Exhibit 4.3
NOTES PURCHASE AGREEMENT
dated as of October 1, 2001
by and between
METROMEDIA FIBER NETWORK, INC.
and
VERIZON INVESTMENTS INC.
TABLE OF CONTENTS
PAGE
1. DEFINITIONS..........................................................1
2. PURCHASE OF CONVERTIBLE NOTES.......................................14
2.1 Purchase of Convertible Notes..............................14
2.2 Closing....................................................15
2.3 Use of Proceeds............................................15
3. PURCHASER REPRESENTATIONS AND WARRANTIES............................15
3.1 Investment Intention.......................................15
3.2 Accredited Investor........................................15
3.3 Corporate Existence........................................15
3.4 Corporate Power; Authorization; Enforceable Obligations....15
3.5 Brokers....................................................16
3.6 Disclosure of Information..................................16
3.7 Investment Experience......................................16
3.8 Restricted Securities......................................16
3.9 Investigation..............................................17
4. COMPANY REPRESENTATIONS AND WARRANTIES..............................17
4.1 Authorized and Outstanding Shares of Capital Stock.........17
4.2 Authorization and Issuance of Convertible Notes............18
4.3 Securities Laws............................................18
4.4 Corporate Existence; Compliance with Law; Permits..........18
4.5 Subsidiaries...............................................19
4.6 Corporate Power; Authorization; Enforceable Obligations....19
4.7 SEC Documents; Financial Statements;
Undisclosed Liabilities....................................21
4.8 Perfection and Priority of Liens...........................22
4.9 Ownership of Property......................................22
4.10 Material Contracts.........................................23
4.11 Environmental Protection...................................23
4.12 Labor Matters..............................................24
4.13 Taxes......................................................24
4.14 No Litigation..............................................25
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.15 Brokers....................................................25
4.16 Patents, Trademarks, Copyrights and Licenses...............25
4.17 Ordinary Course of Business; No Material Adverse Change....26
4.18 ERISA......................................................26
4.19 Insurance..................................................27
4.20 Solvency...................................................27
4.21 Regulatory Matters.........................................27
4.22 No Vote....................................................27
4.23 Employment Agreements......................................28
4.24 Investment Company Act.....................................28
4.25 Stockholders' Consent......................................28
5. COVENANTS OF THE COMPANY AND PURCHASER..............................28
5.1 Regulatory and Other Authorizations........................28
5.2 Further Assurances.........................................29
5.3 Use of Proceeds............................................29
5.4 Proxy or Information Statement.............................29
6. CLOSING CONDITIONS TO OBLIGATION OF THE PURCHASER...................31
6.1 Representations and Warranties.............................31
6.2 Covenants..................................................31
6.3 No Orders..................................................31
6.4 No Investigations..........................................31
6.5 Opinion of Counsel.........................................32
6.6 Additional Transaction Documents...........................32
6.7 Financial Officer's Certificates...........................32
6.8 Financial Statements.......................................32
6.9 Delivery of Convertible Notes..............................33
6.10 Consents and Approvals.....................................33
6.11 Senior Credit Facility.....................................33
6.12 Issuance of Convertible Debt...............................33
6.13 Vendor Agreements..........................................33
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TABLE OF CONTENTS
(CONTINUED)
PAGE
6.14 Depositary Agreement.......................................34
6.15 Security Interest..........................................34
6.16 Good Standing Certificates.................................34
6.17 Officer's Certificate......................................34
6.18 Secretary's Certificate....................................34
6.19 Financial Projections......................................34
6.20 Payments to Purchaser......................................34
6.21 Certain Additional Conditions..............................34
7. CLOSING CONDITIONS TO OBLIGATION OF COMPANY.........................35
7.1 Representations and Warranties.............................35
7.2 Covenants..................................................35
7.3 No Orders..................................................35
7.4 Transaction Documents......................................35
7.5 No Investigations..........................................35
7.6 Consents and Approvals.....................................35
8. INDEMNIFICATION.....................................................35
8.1 Indemnification............................................35
8.2 Limitations on Indemnification for Breaches of
Representations, Warranties and Covenants..................36
8.3 General Indemnification Procedures.........................37
8.4 Tax Treatment of Indemnity Payments........................38
9. MISCELLANEOUS.......................................................38
9.1 Successors and Assigns.....................................38
9.2 Amendments; Etc............................................38
9.3 Entire Agreement...........................................39
9.4 Fees, Costs and Expenses...................................39
9.5 Severability...............................................39
9.6 Governing Law..............................................39
9.7 Waiver of Jury Trial.......................................39
9.8 Notices....................................................39
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TABLE OF CONTENTS
(CONTINUED)
PAGE
9.9 Survival...................................................41
9.10 Sectionand Other Headings..................................41
9.11 Counterparts...............................................41
9.12 Publicity..................................................41
9.13 Remedies...................................................41
SCHEDULES
---------
Schedule 4.1 - Authorized and Outstanding Shares of Capital Stock
Schedule 4.4(a) - Corporate Existence; Compliance with Law
Schedule 4.4(b) - Permits
Schedule 4.5 - Subsidiaries
Schedule 4.6 - Required Consents
Schedule 4.7 - SEC Documents; Financial Statements; Undisclosed
Liabilities
Schedule 4.8 - C&MA Agreement
Schedule 4.9 - Ownership of Property
Schedule 4.10 - Material Contracts
Schedule 4.11 - Environmental Protection
Schedule 4.12 - Labor Matters
Schedule 4.13 - Taxes
Schedule 4.14 - Litigation
Schedule 4.16 - Patents, Trademarks, Copyrights and Licenses
Schedule 4.17 - Ordinary Course of Business; No Material Adverse
Change
Schedule 4.18(a) - ERISA
Schedule 4.18(b) - ERISA Compliance
Schedule 4.21 - Regulatory
EXHIBITS
--------
Exhibit A Indenture
Exhibit B Notes Registration Rights Agreement Amendment
Exhibit C Amended and Restated Stockholders' Agreement
Exhibit D Equity Registration Rights Agreement Amendment
Exhibit E Depositary Agreement
Exhibit F Security Agreement
Exhibit G Exchange Agreement
Exhibit H Fiber Optic Network Agreement Amendment
Exhibit I Intercreditor Agreement
Exhibit J Right of Negotiation Agreement
iv
TABLE OF CONTENTS
(CONTINUED)
PAGE
Exhibit K Old Securities Purchase Agreement Amendment
Exhibit L Stockholders' Consent
Exhibit M Voting Agreement
Exhibit N C&MA Assignment Agreement
v
NOTES PURCHASE AGREEMENT
------------------------
NOTES PURCHASE AGREEMENT, dated as of October 1, 2001, by and between
Metromedia Fiber Network, Inc., a Delaware corporation (the "COMPANY"), and
Verizon Investments Inc., a Delaware corporation formerly known as ▇▇▇▇ Atlantic
Investments, Inc. (the "PURCHASER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has agreed to issue and sell to the Purchaser, and
the Purchaser has agreed to purchase from the Company, upon the terms and
conditions hereinafter provided, one or more 8.5% senior secured convertible
notes due 2011 in the aggregate principal amount of up to $50,000,000, which are
convertible into shares of Class A Common Stock, par value $0.01 per share (the
"CLASS A COMMON STOCK"), of the Company, and shall be governed by and in
accordance with, the terms of the Indenture (as hereinafter defined) (the
"CONVERTIBLE NOTES").
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS
"2008 NOTES" means the Company's 10% Series B Senior Notes due 2008
issued pursuant to the 2008 Notes Indenture.
"2008 NOTES INDENTURE" shall mean that certain Indenture, dated as of
November 25, 1998, between the Company and The Bank of New York as successor to
IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company, as trustee, as amended by the First
Supplemental Indenture, dated September 26, 2001, as the same may be further
amended, supplemented or otherwise modified from time to time.
"2009 NOTES" means the Company's 10% Series B Senior Notes due 2009
issued pursuant to the 2009 Notes Indenture.
"2009 NOTES INDENTURE" shall mean that certain Indenture, dated as of
November 17, 1999, between the Company and The Bank of New York, as trustee, as
amended by the First Supplemental Indenture, dated September 26, 2001, as the
same may be further amended, supplemented or otherwise modified from time to
time.
"AFFILIATE" shall have the meaning given such term in Rule 12b-2 under
the Exchange Act.
"AFFILIATE CONTRACTS" shall mean all agreements, contracts and other
instruments between the Company or any of its Subsidiaries, on the one hand, and
Metromedia Company or any of its Affiliates, on the other hand.
"AFFILIATE FINANCING DOCUMENTS" shall mean collectively, the Affiliate
Notes, the Affiliate Note Purchase Agreement and the Affiliate Registration
Rights Agreement.
"AFFILIATE NOTE PURCHASE AGREEMENT" shall mean the Note Purchase
Agreement, dated as of the date hereof, by and among the Company, the ▇▇▇▇▇
Trust, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"AFFILIATE NOTES" shall mean the 8.5% senior convertible notes due 2011
issued pursuant to the Affiliate Note Purchase Agreement.
"AFFILIATE REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement, dated as of the date hereof, by and among the Company, the
▇▇▇▇▇ Trust, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"AGREEMENT" shall mean this Notes Purchase Agreement, including all
amendments, modifications and supplements hereto and any appendices, exhibits
and schedules hereto or thereto, and shall refer to such agreement as the same
may be in effect at the time such reference becomes operative.
"ASSOCIATE" as used to indicate a relationship with any Person, shall
mean (i) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, (ii) any lineal ancestor, lineal descendant, sibling or
spouse of such Person, or any other Person who has the same home as such Person,
and (iii) any Person who is an Associate of any of the Persons identified in (i)
or (ii).
"BASKET" shall have the meaning set forth in Section 8.2(a) hereof.
"BECHTEL" means ▇▇▇▇▇▇▇ Corporation, a Nevada corporation.
"BECHTEL AGREEMENTS" means, collectively, Vendor Agreements between
Bechtel and one or more of the Company's Subsidiaries that are obligors under
the Senior Credit Facility providing in the aggregate for the deferral of all
presently outstanding Vendor Obligations due from such obligors to Bechtel.
"BENEFICIAL OWNERSHIP" (including correlative meanings) shall mean the
ownership of a security (as defined in the Securities Act) as defined under Rule
13d-3 under the Exchange Act.
"BENEFIT PLANS" shall have the meaning set forth in Section 4.18(a)
hereof.
"BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday or a
day on which commercial banks are required or permitted by law to be closed in
the City of New York in the State of New York or the City of Wilmington in the
State of Delaware.
"C&MA" has the meaning set forth in the Security Agreement.
2
"C&MA ASSIGNMENT" shall have the meaning given to such term in Section
4.6(c) hereof.
"C&MA ASSIGNMENT AGREEMENT" means that certain Assignment Agreement,
dated as of October 1, 2001, among MFNS, as assignor, and the Company, as
assignee, in the form of EXHIBIT N hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"CHARGES" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges or Liens upon or
relating to (i) the Company's or any of its Subsidiaries' employees, payroll,
income or gross receipts, (ii) the Company's or any of its Subsidiaries'
ownership or use of any of its assets, or (iii) any other aspect of the
Company's or any of its Subsidiaries' business.
"CITICORP VOTING AGREEMENT" means that certain Voting Agreement, dated
as of September 6, 2001, by and among Metromedia Company and the initial holders
under the Senior Credit Facility signatory thereto.
"CLASS A COMMON STOCK" shall have the meaning set forth in the recitals
to this Agreement.
"CLASS B COMMON STOCK" shall mean the Company's Class B Common Stock,
par value $.01 per share.
"CLOSING" shall have the meaning set forth in Section 2.2 hereof.
"CLOSING DATE" shall have the meaning set forth in Section 2.2 hereof.
"COLLATERAL" has the meaning set forth in the Security Agreement.
"COMMON STOCK" shall mean collectively the Class A Common Stock and the
Class B Common Stock and any recapitalization or reclassification of either such
class of Common Stock.
"COMPANY" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"COMPANY PLANS" shall have the meaning set forth in Section 4.18(a)
hereof.
"COMPANY SEC DOCUMENTS" shall have the meaning set forth in Section
4.7(a) hereof.
"COMPANY STOCKHOLDERS' MEETING" shall have the meaning given to such
term in Section 5.4(a) hereof.
3
"CONSOLIDATING FINANCIAL STATEMENTS" shall mean, as at the end of and
for any period, separately presented financial statements for the optical
infrastructure business and the internet infrastructure services business of the
Company and its Subsidiaries, setting out the revenues, gross margins and
property, plant and equipment for each such business as at the end of and for
such period.
"CONVERTIBLE NOTES" shall have the meaning set forth in the recitals to
this Agreement.
"DEPOSITARY AGENT" means Wilmington Trust Company, in its capacity as
Depositary Agent under the Depositary Agreement.
"DEPOSITARY AGREEMENT" means that certain Depositary Agreement, dated
as of the date hereof, among the Company, the Indenture Trustee, the Purchaser
and the Depositary Agent named therein for the holders of the Convertible Notes,
in the form of EXHIBIT E hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
"DISBURSEMENT ACCOUNT" has the meaning set forth in the Depositary
Agreement.
"ENVIRONMENTAL LAWS" shall mean all foreign, federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree or judgment, relative to the applicable
real estate, relating to the regulation and protection of worker health and
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include but are not
limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 ET SEQ.)
("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C.
Section 1801 ET SEQ.); the Federal Insecticide, Fungicide, and Rodenticide
Act, as amended (7 U.S.C. Section 136 ET SEQ.); the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Section 6901 ET SEQ.) ("RCRA"); the Toxic
Substance Control Act, as amended (15 U.S.C. Section 2601 ET SEQ.); the Clean
Air Act, as amended (42 U.S.C. Section 740 ET SEQ.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. Section 1251 ET SEQ.); the
Occupational Safety and Health Act, as amended (29 U.S.C. Section 651 ET
SEQ.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C.
Section 300f ET SEQ.), and any and all regulations promulgated thereunder,
and all analogous state and local counterparts or equivalents and any
transfer of ownership notification or approval statutes that relate to worker
health and safety or the environment.
"ENVIRONMENTAL LIABILITIES AND COSTS" shall mean all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all fees, disbursements and expenses of counsel, experts and consultants and
costs of investigation and feasibility
4
studies), fines, penalties, sanctions and interest incurred as a result of any
claim, suit, action or demand by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (including any thereof arising under any Environmental Law, permit,
order or agreement with any Governmental Authority) and which relate to any
environmental condition regulated under any Environmental Law or in connection
with any other environmental matter or Spill or the presence of a Hazardous
Substance or threatened Spill of any Hazardous Substance.
"EQUITY INTERESTS" shall mean shares of Stock and all warrants, options
or other rights to acquire Stock (but excluding any debt security that is
convertible into, or exchangeable for, Stock).
"EQUITY REGISTRATION RIGHTS AGREEMENT" shall mean that certain Equity
Registration Rights Agreement, dated as of March 6, 2000, by and between the
Company and the Purchaser, as amended by Amendment No. 1 to Equity Registration
Rights Agreement, dated as of the date hereof, in the form of EXHIBIT D hereto
(the "EQUITY REGISTRATION RIGHTS AGREEMENT AMENDMENT"), entered into in
connection with the issuance and sale by the Company of Class A Common Stock to
the Purchaser, as the same may be amended, supplemented or otherwise modified
from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean, with respect to the Company, any trade or
business (whether or not incorporated) under common control with the Company and
which, together with the Company, are treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding the Purchaser
and each other Person which would not be an ERISA Affiliate if the Purchaser did
not own any issued and outstanding shares of Stock of the Company or the
Convertible Notes.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"EXCHANGE AGREEMENT" shall mean that certain Exchange Agreement, dated
as of the date hereof, between the Company and the Purchaser, in the form of
EXHIBIT G hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"FACILITY" shall have the meaning set forth in Section 4.11(a) hereof.
"FCC" shall mean the Federal Communications Commission.
"FIBER OPTIC PRIVATE NETWORK AGREEMENT" shall mean the Fiber Optic
Private Network Agreement by and between ▇▇▇▇ Atlantic Global Networks, Inc.,
and MFNS, dated as of October 7, 1999, as amended by Amendment No. 1 to Fiber
Optic Private
5
Network Agreement, dated as of January 30, 2001, and Amendment No. 2 to Fiber
Optic Private Network Agreement, dated as of the date hereof, in the form of
EXHIBIT H hereto (the "FIBER OPTIC NETWORK AGREEMENT AMENDMENT"), as such
agreement may be further amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"FINANCIAL OFFICER" of any Person shall mean the chief financial
officer, chief accounting officer, treasurer or controller of such Person.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state, local or other political subdivision thereof, any court, arbitrator,
official, agency, department or other Person exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
or any foreign, federal, state or local governmental or regulatory agency,
authority, commission or instrumentality.
"HAZARDOUS SUBSTANCE" shall have the meaning set forth in Section
4.11(a) hereof.
"HSR ACT" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1974, as amended.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3(a)
hereof.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3(a)
hereof.
"INDEMNITY PAYMENT" shall have the meaning set forth in Section 8.4
hereof.
"INDENTURE" means the indenture, dated as of the date hereof, by and
between the Company and Wilmington Trust Company, as trustee, relating to the
Convertible Notes, in the form of EXHIBIT A hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"INDENTURE TRUSTEE" shall mean Wilmington Trust Company, as trustee
under the Indenture.
"INFORMATION STATEMENT" has the meaning given to such term in Section
5.4(a) hereof.
"IN-REGION STATES" has the meaning assigned to such term in the
Telecommunications Act.
"INTERCREDITOR AGREEMENT" shall mean that certain Intercreditor
Agreement, dated as of the date hereof, among the Company, the Indenture Trustee
and Citicorp USA Inc., as administrative agent under the Senior Credit Facility,
in the form of EXHIBIT J hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
6
"INTERLATA SERVICES" has the meaning assigned to such term in the
Telecommunications Act.
"INVESTMENT COMPANY ACT" shall have the meaning set forth in Section
4.24 hereof.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"▇▇▇▇▇ TRUST" means ▇▇▇▇ ▇. ▇▇▇▇▇, Chase Manhattan Bank and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, trustees under a Trust Agreement, dated May 30, 1984 and as amended
and restated, between ▇▇▇▇ ▇. ▇▇▇▇▇, as grantor, and ▇▇▇▇ ▇. ▇▇▇▇▇ and
Manufacturers Hanover Trust Company, as trustees, a grantor trust.
"LIEN" shall mean any mortgage or deed of trust, pledge, hypothecation,
preemptive right, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
as to assets owned by the relevant Person under the Uniform Commercial Code or
comparable law of any jurisdiction).
"LOSSES" shall have the meaning set forth in Section 8.1(a) hereof.
"MATERIAL ADVERSE CHANGE" shall mean any change, occurrence or effect
that is or is reasonably likely to be materially adverse to the business,
assets, operations, condition (financial or otherwise), or results of operations
of the Company and its Subsidiaries, taken as a whole; PROVIDED, HOWEVER, that
changes, occurrences or effects (i) resulting from events, changes,
developments, condition or circumstances in worldwide, national or local
conditions (political, regulatory, economic or otherwise), (ii) relating to the
industries in which the Company operates, (iii) relating to the failure by the
Company to meet the revenue or earnings predictions of equity analysts as
reflected in the First Call consensus estimate, or any other external revenue or
earnings predictions or expectations for any period ending on or after the date
of this Agreement, and (iv) relating to changes in law or accounting principles
occurring after the date of this Agreement, shall, in each case, not be deemed
to constitute a "Material Adverse Change."
"MATERIAL ADVERSE EFFECT" shall mean (i) any change, occurrence or effect
that is or is reasonably likely to be materially adverse to the business,
assets, operations, condition (financial or otherwise), or results of operations
of the Company and its Subsidiaries, taken as a whole, (ii) a material
impairment of the ability of the Company to perform its obligations hereunder,
or under the Convertible Notes, the Indenture, the New 6.15% Notes or the New
6.15% Notes Indenture, or (iii) a material impairment of the
7
rights of or benefits available to the Company hereunder, or under the
Convertible Notes, the Indenture, the New 6.15% Notes or the New 6.15% Notes
Indenture.
"MATERIAL CONTRACTS" shall mean (i) all of the Company's and its
Subsidiaries' material contracts that would be required to be filed with the SEC
pursuant to item 601(b)(10) of Regulation S-K of the Securities Act, (ii) all
agreements, leases or other instruments to which the Company or any of its
Subsidiaries is a party or by which the Company, its Subsidiaries or any of
their respective properties are bound, which involve payments by or to the
Company or its Subsidiaries of more than $10,000,000, (iii) all of the Company's
and its Subsidiaries' loan agreements, bank lines of credit agreements,
indentures, mortgages, deeds of trust, pledge and security agreements, factoring
agreements, conditional sales contracts, letters of credit, guarantees or any
other instruments evidencing or representing indebtedness of the Company or any
of its Subsidiaries (including, without limitation, the Senior Notes, the Senior
Note Indentures, the Nortel Agreement, the Bechtel Agreement and the other
Vendor Agreements, the Affiliate Financing Documents and the Senior Credit
Facility), (iv) all non-competition and similar agreements to which the Company
or any of its Subsidiaries is a party that materially restrict the Company's or
any of its Subsidiaries' ability to engage in any business, (v) all contracts
for the employment of any executive officer of the Company or its Subsidiaries,
(vi) all collective bargaining, union and similar labor contracts of the Company
or its Subsidiaries, (vii) all warrant, option or other agreements or
instruments providing for the purchase or acquisition by any means, or the right
to purchase or acquire, shares of capital stock of the Company or any of its
Subsidiaries with a value in excess of $5,000,000, (viii) all material joint
venture or partnership agreements, (ix) all agreements with a vendor or a
contractor pursuant to which the Company reasonably anticipates that the Company
and its Subsidiaries will purchase in the aggregate more than $50,000,000 of
equipment or construction services, (x) any agreement providing for the sale or
lease of fiber by the Company or any Subsidiary for aggregate consideration of
$50,000,000 or more; (xi) all material licenses relating to intellectual
property owned or used by the Company or any of its Subsidiaries, (xii) all
standstill agreements, and (xiii) all Affiliate Contracts.
"MFNS" shall mean Metromedia Fiber Network Services, Inc., a Delaware
corporation and wholly-owned subsidiary of the Company.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 3(37) of ERISA, and to which the Company, any of its Subsidiaries or any
ERISA Affiliate is making, is obligated to make, has made or been obligated to
make, contributions on behalf of participants who are or were employed by any of
them.
"NASDAQ" shall have the meaning given to such term in Section 5.4(a)
hereof.
"NEW 6.15% NOTES" means, collectively, the New 6.15% Series A Notes and
the New 6.15% Series B Notes.
8
"NEW 6.15% NOTES INDENTURE" means that certain Indenture, dated as of
the date hereof, between the Company and U.S. Bank Trust National Association,
as trustee, relating to the New 6.15% Notes, as the same may be amended,
supplemented or otherwise modified from time to time.
"NEW 6.15% SERIES A NOTES" means one or more 6.15% Series A Convertible
Subordinated Notes due 2010 of the Company issued pursuant to the New 6.15%
Notes Indenture.
"NEW 6.15% SERIES B NOTES" means one or more 6.15% Series B Convertible
Subordinated Notes due 2010 of the Company issued pursuant to the New 6.15%
Notes Indenture.
"NORTEL" means Nortel Networks Inc., a Delaware corporation.
"NORTEL AGREEMENT" means, collectively, Vendor Agreements between
Nortel and one or more of the Company's Subsidiaries that are obligors under the
Senior Credit Facility providing in the aggregate for the deferral of all
presently outstanding Vendor Obligations due from such obligors to Nortel giving
effect to a maximum cash payment of $15,000,000 in connection with such
deferral.
"NORTEL VOTING AGREEMENT" means that certain Voting Agreement, dated as
of September 28, 2001, by and among Metromedia Company, Nortel and the
stockholders listed on Schedule I thereto.
"NOTES PURCHASE PRICE" shall have the meaning set forth in Section
2.1(a) hereof.
"NOTES REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement, dated as of March 6, 2000, between the Company and the
Purchaser, as amended by Amendment No. 1 to Notes Registration Rights Agreement,
dated as of the date hereof (the "NOTES REGISTRATION RIGHTS AGREEMENT
AMENDMENT"), in the form of EXHIBIT B hereto, as such agreement may be further
amended, supplemented or otherwise modified from time to time.
"OLD CONVERTIBLE NOTES" means the $975,781,000 in aggregate principal
amount of the Company's 6.15% Convertible Subordinated Notes due 2010 issued
pursuant to the Old Convertible Notes Indenture.
"OLD CONVERTIBLE NOTES INDENTURE" means that certain Indenture, dated
as of March 6, 2000, between the Company and U.S. Bank Trust National
Association, as trustee, as the same may be amended, supplemented or otherwise
modified from time to time.
"OLD SECURITIES PURCHASE AGREEMENT" shall mean that certain Securities
Purchase Agreement, dated as of October 7, 1999, by and between the Company and
the Purchaser, as amended by Amendment No.1 to the Securities Purchase
Agreement, dated as of the
9
date hereof, in the form of EXHIBIT K hereto (the "OLD SECURITIES PURCHASE
AGREEMENT AMENDMENT"), as such agreement may be further amended, supplemented or
otherwise further modified from time to time.
"PARENT" shall mean Metromedia Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"PERMIT" shall mean any license, franchise, permit, consent, approval,
waiver or certificate.
"PERMITTED LIENS" shall mean the following: (i) Liens for taxes or
assessments or other governmental charges or levies, to the extent such amounts
are not yet due and payable or are being contested in good faith by appropriate
proceedings or to the extent that nonpayment thereof is permitted by the terms
of this Agreement; (ii) pledges or deposits securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which the
Company or any of its Subsidiaries is a party as lessee made in the ordinary
course of business; (iv) Liens arising solely by virtue of any statutory or
common law provision relating to bankers' liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; (v) workers, mechanics, suppliers, carriers,
warehousemen's or other similar liens arising in the ordinary course of business
and securing indebtedness, not yet due and payable; (vi) deposits securing or in
lieu of surety, appeal or customs bonds in proceedings to which the Company or
any of its Subsidiaries is a party; (vii) Liens arising in the ordinary course
of business in connection with obligations that are not overdue or which are
being contested in good faith and by appropriate proceedings, including, but not
limited to, Liens under bid, performance and other surety bonds, appeal bonds,
landlord Liens arising under leases of real property, Liens on advance or
progress payments received from customers under contracts for the sale, lease or
license of goods, software or services and upon the products being sold or
licensed, in each case securing performance of the underlying contract or the
repayment of such advances in the event final acceptance of performance under
such contracts does not occur, and Liens upon funds collected temporarily from
others pending payment or remittance on their behalf; and (viii) zoning
restrictions, easements, licenses, or other restrictions on the use of real
property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such real property, leases or leasehold estates.
"PERSON" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether foreign, federal, state, county, city, municipal or
otherwise, including, any instrumentality, division, agency, body or department
thereof).
10
"PLEDGED SECURITIES" has the meaning set forth in the Security
Agreement.
"PROXY STATEMENT" shall have the meaning given to such term in Section
5.4 (a) hereof.
"PURCHASER" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"REGULATORY RELIEF DATE" means the date on which the Purchaser has
obtained pursuant to Section 271 of the Telecommunications Act, the approval of
the FCC to provide InterLATA Services in all states that are, with respect to
the Purchaser, In-Region States (as such term is defined in Section 271(i)(1) of
the Telecommunications Act), such approval to be either an affirmative approval
or a waiver from the restrictions of the Telecommunications Act.
"REQUISITE COMPANY VOTE" shall mean (i) the approval and ratification
of the issuance of shares of Class A Common Stock issuable upon the conversion
of the Convertible Notes by a majority of holders of Class A Common Stock and
Class B Common Stock, voting as a single class, that are present in person or by
proxy at a duly called meeting of the Company's stockholders, or (ii) the 20th
day following the proper delivery by the Company under Regulation 14C under the
Exchange Act of an effective Information Statement meeting the requirements of
Schedule 14C under the Exchange Act that contains the requisite information
describing the action taken by the Stockholders' Consent.
"RIGHT OF NEGOTIATION AGREEMENT" shall mean that certain Right of
Negotiation Agreement, dated as of the date hereof, between the Company and the
Purchaser, in the form of EXHIBIT J hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder.
"SECURITY AGREEMENT" shall mean that certain Pledge and Security
Agreement, dated as of the date hereof, among the Company, the Purchaser and
Wilmington Trust Company, as trustee for the holders of the Convertible Notes,
in the form of EXHIBIT F hereto, as the same may be amended, supplemented or
otherwise modified from time to time.
"SECURITY DOCUMENTS" shall mean the Depositary Agreement, the Security
Agreement and each other security agreement, pledge agreement, mortgage, deed of
trust, assignment agreement and other instrument (including any Uniform
Commercial Code financing statements) being executed concurrently herewith or
from time to time
11
hereafter providing for the grant of liens and security interests (or the
recordation thereof) by the Company in favor of the Indenture Trustee, as
trustee on behalf of the holders of the Convertible Notes, on the Collateral as
collateral security for the obligations of the Company.
"SENIOR CREDIT FACILITY" means that certain Note and Guarantee
Agreement, dated as of September 6, 2001, by and among the Company, the
guarantors party thereto and Citicorp USA, Inc., as Administrative Agent,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"SENIOR NOTE INDENTURES" means the 2008 Notes Indenture and the 2009
Notes Indenture.
"SENIOR NOTES" means the 2008 Notes and the 2009 Notes.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person on a going concern basis is not less than the amount that will be
required to pay the probable liability of such Person on its Indebtedness (as
such term is defined in the Senior Credit Facility) as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur Indebtedness or liabilities beyond such Person's ability to pay as such
Indebtedness and liabilities mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small amount of capital. The portion of contingent liabilities of any Person at
any time that shall be included for purposes of the above determinations shall
be the amount of such contingent liabilities that, in light of all facts and
circumstances existing at such time, could reasonably be expected to become
actual matured liabilities of such Person.
"SPILL" shall have the meaning set forth in Section 4.11(a) hereof.
"STOCK" shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1
under the Exchange Act).
"STOCKHOLDERS' AGREEMENT" shall mean the Amended and Restated
Stockholders' Agreement, dated as of the date hereof, by and among the Company,
the Purchaser and the stockholders listed on Schedule I thereto, in the form of
EXHIBIT C hereto, as such agreement may be amended, supplemented or otherwise
modified from time to time.
12
"STOCKHOLDERS' CONSENT" means that certain Written Consent in Lieu of a
Meeting of the Holders of Common Stock of the Company, dated as of the date
hereof, executed by Parent, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and each of their respective Affiliates and Associates, pursuant to
which, among other things, such stockholders have approved and ratified in all
respects the Company's issuance of shares of Class A Common Stock issuable upon
the conversion of the Convertible Notes, which Stockholders' Consent is in the
form attached as EXHIBIT L hereto.
"SUBSIDIARY" shall mean, with respect to any Person, (i) any
corporation of which an aggregate of 50% or more of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, and (ii) any partnership, joint venture or other entity in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contributions) of 50% or more.
"TELECOMMUNICATIONS ACT" means the U.S. federal statute known as the
Communications Act of 1934, as amended by the Telecommunications Act of 1996, as
amended.
"TELECOMMUNICATIONS ASSETS" shall have the meaning given to such term
in the Senior Note Indentures.
"TELECOMMUNICATIONS BUSINESS" shall have the meaning given to such term
in the Senior Note Indentures.
"THIRD-PARTY CLAIM" shall have the meaning set forth in Section 8.3(a)
hereof.
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Fiber Optic
Private Network Agreement Amendment, the Old Securities Purchase Agreement
Amendment, the Notes Registration Rights Agreement Amendment, the Equity
Registration Rights Agreement Amendment, the Indenture, the Convertible Notes,
the Exchange Agreement, the New 6.15% Notes Indenture, the New 6.15% Notes, the
Stockholders' Agreement, the Security Documents, the Right of Negotiation
Agreement, the Voting Agreement, the C&MA Assignment Agreement and the
Intercreditor Agreement, and each other agreement, document or instrument
executed in connection with the consummation of the transactions contemplated
hereby.
"VENDOR" shall mean Nortel, Bechtel and each other vendor or contractor
party to a Vendor Agreement.
"VENDOR AGREEMENTS" shall mean, in the case of any vendor or
contractor, the agreements and other instruments entered into between such
vendor or contractor and the Company or any of its Subsidiaries providing for
the incurrence of a deferred payment
13
obligation by the Company or any of its Subsidiaries to such Vendor in whole or
partial satisfaction of Vendor Obligations of the Company or any of its
Subsidiaries to such vendor or contractor and, in certain cases, the grant of a
Lien on certain specific assets of the Company or certain of the Company's
Subsidiaries to secure such indebtedness.
"VENDOR OBLIGATIONS" shall mean indebtedness due from the Company or
any of its Subsidiaries to a Vendor.
"VOTING AGREEMENT" means that certain Voting Agreement, dated as of the
date hereof, by and among the Company, the Purchaser, Bechtel and Metromedia
Company, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and their
respective Affiliates and Associates, in the form of EXHIBIT M hereto, as the
same may be amended, supplemented or otherwise modified from time to time.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing.
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including any exhibits and schedules
hereto, as the same may from time to time be amended, modified or supplemented,
and not to any particular section, subsection or clause contained in this
Agreement. The words "includes" or "including" and other words of similar import
shall mean "including, without limitation," unless the context expressly
otherwise requires.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
2. PURCHASE OF CONVERTIBLE NOTES
2.1 PURCHASE OF CONVERTIBLE NOTES.
(a) The Company hereby issues and sells to the Purchaser,
and the Purchaser hereby purchases from the Company, Convertible Notes in the
aggregate principal amount of $50,000,000 for the price of 100% of the aggregate
principal amount of the Convertible Notes (such price, in the aggregate, the
"NOTES PURCHASE PRICE").
(b) At the Closing, the Company will deliver to the
Purchaser a note or notes representing the Convertible Notes in the form
attached as Exhibit A to the Indenture against payment of the Notes Purchase
Price therefor by wire transfer of
14
immediately available funds to an account designated by the Company in writing
two (2) Business Days prior to the date hereof.
(c) The Company and the Purchaser agree to treat the
Notes Purchase Price as the purchase price for the Convertible Notes for all tax
purposes unless a contrary treatment is required by law.
2.2 CLOSING. The closing of the purchase and sale of the
Convertible Notes hereunder (the "CLOSING") shall be held at the offices of
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 1285 Avenue of the Americas, New York,
New York, or at such other place as the Company and the Purchaser mutually
agree, at such time on the date hereof (the "CLOSING DATE") that all of the
provisions referred to in Section 2.1 hereof are complied with and all of the
conditions set forth in Articles 6 and 7 are satisfied or waived.
2.3 USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Convertible Notes solely to purchase the Pledged Securities, the
proceeds of which will be used, subject to the terms of the Depositary
Agreement, solely to finance all or any part of the cost of the engineering,
construction, installation, acquisition, lease, development or improvement of
Telecommunications Assets used by the Company or any of its Subsidiaries only as
permitted by Section 4.09 of the 2008 Notes Indenture and Section 4.09 of the
2009 Notes Indenture.
3. PURCHASER REPRESENTATIONS AND WARRANTIES
The Purchaser makes the following representations and warranties to the
Company:
3.1 INVESTMENT INTENTION. The Purchaser is purchasing the
Convertible Notes pursuant to this Agreement for its own account, for
investment purposes and not with a present view to the distribution thereof.
3.2 ACCREDITED INVESTOR. The Purchaser is an "accredited
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act) and by reason of its business and financial experience, it has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the prospective
investment, is able to bear the economic risk of such investment and is able to
afford a complete loss of such investment.
3.3 CORPORATE EXISTENCE. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
The execution, delivery and performance by the Purchaser of this Agreement and
the other Transaction Documents to be executed by it, and the consummation of
the transactions contemplated hereby and thereby: (i) are within the Purchaser's
corporate power;
15
(ii) have been duly authorized by all necessary corporate action; (iii) do not
require the consent or approval of, or any filing with, any Governmental
Authority or any other Person (except in connection with consents, approvals or
filings that would not materially impair the Purchaser's ability to consummate
the transactions contemplated by this Agreement or any other Transaction
Document); and (iv) are not in contravention of any provision of the Purchaser's
certificate of incorporation or by-laws. This Agreement and each of the other
Transaction Documents to which the Purchaser is a party have been duly executed
and delivered by the Purchaser and (assuming the due authorization, execution
and delivery by the other parties hereto and thereto), this Agreement
constitutes, and the other Transaction Documents when so executed and delivered
will constitute, the legal, valid and binding obligations of the Purchaser,
enforceable against it in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
3.5 BROKERS. Except for those brokers or finders to whom the
Purchaser is solely responsible for the payment of any brokerage or finder's
fees, no broker acting on behalf of the Purchaser brought about the consummation
of any of the transactions contemplated pursuant to this Agreement and the
Purchaser does not have any obligation to any Person in respect of any brokerage
or finder's fees (or any similar obligation) in connection with the transactions
contemplated by this Agreement.
3.6 DISCLOSURE OF INFORMATION. The Purchaser has had full
access to all information it considers necessary or appropriate to make an
informed investment decision with respect to the Convertible Notes to be
purchased by it pursuant to this Agreement. The Purchaser has had an opportunity
to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Convertible Notes pursuant to this Agreement
and to obtain additional information necessary to verify any information
furnished to the Purchaser or to which the Purchaser had access.
3.7 INVESTMENT EXPERIENCE. The Purchaser understands that the
purchase of the Convertible Notes pursuant to this Agreement involves
substantial risk. The Purchaser has experience as an investor in securities of
companies and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment in the Company and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of this investment in the Company and protecting its own
interests in connection with this investment.
3.8 RESTRICTED SECURITIES. The Purchaser understands that the
Convertible Notes to be purchased by it pursuant to this Agreement are
characterized as "restricted securities" under the Securities Act inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering, and that under the Securities Act such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. The Purchaser is familiar with Rule 144 of the
16
Securities Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
3.9 INVESTIGATION. The Purchaser has conducted its own
investigation of the Company and hereby acknowledges that the only
representations and warranties of the Company in connection with the Purchaser's
purchase of the Convertible Notes pursuant to this Agreement are those expressly
made by the Company in Article 4 of this Agreement.
4. COMPANY REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties to the
Purchaser:
4.1 AUTHORIZED AND OUTSTANDING SHARES OF CAPITAL STOCK. As of
September 28, 2001, the authorized capital stock of the Company consisted of (a)
2,404,031,240 shares of Class A Common Stock, $0.01 par value per share, of
which 548,575,321 shares were issued and outstanding; (b) 522,254,782 shares of
Class B Common Stock, $0.01 par value per share, of which 67,538,544 shares were
issued and outstanding; and (c) 20,000,000 shares of Preferred Stock, $0.01 par
value per share, none of which were issued and outstanding. All of such issued
and outstanding shares are validly issued, fully paid and non-assessable. No
shares of capital stock are held by the Company as treasury stock as of the date
of this Agreement and no shares of capital stock of the Company shall be held by
the Company as treasury stock as of the Closing. Except as set forth on SCHEDULE
4.1 hereto and for the Convertible Notes being issued pursuant to this Agreement
and the New 6.15% Notes being issued pursuant to the Exchange Agreement, (i) (A)
there is no existing, and immediately following the consummation of the
transactions contemplated hereby and by the other Transactions Documents, the
Senior Credit Facility, the Nortel Agreement, the Bechtel Agreement and any
other Vendor Agreement, and the Affiliate Financing Documents there will be no,
option, warrant, call, commitment or other agreement to which the Company or any
of its Subsidiaries is a party requiring the issuance of any additional shares
of Stock of the Company or other securities convertible into shares or equity
securities of the Company, and (B) there are no, and immediately following the
consummation of the transactions contemplated hereby and by the other
Transaction Documents, the Senior Credit Facility, the Nortel Agreement, the
Bechtel Agreement and any other Vendor Agreement, and the Affiliate Financing
Documents there will be no, convertible securities of the Company outstanding
which upon conversion, exercise or exchange would require, the issuance of any
additional shares of Stock of the Company or other securities convertible into
shares or equity securities of the Company, and (ii) except for the Voting
Agreement, the Citicorp Voting Agreement and the Nortel Voting Agreement, there
is no agreement to which the Company is a party with respect to the voting or
transfer of the Stock of the Company. No option, warrant or other convertible
security of any kind or nature issued by the Company in connection with the
consummation of the transactions contemplated hereby and by the other
Transaction Documents, the Senior Credit Facility, the Nortel Agreement, the
Bechtel Agreement or any other Vendor Agreement, or the Affiliate
17
Financing Documents will be convertible, exercisable or exchangeable into shares
of Class A Common Stock prior to the Requisite Company Vote. Except as set forth
on SCHEDULE 4.1 hereto and for the Stockholders' Agreement, there are no
stockholders' preemptive rights or rights of first refusal or other similar
rights with respect to the issuance of Stock by the Company. True, correct and
complete copies of the certificate of incorporation and by-laws of the Company
have been made available to the Purchaser.
4.2 AUTHORIZATION AND ISSUANCE OF CONVERTIBLE NOTES. The
issuance of the Convertible Notes pursuant to this Agreement and the New 6.15%
Notes pursuant to the Exchange Agreement has been duly authorized by all
necessary corporate action on the part of the Company (except the issuance of
shares of Class A Common Stock upon conversion of the Convertible Notes remains
subject to the Requisite Company Vote) and, upon delivery to the Purchaser of
the Convertible Notes to be issued pursuant to this Agreement and the New 6.15%
Notes to be issued pursuant to the Exchange Agreement against payment in
accordance with the terms hereof (in the case of the Convertible Notes), the
Convertible Notes and the New 6.15% Notes to be issued pursuant to the Exchange
Agreement will have been validly issued, free and clear of all Liens. The
issuance of shares of Class A Common Stock upon conversion of the Convertible
Notes and the New 6.15% Notes, has been duly authorized by all necessary
corporate action on the part of the Company (except for the Requisite Company
Vote) and, when issued upon conversion of the Convertible Notes and the New
6.15% Notes, such Class A Common Stock will have been validly issued, fully paid
and non-assessable. The Company has duly reserved an adequate number of shares
of Class A Common Stock for issuance pursuant to the terms of the Convertible
Notes and the New 6.15% Notes.
4.3 SECURITIES LAWS. In reliance in part on the investment
representations contained in Sections 3.1, 3.2, 3.6, 3.7, 3.8 and 3.9, the
offer, issuance, sale and delivery of the Convertible Notes to be issued
pursuant to this Agreement and the New 6.15% Notes to be issued pursuant to the
Exchange Agreement, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws. Neither the
Company nor any Person acting on its behalf has taken or will take any action
(including any offering of any securities of the Company under circumstances
which would require the integration of such offering with the issuance of the
Convertible Notes to be issued pursuant to this Agreement and the New 6.15%
Notes to be issued pursuant to the Exchange Agreement under the Securities Act
and the rules and regulations of the SEC thereunder) that would subject the
issuance of the Convertible Notes to be issued pursuant to this Agreement and
the New 6.15% to be issued pursuant to the Exchange Agreement to the
registration requirements of Section 5 of the Securities Act.
4.4 CORPORATE EXISTENCE; COMPLIANCE WITH LAW; PERMITS.
(a) The Company and each of its Subsidiaries (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware in the case of the Company and each jurisdiction as set
forth on SCHEDULE 4.4(a) hereto in the case of its Subsidiaries; (ii) is duly
qualified as a foreign
18
corporation and in good standing under the laws of each jurisdiction as set
forth on SCHEDULE 4.4(a) hereto where its ownership or lease of property or the
conduct of its business requires such qualification (except for jurisdictions in
which such failure to so qualify or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect); (iii) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now being conducted;
(iv) is in compliance with its certificate or articles of incorporation and
by-laws; and (v) is in compliance with all applicable provisions of law, except
for such non-compliance which would not, individually or in the aggregate, have
a Material Adverse Effect.
(b) Each of the Company and its Subsidiaries has obtained
all material Permits from all Persons, including Governmental Authorities, that
are needed for the ownership of and the conduct or operation of their respective
businesses as currently being conducted (including all Permits required by any
Environmental Law, all health and safety Permits, all certificates of occupancy
and all certificates of public convenience and necessity or the equivalent). All
Permits issued by any Governmental Authority to the Company or any of its
Subsidiaries for the purpose of building, maintaining or operating any
telecommunications systems or providing any telecommunications services
(including all franchise agreements with any Governmental Authority or
certificates of public convenience and necessity, but excluding Permits relating
solely to construction or rights of way for construction) are listed on SCHEDULE
4.4(b) hereto. Except as set forth on SCHEDULE 4.4(b) hereto or as would not,
individually or in the aggregate, have a Material Adverse Effect: (i) all such
Permits are in full force and effect (provided that, in the case of certificates
of public convenience and necessity, the Material Adverse Effect qualification
shall not be applicable); (ii) no violations have occurred, are continuing to
occur or have been recorded in respect of any such Permit; (iii) no claim is
pending or, to the knowledge of the Company and its Subsidiaries, threatened, to
revoke or limit any such Permit; and (iv) each of the Company and its
Subsidiaries is in compliance with the terms and conditions of all such Permits
in all respects.
4.5 SUBSIDIARIES. There currently exist no Subsidiaries of
the Company other than as set forth on SCHEDULE 4.5 hereto, which sets forth
such Subsidiaries, together with their respective jurisdictions of organization,
and the authorized and outstanding capital Stock of each such Subsidiary, by
class and number and percentage of each class owned by the Company or a
Subsidiary of the Company or any other Person. There are no options, warrants,
rights to purchase or similar rights covering capital Stock for any such
Subsidiary. Except as set forth on SCHEDULE 4.5 hereto or in the Company SEC
Documents, neither the Company nor any of its Subsidiaries is engaged in any
joint venture or partnership with any other Person.
4.6 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS
19
(a) The execution, delivery and performance by the
Company of this Agreement, the other Transaction Documents to which it is a
party and all instruments and documents to be delivered by the Company hereunder
and under the other Transaction Documents, the issuance and sale of the
Convertible Notes hereunder, the issuance of the New 6.15% Notes pursuant to the
Exchange Agreement and the consummation of the other transactions contemplated
by any of the foregoing, and the execution, delivery and performance by the
Company of the Senior Credit Facility, the Affiliate Financing Documents, the
Nortel Agreement, the Bechtel Agreement and the other Vendor Agreements and the
consummation of the transactions contemplated thereby: (i) are within the
Company's corporate power and authority; (ii) have been duly authorized by all
necessary or proper corporate action (except for the Requisite Company Vote);
(iii) are not in contravention of any provision of the Company's certificate of
incorporation or by-laws; (iv) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality to which the
Company or any of its Subsidiaries is a party or to which its assets are bound;
(v) subject to Sections 4.6(b) and 4.6(c), will not conflict with or result in
the breach or termination of, constitute a default under or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Company or any of its Subsidiaries is
a party or by which the Company, any of its Subsidiaries or any of their
respective properties is bound; (vi) except for the Liens created by the
Security Documents and the Liens created under the Senior Credit Facility, the
Nortel Agreement, the Bechtel Agreement and the other Vendor Agreements, will
not result in the creation or imposition of any Lien upon any of the property of
the Company or any of its Subsidiaries; and (vii) do not require the consent or
approval of, or any filing by the Company or any of its Subsidiaries with, any
Governmental Authority or any other Person (except, in the case of clauses (iv)
through (vii), as would not have, individually or in the aggregate, a Material
Adverse Effect or that would adversely affect the ability of the Company to
consummate, or that would prevent or delay in any material respect, the
transactions contemplated by this Agreement or any other Transaction Documents,
and except for filings specified in SCHEDULE 4.6 hereof).
(b) The execution, delivery and performance by the
Company of this Agreement, the other Transaction Documents to which it is a
party and all instruments and documents to be delivered by the Company, the
issuance and sale of the Convertible Notes hereunder and the issuance of the New
6.15% Notes pursuant to the Exchange Agreement and the consummation of the other
transactions contemplated by any of the foregoing will not conflict with or
result in the breach or termination of, constitute a default under or accelerate
any performance required by: (i) the Senior Notes; (ii) the Senior Note
Indentures; (iii) the Indenture; (iv) the Senior Credit Facility; (v) the Nortel
Agreement; (vi) the Bechtel Agreement and (vii) the other Vendor Agreements.
(c) Subject to the provision of advance notice in
accordance with the 60-day notice provision contained in Section 24.1 of the
C&MA, the assignment by MFNS of its right, title and interest in the C&MA to the
Company (the "C&MA
20
ASSIGNMENT") did not conflict with or result in the breach or termination of, or
constitute a default under, the C&MA.
(d) This Agreement and each of the other Transaction
Documents has been duly executed and delivered by the Company and (assuming the
due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and the other Transaction Documents when so
executed and delivered will constitute, the legal, valid and binding obligations
of the Company, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.7 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES.
(a) Each form, report, schedule, registration statement
and definitive proxy statement filed by Company with the SEC since March 6, 2000
and prior to the date hereof (as such documents have been amended prior to the
date hereof, the "COMPANY SEC DOCUMENTS"), as of their respective dates,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act. None of the Company SEC Documents, as of
their respective dates, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The Company has made available to the Purchaser true,
accurate and complete copies of all of the Company SEC Documents. The
consolidated financial statements of the Company and its Subsidiaries included
in such reports comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited interim financial statements,
as permitted by Form 10-Q of the SEC) and fairly present in all material
respects (subject, in the case of the unaudited interim financial statements, to
normal, year-end audit adjustments) the consolidated financial position of the
Company and its Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended. Since
December 31, 2000, neither the Company nor any of its Subsidiaries has incurred
any material liabilities or obligations (whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due) of any nature, except liabilities, obligations or contingencies (a) which
are reflected on the audited balance sheet of the Company and its Subsidiaries
as at December 31, 2000, (including the notes hereto), or (b) which (i) were
incurred in the ordinary course of business after December 31, 2000 and were
consistent with past practices, or (ii) are disclosed or reflected in the
Company SEC Documents filed after December 31, 2000. Since March 6, 2000, the
Company has timely filed with the SEC all forms, reports and other documents
required to be filed prior to the date
21
hereof, and no Subsidiary of the Company has filed, or been required to file,
any form, report or other document with the SEC, in each case, pursuant to the
Securities Act, the Exchange Act or the rules and regulations thereunder.
(b) Except as set forth on SCHEDULE 4.7 or described in
the Company SEC Documents, no dividends or other distributions have been
declared, paid or made upon any shares of capital Stock of the Company, nor have
any shares of capital Stock of the Company been redeemed, retired, purchased or
otherwise acquired for value by the Company since March 6, 2000.The projected
financial statements delivered pursuant to Section 6.19 hereof have been
prepared in good faith, based on estimates and assumptions that the Company
believes are fair and reasonable at the time such projections have been
furnished to the Purchaser.
4.8 PERFECTION AND PRIORITY OF LIENS. At all times after the
execution of the Security Documents, the Security Documents create, in favor of
the Purchaser, as security for the obligations purported to be secured thereby,
a legal, valid and enforceable perfected first-priority security interest or
Lien in all of the Collateral, superior to and prior to the rights of all third
persons and subject to no Liens. The Company has (or on and after the time it
executes the respective Security Document, will have) good and marketable title
to all items of Collateral (or, as the case may be, collateral) covered by such
Security Document free and clear of all Liens. The C&MA is a Telecommunications
Asset. The copy of the C&MA attached hereto as SCHEDULE 4.8 is a true, correct
and complete copy of the C&MA as in effect on the date hereof.
4.9 OWNERSHIP OF PROPERTY. Except as set forth on SCHEDULE
4.9 hereto, after giving effect to the application of the proceeds of the Senior
Credit Facility, each of the Company and its Subsidiaries has good and valid and
insurable fee simple title to its owned real property, free and clear of all
Liens, except Permitted Liens and Liens created by the Senior Credit Facility,
the Nortel Agreement, the Bechtel Agreement and the Vendor Agreements. After
giving effect to the application of the proceeds of the Senior Credit Facility,
each of the Company and its Subsidiaries has valid leasehold interests in each
of its leases, good and valid title to, or valid leasehold interests in, all of
its other properties and assets free and clear of all Liens, except Permitted
Liens and Liens created by the Senior Credit Facility, the Nortel Agreement, the
Bechtel Agreements and the Vendor Agreements. Each of such leases is valid and
enforceable in accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and is in full force
and effect, except to the extent that such lack of validity or enforceability
would not, individually or in the aggregate, have a Material Adverse Effect.
None of the Company, any of its Subsidiaries nor, to its knowledge, any other
party to any such lease is in default of its obligations thereunder or has
delivered or received any notice of default under any such lease, nor has any
event occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such lease, except to the
22
extent that such default would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries is obligated under or a party to, any option, right of first
refusal, or any other contractual right to purchase, acquire, sell, assign or
dispose of any material real property owned or leased by the Company or such
Subsidiary.
4.10 MATERIAL CONTRACTS. SCHEDULE 4.10 hereto contains a true,
correct and complete list of all Material Contracts that are described in
clauses (i), (iii) (to the extent related to indebtedness for borrowed money in
excess of $10,000,000), (iv), (viii), (x) and (xi) of the definition of
"Material Contracts." Each Material Contract is a valid and binding agreement of
the Company or its Subsidiaries, as the case may be, enforceable against the
Company or such Subsidiary in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)). The Company and
each of its Subsidiaries has fulfilled or received a waiver from all obligations
required pursuant to the Material Contracts to have been performed by the
Company or such Subsidiary on its part except as could not, individually or in
the aggregate, result in a Material Adverse Effect. Except as set forth in
SCHEDULE 4.10 hereto, neither the Company nor any of its Subsidiaries is in
default or breach, nor to the Company's or its Subsidiaries' knowledge is any
third party in default or breach, under or with respect to any Material Contract
except as could not, individually or in the aggregate, result in a Material
Adverse Effect.
4.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth on SCHEDULE 4.11 hereto, to the
Company's and its Subsidiaries' knowledge, all real property owned, leased or
otherwise operated by the Company and its Subsidiaries (each, a "FACILITY") is
free of contamination from any substance, waste or material (i) currently
identified to be toxic or hazardous pursuant to, or which could reasonably be
expected to result in liability under, any Environmental Law or (ii) within the
definition of a substance which is toxic or hazardous under any Environmental
Law, including any asbestos, pcb, radioactive substance, methane, volatile
hydrocarbons, industrial solvents, oil or petroleum or chemical liquids or
solids, liquid or gaseous products, or any other material or substance which,
could reasonably be expected to result in any Environmental Liabilities and
Costs (a "HAZARDOUS SUBSTANCE") which, in either case, could have, individually
or in the aggregate, a Material Adverse Effect. Except as set forth on SCHEDULE
4.11 hereto or in the Company SEC Documents, neither the Company nor any of its
Subsidiaries has caused or suffered to occur any release, spill, migration,
leakage, discharge, spillage, uncontrolled loss, seepage, or filtration of a
Hazardous Substance at or from a Facility (a "SPILL") which could, individually
or in the aggregate, result in Environmental Liabilities and Costs which could
reasonably be expected to have a Material Adverse Effect.
23
(b) The Company and each Subsidiary have generated,
treated, stored and disposed of any Hazardous Substances in full compliance with
applicable Environmental Laws, except for such non-compliances which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(c) Except as set forth on SCHEDULE 4.11, the Company and
each Subsidiary have obtained, or have applied for, and are in compliance with
all Permits required under Environmental Laws (except for such failures which
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect) and neither the Company nor any of its Subsidiaries has
any knowledge of any proceedings to substantially modify or to revoke any such
Permit.
(d) Except as set forth on SCHEDULE 4.11 hereto or in the
Company SEC Documents, there are no investigations, proceedings or litigation
pending or, to the Company's or its Subsidiaries' knowledge, threatened
affecting or against the Company, any of its Subsidiaries or the Facilities
relating to Environmental Laws or Hazardous Substances which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
4.12 LABOR MATTERS.
(a) There are no strikes or other labor disputes against
the Company or any of its Subsidiaries pending or, to the Company's or its
Subsidiaries' knowledge, threatened. To the Company's or its Subsidiaries'
knowledge, there is no organizing activity involving the Company or any of its
Subsidiaries pending or threatened by any labor union or group of employees.
There are no representation proceedings pending or, to the Company's or its
Subsidiaries' knowledge, threatened with the National Labor Relations Board, and
no labor organization or group of employees of the Company or its Subsidiaries
has made a pending demand for recognition. There are no complaints or charges
against the Company or any of its Subsidiaries pending or, to Company's or its
Subsidiaries' knowledge, threatened to be filed with any Governmental Authority
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by the Company or any of its
Subsidiaries of any individual that could have, individually or in the
aggregate, a Material Adverse Effect.
(b) Except as set forth on SCHEDULE 4.12 hereto or in the
Company SEC Documents, neither the Company nor any of its Subsidiaries is, or
since March 6, 2000 was, a party to any labor or collective bargaining agreement
and there are no labor or collective bargaining agreements which pertain to
employees of the Company or its Subsidiaries.
4.13 TAXES. Except as set forth on SCHEDULE 4.13, all material
federal, state, local and foreign tax returns, reports and statements required
to be filed by the Company and its Subsidiaries have been timely filed with the
appropriate Governmental Authority and all such returns, reports and statements
are true, correct and complete in all
24
material respects. All material Charges and other impositions due and payable
for the periods covered by such returns, reports and statements have been paid
prior to the date on which any fine, penalty, interest or late charge may be
added thereto for nonpayment thereof, or any such fine, penalty, interest, late
charge or loss has been paid. No material tax audits or other administrative or
judicial proceedings are pending or, to the Company's knowledge, threatened with
regard to any Charges for which the Company or any Subsidiary may be liable and
no material assessment of Charges is proposed against the Company or any
Subsidiary.
4.14 NO LITIGATION. Except as disclosed on SCHEDULE 4.14
hereto or in the Company SEC Documents, no action, claim or proceeding is now
pending or, to the knowledge of the Company or its Subsidiaries, threatened
against the Company or any of its Subsidiaries, at law, in equity or otherwise,
before any court, board, commission, agency or instrumentality of any foreign,
federal, state, or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. Based on
the claims set forth in the complaint by Mitsubishi Electric Information Network
Corporation against MFNS and in the complaint by Mitsubishi Electric Information
Network Corporation against Pacific Gateway Exchange, Inc. and Pacific Gateway
Exchange (Bermuda) Limited, the actions which are the subject of such complaint
will not adversely affect the Company's or MFNS's rights in or interests
(economic or otherwise) under the C&MA.
4.15 BROKERS. Except for those brokers or finders to whom
the Company is solely responsible for the payment of any brokerage or
finder's fees, no broker or finder acting on behalf of the Company or any of
its Subsidiaries brought about the consummation of the transactions
contemplated pursuant to this Agreement and neither the Company nor any of
its Subsidiaries has any obligation to any Person in respect of any brokerage
or finder's fees (or any similar obligation) in connection with the
transactions contemplated by this Agreement.
4.16 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Except as
set forth on SCHEDULE 4.16 hereto and except with respect to those patents,
trademarks, copyrights and licenses the loss of which could not have,
individually or in the aggregate, a Material Adverse Effect, the Company and
each of its Subsidiaries owns or has the right to use all licenses, patents,
patent applications, copyrights, service marks, trademarks and registrations and
applications for registration thereof, and trade names necessary to continue to
conduct its business as heretofore conducted by it and now being conducted by
it. To the Company's knowledge, the Company and each of its Subsidiaries
conducts its businesses without infringement or claim of infringement of any
license, patent, copyright, service ▇▇▇▇, trademark, trade name, trade secret or
other intellectual property right of others except where the same could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. To the Company's knowledge, there is no infringement by others
of any license, patent, copyright, service ▇▇▇▇, trademark, trade name, trade
secret or other intellectual property right of the
25
Company or any of its Subsidiaries, except where the same could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
4.17 ORDINARY COURSE OF BUSINESS; NO MATERIAL ADVERSE CHANGE.
Except as set forth on SCHEDULE 4.17 hereto or in response to the events
described therein, or as disclosed in the Company SEC Documents, since June 30,
2001, the Company and each of its Subsidiaries has conducted its operations only
in the ordinary course of business consistent with past practice. Except as
disclosed on SCHEDULE 4.17 hereto or in the Company SEC Documents, no event has
occurred since June 30, 2001 which has had or would be reasonably expected to
have, individually or in the aggregate, a Material Adverse Change.
4.18 ERISA.
(a) SCHEDULE 4.18(a) hereto sets forth a list of each
material pension, retirement, savings, disability, dental, health, life, death
benefit, group insurance, profit-sharing, deferred compensation, stock option,
bonus, incentive, severance pay or other employee benefit plan, trust,
arrangement, contract, commitment, agreement or policy (collectively, "BENEFIT
PLANS") sponsored or maintained by the Company or its Subsidiaries, in which
present or former employees of the Company or any Subsidiary participate
(collectively, the "COMPANY PLANS"). Correct and complete copies of the
following documents, which are correct and complete in all material respects,
with respect to each of the Company Plans (other than a Multiemployer Plan),
have been made available to the Purchaser, to the extent applicable: (i) any
plans, all material amendments thereto and related trust documents, and
amendments thereto; (ii) the most recent Forms 5500 and all schedules thereto
and the most recent actuarial report, if any; (iii) the most recent IRS
determination letter; (iv) summary plan descriptions; (v) material written
communications to employees relating to the Company Plans; and (vi) written
descriptions of all material non-written agreements relating to the Company
Plans.
(b) No Company Plan is subject to Title VI of ERISA.
Except as set forth in SCHEDULE 4.18(b) hereto and except as, individually or in
the aggregate, would not or would not reasonably be expected to have a Material
Adverse Effect: (A) the Company Plans have been administered and are in
compliance with the terms of such plan and all applicable laws, (B) no
"reportable event" (as such term is used in Section 4043 of ERISA other than
those events for which the thirty (30) day notice has been waived pursuant to
the regulations), "prohibited transaction" (as such term is used in Section 406
of ERISA or Section 4975 of the IRC) or "accumulated funding deficiency" (as
such term is used in Section 412 or 4971 of the IRC) has heretofore occurred
with respect to any Company Plan and (C) each Company Plan intended to qualify
under Section 401(a) of the IRC has received a favorable determination from the
IRS regarding its qualified status and no notice has been received from the IRS
with respect to the revocation of such qualification. None of the Company Plans
provides for post-employment life or health insurance, benefits or coverage for
any participant or any beneficiary of a participant, except as may be required
under the Consolidated Omnibus
26
Budget Reconciliation Act of 1985, as amended, and at the expense of the
participant or the participant's beneficiary.
(c) There is no litigation or administrative or other
proceeding involving any Company Plan nor has the Company or any of its
Subsidiaries received notice that any such proceeding is threatened, in each
case, that would have or would reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has incurred, nor, to
the Company's knowledge, is reasonably likely to incur, any withdrawal liability
with respect to any Multiemployer Plan which remains unsatisfied in an amount
which would have, individually or in the aggregate, a Material Adverse Effect.
The termination of, or withdrawal from, any Company Plan or Multiemployer Plan
to which the Company or any of its Subsidiaries contributes, on or prior to the
Closing Date, will not subject the Company or any of its Subsidiaries to any
liability under Title IV of ERISA that would have, individually or in the
aggregate, a Material Adverse Effect.
4.19 INSURANCE. There are in full force and effect for the
benefit of the Company and its Subsidiaries insurance policies and bonds
providing adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of the Company and its
Subsidiaries in accordance with prudent business practice in the industry of the
Company and Subsidiaries. No notice has been given or claim made to cancel or
void any such policies or bonds or to reduce the coverage provided thereby,
except as would not have, individually or in the aggregate, a Material Adverse
Effect.
4.20 SOLVENCY. Immediately after the consummation of the
transactions to occur on the Closing Date (including the consummation of the
transactions contemplated hereby and by the other Transaction Documents, the
Senior Credit Facility, the Nortel Agreement, the Bechtel Agreement and the
other Vendor Agreements and the Affiliate Financing Documents) and immediately
following the issuance of each Convertible Note and after giving effect to the
application of the proceeds thereof, each of the Company and MFNS is Solvent.
4.21 REGULATORY MATTERS. Except as provided in SCHEDULE 4.21
hereto and as would not have, individually or in the aggregate, a Material
Adverse Effect, each of the Company and its Subsidiaries: (i) has completed all
regulatory applications, filings and tariffs, has received all regulatory
certificates or other approvals, and has otherwise complied with all regulatory
requirements necessary to offer any and all services currently offered by the
Company or any of its Subsidiaries; and (ii) with respect to any planned or
future services that it may offer, it will complete all regulatory applications,
filings and tariffs, will obtain all regulatory certificates or other approvals
and will otherwise comply with all regulatory requirements necessary to offer
any and all such services.
4.22 NO VOTE. Except for the Requisite Company Vote, no vote
or consent of the Company's stockholders or of the holders of the Senior Notes,
is required
27
to approve this Agreement or any of the other Transaction Documents or for the
Company to consummate the transactions and perform its obligations contemplated
hereby and thereby.
4.23 EMPLOYMENT AGREEMENTS. The execution by the Company of
this Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not result in the Company
being required to make any payments, or accelerate or increase any payments
required to be made by the Company, under any employment agreement to which the
Company or any of its Subsidiaries is a party.
4.24 INVESTMENT COMPANY ACT. The Company and each Subsidiary
of the Company either (i) is not an "investment company," or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company," within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder (the "INVESTMENT COMPANY
ACT") or (ii) satisfies all conditions for an exemption from the Investment
Company Act, and, accordingly, neither the Company nor any Subsidiary of the
Company is required to be registered under the Investment Company Act.
4.25 STOCKHOLDERS' CONSENT. The shares of Common Stock held by
the Persons that have executed, and that are represented by, the Stockholders'
Consent equal more than a majority of the Common Stock outstanding and entitled
to vote at a meeting of the Company's stockholders as of the date hereof and
otherwise represent a sufficient amount of shares of Common Stock to approve the
matters referred to in the Stockholders' Consent.
4.26 NO MATERIAL MISSTATEMENTS. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Company to the Initial Purchaser in connection with the
negotiation, preparation or delivery of this Agreement and each of the other
Transaction Documents or included herein or therein or delivered pursuant hereto
or thereto, when taken as a whole, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading, other than a material fact the effect of which is
favorable to the Company; PROVIDED that to the extent any such information,
report, financial statement, exhibit or schedule was based upon or constitutes a
forecast, projection or expression of opinion, the Company represents only that
it acted in good faith an utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule. All written information furnished after the date hereof by the Company
and its Subsidiaries to the Initial Purchaser in connection with this Agreement
and each of the other Transaction Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact known
to the Company that has had or could reasonably be expected (individually or in
the aggregate) to have a
28
Material Adverse Effect that has not been disclosed herein, in the other
Transaction Documents, or in a report, financial statement, exhibit, schedule,
disclosure letter or other writing furnished to the Initial Purchaser for use in
connection with the transactions contemplated hereby or thereby.
5. COVENANTS OF THE COMPANY AND PURCHASER
5.1 REGULATORY AND OTHER AUTHORIZATIONS.
(a) Each of the Company and the Purchaser shall use its
reasonable best efforts (and cooperate fully with the other party in promptly
seeking) to obtain all authorizations, consents, orders and approvals of
Governmental Authorities that may be or may become necessary for the execution
and delivery of, and the performance of its obligations pursuant to, this
Agreement and the other Transaction Documents, and for the conversion of any of
the New 6.15% Notes and Convertible Notes by the Purchaser, including, without
limitation: prior to the exercise of the Purchaser's conversion rights with
respect to the Convertible Notes under the Indenture or the New 6.15% Notes
under the New 6.15% Notes Indenture, making an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated by this Agreement, the Indenture or the New 6.15%
Notes Indenture, which filing shall request early termination of the waiting
periods imposed by the HSR Act and complying at as early a date as possible with
any Request for Additional Information to cause termination of the waiting
periods under the HSR Act and to prevent the entry by a court of competent
jurisdiction of an order enjoining (x) the consummation of the transactions
contemplated by the Indenture or the New 6.15% Notes Indenture or (y) the
conversion of the New 6.15% Notes or the Convertible Notes pursuant to the New
6.15% Notes Indenture or the Indenture, respectively.
(b) On and after the Regulatory Relief Date, the Company
shall use its reasonable best efforts (and cooperate fully with the Purchaser)
to comply with the provisions of Section 272 of the Telecommunications Act as
implemented by the FCC, and the accounting and other rules, regulations and
orders of any Governmental Authority that may be or may become necessary for the
execution and delivery of, and the performance of its obligations pursuant to,
this Agreement and the other Transaction Documents.
(c) Nothing in this Section 5.1 shall require the Company
or any of its Affiliates or the Purchaser or any of its Affiliates to sell or
otherwise dispose of, or permit the sale or other disposition of, any assets, in
each case, whether as a condition to obtaining any approval from a Governmental
Authority or any other Person or for any other reason.
5.2 FURTHER ASSURANCES. The Company agrees (a) to furnish
upon request to the Purchaser such further information, (b) to execute and
deliver to each other such other documents, and (c) to do such other acts and
things, all as the Purchaser may reasonably request for the purpose of carrying
out the intent of this Agreement and the
29
other Transaction Documents. In connection with the C&MA Assignment, the Company
agrees to cause MFNS on the date hereof to deliver notice of the C&MA Assignment
in accordance with Section 24.1 of the C&MA. In addition to, and not in
limitation of, the Company's obligations under Section 4.2 of the Security
Agreement, to the extent deemed necessary by the Purchaser, at any time after
the date hereof, the Company shall affirm and ratify the C&MA Assignment and the
Security Agreement.
5.3 USE OF PROCEEDS. The Company will use the proceeds from
the sale of the Convertible Notes only for lawful purposes in accordance with
Section 2.3 hereof, as applicable and such uses shall not contravene any
applicable law or any provisions hereof, and, upon request of the Purchaser,
will provide written evidence of such application of proceeds to the Purchaser.
5.4 PROXY OR INFORMATION STATEMENT.
(a) As promptly as practicable after the date hereof, the
Company shall (i)(x) duly call a special meeting of the holders of the Company's
Common Stock (the "COMPANY STOCKHOLDERS' MEETING") to be held to consider
approval of the issuance of the shares of Class A Common Stock issuable upon
conversion of the Convertible Notes, and (y) prepare and file with the SEC a
proxy statement (the "PROXY STATEMENT") relating to the Company Stockholders'
Meeting and the approval of the shares of Class A Common Stock issuable upon
conversion of the Convertible Notes, or (ii) prepare and file with the SEC an
Information Statement meeting the requirements of Schedule 14C under the
Exchange Act (the "INFORMATION STATEMENT") regarding, and containing the
requisite information describing, the Stockholders' Consent and the approval,
among other things, of the shares of Class A Common Stock issuable upon
conversion of the Convertible Notes and containing all other applicable
information required under Regulation 14C and Schedule 14C under the Exchange
Act; IT BEING UNDERSTOOD AND AGREED, that, so long as it is permissible under
the rules and regulations of NASDAQ to obtain the approval of the shares of
Class A Common Stock issuable upon conversion of the Convertible Notes by
written consent and not at a meeting of stockholders, the Company shall be
obligated to comply with the provisions of clause (ii) hereof and the other
provisions in this Section 5.4 relating to the Information Statement. The
Company shall use its reasonable best efforts to cause the Proxy Statement or
the Information Statement, as the case may be, to become cleared as promptly as
practicable by the SEC. The Company shall use its best efforts to file the Proxy
Statement or the Information Statement, as the case may be, no later than
October 8, 2001, and, to the extent applicable, to hold the Company
Stockholders' Meeting, or to cause the corporate action to be taken under the
Stockholders' Consent to be effective by, no later than November 15, 2001. The
Purchaser or the Company, as the case may be, shall furnish all information
concerning the Purchaser or the Company as the other party may reasonably
request in connection with such actions and the preparation of the Proxy
Statement or the Information Statement, as the case may be. As promptly as
practicable (but, in any event, within two (2) Business Days) after the Proxy
Statement or the Information Statement, as the case may be, is (or is deemed)
cleared by the SEC, the Company shall cause the Proxy Statement or the
Information Statement, as the case may be, to be mailed to the
30
stockholders of the Company. The Company shall cause the Proxy Statement or the
Information Statement, as the case may be, to comply as to form and substance in
all material respects with the applicable requirements of (i) the Exchange Act,
including the applicable provisions of Sections 14(a), 14(c) and 14(d) thereof
and the respective regulations promulgated thereunder, and (ii) applicable rules
and regulations of The Nasdaq Stock Market ("NASDAQ"). In connection with the
preparation, filing and delivery of the Proxy Statement or the Information
Statement, as the case may be, the Company shall comply in all material respects
with the applicable requirements of the Exchange Act, including the applicable
provisions of Sections 14(a), 14(c) and 14(d) thereof and Regulations 14A, 14C
and 14D thereunder.
(b) To the extent applicable, the Company will, through
its board of directors, unanimously recommend, and the Proxy Statement shall
include the unanimous and unconditional recommendation of the board of directors
of the Company, to the stockholders of the Company that they vote, as required
by NASDAQ, in favor of the issuance of the shares of Class A Common Stock
issuable upon conversion of the Convertible Notes.
(c) To the extent applicable, the Company shall call and
hold the Company Stockholders' Meeting as promptly as practicable after the
mailing date of the Proxy Statement for the purpose of voting upon the issuance
of the shares of Class A Common Stock issuable upon conversion of the
Convertible Notes. To the extent applicable, the Company shall use its
reasonable best efforts (through its agents or otherwise) to solicit from its
stockholders proxies in favor of the issuance of the shares of Class A Common
Stock issuable upon conversion of the Convertible Notes.
(d) The Company shall take all other actions necessary to
secure the Requisite Company Vote.
(e) Within two (2) Business Days of obtaining the
Requisite Company Vote, the Company shall provide written notice thereof to the
Purchaser.
6. CLOSING CONDITIONS TO OBLIGATION OF THE PURCHASER
The Purchaser's obligation to purchase the Convertible Notes at the
Closing and consummate the transactions contemplated hereby are subject to the
satisfaction or fulfillment on or prior to the date hereof of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Article 4 of this Agreement are true and
correct.
6.2 COVENANTS. All covenants and agreements contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with.
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6.3 NO ORDERS. No statute, rule, regulation, decree,
preliminary or permanent injunction, temporary restraining order or other order
or ruling of any nature of any Governmental Authority shall be in effect that
(i) restrains, prevents or materially changes the transactions contemplated
hereby, or (ii) requires or requests any amendment, modification or waiver of
any provision of this Agreement or any of the other Transaction Documents.
6.4 NO INVESTIGATIONS. There shall not be any pending suit,
action, investigation or proceeding by any Governmental Authority that seeks to
(i) restrain or prohibit the purchase and sale of the Convertible Notes or any
of the other transactions contemplated by this Agreement or any of the other
Transaction Documents, (ii) require the payment of any damages, fees or other
amounts by the Purchaser or any of its Affiliates in connection with the
purchase of the Convertible Notes by the Purchaser or the consummation of the
transactions contemplated hereby or by any other Transaction Document, (iii)
prohibit or limit the ownership or operation by the Purchaser or any of its
Affiliates of, or compel the Purchaser or any of its Affiliates to dispose of or
hold separate, any business or assets, in each case, as a result of the purchase
of the Convertible Notes or any of the other transactions contemplated by this
Agreement, or (iv) require any amendment, modification or waiver of any
provision of this Agreement or any of the other Transaction Documents.
6.5 OPINION OF COUNSEL. The Purchaser shall have received an
opinion or opinions reasonably satisfactory to it, dated as of the Closing Date,
of outside counsel to the Company.
6.6 ADDITIONAL TRANSACTION DOCUMENTS. Each of the following
documents shall have been duly and validly executed and delivered by each of the
parties thereto and the transactions contemplated thereby have been consummated
in a manner satisfactory to the Purchaser: (i) the Security Agreement; (ii) the
Stockholders' Agreement; (iii) the Notes Registration Rights Agreement
Amendment; (iv) the Equity Registration Rights Agreement Amendment; (v) the Old
Securities Purchase Agreement Amendment; (vi) the Fiber Optic Network Agreement
Amendment; (vii) the Intercreditor Agreement; (viii) the Voting Agreement; (ix)
the Right of Negotiation Agreement; (x) the Exchange Agreement; (xi) the
Depositary Agreement; (xii) the Indenture; (xiii) the New 6.15% Notes Indenture
and (xiv) the C&MA Assignment Agreement.
6.7 FINANCIAL OFFICER'S CERTIFICATES. The Purchaser shall
have received a certificate of a Financial Officer of the Company to the effect
that as of the Closing Date and following the issuance of the Convertible Notes
and after giving effect to the application of the proceeds thereof, after giving
effect to the consummation of the transactions contemplated by the other
Transaction Documents, the Senior Credit Facility, the Nortel Agreement, the
Bechtel Agreement and the other Vendor Agreements and the Affiliate Financing
Documents, and taking into account all rights of indemnity, subrogation and
contribution of the Company under applicable law, each of the Company and MFNS
is Solvent. Such certificate shall also state that the financial projections and
underlying assumptions upon which the conclusions set forth in such analysis
were based
32
are, on the Closing Date, fair and reasonable in the opinion of the Company and
accurately computed and that the portion of contingent liabilities of the
Company that have been included for purposes of the above determinations shall
be the amount of such contingent liabilities that, in light of all facts and
circumstances existing at such time, could reasonably be expected to become
actual matured liabilities of the Company.
6.8 FINANCIAL STATEMENTS. The Purchaser shall have received
the following financial statements with respect to the Company and its
Subsidiaries:
(a) the audited consolidated balance sheet of the Company
and its Subsidiaries (and, separately stated, of the Company and its Restricted
Subsidiaries (as defined under the Senior Note Indentures)), in each case as at
December 31, 2000 and the related audited consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries (and,
separately stated, of the Company and its Restricted Subsidiaries), for the
fiscal year ended on such date, with the opinion thereon of the Company's
independent accountants;
(b) the unaudited consolidated balance sheet of the
Company and its Subsidiaries (and, separately stated, of the Company and its
Restricted Subsidiaries), in each case as at March 31, 2001 and June 30, 2001
and the related unaudited consolidated statements of income, stockholders'
equity and cash flows of the Company and its Subsidiaries (and, separately
stated, of the Company and its Restricted Subsidiaries), for the three-month and
six-month periods ended on said dates; and
(c) Consolidating Financial Statements as at and for the
fiscal year ended December 31, 2000;
in each case together with a certificate of a Financial Officer to the effect
that the financial statements referred to in clauses (a) and (b) above
accurately present the financial position, income, stockholders' equity and cash
flows of the Company and its Subsidiaries as of such date and period and, in the
case of the financial statements referred to in clause (c) above, the respective
revenues, gross margins and property, plant and equipment of the businesses
covered thereby.
6.9 DELIVERY OF CONVERTIBLE NOTES. Note or notes representing
the Convertible Notes in the form attached as Exhibit A to the Indenture shall
have been validly delivered and transferred to the Purchaser, free and clear of
any and all Liens.
6.10 CONSENTS AND APPROVALS. All consents and approvals of all
Governmental Authorities and all other Persons that are necessary to consummate
the transactions contemplated hereby and by the other Transaction Documents and
for the Purchaser to receive the benefits contemplated by this Agreement and by
the other Transaction Documents shall have been obtained.
6.11 SENIOR CREDIT FACILITY. The Purchaser shall have received
evidence that the Company shall have received net cash proceeds in an amount
equal to
33
$150,000,000 from the Senior Credit Facility and that the transactions
contemplated by the Senior Credit Facility have been consummated.
6.12 ISSUANCE OF CONVERTIBLE DEBT. The Purchaser shall have
received evidence that the Company shall have received net cash proceeds in an
amount at least equal to $180,000,000 pursuant to the issuance of the Affiliate
Notes and the Affiliate Financing Documents, all of which shall be in form and
substance satisfactory to the Purchaser and that the transactions contemplated
by the Affiliate Financing Documents shall have been consummated.
6.13 VENDOR AGREEMENTS. The Purchaser shall have received
evidence that the Company shall have caused one or more of its Subsidiaries
constituting obligors under the Senior Credit Facility to (i) enter into Vendor
Agreements with Nortel providing in the aggregate for the deferral of all
presently outstanding Vendor Obligations due from the obligors under the Senior
Credit Facility to Nortel giving effect to a maximum cash payment of $15,000,000
in connection with such deferral; (ii) enter into Vendor Agreements with Bechtel
providing in the aggregate for the deferral of all presently outstanding Vendor
Obligations due from the obligors under the Senior Credit Facility to Bechtel;
and (iii) enter into Vendor Agreements with one or more other Vendors providing
for the deferral of Vendor Obligations payable to such Vendors in an aggregate
amount (as to all such other Vendors) of not less than $161,000,000, each of
which Vendor Agreements with Nortel, Bechtel or any such other Vendor shall be
in form and substance, and shall provide for a deferral of Vendor Obligations
upon terms, satisfactory to the Purchaser.
6.14 DEPOSITARY AGREEMENT. The Depositary Agreement shall have
been duly executed and the Company shall have deposited the Notes Purchase Price
into the Disbursement Account pursuant to the Depositary Agreement.
6.15 SECURITY INTEREST. The Security Agreement shall have been
executed and all documents and agreements shall have been filed, and other
actions shall have been taken, as may be required to perfect the security
interest in the Collateral.
6.16 GOOD STANDING CERTIFICATES. The Purchaser shall have
received from the Company long-form good standing certificates, dated within
five (5) Business Days preceding the Closing Date, and related bring-down
memoranda, dated as of the Closing Date, for the Company and each of its
domestic Subsidiaries issued by the Secretary of State in the jurisdiction of
organization of each such entity.
6.17 OFFICER'S CERTIFICATE. The Purchaser shall have received
from the Company an Officer's Certificate executed by the Chief Executive
Officer and Chief Financial Officer of the Company, certifying that, as of the
date hereof, there is no Default or Event of Default under the Old Convertible
Notes Indenture.
6.18 SECRETARY'S CERTIFICATE. The Purchaser shall have
received a Secretary's Certificate executed by the Secretary of the Company
certifying as to copies
34
of the certificate of incorporation and by-laws of the Company, as in effect on
the date hereof, and resolutions authorizing the transactions contemplated by
the Transaction Documents.
6.19 FINANCIAL PROJECTIONS. The Company shall have delivered
to the Purchaser statements of income, stockholders' equity and cash flows of
the Company and its Restricted Subsidiaries, covering the period commencing on
January 1, 2001 through June 30, 2006 (detailed by fiscal quarter through
December 31, 2004).
6.20 PAYMENTS TO PURCHASER. All obligations or indebtedness
owed by the Company or any of its Subsidiaries to the Purchaser or its
Affiliates shall have been paid, including the interest payment on the Old
Convertible Notes that was otherwise due on September 15, 2001 and all amounts
owed to Empire City Subway, but excluding the principal amount of the Old
Convertible Notes.
6.21 CERTAIN ADDITIONAL CONDITIONS. The Purchaser shall have
received evidence satisfactory to the Purchaser that, without limiting the
generality of the representation and warranty set forth in Section 4.17 which,
pursuant to Section 6.1 must be true and correct as a condition to the
Purchaser's obligation to consummate the transactions contemplated hereby, the
destruction of the World Trade Center on September 11, 2001, and the collapse of
neighboring buildings and market disruptions as a consequence thereof (and any
damage that may have been caused to fiberoptic networks of the Company and its
Restricted Subsidiaries in that area) will not result in a Material Adverse
Effect.
7. CLOSING CONDITIONS TO OBLIGATION OF COMPANY
The Company's obligation to issue or sell the Convertible Notes at the
Closing and consummate the transactions contemplated hereby are subject to the
satisfaction or fulfillment on or prior to the date hereof of the following
conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Article 5 of this Agreement are true
and correct.
7.2 COVENANTS. All covenants and agreements contained in this
Agreement to be performed by the Purchaser on or prior to the Closing Date shall
have been performed or complied with.
7.3 NO ORDERS. No statute, rule, regulation, decree,
preliminary or permanent injunction, temporary restraining order or other order
of any nature of any Governmental Authority shall be in effect that restrains or
prevents the transactions contemplated hereby; PROVIDED, HOWEVER, that in the
case of a decree, injunction or other order, the Company shall have used
reasonable efforts to prevent the entry of any such decree, injunction or other
order and to appeal as promptly as possible any such decree, injunction or other
order.
35
7.4 TRANSACTION DOCUMENTS. Each of the Transaction Documents
shall have been duly and validly executed and delivered by the each of the
parties thereto.
7.5 NO INVESTIGATIONS. There shall not be any pending suit,
action, investigation or proceeding by any Governmental Authority that seeks to
restrain or prohibit the purchase and sale of the Convertible Notes or any of
the other transactions contemplated by this Agreement.
7.6 CONSENTS AND APPROVALS. All consents and approvals of all
Governmental Authorities and all other Persons that are necessary to consummate
the transactions contemplated hereby and for the Company to receive the benefits
contemplated by this Agreement shall have been obtained.
8. INDEMNIFICATION
8.1 INDEMNIFICATION. (a) Subject to the terms and conditions
of this Article 8 and Section 9.9 hereof, the Company agrees to indemnify and
hold the Purchaser and each of its officers, directors and Affiliates harmless
from and against any and all liabilities, obligations, damages, losses,
deficiencies, costs, penalties, interest and expenses (including, without
limitation, reasonable attorneys' fees) (collectively, "LOSSES"), including
those arising from third-party claims, arising out of, based upon, attributable
to or resulting from: (i) the failure of any of the representations or
warranties of the Company set forth in Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.7,
4.8, 4.13, 4.14, 4.15, 4.18, 4.20, 4.21, 4.22 and 4.25 hereof, to be true and
correct as of the Closing Date; and (ii) the breach of any covenant or other
agreement on the part of the Company under the terms of this Agreement or any
Transaction Document, in each case, to the extent not waived by the Purchaser.
(b) Subject to the terms and conditions of this Article 8
and Section 9.9 hereof, the Purchaser agrees to indemnify and hold the Company
and each of its officers, directors and Affiliates harmless from and against any
and all Losses, including those arising from third-party claims, arising out of,
based upon, attributable to or resulting from: (i) the failure of any of the
representations or warranties of the Purchaser set forth in Sections 3.1 through
and including 3.8 hereof, to be true and correct as of the Closing Date; and
(ii) the breach of any covenant or other agreement on the part of the Purchaser
under the terms of this Agreement or any Transaction Document.
8.2 LIMITATIONS ON INDEMNIFICATION FOR BREACHES OF
REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) An Indemnifying Party (as defined below) shall not
have any liability to an Indemnified Party (as defined below) under clause (i)
of Section 8.1(a) hereof or clause (i) of Section 8.1(b) hereof, as the case may
be, unless the aggregate amount of Losses to such Indemnified Party finally
determined to arise thereunder, based upon, attributable to or resulting from
the failure of any representation or warranty to be
36
true and correct, exceeds $750,000 (the "BASKET") and, subject to Section 8.2(b)
below, and in such event, such Indemnifying Party shall only be required to pay
the entire amount of such Losses in excess of the Basket.
(b) The aggregate amount that an Indemnified Party shall
be entitled to recover pursuant to Section 8.1 for any Loss or Losses shall not
exceed $50,000,000.
(c) The amount of an Indemnifying Party's liability under
this Article 8 to an Indemnified Party for any Loss shall be determined by
taking into account any insurance proceeds actually received by such Indemnified
Party with respect to such Loss (after deducting reasonable costs and expenses
incurred in connection with recovery of such proceeds).
(d) Except for claims of fraud or similar claims, the
indemnification provided in this Article 8 shall be the sole and exclusive
remedy after the Closing Date in the case of the Convertible Notes for any
claims for indemnification relating to the subject matter of this Agreement for
which indemnification is available; PROVIDED that nothing contained herein shall
limit rights or remedies expressly provided for in this Agreement or any other
Transaction Document or rights or remedies which, as a matter of applicable law
or public policy, cannot be limited or waived.
8.3 GENERAL INDEMNIFICATION PROCEDURES.
(a) A Person entitled to make a claim for indemnification
under Section 8.1 (an "INDEMNIFIED PARTY") against a party (the "INDEMNIFYING
PARTY") required thereunder to indemnify such Indemnified Party not involving a
claim or action by a third party shall give written notice of the assertion of
such claim covered by such indemnity to the Indemnifying Party, which notice
shall set forth in reasonable detail, the amount of such claim and a description
of the basis for such claim with reference to the provision of this Agreement or
the Transaction Document under which liability is asserted. In the event that
any suit, action or proceedings shall be instituted by any third party or that
any claim or demand shall be asserted by any third party in respect of which
indemnification may be sought under Section 8.1 or 8.2 (a "THIRD-PARTY CLAIM"),
the Indemnified Party shall reasonably promptly cause written notice of the
assertion of such Third Party Claim of which it has knowledge to be forwarded to
the Indemnifying Party. The Indemnifying Party shall have the right, at its sole
option and expense, to be represented by counsel of its choice and to defend
against, negotiate, settle or otherwise take over control and deal with any
Third-Party Claim, and if the Indemnifying Party elects to defend against,
negotiate, settle or otherwise take over control and deal with any Third-Party
Claim, the Indemnifying Party's choice of counsel must be reasonably
satisfactory to the Indemnified Party, and the Indemnifying Party shall within
twenty (20) days of such notice (or sooner, if the nature of the Third-Party
Claim so requires) notify the Indemnified Party of its intent to do so. If the
Indemnifying Party elects not to defend against, negotiate, settle or otherwise
take over control and deal with any Third-Party Claim, fails to notify the
Indemnified Party of its election as herein provided or contests
37
its obligation to indemnify the Indemnified Party for such Losses under this
Agreement, the Indemnified Party may defend against, negotiate, settle or
otherwise deal with such Third-Party Claim; PROVIDED, THAT if the Indemnifying
Party contests its obligations to indemnify the Indemnified Party, and if it is
finally determined that any such Third-Party Claim was not a claim for which
indemnification was available under this Article 8, the Indemnified Party shall
reimburse the Indemnifying Party for any expenses advanced on its behalf;
PROVIDED, FURTHER, that the Indemnified Party shall keep the Indemnifying Party
fully informed of the facts of the Third-Party Claim and the progress of the
defense thereof. If the Indemnified Party defends any Third-Party Claim, then
the Indemnifying Party shall reimburse the Indemnified Party for the reasonable
and documented expenses of defending such Third-Party Claim with respect to
which it is entitled to be indemnified hereunder upon submission of periodic
bills. If the Indemnifying Party shall assume the defense of any Third-Party
Claim, the Indemnified Party may participate, at his, her or its own expense, in
the defense of such Third-Party Claim; PROVIDED, HOWEVER, that such Indemnified
Party shall be entitled to participate in any such defense with separate counsel
at the expense of the Indemnifying Party (as provided above) if (i) so requested
by the Indemnifying Party to participate or (ii) in the reasonable opinion of
counsel to the Indemnified Party, a conflict or potential conflict exists
between the Indemnified Party and the Indemnifying Party that would make such
separate representation advisable; and PROVIDED, FURTHER, that the Indemnifying
Party shall not be required to pay for more than one such counsel for all
Indemnified Parties in connection with any Third-Party Claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Third-Party Claim.
(b) After any final judgment or award shall have been
rendered by a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom, or a
settlement (which is reasonably acceptable to the Indemnifying Party) shall have
been consummated, or the Indemnified Party and the Indemnifying Party shall have
arrived at a mutually binding agreement with respect to a claim for
indemnification under Section 8.1, including any Third-Party Claim, the
Indemnified Party shall forward to the Indemnifying Party notice of any sums due
and owing by the Indemnifying Party pursuant to this Agreement, with respect to
such matter and the Indemnifying Party shall be required to make payment of all
sums so due and owing to such Indemnified Party by wire transfer of immediately
available funds within ten (10) Business Days after the date of such notice.
(c) The failure of the Indemnified Party to give
reasonably prompt notice of any Third-Party Claim shall not release, waive or
otherwise affect the Indemnifying Party's obligations with respect thereto
except to the extent that the Indemnifying Party can demonstrate actual loss and
prejudice as a result of such failure.
8.4 TAX TREATMENT OF INDEMNITY PAYMENTS. The parties agree
that any indemnity payment made pursuant to this Article 8 (an "INDEMNITY
PAYMENT") shall be treated by the parties for all tax purposes as an adjustment
to the Notes Purchase Price.
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9. MISCELLANEOUS
9.1 SUCCESSORS AND ASSIGNS. No party may assign this
Agreement or any of its rights or obligations hereunder to any Person without
the prior written consent of the other party; PROVIDED, HOWEVER, that the
Purchaser may assign its rights and obligations hereunder to any direct or
indirect majority-owned subsidiary of Verizon Communications Inc. to whose board
of directors or comparable governing body Verizon Communications Inc. or one of
its majority-owned subsidiaries appointed a majority of the members; PROVIDED,
that, any such assignee shall agree in writing to be bound hereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Except as provided
in Article 8, nothing in this Agreement shall create or be deemed to create any
third party beneficiary rights in any Person not a party to this Agreement.
9.2 AMENDMENTS; ETC. No amendment, modification, termination,
or waiver of any provision of this Agreement, and no consent to any departure by
a party to this Agreement from any provision of this Agreement, shall be
effective unless it shall be in writing making specific reference hereto and
signed and delivered by each other party to this Agreement, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given.
9.3 ENTIRE AGREEMENT. This Agreement, the other Transaction
Documents, the Old Securities Purchase Agreement, the Equity Registration Rights
Agreement and the Notes Registration Rights Agreement embody the entire
agreement and understanding of the parties and supersede all prior agreements or
understandings with respect to the subject matter thereof.
9.4 FEES, COSTS AND EXPENSES. Except as otherwise provided in
Article 8, all fees, costs and expenses (including attorneys' fees and expenses)
incurred by any party hereto in connection with the preparation, negotiation and
execution of this Agreement and the other Transaction Documents, and the
consummation of the transactions contemplated hereby, shall be the sole and
exclusive responsibility of the Company. In addition, if any other fees or
expenses are paid by the Company in connection with the Affiliate Financing
Documents, the Purchaser shall be entitled to receive fees and expenses on
substantially similar terms.
9.5 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
9.6 GOVERNING LAW. THIS AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH
39
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE PURCHASER AND THE
COMPANY AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS
TO VENUE IN THE FEDERAL OR NEW YORK STATE COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK. SERVICE OF PROCESS ON THE PURCHASER OR THE COMPANY IN
ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTION DOCUMENTS SHALL
BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 9.8
HEREOF.
9.7 WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THE TRANSACTION DOCUMENTS.
9.8 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made and shall be effective (i) upon receipt if delivered personally,
(ii) upon receipt of a transmission confirmation if sent by facsimile (with a
confirming copy sent by overnight courier), and (iii) on the next Business Day
if sent by Federal Express, United Parcel Service, Express Mail or other
reputable overnight courier to the parties at the following addresses (or at
such other address for a party as shall be specified by notice):
If to the Company:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Metromedia Fiber Network, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Purchaser:
Verizon Investments Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Verizon Communications Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Associate General Counsel-Strategic Transactions
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to the Persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
9.9 SURVIVAL. The representations and warranties contained
in Sections 3.1 through and including 3.8 and Sections 4.4, 4.7, 4.13, 4.14,
4.18 and 4.21 hereof, and the applicable obligations of the parties to
indemnify each other pursuant to Section 8.1 hereof, shall survive the
execution, delivery and acceptance hereof by the parties hereto and the
Closing, and any examination or due diligence inquiry by a party hereto,
until October 1, 2002, and the representations and warranties contained in
Sections 4.1, 4.2, 4.3, 4.6, 4.8, 4.15, 4.20, 4.22 and 4.25 shall survive
until the expiration of all applicable statutes of limitation (including any
extensions thereof). Except as set forth in the preceding sentence, no other
representation or warranty in this Agreement shall survive the Closing. All
covenants and agreements contained in this Agreement (which terms do not
include representations and warranties) shall, except as provided in such
covenant or agreement, survive the Closing and shall remain operative and in
full force and effect. The obligations to indemnify and hold harmless a
Person pursuant to Article 8 hereof shall survive only until the expiration
of the applicable survival period referred to above for the representation
and warranty under which the claim for indemnification is being made;
PROVIDED, HOWEVER, that such obligations to indemnify and hold harmless shall
not
41
terminate with respect to any such item as to which an Indemnified Party shall
have, before the expiration of the applicable period, previously made a bona
fide good faith claim by delivering a notice (stating in reasonable detail the
basis of such claim) to the Indemnifying Party.
9.10 SECTION AND OTHER HEADINGS. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
9.11 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
9.12 PUBLICITY. Neither the Purchaser nor the Company shall
issue any press release or make any public disclosure regarding the transactions
contemplated hereby unless such press release or public disclosure is approved
by the other party in advance. Notwithstanding the foregoing, each of the
parties hereto may, in documents required to be filed by it with the SEC or
other regulatory bodies, make such statements with respect to the transactions
contemplated hereby as each may be advised by counsel is legally necessary or
advisable, and may make such disclosure as it is advised by its counsel is
required by law, subject, in any such case, to advance consultation with the
Purchaser.
9.13 REMEDIES. Subject to Section 8.2(d), the Purchaser's
rights and remedies under this Agreement shall be cumulative and nonexclusive of
any other rights and remedies which the Purchaser may have under any other
agreement, including the other Transaction Documents, by operation of law or
otherwise.
[Signatures appear on following page.]
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
METROMEDIA FIBER NETWORK, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President and CEO
VERIZON INVESTMENTS INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
43