EXHIBIT 10.13
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PURCHASE AGREEMENT
among
INTIRA CORPORATION,
as Issuer,
and
THE PURCHASERS NAMED HEREIN
Dated as of January 31, 2000
Relating to:
$188,500,000 Aggregate Principal Amount at Maturity of
13% Senior Discount Notes Due 2010
Series A Warrants to purchase
3,114,160 shares of Common Stock
Series B Warrants to purchase
1,070,160 shares of Common Stock
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TABLE OF CONTENTS
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RECITALS.................................................................. 1
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.01. Definitions..................................................... 2
1.02. Computation of Time Periods..................................... 27
1.03. Accounting Terms................................................ 27
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES; REORGANIZATION
2.01. Authorization of Issue.......................................... 27
2.02. Sale............................................................ 27
2.03. Closing......................................................... 28
2.04. Allocation of Purchase Price.................................... 28
2.05. Reorganization.................................................. 28
SECTION 3
CONDITIONS TO CLOSING
3.01. Representations and Warranties.................................. 29
3.02. Performance; No Default Under Other Agreements.................. 29
3.03. Compliance Certificates......................................... 29
(a) Officers' Certificate..................................... 29
(b) Secretary's Certificate................................... 29
3.04. Opinions of Counsel............................................. 30
3.05. No Adverse Events; No Operations of the Issuer.................. 30
3.07. Proceedings and Documents....................................... 30
3.08. Purchase Permitted by Requirements of Law, etc.................. 30
3.09. Transaction Documents in Force and Effect....................... 30
3.10. No Violation; No Legal Constraints; Consents, Authorizations and
Filings, etc.................................................. 31
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
4.01. Financial Condition.............................................. 32
4.02. No Change........................................................ 33
4.03. Corporate Existence; Compliance with Law......................... 33
4.04. No Legal Bar..................................................... 33
4.05. Litigation....................................................... 33
4.06. No Default....................................................... 33
4.07. Ownership of Property; Liens..................................... 34
4.08. Intellectual Property............................................ 34
4.09. Taxes............................................................ 34
4.10. Federal Regulations.............................................. 34
4.11. Labor Matters.................................................... 34
4.12. ERISA............................................................ 34
4.13. Investment Company Act; Other Regulations........................ 35
4.14. Subsidiaries..................................................... 35
4.15. Use of Proceeds.................................................. 35
4.16. Environmental Matters............................................ 36
4.17. Accuracy of Information, etc..................................... 37
4.18. Solvency......................................................... 37
4.19. Year 2000 Matters................................................ 37
4.20. Capitalization................................................... 37
4.21. Due Authorization, Execution and Delivery........................ 39
(a) Agreement.................................................. 39
(b) Notes and Exchange Notes................................... 39
(c) Exchange and Registration Rights Agreement................. 39
(d) Warrants and Common Stock.................................. 39
(e) Stockholders Agreement..................................... 40
4.22. Private Offering; No Integration or General Solicitation......... 40
4.23. Eligibility for Resale Under Rule 144A........................... 40
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
5.01. Purchase for Investment.......................................... 41
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SECTION 6
COVENANTS TO PROVIDE INFORMATION
6.01. Future Reports to Purchasers..................................... 42
(a) Quarterly Statements....................................... 42
(b) Annual Statements.......................................... 43
(c) Chief Financial Officer Certificates....................... 44
(d) Other Information.......................................... 44
(e) Notice of Default.......................................... 44
(f) Additional Information to Holders of Other Indebtedness.... 44
(g) Original Issue Discount Information........................ 45
(i) Credit Agreement........................................... 45
6.02. Information to be Provided Pursuant to Rule 144A(d)(4)........... 45
SECTION 7
OTHER AFFIRMATIVE COVENANTS
7.01. Payment of Principal, Premium and Interest....................... 45
7.02. Preservation of Corporate Existence and Franchises............... 45
7.03. Maintenance of Properties........................................ 46
7.04. Taxes............................................................ 46
(a) Payment of Taxes........................................... 46
(b) Tax Returns................................................ 46
7.05. Books, Records and Access........................................ 46
7.06. Compliance with Law.............................................. 46
7.07. Insurance........................................................ 46
7.08. Offer to Repurchase upon Change of Control....................... 47
7.09. Offer to Purchase by Application of Excess Proceeds.............. 48
SECTION 8
NEGATIVE COVENANTS
8.01. Stay, Extension and Usury Laws................................... 50
8.02. Restricted Payments.............................................. 50
8.03. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries................................................... 54
8.04. Incurrence of Indebtedness and Issuance of Preferred Stock....... 56
8.05. Asset Sales...................................................... 59
8.06. Transactions with Affiliates..................................... 60
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8.07. Ownership of Opco................................................ 62
8.08. Liens............................................................ 62
8.09. Payments for Consents............................................ 62
8.10. Merger, Consolidation and Sale of Assets......................... 63
8.11. Public Disclosures............................................... 64
8.12. Business Activities.............................................. 64
8.13. Limitations on Sale and Leaseback Transactions................... 64
8.14. Investment Company Act........................................... 64
SECTION 9
PROVISIONS RELATING TO RESALES OF SECURITIES
9.01. Private Offerings................................................ 64
(a) Offers and Sales Only to Institutional Accredited Investors
or Qualified Institutional Buyers.......................... 65
(b) No General Solicitation.................................... 65
(c) Purchases by Non-Bank Fiduciaries.......................... 65
(d) Restrictions on Transfer; Legend........................... 65
(e) No Future Liability........................................ 65
(f) Securities Act Restrictions................................ 66
9.02. Resale Offering Assistance....................................... 67
9.03. Blue Sky Compliance.............................................. 68
9.04. No Integration................................................... 68
9.05. Form of Legend for the Securities................................ 69
SECTION 10
THE NOTES
10.01. Form and Execution............................................... 69
10.02. Terms of the Notes............................................... 70
(a) Stated Maturity............................................ 70
(b) Interest................................................... 70
10.03. Denominations.................................................... 70
10.04. Payments and Computations........................................ 70
10.05. Registration; Registration of Transfer and Exchange.............. 70
(a) Security Register.......................................... 70
(b) Registration of Transfer................................... 71
(c) Exchange................................................... 71
(d) Effect of Registration of Transfer or Exchange............. 71
(e) Requirements; Charges...................................... 71
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(f) Certain Limitations........................................ 71
10.06. Mutilated, Destroyed, Lost and Stolen Notes...................... 71
10.07. Persons Deemed Owners............................................ 72
10.08. Cancellation..................................................... 72
10.09. Home Office Payment.............................................. 72
SECTION 11
EVENTS OF DEFAULT
11.01. Events of Default................................................ 73
11.02. Remedies......................................................... 75
11.03. Waiver of Past Defaults.......................................... 76
SECTION 12
REDEMPTION
12.01. Right of Redemption.............................................. 76
12.02. Partial Redemptions.............................................. 76
12.03. Notice of Redemption............................................. 77
12.04. Deposit of Redemption Price...................................... 77
12.05. Notes Payable on Redemption Date................................. 77
12.06. Notes Redeemed in Part........................................... 78
SECTION 13
EXPENSES, INDEMNIFICATION AND
CONTRIBUTION AND TERMINATION
13.01. Expenses......................................................... 78
13.02. Indemnification.................................................. 78
(a) Indemnification by the Issuer.............................. 78
(b) Indemnification by the Purchasers.......................... 79
(c) Notifications and Other Indemnification Procedures......... 79
13.03. Contribution..................................................... 80
13.04. Survival......................................................... 81
13.05. Termination...................................................... 82
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SECTION 14
MISCELLANEOUS
14.01. Notices.......................................................... 82
14.02. Benefit of Agreement; Assignments and Participations............. 83
14.03. No Waiver; Remedies Cumulative................................... 83
14.04. Amendments, Waivers and Consents................................. 83
14.05. Counterparts..................................................... 84
14.06. Reproduction..................................................... 84
14.07. Headings......................................................... 85
14.08. Governing Law; Submission to Jurisdiction; Venue................. 85
14.09. Severability..................................................... 86
14.10. Entirety......................................................... 86
14.11. Survival of Representations and Warranties....................... 86
14.12. Incorporation.................................................... 86
EXHIBITS
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Exhibit A - Form of Note
Exhibit B - Form of Series A Warrant
Exhibit C - Form of Series B Warrant
Exhibit D - Form of Exchange and Registration Rights Agreement
Exhibit E - Form of Registration Rights and Stockholders Agreement
Exhibit F - Form of Officers' Certificate
Exhibit G - Form of Secretary's Certificate
Exhibit H-1 - Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
Special New York counsel to the Issuer
Exhibit H-2 - Form of Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., General Counsel
of the Issuer
Exhibit H-3 - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC, Missouri counsel to the Issuer
Exhibit I - Certificate of Incorporation and Bylaws
Exhibit J-1 - Voting Agreement
Exhibit J-2 - Voting Agreement Amendment
SCHEDULES
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Schedule A - Information Relating to Purchasers
Schedule 4.01 - Existing Indebtedness
Schedule 4.04 - Environmental
Schedule 4.14 - Subsidiaries
Schedule 4.20 - Capitalization
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of January 31, 2000, by and among INTIRA
CORPORATION, a Delaware corporation (the "Issuer"), and THE PURCHASERS NAMED ON
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THE SIGNATURE PAGES HEREIN (each a "Purchaser" and, collectively, the
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"Purchasers").
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RECITALS
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WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Issuer has agreed to sell to the Purchasers, and each
Purchaser, acting severally and not jointly, has agreed to purchase for
aggregate proceeds of $100,453,535 from the Issuer, an aggregate of (i)
$188,500,000 aggregate principal amount at maturity of the Issuer's 13% Senior
Discount Notes Due 2010 in the form of Exhibit A hereto (as defined herein),
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(ii) Series A Warrants to purchase 3,114,160 shares of Common Stock of the
Issuer (the "Series A Warrants") in the form of Exhibit B hereto and (iii)
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Series B Warrants to purchase 1,070,160 shares of Common Stock of the Issuer
(the "Series B Warrants" and, together with the Series A Warrants, the
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"Warrants" and, together with the Notes, the "Securities") in the form of
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Exhibit C hereto.
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WHEREAS, the holders of the Notes from time to time will be entitled
to the benefits of an Exchange and Registration Rights Agreement, dated the date
hereof (the "Exchange and Registration Rights Agreement"), by and among the
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Issuer and the Purchasers in the form of Exhibit D hereto.
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WHEREAS, the holders of Warrants from time to time will be entitled to
the benefits of the Registration Rights and Stockholders Agreement, dated the
date hereof (the "Stockholders Agreement"), by and among the Issuer, the
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Purchasers and certain stockholders of the Issuer in the form of Exhibit E
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hereto.
WHEREAS, the Issuer has duly authorized the creation and issuance of
the Notes and the Warrants and the execution and delivery of this Agreement and
the Exchange and Registration Rights Agreement.
WHEREAS, all things necessary to make this Agreement, the Notes (when
issued and delivered hereunder), the Warrants, the Exchange and Registration
Rights Agreement and the Stockholders Agreement valid and binding obligations of
the Issuer in accordance with their respective terms have been done.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
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1.01. Definitions. As used herein, the following terms shall have the
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meanings specified herein unless the context otherwise requires:
"Accredited Investor" means any Person that is an "accredited
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investor" within the meaning of Rule 501(a) under the Securities Act.
"Accreted Value" as of any date (the "Specified Date") means, with
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respect to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each a
"Semi-Annual Accreted Date"), the amount set forth opposite such date
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below:
Semi-Annual Accreted Date Accreted Value
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Closing Time $ 532.91
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August 1, 2000 567.35
February 1, 2001 604.23
August 1, 2001 643.51
February 1, 2002 685.33
August 1, 2002 729.88
February 1, 2003 777.32
August 1, 2003 827.85
February 1, 2004 881.66
August 1, 2004 938.97
February 1, 2005 $1,000.00
(ii) if the Specified Date occurs between two Semi-Annual Accreted
Dates, the sum of (A) the Accreted Value for the Semi-Annual Accreted Date
immediately preceding the Specified Date and (B) an amount equal to the
product of (i) the Accreted Value for the immediately following Semi-Annual
Accreted Date less the Accreted Value for the immediately preceding Semi-
Annual Accreted Date and (ii) a fraction, the numerator of which is the
number of days from the immediately preceding Semi-Annual Accreted Date to
the Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180.
"Acquired Debt" means, with respect to any specified Person,
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Indebtedness or Preferred Stock of any other Person existing at the time such
other Person is merged with or into or becomes a Subsidiary of such specified
Person (including by Designation or Revoca-
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tion); provided such Indebtedness or Preferred Stock is not incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person.
"Affiliate" means, with respect to any specified Person: (i) any
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other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person; (ii) any other Person
that owns, directly or indirectly, 10% or more of such specified Person's
Capital Stock or any officer or director of any such specified Person or other
Person or, with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption no more remote than first
cousin; or (iii) any other Person 10% or more of the Voting Stock of which is
beneficially owned or held directly or indirectly by such specified Person. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. With respect to a Purchaser, an
Affiliate shall also include, without limitation, any Person managed or advised
by, or controlling or under common control with, such Purchaser or any of its
Affiliates.
"Affiliate Transaction" is defined in Section 8.06.
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"Asset Acquisition" means (i) any capital contribution (by means of
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transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Issuer or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Issuer or any Restricted Subsidiary,
in either case pursuant to which such Person shall (a) become a Restricted
Subsidiary or (b) be merged with or into the Issuer or any Restricted
Subsidiary, or (ii) any acquisition by the Issuer or any Restricted Subsidiary
of the assets of any Person which constitute substantially all of an operating
unit or line of business of such Person or which is otherwise outside of the
ordinary course of business of the Issuer or any Restricted Subsidiary.
"Asset Sale" means (i) the sale, lease, transfer, conveyance or other
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disposition of any property, asset or right (including, without limitation, by
way of a sale and leaseback) of the Issuer or any Restricted Subsidiary, and
(ii) the issue or sale by the Issuer or any of the Restricted Subsidiaries of
Equity Interests of any Subsidiary. Notwithstanding the foregoing, the
following items shall not be deemed to be Asset Sales: (i) any disposition of
properties and assets of the Issuer subject to Section 8.10; provided that any
properties, assets or rights that are not included in any such dispositions
shall be deemed to have been sold in a transaction constituting an Asset Sale,
(ii) a transfer of properties, assets or rights by the Issuer to a Restricted
Subsidiary or by a Subsidiary to the Issuer or to a Restricted Subsidiary, (iii)
a disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of a Permitted Business of the Issuer and the Restricted
Subsidiaries, (iv) the surrender or
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waiver by the Issuer or any of the Restricted Subsidiaries of contract rights or
the settlement, release or surrender of contract, tort or other claims of any
kind by the Issuer or any of the Restricted Subsidiaries or the grant by the
Issuer or any of the Restricted Subsidiaries of a Lien not prohibited by this
Agreement and in the ordinary course of business, and (v) sales, transfers,
assignments and other dispositions of assets (or related assets in related
transactions) (x) in the ordinary course of business, (y) with an aggregate Fair
Market Value of less than $250,000 in any fiscal year or (z) constituting the
incurrence of a Capital Lease Obligation.
"Asset Sale Offer" is defined in Section 8.05(b).
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"Asset Sale Offer Payment Date" is defined in Section 7.09(b).
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"Average Life to Stated Maturity" means, when applied to any
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Indebtedness at any date of determination, the number of years obtained by
dividing (a) the then outstanding aggregate principal amount of such
Indebtedness into (b) the sum of the total of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) which will elapse between such date and the making of
such payment.
"Bankruptcy Law" means Title 11 of the United States Code, as amended
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from time to time, or any similar federal, state or foreign bankruptcy,
insolvency, reorganization or other law for the relief of debtors.
"Board of Directors" means the board of directors or other governing
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body of the Issuer or, if the Issuer is owned or managed by a single entity, the
board of directors or other governing body of such entity, or, in either case,
any committee thereof duly authorized to act on behalf of such board or
governing body.
"Board Resolution" means a duly authorized resolution of the Board of
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Directors.
"Business Day" means any day other than a Legal Holiday.
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"Capital Lease Obligation" means, at the time any determination
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thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
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stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited)
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and (iv) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) marketable
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direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition; (iii) certificates of deposit, time deposits, eurodollar
time deposits or overnight bank deposits having maturities of six months or less
from the date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500 million; (iv) commercial
paper of an issuer related at least A-1 by Standard & Poor's Ratings Service
("S&P") or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), or carrying an
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equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (v)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (iii) of this definition, having a term of not more than
30 days, with respect to securities issued or fully guaranteed or insured by the
United States Government; (vi) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth, territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or a by Moody's; (vii) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any Lender under the Credit Agreement or any commercial bank
satisfying the requirements of clause (iii) of this definition; (viii) shares of
money market mutual or similar funds which invest in assets 95% of which satisfy
the requirements of clauses (i) through (vii) of this definition; or (ix)
investments in instruments described in a corporate investment policy which has
been approved in writing by the required lenders under the Credit Agreement, as
in effect at the Closing Time; provided that with respect to any Foreign
Subsidiary, Cash Equivalents shall also mean those investments that are
comparable to clauses (i) through (vii) above in such Foreign Subsidiary's
country of organization or country where it conducts business operations.
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended from time to time, 42 U.S.C. (S) 9601 et
seq.
"Change of Control" means the occurrence of any of the following: (i)
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any "person" or "group," other than any Permitted Holder, is or becomes the
"beneficial owner" (as such terms are used in Section 13(d)(3) of the Exchange
Act, except that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the voting or economic power represented by all of
the
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outstanding Common Stock (treating convertible preferred stock as converted for
this purpose) of the Issuer, (ii) during any period of two consecutive years,
Continuing Directors cease for any reason to constitute a majority of the Board
of Directors of the Issuer, (iii) the Issuer consolidates or merges with or into
any other Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the assets to any other Person, other
than any Permitted Holder, other than a consolidation or merger or disposition
of assets (a) of or by the Issuer into, with or to a Restricted Subsidiary or
(b) pursuant to a transaction in which the outstanding Common Stock (treating
convertible preferred stock as converted for this purpose) of the Issuer is
changed into or exchanged for securities or other property with the effect that
the beneficial owners of such outstanding Equity Interests of the Issuer
immediately prior to such transaction, beneficially own, directly or indirectly,
at least a majority of the voting or economic power represented by all of the
outstanding Common Stock (treating convertible preferred stock as converted for
this purpose) of the surviving corporation or the Person to whom the Issuer's
assets are transferred immediately following such transaction, or (c) of or by
the Issuer into, with or to any Permitted Holder, or (iv) the adoption of a plan
relating to the liquidation or dissolution of the Issuer.
"Change of Control Offer" is defined in Section 7.08(a).
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"Change of Control Payment" is defined in Section 7.08(a).
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"Change of Control Payment Date" is defined in Section 7.08(b).
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"Closing Time" is defined in Section 2.03.
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"Code" means the Internal Revenue Code of 1986, as amended from time
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to time, and the rules and regulations promulgated thereunder, as amended from
time to time.
"Commission" means the Securities and Exchange Commission, as from
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time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Agreement such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the body
performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
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interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such Person's common stock whether or not
outstanding at the Closing Time, and includes, without limitation, all series
and classes of such common stock.
"Commonly Controlled Entity" means an entity, whether or not
--------------------------
incorporated, that is under common control with the Issuer within the meaning of
Section 4001 of ERISA or is part of a group that includes the Issuer and that is
treated as a single employer under Section 414 of the Code.
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"Consolidated" or "consolidated" (including the correlative term
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"consolidating") or on a "consolidated basis," when used with reference to any
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financial term in this Agreement (but not when used with respect to any Tax
Return or tax liability), means the aggregate for two or more Persons of the
amounts signified by such term for all such Persons, with intercompany items
eliminated and, with respect to net income or earnings, after eliminating the
portion of net income or earnings properly attributable to minority interests,
if any, in the Capital Stock of any such Person or attributable to shares of
preferred stock of any such Person not owned by any other such Person, in
accordance with GAAP.
"Consolidated Cash Flow" means, with respect to the Issuer for any
----------------------
period, the Consolidated Net Income of the Issuer and the Restricted
Subsidiaries for such period plus (A) to the extent that any of the following
items were deducted in computing such Consolidated Net Income, but without
duplication, (i) provision for taxes based on income or profits of the Issuer
and the Restricted Subsidiaries for such period, plus (ii) Consolidated Interest
Expense for such period, plus (iii) depreciation, amortization (including
amortization of goodwill and other intangibles, but excluding amortization of
prepaid cash expenses that were paid in a prior period), and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of the Issuer and the
Restricted Subsidiaries for such period, minus (B) non-cash items increasing
such Consolidated Net Income for such period (other than items that were accrued
in the ordinary course of business), in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Restricted Subsidiary of the
Issuer shall be added to Consolidated Net Income to compute Consolidated Cash
Flow of the Issuer only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended or otherwise distributed
to the Issuer by such Restricted Subsidiary without prior governmental approval
(that has not been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees and Requirements of Law applicable to that Restricted Subsidiary or its
stockholders.
"Consolidated Interest Expense" means, for any period, without
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duplication, the sum of (a) the interest expense of the Issuer and the
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (i) any amortization of
debt discount attributable to such period, (ii) the net cost under or otherwise
associated with Hedging Obligations (in each case, including any amortization of
discounts), (iii) the interest portion of any deferred payment obligation, (iv)
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and (v) all capitalized
interest and all accrued interest, (b) all but the principal component of
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by the Issuer and the Restricted Subsidiaries during such period and as
determined on a consolidated basis in accordance with GAAP and (c) all dividends
paid or scheduled to be
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paid on Disqualified Stock of the Issuer and all dividends paid, accrued and/or
scheduled to be paid or accrued on Disqualified Stock of any Restricted
Subsidiary during such period in accordance with GAAP.
"Consolidated Leverage Ratio" means, with respect to the Issuer, as of
---------------------------
any date, the ratio of (i) the aggregate consolidated amount of Indebtedness of
the Issuer and the Restricted Subsidiaries then outstanding to (ii) the
Consolidated Cash Flow of the Issuer and the Restricted Subsidiaries for the
most recently ended fiscal quarter multiplied by four. For purposes of
calculating "Consolidated Cash Flow" for any fiscal quarter for purposes of this
definition (i) any Subsidiary of the Issuer that is a Restricted Subsidiary on
the Transaction Date shall be deemed to have been a Restricted Subsidiary at all
times during such fiscal quarter and (ii) any Subsidiary of the Issuer that is
not a Restricted Subsidiary on the Transaction Date shall be deemed not to have
been a Restricted Subsidiary at any time during such fiscal quarter. In
addition to and without limitation of the foregoing, for purposes of this
definition, "Consolidated Cash Flow" shall be calculated after giving effect on
a pro forma basis for the applicable fiscal quarter to, without duplication, any
Asset Sale, Asset Acquisition or Restricted Investment (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Issuer or one of the Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Debt) occurring during the period commencing on the first day of such fiscal
quarter to and including the Transaction Date, as if such Asset Sale, Asset
Acquisition or Restricted Investment occurred on the first day of such fiscal
quarter.
"Consolidated Net Income" means, with respect to the Issuer for any
-----------------------
period, the aggregate of the Net Income of the Issuer and the Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the Issuer or
a Restricted Subsidiary thereof by such Person but not in excess of the Issuer's
Equity Interests in such Person, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, or Requirement of Law, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, except that the
Issuer's equity in the net income of any such Restricted Subsidiary for such
period may be included in such Consolidated Net Income (A) up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Issuer as a dividend or as a loan or other advance and
(B) if the only restriction on the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary is a restriction of the type
described in Section 8.03(B)(ii),
-8-
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iv) the equity of the Issuer or any Restricted Subsidiary in the Net
Income (if positive) of any Unrestricted Subsidiary shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Unrestricted Subsidiary during such period to the Issuer or such
Restricted Subsidiary as a dividend or other distribution (but not in excess of
the amount of the Net Income of such Unrestricted Subsidiary for such period),
(v) the cumulative effect of a change in accounting principles shall be
excluded, (vi) all extraordinary, unusual or nonrecurring gains or losses (net
of fees and expenses relating to the transaction giving rise thereto) shall be
excluded, (vii) any gain or loss, net of taxes, realized upon the termination of
any employee pension benefit plan shall be excluded, and (viii) gains or losses
in respect of any Asset Sales (net of fees and expenses relating to the
transaction giving rise thereto) shall be excluded.
"Consolidated Tangible Assets" of the Issuer as of any date means the
----------------------------
total amount of assets of the Issuer and the Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) unamortized debt and debt issuance expenses, deferred charges, goodwill,
patents, trademarks, copyrights, and all other items which would be treated as
intangibles on the consolidated balance sheet of the Issuer and the Restricted
Subsidiaries prepared in accordance with GAAP and (ii) appropriate adjustments
on account of minority interests of other Persons holding equity investments in
Restricted Subsidiaries, in the case of each of clauses (i) and (ii) above, as
reflected on the consolidated balance sheet of the Issuer and the Restricted
Subsidiaries.
"Continuing Directors" means individuals who at the beginning of the
--------------------
period of determination constituted the Board of Directors, together with any
new directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Issuer was approved by a vote of a majority
of the directors of the Issuer then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved or is the designee of any Permitted Holder or any
stockholder (or its affiliates) existing at the Closing Time or any combination
thereof or was nominated or elected by any Permitted Holder or any stockholder
(or its affiliates) existing at the Closing Time or any of its designees.
"Contractual Obligation" means as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Controlling Person" is defined in Section 13.02(a).
------------------
"Credit Agreement" means the Credit Agreement dated as of December 30,
----------------
1999 among Intira Corporation and certain subsidiaries of Intira Corporation, as
guarantors, The Chase Manhattan Bank, as administrative agent, and the other
financial institutions from
-9-
time to time party thereto, together with the related documents (including
guarantees and security agreements), in each case as such agreements may be
amended, supplemented or modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring all
or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent or group of
creditors.
"Cumulative Consolidated Cash Flow" means, as of any date of
---------------------------------
determination, the cumulative Consolidated Cash Flow realized during the period
commencing on January 1, 2000 and ending on the last day of the last fiscal
quarter for which reports have been filed with the Commission or provided to the
Purchasers pursuant to Section 6.01 preceding the date of the event requiring
such calculation to be made.
"Currency Agreement" means, with respect to any Person, any foreign
------------------
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or beneficiary.
"Customer Contract" means any agreement entered into in the ordinary
-----------------
course of business between the Issuer or any of the Restricted Subsidiaries and
a customer whereby the Issuer or the Restricted Subsidiary agrees to provide
netsourcing or similar ancillary or related services to such customer and such
customer agrees to pay for such services, including, without limitation, the
obligation to purchase the computer and communications equipment dedicated to
the exclusive use of such customer in connection with the netsourcing services
and/or the obligation to pay a termination fee in certain circumstances.
"Debt Securities" means any debt securities issued by the Issuer or
---------------
any Subsidiary or Affiliate of the Issuer in a public offering or a private
placement.
"Default" means an Event of Default or any event, act or condition
-------
that is, or with the giving of notice, lapse of time or both would constitute,
an Event of Default.
"Default Amount" means, with respect to a Note, (i) prior to February
--------------
1, 2005, the Accreted Value of such Note as of the payment date, and (ii) on or
after February 1, 2005, the principal amount at maturity of such Note, plus, in
the case of clause (ii), accrued and unpaid interest thereon, if any, to the
payment date and, in the case of clauses (i) and (ii), Special Interest, if any,
to the payment date.
"Demand Registration Statement" is defined in the Exchange and
-----------------------------
Registration Rights Agreement.
"Designation" is defined in Section 8.02(C).
-----------
"Designation Amount" is defined in Section 8.02(C).
------------------
-10-
"Disinterested Director" means, with respect to any transaction or
----------------------
series of related transactions, a member of the Board of Directors who does not
have any material direct or indirect financial interest in or with respect to
such transaction or series of related transactions.
"Disqualified Stock" means any Equity Interest that, by its terms (or
------------------
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to February 1, 2010; provided that any
Equity Interest that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Issuer to repurchase such Equity
Interest upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock if the terms of such Equity Interest provide that
the Issuer may not repurchase or redeem such Equity Interest pursuant to such
provisions unless such repurchase or redemption complies with Section 8.02.
"Enforceability Exceptions" means, with respect to any specified
-------------------------
obligation, any limitations on the enforceability of such obligation due to
bankruptcy, insolvency, reorganization, moratorium, and other similar laws of
general applicability relating to or affecting creditors' rights or general
equity principles (other than, in any such case, any Federal or state laws
relating to fraudulent transfers) and, in the case of any indemnity for
securities law obligations, to the extent such indemnity may not be enforceable
due to public policy considerations.
"Environmental Laws" means any and all foreign, Federal, state, local
------------------
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating or imposing liability or standards
of conduct concerning protection of human health or the environment, as now or
may at any time hereafter be in effect.
"Equity Interests" means Capital Stock and all warrants, options or
----------------
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Event of Default" is defined in Section 11.01.
----------------
"Excess Proceeds" is defined in Section 8.05(a).
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated by the Commission thereunder.
-11-
"Exchange and Registration Rights Agreement" is defined in the second
------------------------------------------
recital to this Agreement.
"Exchange Notes" means the notes issued in the Exchange Offer.
--------------
"Exchange Offer" is defined in the Exchange and Registration Rights
--------------
Agreement.
"Exchange Offer Registration Statement" is defined in the Exchange and
-------------------------------------
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Issuer and the
---------------------
Restricted Subsidiaries in existence at the Closing Time.
"Fair Market Value" means, with respect to any asset or property, the
-----------------
price which could be negotiated in an arm's-length free market transaction, for
cash, between an informed and willing seller and an informed and willing buyer
neither of which is under pressure or compulsion to buy. Fair Market Value
shall be determined conclusively by the Board of Directors acting in good faith
evidenced by a board resolution thereof.
"Foreign Subsidiary" means any Restricted Subsidiary of the Issuer
------------------
which is not organized under the laws of the United States, any state thereof or
the District of Columbia.
"GAAP" means, at any date of determination, generally accepted
----
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"Governmental Authority" means (a) the government of the United States
----------------------
or any State or other political subdivision thereof, (b) any government or
political subdivision of any other jurisdiction in which the Issuer or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Issuer or any Subsidiary, or (c) any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any such government.
"guarantee" means any obligation, contingent or otherwise, of any
---------
Person directly or indirectly guaranteeing any Indebtedness of any other Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not
-12-
include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" means, with respect to any Person, the
-------------------
obligations of such Person under any Interest Rate Agreement or Currency
Agreement.
"Holder" means a Person in whose name a Note is registered on the
------
Security Register.
"incur" is defined in Section 8.04(a).
-----
"Indebtedness" means, with respect to any Person, any indebtedness of
------------
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance of the deferred and
unpaid purchase price of any property or representing any Hedging Obligations or
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing (other than letters of credit (or reimbursement agreements in respect
thereof), banker's acceptances and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
as well as all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right to be secured by) a Lien on any asset
(including, without limitation, accounts and contract rights) of such Person
(whether or not such Indebtedness is assumed by such Person or is not otherwise
such Person's legal liability), Disqualified Stock of such Person and Preferred
Stock of such Person's Restricted Subsidiaries and, to the extent not otherwise
included, the guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be the accreted
value thereof, in the case of any Indebtedness issued with original issue
discount, but the accretion of original issue discount in accordance with the
original terms of Indebtedness issued with an original issue discount will not
be deemed to be an incurrence. Notwithstanding the foregoing, money borrowed
and set aside at the time of the incurrence of any Indebtedness in order to
prefund the payment of interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the payment of such
interest.
"Indemnified Person" is defined in Section 13.02(c).
------------------
"Independent Financial Advisor" means an accounting, appraisal or
-----------------------------
investment banking firm which is nationally recognized within the United States
of America (i) which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in the Issuer or
any of its Subsidiaries or Affiliates and (ii) which, in the judgment of the
Board of Directors, is otherwise independent and qualified to perform the task
for which it is to be engaged.
-13-
"Institutional Accredited Investors" is defined in Section 9.01(a).
----------------------------------
"Intellectual Property" means all rights, priorities and privileges
---------------------
relating to intellectual property, whether arising under United States,
multinational or foreign laws or otherwise, including copyrights, copyright
licenses, patents, patent licenses, trademarks, trademark licenses, Internet
domain names, d/b/a's, logos, tradenames, technology, know-how and processes,
and all rights to ▇▇▇ at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"interest," when used with respect to any Note, means the amount of
--------
all interest accruing on such Note, including Special Interest payable on the
Notes pursuant to the Exchange and Registration Rights Agreement and all
interest accruing subsequent to the occurrence of any events specified in
Sections 11.01(viii) and (ix) hereof or which would have accrued but for any
such event, whether or not such claims are allowable under applicable law.
"Interest Payment Date" is defined in Exhibit A.
---------------------
"Interest Rate Agreements" means, with respect to any Person, any
------------------------
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement to which such Person is a party or
beneficiary.
"Investment" means, with respect to any Person, all investments by
----------
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to directors, officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Issuer or any of the Restricted Subsidiaries sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary, the Issuer shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in Section 8.02(E). The issuance of
Equity Interests (other than Disqualified Stock) of the Issuer as consideration
for any interest that would otherwise constitute an Investment will not
constitute an "Investment."
"IPO Liquidity Event" means the consummation of an initial public
-------------------
offering of Common Stock of the Issuer (or of any parent company to the extent
the proceeds thereof are contributed to the Issuer as common equity) for gross
proceeds of $50.0 million or more.
-14-
"Issuer" is defined in the preamble to this Agreement and its
------
successors and assigns.
"Issuer Indemnified Person" is defined in Section 13.02(b).
-------------------------
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in The City of New York or San Francisco, California or at a place
of payment are authorized by law, regulation or executive order to remain
closed. If any payment date in respect of the Notes is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in, and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Make-Whole Call Premium" means, with respect to each Note at any date
-----------------------
of redemption, the excess, if any, of (a) the present value of the sum of the
Accreted Value and premium that would be payable on such Note on February 1,
2005, discounted on a semi-annual bond equivalent basis from such date of
redemption to February 1, 2005 at a per annum interest rate equal to the sum of
the Treasury Yield (determined on the Business Day immediately preceding the
date of such redemption) plus 50 basis points, over (b) the Accreted Value of
the Note being redeemed.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, management, operations, condition (financial or otherwise) or assets
of the Issuer and its Subsidiaries taken as a whole, (b) the ability of the
Issuer or any Subsidiary to perform any of its material obligations under any of
the Transaction Documents, or (c) the validity or enforceability of any
Transaction Document, other than, in the case of clause (a), any effect arising
from any matter disclosed in writing to the Purchasers on or prior to the date
hereof.
"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Maturity" means, when used with respect to any Note, the date on
--------
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise (including in connection with any offer to purchase
that this Agreement requires the Issuer to make).
-15-
"Multiemployer Plan" shall mean a multiemployer plan within the
------------------
meaning of Section 4001(a)(3) of ERISA (i) to which any Commonly Controlled
Entity is then making or accruing an obligation to make contributions, (ii) to
which any Commonly Controlled Entity has within the preceding five plan years
made contributions, including any Person which ceased to be an ERISA Entity
during such five year period, or (iii) with respect to which the Issuer or any
of its Subsidiaries could incur liability.
"Net Cash Proceeds" means the aggregate amount of cash or Cash
-----------------
Equivalents received by the Issuer in the case of a sale or capital contribution
in respect of Capital Stock and by the Issuer and the Restricted Subsidiaries in
respect of an Asset Sale plus, in the case of an issuance of Capital Stock upon
any exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Issuer that were issued for
cash on or after the Closing Time, the amount of cash originally received by the
Issuer upon the issuance of such securities (including options, warrants, rights
and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and reasonable and customary expenses (including,
without limitation, the fees and expenses of legal counsel and investment
banking fees and expenses) incurred in connection with such Asset Sale or sale
of Equity Interests, and, in the case of an Asset Sale only, less the amount
(estimated reasonably and in good faith by the Issuer) of income, franchise,
sales and other applicable federal, state, provincial, foreign and local taxes
required to be paid or accrued as a liability by the Issuer or any of its
respective Restricted Subsidiaries in connection with such Asset Sale in the
taxable year that such sale is consummated or in the immediately succeeding
taxable year, the computation of which shall take into account the reduction in
tax liability resulting from any available operating losses and net operating
loss carryovers, tax credits and tax credit carryforwards, and similar tax
attributes.
"Net Income" means, with respect to any Person, the net income (loss)
----------
of such Person, determined in accordance with GAAP and before any reduction with
respect to any preferred stock dividends.
"Note Liquidity Event" means the effectiveness of any registration
--------------------
with respect to the Notes or the Exchange Notes under the provisions of the
Exchange and Registration Rights Agreement.
"Notes" means the securities that are issued under this Agreement, as
-----
amended or supplemented from time to time pursuant to this Agreement.
"Obligations" means any principal, premium, interest, Special
-----------
Interest, charge, expense, fee, attorneys' fees and disbursements, indemnities
and other liabilities payable by the Issuer or any of the Restricted
Subsidiaries under or in respect of this Agreement or the Notes.
"Offer Amount" is defined in Section 7.09(b).
------------
-16-
"Officer" means, with respect to any Person, the President, Chief
-------
Executive Officer or the Chief Financial Officer of such Person.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Officers of such Person; provided, however, that every
Officers' Certificate with respect to compliance with a covenant or condition
provided for in this Agreement shall include (i) a statement that the Officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such term or condition
has been satisfied or complied with or the certifications required to be made
therein are complete and accurate, (iii) a statement as to whether, in the
opinion of the signers, such condition has been complied with and (iv) all other
statements and determinations required by the related terms and conditions of
this Agreement giving rise to the delivery of such Officers' Certificate.
"Opco" is defined in the definition of "Reorganization."
----
"outstanding" means, when used with respect to the Notes as of the
-----------
date of determination, all Notes theretofore executed and delivered under this
Agreement, except:
(i) Notes theretofore canceled by the Issuer or delivered to the
Issuer for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore set aside by the Issuer with a third party in
trust for the holders of such Notes; provided that if such Notes are to be
redeemed, notice of such redemption has been duly given as provided in this
Agreement; and
(iii) Notes which have been paid pursuant to Section 10.08 or in
exchange for or in lieu of which other Notes have been executed and
delivered pursuant to this Agreement, other than any such Notes in respect
of which there shall have been presented to the Issuer proof satisfactory
to it that such Notes are held by a bona fide purchaser in whose hands such
Notes are valid obligations of the Issuer;
provided that in determining whether the Holders of the requisite principal
amount at maturity of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Issuer or any other obligor upon the Notes or any Affiliate of the Issuer or
of such other obligor shall be disregarded and deemed not to be outstanding.
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Required
Holders the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer or any other obligor upon the Notes or any Affiliate
of the Issuer or of such other obligor.
-17-
"Pari Passu Indebtedness" means any Indebtedness of the Issuer which
-----------------------
ranks pari passu in right of payment with the Notes.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permits" means all licenses, permits, certificates of need, approvals
-------
and authorizations from all Governmental Authorities required to lawfully
conduct a business as presently conducted.
"Permitted Business" means the provision of netsourcing services which
------------------
include and are not limited to the selling, marketing and provision of data
management services using geographically located data centers, public and
private network services, security and monitoring services, streaming services,
e-commerce services, storage and disaster recovery services, professional
services, collocation services and hosting services (including, without
limitation, all business activities of the Issuer and its Subsidiaries as of the
Closing Time), together with any other activity reasonably related thereto.
"Permitted Credit Facility" means the Credit Agreement and any other
-------------------------
senior commercial term loan and/or revolving credit facility (including any
letter of credit subfacility) entered into principally with commercial banks
and/or other Persons typically party to commercial loan agreements.
"Permitted Holders" means Ascend Communications, Inc. and its
-----------------
Affiliates.
"Permitted Investments" means (a) any Investment in the Issuer or in a
---------------------
Restricted Subsidiary of the Issuer that is engaged entirely or substantially
entirely in a Permitted Business; (b) any Investment in Cash Equivalents; (c)
any Investment by the Issuer or any of the Restricted Subsidiaries in a Person,
if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Issuer or a Restricted Subsidiary; (d) loans or advances to
employees of the Issuer or any Subsidiary of the Issuer in an amount not to
exceed $1.0 million at any time outstanding for relocation or other matters
related to the business of the Issuer and the Restricted Subsidiaries; (e) loans
or advances to employees of the Issuer or any Subsidiary of the Issuer to
finance the purchase of Equity Interests in the Issuer to the extent the
proceeds thereof are not included in the calculation of amounts under Section
8.02(C); (f) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale made in compliance with Section 8.05; (g)
Investments in securities of trade creditors or customers received pursuant to
any plan of reorganization or similar arrangement arising out of the bankruptcy
or insolvency of such trade creditors or customers; and (h) Investments in
Hedging Obligations entered into in compliance with Section 8.04(b)(viii).
-18-
"Permitted Liens" means (i) Liens to secure Indebtedness (other than
---------------
Debt Securities) permitted by Sections 8.04(b)(iv) through (ix) and permitted
refinancings thereof; (ii) Liens on assets of any Restricted Subsidiary (or of
the Issuer to the extent that, following the holding company reorganization,
such Liens will extend solely to assets of a Restricted Subsidiary) to secure
Indebtedness (other than Debt Securities) permitted to be incurred by any
Restricted Subsidiary (or the Issuer to the extent that, following the holding
company reorganization, such Indebtedness will be retained solely by a
Restricted Subsidiary) under such covenant; (iii) Liens in favor of the Issuer
or any Restricted Subsidiary; (iv) Liens on property of a Person existing at the
time such Person is merged with or into or consolidated with the Issuer or any
of the Restricted Subsidiaries; provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Issuer or such Restricted Subsidiary; (v) Liens on property existing at the time
of acquisition thereof by the Issuer or any of the Restricted Subsidiaries;
provided that such Liens were in existence prior to the contemplation of such
acquisition; (vi) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vii) Liens existing at the Closing
Time; (viii) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (ix) zoning restrictions, rights-of-way,
easements and similar charges or encumbrances incurred in the ordinary course
which in the aggregate do not detract from the value of the property thereof;
(x) Liens to secure Indebtedness to the extent on proceeds from the incurrence
of such Indebtedness and granted principally to secure the payment of interest
on such Indebtedness; and (xi) additional Liens incurred in the ordinary course
of business of the Issuer or any of the Restricted Subsidiaries with respect to
obligations that do not exceed 5% of the Issuer's Consolidated Tangible Assets
at any one time outstanding and that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Issuer or such Restricted
Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
----------------------------------
Issuer or any of the Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of the Issuer or any of the Restricted Subsidiaries
(including Indebtedness outstanding at the Closing Time, but other than
Indebtedness incurred pursuant to clause (iii), (iv), (viii) or (ix) of Section
8.04(b)); provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of any premium required to be paid in
-19-
connection with such refinancing pursuant to the terms of such Indebtedness or
otherwise reasonably determined by the Issuer to be necessary and reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is expressly subordinated in right of payment to the Notes on terms
at least as favorable to the Holders as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) if such Permitted Refinancing Indebtedness
refinances Indebtedness of the Issuer incurred under clause (i) of Section
8.04(b), such Permitted Refinancing Indebtedness is incurred by the Issuer.
"Person" means any individual, corporation (including, without
------
limitation, a business trust, professional corporation and insurance company),
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof or any other legally recognizable entity.
"Plan" means, at a particular time, any employee benefit plan that is
----
covered by ERISA and in respect of which the Issuer or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Predecessor Note" of any particular Note means every previous Note
----------------
evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"Preferred Stock" means any Capital Stock of any class or classes of a
---------------
Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Capital Stock of
any other class of such Person.
"Private Offering" is any offering by any of the Purchasers of some or
----------------
all of the Securities that are Registrable Securities without registration under
the Securities Act.
"Properties" is defined in Section 4.16(a).
----------
"property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Public Equity Offering" means an underwritten public offering of
----------------------
Common Stock (other than Disqualified Stock) of the Issuer made pursuant to a
registration statement filed with the Commission under the Securities Act.
-20-
"Purchase Money Indebtedness" means Indebtedness (including Acquired
---------------------------
Debt, in the case of Capital Lease Obligations, mortgage financings and purchase
money obligations) incurred for the purpose of financing all or any part of the
cost of the engineering, construction, installation, importation, acquisition,
lease, development or improvement of any assets used or to be used by the Issuer
or any Restricted Subsidiary, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as the same may be amended, supplemented, modified or restated from
time to time. The Issuer in its reasonable discretion shall determine whether
any item of Indebtedness or portion thereof meeting the foregoing criteria shall
be classified as Purchase Money Indebtedness for the purposes of Section 8.04.
"Purchase Price" is defined in Section 2.02.
--------------
"Purchaser Indemnified Person" is defined in Section 13.02(a).
----------------------------
"Purchasers" is defined in the preamble to this Agreement.
----------
"Qualified Consideration" means all assets, rights (contractual or
-----------------------
otherwise) and properties, whether tangible or intangible, used or intended for
use in a Permitted Business and the Equity Interests of a Person that will
become a Restricted Subsidiary engaged principally in a Permitted Business.
"Qualified Equity Interests" of any Person means any and all Equity
--------------------------
Interests of such Person other than Disqualified Stock.
"Qualified Institutional Buyer" means any Person that is a "qualified
-----------------------------
institutional buyer" within the meaning of Rule 144A.
"Redemption Date" means, when used with respect to any Note to be
---------------
redeemed, the date fixed for such redemption by or pursuant to this Agreement.
"Redemption Price," when used with respect to any Note to be redeemed,
----------------
means the price at which it is to be redeemed pursuant to this Agreement and the
Notes.
"Registrable Securities" means the Securities and any other securities
----------------------
issued or issuable in exchange for the Securities. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (c) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Issuer and
subsequent disposition of them shall not require registration or qualification
of
-21-
them under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
"Registration Default" is defined in the Exchange and Registration
--------------------
Rights Agreement.
"Regular Record Date" is defined in Section 10.04.
-------------------
"Regulation S" means Regulation S under the Securities Act (or any
------------
successor provision), as it may be amended from time to time.
"Reorganization" means any transaction or series of transactions,
--------------
whether involving a merger, transfer of assets or other transaction, entered
into with purpose and with the effect of creating a holding company organized
under the laws of the United States or any state thereof to own 100% of the
issued and outstanding Equity Interests of a corporation ("Opco") that directly
----
or indirectly owns all of the businesses and assets of the Issuer immediately
preceding such transaction or series of transactions (other than any business or
assets retained by the new holding company); provided that the Issuer elects to
treat such transaction or series of transactions as the "Reorganization".
"Reportable Events" means any of the events set forth in Section
-----------------
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. (S) 4043.
"Required Holders" means Holders of more than 50% of the aggregate
----------------
principal amount at maturity of outstanding Notes and Exchange Notes.
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Resale Materials" is defined in Section 9.02(b).
----------------
"Resale Registration Statement" is defined in Exhibit A.
-----------------------------
"Restricted Investment" means any Investment that is not a Permitted
---------------------
Investment.
"Restricted Payments" is defined in Section 8.02(A).
-------------------
"Restricted Subsidiary" of a Person means any Subsidiary of the
---------------------
referent Person that is not an Unrestricted Subsidiary.
-22-
"Revocation" is defined in Section 8.02(D).
----------
"Rule 144" means Rule 144 under the Securities Act (or any successor
--------
provision), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
---------
provision), as it may be amended from time to time.
"San Francisco Data Center" means the computer and communications
-------------------------
equipment operations center expected to be located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and
other executive and employee office space to be located in or around the San
Francisco metropolitan area.
"Securities" is defined in the first recital to this Agreement.
----------
"Securities Act" mean the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated by the Commission thereunder.
"Security" means any of the Notes or the Warrants.
--------
"Security Register" has the meaning given to such term in Section
-----------------
10.05(a).
"Series A Preferred Stock" means the Series A Preferred Stock, no par
------------------------
value, of the Issuer outstanding as of the Closing Time, the terms of which are
reflected in Exhibit I.
---------
"Series A Warrants" is defined in the first recital to this Agreement.
-----------------
"Series B Warrants" is defined in the first recital to this Agreement.
-----------------
"Shelf Registration Statement" is defined in the Exchange and
----------------------------
Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
----------------------
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect at
the Closing Time.
"Single Employer Plan" means any Plan that is covered by Title IV of
--------------------
ERISA, but that is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of the date of any
-------
determination, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (b) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (c) such Person is not
en-
-23-
gaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed as the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Special Interest" is defined in the Exchange and Registration Rights
----------------
Agreement.
"Stated Maturity" means, with respect to any installment of interest
---------------
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders Agreement" has the meaning specified in the third
----------------------
recital to this Agreement.
"Subordinated Indebtedness" means Indebtedness of the Issuer that is
-------------------------
subordinated in right of payment by its terms or the terms of any document or
instrument or instrument relating thereto to the Notes.
"Subsequent Purchaser" is defined in Section 4.22(a).
--------------------
"Subsidiary" means, with respect to any Person, (i) any corporation,
----------
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Tax Returns" means all returns, declarations, reports, estimates,
-----------
information returns and statements required to be filed in respect of any Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes, charges,
-----
fees, imposts, levies or other assessments, including, without limitation, all
net income, alternative minimum, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise,
-24-
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to tax or other
additional amounts imposed by any taxing authority in connection with any item
described in clause (i) and (iii) all transferee, successor, joint and several
or contractual liability (including, without limitation, liability pursuant to
Treas. Reg. (S) 1.1502-6 (or any similar state, local or foreign provision)) in
respect of any items described in clause (i) or (ii).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb) as in effect on the date on which the indenture is qualified under the
TIA.
"Total Incremental Equity" means, at any date of determination, the
------------------------
sum of, without duplication, (a) the aggregate Net Cash Proceeds and Fair Market
Value of any other consideration received by the Issuer from the issue and sale
(other than to a Restricted Subsidiary) by the Issuer of its Qualified Equity
Interests after the Closing Time, plus (b) the aggregate Net Cash Proceeds and
Fair Market Value of any other consideration received by the Issuer or any
Restricted Subsidiary after the Closing Time from the issuance (other than to a
Restricted Subsidiary) from the issue or sale of Disqualified Stock or
Indebtedness of the Issuer or a Restricted Subsidiary that has been converted or
exchanged for Qualified Equity Interests (other than any such Disqualified Stock
or converted or exchanged Indebtedness sold to and held by a Restricted
Subsidiary) plus the amount of Net Cash Proceeds and Fair Market Value of any
other consideration received by the Issuer or any Restricted Subsidiary upon
such conversion or exchange of Disqualified Stock or Indebtedness, minus (c)
the aggregate amount of all Restricted Payments made on or after the Closing
Time and all Designation Amounts arising after the Closing Time, but only to the
extent the amount set forth in this clause (c) would exceed the amount
determined under subclause (i) of clause (c) of Section 8.02(A), plus (d) in the
case of the disposition or repayment of any Investment which has been deducted
pursuant to clause (c) of this definition, an amount equal to the lesser of the
return of capital with respect to such Investment and the amount of such
Investment which has been deducted pursuant to such clause (c), plus (e) in the
case of any Revocation with respect to any Subsidiary that was made the subject
of Designation after the Closing Time and as to which a Designation Amount has
been deducted pursuant to clause (c) of this definition, an amount equal to the
lesser of such Designation Amount or the Fair Market Value of the Investment of
the Issuer and the other Restricted Subsidiaries in such Subsidiary at the time
of Revocation.
"Transaction Date" means the date of the transaction giving rise to
----------------
the need to calculate the Consolidated Leverage Ratio.
"Transaction Documents" means, collectively, this Agreement, the
---------------------
Exchange and Registration Rights Agreement, the Stockholders Agreement, the
Notes, the Exchange
-25-
Notes, the Warrants and all certificates, instruments, financial and other
statements and other documents made or delivered in connection herewith and
therewith.
"Transactions" means, collectively, the transactions provided for in,
------------
or contemplated by, the Transaction Documents.
"Treasury Yield" means the yield to maturity at the time of
--------------
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the date fixed for redemption (or, if such Statistical Release is no longer
published, any publicly available source of similar data)) most nearly equal to
the then remaining average life of the Securities; provided, that if the average
life of the Securities is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given, the Treasury Yield
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of United States Treasury securities
for which such yields are given, except that if the average life of the
Securities is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.
"United States" shall have the meaning assigned to such term in
-------------
Regulation S.
"Unrestricted Subsidiary" means any Subsidiary of the Issuer that is
-----------------------
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution in accordance with the provisions of Section 8.02. Any such
Designation by the Board of Directors shall be evidenced by a Board Resolution
giving effect to such Designation and an Officers' Certificate certifying that
such Designation complied with the foregoing conditions and was permitted by
Section 8.02. The Board of Directors may at any time revoke the Designation of
a Subsidiary as an Unrestricted Subsidiary in accordance with the provisions of
Section 8.02.
"Voting Agreement" means the Voting Agreement dated as of June 30,
----------------
1999 among the Issuer and certain of its shareholders annexed hereto as Exhibit
-------
J-1, as amended on January 28, 2000 annexed hereto as Exhibit J-2 (the "Voting
--- ----------- ------
Agreement Amendment").
-------------------
"Voting Stock" of any Person as of any date means the Capital Stock of
------------
such Person that is at the time entitled to vote in the election of the board of
directors of such Person.
"Warrants" is defined in the first recital to this Agreement.
--------
"Warrant Shares" shall, with respect to Series A Warrants, have the
--------------
meaning provided in the Series A Warrants, and, with respect to the Series B
Warrants, have the meaning provided in the Series B Warrants, collectively.
-26-
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
----------------------------------
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
1.02. Computation of Time Periods. For purposes of computation of
---------------------------
periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
1.03. Accounting Terms. Accounting terms used but not otherwise
----------------
defined herein shall have the meanings provided, and be construed in accordance
with, GAAP.
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES; REORGANIZATION
--------------------------------------------------------------
2.01. Authorization of Issue. The Issuer has authorized the issue
----------------------
and sale of (i) $188,500,000 aggregate principal amount at maturity of Notes,
each Note to be in the form of Exhibit A hereto, (ii) Series A Warrants to
---------
purchase 3,114,160 shares of Common Stock, each Series A Warrant to be in the
form of Exhibit B hereto, and (iii) Series B Warrants to purchase 1,070,160
---------
shares of Common Stock, each Series B Warrant to be in the form of Exhibit C
---------
hereto.
2.02. Sale. On the basis of the representations and warranties herein
----
contained and subject to the terms and conditions herein set forth, the Issuer
agrees to sell to each Purchaser, and each Purchaser, acting severally and not
jointly, agrees to purchase from the Issuer, the aggregate principal amount at
maturity of Notes and the aggregate number of associated Warrants, in each case,
set forth in Schedule A opposite the name of such Purchaser or its nominee at a
----------
purchase price (the "Purchase Price") of 53.291% of the principal amount at
--------------
maturity of Notes so set forth together with accrued original issue discount to
the extent the Closing Time is after February 2, 2000. The Issuer shall not be
obligated to close in the event any Purchaser defaults in its obligations
hereunder. Each Purchaser's obligation to close is conditioned upon each of the
other Purchasers fulfilling its obligation to close.
-27-
2.03. Closing. The purchase and sale of Securities pursuant to this
-------
Agreement shall occur at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 10:00 A.M. (New
York City time), on February 2, 2000, or such other time as shall be agreed upon
by the Purchasers and the Issuer (such time and date of payment and delivery
being herein called the "Closing Time"). At the Closing Time, the Issuer will
------------
deliver to each Purchaser certificates for the Securities to be purchased by
such Purchaser at the Closing Time, in such denominations (in the case of the
Notes any integral multiple of $1,000 principal amount at maturity) as such
Purchaser may request, dated the Closing Time and registered in such Purchaser's
name, against payment by such Purchaser to the Issuer by wire transfer of
immediately available funds in the amount of the Purchase Price to be paid by
such Purchaser therefor to such bank account or accounts as the Issuer may
request in writing at least two Business Days prior to the Closing Time.
2.04. Allocation of Purchase Price. For all income tax purposes, the
----------------------------
Issuer and the Purchasers agree that each $532.91 of the Purchase Price paid by
each Purchaser shall be allocable as follows: $453.65 to each $1,000 principal
amount at maturity of Notes, $79.26 to the portion of any Series A Warrant that
is associated with $1,000 principal amount at maturity of Notes and $0 to the
portion of any Series B Warrant that is associated with $1,000 principal amount
at maturity of Notes. The tax and reporting basis of the Securities under the
Code by the Issuer and the Purchasers shall be consistent with the foregoing.
2.05. Reorganization. Notwithstanding anything herein to the
--------------
contrary, the Issuer and its Subsidiaries will be permitted to undertake the
Reorganization at any time and, upon the effectiveness of such Reorganization,
Opco (if it is the Issuer) will be released from all of the Obligations
hereunder; provided that the holding company resulting from the Reorganization
shall have assumed all of the Obligations of the Issuer hereunder and under the
other Transaction Documents and shall be substituted for (so that from and after
the date of the Reorganization, the provisions of this Agreement referring to
the "Issuer" shall refer instead to the new holding company and not to the prior
issuer), and may exercise every right and power of, the Issuer under this
Agreement hereunder and under the other Transaction Documents with the same
effect as if it had been named herein as the issuer and the prior issuer shall
be released from the Obligations hereunder and under the other Transaction
Documents. The Warrants will become exercisable solely for shares of the new
holding company and will become obligations solely of the new holding company as
well in accordance with their terms.
-28-
SECTION 3
CONDITIONS TO CLOSING
---------------------
Each Purchaser's several obligation to purchase and pay for the
Securities to be purchased by it at the Closing Time is subject to the
satisfaction or waiver by each Purchaser prior to or at the Closing Time of each
of the conditions specified below in this Section 3:
3.01. Representations and Warranties. Each of the representations and
------------------------------
warranties of the Issuer in this Agreement and in each of the other Transaction
Documents shall be true and correct when made and at and as of the Closing Time
as if made on and as of the Closing Time (unless expressly stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct as of such earlier date and, in any such case, there shall
not have occurred since such date and prior to the Closing Time any developments
with respect to the subject matter of any such representation and warranty which
would have a Material Adverse Effect as determined by the Purchasers in their
reasonable judgment).
3.02. Performance; No Default Under Other Agreements. The Issuer
----------------------------------------------
shall have performed and complied in all material respects with all agreements
and conditions contained in this Agreement and each of the other Transaction
Documents required to be performed or complied with by it prior to or at the
Closing Time, and after giving effect to the issue and sale of the Securities
and the other Transactions (and the application of the proceeds thereof as
contemplated by Section 4.15 hereof and the other Transaction Documents), no
Default shall have occurred and be continuing and no default or event of default
shall have occurred and be continuing under any of the other Transaction
Documents.
3.03. Compliance Certificates.
-----------------------
(a) Officers' Certificate. The Issuer shall have delivered to the
---------------------
Purchasers an Officers' Certificate, dated the Closing Time, in the form of
Exhibit F hereto, certifying that the conditions specified in Sections 3.01,
---------
3.02, 3.05, 3.07 and 3.09 have been fulfilled.
(b) Secretary's Certificate. The Issuer shall have delivered to the
-----------------------
Purchasers a certificate substantially in the form of Exhibit G hereto
---------
certifying as to the Issuer's certificate of incorporation, bylaws and
resolutions attached thereto, the incumbency and signatures of certain officers
of the Issuer and other corporate proceedings of the Issuer relating to the
authorization, execution and delivery of the Securities, this Agreement, the
Exchange and Registration Rights Agreement and the other Transaction Documents
to the extent the Issuer is a party thereto.
-29-
3.04. Opinions of Counsel. Such Purchaser shall have received the
-------------------
favorable opinions in form and substance satisfactory to it, dated the Closing
Time, from (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special New York counsel for the Issuer,
(ii) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., General Counsel of the Issuer and (iii) ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ LLC, Missouri counsel to the Issuer, substantially in the forms set forth
in Exhibits H-1, H-2 and H-3, respectively.
------------ --- ---
3.05. No Adverse Events; No Operations of the Issuer. (i) None of the
----------------------------------------------
Issuer or any of its Subsidiaries shall have sustained since September 30, 1999
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree and (ii) except for the
reincorporation transaction and the 2.5-for-one stock split effected on January
25, 2000 or as contemplated by Sections 3, 4.01 and 4.20, since September 30,
1999 there shall not have been any material change in the capital stock or long-
term debt of the Issuer or any of its Subsidiaries or any change, or any
development involving a prospective change, in or affecting the business,
management, operations, condition (financial or otherwise) or assets of the
Issuer and its Subsidiaries.
3.06. Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the Transactions and the other transactions contemplated by
this Agreement and the other Transaction Documents, and all documents and
instruments incident to such transactions and the terms thereof, shall be
reasonably satisfactory to such Purchaser and such Purchasers' special counsel,
and such Purchaser and the Purchasers' special counsel shall have received all
such counterpart originals or certified or other copies of such documents as it
or they may reasonably request. All identified fees owing to, and all expenses
reimbursable by, the Issuer and its Affiliates as of the Closing Time pursuant
to this Agreement shall have been paid in full.
3.07. Purchase Permitted by Requirements of Law, etc. At the Closing
----------------------------------------------
Time, such Purchaser's purchase of the Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which it is subject, (b) not violate any
Requirement of Law (including, without limitation, Regulation U, T or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any Requirement
of Law, which Requirement of Law was not in effect on the date hereof.
3.08. Transaction Documents in Force and Effect. The Exchange and
-----------------------------------------
Registration Rights Agreement in the form of Exhibit D and the Registration
---------
Rights and Stockholders Agreement in the form of Exhibit E shall have been duly
---------
executed and delivered by the parties thereto.
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3.09. No Violation; No Legal Constraints; Consents, Authorizations
------------------------------------------------------------
and Filings, etc.
----------------
(a) The consummation by the Issuer and its Subsidiaries of the
Transactions shall not contravene, violate or conflict with any Requirement of
Law.
(b) The Issuer shall have received (i) a consent from holders of at
least 60% of the outstanding shares of Series A Preferred Stock of the Issuer
for an increase by, and designation contemplated by Section 3.2 of the
Stockholders Agreement of, one additional member to the Board of Directors, (ii)
the approval of at least one director representing the Series A Preferred Stock
to the effective waiver of the application of the anti-dilution adjustments in
the Series A Preferred Stock pursuant to Section 5.7(b)(i) of the Certificate of
Designations related thereto and (iii) a waiver from holders of at least a
majority of the outstanding shares of Series A Preferred Stock that no right of
first refusal shall exist under the Amended and Restated Investors' Rights
Agreement, dated June 30, 1999. The Voting Agreement shall have been amended by
stockholders of the Issuer representing a majority of the issued and outstanding
Voting Stock of the Issuer as of the Closing Time to provide that, subject to
the terms thereof, such stockholders will vote for the member designated under
Section 3.2 of the Stockholders Agreement. The foregoing amendment shall be in
the form of Exhibit J-2. All other consents, authorizations and filings, if
-----------
any, required in connection with the execution, delivery and performance by the
Issuer, and its Subsidiaries of the Transaction Documents to which it is a party
shall have been obtained or made and shall be in full force and effect, except,
in the case of the Exchange and Registration Rights Agreement and the
Stockholders Agreement, for such consents, authorizations and filings which are
required under federal or state securities laws.
(c) There shall be no inquiry, injunction, restraining order,
action, suit or proceeding pending or entered or any statute or rule proposed,
enacted or promulgated by any Governmental Authority or any other Person which,
in the opinion of the Purchasers, (i) individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect or which seeks
to enjoin or seek damages against the Issuer, or any of the Issuer's
Subsidiaries or any of the Purchasers as a result of the Transactions, including
the issuance of the Notes, (ii) relates to any of the Transactions and has or
will have a material adverse effect on any Purchaser, (iii) alleges liability on
the part of any Purchaser in connection with this Agreement, any other
Transaction Documents or the Transactions or any of the other transactions
contemplated hereby or thereby or (iv) would bar the issuance of the Securities
or the use of the proceeds thereof in accordance with the terms of this
Agreement and the other Transaction Documents.
-31-
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
--------------------------------------------
The Issuer represents and warrants to each of the Purchasers as of the
date hereof and as of the Closing Time that:
4.01. Financial Condition.
-------------------
(a) The unaudited pro forma consolidated balance sheet of the
Issuer and its consolidated Subsidiaries as of September 30, 1999 (the "Pro
---
Forma Balance Sheet"), copies of which have heretofore been furnished to each
-------------------
Purchaser, has been prepared giving effect (as if such events had occurred on
such date) to (i) the Securities to be purchased at the Closing Time, (ii) the
execution, delivery and initial funding under the Credit Agreement and the use
of proceeds thereof and (ii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to the Issuer as of the date of delivery thereof, and
presents fairly on a pro forma basis the financial position of Issuer and its
consolidated Subsidiaries as of September 30, 1999, assuming that the events
specified in the preceding sentence had actually occurred at such time.
Schedule 4.01 sets forth the outstanding Indebtedness of the Issuer and its
-------------
consolidated Subsidiaries as of the date hereof.
(b) The audited consolidated balance sheets of the Issuer and its
Subsidiaries as at December 31, 1998, and the related consolidated statements of
income and of cash flows for the fiscal years ended on such dates, reported on
by and accompanied by an unqualified report from KPMG, present fairly the
consolidated financial condition of the Issuer at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited interim consolidated balance
sheet of the Issuer and the related unaudited consolidated statements of income
and cash flows for the three-month period ended March 31, 1999, the six-month
period ended June 30, 1999 and the nine-month period ended September 30, 1999,
present fairly the consolidated financial condition of the Issuer as at such
date, and the consolidated results of its operations and its consolidated cash
flows for the three-month period then ended (subject to normal year-end audit
adjustments and the absence of footnotes); provided that, as previously
disclosed to the Purchasers, the financial information for the nine-month period
ended September 30, 1999 (and all periods included therein) are to be restated
as required by SAB 101 (relating to the recognition of installation fees over
the life of a customer contract), for bonus accruals for bonuses approved after
September 30, 1999 and for restructuring charges relating to the relocation to
the San Francisco Data Center. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). The Issuer and its
Subsidiaries do not have any material guarantee obliga-
-32-
tions, contingent liabilities and liabilities for taxes, or any long-term leases
or unusual forward or long-term commitments, including any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph.
4.02. No Change. Since September 30, 1999, there has been no
---------
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.03. Corporate Existence; Compliance with Law. Each of the Issuer
----------------------------------------
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.04. No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Transaction Documents, the issuance of the Securities
and the use of the proceeds thereof will not violate any Requirement of Law or
any Contractual Obligation of the Issuer or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Credit Agreement).
4.05. Litigation. No litigation, investigation or proceeding of or
----------
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Issuer, threatened by or against the Issuer or any of its Subsidiaries or
against any of their respective properties or revenues (a) with respect to any
of the Transaction Documents or any of the Transactions contemplated hereby or
thereby or (b) that could reasonably be expected to be material to its business
or operations.
4.06. No Default. Neither the Issuer nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing. The binding Memorandum of Understanding
dated January 19, 2000 between the Issuer and Viatal Corp. will require third
party consents and approvals for the Issuer to comply with its obligations
thereunder, and for the benefits of such arrangements, if any to be realized.
-33-
4.07. Ownership of Property; Liens. Each of the Issuer and its
----------------------------
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 8.08. All material leases under which the Issuer or any
Restricted Subsidiary is a lessor or lessee are in full force and effect.
4.08. Intellectual Property. The Issuer and each of its Subsidiaries
---------------------
owns, or is licensed to use, or could obtain the right to use on terms not
materially adverse, all Intellectual Property necessary for the conduct of its
business as currently conducted. No material claim has been asserted and is
pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Issuer know of any valid basis for any such claim. The use of Intellectual
Property by the Issuer and its Subsidiaries does not infringe on the rights of
any Person in any respect that could reasonably be expected to have a Material
Adverse Effect.
4.09. Taxes. Each of the Issuer and each of its Subsidiaries has
-----
filed or caused to be filed all Federal, state and other material Tax Returns
that are required to be filed and has paid all taxes shown to be due and payable
on said Tax Returns or on any assessments made against it or any of its property
and all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than any of the amount or validity that are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Issuer or its Subsidiaries, as the case may be); to the knowledge
of the Issuer no Lien for overdue Taxes has been filed, and no claim is being
asserted, with respect to any such tax, fee or other charge.
4.10. Federal Regulations. No part of the proceeds of the Securities
-------------------
will be used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
regulations of the Board of Governors of the Federal Reserve System.
4.11. Labor Matters. Except as, in the aggregate, could not
-------------
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against the Issuer or any of its Subsidiaries
pending or, to the knowledge of the Issuer, threatened; (b) hours worked by and
payment made to employees of the Issuer and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters; and (c) all payments due from the Issuer or any
of its Subsidiaries on account of employee health and welfare insurance have
been paid or accrued as a liability on the books of the Issuer or the relevant
Subsidiary.
4.12. ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has oc-
-34-
curred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Issuer nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Issuer nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Issuer or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
reorganization within the meaning of Section 4241 of ERISA or insolvent within
the meaning of Section 4245 of ERISA.
4.13. Investment Company Act; Other Regulations. Neither the Issuer
-----------------------------------------
nor any of its Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended. Neither the Issuer nor any of its Subsidiaries
is subject to regulation under any Requirement of Law (other than Regulation X
of the Board) that limits its ability to incur Indebtedness.
4.14. Subsidiaries. (a) Schedule 4.14 sets forth the name and
------------ -------------
jurisdiction of incorporation of each Subsidiary and, as to each such
Subsidiary, the percentage of each class of Capital Stock owned by the Issuer
and/or its Subsidiaries and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than directors
and directors' qualifying shares) of any nature relating to any Capital Stock of
the Issuer or any Subsidiary, except as created by the Transaction Documents.
All of the outstanding shares of Capital Stock of each Subsidiary of the Issuer
shown on Schedule 4.14 as being owned by the Issuer and/or one or more of its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Issuer and/or one or more of its Subsidiaries, free and clear of
all Liens other than pursuant to the Credit Agreement.
4.15. Use of Proceeds. The net proceeds (after fees and expenses) of
---------------
the sale of the Securities shall be used (a) for the construction, expansion,
development or acquisition of assets to be used in a Permitted Business
including for the San Francisco Data Center and Asset Acquisitions and (b) for
working capital and general corporate purposes of the Issuer and its Restricted
Subsidiaries.
-35-
4.16. Environmental Matters. Except as, in the aggregate, could not
---------------------
reasonably be expected to have a Material Adverse Effect:
(a) to the best of the Issuer's knowledge, the facilities and
properties owned, leased or operated by the Issuer or any of its
Subsidiaries, including without limitation, the San Francisco Data Center
(the "Properties"), do not contain, and have not previously contained
----------
during the time of Issuer's control and use thereof, any Materials of
Environmental Concern in amounts or concentrations or under circumstances
that constitute or constituted a violation of, or could give rise to
liability under, any Environmental Law;
(b) except as set forth on Schedule 4.04, neither the Issuer nor
-------------
any of its Subsidiaries has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental
Laws with regard to any of the Properties or the business operated by the
Issuer or any of its Subsidiaries (the "Business"), nor does the Issuer
--------
have knowledge or reason to believe that any such notice will be received
or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of by Issuer from the Properties in violation of, or in a manner
or to a location that could give rise to liability under, any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Issuer, threatened, under any
Environmental Law to which the Issuer or any Subsidiary is or will be named
as a party with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Issuer or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under
Environmental Laws;
(f) to the best of the Issuer's knowledge, the Properties and all
operations at the Properties by Issuer are in compliance, with all
applicable Environmental Laws,
-36-
and there is no contamination at, under or about the Properties or
violation of any Environmental Law with respect to the Properties or the
Business; and
(g) neither the Issuer nor any of its Subsidiaries has expressly
assumed any liability of any other Person under Environmental Laws.
4.17. Accuracy of Information, etc. No statement or information
----------------------------
contained in this Agreement, any other Transaction Document, or any other
document, certificate or statement furnished by or on behalf of the Issuer or
any of its Subsidiaries to the Purchasers for use in connection with the
transactions contemplated by this Agreement or the other Transaction Documents
when taken together with all other such statements and information furnished,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in
--- -----
the materials referenced in Section 4.01, as supplemented or modified from time
to time, are based upon good faith estimates and assumptions believed by
management of the Issuer to be reasonable at the time made, it being recognized
by the Purchasers that such financial information as it relates to future events
is not to be viewed as fact and that actual results during the period or periods
covered by such financial information may differ from the projected results set
forth therein by a material amount. There is no fact known to the Issuer or any
of its Subsidiaries that it presently believes in good faith could reasonably be
expected to have a Material Adverse Effect that has not been expressly disclosed
herein or in the other Transaction Documents.
4.18. Solvency. The Issuer and any of its Subsidiaries is, and after
--------
giving effect to the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.19. Year 2000 Matters. Any reprogramming required to permit the
-----------------
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Issuer or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Issuer or any of its Subsidiaries interface), and the
testing of all such systems and other equipment as so reprogrammed, have been
completed. The costs to the Issuer and its Subsidiaries for such reprogramming
and testing and for the other reasonably foreseeable consequences to them of any
improper functioning of other computer systems and equipment containing embedded
microchips due to the occurrence of the year 2000 could not reasonably be
expected to result in a Default or to have a Material Adverse Effect.
4.20. Capitalization. As of the date of this Agreement, the
--------------
authorized Capital Stock of the Issuer consists of 100,000,000 shares of its
Common Stock, of which
-37-
14,659,524.00 shares were issued and outstanding and 5,760,352 shares were
subject to options and 378,448.375 shares were subject to a Class A Warrant
issued to The Chase Manhattan Bank, and 5,000,000 shares of its Series A
Preferred Stock, of which 4,275,701 shares were issued and outstanding and
convertible into 10,689,261 shares of Common Stock of the Issuer. All the issued
and outstanding shares of Common Stock (including all shares of Common Stock to
be issued upon the exercise of warrants, options or the Series A Preferred
Stock) have been duly authorized and are (or in the case of Common Stock issued
upon exercise of warrants or options or the Series A Preferred Stock, will be)
validly issued, fully paid and nonassessable and are (or in the case of Common
Stock issued upon exercise of warrants, options, the Series A Preferred Stock,
will be) free of preemptive rights. Except for the foregoing and as further
detailed on Schedule 4.20, there are no securities of the Issuer or any of its
-------------
Subsidiaries that are convertible into or exchangeable for shares of any Capital
Stock of the Issuer or any of its Subsidiaries, and no options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Issuer or any of its Subsidiaries to issue,
transfer or sell any shares of Capital Stock of, or other interests in, the
Issuer or any of its Subsidiaries. No antidilution or other adjustments to the
number or type of shares of Common Stock issuable upon exercise, conversion or
exchange of any such securities or under any such agreements or arrangements
will be required by reason of the Transactions or any such adjustments have been
waived in writing. Except as set forth on Schedule 4.20, there are no
-------------
outstanding obligations of the Issuer or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Capital Stock of the Issuer or any of
its Subsidiaries and neither the Issuer nor any of its Subsidiaries has any
awards or options outstanding under any stock option plans or agreements or any
other outstanding stock-related awards. Except as annexed hereto as Exhibit J-1
-----------
and Exhibit J-2 and set forth on Schedule 4.20 and as reflected in the Issuer's
----------- -------------
Certificate of Incorporation, Certificate of Designations and Bylaws, there are
no voting trusts or other agreements or understandings to which the Issuer or
any of its Subsidiaries is a party with respect to the holding, voting or
disposing of Capital Stock of the Issuer or any of its Subsidiaries. As of the
date hereof, neither the Issuer nor any of its Subsidiaries has any outstanding
bonds, debentures, notes or other obligations or other securities (other than
the Common Stock) that entitle the holders thereof to vote with the stockholders
of the Issuer or any of its Subsidiaries on any matter or which are convertible
into or exercisable for securities having such a right to vote. The Series A
Warrants represent, as of the Closing Time, approximately 9% of the outstanding
Common Stock of the Issuer, determined on a fully diluted basis as though all
outstanding Equity Interests convertible, exchangeable or exercisable for Common
Stock other than the Series B Warrants, had been so converted, exchanged or
exercised and the Series B Warrants represent, as of the Closing Time,
approximately 3% of the outstanding Common Stock of the Issuer, determined on a
fully diluted basis as though all outstanding Equity Interests convertible,
exchangeable or exercisable for Common Stock had been so converted, exchanged or
exercised.
-38-
4.21. Due Authorization, Execution and Delivery.
-----------------------------------------
(a) Agreement. This Agreement has been duly authorized, executed
---------
and delivered by the Issuer and constitutes a valid and legally binding
obligation of the Issuer, enforceable against the Issuer in accordance with its
terms, subject to the Enforceability Exceptions.
(b) Notes and Exchange Notes. The Notes to be purchased by the
------------------------
Purchasers from the Issuer are in the form contemplated by this Agreement, have
been duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Issuer at the Closing Time as provided herein, will
have been duly executed, issued and delivered by the Issuer, and will constitute
valid and legally binding obligations of the Issuer, enforceable against it in
accordance with their terms, subject to the Enforceability Exceptions. If and
when the Exchange Notes are issued pursuant to the Exchange and Registration
Rights Agreement and this Agreement in accordance with the terms thereof and
hereof, the Exchange Notes will have been duly authorized for issuance by the
Issuer, will have been duly executed, issued and delivered by the Issuer, and
will constitute valid and legally binding obligations of the Issuer, enforceable
against it in accordance with their terms, subject to the Enforceability
Exceptions.
(c) Exchange and Registration Rights Agreement. The Exchange and
------------------------------------------
Registration Rights Agreement has been duly authorized, executed and delivered
by the Issuer and constitutes a valid and legally binding obligation of the
Issuer, enforceable against the Issuer in accordance with its terms, subject to
the Enforceability Exceptions.
(d) Warrants and Common Stock. The Issuer has the requisite
-------------------------
corporate power and authority to execute, deliver and perform its obligations
under the Warrants. The Warrants have been duly and validly authorized by the
Issuer and, when executed and delivered by the Issuer (assuming the due
countersignature, execution and delivery by the Warrant Agent), will constitute
valid and legally binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms, except that the enforcement thereof may
be limited by the Enforceability Limitations. The Common Stock has been duly
reserved for issuance by the Issuer for issuance upon exercise of the Warrants
in sufficient number to cover the exercise of all of the Warrants, and the
issuance of the Common Stock upon exercise of the Warrants has been duly
authorized, and the Common Stock, when delivered upon exercise of and in
accordance with the terms of the Warrant Certificate, will be validly issued,
fully paid and non-assessable, free and clear of all Liens created by the Issuer
or any of its Subsidiaries and no holder of any securities of the Issuer has any
preemptive or other similar rights to subscribe for or to purchase any common
stock of the Issuer arising by operation of the General Corporation Law of the
State of Delaware or under the Certificate of Incorporation, Certificate of
Designations relating to the Series A Preferred Stock or bylaws of the Issuer,
copies of which
-39-
are attached as Exhibit I hereto, or pursuant to the terms of any agreement or
---------
instrument to which the Issuer is a party.
(e) Stockholders Agreement. The Stockholders Agreement has been
----------------------
duly authorized, executed and delivered by the Issuer and constitutes a valid
and legally binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, subject to the Enforceability Exceptions. It is
acknowledged that the ability of holders of Warrants and Warrant Shares to
secure the benefits of Section 3.2 of the Registration Rights and Stockholders
Agreement depends upon the ability of the holders of Warrants and Warrant Shares
to enforce the Voting Agreement and the Voting Agreement Amendment against
sufficient stockholders to elect the designee of the holders of Warrants and
Warrant Shares.
4.22. Private Offering; No Integration or General Solicitation.
--------------------------------------------------------
(a) Subject to compliance by the Purchasers with the
representations and warranties set forth in Section 5 hereof and with the
procedures set forth in Section 10 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Purchasers and to any
Person to whom any Purchaser sells any of such Securities (each, a "Subsequent
----------
Purchaser") in the manner contemplated by this Agreement to register the
---------
Securities under the Securities Act, or, in the case of the Notes, until such
time as the Exchange Notes are issued or the Notes or Exchange Notes are
otherwise registered pursuant to an effective registration statement under the
Securities Act, to qualify an indenture relating to the Notes or Exchange Notes
under the TIA.
(b) The Issuer has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer, sell or
solicit any offer to buy, any security of a type or in a manner which would be
integrated with the sale of the Securities and require the Securities to be
registered under the Securities Act. None of the Issuer or its Affiliates or
any Person acting on its or any of their behalf (other than the Purchasers, as
to whom the Issuer make no representation or warranty) has engaged or will
engage in any form of general solicitation or general advertising (within the
meaning of Rule 502(c) under the Securities Act) in connection with the offering
of the Securities. With respect to the Securities, if any, sold in reliance
upon the exemption afforded by Regulation S: (i) none of the Issuer, its
Affiliates or any Person acting on its or their behalf (other than the
Purchasers, as to whom the Issuer makes no representation or warranty) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S and (ii) each of the Issuer and its Affiliates and any Person
acting on its or their behalf (other than the Purchasers, as to whom the Issuer
make no representation or warranty) has complied and will comply with the
offering restrictions set forth in Regulation S.
4.23. Eligibility for Resale Under Rule 144A. The Securities are
--------------------------------------
eligible for resale pursuant to Rule 144A and will not, at the Closing Time, be
of the same class as secu-
-40-
rities listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted on a U.S. automated interdealer quotation system.
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
Each Purchaser severally and not jointly represents and warrants to
the Issuer as of the date hereof and as of the Closing Time as follows:
5.01. Purchase for Investment.
-----------------------
(a) Such Purchaser is acquiring the Securities for its own account,
for investment and not with a view to any distribution thereof within the
meaning of the Securities Act.
(b) Such Purchaser understands that (i) the Securities have not
been registered under the Securities Act and are being issued by the Issuer in
transactions exempt from the registration requirements of the Securities Act and
(ii) the Securities may not be offered or sold except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption from registration under the Securities Act.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
(d) Such Purchaser did not, and is not obligated to, pay any broker
or finder in connection with the transactions contemplated in this Agreement.
(e) Such Purchaser is a Qualified Institutional Buyer.
(f) Such Purchaser is aware of the Issuer's business affairs and
financial condition and has such knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Securities and such Purchaser is capable of bearing the
economic risks of such investment for an indefinite period of time.
(g) Such Purchaser understands the lack of liquidity and
restrictions on transfer of the Securities and that this investment is suitable
only for a person or entity of adequate financial means that has no need for
liquidity of this investment and that can afford a total loss of its investment.
-41-
(h) Such Purchaser has had the opportunity to make all inquiries of
the Issuer and its Subsidiaries and management for the purpose of evaluating its
investment in the Securities and the risk factors attendant to an investment
such as this and is satisfied with the scope and extent of its investigations
and the responses to such inquiries and requires no additional information to
make an informed decision. Such Purchaser acknowledges that it is not relying
upon any Person other than itself in making its investment decision and is fully
accountable therefor, subject to the accuracy of the representations and
warranties of the Issuer contained herein.
(i) In the case of Chase Securities, Chase Securities may resell
the Securities that it is acquiring hereunder to investors affiliated with
Caravelle and Sankaty Advisors and represents and warrants that such investors
have made the other representations in this Section 5.01 to it and that such
transfers will comply Section 9 hereof. The Issuer agrees that, for purposes of
any rights hereunder available solely to an original Purchaser, that Chase
Securities may assign such rights to such transferees.
SECTION 6
COVENANTS TO PROVIDE INFORMATION
--------------------------------
The Issuer covenants and agrees that until the principal amount of
(and premium, if any, on) all the Notes, and all interest, Special Interest and
other obligations hereunder in respect thereof, shall have been paid in full,
and while any Warrants or Warrant Shares shall remain outstanding:
6.01. Future Reports to Holders. The Issuer shall deliver to each
-------------------------
Holder:
(a) Quarterly Statements. As soon as available, but in any event
--------------------
within forty-five (45) days after the end of each quarter, duplicate copies
of:
(i) consolidated and consolidating balance sheets of the
Issuer and its Subsidiaries as at the end of such quarter, and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Issuer and its
Subsidiaries, for such quarter and for the portion of the fiscal year
ending with such quarter,
in each case setting forth in comparative form the figures for the
corresponding periods in the prior fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to periodic financial
statements generally, and fairly presenting, in all material respects, the
financial position of the Persons being reported on and their results of
-42-
operations and cash flows, subject to changes resulting from normal year-
end adjustments that will not be material in amount or effect, and
accompanied by a certificate of the chief financial officer of the Issuer
to the foregoing effect; provided, that if the Issuer is then subject to
the reporting requirements under Section 13 or Section 15(d) of the
Exchange Act, the delivery by the Issuer to such Holder of a Quarterly
Report on Form 10-Q or any successor form within the time periods above
described shall satisfy the requirements of this Section 6.01(a). The
consolidating balance sheet and statements of income, stockholders' equity
and cash flows required by this paragraph may be in the form contained in
the notes to the financial statements included in a Form 10-Q.
(b) Annual Statements. As soon as available, but in any event
-----------------
within ninety (90) days after the end of each fiscal year of the Issuer,
duplicate copies of:
(i) consolidated and consolidating balance sheets of the
Issuer and its Subsidiaries as at the end of such year, and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Issuer and its Subsidiaries
for such year,
in each case setting forth in comparative form the figures for the prior
fiscal year, all in reasonable detail, prepared in accordance with GAAP,
fairly presenting, in all material respects, the financial position of the
Persons being reported on and their results of operations and cash flows,
and accompanied by:
(A) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements (other than consolidating statements)
present fairly, in all material respects, the financial position of
the Persons being reported upon and their results of operations and
cash flows and have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with such financial
statements (other than consolidating statements) has been made in
accordance with generally accepted auditing standards in the United
States, and that such audit provides a reasonable basis for such
opinion in the circumstances, and
(B) a certificate of the chief financial officer of the
Issuer stating that such financial statements have been prepared in
accordance with GAAP applicable to periodic financial statements
generally and fairly present, in all material respects, the financial
position of the Persons being reported on and their results of
operations and cash flows;
-43-
provided, however, that if the Issuer is then subject to the reporting
requirements under Section 13 or Section 15(d) of the Exchange Act, the
delivery by the Issuer to such Holder of an Annual Report on Form 10-K or
any successor form within the time periods above described shall satisfy
the requirements of this Section 6.01(b). The consolidating balance sheet
and statements of income, stockholders' equity and cash flows required by
this paragraph may be in the form contained in the notes to the financial
statements included in a Form 10-K.
(c) Chief Financial Officer Certificates. Concurrently with the
------------------------------------
delivery of the financial statements referred to in subsections (a) and (b)
of this Section 6.01, an Officers' Certificate (of which one of the
signatories shall be the chief financial officer of the Issuer) (i) stating
that, to the best of such Officers' knowledge after due inquiry, each of
the Issuer and its Subsidiaries has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Transaction Documents to be observed,
performed or satisfied by it and that such Officer has obtained no
knowledge of any Default, except as specified in such Officers'
Certificate, and (ii) in the case of the certificate delivered to the
Holders, showing as of the end of the related fiscal period the figures and
calculations supporting such statement in respect of Sections 8.02 and 8.04
of this Agreement (but without the necessity of providing the identities of
customers under Section 8.04(b)(vi)).
(d) Other Information. Promptly upon their becoming available,
-----------------
copies of all financial statements, reports, notices and proxy statements
sent to its securityholders or made available generally by the Issuer or
any of its Subsidiaries and all regular and periodic reports and all
registration statements and final prospectuses, if any, filed by the Issuer
or any of its Subsidiaries with any securities exchange or with the
Commission or any Governmental Authority succeeding to any of its
functions.
(e) Notice of Default. Promptly, but in any event within three (3)
-----------------
Business Days, after any Officer of the Issuer becomes aware of the
existence of any Default or that any Person has given any notice or taken
any other action with respect to a claimed Default, a written notice
thereof to the Holders specifying the nature and existence thereof and what
action the Issuer is taking or proposes to take with respect thereto.
(f) Additional Information to Holders of Other Indebtedness.
-------------------------------------------------------
Simultaneously with the furnishing of such information to any other holder
of Debt Securities of the Issuer or any of its Subsidiaries, (i) copies of
all other financial statements, reports or projections with respect to the
Issuer or its Subsidiaries which are broader in scope or on a more frequent
basis than the Issuer is otherwise required to provide under this Agreement
and (ii) copies of all studies, reviews, reports or assessments relating to
environmental matters that reveal circumstances, events or other matters
that would reasonably be expected to have a Material Adverse Effect.
-44-
(g) Original Issue Discount Information. All original issue
-----------------------------------
discount information relating to the Notes as may be required by applicable
law.
(h) Credit Agreement. Promptly after the occurrence thereof, copies
----------------
of any amendment, waiver or other modification of the terms of the Credit
Agreement.
6.02. Information to be Provided Pursuant to Rule 144A(d)(4). As long
------------------------------------------------------
as the Securities are "restricted securities" (within Rule 144 of the Securities
Act), for the benefit of Holders and beneficial owners from time to time of such
Securities, the Issuer shall, upon the request of any such holder or beneficial
owner, furnish, at its expense, to holders and beneficial owners of such
Securities and prospective purchasers thereof information satisfying the
requirements of subsection (d)(4) of Rule 144A.
SECTION 7
OTHER AFFIRMATIVE COVENANTS
---------------------------
The Issuer further covenants and agrees with each Holder that until
the principal amount of (and premium, if any, on) all the Notes, and all
interest, Special Interest and other obligations hereunder in respect thereof,
shall have been paid in full:
7.01. Payment of Principal, Premium and Interest. The Issuer shall
------------------------------------------
duly and punctually pay the principal of (and premium, if any, on) and all
interest (including Special Interest) on the Notes in accordance with the terms
of the Notes and this Agreement.
The Issuer shall pay interest on overdue principal (including post-
petition interest during a proceeding involving the Issuer under any Bankruptcy
Law), and interest on overdue interest (including Special Interest), to the
extent lawful, at the rate specified in the Notes.
7.02. Preservation of Corporate Existence and Franchises. Subject to
--------------------------------------------------
Section 8 hereof, the Issuer shall do or cause to be done all things necessary
to preserve and keep in full force and effect (a) its corporate existence, and
the corporate, partnership or other existence of each of its Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Issuer or any such Subsidiary and (b) the
rights (charter and statutory), licenses and franchises of the Issuer and its
Subsidiaries; provided, however, that the Issuer shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries if (i) the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Issuer and its Subsidiaries, taken as a whole, and (ii) the
loss thereof would not result in a Material Adverse Effect.
-45-
7.03. Maintenance of Properties. The Issuer shall cause all
-------------------------
properties used or useful in the conduct of its business or the business of any
of its Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Issuer may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that the foregoing shall not prevent
the Issuer from discontinuing the operation or maintenance of any of such
properties if (i) the Board of Directors determines that such discontinuance is
desirable in the conduct of its business or the business of any Subsidiary and
(ii) such discontinuance would not result in a Material Adverse Effect and would
not be adverse in any material respect to any Holder.
7.04. Taxes.
-----
(a) Payment of Taxes. The Issuer shall pay or discharge or cause to
----------------
be paid or discharged, before the same shall become delinquent, all Taxes levied
or imposed upon the Issuer or any of its Subsidiaries; provided, however, that
the Issuer shall not be required to pay or discharge or cause to be paid or
discharged any such Tax or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings provided that
appropriate reserves therefor are established in the Issuer's consolidated
financial statements in accordance with GAAP.
(b) Tax Returns. The Issuer and its Subsidiaries shall timely file
-----------
or cause to be filed when due (including extensions) all Tax Returns that are
required to be filed by or with respect to the Issuer or its Subsidiaries and
shall pay any Taxes due in respect of such Tax Returns, except to the extent any
such failure would not have a Material Adverse Effect.
7.05. Books and Records. The Issuer and its Subsidiaries shall keep
-----------------
complete and accurate books and records of their transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.06. Compliance with Law. The Issuer shall, and shall cause each of
-------------------
of its Subsidiaries to, comply with all Requirements of Law and shall obtain and
maintain, and shall cause each of its Subsidiaries to obtain and maintain, all
Permits necessary to the ownership of their respective properties or to the
conduct of their respective businesses, in each case to the extent necessary to
ensure that any such non-compliance with any Requirements of Law or any failure
to obtain or maintain such Permits, individually or in the aggregate, would not
have a Material Adverse Effect.
7.07. Insurance. The Issuer shall, and shall cause its Subsidiaries
---------
to, maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and business against such casualties and
contingencies, of such types, on such terms and
-46-
in such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated.
7.08. Offer to Repurchase upon Change of Control.
------------------------------------------
(a) Upon the occurrence of a Change of Control, the Issuer shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
-----------------------
any part of each Holder's Notes at an offer price in cash equal to 101% of the
Accreted Value thereof as of the Change of Control Payment Date, plus accrued
and unpaid interest and Special Interest, if any, thereon to the Change of
Control Payment Date (the "Change of Control Payment"). The Issuer shall comply
-------------------------
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control, and the Issuer shall not be in violation of this
Agreement by reason of any act required by such rule or other applicable law.
(b) Within 30 days following any Change of Control, the Issuer
shall send, by first-class mail, a notice to each Holder stating:
(i) that the Change of Control Offer is being made pursuant to this
Section 7.08 and that all Notes tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which shall be at
least 30 but no more than 60 days from the date on which the Issuer mails
notice of the Change of Control (the "Change of Control Payment Date");
------------------------------
(iii) that any Notes not tendered will continue to accrue interest,
including Special Interest, if any;
(iv) that, unless the Issuer defaults in the payment of the Change
of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest, including Special
Interest, after the Change of Control Payment Date;
(v) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer shall be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Issuer or its designated agent for such purpose at
the address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date;
-47-
(vi) that Holders will be entitled to withdraw their election if the
Issuer or its designated agent for such purpose receives, not later than
the close of business on the second Business Day preceding the Change of
Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal
to $1,000 in principal amount at maturity or an integral multiple thereof.
(c) On the Change of Control Payment Date, the Issuer shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) mail to each Holder so
tendered the Change of Control Payment for such Notes plus all accrued and
unpaid interest, including any Special Interest, to the Change of Control
Payment Date, (iii) execute and mail (or cause to be transferred by book-entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided, however, that each such new Note
shall be in a principal amount at maturity of $1,000 or an integral multiple
thereof and (iv) execute and mail to the Holders an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Issuer in accordance with the terms of this Section 7.08. The Issuer shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
7.09. Offer to Purchase by Application of Excess Proceeds.
---------------------------------------------------
(a) In the event that, pursuant to Section 8.05 hereof, the Issuer
shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified in this Section 7.09. The Issuer shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes pursuant to an Asset
Sale Offer, and the Issuer shall not be in violation of this Agreement by reason
of any act required by such rule or other applicable law.
(b) Within 30 days following each date on which the Issuer's
obligation to make an Asset Sale Offer is triggered, the Issuer shall send, by
first-class mail, a notice to each Holder stating:
(i) that the Asset Sale Offer is being made pursuant to this
Section 7.09 and Section 8.05;
-48-
(ii) that the Issuer shall purchase the aggregate Accreted Value of
Notes required to be purchased pursuant to Section 8.05 (the "Offer
-----
Amount"), the purchase price per Note and the purchase date, which shall be
------
at least 30 but no more than 60 days from the date on which the Issuer
mails notice of the Asset Sale Offer (the "Asset Sale Offer Payment Date");
-----------------------------
(iii) that any Notes not tendered will continue to accrue interest,
including Special Interest, if any;
(iv) that, unless the Issuer defaults in payment of the Offer Amount
on the Asset Sale Offer Payment Date, all Notes accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue interest, including
Special Interest, after the Asset Sale Offer Payment Date;
(v) that Holders electing to have any Notes purchased pursuant to
an Asset Sale Offer shall be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Issuer or its designated agent for such purpose at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Asset Sale Offer Payment Date;
(vi) that Holders will be entitled to withdraw their election if the
Issuer or its designated agent for such purpose receives, not later than
the close of business on the second Business Day preceding the Asset Sale
Offer Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased;
(vii) that, if the Accreted Value of Notes surrendered by Holders
exceeds the Offer Amount, the Issuer shall select the Notes to be purchased
on a pro rata basis (with such adjustments as may be deemed appropriate by
the Issuer so that only Notes in denominations of $1,000, or integral
multiples thereof, shall be purchased); and
(viii) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount at maturity or an integral multiple thereof.
On the Asset Sale Offer Payment Date, the Issuer shall, to the extent
lawful, (i) accept for payment, on a pro rata basis to the extent necessary, all
Notes or portions thereof properly tendered pursuant to the Asset Sale Offer up
to the principal amount of Notes equal to the Offer Amount, or, if less than the
Offer Amount has been tendered, all Notes tendered, (ii) mail to each Holder so
tendered the purchase price for such Notes, plus all accrued
-49-
and unpaid interest, including any Special Interest, to the Asset Sale Offer
Payment Date, (iii) execute and mail (or cause to be transferred by book-entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any, and (iv) deliver to the Holders an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Issuer in accordance with the terms of this Section 7.09. The
Issuer shall publicly announce the results of the Asset Sale Offer on or as soon
as practicable after the Asset Sale Offer Payment Date.
SECTION 8
NEGATIVE COVENANTS
------------------
The Issuer hereby covenants and agrees with each Purchaser that until
the principal amount of (and premium, if any, on) all the Notes, and all
interest, Special Interest and other obligations hereunder in respect thereof,
shall have been paid in full:
8.01. Stay, Extension and Usury Laws. The Issuer covenants (to the
------------------------------
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of its
obligations under the Notes or this Agreement, and the Issuer hereby expressly
waives all benefit or advantage of any such law, and covenants that it shall
not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Holders, but shall suffer and permit the execution
of every such power as though no such law has been enacted.
8.02. Restricted Payments.
-------------------
(A) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or
distribution on account of the Issuer's or to the direct or indirect
holders of the Issuer's Equity Interests or to the direct or indirect
holders of the Issuer's Equity Interests in their capacity as stockholders
(other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Issuer);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Issuer or any direct or indirect parent of the
Issuer (other than any such Equity Interests owned by the Issuer or any
Restricted Subsidiary);
-50-
(iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Subordinated
Indebtedness, except for scheduled payments of interest or principal; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless:
(a) at the time of and after giving effect to such Restricted
Payment, no Default shall have occurred and be continuing or would
occur as a consequence thereof;
(b) the Issuer would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable period, have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant to Section 8.04(a); and
(c) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and the
Restricted Subsidiaries on or after the Closing Time, is less than the
sum, without duplication, of
(i) the amount of the Issuer's (x) Cumulative
Consolidated Cash Flow determined at the time of such
Restricted Payment less (y) 150% of the cumulative Consolidated
Interest Expense, determined for the period commencing on
January 1, 2000 and ending on the last day of the last fiscal
quarter preceding the date on which such Restricted Payment is
to be made for which financial statements are available, plus
(ii) 80% of the aggregate Net Cash Proceeds and Fair
Market Value of any other consideration received by the Issuer
or any Restricted Subsidiary on and after the Closing Time from
the issue or sale of Qualified Equity Interests of the Issuer
or from the issue or sale of Disqualified Stock or Indebtedness
of the Issuer or a Restricted Subsidiary that has been
converted or exchanged into such Equity Interests (other than
any such Disqualified Stock or converted or exchanged
Indebtedness sold to and held by a Restricted Subsidiary), plus
the amount of Net Cash Proceeds and Fair Market Value of any
other consideration received by the Issuer or any Restricted
Subsidiary upon such conversion or exchange, plus
(iii) the aggregate amount equal to the net reduction in
Restricted Investments in Unrestricted Subsidiaries on or after
the Closing
-51-
Time resulting from (x) dividends, distributions, interest
payments, return of capital, repayments of Restricted
Investments or other transfers of assets to the Issuer or any
Restricted Subsidiary from any Unrestricted Subsidiary, (y)
proceeds realized by the Issuer or any Restricted Subsidiary
upon the sale of such Restricted Investment to a Person other
than the Issuer or any Subsidiary of the Issuer, or (z) the
redesignation of any Unrestricted Subsidiary as a Restricted
Subsidiary, not to exceed in the case of any of the immediately
preceding clauses (x), (y) or (z) the aggregate amount of
Restricted Investments made by the Issuer or any Restricted
Subsidiary in such Unrestricted Subsidiary on or after the
Closing Time, plus
(iv) to the extent that any Restricted Investment that
was made on or after the Closing Time is sold for cash or
otherwise liquidated or repaid for cash, the lesser of, to the
extent paid to the Issuer or a Restricted Subsidiary, (A) the
cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment, minus
(v) 80% in the event of a Restricted Payment prior to
the occurrence of an IPO Liquidity Event or 64% in the event of
a Restricted Payment on or after the occurrence of an IPO
Liquidity Event of the aggregate principal amount of any
outstanding Indebtedness incurred and outstanding pursuant to
Section 8.04(b)(ii).
(B) The foregoing provisions shall not prohibit
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the foregoing provisions;
(ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Subordinated Indebtedness or Equity Interests of the
Issuer in exchange for, or out of the Net Cash Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Issuer)
of, Qualified Equity Interests of the Issuer; provided that the amount of
any such Net Cash Proceeds that are utilized for, and the Equity Interests
issued or exchanged for, any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c) of
Section 8.02(A) and clause (v) of this Section 8.02(B);
(iii) the defeasance, redemption, retirement, repurchase or other
acquisition of Subordinated Indebtedness with the Net Cash Proceeds from,
or issued in exchange for, a substantially concurrent incurrence of
Permitted Refinancing Indebtedness; pro-
-52-
vided that the amount of any Net Cash Proceeds that are utilized for any
such defeasance, redemption, retirement, repurchase or other acquisition
shall be excluded from clause (c) of Section 8.02(A);
(iv) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Issuer held by any employee or
former employee (or his or her spouse or other immediate family, decedent,
estate, trust for the benefit of any member of his or her immediate family
or other legal representative) of the Issuer or a Restricted Subsidiary
upon such employee's death, disability or termination for cause or in
connection with the Issuer's relocation to the San Francisco Data Center;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $2.5 million in any
fiscal year; provided, further, amounts unutilized in any fiscal year may
be carried forward for up to two additional years;
(v) so long as no Default has occurred and is continuing,
Restricted Investments not to exceed an amount (measured on the date each
such Restricted Investment was made), when taken together with all other
Restricted Investments made pursuant to this clause (v) that are at the
time outstanding, the sum of (x) $5.0 million, plus (y) the amount then
available for the making of Restricted Payments pursuant to Section
8.02(A)(c) without giving effect to subclause (i) thereof and treating, for
this purpose, the 80% in subclause (ii) thereof as 100%, the 100% in
subclause (v) as 80% and the 80% in subclause (v) as 64%;
(vi) Restricted Investments in Persons engaged in a Permitted
Business or that will make investments in any such Persons not to exceed
$5.0 million outstanding at any time;
(vii) the repurchase of Equity Interests of the Issuer in accordance
with rights of appraisal under applicable law; and
(viii) payments of cash in lieu of fractional shares upon the exercise
of warrants, options and other rights to purchase Capital Stock of the
Issuer.
Each Restricted Payment permitted pursuant to clauses (i), (iv), (v) and (vi)
above shall be included, and each Restricted Payment permitted pursuant to
clauses (ii) and (iii) above shall be excluded (except as specifically set forth
in each such clause), for all purposes when performing the calculation set forth
in clause (c) of Section 8.02(A).
(C) The Board of Directors may not designate any Subsidiary of the
Issuer (other than a newly created Subsidiary in which no Investment has
previously been made (other than any de minimis amount not to exceed $25,000
required to capitalize such Subsidiary in connection with its organization)) as
an Unrestricted Subsidiary (a "Designation") un-
-----------
-53-
less: (i) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation and (ii) the Issuer
would not be prohibited under this Agreement from making a Restricted Investment
at the time of such Designation (assuming the effectiveness of such Designation
for purposes of this Section 8.02) in an amount equal to the Fair Market Value
of the net Investment of the Issuer and all Restricted Subsidiaries in such
Subsidiary on such date (the "Designation Amount").
------------------
(D) In the event of any such Designation, all outstanding
Investments owned by the Issuer and the Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be a Restricted Investment made as of
the time of such Designation in the Designation Amount and will reduce the
amount available for Restricted Payments under Section 8.02(A)(iv)(c) or (B) (v)
by the Designation Amount in accordance with the terms of such provisions. All
such outstanding Investments will be deemed to constitute Restricted Payments in
an amount equal to the Fair Market Value of such Investments at the time of such
Designation. A Designation may be revoked and an Unrestricted Subsidiary may
thus be redesignated as a Restricted Subsidiary (a "Revocation") by a resolution
----------
of the Board of Directors delivered to the Purchasers; provided that the Issuer
shall not make any Revocation unless: (i) no Default shall have occurred and be
continuing at the time of or after giving effect to such Revocation; and (ii)
all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if incurred at such time, have been
permitted to be incurred at such time for all purposes under this Agreement.
(E) The amount of all Restricted Payments (other than cash) shall
be the Fair Market Value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Issuer (or such
Restricted Subsidiary, as the case may be) pursuant to the Restricted Payment.
8.03. Dividend and Other Payment Restrictions Affecting Restricted
------------------------------------------------------------
Subsidiaries.
------------
(A) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary to:
(i) (a) pay dividends or make any other distributions to the Issuer
or any of the Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Issuer or any of the
Restricted Subsidiaries,
(ii) make loans or advances to the Issuer or any of the Restricted
Subsidiaries, or
-54-
(iii) transfer any of its properties or assets to the Issuer or any
of the Restricted Subsidiaries.
(B) The foregoing restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(i) any Indebtedness (other than under the Credit Agreement) as in
effect at the Closing Time;
(ii) any Indebtedness of a Restricted Subsidiary; provided that (i)
such restrictions do not prohibit payments, transfers, loans, advances or
distributions either (x) on or after the fifth anniversary of the Closing
Time or (y) otherwise necessary for the Issuer to make scheduled payments
of principal, interest and premium on Indebtedness of the Issuer absent a
payment default or event of default in respect of the Indebtedness of the
Restricted Subsidiary, and (ii) the chief financial officer of the Issuer
determines in good faith that (A) any such restrictions are commercially
reasonable for a borrower engaged in a business comparable to the Issuer
that has substantially comparable Indebtedness, and (B) any such
restrictions shall not materially affect the Issuer's ability to make
scheduled payments of principal, premium or interest payments on the Notes;
(iii) applicable law;
(iv) any instrument governing Indebtedness or Equity Interests of a
Person or assets acquired by the Issuer or any of the Restricted
Subsidiaries as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired;
provided, that in the case of Indebtedness, such Indebtedness was permitted
by the terms of this Agreement to be incurred;
(v) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices;
(vi) purchase money obligations for property acquired, constructed,
leased or improved in the ordinary course of business that impose customary
restrictions of the nature described in clause (A)(iii) above on the
property so acquired, constructed, leased or improved;
(vii) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition; provided that the consummation of
such transaction would not result in a Default, that such restriction
terminates if such transaction is not consummated and
-55-
that the consummation or abandonment of such transaction occurs within one
year of the date such agreement was entered into;
(viii) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
(ix) Liens securing Indebtedness, which Liens are otherwise
permitted to be incurred pursuant to Section 8.08 and that limit the right
of the Issuer or any of the Restricted Subsidiaries to dispose of the
assets subject to such Lien; and
(x) customary provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other
similar agreements.
8.04. Incurrence of Indebtedness and Issuance of Preferred Stock.
----------------------------------------------------------
(a) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable for,
contingently or otherwise (including by way of merger, consolidation or
acquisition) (collectively, to "incur"), with respect to any Indebtedness and
-----
the Issuer shall not issue or incur any Disqualified Stock and shall not permit
any of the Restricted Subsidiaries to issue or incur any shares of Preferred
Stock unless the Consolidated Leverage Ratio at the end of the Issuer's most
recently ended fiscal quarter for which a consolidated balance sheet of the
Issuer has been filed with the Commission or provided to the Purchasers pursuant
to Section 6.01 would have been equal to or less than 6.0 to 1.0, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom).
(b) Notwithstanding the foregoing, the provisions of the paragraph
set forth immediately above shall not affect Indebtedness outstanding at the
Closing Time (other than under the Credit Agreement) or prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted
---------
Indebtedness"):
------------
(i) Indebtedness of the Issuer such that, after giving effect to
the incurrence thereof, the total aggregate principal amount of
Indebtedness incurred under this clause (i) and any refinancings thereof
otherwise incurred in compliance with this Agreement would not exceed 100%
of Total Incremental Equity if such incurrence is prior to an IPO Liquidity
Event or 125% of Total Incremental Equity if such incurrence is on or after
an IPO Liquidity Event;
(ii) the incurrence by the Issuer or any Restricted Subsidiary of
Indebtedness represented by the Notes and the Exchange Notes;
-56-
(iii) the incurrence of Indebtedness by the Issuer owing to any
Restricted Subsidiary or Indebtedness of any Restricted Subsidiary owing to
the Issuer or any Restricted Subsidiary (but such Indebtedness shall be
deemed to be incurred upon such Indebtedness being held by any Person other
than the Issuer or such Restricted Subsidiary including upon Designation
and upon such Restricted Subsidiary otherwise no longer being a Restricted
Subsidiary); provided that in the case of Indebtedness of the Issuer, such
obligations shall be unsecured and subordinated in all respects to the
Issuer's obligations pursuant to the Notes;
(iv) the incurrence by the Issuer or a Restricted Subsidiary of
Indebtedness in an aggregate amount incurred and outstanding at any time
pursuant to this clause (iv) of up to $10 million;
(v) the incurrence by the Issuer or any Restricted Subsidiary of
Indebtedness pursuant to one or more Permitted Credit Facilities in an
aggregate amount incurred and outstanding at any time pursuant to this
clause (v) of up to $25.0 million;
(vi) the incurrence (including in connection with an Asset
Acquisition) by the Issuer or any Restricted Subsidiary of Indebtedness
(including Capital Lease Obligations) to the extent the proceeds thereof
are or were used to finance the acquisition of computer, communications,
routers, servers, switches and related installation and/or maintenance
agreements, if any, to be used in connection with the performance of
netsourcing services to customers of the Issuer or any Subsidiary pursuant
to one or more Customer Contracts; provided that (1) such equipment is
acquired for customer-specific purposes (whether one or multiple customers)
related to existing Customer Contracts and (2) the aggregate principal
amount at the time of incurrence of any Indebtedness used to finance the
acquisition of any such assets shall not exceed one-third of the aggregate
dollar backlog (i.e., the cumulative total payments provided for under
---
applicable Customer Contracts over the life of such contracts without any
discount for time value or a reserve of any kind) of all customers for whom
such assets are to be used under the related Customer Contracts (provided
that only three years of backlog under any one Customer Contract may be
taken account of in calculating availability under this clause (vi));
(vii) the incurrence by the Issuer or any Restricted Subsidiary of
Purchase Money Indebtedness (including Indebtedness incurred, acquired or
assumed in connection with an Asset Acquisition), equipment financing,
vendor financing or Capital Lease Obligations, including under a Permitted
Credit Facility; provided that in each case, such Indebtedness shall not
constitute more than 100% of the cost (determined in accordance with GAAP
in good faith by the Board of Directors of the Issuer, but excluding
goodwill in the case of an Asset Acquisition) to the Issuer or a Restricted
Subsidiary, as applicable, of the property so purchased, developed,
acquired, constructed,
-57-
improved or leased together with services provided in connection therewith;
provided that the sum of the aggregate principal amount of Indebtedness
incurred and outstanding under this clause (vii) and clause (v) above will
not exceed at any time $45.0 million;
(viii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest or foreign currency exchange rate risk with
respect to any floating rate Indebtedness or foreign currency based
Indebtedness, respectively, that is permitted to be outstanding; provided
that the notional amount of any such Hedging Obligation does not exceed the
amount of Indebtedness or other liability to which such Hedging Obligation
relates;
(ix) the Issuer and its Restricted Subsidiaries may incur
Indebtedness solely in respect of bankers acceptances, letters of credit
and performance bonds, all in the ordinary course of business; and
(x) Permitted Refinancing Indebtedness.
(c) Indebtedness or Preferred Stock of any Person which is
outstanding at the time such Person becomes a Restricted Subsidiary of the
Issuer (including upon designation of any Subsidiary or other Person as a
Restricted Subsidiary or upon a Revocation such that such Subsidiary becomes a
Restricted Subsidiary) or is merged with or into or consolidated with the Issuer
or a Restricted Subsidiary of the Issuer shall be deemed to have been incurred
at the time such Person becomes such a Restricted Subsidiary of the Issuer or is
merged with or into or consolidated with the Issuer or a Restricted Subsidiary
of the Issuer, as applicable.
(d) Upon each incurrence, the Issuer may designate pursuant to
which provision of this Section 8.04 such Indebtedness is being incurred and
such Indebtedness shall not be deemed to have been incurred by the Issuer under
any other provision of this Section 8.04, except as stated otherwise in the
foregoing provisions or in the next sentence. For purposes of determining
compliance with this covenant, in the event that an item of Indebtedness meets
the criteria of more than one of the types of Indebtedness described in Section
8.04(b)(i) through (x) above, or is permitted under Section 8.04(a) and under
one or more of such Sections, the Issuer, in its sole discretion, may from time
to time reclassify such item of Indebtedness.
(e) The Issuer shall not permit any of the Restricted Subsidiaries
to incur any Indebtedness (including Permitted Indebtedness) representing Debt
Securities or a guarantee thereof without providing a senior guarantee of the
Notes and other obligations hereunder.
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8.05. Asset Sales.
-----------
(a) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, consummate any Asset Sale,
unless:
(i) the Issuer (or such Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(ii) at least 80% of the consideration therefor is in the form of
cash and/or Cash Equivalents or Qualified Consideration; and
(iii) the Net Cash Proceeds received by the Issuer or such Restricted
Subsidiary, as the case may be, from such Asset Sale are applied within 180
days (or, following a Note Liquidity Event, 360 days) following the receipt
of such Net Cash Proceeds, to the extent the Issuer or such Restricted
Subsidiary, as the case may be, elects:
(1) to the permanent redemption or repurchase of outstanding
Indebtedness (which, in the case of a revolver or similar arrangement
that makes credit available, also permanently reduces the commitment
under such facility by the same amount), that is either (I) (A)
secured Indebtedness or (B) Indebtedness of the Issuer that ranks
equally with the Notes but has a maturity date that is prior to the
maturity date of the Notes, in either case other than Subordinated
Indebtedness, or (II) that is Indebtedness of a Restricted Subsidiary;
and/or
(2) to reinvest such Net Cash Proceeds (or any portion
thereof) in assets, rights (contractual or otherwise) and properties,
whether tangible or intangible, in a Permitted Business (including
Equity Interests of a Person that will become a Restricted Subsidiary
as a result of such investment and that is engaged principally in a
Permitted Business).
The balance of such Net Cash Proceeds, after the application of such Net Cash
Proceeds as described in the immediately preceding clauses (1) and (2) and the
passage of the applicable time period, shall constitute "Excess Proceeds."
---------------
(b) When the aggregate amount of Excess Proceeds equals or exceeds
$5 million (taking into account income earned on such Excess Proceeds), the
Issuer shall be required to make a pro rata offer to all Holders and all holders
of Pari Passu Indebtedness with comparable provisions requiring such
Indebtedness to be purchased with the proceeds of such Asset Sale (an "Asset
-----
Sale Offer") to purchase the maximum principal amount accreted value in the
----------
case of Indebtedness issued with an original issue discount of Notes and Pari
Passu Indebtedness that may be purchased out of the Excess Proceeds, at a
purchase price in
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cash in an amount equal to 100% of the Accreted Value in the case of the Notes
or the principal amount of or the accreted value thereof (as applicable) in
other cases, plus accrued and unpaid interest thereon to the date of purchase
(subject to the right of Holders as of the relevant record date to receive
interest due on the relevant interest payment date). To the extent that any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may
use such Excess Proceeds for any purpose not otherwise prohibited by this
Agreement. If the aggregate accreted value of Notes and principal amount or
accreted value of Pari Passu Indebtedness tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Purchasers shall select the Notes and any Pari Passu Indebtedness to be
purchased or retired on a pro rata basis in proportion to the respective
principal amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) of the Notes and such other Indebtedness. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero for purposes of the first sentence of this paragraph.
(c) The amount of
(i) any liabilities (as shown on the Issuer's (or such Restricted
Subsidiary's, as the case may be) most recent balance sheet), other than
Subordinated Indebtedness, of the Issuer or any Restricted Subsidiary, that
are assumed by the transferee of any such assets pursuant to an agreement
that immediately releases the Issuer and all of the Restricted Subsidiaries
from all liability in respect thereof;
(ii) Indebtedness of any Restricted Subsidiary that is no longer a
Restricted Subsidiary as a result of such Asset Sale, if the Issuer and all
of the Restricted Subsidiaries immediately are released from payment of
such Indebtedness and such Indebtedness is no longer the liability of the
Issuer or any of the Restricted Subsidiaries; and
(iii) any securities, notes or other obligations received by the
Issuer (or such Restricted Subsidiary, as the case may be) from such
transferee that are converted by the Issuer (or such Restricted Subsidiary,
as the case may be) into cash and/or Cash Equivalents within 90 days of the
date of such Asset Sale (to the extent of the cash and/or Cash Equivalents
received)
will be deemed to be cash and/or Cash Equivalents for purposes of this
provision.
(d) Notwithstanding any provision of this Section 8.05, the
provisions of this Section 8.05 shall not apply to any transaction constituting
a Restricted Payment that is permitted by Section 8.02 or that otherwise
constitutes a Permitted Investment.
8.06. Transactions with Affiliates. The Issuer shall not, and shall
----------------------------
not permit any of the Restricted Subsidiaries to, make any payment to, or sell,
lease, transfer or otherwise
-60-
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
---------------------
(i) such Affiliate Transaction is on terms that are not materially
less favorable to the Issuer or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Issuer or such Restricted Subsidiary with an unrelated Person entered into
on an arm's-length basis; and
(ii) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration of $1.0 million or
more, the Issuer delivers to the Purchasers a resolution of the Board of
Directors set forth in an Officers' Certificate that such Affiliate
Transaction is approved by a majority of the Disinterested Directors and
certifying that such Affiliate Transaction complies with clause (i) above
and is in the best interests of the Issuer or such Restricted Subsidiary;
provided that if there are either no Disinterested Directors or the
Affiliate Transaction is occurring prior to a Note Liquidity Event and the
consideration therefor would equal $5.0 million or more, the Issuer must
deliver a favorable written opinion from an Independent Financial Advisor
as to the fairness to the Issuer or its Restricted Subsidiaries of such
Affiliate Transaction from a financial point of view.
Notwithstanding the foregoing, the following items shall not be deemed to be
Affiliate Transactions:
(i) (a) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit plan or
program, related trust agreement or any other similar arrangement for or
with any employee, officer or director heretofore or hereafter entered into
in the ordinary course of business, including vacation, health, insurance,
deferred compensation, retirement, savings or other similar plans or (b)
the payment of compensation, performance of indemnification or contribution
obligations, or an issuance, grant or award of stock, options, or other
equity-related interests or other securities, to employees, officers or
directors in the ordinary course of business;
(ii) transactions between or among the Issuer and/or the Restricted
Subsidiaries;
(iii) payment of reasonable director's fees;
(iv) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of the Issuer;
-61-
(v) Affiliate Transactions in effect on the Closing Time that would
otherwise be permitted under other provisions of this paragraph, including
any amendments thereto (provided that the terms of such amendments are not
materially less favorable to the Issuer or the Restricted Subsidiary than
the terms of such agreement prior to such amendment);
(vi) Restricted Payments that are permitted under Section 8.02 and
Permitted Investments described under clause (d) of the definition thereof;
(vii) transactions with Ascend Communications, Inc. and its
Affiliates in the ordinary course of business on terms no less favorable,
taken as a whole, than could be obtained on an arm's length basis; and
(viii) customary investment and commercial banking services from The
Chase Manhattan Bank and its Affiliates.
8.07. Ownership of Opco. After the Reorganization, the Issuer (a)
-----------------
shall not, and shall not permit Opco to, transfer, convey, sell, issue or
otherwise dispose of any Capital Stock of Opco to any Person (other than the
Issuer), unless such transfer, conveyance, sale, issue or other disposition is
pursuant to and in accordance with the provisions of Section 8.10; provided that
this provision shall not apply to any pledge of (but not foreclosure upon)
Capital Stock of Opco to secure Indebtedness under the Credit Agreement and (b)
shall not cause or permit Opco to issue any of its Capital Stock (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying shares
to the extent required by applicable law) to any Person other than to the
Issuer.
8.08. Liens. The Issuer shall not, and shall not permit any of the
-----
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
otherwise cause or suffer to exist or become effective any Lien of any kind
(other than Permitted Liens) to secure Indebtedness upon any of their property
or assets, now owned or hereafter acquired, unless all payments due in respect
of the Notes are secured (except as provided below) on an equal and ratable
basis with the obligations so secured and no Lien shall be granted or be allowed
to exist which secures Subordinated Indebtedness except with respect to Acquired
Debt, in which case, however, such Liens must be made junior and subordinate to
the Liens granted in favor of the Holders.
8.09. Payments for Consents. Neither the Issuer nor any of its
---------------------
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder in
consideration for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of this Agreement or the Notes unless such
consideration is concurrently offered to be paid or is concurrently paid to all
Holders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
-62-
8.10. Merger, Consolidation and Sale of Assets.
----------------------------------------
(a) The Issuer may not, directly or indirectly, consolidate or
merge with or into (whether or not the Issuer is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions, to another Person, unless:
(i) the Issuer is the surviving corporation or the Person formed by
or surviving any such consolidation or merger (if other than the Issuer )
or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; and
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Issuer) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes all the Obligations of the Issuer; and
(iii) no Default shall exist or shall occur immediately after
giving effect on a pro forma basis to such transaction; and
(iv) except in the case of a merger of the Issuer with or into a
Wholly Owned Restricted Subsidiary of the Issuer, the Issuer or the Person
formed by or surviving any such consolidation or merger (if other than the
Issuer), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made will immediately after such transaction
and after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the applicable
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to Section 8.04(a)(i); and
(v) if, as a result of any such transaction, property or assets of
the Issuer would become subject to a Lien subject to the provisions of this
Agreement described under Section 8.08, the Issuer or the successor entity
to the Issuer shall have secured the Notes as required by said Section.
(b) The provisions of this Section 8.10 will not be applicable to
the Reorganization in accordance with Section 2.05 or a transaction the purpose
of which is to reincorporate the Issuer (or its successor or assign) in another
U.S. jurisdiction.
(c) Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Issuer in accordance with Section 8.10(a)
hereof, the successor Person formed by such consolidation or into which the
Issuer is merged or to which such transfer is made shall succeed to and (except
in the case of a lease) be substituted for (so that from and
-63-
after the date of such consolidation, merger or transfer, the provisions of this
Agreement referring to the "Issuer" shall refer instead to the successor Person
and not to the prior issuer), and may exercise every right and power of, the
Issuer under this Agreement with the same effect as if such successor Person had
been named herein as the issuer, and (except in the case of a lease) the prior
issuer shall be released from the Obligations.
8.11. Public Disclosures. The Issuer shall not, and shall not permit
------------------
any of its Subsidiaries to, disclose the name or identity of any Holder as an
investor in the Issuer in any press release or other public announcement or in
any document or material filed with any Governmental Authority, unless such
disclosure is a Requirement of Law or in any Shelf Registration Statement, in
which case prior to making such disclosure the Issuer shall give written notice
to such Holder describing in reasonable detail the proposed content of such
disclosure and shall permit such Holder to review and comment upon the form and
substance of such disclosure.
8.12. Business Activities. The Issuer and the Restricted Subsidiaries
-------------------
shall not collectively engage principally in any business other than a Permitted
Business.
8.13. Limitations on Sale and Leaseback Transactions. The Issuer
----------------------------------------------
shall not, and shall not permit any Restricted Subsidiary to, enter into any
sale and leaseback transaction unless (i) the consideration received in such
sale and leaseback transaction is at least equal to the Fair Market Value of the
property sold, (ii) if the sale and leaseback transaction would be a Capital
Lease Obligation, the Issuer could incur the Indebtedness, if any, attributable
to such sale and leaseback transaction in compliance with Section 8.04 and (iii)
if the sale and leaseback transaction would not be a Capital Lease Obligation
and would be subject to Section 8.05, such sale and leaseback transaction is
permitted by, and the proceeds thereof are applied in compliance with, Section
8.05 hereof.
8.14. Investment Company Act. The Issuer will not, and will not
----------------------
permit any of its Subsidiaries or controlled Affiliates to, conduct its business
in a fashion that would cause the Issuer or any of its Subsidiaries or
controlled Affiliates to be required to register as an "investment company" (as
that term is defined in the Investment Company Act of 1940), or otherwise to
become subject to regulation under the Investment Company Act of 1940 without
exemption.
SECTION 9
PROVISIONS RELATING TO RESALES OF SECURITIES
--------------------------------------------
9.01. Private Offerings. The Issuer and the Purchasers agree that the
-----------------
following provisions will apply to any Private Offerings:
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(a) Offers and Sales Only to Institutional Accredited Investors or
--------------------------------------------------------------
Qualified Institutional Buyers. Offers and sales of the Securities and the
------------------------------
Warrant Shares will be made only by the Purchasers or Affiliates thereof
qualified to do so in the jurisdictions in which such offers or sales are
made. Prior to the effectiveness of a registration statement with respect
to the Notes, the Exchange Notes, the Warrants or the Warrant Shares, each
such offer or sale shall only be made (i) to persons whom the offeror or
seller reasonably believes to be Qualified Institutional Buyers, (ii) to
other institutional accredited investors referred to in Rule 501(a)(1),
(2), (3) or (7) of Regulation D that the offeror or seller reasonably
believes to be and, with respect to sales and deliveries, that are
Accredited Investors ("Institutional Accredited Investors") or (iii)
----------------------------------
non-U.S. persons that are financial institutions, investment advisors or
affiliates of the foregoing or would otherwise be substantially equivalent
to an Institutional Accredited Investor outside the United States to whom
the offeror or seller reasonably believes offers and sales of the Notes may
be made in reliance upon Regulation S under the Securities Act.
(b) No General Solicitation. The Securities and the Warrant Shares
-----------------------
will be offered by approaching prospective Subsequent Purchasers on an
individual basis. No general solicitation or general advertising (within
the meaning of Rule 502(c) under the Securities Act) will be used in the
United States and no directed selling efforts (as defined in Regulation S)
will be used made outside the United States in connection with the offering
of the Securities.
(c) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
---------------------------------
Subsequent Purchaser of a Security or the Warrant Shares acting as a
fiduciary for one or more third parties, in connection with an offer and
sale to such purchaser pursuant to Section 9.01, each third party shall, in
the judgment of the applicable Purchaser, be an Institutional Accredited
Investor or a Qualified Institutional Buyer or a non-U.S. person outside
the United States.
(d) Restrictions on Transfer; Legend. Upon original issuance by the
--------------------------------
Issuer, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Securities and the
Warrant Shares (and all securities issued in exchange therefor or in
substitution thereof, other than, in the case of the Notes, the registered
Exchange Notes) shall bear such legend as is required under Section 9.05 of
this Agreement.
(e) No Future Liability. Following the sale of the Securities or
-------------------
the Warrant Shares by any Purchaser to Subsequent Purchasers in accordance
with the terms of this Section 9, such Purchaser shall not be liable or
responsible to the Issuer for any losses, damages or liabilities suffered
or incurred by the Issuer, including any losses, damages or liabilities
under the Securities Act, arising from or relating to any resale or
transfer
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of any Security or the Warrant Shares previously sold by such Purchaser in
compliance with this Section 9.01.
(f) Securities Act Restrictions.
---------------------------
(i) A Holder selling Securities or the Warrant Shares in a Private
Offering to a transferee that is an Accredited Investor or a Qualified
Institutional Buyer must satisfy each of the following conditions:
(1) such Holder or transferee must represent that the
transferee is acquiring the Securities or the Warrant Shares for its
own account and that it is not acquiring such Securities or the
Warrant Shares with a view to, or for offer or sale in connection
with, any distribution thereof (within the meaning of the Securities
Act) that would be in violation of the securities laws of the United
States or any state thereof, but subject, nevertheless, to the
disposition of its property being at all times within its control; and
(2) such transferee must agree to be bound by the provisions
of this Section 9.01 with respect to any resale of the Securities or
the Warrant Shares.
(ii) A Holder may sell its Securities or the Warrant Shares to a
transferee in accordance with Regulation S under the Securities Act;
provided, however, that each of the following conditions is satisfied:
(1) the offer of Securities or the Warrant Shares must not be
made to a person in the United States;
(2) either:
(A) at the time the buy order is originated, the
transferee is outside the United States or the Holder and any
person acting on its behalf reasonably believes that the
transferee is outside the United States, or
(B) the transaction must be executed in, on or through
the facilities of a designated offshore securities market and
neither the Holder nor any person acting on its behalf knows
that the transaction was pre-arranged with a buyer in the
United States;
(3) no directed selling efforts may be made in contravention
of the requirements of Rule 903(b) or 904(b) of Regulation S under the
Securities Act, as applicable; and
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(4) the transaction must not be part of a plan or scheme to
evade the registration requirements of the Securities Act.
(iii) In the event of a proposed exercise or sale that does not
qualify under either subclause (i) or (ii) above, a Holder may sell its
Securities or the Warrant Shares only if:
(1) such Holder must give written notice to the Issuer of its
intention to exercise or effect such sale, which notice (A) shall
describe the manner and circumstances of the proposed transaction in
reasonable detail and (B) shall designate the counsel for such Holder,
which counsel shall be reasonably satisfactory to the Issuer;
(2) counsel for the Holder must render an opinion, to the
effect that such proposed sale may be effected without registration
under the Securities Act; and
(3) such Holder or transferee must comply with subclause
(i)(1) and (2) above.
9.02. Resale Offering Assistance.
--------------------------
(a) At any time following 24 months after the Closing Time
(provided that the Issuer (or its equivalent from a financial reporting
standpoint), is not then reporting on filings made with the SEC in accordance
with the requirements of Section 13 or 15(d) of the Exchange Act) (the
"Assistance Period"), the Issuer will, if reasonably requested by a Holder that
-----------------
is original Purchaser hereunder, assist the holders of Notes and Exchange Notes
in completing any private or public resale of any portion thereof (including any
such resales of the Notes pursuant to any Private Offering and any resales of
the Exchange Notes following the completion of the Exchange Offer) in accordance
with the Holders' intended method of distribution. Such assistance may, in each
case, include the following:
(i) direct contact between the Issuer's senior management and
advisors and prospective purchasers and hosting of one or more meetings of
prospective purchasers; and
(ii) responding to reasonable inquiries of, and providing answers
to, each prospective purchaser who so requests concerning the Issuer and
its Subsidiaries (to the extent such information is available or can be
acquired and made available to prospective purchasers without unreasonable
effort or expense and to the extent the provision thereof is not prohibited
by any Requirement of Law or applicable confidentiality restrictions) and
the terms and conditions of the applicable distribution.
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(b) During the Assistance Period, all materials supplied or
available under this Section 9.02 or under Section 6 by the Issuer (including
any materials referred to or incorporated by reference therein, "Resale
------
Materials") will not, as of its date, when taken as a whole, include an untrue
---------
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) If, prior to the completion of any sale of the Notes and
Exchange Notes, if applicable, by the selling holders (as evidenced by a notice
in writing from the holders to the Issuer), any event shall occur or condition
exist as a result of which the Resale Materials would contain a misstatement of
a material fact or an omission of a material fact required to make the
statements therein, in the light of the circumstances, not misleading, then the
Issuer agrees to promptly prepare and furnish at its own expense to the selling
holders, further information so that the statements in the Resale Materials,
taken as a whole, will not contain a misstatement of a material fact or an
omission of a material fact required to make the statements therein, in the
light of the circumstances, not misleading. The Issuer hereby expressly
acknowledges the indemnification and contribution provisions of Sections 13.02
and 13.03 hereof are specifically applicable and relate to Resale Materials.
9.03. Blue Sky Compliance. In connection with any Private Offering of
-------------------
the Notes by Holders that were original Purchasers hereunder, the Issuer shall
cooperate with the selling Holders and counsel for the selling Holders to
qualify or register the Notes for sale under (or to obtain exemptions from the
application of) the Blue Sky or state securities laws of those jurisdictions
designated by the selling Holders, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long as
required for the distribution of the Notes. The Issuer shall not be required to
qualify as a foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where they are not then
qualified or to taxation as a foreign corporation. The Issuer will advise the
selling Holders promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Notes for offering, sale or trading
in any jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Issuer shall, with the cooperation
of the selling Holders, use its best efforts to obtain the withdrawal thereof at
the earliest possible moment.
9.04. No Integration. The Issuer agrees that it shall not and (to the
--------------
extent within its control) it shall cause its Affiliates not to make any offer
or sale of securities of any class of the Issuer if, as a result of the doctrine
of "integration" referred to in Rule 502 under the Securities Act, such offer or
sale would render invalid (for the purpose of the sale of the Securities by the
Issuer to the Purchasers) any applicable exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof.
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9.05. Form of Legend for the Securities. Unless otherwise permitted
---------------------------------
by Section 9.01(f), every Note issued and delivered hereunder shall bear a
legend in substantially the following form:
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
--------------
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE APPLICABLE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF JANUARY 31, 2000
(THE "PURCHASE AGREEMENT"), AMONG THE ISSUER AND THE PURCHASERS NAMED THEREIN.
------------------
A COPY OF SUCH PURCHASE AGREEMENT IS AVAILABLE AT THE OFFICES OF THE ISSUER.
Unless otherwise permitted by Section 9.01(f), each Warrant and the
Warrant Shares issued and delivered hereunder and under the Warrants shall bear
a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
--------------
OR QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE APPLICABLE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF JANUARY 31, 2000,
AND THE REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT, DATED AS OF JANUARY 31,
2000. COPIES OF SUCH AGREEMENTS ARE AVAILABLE AT THE OFFICES OF THE ISSUER.
SECTION 10
THE NOTES
---------
10.01. Form and Execution. The Notes shall be in the form of Exhibit
------------------ -------
A hereto. The Notes shall be executed on behalf of the Issuer by its President,
-
Chief Financial
-69-
Officer or one of its Vice Presidents. The signature of any of these officers on
the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
10.02. Terms of the Notes. The terms of the Notes shall be as set
------------------
forth in Exhibit A. Without limiting the foregoing:
---------
(a) Stated Maturity. The Stated Maturity of the principal of Notes
---------------
shall be as provided in Exhibit A.
---------
(b) Interest. The Notes shall not accrue cash interest prior to
--------
February 1, 2005. The Notes will otherwise bear interest and Special
Interest, if any, on their principal amount and overdue interest and
Special Interest as provided in Exhibit A.
---------
10.03. Denominations. The Notes shall be issuable only in registered
-------------
form without coupons and only in denominations of U.S. $1,000 principal amount
at maturity and any integral multiple thereof.
10.04. Payments and Computations. All payments of interest on the
-------------------------
Notes shall be paid to the persons in whose names such Notes are registered on
the Security Register at the close of business on the date fifteen days prior to
the related Interest Payment Date (the "Regular Record Date") and all payments
-------------------
of principal on the Notes shall be paid to the persons in whose names such Notes
are registered on the applicable Redemption Date or at Maturity, as applicable.
Principal on any Note shall be payable only against surrender therefor, while
payments of interest on Notes shall be made, in accordance with this Agreement
and subject to applicable laws and regulations, by check mailed on or before the
due date for such payment to the person entitled thereto at such person's
address appearing on the Security Register or, by wire transfer to such account
as any Holder shall designate by written instructions received by the Issuer no
less than 15 days prior to any applicable Interest Payment Date, which wire
instruction shall continue in effect until such time as the Holder otherwise
notifies the Issuer or such Holder no longer is the registered owner of such
Note or Notes.
Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
10.05. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
(a) Security Register. The Issuer shall maintain a register (the
-----------------
"Security Register") for the registration or transfer of the Notes. The name
-----------------
and address of the Holder of
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each Note, records of any transfers of the Notes and the name and address of any
transferee of a Note shall be entered in the Security Register and the Issuer
shall, promptly upon receipt thereof, update the Security Register to reflect
all information received from a Holder. There shall be no more than one Holder
for each Note, including all beneficial interests therein.
(b) Registration of Transfer. Upon surrender for registration of
------------------------
transfer of any Note at the office or agency of the Issuer, the Issuer shall
execute and deliver, in the name of the designated transferee or transferees,
one or more new Notes, of any authorized denominations and like aggregate
principal amount.
(c) Exchange. At the option of the Holder, Notes may be exchanged
--------
for other Notes, of any authorized denominations and of like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute and
deliver the Notes which the Holder making the exchange is entitled to receive.
(d) Effect of Registration of Transfer or Exchange. All Notes
----------------------------------------------
issued upon any registration of transfer of exchange or Notes shall be the valid
obligations of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Agreement, as the Notes surrendered upon such registration
of transfer or exchange.
(e) Requirements; Charges. Every Note presented or surrendered for
---------------------
registration of transfer or for exchange shall (if so required by the Issuer) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer duly executed, by the Holder thereof or his attorney
duly authorized in writing. No service charge shall be made for any registration
of transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 8.10 not involving any transfer.
(f) Certain Limitations. If the Notes are to be redeemed in part,
-------------------
the Issuer shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of any such Notes
selected for redemption under Section 12.02 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
10.06. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated
-------------------------------------------
Note is surrendered to the Issuer, the Issuer shall execute and deliver in
exchange therefor a new Note of the same principal amount and bearing a number
not contemporaneously outstanding.
-71-
If there shall be delivered to the Issuer (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by then to save each of it and any agent
harmless, then, in the absence of notice that such Note has been acquired by a
bona fide purchaser, the Issuer shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of a like principal amount and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Issuer in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note pursuant to this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
10.07. Persons Deemed Owners. Prior to due presentment of a Note for
---------------------
registration of transfer, the Issuer and any agent of the Issuer may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note be overdue and neither
the Issuer nor any agent of the Issuer shall be affected by notice to the
contrary.
10.08. Cancellation. All Notes surrendered for payment, redemption,
------------
registration of transfer or exchange shall, if surrendered to any Person other
than the Issuer, be delivered to the Issuer and shall be promptly canceled by
it. The Issuer shall cancel any Notes previously issued and delivered hereunder
which the Issuer may have reacquired.
10.09. Home Office Payment. So long as any Purchaser or its nominee
-------------------
shall be the Holder of any Note, and notwithstanding anything contained in this
Agreement or such Note to the contrary, the Issuer will pay all sums becoming
due on such Note for principal, premium, if any, and interest by such method and
at such address as such Purchaser shall have from time to time specified to the
Issuer in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that upon written re-
-72-
quest of the Issuer made concurrently with or reasonably promptly after payment
or prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation reasonably promptly after any such request, to the Issuer at its
principal executive office. Prior to any sale or other disposition of any Note
held by such Purchaser or its nominee such Purchaser will, at its election,
either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Issuer in
exchange for a new Note or Notes pursuant to Section 10.05. The Issuer will
afford the benefits of this Section 10.09 to any direct or indirect transferee
of any Note purchased by such Purchaser under this Agreement and that has made
the same agreement relating to such Note as such Purchaser made in this Section
10.09.
SECTION 11
EVENTS OF DEFAULT
-----------------
11.01. Events of Default. An Event of Default in respect of the Notes
-----------------
shall exist upon the occurrence and continuation of any of the following
specified events (each an "Event of Default"):
----------------
(i) the Issuer defaults in the payment when due of interest or
Special Interest on the Notes and such default continues for a period of 30
days or more; or
(ii) the Issuer defaults in the payment when due of the principal
of, or premium, if any, on the Notes when the same becomes due and payable;
or
(iii) the Issuer fails to comply with the provisions described in
Section 7.08 or 8.05; or
(iv) the Issuer or any Restricted Subsidiary shall default in the
observance or performance of any other agreement contained in this
Agreement or the Notes (other than as provided in paragraphs (i) through
(iii) of this Section 11.01), and such default shall continue unremedied
for a period of 30 days after notice to the Issuer from any Holder, which
notice must specify the failure, demand that it be remedied and state that
the notice is a "Notice of Default";
(v) the Issuer or any Restricted Subsidiary shall (i) default in
making any payment of any principal of any Indebtedness on the scheduled or
original due date with respect thereto; or (ii) default in making any
payment of any interest on any such Indebtedness beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
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contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on behalf
of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
(in the case of any such Indebtedness constituting a guarantee) to become
payable; provided that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which equals or exceeds in
the aggregate $5.0 million; or
(vi) one or more judgments, orders or decrees for the payment of
money in excess of $5.0 million, individually or in the aggregate (net of
applicable insurance coverage which is acknowledged in writing by the
insurer), shall be entered against the Issuer or any Restricted Subsidiary
or any of their respective properties and shall not be discharged and there
shall have been a period of 60 days or more during which a stay of
enforcement of such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect; or
(vii) the Issuer or any of the Restricted Subsidiaries:
(A) commences a voluntary case under any Bankruptcy Law,
(B) consents to the entry of an order for relief against it in
an involuntary case under any Bankruptcy Law,
(C) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing under any Bankruptcy Law its inability
to pay its debts generally as such debts become due; or
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Issuer or any of the Significant
Subsidiaries,
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(B) appoints a custodian of the Issuer or any of its
Significant Subsidiaries or for all or substantially all of the
property of the Issuer or any of its Significant Subsidiaries, or
(C) orders the liquidation of the Issuer or any of its
Significant Subsidiaries; and the order or decree remains unstayed and
in effect for 60 consecutive days.
11.02. Remedies. If an Event of Default (other than an Event of
--------
Default specified in Section 11.01(vii) or (viii) with respect to the Issuer)
occurs and is continuing, then and in every such case the Holders of 40% or more
in principal amount of the then outstanding Notes may declare the Default Amount
to be due and payable immediately, by a notice in writing to the Issuer, and
upon any such declaration such Default Amount shall become immediately due and
payable. For the avoidance of doubt, if any Payment Default or acceleration
that constitutes an Event of Default under Section 11.01(v) shall have occurred
and prior to any acceleration under this Section 11.02 such Payment Default
shall have been cured or waived or such acceleration shall have been rescinded,
then from and after such cure, waiver or rescission, such Event of Default shall
no longer be deemed to be continuing. If an Event of Default specified in
Section 11.01(vii) or (viii) with respect to the Issuer occurs and is
continuing, the Default Amount on the outstanding Notes shall automatically, and
without any declaration or other action on the part of any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained, the
Required Holders, by written notice to the Issuer, may rescind and annul such
declaration and its consequences if:
(a) the Issuer has paid a sum sufficient to pay:
(i) all overdue interest and Special Interest on all Notes;
(ii) the principal amount of (and premium, if any, on) any
Notes which have become due otherwise than by such declaration of
acceleration (including any Notes required to have been purchased
pursuant to an offer to purchase that the Issuer is required to make
hereunder) and any interest and Special Interest thereon at the rate
borne by the Notes; and
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue Special Interest at the
rate provided therefor in the Notes; and
(b) all Events of Default, other than the nonpayment of the
principal amount of (and premium, if any, on) Notes and interest and
Special Interest thereon
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which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 11.03.
Notwithstanding the foregoing, if the Issuer or any Restricted
Subsidiary intentionally takes action to cause or permit an Event of Default for
the purpose of repaying the Notes and avoiding the payment of any premium that
would be otherwise payable upon an optional redemption, the Issuer shall be
required, upon any acceleration provided hereunder to include in the Default
Amount such premium, as of the relevant payment date, as if the Issuer had
exercised its option to redeem such note pursuant to Section 12.
11.03. Waiver of Past Defaults. The Required Holders may on behalf of
-----------------------
the Holders of all the Notes waive any past default hereunder and its
consequences, except a default:
(a) in the payment of the principal (or premium, if any) or
interest or Special Interest on any Note (including any Note which is
required to have been purchased pursuant to an offer to purchase that the
Issuer is required to make hereunder), or
(b) in respect of a covenant or provision hereof which under
Section 16.04 cannot be modified or amended without the consent of the
Holder of each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Agreement; provided, however, no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 12
REDEMPTION
----------
12.01. Right of Redemption. The Notes may be redeemed at the election
-------------------
of the Issuer upon such conditions, at such times, in such amounts and at the
Redemption Prices (together with accrued interest, if any) and any Special
Interest to the Redemption Date) specified in the form of Note attached as
Exhibit A hereto.
---------
12.02. Partial Redemptions. In case the Issuer is entitled to, and
-------------------
elects to, redeem less than all of the Notes, the Issuer shall redeem the Notes
pro rata from each Holder (or as nearly pro rata as practicable). For all
purposes of this Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Notes shall relate, in the case
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of any Notes redeemed or to be redeemed only in part, to the portion of the
principal amount of such Notes which has been or is to be redeemed.
12.03. Notice of Redemption. Notice of redemption shall be given by
--------------------
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each Holder to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the outstanding Notes are to be redeemed, the
portion of each Note to be redeemed,
(d) that on the Redemption Date the Redemption Price will become
due and payable upon each such Note to be redeemed and that interest and
any Special Interest thereon will cease to accrue on and after said date,
and
(e) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the
Issuer shall be given by the Issuer and at the expense of the Issuer.
12.04. Deposit of Redemption Price. Prior to any Redemption Date, the
---------------------------
Issuer shall segregate and hold in trust an amount of money sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) any applicable accrued interest and Special Interest on, all the
Notes which are to be redeemed on that date.
12.05. Notes Payable on Redemption Date. If notice of redemption
--------------------------------
shall have been given as provided above, the Notes so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Issuer shall default in the
payment of the Redemption Price and any applicable accrued interest and Special
Interest) such Notes shall not bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall be paid by the
Issuer at the Redemption Price, together with any applicable accrued interest
and Special Interest to the Redemption Date; provided that installments of
interest or Special Interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Notes registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of this Agreement.
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If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate provided by the Note.
12.06. Notes Redeemed in Part. Any Note which is to be redeemed only
----------------------
in part shall be surrendered at the principal offices of the Issuer (with, if
the Issuer so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Issuer duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Issuer shall execute and deliver
to the Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
SECTION 13
EXPENSES, INDEMNIFICATION AND
CONTRIBUTION AND TERMINATION
----------------------------
13.01. Expenses. Whether or not the transactions contemplated hereby
--------
are consummated, the Issuer will pay all reasonable costs and expenses
(including reasonable and documented attorneys' and accountants' fees and
disbursements) incurred by the Purchasers (and their Affiliates) in connection
with the Transactions, including, without limitation, the Purchasers' reasonable
and documented out-of-pocket expenses in connection with the Purchasers'
examinations and appraisals of the properties, books and records of the Issuer
and its Subsidiaries to the extent approved in advance by the Issuer, and (b)
the reasonable costs and expenses incurred in enforcing (or determining whether
or how to enforce) any rights under this Agreement or any Transaction Document
(to the extent the Purchasers and their Affiliates are entitled to so enforce)
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement, the other
Transaction Documents or the Securities, or by reason of being a holder of any
Securities, including, without limitation, costs and expenses incurred in any
bankruptcy case; provided that the Issuer will not be obligated to reimburse the
Purchasers for the fees and expenses of more than one legal counsel in
connection with the Transactions and then in an amount not to exceed $40,000.
The Issuer will pay, and will save the Purchasers and each other holder of a
Security harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders in relation to the Transactions.
13.02. Indemnification.
---------------
(a) Indemnification by the Issuer. The Issuer agrees to indemnify
-----------------------------
and hold harmless (i) each Purchaser, (ii) each Person, if any, who controls
(within the meaning of
-78-
Section 15 of the Securities Act or Section 20 of the Exchange Act) any
Purchaser (any of the Persons referred to in this clause (ii) being referred to
herein as a "Controlling Person") and (iii) the respective officers, directors,
------------------
managing directors, stockholders, partners, employees, representatives,
trustees, fiduciaries, and agents of any Purchaser or any such Controlling
Person (any such Person referred to in clause (i), (ii) or (iii), a "Purchaser
---------
Indemnified Person") against any losses, claims, damages or liabilities, joint
------------------
or several, to which such Purchaser Indemnified Person may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
in whole or in part any inaccuracy in any of the representations and warranties
of the Issuer contained herein, (ii) in whole or in part upon the failure of the
Issuer to perform its obligations hereunder or under Requirement of Law or (iii)
any change in the financial condition, operations, business or properties of the
Issuer and its Subsidiaries during the period from September 30, 1999 to the
Closing Time, inclusive, that, individually or in the aggregate, has had or
would have a Material Adverse Effect that has not been disclosed in writing to
the Purchasers; and will reimburse each such Purchaser Indemnified Person for
any reasonable legal and other expenses incurred by such Purchaser Indemnified
Person in connection with investigating or defending any such action or claims
as such expenses are incurred. The indemnity agreement set forth in this Section
13.02(a) shall be in addition to any liabilities that the Issuer may otherwise
have. The foregoing indemnification shall apply whether or not such losses,
claims, damages or liabilities are primarily caused, in whole or in part, by any
negligent act or omission of any kind by such Purchaser Indemnified Person.
(b) Indemnification by the Purchasers. Each Purchaser agrees,
---------------------------------
severally and not jointly, to indemnify and hold harmless (i) the Issuer and
(ii) each Controlling Person of an Issuer and (iii) the respective officers,
directors, employees, representatives and agents of each Issuer or any such
Controlling Person (any such Person referred to in clause (i), (ii) or (iii), an
"Issuer Indemnified Person") against any losses, claims, damages or liabilities,
-------------------------
joint or several, to which such Issuer Indemnified Person may become subject,
under the Securities Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
in whole or in part any inaccuracy of any of such Purchaser's representations
and warranties in Section 5 or (ii) in whole or in part the failure of such
Purchaser to perform its obligations in Section 9.01(f) or 9.06; and will
reimburse the Issuer Indemnified Persons for any legal and other expenses
reasonably incurred by the Issuer Indemnified Persons in connection with
investigating or defending any such actions or claims as such expenses are
incurred. The indemnity agreement set forth in this Section 13.02(b) shall be
in addition to any liabilities that each Purchaser may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
--------------------------------------------------
after receipt by a Purchaser Indemnified Person or an Issuer Indemnified Person
(each, an "Indemnified Person") of notice of the commencement of any action,
------------------
such Indemnified Person shall, if a claim in respect thereof is to be made
against an indemnifying party under Section 13.02(a) or 13.02(b), as applicable,
notify such indemnifying party in writing of the commencement
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thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any Indemnified Person otherwise than
under Section 13.02(a) or 13.02(b), as applicable, or to the extent it is not
materially prejudiced as a proximate result of such failure. In case any such
action is brought against any Indemnified Person and it shall notify an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it shall elect within 30
days after receiving any such notification, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such Indemnified Person (who shall not, except with the consent
of the Indemnified Person, which consent shall not be unreasonably withheld, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such Indemnified Person of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such Indemnified Person
under such paragraph for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such Indemnified Person, in
connection with the defense thereof other than reasonable costs of
investigation. Notwithstanding the foregoing, any Indemnified Person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Person unless (i) the Indemnified Person shall have
been advised by counsel that representation of the Indemnified Person by counsel
provided by the indemnifying party would be inappropriate due to actual or
potential conflicting interests between the indemnifying party and the
Indemnified Person, including situations in which there are one or more legal
defenses available to the Indemnified Person that are different from or
additional to those available to the indemnifying party, (ii) the indemnifying
party shall have authorized in writing the employment of counsel for the
Indemnified Person at the expense of the indemnifying party or (iii) the
indemnifying party shall have failed to assume the defense or retain counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
indemnifying party shall not, in connection with any one such action or
proceeding or separate but substantially similar actions or proceedings arising
out of the same general allegations, be liable for the fees and expenses of more
than one separate firm of attorneys at any time for all Indemnified Persons,
except to the extent that local or special counsel, in addition to their regular
counsel, is required in order to effectively defend against such action or
proceeding. No indemnifying party shall, without the written consent of the
Indemnified Person, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the Indemnified Person is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the Indemnified Person from all liability arising out
of such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of any
Indemnified Person.
13.03. Contribution. If the indemnification provided for in Section
------------
13.02 is unenforceable and accordingly unavailable to or insufficient to hold
harmless an Indemnified Person under paragraph (a), (b) or (c) of Section 13.02
in respect of any losses, claims, dam-
-80-
ages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the (i) relative benefits received by the Issuer on the one hand and the
Purchasers on the other hand from the issuance and sale of the Securities; or
(ii) if the allocation provided in clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the related
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party on the one hand and the Indemnified Person on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Issuer on the one hand and the Purchasers on the other hand in connection with
the sale of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Issuer and the commitment fee payable to the Purchasers at the Closing
Time. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party on the one hand or the Indemnified Person on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties agree
that it would not be just and equitable if contributions pursuant to this
Section 13.03 were determined by pro rata allocation (even if the Indemnified
Persons were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 13.03. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 13.03 shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 13.03, no Purchaser shall be
required to contribute any amount which, when taken together with any amounts
paid by such Purchaser under Section 13.02(b) exceeds the commitment fee payable
to the Purchasers at the Closing Time. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The obligations of the Issuer and the Purchasers under this Section
13.03 shall be in addition to any liability which the Issuer and the respective
Purchasers may otherwise have.
13.04. Survival. The obligations of the Issuer under this Section 13
--------
will survive the payment or transfer of any Security or Exchange Note, the
enforcement, amendment or waiver of any provision of this Agreement and the
termination of this Agreement.
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13.05. Termination.
-----------
(a) The Purchasers may terminate this Agreement, by notice to the
Issuer, (1) at any time at or prior to March 1, 2000 if any of the conditions in
Section 3 are not satisfied or waived in writing by the Purchasers or are not
capable of being so satisfied or waived at or prior to March 1, 2000 if the
Closing has not occurred hereunder or (2) except as disclosed herein and in the
Schedules hereto, at any time at or prior to the Closing Time if there has been,
since the time of execution of this Agreement or since September 30, 1999, any
material adverse change in the business, management, operations, condition
(financial or otherwise) or assets of the Issuer and its Subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to this Section
13.05, such termination shall be without liability of any party to any other
party except as provided in Section 13.01 hereof, and provided further that
Sections 1, 13.02, 13.03, 13.04, 14.08 and 14.12 shall survive such termination
and remain in full force and effect.
SECTION 14
MISCELLANEOUS
-------------
14.01. Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set out below if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), (c) the day following the day on which the same has
been delivered prepaid to a reputable national overnight air courier service or
(d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to the respective
parties at the address set forth below, or at such other address as such party
may specify by written notice to the other party hereto:
(i) if to a Purchaser or its nominee, to the Purchaser or its
nominee at the address specified for such communications in Schedule A,
----------
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq., or at such other
address as the Purchaser or its nominee shall have specified to the Issuer
in writing;
(ii) if to any other Holder to such Holder at the address of such
Holder appearing in the Security Register or such other address as such
other holder shall have specified to the Issuer in writing; or
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(iii) if to the Issuer at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer or at such other address as the Issuer
shall have specified to each Holder in writing, with a copy to ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq.
14.02. Benefit of Agreement; Assignments and Participations. Except
----------------------------------------------------
as otherwise expressly provided herein, all covenants, agreements and other
provisions contained in this Agreement by or on behalf of any of the parties
hereto shall bind, inure to the benefit of and be enforceable by their
respective successors and assigns (including, without limitation, any subsequent
holder of a Security or Exchange Note) whether so expressed or not (other than
Section 9.09 as to Persons other than the Purchasers and their Affiliates);
provided, however, that the Issuer may not assign and transfer any of its rights
or obligations without the prior written consent of the other parties hereto and
each such holder.
Nothing in this Agreement or in the Securities or Exchange Notes,
express or implied, shall give to any Person other than the parties hereto,
their successors and assigns and the holders from time to time of the Securities
or Exchange Notes any benefit or any legal or equitable right, remedy or claim
under this Agreement.
14.03. No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of any party hereto or any Holder in exercising any right, power or
privilege hereunder or under the Securities or Exchange Notes and no course of
dealing between any Issuer and any other party or Holder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under the Securities or Exchange Notes preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies provided herein and
in the Securities and Exchange Notes are cumulative and not exclusive of any
rights or remedies which the parties or Holders would otherwise have. No notice
to or demand on the Issuer in any case shall entitle the Issuer to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the other parties hereto or the Holders to any other or
further action in any circumstances without notice or demand.
14.04. Amendments, Waivers and Consents. Except as provided below in
--------------------------------
this Section 14.04, the Issuer may amend or supplement this Agreement (including
Section 7.09 and 8.05 hereof) and the Notes or any supplemental agreement or
modify the rights of the Holders with the consent of the Required Holders
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes), and, subject to Section 11.03 hereof, any
existing Default (other than a Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Agreement or the Notes may be waived with the consent of the Required
Holders (including consents obtained
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in connection with a tender offer or exchange offer for, or purchase of, the
Notes); provided that no such modification may, without the consent of each
Holder affected thereby:
(i) reduce the Accreted Value, principal amount at maturity of,
change the fixed maturity of, or alter the redemption provisions of, the
Notes,
(ii) change the currency in which any Notes or amounts owing
thereon is payable,
(iii) reduce the percentage of the aggregate principal amount at
maturity outstanding of Notes which must consent to an amendment,
supplement or waiver or consent to take any action under this Agreement or
the Notes,
(iv) impair the right to institute suit for the enforcement of any
payment on or with respect to the Notes,
(v) waive a default in payment with respect to the Notes,
(vi) reduce the rate or change the time for payment of interest on
the Notes,
(vii) following the occurrence of a Change of Control or an Asset
Sale, alter the Issuer's obligation to purchase the Notes as a result of
any such Change of Control or Asset Sale in accordance with this Agreement
or waive any default in the performance thereof, or
(viii) affect the ranking of the Notes in a manner adverse to the
Holders.
No amendment or waiver of this Agreement will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or thereby impair any right consequent thereon. As used
herein, the terms this "Agreement" and references thereto shall mean this
---------
Agreement as it may from time to time be amended or supplemented.
14.05. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. Each counterpart may consist of a number of copies hereof,
each signed by less than all, but together signed by all, of the parties hereto.
14.06. Reproduction. This Agreement, the other Transaction Documents
------------
and all documents relating, hereto and thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Purchasers at the Closing Time (except the Notes
themselves), and (c) financial statements, certificates and
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other information previously or hereafter furnished in connection herewith, may
be reproduced by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and any original document so reproduced
may be destroyed. Each Issuer agrees and stipulates that, to the extent
permitted by Requirement of Law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 14.06 shall not prohibit the Issuer, any
other party hereto or any Holder from contesting any such reproduction to the
same extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
14.07. Headings. The headings of the sections and subsections hereof
--------
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
14.08. Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS AGREEMENT AND THE SECURITIES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
(b) If any action, proceeding or litigation shall be brought by
any Purchaser or any Holder in order to enforce any right or remedy under this
Agreement or any of the Securities, the Issuer hereby consents and will submit,
and will cause each of its Subsidiaries to submit, to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement. The
Issuer hereby irrevocably waives any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of forum non
----- ---
conveniens, which they may now or hereafter have to the bringing of any such
----------
action, proceeding or litigation in such jurisdiction. The Issuer further
agrees that it shall not, and shall cause its Subsidiaries not to, bring any
action, proceeding or litigation arising out of this Agreement, the Securities
or any other Transaction Document in any state or federal court other than any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement.
(c) The Issuer hereby irrevocably designates CT Corporation System
at an address in New York City designated at the Closing Time as the designee,
appointee and agent of the Issuer to receive, for and on behalf of the Issuer,
service of process in such jurisdiction in any action, proceeding or litigation
with respect to this Agreement, the Securities or
-85-
any of the other Transaction Documents. It is understood that a copy of such
process served on such agent will be promptly forwarded by mail to the Issuer at
its address set forth opposite its signature below, but the failure of the
Issuer to have received such copy shall not affect in any way the service of
such process. The Issuer further irrevocably consents to the service of process
of any of the aforementioned courts in any such action, proceeding or litigation
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Issuer at its said address, such service to become effective
thirty (30) days after such mailing.
(d) Nothing herein shall affect the right of any holder of a Note
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Issuer in any other jurisdiction.
If service of process is made on a designated agent it should be made by either
(i) personal delivery or (ii) mailing a copy of summons and complaint to the
agent via registered or certified mail, return receipt requested.
(e) THE ISSUER HEREBY WAIVES ANY AND ALL RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE SECURITIES.
14.09. Severability. If any provision of this Agreement is determined
------------
to be illegal, invalid or unenforceable, such provision shall be fully severable
to the extent of such illegality, invalidity or unenforceability and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
14.10. Entirety. This Agreement together with the other Transaction
--------
Documents represents the entire agreement of the parties hereto and thereto, and
supersedes all prior agreements and understandings, oral or written, if any,
relating to the Transaction Documents or the transactions contemplated herein or
therein.
14.11. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties and covenants and indemnities made by the Issuer
herein shall survive the execution and delivery of this Agreement, the issuance
and transfer of all or any portion of the Securities and Exchange Notes and the
payment of principal of the Notes and the Exchange Notes and any other
obligations hereunder, regardless of any investigation made at any time by or on
behalf of the Purchasers or any other holder that is Affiliated with the
Purchasers. All statements contained in any certificate delivered by or on
behalf of the Issuer pursuant to this Agreement shall be deemed representations
and warranties of the Issuer under this Agreement.
14.12. Incorporation. All Exhibits and Schedules attached hereto are
-------------
incorporated as part of this Agreement as if fully set forth herein.
-86-
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
INTIRA CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
ARES LEVERAGED INVESTMENT
FUND, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
ARES LEVERAGED INVESTMENT
FUND II, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
MAGNETITE ASSET INVESTORS L.L.C.
By: BlackRock Financial Management, Inc.,
As Managing Member
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
CARLYLE HIGH YIELD PARTNERS, L.P.
By: TCG High Yield, L.L.C.,
its General Partner
[UNINTELLIGIBLE]
By: ___________________________________
Name:
Title:
CB CAPITAL INVESTORS, LLC
By: Chase Capital Partners, its Manager
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner--Mezzanine
CONTINENTAL CASUALTY COMPANY
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: ___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ ASSET MANAGEMENT,
in its capacity as the investment adviser of
the ▇▇▇▇▇▇▇ Sachs High Yield Fund, a
separate series of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Trust
By: ___________________________________
Name:
Title:
▇▇▇▇▇▇▇, SACHS & CO.,
as delegate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset
Management International, in its capacity as
the investment adviser of the ▇▇▇▇▇▇▇ Sachs
Global High Yield Portfolio, a separate
series of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Funds, S.I.C.A.V.
By: ___________________________________
Name:
Title:
OZ MASTER FUND, LTD.
By: ___________________________________
Name:
Title:
SANKATY HIGH YIELD PARTNERS II, L.P.
By: ___________________________________
Name:
Title:
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By: ___________________________________
Name:
Title:
WAYLAND INVESTMENT FUND, LLC
By: CFSC Wayland Advisors, Inc.,
its Manager
By: [ILLEGIBLE]
------------------------------------
Name:
Title:
CHASE SECURITIES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
COINVESTMENT I, LLC
By ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
as Managing Member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Member
Sun America Inc.
-----------------------------------
Name of Purchaser
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized
▇▇▇▇▇▇ FIDUCIARY TRUST COMPANY on behalf of:
▇▇▇▇▇▇ HIGH YIELD FIXED INCOME FUND, LLC
▇▇▇▇▇▇ HIGH YIELD MANAGED TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇ INVESTMENT MANAGEMENT, INC. on behalf
of:
▇▇▇▇▇▇ HIGH YIELD TRUST
▇▇▇▇▇▇ HIGH YIELD ADVANTAGE FUND
▇▇▇▇▇▇ VARIABLE TRUST-PVT HIGH YIELD FUND
▇▇▇▇▇▇ MASTER INCOME TRUST
▇▇▇▇▇▇ PREMIER INCOME TRUST
▇▇▇▇▇▇ MASTER INTERMEDIATE INCOME TRUST
▇▇▇▇▇▇ DIVERSIFIED INCOME TRUST
▇▇▇▇▇▇ FUNDS TRUST-▇▇▇▇▇▇ HIGH YIELD
▇▇▇▇▇▇ STRATEGIC INCOME FUND
▇▇▇▇▇▇ VARIABLE TRUST-PVT DIVERSIFIED
TRAVELERS SERIES FUND INC.-▇▇▇▇▇▇
DIVERSIFIED INCOME
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
THE ▇▇▇▇▇▇ ADVISORY COMPANY, INC. on behalf
of:
ABBOT LABORATORIES ANNUITY RETIREMENT
PLAN
AMERITECH CORPORATION PENSION PLAN
NORTHROP GRUMMAN EMPLOYEE BENEFIT PLAN
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
EXHIBIT A
---------
[FORM OF NOTE]
------------
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
--------------
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF JANUARY 31, 2000 (THE "PURCHASE
--------
AGREEMENT"), AMONG INTIRA CORPORATION (D/B/A INTIRA CORPORATION) (THE "ISSUER")
--------- ------
AND THE PURCHASERS NAMED THEREIN. A COPY OF SUCH PURCHASE AGREEMENT IS
AVAILABLE AT THE OFFICES OF THE ISSUER.
THIS SECURITY IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF
SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE. FOR EACH $1,000 OF PRINCIPAL
AMOUNT AT MATURITY OF THIS SECURITY, THE ISSUE PRICE IS $ 453.65 AND THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT IS $1,196.35. THE CLOSING TIME OF THIS SECURITY IS
JANUARY 31, 2000 AND THE YIELD TO MATURITY IS 14.9573%.
13% SENIOR DISCOUNT NOTES DUE 2010
No. __________ $ __________
INTIRA CORPORATION, a corporation duly organized and existing under
the laws of Delaware (herein called the "Issuer," which term includes any
------
successor Person under the Purchase Agreement), for value received, hereby
promises to pay to [ ], or registered assigns, the principal sum of
[ ] Dollars on February 1, 2010 (the "Stated Maturity Date"), and to
--------------------
pay interest thereon from February 1, 2005 or from the most recent Interest
Payment Date after February 1, 2005 to which interest has been paid or duly
provided for, semi-annually in arrears on February 1 and August 1 in each year,
commencing August 1, 2005 (each, an "Interest Payment Date") at the rate of 13%
---------------------
per annum, until the principal hereof is paid; provided, however, that (to the
extent that the payment of such interest shall be legally enforceable) any
principal of, or premium or installment of interest or Special Interest on, this
Note which is overdue shall bear interest at the rate of 2.00% per annum in
excess of the rate of interest then borne by the Notes from the date such
A-1
amounts are due until they are paid, and such interest shall be payable on the
next Interest Payment Date. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance. To the extent lawful, the Issuer shall pay interest on overdue
principal at the rate of the then applicable interest rate on the Securities; it
shall pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.
The rate of interest borne by this Note is subject to increase under
the circumstances described in the Exchange and Registration Rights Agreement,
dated January 31, 2000 (the "Exchange and Registration Rights Agreement"), among
------------------------------------------
the Issuer named therein and the Purchasers named therein. All interest
payable, on any Interest Payment Date will, as provided in the Purchase
Agreement, be paid to the Person in whose name this Note is registered at the
close of business on the "Regular Record Date" for such interest, which shall be
-------------------
the fifteenth calendar day (whether or not a Business Day) immediately preceding
such Interest Payment Date. Notwithstanding the foregoing if this Note is
issued after a Regular Record Date and prior to an Interest Payment Date, the
record date for such Interest Payment Date shall be the original Closing Time.
Principal on this Note shall be payable, and payments of interest on
this Note shall be made, in accordance with the Purchase Agreement and subject
to applicable laws and regulations, by check mailed on or before the due date
for such payment to the person entitled thereto at such person's address
appearing on the Security Register or, by wire transfer to such account as any
Holder shall designate by written instructions received by the Issuer no less
than 15 days prior to any applicable Interest Payment Date, which wire
instruction shall continue in effect until such time as the Holder otherwise
notifies the Issuer or such Holder no longer is the registered owner of this
Note.
Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
A-2
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
Dated:
INTIRA CORPORATION
By: _____________________________________
Name:
Title:
A-3
[Form of Reverse of Note]
-----------------------
This Note is one of a duly authorized issue of Notes of the Issuer
designated as its 13% Senior Discount Notes Due 2010 (herein called the "Notes")
-----
issued on January 31, 2000, pursuant to the Purchase Agreement, dated as of
January 31, 2000 (herein called the "Purchase Agreement"), among the Issuer and
------------------
the Purchasers named therein. Reference is hereby made to the Purchase
Agreement and all amendments thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Issuer and the
Holders and of the terms upon which the Notes are, and are to be, issued and
delivered.
The Notes are subject to redemption at the election of the Issuer,
upon not less than 30 nor more than 60 days notice by mail, in whole, but not in
part, either (x) from and after the Closing Time but prior to February 1, 2005,
at a Redemption Price equal to 100% of the then Accreted Value of the Notes
outstanding, plus the Make-Whole Call Premium, together with any Special
Interest to the Redemption Date or (y) from and after August 1, 2001 but prior
to February 1, 2005, out of the net cash proceeds of any issuance of Debt
Securities of the Issuer or any of its Subsidiaries or its parent holding
company in any underwritten public or Rule 144A offering at a Redemption Price
equal to 106.5% of the then Accreted Value of the Notes.
In addition, the Notes are subject to redemption, upon not less than
30 nor more than 60 days' notice by mail, as a whole or in part, at any time on
or after February 1 at the election of the Issuer, at the following Redemption
Prices (expressed as percentages of principal), if redeemed during the 12-month
period beginning February 1 of the years indicated,
Year Redemption Price
---- ----------------
2005........................................... 106.500%
2006........................................... 104.333%
2007........................................... 102.167%
2008 and thereafter............................ 100.000%
together in the case of any such redemption with accrued interest and any
Special Interest (as defined in the Exchange and Registration Rights Agreement)
to the Redemption Date.
Notwithstanding anything contained in this Note or in the Purchase
Agreement to the contrary, the amount of any Make-Whole Call Premium or
Redemption Price payable to a Holder in accordance with the foregoing or the
terms of the Purchase Agreement may be reduced by such Holder, in its sole
discretion.
A-4
If less than all the Notes are to be redeemed pursuant to the third
paragraph above, the Notes shall be redeemed pro rata from each Holder.
The Notes do not have the benefit of any sinking fund obligations.
In the event of redemption or purchase pursuant to an offer to
purchase this Note in part only, a new Note or Notes for the unredeemed or
unpurchased portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the Default
Amount of all the Notes may be declared due and payable in the manner and with
the effect provided in the Purchase Agreement. Upon payment of (i) the
principal so declared due and payable and any overdue installment of interest,
(ii) any overdue principal and premium payable upon redemption or repurchase of
this Note, and (iii) as provided on the face hereof, interest on any overdue
principal of, and any premium, interest and Special Interest on, this Note (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Issuer's obligations in respect of the payment of the
principal of, and interest and Special Interest on, this Note shall terminate.
The Purchase Agreement provides that, subject to certain conditions,
if (i) certain Excess Proceeds are available to the Issuer as a result of Asset
Sales or (ii) a Change of Control occurs, the Issuer shall be required to make
an offer to purchase all or a specified portion of the Notes as provided for in
the Purchase Agreement.
The Purchase Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and certain rights of the Holders under the Purchase
Agreement at any time by the Issuer with the consent of the Holders of a
majority in aggregate principal amount at maturity of the Notes at the time
outstanding. The Purchase Agreement also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Notes at
the time outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Agreement and certain
past defaults under the Agreement and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
As provided in the Purchase Agreement and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Security Register, upon surrender of this Note for registration of transfer at
the principal offices of the Issuer, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Issuer duly executed
by, the Holder hereof or his attorney duly authorized in writing, and thereupon
one
A-5
or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Purchase Agreement and subject to certain limitations therein set forth, Notes
are exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Issuer and any agent of the Issuer may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this
Note be overdue, and neither the Issuer nor any such agent shall be affected by
notice to the contrary.
All terms used in this Note which are defined in the Purchase
Agreement shall have the meanings assigned to them in the Purchase Agreement.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
A-6
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by
the Issuer pursuant to Section 7.08 or 7.09 of the Agreement, check the box:
[_]
If you want to elect to have only a part of the principal amount of
this Note purchased by the Issuer pursuant to Section 7.08 or 7.09 of the
Agreement, state the portion of such amount: $_______________.
Dated: Your Signature: _______________________________________
(Sign exactly as name appears on the other side of this
Note)
Signature Guarantee: _______________________________________________________
(Signature must be guaranteed by a financial
institution that is a member of the Securities Transfer
Agent Medallion Program ("STAMP"), the Stock Exchange
-----
Medallion Program ("SEMP"), the New York Stock
----
Exchange, Inc. Medallion Signature Program ("MSP") or
---
such other signature guarantee program as may be
determined by the Security Registrar in addition to, or
in substitution for, STAMP, SEMP or MSP, all in
accordance with the Securities Exchange Act of 1934, as
amended.)
A-7
EXHIBIT B - FORM OF EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXHIBIT C - FORM OF REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT
------------------------------------------------------------------
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
----------------------------------
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
Ares Leveraged Investment Fund, L.P. $9,500,000 principal $ 5,062,645.00
Ares Leveraged Investment Fund II, L.P. amount at maturity of
c/o Ares Management, L.P. Notes, 156,947.06
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Series A Warrants and
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 53,933.79 Series B
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ Warrants
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 310-201-4170/4171
Carlyle High Yield Partners, L.P. $3,000,000 principal $ 1,598,730.00
c/o TCG High Yield, L.L.C., its General Partner amount at maturity of
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Notes, 49,562.23 Series
41st Floor A Warrants and
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 17,031.72 Series B
Attention: ▇▇▇▇ ▇▇▇▇ Warrants
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 212-381-4950
CB Capital Investors, LLC $18,750,000 principal $ 9,992,062.50
c/o Chase Capital Partners amount at maturity of
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Notes, 309,763.93
12th Floor Series A Warrants and
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 106,448.28 Series B
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Warrants
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
-2-
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
Chase Securities Inc. $13,250,000 principal $ 1,998,412.50
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ amount at maturity of
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Notes, 218,899.85
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Series A Warrants and
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ 75,223.45 Series B
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇ Warrants
Continental Casualty Company $9,500,000 principal $ 5,062,645.00
c/o CNA amount at maturity of
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇. Notes, 156,947.06
CNA Plaza - 23 South Series A Warrants and
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 53,933.79 Series B
Attention: Investments Warrants
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ Sachs High Yield Fund $3,000,000 principal $ 1,598,730.00
▇▇▇▇▇▇▇ ▇▇▇▇▇ Global High Yield Portfolio amount at maturity of
32 Old Slip Notes, 49,562.23 Series
24th Floor A Warrants and
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 17,031.72 Series B
Attention: ▇▇▇▇▇ ▇▇▇▇▇ Warrants
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Magnetite Asset Investors L.C. $7,500,000 principal $ 3,996,825.00
c/o BlackRock Financial Management, Inc., amount at maturity of
its Managing Member Notes, 123,905.57
Coinvestment I, LLC Series A Warrants and
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 42,579.31 Series ▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
-3-
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
OZ Master Fund, Ltd. $42,750,000 principal $22,781,902.50
Citicorp Center amount at maturity of
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Notes, 706,261.75
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Series A Warrants and
Attention: ▇▇▇ ▇▇▇▇ 242,702.07 Series B
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Warrants
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ High Yield Trust $34,250,000 principal $18,252,167.50
▇▇▇▇▇▇ High Yield Advantage amount at maturity of
▇▇▇▇▇▇ Variable Trust - PVT High Yield Fund Notes, 565,835.44
▇▇▇▇▇▇ Master Income Trust Series A Warrants and
▇▇▇▇▇▇ Premier Income Trust 194,445.52 Series B
▇▇▇▇▇▇ Master Intermediate Income Trust Warrants
▇▇▇▇▇▇ Diversified Income Trust
▇▇▇▇▇▇ Funds Trust - ▇▇▇▇▇▇ High Yield
▇▇▇▇▇▇ Strategic Income Fund
▇▇▇▇▇▇ Variable Trust - PVT Diversified
Travelers Series Fund Inc - ▇▇▇▇▇▇ Diversified
Income
▇▇▇▇▇▇ High Yield Managed Trust
▇▇▇▇▇▇ High Yield Fixed Income Fund, LLC
Abbot Laboratories Annuity Retirement Plan
Northrop Grumman Employee Benefit Plan
Ameritech Corporation Pension Plan
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
-4-
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
SunAmerica Inc. $23,500,000 principal $12,523,385.00
SunAmerica Center amount at maturity of
Mail Stop 3805 Notes, 388,237.45
Century City Series A Warrants and
Los Angeles, CA 133,415.17 Series B
Attention: ▇▇▇▇ ▇▇▇▇▇ Warrants
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Wayland Investment Fund, LLC $23,500,000 principal $12,523,385.00
c/o CFSC Wayland Advisors, Inc. amount at maturity of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Notes, 388,237.45
Minnetonka, MN Series A Warrants and
Attention: ▇▇▇ ▇▇▇▇▇▇▇ 133,415.17 Series B
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Warrants
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Schedule 4.01
Existing Indebtedness
See attachment.
Schedule 4.04
Environmental Matters
See attached notification regarding asbestos removal by the landlord
of Borrower's New York data center facility prior to occupancy.
Schedule 4.14
Subsidiary List
LPBDBN Digital Canada Inc., a wholly owned subsidiary of Borrower was
organized on July 9, 1999 under the Canada Business Corporations Act, as
amended.
A subsidiary is expected to be formed as contemplated by the
Memorandum of Understanding with Viatel Corp. referred to on Schedule 4.20.
Schedule 4.20
Capitalization
4,275,701 shares of Series A Preferred Stock convertible into 10,689,252.5
shares of Common Stock
1999 Equity Incentive Plan (options for up to 3,200,000 shares of Common Stock
may be granted)
1999 Executive Stock Option Plan (options for up to 1,800,000 shares may be
granted)
1999 Stock Option Plan (options for approximately 3,200,000 shares have been
granted and no further options are authorized)
Class A Warrant dated December 30, 1999 for 378,448.375 shares of Common Stock
Binding Memorandum of Understanding dated January 19, 2000 with Viatel Corp.
relating to the issuance in the future of 4.99% of the outstanding Common Stock
of the Issuer as of the date thereof. Such shares are not presently outstanding.