EXHIBIT 4.1
================================================================================
SECURITIES PURCHASE AGREEMENT
Dated as of June 30, 1999
By and Among
FIRSTCOM CORPORATION
and
SFG-N INC.
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS............................................................................1
ss.1.0 Definitions............................................................................1
ARTICLE II
REPRESENTATIONS OF THE COMPANY.........................................................6
ss.2.0 Representations of the Company.........................................................6
ss.2.1 Existence and Good Standing............................................................6
ss.2.2 Capital Stock..........................................................................7
ss.2.3 Authorization and Validity of the Documents............................................8
ss.2.4 Subsidiaries and Investments...........................................................8
ss.2.5 SEC and Other Documents; Financial Statements..........................................9
ss.2.6 Title to Properties; Encumbrances; Leases; Telecom Licenses............................9
ss.2.7 Intellectual Property.................................................................10
ss.2.8 Material Contracts....................................................................11
ss.2.9 Consents and Approvals; No Violations.................................................11
ss.2.10 Litigation............................................................................11
ss.2.11 Taxes.................................................................................12
ss.2.12 Compliance with Laws..................................................................12
ss.2.13 Employment Relations..................................................................12
ss.2.14 Employee Benefit Plans................................................................12
ss.2.15 Environmental Laws and Regulations....................................................12
ss.2.16 No Misstatements or Omissions; Projections............................................13
ss.2.17 Investment Company Act................................................................13
ss.2.18 Texas Takeover Law....................................................................13
ss.2.19 Year 2000 Reprogramming...............................................................13
ss.2.20 Securities Law Compliance.............................................................14
ss.2.21 Transactions with Affiliates..........................................................14
ss.2.22 Capital Stock Reserved................................................................14
ss.2.23 No Conflict of Rights.................................................................14
ss.2.24 Use of Proceeds.......................................................................14
ss.2.25 Insurance.............................................................................14
ss.2.26 Permits...............................................................................14
ss.2.27 Extortion Payments....................................................................15
ss.2.28 Improper Payments.....................................................................15
ss.2.29 Broker's or Finder's Fees.............................................................15
(i)
PAGE
----
ARTICLE III
REPRESENTATIONS OF THE PURCHASER......................................................15
ss.3.0 Representations of the Purchaser......................................................15
ss.3.1 Existence and Good Standing; Power and Authority......................................15
ss.3.2 Restrictive Documents.................................................................15
ss.3.3 Purchase for Investment...............................................................16
ss.3.4 Broker's or Finder's Fees.............................................................16
ARTICLE IV
ISSUANCE OF SECURITIES; PAYMENT OF SUBSCRIPTION PRICE; CLOSINGS.......................16
ss.4.1 Issuance of Preferred Stock...........................................................16
ss.4.2 Purchase Price........................................................................16
ss.4.3 Time and Place of Closings............................................................16
ss.4.4 Closing Deliveries....................................................................17
ARTICLE V
CONDITIONS TO THE PURCHASER'S OBLIGATIONS.............................................17
ss.5.0 Conditions to the Purchaser's Obligations.............................................17
ss.5.1 Opinions of Counsel...................................................................17
ss.5.2 Good Standing and Other Certificates..................................................17
ss.5.3 Truth of Representations and Warranties...............................................17
ss.5.4 Performance of Agreements.............................................................17
ss.5.5 No Litigation Threatened..............................................................18
ss.5.6 Third Party Consents; Governmental Approvals..........................................18
ss.5.7 Proceedings...........................................................................18
ss.5.8 Certificate of Designation............................................................18
ss.5.9 Side Letter...........................................................................18
ss.5.10 Investor Rights Agreement.............................................................18
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATIONS...............................................18
ss.6.0 Conditions to the Company's Obligations...............................................18
ss.6.1 Truth of Representations and Warranties...............................................18
ss.6.2 Third Party Consents; Governmental Approvals..........................................18
ss.6.3 Performance of Agreement..............................................................18
ss.6.4 No Litigation Threatened..............................................................19
ss.6.5 Fair Market Value Opinion.............................................................19
ARTICLE VII
POST-CLOSING AGREEMENTS...............................................................19
ss.7.1 Financial Statements and Other Information............................................19
ss.7.2 Inspection............................................................................20
ss.7.3 Reservation of Common Stock; Valid Issuance...........................................21
(ii)
PAGE
----
ss.7.4 Prohibited Actions....................................................................21
ss.7.5 Due Diligence.........................................................................21
ss.7.6 Compliance with Statutes, etc.........................................................22
ss.7.7 Improper Payments.....................................................................22
ARTICLE VIII
SURVIVAL..............................................................................22
ss.8.1 Survival..............................................................................22
ARTICLE IX
INDEMNIFICATION.......................................................................22
ss.9.1 Indemnification.......................................................................22
ss.9.2 Contribution..........................................................................23
ss.9.3 Limitation on Indemnification.........................................................23
ARTICLE X
MISCELLANEOUS.........................................................................23
ss.10.1 Knowledge of the Transaction Parties..................................................23
ss.10.2 Expenses..............................................................................23
ss.10.3 Governing Law.........................................................................23
ss.10.4 Captions..............................................................................23
ss.10.5 Publicity.............................................................................23
ss.10.6 Notices...............................................................................24
ss.10.7 Parties in Interest...................................................................25
ss.10.8 Counterparts..........................................................................25
ss.10.9 Entire Agreement......................................................................25
ss.10.10 Amendments............................................................................25
ss.10.11 Severability..........................................................................25
ss.10.12 Third Party Beneficiaries.............................................................25
ss.10.13 Jurisdiction..........................................................................25
SCHEDULES
Schedule 2.1 Existence and Good Standing
Schedule 2.2 Capital Stock
Schedule 2.4 Subsidiaries and Investments
Schedule 2.5(c) Material Adverse Change
Schedule 2.6(a) Material Property
Schedule 2.6(b) Leases and Telecom Licenses
Schedule 2.7 Intellectual Property
Schedule 2.8 Material Contracts
Schedule 2.14 Plans
Schedule 2.15 Environmental Matters
Schedule 2.21 Transactions with Affiliates
Schedule 2.23 Registration Rights
(iii)
EXHIBITS
A Form of Certificate of Designation
B Form of Investor Rights Agreement
C Form of Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
D Form of Confidentiality Agreement
E Form of Side Letter
(iv)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of June 30, 1999 by and
among FIRSTCOM CORPORATION, a Texas corporation (the "Company"), and SFG-N INC.,
a Delaware corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser desires to subscribe for, and the
Company desires to issue, 1,250,000 shares of Preferred Stock, par value $0.001
per share, of the Company which after giving effect to the transactions
contemplated hereby shall constitute 100% of the issued and outstanding Series A
Cumulative Convertible Preferred Stock of the Company (the "Preferred Stock");
WHEREAS, on or prior to the execution and delivery of this
Agreement, the Company shall have filed with the Secretary of State of the State
of Texas, a certificate of designation, in substantially the form attached
hereto as Exhibit A, setting forth the rights and obligations relating to the
Preferred Stock (the "Certificate of Designation") including without limitation,
provisions relating to the conversion of the Preferred Stock into the Company's
Common Stock, par value $0.001 per share (the "Common Stock"); and
WHEREAS, on or prior to the execution and delivery of this
Agreement, SFG-N Inc., the Company, ▇▇▇▇▇▇▇▇ ▇. Northland and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇
shall have executed and delivered an investor rights agreement, in substantially
the form attached hereto as Exhibit B, setting forth the rights and obligations
relating to the holders of the Preferred Stock (the "Investor Rights
Agreement").
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
-----------
ss. 1.0 DEFINITIONS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with, such Person; PROVIDED, HOWEVER, that, an Affiliate
shall include any entity that directly or indirectly (including through limited
partner or general partner interests) owns more than 10% of any class of the
equity of any other entity.
"Agreement" shall mean this Agreement, as the same may be
amended, supplemented or modified in accordance with the terms hereof, from time
to time.
"Applicable Law" shall mean any constitution, statue, law,
rule, regulation, ordinance, judgment, order, decree, Permit, or any published
directive, guideline, requirement or other governmental restriction which has
the force of law, or any determination by, or interpretation of any of the
foregoing by, any judicial authority, binding on a given person whether in
effect as of the date hereof or as of any date thereafter, including all
applicable Environmental Laws, and also including, without limitation, the
following: (i) for Chile: (a) Chilean Telecommunications Law and (b) Chilean
Foreign Investment Statute; (ii) for Peru: (a) General Telecommunications Law,
(b) State Contracts, (c) the General Regulation to the Telecommunications Law,
(d) the Regulation for the Organization for Supervision of Private Investments
in Telecommunications ("OSIPTEL"), and (e) Foreign Investment Promotion Law;
(iii) for Colombia: (a) Decree 1990 issued in 1990, (b) Law 142 enacted in 1994,
and (c) plans adopted by the National Council for Economic and Social Policy of
Colombia and (iv) all other applicable laws, statutes, regulations and decrees
issued by the Chilean, Peruvian or Colombian governmental authorities.
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in the City
of New York are authorized or obligated by law or executive order to close.
"Certificate of Designation" shall have the meaning set forth
in the recitals of this Agreement.
"Closing" shall have the meaning set forth in Section 4.3 of
this Agreement.
"Closing Date" shall mean June 30, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated and rulings issued thereunder.
"Commission" shall mean, at any time, the Securities and
Exchange Commission or any other Federal agency then administering the
Securities Act and other Federal securities laws.
"Common Stock" shall have the meaning set forth in the
recitals of this Agreement.
"Company" shall have the meaning set forth in the first
paragraph of this Agreement.
"Company Property" shall mean any real property and
improvements owned, leased, used, operated or occupied by any Transaction Party.
"Company Reports" shall have the meaning set forth in Section
2.5 of this Agreement.
-2-
"Copyrights" shall means all material copyrights, whether
registered or unregistered, owned by, assigned to or subject to assignment to
the Transaction Parties anywhere in the world.
"Damages" shall have the meaning set forth in Section 9.1 of
this Agreement.
"Documents" shall mean, collectively, this Agreement, the
Preferred Stock, the Certificate of Designation and the Investor Rights
Agreement.
"Encumbrances" shall have the meaning set forth in Section
2.6 of this Agreement.
"Environmental Claims" shall mean all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued under any such Law
(hereinafter "Claims"), including (a) Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) Claims
by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
"Environmental Law" shall mean any federal, state or local
statute, law, rule, regulation, ordinance, code, policy or rule of common law in
effect and in each case as amended as of the Closing Date, and any judicial or
administrative interpretation thereof as of the Closing Date, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. ss.9601 eT Seq.; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. ss.6901 et seq.; the Federal Water Pollution Control Act, as amended,
33 U.S.C. ss.1351 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.3601
ET SEq.; the Clean Air Act, 42 U.S.C. ss.7401 ET seq.; the Safe Drinking Water
Act, 42 U.S.C. ss.300F ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. ss.3701
ET SEQ.; and their state and local counterparts and equivalents.
"ERISA" shall have the meaning set forth in Section 2.14 of
this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Fully-Diluted Basis" shall mean the total number of shares of
Common Stock outstanding at any time, after giving effect to (a) all Common
Stock outstanding at the time of such determination and (b) all Common Stock
issuable upon the exercise of any outstanding rights, options and/or warrants to
acquire Common Stock and outstanding securities that are, or may be, pursuant to
their terms convertible into or exchangeable for Common Stock or that may be
required to be issued pursuant to any other agreement.
"GAAP" shall have the meaning set forth in Section 2.5(b)
of this Agreement.
-3-
"Governmental Authority" shall mean any national, state,
county, city, town, village, municipal or other local government department,
commission, board, bureau, agency, authority or instrumentality of the United
States or any other national authority or any political subdivision of any
thereof, and any Person exercising executive, legislative, judicial, regulatory
administrative functions of or pertaining to any of the foregoing entities,
having jurisdiction over the Person or matters in question, including, without
limitation, (i) for Chile: (a) Ministry of Transportation and
Telecommunications, (b) Ministry of Economy and (c) Central Bank; (ii) for Peru:
(a) Ministry of Transportation, Communications, Housing and Construction, (b)
Specialized Telecommunications Concession Unit and (c) National Commission on
Foreign Investments; (iii) for Colombia: (a) the Ministry of Communications, (b)
the Superintendency of Public Services, (c) the Commission for the Regulation of
Telecommunications and (d) Central Bank.
"Hazardous Materials" shall mean (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, and radon gas; and (b)
any chemicals, materials or substances defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, pursuant to any applicable
Environmental Law.
"Improper Payments" shall have the meaning set forth in
Section 2.28 of this Agreement.
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness for borrowed money or for the deferred purchase price of
property or services, (ii) all indebtedness of the type otherwise described in
this definition secured by any lien on any property owned by such Person or any
of its Subsidiaries, (iii) capitalized lease obligations, (iv) all guarantees of
any type of indebtedness otherwise described in this definition, (v) all
obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, I.E., take-or-pay or similar
obligations and (vi) interest rate protection hedging agreements, currency
hedging agreements or commodity hedging agreements.
"Intellectual Property" shall have the meaning set forth in
Section 2.7 of this Agreement.
"Investor Rights Agreement" shall have the meaning set forth
in the recitals of this Agreement.
"LAIF" shall have the meaning set forth in Section 3.3 of
this Agreement.
"Leases" shall have the meaning set forth in Section 2.6 of
this Agreement.
"Marks" shall mean all registrations for material trademarks
and service marks and all pending applications for such registrations owned by,
assigned to or subject to assignment
-4-
to the Transaction Parties anywhere in the world and all material unregistered
trademarks, trade names, service marks, brand names, and business names.
"Material Adverse Effect" shall have the meaning set forth in
Section 2.1 of this Agreement.
"NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automatic Quotation System.
"Patents" shall mean all patents and patent applications owned
by, assigned to or subject to assignment to the Transaction Parties anywhere in
the world.
"Permit" shall mean any Federal, state, local, foreign or
other governmental or other third party permit (including occupancy permit),
certificate, license, consent and authorization held by the Company or its
Subsidiaries.
"Permitted Business" shall mean any business in which any of
the Transaction Parties are engaged in on the Closing Date, and any reasonable
extensions thereof; PROVIDED, HOWEVER, that such businesses are operated in
South America, Central America (including, without limitation, Mexico) or the
Caribbean Islands and PROVIDED FURTHER, that such businesses are not primarily
operated in any country which is the target of any United States boycott laws,
embargo laws, or the substantial equivalent thereof.
"Permitted Encumbrances" shall have the meaning set forth in
Section 2.6 of this Agreement.
"Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies, 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.
"Pre-Closing Periods" shall have the meaning set forth in
Section 2.11 of this Agreement.
"Preferred Stock" shall have the meaning set forth in the
recitals of this Agreement, and, in any event, shall be issued on the terms and
conditions set forth in the Certificate of Designation.
"Pro Rata Amount" shall mean the quotient obtained by dividing
the number of shares of Common Stock owned by the Purchaser on a Fully-Diluted
Basis by the total number of shares of Common Stock on a Fully-Diluted Basis.
"Purchaser" shall have the meaning set forth in the first
paragraph of this Agreement.
-5-
"Purchase Price" shall have the meaning set forth in Section
4.2 of this Agreement.
"Returns" shall have the meaning set forth in Section 2.11 of
this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
"Securities Laws" shall mean the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder and under any
applicable state securities laws.
"Senior Notes Indenture" shall mean that certain Indenture,
dated as of October 27, 1997 between the Company and State Street Bank & Trust
Company, N.A., as amended or supplemented from time to time.
"Side Letter" shall mean that certain side letter, from the
Company to the Purchaser and LAIF (as defined herein), in substantially the form
attached hereto as Exhibit E.
"Subsidiary" shall have the meaning set forth in Section
2.4(a) of this Agreement.
"Taxes" shall mean all taxes, assessments, charges, duties,
fees, levies or other governmental charges, including, without limitation, all
Federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and whether
or not requiring the filing of a Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity.
"Telecom License" shall have the meaning set forth in Section
2.6 of this Agreement.
"Transaction Party" shall have the meaning set forth in
Section 2.1 of this Agreement.
"Vendor Financing" shall mean, collectively, the
collateralized vendor financings entered into by certain Transaction Parties on
November 11, 1998 and December 24, 1998.
ARTICLE II
REPRESENTATIONS OF THE COMPANY
------------------------------
ss. 2.0 REPRESENTATIONS OF THE COMPANY. In order to induce the
Purchaser to enter into this Agreement and to purchase the Preferred Stock, the
Company represents and warrants to and agrees with the Purchaser as follows:
-6-
ss. 2.1 EXISTENCE AND GOOD STANDING. The Company and each of
its Subsidiaries (each a "Transaction Party," and collectively, the "Transaction
Parties") is a Person, duly organized, validly existing and in good standing, or
the equivalent thereof, under the laws of the jurisdiction of its organization.
Each Transaction Party has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as proposed to be conducted. Except as set forth in SCHEDULE 2.1, each
Transaction Party is duly qualified or licensed to do business and is in good
standing, or the equivalent thereof, and is authorized to do business, in each
jurisdiction in which the character or location of the properties owned, leased
or operated by such entity or the nature of the business conducted by such
entity makes such qualification or license necessary, except where any such
failure to be duly qualified or licensed or in good standing, or the equivalent
thereof, would not have a material adverse effect on the business, operations,
financial condition or results of operations of the Transaction Parties, taken
as a whole, or on the ability of the Company to perform its obligations under
any of the Documents (a "Material Adverse Effect").
ss. 2.2 CAPITAL STOCK. Immediately prior to giving effect to
the transactions contemplated hereby, the Company had an authorized
capitalization consisting of 50,000,000 shares of Common Stock, par value $0.001
per share ("Common Stock") of which 20,272,644 shares of Common Stock were
outstanding, 15,918,067 shares were being held in reserve for issuance upon the
exercise of outstanding stock options and existing warrants, and 10,000,000
shares of Preferred Stock, par value $0.001 per share of which zero shares were
outstanding, in each case subject to adjustment based on the exercise of
outstanding stock options and existing warrants since June 21, 1999. All
outstanding shares of capital stock of the Company (including, without
limitation, those purchased by the Purchaser hereunder) have been, and, on the
Closing Date, will be duly authorized and validly issued and fully paid and
non-assessable. Except as set forth on SCHEDULE 2.2, and except for the
Preferred Stock, there will be no outstanding subscriptions, options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements or commitments, contingent or otherwise, of any character
providing for the purchase, redemption, acquisition, retirement, issuance or
sale by any Transaction Party of any shares of capital stock of any Transaction
Party or other securities exchangeable or convertible into capital stock of any
Transaction Party, in each case subject to adjustment based on the exercise of
outstanding stock options and existing warrants since June 21, 1999, and there
are no stock appreciation rights or phantom stock plans outstanding. SCHEDULE
2.2 sets forth the aggregate number of shares of Common Stock which, as of June
21, 1999, the Company is obligated to issue in connection with each specific
item set forth on SCHEDULE 2.2 and described in the immediately preceding
sentence, after giving effect to the transactions contemplated thereby. In
addition, except as set forth in SCHEDULE 2.2, there are no rights, agreements,
restrictions or encumbrances (such as preemptive rights, rights of first
refusal, rights of first offer, proxies, voting agreements, voting trusts,
registration rights agreements, shareholders agreements, etc., whether or not
any Transaction Party is a party thereto) nor are there any restrictions on the
transferability or sale of such capital stock pursuant to any provision of law,
contract or otherwise with respect to the purchase, sale or voting of any shares
of capital stock of any Transaction Party (whether outstanding or issuable upon
conversion, exchange or exercise of any other security of any Transaction
Party). Except as set forth in SCHEDULE 2.2 and SCHEDULE 2.23, no Transaction
Party has any outstanding bonds, debentures, notes or other
-7-
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities the holders of which have the
right to vote). The shares of Common Stock to be issued upon exercise of the
Preferred Stock are duly and validly authorized and when issued upon exercise of
the Preferred Stock, will be duly and validly issued, fully paid and
nonassessable, and free and clear of all Encumbrances (as defined herein) and
preemptive or other similar rights other than Encumbrances, and pre-emptive or
similar rights which may have been granted by the Purchaser.
ss. 2.3 AUTHORIZATION AND VALIDITY OF THE DOCUMENTS. The
Company has the requisite power and authority to execute and deliver the
Documents to which it is a party and to perform its obligations thereunder. The
execution, delivery and performance of the Documents by the Company and the
performance of its obligations hereunder have been duly authorized and approved
by all necessary action (including, without limitation, all action of the Board
of Directors, or the equivalent thereof, and shareholders or other required
Persons of the Company) and no other action on the part of such persons is
necessary to authorize the execution, delivery and performance of the Documents
by the Company. Each of the Documents has been duly executed and delivered by
the Company and, assuming due execution thereof by the other parties thereto, is
a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding brought in equity or at law).
ss. 2.4 SUBSIDIARIES AND INVESTMENTS. (a) Set forth in
SCHEDULE 2.4 attached hereto is a list of each Person in which the Company owns,
directly or indirectly, any equity security (each a "Subsidiary").
(b) Set forth on SCHEDULE 2.4 is a list of jurisdictions in
which each Subsidiary is qualified or licensed to do business.
(c) Each Subsidiary has the equity capitalization (including
minority ownership) set forth in SCHEDULE 2.4. All of the outstanding shares of
capital stock or other equity securities, as the case may be, of each Subsidiary
have been duly authorized and validly issued, are fully paid and nonassessable
and are not subject to, nor were they issued in violation of, any preemptive
rights, and, except as set forth in SCHEDULE 2.4, are owned, of record and
beneficially, by the Company or a Subsidiary, free and clear of all
Encumbrances. There are no outstanding options, warrants, rights, subscriptions,
claims of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise relating to the
capital stock or other equity securities, as the case may be, of any Subsidiary,
pursuant to which such Subsidiary, the Company or any other Subsidiary is or may
become obligated to issue or purchase any shares of capital stock or other
equity securities of such Subsidiary or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any capital stock or
other equity securities of such Subsidiary other than such rights granted to the
Company or a subsidiary of the Company.
-8-
(d) There are no restrictions of any kind which prevent or
restrict the payment of dividends by any Subsidiary other than those
restrictions under the Senior Notes Indenture.
ss. 2.5 SEC AND OTHER DOCUMENTS; FINANCIAL STATEMENTS. (a)
Each registration statement, report, including annual and quarterly reports,
proxy statement or information statement, and all exhibits thereto prepared by
the Company or relating to its properties since January 1, 1997, each in the
form (including exhibits and any amendments thereto) filed with the Commission
(collectively, the "Company Reports"), as of their respective dates (i) complied
in all material respects with the applicable requirements of the Securities Laws
and (ii) 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 made therein, in the light of the circumstances under which they were
made, not misleading. There is no unresolved violation asserted by any
Governmental Authority with respect to any of the Company Reports.
(b) Each of the balance sheets included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presented the financial position of the entity or entities to which it
relates as of its date and each of the statements of operations, shareholders'
equity (deficit) and cash flows included in or incorporated by reference into
the Company Reports (including any related notes and schedules) fairly presented
the results of operations, retained earnings or cash flows, as the case may be,
of the entity or entities to which it relates for the periods set forth therein,
in each case in accordance with United States generally accepted accounting
principles consistently applied during the periods involved ("GAAP"), except as
may be noted therein and except, in the case of the unaudited statements,
subject to normal recurring year-end adjustments.
(c) Except as set forth on SCHEDULE 2.5(C) attached hereto,
since December 31, 1998, no Transaction Party has experienced any change, event
or circumstance which would have a Material Adverse Effect.
ss. 2.6 TITLE TO PROPERTIES; ENCUMBRANCES; LEASES; TELECOM
LICENSES. (a) Except as set forth on SCHEDULE 2.6(A), the Transaction Parties do
not own, in fee or otherwise, any interest in any real property material to its
business, other than leasehold interests and easements. Except for such
properties and assets which have been sold or otherwise disposed of in the
ordinary course of business, each of the Transaction Parties has good title to
its material properties and assets (whether real, personal, mixed, tangible or
intangible), subject to no encumbrance, lien, charge or other restriction of any
kind or character ("Encumbrances"), except for (i) Encumbrances for current
taxes, assessments or governmental charges or levies on property not yet due and
delinquent, (ii) Encumbrances arising by operation of law, (iii) other
Encumbrances which could not reasonably be expected to have a Material Adverse
Effect and (iv) Encumbrances arising under the Vendor Financing (Encumbrances of
the type described in clauses (i) - (iv) above are hereinafter sometimes
referred to as "Permitted Encumbrances"). Each Transaction Party owns or
otherwise has the right to use all of the property now used and material to the
operation of the business of the Transaction Parties taken as a whole, which
personal property is in good operating condition and repair, ordinary wear and
tear excepted and substantially fit for the purpose for which they are being
utilized and constitutes all of the property necessary to conduct its business
as it is presently being conducted.
-9-
(b) SCHEDULE 2.6(B)(I) attached hereto contains an accurate
and complete list of all material property (whether real, personal, mixed,
tangible or intangible) leased or sub-leased by the Transaction Parties,
including all amendments, extensions and other modifications (the "Leases").
SCHEDULE 2.6(B)(II) attached hereto contains an accurate and complete list of
all material licenses, concessions, easements, rights-of-way, and equivalent or
similar property interests, relating to telecommunications services, to which
any of the Transaction Parties is a party thereto (the "Telecom Licenses").
Except as otherwise set forth in SCHEDULE 2.6(B)(I) and SCHEDULE 2.6(B)(II)
attached hereto, each Lease and Telecom License is in full force and effect; the
Transaction Parties have a good and valid leasehold interest in and to all of
the leased property, subject to no Encumbrances, except Permitted Encumbrances;
all payments, rents and additional rents due to date from any of the Transaction
Parties in respect of each such Lease and Telecom License have been paid; no
Transaction Party has received notice that it is in default under any Lease or
Telecom License; and, to the knowledge of each of the Transaction Parties, there
exists no event, occurrence, condition or act (including the consummation of the
Transaction) which, with the giving of notice, the lapse of time or the
happening of any further event or condition, would become a default by any
Transaction Party under any such Lease or Telecom License or which brings into
question the validity or effectiveness of any such Lease or Telecom License.
ss. 2.7 INTELLECTUAL PROPERTY. Except as otherwise indicated
on SCHEDULE 2.6 or SCHEDULE 2.7, to the Company's knowledge the Company owns the
entire right, title and interest in and to the Marks, the Copyrights and the
Patents free and clear of any Encumbrances except for Permitted Encumbrances.
Each item that is indicated as registered on SCHEDULE 2.7 has been duly
registered, filed with or issued by the appropriate authorities in the countries
indicated on SCHEDULE 2.7 and to the knowledge of each of the Transaction
Parties, all such registrations, filings and issuances remain in full force and
effect. Except as otherwise indicated on SCHEDULE 2.7, to the Company's
knowledge none of the Marks, the Copyrights or the Patents are the subject of
any pending, or threatened opposition, interference, cancellation proceeding or
other legal or governmental proceeding before a registration or issuing
authority in any jurisdiction. Except as otherwise disclosed in SCHEDULE 2.7, to
the Company's knowledge the conduct of the Transaction Parties' business as
presently conducted does not infringe, violate, or constitute misappropriation
of any trademark, service ▇▇▇▇, copyright (whether registered or unregistered),
patent, trade secret, industrial design, computer program, data base, know-how
or other proprietary right (collectively "Intellectual Property") of any other
Person, nor, since January 1, 1997, has any Transaction Party received notice to
the contrary from any Person. The Company owns or has the right to use through
assignment, lease, license or other agreement all Intellectual Property
necessary for the conduct of the business as presently conducted. Except as set
forth in SCHEDULE 2.7, to the Company's knowledge there are no pending or
threatened material claims by any Person for infringement of any Intellectual
Property or unfair competition by any Transaction Party. Except as set forth in
SCHEDULE 2.7, to the Company's knowledge no Person is infringing upon the
Intellectual Property owned by, assigned to or subject to assignment of, the
Transaction Parties, and the Transaction Parties are aware of no facts that
would support such a claim by the Transaction Parties. The consummation of the
transaction contemplated hereby will not result in the loss or impairment of the
Transaction Parties' right to own or use any of the Intellectual Property
necessary to the conduct of the Transaction Parties' business as presently
conducted
-10-
(including, but not limited to the Marks, the Copyrights and the Patents) nor
will it require the consent of any governmental authority or third party.
ss. 2.8 MATERIAL CONTRACTS. Except as set forth on SCHEDULE
2.8 and SCHEDULE 2.2 attached hereto on the Closing Date, no Transaction Party
is bound by (a) any agreement, contract or commitment providing for annual
payments of more than $250,000, (b) any agreement, indenture or other instrument
which contains restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock providing for annual payments of
more than $250,000, (c) any agreement, indenture or instrument relating to
Indebtedness providing for annual payments of more than $250,000, (d) any
agreement or contract with any Affiliate providing for annual payments of more
than $250,000, (e) any interconnection agreement providing for annual payments
of more than $250,000, (f) employment agreement, consulting agreement (which
entitles any Person to over $100,000 per year) or any other similar type of
contract or (g) any agreement, contract or commitment limiting the ability of
any Transaction Party to engage in any line of business or to compete with any
Person or to otherwise acquire property or conduct business in any area. Except
as otherwise set forth on SCHEDULE 2.8, each contract or agreement set forth on
SCHEDULE 2.8 (or required to be set forth in SCHEDULE 2.8) is in full force and
effect and there exists no material default or material event of default or to
the knowledge of each of the Transaction Parties, event, occurrence, condition
or act (including the consummation of the sale contemplated hereby) which, with
the giving of notice, the lapse of time or the happening of any other material
event or condition, would become a default or event of default thereunder.
ss. 2.9 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution
and delivery of this Agreement and the other Documents by the Company to which
it is a party and compliance by the Company with the terms and provisions hereof
and thereof and the issuance of the Preferred Stock by the Company and the
consummation of the transactions contemplated hereby does not and will not (a)
violate or contravene any provision of the articles of incorporation (or
equivalent thereof) or bylaws (or equivalent thereof) of any Transaction Party,
(b) violate or contravene any statute, rule, regulation, licensing requirement,
order or decree of any court, arbitrator or any other public body or authority
by which any Transaction Party is bound or by which any of its properties or
assets are bound, (c) require any filing with, or permit, consent authorization,
qualification or approval of, or exemption from, or the giving of any notice to,
any governmental or regulatory body, agency or authority, or any other Person
(other than required filings under the Exchange Act) or (d) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Encumbrance upon any of the properties or assets of any Transaction Party under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, lease, franchise agreement or
any other instrument or obligation to which any Transaction Party is bound, or
by which it or any of its properties or assets may be bound.
ss. 2.10 LITIGATION. There is no action, suit, proceeding at
law or in equity, arbitration or administrative or other proceeding by or before
(or, to the knowledge of each of the Transaction Parties, any investigation by)
any governmental or other instrumentality or agency pending, or, to the
knowledge of each of the Transaction Parties, threatened, against or affecting
-11-
any Transaction Party or any such entity's properties or rights which could
reasonably be expected to have a Material Adverse Effect. No Transaction Party
is subject to any judgment, order or decree entered in any lawsuit or proceeding
which could reasonably be expected to have a Material Adverse Effect.
ss. 2.11 TAXES.
(a) TAX RETURNS. Each of the Transaction Parties has timely
filed or caused to be timely filed or will timely file or cause to be timely
filed with the appropriate taxing authorities all material returns, statements,
forms and reports for Taxes (each a "Return" and collectively, the "Returns")
that are required to be filed by, or with respect to, the Transaction Parties on
or prior to the Closing Date. The Returns have accurately reflected and will
accurately reflect all material liability for Taxes of the Transaction Parties
for the periods covered thereby.
(b) PAYMENT OF TAXES. All Taxes and Tax liabilities of the
Transaction Parties for all taxable years or periods that end on or before the
Closing Date and, with respect to any taxable year or period beginning before
and ending after the Closing Date, the portion of such taxable year or period
ending on and including such Closing Date ("Pre-Closing Periods") have been
timely paid or accrued and adequately disclosed and fully provided for pursuant
to the financial statements which have been provided to the Purchaser by the
Company and are in accordance with GAAP.
ss. 2.12 COMPLIANCE WITH LAWS. Each of the Transaction Parties
are in compliance in all material respects with all Applicable Laws,
regulations, licensing requirements, orders, judgments and decrees and have
obtained all required governmental approvals and permits in each jurisdiction in
which they currently do business, in each case except where the failure to do so
would not have a Material Adverse Effect on the Company or any Subsidiary.
Without limiting the generality of the foregoing, each of the Transaction
Parties is in compliance in all respects with the United States Foreign Corrupt
Practices Act of 1977, as amended.
ss. 2.13 EMPLOYMENT RELATIONS. The Transaction Parties are in
substantial compliance with all Federal, state or other applicable laws,
domestic or foreign, respecting employment and employment practices, terms and
conditions of employment and wages and hours, and have not, and are not, engaged
in any unfair labor practice and there is no labor strike, dispute, slowdown or
stoppage actually pending or threatened against or involving any Transaction
Party.
ss. 2.14 EMPLOYEE BENEFIT PLANS. Except as set forth iN
SCHEDULE 2.14 attached hereto, none of the Transaction Parties nor any
organization which, together with any of the Transaction Parties, would be
treated as a "single employer" within the meaning of Section 414(b) or (c) of
the U.S. Internal Revenue Code of 1986, as amended, maintains or contributes to,
or has any obligation to contribute to (or has ever maintained or contributed
to), any domestic or foreign "employee benefit plan" within the meaning of the
U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not covered by ERISA.
-12-
ss. 2.15 ENVIRONMENTAL LAWS AND REGULATIONS. Except as set
forth on SCHEDUle 2.15 attached hereto, and except where the failure of any of
the following to be true and correct would not have a Material Adverse Effect on
the Company or any Subsidiary:
(a) The Company and its Subsidiaries are in compliance with
all Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any Company Property;
(b) There are no past, pending or threatened material
Environmental Claims against the Company, any of its Subsidiaries or any Company
Property;
(c) There are no facts, circumstances, conditions or
occurrences regarding any Company Property or any property adjoining or in the
vicinity of any Company Property, that could reasonably be anticipated (i) to
form the basis of a material Environmental Claim against the Company, any of its
Subsidiaries or any Company Property or assets or (ii) to cause such Company
Property or assets to be subject to any restrictions on its ownership,
occupancy, use or transferability under any Environmental Law.
ss. 2.16 NO MISSTATEMENTS OR OMISSIONS; PROJECTIONS. No
representation or warranty by any Transaction Party contained in this Agreement
and no statement contained in any certificate, schedule, exhibit or other
instrument specified or referred to in this Agreement or any other Document
whether heretofore furnished to the Purchaser or hereafter furnished to the
Purchaser pursuant to this Agreement or any other Document contains or will
contain any untrue statement of a material fact or omits or will omit as of the
date of such document any material fact necessary to make the statements
contained therein in light of the circumstances under which such statement was
made, not misleading. The financial projections provided by the Company to the
Purchaser were prepared in good faith using the best information available to
management of the Company and represent management's good faith estimates of the
future performance of the Company for the periods referred to therein. The
Company is not aware of any material facts or circumstances which would render
such financial projections unreasonable or unobtainable; PROVIDED, HOWEVER, it
being recognized by the Purchaser that actual results may differ from the
projections and no representation is made that the projections will in fact be
attained.
ss. 2.17 INVESTMENT COMPANY ACT. No Transaction Party is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
ss. 2.18 TEXAS TAKEOVER LAW. The purchase of the Preferred
Stock by the Purchaser has been approved by the Board of Directors of the
Company and there shall be no restriction on purchase of the Preferred Stock by
the Purchaser or any of its Affiliates pursuant to the laws of the State of
Texas.
ss. 2.19 YEAR 2000 REPROGRAMMING. The costs to the Company and
its Subsidiaries of reprogramming required to permit the proper functioning in
and following the year 2000, of the (i) computer systems and (ii) equipment
containing embedded microchips, in each case, owned or operated by any
Transaction Party and the testing of all such systems and
-13-
equipment and of the reasonably foreseeable consequences of year 2000 with
respect to such systems and equipment (including, without limitation,
reprogramming errors) could, individually or in the aggregate, not reasonably be
expected to have a Material Adverse Effect. Except for the cost of such of the
reprogramming referred to in this Section 2.19 as may be necessary, the computer
and management information systems of the Company and its Subsidiaries are
sufficient to permit the Company and its Subsidiaries to conduct its business
without such conduct resulting in a Material Adverse Effect.
ss. 2.20 SECURITIES LAW COMPLIANCE. Assuming that the
representations set forth in Article III are true and correct, the offering,
issuance, sale and delivery of the Preferred Stock to the Purchaser is exempt
from the registration requirements of the Securities Act. The Company has
complied with, or is exempt from, all registration requirements of all
applicable state securities laws, or foreign securities law, in connection with
the offering, issue, sale and delivery of the Preferred Stock.
ss. 2.21 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 2.21, none of the Transaction Parties has entered into any transaction
or series of related transactions, whether or not in the ordinary course of
business, with any Affiliate of any Transaction Party, pursuant to which any
Transaction Party maintains any existing obligations and which involves the
payment of more than $60,000 per annum.
ss. 2.22 CAPITAL STOCK RESERVED. Sufficient shares of the
Company's Common Stock have been authorized and duly reserved for issuance upon
conversion of the Preferred Stock.
ss. 2.23 NO CONFLICT OF RIGHTS. Set forth on SCHEDULE 2.23 is
a description of all registration rights held by any Person for which the
Company has not filed a registration statement.
ss. 2.24 USE OF PROCEEDS. All of the proceeds from the sale of
the Preferred Stock shall be used for general corporate purposes, acquisitions
and the repayment of Indebtedness of the Transaction Parties.
ss. 2.25 INSURANCE. The insurance policies of the Transaction
Parties, with respect to their amounts and types of coverage, are adequate to
insure fully against risks to which the Transaction Parties and their respective
property and assets are normally exposed in the operation of their respective
businesses. Since January 1, 1998, there has not been any material adverse
change in the Transaction Parties relationship with its insurers or in the
premiums payable pursuant to such policies.
ss. 2.26 PERMITS. The Company has delivered or made available
to Purchaser for inspection a true and correct copy of each Permit. Each Permit
can be renewed or transferred in the ordinary course of business by the Company
or its Subsidiaries. Any applications for the renewal of any such Permit which
are due prior to the Closing Date or will be timely filed prior to the Closing
Date. No proceeding to modify, suspend, revoke, withdraw, terminate or otherwise
limit any such Permit is pending or threatened and the Company does not know of
any
-14-
valid basis for such proceeding. No administrative or governmental action
has been taken or threatened, in connection with the expiration, continuance or
renewal of any such Permit and the Company does do not know of any valid basis
for any such proceeding.
ss. 2.27 EXTORTION PAYMENTS. No Transaction Party has made any
payment in connection with any Person's scheme or plan to demand money in
exchange for (i) the safety of any person or (ii) the ability of any Person to
conduct otherwise legal business.
ss. 2.28 IMPROPER PAYMENTS. To the Company's knowledge, no
Transaction Party nor any Person acting on any Transaction Party's behalf has
paid or delivered, or promised to pay or deliver, directly or indirectly through
any other Person, of any monies or anything of value to (i) any person or firm
employed by or acting for or on behalf of any customer, supplier, whether
private or governmental, or (ii) any government official or employee or any
political party, for the purpose of illegally or improperly inducing or
rewarding any action by the customer, supplier or official favorable to any
Transaction Party (any such act an "Improper Payment").
ss. 2.29 BROKER'S OR FINDER'S FEES. No agent, broker, person
or firm acting on behalf of the Company is, or will be, entitled to any
commission or broker's or finder's fees from any Transaction Party, or from any
Person controlling, controlled by or under common control with any Transaction
Party, in connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS OF THE PURCHASER
--------------------------------
ss. 3.0 REPRESENTATIONS OF THE PURCHASER. In order to induce
the Company to enter into this Agreement and in order to induce the Company to
issue the Preferred Stock, the Purchaser represents, warrants and agrees as
follows:
ss. 3.1 EXISTENCE AND GOOD STANDING; POWER AND AUTHORITY. The
Purchaser is duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its organization. The Purchaser has the requisite
power and authority to execute and deliver the Documents to which it is a party
and perform its obligations thereunder. Each of the Documents to which it is a
party has been duly authorized and approved by the Purchaser, and assuming due
execution by the other parties thereto is a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws effecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding brought
in equity or law).
ss. 3.2 RESTRICTIVE DOCUMENTS. The Purchaser is not subject to
any mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation by the Purchaser of the transactions contemplated
hereby.
-15-
ss. 3.3 PURCHASE FOR INVESTMENT. (a) The Purchaser will
acquire the Preferred Stock for its own account for investment and not with a
view toward any resale or distribution thereof; PROVIDED, HOWEVER, that the
Purchaser may sell some or all of the Preferred Stock to the AIG-GE Capital
Latin American Infrastructure Fund L.P. and/or any of its affiliates ("LAIF");
PROVIDED FURTHER, however, that the disposition of the Purchaser's property
shall at all times remain within the sole control of the Purchaser.
(b) The Purchaser understands that the Preferred Stock have
not been registered under the Securities Act or under any state securities laws
and may not be sold or transferred unless they are subsequently registered under
the Securities Act and any applicable state or other securities laws, or unless
exemptions from registration under such laws are available;
(c) The Purchaser represents that it is experienced in
investment matters, fully understands the transactions contemplated by this
Agreement, has the knowledge and experience in financial matters as to be
capable of evaluating the merits and risks of its investment and has the
financial ability and resources to bear the economic risks of its investment;
(d) The Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
ss. 3.4 BROKER'S OR FINDER'S FEES. No agent, broker, person or
firm acting on behalf of the Purchaser is, or will be, entitled to any
commission or broker's or finder's fees from any Transaction Party, or from any
Person controlling, controlled by or under common control with any Transaction
Party, in connection with the transactions contemplated hereby.
ARTICLE IV
ISSUANCE OF SECURITIES; PAYMENT OF SUBSCRIPTION PRICE; CLOSINGS
---------------------------------------------------------------
ss. 4.1 ISSUANCE OF PREFERRED STOCK. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date, the Company agrees
to sell to the Purchaser, and the Purchaser agrees to purchase the Preferred
Stock. Delivery of the Preferred Stock to be purchased by the Purchaser pursuant
to this Agreement shall be made, pursuant to Section 4.4, on the Closing Date by
the Company to the Purchaser, against payment of the Purchase Price.
ss. 4.2 PURCHASE PRICE. Subject to the terms and conditions
set forth in this Agreement, in full consideration for the sale by the Company
of the Preferred Stock to the Purchaser, the Purchaser shall deliver to the
Company $10,000,000 (the "Purchase Price") on the Closing Date, by wire transfer
of immediately available funds to the accounts specified by the Company.
ss. 4.3 TIME AND PLACE OF CLOSINGS. The deliveries made on the
Closing Date (the "Closing") shall take place at 10:00 a.m. on the Closing Date,
at the offices of White & Case LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, or such other place and time as the Company and the Purchaser shall
mutually agree.
-16-
ss. 4.4 CLOSING DELIVERIES. At the Closing the Company shall
deliver, or cause to be delivered, to the Purchaser the following: (i)
certificates representing the number of shares of Preferred Stock to be issued
and delivered, the Closing, free and clear of all Encumbrances with all
necessary share transfer and other documentary stamps attached at the expense of
the Company, (ii) evidence or copies of any consents, approvals, orders,
qualifications, agreements or waivers required pursuant to Article V, (iii) all
certificates and other instruments and documents required by this Agreement to
be delivered by the Company to the Purchaser at or prior to the Closing and (iv)
such other documents and instruments reasonably requested by the Purchaser, as
may be necessary or appropriate to confirm or carry out the provisions of the
Documents.
ARTICLE V
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
-----------------------------------------
ss. 5.0 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The
obligations of the Purchaser to purchase the Preferred Stock contemplated by
this Agreement is conditioned upon satisfaction, at or prior to the Closing, of
the following conditions:
ss. 5.1 OPINIONS OF COUNSEL. The Company shall have furnished
the Purchaser with the opinion, dated the applicable Closing Date, of ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the Company to the effect set forth in Exhibit C hereto.
ss. 5.2 GOOD STANDING AND OTHER CERTIFICATES. The Purchaser
shall have received (a) a copy of the articles of incorporation or other
organizational documents of the Company, including all amendments thereto,
certified by the Secretary of State of Texas, (b) a certificate from the
Secretary of State or other appropriate official of the respective State or
country of incorporation or formation to the effect that the Company is in good
standing and listing all charter documents of such entity, (c) a certificate
from the Secretary of State or other appropriate official in each State or
country in which the Company is qualified to do business to the effect that such
entity is in good standing in each such State or country and (d) a copy of the
Bylaws of the Company and the resolutions of the Board of Directors of the
Company authorizing the transactions contemplated hereby, certified by the
Secretary of such Person as being true and correct and in effect on the Closing
Date.
ss. 5.3 TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company contained in this Agreement and
the other Documents, shall be true and correct in all material respects on and
as of such Closing Date other than such representations and warranties made as
of a specific date, which shall be true and correct in all material respects as
of such date, with the same effect as though such representations and warranties
had been made on and as of such date.
ss. 5.4 PERFORMANCE OF AGREEMENTS. The Company shall be in
compliance with the Documents, shall have performed all of its agreements and
covenants thereunder.
-17-
ss. 5.5 NO LITIGATION THREATENED. No action or proceedings
shall have been instituted or, to the knowledge of each of the Transaction
Parties, threatened before a court or other government body or by any public
authority to restrain or prohibit any of the transactions contemplated by the
Documents.
ss. 5.6 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All
consents, approvals, authorizations, exemptions or waivers required in
connection with the consummation of the transactions contemplated by the
Documents shall have been received.
ss. 5.7 PROCEEDINGS. All proceedings to be taken in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Purchaser
and its counsel, and the Purchaser shall have received copies of all such
documents and other evidences as it or its counsel may reasonably request in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ss. 5.8 CERTIFICATE OF DESIGNATION. The Company shall deliver
to the Purchaser evidence that the Certificate of Designation of the Company
shall have been duly filed with the Secretary of State of Texas and shall be in
full force and effect.
ss. 5.9 SIDE LETTER. The Company shall deliver the Side
Letter to the Purchaser.
ss. 5.10 INVESTOR RIGHTS AGREEMENT. The Company, ▇▇▇▇▇▇▇▇ ▇.
Northland and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇ shall deliver the Investor Rights Agreement to
the Purchaser.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATIONS
---------------------------------------
ss. 6.0 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The issuance
of the Preferred Stock by the Company is conditioned upon satisfaction, at or
prior to the Closing, of the following conditions:
ss. 6.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct on and as of the Closing Date other than such
representatives and warranties made as of a specific date, which shall be true
and correct in all material respects as of such date, with the same effect as
though such representations and warranties had been made on and as of such date.
ss. 6.2 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All
consents, approvals authorizations, exemptions or waivers, if any, required in
connection with the consummation of the transactions contemplated by this
Agreement shall have been received.
ss. 6.3 PERFORMANCE OF AGREEMENT. The Purchaser shall have
performed in all material respects, its obligations under this Agreement.
-18-
ss. 6.4 NO LITIGATION THREATENED. No action or proceeding
shall be instituted or, to the knowledge of the Purchaser, threatened before a
court or other government body or any public authority to restrain or prohibit
any of the transactions contemplated hereby.
ss. 6.5 FAIR MARKET VALUE OPINION. The Company shall have
received a determination by an investment banking firm of national standing that
the fair market value of the Preferred Stock sold pursuant to this Agreement is
not more than the Purchase Price.
ARTICLE VII
POST-CLOSING AGREEMENTS
-----------------------
ss. 7.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Company shall deliver to each holder of Preferred Stock:
(i) within 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year, consolidated
statements of earnings, shareholders' equity and cash flows of the
Company for such fiscal quarter, and a consolidated balance sheet of
the Company as of the end of such fiscal quarter, setting forth, in
each case, comparisons to comparable budgeted figures and comparable
figures for the corresponding quarter of the preceding fiscal year, all
prepared in accordance with GAAP, consistently applied, subject to
normal year-end adjustments, and certified by the chief financial
officer or controller of the Company.
(ii) within 90 days after the end of each fiscal year, audited
consolidating and consolidated statements of earnings, shareholders'
equity and cash flows of the Company for such fiscal year, and
consolidated and consolidating balance sheets of the Company as of the
end of such fiscal year, setting forth in each case comparisons to
comparable budgeted figures and comparable figures for the preceding
fiscal year, all prepared in accordance with GAAP, consistently
applied, and certified by, (a) with respect to the consolidated
portions of such statements, an independent accounting firm of national
recognition (such certification to be accompanied by a copy of such
firm's annual management letter to the management of the Company) and
(b) with respect to the consolidating portions of such statements, the
chief financial officer or controller of the Company.
(iii) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs of each of the
Transaction Parties prepared by Company's independent accountants and
provided to any Transaction Party (and not otherwise contained in other
materials provided hereunder);
(iv) as soon as available but in no event later than 15 days
after each fiscal quarter and fiscal year, a quarterly and an annual
budget, as the case may be, of the Transaction Parties for the
following period (such budget to include, without limitation, budgeted
statements of earnings and sources and uses of cash and balance sheets)
and, in
-19-
addition, to the extent delivered to any of the Company's lenders or
prepared for internal use, any other significant budgets prepared by
the Company, and any revisions of such budgets each prepared and in
reasonable detail with appropriate presentation and discussion of the
principle assumptions upon which such budgets are based accompanied by
a certificate of the chief financial officer or controller of the
Company to the effect that, to the best of his or her knowledge, such
budget is a reasonable estimate for the period covered thereby, and
within 30 days after any monthly period in which there is a material
adverse deviation from the annual budget, an officer's certificate
explaining the deviation and what actions the Company has taken and
proposes to take with respect thereto;
(v) promptly (but in any event within three Business Days)
after the discovery or receipt of notice of (a) any default under any
material agreement to which any Transaction Party is a party, or (b)
any other event or circumstance affecting any Transaction Party
(including, without limitation, the filing of any material litigation
against any Transaction Party or the existence of any dispute with any
Person which involves a reasonable likelihood of such material
litigation being commenced) which event or circumstance could
reasonably be expected to have a Material Adverse Effect, an officer's
certificate specifying the nature and period of existence thereof and
what actions the Company has taken and proposes to take with respect
thereto;
(vi) promptly (but in any event within three Business Days)
after transmission thereof, copies of all financial statements, proxy
statements, reports and any other information, documents or
communications which any Transaction Party sends to its equityholders
or which any Transaction Party sends its lenders and copies of all
registration statements and all regular, special or periodic reports
which it files with respect to such Transaction Party, with the
Commission or with any securities exchange on which any of its
securities are then listed, and copies of all press releases and other
statements made available generally by any Transaction Party to the
public concerning material developments in the business of the
Transaction Parties;
(vii) promptly (but in any event within two Business Days) any
document relating to any issuance of securities by the Company; and
(viii) with reasonable promptness, such other information and
financial data concerning any Transaction Party that any person
entitled to receive information under this Section 7.1 may reasonably
request.
ss. 7.2 INSPECTION. The Company covenants and agrees that it
will permit each holder of Preferred Stock and its representatives (including
without limitation, its legal counsel and accountants), upon reasonable notice
during normal business hours to inspect the properties of the Transaction
Parties and to examine and make extracts and copies from the books and records
of the Transaction Parties and discuss with management and the Company's
accountants the business and affairs of the Transaction Parties; PROVIDED,
HOWEVER, that such holder of Preferred Stock and its representatives shall
execute a confidentiality agreement, in substantially the form attached hereto
as Exhibit D.
-20-
ss. 7.3 RESERVATION OF COMMON STOCK; VALID ISSUANCE. (a) The
Company shall at all times reserve for issuance free from preemptive rights and
other rights to preempt or subscribe, (i) a number of shares of Common Stock at
least equal to the number of shares of Common Stock issuable upon conversion or
exercise of the Preferred Stock and (ii) all other securities of the Company
convertible into Common Stock.
(b) The shares of Common Stock issuable upon conversion or
exercise of the Preferred Stock, when issued in accordance with their respective
terms, will be validly issued, fully paid and nonassessable, free of all
preemptive or similar rights, and shall be delivered free and clear of all
Encumbrances.
ss. 7.4 PROHIBITED ACTIONS. Without the prior written approval
of the holders of the Preferred Stock, the Company shall not, and shall not
allow any of its Subsidiaries to:
(i) engage in any business other than a Permitted Business;
(ii) Except in connection with ordinary course compensation
paid to officers of the Company and the issuance of stock options to
officers, directors and employees of the Company, in each case as
authorized by the Board of Directors in good faith, and except as set
forth on SCHEDULE 2.21, enter into any transaction or series of related
transactions, whether or not in the ordinary course of business, with
any Affiliate of the Company, or any Affiliate of any Subsidiary of the
Company, other than transactions on terms and conditions that are no
less favorable to the Company or such Subsidiary than those as would be
obtainable in a comparable third-party transaction negotiated on an
arm's length basis with a person other than an Affiliate; PROVIDED,
HOWEVER, that the Company will not, nor will the Company allow any of
its Subsidiaries to, enter into any of the following transactions or
series of related transactions with any Affiliate of the Company,
except as otherwise permitted by the Senior Notes Indenture: (i) any
sale or purchase of a material amount of assets made between the
Company or any of its Subsidiaries and any of their Affiliates (by
sale, lease, merger, consolidation or otherwise) or (ii) any issuance
of equity securities of the Company or any of its Subsidiaries to any
of their Affiliates; provided, further, that nothing in this Section
7.4 shall prohibit or otherwise restrict transactions between the
Company and its majority owned Subsidiaries;
(iii) wind up, dissolve or liquidate any Transaction Party;
(iv) commence a voluntary case concerning any Transaction
Party under Title 11 of the United States Code entitled "Bankruptcy",
as now or hereafter in effect, or any successor thereto, or the general
assignment for the benefit of creditors by the Company or any of its
Subsidiaries.
ss. 7.5 DUE DILIGENCE. The Company shall provide LAIF, at
LAIF's request, the opportunity during normal business hours and upon reasonable
notice to inspect the facilities and operations the Transaction Parties, and to
meet with the senior management of the Transaction Parties, within 30 days from
the Closing Date, for the purpose of conducting due diligence with
-21-
respect to LAIF's contemplated purchase of the Preferred Stock, as provided in
Section 3.3 hereof.
ss. 7.6 COMPLIANCE WITH STATUTES, ETC. The Company will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, including, without limitation, the
United States Foreign Corrupt Practices Act of 1977, as amended, in respect of
the conduct of its business and the ownership of its property (including
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls), except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or the Company and its Subsidiaries taken as a
whole.
ss. 7.7 IMPROPER PAYMENTS. The Company will not, and will not
permit any Person under its control, to make any Improper Payment.
ARTICLE VIII
SURVIVAL
--------
ss. 8.1 SURVIVAL. Except as expressly provided in this
Agreement, the covenants contained in this Agreement shall survive the Closing
Date indefinitely. The representations and warranties of the Company and the
Purchaser contained in this Agreement and the schedules and certificates
delivered in connection herewith shall survive until two years from the date
hereof, except that the representations and warranties contained in Section 2.11
shall survive until the expiration of the applicable statute of limitations
period (after giving effect to any extensions or waivers thereof) and such
representations and warranties may be relied upon by the Purchaser regardless of
any investigation made at any time by or on behalf of the Purchaser; PROVIDED,
that the Purchaser shall not be entitled to assert claims with respect to any
representation or warranty as to which it had, as of the Closing Date, actual
knowledge that such representation or warranty was false or incorrect.
ARTICLE IX
INDEMNIFICATION
---------------
ss. 9.1 INDEMNIFICATION. The Company agrees to indemnify and
hold the Purchaser and its officers, directors, employees, Affiliates and
agents, and any successors thereto (and any officers, directors, employees,
Affiliates and agents of such successors) harmless from any liability, damage,
deficiency, demand, claim, suit, action, or cause of action, fine, penalty,
loss, cost, expense, including without limitation, reasonable attorney fees
("Damages") incurred or suffered as a result of, in connection with, or arising
out of, the transactions contemplated hereby, including without limitation, any
Damages incurred or suffered as a result of, or in connection with, or arising
out of, the failure of any representation or warranty made by the Company
pursuant to this Agreement, any schedule or exhibit to this Agreement or any
-22-
certificates delivered pursuant thereto to be true and correct as of the date
hereof and on the Closing Date.
ss. 9.2 CONTRIBUTION. To the extent that the undertaking to
indemnify, pay or hold harmless the Purchaser pursuant to Section 9.1 of this
Agreement may be unenforceable, the Company shall make the maximum contribution
to the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
ss. 9.3 LIMITATION ON INDEMNIFICATION. The Company shall not
be liable under this Article IX for a breach of a representation or warranty
unless the aggregate amount of Damages exceeds $200,000; PROVIDED, HOWEVER, that
in the event the amount of Damages exceeds $200,000 in the aggregate, the
Company shall be responsible for only the amount of Damages in excess of
$200,000. In no event shall the amount of Company's obligation under this
Article IX for a breach of representations or warranties exceed the Purchase
Price.
ARTICLE X
MISCELLANEOUS
-------------
ss. 10.1 KNOWLEDGE OF THE TRANSACTION PARTIES. Where any
representation or warranty made by the Company contained in this Agreement is
expressly qualified by reference to its knowledge, such knowledge shall be
deemed to exist if the matter should be within the knowledge of any director,
executive officer or other senior member of management (including, without
limitation, the Company's internal counsel) of the Company.
ss. 10.2 EXPENSES. The Company agrees to pay the reasonable
costs and expenses incurred by the Purchaser in connection with the transactions
contemplated hereby and the Purchaser's investment in the Company (including
without limitation, reasonable attorney's fees and expenses); PROVIDED, HOWEVER,
that in no event shall the amount of payments under this sentence exceed
$150,000. The Company agrees to pay the costs and expenses incurred by the
Purchaser (including without limitation, the reasonable attorney's fees and
expenses and the fees and expenses of any experts retained by the Purchaser) in
connection with any successful action to exercise or enforce any of the rights
contained in this Agreement and/or the other Documents.
ss. 10.3 GOVERNING LAW. The interpretation and construction of
this Agreement, and all matters relating hereto, shall be governed by the laws
of the State of New York applicable to agreements executed and to be performed
solely within such State.
ss. 10.4 CAPTIONS. The Article and Section captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
ss. 10.5 PUBLICITY. Except as otherwise required by law, none
of the parties hereto shall issue any press release or make any other public
statement, in each case relating to, connected with or arising out of this
Agreement or the matters contained herein or therein, without obtaining the
prior approval of the Purchaser and the Company to the contents and the manner
of presentation and publication thereof. No references to the Purchaser shall be
made in any public statement without the Purchaser's consent.
-23-
ss. 10.6 NOTICES. Any notice or other communication required
or permitted under this Agreement shall be sufficiently given if delivered in
person or sent by telecopy or by registered or certified mail, postage prepaid,
addressed as follows:
if to the Company:
Notice Address:
FirstCom Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and if to the Purchaser:
c/o GE Capital Services
Structured Finance Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio-Operations
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to its counsel,
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
-24-
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given upon
automatic confirmation of receipt by the receiving machine if sent by
telecopier, upon delivery if delivered in person, and upon mailing if mailed.
ss. 10.7 PARTIES IN INTEREST. The Company may not transfer,
assign or pledge any of its rights in, or otherwise grant any rights to any
Person in, this Agreement. The Purchaser may transfer any of its rights
hereunder and any assignee or transferee of the Preferred Stock (other than
transferees receiving the Preferred Stock pursuant to a registered sale or a
sale pursuant to Rule 144 of the Securities Act), which transferees shall have
all the rights of the Purchaser hereunder.
ss. 10.8 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, all of which taken together shall constitute one
instrument.
ss. 10.9 ENTIRE AGREEMENT. This Agreement, the Certificate of
Designation and the Investor Rights Agreement, including the exhibits,
schedules, and other documents referred to herein and therein which form a part
hereof and thereof, contain the entire understanding of the parties hereto with
respect to the subject matter contained herein and therein. This Agreement, the
Certificate of Designation and the Investor Rights Agreement supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
ss. 10.10 AMENDMENTS. This Agreement may not be changed
orally, but only by an agreement in writing signed by the Purchaser and the
Company.
ss. 10.11 SEVERABILITY. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof will not in any
way be affected or impaired thereby.
ss. 10.12 THIRD PARTY BENEFICIARIES. Each party hereto intends
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any Person other than the parties hereto (and, in the case of
the Purchaser, its transferees) and those Persons entitled to indemnification
pursuant to Article IX hereof.
ss. 10.13 JURISDICTION. (a) Each of the parties hereto hereby
irrevocably acknowledges and consents that any legal action or proceeding
brought with respect to any of the obligations arising under or relating to this
Agreement may be brought in the courts of the State of New York or in the United
States Southern District Court of New York, as the party bringing such action or
proceeding may elect and each of the parties hereto hereby irrevocably submits
to and accepts with regard to any such action proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each party hereby further irrevocably waives any claim that
any such courts lack jurisdiction over such party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or the
transactions contemplated hereby brought in any of the aforesaid courts, that
any such court lacks jurisdiction such party. Each party irrevocably consents to
the service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage
-25-
prepaid, to such party, at its address for notices set forth in Section 10.6,
such service to become effective 10 days after such mailing. Each party hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other documents contemplated hereby that
service of process was in any way invalid or ineffective. The foregoing shall
not limit the rights of any party to serve process in any other manner permitted
by law. The foregoing consents to jurisdiction shall not constitute general
consents to service of process for any purpose except as provided above and
shall not be deemed to confer rights on any Person other than the respective
parties to this Agreement.
(b) To the fullest extent permitted by applicable law, each of
the parties hereto hereby irrevocably waives the objection which it may not or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby in any of the Courts referred to in Section 10.13(a) and hereby further
irrevocably waives and agrees not to plead or claim that any such court is not a
convenient forum for any such suit, action or proceeding.
(c) The parties hereto agree that any judgment obtained by any
party hereto or its successors or assigns in any action, suit or proceeding
referred to above may, in the discretion of such party (or its successors, or
assigns), be enforced in any jurisdiction, to the extent permitted by applicable
law.
* * * * *
-26-
IN WITNESS WHEREOF the Purchaser has signed this Securities
Purchase Agreement and the Company has caused its corporate name to be hereunto
subscribed by its officers thereunto duly authorized, all as of the day and year
first above written.
FIRSTCOM CORPORATION
By:
---------------------------------------
Name:
Title:
THE PURCHASER:
SFG-N INC.
By:
---------------------------------------
Name:
Title:
-27-