EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of April 25, 2002 (this "AGREEMENT"),
between USA BROADBAND, INC., a Delaware corporation (BROADBAND"), and LAS
AMERICAS BROADBAND, INC., a Colorado corporation ( "LAS AMERICAS"). Broadband
and Las Americas are collectively referred to herein as the "PARTIES" and
individually, as a "PARTY."
RECITALS
WHEREAS, the respective Boards of Directors of Broadband and Las Americas
have approved and declared advisable and in the best interest of each Party's
stockholders this Agreement and the merger of Las Americas with and into
Broadband (the "MERGER") upon the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, Broadband and Las Americas desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement and the
Merger, and also to prescribe various conditions to the Merger;
NOW THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto hereby agree as follows:
ARTICLE I
MERGER; CLOSING; EFFECTIVE TIME; FURTHER ACTION
Section 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, the Certificate of Merger (the "CERTIFICATE OF MERGER")
and in accordance with the applicable provisions of the CBCA and the DGCL, at
the Effective Time (as defined in SECTION 1.3), Las Americas shall be merged
with and into Broadband and the separate corporate existence of Las Americas
shall thereupon cease and Broadband shall continue as the surviving corporation
(the "SURVIVING CORPORATION").
Section 1.2 CLOSING. The closing of the Merger (the "CLOSING") shall take
place (i) at the offices of Xxxxxxx & Xxxxxxxx Ltd., 000 X. Xxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, at 10:00 A.M., local time, on the fifth
(5th) Business Day after the satisfaction or waiver, if permissible, of all the
conditions set forth herein, or (ii) at such other time, date and place as
Broadband and Las Americas may mutually agree upon in writing (the "CLOSING
DATE").
Section 1.3 EFFECTIVE TIME. On or before the Closing Date, but following
satisfaction or waiver of all conditions to Closing: (i) Broadband and Las
Americas shall cause the Certificate of Merger to be executed, acknowledged and
filed with the Secretary of State for the State of Delaware
as provided in Section 258 of the DGCL and (ii) make all other filings or
recordings as may be required by applicable law in connection with the Merger,
including the CBCA. The Merger shall become effective at such time as the
Certificate of Merger has been duly filed with the Secretary of State for the
State of Delaware or such other later time as shall be agreed upon by the
Parties and set forth in the Certificate of Merger (the "EFFECTIVE TIME").
Section 1.4 FURTHER ACTIONS. At and after the Effective Time, the Surviving
Corporation shall take all action as shall be required in connection with the
Merger, including the execution and delivery of any further deeds, assignments,
instruments or documents as are necessary or desirable to effectuate the Merger
and the other transactions contemplated hereby.
ARTICLE II
CORPORATE GOVERNANCE
Section 2.1 CERTIFICATE OF INCORPORATION AND BY-LAWS. At the Effective
Time, the Certificate of Incorporation, as amended, of Broadband shall be the
Certificate of Incorporation of the Surviving Corporation and the By-laws of
Broadband as in effect on the date hereof shall be the By-laws of the Surviving
Corporation.
Section 2.2 DIRECTORS OF BROADBAND. At the Effective Date, Broadband
shall: (i) cause its board of directors to be expanded from six (6) to seven
(7) individuals and (ii) appoint Xx. Xxxxxxx X. Xxxxx and his designee to
fill two (2) of such seats on its board of directors. Xx. Xxxxx and his
designee shall serve until the date that their respective successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation
and By-laws.
Section 2.3 OFFICERS OF BROADBAND. The officers of Broadband immediately
prior to the Effective Date shall be, along with Xx. Xxxxx, the officers of the
Surviving Corporation and shall serve until the date that their respective
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Certificate of
Incorporation and By-laws.
Section 2.4 TAX CONSEQUENCES. It is intended that the Merger shall
constitute a reorganization described in Section 368(a) of the Code and that
this Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code. The Parties shall treat the transactions contemplated
hereby consistently with such intention.
ARTICLE III
EFFECT OF THE MERGER ON STOCK; EXCHANGE OF CERTIFICATES
Section 3.1 EFFECT ON STOCK.
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(a) At the Effective Time, the Merger shall have the following
effects on the capital stock of Broadband and Las Americas, without any
action on the part of any holder of any securities of Broadband and Las
Americas:
(1) CONVERSION OF LAS AMERICAS' COMMON STOCK. At the Effective
Time, each Las Americas Share shall be automatically converted into a
right to receive .12452987 fully paid, nonassessable shares of
Broadband's common stock, par value $0.001 (the "EXCHANGE RATIO"). If
prior to the Effective Time, Las Americas or Broadband should split or
combine its common stock, pay a dividend or other stock distribution
in its common stock, or otherwise change its common stock into any
other securities, or make any other dividend, distribution or issuance
of its common stock, then the Exchange Ratio shall be appropriately
adjusted to reflect such split, combination, dividend or other
distribution or change. The Exchange Ratio shall be, in each case,
rounded upwards to the nearest whole share in accordance with
SECTION 3.4.
(2) CONVERSION OF LAS AMERICAS' OPTIONS AND WARRANTS. At the
Effective Time, each unexercised option and unexercised warrant,
whether or not then vested or exercisable in accordance with its
terms, previously granted by Las Americas to purchase Las Americas
Shares shall be automatically converted into and become an option or
warrant, as the case may be, to purchase .12452987 Broadband Shares
for each Las Americas Share that its holder previously was authorized
to purchase immediately prior to the conversion. Each option or
warrant to purchase Broadband Shares shall have the same terms and
conditions as the option or warrant to purchase Las Americas Shares
that it replaces.
Section 3.2 PAYMENT FOR SHARES IN THE MERGER. At the Effective Time,
Broadband shall make available to an exchange agent selected by Broadband and
reasonably acceptable to Las Americas (the "EXCHANGE AGENT"), for the benefit of
those persons who were the holders of Las Americas Shares immediately prior to
the Effective Time, a sufficient number of certificates representing Broadband
Shares required to effect the delivery of the aggregate merger consideration
required to be issued pursuant to SECTION 3.1 (the certificates representing
Broadband Shares comprising such aggregate merger consideration being herein
referred to as the "EXCHANGE FUND"). The Exchange Agent shall deliver, pursuant
to irrevocable instructions, the shares contemplated to be issued pursuant to
SECTIONS 3.1 AND 3.4 out of the Exchange Fund. The Exchange Fund shall not be
used for any other purpose.
As soon as practicable after the Effective Time, the Exchange Agent shall
send a notice and transmittal form to each holder of record of the Las Americas
Shares immediately prior to the Effective Time advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Exchange
Agent (who may appoint forwarding agents with Broadband's approval) the
certificate or certificates to be exchanged pursuant to the Merger (the
"CERTIFICATES"). Upon the surrender for exchange of Certificates, together with
such letter of transmittal duly completed and properly executed in accordance
with instructions thereto, and such other documents
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as may be required pursuant to such instructions, the holder shall be paid
promptly, without interest thereon and subject to any required withholding of
taxes, the merger consideration to which such holder is entitled hereunder, and
such Certificates shall forthwith be canceled. Until so surrendered and
exchanged, the Certificates shall represent solely the right to receive the
merger consideration pursuant to SECTIONS 3.1 AND 3.4, subject to any required
withholding of taxes. If any payment for the Las Americas Shares is to be made
to any person other than the person in whose name the Certificates for such
shares surrendered are registered, it shall be a condition of the exchange that
the person requesting such exchange shall pay to the Exchange Agent any transfer
or other taxes required by reason of the delivery of such payment to a person
other than the registered owner of the Certificates surrendered or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. To the extent permitted by law, former stockholders of
record of Las Americas shall be entitled to vote, after the Effective Time, at
any meeting of Broadband stockholders, the number of Broadband Shares into which
their respective Las Americas Shares are converted, regardless of whether such
holders have exchanged their Certificates in accordance with this SECTION 3.2.
No dividends or other distributions with respect to Broadband Shares with a
record date after the Effective Time shall be paid to the holders of any
unsurrendered Certificates with respect to the Broadband Shares represented
thereby until the surrender of such Certificates in accordance with this SECTION
3.2. Subject to the effect of applicable laws, following surrender of any such
Certificates, there shall be paid to the holder of the Certificates representing
Broadband Shares issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such Broadband
Shares, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and with a payment subsequent to such surrender payable with
respect to such Broadband Shares.
In the event any Certificates shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Broadband, the
posting by such person of a bond in such amount, form and with such surety as
Broadband may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the number of Broadband Shares
deliverable (and unpaid dividends and distributions) in respect thereof pursuant
to this Agreement.
Section 3.3 EXCHANGE AGENT. Subject to the agreement of the Exchange Agent,
among other things, (i) the Exchange Agent shall maintain the Exchange Fund as a
separate fund to be held for the benefit of the holders of Las Americas Shares,
which shall be promptly applied by the Exchange Agent to making the payments
provided for in SECTIONS 3.1 AND 3.4; (ii) any portion of the Exchange Fund that
has not been paid to holders of the Las Americas Shares pursuant to SECTIONS 3.1
AND 3.4 prior to the date that is six (6) months from the Effective Time shall
be paid to Broadband, and any holders of Las Americas Shares who shall not have
theretofore complied with SECTION 3.2 shall thereafter look only to Broadband
for payment of the number of Broadband Shares to which
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they are entitled under this Agreement; (iii) the Exchange Fund shall not be
used for any purpose that is not provided for herein; and (iv) all expenses of
the Exchange Agent shall be paid directly by Broadband. Promptly following the
date which is six (6) months from the Effective Time, the Exchange Agent shall
return to Broadband all cash, securities and any other instruments in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of Certificates
formerly representing Las Americas Shares may surrender such Certificates to
Broadband and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the merger consideration payable pursuant to
SECTIONS 3.1 AND 3.4, without interest, but shall have no greater rights against
Broadband than may be accorded to general creditors of Broadband under the DGCL.
The Exchange Agent shall not be entitled to vote or exercise any rights of
ownership with respect to the Broadband Shares held by it from time to time
hereunder.
Section 3.4 FRACTIONAL SHARES. No fractional Broadband Shares shall be
issued in the Merger. In lieu of any such fractional securities, the Exchange
Agent shall issue to each holder of Las Americas Shares who otherwise would have
been entitled to a fractional Broadband Share upon surrender of Certificates for
exchange pursuant to this ARTICLE III one (1) additional whole Broadband Share.
For example, a holder of ten and one-third (10.33) Las Americas Shares shall
receive eleven (11) Broadband Shares upon surrender of such holder's
Certificates pursuant to ARTICLE III.
Section 3.5 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of
Las Americas Shares shall be made on the stock transfer books of Las Americas
after the close of business on the day prior to the date of the Effective Time.
Section 3.6 LAS AMERICAS DISSENTING STOCKHOLDER.
(a) Notwithstanding anything herein to the contrary, any Las Americas
Share owned by a Las Americas Dissenting Stockholder shall not be converted
into the right to receive the consideration hereunder, but such Las
Americas Dissenting Stockholder shall be entitled only to such payments as
are provided for by the CBCA, which shall be paid by Broadband.
(b) Notwithstanding the provisions of SECTION 3.6(a), if any Las
Americas Dissenting Stockholders shall effectively withdraw or lose
(through failure to perfect or otherwise) such stockholder's right to
receive the payment provided for by the CBCA for such stockholder's Las
Americas Shares, then, as of the Effective Time, such Las Americas
Dissenting Stockholder's Las Americas Shares automatically shall be
converted into the right to receive only the consideration as is provided
for in Article 113 of the CBCA, which shall be paid by Broadband without
interest thereon.
(c) Prior to the Closing Date, Las Americas shall give Broadband: (i)
prompt notice of any written demands by Las Americas Dissenting
Stockholders, withdrawals of such demands and any other similar instruments
served pursuant to the CBCA and received
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by Las Americas and (ii) the opportunity to discuss with Las Americas any
negotiations and proceedings with respect to such demands and to
participate with Las Americas in such negotiations and proceedings. Prior
to the Closing Date, Las Americas shall not, except with the prior written
consent of Broadband, voluntarily make any payment with respect to any
demands by Las Americas Dissenting Stockholders or settle or offer to
settle any such demands.
Section 3.7 BROADBAND DISSENTING STOCKHOLDERS.
(a) Notwithstanding anything herein to the contrary, any Broadband
Share owned by a Broadband Dissenting Stockholder shall not be converted
into the right to receive the consideration hereunder, but such Broadband
Dissenting Stockholder shall be entitled only to such payments as are
provided for by the DGCL, which shall be paid by Broadband.
(b) Notwithstanding the provisions of SECTION 3.7(a), if any
Broadband Dissenting Stockholders shall effectively withdraw or lose
(through failure to perfect or otherwise) such stockholder's right to
receive the payment provided for by the DGCL for such stockholder's
Broadband Shares, then, as of the Effective Time, such Broadband Dissenting
Stockholder's Broadband Shares automatically shall be converted into the
right to receive only the consideration as is provided for in Section 262
of the DGCL, which shall be paid by Broadband without interest thereon.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LAS AMERICAS
Except as disclosed: (i) in the due diligence schedules to be delivered to
Broadband on or about May 3, 2002 (the "LAS AMERICAS DUE DILIGENCE SCHEDULES");
(ii) in the Las Americas SEC Reports filed within two (2) years from the date of
this Agreement; or (iii) as otherwise set forth in this Agreement, Las Americas
hereby represents and warrants to Broadband as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION. Las Americas is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado. Las Americas is duly qualified to do business and is in good
standing in all foreign jurisdictions wherein the character of the properties so
owned or leased by it or the nature of its business makes such qualification to
do business necessary, except for any such failure to so qualify, which when
taken as a whole with all other such failures, is not reasonably expected to
have a Material Adverse Effect. The copies of the articles of incorporation of
Las Americas, and all amendments thereto, as certified by the Colorado Secretary
of State, and the by-laws, as amended to date, of Las Americas, which have been
previously delivered to Broadband, are complete, accurate and current in all
material respects. The stock transfer books and minute books or similar records
of Las Americas, which have been previously made available to Broadband, are
complete, accurate and current in all material respects.
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Section 4.2 SUBSIDIARIES. Each Subsidiary of Las Americas is identified on
SECTION 4.2 of the Las Americas Due Diligence Schedules. Except as otherwise
provided in SECTION 4.2 of the Las Americas Due Diligence Schedules, (i) all of
the outstanding equity interests of each Subsidiary are owned by Las Americas,
free and clear of all Liens and free and clear of any other restriction
(including any restriction on the right to vote, xxx or otherwise dispose of the
capital stock of such Subsidiary); and (ii) each Subsidiary is in good standing
in the jurisdiction of its incorporation or formation, and all foreign
jurisdictions wherein the character of the properties so owned or leased by it
or the nature of its business makes such qualification to do business necessary,
except where the failure to so qualify, which when taken together with all other
such failures, is not reasonably expected to have a Material Adverse Effect.
Section 4.3 AUTHORITY; ENFORCEABILITY. Las Americas has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement,
subject only to: (i) the adoption of this Agreement by the Holders of at least a
majority of the Las Americas Shares entitled to vote (the "LAS AMERICAS
REQUISITE VOTE") to consummate the Merger and (ii) the receipt of any required
Governmental Approvals. This Agreement has been duly executed and delivered by
Las Americas and, assuming the Agreement constitutes the valid and binding
obligation of Broadband, is a valid and binding agreement of Las Americas
enforceable against Las Americas in accordance with its terms except: (i) as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or similar Laws of general application relating to or affecting
creditors' rights, including the effect of statutory or other Laws regarding
fraudulent conveyances and preferential transfers, and (ii) for the limitations
imposed by general principles of equity or public policy considerations,
including as to enforcement of indemnification provisions.
Section 4.4 CAPITALIZATION. The authorized capital stock of Las Americas
consists of 900,000,000 shares of common stock, par value $0.025, of which
38,851,417 shares are validly issued and outstanding as of April 24, 2002.
All of the Las Americas Shares have been duly authorized and are fully paid,
non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except as set forth in SECTION 4.4 of the
Las Americas Due Diligence Schedules, there are no Las Americas Shares or
other equity interests or securities of Las Americas reserved for issuance or
any outstanding subscriptions, options, warrants, rights, "phantom" stock
rights, convertible or exchangeable securities, stock appreciation rights or
other agreements or commitments granting to any Person any interest in or
right to acquire at any time, or upon the happening of any stated event, any
Las Americas Shares or other equity interest or securities of Las Americas,
or any interest in, exchangeable for or convertible into Las Americas Shares
or other equity interests or securities of Las Americas. Las Americas has no
treasury shares.
Section 4.5 FINANCIAL INFORMATION. Set forth in SECTION 4.5 of the Las
Americas Due Diligence Schedules are: (a) an audited balance sheet of Las
Americas as of December 31, 2000, and the unaudited consolidated and condensed
balance sheet as of March 31, 2002 (each a "LAS AMERICAS BALANCE SHEET" and,
collectively, the "LAS AMERICAS BALANCE SHEETS," and such consolidated and
condensed balance sheet as of March 31, 2002 is referred to herein as the "LAS
AMERICAS INTERIM
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BALANCE SHEET") and (b) consolidated and condensed statements of income, cash
flows and changes in stockholders' equity of Las Americas for the year ended
December 31, 2000 (the "LAS AMERICAS INCOME STATEMENT" and, collectively with
the Las Americas Balance Sheets, the "LAS AMERICAS FINANCIAL STATEMENTS"), and
for the quarterly period ended March 31, 2002 (the "LAS AMERICAS INTERIM INCOME
STATEMENT" and, collectively with the Las Americas Interim Balance Sheet, the
"LAS AMERICAS INTERIM FINANCIAL STATEMENTS"). The Las Americas Financial
Statements have been audited by Good Xxxxxx Xxxxx & Xxxxx LLP, whose reports
thereon are included therein. The Las Americas Financial Statements, the Las
Americas Interim Financial Statements and the notes thereto fairly present in
all material respects the assets, liabilities and financial condition of Las
Americas as of the respective dates thereof, and such statements of income, cash
flows and changes in stockholders' equity and the notes thereto fairly present
in all material respects the results of operations of Las Americas for the
period therein referred to, all in accordance with past practices and GAAP
consistently applied during the period involved, except as otherwise disclosed
in the notes thereto and subject, where appropriate, to normal year-end
adjustments and the absence of notes in the case of interim statements. Las
Americas shall deliver to Broadband audited financial statements for the period
ended December 31, 2001, as soon as practicable following the funding of the
Interim Loan.
Section 4.6 ABSENCE OF CERTAIN CHANGES. Except as set forth in SECTION 4.6
of the Las Americas Due Diligence Schedules, since the date of the Las Americas
Financial Statements, there has not occurred any event, condition, circumstance,
change or development that has or is reasonably expected to have a Material
Adverse Effect on Las Americas.
Section 4.7 TAX MATTERS.
(a) Las Americas files Tax Returns only in the United States and the
States of Colorado and California.
(b) Las Americas has (i) duly filed with the appropriate Governmental
Bodies all material Tax Returns required to be filed by it on or prior to
the date hereof, and such Tax Returns are true, correct and complete in all
material respects and (ii) duly paid in full or made provision in
accordance with GAAP on the books of Las Americas for the payment of all
material Taxes for all periods ending through the date hereof.
(c) Except as set forth on SECTION 4.7(c) of the Las Americas Due
Diligence Schedules, there are no Liens for Taxes upon Las Americas' assets
or Las Americas Shares except for statutory liens for current Taxes not yet
due.
(d) Las Americas has complied in all material respects with all
applicable Laws relating to the payment and withholding of Taxes
(including, withholding of Taxes pursuant to Sections 1441, 1442, 3121,
3402, 3406 and 4421 of the Code or similar provisions under any other
applicable Laws) and has, within the time and the manner prescribed by law,
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withheld from and paid over to the proper Governmental Bodies all amounts
required to be so withheld and paid over under applicable Laws.
(e) There have been no audits or other administrative proceedings or
court proceedings prior to the date hereof, and none are currently pending
with any Governmental Body with regard to any Taxes or Tax Returns of Las
Americas. Las Americas has not received a written notice of any pending
audits or proceedings.
(f) There are no outstanding written requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against Las Americas.
(g) Las Americas is not a party to any Contract providing for the
allocation or sharing of Taxes.
(h) Las Americas is not a party to any Contract or arrangement that
is reasonably expected to result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(i) No power of attorney has been executed by Las Americas with
respect to any matter relating to Taxes, which power of attorney currently
is in force.
Section 4.8 REAL ESTATE.
(a) SECTION 4.8(a) of the Las Americas Due Diligence Schedules sets
forth the address of each parcel of real property owned by Las Americas.
Except as otherwise set forth on SECTION 4.8(a) of the Las Americas Due
Diligence Schedules, with respect to each such parcel of owned real
property: (i) such parcel is free and clear of all Liens, except for the
Las Americas Permitted Real Estate Liens and Las Americas Permitted
Ownership Liens; (ii) there are no leases, subleases, licenses, tenancies,
concessions, or other agreements, written or oral, granting to any Person
the right of use or occupancy of any portion of such owned real property;
and (iii) there are no outstanding actions, rights of first refusal or
options to purchase such parcel.
(b) All leases of real property leased or subleased by or for the use
or benefit of Las Americas and all leases of real property as to which Las
Americas is the lessee or sublessee, and all amendments and modifications
thereof (collectively, the "LEASES"), are listed on SECTION 4.8(b) of the
Las Americas Due Diligence Schedules, and true, correct and complete copies
thereof have been made available to Broadband. All such Leases are valid,
binding and in full force and effect and are enforceable by Las Americas in
accordance with their terms (except as such enforceability may be affected
by bankruptcy, reorganization, moratorium or similar Laws generally
affecting creditors' rights and by general principles of equity or public
policy limitations) and have not been modified or amended except as noted
in SECTION 4.8(b) of the Las Americas Due Diligence Schedules; Las Americas
has performed
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all material obligations required to be performed by it under each such
Lease; and there has been no material breach or default under any such
Leases by Las Americas, or, to Las Americas' knowledge, any other party
thereto, nor any such breach or default by Las Americas, or, to Las
Americas' knowledge, any other party thereto which with notice or lapse of
time or both would constitute a material event of default thereunder.
Section 4.9 LITIGATION. Except as set forth on SECTION 4.9 of the Las
Americas Due Diligence Schedules, there are no claims, actions, suits or
proceedings pending or, to Las Americas' knowledge, threatened against Las
Americas and there are no investigations pending or, to Las Americas' knowledge,
threatened against Las Americas.
Section 4.10 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SECTION 4.10(a) of the Las Americas Due Diligence Schedules
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program, agreement or arrangement, and each other
employee benefit plan program, agreement or management, whether formal
or informal, written or oral, including but not limited to those plans
defined as an "employee benefit plan" within the meaning of Section 3(3)
of ERISA (each, a "BENEFIT PLAN"), that is maintained or contributed to
by Las Americas or, solely with respect to a Benefit Plan that is
subject to Section 302 or Title IV of ERISA, by any other trade or
business, whether or not incorporated, which together with Las Americas
would be deemed a "single employer" within the meaning of Section 4001
of ERISA or Section 414(b), (c), (m) or (o) of the Code (an "ERISA
AFFILIATE"), for the benefit of any employee, consultant, officer or
director of Las Americas or, if applicable, any ERISA Affiliate.
(b) Except as set forth on SECTION 4.10(b) of the Las Americas Due
Diligence Schedules, no Benefit Plan is a "multiemployer plan," as such
term is defined in Section 3(37) of ERISA and no Benefit Plan is subject to
Title IV or Section 302 of ERISA. To Las Americas' knowledge, each of the
Benefit Plans is operated in all material respects in accordance with the
requirements of all applicable Laws.
(c) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any
Benefit Plan. Las Americas has not incurred any liability for any excise
tax arising under Section 4975 or 4976 of the Code or civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA and no fact or event
exists that is reasonably expected to give rise to any such liability with
respect to any Benefit Plan. Except as set forth on SECTION 4.10(c) of the
Las Americas Due Diligence Schedules, there are no pending or, to Las
Americas' knowledge, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Plans, or any
trusts related thereto or any trustee or administrator thereof. Except as
set forth on SECTION 4.10(c)
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of the Las Americas Due Diligence Schedules, no litigation or
administrative or other proceeding has occurred or is threatened involving
any Plan or any trusts related thereto or any trustee or administrator
thereof.
(d) To Las Americas' knowledge, all contributions to, and payments
from, any Benefit Plan required to be made by Las Americas or any ERISA
Affiliate in accordance with the terms of the Benefit Plans have been
timely made as of the last day of the most recent plan year thereof ended
prior to the date of this Agreement, or will be timely made in accordance
with Section 404(a)(6) of the Code. Except as set forth on SECTION 4.10(d)
of the Las Americas Due Diligence Schedules, all required contributions to,
and payments from, the Plans that were not required to be made as of such
date were properly accrued and reflected on the Las Americas Balance Sheet
and on the Las Americas Interim Balance Sheet.
Section 4.11 ENVIRONMENTAL MATTERS.
(a) Except as set forth on SECTION 4.11(a) of the Las Americas Due
Diligence Schedules, Las Americas is in material compliance with all
applicable Environmental Laws. To its knowledge, Las Americas has not
received any written communication that alleges that Las Americas is not in
such compliance.
(b) Except as set forth on SECTION 4.11(b) of the Las Americas Due
Diligence Schedules, there is no Environmental Claim pending or, to Las
Americas' knowledge, threatened against Las Americas.
Section 4.12 COMPLIANCE WITH APPLICABLE LAWS. Except as, individually or in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect on Las Americas or its Subsidiaries, when taken as a whole, or except as
set forth on SECTION 4.12 of the Las Americas Due Diligence Schedules, Las
Americas and its Subsidiaries hold all permits, licenses, franchises, variances,
exemptions, orders and approvals of all Governmental Bodies which are necessary
for the operations of the business now being conducted by Las Americas and its
Subsidiaries, taken as a whole (the "LAS AMERICAS PERMITS"), and no suspension
or cancellation of any of the Las Americas Permits is pending or, to the
knowledge of Las Americas, threatened. Las Americas and its Subsidiaries are in
compliance with the terms of the Las Americas Permits, except where the failure
to so comply, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on Las Americas or its Subsidiaries, when
taken as a whole. Neither Las Americas nor its Subsidiaries is in violation of,
and Las Americas and its Subsidiaries have not received any written notices
claiming a violation of any laws, statutes, ordinances, rules or regulations of
any Governmental Body, except for violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Las Americas or its Subsidiaries, when taken as a whole.
Section 4.13 COMMISSIONS. Neither Las Americas nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees,
11
commissions or finders' fees in connection with the Merger or the other
transactions contemplated by this Agreement for which Broadband bears any
liability or responsibility.
Section 4.14 NO UNDISCLOSED LIABILITIES. Except as set forth on SECTION
4.14 of the Las Americas Due Diligence Schedules, Las Americas does not have any
material liability or obligation of any nature, whether fixed or contingent or
otherwise, whether due or to become due, including any unfunded obligation under
any pension plan, any liability for Taxes or any environmental liabilities, that
is not reflected or reserved against in the Las Americas Balance Sheet or the
Las Americas Interim Balance Sheet or otherwise disclosed in the notes thereto,
other than liabilities and obligations incurred subsequent to the Las Americas
Balance Sheet Date or the Interim Las Americas Balance Sheet Date in the
ordinary course of business consistent with past practice and not in violation
of this Agreement. Except as set forth on SECTION 4.14 of the Las Americas Due
Diligence Schedules, there are no agreements or arrangements pursuant to which
Las Americas has incurred Indebtedness or is liable for payments to stockholders
or former stockholders or their respective Affiliates or Associates.
Section 4.15 Omitted.
Section 4.16 INTELLECTUAL PROPERTY. Set forth on SECTION 4.16 of the Las
Americas Due Diligence Schedules is a true, correct and complete list of Las
Americas' Intellectual Property and all license agreements relating thereto to
which Las Americas is a party.
Section 4.17 CONTRACTS AND COMMITMENTS. Except as (i) expressly referred to
in the notes to the Las Americas Financial Statements or the Las Americas
Interim Financial Statements or (ii) contained in SECTION 4.17 of the Las
Americas Due Diligence Schedules:
(a) Las Americas is not party to or bound by any Contract which is
related to its business, operations, financial condition or prospects or
which involves, or is reasonably likely to involve, the expenditure or
receipt by Las Americas after the date of the Las Americas Interim Balance
Sheet of more than Fifty Thousand Dollars ($50,000). The legal
enforceability after the Closing by Las Americas of its Contracts will not
be affected in any material respect by the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(b) Las Americas is not a party to or bound by (i) any Contract with
stockholders or former stockholders, or any Person known to Las Americas to
be an Affiliate or Associate of a stockholder or former stockholder; (ii)
any Contract with officers, employees, agents, consultants, advisors,
salesmen, sales representatives, distributors or dealers that are not
cancelable by Las Americas at will without liability, penalty or premium;
(iii) any Contract providing for the payment of any bonus or commission
based on sales or earnings; (iv) any Contract that contains any severance
or termination or change in control pay liability or obligation; (v) any
Contract for the purchase or sale of any security; (vi) any Contract for
the borrowing of money (or guarantee of indebtedness); (vii) any Contract
for leasing personal
12
property which requires annual payments in excess of Twenty-Five Thousand
Dollars ($25,000) or the term of any of which exceeds three (3) years;
(viii) any Contract relating to express product or service warranties by
Las Americas; (ix) any Contract containing a covenant not to compete by Las
Americas; (x) any Contract granting a Lien (other than a Las Americas
Permitted Ownership Lien or Las Americas Permitted Real Estate Lien),
security interest or other material encumbrance on any property or asset of
Las Americas; (xi) any Contract providing for exclusive purchases by or
from Las Americas or containing a requirement purchase obligation; (xii)
any Contract providing for administration, service, utilization review,
adjustment, claims management or similar function relating to insurance or
litigation of Las Americas; or (xii) any Contract for the sale of any of
the assets, property or rights of Las Americas outside of the ordinary
course of business, except as contemplated by this Agreement.
(c) Las Americas has not given any power of attorney (whether
revocable or irrevocable) to any Person that is or may hereafter be in
force for any purpose whatsoever.
(d) Each Contract of Las Americas is valid and binding upon Las
Americas and, to Las Americas' knowledge, each other party thereto and is
in full force and effect and enforceable by Las Americas in accordance with
its terms except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or similar Laws of general application
relating to or affecting creditors' rights, including the effect of
statutory or other Laws regarding fraudulent conveyances and preferential
transfers, and (ii) for the limitations imposed by general principles of
equity or public policy considerations, including as to enforcement of
indemnification provisions. Las Americas has performed all material
obligations required to be performed by it to date under each Contract to
which Las Americas is a party, and there has been no breach or default or,
to Las Americas' knowledge, a claim of default by Las Americas or by any
other party thereto under any provision thereof and no event has occurred
which, with or without notice, the passage of time or both, would
constitute a default by Las Americas or, to Las Americas' knowledge, any
other party thereto under any provision thereof or which would permit
modification, acceleration or termination of any Contract by any other
party thereto or by Las Americas.
(e) True, complete and correct copies of each of the Contracts
expressly referred to in the notes to Las Americas' financial statements
have heretofore been provided to Broadband by Las Americas.
Section 4.18 DISCLOSURE OF ALL MATERIAL FACTS. The representations and
warranties of Las Americas contained herein, and the statements contained in any
certificate, schedule, list or other writing furnished to Broadband pursuant to
the provisions of this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact which is necessary in order to
make the information given by Las Americas to Broadband or its representatives
prior to the Closing not misleading.
13
Section 4.19 NO BREACH, CONSENTS. Assuming receipt of the consents,
approvals and authorizations specifically contemplated by the next sentence, the
execution and delivery of the Agreement by Las Americas does not, and the
consummation by Las Americas of the transactions contemplated hereby will not:
(i) violate or conflict with or result in any breach of any provision of the
articles of incorporation or by-laws of Las Americas; (ii) violate or conflict
with or constitute a breach or default (or an event that with notice or lapse of
time, or both, would become a breach or default) under or will result in the
termination of, or accelerate the performance required by, or result in the
creation of any Lien, other than a Lien arising from or through Broadband, upon
any of the assets under, any Contract to which Las Americas is a party or by
which its assets or properties may be bound or affected or (iii) violate any Law
applicable to Las Americas, excluding from the foregoing clauses (ii) and (iii)
such defaults, rights and violations which, in the aggregate are not reasonably
expected to have a Material Adverse Effect on Las Americas' ability to perform
its obligations under this Agreement or to consummate the Merger. Except for the
applicable requirements of the HSR Act, the Merger Filing and obtaining the Las
Americas' Requisite Vote (including applicable federal securities laws), no
Government Approval, or consent, approval, authorization or action by, notice
to, or filing with, any other Person is required in connection with the
execution, delivery and performance of this Agreement, the other documents and
instruments to be executed and delivered by Las Americas pursuant hereto or the
consummation by Las Americas of the transactions contemplated hereby or thereby,
except where the failure to obtain such Governmental Approvals or other
consents, approvals, authorizations or actions, to give such notices or to make
such filings is not reasonably expected to have a Material Adverse Effect on Las
Americas' ability to perform its obligations under this Agreement or to
consummate the Merger.
Section 4.20 REPORTS, FINANCIAL STATEMENTS, ETC.
(a) Except as set forth on SECTION 4.20(a) of the Las Americas Due
Diligence Schedules, Las Americas has filed with the SEC all material
forms, statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) (the "LAS AMERICAS SEC
REPORTS") required to be filed by it under each of the Securities Act, the
Securities Exchange Act of 1934, as amended, and the respective rules and
regulations thereunder, all of which, as amended if applicable, complied
when filed in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. As of their
respective dates, the Las Americas SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) Since the date of the Las Americas Financial Statements, there
has not been any material change by Las Americas in accounting principles,
methods or policies for financial accounting purposes, except as required
by concurrent changes in GAAP or as disclosed in Las Americas SEC Reports.
There are no material amendments or modifications to agreements, documents
or other instruments which previously had been filed by Las Americas with
the SEC pursuant to the Securities Act or the Securities Exchange Act of
14
1934, as amended, which have not yet been filed with the SEC but which are
required to be filed.
Section 4.21 PROXY STATEMENT/PROSPECTUS. None of the information to be
supplied by Las Americas for inclusion in any joint proxy/registration statement
to be distributed in connection with Las Americas' and Broadband's respective
meeting of stockholders to vote upon this Agreement and the transactions
contemplated hereby (the "PROXY STATEMENT/PROSPECTUS") will contain, at the time
of the mailing of the Proxy Statement/Prospectus and any amendments or
supplements thereto, and at the time of the meeting of the stockholders of Las
Americas to be held in connection with the transactions contemplated by this
Agreement, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 4.22 BALANCE SHEET. As of the date of this Agreement, Las Americas
has accounts payable and long-term debt of not more than a total of Two Million
Dollars ($2,000,000).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BROADBAND
Except as disclosed (i) in the due diligence schedules to be delivered to
Las Americas on or about May 3, 2002 (the "BROADBAND DUE DILIGENCE SCHEDULES");
(ii) in the Broadband SEC Reports filed within two (2) years from the date of
this Agreement; or (iii) as otherwise set forth in this Agreement, Broadband
hereby represents and warrants to Las Americas as follows:
Section 5.1 ORGANIZATION AND QUALIFICATION. Broadband is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Broadband is duly qualified to do business and is in good standing in
all foreign jurisdictions wherein the character of the properties so owned or
leased by it or the nature of its business makes such qualification to do
business necessary, except for any such failure to so qualify, which when taken
as a whole with all other such failures, is not reasonably expected to have a
Material Adverse Effect. The copies of the articles of incorporation of
Broadband, and all amendments thereto, as certified by the Delaware Secretary of
State, and the by-laws, as amended to date, of Broadband, which have been
previously delivered to Las Americas, are complete, accurate and current in all
material respects. The stock transfer books and minute books or similar records
of Broadband, which have been previously made available to Las Americas, are
complete, accurate and current in all material respects.
Section 5.2 SUBSIDIARIES. Each Subsidiary of Broadband is identified on
SECTION 5.2 of the Broadband Due Diligence Schedules. Except as otherwise
provided in SECTION 5.2 of the Broadband Due Diligence Schedules, (i) all of the
outstanding equity interests of each Subsidiary are owned by Broadband, free and
clear of all Liens and free and clear of any other restriction (including any
restriction on the right to vote, xxx or otherwise dispose of the capital stock
of such Subsidiary); and (ii) each Subsidiary is in good standing in the State
of Delaware and all foreign jurisdictions wherein the character of the
properties so owned or leased by it or the nature of its business makes such
15
licensing or qualification to do business necessary, except where the failure to
so qualify or be licensed, which when taken together with all other such
failures, is not reasonably expected to have a Material Adverse Effect.
Section 5.3 AUTHORITY; ENFORCEABILITY. Broadband has all requisite
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement and,
subject only to adoption of this Agreement by the Holders of at least a majority
of Broadband Shares entitled to vote (the "BROADBAND REQUISITE VOTE") to
consummate the Merger. This Agreement has been duly executed and delivered by
Broadband and is a valid and binding agreement of Broadband enforceable against
Broadband in accordance with its terms except: (i) as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or similar Laws of
general application relating to or affecting creditors' rights, including the
effect of statutory or other Laws regarding fraudulent conveyances and
preferential transfers, and (ii) for the limitations imposed by general
principles of equity or public policy considerations, including as to
enforcement of indemnification provisions.
Section 5.4 CAPITALIZATION. The authorized capital stock of Broadband
consists of (i) 100,000,000 shares of common stock, of which 4,963,043 shares
are validly issued and outstanding; (ii) 7,000,000 shares designated as Series A
Preferred Stock, of which 3,283,899 shares are validly issued and outstanding;
(iii) 2,625,000 shares designated as Series B Preferred Stock, all which are
validly issued and outstanding; and (iv) 7,875,000 shares designated as Series C
Preferred Stock, all of which are validly issued and outstanding. All Broadband
Shares have been duly authorized and are fully paid, non-assessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Except as set forth in SECTION 5.4 of the Broadband Due Diligence
Schedules, there are no Broadband Shares or other equity interests or securities
of Broadband reserved for issuance or any outstanding subscriptions, options,
warrants, rights, "phantom" stock rights, convertible or exchangeable
securities, stock appreciation rights or other agreements or commitments
granting to any Person any interest in or right to acquire at any time, or upon
the happening of any stated event, any Broadband Shares or other equity interest
or securities of Broadband, or any interest in, exchangeable for or convertible
into Broadband Shares or other equity interests or securities of Broadband.
Broadband has no treasury shares.
Section 5.5 FINANCIAL INFORMATION. Set forth on SECTION 5.5 of the
Broadband Due Diligence Schedules are (a) audited balance sheets of Broadband
as of September 30, 2001 and 2000, and the unaudited balance sheet as of
December 31, 2001 (each a "BROADBAND BALANCE SHEET" and, collectively the
"BROADBAND BALANCE SHEETS," and such balance sheet as of December 31, 2002 is
referred to herein as the "BROADBAND INTERIM BALANCE SHEET") and (b)
statements of income, cash flows and changes in stockholders' equity of
Broadband for each of the years ended September 30, 2001 and 2000 (each a
"BROADBAND INCOME STATEMENT" and, collectively the "BROADBAND INCOME
STATEMENTS" and, collectively with the Broadband Balance Sheets, the
"BROADBAND FINANCIAL STATEMENTS"), and for the quarterly period ended
December 31, 2001 (the "BROADBAND INTERIM INCOME STATEMENT" and, collectively
with the Broadband Interim Balance Sheet, the "BROADBAND INTERIM FINANCIAL
STATEMENTS"). The Broadband Financial Statements have been audited by either
Xxxx & Associates (September 30, 2001 and December 31, 2001) or
16
Xxxxxx, Bierwolf & Xxxxxxxx (September 30, 2000), whose reports thereon are
included therein. The Broadband Financial Statements, the Broadband Interim
Financial Statements and the notes thereto fairly present, in all material
respects, the assets, liabilities and financial condition of Broadband as of the
respective dates thereof, and such statements of income, cash flows and changes
in stockholders' equity and the notes thereto fairly present, in all material
respects, the results of operations of Broadband for the period therein referred
to, all in accordance with GAAP consistently applied during the period involved,
except as otherwise disclosed in the notes thereto and subject, where
appropriate, to normal year-end adjustments (which will not be material in
amount) and the absence of notes in the case of interim statements and the
absence of notes in the case of interim statements.
Section 5.6 ABSENCE OF CERTAIN CHANGES. Except as otherwise contemplated by
this Agreement, since the date of the Broadband Financial Statements, there has
not occurred any event, condition, circumstance, change or development that has
or is reasonably expected to have a Material Adverse Effect on Broadband.
Section 5.7 TAX MATTERS.
(a) Broadband files Tax Returns only in the United States and the
State of Delaware.
(b) Broadband has (i) duly filed with the appropriate Governmental
Bodies all material Tax Returns required to be filed by it on or prior to
the date hereof, and such Tax Returns are true, correct and complete in all
material respects and (ii) duly paid in full or made provision in
accordance with GAAP on the books of Broadband for the payment of all
material Taxes for all periods ending through the date hereof.
(c) Except as set forth on SECTION 5.7 of the Broadband Due Diligence
Schedules, there are no Liens for Taxes upon Broadband's assets or
Broadband Shares except for statutory liens for current Taxes not yet due.
(d) Broadband has complied in all material respects with all
applicable Laws relating to the payment and withholding of Taxes
(including, withholding of Taxes pursuant to Sections 1441, 1442, 3121,
3402, 3406 and 4421 of the Code or similar provisions under any other
applicable Laws) and has, within the time and the manner prescribed by law,
withheld from and paid over to the proper Governmental Bodies all amounts
required to be so withheld and paid over under applicable Laws.
(e) There have been no audits or other administrative proceedings or
court proceedings prior to the date hereof, and none are currently pending
with any Governmental Body with regard to any Taxes or Tax Returns of
Broadband, and Broadband has not received a written notice of any pending
audits or proceedings.
17
(f) There are no outstanding written requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against Broadband.
(g) Broadband is not a party to any Contract providing for the
allocation or sharing of Taxes.
(h) Broadband is not a party to any Contract or arrangement that is
reasonably expected to result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(i) No power of attorney has been executed by Broadband with respect
to any matter relating to Taxes, which power of attorney currently is in
force.
Section 5.8 REAL ESTATE.
(a) SECTION 5.8(a) of the Broadband Due Diligence Schedules sets
forth the address of each parcel of real property owned by Broadband.
(b) All leases of real property leased or subleased by or for the use
or benefit of Broadband and all leases of real property as to which
Broadband is the lessee or sublessee, and all amendments and modifications
thereof (collectively, the "LEASES"), are listed on SECTION 5.8(b) of the
Broadband Due Diligence Schedules, and true, correct and complete copies
thereof have been delivered to Las Americas. All such Leases are valid,
binding and in full force and effect and are enforceable by Broadband in
accordance with their terms (except as such enforceability may be affected
by bankruptcy, reorganization, moratorium or similar Laws generally
affecting creditors' rights and by general principles of equity or public
policy limitations) and have not been modified or amended except as noted
in SECTION 5.8(b) of the Broadband Due Diligence Schedules; Broadband has
performed all material obligations required to be performed by it under
each such Lease; and there has been no material breach or default under any
such Leases by Broadband, or, to Broadband's knowledge, any other party
thereto, nor any such breach or default by Broadband, or, to Broadband's
knowledge, any other party thereto which with notice or lapse of time or
both would constitute a material event of default thereunder.
Section 5.9 LITIGATION. Except as set forth on SECTION 5.9 of the
Broadband Due Diligence Schedules, there are no claims, actions, suits or
proceedings pending or, to Broadband's knowledge, threatened against Broadband
and there are no investigations pending or, to Broadband's knowledge, threatened
against Broadband.
Section 5.10 EMPLOYEE BENEFIT PLANS; ERISA
(a) SECTION 5.10(a) of the Broadband Due Diligence Schedules
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase,
18
stock option, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, agreement or
arrangement, and each other employee benefit plan program, agreement or
management, whether formal or informal, written or oral, including but not
limited to those plans defined as an "employee benefit plan" within the
meaning of Section 3(3) of ERISA (each, a "BENEFIT PLAN"), that is
maintained or contributed to by Broadband or, solely with respect to a
Benefit Plan that is subject to Section 302 or Title IV of ERISA, by any
other trade or business, whether or not incorporated, which together with
Broadband would be deemed a "single employer" within the meaning of Section
4001 of ERISA or Section 414(b), (c), (m) or (o) of the Code (an "ERISA
AFFILIATE"), for the benefit of any employee, consultant, officer or
director of Broadband or, if applicable, any ERISA Affiliate.
(b) Except as set forth on SECTION 5.10(b) of the Broadband Due
Diligence Schedules, no Benefit Plan is a "multiemployer plan," as such
term is defined in Section 3(37) of ERISA and no Benefit Plan is subject to
Title IV or Section 302 of ERISA. To Broadband's knowledge, each of the
Benefit Plans is operated in all material respects in accordance with the
requirements of all applicable Laws.
(c) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any
Benefit Plan. Broadband has not incurred any liability for any excise tax
arising under Section 4975 or 4976 of the Code or civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA and no fact or event exists that
is reasonably expected to give rise to any such liability with respect to
any Benefit Plan. Except as set forth on SECTION 5.10(c) of the Broadband
Due Diligence Schedules, there are no pending or, to Broadband's knowledge,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any of the Plans, or any trusts related thereto
or any trustee or administrator thereof. Except as set forth on SECTION
5.10(c) of the Broadband Due Diligence Schedules, no litigation or
administrative or other proceeding has occurred or is threatened involving
any Plan or any trusts related thereto or any trustee or administrator
thereof.
(d) To Broadband's knowledge, all contributions to, and payments
from, any Benefit Plan required to be made by Broadband or any ERISA
Affiliate in accordance with the terms of the Benefit Plans have been
timely made as of the last day of the most recent plan year thereof ended
prior to the date of this Agreement, or will be timely made in accordance
with Section 404(a)(6) of the Code. Except as set forth on SECTION 5.10(d)
of the Broadband Due Diligence Schedules, all required contributions to,
and payments from, the Plans that were not required to be made as of such
date were properly accrued and reflected on the Broadband Balance Sheet and
on the Broadband Interim Balance Sheet.
Section 5.11 ENVIRONMENTAL MATTERS.
19
(a) Except as set forth on SECTION 5.11(a) of the Broadband Due
Diligence Schedules, Broadband is in material compliance with all
applicable Environmental Laws. To Broadband's knowledge, Broadband has not
received any written communication that alleges that Broadband is not in
such compliance.
(b) Except as set forth on SECTION 5.11(b) of the Broadband Due
Diligence Schedules, there is no Environmental Claim pending or, to
Broadband's knowledge, threatened against Broadband.
Section 5.12 COMPLIANCE WITH APPLICABLE LAWS. Except as, individually or in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect on Broadband or its Subsidiaries, when taken as a whole, or except as set
forth on SECTION 5.12 of the Broadband Due Diligence Schedules, Broadband and
its Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
orders and approvals of all Governmental Bodies which are necessary for the
operations of the business now being conducted by Broadband and its
Subsidiaries, taken as a whole (the "BROADBAND PERMITS"), and no suspension or
cancellation of any of the Broadband Permits is pending or, to the knowledge of
Broadband, threatened. Broadband and its Subsidiaries are in compliance with the
terms of the Broadband Permits, except where the failure to so comply,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Broadband or its Subsidiaries, when taken as a whole.
Neither Broadband nor its Subsidiaries is in violation of, and Broadband and its
Subsidiaries have not received any written notices claiming a violation of any
laws, statutes, ordinances, rules or regulations of any Governmental Body,
except for violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Broadband or its
Subsidiaries, when taken as a whole.
Section 5.13 COMMISSIONS. Except as set forth on SECTION 5.13 of the
Broadband Due Diligence Schedules neither Broadband nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated by this Agreement for
which Las Americas bears any liability or responsibility.
Section 5.14 NO UNDISCLOSED LIABILITIES. Except as set forth on SECTION
5.14 of the Broadband Due Diligence Schedules, Broadband, as of the date hereof,
does not have any material liability or obligation of any nature, whether fixed
or contingent or otherwise, whether due or to become due, including any unfunded
obligation under any pension plan, any liability for Taxes or any environmental
liabilities, that is not reflected or reserved against in the Broadband Balance
Sheet, the Broadband Interim Balance Sheet, or otherwise disclosed in the notes
thereto, other than liabilities and obligations incurred subsequent to the date
of the Broadband Balance Sheet or the Broadband Interim Balance Sheet in the
ordinary course of business consistent with past practice and not in violation
of this Agreement. There are no agreements or arrangements pursuant to which
Broadband has incurred Indebtedness or is liable for payments to stockholders or
former stockholders or their respective Affiliates or Associates.
Section 5.15 Omitted.
20
Section 5.16 CONTRACTS AND COMMITMENTS. Except as (i) expressly referred to
in the notes to the Broadband Financial Statements or the Broadband Interim
Financial Statements or (ii) contained in SECTION 5.16 of the Broadband Due
Diligence Schedules:
(a) Broadband is not party to or bound by any Contract which is
related to its business, operations, financial condition or prospects or
which involves, or is reasonably likely to involve, the expenditure or
receipt by Broadband after the Broadband Interim Balance Sheet Date of more
than Fifty Thousand Dollars ($50,000). The legal enforceability after the
Closing by Broadband of its Contracts will not be affected in any material
respect by the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(b) Broadband is not a party to or bound by (i) any Contract with
stockholders or former stockholders, or any Person known to Broadband to be
an Affiliate or Associate of a stockholder or former stockholder; (ii) any
Contract with officers, employees, agents, consultants, advisors, salesmen,
sales representatives, distributors or dealers that are not cancelable by
Broadband at will without liability, penalty or premium; (iii) any Contract
providing for the payment of any bonus or commission based on sales or
earnings; (iv) any Contract that contains any severance or termination or
change in control pay liability or obligation; (v) any Contract for the
purchase or sale of any security; (vi) any Contract for the borrowing of
money (or guarantee of indebtedness); (vii) any Contract for leasing
personal property which requires annual payments in excess of Twenty-Five
Thousand Dollars ($25,000) or the term of any of which exceeds three (3)
years; (viii) any Contract relating to express product or service
warranties by Broadband; (ix) any Contract containing a covenant not to
compete by Broadband; (x) any Contract granting a Lien (other than a
Broadband Permitted Ownership Lien or Broadband Permitted Real Estate
Lien), security interest or other material encumbrance on any property or
asset of Broadband; (xi) any Contract providing for exclusive purchases by
or from Broadband or containing a requirement purchase obligation; (xii)
any Contract providing for administration, service, utilization review,
adjustment, claims management or similar function relating to insurance or
litigation of Broadband; or (xii) any Contract for the sale of any of the
assets, property or rights of Broadband outside of the ordinary course of
business, except as contemplated by this Agreement.
(c) Broadband has not given any power of attorney (whether revocable
or irrevocable) to any Person that is or may hereafter be in force for any
purpose whatsoever.
(d) Each Contract of Broadband is valid and binding upon Broadband
and, to Broadband's knowledge, each other party thereto and is in full
force and effect and enforceable by Broadband in accordance with its terms
except (i) as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or similar Laws of general application relating to
or affecting creditors' rights, including the effect of statutory or other
Laws regarding fraudulent conveyances and preferential transfers, and (ii)
for the limitations
21
imposed by general principles of equity or public policy considerations,
including as to enforcement of indemnification provisions. Broadband has
performed all material obligations required to be performed by it to date
under each Contract to which Broadband is a party, and there has been no
breach or default or, to Broadband's knowledge, a claim of default by
Broadband or by any other party thereto under any provision thereof and no
event has occurred which, with or without notice, the passage of time or
both, would constitute a default by Broadband or, to Broadband's knowledge,
any other party thereto under any provision thereof or which would permit
modification, acceleration or termination of any Contract by any other
party thereto or by Broadband.
(e) True, complete and correct copies of each of the Contracts
expressly referred to in the notes to Broadband's financial statements,
other than the Contracts that have been filed with the Broadband SEC
Reports prior to the date of this Agreement, have heretofore been provided
to Las Americas by Broadband.
Section 5.17 DISCLOSURE OF ALL MATERIAL FACTS. The representations and
warranties of Broadband contained herein, and the statements contained in any
certificate, schedule, list or other writing furnished to Las Americas pursuant
to the provisions of this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact which is necessary in order to
make the information given by Broadband to Las Americas or its representatives
prior to the Closing not misleading.
Section 5.18 NO VIOLATION, CONSENTS. Assuming receipt of the consents,
approvals and authorizations specifically contemplated by the next sentence, the
execution and delivery of the Agreement by Broadband does not, and the
consummation by Broadband of the Merger will not: (i) violate or conflict with
or result in any breach of any provision of Broadband's certificate of
incorporation or by-laws; (ii) violate or conflict with or constitute a breach
or default (or an event that, with notice or lapse of time, or both, would
become a breach or default) under or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the assets under, any Contract to which Broadband is a party or by
which its assets or properties may be bound or affected; or (iii) violate any
Law applicable to Broadband, excluding from the foregoing clauses (ii) and (iii)
such defaults, rights and violations which, in the aggregate, are not reasonably
expected to have a material adverse effect on Broadband's ability to perform its
obligations under this Agreement or to consummate the Merger. Except for the
consents required under the Merger Filing, the Broadband Requisite Vote
(including applicable securities laws) and the applicable requirements of the
HSR Act, no Governmental Approval or consent, approval, authorization or action
by, notice to, or filing with any other Person is required in connection with
the execution, delivery and performance of this Agreement, the other documents
and instruments to be executed and delivered by Broadband pursuant hereto or the
consummation by Broadband of the transactions contemplated hereby or thereby,
except where the failure to obtain such Governmental Approvals or other
consents, approvals, authorizations or actions, to give such notices or to make
such filings is not reasonably expected to have a material adverse effect on the
ability of Broadband to perform its obligations under this Agreement or to
consummate the Merger.
22
Section 5.19 REPORTS, FINANCIAL STATEMENTS, ETC.
(a) Except as set forth in SECTION 5.19(a) of the Broadband Due
Diligence Schedules, since March 1, 2002, Broadband has filed with the SEC
all material forms, statements, reports and documents (including all
exhibits, post-effective amendments and supplements thereto) (the
"BROADBAND SEC REPORTS") required to be filed by it under each of the
Securities Act, the Securities Exchange Act of 1934, as amended, and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied when filed in all material respects with all
applicable requirements of the appropriate act and the rules and
regulations thereunder. As of their respective dates, the Broadband SEC
Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Since the date of the Broadband Financial Statements, there has
not been any material change by Broadband in accounting principles, methods
or policies for financial accounting purposes, except as required by
concurrent changes in GAAP or as disclosed in Broadband SEC Reports. There
are no material amendments or modifications to agreements, documents or
other instruments which previously had been filed by Broadband with the SEC
pursuant to the Securities Act or the Securities Exchange Act of 1934, as
amended, which have not yet been filed with the SEC but which are required
to be filed.
Section 5.20 PROXY STATEMENT/PROSPECTUS. None of the information to be
supplied by Broadband for inclusion in the Proxy Statement/Prospectus will
contain, at the time of the mailing of the Proxy Statement/Prospectus and any
amendments or supplements thereto, and at the time of the meeting of the
stockholders of Broadband to be held in connection with the transactions
contemplated by this Agreement, any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
ARTICLE VI
COVENANTS OF LAS AMERICAS
Las Americas covenants and agrees with Broadband that:
Section 6.1 ACQUISITION PROPOSAL. Except as set forth on SECTION 6.1 of the
Las Americas Due Diligence Schedules, neither Las Americas, nor its Subsidiaries
nor any of their respective officers and directors shall, and Las Americas shall
use its reasonable best efforts to cause its and its Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, encourage, solicit, participate in or initiate (including by way of
furnishing or disclosing non-public information) or knowingly take any action
designed to facilitate any discussions, inquiries, negotiations or the making of
any proposals with respect to or concerning any merger, consolidation, share
acquisition,
23
asset purchase, share exchange, business combination, tender offer, exchange
offer or similar transaction involving the acquisition of twenty percent (20%)
or more of the assets of Las Americas, taken as a whole, or any purchase or sale
of, or tender or exchange offer for the equity securities of Las Americas that,
if consummated, would result in any Person (or the stockholders of that Person)
beneficially owning securities representing twenty percent (20%) or more of the
total voting power of Las Americas or any of its Subsidiaries (any of those
proposed transactions being a "LAS AMERICAS ACQUISITION PROPOSAL"). Nothing
contained in this SECTION 6.1 or any other provision of this Agreement shall
prohibit Las Americas or its board from: (i) taking and disclosing to Las
Americas' stockholders a position with respect to a tender or exchange offer by
a third party not solicited, encouraged, discussed, continued or failed to be
ceased or terminated in contravention of this Agreement pursuant to Rules 14d-9
and 14e-2 under the Exchange Act or (ii) making such disclosure to Las Americas'
stockholders as, in the good faith judgment of its board, pursuant to advice
from outside counsel, is reasonably expected to be required under applicable
law, provided that Las Americas may not, except as otherwise permitted under
this Agreement, withdraw or modify its position with respect to the Merger or
approve or recommend any Las Americas Acquisition Proposal, or enter into any
agreement with respect to any Las Americas Acquisition Proposal. Upon execution
of this Agreement, Las Americas immediately will cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Notwithstanding the foregoing, prior to the Effective
Time, Las Americas may furnish information (including non-public information) to
any Person pursuant to appropriate confidentiality agreements (which shall
permit the disclosure contemplated by this SECTION 6.1), which agreement shall
contain terms no less restrictive than the terms of the confidentiality
agreement by and between Las Americas and Broadband dated April 22, 2002, and
may negotiate and participate in discussions and negotiations with such Person
concerning a Las Americas Acquisition Proposal if:
(a) Such entity or group has submitted, on an unsolicited basis, a
bona fide written proposal to Las Americas' board relating to any such
transaction which Las Americas' board determines in good faith, consistent
with advice from an independent investment banker, (i) is reasonably
capable of being funded on the disclosed terms and (ii) is reasonably
likely to be consummated in accordance with its terms; and
(b) in the opinion of Las Americas' board, such action is reasonably
expected to be required in order to discharge Las Americas' board's
fiduciary duties to Las Americas' stockholders under applicable law,
determined only after Las Americas' board concludes in good faith that the
Las Americas Acquisition Proposal reasonably could be expected to
constitute a proposal that is superior from a financial standpoint with
respect to the stockholders of Las Americas to the Merger (a "SUPERIOR
PROPOSAL").
Immediately prior to providing any material information or engaging in any
substantive discussions, Las Americas shall notify Broadband of: (i) the
existence of any Las Americas Acquisition Proposal received by Las Americas or
its agents or representatives, the terms and conditions of such Las Americas
Acquisition Proposal and the identity of the Person making such Las Americas
Acquisition Proposal and (ii) any inquiry received by Las Americas or any of its
agents
24
or representatives, in each case, with respect to an Las Americas Acquisition
Proposal. Las Americas promptly will provide to Broadband any non-public
information concerning Las Americas provided to any other party which was not
previously provided to Broadband. Las Americas shall keep Broadband informed of
any material change in the terms and conditions of any such Las Americas
Acquisition Proposal which it or any of its representatives may receive.
Section 6.2 OPERATION OF BUSINESS. From the date of this Agreement to the
Closing Date, except with Broadband's written consent, Las Americas shall:
(a) operate its business substantially as previously operated and
only in the ordinary course of business consistent with past practices and
use its commercially reasonable best efforts to preserve intact its
organization and goodwill; maintain all of Las Americas' tangible assets in
good condition, ordinary wear and tear excepted; comply in all material
respects with all laws applicable to the conduct of Las Americas' business
the failure of which would result in a Material Adverse Effect to the Las
Americas Shares or Las Americas' assets;
(b) except as set forth in SECTION 6.2(b) of the Las Americas Due
Diligence Schedules, not permit a split, combination or reclassification of
any shares of capital stock for Las Americas or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of Las Americas' capital stock;
(c) not repurchase, redeem or otherwise acquire any shares of capital
stock of Las Americas;
(d) except as set forth in SECTION 6.2(d) of the Las Americas Due
Diligence Schedules, not issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of capital stock of Las
Americas or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares;
(e) maintain Las Americas' books and records in the ordinary course
of business consistent with past practices;
(f) not pay any brokerage commissions or finder's fees incurred by
reason of any action taken by Las Americas in connection with the
transactions contemplated by this Agreement;
(g) except as set forth in SECTION 6.2(g) of the Las Americas Due
Diligence Schedules, incur any additional debt, except in the ordinary
course of business that is consistent with Las Americas' past practices;
(h) not change accounting methods, unless otherwise required by GAAP;
25
(i) except as set forth in SECTION 6.2(i) of the Las Americas Due
Diligence Schedules, be timely in all governmental filings and shall
deliver copies thereof to Broadband;
(j) take no actions that would cause the Merger to be treated as
other than tax-free;
(k) not declare or pay any dividends on or make other distributions
in respect of any of its capital stock;
(l) not increase the amount of compensation of any director or
officer of Las Americas or any of its Subsidiaries or make any increase in
or commitment to increase any employee benefits; and
(m) not permit any of its Subsidiaries to take any action contrary to
the restrictions imposed on Las Americas by this SECTION 6.2.
Section 6.3 VOTING AGREEMENT. Las Americas shall cause the Las Americas
Principal Stockholders to enter into a voting agreement, substantially in the
form of EXHIBIT 6.3, pursuant to which the Las Americas Principal
Stockholders shall vote their Las Americas Shares in favor of the Merger.
Section 6.4 LOCK-UP AGREEMENTS. Las Americas shall cause the Las
Americas Principal Stockholders to enter into "lock-up agreements,"
substantially in the form of EXHIBIT 6.4, that restrict the transferability
of any securities that they receive in the Merger.
Section 6.5 EXISTENCE. Las Americas shall take such commercially
reasonable action as may be necessary to maintain, preserve, renew and keep in
full force and effect Las Americas' existence (corporate or otherwise) and
rights and will not amend Las Americas' articles of incorporation or its
by-laws.
Section 6.6 IMPLEMENTING AGREEMENT. Las Americas shall cooperate with
Broadband and use its commercially reasonable best efforts to take or cause to
be taken all actions, and do or cause to be done all things, necessary, proper
or advisable on their part under this Agreement and applicable Laws to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement as soon as practicable. Without limiting the generality of the
foregoing, Las Americas shall take all commercially reasonable action necessary,
including providing written notice to its stockholders in accordance with
Article 107 of the CBCA, to convene and hold a meeting of its stockholders as
soon as reasonably practicable following the execution of this Agreement. Las
Americas shall provide Broadband with copies of such documents for review and
comment as to the form and content of the notice and any additional materials to
be provided to the holders of Las Americas Shares in connection with such
meeting or solicitation of written consents.
26
Section 6.7 REASONABLE EFFORTS. Las Americas shall use its reasonable best
efforts to cause to be satisfied as soon as practicable all of the conditions
set forth in ARTICLE VIII to the obligations of Broadband to consummate the
transactions contemplated by this Agreement.
Section 6.8 CONFIDENTIALITY. Las Americas shall maintain as confidential
all documents, schedules and information relating to this Agreement on the terms
and conditions contained in the Confidentiality Agreement by and between Las
Americas and Broadband dated April 22, 2002.
Section 6.9 ACCESS TO INFORMATION. Subject to applicable law, Las Americas
shall provide to Broadband and its accountants, counsel, financial advisors and
other representatives reasonable access during normal business hours with
reasonable written notice through the period prior to the Effective Time to Las
Americas' properties, books, records, contracts and commitments and during such
period shall furnish promptly (i) financial statements, schedules and reports of
Las Americas and all amendments thereto and (ii) such other information
concerning Las Americas, its properties and personnel as Broadband shall
reasonably request and Las Americas shall obtain the cooperation of its
officers, employees, counsel, accountants and other representatives.
Section 6.10 GOVERNMENTAL FILINGS. Las Americas shall make, as promptly as
practicable, any required governmental filings required of Las Americas,
including filings pursuant to the HSR Act or applicable securities law,
obtaining any required Government Approvals and complying with any applicable
governmental waiting periods or notification or other procedures required to be
complied with by Las Americas in connection with the transactions contemplated
by this Agreement. Las Americas shall advise Broadband of such filings prior to
their submission to the applicable Governmental Entity.
Section 6.11 MEETING OF LAS AMERICAS' STOCKHOLDERS. Las Americas shall
take, as promptly as practicable after the date of this Agreement, all action
necessary in accordance with the CBCA, its articles of incorporation and by-laws
to convene a meeting of Las Americas' stockholders (the "LAS AMERICAS
STOCKHOLDERS' MEETING") to act on this Agreement. The Las Americas Stockholders'
Meeting shall be held on the same date as the Broadband Stockholders' Meeting.
Subject to the conditions contained in ARTICLE XI of this Agreement, Las
Americas' board of directors shall recommend that Las Americas' stockholders
vote to approve the Merger and adopt this Agreement; PROVIDED, HOWEVER, that Las
Americas may change its recommendation in any manner if its recommendation of
the Merger would be reasonably likely to be inconsistent with Las Americas'
board of directors' fiduciary duties under applicable law, including its duties
under SECTION 6.1 of this Agreement, as concluded by Las Americas' board of
directors in good faith after consultation with its legal and financial
advisors.
Section 6.12 PREPARATION OF PROXY STATEMENT/PROSPECTUS. As promptly as
practicable after the execution of this Agreement, Las Americas shall work
together with Broadband to prepare the Proxy Statement/Prospectus, file it
with the SEC and use all reasonable efforts to have the Proxy
Statement/Prospectus cleared by the SEC. Las Americas shall notify Broadband
of the receipt of any comments of the SEC with respect to the
27
Proxy Statement and of any requests by the SEC for any amendment or supplement
thereto or for additional information. Las Americas shall promptly provide to
Broadband copies of all correspondence between Las Americas, or any
representatives of Las Americas, and the SEC. Las Americas shall provide
Broadband and its counsel the opportunity to review the Proxy
Statement/Prospectus and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC. As
promptly as practicable after the Proxy Statement/Prospectus has been cleared by
the SEC, Las Americas shall mail the Proxy Statement/Prospectus to Las Americas'
stockholders.
Section 6.13 TAX RETURNS. Las Americas shall prepare or cause to be
prepared all Tax Returns of Las Americas for taxable years or the period ending
on or prior to the Closing Date. Las Americas shall deliver such Tax Returns to
Broadband not later than thirty (30) days prior to the respective due date for
filing such Tax Returns for Broadband's review.
Section 6.14 CABLE CALIFORNIA. No later than one hundred-fifty (150) days
following the execution of this Agreement, Las Americas shall have acquired no
less than: (i) forty-nine percent (49%) of the voting stock of Cable California
S.A. de C.V. ("CABLE CALIFORNIA"), which shall be represented by one hundred
percent (100%) of the outstanding shares of Class B stock of Cable California;
and (ii) ninety percent (90%) of the economic interest of Cable California,
which shall be represented by one-hundred percent (100%) of the outstanding
shares of Class N stock of Cable California.
Section 6.15 FAIRNESS OPINION. Las Americas and its board of directors
shall obtain, in a form satisfactory to Las Americas, no later than ten (10)
Business Days prior to the filing of the Proxy Statement/Prospectus, but in no
event later than July 15, 2002, an opinion of an investment banker of recognized
standing that the Merger is fair, from a financial standpoint, to the holders of
the common stock of Las Americas.
ARTICLE VII
COVENANTS OF BROADBAND
Broadband covenants and agrees with Las Americas that:
Section 7.1 REASONABLE EFFORTS. Broadband shall use its reasonable best
efforts to cause to be satisfied as soon as practicable all of the conditions
set forth in ARTICLE IX to the obligations of Las Americas to consummate the
transactions contemplated by this Agreement.
Section 7.2 CONFIDENTIALITY. Broadband shall maintain as confidential all
documents, schedules and information relating to this Agreement on the terms and
conditions contained in the Confidentiality Agreement by and between Las
Americas and Broadband dated April 22, 2002.
Section 7.3 GOVERNMENTAL FILINGS. Broadband shall make, as promptly as
practicable, any required governmental filings required of Broadband, including
filings pursuant to the HSR Act or
28
applicable securities law, obtaining any required Government Approvals and
complying with any applicable governmental waiting periods or notification or
other procedures required to be complied with by it in connection with the
transactions contemplated by this Agreement. Broadband shall advise Las Americas
of such filings prior to their submission to the applicable Governmental Entity.
Section 7.4 IMPLEMENTING AGREEMENT. Broadband shall cooperate with Las
Americas and use its commercially reasonable best efforts to take or cause to be
taken all actions, and do or cause to be done all things, necessary, proper or
advisable on their part under this Agreement and applicable Laws to consummate
and make effective the Merger and the other transactions contemplated by this
Agreement as soon as practicable. Without limiting the generality of the
foregoing, Broadband shall take all commercially reasonable action necessary,
including providing written notice to its stockholders in accordance with
Section 222 of the DGCL, to convene and hold a meeting of its stockholders as
soon as reasonably practicable following the execution of this Agreement.
Broadband shall provide Las Americas with copies of such documents for review
and comment as to the form and content of the notice and any additional
materials to be provided to the holders of Broadband Shares in connection with
such meeting or solicitation of written consents.
Section 7.5 ACQUISITION PROPOSAL. Except as set forth on SECTION 7.5 of the
Broadband Due Diligence Schedules, neither Broadband, nor its Subsidiaries nor
any of their respective officers and directors shall, and Broadband shall use
its reasonable best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
encourage, solicit, participate in or initiate (including by way of furnishing
or disclosing non-public information) or knowingly take any action designed to
facilitate any discussions, inquiries, negotiations or the making of any
proposals with respect to or concerning any merger, consolidation, share
acquisition, asset purchase, share exchange, business combination, tender offer,
exchange offer or similar transaction involving the acquisition of twenty
percent (20%) or more of the assets of Broadband, taken as a whole, or any
purchase or sale of, or tender or exchange offer for the equity securities of
Broadband that, if consummated, would result in any Person (or the stockholders
of that Person) beneficially owning securities representing twenty percent (20%)
or more of the total voting power of Broadband or any of its Subsidiaries (any
of those proposed transactions being a "BROADBAND ACQUISITION PROPOSAL").
Nothing contained in this SECTION 7.5 or any other provision of this Agreement
shall prohibit Broadband or its board from: (i) taking and disclosing to
Broadband's stockholders a position with respect to a tender or exchange offer
by a third party not solicited, encouraged, discussed, continued or failed to be
ceased or terminated in contravention of this Agreement pursuant to Rules 14d-9
and 14e-2 under the Exchange Act or (ii) making such disclosure to Broadband's
stockholders as, in the good faith judgment of its board, pursuant to advice
from outside counsel, is reasonably expected to be required under applicable
law, provided that Broadband may not, except as otherwise permitted under this
Agreement, withdraw or modify its position with respect to the Merger or approve
or recommend any Broadband Acquisition Proposal, or enter into any agreement
with respect to any Broadband Acquisition Proposal. Upon execution of this
Agreement, Broadband immediately will cease any existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the
29
foregoing, prior to the Effective Time, Broadband may furnish information
(including non-public information) to any Person pursuant to appropriate
confidentiality agreements (which shall permit the disclosure contemplated by
this SECTION 7.5), which agreement shall contain terms no less restrictive than
the terms of the confidentiality agreement by and between Las Americas and
Broadband dated April 22, 2002, and may negotiate and participate in discussions
and negotiations with such Person concerning a Broadband Acquisition Proposal
if:
(a) Such entity or group has submitted, on an unsolicited basis, a
bona fide written proposal to Broadband's board relating to any such
transaction which Broadband's board determines in good faith, consistent
with advice from an independent investment banker, (i) is reasonably
capable of being funded on the disclosed terms and (ii) is reasonably
likely to be consummated in accordance with its terms; and
(b) in the opinion of Broadband's board, such action is reasonably
expected to be required in order to discharge Broadband's board's fiduciary
duties to Broadband's stockholders under applicable law, determined only
after Broadband's board concludes in good faith that the Broadband
Acquisition Proposal reasonably could be expected to constitute a proposal
that is superior from a financial standpoint with respect to the
stockholders of Broadband to the Merger (a "BROADBAND SUPERIOR PROPOSAL").
Immediately prior to providing any material information or engaging in any
substantive discussions, Broadband shall notify Las Americas of: (i) the
existence of any Broadband Acquisition Proposal received by Broadband or its
agents or representatives, the terms and conditions of such Broadband
Acquisition Proposal and the identity of the Person making such Broadband
Acquisition Proposal and (ii) any inquiry received by Broadband or any of its
agents or representatives, in each case, with respect to a Broadband Acquisition
Proposal. Broadband promptly will provide to Las Americas any non-public
information concerning Broadband provided to any other party which was not
previously provided to Las Americas. Broadband shall keep Las Americas informed
of any material change in the terms and conditions of any such Broadband
Acquisition Proposal which it or any of its representatives may receive.
Notwithstanding the foregoing, Broadband may continue to initiate, solicit
and encourage discussions regarding acquisitions in the multi-dwelling unit
("MDU") marketplace and may continue to make such MDU acquisitions in the
ordinary course of Broadband's business, which proposed acquisitions are set
forth on SCHEDULE 7.5 of the Broadband Due Diligence Schedules.
Section 7.6 ACCESS TO INFORMATION. Subject to applicable law, Broadband
shall provide to Las Americas, and its accountants, counsel, financial advisors
and other representatives reasonable access during normal business hours with
reasonable written notice through the period prior to the Effective Time to
Broadband's properties, books, records, contracts and commitments and during
such period shall furnish promptly (i) financial statements, schedules and
reports of Broadband and (ii) such other information concerning Broadband, its
properties and personnel as Las Americas shall reasonably request and Broadband
shall obtain the cooperation of its officers, employees, counsel, accountants
and other representatives.
30
Section 7.7 MEETING OF BROADBAND'S STOCKHOLDERS. Broadband shall take, as
promptly as practicable after the date of this Agreement, all action necessary
in accordance with the DGCL, its certificate of incorporation and by-laws to
convene a meeting of Broadband's stockholders (the "BROADBAND STOCKHOLDERS'
MEETING") to act on this Agreement. The Broadband Stockholders' Meeting shall be
held on the same date as the Las Americas Stockholders' Meeting. Subject to the
conditions contained in ARTICLE XI of this Agreement, Broadband's board of
directors shall recommend that Broadband's stockholders vote to approve the
Merger and adopt this Agreement; PROVIDED, HOWEVER, that Broadband may change
its recommendation in any manner if its recommendation of the Merger would be
reasonably likely to be inconsistent with Broadband's board of directors'
fiduciary duties under applicable law, including its duties under SECTION 7.5 of
this Agreement, as concluded by Broadband's board of directors in good faith
after consultation with its legal and financial advisors.
Section 7.8 OPERATION OF BUSINESS. From the date of this Agreement to the
Closing Date, except with Las Americas' written consent, Broadband shall:
(a) operate its business substantially as previously operated and
only in the ordinary course of business consistent with past practices and
use its commercially reasonable best efforts to preserve intact its
organization and goodwill; maintain all of Broadband's tangible assets in
good condition, ordinary wear and tear excepted; comply in all material
respects with all laws applicable to the conduct of Broadband's business
the failure of which would result in a Material Adverse Effect to the
Broadband Shares or Broadband's assets;
(b) except as set forth in SECTION 7.8(b) of the Broadband Due
Diligence Schedules, not permit a split, combination or reclassification of
any shares of capital stock for Broadband or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of Broadband's capital stock;
(c) not repurchase, redeem or otherwise acquire any shares of capital
stock of Broadband;
(d) except as set forth in SECTION 7.8(d) of the Broadband Due
Diligence Schedules, not issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of capital stock of Broadband
or any securities convertible into or exercisable for, or any rights,
warrants or options to acquire, any such shares;
(e) maintain Broadband's books and records in the ordinary course of
business consistent with past practices;
(f) not pay any brokerage commissions or finder's fees incurred by
reason of any action taken by Broadband in connection with the transactions
contemplated by this Agreement, other than the Commissions;
31
(g) except as set forth in SECTION 7.8(g) of the Broadband Due
Diligence Schedules, incur any additional debt, except in the ordinary
course of business that is consistent with Broadband's past practices;
(h) not change accounting methods, unless otherwise required by GAAP;
(i) except as set forth in SECTION 7.8(i) of the Broadband Due
Diligence Schedules, be timely in all governmental filings and shall
deliver copies thereof to Las Americas;
(j) take no actions that would cause the Merger to be treated as
other than tax-free;
(k) not declare or pay any dividends on or make other distributions
in respect of any of its capital stock;
(l) not increase the amount of compensation of any director or
officer of Broadband or any of its Subsidiaries or make any increase in or
commitment to increase any employee benefits; and
(m) not permit any of its Subsidiaries to take any action contrary
to the restrictions imposed on Broadband by this SECTION 7.8.
Section 7.9 VOTING AGREEMENTS. Broadband shall cause its officers and
directors who are acting as such immediately prior to the Effective Time to
enter into a voting agreement, substantially in the form of EXHIBIT 6.3,
pursuant to which its officers and directors shall vote their Broadband
Shares in favor of the Merger.
Section 7.10 LOCK-UP AGREEMENTS. Broadband shall cause its officers and
directors that are acting as such immediately prior to the Effective Time to
enter into "lock-up agreements," substantially in the form of EXHIBIT 6.4,
that restrict the transferability of any securities that they receive in the
Merger.
Section 7.11 EMPLOYMENT AGREEMENT. Broadband shall enter into an
employment agreement, substantially in the form of EXHIBIT 7.11, with Xxxxxxx
X. Xxxxx to act as Broadband's chairman and chief executive officer for a
period of three (3) years from the Effective Date. The terms and conditions
of such employment agreement shall be mutually agreeable to Broadband and
Xxxxxxx X. Xxxxx.
Section 7.12 FAIRNESS OPINION. Broadband and its board of directors shall
obtain, in a form satisfactory to Broadband, no later than ten (10) Business
Days prior to the filing of the Proxy Statement/Prospectus, but in no event
later than July 15, 2002, an opinion of an investment banker of recognized
standing that the Merger is fair, from a financial standpoint, to the holders of
the common stock of Broadband.
32
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BROADBAND
The obligation of Broadband to effect the Merger is subject to the
satisfaction or waiver by Broadband, at or prior to the Effective Time, of the
following conditions:
Section 8.1 REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Las Americas made herein shall be true and correct in all material
respects, in each case as of the date made and, except to the extent such
representation, warranty or covenant expressly provides that it relates solely
to the date hereof or an earlier date, at and as of the Closing Date, with the
same force and effect as though made at and as of the Closing Date.
Section 8.2 PERFORMANCE; NO DEFAULT. Las Americas will have performed and
complied in all material respects with all the obligations, agreements and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing.
Section 8.3 DELIVERY OF CERTIFICATE. Las Americas shall have delivered to
Broadband a certificate, dated the Closing Date, executed by Las Americas,
certifying to the fulfillment of the conditions set forth in SECTIONS 8.1 AND
8.2.
Section 8.4 TAX OPINION. Broadband shall have received from Xxxxxxx &
Xxxxxxxx Ltd., counsel to Broadband, on the Closing Date, a written opinion, in
form and substance reasonably satisfactory to Broadband, to the effect that, for
federal income tax purposes, the Merger shall constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and Broadband and Las Americas
each shall be a party to that reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, Xxxxxxx & Xxxxxxxx Ltd. may rely
upon representations contained herein and may receive and rely upon
representations from Broadband (the "BROADBAND TAX CERTIFICATE"), Las Americas
(the "LAS AMERICAS TAX CERTIFICATE"), and others.
Section 8.5 GOVERNMENTAL APPROVALS. All Governmental Approvals from, and
all declarations, filings and registrations with, any Governmental Body required
to legally consummate the Merger and the transactions contemplated herein shall
have been obtained or made, all applicable waiting periods under the HSR Act
shall have expired or been terminated, and no Governmental Body shall have an
outstanding injunction against Las Americas.
Section 8.6 LIENS. There shall be no Liens on any property or assets of Las
Americas other than Las Americas Permitted Ownership Liens and Las Americas
Permitted Real Estate Liens.
Section 8.7 GOOD STANDING. Broadband shall have received a good standing
certificate for Las Americas from the Colorado Secretary of State dated within
five (5) days of the Effective Time.
Section 8.8 STOCKHOLDER APPROVAL. This Agreement shall have been adopted by
the Las Americas Requisite Vote at or prior to the Effective Time.
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Section 8.9 CONSENTS. Broadband shall have received the consents and
approvals, in form and substance reasonably satisfactory to Broadband, to the
transactions contemplated hereby from the Persons specified in SECTION 8.9 of
the Broadband Due Diligence Schedules.
Section 8.10 RECEIPT OF FAIRNESS OPINIONS. Broadband shall have received
the fairness opinion referred to in SECTION 7.12.
Section 8.11 MEXICO CONCESSION. Broadband shall have received evidence
reasonably satisfactory to Broadband that Cable California: (i) validly
exists; (ii) is duly qualified to do business; (iii) is in good standing
under the laws of all jurisdictions wherein the character of its properties
so owned or leased by it or the nature of its business makes such
qualification to do business necessary; (iv) validly possesses a concession
that allows it to provide cable television services in the Tijuana region of
Mexico; (v) has obtained all authorizations from the relevant authorities of
Mexico for the transfer of the shares issued by Cable California; and (vi)
has no liability, real or contingent, on or off balance sheet different from
those shown in Cable California's balance sheet dated as of December 31,
2001, which shall be attached to SECTION 8.11 of the Las Americas Due
Diligence Schedules; and (vii) has complied fully with Broadband's due
diligence review and Broadband is satisfied with the results of such due
diligence review.
Section 8.12 FIRPTA CERTIFICATE. Las Americas shall have delivered, not
more than 20 days prior to the Closing Date, a statement in accordance with
Treasury Regulations Sections 1.1445-2(c)(3) and 1.897-2(h) certifying that Las
Americas is not, and has not been, a "United States real property holding
corporation" for purposes of Sections 897 and 1445 of the Code, and Broadband
shall not have actual knowledge that such statement is false or shall have
received a notice that the statement is false pursuant to Treasury Regulations
Section 1.1445-4. In addition, Las Americas shall have delivered on the Closing
Date the notification to the Internal Revenue Service, in accordance with the
requirements pursuant to Treasury Regulations Section 1.897-(h)(2), of delivery
of the statement referred to in the preceding sentence, signed by a responsible
corporate officer of Las Americas.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF LAS AMERICAS
The obligation of Las Americas to effect the Merger is subject to the
satisfaction or waiver by Las Americas, at or prior to the Effective Time, of
the following conditions:
Section 9.1 REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Broadband made herein, shall be true and correct in all material
respects in each case as of the date made and, except to the extent such
representation, warranty or covenant expressly provides that it relates solely
to the date hereof or an earlier date, at and as of the Closing Date, with the
same force and effect as though made at and as of the Closing Date.
34
Section 9.2 PERFORMANCE; NO DEFAULT. Broadband shall have performed and
complied in all material respects with all the obligations, agreements and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing.
Section 9.3 DELIVERY OF CERTIFICATE. Broadband shall have delivered to Las
Americas a certificate, dated the Closing Date, executed by an executive
officer, certifying to the fulfillment of the conditions set forth in SECTIONS
9.1 AND 9.2.
Section 9.4 TAX OPINION. Las Americas shall have received from Jenkens &
Xxxxxxxxx Xxxxxx Xxxxxx LLP, counsel to Las Americas, on the Closing Date, a
written opinion, in form and substance reasonably satisfactory to Las Americas,
to the effect that, for federal income tax purposes, the Merger shall constitute
a "reorganization" within the meaning of Section 368(a) of the Code, and
Broadband and Las Americas each shall be a party to that reorganization within
the meaning of Section 368(b) of the Code. In rendering such opinion, Jenkens &
Xxxxxxxxx Xxxxxx Xxxxxx LLP may rely upon the representations contained herein
and may receive and rely upon representations contained in the Broadband Tax
Certificate, the Las Americas Tax Certificate and from others.
Section 9.5 GOVERNMENTAL APPROVALS. All Governmental Approvals from, and
all declarations, filings and registrations with, any Governmental Body required
to consummate the transactions contemplated by this Agreement shall have been
obtained or made, all applicable waiting periods under the HSR Act shall have
expired or been terminated, and no Governmental Body shall have an outstanding
injunction against Broadband.
Section 9.6 STOCKHOLDER APPROVAL. This Agreement shall have been adopted
by the Broadband Requisite Vote at or prior to the Effective Time.
Section 9.7 CONSENTS. Las Americas shall have received the consents and
approvals, in form and substance reasonably satisfactory to Las Americas, to the
transactions contemplated hereby from the Persons specified in SECTION 9.7 of
the Las Americas Due Diligence Schedules.
Section 9.8 RECEIPT OF INTERIM BRIDGE LOAN FUNDS. Within ten (10) days
from the date of this Agreement, Las Americas shall have received from
Broadband the principal amount of Five Hundred Thousand Dollars ($500,000)
(the "INTERIM LOAN"), subject to a promissory note/loan agreement between the
Parties substantially in the form attached hereto as EXHIBIT 9.8.
Section 9.9 RECEIPT OF FAIRNESS OPINIONS. Las Americas shall have received
the fairness opinion referred to in SECTION 6.15.
Section 9.10 RECEIPT OF BRIDGE LOAN FUNDS. Las Americas shall have
received from Broadband, within one hundred-eighty (days) from the date of
this Agreement, the principal amount of Two Million Dollars ($2,000,000),
subject to a promissory note/loan agreement in a form to be reasonably agreed
upon by the Parties.
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ARTICLE X
ADDITIONAL AGREEMENTS
Section 10.1 FURTHER ASSURANCES. Each Party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
Section 10.2 COMPLIANCE WITH COVENANTS. The Parties shall comply with all
of their respective covenants under this Agreement.
Section 10.3 NOTIFICATION OF CERTAIN MATTERS. The Parties shall give prompt
notice to each other of the occurrence or non-occurrence of any event which
likely would cause any representation or warranty contained herein to be untrue
or inaccurate, or any covenant, condition, or agreement contained herein not to
be complied with or satisfied.
Section 10.4 CONFIDENTIALITY; PUBLICITY. Except as may be required by law
or as otherwise permitted or expressly contemplated herein, prior to the
Closing, no Party hereto or their respective Affiliates, employees, agents and
representatives shall disclose to any third party this Agreement or the subject
matter or terms hereof without the prior written consent of the other parties
hereto. No press release or other public announcement related to this Agreement
or the transactions contemplated hereby shall be issued by any party hereto
without the prior written approval of the other Party. Each Party may make such
public disclosure which such Party believes in good faith is required by law or
by the terms of any listing agreement with or requirements of a securities
exchange, but shall provide a draft of such required public disclosure to the
other Party for its review prior to making such disclosure and shall incorporate
all reasonable covenants made thereto by the other Party.
Section 10.5 INTERIM BRIDGE LOAN AND FUNDING. The Parties shall execute and
deliver a promissory note/loan agreement whereby Las Americas shall receive from
Broadband the principal sum of Five Hundred Thousand Dollars ($500,000) within
ten (10) days from the date of this Agreement on terms and conditions acceptable
to each Party.
Section 10.6 BRIDGE LOAN AND FUNDING. The Parties shall execute and
deliver a promissory note/loan agreement, in the form to be reasonably agreed
upon by the parties, whereby Las Americas shall receive from Broadband the
principal sum of Two Million Dollars ($2,000,000) within one hundred-eighty
(180) days from the date of this Agreement.
Section 10.7 SATISFACTION OF OLIVE LOAN. The Parties hereby agree that,
upon the funding of the Bridge Loan as set forth in XXXXXXX 00.0, Xxx Xxxxxxxx
shall arrange, notwithstanding anything to the contrary contained herein, for
the satisfaction of the loan from Olive Enterprises, Inc., a Pennsylvania
corporation, to Las Americas in accordance with the terms and conditions of
such loan.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at
any time prior to the Closing:
(a) by written consent of Broadband and Las Americas;
(b) by Broadband, if there has been a material breach by Las Americas
of any of its agreements, representations, warranties or covenants
contained herein which has not been waived by Broadband in writing;
(c) by Las Americas if there has been a material breach by Broadband
of any of its agreements, representations, warranties or covenants
contained herein which has not been waived by Las Americas, as the case may
be, in writing;
(d) by Broadband, if any of the conditions to the obligations of
Broadband set forth in ARTICLE VIII shall have become incapable of
fulfillment and shall not have been waived by Broadband in writing;
PROVIDED, HOWEVER, that Broadband shall not be entitled to terminate this
Agreement pursuant to this SECTION 11.1(d) if Broadband is in breach in any
material respect of its representations, warranties, covenants or
agreements contained in this Agreement;
(e) by Las Americas, if any of the conditions to the obligations of
Las Americas set forth in ARTICLE IX shall have become incapable of
fulfillment and shall not have been waived by Las Americas in writing;
PROVIDED, HOWEVER, that Las Americas shall not be entitled to terminate
this Agreement pursuant to this SECTION 11.1(e) if Las Americas is in
breach in any material respect of its representations, warranties,
covenants or agreements contained in this Agreement;
(f) by Broadband, if the information contained in the Las Americas
Due Diligence Schedules indicates a Material Adverse Effect;
(g) by Las Americas, if the information contained in the Broadband
Due Diligence Schedules indicates a Material Adverse Effect;
(h) by Broadband or Las Americas if the Closing has not occurred on
or before the Termination Date;
(i) by Las Americas if it does not receive the principal sum of Five
Hundred Thousand Dollars ($500,000) from Broadband in connection with the
Interim Bridge Loan within ten (10) days from the date of this Agreement;
37
(j) by Las Americas if it does not receive the principal sum of Two
Million Dollars ($2,000,000) from Broadband in connection with the Bridge
Loan within one hundred-eighty (180) days of this Agreement; or
(k) by Broadband or Las Americas, as the case may be, if no fairness
opinion is rendered by July 15, 2002, or a fairness opinion is rendered
indicating that the transaction contemplated by this Agreement is not fair
from a financial point of view.
Section 11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in SECTION 11.1, this Agreement shall forthwith become
void and of no further force and effect with respect to the Parties to this
Agreement other than this SECTION 11.2, SECTION 6.9, SECTION 7.2, SECTION 13.2,
and SECTION 13.8 and there shall be no liability on the part of any Party to
this Agreement to one another, except for any liability of the breaching Party
for any breaches of this Agreement prior to the time of such termination;
provided, however, that with regard to any breach of SECTION 4.22, there shall
not be any liability on the part of the breaching Party in the absence of
willful misrepresentation by the breaching Party.
ARTICLE XII
SURVIVAL
Section 12.1 SURVIVAL OF REPRESENTATIONS. Except as otherwise provided
herein, all representations and warranties contained in this Agreement shall
survive until the Closing (unless the Party seeking damages from a breach
thereof knew or had reason to know of any such breach at the time of Closing).
ARTICLE XIII
MISCELLANEOUS
Section 13.1 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
Section 13.2 EXPENSES. Except as expressly provided herein, whether or not
the transactions contemplated by this Agreement are consummated, all costs and
expenses, including legal and financial advisory fees, incurred in connection
with this Agreement and the transactions contemplated thereby shall be paid by
the Party incurring such expenses. The foregoing shall not effect the legal
right, if any, that any Party hereto may have to recover expenses from the other
Party that breaches its obligations hereunder.
Section 13.3 ENTIRE AGREEMENT. This Agreement, the Las Americas Due
Diligence Schedules, the Broadband Due Diligence Schedules and Exhibits and
other writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the
38
Parties with respect to their subject matter. This Agreement supersedes all
other prior agreements and understandings between the Parties with respect to
its subject matter.
Section 13.4 AMENDMENT, EXTENSION AND WAIVER. This Agreement may not be
amended except by an instrument in writing signed on behalf of all of the
Parties hereto. Any agreement on the part of a Party hereto to any extension or
waiver under this SECTION 13.4 shall be valid only if set forth in an instrument
in writing signed on behalf of such Party. Except as expressly provided in this
Agreement, no delay on the part of any Party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any Party of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. Notwithstanding the foregoing, Broadband
shall have the right, in its sole discretion, to amend the Broadband Due
Diligence Schedules and Las Americas shall have the right, in its sole
discretion, to amend the Las Americas Due Diligence Schedules until ten (10)
days prior to the filing of the Proxy Statement/Prospectus.
Section 13.5 HEADINGS. The article and Section headings contained herein
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
Section 13.6 NOTICES. All notices, demands, consents, requests,
instructions and other communications to be given or delivered or permitted
under or by reason of the provisions of this Agreement, or in connection with
the transactions contemplated hereby and thereby, shall be in writing and shall
be deemed to be delivered and received by the intended recipient as follows: (a)
if personally delivered, on the Business Day of such delivery (as evidenced by
the receipt of the personal delivery service); (b) if mailed by certified or
registered mail, return receipt requested, four (4) Business Days after the
aforesaid mailing; (c) if delivered by overnight courier (with all charges
having been prepaid), on the second Business Day of such delivery (as evidenced
by the receipt of the overnight courier service of recognized standing); or (d)
if delivered by facsimile transmission, on the Business Day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding Business Day (as evidenced by the printed confirmation of
delivery generated by the sending party's telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this SECTION 13.6), or the refusal to accept same, the notice shall be deemed
received on the Business Day the notice is sent (as evidenced by a sworn
affidavit of the sender). All such notices, demands, consents, requests,
instructions and other communications will be sent to the following addresses or
facsimile numbers as applicable:
39
If to Broadband:
USA Broadband, Inc.
000 Xxxxxxxxx Xxx, Xxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
With a copy (which shall not constitute notice) given in the manner prescribed
above to:
XXXXXXX & XXXXXXXX LTD.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
If to Las Americas:
Las Americas Broadband, Inc.
00000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With a copy (which shall not constitute notice) given in the manner prescribed
above to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
Section 13.7 ASSIGNMENT. This Agreement will be binding upon and inure to
the benefit of the Parties hereto and their respective successors, legal
representatives and assigns, but this Agreement may not be assigned by any Party
without the written consent of the other Parties. Any attempted assignment in
violation of this SECTION 13.7 shall be void.
Section 13.8 APPLICABLE LAW. This Agreement will be governed by and
construed and enforced in accordance with the Laws of the State of Delaware
applicable to agreements made and to
40
be performed entirely within such State, without giving effect to the conflict
of laws provisions thereof that would defer to the substantive law of another
jurisdiction.
Section 13.9 WORDS IN SINGULAR AND PLURAL FORM. Words used in the singular
form in this Agreement shall be deemed to import the plural, and vice versa, as
the sense may require.
Section 13.10 ANTITRUST NOTIFICATION. Each of the Parties will as promptly
as practicable, but in no event later than ten (10) Business Days following the
execution and delivery of this Agreement, file or cause to be filed with the FTC
and the DOJ the notification and report form required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information will be in substantial compliance with the requirements
of the HSR Act. Each of the Parties will furnish to the others such necessary
information and reasonable assistance as the others may request in connection
with the preparation of any filing or submission which is necessary under the
HSR Act. Each of the Parties will keep each other apprised of the status of any
communications with, and inquiries or requests for additional information
addressed to the entity that filed a notification and report form as an acquired
or acquiring person from, the FTC or the DOJ and shall comply or cause its
respective filing person to comply promptly with any such inquiry or request.
Each of the Parties will use its reasonable best efforts to obtain any clearance
required under the HSR Act for the Merger.
Section 13.11 THIRD-PARTY BENEFICIARIES. Except as otherwise provided
herein, (a) this Agreement is for the sole benefit of the Parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the Parties hereto and such assigns,
any legal or equitable rights hereunder; and (b) all references herein to the
enforceability of agreements with third parties, the existence or non-existence
of third-party rights, the absence of breaches or defaults by third parties, or
similar matters or statements, are intended only to allocate rights and risks
between the parties and are not intended to be admissions against interests,
give rise to any inference or proof of accuracy, be admissible against any Party
by any non-Party, or give rise to any claim or benefit to any non-Party.
Section 13.12 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof (or the remaining portion thereof) or the application
of such provision to any other persons or circumstance.
Section 13.13 ENFORCEMENT. The Parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the United States District Court
located in the State of Delaware, a state court located in the State of
Delaware, this being in addition to any other remedy to
41
which they are entitled at law or in equity. In addition, each of the Parties
hereto (i) consents to submit such Party to the personal jurisdiction of the
United States District Court located in the State of Delaware or any state court
located in the State of Delaware, in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated hereby
in any court other than the United States District Court located in the State of
Delaware or a state court located in the State of Delaware, and (iv) waives any
right to trial by jury with respect to any claim or proceeding related to or
arising out of this Agreement or any of the transactions contemplated hereby.
Section 13.14 DAMAGES. No Party shall be liable for any special, exemplary,
consequential, speculative, or punitive damages in any claim arising out of this
Agreement or any breach hereof.
ARTICLE XIV
DEFINITIONS
"AFFILIATE" shall have the meaning defined in the rules and regulations of
the SEC under the Securities Act as of the date of this Agreement.
"AGREEMENT" means this Agreement and Plan of Merger including the Exhibits
and Due Diligence Schedules thereto, as they may be amended as permitted
hereunder from time to time.
"ASSOCIATE" shall have the meaning defined in the rules and regulations of
the SEC under the Securities Act as of the date of this Agreement.
"BENEFIT PLAN" shall have the meaning ascribed to such term in SECTION
4.10(a).
"BROADBAND" shall have the meaning ascribed to such term in the Preamble to
this Agreement.
"BROADBAND ACQUISITION PROPOSAL" shall have the meaning ascribed to such
term in SECTION 7.5.
"BROADBAND BALANCE SHEET DATE" means September 30, 2001.
"BROADBAND DISSENTING STOCKHOLDER" means any Broadband stockholder who has
not voted his shares in favor of the Merger and who has not complied with
Section 262 of the DGCL, and ceases to have any of the rights of a stockholder
other than the right to be paid the payments provided for by the DGCL for his
Broadband Shares and any other rights under the DGCL.
"BROADBAND'S DUE DILIGENCE SCHEDULES" shall have the meaning ascribed to
such term in ARTICLE V.
"BROADBAND INTERIM BALANCE SHEET DATE" means December 31, 2002.
42
"BROADBAND PERMITTED OWNERSHIP LIENS" means those Liens (i) for taxes not
yet due and payable or which are being contested in good faith; (ii) which arose
from or through Las Americas; or (iii) liens for indebtedness incurred by
Broadband prior to the date of this Agreement.
"BROADBAND PERMITS" shall have the meaning ascribed to such term in SECTION
5.12.
"BROADBAND PERMITTED REAL ESTATE LIENS" means those Liens (i) set forth on
the title policy provided to Las Americas by Broadband; (ii) Liens for Taxes and
other governmental charges and assessments which are not yet due and payable;
(iii) Liens of landlords and Liens of carriers, warehousemen, mechanics and
material men and other like Liens arising in the ordinary course of business for
sums not yet due and payable; or (iv) disclosed on the Broadband Balance Sheet
provided to Las Americas.
"BROADBAND SEC REPORTS" shall have the meaning ascribed to such term in
SECTION 5.19.
"BROADBAND SHARES" means shares of Broadband's common stock that are issued
and outstanding or subject to being issued in connection with the exercise of
options or warrants or through the conversion of preferred stock.
"BROADBAND STOCKHOLDERS' MEETING" shall have the meaning ascribed to such
term in SECTION 7.7.
"BROADBAND SUPERIOR PROPOSAL" shall have the meaning ascribed to such term
in SECTION 7.5.
"BROADBAND TAX CERTIFICATE" shall have the meaning ascribed to such term in
SECTION 8.4.
"BUSINESS DAY" means any day (other than a Saturday or Sunday) on which
banks are permitted to be open and transact business in the City of Chicago,
Illinois.
"CABLE CALIFORNIA" shall have the meaning ascribed to such term in SECTION
6.14.
"CBCA" means the Colorado Business Corporation Act, as amended.
"CERTIFICATE" shall have the meaning ascribed to such term in SECTION 3.2.
"CERTIFICATE OF MERGER" shall have the meaning ascribed to such term in
SECTION 1.1.
"CLOSING" shall have the meaning ascribed to such term in SECTION 1.2.
"CLOSING DATE" shall have the meaning ascribed to such term in SECTION 1.2.
"CODE" means the Internal Revenue Code of 1986, as amended, and reference
to any section of the Code shall refer to that section as in effect at the date
or, if such section has been modified, corresponding provisions of subsequent
Federal tax Law in effect at the relevant time.
"CONTRACT" or "CONTRACTS" means any material binding agreement or
understanding, whether written or oral, including any commitment, letter of
intent, mortgage, indenture, note, guarantee,
43
lease, license, contract, deed of trust, option agreement, right of first
refusal, security agreement, development agreement, operating agreement,
management agreement, service agreement, partnership agreement, purchase, sale
or other agreement, together with any amendments thereto.
"DGCL" means the Delaware General Corporation Law, as amended.
"DOJ" means the United States Department of Justice.
"EFFECTIVE TIME" shall have the meaning ascribed to such term in SECTION
1.3.
"ENVIRONMENTAL CLAIM" means any material claim, action, cause of action,
investigation or written notice by any person or entity alleging potential
liability (including potential liability for investigatory costs, cleanup and
removal costs, governmental enforcement and response costs, natural resources
damaged, property damages, economic loss, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, discharge or
release or threatened discharge or release into the environment, of any
Materials of Environmental Concern at any location owned or operated by Las
Americas or Broadband or (b) circumstances forming the basis of any violation,
or alleged violation, of any Environmental Law by Las Americas or Broadband.
"ENVIRONMENTAL LAWS" means all material Federal, state, and local Laws (as
of the relevant applicable date, but in no event as of a date later than the
Closing Date) primarily relating to pollution or protection of human health from
pollution or the protection of the environment (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata), navigable
waters, waters of contiguous and exclusive economic zones, ocean waters and
international waters, including Laws relating to emissions, discharges, releases
or threatened discharge or releases of non-permitted non-consumer quantities of
Materials of Environmental Concern or the dredging, handling and disposal of
river sediments, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
non-permitted or non-consumer quantities of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" shall have the meaning ascribed to such term in SECTION
4.10(a).
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXCHANGE AGENT" shall have the meaning ascribed to such term in SECTION
3.2.
"FTC" means the United States Federal Trade Commission.
"GAAP" means generally accepted accounting principles.
"GOVERNMENTAL APPROVALS" mean any material permit, license, certificate,
franchise, concession, approval, consent, ratification, permission, clearance,
confirmation, endorsement,
44
waiver, certification, filing, franchise, notice, variance, right, designation,
rating, registration, qualification or authorization that is or has been issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Law.
"GOVERNMENTAL BODY" means any:
(a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, taxing authority, unit, body or Person and any
court or other tribunal);
(d) multinational organization or body; or
(e) individual, Person, or body exercising, or entitled to exercise,
any executive, legislative, judicial, administrative, regulatory, police,
military or taxing authority or power of any nature.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INCLUDING" means including, without limitation.
"INCOME TAX" or "INCOME TAXES" means any federal, state, local or foreign
income, franchise or similar Tax.
"INTELLECTUAL PROPERTY" means all registered and unregistered trademarks,
service marks, trade names, corporate names, company names, fictitious business
names, trade styles, trade dress, logos, and other source or business
identifiers; patents; copyrights; proprietary formulas, recipes, technology,
knowhow and other trade secrets used in or necessary to conduct Las Americas' or
Broadband's business as currently conducted, and all registrations and
recordings thereof, all applications for registration pending therefor, all
extensions and renewals thereof, all goodwill associated therewith, and all
proprietary rights therein, in any jurisdiction in which Las Americas operates
or does business.
"INTERIM LOAN" shall have the meaning ascribed to such term in SECTION 9.8.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means actual, conscious knowledge of a fact or other matter,
excluding constructive knowledge. With regard to Las Americas, "knowledge" shall
mean the knowledge of Xx. Xxxxxxx X. Xxxxx. With regard to Broadband,
"knowledge" shall mean the knowledge of Xx. Xxxxxx X. Xxxxxx.
45
"LAS AMERICAS" shall have the meaning ascribed to such term in the Preamble
to this Agreement.
"LAS AMERICAS ACQUISITION PROPOSAL" shall have the meaning ascribed to such
term in SECTION 6.1.
"LAS AMERICAS BALANCE SHEET" shall have the meaning ascribed to such term
in SECTION 4.5.
"LAS AMERICAS BALANCE SHEET DATE" means December 31, 2001.
"LAS AMERICAS DISSENTING STOCKHOLDER" means any Las Americas stockholder
who has not voted his shares in favor of the Merger and who has not complied
with Article 113 of the CBCA, and ceases to have any of the rights of a
stockholder other than the right to be paid the payments provided for by the
CBCA for his Las Americas Shares and any other rights under the CBCA.
"LAS AMERICAS' DUE DILIGENCE SCHEDULES" shall have the meaning ascribed to
such term in ARTICLE IV
"LAS AMERICAS INTERIM BALANCE SHEET DATE" means March 31, 2002.
"LAS AMERICAS PERMITS" shall have the meaning ascribed to such term in
SECTION 4.12.
"LAS AMERICAS PERMITTED OWNERSHIP LIENS" means those Liens (i) for taxes
not yet due and payable or which are being contested in good faith; (ii)
which arose from or through Broadband; or (iii) liens for indebtedness
incurred by Las Americas prior to the date of this agreement.
"LAS AMERICAS PERMITTED REAL ESTATE LIENS" means those Liens (i) set forth
on the title policy provided to Broadband by Las Americas; (ii) Liens for Taxes
and other governmental charges and assessments which are not yet due and
payable; (iii) Liens of landlords and Liens of carriers, warehousemen, mechanics
and material men and other like Liens arising in the ordinary course of business
for sums not yet due and payable; or (iv) disclosed on the Las Americas Balance
Sheet provided to Broadband.
"LAS AMERICAS PRINCIPAL STOCKHOLDERS" mean Xxxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxx and Xxxxxx Xxxx Xxxxxxxx.
"LAS AMERICAS REQUISITE VOTE" shall have the meaning ascribed to such term
in SECTION 4.3.
"LAS AMERICAS SEC REPORTS" shall have the meaning ascribed to such term in
SECTION 4.20.
"LAS AMERICAS SHARES" means shares of issued and outstanding $.025 par
value, common stock of Las Americas.
"LAS AMERICAS STOCKHOLDERS' MEETING" shall have the meaning ascribed to
such term in SECTION 6.14.
46
"LAS AMERICAS SUPERIOR PROPOSAL" shall have the meaning ascribed to such
term in SECTION 6.1.
"LAS AMERICAS TAX CERTIFICATE" shall have the meaning ascribed to such term
in SECTION 8.4.
"LAWS" mean all laws (whether statutory or otherwise), rules, regulations,
orders, writs, injunctions, ordinances, judgments or decrees of any Governmental
Body, the Federal Occupational Safety and Health Act and all laws relating to
the safe conduct of business and environmental protection and conservation, the
Civil Rights Act of 1964 and Executive Order 11246 concerning equal employment
opportunity obligations of federal contractors, the Americans with Disabilities
Act of 1990 and any applicable health, sanitation, fire, safety, labor, zoning
and building laws and ordinances.
"LEASED PROPERTY" means each parcel of real property and each interest in
real property leased by Las Americas or Broadband.
"LEASES" means all of those certain leases set forth on the list attached
hereto as SECTION 4.7(b) of the Las Americas/Broadband Due Diligence Schedules
concerning the Leased Property.
"LIENS" means all mortgages, pledges, security interests, liens, charges,
options, conditional sales agreements, claims, restrictions, covenants,
easements, rights of way, title defects or other encumbrances or restrictions of
any nature whatsoever.
"MATERIAL ADVERSE EFFECT" means any change or effect that is, individually
or in the aggregate, materially adverse to the business, prospects, properties,
assets or financial condition or results of operations of any Person, taken as a
whole; provided that any such (i) changes in circumstances or conditions
affecting broadcast, cable and satellite television broadcasts insofar as they
relate to either Party's operations, properties, licenses or transmissions; (ii)
changes in the United States or global economy or financial market conditions;
or (iii) changes in GAAP, shall not be considered to a material adverse change
or a material adverse effect.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any hazardous substance defined
as such under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"MDU" shall have the meaning ascribed to such term in SECTION 7.5.
"MERGER" shall have the meaning ascribed to such term in the Preamble of
this Agreement.
"MERGER FILING" means the filing of the articles of merger with the
Delaware Secretary of State as provided in Section 252 of the DGCL.
"PARTIES" shall have the meaning ascribed to such term in the Preamble to
this Agreement.
"PERSON" means any individual, corporation, limited liability corporation,
joint stock company, joint venture, partnership, unincorporated association,
Governmental Body, country, state or political subdivision thereof, trust or
other entity.
47
"PROXY STATEMENT/PROSPECTUS" shall have the meaning ascribed to such term
in SECTION 4.21.
"SEC" means the United States Securities and Exchange Commission.
"SUBSIDIARY" or "SUBSIDIARIES" means as to any Person, a corporation,
limited liability company, partnership or other entity of which shares of stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, limited liability
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, or of which a majority in equity ownership
interest is held, by such Person.
"TAXES" means all taxes, charges, fees, levies or other assessments,
including income, gross receipts, excise, gaming, property, sales, withholding,
social security, occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges, including estimated
taxes, imposed by the United States or any taxing authority (domestic or
foreign), whether computed on a separate, consolidated, unitary, combined or any
other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to, or imposed upon, or with respect to any such
taxes, charges, fees, levies or other assessments.
"TAX RETURN" or "TAX RETURNS" means any return, report or other document or
information required to be supplied to a taxing authority in connection with
Taxes.
"TERMINATION DATE" means February 1, 2003, or such other date as the
Parties unanimously agree.
[SIGNATURE PAGE TO FOLLOW]
48
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed and delivered by the Parties as of the day and year first above
written.
USA BROADBAND, INC., a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------
Title: Interim President
-----------------------------
LAS AMERICAS BROADBAND, INC., a Colorado
corporation
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------
Title: President
-----------------------------
49
EXHIBITS
6.3................................... Voting Agreement
6.4................................... Lock-Up Agreement
7.11.................................. Employment Agreement
9.8................................... Promissory Note/Loan Agreement
50
EXHIBIT 6.3
TO AGREEMENT AND PLAN OF MERGER
VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 25, 2002 (this "AGREEMENT"), by and
among Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxxx Xxxx Xxxxxxxx (collectively
the "LAS AMERICAS PRINCIPAL STOCKHOLDERS"), stockholders of Las Americas
Broadband, Inc., a Colorado corporation (the "COMPANY"), and USA Broadband,
Inc., a Delaware corporation ("GRANTEE").
WHEREAS, Grantee and the Company have entered into an Agreement and
Plan of Merger, dated as of the date hereof (including all amendments thereto,
the "MERGER AGREEMENT"), providing for, among other things, the merger of the
Company with and into the Grantee with the Grantee continuing as the surviving
corporation (the "MERGER");
WHEREAS, as of the date hereof, the Las Americas Principal Stockholders
beneficially own or exercise sole voting power over 18,374,285 shares of the
common stock, par value $0.025 per share of the Company (the "COMMON STOCK"),
which are owned of record or beneficially by the Las Americas Principal
Stockholders as of the date hereof (the "Shares") (set forth on Schedule 1
attached hereto);
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, the Company has requested that the Las Americas Principal
Stockholders agree to enter into this Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, the Las Americas
Principal Stockholders and Grantee agree as follows:
1. DEFINED TERMS. Capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
2. VOTING OF SHARES; PROXY.
(a) AGREEMENT TO VOTE. The Las Americas Principal Stockholders
agree so long as the Merger Agreement has not been terminated in accordance
with its terms:
(i) to vote the Shares on all matters regarding the Merger
as to which the Las Americas Principal Stockholders are
entitled to vote at a meeting of the stockholders of the
Company, in the manner specified in writing by Grantee (which
notice shall be delivered on or prior to the date on which such
votes are to be cast), which manner shall be determined in
Grantee's absolute, sole and binding discretion; and
(ii) to express consent or dissent to corporate action in
writing without a meeting on all the Shares for all matters
regarding the Merger to which stockholders are allowed to
express such consent or dissent without a meeting, in the
manner specified in writing by Grantee (which notice shall be
delivered on or prior to the date on which such votes, consents
or dissents are to be cast), which manner shall be determined
in Grantee's absolute, sole and binding discretion.
(b) PROXY. Each of the Las Americas Principal Stockholders
hereby irrevocably grants to and appoints Xxxxxx X. Xxxxxx or Xxxx Xxxxxxx
Xxxxxx with full power of substitution (such individual or individuals are
referred to herein as the "PROXY"), as attorney and proxy to vote all Shares
on all matters regarding the Merger as to which the Las Americas Principal
Stockholders are entitled to vote at a meeting of all of the stockholders of
the Company, or to which the Las Americas Principal Stockholders are
entitled to express consent or dissent to corporate action in writing
without a meeting, in the Proxy's absolute, sole and binding discretion. The
Las Americas Principal Stockholders agree that the Proxy may, in the Las
Americas Principal Stockholders names and stead, (i) attend any annual or
special meeting of the stockholders of the Company and vote all Shares on
all matters regarding the Merger at any such annual or special meeting, and
(ii) execute with respect to all Shares any written consent to, or dissent
from, corporate action respecting any matter regarding the Merger to which
the stockholders of the Company are entitled to express such consent or
dissent without a meeting. With respect to any matter regarding the Merger,
the Las Americas Principal Stockholders agree to refrain from (a) voting at
any annual or special meeting of the stockholders of the Company, (b)
executing any written consent in lieu of a meeting of the stockholders of
the Company, (c) exercising any rights of dissent with respect to the
Shares, and (d) granting any proxy or authorization to any person with
respect to the voting of the Shares, except pursuant to this Agreement, or
taking any action contrary to or in any manner inconsistent with the terms
of this Agreement. The Las Americas Principal Stockholders agree that this
grant of proxy pursuant to this Section 2(b) is irrevocable and coupled with
an interest and agrees that the persons designated as the Proxy pursuant
hereto may at any time name any other person who is an officer of Grantee as
a substituted Proxy hereunder to act pursuant hereto, either as to a
specific matter or as to all matters. The Las Americas Principal
Stockholders further agree to execute all additional writings, consents and
authorizations as may be reasonably requested by the Proxy in writing to
evidence the powers granted to the Proxy hereby or to enable the Proxy to
exercise those powers. The Las Americas Principal Stockholders hereby revoke
any proxy previously granted by them with respect to the Shares.
The Las Americas Principal Stockholders affirm that the grant
of proxy set forth in this Section 2(b) is given in connection with the
execution of
2
the Merger Agreement, and that such proxy is given to secure the performance
of the duties of the Las Americas Principal Stockholders under this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE LAS AMERICAS PRINCIPAL
STOCKHOLDERS. Each of the Las Americas Principal Stockholders hereby
severally, for himself only, represents and warrants to Grantee as follows:
(a) OWNERSHIP. Collectively, the Las Americas Principal
Stockholders beneficially own 18,374,285 Shares of Common Stock
(collectively, the "OWNED SHARES") free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever except as otherwise provided
on Schedule 3(a) attached hereto. Other than the Owned Shares, the Las
Americas Principal Stockholders do not (directly or indirectly through
affiliates, or otherwise) own, or have an ownership interest in, (i) any
shares of Common Stock, (ii) any options, warrants, rights or other
securities convertible into or exercisable for shares of Common Stock, (iii)
any other capital stock or other voting securities of the Company or any of
its Subsidiaries, (iv) any other options, warrants, rights or other
securities of the Company convertible into or exchangeable into shares of
capital stock or securities of the Company or any of its Subsidiaries, or
(v) any equity equivalent interests in the ownership or earnings of the
Company or its Subsidiaries or other similar rights.
(b) CAPACITY; ENFORCEABILITY. Each of the Las Americas
Principal Stockholders has the necessary capacity to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. There
are no restrictions on any voting rights or rights of disposition with
respect to the Owned Shares except as otherwise set forth on Schedule 3(b)
attached hereto. Assuming this Agreement has been duly and validly
authorized, executed and delivered by Grantee, this Agreement constitutes a
valid and binding agreement of each of the Las Americas Principal
Stockholders, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership, or
similar laws relating to, or affecting generally the enforcement of
creditor's rights and remedies or by other equitable principles of general
application.
(c) NO CONFLICTS. Except as set forth on Schedule 3(c) attached
hereto, neither the execution and delivery of this Agreement nor the
consummation by the Las Americas Principal Stockholders of the transactions
contemplated hereby will conflict with or constitute a violation of or
default under any material contract, commitment, agreement, arrangement or
restriction of any kind to which any of the Las Americas Principal
Stockholders is a party or is bound.
4. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to the Las Americas Principal Stockholders as
follows:
3
(a) DUE AUTHORIZATION. Grantee has the necessary corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly
authorized by all necessary corporate action on the part of Grantee and has
been duly executed by a duly authorized officer of Grantee. Assuming this
Agreement has been duly and validly executed and delivered by the Las
Americas Principal Stockholders, this Agreement constitutes a valid and
binding agreement of Grantee, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership, or similar laws relating to, or affecting generally the
enforcement of creditor's rights and remedies or by other equitable
principles of general application.
(b) NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation by the Grantee of the transactions
contemplated hereby will conflict with or constitute a violation of or
default under any material contract, commitment, agreement, arrangement or
restriction of any kind to which the Grantee is a party or is bound.
5. TERMINATION. This Agreement and Proxy shall terminate
immediately upon the earlier of (the "TERMINATION DATE") (i) the Effective
Time of the Merger or (ii) the date of termination of the Merger Agreement
in accordance with its terms.
6. TRANSFER OF THE SHARES. Prior to the Termination Date, the Las
Americas Principal Stockholders shall not: (i) transfer, sell, gift-over,
pledge or otherwise dispose of, or consent to any of the foregoing
("TRANSFER"), with regard to any or all of the Owned Shares or any interest
therein (ii) enter into any contract, option or other agreement or
understanding with respect to any Transfer of the Shares; (iii) grant any
proxy, power-of-attorney or other authorization or consent with respect to
any of the Shares; (iv) deposit any of the Shares into a voting trust, or
enter into a voting agreement or arrangement with respect to any of the
Shares; or (v) except in fulfillment of their fiduciary obligations as
directors of the Company, take any other action that would in any way
restrict, limit or interfere with the performance of the Las Americas
Principal Stockholders' obligations hereunder or the transactions
contemplated hereby.
7. NO SOLICITATION. Except as provided below, the Las Americas
Principal Stockholders solely in their capacities as stockholders of the
Company, and not in any capacity as a director of the Company will not and
will cause (to the extent they can control the actions of such parties)
their representatives and other agents, including investment bankers,
attorneys and accountants, not to, directly or indirectly, encourage,
solicit, participate in or initiate (including by way of furnishing or
disclosing non-public information) or knowingly take any action designed to
facilitate any discussions, inquiries, negotiations or the making of any
proposals with respect to or concerning any merger, consolidation, share
acquisition, asset purchase, share exchange, business
4
combination, tender offer, exchange offer or similar transaction involving
the acquisition of all or a substantial portion of the assets of the Company
and its Subsidiaries, taken as a whole, or a significant equity interest in
(including by way of tender offer), or a recapitalization or restructuring
of, the Company (any of those proposed transactions being an "ACQUISITION
PROPOSAL"). Upon execution of this Agreement, the Las Americas Principal
Stockholders will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. The Las Americas Principal Stockholders will promptly
notify the Grantee of the existence of any proposal (and the identity of the
Person making it), discussion, negotiation or inquiry received by the Las
Americas Principal Stockholders or any of their representatives relating to
any Acquisition Proposal (including, without limitation, the terms and
conditions thereof) within 48 hours of such receipt. Notwithstanding the
foregoing, if the Company pursuant to Section 6.1 of the Merger Agreement is
permitted to participate in negotiations or discussions with, and otherwise
communicate with, or furnish information to, a third party, then the Las
Americas Principal Stockholders may also participate in negotiations or
discussions with, or furnish information to, such third party, to the same
extent, but subject to the same limitations, as the Company.
8. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto shall bear and pay all
costs and expenses incurred by such party or on its behalf in connection
with the transactions contemplated hereunder, including, without limitation,
the fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision, any such waiver to be evidenced in writing. This Agreement may
not be modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by all of the parties hereto.
(c) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY. This
Agreement (a) constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to such subject matter and (b) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
(d) SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid by a court of competent jurisdiction, the portion of such provision
which is not held invalid and the other provisions hereof shall remain
enforceable and shall
5
not be affected and the application of such provision to persons or
circumstances other than the party as to which it is held invalid shall not
be affected.
(e) GOVERNING LAW. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to the provisions thereof relating
to conflicts of law that would defer to the substantive laws of another
jurisdiction).
(f) HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, demands, consents, requests,
instructions and other communications to be given or delivered or permitted
under or by reason of the provisions of this Agreement, or in connection
with the transactions contemplated hereby shall be in writing and shall be
deemed to be delivered and received by the intended recipient as follows:
(a) if personally delivered, on the Business Day of such delivery (as
evidenced by the receipt of the personal delivery service); (b) if mailed by
certified or registered mail return receipt requested, four (4) Business
Days after the aforesaid mailing; (c) if delivered by overnight courier
(with all charges having been prepaid), on the second Business Day of such
delivery (as evidenced by the receipt of the overnight courier service of
recognized standing); or (d) if delivered by facsimile transmission, on the
Business Day of such delivery if sent by 6:00 p.m. in the time zone of the
recipient, or if sent after that time, on the next succeeding Business Day
(as evidenced by the printed confirmation of delivery generated by the
sending party's telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this
Section 8), or the refusal to accept same, the notice, demand consent,
request, instruction or other communication shall be deemed received on the
Business Day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and
other communications will be sent to the following addresses or facsimile
numbers as applicable:
If to the Las Americas Principal Stockholders:
Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and
Xxxxxx Xxxx Xxxxxxxx
c/o Las Americas Broadband, Inc.
00000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
6
with a copy of all notices and
communications concurrently sent to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to the Grantee:
USA Broadband, Inc.
000 Xxxxxxxxx Xxx, Xxxxx 0
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy of all notices and
communications concurrently sent to:
Xxxxxxx & Xxxxxxxx Ltd.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
or to such other address as any party may specify by notice given to the
other party in accordance with this Section 9(g).
(h) COUNTERPARTS. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
(i) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective successors, permitted assigns,
heirs, executors, administrators and other legal representatives.
(j) FURTHER ASSURANCES. The Las Americas Principal Stockholders
and Grantee shall execute and deliver all other documents and instruments
and take all other action that may be requested by the other as being
necessary to provide the rights and benefits contemplated by this Agreement.
7
(k) SPECIFIC PERFORMANCE. The parties acknowledge that it would
be impossible to fix money damages for violations of this Agreement and that
such violations will cause irreparable injury for which adequate remedy at
law is not available and, therefore, this Agreement must be enforced by
specific performance or injunctive relief. The parties hereto agree that any
party may, in its sole discretion, apply to any court of competent
jurisdiction for specific performance or injunctive or such other relief as
such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable law,
each party waives any objection or defense to the imposition of such relief.
Nothing herein shall be construed to prohibit any party from bringing any
action for damages in addition to an action for specific performance or an
injunction for a breach of this Agreement.
IN WITNESS WHEREOF, the Las Americas Principal Stockholders and Grantee
have caused this Voting Agreement to be signed by themselves or their respective
officers thereunto duly authorized, all as of the day and year first written
above.
USA BROADBAND, INC.
By: ______________________________
Name:
Title:
Date: ________________________
XXXXXXX X. XXXXX
__________________________________
Date: ____________________________
XXXXXXX X. XXXXX
__________________________________
Date: ____________________________
XXXXXX XXXX XXXXXXXX
__________________________________
Date: ____________________________
8
EXHIBIT 6.4
TO AGREEMENT AND PLAN OF MERGER
LOCK-UP AGREEMENT
This Agreement (the "Agreement") is made and entered into by and
between USA Broadband, Inc., a Delaware corporation (the "COMPANY") and
_____________________________, a "LAS AMERICAS PRINCIPAL STOCKHOLDER," as such
term is defined in the Agreement and Plan of Merger Agreement (the "MERGER
AGREEMENT") dated April 25, 2002, by and between the Company and Las Americas
Broadband, Inc. (the "TARGET COMPANY"), as of the 25th day of April, 2002, under
the following circumstances:
A. WHEREAS, the Las Americas Principal Stockholder is the holder of
shares of the common stock of the Target Company prior to the execution of the
Merger Agreement.
B. WHEREAS, in connection with the Merger Agreement, the Las Americas
Principal Stockholder will receive shares in the Company (the "SHARES"); and the
Las Americas Principal Stockholder has agreed that the Shares will be subject to
certain lock-up restrictions as set forth below.
NOW THEREFORE, in consideration of the issuance by the Company of the
Shares to the Las Americas Principal Stockholder and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the Las
Americas Principal Stockholder hereby agrees as follows:
1. In order to induce the Company and the Target Company to enter into
the Merger Agreement, the Las Americas Principal Stockholder hereby agrees that
for a period of ninety (90) days following the Closing Date, as defined in the
Merger Agreement (the "INITIAL LOCK-UP PERIOD"), the Las Americas Principal
Stockholder will not, without prior written consent of the Company, directly or
indirectly, (i) issue, offer, agree to offer to sell, sell, grant an option for
the purchase or sale of, transfer, pledge, assign, hypothecate, distribute or
otherwise encumber or dispose of (whether pursuant to Rule 144 of the General
Rules and Regulations under the Securities Act of 1933, as amended, or
otherwise) any Shares of the Company or (ii) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of the Shares. Notwithstanding the
foregoing, this PARAGRAPH 1 shall not prohibit: (a) a bona fide gift or gifts of
a portion or all of the Shares, provided that the Las Americas Principal
Stockholder provides written notice of such gifts to the Company and the donee
or donees thereof agree in writing to be bound by the terms and conditions of
this Agreement; (b) transfers upon the death of the undersigned to his
executors, administrators, testamentary trustees, legatees or beneficiaries,
provided that, in each case, any such transferee shall be bound by the terms and
conditions of this Agreement; and (c) transfers made by the Las Americas
Principal Stockholder to a trust or custodianship, the beneficiaries of which
include the Las Americas Principal Stockholder, his spouse or descendants
(biological or adoptive), provided that the transferee or transferees agree in
writing to be bound by the terms and conditions of this Agreement. In
furtherance of the foregoing, the Company and its transfer agent are hereby
authorized to decline to make any transfer of the Shares if such transfer would,
or could be reasonably expected to, constitute a violation or breach of this
Agreement.
2. After the Initial Lock-Up Period, one-ninth (1/9) of the Shares
issued to the Las Americas Principal Stockholder shall be released from the
terms of this Agreement each month thereafter until all of the Shares are free
from the lock-up restriction.
3. Notwithstanding the foregoing, if, in the reasonable opinion of the
Company's board of directors, following a request from any underwriter or
placement agent engaged by the Company in connection with the offering of equity
securities, it is necessary in connection with such offering to extend the
restrictions imposed in this Agreement; and provided all of the Company's
directors, officers and other significant stockholders (subject to the Company's
best efforts to obtain an agreement with such significant stockholders) are also
subject to identical restrictions, terms and conditions; and further provided
that such restrictions are imposed on a pro rata basis on all such parties, the
Las Americas Principal Stockholder agrees to execute and deliver a lock-up
agreement containing customary terms and conditions to any underwriter or
placement agent.
4. The Las Americas Principal Stockholder hereby represents and
warrants that he has full capacity to enter into this Agreement and that, upon
request, the Las Americas Principal Stockholder will execute and deliver any
additional documents reasonably necessary in connection with the enforcement
hereof. Any obligations of the Las Americas Principal Stockholder shall be
binding upon the heirs, personal representatives, successors and assigns of the
Las Americas Principal Stockholder.
5. The Las Americas Principal Stockholder hereby consents to the
placing of legends or stop-transfer orders with the transfer agent of the
Company with respect to any of the Shares registered in the name of the Las
Americas Principal Stockholder or beneficially owned by the Las Americas
Principal Stockholder.
6. All notices, demands, consents, requests, instructions and other
communications to be given or delivered or permitted under or by reason of the
provisions of this Agreement, or in connection with the transactions
contemplated hereby and thereby, shall be in writing and shall be deemed to be
delivered and received by the intended recipient as follows: (a) if personally
delivered, on the Business Day of such delivery (as evidenced by the receipt of
the personal delivery service); (b) if mailed by certified or registered mail,
return receipt requested, four (4) Business Days after the aforesaid mailing;
(c) if delivered by overnight courier (with all charges having been prepaid), on
the second Business Day of such delivery (as evidenced by the receipt of the
overnight courier service of recognized standing); or (d) if delivered by
facsimile transmission, on the Business Day of such delivery if sent by 6:00
p.m. in the time zone of the recipient, or if sent after that time, on the next
succeeding Business Day (as evidenced by the printed confirmation of delivery
generated by the sending party's telecopier machine). If any notice, demand,
consent, request, instruction or other communication cannot be delivered because
of a changed address of which no notice was given (in accordance with this
PARAGRAPH 6), or the refusal to accept same, the notice shall be deemed received
on the Business Day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable:
2
If to the Las Americas Principal Stockholder:
_______________________
_______________________
_______________________
Facsimile: ____________
With a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company:
USA Broadband, Inc.
000 Xxxxxxxxx Xxx, Xxxxx 0
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Or to such other address as a party may have furnished to the other
parties in writing in accordance herewith. Any notice consent, direction,
approval, instruction, request or other communication given in accordance with
this PARAGRAPH 6 shall be effective after it is received by the intended
recipient.
7. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Delaware
(without giving effect to the provisions thereof relating to conflicts of law
that would defer to the substantive laws of another jurisdiction).
8. This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
3
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
LAS AMERICAS PRINCIPAL COMPANY:
STOCKHOLDER:
___________________________________ USA BROADBAND, INC., a Delaware
[SIGNATURE] Corporation
___________________________________
[PRINT NAME] By: _________________________________
Its: _________________________________
___________________________________
[TITLE]
4
EXHIBIT 7.11
TO AGREEMENT AND PLAN OF MERGER
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of April 25, 2002 (this "AGREEMENT"), by and
between XXXXXXX X. XXXXX, a resident of California (the "EXECUTIVE"), and USA
BROADBAND, INC., a Delaware corporation (the "COMPANY").
WHEREAS, the Company desires to employ the Executive as the Chairman of the
Board of Directors and Chief Executive Officer of the Company and the Executive
desires to accept employment with the Company in the aforementioned capacity,
all upon the terms and provisions, and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth in this SECTION 1:
a) "Affiliate" of any Person means any stockholder or person or entity
controlling, controlled by or under common control with such Person, or
any director, officer or key executive of such Person or any of their
respective relatives. For purposes of this definition, "control," when
used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings that
correspond to the foregoing.
b) "Cause" shall mean: (i) the Company being subjected to any criminal
liability under any applicable law as a result of any action or inaction
on the part of the Executive, which the Executive did not, at the time,
reasonably believe to be in the best interests of the Company; (ii) the
conviction or admission of the Executive of, or plea by the Executive of
nolo contendere to, any felony or any other crime involving moral
turpitude which the Board of Directors of the Company concludes is
likely to have a material and adverse effect on the business, operations
or reputation of the Company; (iii) if the Executive becomes chronically
addicted to any narcotic or other illegal or controlled substance or
repeatedly abuses any alcoholic product or any prescription stimulant or
depressant, as determined by a physician designated by the Company,
which in the reasonable opinion of the Board of Directors of the Company
materially interferes with Executive's performance of his duties and
obligations hereunder; (iv) the Executive commits fraud, steals or
misappropriates any asset or property of the Company including, without
limitation, any theft or embezzlement of a corporation opportunity; or
(v) a breach of a material term or material provision of this Agreement
by the Executive which is not cured within thirty (30) business days
after written notice of such breach is received by the Executive from
the Company.
c) "Change of Control" shall mean the occurrence of the following: (i) a
change in the membership of more than fifty percent (50%) of the members
of the current Board of
Directors of the Company in any twelve (12) month period; (ii) any
Person or Person who together with a group (as such term is used in
Section 13 of the Securities Exchange Act of 1934, as amended) (other
than the Executive and Xx. Xxxxxxx X. Xxxxx) shall acquire more than
fifty percent (50%) of the capital stock of the Company of all classes
of stock entitled to vote for directors.
d) "Common Stock" shall mean the common stock, par value $0.001 per share,
of the Company, and any other class of common stock of the Company
created after the date of this Agreement in accordance with the
Company's Certificate of Incorporation and applicable law.
e) "Confidential and Proprietary Information" shall mean any and all: (i)
confidential or proprietary information or material not in the public
domain about or relating to the business, operations, assets or
financial condition of the Company or any Affiliate of the Company or
any of the Company's or any such Affiliate's trade secrets (regardless
of the medium in which maintained or stored), including, without
limitation, research and development plans or projects, data and
reports, computer materials such as programs, instructions and
printouts, formulas, product testing information, business improvements,
processes, marketing and selling strategies, strategic business plans
(whether pursued or not), budgets, unpublished financial statements,
licenses, pricing, pricing strategy and cost data, information regarding
the skills and compensation of executives, the identities of customers
and potential customers, intellectual property strategies and any work
in respect of any patents, trademarks, tradenames, service marks, trade
dress, logos or other intellectual property prior to any filing or the
use thereof in commerce, pricing, timing, sales terms, service plans,
methods, practices, strategies, forecasts, know-how and other marketing
techniques; and (ii) information, documentation or material not in the
public domain by virtue of any action by or on the part of the
Executive, the knowledge of which gives or may give the Company or any
Affiliate of the Company a competitive advantage over any Person not
possessing such information. For purposes hereof, the term Confidential
and Proprietary Information shall not include any information or
material: (1) that is known to the general public other than due to a
breach of this Agreement by the Executive; or (2) was disclosed to the
Executive by a Person whom the Executive did not reasonably believe was
bound to a confidentiality or similar agreement with the Company.
f) "Discretionary Bonus" shall have the meaning given to that term in
SECTION 4(b) hereof.
g) "Employment Term" shall have the meaning given to that term in SECTION 2
hereof.
h) "GAAP" shall mean generally accepted United States accounting
principles, as from time to time in effect.
i) "Good Reason" shall mean a (i) substantial change to or reduction in the
duties or responsibilities of the Executive such that the
responsibilities of the Executive are no longer commensurate with the
Executive's office with the Company as set forth herein; (ii) a change
in the Executive's office from that of Chairman of the Board of
Directors and Chief Executive Officer of the Company which is not
agreed to by
2
the Executive within three (3) months of its occurrence; or (iii) the
breach of a material term or provision of this Agreement by the Company
which is not cured by the Company within thirty (30) business days after
written notice of said breach is received by the Company from the
Executive.
j) "Gross Revenues" for each twelve (12) month period during the Term shall
have the meaning of gross revenues of the Company set forth in the
annual financial statements of the Company for the respective applicable
twelve (12) months and which shall be determined in accordance with GAAP
applied on a consistent basis.
k) "Incapacity" shall mean any illness, mental or physical incapacity or
disability which prevents the Executive from performing his duties or
obligations hereunder for a continuous period of one hundred twenty
(120) consecutive days or for shorter periods aggregating one hundred
eighty (180) days within any consecutive twelve (12) month period.
l) "Inventions" shall mean inventions, discoveries, concepts and ideas
whether patentable or not, including, without limitation, processes,
methods, formulae and techniques, and improvements thereof or know-how
related thereto, concerning any business activity of the Company or any
Affiliate of the company, with which the Executive becomes, directly or
indirectly, involved as a result in whole or in part, directly or
indirectly, of the Executive's employment by the Company, or any
Affiliate of the Company.
m) "Market Cap" shall mean the aggregate market value of all of the
Company's issued and outstanding shares of Common Stock as of the date
of determination.
n) "Person" shall mean, without limitation, any natural person,
corporation, partnership, limited liability company, joint stock
company, joint venture association, trust or other similar entity or
firm.
o) "Salary" shall have the meaning given to that term in SECTION 4(a)
hereof.
p) "Without Cause" shall mean the termination of the Executive's employment
hereunder by the Company, other than termination by the Company due to
the Executive's death or Incapacity or based upon Cause.
Section 2. EMPLOYMENT AND TERM. The Company hereby employs the Executive
as the Chairman of the Board of Directors and Chief Executive Officer of the
Company and the Executive hereby accepts such employment in that office and
capacity, upon the terms and provisions, and subject to the conditions, set
forth in this Agreement, for a term of three (3) years, commencing on the
date of the Effective Time (as such term is defined in that certain Agreement
and Plan of Merger by and between the Company and Las Americas Broadband,
Inc. dated April 25, 2002), and terminating three (3) years from the date of
the Effective Time, unless earlier terminated as provided in this Agreement
(the "EMPLOYMENT TERM" or "TERM").
Section 3. EXECUTIVE'S DUTIES.
3
a) The Executive shall be the senior executive officer of the Company
responsible for overseeing the day-to-day operations of the Company and
the Company's strategic operations including, without limitation,
overseeing the Company's merger and acquisition activity, strategic
business development, joint ventures, capital raising (including,
without limitation, liaising with investment banks and financial
advisers), international affairs and the Company's relationships with
outside counsel and other professionals. The Executive shall report
directly and only to the Company's Board of Directors. The Executive may
perform such other duties as may reasonably be assigned to the Executive
by the Company's Board of Directors.
b) The Executive shall devote a substantial part of his business time,
effort, skill and attention to the business, operations and affairs of
the Company and to the furtherance of the interests, business and
prospects of the Company. The Executive shall perform the Executive's
duties and obligations hereunder diligently, competently, faithfully and
to the best of his ability. Subject to disclosure to the Company's
general corporate counsel, the Executive may serve on the board of
directors or other governing boards of, and act as a consultant to,
other corporations, businesses or organizations; PROVIDED that such
service does not materially interfere with the Executive's performance
of his duties and obligations hereunder. The Executive may also engage
in such charitable activities that do not materially interfere with the
Executive's performance of his duties and obligations hereunder.
c) The Executive agrees to execute policy statements and agreements that
the Company may reasonably from time to time require all of its senior
executive officers to execute.
Section 4. COMPENSATION.
a) In consideration of the performance of all of the duties and obligations
to be performed by the Executive hereunder, the Company agrees to pay,
and the Executive agrees to accept during the Employment Term a salary
(the "SALARY") at an annual rate of $240,000, payable in accordance with
the Company's regular payroll practices as from time to time in effect,
less all withholding sand other deductions required to be deducted in
accordance with any applicable federal, state, local or foreign law,
rule or regulation.
b) Simultaneously with the execution and delivery hereof, the Company shall
grant to the Executive (the "EXECUTIVE OPTION") the right and option to
purchase up to 750,000 shares of the Company's Common Stock, at the
prices and according to the terms and conditions set forth in the option
agreement attached hereto as EXHIBIT A.
c) At the sole discretion of the Board of Directors of the Company the
Executive may be paid, in cash, Common Stock, options to purchase Common
Stock, stock appreciation rights ("SAR'S") or any combination thereof,
an annual bonus in such an amount, if any, and based upon such criteria
as the Board of Directors of the Company may from time to time consider
appropriate (the "DISCRETIONARY BONUS").
4
d) As additional consideration for Executive's services to the Company
hereunder, the Board of Directors of the Company may adopt a performance
incentive plan for the Executive, which shall be based upon such
criteria as the Board of Directors of the Company may establish
including, without limitation, the Company attaining a certain level of
annual Gross Revenues or the Company's Market Cap attaining certain
levels. Any amounts earned by the Executive pursuant to such incentive
plan shall be in the form of stock options or SAR's, as shall be
determined by the Board of Directors of the Company.
e) Should there be a Change of Control of the Company or any other
transaction in which the Company is not the surviving entity during the
Employment Term, then as part of that transaction, the Company will
require the surviving entity to modify this Agreement in an equitable
manner to provide the Executive the same type of benefits that he is
entitled to earn pursuant to SECTION 4(d) of this Agreement.
f) All options granted to the Executive pursuant to this Agreement or
referred to herein, to the extent permitted by applicable law, shall be
transferable and assignable. Any unvested options granted to the
Executive hereunder shall fully vest upon a Change of Control or upon a
termination of the Executive's employment under this Agreement by the
Company Without Cause pursuant to SECTION 7(d) hereof or by the
Executive for Good Reason pursuant to SECTION 7(e) hereof.
Section 5. BENEFITS, VACATION.
a) During the Employment Term, the Executive shall be entitled to such
insurance and health and medical benefits pursuant to such plans as are
generally made available to the senior executives of the Company, as a
group, pursuant to such plans as are from time to time maintained by the
Company including, without limitation, medical insurance and dental
insurance coverage; provided, however, that the Executive shall be
required to comply with the conditions of coverage attendant to such
plans.
b) During each contract year of the Employment Term, the Executive shall be
entitled to six (6) weeks of vacation. The Executive shall take vacation
at such time or times as the Executive desires, subject to the
concurrence of the Company based upon the then current business needs
and activities of the Company.
c) During the Employment Term, the Executive shall be eligible to
participate in such profit sharing and other benefit plans that the
Company from time to time makes available to the senior executives of
the Company as a group (including, without limitation, any pension plans
and/or 401K plan implemented by the Company), subject to the terms,
provisions and conditions of such plans, including, without limitations,
any vesting periods and eligibility criteria.
d) During the Employment Term, the Company shall lease a luxury class
automobile for the Executive.
e) The Company shall obtain a term life insurance policy in the face amount
aggregating Five Million Dollars ($5,000,000.00), which is made payable
to such beneficiary or
5
beneficiaries who are designated by the Executive. The Company shall pay
all premiums due on such policies during the Employment Term. After the
termination or expiration of the Employment Term, at the request of the
Executive, the Company shall assign such insurance policies to the
Executive; provided that the Executive assumes the obligation for any
remaining premium payments on such policy.
Section 6. BUSINESS EXPENSES. The Executive shall be entitled to
reimbursement of all ordinary, necessary and reasonable business expenses
actually incurred by the Executive during the Employment Term in the performance
of the Executive's duties hereunder. For all air travel of more than two (2)
hours of flying time, the Executive shall be entitled to travel business class.
Section 7. TERMINATION OF EMPLOYMENT TERM.
a) In the event of death of the Executive during the Employment Term, the
Executive's employment hereunder shall automatically terminate as of the
date of death; provided; however, that the Executive's estate or legal
representative, as the case may be, shall be entitled to receive, and
the Company shall pay, any accrued and unpaid salary for a one (1) year
period following the date of death and reimbursement of any amounts
which are properly owing to the Executive pursuant to SECTION 6 hereof.
b) In the event of the Executive's Incapacity, the Company may, in its sole
discretion, terminate the Executive's employment hereunder upon written
notice to the Executive; provided, however, that the executive or the
Executive's legal representative, as the case may be, shall be entitled
to receive, and the Company shall pay, any accrued and unpaid salary for
a one (1) year period from the date of termination, less any amounts
received by the Executive under any disability insurance policy
maintained by the Company, and reimbursement of business expenses which
are properly owning to the Executive pursuant to SECTION 6 hereof,
through the date of termination.
c) The Company shall have the right to terminate the Executive's employment
under this Agreement at any time for Cause upon written notice to the
Executive. In the event the Executive's employment hereunder is
terminated by the Company for Cause, the Company shall only be obligated
to pay accrued and unpaid salary through the date of termination and the
Company shall pay any accrued and unreimbursed business expenses which
are properly owing to the Executive pursuant to SECTION 6 hereof through
the date of termination.
d) The Company shall have the right to terminate the Executive's employment
hereunder Without Cause at any time upon thirty (30) days' prior written
notice to the Executive. If the Company terminates the Executive's
employment hereunder Without Cause, the Company shall (i) continue to
pay Salary to the Executive provided for hereunder for the greater of
(a) one (1) year from the date of termination or (b) the remainder of
Executive's Employment Term and (ii) pay any unreimbursed business
expenses which are properly owing to the Executive pursuant to SECTION 6
hereof through the date of termination. Any options granted to Executive
hereunder to purchase shares of the Company's common stock that are
unvested at the time of
6
such termination Without Cause shall vest immediately and be immediately
exercisable for the term of such options pursuant to the option
agreement attached hereto as EXHIBIT A. The Executive shall not be under
any obligation to mitigate the Company's obligation pursuant to this
SECTION 7(d) by securing other employment or otherwise.
e) The Executive shall have the right to terminate his employment with the
Company hereunder for Good Reason, upon not less than thirty (30) days
prior written notice to the Company. Should the Executive terminate his
employment hereunder for Good Reason, the Company shall be obligated to
make the payments to the Executive provided for in SECTION 7(d) hereof
upon the termination of the Executive's employment by the Company
Without Cause. In addition, the options shall be treated as in Section
7(d).
f) The failure of the Company to continue the employment of the Executive
upon expiration of the entire three (3) year Employment Term shall not
be considered a termination of employment for purposes of this
Agreement.
Section 8. INVENTIONS. Any Inventions originated or conceived by the
Executive related to the Company's business, during his employment by the
Company or any Affiliate of the Company or with the use or assistance of the
facilities, materials or personnel of the Company or any Affiliate of the
Company, either solely or jointly with others, during the period of employment
with the Company or any Affiliate of the Company shall be the sole and exclusive
property of the Company. The Executive hereby irrevocably assigns and transfers
to the Company and agrees to transfer and assign to the Company all of his
right, title and interest in and to all Inventions, and to applications for
patents and patents granted upon such Inventions and to all copyrightable
material related thereto developed by the Executive or under his supervision.
The Executive agrees for himself and his heirs and personal representatives,
upon the request of the Company and at the Company's expense, to do such acts,
to execute such documents and instruments and to participate in such legal
proceedings as from time to time may be necessary or required to apply for,
secure, maintain, reissue, extend or defend the worldwide rights of the Company
in the Inventions.
Section 9. RESTRICTIONS RESPECTING COMPETING BUSINESSES, CONFIDENTIAL
INFORMATION, ETC. The Executive acknowledges and agrees that by virtue of the
Executive's position and involvement with the business and affairs of the
Company, the Executive will develop substantial expertise and knowledge with
respect to all aspects of the Company's business, affairs and operations and
will have access to all significant aspects of the business and operations of
the Company and to Confidential and Proprietary Information.
a) The Executive hereby covenants and agrees that, during the Employment
Term and thereafter, unless otherwise authorized by the Company in
writing, the Executive shall not, directly or indirectly, under any
circumstances: (i) disclose to any other Person (other than in the
regular course of business of the Company) any Confidential and
Proprietary Information, other than pursuant to applicable law,
regulation or subpoena or with the prior written consent of the Company;
(ii) act or fail to act so as to impair the confidential or proprietary
nature of any Confidential and Proprietary Information; (iii) use any
Confidential and Proprietary Information other than for the sole and
exclusive benefit of the Company; or (iv) offer or agree to, or cause or
assist in the
7
inception or continuation of, any such disclosure, impairment or use of
any Confidential and Proprietary Information. Following the Employment
Term, the Executive shall return all documents, records and other items
containing any Confidential and Proprietary Information to the Company
(regardless of the medium in which maintained or stored), or shall
destroy such documents, records and items (any such destruction to be
certified by the Executive to the Company in writing).
b) The Executive hereby covenants and agrees that, while the Executive is
employed by the Company and for a period of one (1) year thereafter, he
shall not, and shall cause each of his Affiliates not to, (i) directly
or indirectly, engage or be interested (whether as an owner, partner,
member, lender, shareholder, consultant, employee, agent, supplier,
distributor or otherwise) in any business, activity or enterprise which
competes with any aspect of the business of the Company in those states
or countries in which the Company engages in business; or (ii) at any
time, directly or indirectly, induce or influence any customer, vendor,
supplier, distributor, consultant or any other Person that had a
business relationship with the Company or any of its Affiliates, to
terminate such relationship or to discontinue or reduce the extent of
its relationship with the Company or any of its Affiliates; provided,
however, that if the Executive's employment is terminated hereunder
Without Cause or for Good Reason, the restrictions of this Paragraph
9(b) shall apply for the lesser of (a) one (1) year from the date of
such termination or (b) the period that the Company is obligated
hereunder to pay Salary to the Executive. For purposes of this
agreement, neither the Executive nor his Affiliates shall be deemed to
be directly or indirectly interested in a business if their interest,
individually or in the aggregate with each other, is limited solely to
the ownership of not more than five percent (5%) of the securities of
any class of a corporation whose shares are listed or admitted to trade
on a national securities exchange or are quoted on NASDAQ or a similar
means if NASDAQ is no longer providing such information.
c) While the Executive is employed by the Company and for one (1) year
after the executive ceases to be an employed by the Company, the
Executive shall not, directly or indirectly, solicit to employ for
himself or others any employee of the Company or any Affiliate of the
Company who was an employee of the Company or any Affiliate of the
Company as of the date of the termination of the Executive's employment
with the Company, or to solicit any such employee to leave such
employee's employment or join the employment of another, then or at a
later time; provided that the foregoing shall not apply to the
Executive's administrative assistant; provided, however, that if the
Executive's employment is terminated hereunder Without Cause or for Good
Reason, the restrictions of this Paragraph 9(c) shall apply for the
lesser of (a) one (1) year from the date of such termination or (b) the
period that the Company is obligated hereunder to pay Salary to the
Executive.
d) The parties agree that nothing in this Agreement shall be construed to
limit or negate the common law of torts, confidentiality, trade secrets,
fiduciary duty and obligations where such laws provide the Company with
any broader, further or other remedy or protection than those provided
herein.
8
e) The parties acknowledge that a breach or attempted or threatened breach
by the Executive of any of the provisions of this agreement will result
in immediate and irreparable injury and damage to the Company for which
the Company will not have an adequate remedy at law and for which
monetary damages are not readily calculable. Therefore, the Company
shall be entitled to obtain injunctive and other equitable relief
restraining and prohibiting any such breach or threatened breach
including, without limitation, obtaining a temporary and permanent
injunction enjoining any such breach or threatened breach (without being
required to post a bond or other security or to show any actual
damages). The right to an injunction and other equitable relief shall be
in addition to, and cumulative with, all other rights and remedies
available to the Company at law, in equity or otherwise. In addition, in
the event of a breach of any such provision or any other agreement of
the Executive contained herein, the Company shall not be limited in its
recovery to actual or other damages.
f) The provisions of this SECTION 9 are in addition to and independent of
any agreements or covenants contained in any other agreement between the
Company and the Executive.
g) Without limiting the generality of the foregoing, if any provision of
this SECTION 9 shall be held by any court of competent jurisdiction or
another competent authority to be illegal, invalid or unenforceable,
such provision shall be construed and enforced as if it had been more
narrowly drawn so that such provisions shall be legal, valid and binding
to the fullest extent permitted by applicable law, and such illegality,
invalidity or unenforceability shall have no effect upon and shall not
impair the enforceability of any other provision of this Agreement.
Section 10. SEVERABILITY. Each term and provision of this Agreement is
severable; the invalidity, illegality, unenforceability or modification of any
term or provision of this Agreement shall not affect the validity, legality and
enforceability of the other terms and provisions of this Agreement, which shall
remain in full force and effect. Since it is the desire and intent of the
parties that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought, should any particular provision of this Agreement
be deemed invalid, illegal or unenforceable, the same shall be deemed reformed
and amended to delete that portion that is adjudicated to be invalid, illegal or
unenforceable and the deletion shall apply only with respect to the operation of
such provision and to the extent of such provision and, to the extent that a
provision of this Agreement would be deemed unenforceable by virtue of its
scope, but may be made enforceable by limitation thereon, each party agrees that
this Agreement shall be reformed and amended so that the same shall be
enforceable to the fullest extent permissible under the laws and public policies
applied in the jurisdiction in which enforcement is sought.
Section 11. ASSIGNMENT. This Agreement and the rights and obligations of
the parties hereto shall bind and inure to the benefit of each of the parties
hereto, the heirs, executors, administrators and legal representatives of the
Executive and the successors and permitted assigns of the Company. (Neither this
Agreement nor any rights or benefits hereunder may be assigned by the Executive
or the Company without the prior written consent of the other party
9
hereto, except that the Company may assign any of its rights or obligations
hereunder to any other Person which purchases all or substantially all of the
common stock or assets of the Company or is the successor to the Company by
merger, consolidation or other similar transaction).
Section 12. AMENDMENT: ENTIRE AGREEMENT. This Agreement may not be
modified, amended, altered or supplemented except by a written agreement
executed by the parties hereto. This Agreement contains the entire agreement and
understanding of the parties hereto with respect to the subject matter of this
Agreement and supersedes all prior and/or contemporaneous agreements and
understandings of any kind and nature (whether written or oral) between the
parties with respect to such subject matter, all of which are merged herein.
Section 13. WAIVERS. Waiver by either party of either breach of or failure
to comply with any provision of this Agreement by the other party shall not be
construed as, or constitute, a continuing waiver of such provision, or a waiver
of any other breach of, or failure to comply with, any other provision of this
Agreement, any such waiver must be in writing to be limited to the specific
matter and instance for which it is given. No waiver of any such breach or
failure or of any term or condition of this Agreement shall be effective unless
in a written instrument and signed by the waiving party and delivered, in the
manner required for notices generally, to the affected party.
Section 14. NOTICES. All notices, demands, consents, requests, instructions
and other communications to be given or delivered or permitted under or by
reason of the provisions of this Agreement, or in connection with the
transactions contemplated hereby and thereby, shall be in writing and shall be
deemed to be delivered and received by the intended recipient as follows: (a) if
personally delivered, on the Business Day of such delivery (as evidenced by the
receipt of the personal delivery service); (b) if mailed by certified or
registered mail, return receipt requested, four (4) Business Days after the
aforesaid mailing; (c) if delivered by overnight courier (with all charges
having been prepaid), on the second Business Day of such delivery (as evidenced
by the receipt of the overnight courier service of recognized standing); or (d)
if delivered by facsimile transmission, on the Business Day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding Business Day (as evidenced by the printed confirmation of
delivery generated by the sending party's telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this SECTION 14), or the refusal to accept same, the notice shall be deemed
received on the Business Day the notice is sent (as evidenced by a sworn
affidavit of the sender). All such notices, demands, consents, requests,
instructions and other communications will be sent to the following addresses or
facsimile numbers as applicable:
If to the Executive:
Xx. Xxxxxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
10
With a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company:
USA Broadband, Inc.
000 Xxxxxxxxx Xxx, Xxxxx 0
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Or to such other address as a party may have furnished to the other parties
in writing in accordance herewith. Any notice consent, direction, approval,
instruction, request or other communication given in accordance with this
SECTION 14 shall be effective after it is received by the intended recipient.
Section 15. GOVERNING LAW: JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE,
WITHOUT REGARD OR REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD
DEFER TO THE SUBSTANTIVE LAWS OF ANOTHER JURISDICTION, THIS AGREEMENT SHALL
BE CONSTRUED AND INTERPRETED WITHOUT REGARD TO ANY PRESUMPTION AGAINST THE
PARTY CAUSING THIS AGREEMENT TO BE DRAFTED. EACH OF THE PARTIES
UNCONDITIONALLY AND IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF CALIFORNIA AND THE FEDERAL DISTRICT COURT FOR THE
CENTRAL DISTRICT OF CALIFORNIA WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH OF THE PARTIES WAIVE
ANY RIGHT TO CONTEST THE VENUE OF SAID COURTS OR TO CLAIM THAT SAID COURTS
CONSTITUTE AN INCONVENIENT FORUM. EACH OF THE PARTIES UNCONDITIONALLY AND
IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Section 16. HEADINGS: COUNTERPARTS. The headings contained in this
Agreement are inserted for reference purposes only an shall not in any way
affect the meaning, construction
11
or interpretation of this Agreement. This Agreement may be executed in two (2)
counterparts, each of which when executed shall be deemed to be an original, but
both of which, when taken together, shall constitute one and the same document.
[INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
----------------------------------
XXXXXXX X. XXXXX
USA BROADBAND, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
13
EXHIBIT A
OPTION AGREEMENT
See attached
EXHIBIT A TO
EXHIBIT 7.11
EMPLOYMENT AGREEMENT
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement"), made and entered into as of
this __ day of _________, 2002 (the "Date of Issuance"), by and between USA
Broadband, Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxx
("Optionee").
R E C I T A L S:
A. Optionee has entered into that certain Employment Agreement with the
Company of even date herewith (the "Employment Agreement"); and
B. In return for entering into the Employment Agreement, the Company
desires to grant to Optionee an option to purchase up to Seven Hundred Fifty
Thousand (750,000) shares of the Company's common stock, par value $0.001, on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
GRANT OF OPTIONS
1.1 GRANT OF OPTIONS; VESTING; EXERCISE PRICE. As partial consideration
for entering into the Employment Agreement, the Company hereby grants to
Optionee the right and option to purchase from the Company (the "Option"), upon
the terms and subject to the vesting requirements and other conditions
hereinafter set forth, in whole or in part, from time to time, up to Seven
Hundred Fifty Thousand (750,000) shares (the "Option Shares") of Common Stock at
a purchase price per Option Share equal to the Fair Market Value (as defined
herein) per share of the Company's common stock as of the date of this Agreement
(the "Exercise Price"). Optionee shall have the right to purchase the Option
Shares under this Option according to the following schedule and on each of the
following dates (each a "Vesting Date" and collectively, the "Vesting Dates"):
(a) One Hundred Fifty Thousand (150,000) of the Option Shares on or
after the Date of Issuance;
(b) Two Hundred Thousand (200,000) of the Option Shares on or after
the date that is one (1) year after the Date of Issuance;
(c) Two Hundred Thousand (200,000) of the Option Shares on or after
the date that is two (2) years after the Date of Issuance; and
(d) Two Hundred Thousand (200,000) of the Option Shares on or after
the date that is three (3) years after the Date of Issuance;
Executive shall have the right to purchase Option Shares that have become vested
hereunder between the Vesting Date of such Option Share and the date that is
five (5) years from the date of this Agreement (the "Expiration Date"). The
number of Option Shares and Exercise Price are
subject to adjustment as provided herein, and all references to "Option Shares"
and "Exercise Price" herein shall be deemed to include any such adjustment or
series of adjustments.
1.2 ACKNOWLEDGMENT. The parties acknowledge that the Option is not an
"incentive stock option" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended.
ARTICLE II
EXERCISE OF OPTIONS
2.1 EXERCISE PRICE; METHOD OF PAYMENT. Payment of the aggregate Exercise
Price shall be by cash, certified or cashier's check, or Option Shares (if a
cashless exercise).
2.2 EXERCISE OF OPTION. Optionee may exercise this Option, in whole or in
part, at any time, or from time to time, subsequent to the applicable Vesting
Dates and prior to the Expiration Date, by giving written notice to the Company
(the "Exercise Notice"). The Exercise Notice shall: (i) be signed by Optionee;
(ii) state the number of Option Shares with respect to which the Option is being
exercised; (iii) be accompanied either by cash or certified or cashier's check
made payable to the Company in the amount of the Exercise Price multiplied by
the number of Option Shares being purchased or by a written instruction from
Optionee to the Company instructing the Company to retain that number of Option
Shares for which the Option is being exercised having a Fair Market Value equal
to the aggregate Exercise Price; and (iv) otherwise comply with the terms and
conditions of this Agreement. No partial exercise of this Option shall be for
less than one hundred (100) Option Shares.
2.3 CASHLESS EXERCISE.
(a) In lieu of payment of the Exercise Price in cash or by certified
or cashier's check, Optionee may elect to pay the Exercise Price with Option
Shares (a "Cashless Exercise"). If Optionee elects to make a Cashless Exercise,
Optionee shall provide written instruction to the Company of its desire to make
a Cashless Exercise and such instruction shall be contained in the Exercise
Notice as provided in SECTION 2.2 and shall be irrevocable. Upon receipt by the
Company of the Exercise Notice indicating that Optionee desires to make a
Cashless Exercise, the Company shall withhold that number of the Option Shares
for which the Option is being exercised having a Fair Market Value (defined
below) equal to the aggregate Exercise Price plus any withholding obligations
for taxes as described in SECTION 2.6 below. If the number of Option Shares to
be withheld by the Company on such exercise do not have a Fair Market Value
equal to or greater than the aggregate Exercise Price, then the Optionee may not
make a Cashless Exercise. Election of a Cashless Exercise shall constitute an
authorization to the Company to withhold that number of Option Shares for which
the Option is being exercised having a Fair Market Value equal to the aggregate
Exercise Price plus any withholding obligations for taxes as described in
Section 2.6 below.
(b) For purposes of this Agreement, the term "Fair Market Value" shall
mean: (i) if the Company's common stock is listed on a national securities
exchange or included for quotation on the Nasdaq Stock Market, the average of
the closing prices of the common stock on such exchange or market for the five
(5) days immediately preceding the date of the Exercise Notice or if no such
sales occurred on such dates, then on the next five (5) preceding dates on
2
which sales were made; (ii) if the common stock is actively traded on the
over-the counter market, the average of the closing "bid prices" for five (5)
days immediately preceding the date of the Exercise Notice or if no such sales
occurred on such dates, then on the next five (5) preceding dates on which sales
were made; and (iii) if the common stock is not listed on a national securities
exchange or included for quotation on the Nasdaq Stock Market or actively traded
on the over-the-counter market or otherwise admitted to unlisted trading
privileges and closing prices are not so reported, the amount determined by a
written appraisal prepared by an appraiser selected in good faith by the
Company. The fair market value is defined for purposes of this SECTION
2.3(b)(iii) as the price in a single transaction determined on a going-concern
basis that would be agreed upon by the most likely hypothetical buyer for a 100%
controlling interest in the equity capital of the Company (on a fully diluted
basis including any fractional shares and assuming the exercise in full of all
then outstanding options, warrants or otherwise purchased shares of common stock
that are then currently exercisable), each extending for a period of time
considered sufficient by all parties to effect the transfer of goodwill from the
seller to the buyer and disregarding any discounts for non-marketability of
common stock of the Company. The cost of the appraisal shall be borne by the
Company, but the cost thereof shall be deemed an account payable of the Company
and shall be considered in the determination of the appraised value.
2.4 ISSUANCE OF OPTION SHARES. Within five (5) business days following
receipt by the Company of the Exercise Notice (which date may be extended by the
Company if any law or regulation requires the Company to take any action with
respect to the Option Shares prior to the issuance thereof), the Company shall
deliver to Optionee an appropriate certificate or certificates for the Option
Shares as to which the Option was exercised (or in the case of a Cashless
Exercise, the Option Shares as to which the Option was exercised less that
number of Option Shares having a Fair Market Value equal to the aggregate
Exercise Price and all applicable taxes required to be withheld or payable on
exercise), registered in the name of Optionee and containing the legend provided
for in SECTION 2.7. The Company hereby represents and warrants that all Option
Shares that may be issued upon the exercise of this Option will, upon payment of
the Exercise Price, be duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the
issuance thereof (other than liens or charges created by or imposed upon
Optionee as the holder of the Option pursuant to this Agreement or taxes in
respect of any transfer occurring contemporaneously or otherwise specified
herein).
2.5 NO RIGHTS AS STOCKHOLDER PRIOR TO EXERCISE. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
the issuance of Option Shares upon the exercise of the Option, no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Option Shares, notwithstanding the exercise of the Option. Except
as provided herein, no adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued.
2.6 TAXES. Optionee shall be responsible for all federal, state and other
taxes related to the receipt or exercise of the Option and of receipt of the
Option Shares. The Company shall have the power to withhold from any source, or
require Optionee to remit to the Company, an amount sufficient to satisfy any
withholding or other federal, state or other tax due from
3
Optionee or the Company as a result of any transaction contemplated by this
Agreement. If Optionee does not remit to the Company amounts sufficient to meet
such obligations, the Company shall withhold Option Shares from Optionee, such
that the number of Option Shares withheld has a fair market value (as determined
in the sole discretion of the Company) sufficient to satisfy the associated
obligation of the Company to withhold federal, state and other taxes.
2.7 WARRANTIES. Unless the Option Shares to be issued upon the particular
exercise of an Option granted under this Agreement shall have been effectively
registered under the Securities Act of 1933, as now in force or hereafter
amended, the Company shall be under no obligation to issue the Option Shares
covered by such exercise unless Optionee warrants to the Company, at the time of
such exercise, that Optionee is acquiring the Option Shares for investment and
not with a view toward, or for sale in connection with, the distribution of any
such shares; and in such event Optionee shall be bound by the provisions of the
following legend or similar legend which shall be endorsed upon the certificate
or certificates evidencing the Option Shares issued by the Company pursuant to
such exercise:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR UNDER THE LAWS OF ANY STATE, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER SUCH LAWS OR AN OPINION OF COUNSEL
ACCEPTABLE TO USA BROADBAND, INC. TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED."
ARTICLE III
ADJUSTMENTS TO OPTIONS SHARES AND EXERCISE PRICE
3.1 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF OPTION SHARES. The number
of Option Shares and the Exercise Price shall be subject to adjustment from time
to time upon the occurrence of certain events, as follows:
(a) RECLASSIFICATION, MERGER OR CERTAIN OTHER TRANSACTIONS. In case
of (i) any reclassification, change or conversion of securities of the class
issuable upon exercise of the Option (other than as a result of a subdivision or
combination), or (ii) in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is a continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of the Option), the
Company or such successor, as the case may be, shall execute a new Stock Option
Agreement (on substantially the same terms and conditions as this Agreement,
except as the context otherwise requires, and in form reasonably satisfactory to
Optionee) providing that Optionee shall have the right to exercise such new
options and upon such exercise to receive, in lieu of each Option Share
theretofore issuable upon exercise of the Option, the kind and amount of shares
of stock, other securities, money and property receivable upon such event or
transaction by a holder of one share of Common Stock. Such new options shall
provide for adjustments that shall be as nearly
4
equivalent as may be practicable to the adjustments provided for in this SECTION
3.1. The provisions of this SECTION 3.1 shall similarly apply to successive
events and transactions described above.
(b) Subdivisions or Combination of Shares. If the Company at any time
while this Option remains outstanding and unexercised shall subdivide or combine
its Common Stock, the Exercise Price and the number of Option Shares issuable
upon exercise shall be proportionally adjusted.
ARTICLE IV
REGISTRATION RIGHTS
4.1 PIGGYBACK REGISTRATION. If the Company files a registration statement
(other than a registration relating to the sale of securities to participants in
a dividend reinvestment plan, a registration on Form S-4 relating to a business
combination or similar transaction permitted to be registered on such Form S-4,
a registration on Form S-8 relating to the sale of securities to participants in
a stock or employee benefit plan) with the Securities and Exchange Commission
(the "Commission") while any Registrable Securities (as defined herein) are
outstanding, the Company shall give Optionee at least ten (10) days' prior
written notice of the filing of such registration statement (a "Piggyback
Registration"). If requested by Optionee in writing within two (2) days after
receipt of any such notice, the Company shall register all or, at such
Optionee's option, any portion of Optionee's Registrable Securities concurrently
with the registration of such other securities, all to the extent required to
permit the public offering and sale of the Registrable Securities. The Company
will use its reasonable efforts through its officers, directors, auditors, and
counsel to cause such registration statement to become effective as promptly as
reasonably practicable; PROVIDED, HOWEVER, that the number of Registrable
Securities that may be registered pursuant to this SECTION 4.1 on any such
registration statement involving an underwriting shall be subject to those
reductions determined to be necessary by the underwriter of the offering
pursuant to SECTION 4.2.
As used herein, "Registrable Securities" shall mean (i) the Option Shares
acquired by Optionee from the Company upon the exercise of this Option and (ii)
any Common Stock issued by way of a stock split, stock dividend,
recapitalization, merger or other distribution with respect to, or in exchange
for, or in replacement of, such Option Shares.
4.2 UNDERWRITING. If a Piggyback Registration is for a registered public
offering involving an underwriting, the Company shall so advise Optionee as part
of the notice given pursuant hereto. The Company shall (together with all other
holders of Common Stock proposing to distribute their securities through such
underwriting), if requested by the underwriter, enter into an underwriting
agreement in customary form with a managing underwriter selected for such
underwriting by the Company. Notwithstanding any other provision of this Article
IV, if the managing underwriter advises the Company in writing that market
factors require exclusion of shares to be sold by selling stockholders, or a
limitation of the number of shares to be so sold, then the Company shall so
advise Optionee and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated: (i) first, to
the securities to be registered on behalf of the Company; (ii) second, the
5
securities sought to be registered by the holders of the Company's Series A
Convertible Preferred Stock; and (iii) third, pro rata among the holders of
Registrable Securities and other securities requested to be included in the
registration. No Registrable Securities excluded from the underwriting by reason
of the underwriter market limitation shall be included in such registration.
4.3 EXPENSES OF REGISTRATION. All Registration Expenses (defined below)
incurred in connection with a Piggyback Registration shall be borne by the
Company. All Selling Expenses (defined below) incurred in connection with a
Piggyback Registration shall be borne by Optionee for the Registrable Securities
so registered. For purposes of this SECTION 4.3:
(a) "REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in connection with a Piggyback Registration, including, without
limitation, all registration, filing and qualification fees, underwriters
expense allowances, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company).
(b) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of the Registrable Securities in the
Piggyback Registration and all fees and disbursements of any special counsel
(other than the Company's regular counsel) for Optionee(but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
4.4 QUALIFICATION FOR SALE. In connection with a Piggyback Registration,
the Company shall use its reasonable best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as Optionee may reasonably
request; PROVIDED, HOWEVER, that the Company shall not be required to qualify to
do business in any state by reason of this SECTION 4.4 in which it is not
otherwise required to qualify to do business.
4.5 EFFECTIVENESS. In connection with a Piggyback Registration, the
Company shall prepare and file with the Commission a registration statement with
respect to the Registrable Securities requested to be registered and use its
reasonable best efforts to cause such registration statement to become
effective, and shall keep effective any Piggyback Registration and shall from
time to time amend or supplement each applicable registration statement,
preliminary prospectus, final prospectus, application, document and
communication for such period of time as shall be required to permit Optionee to
complete the offer and sale of the Registrable Securities covered thereby. The
Company shall in no event be required to keep any such Piggyback Registration in
effect for more than twelve (12) months from the initial effective date of the
Piggyback Registration; PROVIDED, HOWEVER, that, if during the twelve (12) month
period of effectiveness of the registration statement, the Company gives to
Optionee a Blackout Notice pursuant to SECTION 4.6, the Company shall extend the
effectiveness of the registration statement for the same time period as that set
forth in the Blackout Notice.
4.6 BLACKOUT RIGHTS. Following the effective date of any registration
statement filed pursuant to Article 4 of this Agreement, the Company shall be
entitled, from time to time, to
6
notify Optionee to discontinue offers or sales of shares pursuant to such
registration statement for Registrable Securities for the period of time stated
in the written notice (the "Blackout Notice"), if the Company determines, in its
reasonable business judgment, that the disclosure required in connection with
the offers and sales of the Registrable Securities could materially damage the
Company's ability to successfully complete an acquisition, corporate
reorganization, securities offering or other voluntary transaction undertaken by
the Company (which information the Company would not be required to disclose at
such time other than in connection with Optionee's registration statement) that
is material to the Company and its subsidiaries taken as a whole. The time
period for which Optionee must discontinue offers or sales of shares pursuant to
a Blackout Notice shall be for any period the Company reasonably believes is
necessary, and if, the Company is unable to determine the duration of such
period at the time the Blackout Notice is issued, the Blackout Notice may state
that the period extends "until the Optionee is otherwise notified by the
Company;" provided that the Blackout Notice may not exceed more than ninety (90)
consecutive days or an aggregate of one hundred eighty (180) days within any
calendar year. The Blackout Notice shall be signed by an authorized officer of
the Company and shall certify the Company's determination. Optionee agrees that
upon receipt of a Blackout Notice he shall discontinue offers or sales of
Registrable Shares pursuant to any such registration statement for the period of
time stated in the Blackout Notice.
4.7 DISTRIBUTION OF REGISTRATION STATEMENT. In connection with Piggyback
Registration, the Company shall promptly furnish to Optionee such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations thereunder, and such other
documents, as Optionee may reasonably request to facilitate the disposition of
the Registrable Securities included in such registration.
4.8 NOTIFICATION OF EFFECTIVENESS. The Company shall notify Optionee
promptly when such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed.
4.9 OTHER NOTIFICATIONS. The Company shall promptly notify Optionee at any
time when the prospectus included in the Piggyback Registration, as then in
effect, would include an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the reasonable request of Optionee prepare and furnish to it
such number of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
4.10 INDEMNIFICATION BY COMPANY. Subject to the conditions set forth below,
the Company agrees to indemnify and hold harmless Optionee from and against any
and all loss, liability, charge, claim, damage, and expense whatsoever (which
shall include, for all purposes of
7
this SECTION 4.10, but not be limited to, reasonable attorneys' fees and any and
all reasonable expenses whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus, or final
prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, relating to the sale of any of the Registrable Securities or
(B) in any application or other document or communication (in this SECTION 4.10
collectively called an "Application") executed by or on behalf of the Company
and based upon written information furnished by or on behalf of the Company
filed in any jurisdiction in order to register or qualify any of the Registrable
Securities under the Securities Act or blue sky laws thereof or filed with the
Commission or any securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements made therein not misleading, unless such statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of Optionee for inclusion in any registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be.
If any action is brought against Optionee in respect of which indemnity may
be sought against the Company pursuant to the foregoing paragraph, Optionee
shall promptly notify the Company in writing of the institution of such action
(the failure to notify the Company within a reasonable time of the commencement
of any such action, to the extent prejudicial to the Company's ability to defend
such action, shall relieve the Company of liability to Optionee pursuant to this
SECTION 4.10) and the Company shall promptly assume the defense of such action,
including the employment of counsel, provided that Optionee shall have the right
to employ his own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of Optionee unless the employment of such
counsel shall have been authorized in writing by the Company in connection with
the defense of such action or Optionee shall have reasonably concluded that
there may be one or more legal defenses available to him which are different
from or additional to those available to the Company, in any of which events
such fees and expenses shall be borne by the Company and the Company shall not
have the right to direct the defense of such action on behalf of Optionee.
Notwithstanding anything in this SECTION 4.10 to the contrary, the Company shall
not be liable for any settlement of any such claim or action effected without
its written consent. The Company shall not, without the prior written consent of
Optionee, settle or compromise any action, or permit a default or consent to the
entry of judgment in or otherwise seek to terminate any pending or threatened
action, in respective of which indemnity may be sought hereunder, unless such
settlement, compromise, consent, or termination includes an unconditional
release of Optionee from all liability in respect of such action. The Company
agrees promptly to notify Optionee of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the sale of any Registrable Securities or any preliminary
prospectus, prospectus, registration statement, or amendment or supplement
thereto, or any application relating to any sale of any Registrable Securities.
4.11 INDEMNIFICATION BY OPTIONEE. Optionee agrees to indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall have signed any registration statement covering Registrable Securities
held by Optionee, to the same extent
8
as the foregoing indemnity from the Company to Optionee in SECTION 4.10, but
only with respect to statements or omissions, if any, made in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Company with respect to Optionee by or on behalf of Optionee,
for inclusion in any such registration statement, preliminary prospectus, or
final prospectus, or any amendment or supplement thereto, or in any application,
as the case may be. If any action shall be brought against the Company or any
other person so indemnified based on any such registration statement,
preliminary prospectus, or final prospectus or any amendment or supplement
thereto, or in any application, and in respect of which indemnity may be sought
against Optionee pursuant to this SECTION 4.11, Optionee shall have the rights
and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to Optionee, by the
provisions of SECTION 4.10.
4.12 TERMINATION OF REGISTRATION RIGHTS. The covenants set forth in Article
IV of this Agreement shall terminate with respect to Optionee on the date that
Optionee is eligible to sell all of his Registrable Securities under Rule 144
under the Securities Act.
ARTICLE V
LOCK UP
5.1 LOCK-UP PERIOD. Optionee hereby agrees that, if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Registrable
Securities during the period requested in writing by the managing underwriter
and agreed to in writing by the Company (the "Market Standoff Period"). The
Company may impose stop transfer instructions with respect to Option Shares
subject to the foregoing restrictions until the end of such Market Standoff
Period.
ARTICLE VI
GENERAL PROVISIONS
6.1 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding of the Parties relating to the subject matter contained herein and
merge all prior discussions, correspondence, agreements, promises, commitments,
contracts or other instruments or understandings between them, and no Party
shall be bound by any subsequent instrument, agreement or representation
pertaining to the subject matter contained herein unless expressed in writing
and signed by the Parties hereto.
6.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each shall have the same force and effect as the other, as one and
the same instrument.
6.3 GOVERNING LAW. This Agreement shall be governed by laws of the State
of Delaware.
9
6.4 BINDING AGREEMENT. The Parties hereto warrant that each has been
represented by counsel in connection with this Agreement, that they have read
this Agreement, that they intend to be legally bound by the same, that they have
entered into this Agreement freely and voluntarily, and that they have the full
right, power, authority and capacity to enter into and execute the same. The
Parties hereto further warrant that this Agreement is entered into with no Party
relying upon any statement or representation made by any other Party not
expressly embodied in this Agreement.
6.5 ATTORNEYS' FEES. In any claim arising out of or relating to this
Agreement, the prevailing party shall recover his or its reasonable costs and
attorneys' fees.
6.6 NOTICES. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to be duly given if delivered or mailed
by prepaid mail addressed or sent via facsimile to:
If to Optionee: Xxxxxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to: Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
If to the Company: USA Broadband, Inc.
000 Xxxxxxxxx Xxx, #0
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: 707-769-1622
With a copy to: Xxxxxxx & Xxxxxxxx Ltd.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
or such other address as the addressee may direct in writing.
6.7 CAPTIONS. The captions applied to the sections of this Agreement are
for convenience only and shall not affect their meaning or construction.
6.8 WAIVER. The failure of either party to insist in any instance or
performance of any term of this Agreement shall not be construed as a waiver of
future performance of any such term.
10
6.9 SEVERABILITY. If any portion of this Agreement is held invalid or
unenforceable, the remainder thereof shall remain in full force and effect, and
if the invalidity or unenforceability is due to the unreasonableness of time or
geographical restrictions, such covenants and restrictions shall be effective
for such period of time and for such areas as may be determined to be reasonable
by a court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers and to be dated the Date of Issuance hereof.
USA BROADBAND, INC.
a Delaware corporation
By:
----------------------------
Its:
----------------------------
11
EXHIBIT 9.8
TO AGREEMENT AND PLAN OF MERGER
INTERIM LOAN AGREEMENT
DATED AS OF ___________, 2002
BETWEEN
USA BROADBAND, INC.
AS LENDER
AND
LAS AMERICAS BROADBAND, INC.
AS BORROWER
LAS AMERICAS BROADBAND, INC.
INTERIM LOAN AGREEMENT
TABLE OF CONTENTS
PAGE
RECITALS: .................................................................. 1
Section 1. DEFINITIONS .................................................... 1
Section 2. AMOUNT AND TERM OF LOAN ........................................ 6
Section 3. CONDITIONS TO LOAN ............................................. 9
Section 4. THE COMPANY'S REPRESENTATIONS AND WARRANTIES ................... 10
Section 5. THE COMPANY'S COVENANTS ........................................ 11
Section 6. EVENTS OF DEFAULT .............................................. 13
Section 7. MISCELLANEOUS .................................................. 16
EXHIBITS
I FORM OF NOTE
II FORM OF STOCK PLEDGE AND SECURITY AGREEMENT
LAS AMERICAS BROADBAND, INC.
INTERIM LOAN AGREEMENT
This INTERIM LOAN AGREEMENT is dated as of ____________, 2002 (the
"AGREEMENT") and entered into by and between Las Americas Broadband, Inc., a
Colorado corporation (the "COMPANY") and USA Broadband, Inc., a Delaware
corporation (the "LENDER").
RECITALS:
A. The Company is desirous of obtaining a loan and, subject to and upon
the terms and conditions contained herein, Lender is willing to make the loan to
the Company to provide working capital and funds to repay certain of the
Company's existing indebtedness.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Company and Lender agree as
follows:
Section 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"AFFILIATE," as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGREEMENT" has the meaning assigned to that term in the introduction to
this Agreement, as it may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.
"CASH EQUIVALENTS" means: (i) marketable securities issued or directly and
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed, directly or indirectly, by the full faith and credit
of the United States, in each case maturing within one year from the date of
acquisition thereof and repurchase agreements backed by United States government
securities; (ii) commercial paper maturing no more than one year from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from Standard & Poor's Corporation and at least P-1 from Xxxxx'x Investors
Service, Inc.; and
(iii) certificates of deposit, time deposits or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia having unimpaired capital and surplus of not
less than $250,000,000.
"CLOSING DATE" means May ___, 2002.
"COMPANY" has the meaning assigned to that term in the introduction to this
Agreement
"CONTINGENT OBLIGATION," as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation that such obligation will
be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, or (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings. Contingent Obligations shall
include, without limitation: (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquires such obligation or any security therefore, or
to provide funds for the payment of discharge of such obligation (whether in the
form of loans, advances, stock purchase, capital contributions or otherwise) and
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTRACTUAL OBLIGATION," as applied to any Person, means any provision of
any security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means: (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is, or was at any time, a member; (ii) any trade or business (whether or
not incorporated) which is, or was at any time, a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is, or was at any time, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal
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Revenue Code of which that Person, any corporation described in clause (i) above
or any trade or business described in clause (ii) above is, or was at any time,
a member.
"ERISA EVENT" means: (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by the
Company or any of its ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan resulting in
liability pursuant to Sections 4063 or 4064 of ERISA; (v) the institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability on the Company or any of its ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal by the Company or any of its
ERISA Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any
potential liability therefor, or the receipt by the Company or any of its ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on the
Company or any of its ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (1) or 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against the Company or any of its ERISA Affiliates in connection
with any such Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"EVENT OF DEFAULT" means each of the events set forth in SECTION 6.
"FISCAL YEAR" means a twelve-month period ending on December 31 of each
year.
"FORCE MAJEURE EVENT" means an event of fire, earthquake, flood, severe
storm, washout, mud slide, casualty, riot, insurrection, civil disturbance,
strike (provided that, if practicable, such party shall make reasonable efforts
to staff its operations so as to minimize disruptions to its operations),
inability to obtain materials or supplies beyond the party's reasonable control,
act of civil or military authorities, act of public enemy, embargo, war, act of
God, rationing, or any other similar cause beyond a Person's reasonable control
(and each party
- 3 -
agrees to notify promptly the other party when the non-performance of its
obligations hereunder is the result of any of the circumstances described above,
and shall use all reasonable efforts to remedy such situation, and further
agrees to provide the other party with periodic reports describing in reasonable
detail the current condition of such circumstance for so long as such
circumstance prevents the performance of an obligation required hereunder).
"GAAP" means, subject to the limitations on the application thereof set
forth in SUBSECTION 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"INDEBTEDNESS," as applied to any Person, means: (i) all indebtedness for
borrowed money, (ii) notes payable and drafts accepted representing extensions
of credit whether or not representing obligations for borrowed money, (iii) any
obligation owed for all or any part of the deferred purchase price of property
or services, which purchase price is: (a) due more than six months from the date
of occurrence of the obligation in respect thereof, or (b) evidenced by a note
or similar written instrument, and (iv) all indebtedness secured by any Lien on
any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person.
"INDEMNITEE" has the meaning assigned to that term in SUBSECTION 7.2.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.
"INVESTMENT" means: (i) any direct or indirect purchase or other
acquisition by the Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person; or (ii) any direct or indirect
loan, advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by the Company or any of its
Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business.
"LENDER" has the meaning assigned to that term in the introduction to this
Agreement.
"LIEN" means any mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"LOAN" means the loan made by Lender to the Company pursuant to this
Agreement.
"LOAN DOCUMENTS" means this Agreement, the Note, the Stock Pledge and
Security Agreement and the instruments, documents and agreements executed and
delivered pursuant to
- 4 -
the foregoing or otherwise executed and delivered in connection with the Loan,
all as amended, supplemented or otherwise modified from time to time.
"MATERIAL ADVERSE EFFECT" means any change or effect that is, individually
or in the aggregate, materially adverse to the business, prospects, properties,
assets or financial condition or results of operations of any Person, taken as a
whole; provided that any such (i) changes in circumstances or conditions
affecting broadcast, cable and satellite television broadcasts insofar as they
relate to either Party's operations, properties, licenses or transmissions; (ii)
changes in the United States or global economy or financial market conditions;
or (iii) changes in GAAP, shall not be considered to a material adverse change
or a material adverse effect.
"MERGER AGREEMENT" means the Agreement and Plan of Merger by and between
Lender and the Company dated April 25, 2002.
"NOTE" means the promissory note of the Company issued pursuant to
SUBSECTION 2.1B on the Closing Date, substantially in the form of EXHIBIT I
annexed hereto with appropriate insertions, as it may be amended, supplemented
or otherwise modified from time to time.
"OBLIGATIONS" means all obligations of every nature of the Company and its
respective Subsidiaries from time to time owed to Lender under the Loan
Documents, whether for principal, interest, fees, expenses, indemnification or
otherwise.
"OFFICER'S CERTIFICATE" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents or by its chief
financial officer or its treasurer; PROVIDED that every Officer's Certificate
with respect to the compliance with a condition precedent to the making of the
Loan hereunder shall include: (i) a statement that the officer or officers
making or giving such Officer's Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"PERMITTED ENCUMBRANCES" shall mean Liens granted to Lender hereunder,
under the other Loan Documents or liens granted under the Olive Note.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, limited liability
companies, limited liability partnerships, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"RESTRICTED JUNIOR PAYMENT" means: (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of the
Company or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of that
class, and except for dividends payable by a wholly-owned corporate Subsidiary
to its direct parent, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of the Company or any of its Subsidiaries now or
hereafter outstanding; (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
- 5 -
shares of any class of stock of the Company or any of its Subsidiaries now or
hereafter outstanding, (iv) any distribution or other payment, direct or
indirect, on account of any partnership interest in any of the Company's
Subsidiaries which is a partnership or joint venture, except for distributions
payable by a Subsidiary of the Company which is a partnership or joint venture
to its constituent partners which are wholly-owned Subsidiaries of the Company,
PROVIDED THAT such distribution or payment is in turn delivered to the Company,
and (v) any payment or prepayment of principal of, premium, if any, or interest
on, or redemption, purchase, retirement, defeasance (including in-substance or
legal defeasance), sinking fund or similar payment with respect to, any
Indebtedness, except for Indebtedness permitted under SECTION 5.2.
"SECURITIES" means any stock, shares, shares of beneficial interest,
partnership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participation in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture, limited liability company, business
trust or other business entity of which 50% or more of the total voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; PROVIDED that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office is located or in which that Person is deemed to be
doing business on all or part of the net income, profits or gains of that
Person.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT. Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS. References to "Sections" and
"subsections" shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided. Words used in the singular
form in this Agreement shall be deemed to import the plural, and vice versa, as
the sense may require. The terms "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation or exclusion."
Section 2. AMOUNT AND TERM OF LOAN
2.1 MAKING OF LOAN; NOTE.
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A. AGREEMENT TO MAKE LOAN. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the Company
set forth herein, Lender agrees to lend to the Company Five Hundred Thousand
Dollars ($500,000).
B. NOTE/STOCK PLEDGE AND SECURITY AGREEMENT. The Company shall execute
and deliver to Lender on the Closing Date a Note substantially in the form of
EXHIBIT I annexed hereto and the Stock Pledge and Security Agreement
substantially in the form of EXHIBIT II annexed hereto.
2.2 INTEREST ON THE LOAN.
A. RATE OF INTEREST. Subject to SUBSECTION 2.2C, the Loan shall bear
interest on the unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) at the rate of ten percent (10%)
per annum. Interest on the Loan shall be compounded each calendar quarter (or
portion thereof) from the Closing Date.
B. INTEREST PAYMENTS. Interest on the Loan shall be payable by the
Company in arrears upon any prepayment of the Loan and on the Maturity Date.
C. DEFAULT RATE. To the extent permitted by law, any principal or
interest payments on the Loan or any fees or other amounts owed hereunder not
paid when due, in each case whether at stated maturity, by notice or prepayment,
by acceleration or otherwise, shall thereafter bear interest (including
post-petition interest in any proceeding under the Bankruptcy Code or other
applicable bankruptcy laws) payable on demand at a rate of thirteen percent
(13%) per annum until paid. While bearing interest at such rate, interest on the
Loan shall be compounded each calendar quarter (or portion thereof) from the
date such rate is in effect. Payment or acceptance of the increased rates of
interest provided for in this SUBSECTION 2.2C is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Lender.
D. COMPUTATION OF INTEREST. Interest on the Loan shall be computed on the
basis of a 365-day year, in each case for the actual number of days elapsed in
the period during which it accrues. In computing interest on the Loan, the
Closing Date or the first day of any period specified in this Agreement shall be
included, and the date of payment shall be excluded.
2.3 PRINCIPAL PAYMENTS; PREPAYMENT; GENERAL PROVISIONS REGARDING PAYMENTS.
A. MATURITY DATE. The entire outstanding principal balance of the Loan,
and all interest accrued thereon (and all other amounts owing by the Company
under this Agreement with respect to the Loan), shall be due and payable by the
Company on the earlier of (i) termination of the Merger Agreement for any
reason and (ii) December 31, 2002 (the "Maturity Date").
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) MANNER AND TIME OF PAYMENT. All payments by the Company of
principal, interest, fees and other Obligations hereunder and under the
Note shall be made only in Dollars in immediately available funds, without
defense, setoff or counterclaim, free of any restriction or condition, and
delivered to Lender by wire transfer not later than
- 7 -
1:00 p.m. (New York time) on the date due; funds received by Lender after
that time on such due date shall be deemed to have been paid by the Company
on the next succeeding Business Day. Whenever payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the next succeeding Business Day. All payments due
hereunder shall be paid to accounts designated in writing, from time to
time, by Lender.
(ii) APPLICATION OF PAYMENTS TO PRINCIPAL AND INTEREST. Except as
otherwise provided herein, all payments in respect of the principal amount
of the Loan shall include payment of accrued interest on the principal
amount being repaid or prepaid, and all such payments shall be applied to
the payment of interest before application to principal.
(iii) INTEREST RATE LIMITATION. It is the intent of the Company and
Lender in executing this Agreement and the other Loan Documents that none
of the terms and provisions of this Agreement or any of the other Loan
Documents shall ever be construed to create a contract for the use,
forbearance or detention of money requiring payment of interest at a rate
in excess of the maximum interest rate permitted to be charged by law. If
Lender shall collect any monies which are deemed to constitute interest
which would otherwise increase the effective interest rate on the Loan to a
rate in excess of the maximum interest rate permitted to be charged by law,
all such sums deemed to constitute interest in excess of such maximum rate
shall, at the option of Lender, be credited to the payment of sums due
hereunder or under the other Loan Documents or shall be returned to the
Company.
2.4 USE OF LOAN PROCEEDS. The proceeds of the Loan shall be used by the
Company solely for working capital purposes and to repay certain existing
indebtedness of the Company set forth on SCHEDULE 2.4 hereto which has been
approved by the Lender. No portion of the proceeds of the Loan shall be used by
the Company or any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation G,
Regulation U, Regulation T or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.
2.5 NO DEDUCTIONS. All sums payable by the Company under this Agreement
and the other Loan Documents shall be paid free and clear of and (except to the
extent required by law) without any deduction or withholding on account of any
Tax If the Company or any other Person is required by law to make any deduction
or withholding on account of any such Tax from any sum paid or payable by the
Company to Lender under any of the Loan Documents:
(i) the Company and Lender shall notify each other of the requirement
or any change in any the requirement as soon as either becomes aware of it;
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(ii) the Company shall pay any Tax before the date on which penalties
attach thereto; and
(iii) within 30 days after paying any sum from which it is required by
law to make any deduction or withholding, and within 30 days after the due
date of payment of any Tax which it is required by clause (ii) above to
pay, the Company shall deliver to Lender evidence satisfactory to the
Lender of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority.
In connection with the foregoing provisions of this SUBSECTION 2.5: (i) Lender,
by executing this Agreement, confirms that it is a "United States person" within
the meaning of Section 7701(a)(30) of the Internal Revenue Code, and that Lender
is not subject to any deduction or withholding with respect to any payments to
Lender of principal, interest or other amounts payable under any of the Loan
Documents, and (ii) Lender agrees to notify the Company if it is or becomes
subject to any deduction, withholding or payment mentioned in this SUBSECTION
2.5.
Section 3. CONDITIONS TO LOAN
3.1 DELIVER OF DOCUMENTS ON CLOSING DATE. The obligations of Lender to
make the Loan on the Closing Date is subject to the prior or concurrent
satisfaction of all of the following conditions:
A. COMPANY DOCUMENTS. On or before the Closing Date, the Company shall
deliver or cause to be delivered to Lender the following, each, unless otherwise
noted, dated the Closing Date:
(i) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents to be executed by the Company certified as of the Closing
Date by its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment;
(ii) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents to be executed by the Company;
(iii) Executed originals of this Agreement, the Note and the other
Loan Documents to be executed by the Company, including proper Financing
Statements (Form UCC-1) fully executed for filing under the UCC or other
appropriate filing offices of each jurisdiction as may be necessary or, in
the Lender's opinion, desirable to perfect the security interests purported
to be created by the Stock Pledge and Security Agreement; and
(iv) Such other document as the Lender reasonably may request
including SCHEDULE 2.4 which shall be approved by Lender.
3.2 SATISFACTION OF CONDITIONS AND DELIVERY OF DOCUMENTS.
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A. OFFICER'S CERTIFICATE. On the Closing Date, the following conditions
shall be satisfied and the Company shall have delivered to Lender an Officer's
Certificate, in form and substance satisfactory to Lender, to that effect:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects;
(ii) No event shall have occurred and be continuing that would
constitute an Event of Default or a Potential Event of Default;
(iii) The Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before the Closing Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender from
making the Loan; and
(v) The making of the Loan shall not violate any law including,
without limitation, Regulation G, Regulation T, Regulation U or Regulation
X of the Board of Governors of the Federal Reserve System.
Section 4. THE COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the Loan
hereunder, the Company represents and warrants to Lender, on the date of this
Agreement and on the Closing Date, that the following statements are true,
correct and complete:
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. The Company has all requisite corporate power
and authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into this Agreement and the
Loan Documents to be executed by the Company.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION/BINDING OBLIGATION. The execution, delivery and
performance of this Agreement and the other Loan Documents to be executed by the
Company have been duly authorized and are the valid and binding obligation of
the Company, enforceable against the Company in accordance with their respective
terms, except as enforcement may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles relating to
enforceability.
B. NO CONFLICT. The execution, delivery and performance by the Company of
this Agreement and the other Loan Documents by the Company and the consummation
of the transaction contemplated thereby, do not and will not: (i) violate any
provision of any law or any
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governmental rule or regulation applicable to the Company or the Company's
Articles of Incorporation or Bylaws or any order, judgment or decree of any
court or other agency of government binding on the Company; (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company; (iii) result in or
require the creation or imposition of any Lien upon any of Collateral (as
defined in the Stock Pledge and Security Agreement) of the Company (other than
Liens in favor of the Lender); or (iv) require any approval of shareholders or
any approval or consent of any Person.
C. GOVERNMENTAL CONSENTS. To the best knowledge of the Company, the
execution, delivery and performance by the Company of this Agreement and the
other Loan Documents and the consummation of the transactions contemplated
hereby and thereby, do not and will not require any consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body.
D. TITLE TO PROPERTIES; LIENS. The Company and its Subsidiaries have: (i)
good, marketable and legal title to (in the case of fee interests in real
property); (ii) valid leasehold interests in (in the case of leasehold interests
in real or personal property); or (iii) good title to (in the case of all other
personal property), all of the Collateral and except as permitted by this
Agreement, all free and clear of any Liens except Permitted Encumbrances.
Section 5. THE COMPANY'S COVENANTS
The Company covenants and agrees that, until termination of this Agreement
and payment in full of the Loan, unless Lender shall otherwise give prior
written consent, the Company shall perform or not perform, as the case may be,
and shall cause each of its Subsidiaries to perform or not perform, all
covenants in this SECTION 5.
5.1 CORPORATE EXISTENCE. The Company will, and will cause each of its
Subsidiaries to, at all times preserve and keep in full force and effect their
respective corporate existence and all rights and franchises material to its
business.
5.2 INDEBTEDNESS. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
A. Indebtedness incurred pursuant to the Loan Documents;
B. The Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations existing as of the date of this Agreement;
C. The Company may become and remain liable with respect to Indebtedness
to any of its wholly-owned Subsidiaries, and any wholly-owned Subsidiary of
the Company may become and remain liable with respect to Indebtedness to
the Company or any other wholly-owned Subsidiary of the Company;
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D. Indebtedness incurred in the ordinary course of the Company's business
consistent with past practice; provided that in no event shall the Company or
its Subsidiaries incur any Indebtedness to Affiliates except as permitted by
(ii) and (iii) above; and
E. Indebtedness evidenced by the promissory note of the Company to
Olive Enterprises, Inc. dated as of March 21, 2002 (the "Olive Note").
5.3 LIENS AND RELATED MATTERS.
PROHIBITION ON LIENS. the Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of the Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit
the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any State or under
any similar recording or notice statute, except: for Permitted
Encumbrances.
A. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to a sale of such property, neither the
Company nor any of its Subsidiaries shall enter into any agreement prohibiting
the creation or assumption of any Lien upon any of its properties or assets,
whether now owned or hereafter acquired.
B. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein, the Company will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to: (i) pay dividends or make any
other distributions on any of such Subsidiary's equity Securities owned by
the Company or any other Subsidiary of the Company; (ii) repay or prepay any
Indebtedness owed by such Subsidiary to the Company or any other of the
Company; (iii) make loans or advances to Company or any other Subsidiary of
the Company; or (iv) transfer any of its property or assets to the Company or
any other Subsidiary of the Company.
5.4 RESTRICTED JUNIOR PAYMENTS. the Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, declare, order,
pay, make or set apart any sum for any Restricted Junior Payment, except for
payments due under the Olive Note.
5.5 OPERATION OF BUSINESS.
A. operate its business substantially as previously operated and only in
the ordinary course of business consistent with past practices and use its
commercially reasonable best efforts to preserve intact its organization and
goodwill; maintain all of Las Americas' tangible assets in good condition,
ordinary wear and tear excepted; comply in all material respects with all laws
applicable to the conduct of Las Americas' business the failure of which would
result in a Material Adverse Effect to the Las Americas Shares or Las Americas'
assets;
B. except as set forth in SECTION 6.2(b) of the Las Americas Due
Diligence Schedules to the Merger Agreement, not permit a split, combination or
reclassification of any shares of
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capital stock for Las Americas or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for shares of
Las Americas' capital stock;
C. not repurchase, redeem or otherwise acquire any shares of capital
stock of Las Americas;
D. except as set forth in SECTION 6.2(d) of the Las Americas Due
Diligence Schedules to the Merger Agreement, not issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of, any shares of capital
stock of Las Americas or any securities convertible into or exercisable for, or
any rights, warrants or options to acquire, any such shares;
E. maintain Las Americas' books and records in the ordinary course of
business consistent with past practices;
F. not pay any brokerage commissions or finder's fees incurred by reason
of any action taken by Las Americas in connection with the transactions
contemplated by this Agreement;
G. Intentionally omitted;
H. not change accounting methods, unless otherwise required by GAAP;
I. except as set forth in SECTION 6.2(i) of the Las Americas Due
Diligence Schedules to the Merger Agreement, be timely in all governmental
filings and shall deliver copies thereof to Broadband;
J. take no actions that would cause the Merger to be treated as other
than tax-free;
K. not declare or pay any dividends on or make other distributions in
respect of any of its capital stock;
L. not increase the amount of compensation of any director or officer of
Las Americas or any of its Subsidiaries or make any increase in or commitment to
increase any employee benefits; and
M. not permit any of its Subsidiaries to take any action contrary to the
restrictions imposed on Las Americas by this SECTION 5.
Section 6. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT") shall
occur and the Company shall fail following the receipt of written notice to cure
such default within, except as otherwise provided for herein, ten (10) Business
Days after receipt of notice of the default from the Lender:
6.1 FAILURE TO MAKE PAYMENTS WHEN DUE. Failure by the Company to pay the
principal of or interest on the Loan when due, whether at stated maturity, by
acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise, where such default is not cured within five (5) Business Days
after notice from Lender.
6.2 DEFAULT IN OTHER AGREEMENTS. Failure of the Company to pay when due
any principal of or interest on any Indebtedness beyond the end of any grace
period provided therefor; or (ii) breach or default by the Company or any of its
Subsidiaries with respect to any
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other material term of (a) any evidence of any Indebtedness or (b) any loan
agreement, mortgage, indenture or other agreement relating to such Indebtedness,
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness (or a trustee on behalf of such holder or holders)
to cause, that Indebtedness to become or be declared due and payable prior to
its stated maturity or the stated maturity of any underlying obligation, as the
case may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise).
6.3 BREACH OF CERTAIN COVENANTS. Failure of the Company to perform or
comply with any term or condition contained in SUBSECTION 2.5 or SECTION 5 of
this Agreement.
6.4 BREACH OF WARRANTY. Any representation, warranty, certification or
other statement made by the Company or any of its Subsidiaries in this
Agreement, the other Loan Documents or the Merger Agreement, or in any statement
or certificate at any time given by the Company or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the Closing Date; or
6.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS. The Company shall default in the
performance of or compliance with any material term contained in this Agreement,
or any of the other Loan Documents, and such default shall not have been
remedied or waived within 30 days after receipt by the Company of notice from
the Lender of such default, where such default is not remedied within 30 days
after receipt by the Company of notice from the Lender (PROVIDED THAT if such
default is not reasonably capable of being cured in such 30 day period, then
such default shall not be an Event of Default if the Company commences to cure
such default within the 30 day period and thereafter diligently and continuously
proceeds to cure such default or impairment within 90 days after receipt of
notice from the Lender, subject to delays caused by Force Majeure Events); or
6.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. Either (i) a
court shall enter a decree or order for relief in respect of the Company or any
of its Subsidiaries in an involuntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief shall
be granted under any applicable federal or state law; or (ii) an involuntary
case shall be commenced against the Company or any of its Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over the
Company or any of its Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of the Company or
any of its Subsidiaries for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of the Company or any of its
Subsidiaries, and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged.
6.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. Either (i) the
Company or any of its Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency
- 14 -
or similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or the Company or any of its
Subsidiaries shall make an assignment for the benefit of creditors; or (ii) the
Company or any of its Subsidiaries shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the Board of Directors of the Company or any of its Subsidiaries (or any
committee thereof) shall adopt any resolution or other authorize any action to
approve any of the actions referred to in clause (i) above or this clause (ii).
6.8 JUDGMENTS AND ATTACHMENTS. Any money judgment, writ or warrant of
attachment or similar process involving (i) in any individual case an amount in
excess of $10,000 or (ii) in the aggregate at any time an amount in excess of
$50,000 (in either case not adequately covered by insurance as to which a
solvent and unaffiliated insurance company has acknowledged coverage) shall be
entered or filed against the Company or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder).
6.9 DISSOLUTION. Any other judgment or decree shall be entered against the
Company or any of its Subsidiaries decreeing the dissolution or split up of the
Company or any of its Subsidiaries and such order shall remain undischarged or
unstayed for a period in excess of 45 days.
6.10 EMPLOYEE BENEFIT PLANS. There shall occur one or more ERISA Events
which individually or in the aggregate results in or might reasonably be
expected to result in liability of the Company or any of its ERISA Affiliates in
excess of $100,000 during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $100,000.
6.11 CHANGE IN CONTROL. Any Person (other than the Lender or Affiliates of
the Lender) or any two or more Persons acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of equity Securities of the Company (or other Securities
convertible into such equity Securities) representing more than 50% of the
combined voting power of all equity Securities of the Company entitled to vote
in the election of directors.
THEN (i) upon the occurrence of any Event of Default described in SUBSECTION 6.6
or 6.7, (a) the unpaid principal amount of and accrued interest on the Loan and
(b) all other Obligations shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company, and (ii) upon the
occurrence and during the continuation of any other Event of Default, the
Lender, by written notice to the Company, may declare all or any portion of the
amounts described in clauses (a) and (b) above to be immediately due and
payable. In addition, upon any Event of Default, the Lender at its option and
without notice to or demand upon the Company or its
- 15 -
Subsidiaries (which are expressly waived by the Company and its Subsidiaries),
may proceed to protect, exercise and enforce its rights and remedies provided in
the Loan Documents, and all other rights and remedies available at law and in
equity.
Section 7. MISCELLANEOUS
7.1 EXPENSES. Whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to pay promptly after the occurrence of an Event
of Default, all costs of settlement, incurred by the Lender in enforcing any
Obligations of or in collecting any payments due from the Company hereunder or
under the other Loan Documents by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out", pursuant to any
insolvency or bankruptcy proceedings or in connection with enforcing any
judgment.
7.2 INDEMNITY. In addition to the payment of expenses pursuant to
SUBSECTION 7.1, whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to defend, indemnify, pay and hold harmless the
Lender and the officers, directors, employees, agents, nominees and affiliates
of the Lender (collectively called the "INDEMNITEES") from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including without limitation the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including without limitation securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of this Agreement or the other Loan Documents (including without
limitation Lender's agreement to make the Loan hereunder or the use or intended
use of the proceeds of any of the Loan) (collectively called the "INDEMNIFIED
LIABILITIES"); PROVIDED THAT the Company shall not have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction. To the extent that the undertaking to defend, indemnify,
pay and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnitees or any of them.
7.3 AMENDMENTS AND WAIVERS. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, or the other Loan Documents
shall in any event be effective without the written concurrence of the Lender
and the Company, and no consent to any departure by the Company from the
provisions of this Agreement, the Note or the other Loan Documents shall be
effective without the written concurrence of the Lender; PROVIDED THAT any such
amendment, modification, termination, waiver or consent which: changes in any
manner
- 16 -
any provision of this Agreement; postpones the scheduled final maturity date of
the Loan; postpones the date or reduces the amount of any scheduled payment of
principal of the Loan; postpones the date on which any interest is payable;
decreases the interest rate borne by the Loan; or changes in any manner the
provisions contained in SUBSECTION 6.1 or this SUBSECTION 7.3, shall be
effective only if evidenced by a writing signed by or on behalf of the Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances.
7.4 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of an Event of Default or Potential Event of Default if
such action is taken or condition exists.
7.5 NOTICES. All notices, demands, consents, requests, instructions and
other communications to be given or delivered or permitted under or by reason of
the provisions of this Agreement, or in connection with the transactions
contemplated hereby and thereby, shall be in writing and shall be deemed to be
delivered and received by the intended recipient as follows: (a) if personally
delivered, on the Business Day of such delivery (as evidenced by the receipt of
the personal delivery service); (b) if mailed by certified or registered mail,
return receipt requested, four (4) Business Days after the aforesaid mailing;
(c) if delivered by overnight courier (with all charges having been prepaid), on
the second Business Day of such delivery (as evidenced by the receipt of the
overnight courier service of recognized standing); or (d) if delivered by
facsimile transmission, on the Business Day of such delivery if sent by 6:00
p.m. in the time zone of the recipient, or if sent after that time, on the next
succeeding Business Day (as evidenced by the printed confirmation of delivery
generated by the sending party's telecopier machine). If any notice, demand,
consent, request, instruction or other communication cannot be delivered because
of a changed address of which no notice was given (in accordance with this
SECTION 7.5), or the refusal to accept same, the notice shall be deemed received
on the Business Day the notice is sent (as evidenced by a sworn affidavit of the
sender). For the purpose hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or such other
address as shall be designated by such Person in a written notice delivered to
the other parties hereto.
7.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements made herein shall survive the
execution and delivery of this Agreement and making of the Loan hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of the Company set forth in SUBSECTIONS 7.1 AND 7.2 shall survive
the payment of the Loan and the termination of this Agreement.
7.7 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of the Lender in the exercise of any power, right or privilege
hereunder or under any other Loan Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
- 17 -
privilege. All rights and remedies existing under this Agreement and the other
Loan Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
7.8 MARSHALLING; PAYMENTS SET ASIDE. The Lender shall not be under any
obligation to marshal any assets in favor of the Company or any other party or
against or in payment of any or all of the Obligations. To the extent that the
Company makes a payment or payments to the Lender, or the Lender exercises its
right of setoff, and such payment or payments or the proceeds of such setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, any other state or federal law, common law
or any equitable cause, then, to the extent of the recovery, the obligation or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such setoff
had not occurred.
7.9 SEVERABILITY. In case any provision in or obligation under this
Agreement or any of the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
7.10 HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
7.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD DEFER TO THE
SUBSTANTIVE LAW PROVISIONS OF ANOTHER JURISDICTION.
7.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and assigns of the Lender.
Neither the Company's rights or obligations hereunder nor any interest therein
may be assigned or delegated by the Company without the prior written consent of
the Lender.
7.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF DELAWARE, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT THE COMPANY ACCEPTS, GENERALLY AND UNCONDITIONALLY, THEN ON
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS AND IRREVOCABLY AGREES TO THE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. The
Company and the Lender hereby agree that service of all process in any such
proceeding in any such court may be made by
- 18 -
registered or certified mail, return receipt requested, to each party at its
address provided in SUBSECTION 7.5, such service being hereby acknowledged to be
sufficient for personal jurisdiction in any action in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right to bring proceedings in the courts of any other jurisdiction.
7.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. THIS WAIVER IS IRREVOCABLE AND MEANING MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING AND SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS.
7.15 COUNTERPARTS; EFFECTIVENESS. This Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
7.16 CONFLICTING PROVISIONS. Except as otherwise provided in this Agreement
or in any of the other Loan Documents, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any of the provisions of
any of the other Loan Documents, the provisions contained in this Agreement
shall govern and control.
7.17 ENTIRE AGREEMENT. This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to the matters contained in
this Agreement. All prior or contemporaneous understandings, oral
representations or agreements had among the parties with respect to the subject
matter are merged and contained in this Agreement.
[Signature pages follow]
- 19 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above
COMPANY: LAS AMERICAS BROADBAND, INC.,
a Colorado corporation
By:
-----------------------------------------
Printed Name:
Title:
Notice Address:
00000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With a copy (which shall not constitute notice) to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
LENDER: USA BROADBAND, INC.,
a Delaware corporation
By:
-----------------------------------------
Printed Name:
-------------------------------
Title:
--------------------------------------
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Notice Address:
000 Xxxxxxxxx Xxx, Xxxxx 0
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
- 21 -
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of May 3, 2002 between LAS
AMERICAS BROADBAND, INC., a Colorado corporation, with offices at 00000 Xxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("DEBTOR"), and USA BROADBAND, INC., a
Delaware corporation, with offices at 000 Xxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxxxxx
00000 ("SECURED PARTY").
W I T N E S S E T H:
WHEREAS, the Secured Party has advanced funds, in the sum of
$500,000.00, to the Debtor, as evidenced by that certain promissory note dated
as of even date herewith in favor of the Secured Party (the "NOTE"); and
WHEREAS, as a condition to such advance, the Secured Party
required Debtor to grant to him a security interest in the Collateral (as
defined herein) in order to secure Debtor's obligations under the Note, upon the
terms and conditions more fully set forth herein;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms not otherwise defined
herein, are used herein as defined in the New York Uniform Commercial Code (the
"UCC").
2. SECURITY INTEREST. As collateral security for payment in
full by the Debtor of all amounts when due under the Note and the other
obligations to be performed under this Security Agreement and the Note
(collectively, the "OBLIGATIONS"), Debtor hereby pledges, assigns and grants to
the Secured Party a continuing first priority security interest, subject only to
that certain Promissory Note and Security Agreement, each dated as of March 21,
2002 by and between Debtor and Olive Enterprises, Inc., in and lien on the
following, whether now owned or hereafter acquired, (the "COLLATERAL"):
(a) Equipment as defined in the UCC, including
without limitation, equipment in all of its forms, wherever located, all
machinery and other goods, furniture, furnishings, fixtures, office supplies and
other tangible personal property and all parts thereof and all accessions
thereto, including, without limitation, office, kitchen and restaurant furniture
and furnishings, ovens, refrigeration and other food storage devices, computers,
cash registers and credit card processing devices, motor vehicles and other
machinery and equipment (whether utilized in the kitchen, restaurant or
otherwise), together with all parts, fittings, special tools, alterations,
substitutions, replacements and accessions thereto;
(b) Inventory as defined in the UCC, including
without limitation, all inventory, food, food stuffs, wines, liquors and all
other beverages, in all of its forms, all linens, crystal, glassware, barware,
stemware, silverware, china, dishes, cups, saucers, pots, pans, utensils and all
other items of personal property used or usable in the operation of the business
of
the Debtor, all paper products, menus, maintenance, janitorial and cleaning and
other operating supplies and equipment, other supplies, labels, xxxx checks and
sales and promotional materials and brochures, wherever located;
(c) Accounts as defined in the UCC, including without
limitation, all accounts, accounts receivable, contract rights, chattel paper,
electronic chattel paper, letter of credit rights, instruments, acceptances,
drafts, and other obligations of any kind, now or hereafter existing, whether or
not arising out of or in connection with the sale or lease of goods or the
rendering of services, together with all ledger sheets, files, records and
documents relating to any of the foregoing, (collectively, the "RECEIVABLES"),
and all rights now or hereafter existing in and to all security agreements,
leases, and other contracts securing or otherwise relating to any such
Receivables other than contracts or agreements which by their terms expressly
prohibit the granting of a lien, charge, security interest or encumbrance
(collectively, a "LIEN"). The term "Receivables" shall also include, but not be
limited to, the right to receive the proceeds, cash or other consideration
received in connection with the Company's sale, transfer, assignment or
disposition of its operations in Xxxx County, California.
(d) All rights under all contracts and agreements to
which the Debtor is a party (other than contracts or agreements which by their
terms expressly prohibit the granting of a Lien and security interest thereon);
(e) All right, title and interest, in, to and under,
any accounts or deposit accounts maintained by the Debtor at any bank or other
financial institution;
(f) General intangibles as defined in the UCC,
including without limitation, payment intangibles, software, good will and tax
refunds;
(g) All other personal property of the Debtor,
including, without limitation, all other goods, documents, instruments, general
intangibles, money, accounts and chattel paper; and
(h) All documents and documents of title relating to
or covering any of the foregoing or any other assets; and
(i) All products and proceeds of any of the
foregoing, including, without limitation, insurance proceeds, all payments and
other distributions with respect thereto.
3. REPRESENTATIONS AND WARRANTIES. Debtor represents
and warrants to the Secured Party as follows:
(a) Debtor has full power and authority to execute,
deliver and perform this Security Agreement, which has been duly authorized by
all necessary and proper corporate action.
(b) This Security Agreement has been duly executed
and delivered, and constitutes the legal, valid and binding obligation of
Debtor, enforceable in accordance with its terms.
(c) No effective security agreement, financing
statement, equivalent security or lien instrument or continuation security
agreement covering all or any part of the Collateral is on file or of record in
any public office.
(d) Debtor has good title to and is the lawful owner
of the Collateral, free from all claims, liens, encumbrances, charges or
security interests whatsoever except as otherwise granted by this Security
Agreement.
(e) The provisions of this Security Agreement create
a valid and, upon the filing of the related financing statement(s) in accordance
with this Security Agreement, perfected security interest in the Collateral,
enforceable in accordance with its terms.
4. COVENANTS. Debtor covenants and agrees that, until
the Obligations are irrevocably satisfied in full or otherwise discharged:
(a) The Secured Party may sign and file on Debtor's
behalf one or more financing statements pursuant to the UCC, in such
jurisdictions as the Secured Party shall determine. At any time and from time to
time, upon request of the Secured Party, Debtor shall give, execute, file and/or
record any notice, financing statement, statement, instrument, document or
agreement that the Secured Party considers necessary to create, preserve,
continue, perfect or validate any security interest granted hereunder or which
the Secured Party considers necessary or desirable to exercise or enforce the
Secured Party's rights hereunder with respect to such security interest. Without
limiting the generality of the foregoing, the Secured Party is authorized to
file with respect to the Collateral one or more additional financing statements,
continuation statements or other documents without the signature of Debtor and
to name therein Debtor as debtor and the Secured Party as secured party; or to
correct or complete, or cause to be corrected or completed, any financing
statements, continuation statements or other such documents as have been filed
naming Debtor as debtor and the Secured Party as secured party.
(b) Debtor shall keep the Collateral insured for the
benefit of the Secured Party against fire, theft and such other hazards, and in
amounts and with such insurance underwriters, as are prudent and customary in
the Debtor's industry.
(c) Debtor shall (i) defend the Collateral against
adverse claims and demands of all persons; (ii) not remove Collateral from any
warehouse or any future location without providing the Secured Party with
reasonable advance notice (not less than 15 days) sufficient to give the Secured
Party an opportunity to file such financing statements and otherwise perfect its
security interest in such Collateral at such locations; (iii) not sell, assign,
convey, grant, create or suffer to exist any lien, claim, security interest or
encumbrance upon the Collateral in favor of any person other than the Secured
Party, and (iv) not otherwise transfer or
dispose of any Collateral ("TRANSFER"), except for a Transfer, other than a
security interest, made in the ordinary course of business for reasonably
equivalent value.
5. REMEDIES. If there is an Event of Default under and as
defined in the Note, the Secured Party shall have, in addition to all other
rights and remedies provided in this Security Agreement or otherwise, the
remedies of a secured party under the UCC, including without limitation the
right to take possession of the Collateral, and for that purpose the Secured
Party may, so far as Debtor can give authority therefor, enter upon any premises
upon which Collateral may be situated and remove the same therefrom. The Secured
Party may require Debtor to assemble the Collateral and make it available to the
Secured Party at a place to be designated by the Secured Party which is
reasonably convenient to the Secured Party. Without limiting the generality of
the foregoing, the Secured Party may immediately, without demand or performance
and without notice of intention to sell or of time or place of sale or of
redemption or other notice or demand whatsoever to Debtor, all of which are
hereby expressly waived, and without advertisement, sell at public or private
sale or otherwise realize upon, in New York City, New York, or elsewhere, the
whole or from time to time any part of the Collateral upon which the Secured
Party shall have a security interest or lien hereunder, or any interest which
Debtor may have therein, and after deducting from the proceeds of sale or other
disposition of the Collateral all expenses (including all reasonable expenses
for legal services), shall apply the residue of such proceeds toward the payment
of the Obligations and other liabilities of Debtor, Debtor remaining liable for
any deficiency remaining unpaid after such application. If notice of any sale or
other disposition is required by law to be given, Debtor hereby agrees that a
notice sent at least two days before the time of any intended public sale or of
the time after which any private sale or other disposition of the Collateral is
to be made, shall be reasonable notice of such sale or other disposition. The
Secured Party, in its discretion, may in its name or in the name of Debtor,
demand, xxx for, collect and receive any money, receivables or proceeds included
in the Collateral and extend the time of payment or otherwise modify any of the
terms of or release Debtor under any such Collateral, without thereby incurring
responsibility to or discharging or otherwise affecting any liability of Debtor.
Debtor shall pay to the Secured Party on demand any and all attorneys' fees
reasonably and necessarily incurred or paid by the Secured Party in protecting
or enforcing the Obligations and the other rights of the Secured Party under
this Security Agreement, including its right to take possession of and realize
on Collateral.
6. POWER OF ATTORNEY. Debtor authorizes the Secured Party and
does hereby make, constitute and appoint the Secured Party and agents of the
Secured Party with full power of substitution, as Debtor's true and lawful
attorney-in-fact with power, in its own name or in the name of Debtor, upon the
occurrence and continuance of any Event of Default, to endorse any notes checks,
drafts, money orders, or other instruments of payment (including, payments under
or in respect of any policy of insurance) in respect of the Collateral that may
come into possession of the Secured Party; to sign and endorse any documents
relating to the Collateral; to pay or discharge taxes, liens, security interests
or other encumbrances at any time levied or placed on or threatened against the
Collateral; to grant, collect, receipt or, compromise, settle and xxx for sums
due in respect of the Collateral; and generally, to do at the Secured Party's
option and at Debtor's expense, at any time, or from time to time all acts and
things which the Secured
Party deems necessary to protect, preserve and realize upon the Collateral and
Debtor's security interests therein in order to effect the intent of this
Security Agreement, as fully and effectually as Debtor might or could do; and
Debtor hereby ratifies all that said attorney shall do or cause to be done by
virtue hereof. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE FOR AS LONG AS ANY OF THE OBLIGATIONS SHALL BE OUTSTANDING. Debtor
agrees that any reasonable fees, costs and expense incurred by the Secured Party
pursuant to the foregoing authorization, shall become part of the Obligations
and be secured by the Collateral.
7. MISCELLANEOUS.
(a) TERM OF SECURITY AGREEMENT. The term of this
Security Agreement shall commence on the date hereof and continue in full force
and effect until all of the Obligations have been fully and indefeasibly paid
and performed and such payment and performance has been acknowledged in writing
by the Secured Party. At such time, this Security Agreement shall terminate,
Secured Party shall release its security interests hereunder (and deliver and
sign appropriate UCC termination statements), and the Collateral shall be
reassigned to the Debtor.
(b) NOTICES. All notices, demands, consents,
requests, instructions and other communications to be given or delivered or
permitted under or by reason of the provisions of this Security Agreement or in
connection with the transactions contemplated hereby shall be in writing and
shall be deemed to be delivered and received by the intended recipient as
follows: (i) if personally delivered, on the business day of such delivery (as
evidenced by the receipt of the personal delivery service), (ii) if mailed
certified or registered mail return receipt requested, four (4) business days
after being mailed, (iii) if delivered by overnight courier (with all charges
having been prepaid), on the business day of such delivery (as evidenced by the
receipt of the overnight courier service of recognized standing), or (iv) if
delivered by facsimile transmission, on the business day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding business day (as evidenced by the printed confirmation of
delivery generated by the sending party's telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this paragraph), or the refusal to accept same, the notice, demand, consent,
request, instruction or other communication shall be deemed received on the
second business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the addresses first above set forth or to such
other address as any party may specify by notice given to the other party in
accordance with this paragraph.
(c) AMENDMENT. Except as otherwise provided herein,
no amendment of this Security Agreement shall be valid or effective, unless in
writing and signed by or on behalf of the parties hereto.
(d) WAIVER. No course of dealing or omission or delay
on the part of either party hereto in asserting or exercising any right
hereunder shall constitute or operate as a waiver of any such right. No waiver
of any provision hereof shall be effective, unless in writing and signed by or
on behalf of the party to be charged therewith. No waiver shall be deemed a
continuing waiver or waiver in respect of any other or subsequent breach or
default, unless expressly so stated in writing.
(e) GOVERNING LAW; JURISDICTION. This Security
Agreement shall be governed by, construed and enforced in accordance with the
laws of the State of New York applicable to agreements made and to be performed
therein, without regard or reference to its choice of laws or conflicts of laws
principles. This Security Agreement shall not be construed or interpreted
against the party causing this note to be drafted. The Debtor hereby
unconditionally and irrevocably consents to the exclusive personal and subject
matter jurisdiction of the Federal District Court for the Southern District of
New York and of the Supreme Court of the State of New York located in the county
of New York in respect of any claim, action, suit or other proceeding arising
out of or relating to this Security Agreement. In connection with any such
claim, action, suit or other proceeding, the Debtor hereby unconditionally and
irrevocably waives any right (a) to contest the venue of such courts; (b) to
assert that such courts in any way constitute an inconvenient forum; (c) to have
a jury trial; and (d) to assert that the Debtor is entitled to any immunity
(whether sovereign or otherwise) from legal process, judgment or execution of
judgment. The Debtor further agrees that the Debtor shall at all times maintain
in New York county in the State of New York an agent for purposes of accepting
service of process in any such claim, action, suit or other proceeding and that
service upon such agent in accordance with the rules of either of the aforesaid
courts shall constitute valid and effective service upon the matter.
(f) EQUITABLE REMEDIES. In the event of any actual or
prospective breach or default by either party, the other party shall be entitled
to equitable relief, including remedies in the nature of injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either party from pursuing
any other remedy or relief available at law or in equity for any actual or
prospective breach or default, including the recovery of damages.
(g) SEVERABILITY. The provisions hereof are severable
and in the event that any provision of this Security Agreement shall be
determined to be invalid or unenforceable in any respect by a court of competent
jurisdiction, the remaining provisions hereof shall not be affected, but shall,
subject to the discretion of such court, remain in full force and effect, and
any invalid or unenforceable provision shall be deemed, without further action
on the part of the parties hereto, amended and limited to the extent necessary
to render such provision, as so amended and limited, valid and enforceable.
(h) ASSIGNMENT. This Security Agreement, and each
right, interest and obligation hereunder, may not be assigned by either party
hereto without the prior written
consent of the other party hereto. Any purported assignment without such consent
shall be void and without effect.
(i) BINDING EFFECT. This Security Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Security Agreement is not intended, and
shall not be deemed, to create or confer any right or interest for the benefit
of any person not a party hereto.
(j) ENTIRE AGREEMENT. This Security Agreement as well
as the Note and the Intercreditor Agreement dated May 3, 2002 between the
Secured Party and Olive Enterprises, Inc., a Pennsylvania corporation, contain
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersede any prior agreement, commitment or arrangement relating
thereto.
(k) COUNTERPARTS. This Security Agreement may be
executed in counterparts, each of which shall be deemed an original and which
together shall constitute one and the same agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties, by their respective duly authorized officers,
have duly executed this Security Agreement on the date set forth in the Preamble
hereto.
SECURED PARTY: USA Broadband, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Interim President & Chief
Executive Officer
DEBTOR: Las Americas Broadband, Inc.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President & Chief Executive
Officer
ACKNOWLEDGMENT
STATE OF ____________________ )
:ss.:
COUNTY OF __________________ )
On the ______ day of ____________, 2002, before me
personally came ________________________, to me known, who, being by me duly
sworn, did depose and say that he/she resides at ______________________________
____________________________________; that he/she is a ________ of Las Americas
Broadband, Inc., a Colorado corporation described in and which executed the
foregoing instrument; and that he/she signed his/her name thereto by order of
the management of said corporation.
-----------------------------
Notary Public
806163
PROMISSORY NOTE
U.S. $500,000.00 New York, New York
As of May 3, 2002
FOR VALUE RECEIVED, the undersigned, LAS AMERICAS BROADBAND,
INC., a Colorado corporation, with offices at 00000 Xxxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 (the "COMPANY"), hereby promises to pay to the order of USA
BROADBAND, INC., a Delaware corporation (the "HOLDER"), at the Holder's office
at 000 Xxxxxxxxx Xxx, Xxxxx 0, Xxxxxxxx, Xxxxxxxxxx 00000 or at such other place
as may be designated in writing by the Holder, in accordance with this Note, the
principal sum of five hundred thousand dollars ($500,000), or such lesser amount
as shall be equal to the aggregate unpaid principal amount hereof as of
September 21, 2002 or such earlier date as provided in Section 5 hereof (the
"MATURITY DATE"), and to pay interest hereunder in arrears on the Maturity Date
at a rate per annum equal to eight percent (8%). Interest on the unpaid
principal amount hereof shall be calculated on the basis of a year of twelve
(12) thirty (30) days months. All payments hereunder shall be made in U.S.
Dollars and in immediately available funds.
1. PREPAYMENT.
(a) OPTIONAL PRE-PAYMENT. The Company may, at its
option, prepay all or a portion of the outstanding principal amount of this
Note, at any time and from time to time, prior to the Maturity Date without
premium or penalty. Each prepayment shall be applied first to the payment of all
interest accrued hereunder on the date of any prepayment, and the balance of any
such prepayment shall be applied to the principal amount hereof.
(b) MANDATORY PRE-PAYMENT. The Company shall be
required to prepay all of the outstanding principal amount of this Note and all
interest accrued thereon prior to the Maturity Date if the Company sells,
transfers, assigns or disposes or agrees to sell, transfer, assign or dispose of
its operations in Xxxx County, California.
2. SECURITY AGREEMENT. The indebtedness represented
by this Note is secured by that certain Security Agreement of even date herewith
by and between the Company and the Holder (as the same may be supplemented,
modified, amended or restated from time to time, the "SECURITY AGREEMENT").
3. MAXIMUM INTEREST. It is the intention of the Company and
the Holder that the interest (as defined under applicable law) that may be
charged to, collected from or received from the Company under this Note shall
not exceed the maximum rate permissible under applicable law. Accordingly,
notwithstanding anything in this Note to the contrary, in the event any interest
(as so defined) is charged to, collected from or received from the Company under
this Note in excess of such maximum lawful rate, then the excess of such payment
over that maximum shall be applied to the reduction of the outstanding principal
balance under this Note, including the principal balance of the capital advances
made to the Company by the Holder prior to the date of this Note (without any
prepayment premium or penalty), and any portion of such
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excess payment remaining after payment and satisfaction in full shall be
returned to the Company.
4. EVENTS OF DEFAULT. If any of the following events
shall occur and be continuing (each an "EVENT OF DEFAULT"):
(a) the Company shall fail to pay the principal of or
any installment of accrued interest on this Note within ten (10) business days
after the due date hereof;
(b) any representation or warranty made in this Note
or the Security Agreement shall prove to have been false or misleading in any
material respect when made or deemed made; or
(c) (i) the Company shall generally fail or be unable
to pay its debts as such debts become due, (ii) the Company shall admit in
writing its inability to pay its debts as they become due, (iii) the Company
shall make a general assignment for the benefit of creditors; (iv) any
proceeding shall be instituted by or against the Company seeking to adjudicate
it as bankrupt or insolvent, or seeking liquidation, dissolution, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts, or relief similar to any of the foregoing, under any statute,
law or regulation, now and from time to time hereafter in effect, relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or
similar official for it or for any part of its property and, in the case that a
proceeding is instituted against the Company, such proceeding remains unstayed
for a period of 45 days; or (v) the Company shall take any action in furtherance
of, or indicating its consent to, approval of, acquiescence in, any of the
actions set forth above in this Section 4(c).
5. EFFECT OF DEFAULT. Upon the occurrence of an Event of
Default, the Holder shall have the immediate right, at its sole discretion, and
without further notice, demand, presentment, notice of non-payment or
non-performance, protest, notice of protest or any other notice, all of which
are hereby irrevocably and unconditionally waived by the Company to declare that
the balance of the Loan then outstanding shall bear interest until repaid in
full at an annual rate equal to four percent (4%) per annum above the prime
interest rate as reported in The Wall Street Journal on the date of the Event of
Default and shall be payable ON DEMAND.
6. GOVERNING LAW; JURISDICTION. THIS NOTE SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD OR
REFERENCE TO ITS CHOICE OF LAWS OR CONFLICTS OF LAWS PRINCIPLES. THIS NOTE SHALL
NOT BE CONSTRUED OR INTERPRETED AGAINST THE PARTY CAUSING THIS NOTE TO BE
DRAFTED. THE COMPANY HEREBY UNCONDITIONALLY AND IRREVOCABLY CONSENTS TO THE
EXCLUSIVE PERSONAL AND SUBJECT MATTER JURISDICTION OF THE FEDERAL DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF THE SUPREME COURT OF THE STATE OF
NEW YORK LOCATED IN THE COUNTY OF NEW YORK IN RESPECT
A-2
OF ANY CLAIM, ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE. IN CONNECTION WITH ANY SUCH CLAIM, ACTION, SUIT OR OTHER PROCEEDING,
THE COMPANY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY RIGHT (A) TO
CONTEST THE VENUE OF SUCH COURTS; (B) TO ASSERT THAT SUCH COURTS IN ANY WAY
CONSTITUTE AN INCONVENIENT FORUM; (C) TO HAVE A JURY TRIAL; AND (D) TO ASSERT
THAT THE COMPANY IS ENTITLED TO ANY IMMUNITY (WHETHER SOVEREIGN OR OTHERWISE)
FROM LEGAL PROCESS, JUDGMENT OR EXECUTION OF JUDGMENT. THE COMPANY FURTHER
AGREES THAT THE COMPANY SHALL AT ALL TIMES MAINTAIN IN NEW YORK COUNTY IN THE
STATE OF NEW YORK AN AGENT FOR PURPOSES OF ACCEPTING SERVICE OF PROCESS IN ANY
SUCH CLAIM, ACTION, SUIT OR OTHER PROCEEDING AND THAT SERVICE UPON SUCH AGENT IN
ACCORDANCE WITH THE RULES OF EITHER OF THE AFORESAID COURTS SHALL CONSTITUTE
VALID AND EFFECTIVE SERVICE UPON THE MATTER.
7. NOTICE. All notices, demands, consents, requests,
instructions and other communications to be given or delivered or permitted
under or by reason of the provisions of this Agreement or in connection with the
transactions contemplated hereby shall be in writing and shall be deemed to be
delivered and received by the intended recipient as follows: (i) if personally
delivered, on the business day of such delivery (as evidenced by the receipt of
the personal delivery service), (ii) if mailed certified or registered mail
return receipt requested, four (4) business days after being mailed, (iii) if
delivered by overnight courier (with all charges having been prepaid), on the
business day of such delivery (as evidenced by the receipt of the overnight
courier service of recognized standing), or (iv) if delivered by facsimile
transmission, on the business day of such delivery if sent by 6:00 p.m. in the
time zone of the recipient, or if sent after that time, on the next succeeding
business day (as evidenced by the printed confirmation of delivery generated by
the sending party's telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this
paragraph), or the refusal to accept same, the notice, demand, consent, request,
instruction or other communication shall be deemed received on the second
business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the addresses first above set forth or to such
other address as any party may specify by notice given to the other party in
accordance with this paragraph.
8. ENFORCEMENT OF EXPENSES. The Company shall pay all of the
costs and expenses incurred by the Holder or other holder hereof in connection
with enforcing the terms and provisions of this Note (including, without
limitation, the reasonable fees and disbursements of attorneys and any related
court costs). The Company shall not have any right to offset payments due under
this Note against any sums that the Holder hereof or any subsidiary or affiliate
of the Holder or any other such holder may now or in the future owe to the
Company, onto any subsidiary or affiliate of the Company.
9. WAIVER, ETC. Failure by the Holder to insist upon the
strict performance by the Company of any terms and provisions herein shall not
be deemed to be a waiver of any terms
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and provisions herein, and the Holder shall retain the right thereafter to
insist upon strict performance by the Company of any and all terms and
provisions of this Note or any document securing the repayment of this Note. Any
waiver of this Note shall be in writing and executed by the Company. Any such
waiver shall be limited to the instance and purpose for which it is given. This
Note may not be amended, modified or altered, except by an instrument in writing
executed by each of the Company and the Holder.
10. BINDING EFFECT. The terms of this Note shall be binding
upon and inure to the benefit of the successors to the Company, the Holder or
any other holder thereof, as applicable. This Note and the obligations of the
Company hereunder may not be assigned or delegated by the Company without the
prior written consent of the Holder, which may be granted or withheld by the
Holder in the Holder's sole and absolute discretion.
11. NOTE ABSOLUTE. The Company hereby agrees that subject to
the terms of this Note, its obligations hereunder shall be continuing, absolute
and unconditional, and without the benefit of any defense, claim, set-off,
recoupment, abatement or other right, existing or future, which the Company may
have against the Holder, or any other entity, and shall remain in full force and
effect until the date the Company fully discharges any obligations due and owing
to the Holder hereunder.
12. ENTIRE AGREEMENT. This Note as well as the Security
Agreement and the Intercreditor Agreement dated May ___, 2002 between the Holder
and Olive Enterprises, Inc., a Pennsylvania corporation, contain the entire
understanding and agreement of the Company and the Holder with respect to the
subject matter hereof and supersede all other prior and/or contemporaneous
representations, warranties, agreements and understandings (oral or otherwise)
relating thereto.
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IN WITNESS WHEREOF, the Company has executed and delivered
this Note as of the date first written above.
LAS AMERICAS BROADBAND, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President & Chief Executive Officer
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