property, a policy
of title insurance (or marked up title insurance commitment
having the effect of a policy of title insurance) insuring the
Lien of such Mortgage as a valid first mortgage Lien on the
Mortgaged Property and the applicable Issuer(s) right, title
and interest in fixtures described therein in the amount equal
to not less than 115% of the fair market value of such
Mortgaged Property and the applicable Issuer(s) right, title
and interest in such fixtures, which fair market value based
on the good faith estimate of the Company is set forth on
SCHEDULE 7.17(A)(3), which policy (or such marked-up
commitment) (each, a "TITLE POLICY") shall (A) be issued by
the Title Company, (B) to the extent necessary, include such
reinsurance arrangements (with provisions for direct access,
if necessary) as shall be reasonably acceptable to the Agent,
(C) contain a "tie-in" or "cluster" endorsement, if available
under Applicable Law (I.E., policies which insure against
losses regardless of location or allocated value of the
insured property up to a stated maximum coverage amount), (D)
have been supplemented by such endorsements (or where such
endorsements are not available, opinions of special counsel,
architects or other professionals reasonably acceptable to the
Agent and the Required Holders) as shall be reasonably
requested by the Agent or the Required Holders (including
endorsements on matters relating to usury, first loss, last
dollar, zoning, contiguity, revolving credit, doing business,
non-imputation, public road access, survey, variable rate,
environmental lien, subdivision, mortgage recording tax,
separate tax lot, and so-called comprehensive coverage over
covenants and restrictions to the extent applicable to such
Mortgaged Property and available in the subject jurisdiction),
and (E) contain no exceptions to title other than exceptions
acceptable to the Agent and the Required Holders;
(4) with respect to the Mortgaged Property, such
affidavits, certificates, information (including financial
data) and instruments of indemnification (including a
so-called "gap" indemnification) as shall be required to
induce the Title Company to issue the Title Policy and
endorsements contemplated above;
(5) evidence reasonably acceptable to the Agent and
the Required Holders of payment by the Company of all Title
Policy premiums, search and examination charges, escrow
charges and related charges, mortgage recording taxes, fees,
charges, costs and expenses required for the recording of the
Mortgage and issuance of the Title Policy referred to above;
(6) with respect to each Real Property or Mortgaged
Property, copies of all Leases in which the Company or any
Subsidiary holds the lessor's interest or other agreements
relating to possessory interests, if any. To the extent any of
the foregoing affect any Mortgaged Property, the applicable
Issuer(s) shall use their commercially reasonable efforts to
cause such agreement to be subordinate to the Lien of the
Mortgage to be recorded against such Mortgaged Property,
either expressly by its terms or pursuant to a subordination,
non-disturbance and attornment agreement, and shall otherwise
be acceptable to the Agent and the Required Holders;
-65-
(7) with respect to the Mortgaged Property, the
Company shall have made all notifications, registrations and
filings, to the extent required by, and in accordance with,
all Governmental Real Property Disclosure Requirements
applicable to such Mortgaged Property;
(8) Surveys with respect to the Mortgaged Property;
(9) a completed Federal Emergency Management Agency
Standard Flood Hazard Determination with respect to the
Mortgaged Property; and
(10) a favorable written opinion of local counsel in
the state in which such Mortgaged Property is located, as
required by Section 3.04(ii); and
(ii) with respect to each location set forth on SCHEDULE
7.17(B), a Landlord Access Agreement within sixty (60) days after the
Closing Time; PROVIDED that no such Landlord Access Agreement shall be
required with respect to any Real Property that could not be obtained
after the Issuer that is the lessee shall have used its commercially
reasonable efforts to do so; and
(b) The Company shall obtain and deliver to the Agent, within
thirty (30) days after the Closing Time (unless waived or extended by the Agent
in its discretion) and provided further that Agent delivers all instruments that
Agent must provide to accomplish the following at least ten (10) days prior to
the expiration of the thirty (30) day period or such period shall be deemed
extended until ten (10) days following Agent's delivery thereof, to the extent
such items have not been delivered as of the Closing Time, or delivery has not
been waived by the Agent in its discretion, the following:
(i) (A) Pledge of Shares Deed providing for the pledge of 100%
of the outstanding shares of NAP Madrid owned by the Company or any of
its Subsidiaries as of the Closing Time (the "Spanish Pledge") and
opinion of Spanish counsel to the Company relating to the Spanish
Pledge, each in form and substance reasonably satisfactory to the
Agent, (B) evidence satisfactory to the Agent that the certificate
evidencing 100% of the outstanding shares of NAP Madrid owned by the
Company or any of its Subsidiaries as of the Closing Time has been
delivered to the notary attesting the Spanish Pledge and that such
certificate has been amended to reflect the Spanish Pledge, (C)
evidence that the Spanish Pledge has been registered with the Shares
Registry Book of NAP Madrid, (D) Pledge of Stock providing for the
pledge of 100% of the outstanding shares of Terremark Latin America
(Brasil) Ltda. and Terremark do Brasil Ltda. (the "Brazilian Pledge")
and opinion of Brazilian counsel to the Company relating to the
Brazilian Pledge, each in form and substance reasonably satisfactory to
the Agent, and (E) evidence satisfactory to the Agent that the by-laws
of each of Terremark Latin America (Brasil) Ltda. and Terremark do
Brasil Ltda. have been amended to reflect the Brazilian Pledge (the
"By-Laws Amendment"), that the Brazilian Pledge has been registered
-66-
with the Registry Office in Brazil and that the By-Laws Amendment has
been register with Sao Paulo Board of Trade's registry in Brazil; and
(ii) for each of Terremark Latin America (Brasil) Ltda. and
Terremark do Brasil Ltda., (A) a Subsidiary Guarantee of the Notes in
the form of EXHIBIT B hereto and a supplemental agreement substantially
in the form of EXHIBIT C hereto, in each case as may be modified to the
extent necessary to be compatible with the laws of such Subsidiary's
jurisdiction, pursuant to which such Subsidiary shall unconditionally
guarantee all of the Company's obligations under the Notes on the terms
set forth in such supplemental agreement and (B) a security agreement
compatible with the laws of such Subsidiary's jurisdiction in form and
substance reasonably satisfactory to the Agent, and to take all actions
necessary or advisable in the opinion of the Required Holders or the
Agent to cause the Lien created by the applicable Security Agreement to
be duly perfected to the extent required by such agreement in
accordance with all applicable Requirements of Law, including the
filing of financing statements in such jurisdictions as may be
reasonably requested by the Required Holders or the Agent
SECTION 7.18. CASUALTY EVENT. Upon receipt by the Company or
any of its Subsidiaries of any Net Cash Proceeds from a Casualty Event, the
Company or such Subsidiary shall apply such Net Cash Proceeds as if they were
Net Cash Proceeds from an Asset Sale in accordance with Section 8.05(b).
SECTION 7.19. NAP MADRID POST CLOSING MATTERS.
(a) If TerreNAP Data Centers, Inc. transfers to NAP Madrid the
assets listed on Schedule B it shall receive NAP Madrid's Preferred Stock issued
to the Company or a Guarantor in exchange therefor;
(b) The Company shall guarantee the obligations under the
lease listed on Schedule B to be transferred to NAP Madrid; and
(c) To the extent NAP Madrid sells 8,652,016 shares of the
Company's Common Stock held by it, the proceeds of such sale shall be used (i)
first, to repay all of NAP Madrid's outstanding loan to Banco Xxxxxx in the
aggregate principal amount of (Euro)3,500,000; (ii) second, to redeem the shares
of Preferred Stock issued to the Company or a Guarantor as set forth in clause
(a) above; and (iii) third, to the extent of any remaining proceeds, for NAP
Madrid's working capital purposes.
SECTION 7.20. RECEIVABLES ACCOUNT. The Company shall cause all
payments made under, and proceeds of, agreements entered with any subtenants or
licensees of the Company or any Guarantor with respect to the Facility to be
deposited in an account for which a Control Agreement (as defined in the
Security Agreement) has been delivered to the Agent in accordance with the
Security Agreement; PROVIDED that the Agent shall at all times have "control"
(within the meaning of section 9-104 of the Uniform Commercial Code as in effect
in the State of New York) over such account(s); PROVIDED, FURTHER that such
payments or proceeds shall not be kept in more than thirty (30) such accounts.
-67-
SECTION 8
NEGATIVE COVENANTS
Each Issuer hereby covenants and agrees with each Purchaser
and each Noteholder that until the principal amount of (and premium, if any, on)
all the Notes, and all interest and other obligations (other than contingent
indemnification obligations to the extent no claim has been asserted) hereunder
in respect thereof, shall have been paid in full:
SECTION 8.01. STAY, EXTENSION AND USURY LAWS. Each Issuer
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of its obligations under the Notes, the Subsidiary Guarantees or
this Agreement, and each Issuer hereby expressly waives all benefit or advantage
of any such law and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Noteholders, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 8.02. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not cause or permit any
of its Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution
or payment on or in respect of Capital Stock of the Company or any
payment to the direct or indirect holders (in their capacities as such)
of Capital Stock of the Company (other than dividends or distributions
payable solely in shares of Qualified Capital Stock of the Company or
in options, warrants or other rights to acquire shares of such
Qualified Capital Stock);
(ii) purchase, redeem, defease or otherwise acquire or retire
for value, directly or indirectly, the Company's Capital Stock or any
Capital Stock of any Affiliate of the Company (other than any such
Capital Stock owned by the Company or any Guarantor or as otherwise
required by the organizational documents of NAP Madrid) or options,
warrants or other rights to acquire such Capital Stock;
(iii) make any principal payment on, or purchase, repurchase,
redeem, defease, retire or otherwise acquire for value, prior to any
scheduled maturity, scheduled repayment, scheduled sinking fund payment
or other Stated Maturity, any Subordinated Indebtedness (other than any
Subordinated Indebtedness owed to and held by the Company or a
Guarantor); or
-68-
(iv) make any Investment (other than any Permitted
Investments) in any Person
(any of the foregoing actions described in clauses (i) through (iv),
collectively, "RESTRICTED PAYMENTS").
(b) Notwithstanding the foregoing, and, so long as no Default
or Event of Default shall have occurred and be continuing or would arise
therefrom, the foregoing provisions shall not prohibit dividend payments in cash
on the Series I Preferred Stock of the Company, so long as the aggregate of such
cash dividends, together with outstanding Investments permitted by clause (e) of
the definition of Permitted Investments, does not exceed $10.0 million (a
"PERMITTED PAYMENT").
(c) The amount of all Restricted Payments (other than cash)
shall be the Fair Market Value (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Noteholders) on
the date of the Restricted Payment of the asset(s) proposed to be transferred by
the Company or such Subsidiary or on the date the obligation to pay such
Restricted Payment was incurred, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Noteholders an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 8.02 were computed, which calculations
may, to the extent applicable, be based upon the Company's latest available
financial statements.
SECTION 8.03. DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES. The Company shall not, and shall not cause or permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective or enter into any agreement with any Person
that would cause to become effective, any consensual encumbrance or restriction
of any kind, on the ability of any Subsidiary of the Company to (a)(i) pay
dividends, in cash or otherwise, or make any other distributions to the Company
or any of its Subsidiaries (A) on or in respect of its Capital Stock or (B) with
respect to any other interest or participation in, or measured by, its profits,
or (ii) pay any Indebtedness owed to the Company or any of its Subsidiaries, (b)
make any Investment in the Company or any of its Subsidiaries or (c) transfer
any of its properties or assets to the Company or any of its Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (i)
any encumbrance or restriction existing under any agreement in effect on the
date of this Agreement, (ii) the SPV Financing Agreement as in effect as of the
date of this Agreement, and any amendments, modifications, restatements,
renewals, supplements, refundings, replacements or refinancings thereof;
PROVIDED, HOWEVER, that such amendments, modifications, restatements, renewals,
supplements, refundings, replacement or refinancings are no more restrictive
with respect to such dividend and other payment restrictions than those
-69-
contained in the SPV Financing Agreement as in effect on the date of this
Agreement, (iii) this Agreement, the Notes and the Subsidiary Guarantees, (iv)
customary nonassignment provisions in leases, licenses and other agreements
entered into in the ordinary course of business and consistent with past
practices, (v) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(c) above on the property so acquired, (vi) any encumbrance or restriction, with
respect to a Subsidiary that is not a Subsidiary of the Company on the date of
this Agreement, in existence at the time such Person becomes a Subsidiary of the
Company and not incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary; PROVIDED, HOWEVER, that such encumbrances and
restrictions are not applicable to the Company or any other Subsidiary, or the
properties or assets of the Company or any other Subsidiary, (vii) customary
restrictions with respect to a Subsidiary of the Company pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary; PROVIDED,
HOWEVER, that any such restriction relates only to the Capital Stock or assets
being sold pursuant to such agreement, and (viii) any encumbrance or restriction
existing under any agreement that extends, renews, refinances or replaces the
agreements containing the encumbrances or restrictions in the foregoing clauses
(i) through (vii), or in this clause (viii), PROVIDED that the terms and
conditions of any such encumbrances or restrictions are no more restrictive than
those under or pursuant to the agreement so extended, renewed, refinanced or
replaced.
SECTION 8.04. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK.
(a) The Company shall not, and shall not cause or permit any
of the Subsidiaries to, directly or indirectly, create, incur, assume, issue,
guarantee or in any manner become liable for or with respect to, contingently or
otherwise (in each case, to "INCUR"), the payment of, any Indebtedness
(including any Acquired Indebtedness) or issue any Preferred Stock, PROVIDED,
HOWEVER, that the Company and, to the extent specifically set forth below, the
Guarantors and the Subsidiaries may incur each and all of the following
(collectively, "PERMITTED Indebtedness"):
(i) Indebtedness of the Company or the SPV under the SPV
Financing Agreement in an aggregate principal amount at any one time
outstanding not to exceed $49.0 million, less (x) any mandatory
prepayment made thereunder or scheduled payments made thereunder and
(y) the amount of any such Indebtedness repaid with the Net Cash
Proceeds of any Asset Sale or Casualty Event;
(ii) Subordinated Indebtedness or Preferred Stock of the
Company or any Guarantor in an aggregate principal amount or
liquidation value at any one time outstanding not to exceed
$10,000,000; PROVIDED, HOWEVER, that if after giving effect to the
incurrence of any such Indebtedness or Preferred Stock the Company's
Incurrence Ratio would exceed 2.25 to 1.0 then prior to the incurrence
of any such Indebtedness or the issuance of any such Preferred Stock,
the Company or such Guarantor, as the case may be, shall have first
complied with the right of first offer provisions of clause (c) below;
(iii) Indebtedness of the Company pursuant to the Notes and
Indebtedness of any Guarantor pursuant to a Subsidiary Guarantee of the
Notes;
(iv) Indebtedness of the Company or any Subsidiary outstanding
at the Closing Time, except Indebtedness to be repaid in connection
with the Transactions;
(v) Indebtedness of the Company owing to a Wholly Owned
Subsidiary for so long as such Indebtedness is owing to a Wholly Owned
Subsidiary; PROVIDED that any Indebtedness of the Company to any Wholly
-70-
Owned Subsidiary is Subordinated Indebtedness, pursuant to a written
agreement, to the Company's obligations under this Agreement and the
Notes; PROVIDED, FURTHER, that disposition, pledge or transfer of any
such Indebtedness to a Person (other than a disposition, pledge or
transfer to a Wholly Owned Subsidiary) shall be deemed to be an
incurrence of such Indebtedness by the Company not permitted by this
clause (v);
(vi) Indebtedness of a Wholly Owned Subsidiary owing to and
held by the Company or another Wholly Owned Subsidiary which is
unsecured; PROVIDED that (a) any disposition, pledge or transfer of any
such Indebtedness to a Person (other than the Company or a Wholly Owned
Subsidiary) shall be deemed to be an incurrence of such Indebtedness by
the obligor not permitted by this clause (vi), and (b) any transaction
pursuant to which any Wholly Owned Subsidiary, which has Indebtedness
owing to the Company or any other Wholly Owned Subsidiary, ceases to be
a Wholly Owned Subsidiary shall be deemed to be the incurrence of
Indebtedness by such Wholly Owned Subsidiary that is not permitted by
this clause (vi); PROVIDED, FURTHER, that if such Indebtedness is
incurred by a non-Guarantor (other than Terremark Latin America
(Brasil) Ltda. or any future Wholly Owned Subsidiary that is a Foreign
Subsidiary) then such incurrence must also comply with clause (e) of
the definition of "Permitted Investments";
(vii) the incurrence by the Company or any Subsidiary of the
Company of Hedging Obligations that are incurred in the ordinary course
of business of the Company or such Subsidiary or the SPV Financing
Agreement as in effect on the date hereof and not for speculative
purposes; PROVIDED that, in the case of any Hedging Obligation that
relates to (i) interest rate risk, the notional principal amount of
such Hedging Obligation does not exceed the principal amount of the
Indebtedness to which such Hedging Obligation related and (ii) currency
risk, such Hedging Obligation does not increase the Indebtedness of the
Company and its Subsidiaries outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(viii) Indebtedness of the Company or any Subsidiary
represented by Capitalized Lease Obligations or Purchase Money
Obligations or other Indebtedness incurred or assumed in connection
with the acquisition or development of real or personal movable or
immovable property in each case incurred for the purpose of financing
or refinancing all or any part of the purchase price or cost of
construction or improvement of property used in the business of the
Company or such Subsidiary, in an aggregate principal amount pursuant
to this clause (viii) not to exceed $20.0 million at any one time
outstanding; PROVIDED that no more than $2.5 million of such
Indebtedness may be at any one time outstanding at Subsidiaries that
are not Guarantors; PROVIDED that the principal amount of any
Indebtedness permitted under this clause (viii) did not in each case at
the time of incurrence exceed the Fair Market Value, as determined by
the Company or such Subsidiary in good faith, of the property to which
it relates; PROVIDED, FURTHER, that any such Indebtedness permitted
under this clause (viii) is either (A) Subordinated Indebtedness or (B)
-71-
with respect to any real or personal property other than the specific
property being financed or refinanced, secured by a Lien which is
junior to the Liens granted pursuant to the Security Documents;
(ix) letters of credit to support workers compensation
obligations and bankers acceptances and performance bonds, surety bonds
and performance guarantees of the Company or any Guarantor, in each
case, in the ordinary course of business consistent with past practice,
not to exceed $2.5 million in the aggregate at any time outstanding;
(x) Preferred Stock of NAP Madrid issued to the Company or any
Guarantor in consideration for the transfer of assets set forth on
Schedule B to NAP Madrid in accordance with Section 7.19; PROVIDED that
all shares of such Preferred Stock that are required to be pledged
pursuant to Section 7.13(b) shall have been pledged as Collateral;
(xi) the Company's guarantee, in an amount not to
exceed (Euro)475,000, of the lease to be transferred by TerreNAP Data
Centers, Inc. to NAP Madrid in accordance with Section 7.19; and
(xii) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "REFINANCING") of any
Indebtedness described in clauses (i), (ii), (iii) and (iv) above,
including any successive refinancings so long as the aggregate
principal amount of Indebtedness represented thereby is not increased
by such refinancing plus the lesser of (I) the stated amount of any
premium or other payment required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness being refinanced
or (II) the amount of premium or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case, the amount of
expenses of the Company or a Subsidiary of the Company incurred in
connection with such refinancing and (A) in the case of any refinancing
of Indebtedness that is Subordinated Indebtedness, such new
Indebtedness is subordinated to the Notes at least to the same extent
as the Indebtedness being refinanced and (B) such refinancing does not
reduce the Average Life to Stated Maturity or the Stated Maturity of
such Indebtedness.
(b) For purposes of determining compliance with this Section
8.04, in the event that an item of Indebtedness meets the criteria of more than
one of the categories of Indebtedness described in clauses (i) through (x) of
the immediately preceding paragraph (a), the Company shall, in its sole
discretion, classify such item of Indebtedness in any manner that complies with
this Section 8.04 and will only be required to include the amount and type of
such Indebtedness in one of such clauses. Accrual of interest, accretion of
accreted value and the payment of interest through the issuance of securities
paid-in-kind shall not be deemed to be an incurrence of Indebtedness for
purposes of this Section 8.04.
(c) If in accordance with clause (a)(ii) above, this clause
(c) shall be applicable, the Company or the applicable Guarantor shall comply
with the following provisions:
(i) If the Company or any Guarantor proposes to incur any
Indebtedness and/or issue any Preferred Stock pursuant to clause (a)(i)
above then prior to any such incurrence or issuance the Company or the
applicable Guarantor will deliver by fax or hand delivery a notice
("RIGHT OF FIRST OFFER NOTICE") to each Noteholder stating (i) its bona
-72-
fide intention to incur such Indebtedness and/or issue such Preferred
Stock, (ii) the principal amount of the Indebtedness or the number of
shares of Preferred Stock to be offered and (iii) the terms upon which
it proposes to incur such Indebtedness or issue such Preferred Stock.
(ii) By written notification received by the Company, within
fifteen (15) days after the Company gives the Right of First Offer
Notice, each Noteholder may elect to purchase, upon the same terms as
the proposed purchaser(s) propose(s) to purchase such Indebtedness
and/or Preferred Stock, up to that portion of such Indebtedness and/or
Preferred Stock which equals the percentage of all outstanding Notes
held by such Noteholder; PROVIDED HOWEVER that if one or more
Noteholders do not purchase the entire amount of Indebtedness or
Preferred Stock offered to them then each remaining Noteholder shall
have the right to purchase such additional amounts as it may desire (on
a proportionate basis to the extent necessary). If all of the
Indebtedness and/or Preferred Stock that the Company or such Guarantor
proposes to offer pursuant to this clause (c) is not elected to be
purchased by the Noteholders as provided herein, the Noteholders may,
during the ten (10) day period following the expiration of the fifteen
(15) day period provided in the first sentence of this subclause (ii),
find a third-party investor to buy the remaining unsubscribed portion
of such Indebtedness and/or Preferred Stock. If all of the Indebtedness
and/or Preferred Stock that the Company or such Guarantor proposes to
offer pursuant to this clause (c) is not elected to be purchased by the
Noteholders and such third party, the Company or the applicable
Guarantor may, during the sixty (60) day period following the
expiration of the ten (10) day period provided in the immediately
preceding sentence, sell all of such Indebtedness and/or Preferred
Stock to third-party investors pursuant to subclause (i) above upon
terms that are not materially different from those made available to
the Noteholders. If the Company does not, within such sixty (60) day
period, consummate such sale to such third-party investors or if such
sale is not on terms that are not materially different from those
offered to the Noteholders, then prior to any subsequent sale of such
Indebtedness and/or Preferred Stock the Company or such applicable
Guarantor must comply with the provisions of this clause (c).
SECTION 8.05. ASSET SALES.
(a) The Company shall not, and shall not cause or permit any
Subsidiary of the Company to, directly or indirectly, consummate an Asset Sale;
unless (i) at least 85% of the consideration from such Asset Sale is received in
cash and (ii) the Company or such Subsidiary receives consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the shares or
assets subject to such Asset Sale; PROVIDED, HOWEVER, that the amount of (x) any
liabilities (as shown on the Company's or such Subsidiary's most recent balance
sheet) of the Company or any Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to any
arrangement releasing the Company or such Subsidiary from further liability and
(y) any notes or other obligations received by the Company or any such
Subsidiary from such transferee that are immediately converted by the Company or
such Subsidiary into cash (to the extent of the cash received), shall be deemed
to be cash for purposes of this provision.
-73-
(b) Within 270 days after the receipt of any Net Cash Proceeds
from an Asset Sale, the Company may apply such Net Cash Proceeds (i) in the case
of any Asset Sale of property or assets of the SPV only, to permanently reduce
Indebtedness under the SPV Financing Agreement (and to correspondingly reduce
commitments with respect thereto) or (ii) to fund the acquisition of a
controlling interest in another business, the making of a capital expenditure or
the acquisition of other long term assets, in each case, in the same or a
similar, related or ancillary line of business as the Company was engaged in on
the date of this Agreement. Any Net Cash Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess
Proceeds exceeds $500,000, the Company shall make an Asset Sale Offer pursuant
to Section 7.09 hereof to purchase the maximum principal amount of Notes, that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus the Applicable
Premium, plus accrued and unpaid interest thereon to the date of purchase, in
accordance with the procedures set forth in Section 7.09 hereof. To the extent
that the aggregate principal amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. Subject to the terms of the
Intercreditor Agreement, any Net Cash Proceeds from an Asset Sale involving
Collateral shall, pending their application in accordance with the terms hereof,
be deposited in a collateral account with the Agent in which the Agent shall be
granted a perfected first priority security interest, and the terms of which
shall be satisfactory to the Agent and the Required Holders. Any property or
assets acquired with the Net Cash Proceeds of an Asset Sale involving Collateral
shall constitute Collateral under this Agreement and the Security Documents. If
the aggregate principal amount of Notes surrendered by Noteholders thereof
exceeds the amount of Excess Proceeds, the Company shall select the Notes to be
purchased on a PRO RATA basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
SECTION 8.06. TRANSACTIONS WITH AFFILIATES. The Company shall
not, and shall not cause or permit any of its Subsidiaries to, directly or
indirectly, conduct any business or enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with, or
for the benefit of, any Affiliate of the Company or of a Subsidiary (other than
the Company or a Wholly Owned Subsidiary) or any beneficial holder of 10% or
more of any class of Capital Stock of the Company or any officer, director or
employee of the Company or any Subsidiary unless such transaction or series of
related transactions is entered into in good faith and in writing and (a) such
transaction is on terms that are no less favorable to the Company or such
Subsidiary, as the case may be, than those that would be available in a
comparable transaction in arm's-length dealings with an unrelated third party,
(b) with respect to any transaction or series of related transactions involving
aggregate value in excess of $1.0 million, the Company delivers to each
Noteholder an Officers' Certificate describing such transaction or transactions,
certifying that such transaction or transactions have been approved by a
majority of the Board of Directors of the Company as well as a majority of the
Disinterested Directors of the Company, or in the event there is only one
Disinterested Director, by such Disinterested Director, and certifying that such
transaction or transactions complies with clause (a) above and (c) with respect
to any transaction or series of related transactions involving aggregate
payments in excess of $5.0 million, the Company delivers to each Noteholder a
written opinion of an Independent Financial Advisor stating that the transaction
or series of related transactions is fair to the Company or such Subsidiary from
-74-
a financial point of view; PROVIDED, HOWEVER, that this provision shall not
apply to (i) any transaction with an officer or director of the Company (acting
in such capacity) entered into in the ordinary course of business (including
compensation and employee benefit arrangements with any officer, director or
employee of the Company, including under any stock option or stock incentive
plans); PROVIDED that such transaction has been approved in the manner described
in clause (b) above, and (ii) any Permitted Payment otherwise permitted by the
terms of this Agreement and (iii) indemnification agreements for the benefit of
officers, directors and employees entered into in the ordinary course of
business.
SECTION 8.07. LIMITATION ON LIENS. The Company shall not, and
shall not cause or permit any Subsidiary of the Company to create, incur, assume
or permit to exist, directly or indirectly, any Lien on any property now owned
or hereafter acquired by it or on any income or revenues or rights in respect of
any thereof, except the following (collectively, the "PERMITTED LIENS"):
(a) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or delinquent and Liens for
taxes, assessments or governmental charges or levies, which (i) are
being contested in good faith by appropriate proceedings which
proceedings (or orders entered in connection with such proceedings)
have the effect of preventing the forfeiture or sale of the property
subject to any such Lien (and for which adequate reserves have been
established in accordance with GAAP), or (ii) in the case of any such
charge or claim which has or may become a Lien against any of the
Collateral, such Lien and the contest thereof shall satisfy the
Contested Collateral Lien Conditions;
(b) Liens in respect of property of the Company or any of its
Subsidiaries imposed by Requirements of Law, which were incurred in the
ordinary course of business and do not secure Indebtedness for borrowed
money, such as carriers', warehousemen's, materialmen's, landlords',
workmen's, suppliers', repairmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, and (i) which
do not in the aggregate materially detract from the value of the
property of the Company and its Subsidiaries, taken as a whole, and do
not materially impair the use thereof in the operation of the business
of the Company and its Subsidiaries, taken as a whole, (ii) which, if
they secure obligations that are then due and unpaid, are being
contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, which
proceedings (or orders entered in connection with such proceedings)
have the effect of preventing the forfeiture or sale of the property
subject to any such Lien, and (iii) in the case of any such Lien which
has or may become a Lien against any of the Collateral, such Lien and
the contest thereof shall satisfy the Contested Collateral Lien
Conditions;
(c) any Lien in existence on the Closing Time and set forth on
SCHEDULE 8.07(C) and any Lien granted as a replacement or substitute
therefor; PROVIDED that any such replacement or substitute Lien (i)
-75-
does not secure an aggregate amount of Indebtedness, if any, greater
than that secured on the Closing Time and (ii) does not encumber any
property other than the property subject thereto on the Closing Time
(any such Lien, an "EXISTING LIEN");
(d) easements, rights-of-way, restrictions (including zoning
restrictions), covenants, licenses, encroachments, protrusions and
other similar charges or encumbrances, and minor title deficiencies on
or with respect to any Real Property, in each case whether now or
hereafter in existence, not (i) securing Indebtedness, (ii)
individually or in the aggregate materially impairing the value or
marketability of such Real Property or (iii) individually or in the
aggregate materially interfering with the ordinary conduct of the
business of the Company and its Subsidiaries at such Real Property;
(e) Liens arising out of judgments, attachments or awards not
resulting in a Default and in respect of which the Company or such
Subsidiary shall in good faith be prosecuting an appeal or proceedings
for review in respect of which there shall be secured a subsisting stay
of execution pending such appeal or proceedings and, in the case of any
such Lien which has or may become a Lien against any of the Collateral,
such Lien and the contest thereof shall satisfy the Contested
Collateral Lien Conditions;
(f) Liens (other than any Lien imposed by ERISA) (x) imposed
by Requirements of Law or deposits made in connection therewith in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation,
(y) incurred in the ordinary course of business to secure the
performance of tenders, statutory obligations (other than excise
taxes), surety, stay, customs and appeal bonds, statutory bonds, bids,
leases, government contracts, trade contracts, performance and return
of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) or (z) arising by virtue of deposits
made in the ordinary course of business to secure liability for
premiums to insurance carriers; PROVIDED that (i) with respect to
clauses (x), (y) and (z) of this paragraph (f), such Liens are for
amounts not yet due and payable or delinquent or, to the extent such
amounts are so due and payable, such amounts are being contested in
good faith by appropriate proceedings for which adequate reserves have
been established in accordance with GAAP, which proceedings for orders
entered in connection with such proceedings have the effect of
preventing the forfeiture or sale of the property subject to any such
Lien, (ii) to the extent such Liens are not imposed by Requirements of
Law, such Liens shall in no event encumber any property other than cash
and Cash Equivalents, (iii) in the case of any such Lien against any of
the Collateral, such Lien and the contest thereof shall satisfy the
Contested Collateral Lien Conditions and (iv) the aggregate amount of
deposits at any time pursuant to clause (y) and clause (z) of this
paragraph (f) shall not exceed $250,000 in the aggregate;
(g) Leases of the properties of the Company or any of its
Subsidiaries, in each case entered into in the ordinary course of the
Company's or such Subsidiary's business and do not, individually or in
the aggregate, (i) interfere in any material respect with the ordinary
-76-
conduct of the business of the Company or any of its Subsidiaries, or
(ii) materially impair the use (for its intended purposes) or the value
of the property subject thereto;
(h) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into
by the Company or any of its Subsidiaries in the ordinary course of
business;
(i) bankers' Liens, rights of setoff and other similar Liens
existing solely with respect to cash and Cash Equivalents on deposit in
one or more accounts maintained by the Company or any of its
Subsidiaries, in each case granted in the ordinary course of business
in favor of the bank or banks with which such accounts are maintained,
securing amounts owing to such bank with respect to cash management and
operating account arrangements, including those involving pooled
accounts and netting arrangements; PROVIDED that, unless such Liens are
non-consensual and arise by operation of law, in no case shall any such
Liens secure (either directly or indirectly) the repayment of any
Indebtedness;
(j) Liens on property of a person existing at the time such
person is acquired or merged with or into or consolidated with the
Company or any of its Subsidiaries to the extent permitted hereunder
(and not created in anticipation or contemplation thereof); PROVIDED
that such Liens do not extend to property not subject to such Liens at
the time of acquisition (other than improvements thereon) and are no
more favorable to the lienholders than such existing Lien;
(k) Liens granted pursuant to the Security Documents to secure
the Secured Obligations;
(l) licenses of Intellectual Property granted by the Company
or any of its Subsidiaries in the ordinary course of business and not
interfering in any material respect with the ordinary conduct of
business of the Company or any of its Subsidiaries;
(m) the filing of UCC financing statements solely as a
precautionary measure in connection with operating leases or
consignment of goods;
(n) Liens on property of the SPV or agreed to by Agent
pursuant to the Intercreditor Agreement granted to secure the
obligations under the SPV Financing Agreement as contemplated therein;
PROVIDED, there shall have been no material amendments, alterations,
modifications or waivers of any provision thereof since the date of
this Agreement without the prior written consent of the Agent;
PROVIDED, FURTHER, that any increase in the scope of the collateral to
which the Liens attach will be deemed material;
(o) Liens securing Subordinated Indebtedness permitted by
Section 8.04(a)(ii), so long as such Liens are junior to the Liens
granted pursuant to the Security Documents;
-77-
(p) Liens securing Indebtedness not to exceed (Euro)475,000
and permitted by Section 8.04(a)(xi); and
(q) Liens securing Indebtedness incurred in accordance with
Section 8.04(a)(viii), so long as such Liens, to the extent covering
any Collateral other than the specific property being financed or
refinanced, are junior to the Liens granted pursuant to the Security
Documents;
PROVIDED, HOWEVER, that no consensual Liens shall be permitted to exist,
directly or indirectly, on any Securities Collateral, other than Liens granted
pursuant to the Security Documents and Liens granted pursuant to the SPV
Financing Agreement at the Closing Time.
SECTION 8.08. LIMITATION ON ISSUANCES AND SALES OF CAPITAL
STOCK OF SUBSIDIARIES. The Company (a) shall not, and shall not cause or permit
any Subsidiary of the Company to, transfer, convey, sell, lease, pledge or
otherwise dispose of any Capital Stock of any Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Subsidiary), unless (i) such
transfer, conveyance, sale, lease, pledge or other disposition is of all the
Capital Stock of such Subsidiary and (ii) the Net Cash Proceeds from such
transfer, conveyance, sale, lease, pledge or other disposition are applied in
accordance with the provisions of Section 8.05 hereof; PROVIDED, HOWEVER, that
this clause (a) shall not apply to the pledge of Capital Stock of the SPV
securing Indebtedness under the SPV Financing Agreement, and (b) shall not cause
or permit any Subsidiary of the Company to issue any of its Capital Stock (other
than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares to the extent required by applicable law) to any Person other
than to the Company or a Wholly Owned Subsidiary.
SECTION 8.09. PAYMENTS FOR CONSENTS. Neither the Company nor
any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any
Noteholder in consideration for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Agreement or the Notes
unless such consideration is concurrently offered to be paid or is concurrently
paid to all Noteholders that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.
SECTION 8.10. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The
Company shall not, and shall not permit any of its Subsidiaries to, alter the
corporate, capital or legal structure of the Company or any of its Subsidiaries,
or enter into any transaction of merger or consolidation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease or sublease (as lessor or sublessor), transfer or otherwise dispose of, in
one transaction or a series of transactions, all or any part of its business,
property or assets (including its notes or receivables and Capital Stock of a
Subsidiary, whether newly issued or outstanding), whether now owned or hereafter
acquired, or acquire by purchase or otherwise all or substantially all the
business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business of any Person
(other than purchases or other acquisitions of inventory, materials and
equipment in the ordinary course of the Company's or any of its Subsidiaries'
business) except:
-78-
(i) any Subsidiary of the Company may be merged with or into
the Company or any wholly owned Guarantor, or be liquidated, wound up
or dissolved, or all or any part of its business, property or assets
may be conveyed, sold, leased, transferred or otherwise disposed of, in
one transaction or a series of transactions, to the Company or any
wholly owned Guarantor; PROVIDED that (i) in the case of such a merger,
the Company or such wholly owned Guarantor shall be the continuing or
surviving Person and (ii) in the case of such a liquidation, winding-up
or dissolution, all of the assets of such wholly owned Guarantor are
transferred to the Company or a Guarantor that is wholly owned,
directly or indirectly, by the Company or as otherwise expressly
permitted under this Agreement;
(ii) the Company and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
PROVIDED that the consideration received for such assets shall be in an
amount at least equal to the Fair Market Value thereof;
(iii) the Company and its Subsidiaries may consummate one or
more Asset Sales; PROVIDED that the Company or the applicable
Subsidiary complies with the other applicable provisions of this
Agreement; and
(iv) the Company and its Subsidiaries may make Permitted
Investments.
SECTION 8.11. CONDUCT OF BUSINESS. The Company and its
Subsidiaries shall not engage in any businesses which are not the same, similar,
related or ancillary to the businesses in which the Company and its Subsidiaries
are engaged in at the Closing Time after giving effect to the Transactions.
SECTION 8.12. LIMITATION ON TAX CONSOLIDATION. The Company
shall not and shall not permit any of its Subsidiaries to become a party to a
consolidated Federal income tax return with any Person other than the Company
and its Subsidiaries if as a result thereof, as of any date, the aggregate
amount of Federal income taxes which the Company and its Subsidiaries have then
or theretofore paid or become obligated to pay (determined on a cumulative
basis, taking into account net benefits received by the Company and its
Subsidiaries and also giving effect to amounts payable under any applicable
indemnity agreement from any other party to such consolidated returns) or will
become obligated to pay in the future exceeds (or will exceed) the amount which
the Company and its Subsidiaries would have been required to pay pursuant to a
consolidated tax return solely of the Company and its Subsidiaries.
SECTION 8.13. PUBLIC DISCLOSURES. The Company shall not, and
shall not permit any of its Subsidiaries to, disclose the name or identity of
any Holder as an investor in the Company in any press release or other public
announcement or in any document or material filed with any governmental entity,
unless such disclosure is required by Applicable Law or governmental regulations
or by order of a court of competent jurisdiction, in which case prior to making
such disclosure the Company shall give written notice to such Holder describing
in reasonable detail the proposed content of such disclosure and shall permit
such Holder to review and comment upon the form and substance of such
disclosure; PROVIDED, HOWEVER, that each Holder hereby expressly agrees to the
filing of any Transaction Document as an exhibit to the Company's filings with
the Commission and any description of the terms thereof in any such filings.
-79-
SECTION 8.14. LIMITATION ON REPURCHASES AND OTHER REPAYMENTS
OF NOTES. The Company shall not, and shall not permit any of its Subsidiaries
to, prepay, repurchase, redeem or otherwise acquire or retire in whole or in
part, directly or in-directly, any Notes held by any Noteholder unless the
Company or such Subsidiary shall have offered to prepay, repurchase, redeem or
otherwise acquire or retire, as the case may be, the same proportion of the
aggregate principal amount of the Notes held by each other Noteholder at the
time outstanding upon the same terms and conditions.
SECTION 8.15. LIMITATION ON ACTIVITIES.
(a) The SPV will not engage in any business or business
activity other than the activities related to the ownership and operation of the
Facility and its existence. The SPV will not own or acquire any assets (other
than the Facility) or incur any liabilities or obligations (other than the
liabilities imposed by law, including Tax and other liabilities related to its
existence) or issue any Capital Stock other than to the Company or a Wholly
Owned Subsidiary that is a Guarantor.
(b) If at any time after the Closing Time any of Terremark
Asia Company, Ltd., Terremark Latin America de Mexico or Terremark Latin America
de Argentina, SA (i) engages in any business or business activity other than the
activities related to its existence or (ii) owns or acquires any assets or
incurs any liabilities or obligations (other than the liabilities imposed by
law, including Tax and other liabilities related to its existence) or issues any
Capital Stock other than to the Company or a Wholly Owned Subsidiary that is a
Guarantor, such entity shall comply with the requirements of Section 7.13(b).
SECTION 8.16. LIMITATION ON ACCOUNTING CHANGES. The Company
shall not and shall not permit any of its Subsidiaries to make any change in
financial or Tax accounting policies or reporting practices, without the consent
of the Required Holders, which consent shall not be unreasonably withheld,
except changes that are required by GAAP or applicable Tax laws.
SECTION 8.17. FISCAL YEAR. The Company shall not and shall not
permit any of its Subsidiaries to change its Fiscal Year-end to a date other
than March 31.
SECTION 8.18. AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS. The
Company shall not, and shall not cause or permit any of its Subsidiaries to,
amend or otherwise modify, or waive any rights, or suffer to occur any amendment
or other modification or waiver, under (i) any Transaction Document or (ii) any
provisions of any agreement, instrument or document evidencing or securing any
Subordinated Indebtedness, in each case, other than amendments, modifications
and waivers not materially adverse to the interests of the Noteholders as
determined by the Required Holders in their reasonable judgment.
SECTION 8.19. AMENDMENTS TO CHARTER DOCUMENTS. The Company
shall not, nor shall it cause or permit any of its Subsidiaries to, amend its
certificate of incorporation or bylaws in any respect which could be materially
adverse to the interests of the Noteholders.
SECTION 8.20. NO INTEGRATION. The Company shall not and (to
the extent within its control) it shall cause its Affiliates not to make any
offer or sale of securities of any class of the Company if, as a result of the
-80-
doctrine of "integration" referred to in Rule 502 under the Securities Act, such
offer or sale would render invalid (for the purpose of the sale of the
Securities by the Company to the Purchasers) any applicable exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof
or by Rule 144A or Regulation S thereunder or otherwise.
SECTION 9
THE NOTES
SECTION 9.01. FORM AND EXECUTION. The Notes shall be in the
form of EXHIBIT A hereto. The Notes shall be executed on behalf of the Company
by its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Notes may be manual
or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
SECTION 9.02. TERMS OF THE NOTES. The terms of the Notes shall
be as set forth in EXHIBIT A. Without limiting the foregoing:
(a) STATED MATURITY. The Stated Maturity of the principal of
Notes shall be as provided in EXHIBIT A.
(b) INTEREST. The Notes will bear interest on their principal
amount and overdue interest as provided in EXHIBIT A.
SECTION 9.03. DENOMINATIONS. The Notes shall be issuable only
in registered form without coupons and only in denominations of U.S.$1,000 and
any integral multiple thereof.
SECTION 9.04. FORM OF LEGEND FOR THE NOTES. Unless otherwise
permitted by Section 9.07, every Note issued and delivered hereunder shall bear
a legend in substantially the following form:
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS
IN EFFECT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF
THIS SECURITY IS SUBJECT TO THE TERMS OF THE PURCHASE AGREEMENT, DATED
AS OF DECEMBER 31, 2004 (THE "PURCHASE AGREEMENT"), AMONG TERREMARK
-81-
WORLDWIDE, INC. (THE "COMPANY"), THE GUARANTORS NAMED THEREIN, THE
AGENT NAMED THEREIN AND THE PURCHASERS NAMED THEREIN. A COPY OF SUCH
PURCHASE AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER,
THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000
PRINCIPAL AMOUNT OF THIS NOTE, (1) THE ISSUE PRICE IS $939.36; (2) THE
AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS $224.07; (3) THE ISSUE DATE IS
DECEMBER 31, 2004; AND (4) THE YIELD TO MATURITY IS 14.42% (COMPOUNDED
QUARTERLY).
SECTION 9.05. PAYMENTS AND COMPUTATIONS. All payments of
interest on the Notes shall be paid to the persons in whose names such Notes are
registered on the Security Register at the close of business on the date fifteen
calendar days prior to the related Interest Payment Date (the "REGULAR RECORD
DATE") and all payments of principal on the Notes shall be paid to the persons
in whose names such Notes are registered on the applicable Redemption Date or at
Maturity, as applicable. Notwithstanding the foregoing, if a Note is issued
after a Regular Record Date and prior to an Interest Payment Date, the record
date for such Interest Payment Date shall be the original issue date. Principal
and premium on any Note shall be payable only against surrender therefor, while
payments of interest on Notes shall be made, in accordance with this Agreement
and subject to applicable laws and regulations, by check mailed on or before the
due date for such payment to the person entitled thereto at such person's
address appearing on the Security Register or, by wire transfer to such account
as any Noteholder shall designate by written instructions received by the
Company no less than 15 days prior to any applicable Interest Payment Date,
which wire instruction shall continue in effect until such time as the
Noteholder otherwise notifies the Company or such Noteholder no longer is the
registered owner of such Note or Notes.
SECTION 9.06. REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE.
(a) SECURITY REGISTER. The Company shall maintain a register
(the "SECURITY REGISTER") for the registration or transfer of the Notes. The
name and address of the Noteholder of each Note, records of any transfers of the
Notes and the name and address of any transferee of a Note shall be entered in
the Security Register and the Company shall, promptly upon receipt thereof,
update the Security Register to reflect all information received from a
Noteholder. There shall be no more than one Noteholder for each Note, including
all beneficial interests therein.
(b) REGISTRATION OF TRANSFER. Upon surrender for registration
of transfer of any Note properly endorsed for transfer at the office or agency
of the Company, the Company shall execute and deliver, in the name of the
-82-
designated transferee or transferees, one or more new Notes, of any authorized
denominations and like aggregate principal amount.
(c) EXCHANGE. At the option of the Noteholder, Notes may be
exchanged for other Notes, of any authorized denominations and of like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, the Company shall
execute and deliver the Notes which the Holder making the exchange is entitled
to receive.
(d) EFFECT OF REGISTRATION OF TRANSFER OR EXCHANGE. All Notes
issued upon any registration of transfer or exchange of Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Agreement, as the Notes surrendered upon such registration
of transfer or exchange.
(e) REQUIREMENTS; CHARGES. Every Note presented or surrendered
for registration of transfer or for exchange shall (if so required by the
Company) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Company duly executed, by the Noteholder thereof or
his attorney duly authorized in writing. No service charge shall be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any Tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 8.10 not involving any transfer.
(f) CERTAIN LIMITATIONS. If the Notes are to be redeemed in
part, the Company shall not be required (i) to issue, register the transfer of
or exchange any Note during a period beginning at the opening of business 15
Business Days before the day of the mailing of a notice of redemption of any
such Notes selected for redemption under Section 11.02 and ending at the close
of business on the Business Day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
SECTION 9.07. TRANSFER RESTRICTIONS.
(a) No Note may be sold, transferred or otherwise disposed of
(any such sale, transfer or other disposition is herein referred to as a
"SALE"), except in compliance with this Section 9.07.
(b) A Noteholder may sell Notes to a transferee that is an
Accredited Investor or a Qualified Institutional Buyer; PROVIDED, HOWEVER, that
each of the following conditions is satisfied:
(i) such Noteholder or transferee represents that it is
acquiring the Note or Notes for its own account and that it is not
acquiring such Note or Notes with a view to, or for offer or sale in
connection with, any distribution thereof (within the meaning of the
Securities Act) that would be in violation of the securities laws of
the United States or any state thereof, but subject, nevertheless, to
the disposition of its property being at all times within its control;
and
-83-
(ii) such transferee agrees to be bound by the provisions of
this Section 9.07 with respect to any resale of the Notes.
(c) A Noteholder may sell its Notes to a transferee in
accordance with Regulation S under the Securities Act; PROVIDED, HOWEVER, that
each of the following conditions is satisfied:
(i) the offer of Notes is not made to a person in the United
States;
(ii) either:
(A) at the time the buy order is originated, the transferee is
outside the United States or the Noteholder and any person acting on
its behalf reasonably believes that the transferee is outside the
United States, or
(B) the transaction is executed in, on or through the
facilities of a designated offshore securities market and neither the
Noteholder nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States;
(iii) no directed selling efforts are made in contravention of
the requirements of Rule 903(b) or 904(b) of Regulation S under the
Securities Act, as applicable; and
(iv) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(d) In the event of a proposed exercise or sale that does not
qualify under either Section 9.07(b) or 9.07(c) above, a Noteholder may sell its
Notes only if:
(i) such Noteholder gives written notice to the Company of its
intention to exercise or effect such sale, which notice (A) shall
describe the manner and circumstances of the proposed transaction in
reasonable detail and (B) shall designate the counsel for such
Noteholder, which counsel shall be reasonably satisfactory to the
Company;
(ii) counsel for the Noteholder shall render an opinion to the
effect that such proposed sale may be effected without registration
under the Securities Act; and
(iii) such Noteholder or transferee complies with Sections
9.07(b)(i) and 9.07(b)(ii).
SECTION 9.08. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If
any mutilated Note is surrendered to the Company, the Company shall execute and
deliver in exchange therefor a new Note of the same principal amount and bearing
a number not contemporaneously outstanding.
If there shall be delivered to the Company (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by the Company to save each of it and any agent
harmless, then, in the absence of notice that such Note has been acquired by a
-84-
bona fide purchaser, the Company shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of a like principal amount and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note pursuant to this Section,
the Company may require the payment of a sum sufficient to cover any Tax or
other governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 9.09. PERSONS DEEMED OWNERS. Prior to due presentment
of a Note for registration of transfer, the Company and any agent of the Company
shall treat the Person in whose name such Note is registered as the owner of
such Note for the purpose of receiving payment of principal of and interest on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue and neither the Company nor any agent of the Company shall be affected
by notice to the contrary.
SECTION 9.10. CANCELLATION. All Notes surrendered for payment,
redemption, registration of transfer or exchange shall, if surrendered to any
Person other than the Company, be delivered to the Company and shall be promptly
canceled by it. The Company shall cancel any Notes previously issued and
delivered hereunder which the Company may have reacquired.
SECTION 9.11. HOME OFFICE PAYMENT. So long as any Purchaser or
its nominee shall be the holder of any Note, and notwithstanding anything
contained in this Agreement or such Note to the contrary, the Company will pay
all sums becoming due on such Note for principal, premium, if any, and interest
by such method and at such address as such Purchaser shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, such
Purchaser shall surrender such Note for cancellation reasonably promptly after
any such request, to the Company at its principal executive office. Prior to any
sale or other disposition of any Note held by such Purchaser or its nominee such
-85-
Purchaser will, at its election, either endorse thereon the amount of principal
paid thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes pursuant
to Section 9.06. The Company will afford the benefits of this Section 9.11 to
any Institutional Investor that is the direct or indirect transferee of any Note
purchased by such Purchaser under this Agreement and that has made the same
agreement relating to such Note as such Purchaser made in this Section 9.11.
SECTION 10
EVENTS OF DEFAULT
SECTION 10.01. EVENTS OF DEFAULT. An Event of Default shall
exist upon the occurrence of any of the following specified events (each an
"EVENT OF DEFAULT"):
(a) the Company defaults in the payment when due of interest
on the Notes and such default continues for a period of three (3)
Business Days;
(b) the Company defaults in the payment when due of principal
of or premium, if any, on the Notes when the same becomes due and
payable at its Maturity;
(c) the Company or any Subsidiary fails to comply with any of
the provisions of Section 7.08, 7.09, 8.02, 8.04, 8.05, 8.06, 8.08,
8.10, 8.11, 8.12, 8.13, 8.14 or 8.15;
(d) the Company or any Subsidiary fails to observe or perform
any other covenant, or other agreement in this Agreement, the Notes or
the Guarantees and such failure continues for a period of 30 days after
the earlier of (x) the Company becoming aware of such failure and (y)
the Company receiving a notice of such failure from any Noteholder,
which notice must specify the failure, demand that it be remedied and
state that the notice is a "Notice of Default";
(e) any representation, warranty, certification or statement
made or deemed to have been made by or on behalf of any Issuer or by
any officer of any Issuer in respect of any Transaction Document or in
any statement or certificate at any time given by or on behalf of any
Issuer or by any officer of any Issuer in writing pursuant hereto or in
connection herewith or therewith shall be false in any material respect
on the date as of which made;
(f) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Company or any of its
Subsidiaries (or payment of which is guaranteed by the Company or any
of its Subsidiaries), whether such Indebtedness or guarantee now exists
or is created after the date of this Agreement, which default (i)
constitutes a failure to pay any portion of the principal of or
premium, if any, or interest on such Indebtedness when due and payable
after the expiration of any applicable grace period provided in such
Indebtedness on the date of such default (a "PAYMENT DEFAULT") or (ii)
shall have resulted in such Indebtedness being ---------------
accelerated or otherwise becoming or being declared due and payable
prior to its stated maturity and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any other
-86-
such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $1,000,000 or
more;
(g) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Company or any of its Subsidiaries and such judgment or
judgments remain unpaid and undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, PROVIDED that
the aggregate of all such undischarged judgments exceeds $1,000,000;
(h) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy
Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of a decree or order for
relief against it in an involuntary case or proceeding or to
the commencement of any case or proceeding against it,
(iii) consents to the filing of a petition or to the
appointment of or taking possession by a Custodian of it or
for all or any substantial part of its property,
(iv) makes or consents to the making of a general
assignment for the benefit of its creditors or
(v) generally is not paying, or admits in writing
that it is not able to pay, its debts as they become due;
(i) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary,
in an involuntary case or proceeding;
(B) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary,
or for all or any substantial part of the property of the
Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, or approves as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of any of the foregoing; or
(C) orders the winding up or liquidation of the
Company or any of its Significant Subsidiaries or any group of
-87-
Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, or adjudges any of them a bankrupt or
insolvent;
and any such order or decree remains unstayed and in effect for 60
consecutive days;
(j) any Subsidiary Guarantee of a Significant Subsidiary
ceases to be in full force and effect or any Subsidiary Guarantee of a
Subsidiary is declared to be null and void and unenforceable or any
Subsidiary Guarantee of a Subsidiary is found to be invalid or any
Guarantor denies its liability under its Subsidiary Guarantee (other
than by reason of release of a Guarantor in accordance with the terms
of this Agreement);
(k) any security interest and Lien purported to be created by
any Security Document shall cease to be in full force and effect, or
shall cease to give the Agent, for the benefit of the Secured Parties,
the Liens, rights, powers and privileges purported to be created and
granted under such Security Document (including a perfected first
priority security interest in and Lien on all of the Collateral
thereunder (except as otherwise expressly provided in this Agreement or
such Security Document)) in favor of the Agent, or shall be asserted by
Company or any other Issuer not to be a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement or
such Security Document) security interest in or Lien on the Collateral
covered thereby and such defect in such security interest or Lien
continues for a period of 30 days after the earlier of (x) the Company
becoming aware of such failure and (y) the Company receiving a notice
of such defect from the Agent or any Noteholder, which notice must
specify the defect, demand that it be remedied and state that the
notice is a "Notice of Default";
(l) any Basic Document or any material provisions thereof
shall at any time and for any reason be declared by a court of
competent jurisdiction to be null and void, or a proceeding shall be
commenced by any Issuer or any other person, or by any Governmental
Authority, seeking to establish the invalidity or unenforceability
thereof (exclusive of questions of interpretation of any provision
thereof), or any Issuer shall repudiate or deny any portion of its
liability or obligation for the Obligations; or
(m) any agent or lender under the SPV Financing Agreement
shall at any time seek to enforce the guaranty of the Company provided
under the SPV Financing Agreement or the guaranty agreement between the
Company and Citigroup dated the date hereof unless the Company shall
cause a proceeding instituted contesting such enforcement to stay the
enforcement of such guaranty.
The term "CUSTODIAN" means any custodian, receiver, trustee,
assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.
SECTION 10.02. REMEDIES. If an Event of Default (other than an
Event of Default specified in Section 10.01(h) or 10.01(i)) occurs and is
continuing, then and in every such case the Noteholders of 25% or more in
principal amount of the then outstanding Notes may declare the principal amount
of all the Notes to be due and payable immediately, by a notice in writing to
the Company, and upon any such declaration such principal amount and any accrued
interest shall become immediately due and payable. For the avoidance of doubt,
if any Payment Default or acceleration that constitutes an Event of Default
under Section 10.01(f) shall have occurred and prior to any acceleration under
-88-
this Section 10.02 such Payment Default shall have been cured or waived or such
acceleration shall have been rescinded, then from and after such cure, waiver or
rescission, such Event of Default shall no longer be deemed to be continuing. If
an Event of Default specified in Section 10.01(h) or 10.01(i) occurs and is
continuing, the principal amount of and any accrued interest on the outstanding
Notes shall automatically, and without any declaration or other action on the
part of any Noteholder, become immediately due and payable. Notwithstanding the
foregoing, the right of any Noteholder to receive payment of principal of,
premium, if any, or interest of any Note held by such Noteholder on or after the
respective dates expressed in such Note, or to bring suit for the enforcement of
any such repayment on or after such respective date, is absolute and
unconditional and shall not be impaired or affected without the consent of such
Noteholder.
If an Event of Default occurs by reason of any willful action
(or inaction) taken (or not taken) by or on behalf of the Company or any of its
Subsidiaries with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to optionally
redeem the Notes pursuant to Paragraph 3 of the Notes, then, upon acceleration
of the Notes, the Applicable Premium shall also become and be immediately due
and payable, to the extent permitted by Applicable Law, anything in this
Agreement or in the Notes to the contrary notwithstanding.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained, the Required Holders, by written notice to the Company, may rescind
and annul such declaration and its consequences if:
(a) the Company has paid a sum sufficient to pay:
(i) all overdue interest on all Notes;
(ii) the principal of (and premium, if any, on) any
Notes which have become due otherwise than by such declaration
of acceleration (including any Notes required to have been
purchased pursuant to an offer to purchase that the Company is
required to make hereunder) and any interest thereon at the
rate borne by the Notes; and
(iii) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate provided
therefor in the Notes; and
(b) all Events of Default, other than the nonpayment of the
principal amount of Notes and interest thereon which have become due
solely by such declaration of acceleration, have been cured or waived
as provided in Section 10.03.
SECTION 10.03. WAIVER OF PAST DEFAULTS. The Required Holders may on
behalf of the Noteholders of all the Notes waive any past default hereunder and
its consequences, except a default:
-89-
(a) in the payment of the principal (or premium, if any) or
interest on any Note (including any Note which is required to have been
purchased pursuant to an offer to purchase that the Company is required
to make hereunder), or
(b) in respect of a covenant or provision hereof which under
Section 15.04 cannot be modified or amended without the consent of the
Noteholder of each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Agreement; PROVIDED, HOWEVER, no such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.
SECTION 11
REDEMPTION
SECTION 11.01. RIGHT OF REDEMPTION. The Notes may be redeemed
at the election of the Company at such times, in such amounts and at the
Redemption Prices (together with any applicable accrued interest to the
Redemption Date) specified in the form of Note attached as EXHIBIT A hereto.
SECTION 11.02. PARTIAL REDEMPTIONS. In case the Company elects
to redeem less than all of the Notes, the Company shall redeem the Notes PRO
RATA from each Noteholder. For all purposes of this Agreement, unless the
context otherwise requires, all provisions relating to the redemption of Notes
shall relate, in the case of any Note redeemed or to be redeemed only in part,
to the portion of the principal amount of such Note which has been or is to be
redeemed.
SECTION 11.03. NOTICE OF REDEMPTION. Notice of redemption
shall be given by first-class mail, postage prepaid, mailed not less than 30 nor
more than 45 days prior to the Redemption Date, to each Noteholder to be
redeemed, at its address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the outstanding Notes are to be redeemed,
the portion of each Note to be redeemed,
(d) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note to be redeemed and that
interest thereon will cease to accrue on and after said date, and
-90-
(e) the place or places where such Notes are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election
of the Company shall be given by the Company and at the expense of the Company.
SECTION 11.04. NOTES PAYABLE ON REDEMPTION DATE. If notice of
redemption shall have been given as provided above, the Notes to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and any applicable accrued
interest) such Notes shall not bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price, together with any applicable accrued interest
to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Noteholders of such Notes, or one or more Predecessor Notes, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of this Agreement.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Note.
SECTION 11.05. NOTES REDEEMED IN PART. Any Note which is to be
redeemed only in part shall be surrendered at the principal offices of the
Company (with, if the Company so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company duly executed by, the
Noteholder thereof or his attorney duly authorized in writing), and the Company
shall execute and deliver to the Noteholder of such Note without service charge,
a new Note or Notes, of any authorized denomination as requested by such
Noteholder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
SECTION 12
SUBSIDIARY GUARANTEES
SECTION 12.01. SUBSIDIARY GUARANTEES. Each of the Guarantors
hereby, jointly and severally, unconditionally guarantees to each Noteholder,
irrespective of the validity and enforceability of this Agreement, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and premium and interest on the Notes shall be promptly paid in full when
due, whether at Stated Maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of (and any premium) and interest on the
Notes, if any, if lawful, and all other obligations of the Company to the
Noteholders hereunder or thereunder shall be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same shall be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
-91-
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Agreement, the absence of any action to enforce the same, any
waiver or consent by any Noteholder with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Agreement.
If any Noteholder is required by any court or otherwise to
return to the Company or Guarantors, or any Custodian, trustee, liquidator or
other similar official acting in relation to either the Company or Guarantors,
any amount paid by such Noteholder, this Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor agrees that it shall not be entitled to any right of subrogation in
relation to the Noteholders in respect of any obligations guaranteed hereby
until payment in full of all obligations guaranteed hereby. Each Guarantor
further agrees that, as between the Guarantors, on the one hand, and the
Noteholders, on the other hand, (a) the Maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 10 for the purposes of this
Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby and
(b) in the event of any declaration of acceleration of such obligations as
provided in Section 10, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Subsidiary Guarantee. The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Noteholders under the Subsidiary Guarantees.
SECTION 12.02. EXECUTION AND DELIVERY OF SUBSIDIARY
GUARANTEES. To evidence its Subsidiary Guarantee set forth in Section 12.01,
each Guarantor hereby agrees that this Agreement and a Subsidiary Guarantee in
the form of EXHIBIT B hereto shall be executed on behalf of such Guarantor by
its President or one of its Vice Presidents and, to the extent not a party to
this Agreement on the date hereof, each Guarantor shall execute and deliver to
the Noteholders a Subsidiary Guarantee in the form of EXHIBIT B hereto and a
supplemental agreement substantially in the form of EXHIBIT C hereto, pursuant
to which such Subsidiary shall become a Guarantor under this Section 12 and
shall guarantee the Obligations of the Company under this Agreement and the
Notes. Concurrently with the execution and delivery of such Subsidiary Guarantee
and such supplemental agreement, such Guarantor shall deliver to the Noteholders
an opinion of counsel reasonably acceptable to the Purchasers that the foregoing
have been duly authorized, executed and delivered by such Guarantor and that
such Guarantor's Subsidiary Guarantee is a valid and legally binding obligation
of such Guarantor, enforceable against such Guarantor in accordance with its
terms.
-92-
If an officer whose signature is on this Agreement or on a
Subsidiary Guarantee no longer holds that office at the time the Company
executes and delivers the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless. The execution and delivery of
any Note by the Company shall constitute due delivery of the Subsidiary
Guarantee set forth in this Agreement on behalf of the Guarantors. Each
Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 12.01
shall remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of such Subsidiary Guarantee.
SECTION 12.03. GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN
TERMS. No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or entity
(other than the Company or another Guarantor) unless:
(a) subject to the provisions of Section 12.04 hereof, the
Person formed by or surviving any such consolidation or merger (if
other than such Guarantor) unconditionally assumes all the obligations
of such Guarantor under the Notes and this Agreement pursuant to a
supplemental agreement, in the form of EXHIBIT C hereto; and
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists.
Notwithstanding the foregoing, no Guarantor shall be permitted
to consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person), another corporation, Person or entity pursuant to the
preceding sentence if such consolidation or merger would not be permitted by
Section 8.10 hereof.
In case of any such consolidation or merger and upon the
assumption by the successor corporation, by supplemental agreement, executed and
delivered to the Noteholders and satisfactory in form to the Noteholders, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Agreement to be
performed by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Subsidiary Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company. All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Agreement as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this Agreement
as though all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
Except as set forth in Section 8 hereof, nothing contained in
this Agreement or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company, or shall prevent any sale or conveyance
of the property of a Guarantor as an entirety or substantially as an entirety to
the Company.
SECTION 12.04. RELEASES OF SUBSIDIARY GUARANTEES. In the event
of (i) a sale or other disposition of all of the assets of any Guarantor, by way
of merger, consolidation or otherwise or (ii) a sale or other disposition of all
of the Capital Stock of any Guarantor, such Guarantor (in the event of a sale or
-93-
other disposition, by way of such a merger, consolidation, distribution or
otherwise, of all of the Capital Stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all of
the assets of such Guarantor) will be released and relieved of any obligations
under its Subsidiary Guarantee; PROVIDED that the net proceeds of such sale or
other disposition shall be applied in accordance with the provisions of Section
8.05 hereof. Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under this
Agreement as provided in this Section 12.
SECTION 12.05. LIMITATION ON GUARANTOR LIABILITY. Each
Guarantor, and by its acceptance of the Notes, each Noteholder, hereby confirms
that it is the intention of all such parties that the Subsidiary Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Subsidiary Guarantee. To effectuate the foregoing intention, the Noteholders and
the Guarantors hereby irrevocably agree that the obligations of such Guarantor
under its Subsidiary Guarantee and this Section 12 shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Section 12, result
in the obligations of such Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance.
SECTION 13
EXPENSES, INDEMNIFICATION AND CONTRIBUTION, AND TERMINATION
SECTION 13.01. EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Issuers will pay all costs and expenses
(including reasonable attorneys', accountants', advisors', appraisers' and
consultants' fees and disbursements) incurred by the Purchasers, the Agent or
any Holder in connection with the Transactions and in connection with any
amendments, waivers or consents under or in respect of this Agreement, the other
Transaction Documents or the Securities (whether or not such amendment, waiver
or consent becomes effective), including, without limitation: (a) the
Purchasers' reasonable out-of-pocket expenses in connection with the Purchasers'
examinations and appraisals of the Issuers' properties, books and records, (b)
the Purchasers' reasonable out-of-pocket expenses in connection with the
preparation, review, negotiation, execution and delivery of the Transaction
Documents and the consummation of the Transactions, (c) the costs and expenses
incurred in enforcing, defending or declaring (or determining whether or how to
enforce, defend or declare) any rights or remedies under this Agreement, the
-94-
Transaction Documents or the Securities or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement, the other Transaction Documents or the Securities, or by reason
of being a holder of any Securities, and (d) the costs and expenses, including
reasonable and documented consultants' and advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary of
the Company or in connection with any work-out or restructuring of the
transactions contemplated hereby, by the other Transaction Documents or by the
Securities. The Company will pay, and will save the Purchasers, the Agent and
each other holder of a Purchased Security harmless from, all claims in respect
of any fees, costs or expenses if any, of brokers and finders in relation to the
Transactions.
SECTION 13.02. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE ISSUERS. Each Issuer, jointly and
severally, agrees to indemnify and hold harmless (i) each Purchaser, (ii) the
Agent, (iii) each Person, if any, who controls (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) any such Person
referred to in clause (i) (any of the Persons referred to in this clause (iii)
being referred to herein as a "CONTROLLING PERSON") and (iv) the respective
officers, directors, managing directors, stockholders, partners, employees,
representatives, trustees, fiduciaries, and agents of any Person referred to in
clause (i) or any such Controlling Person (any such Person referred to in clause
(i), (ii), (iii) or (iv), a "PURCHASER INDEMNIFIED PERSON") against any losses,
claims, damages or liabilities, joint or several, to which such Purchaser
Indemnified Person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) in whole or in part upon any
inaccuracy in any of the representations and warranties of the Issuers contained
herein, (ii) in whole or in part upon any failure of any Issuer to perform its
obligations hereunder or under Applicable Law, or (iii) any change in the
financial condition, operations, business, properties or prospects of the
Company and its Subsidiaries during the period from the Audit Date to the
Closing Time, inclusive, that, individually or in the aggregate, has had or
would have a Material Adverse Effect that has not been disclosed in writing to
the Purchasers, and will reimburse each such Purchaser Indemnified Person for
any legal and other expenses incurred by such Purchaser Indemnified Person in
connection with investigating or defending any such action or claims as such
expenses are incurred. The indemnity agreement set forth in this Section
13.02(a) shall be in addition to any liabilities that the Issuers may otherwise
have.
(b) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES.
Promptly after receipt by a Purchaser Indemnified Person of notice of the
commencement of any action, such Purchaser Indemnified Person shall, if a claim
in respect thereof is to be made against an indemnifying party under Section
13.02(a), notify such indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any Purchaser Indemnified Person otherwise
than under Section 13.02(a), or to the extent it is not materially prejudiced as
a proximate result of such failure. In case any such action is brought against
any Purchaser Indemnified Person and it shall notify an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it shall elect within 30 days after receiving
any such notification, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
Purchaser Indemnified Person, and, after notice from the indemnifying party to
such Purchaser Indemnified Person of its election so to assume the defense
-95-
thereof, the indemnifying party shall not be liable to such Purchaser
Indemnified Person under such paragraph for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such Purchaser
Indemnified Person, in connection with the defense thereof other than reasonable
costs of investigation. Notwithstanding the foregoing, any Purchaser Indemnified
Person shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Purchaser Indemnified Person unless (i) the
Purchaser Indemnified Person shall have been advised by counsel that
representation of the Purchaser Indemnified Person by counsel provided by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between the indemnifying party and the Purchaser Indemnified Person,
including situations in which there are one or more legal defenses available to
the Purchaser Indemnified Person that are different from or additional to those
available to the indemnifying party, (ii) the indemnifying party shall have
authorized in writing the employment of counsel for the Purchaser Indemnified
Person at the expense of the indemnifying party or (iii) the indemnifying party
shall have failed to assume the defense or retain counsel reasonably
satisfactory to the Purchaser Indemnified Person; PROVIDED, HOWEVER, that the
indemnifying party shall not, in connection with any one such action or
proceeding or separate but substantially similar actions or proceedings arising
out of the same general allegations, be liable for the fees and expenses of more
than one separate firm of attorneys at any time for all Purchaser Indemnified
Persons, except to the extent that local counsel, in addition to their regular
counsel, is required in order to effectively defend against such action or
proceeding. No indemnifying party shall, without the written consent of the
Purchaser Indemnified Person, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or threatened action
or claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the Purchaser Indemnified Person is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the Purchaser Indemnified
Person from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any Purchaser Indemnified Person.
SECTION 13.03. CONTRIBUTION. If the indemnification provided
for in Section 13.02 is unavailable to or insufficient to hold harmless a
Purchaser Indemnified Person under paragraph (a) or (b) of Section 13.02 in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such Purchaser Indemnified Person as a result of
such losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the (i) relative benefits received
by the Issuers on the one hand and the Purchasers on the other hand from the
issuance and sale of the Securities; or (ii) if the allocation provided in
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the related benefits referred to in clause (i)
above but also the relative fault of the indemnifying party on the one hand and
the Purchaser Indemnified Person on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
-96-
considerations. The relative benefits received by the Issuers on the one hand
and the Purchasers on the other hand in connection with the sale of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Issuers and the total fees received by the Purchasers, bear to the aggregate
initial sale price of the Securities. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party on the one hand or the
Purchaser Indemnified Person on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just and equitable
if contributions pursuant to this Section 13.03 were determined by PRO RATA
allocation (even if the Purchaser Indemnified Persons were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 13.03.
The obligations of the Issuers under this Section 13.03 shall
be in addition to any liability which the Issuers may otherwise have.
SECTION 13.04. SURVIVAL. The obligations of the Issuers under
this Section 13 will survive the payment or transfer of any Purchased Security,
the enforcement, amendment or waiver of any provision of this Agreement and the
termination of this Agreement.
SECTION 13.05. TERMINATION.
(a) The Purchasers may terminate this Agreement, by notice to
the Company, at any time at or prior to the Closing Time (i) if there has been,
since the time of execution of this Agreement or since the Audit Date, any
material adverse change in the business, management, operations, affairs,
condition (financial or otherwise) assets, property, prospects or results of
operations of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions which, in each case, in the judgment of the Purchasers,
could reasonably be expected to materially and adversely affect or impair the
ability to sell or place securities such as the Securities, or (iii) if trading
in any securities of the Company has been suspended or materially limited by the
Commission or the American Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to
this Section 13.05, such termination shall be without liability of any party to
any other party except as provided in Section 13.01 hereof, PROVIDED that
Sections 1, 13.02, 13.03, 13.04, 14.08 and 14.12 shall survive such termination
and remain in full force and effect.
-97-
SECTION 14
AGENT
SECTION 14.01. APPOINTMENT. Each Noteholder hereby designates
and appoints FMP Agency Services, LLC as its agent under this Agreement and the
other Basic Documents, and each Noteholder hereby irrevocably authorizes Agent
to execute and deliver the Security Documents, the Intercreditor Agreement, any
post-closing agreements and all other intercreditor agreements as Agent deems
appropriate and to take such action or to refrain from taking such action on its
behalf under the provisions of such agreements, this Agreement and the other
Basic Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Each
Holder agrees to be bound by the terms and conditions of each Basic Document
entered into by Agent on behalf of such Holder. Agent is authorized and
empowered to amend, modify or waive any provisions of this Agreement or the
other Basic Documents on behalf of the Noteholders subject to the requirement
that certain of the Noteholders' consent be obtained in certain instances as
provided in this Section 14.01 and Section 15.04. The provisions of this Section
14.01 are solely for the benefit of Agent and the Noteholders and neither the
Company nor any other Issuer shall have any rights as a third-party beneficiary
of any of the provisions hereof. In performing its functions and duties under
this Agreement, Agent shall act solely as agent of the Noteholders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for the Company or any other Issuer.
Agent may perform any of its duties hereunder, or under the Basic Documents, by
or through its agents or employees.
SECTION 14.02. NATURE OF DUTIES. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Noteholder. Nothing in this
Agreement or any of the Basic Documents, express or implied, is intended to or
shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Basic Documents except as expressly set forth herein or
therein. Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Noteholder with any credit or other information
with respect to the Issuers (other than as expressly required herein). If Agent
seeks the consent or approval of any Noteholders to the taking or refraining
from taking of any action hereunder, then Agent shall send notice thereof to
each Noteholder. Agent shall promptly notify each Noteholder any time that the
Required Holders have instructed Agent to act or refrain from acting pursuant
hereto.
SECTION 14.03. RIGHTS, EXCULPATION, ETC. Neither Agent nor any
of its officers, directors, employees or agents shall be liable to any
Noteholder for any action taken or omitted by it hereunder or under any of the
Basic Documents, or in connection herewith or therewith, except that Agent shall
be liable to the extent of its own gross negligence or willful misconduct as
determined by a final non-appealable order by a court of competent jurisdiction.
Agent shall not be liable for any apportionment or distribution of payments made
by it in good faith and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Noteholder to whom payment was due but not made shall be to recover from other
Noteholders any payment in excess of the amount to which they are determined to
be entitled (and such other Noteholders hereby agree to return to such
Noteholder any such erroneous payments received by them). In no event shall
-98-
Agent be liable for punitive, special, consequential, incidental, exemplary or
other similar damages. In performing its functions and duties hereunder, Agent
shall exercise the same care which it would in dealing with transactions for its
own account, but neither Agent nor any of its agents or representatives shall be
responsible to any Noteholder for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any of the
Basic Documents or the transactions contemplated thereby, or for the financial
condition of any Issuer. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Basic Documents or the financial
condition of any Issuer, or the existence or possible existence of any Default
or Event of Default. Agent may at any time request instructions from the
Required Holders or all affected Noteholders with respect to any actions or
approvals which by the terms of this Agreement or of any of the Basic Documents
Agent is permitted or required to take or to grant. If such instructions are
promptly requested, Agent shall be absolutely entitled to refrain from taking
any action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Basic Documents until it shall have received such
instructions from the Required Holders or such other portion of the Noteholders
as shall be prescribed by this Agreement. Without limiting the foregoing, no
Noteholder shall have any right of action whatsoever against Agent as a result
of Agent acting or refraining from acting under this Agreement or any of the
other Basic Documents in accordance with the instructions of the Required
Holders or all affected Noteholders, as applicable; and, notwithstanding the
instructions of Required Holders or all affected Noteholders, as applicable,
Agent shall have no obligation to take any action if it believes, in good faith,
that such action is deemed to be illegal by Agent or exposes Agent to any
liability for which it has not received satisfactory indemnification in
accordance with Section 14.05.
SECTION 14.04. RELIANCE. Agent shall be entitled to rely, and
shall be fully protected in relying, upon any written or oral notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, telex, fax or telegram) believed by
it in good faith to be genuine and correct and to have been signed, sent or made
by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Basic Documents and its duties hereunder or thereunder,
Agent shall be entitled to rely upon the advice of legal counsel, independent
accountants and other experts selected by Agent in its sole discretion.
SECTION 14.05. INDEMNIFICATION. The Noteholders will reimburse
and indemnify Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, attorneys' fees and expenses), advances or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agent in any way relating to or arising out of this
Agreement or any of the Basic Documents or any action taken or omitted by Agent
under this Agreement or any of the Basic Documents, in proportion to each
Noteholder's Pro Rata Share, but only to the extent that any of the foregoing is
not reimbursed by the Company; PROVIDED, HOWEVER, that no Noteholder shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
to the extent resulting from Agent's gross negligence or willful misconduct as
-99-
determined by a final non-appealable order by a court of competent jurisdiction.
If any indemnity furnished to Agent for any purpose shall, in the opinion of
Agent, be insufficient or become impaired, Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against even if
so directed by the Required Holders or such other portion of the Noteholders as
shall be prescribed by this Agreement until such additional indemnity is
furnished. The obligations of the Noteholders under this Section 14.05 shall
survive the payment in full of the Obligations and the termination of this
Agreement.
SECTION 14.06. FMP AGENCY SERVICES, LLC INDIVIDUALLY. With
respect to its purchase of the Purchased Securities hereunder, Agent shall have
and may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Noteholder. The terms "Noteholders," "Required Holders" or any similar terms
shall, unless the context clearly otherwise indicates, include FMP Agency
Services, LLC in its individual capacity as a Noteholder or one of the Required
Holders. Agent, either directly or through strategic affiliations, may lend
money to, acquire equity or other ownership interests in, provide advisory
services to and generally engage in any kind of banking, trust or other business
with any Issuer as if it were not acting as Agent pursuant hereto and without
any duty to account therefor to Noteholders. Agent, either directly or through
strategic affiliations, may accept fees and other consideration from any Issuer
for services in connection with this Agreement or otherwise without having to
account for the same to Noteholders.
SECTION 14.07. SUCCESSOR AGENT.
(a) RESIGNATION. Agent may resign from the performance of all
its agency functions and duties hereunder at any time by giving at least thirty
(30) Business Days' prior written notice to the Company and the Noteholders.
Such resignation shall take effect upon the acceptance by a successor agent of
appointment pursuant to clause (ii) below or as otherwise provided in clause
(ii) below.
(b) APPOINTMENT OF SUCCESSOR. Upon any such notice of
resignation pursuant to clause (a) above, the Required Holders shall appoint a
successor agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to the Company. If a successor agent
shall not have been so appointed within the thirty (30) Business Day period
referred to in clause (a) above, the retiring agent, upon notice to the Company,
shall then appoint a successor agent who shall serve as agent until such time,
if any, as the Required Holders appoint a successor agent as provided above.
(c) SUCCESSOR AGENT. Upon the acceptance of any appointment as
agent under the Basic Documents by a successor agent, such successor agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring agent, and the retiring agent shall be discharged
from its duties and obligations under the Basic Documents. After any retiring
agent's resignation as agent, the provisions of this Section 14 shall continue
to inure to its benefit as to any actions taken or omitted to be taken by it in
its capacity as agent.
SECTION 14.08. COLLATERAL MATTERS.
-100-
(a) RELEASE OF COLLATERAL. The Noteholders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any Collateral (x) upon payment and
satisfaction of all Obligations (other than contingent indemnification
obligations to the extent no claims giving rise thereto have been asserted), or
(y) constituting property being sold or disposed of if the Company certifies to
Agent that the sale or disposition is made in compliance with the provisions of
this Agreement (and Agent may rely in good faith conclusively on any such
certificate, without further inquiry).
(b) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES. Without
in any manner limiting Agent's authority to act without any specific or further
authorization or consent by the Noteholders (as set forth in Section 14.08(a)),
each Noteholder agrees to confirm in writing, upon request by Agent or the
Company, the authority to release any Collateral conferred upon Agent under
clauses (x), (y) and (z) of Section 14.08(a). Upon receipt by Agent of any
required confirmation from the Required Holders of its authority to release any
particular item or types of Collateral, and upon at least ten (10) Business
Days' prior written request by the Company, Agent shall (and is hereby
irrevocably authorized by the Noteholders to) execute such documents as may be
necessary to evidence the release of the Liens granted to Agent upon such
Collateral; PROVIDED, HOWEVER, that (x) Agent shall not be required to execute
any such document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (y) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of any Issuer in respect of) all interests retained by any
Issuer, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(c) ABSENCE OF DUTY. Agent shall have no obligation whatsoever
to any Noteholder or any other Person to assure that the property covered by the
Security Documents exists or is owned by the Company or any other Issuer or is
cared for, protected or insured or has been encumbered or that the Liens granted
to Agent have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this Section 14.08(c) or in any of the Basic
Documents, it being understood and agreed that in respect of the property
covered by the Security Documents or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interest in property covered by the Security Documents as one of the
Noteholders and that Agent shall have no duty or liability whatsoever to any of
the other Noteholders, provided that Agent shall exercise the same care which it
would in dealing with loans for its own account.
SECTION 14.09. AGENCY FOR PERFECTION. Agent and each
Noteholder hereby appoint each other Noteholder as agent for the purpose of
perfecting Agent's security interest in assets which, in accordance with the
Code in any applicable jurisdiction, can be perfected by possession or control.
Should any Noteholder (other than Agent) obtain possession or control of any
such assets, such Noteholder shall notify Agent thereof, and, promptly upon
Agent's request therefor, shall deliver such assets to Agent or in accordance
with Agent's instructions or transfer control to Agent in accordance with
-101-
Agent's instructions. Each Noteholder agrees that it will not have any right
individually to enforce or seek to enforce any Security Document or to realize
upon any collateral security for the Notes and the Guarantees unless instructed
to do so by Agent in writing, it being understood and agreed that such rights
and remedies may be exercised only by Agent.
SECTION 14.10. NOTICE OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
except with respect to defaults in the payment of principal, interest and Fees
required to be paid to Agent for the account of the Noteholders, unless Agent
shall have received written notice from a Noteholder or the Company referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "Notice of Default." Agent will use reasonable efforts to
notify each Noteholder of its receipt of any such notice, unless such notice is
with respect to defaults in the payment of principal, interest and fees, in
which case Agent will notify each Noteholder of its receipt of such notice.
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Required Holders in accordance with Section 10. Unless
and until Agent has received any such request, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interests of Noteholders.
SECTION 14.11. NOTEHOLDER ACTIONS AGAINST COLLATERAL. Each
Noteholder agrees that it will not take any action, nor institute any actions or
proceedings, with respect to the Notes and the Guarantees, against the Company
or any Issuer hereunder or under the other Basic Documents or against any of the
Real Property encumbered by Mortgages without the consent of the Required
Holders. With respect to any action by Agent to enforce the rights and remedies
of Agent and the Noteholders under this Agreement and the other Basic Documents,
each Noteholder hereby consents to the jurisdiction of the court in which such
action is maintained, and agrees to deliver its Notes to Agent to the extent
necessary to enforce the rights and remedies of Agent for the benefit of the
Noteholders under the Mortgages in accordance with the provisions hereof.
SECTION 14.12. SETOFF AND SHARING OF PAYMENTS. In addition to
any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, during the continuance of any Event of Default,
each Noteholder is hereby authorized by the Company at any time or from time to
time, with reasonably prompt subsequent notice to the Company (any prior or
contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (A) balances held by such Noteholder at any
of its offices for the account of the Company or any of its Subsidiaries
(regardless of whether such balances are then due to the Company or its
Subsidiaries), and (B) other property at any time held or owing by such
Noteholder to or for the credit or for the account of the Company or any of its
Subsidiaries, against and on account of any of the Obligations; except that no
Noteholder shall exercise any such right without the prior written consent of
Agent. Any Noteholder exercising a right to set off shall purchase for cash (and
the other Noteholders shall sell) interests in each of such other Noteholder's
Pro Rata Share of the Obligations as would be necessary to cause all Noteholders
to share the amount so set off with each other Noteholder in accordance with
their respective Pro Rata Shares. The Company agrees, to the fullest extent
-102-
permitted by law, that any Noteholder may exercise its right to set off with
respect to amounts in excess of its Pro Rata Share of the Obligations and upon
doing so shall deliver such amount so set off to the Agent for the benefit of
all Noteholders in accordance with their Pro Rata Shares.
SECTION 15
MISCELLANEOUS
SECTION 15.01. NOTICES. Except as otherwise expressly provided
herein, all notices and other communications shall have been duly given and
shall be effective (a) when delivered, (b) when transmitted via telecopy (or
other facsimile device) to the number set out below if the sender on the same
day sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), (c) the Business Day following the day on which the
same has been delivered prepaid to a reputable national overnight air courier
service or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address set forth below, or at such other address as
such party may specify by written notice to the other party hereto:
(i) if to a Purchaser or its nominee, to the Purchaser or its
nominee at the address specified for such communications in SCHEDULE A,
with a copy to Xxxxxx Xxxxxx & Xxxxxxx LLP, 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, attention: Xxxx Xxxxxxxxxxxx, Esq., or at such other
address as the Purchaser or its nominee shall have specified to the
Company in writing;
(ii) if to any other Holder, to such Holder at the address of
such Holder appearing in the Security Register or such other address as
such other Holder shall have specified to the Company in writing;
(iii) if the Agent, to the Agent at 00 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx, 00000, attention Xxxxxxx X. Xxxxxxx, Xx. with a
copy to Falcon Mezzanine Partners, LP, attention: Xxxxxxx Xxxx; or
(iv) if to an Issuer, to the Company at 0000 X. Xxxxxxxx
Xxxxx, Xxxxx, XX 00000, Attention: Chief Financial Officer, with a copy
to: Xxxxxxxxx Traurig at 0000 Xxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxx, XX
00000, Attention: Xxxx Xxxxxxxxx, or at such other address as the
Company shall have specified to such Holder in writing.
SECTION 15.02. BENEFIT OF AGREEMENT; ASSIGNMENTS AND
PARTICIPATIONS. Except as otherwise expressly provided herein, all covenants,
agreements and other provisions contained in this Agreement by or on behalf of
any of the parties hereto shall bind, inure to the benefit of and be enforceable
by their respective successors and registered assigns (including, without
limitation, any subsequent holder of a Purchased Security) whether so expressed
or not; PROVIDED, HOWEVER, that the Company may not assign and transfer any of
its rights or obligations without the prior written consent of the other parties
hereto and each such holder.
-103-
Nothing in this Agreement or in the Securities, express or
implied, shall give to any Person other than the parties hereto, their
successors and assigns and the holders from time to time of the Securities any
benefit or any legal or equitable right, remedy or claim under this Agreement.
SECTION 15.03. NO WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of any party hereto or any Holder in exercising any right,
power or privilege hereunder or under the Securities and no course of dealing
between any Issuer and any other party or Holder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under the Securities preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies provided herein and in the
Securities are cumulative and not exclusive of any rights or remedies which the
parties or Holders would otherwise have. No notice to or demand on any Issuer in
any case shall entitle any Issuer to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the other
parties hereto or the Holders to any other or further action in any
circumstances without notice or demand.
SECTION 15.04. AMENDMENTS, WAIVERS AND CONSENTS. This
Agreement may be amended, and the observance of any term hereof may be waived
(either retroactively or prospectively) with (and only with) the written consent
of the Company and the Required Holders (provided that any amendment or waiver
which relates to the Shares or the Warrants and/or Warrant Shares shall require
the written consent of the Company and the holders of a majority of the
outstanding Shares or Warrants and/or Warrant Shares (with Warrants counted on
an as-converted basis)) (or, if prior to the Closing Time, Purchasers who have
agreed to purchase a majority in aggregate principal amount of the Notes, a
majority of the Shares and a majority of the Warrants); PROVIDED, HOWEVER, that
no such amendment or waiver may, without the prior written consent of each
Noteholder affected thereby (or each Purchaser if prior to the Closing Time) (i)
subject any Noteholder to any additional obligation, (ii) reduce the principal
of (or premium, if any) or rate of interest on any Note, (iii) postpone the date
fixed for any payment of principal of (or premium, if any) or interest on any
Note, (iv) change the percentage of the aggregate principal amount of the Notes
the Noteholders of which shall be required to consent or take any other action
under this Section 15.04 or any other provision of this Agreement, (v) amend or
waive the provisions of (a) Section 7.08 following the occurrence of a Change of
Control or (b) Sections 7.09 or 8.05 following the maturity at the Company's
obligation to make an Asset Sale Offer and in the case of each of clauses (a)
and (b), any of the definitions used in such Sections, (vi) reduce the premium
payable upon any redemption of the Notes or change the time at which any Note
may be redeemed, (vii) impair the right of any Noteholder to receive payment of
principal, premium, if any, and interest on such Noteholder's Notes on or after
the due dates therefore or to institute suit for the enforcement of any payment
on or with respect to such Noteholder's Notes, (viii) adversely affect the
ranking of the Notes, (ix) change the currency in which amounts due under the
-104-
Notes are payable, (x) release any Guarantor from its Guarantee of the Notes
other than in accordance with the terms of this Agreement or (xi) release all or
a substantial portion of the Collateral from the Liens of the Security Documents
or alter the relative priorities of the Secured Obligations entitled to the
Liens of the Security Documents, in each case without the written consent of
each Holder. No amendment or waiver of this Agreement will extend to or affect
any obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or thereby impair any right consequent thereon. Without the
consent of any other person, the applicable Issuer or Issuers and the Agent may
(in its or their respective sole discretion, or shall, to the extent required by
any Basic Document) enter into any amendment or waiver of any Basic Document, or
enter into any new agreement or instrument, to effect the granting, perfection,
protection, expansion or enhancement of any security interest in any Collateral
or additional property to become Collateral for the benefit of the Secured
Parties, or as required by local law to give effect to, or protect any security
interest for the benefit of the Secured Parties, in any property or so that the
security interests therein comply with applicable Requirements of Law. As used
herein, the term this "AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
SECTION 15.05. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the same instrument.
It shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
SECTION 15.06. REPRODUCTION. This Agreement, the other
Transaction Documents and all documents relating, hereto and thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by the Purchasers at the Closing Time
(except the Securities themselves), and (c) financial statements, certificates
and other information previously or hereafter furnished in connection herewith,
may be reproduced by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and any original document so
reproduced may be destroyed. Each Issuer agrees and stipulates that, to the
extent permitted by Applicable Law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 14.06 shall not prohibit any Issuer, any
other party hereto or any Holder from contesting any such reproduction to the
same extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
SECTION 15.07. HEADINGS. The headings of the sections and
subsections hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
SECTION 15.08. GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE.
(a) THIS AGREEMENT AND THE SECURITIES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
-105-
(b) If any action, proceeding or litigation shall be brought
by any Purchaser or any Holder in order to enforce any right or remedy under
this Agreement or any of the Securities, the Issuers hereby consent and will
submit, and will cause each of their Subsidiaries to submit, to the jurisdiction
of any state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement. The
Issuers hereby irrevocably waive any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which they may now or hereafter have to the bringing of any such
action, proceeding or litigation in such jurisdiction. The Issuers further agree
that they shall not, and shall cause their Subsidiaries not to, bring any
action, proceeding or litigation arising out of this Agreement, the Securities,
the Subsidiary Guarantees or any other Transaction Document in any state or
federal court other than any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the date
of this Agreement.
(c) The Issuers hereby irrevocably designate CT Corporation
System at an address in New York City designated at the Closing Time as the
designee, appointee and agent of the Issuers to receive, for and on behalf of
the Issuers, service of process in such jurisdiction in any action, proceeding
or litigation with respect to this Agreement, the Securities, the Subsidiary
Guarantees or any of the other Transaction Documents. It is understood that a
copy of such process served on such agent will be promptly forwarded by mail to
the applicable Issuers at its address set forth opposite its signature below,
but the failure of the applicable Issuers to have received such copy shall not
affect in any way the service of such process. The applicable Issuers further
irrevocably consent to the service of process of any of the aforementioned
courts in any such action, proceeding or litigation by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Company at its
said address, such service to become effective thirty (30) days after such
mailing.
(d) Nothing herein shall affect the right of any Holder to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Issuers in any other jurisdiction.
If service of process is made on a designated agent it should be made by either
(i) personal delivery or (ii) mailing a copy of summons and complaint to the
agent via registered or certified mail, return receipt requested.
(e) THE ISSUERS HEREBY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, ANY
OF THE SECURITIES OR THE SUBSIDIARY GUARANTEES.
SECTION 15.09. SEVERABILITY. If any provision of this
Agreement is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable to the extent of such illegality, invalidity or
unenforceability and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
SECTION 15.10. ENTIRETY. This Agreement together with the
other Transaction Documents represents the entire agreement of the parties
-106-
hereto and thereto, and supersedes all prior agreements and understandings, oral
or written, if any, relating to the Transaction Documents or the transactions
contemplated herein or therein.
SECTION 15.11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties and covenants and indemnities made by the Issuers
herein shall survive the execution and delivery of this Agreement, the issuance
and transfer of all or any portion of the Securities and the payment of
principal of the Notes, the expiration, exercise or other termination of the
Warrants and any other obligations hereunder, regardless of any investigation
made at any time by or on behalf of the Purchasers or any other holder that is
Affiliated with the Purchasers. All statements contained in any certificate
delivered by or on behalf of any Issuers pursuant to this Agreement shall be
deemed representations and warranties of the Issuers under this Agreement.
SECTION 15.12. INCORPORATION. All Exhibits and Schedules
attached hereto are incorporated as part of this Agreement as if fully set forth
herein.
SECTION 15.13. CERTAIN RIGHTS AND OBLIGATIONS AMONG
NOTEHOLDERS. If, at any time or times, a Noteholder shall not have received a
payment in respect of the Notes when due, then it shall notify the other
Noteholders of such fact, the amount of such nonpayment, the date or period to
which it relates and such other Noteholders which have received such payments
(whether by voluntary payment, setoff or otherwise) shall remit to the unpaid
Noteholder such amount as is necessary to allocate the aggregate amount of such
payments among all Noteholders in accordance with their Pro Rata Share. The
amount of any such remittance shall be credited on the Note of the Noteholder to
whom it is remitted, and shall not be credited on the Note of the remitting
Noteholder. The provisions of this Section are solely for the benefit of the
Noteholders, and neither the Issuers nor any other Person other than a
Noteholder shall have any rights with respect to or be entitled to enforce this
Section.
-107-
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
THE COMPANY:
TERREMARK WORLDWIDE, INC.
By: /s/ XXXX XXXXXXX
-------------------------------------
Name:
Title:
THE GUARANTORS:
NAP OF THE AMERICAS, INC.
NAP OF THE AMERICAS/WEST, INC.
OPTICAL COMMUNICATIONS, INC.
PARK WEST TELECOMMUNICATIONS INVESTORS, INC.
SPECTRUM TELECOMMUNICATIONS CORP.
TECOTA SERVICES CORP.
TERREMARK FINANCIAL SERVICES, INC.
TERREMARK FORTUNE HOUSE #1, INC.
TERREMARK LATIN AMERICA, INC.
TERREMARK MANAGEMENT SERVICES, INC.
TERREMARK REALTY, INC.
TERREMARK TECHNOLOGY CONTRACTORS, INC.
TERRREMARK TRADEMARK HOLDINGS, INC.
TERRENAP DATA CENTERS, INC.
TERRENAP SERVICES, INC.
By: /s/ XXXX XXXXXXX
--------------------------------------
Name:
Title:
-108-
AGENT:
FMP AGENCY SERVICES, LLC
By: /s/ XXXXXX XXXXX
-----------------------------------
Name:
Title:
-109-
PURCHASERS:
FALCON MEZZANINE PARTNERS, LP
By: Falcon Mezzanine Investments, LLC,
its General Partner
By: /s/ XXXXXX XXXXX
------------------------------------
Name:
Title:
-110-
STICHTING PENSIOENFONDS VOOR DE GEZOND-XXXX,
GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN,
Duly represented by
AlpInvest Partners, N.V.
By: /s/ X. XXXXXXX
----------------------------------------
Name: X. Xxxxxxx
Title: Legal Counsel
By: /s/ X. XXXXXXX
----------------------------------------
Name: X.Xxxxxxx
Title: Managing Partner Co-Investments
STICHTING PENSIOENFONDS
ABP, Duly represented by
AlpInvest Partners N.V.
By: /s/ X. XXXXXXX
----------------------------------------
Name: X. Xxxxxxx
Title: Legal Counsel
By: /s/ X. XXXXXXX
----------------------------------------
Name: X. Xxxxxxx
Title: Managing Partner Co-Investments
-111-
