EXHIBIT 10.2
EXECUTION COPY
Digex, Incorporated
Floating Rate Senior Notes due December 31, 2002
NOTE PURCHASE AGREEMENT
Dated July 31, 2001
TABLE OF CONTENTS
ARTICLE I
AUTHORIZATION OF NOTES 1
ARTICLE II
SALE AND PURCHASE OF NOTES
Section 2.01. Sale and Purchase of Notes 1
Section 2.02. Procedure for Purchasing 2
Section 2.03. Interest2
Section 2.04. Alternate Rate of Interest2
Section 2.05. Increased Costs 3
Section 2.06. Break-Funding Payments 4
Section 2.07. Maturity4
Section 2.08. Term-Out Option 4
ARTICLE III
PURCHASE 5
ARTICLE IV
CONDITIONS TO CLOSING
Section 4.01. Conditions to Initial Purchase 6
Section 4.02. Conditions to Each Purchase 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.01. Organization; Power and Authority 9
Section 5.02. Authorization, Etc. 10
Section 5.03. Disclosure 10
Section 5.04. Organization and Ownership of Shares of
Subsidiaries; Affiliates 10
Section 5.05. Financial Statements 11
Section 5.06. Compliance with Laws, Other Instruments, Etc. 11
Section 5.07. Litigation; Observance of Agreements,
Statutes and Orders12
Section 5.08. Taxes 12
Section 5.09. Title to Property; Leases 12
Section 5.10. Licenses, Permits, Etc. 13
Section 5.11. Compliance with ERISA 13
Section 5.12. Private Offering by the Company 13
Section 5.13. Use of Proceeds; Margin Regulations 14
Section 5.14. Existing Indebtedness; Future Liens 14
Section 5.15. Status Under Certain Statutes 14
Section 5.16. Environmental Matters 15
Section 5.17. Insurance 15
Section 5.18. Intellectual Property 15
ARTICLE VI
REPRESENTATION OF THE PURCHASER 15
ARTICLE VII
INFORMATION AS TO COMPANY
Section 7.01. Financial and Business Information 16
Section 7.02. Officer's Certificate 19
Section 7.03. Inspection 19
ARTICLE VIII
PREPAYMENT OF THE NOTES
Section 8.01. Optional Prepayments 20
Section 8.02. Mandatory Prepayments 20
Section 8.03. Maturity; Surrender, Etc. 21
Section 8.04. Purchase of Notes 21
ARTICLE IX
AFFIRMATIVE COVENANTS
Section 9.01. Use of Free Cash, Assets and Proceeds 21
Section 9.02. Compliance with Law 21
Section 9.03. Insurance 22
Section 9.04. Maintenance of Properties 22
Section 9.05. Payment of Taxes and Claims 22
Section 9.06. Corporate Existence, Etc. 22
Section 9.07. Provision of Business Plans 23
Section 9.08. Alternative Financing 23
ARTICLE X
NEGATIVE COVENANTS
Section 10.01. Restricted Payments 23
Section 10.02. Dividend and Other Payment Restrictions
Affecting Subsidiaries 24
Section 10.03. Incurrence of Indebtedness and Issuance
of Disqualified Stock 25
Section 10.04. Asset Sales 27
Section 10.05. Transactions with Affiliates 27
Section 10.06. Liens 28
Section 10.07. Limitations on Sale and Leaseback
Transactions 28
Section 10.08. Corporate Existence28
Section 10.09. Business Activities29
Section 10.10. Employee Benefit Plans 29
Section 10.11. Environmental Laws 29
ARTICLE XI
EVENTS OF DEFAULT 30
ARTICLE XII
REMEDIES ON DEFAULT, ETC.
Section 12.01. Acceleration 32
Section 12.02. Other Remedies 32
Section 12.03. Rescission 32
Section 12.04. No Waivers or Election of Remedies,
Expenses, Etc. 33
ARTICLE XIII
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
Section 13.01. Registration of Notes 33
Section 13.02. Transfer and Exchange of Notes 33
Section 13.03. Replacement of Notes 34
ARTICLE XIV
PAYMENTS ON NOTES 35
ARTICLE XV
EXPENSES, ETC.
Section 15.01. Transaction Expenses 35
Section 15.02. Survival 36
ARTICLE XVI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT 36
ARTICLE XVII
AMENDMENT AND WAIVER
Section 17.01. Requirements 36
Section 17.02. Solicitation of Holders of Notes 37
Section 17.03. Binding Effect, Etc. 37
ARTICLE XVIII
NOTICES 38
ARTICLE XIX
REPRODUCTION OF DOCUMENTS 38
ARTICLE XX
CONFIDENTIAL INFORMATION 39
ARTICLE XXI
SUBSTITUTION OF PURCHASER 40
ARTICLE XXII
MISCELLANEOUS
Section 22.01. Waiver of Facilities Commitment. 40
Section 22.02. Optional Amendment 41
Section 22.03. Assignment 41
Section 22.04. Successors and Assigns 41
Section 22.05. Payments Due on Non-Business Days 41
Section 22.06. Severability 41
Section 22.07. Construction 42
Section 22.08. Counterparts 42
Section 22.09. Governing Law42
Section 22.10. Jurisdiction and Consent to Service of
Process42
Section 22.11. Waiver of Jury Trial 43
SCHEDULES:
Schedule A - Definitions
Schedule 5.01 - Jurisdictions of Incorporation
Schedule 5.03 - Disclosure
Schedule 5.04 - Subsidiaries
Schedule 5.05 - Financial Statements
Schedule 5.07 - Litigation
Schedule 5.10 - Licenses, Permits
Schedule 5.14 - Indebtedness
EXHIBITS:
Exhibit I - Form of Note
Exhibit II - Form of Borrowing Notice
Exhibit III - 2001 Business Plan
Exhibit IV - Form of Notice of Substitution of Purchaser
Digex, Incorporated
Xxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Floating Rate Senior Notes due December 31, 2002
July 31, 2001
WORLDCOM, INC.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
Digex, Incorporated, a Delaware corporation (the "COMPANY"), agrees
with you as follows (the "AGREEMENT"):
ARTICLE I
AUTHORIZATION OF NOTES
The Company will authorize the issue and sale of Senior Notes (the
"NOTES", such term to include any such notes issued in substitution therefor
pursuant to Article XIII of this Agreement) up to an aggregate principal amount
equal to the Total Purchase Amount. The Notes shall be substantially in the form
set out in EXHIBIT I, with such changes therefrom, if any, as may be approved by
you and the Company. Certain capitalized terms used in this Agreement are
defined in SCHEDULE A; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
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ARTICLE II
SALE AND PURCHASE OF NOTES
SECTION 2.01. SALE AND PURCHASE OF NOTES . Subject to the terms and
conditions of this Agreement, the Company will issue and sell to you and you
will purchase from the Company, on each Purchase Date, Notes at the purchase
price of 100% of the principal amount of such Purchase (the "PURCHASE PRICE");
PROVIDED that, without your prior written consent, (a) the aggregate principal
amount of all Purchases in any one-month period during 2001 shall not exceed 20%
of the total amount of funding of the Company by you, as approved in the 2001
Business Plan, (b) the aggregate principal amount of all Purchases in any Fiscal
Quarter during 2001 shall not exceed 60% of the total amount of funding of the
Company by you, as approved in the 2001 Business Plan, (c) the aggregate
principal amount of all Purchases in any one-month period during 2002 shall not
exceed 12.5% of the total amount of funding of the Company by you, as approved
in the 2002 Business Plan, and (d) the aggregate principal amount of all
Purchases in any Fiscal Quarter during 2002 shall not exceed 30% of the total
amount of funding of the Company by you, as approved in the 2002 Business Plan.
It is understood that, in connection with the 2002 Business Plan approval
process described in Section 9.07, the parties will mutually discuss whether to
amend the percentages in clauses (c) and (d) of the preceding sentence. The
aggregate principal amount of all Purchases shall not exceed the Total Purchase
Amount.
SECTION 2.02. PROCEDURE FOR PURCHASING . In order to effect a
Purchase hereunder, the Company shall give you irrevocable notice (which notice
must be received by you prior to 12:00 noon, New York City time, five Business
Days prior to the Purchase Date, PROVIDED, however, that, with respect to the
Initial Purchase (as defined below), the Company may provide notice to you one
Business Day prior to the Closing Date with respect to such Initial Purchase),
specifying the amount of Notes to be purchased and the Purchase Date (a
"Borrowing Notice"). The Borrowing Notice shall be substantially in the form set
out in EXHIBIT II, with such changes in form therefrom, if any, as may be
approved by you and the Company. Each Purchase shall be in an aggregate amount
equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if
the then aggregate Available Purchase Amount is less than $5,000,000, such
lesser amount). You will make the Purchase Price available to the Company by
3:00 p.m., New York City time, on the Purchase Date in funds immediately
available to the Company. If the Borrowing Notice is received after 12:00 noon
as set forth above in this Section, such Borrowing Notice shall be deemed to
have been received on the following Business Day. No Borrowing Notice need be
accepted by you after December 6, 2002.
SECTION 2.03. INTEREST . Subject to the provisions of Section 2.04,
each Note shall bear interest for each day at a rate per annum equal to the
Interest Rate. Interest on the unpaid balance of the aggregate principal amount
of all Notes will be due and payable on the first day of each calendar month.
Interest also shall be paid on the Maturity Date and upon any prepayment of
principal with respect to the principal repaid. Interest and fees payable
pursuant hereto shall be calculated on the basis of a year of 365 days (or 366
days in a leap year) for the actual days elapsed.
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SECTION 2.04. ALTERNATE RATE OF INTEREST . If on any Date of
Determination you determine (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
LIBOR, then you shall give notice thereof to the Company by telephone or
telecopy as promptly as practicable thereafter, and, until you notify the
Company that the circumstances giving rise to such notice no longer exist, the
interest rate that otherwise would have been determined on such Date of
Determination shall be the Alternate Interest Rate.
SECTION 2.05. INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any holder of a Note or
(ii) impose on any holder of a Note or the London interbank market
any other condition affecting this Agreement,
and the result of any of the foregoing shall be to increase the cost to such
holder of holding any Note (or of maintaining its obligation to hold any such
Note) or to reduce the amount of any sum received or receivable by such holder
hereunder (whether of principal, interest or otherwise), then the Company will
pay to such holder such additional amount or amounts as will compensate such
Holder for such additional costs actually incurred or reduction actually
suffered.
(b) If any holder of any Note determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such holder's capital or on the capital of such holder's holding
company, if any, as a consequence of this Agreement or the Purchases made by
such holder, to a level below that which such holder or such holder's holding
company could have achieved but for such Change in Law (taking into
consideration such holder's policies and the policies of such holder's holding
company with respect to capital adequacy), then from time to time the Company
will pay to such holder such additional amount or amounts as will compensate
such holder or such holder's holding company for any such reduction actually
suffered.
(c) A certificate of any holder of any Note setting forth the amount
or amounts necessary to compensate such holder or its holding company, as the
case may be, as specified in paragraph (a) or (b) of this Section shall be
delivered to the Company and shall be conclusive absent manifest error. The
Company shall pay such holder the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d) A holder of a Note who becomes entitled to compensation under
this Section 2.05 shall give prompt written notice after such holder becomes
aware of such entitlement, but failure or delay on the part of any holder of any
Note to demand compensation pursuant to this Section shall not constitute a
waiver of such holder's right to demand such compensation.
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Notwithstanding any other provision of this Section 2.05, no holder
of a Note shall demand compensation for any increased costs or reduction
referred to above if it shall not be the general policy or practice of such
holder to demand such compensation in similar circumstances under comparable
provisions of other note purchase, credit or loan agreements, if any (it being
understood that this sentence shall not in any way limit the discretion of any
holder to waive the right to demand such compensation in any given case).
SECTION 2.06. BREAK-FUNDING PAYMENTS . In the event of the payment
of any principal of any Purchase other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default) or the
failure to purchase, prepay or repurchase any Note on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice is revoked),
then, in any such event, the Company shall compensate each holder of any such
Note for the loss, cost and expense attributable to such event. In the case of a
Purchase, the loss to any holder of a Note attributable to any such event shall
be deemed to include an amount determined by such holder to be equal to the
excess, if any, of (a) the amount of interest that such holder would pay for a
deposit equal to the principal amount of such Note for the period from the date
of such payment or failure to the last day of the then current Interest Period
for such Note (or, in the case of a failure to purchase or repurchase, the
duration of the Interest Period that would have resulted from such purchase or
repurchase) if the interest rate payable on such deposit were equal to the
Interest Rate for such Interest Period over (b) the amount of interest that such
holder would earn on such principal amount for such period if such holder were
to invest such principal amount for such period at the interest rate that would
be bid by such holder (or an affiliate of such holder) for dollar deposits from
banks in the market of loans bearing interest at a rate determined by reference,
in whole or in part, directly or indirectly, to LIBOR at the commencement of
such period. A certificate of any holder setting forth any amount or amounts
that such holder is entitled to receive pursuant to this Section shall be
delivered to the Company and shall be conclusive absent manifest error. The
Company shall pay such holder the amount shown as due on any such certificate
within 10 days after receipt thereof.
SECTION 2.07. MATURITY . Except as provided in Section 2.08, the
Notes shall mature (the "MATURITY DATE"), and shall be immediately due and
payable without any requirement of demand or request by you, on December 31,
2002.
SECTION 2.08. TERM-OUT OPTION . Upon the election of the Company by
written notice (the "TERM-OUT NOTICE") given not later than December 13, 2002,
to all holders of Notes, the Company may elect (the "TERM-OUT ELECTION") to
extend the maturity of all the then outstanding Notes to December 31, 2006. If
the Company so elects, the Notes shall thereafter have required equal monthly
straight-line amortization payments prior to final maturity. From and after the
date of delivery of the Term-Out Notice, the references to Maturity Date herein
shall be deemed to be appropriately modified to reflect such election.
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ARTICLE III
PURCHASE
On the date of each Purchase, the Company will deliver to you the
Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may request), dated
the Purchase Date and registered in your name (or in the name of your nominee),
as you shall request, against delivery by you to the Company or its order of
immediately available funds in the amount of the Purchase Price therefor by wire
transfer of immediately available funds for the account of the Company to:
Bank of America
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
ABA/Routing No.: *********
Account Name: Digex Operating Account
Account No.: *********
For International Wires:
SWIFT (USD): ********
SWIFT (Foreign): ********
or at such other address as the Company shall have from time to time specified
to you in writing for such purpose. If on the Purchase Date the Company shall
fail to tender such Note or Notes to you as provided above in this Article III,
or any of the applicable conditions specified in Article IV shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement with respect to such Purchase, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.
ARTICLE IV
CONDITIONS TO CLOSING
SECTION 4.01. CONDITIONS TO INITIAL PURCHASE . Your obligation to
purchase and pay for any Notes to be sold to you in connection with the initial
Purchase of Notes (the "INITIAL PURCHASE") is subject to the fulfillment to your
satisfaction, prior to or on the date of the Initial Purchase, of the following
conditions:
(a) NOTE PURCHASE AGREEMENT. You shall have received a copy of this
Agreement executed by the Company, and the Company shall have received a copy of
this Agreement executed by you.
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(b) PERFORMANCE. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or on the Closing Date.
(c) SECRETARY'S CERTIFICATE. The Company shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and this Agreement.
(d) COMPANY BUSINESS PLAN. The Boards of Directors of the Company and you
shall have approved the 2001 Business Plan, and such plan shall have been
neither amended, rescinded, revised nor updated between the time of the initial
approval by your Board of Directors and the date of the Initial Purchase.
(e) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
(f) COMMERCIAL AGREEMENTS. The following agreements shall have been
executed and delivered and be in full force and effect with an absence of
default: (1) the Master Channel Agreement dated as of January 1, 2001, between
MCI WorldCom Network Services, Inc. ("MCI") and the Company, (2) Amendment No. 1
to the UUdirect Multi-Megabit Agreement dated October 18, 2000, between UUNET
Technologies, Inc. and the Company and (3) the Master Facilities Agreement dated
as of January 1, 2001, between MCI and the Company.
(g) FEES. The Company shall have paid you or your counsel all its fees,
charges and disbursements that are in connection with the preparation of this
Agreement or any amendments, modifications or waivers of the provisions thereof
(whether or not the transactions contemplated hereby or thereby shall have been
consummated) and the invoices for which have been presented to the Company prior
to the Initial Purchase.
SECTION 4.02. CONDITIONS TO EACH PURCHASE . Your agreement to
purchase Notes requested to be purchased on any Purchase Date (including the
Purchase Date of the Initial Purchase) is subject to the fulfillment to your
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of each Purchase.
(b) NO DEFAULT. After giving effect to the issue and sale of the
Notes on any Purchase Date, no Default or Event of Default shall have occurred
and be continuing.
(c) NEEDS AND USES. (i) The Company is unable to meet its monthly
cash requirements to fund its operating expenses and working capital after using
all but $5,000,000 of unrestricted cash available to the Company,
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(ii) the Company shall have provided you with a schedule setting
forth the actual uses and expenditures from the previous Purchase and the
proposed uses and expenditures of the proceeds of the Purchase (a
"PROPOSED EXPENDITURES SCHEDULE") consistent with the requirements of this
Section 4.02(c) and in form reasonably satisfactory to you, and
(iii) the actual uses and expenditures from the previous Purchase
have been used in the manner specified by the Company in the schedule
accompanying the Borrowing Notice relating to such Purchase.
(d) PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the Purchase
Date your Purchase shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, (ii)
not violate any applicable law or regulation (including
Regulations T, U or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate
certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so
permitted.
(e) OFFICERS' CERTIFICATE. The Company shall have delivered to you
an Officer's Certificate, dated as of the Purchase Date,
certifying:
(i) that each of the conditions specified in Sections 4.02(a)-(d)
above has been fulfilled,
(ii) as to whether such Purchase violates, or is expected after duly
diligent investigation by counsel of the Company to violate, any provision
of any publicly filed Senior Intermedia Note Indenture, Senior
Subordinated Intermedia Note Indenture or certificate of designation
relating to any outstanding shares of preferred stock of Intermedia
(collectively, the "INTERMEDIA DEBT DOCUMENTS"), and
(iii) either:
(A) as to which such provision or provisions such Purchase
either violates, or is expected after duly diligent investigation by
counsel of the Company to violate, and, in each case, as to what
amount, or
(B) as to which provision or provisions of the Intermedia Debt
Documents provide satisfaction of any other provisions therein that
would otherwise restrict such Purchase, and, in each case, as to
what amount;
PROVIDED, HOWEVER, that any such purported violation or restriction in the
Intermedia Debt Documents shall not relieve you of your obligation under
this Agreement to purchase, or cause to be purchased, Notes requested to
be purchased on any Purchase Date.
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(f) CHANGES IN CORPORATE STRUCTURE. Unless permitted under the
terms of this Agreement and set forth in a writing delivered to you on or prior
to the Purchase Date, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in SCHEDULE 5.05.
(g) COMPANY BUSINESS PLAN. (i) With respect to any Purchase Date
prior to January 1, 2002, the 2001 Business Plan, as most recently provided by
the Company to you in accordance with Section XVIII hereof, shall not have been
rescinded or materially revised, amended or updated between the time of such
most recent notice and such Purchase Date.
(ii) With respect to the first Purchase Date after December 1, 2001,
the Company shall have delivered to you a copy of the proposed 2002
Business Plan in a form that reflects no less a level of detail than does
the 2001 Business Plan.
(iii) With respect to any Purchase Date on or after January 1, 2002,
the 2002 Business Plan, as most recently provided by the Company to you in
accordance with Section XVIII hereof shall have been approved by your
Board of Directors and shall not have been rescinded or materially
revised, amended or updated between the time of such most recent notice
and such Purchase Date.
(h) FEES. The Company shall have paid you or your counsel all its
fees, charges and disbursements that are in connection with the preparation of
this Agreement or any amendments, modifications or waivers of the provisions
thereof (whether or not the transactions contemplated hereby or thereby shall
have been consummated) and the invoices for which have been presented to the
Company prior to the Purchase Date.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to you that:
SECTION 5.01. ORGANIZATION; POWER AND AUTHORITY . The Company and
each of its Subsidiaries are duly organized, validly existing and in good
standing under the laws of their jurisdiction of incorporation or organization,
as applicable (such jurisdictions being identified on SCHEDULE 5.01, as
supplemented and modified in writing from time to time to reflect any changes to
such Schedule as a result of transactions permitted by this Agreement); are duly
qualified as foreign corporations or foreign entities, as applicable; and are in
good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company and each of its
Subsidiaries possess all Authorizations, licenses and grants necessary or
required in the conduct of their respective businesses, except where the failure
to have such Authorizations, licenses or grants would not reasonably be expected
to result in a Material Adverse Effect; and the same which are described on
SCHEDULE 5.01 hereto are valid, binding, enforceable, and subsisting without any
material defaults thereunder or enforceable adverse limitations thereon and are
not subject to any proceedings or claims opposing the issuance, development, or
use thereof or contesting the validity thereof. No Authorization, development,
or formal exemptions from, nor any filing, declaration, or registration with,
any Governmental Authority (federal, state, or local), or non-governmental
entity, under the terms of contracts or otherwise, is required by reason of or
in connection with the execution and performance of this Agreement or the Notes
by the Company, except where the failure to have such Authorizations, licenses
or grants would not reasonably be expected to result in a Material Adverse
Effect. The Company has the corporate power and authority to own or hold under
lease the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement and the Notes and to perform the provisions hereof.
SECTION 5.02. AUTHORIZATION, ETC. (a) This Agreement and the Notes
have been duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) Each of the 2001 Business Plan and the 2002 Business Plan (when
applicable), as most recently approved by your Board of Directors, has been
neither amended, revised, rescinded nor modified by the Company's Board of
Directors (unless the Company has notified you to that effect pursuant to
Section 9.07), and such Approved Business Plans (as so amended, revised or
modified) accurately represent the Company's
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best estimate as of the date thereof of the funding it needs for its operations
for the periods (1) from July 1, 2001 through December 31, 2001, and (2) from
January 1, 2002, through December 31, 2002, respectively.
SECTION 5.03. DISCLOSURE. Except as disclosed in SCHEDULE 5.03, this
Agreement, the documents, certificates or other writings delivered to you by or
on behalf of the Company in connection with the transactions contemplated hereby
and the financial statements listed in SCHEDULE 5.05, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in SCHEDULE 5.03,
or in one of the documents, certificates or other writings identified therein,
or in the financial statements listed in SCHEDULE 5.05, since December 31, 2000,
there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any of its Subsidiaries except changes
that individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the other documents, certificates and other writings
delivered to you by or on behalf of the Company specifically for use in
connection with the transactions contemplated hereby.
SECTION 5.04. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
AFFILIATES. (a) SCHEDULE 5.04 contains (except as noted therein) complete and
correct lists, as of the date hereof, of (i) the Company's Subsidiaries,
showing, as to each Subsidiary, the correct name thereof, the jurisdiction of
its organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary, (ii) the Company's Affiliates, other than Subsidiaries, and
(iii) the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in SCHEDULE 5.04 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and, as of the date hereof, are owned by the Company or another
Subsidiary free and clear of any Lien (except as otherwise disclosed in SCHEDULE
5.04).
(c) Each Subsidiary identified in SCHEDULE 5.04 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
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(d) No Subsidiary of the Company is a party to, or otherwise subject
to, any legal restriction or any agreement (other than this Agreement, the
agreements listed on SCHEDULE 5.04 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.
SECTION 5.05. FINANCIAL STATEMENTS. The Company has delivered to you
copies of the financial statements of the Company and its Subsidiaries listed on
SCHEDULE 5.05. All of such financial statements (including in each case the
related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
SECTION 5.06. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any of its Subsidiaries under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter or by-laws,
or any other agreement or instrument to which the Company or any of its
Subsidiaries is bound or by which the Company or any of its Subsidiaries or any
of their respective properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any, court, arbitrator or Governmental Authority
applicable to the Company or any of its Subsidiaries or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any of its Subsidiaries, in each case,
except for such contraventions, breaches, defaults, conflicts and violations
that could not have a Material Adverse Effect.
SECTION 5.07. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND
ORDERS. (a) Except as disclosed in SCHEDULE 5.07, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any property of the Company
or any of its Subsidiaries in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is in default
under any term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment, decree or ruling of any court, arbitrator
or Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including Environmental Laws) of any Governmental Authority,
which default or violation, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
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SECTION 5.08. TAXES. All Tax returns of the Company and each of its
Subsidiaries required to be filed have been filed (or extensions have been
granted) prior to delinquency, except for any such returns for which the failure
to so file could not have a Material Adverse Effect, and all Taxes imposed upon
the Company and each of its Subsidiaries that are due and payable have been paid
prior to delinquency, OTHER THAN Taxes for which the criteria for Permitted
Liens have been satisfied or for which nonpayment thereof could not reasonably
be expected to have a Material Adverse Effect.
SECTION 5.09. TITLE TO PROPERTY; LEASES. The Company and its
Subsidiaries have good and sufficient title to their respective properties that
individually or in the aggregate are Material, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.05
or purported to have been acquired by the Company or any of its Subsidiaries
after said date (except as sold or otherwise disposed of in the ordinary course
of business), in each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.
SECTION 5.10. LICENSES, PERMITS, ETC. Except as disclosed in
SCHEDULE 5.10,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service xxxx, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service xxxx,
trademark, trade name or other right owned or used by the Company or any
of its Subsidiaries.
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SECTION 5.11. COMPLIANCE WITH ERISA. (a) No Employee Plan has
incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA
and Section 412 of the Code), (b) neither the Company nor any of its
Subsidiaries or any ERISA Affiliate has incurred material liability to the PBGC
or with respect to an Employee Plan, which liability is currently due and
remains unpaid under Title IV of ERISA, (c) each Employee Plan subject to ERISA
and the Code complies in all material respects, both in form and operation, with
ERISA and the Code, (d) no ERISA Event has occurred or is reasonably expected to
occur with respect to any Employee Plan or Multiemployer Plan that, individually
or collectively with all other ERISA Events then existing, could reasonably be
expected to have a Material Adverse Effect, (e) the present value of all accrued
benefits under each Employee Plan (based on actuarial assumptions used for
funding purposes in the most recent actuarial valuation prepared by the Employee
Plan's actuary with respect to such Employee Plan) did not, as of the last
annual actuarial valuation date for such Employee Plan, exceed the then-current
value of the assets of such Employee Plan, and (f) the present value of accrued
benefits under each Employee Plan (based on PBGC actuarial assumptions used for
plan termination), on any date of determination, does not exceed the value of
the assets of such Employee Plan.
SECTION 5.12. PRIVATE OFFERING BY THE COMPANY. Neither the Company
nor anyone acting on its behalf has offered the Notes or any similar securities
for sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
SECTION 5.13. USE OF PROCEEDS; MARGIN REGULATIONS. No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
or for the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board or to involve any broker or dealer in a violation of Regulation T of said
Board. Margin stock does not constitute more than 5 % of the value of the
consolidated assets of the Company and its Subsidiaries, and the Company does
not have any 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
said Regulation U. All proceeds from the sale of the Notes by the Company will
be used by the Company to fund its operations and capital-expenditure
requirements in a manner consistent with the Approved Business Plans, and such
proceeds may also be used to fund interest payments on the Notes as well as to
refinance any outstanding intercompany borrowings from Intermedia.
SECTION 5.14. EXISTING INDEBTEDNESS; FUTURE LIENS. (a) Except as
described therein, SCHEDULE 5.14 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of the Closing
Date, since which there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Indebtedness of
the Company or its Subsidiaries, except
14
pursuant to incurrences of Indebtedness permitted by Section 10.03 and payments
of Indebtedness made in accordance with the terms of the applicable agreements
evidencing such Indebtedness. Neither the Company nor any of its Subsidiaries is
in default and no waiver of default is currently in effect, in the payment of
any principal 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 that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Indebtedness to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.
(b) Except as disclosed in SCHEDULE 5.14, 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, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.06.
SECTION 5.15. STATUS UNDER CERTAIN STATUTES. Neither the Company nor
any of its Subsidiaries is subject to regulation under the Investment Company
Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, or any other law (other than Regulations T, U, and X of the Board of
Governors of the Federal Reserve System and the requirements of any PUC or
public service commission) that regulates the incurrence of Indebtedness.
SECTION 5.16. ENVIRONMENTAL MATTERS. Neither the Company nor any of
its Subsidiaries (a) knows of any environmental condition or circumstance, such
as the presence or Release of any Hazardous Material, on any property presently
or previously owned by the Company or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect, (b) knows of any
violation by the Company or any of its Subsidiaries of any Environmental Law,
except for such violations that could not reasonably be expected to have a
Material Adverse Effect, or (c) knows that the Company or any of its
Subsidiaries is under any obligation to remedy any violation of any
Environmental Law, except for such obligations that could not reasonably be
expected to have a Material Adverse Effect; PROVIDED that the Company and each
of its Subsidiaries (x) to the best of its knowledge, has in full force and
effect all environmental permits, licenses, and approvals required to conduct
its operations and is operating in substantial compliance thereunder, and (y)
has taken prudent steps to determine that its properties and operations are not
in violation of any Environmental Law.
15
SECTION 5.17. INSURANCE. The Company and each of its Subsidiaries
maintains, with financially sound, responsible, and reputable insurance
companies or associations, insurance concerning its properties and businesses
against such casualties and contingencies and of such types and in such amounts
(and with co-insurance and deductibles) as is customary in the case of same or
similar businesses.
SECTION 5.18. INTELLECTUAL PROPERTY. The Company and each of its
Subsidiaries owns or has sufficient and legally enforceable rights to use all
material licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, and trade names necessary to continue to
conduct its businesses as heretofore conducted by it, now conducted by it, and
now proposed to be conducted by it. The Company and each of its Subsidiaries is
conducting its business without infringement or claim of infringement of any
license, patent, copyright, service xxxx, trademark, trade name, trade secret,
or other intellectual property right of others, other than any such
infringements or claims that, if successfully asserted against or determined
adversely to the Company or any of its Subsidiaries, could not, individually or
collectively, reasonably be expected to constitute a Material Adverse Event.
ARTICLE VI
REPRESENTATION OF THE PURCHASER
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds and not with a view to the distribution thereof;
PROVIDED that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
ARTICLE VII
INFORMATION AS TO COMPANY
SECTION 7.01. FINANCIAL AND BUSINESS INFORMATION. The Company shall
deliver to you:
(a) MANAGEMENT REPORTS. Within 30 days after the end of each
calendar month, in form reasonably satisfactory to you:
(i) reasonably detailed actual vs. budget reports covering
operating results and capital expenditures for the period, each such
report providing explanations for any material variances to budget,
16
(ii) reasonably detailed updates to the Company's monthly 2001
Business Plan and 2002 Business Plan, each such update reflecting actual
results and projected revisions to the Approved Business Plans, and
(iii) a reasonably detailed cash report reflecting actual cash uses
for said month (including uses of cash from any Purchase) and forecasted
cash needs for the next two months (including forecasted needs for
Purchases);
(b) QUARTERLY STATEMENTS. Within 45 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of:
(i) a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Subsidiaries, for such
quarter and (in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments; PROVIDED that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.01(b);
(c) ANNUAL STATEMENTS. Within 90 days after the end of each fiscal
year of the Company, duplicate copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Subsidiaries for such year,
17
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by:
(A) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the financial position of the companies 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 has been
made in accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default
unless such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit);
PROVIDED that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor
and filed with the Securities and Exchange Commission, together with the
accountant's certificate described in clause (B) above, shall be deemed to
satisfy the requirements of this Section 7.01(c);
(d) SEC AND OTHER REPORTS. Promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by the Company or any of its Subsidiaries to public securities holders
generally, and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by the Company or any of its
Subsidiaries with the Securities and Exchange Commission and of all press
releases and other statements made available generally by the Company or any of
its Subsidiaries to the public concerning developments that are Material;
(e) NOTICE OF DEFAULT OR EVENT OF DEFAULT. Promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Article XI(f), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;
18
(f) ERISA MATTERS. Promptly, and in any event within five days after
a Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on
the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Multiemployer Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, or in the imposition of any Lien
on any of the rights, properties or assets of the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to have a
Material Adverse Effect;
(g) NOTICES FROM GOVERNMENTAL AUTHORITY. Promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any of
its Subsidiaries from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(h) REQUESTED INFORMATION. With reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by you.
SECTION 7.02. OFFICER'S CERTIFICATE. Each set of financial
statements delivered to a holder of Notes pursuant to Section 7.01(b) or Section
7.01(c) hereof shall be accompanied by a certificate of a Senior Financial
Officer setting forth a statement that such officer has reviewed the relevant
terms hereof and has made, or caused to be made, under his or her supervision, a
review of the transactions and conditions of the Company and its Subsidiaries
from the beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition or
event existed or exists (including any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any Environmental
Law), specifying the nature and period of
19
existence thereof and what action the Company shall have taken or proposes to
take with respect thereto.
SECTION 7.03. INSPECTION. The Company shall permit you and your
representatives:
(a) NO DEFAULT. If no Default or Event of Default then exists, at
your expense and upon reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the Company's officers, and
(with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and
(b) DEFAULT. If a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
ARTICLE VIII
PREPAYMENT OF THE NOTES
SECTION 8.01. OPTIONAL PREPAYMENTS. The Company may, at its option,
upon notice as provided below, prepay at any time all, or from time to time any
part of, the Notes, at 100% of the principal amount so prepaid, plus accrued and
unpaid interest. The minimum principal amount of each such prepayment shall be
equal to $2,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if
the then aggregate principal amount of Notes outstanding is less than
$3,000,000, such lesser amount) . The Company will give all holders of Notes
written notice of each optional prepayment under this Section 8.01 not less than
5 Business Days and not more than 10 Business Days prior to the date fixed for
such prepayment. Each such notice shall specify such date, the aggregate
principal amount of the Notes to be prepaid on such date, the principal amount
of each Note to be prepaid, the interest to be paid on the prepayment date with
respect to such principal amount being prepaid and whether such optional
prepayment is a permanent prepayment. Any amounts prepaid that are not so
specified to be permanent prepayments may be repurchased in accordance with the
procedures for purchasing set forth in Section 2.02. If any prepayment is made
on a date other than the last day of an Interest Period so that a payment is due
pursuant to Section 2.06 hereto, or if any other amount is due pursuant to this
Agreement, you will notify the Company and the Company will pay you such amount
on such date.
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SECTION 8.02. MANDATORY PREPAYMENTS. The Company shall, on the date
of receipt of any Net Proceeds by the Company or any of its Subsidiaries from
the sale, lease, transfer or other disposition of any assets ("ASSET Sale") of
the Company or any of its Subsidiaries, prepay any amounts outstanding under
this Agreement or the Notes in an amount equal to the amount of such Net
Proceeds. Notwithstanding the foregoing sentence, the Company shall not be
required to make any prepayments pursuant to this Section 8.02 if the Company or
any of its Subsidiaries shall apply any of the Net Proceeds it received from
such Asset Sale for reinvestment in its business within 180 days after receipt
thereof by the Company or any of its Subsidiaries, PROVIDED that the Company
shall have notified you of its intent to so reinvest such Net Proceeds.
SECTION 8.03. MATURITY; SURRENDER, ETC. In the case of each
prepayment of Notes pursuant to this Article VIII, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued to such
date, payments due in accordance with Section 2.06 hereto and any other costs of
which the Company has been notified. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
SECTION 8.04. PURCHASE OF NOTES. The Company will not, and will not
permit any Affiliate other than you or Intermedia to, purchase, redeem, prepay
or otherwise acquire, directly or indirectly, any of the outstanding Notes
except upon the payment or prepayment of the Notes in accordance with the terms
of this Agreement and the Notes. The Company will promptly cancel all Notes
acquired by it or any Affiliate other than you or Intermedia pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement, and no Notes may be issued in substitution or exchange for any such
Notes.
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ARTICLE IX
AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes are
outstanding:
SECTION 9.01. USE OF FREE CASH, ASSETS AND PROCEEDS. The Company
will, to the extent it can with commercial reasonableness do so, use (a) its
free cash (i.e., from sources other than the Notes) and assets to pay for any of
its expenses that do not qualify as Vendor Indebtedness and (b) the proceeds of
any Purchase in such a manner as to qualify such proceeds as Vendor
Indebtedness.
SECTION 9.02. COMPLIANCE WITH LAW. The Company will and will cause
each of its Subsidiaries to comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including Environmental
Laws, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations 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 non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 9.03. INSURANCE. The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
SECTION 9.04. MAINTENANCE OF PROPERTIES. The Company will and will
cause each of its Subsidiaries to maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times; PROVIDED that
this Section shall not prevent the Company or any Subsidiary from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 9.05. PAYMENT OF TAXES AND CLAIMS. The Company will and will
cause each of its Subsidiaries to file all tax returns required to be filed in
any jurisdiction and to pay and discharge (a) all taxes shown to be due and
payable on such returns and all other Material taxes, assessments, governmental
charges, or levies imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent and (b) all claims for which sums have
become due and payable that have or might become a Lien
22
on properties or assets of the Company or any Subsidiary; PROVIDED that neither
the Company nor any Subsidiary need pay any such tax or assessment or claims if
the amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary.
SECTION 9.06. CORPORATE EXISTENCE, ETC. The Company will at all
times preserve and keep in full force and effect its corporate existence.
Subject to Section 10.04, the Company will at all times preserve and keep in
full force and effect the corporate, partnership or other existence of each of
its Subsidiaries (unless merged into the Company or a Subsidiary) and all rights
and franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate, partnership or other existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 9.07. PROVISION OF BUSINESS PLANS. (a) The Company will
deliver to you, no later than December 1, 2001, a 2002 Business Plan in at least
the same level of detail as that contained in the 2001 Business Plan attached
hereto as Exhibit III. The Company shall provide such information with respect
to the updated 2002 Business Plan as you shall reasonably request. Such 2002
Business Plan shall be subject to the approval of your Board of Directors and,
once approved, shall become the 2002 Business Plan for purposes of this
Agreement.
(b) If any Approved Business Plan has been rescinded or materially
amended, revised or updated after either Board of Directors has approved such
plan, the Company will deliver a written notice (each such notice, a
"BUSINESS-PLAN-REVISION NOTICE") to you of such change no later than one
Business Day after the Company's Board of Directors has approved such change,
and the Company will submit a new, amended, revised or updated business plan, as
the case may be, to your Board of Directors no later than five Business Days
after having delivered the Business-Plan-Revision Notice.
SECTION 9.08. ALTERNATIVE FINANCING. The Company will use its best
efforts to obtain a Vendor Indebtedness facility in an aggregate principal
amount of at least $150,000,000 no later than September 1, 2001. The Net
Proceeds of any such facility shall be used to prepay Notes pursuant to Section
8.02 hereto.
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ARTICLE X
NEGATIVE COVENANTS
The Company covenants that so long as any of the Notes are
outstanding:
SECTION 10.01. RESTRICTED PAYMENTS. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any distribution on account
of any Equity Interests of the Company or any of its Subsidiaries other
than dividends or distributions payable (A) in Equity Interests of the
Company that are not Disqualified Stock or (B) to you, Intermedia, the
Company or any Subsidiary of the Company;
(b) purchase, redeem, defease, retire or otherwise acquire for value
("RETIRE" and correlatively, a "RETIREMENT") any Equity Interests of the
Company or any of its Subsidiaries or other Affiliate of the Company
(other than any such Equity Interests owned by Intermedia, the Company or
any of its Subsidiaries);
(c) Retire for value any Indebtedness of (i) the Company that is
subordinate in right of payment to the Notes or (ii) any Subsidiary of the
Company, except, with respect to clause (i) or (ii) above, at final
maturity or in accordance with the mandatory redemption or repayment
provisions set forth in the original documentation governing such
Indebtedness; or
(d) make any Restricted Investment (all such payments and other
actions set forth in clauses (a) through (c) above being collectively
referred to as "RESTRICTED PAYMENTS").
SECTION 10.02. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause to become
effective any consensual encumbrance or restriction on the ability of any
Subsidiary to:
(a) pay dividends or make any other distributions to the Company or
any of its Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness owed to the Company or any of its Subsidiaries;
(b) make loans or advances to the Company or any of its
Subsidiaries; or
24
(c) transfer any of its properties or assets to the Company or any
of its Subsidiaries;
EXCEPT for such encumbrances or restrictions existing as of the Closing Date or
under or by reason of:
(i) Existing Indebtedness;
(ii) applicable law;
(iii) any instrument governing Acquired Debt as in effect at the
time of acquisition (except to the extent such Indebtedness was incurred
in connection with, or in contemplation of, such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired;
(iv) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices;
(v) Indebtedness in respect of a Permitted Refinancing; PROVIDED
that the restrictions contained in the agreements governing such
Refinancing Indebtedness are not materially more restrictive than those
contained in the agreements governing the Indebtedness being refinanced;
(vi) with respect to clause (iii) above, purchase money obligations
for property acquired in the ordinary course of business, Vendor
Indebtedness incurred in connection with the purchase or lease of
Telecommunications-Related Assets or performance bonds or similar security
for performance which liens securing such obligations do not cover any
asset other than the asset acquired or, in the case of performance bonds
or similar security for performance, the assets associated with the
Company's performance;
(vii) this Agreement and the Notes; or
(viii) in the case of clauses (i), (iii), (v) and (vii) above, any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; PROVIDED that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are not materially more
restrictive with respect to such dividend and other payment restrictions
than those contained in such instruments as in effect on the date of their
incurrence or, if later, the Closing Date.
SECTION 10.03. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED STOCK. The Company and its Subsidiaries shall not, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable for the payment of (collectively, "incur" and,
correlatively, "incurred" and "incurrence") any Indebtedness (including Acquired
Debt) or issue any Disqualified Stock.
25
(b) The foregoing limitation in Section 10.03(a) shall not apply to
(with each exception to be given independent effect):
(i) the incurrence by the Company or any of its Subsidiaries of
Vendor Indebtedness; PROVIDED that the aggregate amount of such Vendor
Indebtedness incurred does not exceed 80% of the total cost of the
Telecommunications-Related Assets financed therewith (or 100% of the total
cost of the Telecommunications-Related Assets financed therewith if such
Vendor Indebtedness was extended for the purchase of tangible physical
assets and was so financed by the vendor thereof or an affiliate of such
vendor);
(ii) the incurrence by the Company or any of its Subsidiaries of the
Existing Series A Preferred Stock and all other Indebtedness of the
Company and its Subsidiaries in existence on the Closing Date;
(iii) the incurrence (a "PERMITTED REFINANCING") by the Company or
any of its Subsidiaries of Indebtedness issued in exchange for, or the
proceeds of which are used to refinance, replace, refund or defease
("REFINANCE" and, correlatively, "REFINANCED" and "REFINANCING")
Indebtedness, other than Indebtedness incurred pursuant to clause (i)
above, but only to the extent that:
(A) the net proceeds of such Refinancing Indebtedness do not exceed
the principal amount of and premium, if any, and accrued interest on the
Indebtedness so Refinanced (or if such Indebtedness was issued at an
original issue discount, the original issue price plus amortization of the
original issue discount at the time of the repayment of such Indebtedness)
plus the fees, expenses and costs of such Refinancing and reasonable
prepayment premiums, if any, in connection therewith;
(B) the Refinancing Indebtedness has a final maturity no earlier
than, and a Weighted Average Life to Maturity equal to or greater than,
the final maturity and Weighted Average Life to Maturity of the
Indebtedness being Refinanced;
(C) if the Indebtedness being Refinanced is subordinated in right of
payment to the Notes, the Refinancing Indebtedness is subordinated; and
(D) if the Indebtedness being Refinanced is secured, the scope of
any Lien is not expanded;
(iv) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries;
(v) unsecured Indebtedness of the Company or any of its
Subsidiaries; PROVIDED that such Indebtedness (A) has a maturity date
after the later to occur of (x) the Maturity Date or (y) December 31,
2006, (B) is permitted to be incurred pursuant to the terms of the
Intermedia Debt Documents and (C) reduces the commitment to purchase Notes
hereunder by the amount of such Indebtedness;
26
(vi) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate or foreign currency risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Agreement to be
outstanding; and
(vii) the incurrence by the Company of additional Indebtedness under
this Agreement.
For the purpose of determining compliance with this Section 10.03,
in the event that an item of Indebtedness or Disqualified Stock meets the
criteria of more than one of the categories described in clauses (i) through
(vii) above, the Company shall, in its sole discretion, classify such item in
any manner that complies with this Section and such item shall be treated as
having been incurred pursuant to only one of such clauses. Accrual of interest
or dividends, the accretion of accreted value or liquidation preference and the
payment of interest or dividends in the form of additional Indebtedness, Common
Stock or Preferred Stock shall not be deemed to be an incurrence of Indebtedness
or issuance of Disqualified Stock for purposes of this Section.
SECTION 10.04. ASSET SALES. The Company shall not, and shall not
permit any of its Subsidiaries to, whether in a single transaction or a series
of related transactions occurring within any twelve-month period:
(a) sell, lease, convey, dispose or otherwise transfer any assets
(including by way of a Sale and Leaseback Transaction) other than sales,
leases, conveyances, dispositions or other transfers (i) in the ordinary
course of business, (ii) to the Company by any of its Subsidiaries or from
the Company to any of its Subsidiaries or (iii) that constitute a
Restricted Payment, Investment or dividend or distribution permitted under
Section 10.01 hereof or
(b) issue or sell Equity Interests in any of its Subsidiaries (other
than an issuance or sale of Equity Interests of any such Subsidiary to the
Company or any of its Subsidiaries).
SECTION 10.05. TRANSACTIONS WITH AFFILIATES. The Company shall not,
and shall not permit any of its Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of their respective properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate other than you or any of your Affiliates (each of the foregoing, an
"AFFILIATE TRANSACTION") UNLESS:
(a) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person,
(b) such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors of the Company and
27
(c) the Company delivers to you, with respect to any Affiliate
Transaction involving aggregate payments in excess of $1.0 million, a
resolution of a committee of independent directors of the Company set
forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clauses (a) and (b) above;
PROVIDED that:
(i) transactions pursuant to any employment, stock option or stock
purchase agreement entered into by the Company or any of its Subsidiaries,
or any grant of stock, in the ordinary course of business that are
approved by the Board of Directors of the Company,
(ii) transactions between or among the Company and its Subsidiaries,
and
(iii) transactions permitted by Section 10.01 hereof
shall not be deemed Affiliate Transactions.
SECTION 10.06. LIENS. The Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom, or assign
or convey any right to receive income therefrom, except for Permitted Liens.
SECTION 10.07. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS. The
Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into, assume, Guarantee or otherwise become liable with
respect to any Sale and Leaseback Transaction; PROVIDED that the Company or any
of its Subsidiaries may enter into any such transaction if:
(a) the Company or such Subsidiary would be permitted under Sections
10.03 and 10.06 hereof to incur secured Indebtedness in an amount equal to
the Attributable Debt with respect to such transaction and
(b) the consideration received by the Company or such Subsidiary
from such transaction is at least equal to the Fair Market Value of the
property being transferred.
SECTION 10.08. CORPORATE EXISTENCE. The Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect:
(a) its existence as a corporation, and the corporate, partnership
or other existence of any 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
28
(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 the Board of Directors of the Company 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 that the
loss thereof is not adverse in any material respect to you.
SECTION 10.09. BUSINESS ACTIVITIES. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, engage in any
business other than the Telecommunications Business.
SECTION 10.10. EMPLOYEE BENEFIT PLANS. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, engage in
any non-exempt "prohibited transaction" with respect to any Employee Plan or
Multiemployer Plan (as defined in Section 406 of ERISA or Section 4975 of the
Code), and neither the Companies nor their respective ERISA Affiliates shall
permit any of the events or circumstances described in Section 5.11 to exist or
occur.
SECTION 10.11. ENVIRONMENTAL LAWS. The Company shall, and shall
cause each of its Subsidiaries to:
(a) conduct its business so as to comply with all applicable
Environmental Laws and shall promptly take corrective action to remedy any
non-compliance with any Environmental Law and
(b) promptly investigate and remediate any known Release or
threatened Release of any Hazardous Material on any property owned by the
Company or any of its Subsidiaries or at any facility operated by the
Company or any of its Subsidiaries to the extent and degree necessary to
comply with Law and to assure that any Release or threatened Release does
not result in a substantial endangerment to human health or the
environment.
ARTICLE XI
EVENTS OF DEFAULT
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal on any Note
when the same becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise; or
29
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable;
or
(c) the Company defaults in the performance of or compliance with
any term contained in Sections 10.01, 10.03 or 10.04; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Article XI) and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company receiving written notice of
such default from you (any such written notice to be identified as a
"notice of default" and to refer specifically to this paragraph (d) of
Article XI); or
(e) any representation or warranty made in writing by or on behalf
of the Company or by any officer of the Company in this Agreement or in
any writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any material respect on
the date as of which made; or
(f) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the 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 Closing Date, which default results in the acceleration
(which acceleration has not been rescinded) of such Indebtedness prior to
its express maturity and the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness the
maturity of which has been so accelerated, aggregates $2,000,000 or more;
or
(g) the Company or any of its Subsidiaries (i) is generally not
paying, or admits in writing its inability to pay, its debts (other than
debts that are subject to a bona fide dispute) as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition
in bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes a general assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated or (vi) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency
30
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and
not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $2,000,000 (other than any judgment as to which a
reputable insurance company has accepted full liability in writing) are
rendered against one or more of the Company and its Subsidiaries and which
judgments are not, within 30 days after entry thereof, bonded, discharged
or stayed pending appeal, or are not discharged within 30 days after the
expiration of such stay; or
(j) any event or condition shall occur or exist with respect to any
activity or substance regulated under any Environmental Law, and, as a
result of such event or condition, the Company or any of its Subsidiaries
shall have incurred, or in your opinion be reasonably likely to incur,
when aggregated with any environmental liability for the Company and each
of its Subsidiaries, a liability in excess of $2,000,000 liability during
any consecutive 12-month period; or
(k) (i) The Company or any of its Subsidiaries or ERISA Affiliates
shall fail to pay when due an amount or amounts for which it is liable
under Title IV of ERISA, which unpaid amounts exceed $2,000,000 in the
aggregate, or (ii) an ERISA Event shall occur or exist with respect to any
Employee Plan or Multiemployer Plan, and, as a result of such ERISA Event
and all other ERISA Events then existing, the aggregate liabilities
incurred by the Company or any of its Subsidiaries and the ERISA
Affiliates with respect to any Employee Plan, Multiemployer Plan, or the
PBGC (or any combination thereof) shall exceed $2,000,000.
ARTICLE XII
REMEDIES ON DEFAULT, ETC.
SECTION 12.01. ACCELERATION. If an Event of Default with respect to
the Company described in paragraph (g) or (h) of Article XI (other than an Event
of Default described in clause (i) of paragraph (g) or described in clause (vi)
of paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
If any other Event of Default has occurred and is continuing, the
holders of at least 25% of the principal amount of all Notes outstanding may at
any time, by notice to the Company, declare all the Notes then outstanding to be
immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.01,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus all accrued and unpaid
interest thereon, shall all be immediately due and payable, in each and every
case without presentment, demand, protest or further notice, all of which are
hereby waived.
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SECTION 12.02. OTHER REMEDIES. If any Default or Event of Default
has occurred and is continuing, and irrespective of whether any Notes have
become or have been declared immediately due and payable under Section 12.01,
any holder of Notes may proceed to protect and enforce the rights of such holder
by an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note, or
for an injunction against a violation of any of the terms hereof or thereof, or
in aid of the exercise of any power granted hereby or thereby or by law or
otherwise.
SECTION 12.03. RESCISSION. At any time after any Notes have been
declared due and payable pursuant to clause (b) of Section 12.01, the holders of
at least 25% of all outstanding Notes may, by written notice to the Company,
rescind and annul any such declaration and its consequences if (a) the Company
has paid, at the Default Rate, all overdue interest on the Notes and all
principal of any Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue principal and (to
the extent permitted by applicable law) any overdue interest in respect of the
Notes, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Article XVII and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.03 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
SECTION 12.04. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No
course of dealing and no delay on the part of any holder of Notes in exercising
any right, power or remedy shall operate as a waiver thereof or otherwise
prejudice the rights, powers or remedies of any holder of Notes. No right, power
or remedy conferred upon any holder of Notes by this Agreement or by any Note
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Article XV, the
Company will pay each holder of Notes on demand such further amount as shall be
sufficient to cover all costs and expenses incurred in any enforcement or
collection under this Article XII, including reasonable attorneys' fees,
expenses and disbursements.
32
ARTICLE XIII
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
SECTION 13.01. REGISTRATION OF NOTES. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor, promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
SECTION 13.02. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or his attorney duly authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof and an opinion of counsel reasonably acceptable to the
Company as to the exemption from registration under the Securities Act of such
transfer), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) in exchange therefor in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of EXHIBIT I. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000; PROVIDED that,
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $100,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
Article VI.
SECTION 13.03. REPLACEMENT OF NOTES. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note is, or
is a nominee for, you or another holder of a Note with a minimum net worth of at
least $100,000,000, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
33
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company shall execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
The Company may charge for its expenses in replacing a Note.
ARTICLE XIV
PAYMENTS ON NOTES
So long as you or your nominee shall be the holder of any Note, the
Company will pay all sums becoming due on such Note for principal and interest
to your account with the Bank of America in accordance with the following
information:
Bank of America
San Francisco, CA
ABA: *********
Account No.: ***** - *****
Account Name: WorldCom, Inc.
RE: pmt under Digex Note Purchase Agreement
or by such other method or at such other address as you 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.
With respect to each other holder of Notes, the Company shall pay all sums
becoming due on such Notes for principal and interest to the address of such
holder as set forth in the records of the Company, without the presentation or
surrender of such Note or the making of any notation thereon. Notwithstanding
the foregoing, upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, the holder
of such Note 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 any holder or any holder's
nominee, such holder 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 13.02. The Company will afford the benefits of this Article
XIV to any Institutional Investor that is the direct or indirect transferee of
any Note purchased by you under this Agreement and that has made the same
agreement relating to such Note as you have made in this Article XIV.
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ARTICLE XV
EXPENSES, ETC.
SECTION 15.01. TRANSACTION EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you in connection with such
transactions and in connection with any amendments, consents or waivers under or
in respect of this Agreement or the Notes (whether or not such amendment,
consent or waiver becomes effective), including: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or the Notes, or by reason of being a holder of
any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
of its Subsidiaries or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will hold you harmless from, all claims in respect of any fees, costs or
expenses if any, of brokers and finders (other than those retained by you).
SECTION 15.02. SURVIVAL. The obligations of the Company under this
Article XV will survive the payment or transfer of any Note; the enforcement,
amendment or waiver of any provision of this Agreement or the Notes; and the
termination of this Agreement.
ARTICLE XVI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.
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ARTICLE XVII
AMENDMENT AND WAIVER
SECTION 17.01. REQUIREMENTS. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the holders of a majority of the principal amount of
Notes outstanding. Notwithstanding the foregoing and in order to allow you to
resell Notes to Affiliates or third parties, should you desire to do so at some
time or from time to time on or after December 31, 2002, the Company agrees to
supplement and amend this Agreement, and to waive the observance of any term
hereof or of the Notes (either retroactively or prospectively), as may be
reasonably necessary to effect any such resale, as you reasonably request, in
accordance with then-prevailing market practice.
SECTION 17.02. SOLICITATION OF HOLDERS OF NOTES. The Company will
provide each holder of Notes with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such holder to make an
informed and considered decision with respect to any proposed amendment, consent
or waiver in respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of each amendment,
consent or waiver effected pursuant to the provisions of this Article XVII to
each holder of Notes promptly following the date on which it is executed.
SECTION 17.03. BINDING EFFECT, ETC. Any amendment or waiver
consented to as provided in this Article XVII is binding upon each holder of
Notes and upon each future holder of any Note and upon the Company without
regard to whether such Note has been marked to indicate such amendment or
waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and any holder of Notes nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any of such holder's rights under
this Agreement or the Notes. 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.
ARTICLE XVIII
NOTICES
All notices and communications provided for hereunder shall be in
writing and sent by (a) telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), (b) registered or certified mail with return receipt
requested (postage prepaid) or (c) a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address set forth
at the beginning hereof to the attention of XXXXX X. XXXXXXXX AND XXXXX
XXXXX, or at
36
such other address or attention party as you shall have specified to the
Company in writing.
(ii) if to any other holder of Notes, to such holder at its address
set forth on the records of the Company.
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of XXXXXXX XXXXX AND XXXXX XXXXX, or
at such other address or attention party as the Company shall have
specified to you in writing.
Unless otherwise specified in this Agreement, the effective date of any notice
or request given in connection with this Agreement will be deemed given only
when the addressee actually receives it.
ARTICLE XIX
REPRODUCTION OF DOCUMENTS
This Agreement and all documents relating thereto, including (a)
consents, modifications and waivers that may hereafter be executed, (b)
documents received by you on the Closing Date (except the Notes themselves) and
(c) financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, microcard, miniature photographic or other similar
process and you may destroy any original document so reproduced. The Company
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 by you in the regular
course of business), and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Article XIX
shall not prohibit the Company 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.
37
ARTICLE XX
CONFIDENTIAL INFORMATION
For the purposes of this Article XX, "CONFIDENTIAL INFORMATION"
means non-public information delivered to you by or on behalf of the Company or
any of its Subsidiaries in connection with the transactions contemplated by or
otherwise pursuant to this Agreement (or information provided to you in
connection with the Merger and any other transactions contemplated in connection
with the Merger Agreement) that is proprietary in nature; PROVIDED that such
term does not include any information or matter that (a) at the time of
disclosure or thereafter is generally known by the public (other than as a
result of its disclosure by you or your respective representatives in breach of
this Article XX), (b) was or becomes available to you on a nonconfidential basis
from a Person who is not known by you to be bound by a confidentiality agreement
with the Company prohibiting disclosure thereof or (c) is independently
developed by you or your representatives. You will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by you in
good faith to protect confidential information of third parties delivered to
you; PROVIDED that you may deliver or disclose Confidential Information to (i)
your affiliates, directors, officers, employees, advisors, agents, bank or
institutional lenders, controlling persons or representatives thereof (to the
extent such disclosure reasonably relates to the administration of the
investment represented by your Notes and it being understood that prior to such
disclosure any such Person will be informed of the confidential nature of the
Confidential Information and shall agree to be bound by this Article XX and that
you agree to be responsible for any breach of this Article XX by any such
Person), (ii) any other holder of any Note, (iii) any Institutional Investor to
which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Article
XX), (iv) any Person from which you offer to purchase any security of the
Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Article XX), (v)
any federal or state regulatory authority having jurisdiction over you, (vi) the
National Association of Insurance Commissioners, any similar organization or any
nationally recognized rating agency that requires access to information about
your investment portfolio, (vii) any other Person to whom such Confidential
information must be disclosed pursuant to applicable law; PROVIDED, with respect
to clauses (v), (vi) and (vii), that you agree to (A) immediately notify the
Company of the existence, terms and circumstances surrounding the request or
requirement for disclosure pursuant to applicable law and (B) consult with the
Company on the advisability of taking legally available steps to resist or
narrow such request with respect to any other Person to which such delivery or
disclosure may or may not be necessary or appropriate or (viii) if an Event of
Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your Notes
and this Agreement. Each holder of a Note, by its acceptance of a Note, will be
deemed to have agreed to be bound by and to be entitled to the benefits of this
Article XX as though it were a party to this Agreement.
38
ARTICLE XXI
SUBSTITUTION OF PURCHASER
You shall have the right, at any time or from time to time, to cause
any of your Affiliates to pay the Purchase Price on the Purchase Date or to
substitute (each such instance, a "SUBSTITUTION") any of your Affiliates as a
purchaser of some or all of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall (i) be
substantially in the form set out in EXHIBIT IV, (ii) be signed by both you and
such Affiliate, (iii) contain such Affiliate's agreement to be bound by this
Agreement and (iv) contain a confirmation by such Affiliate of the accuracy with
respect to it of the representation set forth in Article VI. Upon receipt of
each such notice, wherever the word "you" is used in this Agreement (other than
in this Article XXI), such word shall be deemed to refer to each such Affiliate
in lieu of you to the extent commensurate with each such Substitution. If and to
the extent that any such Affiliate is so substituted as a purchaser hereunder
and such Affiliate thereafter transfers (each such instance, a "TRANSFER") to
you all of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this Article XXI), such word shall no longer be deemed to refer
to such Affiliate but shall refer to you, and you shall have all the rights of
an original holder of the Notes under this Agreement, in each case to the extent
commensurate with each such Transfer.
ARTICLE XXII
MISCELLANEOUS
SECTION 22.01. WAIVER OF FACILITIES COMMITMENT. The annual "Digex
Minimum Commitments" contained in Section 5 and in Paragraph 3 of Schedule 1 to
the Master Facilities Agreement dated as of January 1, 2001, between MCI
WorldCom Network Services, Inc. and the Company shall be waived, and the Company
shall not be obligated to purchase any minimum level of service thereunder, as
of the Closing Date and shall remain in effect whether or not this Agreement
remains in effect.
SECTION 22.02. OPTIONAL AMENDMENT. (a) You will review any funding
request with respect to the Company's 2003 business plan following the Company's
submission of such plan to your Board of Directors but will have no obligation
to provide funding in connection therewith.
(b) If at any time an Approved Business Plan is rescinded or
materially amended, revised or updated, you shall have no obligation to provide
any funds to the Company following such change in excess of that required prior
to such change unless and until the Boards of Directors of the Company and you,
acting reasonably, shall each have approved a new such business plan or such
change, as applicable.
SECTION 22.03. ASSIGNMENT. This Agreement, or any interest herein
other than any ownership interest in any Note, may not be assigned, in whole or
in part, by
39
either party without the prior written consent of the other party, which shall
not be unreasonably withheld. Notwithstanding the foregoing, you may assign this
Agreement, in whole or in part, to an Affiliate or, on or after December 31,
2002, a third party, PROVIDED that any such assignment to an Affiliate shall not
relieve you of your funding obligations if such Affiliate fails to fulfill them,
and PROVIDED FURTHER that such assignment shall not violate any Federal
securities laws.
SECTION 22.04. SUCCESSORS AND ASSIGNS. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including any subsequent holder of a Note), whether so expressed or not.
SECTION 22.05. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or interest on any Note that is due on a date other than a Business Day shall
be made on the next succeeding Business Day including the additional days
elapsed in the computation of the interest payable on such next succeeding
Business Day.
SECTION 22.06. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof; such provision shall be deemed
deleted and replaced by a valid and enforceable provision that so far as
possible achieves the same objection as the severed provision; and any such
prohibition or unenforceability in any jurisdiction shall (to the full extent
permitted by law) not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 22.07. CONSTRUCTION. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
that any Person is to take, or that such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
SECTION 22.08. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. 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 22.09. GOVERNING LAW. This Agreement shall be subject to,
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.
SECTION 22.10. JURISDICTION AND CONSENT TO SERVICE OF PROCESS. (a)
For resolution of any dispute that is not resolved by the Company and you in
accordance with the immediately preceding Section, including any action or
proceeding arising out of
40
or relating to this Agreement, or for recognition or enforcement of any
judgment, the Company hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the courts of Washington,
D.C., and any appellate court thereof, and the Company and you hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard and determined in such Washington, D.C.,
court. The Company and you agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that you may otherwise have to bring any action
or proceeding relating to this Agreement against the Company or its properties
in the courts of any jurisdiction.
(b) The Company hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (a) of this Section. The Company and you each hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) The Company and you each irrevocably consents to service of
process in the manner provided for notices in Article XVIII. Nothing in this
Agreement will affect the right of the Company or you to serve process in any
other manner permitted by law.
SECTION 22.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
* * * * *
41
If you are in agreement with the foregoing, please sign the
accompanying counterpart of this Agreement and return it to the Company,
whereupon the foregoing shall become a binding agreement between you and the
Company.
DIGEX, INCORPORATED
by /s/ XXXX X. XXXXX
--------------------------
Name: Xxxx X. Xxxxx
Title: President & CEO
The foregoing is hereby
agreed to as of the
date thereof.
WORLDCOM, INC.
by /s/ XXXXXXX X. XXXXXX
-------------------------
Name:
Title:
1
SCHEDULE A
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that any Beneficial Owner of 25% or more of the voting securities of a Person
shall be deemed to have control.
"AFFILIATE TRANSACTION" is defined in Section 10.05.
"AGREEMENT" is defined in the preamble hereto.
"ALTERNATE INTEREST RATE" means 100 basis points more than the rate
of interest per annum publicly announced from time to time by The Chase
Manhattan Bank as its prime rate in effect at its principal office in New York
City; each change in such prime rate shall be effective from and including the
date such change is publicly announced as being effective.
"APPROVED BUSINESS PLAN" means (i) with respect to each of the 2001
Business Plan and the 2002 Business Plan, such business plan and any amendments,
modifications or revisions thereto as has been most recently approved by your
Board of Directors, and (ii) with respect to any business plan of the Company
for any year after 2002, such business plan as may be approved by your Board of
Directors, in its sole discretion, from time to time.
"ASSET SALE" is defined in Section 8.02.
"ATTRIBUTABLE DEBT" means, with respect to any Sale and Leaseback
Transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty), after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges.
2
"AUTHORIZATIONS" means all filings, recordings and registrations
with, and all validations or exemptions, approvals, orders, authorizations,
consents, franchises, licenses, certificates and permits from, any Governmental
Authority, including any of the foregoing authorizing or permitting the
acquisition, construction, or operation of any network facility or any other
telecommunication system.
"AVAILABLE PURCHASE AMOUNT" means the Total Purchase Amount less the
aggregate principal amount of all Purchases.
"BENEFICIAL OWNER" means a beneficial owner as defined in Rules
13d-3 and 13d-5 under the Exchange Act (or any successor rules), including the
provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days; PROVIDED that a Person will not be deemed a beneficial owner of, or to own
beneficially, any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and (2)
is not also then reportable on Schedule 13D or Schedule 13G (or any successor
schedule) under the Exchange Act.
"BOARD OF DIRECTORS" means, unless otherwise specified, the board of
directors of the Company (or Intermedia, as applicable) or any authorized
committee thereof.
"BOARD RESOLUTION" means a resolution authorized by the Board of
Directors.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or authorized to be
closed.
"BUSINESS-PLAN-REVISION NOTICE" is defined in Section 9.07.
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (c) in the case of a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.
"CHANGE IN LAW" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by you or any
Person to which you have sold any Note with any request, guideline or directive
of any Governmental Authority made or issued after the date of this Agreement.
"CLOSING DATE" means the date of this Agreement.
"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.
3
"COMMON STOCK" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"COMPANY" means Digex, Incorporated, a Delaware corporation.
"CONFIDENTIAL INFORMATION" is defined in Article XX.
"CONTINGENT INVESTMENT" means, with respect to any Person, any
guarantee by such Person of the performance of another Person or any commitment
by such Person to invest in another Person. Any Investment that consists of a
Contingent Investment shall be deemed made at the time that the guarantee of
performance or the commitment to invest is given, and the amount of such
Investment shall be the maximum monetary obligation under such guarantee of
performance or commitment to invest. To the extent that a Contingent Investment
is released or lapses without payment under the guarantee of performance or the
commitment to invest, such Investment shall be deemed not made to the extent of
such release or lapse. With respect to any Contingent Investment, the payment of
the guarantee of performance or the payment under the commitment to invest shall
not be deemed to be an additional Investment.
"DATE OF DETERMINATION" means the Closing Date and, thereafter, the
first day of each calendar month.
"DEFAULT" means an event or condition, the occurrence or existence
of which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
"DEFAULT RATE" means that rate of interest 2% per annum above the
Interest Rate.
"DISQUALIFIED STOCK" means any Capital Stock to the extent that, and
only to the extent that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date on which the Notes mature.
"ELIGIBLE INSTITUTION" means a commercial banking institution that
has combined capital and surplus of not less than $500.0 million or its
equivalent in foreign currency, whose debt is rated "A" (or higher) according to
S&P or Moody's at the time as of which any investment or rollover therein is
made.
"ELIGIBLE RECEIVABLE" means any Receivable not more than 90 days
past due under its scheduled payment terms.
"EMPLOYEE PLAN" means an employee pension benefit plan covered by
Title IV of ERISA and established or maintained by the Company or any ERISA
Affiliate, but not including any Multiemployer Plan.
"ENVIRONMENTAL LAW" means any applicable Law that relates to (a) the
condition or protection of air, groundwater, surface water, soil, or other
environmental media, (b) the environment, including natural resources or any
activity that affects the environment, (c) the regulation of any pollutants,
contaminants, wastes, substances, and Hazardous Material, including the
Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C.ss.9601 et seq.) ("CERCLA"), the Clean Air Act (42 U.S.C.ss.7401 et seq.),
the Federal Water Pollution Control Act, as amended by the Clean Water Act (33
U.S.C.ss.1251 et seq.), the Federal
4
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.136 et seq.), the
Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C.ss.11001 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C.ss.1801 et seq.),
the National Environmental Policy Act of 1969 (42 U.S.C.ss.4321 et seq.), the
Oil Pollution Act (33 U.S.C.ss.2701 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. ss.6901 et seq.), the Rivers and Harbors Act (33
U.S.C.ss.401 et seq.), the Safe Drinking Water Act (42 U.S.C.ss.201 andss.300f
et seq.), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984
(42 U.S.C.ss.6901 et seq.), the Toxic Substances Control Act (15 U.S.C.ss.2601
et seq.), and analogous state and local Laws, as any of the foregoing may have
been and may be amended or supplemented from time to time, and any analogous
future enacted or adopted Law, or (d) the Release or threatened Release of
Hazardous Materials.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock or that are measured by the value of
Capital Stock (but excluding any debt security that is convertible into or
exchangeable for Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any company or trade or business (whether or
not incorporated) that, for purposes of Title IV of ERISA, is a member of the
Company's controlled group or that is under common control with the Company
within the meaning of Section 414(b), (c), (m), or (o) of the Code.
"EVENT OF DEFAULT" is defined in Article XI.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
(or any successor act), and the rules and regulations thereunder.
"EXISTING INDEBTEDNESS" means the Existing Intermedia Senior Notes,
the Existing Intermedia Senior Subordinated Notes and the Existing Series A
Preferred Stock and all other Indebtedness of the Company and its Subsidiaries
in existence on the Closing Date.
"EXISTING INTERMEDIA SENIOR NOTES" means Intermedia's 9-1/2% Senior
Notes due 2009, 12-1/2% Senior Notes due 2006, 11-1/4% Senior Discount Notes due
2007, 8-7/8% Senior Notes due 2007, 8-1/2% Senior Notes due 2008 and 8.60%
Senior Notes due 2008.
"EXISTING INTERMEDIA SENIOR SUBORDINATED NOTES" means Intermedia's
12-1/4% Senior Subordinated Notes due 2009.
"EXISTING SERIES A PREFERRED STOCK" means the Series A Convertible
Preferred Stock of the Company outstanding on the Closing Date.
"FAIR MARKET VALUE" means with respect to any asset or property, the
sale value that would be obtained in an arm's length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"FISCAL QUARTER" means each of January 1 through March 31, April 1
through June 30, July 1 through September 31 and October 1 through December 31,
of any fiscal year.
5
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GOVERNMENTAL AUTHORITY" means:
(a) the government of (i) the United States of America or any State
or other political subdivision thereof, (ii) any jurisdiction in which the
Company or any of its Subsidiaries conducts all or any part of its business or
(iii) any jurisdiction that asserts jurisdiction over any properties of the
Company or any of its Subsidiaries or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including letters of credit and reimbursement
agreements in respect thereof), of all or any part of any Indebtedness.
"HAZARDOUS MATERIAL" means (a) any substance that is designated,
defined, or classified as a hazardous waste, hazardous material, pollutant,
contaminant, or toxic or hazardous substance under any Environmental Law,
including any hazardous substance within the meaning of Section 101(14) of
CERCLA, (b) petroleum, oil, gasoline, natural gas, fuel oil, motor oil, waste
oil, diesel fuel, jet fuel, and other petroleum hydrocarbons, (c) regulated
asbestos and asbestos-containing materials in any form, (d) polychlorinated
biphenyls or (e) urea formaldehyde foam.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under Interest Rate Agreements.
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.01.
"INCLUDING" means including without limitation.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to capital leases) or representing any Hedging Obligations, except any
such balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing (other than Hedging Obligations or letters of
credit) would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP, all indebtedness of others secured by a Lien on any
asset of such Person (whether or not such indebtedness is assumed by such
Persons), all obligations to purchase, redeem, retire, defease or otherwise
acquire for value any Disqualified Stock or any warrants, rights or options to
acquire such Disqualified Stock valued, in the case of Disqualified Stock, at
the greatest amount payable in respect thereof on a liquidation (whether
voluntary or involuntary) plus accrued and unpaid dividends, the liquidation
value of any Preferred Stock issued by Subsidiaries of such Person plus accrued
and unpaid dividends, and also includes, to the extent not otherwise included,
the Guarantee of items that
6
would be included within this definition and any amendment, supplement,
modification, deferral, renewal, extension or refunding of any of the above;
notwithstanding the foregoing, in no event will performance bonds or similar
security for performance be deemed Indebtedness so long as such performance
bonds or similar security for performance would not appear as a liability on a
balance sheet of such Person prepared in accordance with GAAP; and PROVIDED
FURTHER that the amount of any Indebtedness in respect of any Guarantee shall be
the maximum principal amount of the Indebtedness so guaranteed.
"INITIAL PURCHASE" is defined in Section 4.01.
"INSTITUTIONAL INVESTOR" means (a) you, (b) any holder of a Note
holding more than 10 % 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, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.
"INTEREST PERIOD" means, with respect to any Purchase, successive
periods of three calendar months.
"INTEREST RATE" means, subject to the provisions of Section 2.04,
LIBOR + 300 basis points, as determined on and in effect from and including each
Date of Determination. The interest rate for any date that is not a Date of
Determination shall be the interest rate as determined on the most recent Date
of Determination.
"INTEREST RATE AGREEMENTS" means (a) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (b) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"INTERMEDIA" means Intermedia Communications, Inc., a Delaware
corporation.
"INTERMEDIA DEBT DOCUMENTS" is defined in Section 4.02(e).
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, Contingent Investments, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities of any other Person and
all other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP; PROVIDED, HOWEVER, that any investment
to the extent made with Capital Stock of the Company (other than Disqualified
Stock) shall not be deemed an "Investment" for purposes of this Agreement.
"LAWS" means all applicable statutes, laws, treaties, ordinances,
tariff requirements, rules, regulations, orders, writs, injunctions, decrees,
judgments, binding opinions, or binding interpretations of any Governmental
Authority.
"LIBOR" means, with respect to any Date of Determination, the rate
appearing on page 3750 of the Telerate Service (or any successor or substitute
page of such Service, or any successor to or substitute for such Service that
provides rate quotations comparable to those currently provided on such page of
such Service, in each case as reasonably determined by you) at approximately
11:00 a.m., London time, two Business Days prior to such Date of Determination,
as the rate for dollar deposits of three months.
7
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title-retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MARKETABLE SECURITIES" means:
(a) Government Securities;
(b) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an Eligible
Institution;
(c) commercial paper maturing not more than 270 days after the date
of acquisition issued by a corporation (other than an Affiliate of the
Company) with a rating, at the time as of which any investment therein is
made, of "A-l" (or higher), according to S&P, or "P-l" (or higher),
according to Moody's;
(d) any banker's acceptances or money market deposit accounts issued
or offered by an Eligible Institution; and
(e) any fund investing exclusively in investments of the types
described in clauses (a) through (d) above.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, (b) the ability of the Company to
perform its obligations under this Agreement and the Notes or (c) the validity
or enforceability of this Agreement or the Notes, except in each case for those
resulting from the announcement of the Merger or the marketing of any assets of
the Company by you, or relating to the economy or the securities markets in
general or the industries in which the Company and its Subsidiaries operate in
general.
"MATURITY DATE" is defined in Section 2.07.
"MERGER" means the merger contemplated by the Merger Agreement.
"MERGER AGREEMENT" means the Agreement and Plan of Merger by and
among you, WildCat Acquisition Corp., a Delaware corporation, and Intermedia,
dated September 1, 2000, as amended by the First Amendment dated as of February
15, 2001, and by the Second Amendment dated as of May 14, 2001.
"MOODY'S" means Xxxxx'x Investors Service, Inc. and its successors.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which the
Company or any of its Subsidiaries or any ERISA Affiliate is making, or has
made, or is accruing, or has accrued, an obligation to make contributions or
has, within any of the preceding five plan years, made or accrued an obligation
to make contributions.
8
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Vendor Indebtedness
facility or Asset Sale, net of the direct costs relating to such receipt
(including sales commissions and legal, accounting and investment-banking fees),
any relocation expenses incurred as a result thereof, any amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that are the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets. Net Proceeds shall exclude
any non-cash proceeds received from any Asset Sale but shall include such
proceeds when and as converted by the Company or any Subsidiary of the Company
to cash. In addition, no proceeds realized in a single transaction or series of
related transactions shall constitute Net Proceeds unless, and to the extent,
such proceeds shall exceed $2,000,000.
"NOTES" is defined in Article I.
"OFFICER" means, with respect to any Person, the chairman of the
board, the chief executive officer, the president, the chief operating officer,
the chief financial officer, the treasurer, any assistant treasurer, controller,
secretary or any vice president of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers
of the Company, one of whom must be the principal executive officer, principal
financial officer, treasurer or principal accounting officer of the Company.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERMITTED INVESTMENT" means (a) any Investments in Intermedia or
any Subsidiary of Intermedia; (b) any Investments in Marketable Securities; (c)
Investments by Intermedia or any Subsidiary of Intermedia in a Person, if as a
result of such Investment (i) such Person becomes a Subsidiary of Intermedia or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
Intermedia or a Subsidiary of Intermedia; (d) any Investments in property or
assets to be used in (i) any line of business in which Intermedia or any of its
Subsidiaries was engaged on the Closing Date or (ii) any Telecommunications
Business; (e) Investments in any Person in connection with the acquisition of
such Person or substantially all of the property or assets of such Person by
Intermedia or any Subsidiary of Intermedia; PROVIDED that, within 180 days from
the first date of any such Investment, either (i) such Person becomes a
Subsidiary of Intermedia or any of its Subsidiaries or (ii) the amount of any
such Investment is repaid in full to Intermedia or any of its Subsidiaries; (f)
Investments pursuant to any agreement or obligation of Intermedia or a
Subsidiary, in effect on the Closing Date or on the date a subsidiary becomes a
Subsidiary (provided that any such agreement was not entered into in
contemplation of such subsidiary becoming a Subsidiary), to make such
Investments; (g) Investments in prepaid expenses, negotiable instruments held
for collection and lease, utility and workers' compensation, performance and
other similar deposits; and (h) Hedging Obligations permitted to be incurred
pursuant to Section 10.03(b) hereof.
"PERMITTED LIENS" means (a) Liens securing Indebtedness (including
Capital Lease Obligations) permitted to be incurred pursuant to Section
10.03(b)(i) hereof, PROVIDED that such Liens do not extend beyond the property
acquired; (b) Liens in favor of Intermedia; (c) Liens on property of a Person
existing at the time such Person is merged into or consolidated with Intermedia
or any Subsidiary of Intermedia, PROVIDED that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with
Intermedia; (d) Liens on property existing at the time of acquisition thereof by
Intermedia or any Subsidiary of Intermedia, PROVIDED that such
9
Liens were in existence prior to the contemplation of such acquisition; (e)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (f) Liens existing on the Closing Date; (g) Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
timely instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (h) Liens incurred in the ordinary course of business of
Intermedia or any Subsidiary of Intermedia with respect to obligations that do
not exceed $2.0 million at any one time outstanding and that (i) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (ii)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by Intermedia or
such Subsidiary; (I) Liens on Telecommunications-Related Assets existing during
the time of the construction thereof; (j) Liens on Receivables to secure
Indebtedness permitted to be incurred pursuant to Section 10.03(b) hereof, but
only to the extent that the outstanding amount of the Indebtedness secured by
such Liens would not represent more than 80% of Eligible Receivables and (k)
Liens to secure any Permitted Refinancing of any Indebtedness secured by Liens
referred to in the foregoing clauses (a), (c), (e) or (j); but only to the
extent that such Liens do not extend to any other property or assets and the
principal amount of the Indebtedness secured by such Liens is not increased.
"PERMITTED REFINANCING" is defined in Section 10.03.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof or any other entity.
"PREFERRED STOCK" as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, inchoate
or not inchoate.
"PROPOSED EXPENDITURES SCHEDULE" is defined in Section 4.02(c).
"PURCHASE" means each purchase of Notes by you made pursuant to the
terms and conditions of this Agreement.
"PURCHASE DATE" means each Business Day the Company designates as a
day on which you will purchase Notes from the Company in accordance with the
terms and conditions of this Agreement.
"PURCHASE PRICE" is defined in Section 2.01.
"RECEIVABLES" means, with respect to any Person, all of the
following property and interests in property of such person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (a)
accounts; (b) accounts receivable, including all rights to payment created by or
arising from sales of goods, leases of goods or the rendition of services no
matter how evidenced, whether or not earned by performance; (c) all unpaid
seller's or lessor's rights including rescission, replevin, reclamation and
stoppage in transit, relating to any of the
10
foregoing after creation of the foregoing or arising therefrom; (d) all rights
to any goods or merchandise represented by any of the foregoing, including
returned or repossessed goods; (e) all reserves and credit balances with respect
to any such accounts receivable or account debtors; (f) all letters of credit,
security, or Guarantees for any of the foregoing; (g) all insurance policies or
reports relating to any of the foregoing; (h) all collection of deposit accounts
relating to any of the foregoing; (i) all proceeds of any of the foregoing; and
(j) all books and records relating to any of the foregoing.
"REFINANCE" is defined in Section 10.03(b).
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposal, deposit,
dispersal, migrating, or other movement into the air, ground, or surface water,
or soil.
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED PAYMENT" is defined in Section 10.01(a).
"RETIRE" is defined in Section 10.01(a).
"SALE AND LEASEBACK TRANSACTION" means, with respect to any Person,
any direct or indirect arrangement pursuant to which any property (other than
Capital Stock) is sold by such Person or a Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Subsidiaries.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SENIOR SUBORDINATED INTERMEDIA NOTE INDENTURE" means any indenture
governing Existing Intermedia Senior Notes, as amended or supplemented from time
to time.
"SUBSIDIARY" of any Person means (a) any corporation, association or
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of such Person or a combination thereof and (b) any
partnership (i) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (ii) the only general
partners of which are such Person or one or more Subsidiaries of such Person or
any combination thereof; PROVIDED that any Unrestricted Subsidiary shall be
excluded from this definition of "Subsidiary."
"TAXES" means, for any Person, taxes, assessments, or other
governmental charges or levies imposed upon such Person, its income, or any of
its properties, franchises or assets.
"TELECOMMUNICATIONS BUSINESS" means, when used in reference to any
Person, that such Person is engaged primarily in the business of (a)
transmitting, or providing services
11
relating to the transmission of, voice, video or data through owned or leased
transmission facilities; (b) creating, developing or marketing communications
related network equipment, software and other devices for use in a
Telecommunications Business or (c) evaluating, participating or pursuing any
other activity or opportunity that is related to those identified in (a) or (b)
above; PROVIDED that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of the Company.
"TELECOMMUNICATIONS-RELATED ASSETS" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
in connection with a Telecommunications Business.
"TOTAL PURCHASE AMOUNT" means the aggregate principal amount
sufficient to satisfy the Company's net cash requirements (including losses from
operations, working capital, capital expenditures and debt service), as and to
the extent provided in the Approved Business Plans, plus the aggregate principal
amount of any Notes prepaid pursuant to the terms and conditions of this
Agreement and less any proceeds from asset sales and any vendor or other
indebtedness that, in each case, the Company incurs (a) other than by the sale
of Notes pursuant to this Agreement and (b) during the period beginning on the
Closing Date and ending on December 31, 2002 (it being understood that any such
proceeds and indebtedness shall (i) be consistent with the limitations and terms
of (A) this Agreement, (B) the Intermedia Debt Documents, (C) the certificate of
designation relating to any outstanding shares of Existing Series A Preferred
Stock and (D) the certificates of designation and indentures relating to any
other Indebtedness of the Company and its Subsidiaries in existence on the
Closing Date and (ii) not materially negatively affect your ability to purchase
Notes hereunder).
"2001 BUSINESS PLAN" means the 2001 Business Plan attached hereto as
EXHIBIT III, as such Plan may hereafter be amended, revised or updated with the
approval of the Boards of Directors of the Company and you.
"2002 BUSINESS PLAN" means the 2002 Business Plan as described in
Section 9.07 and approved by your Board of Directors, as such Plan may be
amended, revised or updated with the approval of the Boards of Directors of the
Company and you.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution.
"VENDOR INDEBTEDNESS" means any Indebtedness of Intermedia or any of
its Subsidiaries incurred in connection with the acquisition or construction of
Telecommunications-Related Assets.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; PROVIDED that, with respect to Capital
Lease Obligations, that maturity shall be calculated after giving effect to all
renewal options by the lessee.
EXHIBIT I
[FORM OF NOTE]
DIGEX, INCORPORATED
FLOATING RATE SENIOR NOTE DUE DECEMBER 31, 2002
No. [ ] [Date]
$ [ ] PPN [ ]
FOR VALUE RECEIVED, the undersigned, DIGEX, INCORPORATED (herein
called the "COMPANY"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to [NAME OF PURCHASER], a !
corporation, or registered assigns, the principal sum of [ ] DOLLARS on the
Maturity Date (as defined in the Note Purchase Agreement referred to below),
with interest (computed and payable as set forth in Sections 2.03 and 2.04 of
the Note Purchase Agreement referred to below), until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal and any overdue
payment of interest, payable quarterly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the Interest Rate or the Alternate Interest Rate, as the case may be,
plus 200 basis points.
Payments of principal of and interest on this Note are to be made by
wire transfer in immediately available funds at Bank of America, 0000 Xxxxxxxxx
Xxxxx, Xxxxxxxx, XX 00000, ABA/Routing No.: *********, Account Name: Digex
Operating Account, Account No.: ********* (or, for international wires, SWIFT
(USD): ******** or SWIFT (Foreign): ********), Re: pmt. under Digex Note
Purchase Agreement, or at such other place as the Company shall have designated
by written notice to the holder of this Note as provided in the Note Purchase
Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"NOTES") issued pursuant to the Note Purchase Agreement, dated as of July 31,
2001 (as from time to time amended, the "NOTE PURCHASE AGREEMENT"), between the
Company and [NAME OF PURCHASER] and is entitled to the benefits thereof. Each
holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed
to the confidentiality provisions set forth in Article XX of the Note Purchase
Agreement and (ii) to have made the representation set forth in Article VI of
the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing and an opinion of counsel reasonably acceptable to the Company as to the
exemption from registration under applicable securities laws of such transfer, a
new Note for a like principal amount will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of transfer,
the Company may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Company will not be affected by any notice to the contrary.
2
This Note is subject to optional prepayment, in whole or from time
to time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price and with the effect
provided in the Note Purchase Agreement.
This Note 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 the jurisdiction other than such State.
DIGEX, INCORPORATED
by ___________________________
Name:
Title:
EXHIBIT II
[FORM OF BORROWING NOTICE]
(DIGEX, INCORPORATED)
_________, 200__
WORLDCOM, INC.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
(Fax: 000-000-0000)
Xxxxx Xxxxx
(Fax: 000-000-0000)
Reference is made to the Note Purchase Agreement, dated as of July
31, 2001 (as amended, modified, supplemented, or restated from time to time, the
"PURCHASE AGREEMENT"), among the undersigned, as Issuer, and WorldCom, Inc., as
Purchaser. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Purchase Agreement. The
undersigned hereby gives you notice pursuant to the Purchase Agreement that it
requests a Purchase under the Purchase Agreement and, in that connection, sets
forth below the terms on which such Purchase is requested to be made:
-------------------------------------------------------------------------
(A) Purchase Date(1)
-------------------------------------------------------------------------
(B) Amount of Purchase(2)
-------------------------------------------------------------------------
The Company hereby certifies that the following statements are true
and correct on the date hereof, and will be true and correct on the Purchase
Date specified herein after giving effect to such Purchase:
(a) The representations and warranties of the Company set forth in
the Purchase Agreement are true and correct and will be true and correct
at the time of the requested Purchase;
----------
(1) Must be at least five Business Days after the date of this Borrowing
Notice.
(2) Must be in an aggregate amount equal to $5,000,000 or whole multiples of
$1,000,000 in excess thereof.
2
(b) After giving effect to the issue and sale of the Notes on the
requested Purchase Date, no Default or Event of Default will have occurred
and be continuing;
(c) The Company is unable to meet its monthly cash requirements to
fund its operating expenses and working capital after using all but
$5,000,000 of unrestricted cash available to the Company, and attached
hereto is a schedule setting forth the actual uses and expenditures from
the previous Purchase and the proposed uses and expenditures of the
proceeds of the Purchase;
(d) On the Purchase Date the Purchase of Notes will (i) be permitted
by the laws and regulations of each jurisdiction to which the Company is
subject, (ii) not violate any applicable law or regulation (including,
without limitation, Regulations T, U or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject the Company to any tax,
penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof;
and
(e) The Company has not changed its jurisdiction of incorporation or
been party to any merger or consolidation and has not succeeded to all or
any substantial part of the liabilities of any other entity.
Very truly yours,
DIGEX, INCORPORATED
by: _______________________
Name:
Title:
EXHIBIT III
DIGEX, INCORPORATED
2001 BUSINESS PLAN
Exhibit IV
[FORM OF NOTICE OF SUBSTITUTION OF PURCHASER]
To: Digex, Incorporated
From: WorldCom, Inc. and [NAME OF AFFILIATE PURCHASER TO BE SUBSTITUTED FOR
WORLDCOM, INC.]
[Date]
NOTE PURCHASE AGREEMENT
DATED JULY 31, 2001
BETWEEN DIGEX, INCORPORATED AND WORLDCOM, INC.
We refer to Article XXI (Substitution of Purchaser) of the Note
Purchase Agreement dated July 31, 2001, between Digex, Incorporated and
WorldCom, Inc. (the "AGREEMENT"). Capitalized terms used but not defined herein
shall have the meanings assigned thereto in the Agreement.
Pursuant to Article XXI of the Agreement, we agree to [payment of
$!, the Purchase Price, by [NAME OF AFFILIATE] on !, the Purchase Date][the
substitution of [NAME OF AFFILIATE] for WorldCom, Inc. as the purchaser of the
Notes to be purchased [on !, the Purchase Date].
The specified date for the purpose of such [payment][substitution]
is [today][!].
[NAME OF AFFILIATE] agrees to be bound by the Note Purchase
Agreement and confirms that, as of this date, the representation set forth in
Article VI thereof is accurate with respect to [NAME OF AFFILIATE].
[NAME OF AFFILIATE]
by ___________________________
Name:
Title:
WORLDCOM, INC.
by ___________________________
Name:
Title:
