PORTIONS OF THIS DOCUMENT INDICATED BY AN [***] HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT OF SUCH INFORMATION.
EXHIBIT 4.4
--------------------------------------------------------------------------------
PURCHASE AGREEMENT
DATED AS OF DECEMBER 30, 2003
AMONG
BRIGHTSTAR CORP.,
AS ISSUER,
THE GUARANTORS NAMED HEREIN,
AS GUARANTORS,
AND
THE PURCHASERS LISTED HEREIN,
AS PURCHASERS
UP TO $31,750,000 AGGREGATE PRINCIPAL AMOUNT OF 10.5%
CONVERTIBLE SENIOR SUBORDINATED NOTES DUE DECEMBER 31, 2008
AND
UP TO 3,750,000 SHARES OF 8.0% SENIOR CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES A, $0.0001 PAR VALUE
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
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Section 1. DEFINITIONS..................................................................... 1
1.1. Certain Defined Terms........................................................... 1
1.2. Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement................................................................ 27
1.3. Other Definitional Provisions and Rules of Construction......................... 27
Section 2. AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES.................................. 28
2.1. Authorization of Issue.......................................................... 28
2.2. Purchase and Sale............................................................... 28
2.3. Closings........................................................................ 28
2.4. Use of Proceeds................................................................. 29
Section 3. THE NOTES....................................................................... 30
3.1. Form and Execution.............................................................. 30
3.2. Terms of the Notes.............................................................. 30
3.3. Denominations................................................................... 30
3.4. Form of Legend for the Notes.................................................... 30
3.5. Payments and Computations....................................................... 31
3.6. Registration; Registration of Transfer and Exchange............................. 31
3.7. Transfer Restrictions........................................................... 32
3.8. Mutilated, Destroyed, Lost and Stolen Notes..................................... 33
3.9. Persons Deemed Owners........................................................... 33
3.10. Cancellation.................................................................... 33
3.11. Home Office Payment............................................................. 33
Section 4. CONDITIONS TO CLOSING........................................................... 34
4.1. Credit Party Documents.......................................................... 34
4.2. No Material Adverse Effect...................................................... 35
4.3. Corporate and Capital Structure................................................. 35
4.4. Representations and Warranties; Performance of Agreements....................... 35
4.5. Financial Statements; Pro Forma Financial Statements............................ 35
4.6. Opinions of Counsel to Credit Parties and Purchasers............................ 36
4.7. Necessary Government Authorizations and Consents; Expiration of
Waiting Periods, Etc........................................................... 36
4.8. Completion of Proceedings....................................................... 36
4.9. Solvency Assurances............................................................. 36
4.10. Stockholders Agreement.......................................................... 37
4.11. Management Rights Agreements.................................................... 37
4.12. Private Placement Numbers....................................................... 37
4.13. Simultaneous Purchase........................................................... 37
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4.14. Other Requests.................................................................. 37
4.15. ▇▇▇▇▇▇▇▇ Redemption............................................................. 37
Section 5. THE COMPANY'S REPRESENTATIONS AND WARRANTIES.................................... 37
5.1. Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.................................................................. 37
5.2. Authorization of Borrowing, etc................................................. 38
5.3. Capitalization.................................................................. 39
5.4. Financial Condition............................................................. 40
5.5. No Material Adverse Change; No Restricted Junior Payments....................... 41
5.6. Title to Properties; Liens; Real Property; Intellectual Property................ 41
5.7. Litigation; Adverse Facts....................................................... 42
5.8. Payment of Taxes................................................................ 42
5.9. Performance of Agreements; Materially Adverse Agreements;
Material Contracts............................................................ 43
5.10. Government Regulation, OFAC; Patriot Act; Foreign Corrupt
Practices Act................................................................. 43
5.11. Securities Activities........................................................... 44
5.12. Employee Benefit Plans.......................................................... 44
5.13. Certain Fees and Agreement...................................................... 45
5.14. Environmental Protection........................................................ 45
5.15. Employee Matters................................................................ 46
5.16. Solvency........................................................................ 47
5.17. Disclosure...................................................................... 47
5.18. Proceeds of Notes............................................................... 47
5.19. Private Offering; No Integration or General Solicitation........................ 47
Section 5A. THE PURCHASERS' REPRESENTATIONS AND WARRANTIES.................................. 48
5A(1). Organization, Powers, Qualification, Good Standing,............................. 48
5A(2). Authorization of Purchasing, etc................................................ 48
5A(3). Private Placement............................................................... 49
Section 6. THE COMPANY'S AFFIRMATIVE COVENANTS............................................. 51
6.1. Payment of Principal, Premium and Interest...................................... 51
6.2. Financial Statements and Other Reports.......................................... 51
6.3. Existence, etc.................................................................. 56
6.4. Payment of Taxes and Claims; Tax................................................ 56
6.5. Maintenance of Properties; Insurance............................................ 57
6.6. Inspection Rights............................................................... 57
6.7. Compliance with Laws, etc....................................................... 58
6.8. Execution of Subsidiary Guarantee After the First Closing Date.................. 58
6.9. Solvency........................................................................ 59
6.10. Offer to Repurchase upon Change of Control...................................... 59
6.11. Offer to Purchase by Application of Excess Proceeds............................. 60
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6.12. Stock Option Plan............................................................... 62
Section 7. THE COMPANY'S NEGATIVE COVENANTS................................................ 62
7.1. Indebtedness.................................................................... 62
7.2. Liens and Related Matters....................................................... 63
7.3. Investments; Acquisitions....................................................... 65
7.4. Contingent Obligations.......................................................... 66
7.5. Restricted Junior Payments...................................................... 67
7.6. Financial Covenants............................................................. 67
7.7. Restriction on Fundamental Changes; Asset Sales................................. 69
7.8. Transactions with Shareholders and Affiliates................................... 70
7.9. Designations of Unrestricted Subsidiaries....................................... 71
7.10. Conduct of Business............................................................. 72
7.11. Amendments or Waivers of Certain Agreements; Amendments of
Documents Relating to Subordinated Indebtedness and Credit Agreements......... 73
7.12. Fiscal Year..................................................................... 74
7.13. Public Disclosures.............................................................. 74
7.14. Payments for Consents........................................................... 74
7.15. Limitation on Repurchases of Notes.............................................. 74
7.16. No Integration.................................................................. 75
7.17. Restriction on Repurchases...................................................... 75
7.18. Waiver of Stay, Extension or Usury Laws......................................... 75
7.19. Limitation on Capital Stock of Subsidiaries..................................... 75
Section 8. EVENTS OF DEFAULT............................................................... 75
8.1. Failure to Make Payments When Due............................................... 76
8.2. Default in Other Agreements..................................................... 76
8.3. Breach of Certain Covenants..................................................... 76
8.4. Breach of Warranty.............................................................. 76
8.5. Other Defaults Under Purchase Documents......................................... 76
8.6. Involuntary Bankruptcy; Appointment of Receiver, etc............................ 77
8.7. Voluntary Bankruptcy; Appointment of Receiver, etc.............................. 77
8.8. Judgments and Attachments....................................................... 78
8.9. Dissolution..................................................................... 78
8.10. Employee Benefit Plans.......................................................... 78
8.11. Invalidity of Purchase Documents; Repudiation of Obligations.................... 78
8.12. Loss of Material License........................................................ 78
8.13. Criminal or Civil Proceedings................................................... 79
Section 9. CONVERSION...................................................................... 80
9.1. Conversion and Anti-Dilution Provisions......................................... 80
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Section 10. SUBSIDIARY GUARANTEES........................................................... 86
10.1. Subsidiary Guarantees........................................................... 86
10.2. Execution and Delivery of Subsidiary Guarantees................................. 87
10.3. Subsidiary Guarantors May Consolidate, Etc. on Certain Terms.................... 88
10.4. Releases of Subsidiary Guarantees............................................... 89
10.5. Subsidiary Guarantees Subordinate to Guarantor Senior Obligations............... 89
10.6. Payment Over of Proceeds upon Dissolution, Etc.................................. 89
10.7. No Payment When Guarantor Senior Obligations in Default......................... 91
10.8. Payment Permitted if No Default................................................. 93
10.9. Subrogation to Rights of Holders of Guarantor Senior Obligations................ 93
10.10. Provisions Solely to Define Relative Rights..................................... 93
10.11. No Waiver of Subordination Provisions........................................... 94
10.12. Reliance on Judicial Order or Certificate of Liquidating Agent.................. 94
10.13. Reliance by Holders of Guarantor Senior Obligations on
Subordination Provisions...................................................... 95
10.14. Limitation on Guarantor Liability............................................... 95
Section 11. SUBORDINATION OF NOTES.......................................................... 96
11.1. Notes Subordinate to Senior Obligations......................................... 96
11.2. Payment Over of Proceeds upon Dissolution, Etc.................................. 96
11.3. No Payment When Senior Obligations in Default................................... 97
11.4. Payment Permitted if No Default................................................. 99
11.5. Limitation or Enforcement of Remedies, Etc...................................... 99
11.6. Subrogation to Rights of Holders of Senior Obligations.......................... 100
11.7. Provisions Solely to Define Relative Rights..................................... 100
11.8. No Waiver of Subordination Provisions........................................... 100
11.9. Reliance on Judicial Order or Certificate of Liquidating Agent.................. 101
11.10. Restrictions on Amendment....................................................... 101
11.11. Reliance by Holders of Senior Obligations on Subordination
Provisions.................................................................... 102
Section 12. MISCELLANEOUS................................................................... 103
12.1. Successors and Assigns.......................................................... 103
12.2. Expenses........................................................................ 103
12.3. Indemnity....................................................................... 104
12.4. Amendments and Waivers.......................................................... 105
12.5. Independence of Covenants....................................................... 105
12.6. Notices; Effectiveness of Signatures............................................ 106
12.7. Survival of Representations, Warranties and Agreements.......................... 106
12.8. Failure or Indulgence Not Waiver; Remedies Cumulative........................... 106
12.9. Severability.................................................................... 106
12.10. Obligations Several; Independent Nature of Securityholders' Rights.............. 107
12.11. Applicable Law.................................................................. 107
12.12. Consent to Jurisdiction and Service of Process.................................. 107
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12.13. Waiver of Jury Trial............................................................ 108
12.14. Confidentiality................................................................. 108
12.15. Counterparts; Effectiveness..................................................... 110
12.16. Limitation of Liability......................................................... 110
12.17. Further Assurances.............................................................. 110
12.18. Incorporation................................................................... 110
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Subsidiary Guarantee
Exhibit C - Form of Certificate of Designations
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Supplemental Agreement
Exhibit F-1 - Form of Management Rights Agreement - Falcon
Exhibit F-2 - Form of Management Rights Agreement - Prudential
Exhibit F-3 - Form of Management Rights Agreement - [***]/Arrow
Exhibit G - Form of Opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit H - Form of Solvency Certificate
Exhibit I - Form of Consent from General Electric Capital Corporation
Exhibit J - Form of Consent from Motorola, Inc.
Exhibit K - Form of Consent from Ocean Bank
SCHEDULES
Schedule A-1 - Purchase Price Allocation - First Closing Date
Schedule A-2 - Purchase Price Allocation - Second Closing Date
Schedule 4.3(i) - Capital Structure
Schedule 4.3(ii) - Management Structure
Schedule 5.1 - Subsidiaries of Company
Schedule 5.3(b)(iv) - Stockholder, Operating and Joint Venture Agreements
Schedule 5.6B - Real Property
Schedule 5.6C - Intellectual Property
Schedule 5.7A - Litigation
Schedule 5.9 - Material Contracts
Schedule 5.13 - Certain Fees
Schedule 7.1 - Indebtedness
Schedule 7.2 - Liens
Schedule 7.4 - Contingent Obligations
Schedule 10.8 - Notice Information - Senior Obligations
-v-
BRIGHTSTAR CORP.
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is dated as of December 30, 2003 and entered
into by and among BRIGHTSTAR CORP., a Delaware corporation (the "COMPANY"), THE
GUARANTORS LISTED ON THE SIGNATURE PAGES HERETO OR PARTY FROM TIME TO TIME
HERETO (each individually referred to herein as a "SUBSIDIARY GUARANTOR" and
collectively as "SUBSIDIARY GUARANTORS") and THE PURCHASERS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as a "PURCHASER"
and collectively as "PURCHASERS").
R E C I T A L S
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Company has agreed to sell to the Purchasers and the
Purchasers, acting severally and not jointly, have agreed to purchase from the
Company (x) up to $31,750,000 principal amount of the Company's 10.5%
Convertible Senior Subordinated Notes due 2008 in the form of Exhibit A hereto
(the "NOTES") and (y) up to 3,750,000 shares of the Company's 8.0% Senior
Cumulative Convertible Preferred Stock, Series A, $0.0001 par value per share
(the "PURCHASED PREFERRED STOCK"), to be issued pursuant to a Certificate of
Designations in the form of Exhibit C hereto; and
WHEREAS, the obligations of the Company under the Notes and this
Agreement (to the extent they relate to the Notes) will be Guaranteed by the
Subsidiary Guarantors, such Subsidiary Guarantees to be in the form of Exhibit B
hereto.
NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the Company, the Subsidiary
Guarantors and the Purchasers agree as follows:
SECTION 1. DEFINITIONS
1.1. CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings: "
ADDITIONAL NOTES" means $2,313,765.20 aggregate principal amount of
the Notes to be issued by the Company on the Second Closing Date, if it occurs.
"ADDITIONAL PURCHASED PREFERRED STOCK" means 273,279.349 shares of
Purchased Preferred Stock to be issued by the Company on the Second Closing
Date, if it occurs.
"ADMINISTRATIVE AGENT" means, (i) with respect to any Credit
Agreement, the administrative agent under such Credit Agreement or if there is
no administrative agent at such time, the representative(s) of the lenders under
such Credit Agreement, or if there are no repre-
sentatives, the holders of such Indebtedness, and (ii) with respect to any of
the Motorola Distributor Documents, Motorola.
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting
Securities or by contract or otherwise. For purposes of this definition, a
Person shall be deemed to be "controlled by" a Person if such Person possesses,
directly or indirectly, power to vote 10% or more of the Securities having
ordinary voting power for the election of directors of such Person.
Notwithstanding the foregoing, no Purchaser or direct or indirect transferee
(other than any Permitted Holder or any Affiliates thereof) shall be deemed to
be an Affiliate of any of the Credit Parties.
"AGREEMENT" means this Purchase Agreement dated as of December
30, 2003.
"ASSET SALE" means the sale (in any single transaction or series of
related transactions) by the Company or any of the Company's Subsidiaries to
any Person other than the Company or any Subsidiary Guarantor of (i) any of
the Capital Stock of any of the Company's Subsidiaries, (ii) substantially all
of the assets of any division or line of business of the Company or any of the
Company's Subsidiaries, or (iii) any other assets (whether tangible or
intangible) of the Company or any of the Company's Subsidiaries (other than (a)
inventory sold in the ordinary course of business, (b) surplus or obsolete
equipment, (c) sales of assets from the Company or any of the Company's
Subsidiaries to the Company or any Subsidiary Guarantor, and (d) sales,
assignments, transfers or dispositions of accounts receivable in the ordinary
course of business for purposes of collection, including, without limitation,
the factoring of trade accounts receivable in the ordinary course of
business).
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy."
"BANKRUPTCY LAW" means the Bankruptcy Code or any similar federal,
state or foreign bankruptcy, insolvency, reorganization or other law for the
relief of debtors.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CAPITAL STOCK" means (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, mem-
-2-
bership interests, and (v) 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" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or ▇▇▇▇▇'▇; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
▇▇▇▇▇'▇; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia that (a) is at least "adequately capitalized" (as defined
in the regulations of its primary Federal banking regulator) and (b) has
capital, surplus and undivided profits aggregating at least $500,000,000 and
which issues (or the parent of which issues) certificates of deposit or
commercial paper with a rating described in clause (iii) above; and (v) shares
of any money market mutual fund that (a) invest solely in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of
not less than $500,000,000, and (c) has the highest rating obtainable from
either S&P or ▇▇▇▇▇'▇.
"CASH INTEREST EXPENSE COVERAGE RATIO" means, for any period, the
ratio of (a) Consolidated EBITDA for such period to the sum of (b) (i)
Consolidated Interest Expense of the Company and its Subsidiaries for such
period to the extent paid in cash or other property (valued at Fair Market
Value) other than through the issuance of in-kind securities of the same class
plus (ii) dividends on preferred stock for such period to the extent paid in
cash or other property (valued at Fair Market Value) other than through the
issuance of in-kind securities of the same class. For purposes of calculating
the Cash Interest Expense Coverage Ratio (a) for the first Fiscal Quarter after
the First Closing Date, Consolidated Interest Expense and dividends on preferred
stock for the four consecutive Fiscal Quarter period shall be deemed to equal
Consolidated Interest Expense and dividends on preferred stock, respectively
for such first Fiscal Quarter, in each case, multiplied by 4, (b) for the
second Fiscal Quarter after the First Closing Date, Consolidated Interest
Expense and dividends on preferred stock for the four consecutive quarter period
shall be deemed to equal Consolidated Interest Expense and dividends on
preferred stock, respectively, for the first and second Fiscal Quarters,
respectively, multiplied by 2 and (c) for the third Fiscal Quarter after the
First Closing Date, Consolidated Interest Expense and dividends on preferred
stock for the four consecutive Fiscal Quarter period shall be deemed to equal
Consolidated Interest Expense and dividends on preferred stock, respectively,
for the first, second and third Fiscal Quarters, respectively multiplied by
1.33.
"CERTIFICATE OF DESIGNATION" means the Certificate of Designation of
the Powers, Preferences and Relative, Participating, Optional and Other Special
Rights relating to the Purchased Preferred Stock.
-3-
"CHANGE OF CONTROL" means the occurrence of any of the following
events (whether or not approved by the Governing Body of the Company):
(a) the Permitted Holders cease to beneficially own (as defined
under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) at least a majority of both (x) the total voting power of
the Company's Voting Stock and (y) the total economic ownership of the
then outstanding Common Stock of the Company;
(b) any sale, liquidation, dissolution or winding-up of the Company
or a transaction or series of related transactions (including but not
limited to a merger or reorganization) which results in holders of the
Company's Capital Stock outstanding prior to such event owning less than
50% of either (x) the total voting power of the then outstanding Voting
Stock of the Company or (y) the total economic ownership of the then
outstanding Common Stock of the Company;
(c) the Company consolidates with or merges with or into any Person
or sells, assigns, conveys, transfers, leases or otherwise disposes of all
or substantially all of its assets to any Person unless holders of the
Company's Capital Stock outstanding prior to such event own at least 50%
of the surviving or purchasing entity;
(d) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Governing Body of the
Company (together with any new directors whose election to such board or
whose nomination for election by the stockholders of the Company was
approved by a vote of a majority of the directors 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) cease for any reason
to constitute a majority of such Governing Body then in office;
(e) any order, judgment or decree shall be entered against the
Company decreeing the dissolution or split-up of the Company and such
order shall remain undischarged or unstayed for a period in excess of 60
days; or
(f) the occurrence of any "change of control" under any Credit
Agreement.
"CHANGE OF CONTROL OFFER" has the meaning assigned to that term in
Section 6.10(a).
"CHANGE OF CONTROL PURCHASE PRICE" has the meaning assigned to that
term in Section 6.10(a).
"CLOSING DATE" means, collectively, the First Closing Date and the
Second Closing, if it occurs.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, $0.0001 par
value per share.
-4-
"COMPANY" has the meaning assigned to that term in the introductory
paragraph to this Agreement and its successors and permitted assigns.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of Exhibit D annexed hereto.
"CONSOLIDATED EBITDA" means, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on Federal,
state, local and foreign income, (iv) total depreciation expense, (v) total
amortization expense, and (vi) other non-cash items reducing Consolidated Net
Income, (other than any such items which reflect on an accrual or reserve for a
future cash charge or expense) less any non-cash items increasing Consolidated
Net Income, all of the foregoing as determined on a consolidated basis for the
Company and the Company's Subsidiaries in conformity with GAAP; provided that in
calculating any such items for purposes of determining the Consolidated Total
Leverage Ratio for such period, any Asset Sales or other acquisitions or
dispositions of assets during such period shall have been deemed to have
occurred on the first day of such period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, without
duplication, the interest expense of the Company and its Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP,
including, without limitation, (a) any amortization of debt discount
attributable to such period, (b) the net cost under or otherwise associated with
Hedge Agreements (in each case, including any amortization of discounts), (c)
the interest portion of any deferred payment obligation, (d) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and (e) all capitalized interest and all accrued
interest.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of the Company and the Company's Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of the Company) in which any other Person (other
than the Company or any of the Company's Subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other distributions actually
paid to the Company or any of the Company's Subsidiaries by such Person during
such period, (ii) the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary of the Company or is merged into or consolidated with
the Company or any of the Company's Subsidiaries or that Person's assets are
acquired by the Company or any of the Company's Subsidiaries, (iii) the income
of any Subsidiary of the Company to the extent that the declaration or payment
of dividends or similar distributions by that Subsidiary of that income is not
at the time permitted by operation of the terms of its organization documents or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) any after-tax
gains or losses attributable to Asset Sales or returned surplus assets of any
Pension Plan, and (v) (to the extent not included in clauses (i) through (iv)
above) any net non-cash extraordinary gains or net non-cash extraordinary
losses.
-5-
"CONSOLIDATED NET WORTH" with respect to any Person means the equity
of the holders of Capital Stock of such Person and its Subsidiaries, as
reflected in a balance sheet of such Person determined on a consolidated basis.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination,
the aggregate principal amount of all Indebtedness of the Company and the
Company's Subsidiaries, determined on a consolidated basis.
"CONSOLIDATED TOTAL LEVERAGE RATIO" means, as at each day of each
Fiscal Quarter, the ratio of (a) the sum of (i) Consolidated Total Debt as of
such day of such Fiscal Quarter and (ii) other than with respect to any date
occurring during the fourth Fiscal Quarter of the Company, the aggregate of all
of the outstanding balances of accounts receivable which have been factored or
otherwise sold by the Company or any Subsidiary and which remain uncollected by
the counterparty to such factoring or other sale as of such day of such Fiscal
Quarter, to (b) Consolidated EBITDA for the four Fiscal Quarter period ended on
the last day of the Fiscal Quarter for which financial statements are most
recently required to be delivered pursuant to Section 6.2(ii) or (iii) (except
that if such calculation as of the last day of a Fiscal Quarter of Consolidated
EBITDA shall be for the four Fiscal Quarter period ended on such date).
"CONTINGENT OBLIGATION", as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person (i) with respect
to any Indebtedness, lease, dividend or other obligation of another if the
primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, or (ii) under Hedge Agreements. Contingent Obligations shall include
(a) the direct or indirect guaranty, endorsement (otherwise than for collection
or deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another,
including, without limitation, any credit support agreements, makewell
agreements, keepwell agreements and any other agreements evidencing similar
obligations and (b) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (1) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (2) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(1) or (2) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any Material Contract to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"CONVERSION PRICE" means $8.00, and shall be subject to adjustment
as provided herein.
-6-
"CONVERSION SHARES" means, collectively, the Notes Conversion Shares
and the Preferred Conversion Shares.
"CREDIT AGREEMENT" means each of the GE Facility and the Ocean Bank
Facility, including, in each case, all related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, in each
case as in effect at the First Closing Date and as such agreements, instruments,
documents, notes and guarantees may from time to time be amended (including any
amendment, document or instruments and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement, document or
instrument extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted under Section
7.1) or adding Subsidiaries of the Company as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness and other obligations under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"CREDIT PARTY" means each of the Company and any of the Company's
Subsidiaries from time to time executing a Purchase Document, and "CREDIT
PARTIES" means all such Persons, collectively.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement to which the Company or any of the Company's
Subsidiaries are a party.
"CURRENT MARKET PRICE" per share of Common Stock on any date means:
(i) if the Common Stock is not registered under the Exchange Act, or
if the Common Stock is so registered and the closing price cannot be
determined as set forth in clause (ii) below, (A) the value of the Common
Stock determined by the unanimous vote or consent of the members of the
Governing Body of the Company and certified in a resolution of such
Governing Body, or (B) if the members of the Governing Body of the Company
are unwilling or unable to unanimously agree on such value within a period
of 30 days, the value of the Common Stock as determined by an Independent
Financial Advisor, or
(ii) if the Common Stock is registered under the Exchange Act, the
Current Market Price per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices for each trading day during
the period commencing 15 trading days before such date and ending on the
date one trading day prior to the day in question. The "closing price" on
any trading day shall mean the reported closing price on such day on the
New York Stock Exchange or on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if the
Common Stock is not listed or admitted to trading on such exchange, then
the average of the reported closing bid and asked prices in the
over-the-counter market as reported on NASDAQ or a similar reporting
service or, if no such quotations are available, the fair market price as
determined by clause (i) above. A "TRADING DAY" is a day on which the
New York Stock Ex-
-7-
change, principal national securities exchange, or over-the-counter
market, as appropriate, is open for trading.
"CUSTODIAN" means any custodian, receiver, trustee, assignee,
liquidator, sequestrator or similar official under any bankruptcy law.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook, brokerage
or similar account maintained with a Person or securities intermediary engaged
in the business of banking, including any savings bank, savings and loan
association, credit union or trust company, other than an account evidenced by a
negotiable certificate of deposit.
"DESIGNATION" has the meaning assigned to such term in Section 7.9.
"DESIGNATION AMOUNT" has the meaning assigned to such term in
Section 7.9.
"DISINTERESTED DIRECTOR" means, with respect to any transaction or
series of related transactions, a member of the Governing Body of the Company
who does not have any material direct or indirect financial interest in or
with respect to such transaction or series of related transactions.
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary of the Company that is
incorporated or organized under the laws of the United States of America, any
state thereof or the District of Columbia.
"EMPLOYEE BENEFIT PLAN" means any Pension Plan (as defined herein)
which is or was maintained or contributed to by the Company, any of the
Company's Subsidiaries or any of their respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any Government Authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all statutes, ordinances, orders,
rules, regulations, legally enforceable guidance documents, judgments,
Government Authorizations, or any other requirements of any Government Authority
relating to (i) environmental matters, including those relating to any
Hazardous Materials Activity, (ii) the generation, use, storage, transportation
or disposal of Hazardous Materials, or (iii) occupational safety and health or
the protection of human health or safety, in any manner applicable to the
Company or any of the Company's Subsidiaries or any Facility, including the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
-8-
Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 2601 et Seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the Oil
Pollution Act (33 U.S.C. Section 2701 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), and any analogous
state or local statutes or laws.
"EQUITY INTERESTS" has the meaning assigned to that term in Section
7.5(a).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means, as applied to any Person (i) any
corporation that is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is
a member; (ii) any trade or business (whether or not incorporated) that is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is
a member; and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member. Any former ERISA Affiliate of a Person shall
continue to be considered an ERISA Affiliate of such Person within the meaning
of this definition with respect to the period such entity was an ERISA Affiliate
of such Person.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice to
the PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to
any Pension Plan (whether or not waived in accordance with Section 412(d) of
the Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041 (c) of ERISA; (iv) the
withdrawal by the Company, any of the Company's Subsidiaries or any of their
respective ERISA Affiliates from any Pension Plan with two or more contributing
sponsors or the termination of any such Pension Plan resulting, in either case,
in a liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution by
the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on the Company,
any of the Company's Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of the Company, any of the
Company's Subsidiaries or any of their respective ERISA Affiliates in a complete
or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA)
from any Multiemployer Plan if there is any potential liability therefor, or the
receipt by the Company, any of the Company's Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of
-9-
ERISA, or that it intends to terminate or has terminated under Section 4041A or
4042 of ERISA; (viii) the assertion of a material claim (other than routine
claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against the Company, any of the
Company's Subsidiaries or any of their respective ERISA Affiliates in connection
with any Employee Benefit Plan; (ix) receipt from the Internal Revenue Service
of notice of the failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue Code) to
qualify under Section 401(a) of the Internal Revenue Code, or the failure of any
trust forming part of any Pension Plan to qualify for exemption from taxation
under Section 501(a) of the Internal Revenue Code; or (x) the imposition of a
Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCESS PROCEEDS OFFER" has the meaning assigned to that term in
Section 6.11(a).
"EXCESS PROCEEDS OFFER AMOUNT" has the meaning assigned to that term
in Section 6.11(b)(ii).
"EXCESS PROCEEDS OFFER PAYMENT DATE" has the meaning assigned to
that term in Section 6.11(b)(ii).
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXECUTIVE ORDER" has the meaning assigned to such term in Section
5.10B.
"FACILITIES" means all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased or operated by the Company or any of the Company's Subsidiaries
or any of their respective predecessors or Affiliates.
"FAIR MARKET VALUE" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length transaction, for cash,
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy; provided, that with
respect to any sales, endorsements and/or assignments of any accounts receivable
by the Company or any of its Subsidiaries to Motorola pursuant to any of the
Motorola Distributor Documents, "FAIR MARKET VALUE" means the consideration
provided in the relevant Motorola Distributor Document.
"FINANCIAL PLAN" has the meaning assigned to that term in Section
6.2(xii).
"FIRST CLOSING DATE" has the meaning assigned to that term in
Section 2.3.
"FIRST CLOSING DIVIDENDS" has the meaning assigned to that term in
Section 2.4.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
-10-
"FISCAL YEAR" means the fiscal year of the Company and the Company's
Subsidiaries ending on December 31 of each calendar year. For purposes of
this Agreement, any particular Fiscal Year shall be designated by reference to
the calendar year in which such Fiscal Year commences.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Company that is not
a Domestic Subsidiary.
"GAAP" means, subject to the limitations on the application thereof
set forth in Section 1.2, generally accepted accounting principles as in effect
in the United States of America set forth in opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, in each case as the same are applicable to the circumstances as
of the date of determination.
"GE FACILITY" means that certain Credit Agreement dated as of June
12, 2002 among the Company, Brightstar US, Inc. and General Electric Capital
Corporation.
"GOVERNING BODY" means the board of directors or other body having
the power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.
"GOVERNMENT AUTHORITY" means any political subdivision or department
thereof, any other governmental or regulatory body, including the National
Association of Insurance Commissioners, commission, central bank, board, bureau,
organ or instrumentality or any court, in each case whether federal, state,
local or foreign.
"GOVERNMENT AUTHORIZATION" means any permit, license, registration,
authorization, plan, directive, consent, order or consent decree of or from,
or required notice to, any Government Authority.
"GUARANTEE PAYMENT" has the meaning assigned to that term in Section
10.6.
"GUARANTOR PAYMENT BLOCKAGE PERIOD" has the meaning assigned to such
term in Section 10.7.
"GUARANTOR PROCEEDING" has the meaning assigned to that term in
Section 10.6.
"GUARANTOR SENIOR OBLIGATIONS" means the principal of and premium,
if any, and interest on, and any and all other fees, expense reimbursement
obligations and other amounts due pursuant to the terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with
(a) all Obligations of any Subsidiary Guarantor owed to lenders
under any Credit Agreement incurred in accordance with this Agreement;
provided, however, that (i) Guarantor Senior Obligations and Senior
Obligations in respect of Indebtedness under the Ocean Bank Facility shall
not exceed $24,600,000 and (ii) Guarantor Senior Obliga-
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tions and Senior Obligations in respect of Indebtedness under the GE
Facility shall not exceed $33,000,000;
(b) all Obligations of any Subsidiary Guarantor with respect to any
Hedge Agreement with one or more lenders or Affiliates thereof under a
Credit Agreement with respect to the Obligations of such Subsidiary
Guarantor under such Credit Agreement;
(c) all Obligations of any Subsidiary Guarantor to reimburse any
bank or other Person in respect of amounts paid under letters of credit,
acceptances or other similar instruments created under any Credit
Agreement; and
(d) all Obligations of any Subsidiary Guarantor in respect of the
Motorola Obligations (other than Indebtedness) arising pursuant to any
of the Motorola Distributor Documents.
Notwithstanding anything to the contrary in the foregoing, Guarantor
Senior Obligations will not include
(i) Indebtedness of a Subsidiary Guarantor to the Company or any of
its Subsidiaries, or to any Affiliate of the Company or any of such
Affiliate's Subsidiaries;
(ii) any Obligations which by the express terms of the agreement or
instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Guarantor Senior
Obligations; provided that the Obligations owing by any Subsidiary
Guarantor to Motorola under the Motorola Distributor Documents shall
constitute Guarantor Senior Obligations even though such Obligations (or
the liens securing such Obligations) may be subordinate to one or more
other items of Guarantor Senior Obligations;
(iii) except as provided in clause (d) above, any trade payable
arising from the purchase of goods or materials or for services obtained
in the ordinary course of business;
(iv) the principal amount of Indebtedness under any Credit Agreement
in excess of the principal amount described in clause (a) above; and
(v) any Indebtedness to or guaranteed on behalf of any shareholder,
director, officer or employee of the Company or any Subsidiary of the
Company.
"GUARANTOR SENIOR NON-PAYMENT DEFAULT" has the meaning assigned to
such term in Section 10.7.
"GUARANTOR SENIOR PAYMENT DEFAULT" has the meaning assigned to that
term in Section 10.7.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance
at any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazard-
-12-
ous waste", "infectious waste", "toxic substances" in any Environmental Law, or
any other term that defines, lists or classifies substances harmful to human
health, safety or the indoor or outdoor environment (including properties such
as ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of similar
import under any applicable Environmental Laws); (ii) any oil, petroleum,
petroleum fraction or petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any
flammable substances or explosives; (v) any radioactive materials; (vi) any
asbestos-containing materials; (vii) urea formaldehyde foam insulation; (viii)
polychlorinated biphenyls; (ix) pesticides; and (x) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any Government Authority.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, storage, holding, presence, Release, threatened
Release, discharge, placement, generation, transportation, processing,
treatment, abatement, removal, remediation, disposal, disposition or handling
of any Hazardous Materials, and any corrective action or response action with
respect to any of the foregoing.
"HEDGE AGREEMENT" means (i) an Interest Rate Agreement designed to
hedge against fluctuations in interest rates, (ii) any Currency Agreement
designed to hedge against fluctuations in currency values, and (iii) any other
agreement or arrangement to which the Company or any of the Company's
Subsidiaries is a party which ▇▇▇▇▇▇ against or is based upon fluctuations in
the value of the equity Securities of any Person, or any equity forward
agreements or similar agreements or arrangements.
"INDEBTEDNESS", as applied to any Person, means, without
duplication, (i) all indebtedness for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made without regard to any
original issue discount relating thereto, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person (other than customary reservations or retentions), (iv)
that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP, (v) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (vi) any obligation owed for all or
any part of the deferred purchase price of property or services (excluding any
such obligations incurred under ERISA), which purchase price is (a) due more
than six months from the date of incurrence of the obligation in respect thereof
or (b) evidenced by a note or similar written instrument, (vii) all obligations
in respect of any preferred Capital Stock of such Person (including without
limitation, the Purchased Preferred Stock) subject to mandatory sinking fund
payments, redemption, repayment or other acceleration or that require the
payment of dividends in cash at any time when the Notes are outstanding, (viii)
all Indebtedness secured by any Lien on any property or asset owned or held by
that Person regardless of whether the Indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person, (ix)
the face amount of all letters of credit or bankers' acceptances that such
Person is obligated to reimburse the related letter of credit bank for, (x) the
principal balance outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product,
-13-
(xi) the Indebtedness of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer, (xii) the obligation
to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (xiii) all
Contingent Obligations with respect to items (i)-(xii) above; provided, however,
any balances that constitute trade payables (including trade payables arising
under the Motorola Distributor Documents) or liabilities arising from advance
payments or customer deposits for goods and services sold by the Company arising
in the ordinary course of business shall not constitute Indebtedness.
Obligations under Interest Rate Agreements and Currency Agreements constitute
(1) in the case of Hedge Agreements, Contingent Obligations, and (2) in all
other cases, Investments, and in neither case constitute Indebtedness.
"INDEMNIFIED LIABILITIES" has the meaning assigned to that term in
Section 12.3.
"INDEMNITEE" has the meaning assigned to that term in Section 12.3.
"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 Company
or any of its Subsidiaries or Affiliates, (ii) which, in the judgment of the
Governing Body of the Company, is otherwise independent and qualified to perform
the task for which it is to be engaged and (iii) which is acceptable to the
Required Holders.
"INITIAL NOTES" means $29,346,234.82 aggregate principal amount of
the Notes to be issued by the Company on the First Closing Date.
"INITIAL PURCHASED PREFERRED STOCK" means 3,476,720.648 shares of
Purchased Preferred Stock to be issued by the Company on the First Closing Date.
"INSTITUTIONAL INVESTOR" means (a) any original Purchaser of a Note
and any transferee that is an Affiliate of any original Purchaser, (b) any
holder of a Note holding more than 25% of the aggregate principal amount of the
Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company or investment fund, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form,
organized under the laws of the United States or a State thereof, with capital
and surplus in excess of $50,000,000.
"INTELLECTUAL PROPERTY" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice),
all improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, (c) all copyrightable
works, all copyrights and all applications, registrations and renewals in
connection therewith, (d) all broadcast rights, (e) all mask works and all
applications, registrations and renewals in connection therewith, (f) all
know-how, trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice (including
ideas, research and development, know-how, formulas, compositions and manu-
-14-
facturing and production process and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (g) all computer
software (including data and related documentation), (h) all other proprietary
rights, (i) all copies and tangible embodiments thereof (in whatever form or
medium) and (j) all licenses and agreements in connection therewith.
"INTEREST PAYMENT DATE" is defined in Exhibit A.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which the Company or any of the Company's
Subsidiaries is a party.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by the Company or any of the Company's Subsidiaries of, or of a
beneficial interest in, any Securities of any other Person (including any
Subsidiary of the Company), (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by the Company or any
Subsidiary of the Company from any Person other than the Company or any of the
Company's Subsidiaries, of any equity Securities of such Subsidiary, (iii) any
direct or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by the Company or any
of the Company's Subsidiaries to any other Person, including all Indebtedness
and accounts receivable from that other Person that are not current assets or
did not arise from sales to that other Person in the ordinary course of
business, or (iv) Interest Rate Agreements or Currency Agreements not
constituting Hedge Agreements. The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto, without
any adjustments for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form which does
not constitute a Subsidiary; provided that in no event shall any corporate
Subsidiary of any Person be considered to be a Joint Venture to which such
Person is a party.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MANAGEMENT RIGHTS AGREEMENTS" means those certain Management Rights
Agreements, dated as of the date hereof, among the Company and the Purchasers
named therein substantially in the form of Exhibits F-1, F-2 and F-3.
-15-
"MATERIAL ADVERSE EFFECT" means any act, omission, situation,
circumstance, event or undertaking which could reasonably be expected to have,
singly or in any combination with one or more other acts, omissions, situations,
circumstances, events or undertakings, a materially adverse effect upon (a)
the business, results of operation, assets, liabilities, condition (financial
or otherwise) or prospects of the Company and the Company's Subsidiaries taken
as a whole, (b) the respective ability of the Company or any of the other Credit
Parties to perform any of their respective Obligations under this Agreement or
any other Purchase Document to which it is a party that materially impairs the
collective ability of the Credit Parties to perform their Obligations under
the Purchase Documents taken as a whole or (c) the legality, validity, binding
effect, enforceability, or admissibility into evidence of any Purchase
Document or the rights or remedies of the Securityholders under or in connection
with any Purchase Document that materially impairs the rights and remedies of
the Securityholders under the Purchase Documents taken as a whole.
"MATERIAL CONTRACT" means any contract, indenture, mortgage, deed of
trust, undertaking, agreement, instrument or other arrangement, whether
written or oral, to which the Company or any of the Company's Subsidiaries is a
party (other than the Purchase Documents), for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to have a Material
Adverse Effect.
"MATURITY", when used with respect to any Note, means 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 Company to make).
"MEXICO SUBSIDIARY" means Brightstar de Mexico, S.A. de C.V.
"MOTOROLA" means, collectively, Motorola, Inc., a Delaware
corporation, and all of its Subsidiaries and Affiliates.
"MOTOROLA DISTRIBUTION AGREEMENT" means, collectively, the Motorola
Latin America Distribution Agreement, the Motorola Mexico Distribution
Agreement, the Motorola US Distribution Agreement and any other agreements
pursuant to which the Company or any of its Subsidiaries or Affiliates are
appointed to act as a distributor on behalf of Motorola, as any of the foregoing
may be amended, supplemented or restated from time to time.
"MOTOROLA DISTRIBUTOR DOCUMENTS" means, collectively, the Motorola
Distribution Agreement, the Motorola Endorsement Agreement, the Motorola
Security Agreement and any other agreements, instruments or other documents
under which any of the Motorola Liens are granted or any of the Motorola
Obligations are created, evidenced, guaranteed or secured and any modifications,
restatements or refinancings thereof or replacements therefore.
"MOTOROLA ENDORSEMENT AGREEMENT" means, collectively, that certain
Agreement, dated as of July 30, 2001, entered into between Motorola de Mexico,
S.A. and Brightstar de Mexico, S.A. de C.V., and any other agreements pursuant
to which the Company and/or any of its Subsidiaries or Affiliates agree to sell,
endorse and/or assign any of their accounts receiv-
-16-
able to Motorola, as any of the foregoing are amended, supplemented or restated
from time to time.
"MOTOROLA LATIN AMERICA DISTRIBUTION AGREEMENT" means that certain
Distribution Agreement, effective as of June 1, 2000, entered into between
Motorola, Inc. and the Company, as amended and restated by that certain Amended
and Restated Distribution Agreement, effective as of October 9, 2003, and as
the same may be further amended, supplemented or restated from time to time.
"MOTOROLA LIENS" means any and all Liens which may be now or
hereafter granted to Motorola by the Company or any of its Subsidiaries or
Affiliates pursuant to the Motorola Distributor Documents or otherwise to
secure any and all of the Motorola Obligations.
"MOTOROLA MEXICO DISTRIBUTION AGREEMENT" means that certain
Distribution Agreement, effective as of July 30, 2001, entered into between
Motorola de Mexico, S.A. and Brightstar de Mexico, S.A. de C.V., as the same may
be amended, supplemented or restated from time to time.
"MOTOROLA OBLIGATIONS" shall mean the Obligations (as such term is
defined in the Motorola Parent Security Agreement) and all other indebtedness,
fees, interest, expenses and other obligations from time to time owing by one or
more of the Covered Parties (as such term is defined in the Motorola Parent
Security Agreement) to Motorola under the Motorola Distributor Documents or any
of the other Transaction Documents (as such term is defined in the Motorola
Parent Security Agreement).
"MOTOROLA PARENT SECURITY AGREEMENT" means that certain Security
Agreement dated as of June 21, 2001 by the Company in favor of Motorola, Inc.,
as amended, supplemented or restated from time to time.
"MOTOROLA SECURITY AGREEMENT" means, collectively, the Motorola
Parent Security Agreement, the Motorola US Security Agreement and all other
documents pursuant to which any of the Motorola Liens are created, as any of the
foregoing may be amended, supplemented or restated from time to time.
"MOTOROLA US DISTRIBUTION AGREEMENT" means that certain Distribution
Agreement, effective as of November 20, 2003, entered into between Motorola,
Inc. and Brightstar US, Inc., as the same may be amended, supplemented or
restated from time to time.
"MOTOROLA US SECURITY AGREEMENT" means that certain Security
Agreement dated as of May 24, 2002 by Brightstar US, Inc., in favor of Motorola,
Inc., as amended, supplemented or restated from time to time.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan that is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
-17-
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale,
Cash payments (including any Cash received by way of deferred payment pursuant
to, or by monetization of, a note receivable or otherwise, but only as and when
so received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset
Sale, (ii) payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness that is (a) secured by a Lien on the
stock or assets in question and that is required to be repaid under the terms
thereof as a result of such Asset Sale and (b) actually paid at the time of
receipt of such cash payments to a Person that is not an Affiliate of any Credit
Party and (iii) any reasonable brokerage fees, commissions and other similar
expenses relating to such Asset Sale; provided, that any such costs, fees,
commissions, similar expenses and other costs paid to an Affiliate of any Credit
Party must not be in excess of those charged by third Persons in an arm's length
transaction.
"NOTEHOLDER" means, prior to the applicable Closing Date, a
Purchaser, and after the applicable Closing Date, a Person in whose name a Note
is registered on the Security Register.
"NOTEHOLDER REPRESENTATIVE" means (i) with respect to Falcon
Mezzanine Partners, LP, itself, (ii) with respect to Prudential Capital
Partners, L.P. and Prudential Capital Partners Management Fund, L.P., Prudential
Capital Group, L.P., (iii) with respect to ** and Arrow Investment Partners,
Grandview Capital Management, LLC, (iv) with respect to RCG Carpathia Master
Fund, Ltd, itself, and (v) any one or more additional Persons whose names are
identified by written notice to the Company, the Subsidiary Guarantors and each
Administrative Agent in accordance with the terms of this Agreement (such
additional Persons, the "ADDITIONAL REPRESENTATIVE(S)") who are transferees or
designated representatives of transferees of the Notes; provided that (x) at no
time shall there be more than a total of fourteen (14) Noteholder
Representatives and (y) subject to the limitation in the immediately preceding
clause (x) as to the total number of Noteholder Representatives, each Purchaser
together with all transferees of Notes originally acquired by such Purchaser
shall be entitled to appoint in the aggregate two (2) Noteholder
Representatives.
"NOTES" means up to $31,750,000 in aggregate principal amount of
10.5% Convertible Senior Subordinated Notes due 2008 of the Company issued
pursuant to this Agreement.
"NOTES CONVERSION SHARES" has the meaning assigned to such term in
Section 9.1.
"NOTES PAYMENT" has the meaning assigned to such term in Section
11.2.
"OBLIGATIONS" means any principal, premium, interest, fees, expense
reimbursement and other obligations and liabilities payable by the Company or
any of its Subsidiaries.
"OCEAN BANK FACILITY" means that certain Credit Agreement dated as
of December 12, 2002 by and among Brightstar Corp. Chile Limitada, S.R.L., an
entity organized under the laws of Chile, Brightstar Guatemala, S.A., an
entity organized under the laws of Guatemala,
-18-
Brightstar El Salvador, S.A., an entity organized under the laws of El Salvador,
Brightstar Uruguay, S.A., an entity organized under the laws of Uruguay,
Brightstar De Paraguay, S. de ▇.▇., an entity organized under the laws of
Paraguay, Brightstar de Venezuela, C.A., an entity organized under the laws of
Venezuela, Brightstar Dominicana, S.A., an entity organized under the laws of
the Dominican Republic, Brightstar Peru, S.R.L., an entity organized under the
laws of Peru, Brightstar de Mexico, S.A. de C.V., an entity organized under the
laws of Mexico, Soluciones Inteligentes Para El ▇▇▇▇▇▇▇ Movil, S.A. de C.V., an
entity organized under the laws of Mexico, and Brightstar de Argentina, S.A., an
entity organized under the laws of Argentina and Ocean Bank.
"OFAC" has the meaning assigned to such term in Section 5.10B.
"OFFER PAYMENT DATE" has the meaning assigned to that term in
Section 6.10(b)(ii).
"OFFICER" means the president, chief executive officer, a vice
president, chief Financial officer, treasurer, general partner (if an
individual), managing member (if an individual) or other individual appointed by
the Governing Body or the Organizational Documents of a corporation,
partnership, trust or limited liability company to serve in a similar capacity
as the foregoing.
"OFFICER'S CERTIFICATE", as applied to any Person that is a
corporation, partnership, trust or limited liability company, means a
certificate executed on behalf of such Person by one or more Officers of such
Person or one or more Officers of a general partner or a managing member if such
general partner or managing member is a corporation, partnership, trust or
limited liability company.
"ORGANIZATIONAL DOCUMENTS" means the documents (including bylaws, if
applicable) pursuant to which a Person that is a corporation, partnership,
trust or limited liability company is organized.
"OUTSTANDING", when used with respect to the Notes, means, as of the
date of determination, all Notes theretofore executed and delivered under this
Agreement, except:
(a) Notes theretofore cancelled by the Company or
delivered to the Company for cancellation;
(b) Notes for whose payment or redemption money in the necessary
amount has been theretofore set aside by the Company 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
(c) Notes which have been paid pursuant to Section 3.8 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 Company proof
satisfactory to it that such Notes are held by a bona fide purchaser in
whose hands such Notes are valid Obligations of the Company;
-19-
provided, however, that in determining whether the holders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
any Credit Party or any other obligor upon the Notes or any Affiliate of any
Credit Party 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 (excluding such pledgee) the pledgee's right so to act with
respect to such Notes and that the pledgee is not a Credit Party or any other
obligor upon the Notes or any Affiliate of any Credit Party or of such other
obligor. For purposes of this definition, no Purchaser or any direct or indirect
transferee (other than a Permitted Holder or any Affiliate thereof) shall be
deemed to be an "Affiliate" of the Company or any of its Subsidiaries solely as
a result of holding any Purchased Securities or Conversion Shares.
"PAID IN FULL", "PAYMENT IN FULL", "PAY IN FULL" means, with respect
to the Obligations of the Company and its Subsidiaries with respect to the
Senior Obligations and the Guarantor Senior Obligations, that (i) all of the
Obligations under such Senior Obligations or Guarantor Senior Obligations, as
applicable, have been indefeasibly paid in full in Cash or Cash Equivalents,
(ii) all commitments to lend or otherwise advance credit under any Credit
Agreement or Hedge Agreement relating to such Senior Obligations or Guarantor
Senior Obligations, as applicable, have been terminated, (iii) all letters of
credit issued under the Credit Agreement relating to such Senior Obligations or
the Guarantor Senior Obligations, as applicable, have been terminated or cash
collateralized in a manner satisfactory to the Administrative Agent under such
Senior Obligations or Guarantor Senior Obligations, as applicable, and (iv) all
guaranties of the Senior Obligations or Guarantor Senior Obligations, as
applicable, arising under a Credit Agreement or Hedge Agreement have been
terminated and all security interests released.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, that is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by Section 6.3 or
which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the
books of the Company or the Company's Subsidiaries, as the case may be, in
conformity with GAAP (or, in the case of Subsidiaries with significant
operations outside of the United States of America, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);
(ii) statutory Liens of landlords, Liens of collecting banks under
the UCC on items in the course of collection, statutory Liens and rights
of set-off of banks, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in
each case incurred in the ordinary course of business (a) for amounts not
yet overdue or (b) for amounts that are overdue and that (in the case
-20-
of any such amounts overdue for a period in excess of five days) are being
contested in good faith by appropriate proceedings, so long as such
reserves or other appropriate provisions, if any, as shall be required
by GAAP shall have been made for any such contested amounts;
(iii) deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of
social security or to secure the performance of statutory obligations,
bids, leases, government contracts, trade contracts and other similar
obligations (exclusive of obligations for the payment of borrowed
money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under Section 8.8;
(v) licenses (with respect to Intellectual Property and other
property), leases or subleases granted to third parties and not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of the Company's Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do not
and will not interfere in any material respect with the ordinary conduct
of the business of the Company or any of the Company's Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
lease not prohibited by this Agreement, (b) Lien or restriction that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any Lien or restriction referred to in the preceding clause (b), so
long as the holder of such Lien or restriction agrees to recognize the
rights of such lessee or sublessee under such lease;
(viii) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods so long as such Liens attach only to the imported
goods;
(ix) Liens arising out of consignment or a similar arrangement for
the sale of goods entered into in the ordinary course of business and in
accordance with past practices; and
(x) Liens arising from filing UCC financing statements relating
solely to leases not prohibited by this Agreement.
"PERMITTED HOLDERS" means, collectively, R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, his
spouse, children or other lineal descendants (whether adoptive or biological)
and any revocable or irrevocable inter vivos or testamentary trust or the
probate estate of any such individual, so long as one or more of the foregoing
individuals is the principal beneficiary of such trust or probate estate.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock com-
-21-
panies, Joint Ventures, associations, companies, trusts, banks, trust companies,
land trusts, business trusts or other organizations, whether or not legal
entities, and governments (whether federal, state or local, domestic or
foreign, and including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.
"▇▇▇▇▇▇▇▇ REDEMPTION" has the meaning assigned to such term in
Section 2.4.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PREFERRED CONVERSION SHARES" means the shares of Common Stock and
other securities issued upon conversion of the Purchased Preferred Stock and any
other securities into which the Common Stock or other such securities are
changed, reclassified, split, combined or converted or for which they are
exchanged by amendment to the Certificate of Incorporation or by consolidation,
merger or otherwise, and any securities paid as a dividend thereon.
"PREFERRED HOLDER" means prior to the applicable Closing Date, a
Purchaser, and after the applicable Closing Date, a registered holder of
Purchased Preferred Stock and "PREFERRED HOLDERS" means all such Persons,
collectively.
"PRINCIPAL AMOUNT" means, when used with respect to any particular
Note, the principal amount of such Note at its Stated Maturity.
"PROCEEDINGS" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration.
"PROHIBITED PERSONS" has the meaning assigned to such term in
Section 5.10B.
"PTE" has the meaning assigned to such term in Section 5A(f)(A).
"PURCHASE DOCUMENTS" means, collectively, this Agreement, the Notes,
the Subsidiary Guarantees, the Stockholders Agreement, the Purchased Preferred
Stock, the Certificate of Designation and the Management Rights Agreements and
all certificates, instruments, financial and other statements and other
documents made or delivered in connection herewith and therewith and the other
documents executed in connection therewith.
"PURCHASE PRICE" has the meaning assigned to such term in Section
2.2.
"PURCHASED PREFERRED STOCK" has the meaning assigned to such term in
the Recitals to this Agreement.
"PURCHASED SECURITIES" means, collectively, the Notes, the
Subsidiary Guarantees and the Purchased Preferred Stock.
"PURCHASER" and "PURCHASERS" means the Persons identified as
"Purchasers" and listed on the signature pages of this Agreement, together with
their successors and permitted Assigns. For purposes of the Second Closing
Date, Purchasers shall mean those of the Purchasers identified in Schedule A-2
to this Agreement.
-22-
"QUALIFYING IPO" has the meaning assigned to such term in Section
9.1(ii)(A).
"REAL PROPERTY ASSET" means, at any time of determination, any
interest then owned or leased by the Company or its Subsidiaries (other than any
Foreign Subsidiary) in any real property.
"REFINANCING INDEBTEDNESS" has the meaning assigned to that term in
Section 7.1(vi).
"REGULAR RECORD DATE" has the meaning assigned to that term in
Section 3.5.
"RELATED AGREEMENTS" means, collectively, the Credit Agreements and
all certificates, instruments, financial and other statements and other
documents made or delivered in connection herewith and therewith and the other
documents executed in connection therewith.
"RELEASE" means any release, spill, emitting, leaking, pumping,
pouring, injecting, escaping, depositing, disposing, discharging, dispersal,
dumping, leaching or migration of Hazardous Materials into the environment
(including the abandonment or discarding of any barrels, containers or other
closed receptacles containing any Hazardous Materials), including the migration
of any Hazardous Materials through the air, soil, surface water or groundwater.
"REQUIRED HOLDERS" means Noteholders having or holding more than 50%
of the sum of the aggregate principal amount of outstanding Notes.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of the Company or any of the Company's Subsidiaries now or
hereafter outstanding, except a dividend payable solely in shares of that class
of Capital Stock to the holders of that class and a dividend payable by any of
the Company's Subsidiaries to the Company or any Subsidiary Guarantor, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of
Capital Stock of the Company or any of the Company's Subsidiaries now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire any
shares of any class of Capital Stock of the Company or any of the Company's
Subsidiaries now or hereafter outstanding, and (iv) any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Subordinated Indebtedness.
"REVOCATION" has the meaning assigned to such term in Section 7.9.
"S&P" means Standard & Poor's Ratings Group.
"SDN LIST" has the meaning assigned to such term in Section 5.10B.
"SECOND CLOSING DATE" has the meaning assigned to that term in
Section 2.3.
"SECURITIES" means any stock, shares, partnership interests,
membership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or
-23-
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITY REGISTER" has the meaning assigned to such term in Section
3.6(a).
"SECURITYHOLDER" means, collectively, the Noteholders and the
Preferred Holders and "SECURITYHOLDERS" means all such Persons, collectively.
"SENIOR OBLIGATIONS" means the principal of and premium, if any, and
interest on, and any and all other fees, expense reimbursement Obligations and
other amounts due pursuant to the terms of all agreements, documents and
instruments providing for, creating, securing or evidencing or otherwise entered
into in connection with
(a) all Obligations of the Company owed to lenders under any Credit
Agreement incurred in accordance with this Agreement, including, without
limitation, pursuant to any guaranty of the Obligations of one or more
Subsidiaries of the Company under any Credit Agreement provided, however,
that (i) Senior Obligations and Guarantor Senior Obligations in respect of
Indebtedness under the Ocean Bank Facility shall not exceed $24,600,000
and (ii) Senior Obligations and Guarantor Senior Obligations in respect of
Indebtedness under the GE Facility shall not exceed $33,000,000;
(b) all Obligations of the Company with respect to any Hedge
Agreement with one or more lenders or Affiliates thereof under a Credit
Agreement with respect to the obligations of the Company under such Credit
Agreement;
(c) all Obligations of the Company to reimburse any bank or other
Person in respect of amounts paid under letters of credit, acceptances or
other similar instruments created under any Credit Agreement; and
(d) all Obligations of the Company in respect of the Motorola
Obligations (other than Indebtedness) arising pursuant to any of the
Motorola Distributor Documents.
Notwithstanding anything to the contrary in the foregoing, Senior
Obligations will not include
(i) Indebtedness of the Company to any of its Subsidiaries, or to
any Affiliate of the Company or any of such Affiliate's Subsidiaries;
(ii) any Obligations which by the express terms of the agreement or
instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior obligations;
provided that the Obligations owing by the Company to Motorola under the
Motorola Distributor Documents shall constitute Senior Ob-
-24-
ligations even though such Obligations (or the liens securing such
obligations) may be subordinate to one or more other items of Senior
Obligations;
(iii) except as provided in clause (d) above, any trade payable
arising from the purchase of goods or materials or for services obtained
in the ordinary course of business;
(iv) the principal amount of Indebtedness under any Credit Agreement
in excess of the principal amount described in clause (a) above; and
(v) any Indebtedness to or guaranteed on behalf of any shareholder,
director, officer or employee of the Company or any Subsidiary of the
Company.
"SENIOR NON-PAYMENT DEFAULT" has the meaning assigned to such term
in section 11.3.
"SENIOR PAYMENT DEFAULT" has the meaning assigned to such term in
section 11.3.
"SIGNIFICANT SUBSIDIARY" has the meaning ascribed to such term in
Regulation S-X (17 CFR Part 210) as in effect on the First Closing Date.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (Z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"SOURCE" has the meaning assigned to such term in Section 5A(f).
"STANDSTILL TERMINATION EVENT" has the meaning assigned to such term
in Section 11.4.
"STATED MATURITY" means, with respect to any Note or any installment
of interest thereon, the dates specified in such Note as the fixed date on which
the principal of such Note or such installment of interest is due and payable,
and when used with respect to any other Indebtedness, means the date specified
in the instrument governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or any installment of interest is due and
payable.
-25-
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated as
of the First Closing Date among the Company, the Purchasers, and the other
Stockholders of the Company from time to time party thereto.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Company or
a Subsidiary Guarantor, as the case may be, incurred from time to time and
subordinated in right of payment to the Notes or the Subsidiary Guarantee of
such Subsidiary Guarantor on terms and conditions reasonably satisfactory to the
Required Holders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, Joint Venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the members of the Governing Body
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof.
For purposes of this Agreement, an "Unrestricted Subsidiary" of the Company
shall be deemed not to be a "Subsidiary" of the Company.
"SUBSIDIARY GUARANTEE" means the Subsidiary Guarantee executed and
delivered by the existing Domestic Subsidiaries of the Company on the First
Closing Date and identified on the signature pages to this Agreement and to be
executed and delivered by additional Domestic Subsidiaries of the Company from
time to time thereafter in accordance with Section 6.8.
"SUBSIDIARY GUARANTOR" means any Domestic Subsidiary of the Company
that executes and delivers a counterpart of the Subsidiary Guarantee on the
First Closing Date or from time to time thereafter pursuant to Section 6.8.
"SUPPLEMENTAL AGREEMENT" means the Supplemental Agreement
substantially in the form of Exhibit E hereto.
"TAX" OR "TAXES" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever called,
by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed, including interest, penalties, additions to tax and any similar
liabilities with respect thereto.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"UNRESTRICTED SUBSIDIARY" means each Subsidiary of the Company
designated as such pursuant to and in compliance with Section 7.9. Any such
designation may be revoked by a resolution of the Governing Body of the Company
delivered to the Noteholders, subject to the provisions of such Section 7.9.
"USA PATRIOT ACT OF 2001" has the meaning assigned to such term in
Section 5.10C.
"VOTING STOCK" means any class or classes of Capital Stock pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a
-26-
majority of the members of the Governing Body, managers or trustees of any
Person (irrespective of whether or not, at the time, stock of any other class or
classes shall have, or might have, voting power by reason of the happening of
any contingency).
1.2. ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by the Company to the Noteholders pursuant to clauses
(i), (ii), (iii) and (xii) of Section 6.2 shall be prepared in accordance with
GAAP at the time of such preparation) other than an absence of footnotes with
respect to financial statements and other information delivered pursuant to
clauses (i) and (ii) of Section 6.2 and delivered together with the
reconciliation statements provided for in section 6.2(v). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize GAAP on the date of determination, applied in a manner
consistent with that used in preparing the financial statements referred to in
Section 5.4. The Company shall deliver to Noteholders at the same time as the
delivery of any annual or quarterly financial statements given in accordance
with the provisions of Section 6.2, (a) a description in reasonable detail of
any material change in the application of accounting principles employed in the
preparation of such financial statements from those applied in the most recently
preceding quarterly or annual financial statements as to which no objection
shall have been made in accordance with the provisions above and (b) a
reasonable estimate of the effect on such financial statements on account of
such changes in application.
1.3. OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" shall be to Sections of this Agreement
unless otherwise specifically provided. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
C. The use in any of the Purchase Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
D. Each of the parties hereto acknowledges that (i) it has been
represented by counsel in the negotiation and documentation of the terms of this
Agreement and other Purchase Documents to be executed on or prior to the First
Closing Date, (ii) it has had full and fair opportunity to review and negotiate
the terms of this Agreement and such other Purchase Documents,
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(iii) this Agreement and such other Purchase Documents have been drafted jointly
by all of the parties hereto, and (iv) no Purchaser has any fiduciary
relationship with or duty to the Company arising out of or in connection with
this Agreement or any of the other Purchase Documents, and the relationship
between the Purchasers, on the one hand, and the Company, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor.
Accordingly, each of the parties hereto acknowledges and agrees that the terms
of this Agreement shall not be construed against or in favor of another party.
E. Any reference in this Agreement or any other Purchase Document to
any agreement (including any Purchase Document) means such agreement as it may
be amended, restated, supplemented or otherwise modified from time to time; (ii)
any reference in this Agreement or any other Purchase Document to any law,
statute, regulation, rule or other legislative action shall mean such law,
statute, regulation, rule or other legislative action as amended, supplemented
or otherwise modified from time to time and any successor thereto, and shall
include all rules or regulations promulgated thereunder; and (iii) any
reference in this Agreement or any other Purchase Document to a Person shall
include the permitted successor or assignee of such Person.
SECTION 2. AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES
2.1. AUTHORIZATION OF ISSUE.
The Company has authorized the issue and sale of up to $31,750,000
aggregate principal amount of the Notes, each Note to be in the form of Exhibit
A hereto, (ii) the Company has authorized the issuance and delivery of up to
3,750,000 shares of Purchased Preferred Stock, each share of Purchased Preferred
Stock to be in the form of Exhibit C hereto, and (iii) each Subsidiary Guarantor
has authorized the issue of its Subsidiary Guarantee of the Notes, each such
Subsidiary Guarantee to be in the form of Exhibit B hereto.
2.2. PURCHASE AND SALE.
On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Purchaser, and each Purchaser, acting severally and not jointly,
agrees to purchase from the Company, the aggregate principal amount of Notes
and the aggregate number of shares of Purchased Preferred Stock, in each case,
set forth in Schedules A-1 and A-2 opposite the name of such Purchaser (a) at
100% of the principal amount thereof in the case of the Notes and (b) at $8.00
per share of Purchased Preferred Stock (the "PURCHASE PRICE").
2.3. CLOSINGS.
(a) FIRST CLOSING DATE. The purchase and sale of the Initial Notes
and the Initial Purchased Preferred Stock pursuant to this Agreement shall occur
at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ at 9:00 a.m., New York City time, on December 30,2003, or such other
time as shall be agreed upon by the Purchasers and the Company (such time and
date of payment and delivery being herein called the "FIRST CLOSING DATE"). On
the First Closing Date, the Company will deliver to each Purchaser the initial
Notes and certificates for the Initial Purchased Preferred Stock to be purchased
by such Pur-
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chaser on the First Closing Date, in such denominations as such Purchaser may
request, dated the First Closing Date and registered in the name(s) such
Purchaser may request, against payment by such Purchaser to the Company or to
its order 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 Company may request in writing at least two Business Days prior
to the First Closing Date.
(b) SECOND CLOSING DATE. Subject to the terms and conditions set
forth herein, including without limitation, this Section 2.3(b), the purchase
and sale of the Additional Notes and the Additional Purchased Preferred Stock
pursuant to this Agreement shall, if it occurs, occur at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 9:00 am., New
York City time, on January 30,2004, or such other time as shall be agreed upon
by the Purchasers and the Company (such time and date of payment and delivery
being herein called the "SECOND CLOSING DATE"). On the Second Closing Date, if
it occurs, the Company will deliver to each Purchaser the Additional Notes and
certificates for the Additional Purchased Preferred Stock to be purchased by
such Purchaser on the Second Closing Date, if it occurs, in such denominations
as such Purchaser may request, dated the Second Closing Date, if it occurs, and
registered in the name(s) such Purchaser may request, against payment by such
Purchaser to the Company or to its order 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 Company may request in
writing at least two Business Days prior to the Second Closing Date, if it
occurs.
Notwithstanding anything contained in this Agreement to the
contrary, the consummation of the issuance and sale of the Additional Notes
and Additional Purchased Preferred Stock on the Second Closing Date, shall, in
addition to the other terms and conditions set forth herein, be subject to the
receipt by each Purchaser set forth in Schedule A-2 of all consents and
authorizations that such Purchaser determines are necessary or advisable in
order to consummate such purchase on the Second Closing Date. In the event that
any such Purchaser does not obtain such consents or authorizations, (x) no
Purchaser shall be obligated to purchase any Additional Notes or Additional
Purchased Preferred Stock, and (y) the Purchasers shall not be in default under
this Agreement by reason of their failure to purchase the Additional Notes and
Additional Purchased Preferred Stock.
2.4. USE OF PROCEEDS.
The proceeds from the Notes and the Purchased Preferred Stock shall
be applied by the Company as follows: (a) the proceeds from the issuance of
Purchased Securities on the First Closing Date shall be used (i) to repay all
Indebtedness outstanding to GE Capital under the GE Facility (provided that such
payment shall not reduce the committed amounts under the GE Facility); (ii) on
the First Closing Date to purchase 4,591,227 shares of the outstanding Common
Stock of the Company, representing 22.0% of the outstanding Common Stock of the
Company immediately prior to the issuance of the Initial Notes and Initial
Purchased Preferred Stock, from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ for a purchase price not to
exceed $5,875,000 (the "▇▇▇▇▇▇▇▇ REDEMPTION"); (iii) to pay R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ dividends in an aggregate amount not to exceed $2,940,000
(the "FIRST CLOSING DIVIDENDS"); (iv) except as set forth in clause (b) below,
to pay expenses incurred in connection with the transactions contemplated by
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this Agreement; and (v) to the extent the Company elects, repay Indebtedness to
Ocean Bank under the Ocean Bank Facility (provided that such payment shall not
reduce the committed amounts under the Ocean Bank Facility); and (b) the
proceeds from the issuance of Purchased Securities on the Second Closing Date,
if it occurs, shall be used to (i) pay the fees and commission incurred in
connection with the transactions contemplated by this Agreement and described in
Schedule 5.13 to this Agreement (it being acknowledged that the payment of such
fees and commissions is governed by the agreements with the parties disclosed in
such Schedule and will be due and owing whether or not the Second Closing Date
occurs); and (ii) to the extent the Company elects, repay Indebtedness to Ocean
Bank under the Ocean Bank Facility (provided that such payment shall not reduce
the committed amounts under the Ocean Bank Facility). The balance of any
proceeds remaining after any Closing Date shall be used to fund the working
capital needs and for general corporate purposes, in each case, of the Company.
SECTION 3. THE NOTES
3.1. FORM AND EXECUTION.
The Notes shall be in the form of Exhibit A hereto. The Notes shall
be executed on behalf of the Company by its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. 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 Company shall bind the Company,
notwithstanding that such individuals or any of them has 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.
3.2. 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 will bear interest on their principal amount
and overdue interest as provided in Exhibit A.
33. DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons.
3.4. FORM OF LEGEND FOR THE NOTES.
Unless otherwise permitted by Section 3.7, every Note issued and
delivered hereunder shall bear a legend in substantially the following form:
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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
DECEMBER 30, 2003 (AS THE SAME MAY BE AMENDED, MODIFIED, RESTATED OR
SUPPLEMENTED FROM TIME TO TIME, THE "PURCHASE AGREEMENT"), AMONG
BRIGHTSTAR CORP. (THE "THE COMPANY"), THE GUARANTORS NAMED THEREIN AND THE
PURCHASERS NAMED THEREIN. A COPY OF SUCH PURCHASE AGREEMENT IS AVAILABLE
AT THE OFFICES OF THE COMPANY.
THIS INDEBTEDNESS AND OTHER PAYMENT OBLIGATIONS EVIDENCED BY THIS
SECURITY IS SUBORDINATED TO THE PRIOR PAYMENT AND SATISFACTION IN CASH OF
ALL SENIOR OBLIGATIONS, AS DEFINED IN THE PURCHASE AGREEMENT, TO THE
EXTENT, AND IN THE MANNER PROVIDED IN THE PURCHASE AGREEMENT.
3.5. PAYMENTS AND COMPUTATIONS.
All payments of interest on the Notes shall, to the extent such
payment is not then prohibited under Section 11 hereof, 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 of the Notes, to the
extent such payment is not then prohibited under Section 11 hereof, shall be
paid to the persons in whose names such Notes are registered on the applicable
repurchase date or at Maturity, as applicable. Subject to Section 3.11,
principal on any Note shall be payable only against surrender thereof, 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 Noteholder shall designate by written instructions received by the
Company no less than 15 days prior to any applicable Interest Payment Date,
which wire instruction shall continue in effect until such time as the
Noteholder otherwise notifies the Company or such Noteholder no longer is the
registered owner of such Note or Notes.
3.6. REGISTRATION: REGISTRATION OF TRANSFER AND EXCHANGE.
(a) SECURITY REGISTER. The Company shall maintain a register (the
"SECURITY REGISTER") for the registration or transfer of the Notes. The name and
address of the holder of 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 Company shall, promptly upon receipt thereof, update
the Security Register to reflect all information received from a Noteholder.
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There shall be no more than one Noteholder 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 Company, the Company 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 Noteholder, 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 Company shall
execute and deliver the Notes which the Noteholder making the exchange is
entitled to receive.
(d) EFFECT OF REGISTRATION OF TRANSFER OR EXCHANGE. All Notes issued
upon any registration of transfer or exchange of Notes shall be the valid
Obligations of the Company, 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 Company)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company duly executed by the Noteholder 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 Company 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 7.7 not involving any transfer.
3.7. TRANSFER RESTRICTIONS.
Subject to the provisions of this Section 3.7 and to the terms of
the Stockholders Agreement, (i) any Note may be transferred or assigned, in
whole or in part, by the Noteholder of such Note at any time, and from time to
time, and (ii) A Noteholder may pledge any or all of the Notes to any commercial
bank or other institutional lender. Each transferee or assignee of any Note
acknowledges that the Note has not been registered under the Securities Act and
may be transferred or assigned only pursuant to an effective registration under
the Securities Act or pursuant to an applicable exemption from the
registration requirements of the Securities Act. With respect to any transfer or
assignment of a Note occurring prior to the second anniversary of the applicable
Closing Date on which such Note was issued, such Noteholder shall, if reasonably
requested by the Company, request a customary opinion of counsel (which may be
internal or external counsel to the Noteholder) that the proposed transfer may
be effected without registration under the Securities Act. Counsel shall, as
promptly as practicable, notify the Company and the Noteholder of such opinion
and of the terms and conditions, if any, to be observed in such transfer,
whereupon the Noteholder shall be entitled to transfer such Note (or portion
thereof), subject to any other provisions and limitations contained in this
Agreement or such Note.
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3.8. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note is surrendered to the Company, the Company
shall execute and deliver in exchange therefor a new Note of the same principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company (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 it 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 Company 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.
Upon the issuance of any new Note pursuant to this Section 3.8, the
Company 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 3.8 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
Contractual Obligation of the Company, 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 3.8 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.
3.9. PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of transfer, the
Company and any agent of the Company 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 Company nor any
agent of the Company shall be affected by notice to the contrary.
3.10. CANCELLATION.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Company,
be delivered to the Company and shall be promptly canceled by it. The Company
shall cancel any Notes previously issued and delivered hereunder which the
Company may have reacquired.
3.11. 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 Company 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 Com-
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pany in writing for such purpose (as of the First Closing Date such information
is set forth in Schedule A-1), without the presentation or surrender of such
Note or the making of any notation thereon, except that upon written request of
the Company 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 Company at its
principal executive office. Prior to any sale or other disposition of any Note
held by any 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 Company in
exchange for a new Note or Notes pursuant to Section 3.6. The Company will af-
ford the benefits of this Section 3.11 to any Institutional Investor that is
not an Industry Participant (as defined in the Stockholders Agreement), the
direct or indirect transferee of any Note by any Purchaser under this Agreement
and that has made the same agreement relating to such Note as such Purchaser
made in this Section 3.11.
SECTION 4. CONDITIONS TO CLOSING
Each Purchaser's several obligation to purchase and pay for the
Purchased securities to be purchased by it on the applicable Closing Date is
subject to the satisfaction or waiver by each Purchaser prior to or on such
Closing Date of each of the conditions specified below in this Section 4.
4.1. CREDIT PARTY DOCUMENTS.
On or before each Closing Date, the Company shall, and shall cause
each other Credit Party to, deliver to the Purchasers the following with respect
to the Company or such Credit Party, as the case may be and to the extent
applicable, each, unless otherwise noted, dated such Closing Date:
(i) Copies of the Organizational Documents of each Credit Party,
certified by the Secretary of State of its jurisdiction of organization
or, if such document is of a type that may not be so certified, certified
by the secretary or similar Officer of the Company, together with a good
standing certificate from the Secretary of State of its jurisdiction of
organization and each other state in which such Credit Party is qualified
to do business and, to the extent generally available, a certificate or
other evidence of good standing as to payment of any applicable franchise
or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to such Closing Date;
(ii) Resolutions of the Governing Body of each Credit Party
approving and authorizing the execution, delivery and performance of the
Purchase Documents to which it is a party, certified AS of such Closing
Date by the secretary or similar Officer of such Credit Party as being in
full force and effect without modification or amendment;
(iii) Signature and incumbency certificates of the Officers of each
Credit Party executing the Purchase Documents to which it is a party;
(iv) Executed originals of the Purchase Documents to which each
Credit Party is a party; and
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(v) Such other documents as the Purchasers may reasonably request.
4.2. NO MATERIAL ADVERSE EFFECT.
Since December 31, 2002, no Material Adverse Effect (in the sole
opinion of the Purchasers) shall have occurred.
4.3. CORPORATE AND CAPITAL STRUCTURE.
(i) CORPORATE STRUCTURE. The corporate organizational structure,
capital structure, ownership and jurisdiction of organization of the
Company, both before and after giving effect to the transactions
contemplated herein, shall be as set forth on Schedule 4.3(i) annexed
hereto.
(ii) MANAGEMENT; EMPLOYMENT CONTRACTS. The management structure of
the Company after giving effect to the transactions contemplated herein
shall be as set forth on Schedule 4.3(ii) annexed hereto, and the
Purchasers shall have received copies of, and shall be satisfied with the
form and substance of, any and all employment contracts with senior
management of the Company.
4.4. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.
The representations and warranties in Section 5 hereof are true,
correct and complete in all material respects on and as of such Closing Date
to the same extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that the Company has performed in
all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before such
Closing Date except as otherwise disclosed to and agreed to in writing by the
Purchasers; provided that where a representation and warranty, covenant or
condition is qualified as to materiality, such materiality qualifier shall be
disregarded for purposes of this condition.
4.5. FINANCIAL STATEMENTS; PRO FORMA FINANCIAL STATEMENTS.
On or before the First Closing Date, the Purchasers shall have
received from the Company (i) audited financial statements of the Company and
the Company's Subsidiaries for Fiscal Years ended December 31, 2001 and December
31, 2002, consisting of balance sheets and the related consolidated statements
of income, stockholders' equity and cash flows for such Fiscal Years, (ii)
unaudited financial statements of the Company and the Company's Subsidiaries as
at September 30, 2003 and September 30,2002, consisting of balance sheets and
the related consolidated statements of income and stockholders' equity for the
nine-month periods ending on such dates, all in reasonable detail and certified
by the chief financial officer of the Company that they fairly present the
financial condition of the Company and the Company's Subsidiaries as at the
dates indicated and the results of their operations for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(iii) a pro forma estimated consolidated balance sheet of the Company and the
Company's Subsidiaries as at the First Clos-
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ing Date and reflecting the consummation of the transactions contemplated
herein, which pro forma balance sheet shall be in form and substance
satisfactory to the Purchasers.
4.6. OPINIONS OF COUNSEL TO CREDIT PARTIES AND PURCHASERS.
The Purchasers shall have received originally executed copies of one
or more favorable written opinions of (i) ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel
for the Company and the Company's Subsidiaries, in form and substance reasonably
satisfactory to the Purchasers and their counsel, addressed to the Purchasers,
dated as of each Closing Date and setting forth substantially the matters in
the opinions designated in Exhibit G annexed hereto and as to such other matters
as the Purchasers may reasonably request (this Purchase Agreement constituting a
written request by the Company to such counsel to deliver such opinions to the
Purchasers) and (ii) of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Purchasers,
addressed to the Purchasers dated as of the First Closing Date, as to such
matters as the Purchasers and such counsel may agree upon.
4.7. NECESSARY GOVERNMENT AUTHORIZATIONS AND CONSENTS; EXPIRATION OF
WAITING PERIODS, ETC.
The Company shall have obtained all Governmental Authorizations and
all consents of other Persons, including consents substantially in the forms
of Exhibit I, Exhibit J and Exhibit K, in each case that are necessary or
reasonably advisable in connection with the transactions contemplated by the
Purchase Documents and the Related Agreements and the continued operation of the
business conducted by the Company and the Company's Subsidiaries in
substantially the same manner as conducted prior to the First Closing Date. Each
such Governmental Authorization and consent shall be in full force and effect,
except in a case where the failure to obtain or maintain a Governmental
Authorization or consent, either individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. All applicable
waiting periods shall have expired without any action being taken or threatened
by any competent authority that would restrain, prevent or otherwise impose
adverse conditions on the transactions contemplated by the Purchase Documents
and the Related Agreements. No action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall
be pending, and the time for any applicable Government Authority to take action
to set aside its consent on its own motion shall have expired.
4.8. COMPLETION OF PROCEEDINGS.
All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents
incidental thereto not previously found acceptable by the Purchasers and their
counsel shall be satisfactory in form and substance to the Purchasers and such
counsel, and the Purchasers and such counsel shall have received all such
counterpart originals or certified copies of such documents as the Purchasers
may reasonably request.
4.9. SOLVENCY ASSURANCES.
On the First Closing Date, the Purchasers shall have received an
Officer's Certificate of the Company dated the First Closing Date,
substantially in the form of Exhibit H annexed
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hereto and with appropriate attachments, in each case demonstrating that, after
giving effect to the consummation of the transactions contemplated by the
Purchase Documents, the Company and each Subsidiary Guarantor and the Company
and the Subsidiary Guarantors, taken as a whole, will be Solvent.
4.10. STOCKHOLDERS AGREEMENT.
The Stockholders Agreement shall have been executed and delivered by
the parties thereto.
4.11. MANAGEMENT RIGHTS AGREEMENTS.
On or prior to the First Closing Date, the Management Rights
Agreements shall have been executed and delivered by the parties thereto.
4.12. PRIVATE PLACEMENT NUMBERS.
On or prior to the First Closing Date, the Company shall have
requested and received from S&P a private placement number for each of the
Notes, the Purchased Preferred Stock and the Common Stock of the Company.
4.13. SIMULTANEOUS PURCHASE.
Each of the Purchasers will simultaneously purchase the Purchased
Securities to be purchased by such Purchaser on such Closing Date.
4.14. OTHER REQUESTS.
The Company shall have delivered such other certificates or
documents that the Purchasers shall reasonably request, in form and substance
satisfactory to the Purchasers.
4.15. ▇▇▇▇▇▇▇▇ REDEMPTION
Concurrently with the receipt of the proceeds received on the First
Closing Date, the Company shall consummate the ▇▇▇▇▇▇▇▇ Redemption.
SECTION 5. THE COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Purchasers to enter into this Agreement, the
Company represents and warrants to each Purchaser as of the date hereof and as
of each Closing Date:
5.1. ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each of the Company and the Company's
Subsidiaries is a corporation, partnership, trust or limited liability company
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization as specified in Schedule 5.1 annexed hereto. Each
of the Company and the Company's Subsidiaries has all requisite power and
authority to own and operate its properties, to carry on its business as now
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conducted and as proposed to be conducted, to enter into the Purchase Documents
and the Related Agreements to which it is a party and to carry out the
transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each of the Company and its
Subsidiaries is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing has not had and could not reasonably be expected
to result in a Material Adverse Effect.
C. SUBSIDIARIES. All of the Subsidiaries of the Company as of the
First Closing Date and their jurisdictions of organization are identified in
Schedule 5.1 annexed hereto. The Capital Stock of the Company and each of the
Subsidiaries of the Company identified in Schedule 5.1 annexed hereto is duly
authorized, validly issued, fully paid and nonassessable and none of such
Capital Stock constitutes Margin Stock. Each of the Subsidiaries of the Company
identified in Schedule 5.1 annexed hereto is a corporation, partnership, trust
or limited liability company duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization set forth
therein, has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted, to enter into the Purchase Documents to which it is a party and to
carry out the transactions contemplated thereby, and is qualified to do
business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in
each case except where failure to be so qualified or in good standing or a lack
of such power and authority has not had and could not reasonably be expected to
result in a Material Adverse Effect. Schedule 5.1 annexed hereto correctly
sets forth, as of the First Closing Date, the ownership interest of the Company
and each of the Company's Subsidiaries in each of the Subsidiaries of the
Company identified therein.
5.2. AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and
performance of the Purchase Documents and the Related Agreements have been duly
authorized by all necessary action on the part of the Company and the
Company's Subsidiaries that are a party thereto.
B. NO CONFLICT. The execution, delivery and performance by the
Company and the Company's Subsidiaries of the Purchase Documents and the Related
Agreements to which they are parties and the consummation of the transactions
contemplated by the Purchase Documents and the Related Agreements do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company or any of the Company's Subsidiaries, the
Organizational Documents of the Company or any of the Company's Subsidiaries or
any order, judgment or decree of any court or other Government Authority binding
on the Company or any of the Company's Subsidiaries, (ii) conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company or any of the Company's
Subsidiaries the violation of which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect or (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of the Company or any of the Company's Subsidiaries, or (iv) require
any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of the Company or any of
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the Company's Subsidiaries, except for such approvals or consents which will be
obtained on or before the First Closing Date and disclosed in writing to the
Purchasers.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
the Company and the Company's Subsidiaries of the Purchase Documents and the
Related Agreements to which they are parties and the consummation of the
transactions contemplated by the Purchase Documents and the Related Agreements
do not and will not require any Governmental Authorization, except as have
been obtained.
D. BINDING OBLIGATION. Each of the Purchase Documents and the
Related Agreements has been duly executed and delivered by each Credit Party
that is a party thereto and is the legally valid and binding Obligation of such
Person, enforceable against such Person in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
E. COMPLIANCE WITH LAWS. The Company and the Company's Subsidiaries
are in compliance with all presently existing applicable statutes, laws,
regulations, rules, ordinances and orders of any kind whatsoever (including,
without limitation, any zoning and building laws or ordinances, subdivision
laws or ordinances, any Environmental Laws or any presently existing rules,
regulations or orders of any Government Authority), and with all present
existing covenants and restrictions of record relating to the use and occupancy
of any of their respective properties, except where the failure to so comply
could not reasonably be expected to result in a Material Adverse Effect.
5.3. CAPITALIZATION.
(a) SHARES OUTSTANDING. as of the First Closing Date, the authorized
Capital Stock of the Company will consist solely of 50,000,000 shares of its
Common Stock, par value $0.0001 per share, of which 20,869,213 shares will be
issued and outstanding, and 5,000,000 shares of its preferred stock, par value
$0.0001 per share, of which 3,750,000 have been designated Senior Cumulative
Convertible Preferred Stock, Series A, pursuant to the Certificate of
Designation, none of which are issued and outstanding. No shares of any class of
the Capital Stock of the Company were held by the Company in its treasury or by
the Company's Subsidiaries. Since December 31, 2002, the Company (i) has not
issued any shares of any class of its Capital Stock and (ii) other than the
forward stock split consummated on December 29, 2003 in connection with the
transactions contemplated by this Agreement, has not split, combined or
reclassified any of its shares of any class of its Capital Stock. All the issued
and outstanding shares of Common Stock have been duly authorized and are validly
issued, fully paid and nonassessable and are free of preemptive rights and the
Purchased Preferred Stock has been duly authorized and, when issued in
accordance with this Agreement, the Certificate of Designation and the
certificate of incorporation, will be validly issued, fully paid, nonassessable
and free of preemptive rights. The Company has duly reserved for issuance a
sufficient number of shares of Common Stock for issuance upon exercise of the
Purchased Securities at the initial conversion rate thereof. Upon conversion of
the Purchased Securities, the Conversion Shares shall have been duly authorized,
validly issued, fully paid an nonassessable and will be free of preemptive
rights.
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(b) OTHER SECURITIES.
(i) There are no securities of the Company or any of its
Subsidiaries that are convertible into or exchangeable for shares of any Capital
Stock of the Company or any of its Subsidiaries, and no options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of Capital Stock of, or other interests in, the
Company or any of its Subsidiaries;
(ii) There are no outstanding Obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Capital Stock of the Company or any of its Subsidiaries and neither the Company
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;
(iii) After the First Closing Date, neither the Company nor any of
its Subsidiaries will have any obligation to issue, transfer or sell any shares
of Capital Stock of the Company or its Subsidiaries;
(iv) Except as set forth on Schedule 5.3(b)(iv), there are no voting
trusts or other agreements or understandings to which the Company or any of its
Subsidiaries is a party with respect to the holding, voting or disposing of
Capital Stock of the Company or any of its Subsidiaries; and
(v) As of the First Closing Date, neither the Company nor any of its
Subsidiaries will have 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 Company or any of its
Subsidiaries on any matter or which are convertible into or exercisable for
securities having such a right to vote.
5.4. FINANCIAL CONDITION.
The Company has heretofore delivered to the Purchasers, at the
Purchasers' request, the financial statements and information required to be
delivered pursuant to Section 4.6. All such statements were prepared in
conformity with GAAP and fairly present, the financial position (on a
consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
Neither the Company nor any of the Company's Subsidiaries has (and will not
have following the issuance of the Notes) any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that, as of the First Closing Date, is not reflected in the
foregoing financial statements or the notes thereto or arose in the ordinary
course of business since that date and could not be reasonably expected to
result in a Material Adverse Effect and that, in any such case, is material in
relation to the business, results of operation, assets, liabili-
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ties, condition (financial or otherwise) or prospects of the Company and the
Company's Subsidiaries taken as a whole.
5.5. NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since December 31, 2002, no event or change has occurred that has
resulted in or evidences, either in any case or in the aggregate, a Material
Adverse Effect. Since December 31, 2002, neither the Company nor any of the
Company's Subsidiaries has directly or indirectly declared, ordered, paid or
made, or set apart any sum or property for, any Restricted Junior Payment or
agreed to do so except as permitted by Section 7.5.
5.6. TITLE TO PROPERTIES; LIENS; REAL PROPERTY; INTELLECTUAL PROPERTY.
A. TITLE TO PROPERTIES; LIENS. The Company and the Company's
Subsidiaries have (i) good, sufficient and legal title to, (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
all of their respective properties and assets reflected in the financial
statements referred to in Section 5.4 or in the most recent financial
statements delivered pursuant to Section 6.2, in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under Section 7.7. Except as permitted by
this Agreement, all such properties and assets are free and clear of Liens.
B. REAL PROPERTY. As OF the First Closing Date, Schedule 5.6B
annexed hereto contains a true, accurate and complete list of (i) all fee
interests in any Real Property Assets and (ii) all leases, subleases or
assignments of leases (together with all amendments, modifications,
supplements, renewals or extensions of any thereof) affecting each Real Property
Asset, regardless of whether the Company or any of the Company's Subsidiaries is
the landlord or tenant (whether directly or as an assignee or successor in
interest) under such lease, sublease or assignment. Except as set forth on
Schedule 5.6B, each agreement listed in Schedule 5.6B pursuant to clause (ii)
of the immediately preceding sentence is in full force and effect, there is no
default by the Company or any of the Company's Subsidiaries thereunder, and
the Company does not have knowledge of any default that has occurred and is
continuing thereunder, and each such agreement constitutes the legally valid and
binding obligation of each applicable Credit Party, enforceable against such
Credit Party in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable principles relating
to enforceability.
C. INTELLECTUAL PROPERTY. As of the First Closing Date, the Company
and the Company's Subsidiaries own or have the right to use all Intellectual
Property used in or necessary to the conduct of their business, except as set
forth on Schedule 5.6C or where the failure to own or have such right to use,
individually or in the aggregate could not reasonably be expected to result in a
Material Adverse Effect. Except as set forth on Schedule 5.6C, no claim has been
asserted and is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Company know of any valid basis for any such
claim except for such claims that individually or in the ag-
-41-
gregate could not reasonably be expected to result in a Material Adverse Effect.
The use of such Intellectual Property by the Company and the Company's
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. All federal and
state and all foreign registrations of and applications for Intellectual
Property, and all unregistered Intellectual Property, that are owned or
licensed by the Company or any of the Company's Subsidiaries on the First
Closing Date and are material to the conduct of business of the Company and
the Company's Subsidiaries are described on Schedule 5.6C annexed hereto.
5.7. LITIGATION; ADVERSE FACTS.
A. LITIGATION. Except as set forth in Schedule 5.7A annexed hereto,
there are no Proceedings (whether or not purportedly on behalf of the Company or
any of the Company's Subsidiaries) at law or in equity, or before or by any
court or other Government Authority (including any Environmental Claims) that
are pending or, to the knowledge of the Company or any of the Company's
Subsidiaries, threatened against or affecting the Company or any of the
Company's Subsidiaries or any property of the Company or any of the Company's
Subsidiaries and that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any of
the Company's Subsidiaries (i) is in violation of any applicable laws (including
Environmental Laws) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, or (ii) is subject to or in
default with respect to any final judgments, writs, injunctions, decrees, rules
or regulations of any court or other Government Authority, that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
B. LAND USE PROCEEDINGS. As of the each Closing Date, there are no
pending condemnation, zoning or other land use Proceedings or special
assessment Proceedings with respect to the Real Property Assets or the use
thereof, and neither the Company nor any of the Company's Subsidiaries has
received written notice from any Government Authority threatening any such
Proceeding. After each Closing Date, there are no pending condemnation, zoning
or other land use Proceedings or special assessment Proceedings with respect to
the Real Property Assets or the use thereof that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
and neither the Company nor any of the Company's Subsidiaries has received
written notice from any Government Authority threatening any such proceeding.
No Credit Party has entered into any agreements or commitments with any
Government Authority that will be binding on the Real Property Assets after each
Closing Date and that would (i) materially affect the operations of or the
entitlements applicable to such property, (ii) require the owner of such
property to make improvements to such property or make dedications or off-site
improvements for the benefit of adjoining properties, or (iii) make additional
expenditures with respect to the operation of the Real Property Assets.
5.8. PAYMENT OF TAXES.
Except to the extent permitted by Section 6.4, all tax returns and
reports of the Company and the Company's Subsidiaries required to be filed by
any of them have been timely filed, and all taxes shown on such tax returns to
be due and payable and all assessments, fees and other governmental charges upon
the Company and the Company's Subsidiaries and upon their
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respective properties, assets, income, businesses and franchises that are due
and payable have been paid when due and payable, except for such taxes (i) which
are not yet delinquent or (ii) that are being contested in good faith and by
proper proceedings, and against which adequate reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor. The Company knows of no proposed tax assessment
against the Company or any of the Company's Subsidiaries that is not being
actively contested by the Company or such Subsidiary in good faith and by
appropriate proceedings and that could reasonably be expected to have a Material
Adverse Effect.
5.9. PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
CONTRACTS.
A. Neither the Company nor any of the Company's Subsidiaries is in
default in the performance, observance or fulfillment of any of the Obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
B. Neither the Company nor any of the Company's Subsidiaries is a
party to or is otherwise subject to any agreements or instruments or any charter
or other internal restrictions or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
C. Schedule 5.9 contains a true, correct and complete list of all
the Material Contracts in effect on the First Closing Date. All such Material
Contracts are in full force and effect and no defaults currently exist
thereunder, except for defaults that, individually or in the aggregate, could
not reasonably be deemed to have a Material Adverse Effect.
5.10. GOVERNMENT REGULATION, OFAC; PATRIOT ACT; FOREIGN CORRUPT PRACTICES
ACT.
A. GOVERNMENTAL REGULATION. Neither the Company nor any of the
Company's Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or under any other federal or state statute or
regulation which may limit its ability to incur Indebtedness or that may
otherwise render all or any portion of the Obligations hereunder unenforceable.
B. OFAC. Neither the extensions of credit to the Company hereunder
nor the use of the respective proceeds thereof, shall cause any Purchaser to
violate the U.S. BANK Secrecy Act, as amended, and any applicable regulations
thereunder or any of the sanctions programs administrated by the Office of
Foreign Assets Control ("OFAC") of the United States Department of Treasury, any
regulations promulgated thereunder by OFAC or under any affiliated or successor
governmental or quasi-governmental office, bureau or agency and any enabling
legislation or executive order relating thereto. Without limiting the foregoing,
neither the Company nor any of its Affiliates (a) is or will become a person
whose property or interests in property are
-43-
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001))
(the "EXECUTIVE ORDER"), (b) engages or will engage in any dealings or
transactions prohibited by Section 2 of the Executive Order, or be otherwise
associated with any such person in any manner violative of Section 2, or (c) is
or will otherwise become a person on the list of Specially Designated Nationals
and Blocked Persons ("SDN LIST") or subject to the limitations or prohibitions
under any other OFAC regulation or executive order ("PROHIBITED PERSONS").
C. PATRIOT ACT; FOREIGN CORRUPT PRACTICES ACT. The Company and each
of the Company's Subsidiaries are in compliance, in all material respects, with
the Uniting And Strengthening of America By Providing the Appropriate Tools
Required To Intercept And Obstruct Terrorism Act of 2001 (the "USA PATRIOT ACT
OF 2001"). No part of the extensions of credit hereunder will be used, directly
or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended.
5.11. SECURITIES ACTIVITIES.
A. Neither the Company nor any of the Company's Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of the Purchased
Securities, not more than 25% of the value of the assets (either of the Company
only or of the Company and the Company's Subsidiaries on a consolidated basis)
subject to the provisions of Sections 7.2 and 7.7 and subject to any restriction
contained in any agreement or instrument, between the Company and any Noteholder
or any Affiliate of any Noteholder, relating to Indebtedness and within the
scope of Section 8.2, will be Margin Stock.
5.12. EMPLOYEE BENEFIT PLANS.
A. The Company, each of the Company's Subsidiaries and each of their
respective ERISA Affiliates are in compliance with all applicable provisions
and requirements of ERISA and the Internal Revenue Code and the regulations and
published interpretations there-under with respect to each Employee Benefit
Plan, and have performed all their Obligations under each Employee Benefit
Plan, except where any failures to comply or perform, either individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
B. No ERISA Event has occurred or is reasonably expected to occur
which, either individually or when aggregated with other ERISA Events, could
reasonably be expected to result in a Material Adverse Effect.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of
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insurance or otherwise) for any retired or former employee of the Company, any
of the Company's Subsidiaries or any of their respective ERISA Affiliates that
have or could reasonably be expected to have a Material Adverse Effect.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), would not result in a Material Adverse Effect if
such Pension Plans were terminated as of that date.
E. As of the most recent valuation date for each Multiemployer Plan
for which the actuarial report is available, the liability of the Company, the
Company's Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA), when aggregated with such liability for A complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221
(e) of ERISA, would not result in a Material Adverse Effect if the Company, the
Company's Subsidiaries and their respective ERISA Affiliates all withdrew from
such Multiemployer Plans as of such date.
F. The execution and delivery of this Agreement and the issuance and
sale of the Notes to the CIGNA Entities hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section 4975(c)
(1)(A)-(D) of the Code. The representation by the Company in the first sentence
of this Section 5.12(F) is made in reliance upon and subject to the accuracy of
the Purchasers' representation in Section 5A(f) as to the sources of the funds
used to pay the purchase price of the Notes to be purchased by the Purchasers.
5.13. CERTAIN FEES AND AGREEMENT.
Except as set forth in Schedule 5.13, no broker's or finder's fee or
commission or any other fees will be payable by any Credit Party with respect to
this Agreement or any of the transactions contemplated by the Purchase
Documents, and the Company hereby indemnifies the Purchasers and Noteholders
against, and agrees that it will hold the Purchasers and Noteholders harmless
from, any claim, demand or liability for any such broker's or finder's fees
alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.14. ENVIRONMENTAL PROTECTION.
(i) Neither the Company nor any of the Company's Subsidiaries nor
any of their respective Facilities or operations are subject to any outstanding
written order, consent decree or settlement agreement with any Person relating
to any Environmental Law, any Environmental Claim, or any Hazardous Materials
Activity;
(ii) neither the Company nor any of the Company's Subsidiaries has
received any letter or request for information under Section 104 of the
Comprehensive Environmental Response, compensation, and Liability Act (42
U.S.C. Section 9604) or any comparable state law;
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(iii) there are and, to the Company's knowledge, have been no
conditions, occurrences, or Hazardous Materials Activities that could
reasonably be expected to form the basis of an Environmental Claim against the
Company or any of the Company's Subsidiaries except for such Environmental Claim
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect;
(iv) neither the Company nor any of the Company's Subsidiaries nor,
to the Company's knowledge, any predecessor of the Company or any of the
Company's Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment of Hazardous Materials at any Facility,
and none of the Company's or any of the Company's Subsidiaries' operations
involves the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent, in each case in a manner that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect;
(v) the Company employs management personnel who are responsible for
environmental, health and safety matters for its and each of the Company's
Subsidiaries' operations, to the extent such matters involve Environmental
Laws, that (a) are knowledgeable in the requirements of Environmental Laws
applicable to the Company's and its Subsidiaries', if any, operations, (b) from
time to time retain environmental consultants to aid in ensuring any known or
potential incidents of non-compliance with Environmental Laws are corrected and
(c) provide training to employees in compliance with applicable worker health
and safety requirements;
(vi) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws would not, individually or
in the aggregate, be reasonably expected to result in a Material Adverse
Effect. Nothing in this Section 5.14 to the contrary, no event or condition
has occurred or is occurring with respect to the Company or any of the Company's
Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect;
(vii) to the Company's and each of its Subsidiary's knowledge, all
Facilities and all operations of the Company and the Company's Subsidiaries are
in compliance, and have in the last five years been in compliance, with
Environmental Laws except where failure to comply, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect; and
(viii) no judicial proceeding or action by any Government Authority
is pending, or to the knowledge of the Company and each of the Company's
Subsidiaries, threatened, under any Environmental Law to which the Company or
any of the Company's Subsidiaries is or will be named as a party.
5.15. EMPLOYEE MATTERS.
There are no collective bargaining agreements covering the employees
of the Company and the Company's Subsidiaries that could, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
There is no strike or work stoppage in
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existence or threatened involving the Company or any of the Company's
Subsidiaries that could reasonably be expected to result in a Material Adverse
Effect, and there are no strikes or walkouts in progress, pending or to the
Company's knowledge contemplated relating to any labor contracts to which the
Company or any of the Company's Subsidiaries is a party, relating to any labor
contracts being negotiated, or otherwise that could, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
5.16. SOLVENCY.
Each Credit Party is and, upon the incurrence of any Obligations by
such Credit Party on any date on which this representation is made, will be,
Solvent. The Company and the Company's Subsidiaries taken as a whole are and,
upon the incurrence of any Obligations by the Company and the Company's
Subsidiaries taken as a whole on any date on which this representation is
made, will be, Solvent.
5.17. DISCLOSURE.
No representation or warranty of the Company or any of the Company's
Subsidiaries contained in any Purchase Document, Related Agreement or in any
other document, certificate or written statement or information furnished to the
Purchasers by or on behalf of the Company or any of the Company's Subsidiaries
for use in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact (known to the Company, in the case of any document not furnished by it)
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by the Company to be
reasonable at the time made, it being recognized by the Purchasers that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to the Company (other than matters of
a general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to the Purchasers for use in connection with the transactions
contemplated hereby.
5.18. PROCEEDS OF NOTES.
The proceeds of the Purchased Securities will be used solely by the
Company for the purposes set forth in Section 2.4.
5.19. PRIVATE OFFERING; NO INTEGRATION OR GENERAL SOLICITATION.
(a) It is not necessary in connection with the offer, sale and
delivery of the Purchased Securities to the Purchasers pursuant to this
Agreement to register the Purchased Securities under the Securities Act.
(b) No Credit Party has, 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
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of a type or in a manner which would be integrated with the sale of the
Purchased Securities and require the Purchased Securities to be registered under
the Securities Act. No Credit Party, its Affiliates or any person acting on its
or any of their behalf (other than the Purchasers, as to whom the Company makes
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 Purchased Securities.
SECTION 5A. THE PURCHASERS' REPRESENTATIONS AND WARRANTIES
In order to induce the Company to enter into this Agreement, each
Purchaser severally represents and warrants to the Company as of the date
hereof and as of each Closing Date:
5A(1). ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
(a) ORGANIZATION AND POWERS. Such Purchaser is a corporation,
partnership, trust or limited liability company duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization. Such
Purchaser has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and AS proposed to be
conducted, to enter into the Purchase Documents and the Related Agreements to
which it is a party and to carry out the transactions contemplated thereby.
(b) QUALIFICATION AND GOOD STANDING. Such Purchaser is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had and could not reasonably be expected to result in a Material Adverse
Effect.
5A(2). AUTHORIZATION OF PURCHASING, ETC.
(a) AUTHORIZATION OF PURCHASING. Except with respect to purchase of
the Additional Notes and Additional Purchased Preferred Stock by the Purchasers
identified on Schedule A-2, the execution, delivery and performance of the
Purchase Documents and the Related Agreements have been duly authorized by all
necessary action on the part of such Purchaser.
(b) NO CONFLICT. The execution, delivery and performance by such
Purchaser of the Purchase Documents and the Related Agreements to which it is
party and the consummation of the transactions contemplated by the Purchase
Documents and the Related Agreements do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to such
Purchaser, the Organizational Documents of such Purchaser or any order, judgment
or decree of any court or other Government Authority binding on such Purchaser,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) A default under any Contractual Obligation of such
Purchaser the violation of which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect or (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of such Purchaser, or (iv) except with respect to purchase of the
Additional Notes and Additional Purchased Preferred Stock by the Purchasers
identified on Schedule A-2, require any approval of
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stockholders or any approval or consent of any Person under any Contractual
Obligation of such Purchaser, except for such approvals or consents which will
be obtained on or before the First Closing Date and disclosed in writing to the
Company.
(c) GOVERNMENTAL CONSENTS. The execution, delivery and performance
by such Purchaser of the Purchase Documents and the Related Agreements to which
it is party and the consummation of the transactions contemplated by the
Purchase Documents and the Related Agreements do not and will not require any
Governmental Authorization, except as have been obtained.
(d) BINDING OBLIGATION. Except with respect to purchase of the
Additional Notes and Additional Purchased Preferred Stock by the Purchasers
identified on Schedule A-2, Each of the Purchase Documents and the Related
Agreements has been duly executed and delivered by such Purchaser that is a
party thereto and is the legally valid and binding obligation of such Person,
enforceable against such Person in accordance with its respective terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
(e) COMPLIANCE WITH LAWS. Such Purchaser is in compliance with all
presently existing applicable statutes, laws, regulations, rules, ordinances
and orders of any kind whatsoever (including, without limitation, any zoning and
building laws or ordinances, subdivision laws or ordinances, any Environmental
Laws or any presently existing rules, regulations or orders of any Government
Authority), and with all present existing covenants and restrictions of record
relating to the use and occupancy of any of their respective properties, except
where the failure to so comply could not reasonably be expected to result in a
Material Adverse Effect.
5A(3). PRIVATE PLACEMENT.
(a) Such Purchaser is acquiring the Purchased 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 Purchased Securities
have not been registered under the Securities Act, by reason of their issuance
by the Company in a transaction exempt from the registration requirements of the
Securities Act; and (ii) the Purchased Securities may not be sold unless such
disposition is registered under the Securities Act or is exempt from
registration thereunder.
(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 employ any broker or finder in connection
with the transactions contemplated in this Agreement.
(e) Such Purchaser is an "Accredited Investor" (as defined in Rule
501(a) under the Securities Act).
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(f) At least one of the following statements is an accurate
representation as to each source of funds (a "SOURCE") to be used by it to pay
the purchase price of the Purchased Securities to be purchased by it hereunder:
A. the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan, all plans maintained by the same employer or
employee organization, with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on behalf
of such plan, exceeds 10% of the total reserves and liabilities of such
general account (exclusive of separate account liabilities) plus surplus,
as set forth in the NAIC Annual Statement filed with such Purchaser's
state of domicile; or
B. the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as it has disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or group
of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
C. the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of PART V of
the QPAM Exemption), no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part I(c) and (G) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by
the QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (C);or
D. the Source is a governmental plan; or
E. the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this paragraph (E); or
F. the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
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SECTION 6. THE COMPANY'S AFFIRMATIVE COVENANTS
The Company and the Subsidiary Guarantors jointly and severally
covenant and agree with each Purchaser and each Noteholder that until the
principal amount of (and premium, if any, on) all the Notes, and all interest
and other Obligations hereunder in respect thereof, shall have been paid in
full:
6.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall duly and punctually pay the principal of (and
premium, if any, on) and all interest on the Notes in accordance with the terms
of the Notes and this Agreement.
The Company shall pay interest on overdue principal (including
post-petition interest on a proceeding under any Bankruptcy Law), and interest
on overdue interest, to the extent lawful, at the rate specified in the Notes.
6.2. FINANCIAL STATEMENTS AND OTHER REPORTS.
The Company will maintain, and cause each of the Company's
Subsidiaries to maintain, a system of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP. The Company will deliver to each Noteholder:
(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month, the consolidated and consolidating
balance sheets of the Company and the Company's Subsidiaries as at the end
of such fiscal period and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of the Company
and the Company's Subsidiaries for such fiscal period and for the period
from the beginning of the then current Fiscal Year to the end of such
fiscal period, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures from the Financial Plan for
the current Fiscal Year, to the extent prepared for such fiscal period,
all in reasonable detail and certified by the chief financial officer of
the Company that they fairly present, in all material respects, the
financial condition of the Company and the Company's Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated, subject to changes resulting from audit
and normal year-end adjustments;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, (a) the consolidated
and consolidating balance sheets of the Company and the Company's
Subsidiaries AS at the end of such Fiscal Quarter and the related
consolidated and consolidating statements of income, stockholders' equity
and cash flows of the Company and the Company's Subsidiaries for such
Fiscal Quarter and for the period from the beginning of then current
Fiscal Year to the end of such Fiscal Quarter, setting forth in each case
in comparative form the corresponding figures for the corresponding
periods of the previous Fiscal Year and the corresponding figures from the
Financial Plan for the current Fiscal Year, all in reasonable detail and
certified by the
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chief financial officer of the Company that they fairly present, in all
material respects, the financial condition of the Company and the
Company's Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, and (b) a
narrative report describing the operations of the Company and the
Company's Subsidiaries in the form prepared for presentation to senior
management for such Fiscal Quarter and for the period from the beginning
of the then current Fiscal Year to the end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of the Company and the Company's Subsidiaries
as at the end of such Fiscal Year and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows of
the Company and the Company's Subsidiaries for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the
previous Fiscal Year and the corresponding figures from the Financial Plan
for the Fiscal Year covered by such financial statements, all in
reasonable detail and certified by the chief financial officer of the
Company that they fairly present, in all material respects, the financial
condition of the Company and the Company's Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, (b) a narrative report describing the operations of the
Company and the Company's Subsidiaries in the form prepared for
presentation to senior management for such Fiscal Year, and (c) in the
case of such consolidated financial statements, a report thereon of a
nationally recognized accounting firm or other independent certified
public accountants of recognized national standing selected by the Company
and satisfactory to the Required Holders, which report shall be
unqualified, shall express no doubts, assumptions or qualifications
concerning the ability of the Company and the Company's Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of the Company and the Company's
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(iv) Officer and Compliance Certificates: together with each
delivery of financial statements of the Company and the Company's
Subsidiaries pursuant to subdivisions (ii) and (iii) above, (a) an
Officer's Certificate of the Company stating that the signers have
reviewed the terms of this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail of the
transactions and condition of the Company and the Company's Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed, and that the signers do not have knowledge
of, the existence of any condition or event that constitutes an Event of
Default or Potential Event of Default, at the end of or, with respect to
any Event of Default or Potential Event of Default other than under
Section 8.3 in respect of a violation of Section 7.6, during the
accounting period covered by such financial statements or as of the date
of such Officer's Certificate, or, if any such condition or event existed
or exists,
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specifying the nature and period of existence thereof and what action the
Company has taken, is taking and proposes to take with respect thereto;
and (b) a Compliance Certificate demonstrating in reasonable detail
compliance during and at the end of the applicable accounting periods
with the restrictions contained in Section 7, in each case to the extent
compliance with such restrictions is required to be tested at the end of
the applicable accounting period;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in Section 5.4, the
consolidated and consolidating financial statements of the Company and the
Company's Subsidiaries delivered pursuant to subdivisions (ii), (iii) or
(xii) of this Section 6.2 will differ in any material respect from the
consolidated and consolidating financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xii) of this Section 6.2 following such change, consolidated and
consolidating financial statements of the Company and the Company's
Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (2) the two full Fiscal Years immediately preceding the Fiscal
Year in which such change is made, in each case prepared on a pro forma
basis AS if such change had been in effect during such periods, and (b)
together with each delivery of financial statements pursuant to
subdivision (ii), (iii) or (xii) of this Section 6.2 following such
change, if required pursuant to Section 1.2, a written statement of the
chief accounting officer or chief financial officer of the Company setting
forth the differences (including any differences that would affect any
calculations relating to the financial covenants set forth in Section 7.6)
which would have resulted if such financial statements had been prepared
without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated and consolidating financial statements of the Company and the
Company's Subsidiaries pursuant to subdivision (iii) above, a written
statement by the independent certified public accountants giving the
report thereon (a) stating whether, in connection with their audit
examination, any condition or event that constitutes noncompliance with
Section 7.6 as they relate to accounting matters has come to their
attention and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such noncompliance that would not be disclosed in the
course of their audit examination, and (b) stating that based on their
audit examination nothing has come to their attention that causes them to
believe either or both that the information contained in the certificates
delivered therewith pursuant to subdivision (iv) above is not correct or
that the matters set forth in the Compliance Certificates delivered
therewith pursuant to clause (a) of subdivision (iv) above for the
applicable Fiscal Year are not stated in accordance with the terms of
this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to the Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company and the Company's Subsidiaries made
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by such accountants, including any final comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by the Company to its
Security holders or by any Subsidiary of the Company to its Security
holders other than the Company or another Subsidiary of the Company, (b)
all regular and periodic reports and all registration statements (other
than on Form S-8 or a similar form) and prospectuses, if any, filed by the
Company or any of the Company's Subsidiaries with any securities exchange
or with the Commission or any Government Authority or private regulatory
authority, and (c) all press releases and other statements made available
generally by the Company or any of the Company's Subsidiaries to the
public concerning material developments in the business of the Company or
any of the Company's Subsidiaries;
(ix) Litigation or Other Proceedings: (a) promptly upon, but in any
event within five Business Days after, any officer of the Company
obtaining knowledge of (1) the institution of, or non-frivolous threat of,
any Proceeding against or affecting the Company or any of the Company's
Subsidiaries or any property of the Company or any of the Company's
Subsidiaries not previously disclosed in writing by the Company to the
Noteholders or (2) any material development in any Proceeding that, in the
case of any of (1) or (2):
(X) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(y) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to the Company to enable the Noteholders and their
counsel to evaluate such matters; and (b) within twenty days after the
end of each Fiscal Quarter, a schedule of all Proceedings involving an
alleged liability of, or claims against or affecting, the Company or any
of the Company's Subsidiaries equal to or greater than $250,000 and
promptly after request by the Required Holders such other information as
may be reasonably requested by the Required Holders to enable the
Noteholders and their counsel to evaluate any of such Proceedings;
(x) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event which could reasonably be
expected to result in a Material Adverse Effect, a written notice
specifying the nature thereof, what action the Company, any of the
Company's Subsidiaries or any of their respective ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
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(xi) ERISA Notices: with reasonable promptness, copies of (a) each
Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by the Company, any of the Company's Subsidiaries or any
of their respective ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan as the Required Holders reasonably
request; (b) all notices received by the Company, any of the Company's
Subsidiaries or any of their respective ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event which could
reasonably be expected to result in a Material Adverse Effect; and (c)
copies of such other documents or governmental reports or filings relating
to any Employee Benefit Plan as the Required Holders shall reasonably
request;
(xii) Financial Plans: as soon as practicable and in any event no
later than (x) February 15, 2004 in the case of Fiscal Year 2004 and (y)
30 days after the beginning of each Fiscal Year commencing with Fiscal
Year 2005, a consolidated plan and financial forecast for such Fiscal Year
(the "FINANCIAL PLAN" for such Fiscal Year), including (a) projected
consolidated and consolidating balance sheets and projected consolidated
and consolidating statements of income and cash flows of the Company and
the Company's Subsidiaries for such Fiscal Year, together with pro forma
Compliance Certificates for such Fiscal Year and an explanation of the
assumptions on which such forecasts are based, (b) projected consolidated
and consolidating statements of income and cash flows of the Company and
the Company's Subsidiaries for each month of such Fiscal Year, together
with an explanation of the assumptions on which such forecasts are based,
(c) the amount of projected unallocated overhead for such Fiscal Year, and
(d) such other information and projections as the Required Holders may
reasonably request;
(xiii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of the Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of the
Company and (b) all of the data required to be set forth in Schedule 5.1
annexed hereto with respect to all Subsidiaries of the Company (it being
understood that such written notice shall be deemed to supplement Schedule
5.1 annexed hereto for all purposes of this Agreement);
(xiv) Employment Contracts: promptly, and in any event within ten
Business Days after any employment contract with an Officer, director or
senior manager of the Company or any of the Company's Subsidiaries is
terminated or amended in a manner that is materially adverse to the
Company or such Subsidiary, as the case may be, or any new employment
contract is entered into with an Officer, director or senior manager of
the Company or any of the Company's Subsidiaries, a written statement
describing such event with copies of such material amendments or new
contracts, and an explanation of any actions being taken with respect
thereto;
(xv) Events of Default, etc.: promptly upon, and within ten Business
Days after, any officer of the Company obtaining knowledge (a) of any
condition or event that constitutes an Event of Default or Potential Event
of Default, or becoming aware that any Noteholder has given any notice or
taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
the Company or any of the Company's Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type
referred to in Section 8.2, (c) of any
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resignation or dismissal of the Company's independent accountant, (d) of
any Change of Control or other event requiring a prepayment of principal
on any Subordinated Indebtedness, (e) of any individual or series of
related Asset Sales or issuances of Capital Stock aggregating in excess of
$250,000, or (f) of the occurrence of any event or change that has caused
or evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officer's Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action the Company has taken, is taking and proposes to take with
respect thereto;
(xvi) Corporate Matters: with reasonable promptness, written notice
of (1) any change in the composition of the Governing Body of any of the
Company or any of the Company's Subsidiaries, and (2) any change in the
executive Officers of the Company or any of the Company's Subsidiaries;
(xvii) Telephonic Conference: Within five Business Days after the
delivery of the financial statements referred to in paragraphs (i), (ii),
(iii) and (xii) above, the Chief Financial Officer of the Company shall
participate in a telephonic conference upon the request of the Required
Holders; and
(xviii) Other Information: with reasonable promptness, such other
information and data with respect to the Company or any of the Company's
Subsidiaries as from time to time may be reasonably requested by any
Noteholder.
6.3. EXISTENCE, ETC.
Except AS permitted under Section 7.7, the Company will, and will
cause each of the Company's Subsidiaries to, at all times preserve and keep in
full force and effect its existence in the jurisdiction of organization
specified on Schedule 5.1 and all rights and franchises material to its
business; provided, however, that neither the Company nor any of the Company's
Subsidiaries shall be required to preserve any such right or franchise if the
Governing Body of the Company or such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or such Subsidiary, as the case may be, and that the loss thereof is
not disadvantageous in any material respect to the Company, such Subsidiary or
the Noteholders.
6.4. PAYMENT OF TAXES AND CLAIMS; TAX.
A. The Company will, and will cause each of the Company's
Subsidiaries to, pay all material Taxes and other governmental charges imposed
upon it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and all claims
(including claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon any
of its properties or assets, prior to the time when any penalty or fine shall
be incurred with respect thereto; provided that no such Tax charge or claim need
be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as such reserve or
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other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor.
B. The Company will not, nor will it permit any of the Company's
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than the Company or any of the Company's
Subsidiaries).
6.5. MAINTENANCE OF PROPERTIES; INSURANCE.
A. MAINTENANCE OF PROPERTIES. (i) The Company will, and will cause
each of the Company's Subsidiaries to, maintain or cause to be maintained in
good repair, working order and condition, ordinary wear and tear excepted, all
material properties used or useful in the business of the Company and the
Company's Subsidiaries (including all material Intellectual Property) and from
time to time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.
(ii) The Company and the Company's Subsidiaries shall (a) prosecute,
file and/or make (1) all applications relating to the Intellectual Property
owned, held or used by the Company or the Company's Subsidiaries that is pending
as of the date of this Agreement, (2) all registrations of any material existing
or future unregistered or copyrightable works and (3) all Trademark opposition
and cancellation proceedings and renewal Trademark Registrations and Copyright
Registrations and (b) do any and all acts which are necessary or desirable to
preserve and maintain all rights in all Intellectual Property, except in each
case under clause (a) or clause (b) where the failure, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
Any expenses incurred in connection therewith shall be borne solely be the
Company and the Company's Subsidiaries.
B. INSURANCE. The Company will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the assets, properties and businesses of the Company and the Company's
Subsidiaries as may customarily be carried or maintained under similar
circumstances by corporations of established reputation engaged in similar
businesses, in each case in such amounts (giving effect to self-insurance), with
such deductibles, covering such risks and otherwise on such terms and conditions
as shall be customary for corporations similarly situated in the industry.
6.6. INSPECTION RIGHTS.
The Company shall, and shall cause each of the Company's
Subsidiaries to, permit any authorized representatives designated by each
Noteholder to visit and inspect any of the properties of the Company or of any
of the Company's Subsidiaries to inspect, copy and take extracts from the
Company's and the Company's Subsidiaries' financial and accounting records, and
to discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (provided that the Company may, if
it so chooses, be present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal business hours
and as often as may reasonably be requested; provided that upon the
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occurrence and during the continuation of an Event of Default or a Potential
Event of Default, authorized representatives designated by any Noteholder shall
be permitted to conduct such inspection and other related activities without
notice and at any time; provided further that any such inspection conducted by
an authorized representative of a Noteholder upon the occurrence and during the
continuation of an Event of Default or a Potential Event of Default shall be at
the Company's sole cost and expense.
6.7. COMPLIANCE WITH LAWS, ETC.
The Company shall comply, and shall cause each of the Company's
Subsidiaries and all other Persons on or occupying any Real Property Assets to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any Government Authority (including all Environmental Laws), except
where failure to so comply could not reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.
6.8. EXECUTION OF SUBSIDIARY GUARANTEE AFTER THE FIRST CLOSING DATE.
A. EXECUTION OF SUBSIDIARY GUARANTEE. If any Person becomes a direct
or indirect Domestic Subsidiary of the Company after the date hereof, the
Company will promptly notify the Noteholders of that fact and, if the Company
and its Subsidiaries directly or indirectly hold or own at least 80% of the
voting or economic power of the Capital Stock of such Domestic Subsidiary, cause
such Domestic Subsidiary to execute and deliver to the Noteholders a Subsidiary
Guarantee and a Supplemental Agreement to this Agreement whereby said Subsidiary
shall become a party to this Agreement pursuant to Section 10.2.
B. SUBSIDIARY ORGANIZATIONAL DOCUMENTS, LEGAL OPINIONS, ETC. The
Company shall deliver to the Noteholders, together with such Subsidiary
Guarantee, (i) certified copies of such Subsidiary's Organizational Documents,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its organization and each other state in which such Person is
qualified to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to the
Noteholders, (ii) a certificate executed by the secretary or similar Officer of
such Subsidiary as to (a) the fact that the attached resolutions of the
Governing Body of such Subsidiary approving and authorizing the execution,
delivery and performance of the Purchase Documents are in full force and effect
and have not been modified or amended and (b) the incumbency and signatures of
the Officers of such Subsidiary executing such Subsidiary Guarantee, and (iii)
a favorable opinion of counsel to such Subsidiary, addressed to the Noteholders,
in form and substance satisfactory to the Required Holders and their counsel, as
to (a) the due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of such Subsidiary
Guarantee and Supplemental Agreement, (c) the enforceability of such
Subsidiary Guarantee and Supplemental Agreement against such Subsidiary and (d)
such other matters as the Required Holders may reasonably request, all of the
foregoing to be satisfactory in form and substance to the Required Holders and
their counsel.
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6.9. SOLVENCY.
The Company shall at all times be Solvent and the Company shall
cause the Company and the Company's Subsidiaries, taken as a whole, to be at all
times Solvent.
6.10. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall
(1) notify the Noteholders of such Change of Control and (2) if requested by the
Required Holders, make an offer (a "CHANGE of CONTROL OFFER") to each Noteholder
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of each Noteholder's Notes at an offer price in cash equal to 101% of the
principal amount thereof as of the Offer Payment Date, plus accrued and unpaid
interest, if any, thereon to the Offer Payment Date (the "CHANGE of CONTROL
PURCHASE PRICE"). The Company 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 Company
shall not be in violation of this Agreement by reason of any act required by
such rule or other applicable law.
(b) Within 20 days following any Change of Control, as applicable,
the Company shall send, by first-class mail, a notice to each Noteholder
stating:
(i) that the Change of Control Offer is being made pursuant to this
Section 6.10 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 not more than 45 days from the date on which the Company
mails notice of the Change of Control (the "OFFER PAYMENT DATE");
(iii) that any Notes not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change
of Control Purchase Price, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Offer
Payment Date;
(v) that Noteholders 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 Company or its designated agent for such
purpose at the address specified in the notice prior to the close of
business on the first Business Day preceding the Offer Payment Date; and
(vi) that Noteholders 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.
(c) On the Offer Payment Date, the Company shall, to the extent
lawful and to the extent such repurchase is not then prohibited under Section 11
hereof, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) mail
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to each Noteholder who has so tendered the Change of Control Purchase Price for
such Notes plus all accrued and unpaid interest to the Offer Payment Date, and
(iii) execute and mail (or cause to be transferred by book-entry) to each
Noteholder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any. The Company shall inform the Noteholders in
writing of the results of the Change of Control Offer on or as soon as
practicable after the Offer Payment Date.
(d) Prior to complying with any of the procedures of this Section
6.10, but in any event within 20 days following any Change of Control, the
Company covenants to:
(i) repay in full all Senior Obligations and terminate all
commitments, if any, under or in respect of any Senior Obligations arising
under a Credit Agreement; or
(ii) obtain the consents of the Administrative Agent under its
Senior Obligations to repurchase the Notes as described above.
The Company must first comply with the covenant described in the preceding
sentence before it shall be required to purchase Notes in the event of a Change
of Control; provided that the Company's failure to comply with the covenant
described in the preceding sentence shall constitute an Event of Default
described in Section 8.3.
(e) If the Company or any of its Subsidiaries has outstanding any
preferred stock or Indebtedness that is pari passu or subordinated in right of
payment to the Notes, and the Company or such Subsidiary is required to make a
change of control offer or to make a distribution with respect to such
preferred stock or pari passu or Subordinated Indebtedness in the event of a
Change of Control, the Company shall not consummate any such offer or
distribution with respect to such preferred stock or pari passu or Subordinated
Indebtedness until such time as the Company has paid the Change of Control
Purchase Price to the Noteholders that have accepted the Company's Change of
Control Offer and must otherwise have consummated the Change of Control Offer.
The Company shall not issue preferred stock or Indebtedness that is pari passu
or subordinated in right of payment to the Notes with change of control
provisions requiring the payment of such preferred stock or Indebtedness prior
to the payment of the Notes in the event of a Change of Control.
6.11. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
(a) In the event that, pursuant to Section 7.7 hereof, the Company
shall be required to commence an offer to Noteholders to purchase Notes (an
"EXCESS PROCEEDS OFFER"), it shall follow the procedures specified in this
Section 6.11. The Company 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 Excess Proceeds Offer, and the
Company shall not be in violation of this Agreement by reason of any act
required by such rule or other applicable law.
(b) Within 20 days following each date on which the Company's
obligation to make an Excess Proceeds Offer is triggered, the Company shall
send, by first-class mail, a notice to each Noteholder stating:
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(i) that the Excess Proceeds Offer is being made pursuant to this
Section 6.11 and Section 7.7, as the case may be (such notice shall
identify which of such two sections applies to such offer);
(ii) that the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 7.7 (the "EXCESS PROCEEDS
OFFER AMOUNT"), the purchase price per Note and the purchase date, which
shall be at least 30 but no more than 45 days from the date on which the
Company mails notice of the Excess Proceeds Offer (the "EXCESS PROCEEDS
OFFER PAYMENT DATE");
(iii) that any Notes not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in payment of the Excess
Proceeds Offer Amount on the Excess Proceeds Offer Payment Date, all
Notes accepted for payment pursuant to the Excess Proceeds Offer shall
cease to accrue interest after the Excess Proceeds Offer Payment Date;
(v) that Noteholders electing to have any Notes purchased pursuant
to an Excess Proceeds 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 Company 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 Excess Proceeds Offer
Payment Date;
(vi) that Noteholders will be entitled to withdraw their election if
the Company or its designated agent for such purpose receives, not later
than the close of business on the second Business Day preceding the Excess
Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Noteholder, the principal amount of
Notes delivered for purchase, and a statement that such Noteholder is
withdrawing his election to have the Notes purchased;
(vii) that, if the aggregate principal amount of Notes surrendered
by Noteholders exceeds the Excess Proceeds Offer Amount, the Company
shall select the Notes to be purchased on a pro rata basis; and
(viii) that Noteholders 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.
On the Excess Proceeds Offer Payment Date, the Company shall, to the
extent lawful and to the extent such repurchase is not then prohibited under
Section 11 hereof, (i) accept for payment, on a pro rata basis to the extent
necessary, all Notes or portions thereof properly tendered pursuant to the
Excess Proceeds Offer up to the principal amount of Notes equal to the Excess
Proceeds Offer Amount, or, if less than the Excess Proceeds Offer Amount has
been tendered, all Notes tendered, (ii) mail to each Noteholder so tendered
the purchase price for such Notes, plus all accrued and unpaid interest to the
Excess Proceeds Offer Payment Date, (iii) execute and mail (or cause to be
transferred by book-entry) to each Noteholder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any, and
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(iv) deliver to the Noteholders an Officer's Certificate stating that such Notes
or portions thereof were accepted for payment by the Company in accordance with
the terms of this Section 6.11. The Company shall inform the Noteholders in
writing of the results of the Excess Proceeds Offer on or as soon as practicable
after the Excess Proceeds Offer Payment Date.
6.12. STOCK OPTION PLAN.
The Company shall use its best efforts to establish a stock option
plan reasonably acceptable to the Required Holders within 30 days of the First
Closing Date.
SECTION 7. THE COMPANY'S NEGATIVE COVENANTS
The Company and the Subsidiary Guarantors hereby covenant and agree
with each Purchaser and each Noteholder that until the principal amount of (and
premium, if any, on) all the Notes, and all interest and other Obligations
hereunder in respect thereof, shall have been paid in full:
7.1. INDEBTEDNESS.
The Company shall not, and shall not permit any of the Company's
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness or issue any preferred stock, except:
(i) Indebtedness of the Company and/or one or more Subsidiaries
under one or more Credit Agreements in an aggregate principal amount not
to exceed $100,000,000 at any time outstanding less (A) any mandatory
prepayment actually made thereunder (to the extent, in the case of
payments of revolving credit borrowings, that the corresponding
commitments have been permanently reduced) or scheduled payments actually
made thereunder and (B) any Net Asset Sale Proceeds used to repay
Indebtedness under any Credit Agreement in accordance with Section 7.7;
(ii) the Company and the Company's Subsidiaries may become and
remain liable with respect to Contingent Obligations permitted by
Section 7.4 and, upon any matured Obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) the Company may become and remain liable with respect to
unsecured Subordinated Indebtedness to any Subsidiary Guarantor, and any
Subsidiary Guarantor may become and remain liable with respect to
unsecured Subordinated Indebtedness to the Company or any other Subsidiary
Guarantor;
(iv) the Company and the Company's Subsidiaries, as applicable, may
remain liable with respect to Indebtedness outstanding as of the First
Closing Date and described in Schedule 7.1 annexed hereto;
(v) the Company may become and remain liable with respect to the
Indebtedness under this Agreement, the Notes and the Subsidiary
Guarantees; and
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(vi) Indebtedness of the Company or its Subsidiaries representing a
refinancing, replacement or refunding of Indebtedness permitted by any
of clauses 7.1(ii) and (iv) above; provided that (A) such Indebtedness
(the "REFINANCING INDEBTEDNESS") is an original aggregate principal amount
not greater than the aggregate principal amount of, and unpaid interest
on, the Indebtedness being refinanced, replaced or refunded plus the
amount of any premiums required to be paid thereon and fees and expenses
associated therewith, (B) such Refinancing Indebtedness has a later or
equal final maturity and a longer or equal weighted average life than the
Indebtedness being refinanced, replaced or refunded, (C) if the
Indebtedness being refinanced, replaced or refunded is subordinated to the
Notes, such Refinancing Indebtedness is subordinated to the Notes on terms
no less favorable to the Noteholders than the terms of the Indebtedness
being refinanced, replaced or refunded, (D) the covenants, events of
default and any Contingent Obligations in respect thereof shall be no less
favorable to the Noteholders than those contained in the Indebtedness
being refinanced, replaced or refunded, (E) the interest rate of such
Refinancing Indebtedness may not exceed by more than 100 basis points
the Indebtedness being refinanced, replaced or refunded, (F) at the time
of, and after giving effect to, such refinancing, replacement or
refunding, no Potential Event of Default or Event of Default shall have
occurred and be continuing and (G) such Refinancing Indebtedness is
incurred by the obligor under the Indebtedness being refinanced.
7.2. LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. The Company shall not, and shall not permit
any of the Company's Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of any kind (including any document or instrument in respect of goods or
accounts receivable) of the Company or any of the Company's Subsidiaries,
whether now owned or hereafter acquired, or any income or profits therefrom or
proceeds thereof, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien with respect
to any such property, asset, income or profits or proceeds under the UCC of any
State or under any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) (x) Liens securing Senior Obligations and Guarantor Senior
Obligations under the Credit Agreements incurred pursuant to Section
7.1(i) and (y) the Motorola Liens;
(iii) Liens existing on the First Closing Date and set forth on
Schedule 7.2; provided that no such Lien shall at any time be extended to
cover property or assets other than the property or assets subject thereto
on the First Closing Date;
(iv) pledges or deposits of cash and Cash Equivalents securing
deductibles, self-insurance, co-payment, co-insurance, retentions and
similar Obligations to providers of insurance in the ordinary course of
business;
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(v) Liens on Cash and Cash Equivalents securing Obligations under
Currency Agreements entered into in the ordinary course of business in
connection with the entry into purchase orders and for purposes of
managing existing or anticipated exchange rate risks in connection with
the booking of purchase orders from customers and not for speculative
purposes; and
(vi) replacement Liens securing Refinancing Indebtedness permitted
under Section 7.1(vi); provided that any such replacement Lien shall not
be secured by any additional assets not secured by the Indebtedness
being refinanced.
B. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO THE COMPANY OR
OTHER SUBSIDIARIES. The Company will not, and will not permit any of the
Company's Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (a) pay dividends or make any other
distributions on any of such Subsidiary's Capital Stock owned by the Company or
any other Subsidiary of the Company, (b) repay or prepay any Indebtedness owed
by such Subsidiary to the Company or any other Subsidiary of the Company, (c)
make loans or advances to the Company or any other Subsidiary of the Company, or
(d) transfer any of its property or assets to the Company or any other
Subsidiary of the Company, except AS provided in this Agreement, other than:
(i) this Agreement and the other Purchase Documents;
(ii) restrictions in effect on the date of this Agreement contained
in the Credit Agreements or the Motorola Distributor Documents and any
restrictions imposed by any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
of any of the foregoing (including, without limitation, restrictions
that directly or indirectly bind any current or future Subsidiary of the
Company that is not subject to such restrictions as of the date of this
Agreement); provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Company, no more
restrictive with respect to the items described in clauses (a) through (d)
above than those contained in the restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing;
(iii) customary non-assignment provisions with respect to leases or
licensing agreements entered into by the Company or any of its
Subsidiaries, in each case entered into in the ordinary course of business
and consistent with past practices;
(iv) any restriction or encumbrance with respect to a Subsidiary of
the Company imposed pursuant to an agreement which has been entered into
for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Subsidiary, so long as such sale or disposition is
permitted under this Agreement; and
(v) Liens permitted under Section 7.2A and any documents or
instruments governing the terms of any Indebtedness or other Obligations
secured by any such Liens;
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provided that such prohibitions or restrictions apply only to the assets
subject to such Liens.
7.3. INVESTMENTS; ACQUISITIONS.
The Company shall not, and shall not permit any of the Company's
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, or acquire, by purchase or otherwise, all
or substantially all the business, property or fixed assets of, or Capital Stock
or other ownership interest of any Person, or any division or line of business
of any Person except:
(i) the Company and the Company's Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) the Company and its Subsidiaries may make Investments in the
Company or any other Subsidiary or any other Person if, as a result of
such Investment, such Person becomes a Subsidiary of the Company;
(iii) the Company and the Subsidiary Guarantors may make
intercompany loans to the extent permitted under Section 7.1(iii);
(iv) the Company and each Subsidiary may acquire and own
Investments received in connection with the bankruptcy or reorganization
of suppliers and customers and in settlement of delinquent obligations of,
and other disputes with, customers and suppliers arising in the ordinary
course of business and consistent with past practices;
(v) the Company and each Subsidiary may make deposits in the
ordinary course of business consistent with past practices to secure the
performance of leases;
(vi) the Company may (x) purchase Capital Stock to the extent
permitted under Section 7.5(iii)(b) and (y) acquire and hold obligations
of one or more officers or other employees of the Company or any of its
Subsidiaries in connection with such officers' or employees' acquisition
of shares of common stock of the Company, so long as no cash is paid by
the Company or any of its Subsidiaries to such officers or employees in
connection with the acquisition of any such obligations and such
obligations are recourse obligations of such officers or other employees;
(vii) the Company may make loans and advances to employees and
officers of the Company and its Subsidiaries in the ordinary course of
business not to exceed $1,000,000 in the aggregate at any one time
outstanding;
(viii) the Company and its Subsidiaries may hold Investments which
consist of trade accounts receivable of the Company or such Subsidiary
created in the ordinary course of business;
(ix) the Company and its Subsidiaries may make Investments
represented by Hedge Agreement made in the ordinary course of business;
provided that such Hedge
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Agreements or otherwise entered into in compliance with the terms of this
Agreement; and
(x) the Company and its Subsidiaries may make Investments in Joint
Ventures and Unrestricted Subsidiaries; provided that the amount of all
such Investments does not exceed $10,000,000 in the aggregate for all such
Investments since the First Closing Date.
7.4. CONTINGENT OBLIGATIONS.
The Company shall not, and shall not permit any of the Company's
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) Subsidiaries of the Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary Guarantee
of such Subsidiary;
(ii) the Company may become and remain liable with respect to (a)
Contingent Obligations under Hedge Agreements with respect to the
Indebtedness under any Credit Agreement in an aggregate notional amount up
to the amount of then-outstanding principal amount of the Indebtedness
under such Credit Agreement; and (b) under other Hedge Agreements with
respect to Indebtedness entered into in the ordinary course of business in
order to manage existing or anticipated interest rate, exchange rate or
commodity price risks and not for speculative purposes;
(iii) the Company and the Company's Subsidiaries may become and
remain liable with respect to Contingent Obligations in respect of
customary indemnification and purchase price adjustment Obligations
incurred in connection with Asset Sales or other sales of assets;
(iv) the Company and the Company's Subsidiaries may become and
remain liable with respect to Contingent Obligations in respect of any
Indebtedness of the Company or any of the Company's Subsidiaries
permitted by Section 7.1 or in respect of any of the Motorola Obligations;
(v) the Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations resulting from the factoring of
accounts receivable in the ordinary course of business;
(vi) the Company and the Company's Subsidiaries, as applicable, may
remain liable with respect to Contingent Obligations described in Schedule
7.4 annexed hereto;
(vii) the Company and the Company's Subsidiaries may remain liable
with respect to Contingent Obligations in respect of letters of credit
incurred in the ordinary course of business with a face value not to
exceed $10,000,000 at any one time outstanding; and
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(viii) the Company and the Company's Subsidiaries may remain liable
with respect to Contingent Obligations represented by guarantees of
trade payables of Subsidiaries incurred in the ordinary course of
business.
7.5. RESTRICTED JUNIOR PAYMENTS.
The Company shall not, and shall not permit any of the Company's
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that (i) the Company may
make regularly scheduled payments of interest in respect of any Subordinated
Indebtedness in accordance with the terms of, and only to the extent required
by, and subject to the subordination provisions contained in the indenture or
other agreement pursuant to which such Subordinated Indebtedness was issued, as
such indenture or other agreement may be amended from time to time to the extent
permitted under Section 7.11B, and (ii) so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby:
(a) the Company may redeem or repurchase Capital Stock or options,
warrants or other rights therefor (collectively, "EQUITY INTERESTS")
from (i) officers, employees and directors of the Company or any
Subsidiary (or their estates) upon the death, permanent disability,
retirement or termination of employment of any such Person or otherwise in
accordance with any stock option plan or any employee stock ownership plan
maintained by the Company or any of its Subsidiaries and (ii) other
holders of Capital Stock in the Company so long as the purpose of such
purchase is to acquire common stock for reissuance to new officers,
employees and directors (or their estates) of the Company or any
Subsidiary to the extent so reissued within 12 months after any such
purchase; provided that in all such cases (x) no Potential Event of
Default or Event of Default is then in existence or would otherwise arise
therefrom (y) the aggregate amount of all cash paid in respect of all such
shares so redeemed or repurchased less net cash proceeds from the sale
of any such redeemed or repurchased shares does not exceed $5,000,000 in
the aggregate from and after the First Closing Date;
(b) the Company may pay dividends on the Purchased Preferred Stock
in accordance with the terms thereof as in effect at the First Closing
Date; and
(c) the Company may pay (i) the First Closing Dividends and (ii)
additional dividends to R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in an
aggregate amount not to exceed $2,935,000 at any time following the
refinancings of the GE Facility and the Ocean Bank Facility.
7.6. FINANCIAL COVENANTS.
A. MINIMUM CASH INTEREST COVERAGE RATIO. The Company shall not
permit the Cash Interest Expense Coverage Ratio for any four-Fiscal Quarter
period ending on the date set forth below to be less than the correlative ratio
indicated:
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MINIMUM INTEREST
PERIOD COVERAGE RATIO
------------------ ----------------
December 31, 2003 2.50:1.00
March 31, 2004 2.50:1.00
June 30, 2004 2.50:1.00
September 30, 2004 2.50:1.00
December 31, 2004 2.50:1.00
March 31, 2005 2.75:1.00
June 30, 2005 2.75:1.00
September 30, 2005 2.75:1.00
December 31, 2005 2.75:1.00
March 31, 2006 and the last day of each Fiscal
Quarter thereafter 3.00:1.00
B. MAXIMUM TOTAL LEVERAGE RATIO. The Company shall not permit the
Consolidated Total Leverage Ratio at any time during any period set forth below
to exceed the correlative ratio indicated:
MAXIMUM TOTAL
PERIOD LEVERAGE RATIO
--------------------------------------- --------------
Fiscal Quarter Ended March 31, 2004 5.00:1.00
Fiscal Quarter Ended June 30, 2004 5.00:1.00
Fiscal Quarter Ended September 30, 2004 5.00:1.00
Fiscal Quarter Ended December 31, 2004 5.00:1.00
Fiscal Quarter Ended March 31, 2005 5.00:1.00
Fiscal Quarter Ended June 30, 2005 4.00:1.00
Fiscal Quarter Ended September 30, 2005 4.00:1.00
Fiscal Quarter Ended December 31, 2005 4.00:1.00
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MAXIMUM TOTAL
PERIOD LEVERAGE RATIO
------------------------------------- --------------
Fiscal Quarter Ended March 31, 2006 4.00:1.00
June 30, 2006 and each Fiscal Quarter
thereafter 3.00:1.00
7.7. RESTRICTION ON FUNDAMENTAL CHANGES: ASSET SALES.
(a) The Company shall not, and shall not permit any of the Company's
Subsidiaries to, alter the corporate or legal structure of the Company or any
of the Company's Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sublease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets (including any
Capital Stock of a Subsidiary, whether newly issued or outstanding), whether now
owned or hereafter acquired, except:
(i) any Subsidiary of the Company may be merged with or into the
Company or any Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to the Company or any Subsidiary
Guarantor; provided that (A) the Company or such Subsidiary Guarantor is
the surviving corporation; (B) immediately after such transaction no
Potential Event of Default or Event of Default shall have occurred and be
continuing; and (C) the Company or such Subsidiary Guarantor or the
successor company (y) will have Consolidated Net Worth immediately after
the transaction equal to or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction and (z) will, after giving
pro forma effect thereto, be in compliance with Section 7.6;
(ii) the Company and the Company's Subsidiaries may sell or
otherwise dispose of assets in transactions that do not constitute Asset
Sales; provided that the consideration received for such assets shall be
in an amount at least equal to the Fair Market Value thereof;
(iii) the Company and the Company's Subsidiaries may dispose of
obsolete, worn out or surplus property in the ordinary course of business;
(iv) the Company and the Company's Subsidiaries may make Asset
Sales to Persons who are not Affiliates of the Company and the Company's
Subsidiaries; provided that (a) the consideration received for such assets
shall be in an amount at least equal to the Fair Market Value thereof; (b)
at least 85% of the consideration received shall be Cash; and (c) the
proceeds of such Asset Sales shall be applied as required by Section
7.7(b);
(v) the Company or a Subsidiary may sell or dispose of shares of
Capital Stock of any of the Company's Subsidiaries in order to qualify
members of the Governing Body of the Subsidiary if required by
applicable law; and
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(vi) the Company may alter the legal structure of its Mexico
Subsidiary for the purpose of reducing its tax expense, provided that
after giving effect to such new capital structure, the Company shall own,
directly or indirectly, at least the same percentage of the Capital Stock
of each newly formed entity as it did of its Mexico Subsidiary prior to
such event.
(b) The Company shall not, and shall not permit any of the
Company's Subsidiaries to consummate any Asset Sale unless the Net Asset Sale
Proceeds, if any, received by the Company or such Subsidiary are applied as
follows:
(A) first, to prepay, repay or purchase Senior Obligations (or cash
collateralize letters of credit issued under a Credit Agreement relating
to such Senior Obligations) permitted by the terms of this Agreement
within 180 days following the receipt of the Net Asset Sale Proceeds from
any Asset Sale; provided that (x) any such repayment of Senior Obligations
shall, in the case of any Senior Obligations under any Credit Agreement,
result in a permanent reduction of the commitments under the relevant
Credit Agreement in an amount equal to the principal amount so repaid and
(y) any proceeds applied to cash collateralize letter of credit
Obligations shall upon return to the Company or any of its Subsidiaries
once again constitute Net Asset Sale Proceeds which shall be required to
be applied as provided for in this clause (b);
(B) second, to the extent of the balance of Net Asset Sale Proceeds
after application as described in subclause (A) above, to the extent the
Company elects, to an Investment in property or other assets (including
Capital Stock or other securities purchased in connection with the
acquisition of Capital Stock or property of another Person so long as such
Person becomes a Subsidiary of the Company or is acquired substantially in
its entirety) otherwise in compliance with the terms of this Agreement;
provided that such Investment occurs within 180 days following receipt of
such Net Asset Sale Proceeds; and
(C) third, if on such 180th day in the case of clause (A) or (B)
with respect to any Asset Sale, the Net Asset Sale Proceeds (together with
the Net Asset Sale Proceeds from any other Asset Sale with respect to
which an offer has not been made pursuant to Section 6.11) exceed
$2,500,000, the Company shall, subject to the provisions of Sections 10
and 11 of this Agreement, apply an amount equal to the Net Asset Sale
Proceeds not so applied to an offer to repurchase the Notes, at a purchase
price in cash equal to 100% of the principal amount thereof plus accrued
and unpaid interest, if any, to the purchase date in accordance with the
terms of Section 6.11.
7.8. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, conduct any business or enter into or
suffer to exist any transaction or series of related transactions (including,
without limitation, the sale, purchase, exchange or lease of assets, property or
services) with, or for the benefit of, any Affiliate of the Company or of a
Subsidiary (other than the Company or a wholly owned Subsidiary) or any
beneficial holder of 5% or more of any class of Capital Stock of the Company or
any officer, director or employee of the
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Company or any Subsidiary unless such transaction or series of related
transactions is entered into in good faith and in writing and
(a) such transaction (or agreement pursuant to which such
transaction is entered into) is on terms that are no less favorable to
the Company or such subsidiary, as the case may be, than those that would
be available in a comparable transaction in arm's-length dealings with an
unrelated third party;
(b) with respect to any transaction or series of related
transactions involving aggregate value in excess of $500,000, the Company
delivers to each Noteholder an officer's Certificate describing such
transaction or transactions, certifying that such transaction or
transactions have been approved by a majority of the members of the
Governing Body of the Company as well as a majority of the Disinterested
Directors of the Company or, in the event there is only one
Disinterested Director, by such Disinterested Director, and certifying
that such transaction or transactions complies with clause (a) above; and
(c) with respect to any transaction or series of related
transactions involving aggregate payments in excess of $1,500,000, the
Company delivers to each Noteholder a written opinion of an Independent
Financial Advisor stating that the transaction or series of related
transactions is fair to the Company or such Subsidiary from a financial
point of view;
provided, however, that this provision shall not apply to (i) any transaction
with an officer, director or employee of the Company or any Subsidiary entered
into in the ordinary course of business providing for compensation and
employee benefit arrangements with respect to such officer, director or employee
of the Company, including under any stock option or stock incentive plans;
provided that such transaction has been approved in the manner described in
clause (b) above, (ii) any Restricted Junior Payment otherwise permitted by the
terms of this Agreement and (iii) indemnification agreements for the benefit of
officers, directors and employees entered into in the ordinary course of
business.
Notwithstanding anything to the contrary in this Section 7.8, the
Company shall not pay R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ compensation in excess of $800,000 per
annum unless approved by a majority of the independent members of the Board of
Directors of the Company or, if there are no independent Directors at such time,
by the Required Holders, it being agreed that the grant to ▇▇. ▇▇▇▇▇▇ of stock
options exercisable into Common Stock pursuant to one or more stock option
plans approved by the Board of Directors which options have an exercise price
per share at least equal to the Current Market Price per share of the Company's
Common Stock shall not be included in such amount.
7.9. DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES.
The Company may designate after the First Closing Date any
Subsidiary (other than a Guarantor) as an "Unrestricted Subsidiary" under this
Agreement (a "DESIGNATION") only if
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(i) no Potential Event of 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 Company would be permitted to make an Investment at the
time of Designation (assuming the effectiveness of such Designation)
pursuant to Section 7.3(x) in an amount (the "DESIGNATION AMOUNT") equal
to the Fair Market Value of the Company's interest in such Subsidiary on
such date.
The Company shall not, and shall not cause or permit any Subsidiary
to, at any time (x) provide credit support for or subject any of its property or
assets (other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary). All
Subsidiaries of Unrestricted Subsidiaries shall automatically be deemed to be
Unrestricted Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "REVOCATION") if
(i) no Potential Event of Default or Event of Default shall have
occurred and be continuing at the time of and after giving effect to such
Revocation;
(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 for all purposes of this
Agreement; and
(iii) any transaction (or series of related transactions) between
such Subsidiary and any of its Affiliates that occurred while such
Subsidiary was an Unrestricted Subsidiary would be permitted by Section
7.8 hereof as if such transaction (or series of related transactions) had
occurred at the time of such Revocation.
All Designations and Revocations must be evidenced by resolutions of
the Governing Body of the Company delivered to each Noteholder certifying
compliance with the foregoing provisions.
Notwithstanding anything to the contrary herein, the Company may not
designate any given Subsidiary as an Unrestricted Subsidiary more than once.
7.10. CONDUCT OF BUSINESS.
From and after the First Closing Date, the Company shall not, and
shall not permit any of the Company's Subsidiaries to, engage in any business
other than (i) the businesses engaged in by the Company and the Company's
Subsidiaries on the First Closing Date and similar
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or related businesses and (ii) such other lines of business as may be consented
to by Required Holders in their reasonable discretion.
7.11. AMENDMENTS OR WAIVERS OF CERTAIN AGREEMENTS;
AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED
INDEBTEDNESS AND CREDIT AGREEMENTS.
A. AMENDMENTS OR WAIVERS OF CERTAIN AGREEMENTS. Neither the Company
nor any of the Company's Subsidiaries will agree to any material amendment to,
or waive any of its material rights under, any Organization Document after the
First Closing Date if to do so would have a material and adverse effect on the
rights of any Noteholders under the Notes, the Subsidiary Guarantees or this
Agreement or on the Company's ability to perform its obligations under this
Agreement without in each case obtaining the prior written consent of the
Required Holders to such amendment or waiver.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
The Company shall not, and shall not permit any of the Company's Subsidiaries
to, amend or otherwise change the terms of any Subordinated Indebtedness, or
make any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof,
change the subordination provisions thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase materially the Obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to the Company or the Noteholders.
C. AMENDMENTS TO SENIOR OBLIGATIONS. The holders of Senior
Obligations and the Credit Parties and their Subsidiaries may modify, supplement
or amend the terms of the Credit Agreements or the Motorola Distributor
Documents, AS applicable, or waive any of the provisions thereof, in any manner
whatsoever, all without consent of any of the Noteholders and without affecting
the standstill and subordination provisions set forth in this Agreement and the
other Purchase Documents or the liabilities and obligations of the Noteholders
to the holders of Senior Obligations hereunder. Without limiting the generality
of the foregoing, the holders of Senior Obligations and the Credit Parties and
their Subsidiaries may, without the consent of any of the Noteholders and
without affecting the standstill and subordinations set forth in this Agreement
or the liabilities and obligations of the Noteholders to the holders of Senior
Obligations hereunder and under the Purchase Documents, increase or decrease
the principal amount of the Senior Obligations (subject to the definition of
"Senior Obligations" set forth in Section 1.1 hereof), amend the advance rates
against assets of the Credit Parties, amend the borrowing base provisions, and
amend the eligibility standards with respect to assets of the Credit Parties;
provided however, that notwithstanding any provision contained herein to
the contrary, the Company shall not, and shall not permit any of the Company's
Subsidiaries to, amend or otherwise change the terms of any Credit Agreement or
Motorola Distributor Documents in effect on the
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First Closing Date or enter into or otherwise amend or change the terms of any
subsequent Credit Agreement or Motorola Distribution Documents, or make any
payment, if the effect of such amendment or change or the terms of such
subsequent Credit Agreement is to (a) increase the principal amount of the
Indebtedness in excess of the maximum principal amount permitted to be incurred
under this Agreement or (b) directly prohibit or restrict the payment of
principal of, interest on, or other amounts payable with respect to the Notes
in a manner that is more restrictive than the prohibitions and restrictions
contained in any Credit Agreement or Motorola Distributor Document on the First
Closing Date.
7.12. FISCAL YEAR.
The Company shall not change its Fiscal Year-end from December 31.
7.13. PUBLIC DISCLOSURES.
Neither the Company nor any of its Subsidiaries shall disclose the
name or identity of any Noteholder as an investor in the Company in any press
release or other public announcement or in any document or material filed with
any governmental entity, unless such disclosure is required by Applicable Law
or by order of a court of competent jurisdiction, in which case prior to making
such disclosure the Company shall give written notice to such Noteholder '
describing in reasonable detail the proposed content of such disclosure and
shall permit such Noteholder to review and comment upon the form and substance
of such disclosure.
7.14. PAYMENTS FOR CONSENTS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Noteholder 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 offered to be paid
or agreed to be paid to all Noteholders that so consent, waive or agree to amend
in the time frame set forth in solicitation documents relating to such consent,
waiver or amendment; provided however, that a Noteholder's participation in a
subsequent financing for which such consent, waiver or amendment is sought
will not constitute, for purposes of this Section 7.14, consideration for such
consent, waiver or amendment. The Noteholders agree with the Company that they
shall not be entitled to any consent fee with respect to any consent which may
be granted by such Noteholders in connection with the first refinancing of the
Credit Agreements as they are in effect on the First Closing Date.
7.15. LIMITATION ON REPURCHASES OF NOTES.
The Company shall not and shall not permit any of its Subsidiaries
or Affiliates to, purchase or offer to purchase, prepay, redeem or otherwise
acquire for value any Notes from any Noteholder (or otherwise enter into any
transaction that has the practical effect of acquiring any Notes) unless the
Company, such Subsidiary or such Affiliate makes such offer open to all
Noteholders on the same terms and purchases all Notes tendered pursuant to the
terms of such offer (on a pro rata basis to the extent the principal amount of
Notes tendered exceeds the offer amount). The Company shall provide each
Noteholder with written notice of each such offer within two Business Days of
each date on which any such offer may be made to any Noteholder.
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7.16. NO INTEGRATION.
The Company agrees that it shall not and it shall cause or permit
any of its Subsidiaries or Affiliates to not make any offer or sale of
securities of any class of such Company 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 the sale of the Notes and Purchased Preferred Stock by
the Company to the Purchasers under exemption from the registration requirements
of the Securities Act provided by Section 4(2) thereof or otherwise.
7.17. RESTRICTION ON REPURCHASES.
Until the expiration of two years after the original issuance of the
Notes and Purchased Preferred Stock, the Company shall not, and shall cause
its Affiliates not to, purchase or agree to purchase or otherwise acquire any
Notes and Purchased Preferred Stock which are "restricted securities" (as such
term is defined under Rule 144(a)(3) under the Securities Act), whether as
beneficial owner or otherwise unless, immediately upon any such purchase, such
Company or any Affiliates shall cause such Notes and Purchased Preferred Stock
to be cancelled or shall not resell such Notes and Purchased Preferred Stock
until expiration of such period.
7.18. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company and each of the Subsidiary Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon, or
plead (as a defense or otherwise) or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or
other law which would prohibit or forgive any of the Company and the Subsidiary
Guarantors from paying all or any portion of the principal of, premium, if any,
and/or interest on the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Agreement; and (to the extent that they may lawfully do so)
each of the Company and the Subsidiary Guarantors hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
7.19. LIMITATION ON CAPITAL STOCK OF SUBSIDIARIES.
The Company will not:
1. sell, pledge, hypothecate or otherwise convey or dispose of any
Capital Stock of any Subsidiary of the Company (other than any such
transaction resulting in a Lien permitted pursuant to Section 7.2(A)(ii));
or
2. permit any of its Subsidiaries to issue any Capital Stock, other
than to the Company or a Subsidiary of the Company.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
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8.1. FAILURE TO MAKE PAYMENTS WHEN DUE.
(a) The Company defaults in the payment when due of interest on the
Notes and such default continues for a period of five calendar days (whether or
not such payment is otherwise then permitted by the provisions of Sections 10 or
11); or
(b) The Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at its
Maturity (whether or not such payment is otherwise then permitted by the
provisions of Sections 10 or 11); or
8.2. DEFAULT IN OTHER AGREEMENTS.
(a) The failure of the Company or any Subsidiary to pay when due
(giving effect to any applicable grace periods and any extensions thereof) any
principal amount of any of the Company's or its Subsidiaries Indebtedness or
Contingent Obligations or any Motorola Obligations, or the acceleration of the
final stated maturity of any such Indebtedness or Contingent Obligations or such
Motorola Obligations (which acceleration is not rescinded, annulled or
otherwise cured within 20 days of receipt by the Company or such Subsidiary of
notice of any such acceleration) if the aggregate principal amount of such
Indebtedness or Contingent Obligations or such Motorola Obligations, together
with the principal amount of any other such Indebtedness or Contingent
Obligations or Motorola Obligations in default for failure to pay principal at
scheduled maturity or Motorola Obligations or which has been accelerated (in
each case with respect to which the 20-day period described above has elapsed),
aggregates $5,000,000 or more at any time.
(b) Any Motorola Distributor Agreement shall be terminated for any
reason.
8.3. BREACH OF CERTAIN COVENANTS.
Failure of the Company to perform or comply with any term or
condition contained in Section 2.4,6.3,6.10 or 6.1 1 or Section 7 of this
Agreement; or
8.4. BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made
by the Company or any of the Company's Subsidiaries in any Purchase Document
or in any statement or certificate at any time given by the Company or any of
the Company's Subsidiaries in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material respect on the
date as of which made; or
8.5. OTHER DEFAULTS UNDER PURCHASE DOCUMENTS.
The Company or any Subsidiary Guarantor shall default in the
performance of or compliance with any term contained in this Agreement or any of
the other Purchase Documents, other than any such term referred to in any other
Section of this Section 8, and such default shall not have been remedied or
waived within 30 days after the earlier of (i) an officer of the Company or
such Credit Party becoming aware of such default or (ii) receipt by the Company
and such Credit Party of notice from any Noteholder of such default; or
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8.6. INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company or any Significant Subsidiary, or
group of Subsidiaries that collectively would constitute a Significant
Subsidiary, in an involuntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or
any other similar relief shall be granted under any applicable federal or state
law, and any such event described in this clause (i) shall continue for 60 days
unless dismissed or stayed; or
(ii) an involuntary case shall be commenced against the Company or
any Significant Subsidiary, or group of Subsidiaries that collectively would
constitute a Significant Subsidiary, under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Company or any Significant
Subsidiary, or group of Subsidiaries that collectively would constitute a
Significant Subsidiary, or over all or a substantial part of its property, shall
have been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of the Company or any
Significant Subsidiary, or group of Subsidiaries that collectively would
constitute a Significant Subsidiary, for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of the Company or any
Significant Subsidiary, or group of Subsidiaries that collectively would
constitute a Significant Subsidiary, and any such event described in this clause
(ii) shall continue for 60 days unless dismissed, bonded or discharged; or
8.7. VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) The Company or any Significant Subsidiary, or group of
Subsidiaries that collectively would constitute a Significant Subsidiary, shall
have an order for relief entered with respect to it or commence a voluntary case
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or the Company or any
Significant Subsidiary, or group of Subsidiaries that collectively would
constitute a Significant Subsidiary, shall make any assignment for the benefit
of creditors; or
(ii) The Company or any Significant Subsidiary, or group of
Subsidiaries that collectively would constitute a Significant Subsidiary, shall
be unable, or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due; or the Governing Body of the Company or
any Significant Subsidiary, or group of Subsidiaries that collectively would
constitute a Significant Subsidiary, (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii); or
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8.8. JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $2,500,000 or in the
aggregate at any time an amount in excess of $5,000,000 (in either case not
adequately covered by insurance as to which a solvent and unaffiliated insurance
the Company has acknowledged coverage) shall be entered or filed against the
Company or any Significant Subsidiary, or group of Subsidiaries that
collectively would constitute a Significant Subsidiary, or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 60 days (or in any event later than five days prior to the date
of any proposed sale thereunder); or
8.9. DISSOLUTION.
Except to the extent permitted by Section 6.3 or 7.7 of this
Agreement, any order, judgment or decree shall be entered against the Company or
any of the Subsidiary Guarantors decreeing the dissolution or split up of the
Company or that Subsidiary Guarantor and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
8.10. EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in
the aggregate results in or could reasonably be expected to result in a
Material Adverse Effect during the term of this Agreement; or there shall exist
an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which would result in a Material Adverse Effect if
one or more Pension Plans were terminated; or there exists potential withdrawal
liability (under Section 4201 et seq. of ERISA) with respect to one or more
Multiemployer Plans, which would result in a Material Adverse Effect if the
Company, the Company's Subsidiaries and their respective ERISA Affiliates
withdrew from such Multiemployer Plans; or
8.11. INVALIDITY OF PURCHASE DOCUMENTS; REPUDIATION
OF OBLIGATIONS.
At any time after the execution and delivery thereof, (i) any
Purchase Document or any provision thereof for any reason, other than the
satisfaction in full of all Obligations thereunder, shall cease to be in full
force and effect (other than in accordance with its terms) or shall be declared
to be null and void, or (ii) any Credit Party shall contest the validity or
enforceability of any Purchase Document or any provision thereof in writing or
deny in writing that it has any further liability under any Purchase Document or
any provision thereof to which it is a party; or
8.12. LOSS OF MATERIAL LICENSE.
Any license, authorization, approval or other similar action by any
Government Authority existing as of the First Closing Date as to the Company or
any of the Company's Subsidiaries, the failure or removal of which could
reasonably be expected to result in a Material Adverse Effect shall cease to be
in full force and effect as to the Company or such Subsidiary; or
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8.13. CRIMINAL OR CIVIL PROCEEDINGS.
The indictment or threatened indictment of the Company or any of the
Company's Subsidiaries under any criminal statute, or commencement or threatened
commencement of criminal or civil proceedings against the Company or any of the
Company's Subsidiaries, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture of any of the property of
the Company or such Subsidiary.
If an Event of Default (other than an Event of Default specified in
Section 8.6 or 8.7) occurs and is continuing, then and in every such case the
Required Holders may declare the principal amount of all the Notes to be due and
payable immediately, by a notice in writing to the Company, and upon any such
declaration such principal amount and any accrued interest shall become
immediately due and payable. If an Event of Default specified in Section 8.6 or
8.7 occurs and is continuing, the principal amount of and any accrued interest
on the outstanding Notes shall automatically, and without any declaration or
other action on the part of any Noteholder, become immediately due and payable.
Subject to the subordination and standstill provisions of this Agreement, the
right of any Noteholder to receive payment of principal of, premium, if any, or
interest of any Note held by such Noteholder on or after the respective dates
expressed in such Note, or to bring suit for the enforcement of any such
repayment on or after such respective date, is absolute and unconditional and
shall not be impaired or affected without the consent of such Noteholder.
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 Company, may rescind and annul
such declaration and its consequences if:
(a) The Company has paid a sum sufficient to pay:
(i) all overdue interest on all Notes;
(ii) the principal 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 Company is required to
make hereunder) and any 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 at the rate provided therefor in the
Notes; and
(b) all Events of Default, other than the nonpayment of the
principal amount of Notes and interest thereon which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 8.
The Required Holders may on behalf of the holders of all the Notes
waive any past default hereunder and its consequences, except a default:
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(a) in the payment of the principal (or premium, if any) or interest
on any Note (including any Note which is required to have been purchased
pursuant to an offer to purchase that the Company is required to make
hereunder), or
(b) in respect of a covenant or provision hereof which under Section
12.5 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 9. CONVERSION
9.1. CONVERSION AND ANTI-DILUTION PROVISIONS.
(i) NOTEHOLDERS' RIGHT TO CONVERT. Each Noteholder may at any time
and from time to time convert all or any portion of any Note or Notes held by
such Noteholder into such number of fully paid and nonassessable shares of
Common Stock as determined by dividing the principal amount of the Note or Notes
(or portion thereof) to be converted by the Conversion Price then in effect.
Such conversion right shall be exercised by the surrender of the Note or Notes
to be converted to the Company, accompanied by written notice to the Company of
such Noteholder's election to convert.
(ii) COMPANY'S RIGHT TO CONVERT. The Company may convert the Notes
in whole but not in part with each Note converting into such number of fully
paid and nonassessable shares of Common Stock as determined by dividing the
principal amount of such Note by the Conversion Price then in effect.
(A) if the Company consummates a bona fide underwritten initial
public offering of the Common Stock of the Company (1) pursuant to an
effective registration statement filed with the Commission in accordance
with the Securities Act (whether alone or in conjunction with a secondary
public offering), resulting in gross proceeds of at least $50,000,000 and
(2)(a) if such offering occurs prior to the first anniversary of the First
Closing Date, the shares of Common Stock sold in such offer are sold at a
price to the public of at least 150% of the Conversion Price then in
effect; provided that prior to or simultaneously with such conversion the
Noteholders and Preferred Holders receive in the aggregate and on a pro
rata basis at least $30,000,000 in cash in consideration for their
Conversion Shares (valued at the price to the public referred to above in
this clause 2(a))or (b) the shares of Common Stock sold in such offering
are sold at a price to the public of at least 200% of the Conversion Price
then in effect (either event described under (2)(a) and (2)(b) above, a
"QUALIFYING IPO"), or
(B) upon the occurrence of a Change of Control, so long as the value
of the cash consideration to be paid to the Noteholders and Preferred
Holders in respect of their Conversion Shares is at least equal to 200% of
the original purchase price of the Purchased Securities paid by the
Purchasers on the First Closing Date.
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(iii) CONVERSION MECHANICS.
(A) To convert a Note or Notes (or any portion thereof) into shares
of Common Stock pursuant to this Section 9.1, the Noteholder must
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Company or of any registrar for the Notes, and give written
notice to the Company at its principal corporate office of the election to
convert such Note or Notes (or any portion thereof) and, if desired, the
name of such Noteholder's nominee in which the certificates for Common
Stock issued upon such conversion are to be issued. The Company shall, as
soon as practicable after such surrender but in any event within two
Business Days, issue and deliver at such office to such Noteholder, or to
the nominee or nominees of such Noteholder, a certificate or certificates
for the number of shares of Common Stock to which such Noteholder is
entitled as a result of such conversion. Such conversion shall be deemed
to have been immediately prior to the close of business on the date of
such surrender of the Note or Notes (or any portion thereof) to be
converted, if the conversion is made pursuant to Section 9.1(i), or at the
time of such conversion specified in Section 9.1(ii), if the conversion is
effected under Section 9.1(ii), all rights of the Noteholder shall cease
at such time, and the Person(s) in whose name(s) the certificates for such
shares of Common Stock are to be issued shall be treated for all
purposes as having become the record holder(s) thereof at such time.
(B) In the event of a conversion pursuant to Section 9.1(ii), the
outstanding Notes shall be converted without any further action by the
Noteholders or any other Person and whether or not the certificates
representing such Notes are surrendered to the Company; provided, however,
that the Company shall not be obligated to issue certificates evidencing
the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such Notes are either delivered to the Company, as
provided below, or the Noteholder notifies the Company that such
certificates have been lost, stolen, or destroyed and executes an
agreement satisfactory to the Company to indemnify the Company from any
loss incurred by it in connection with such certificates. Upon the
occurrence of such conversion of Notes, the Noteholders shall surrender
the certificates representing such Notes at the office of the Company or
provide an indemnity agreement as described above. Thereupon, there shall
be issued and delivered to such Noteholder promptly at such office and in
its name as shown on such surrendered certificate or certificates (or as
contemplated by such indemnity agreement), a certificate or certificates
for the number of shares of Common Stock into which its Notes surrendered
were convertible on the date on which such conversion occurred, and any
unpaid interest shall be paid in accordance with the provisions of Section
9.1(iv).
(iv) INTEREST ON CONVERTED NOTES. The holder of any Note or Notes
(or portion thereof) that is converted at a time that there is accrued and
unpaid interest on such Note or Notes (or portion thereof) shall continue to be
entitled to receive such interest notwithstanding the conversion thereof (but
such Note or Notes (or portion thereof) so converted shall not accrue interest
after the date of conversion), the payment of which interest shall be made on
the immediately succeeding Interest Payment Date.
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(v) ADJUSTMENTS TO NUMBER OF SHARES. The number of shares of Common
Stock issuable upon conversion of each Note shall be adjusted from time to time
as follows:
(A) If, after the First Closing Date, the Company (I) pays a
dividend or makes a distribution on its Common Stock in shares of its
Capital Stock, (II) subdivides its outstanding shares of Common Stock
into a greater number of shares, (III) combines its outstanding shares
of Common Stock into a smaller number of shares, or (IV)issues by
reclassification of its shares of Common Stock any shares of Capital Stock
of the Company (including any reclassification in connection with a merger
or consolidation in which the Company is the surviving corporation), then
the number of shares of Common Stock issuable upon conversion of each
Note shall be adjusted so that the Noteholder of any Note or Notes (or
portion thereof) thereafter surrendered for conversion shall be entitled
to receive the number and kind of shares of Capital Stock that such
holder would have owned immediately following such action had such share
been converted immediately prior thereto and the Conversion Price shall be
appropriately adjusted to reflect any such event. An adjustment made
pursuant to this Section 9.1(v)(A) shall become effective immediately
after the record in the case of a dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination, or reclassification.
(B) If, after the First Closing Date, the Company issues or sells
any shares of Common Stock or is deemed to have issued or sold any shares
of its Common Stock (including Common Stock deemed to have been issued
or sold pursuant to Section (v)(E)(III)) as a result of the issuance of
any options, warrants or convertible securities for consideration of less
than the Current Market Price, then the Conversion Price shall be reduced
so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such date by a fraction
of which (X) the numerator shall be the number of shares of Common Stock
outstanding on such date plus the number of shares which the aggregate
offering price of the total number of shares of Common Stock so offered
(or the aggregate conversion price or exercise price of the warrants,
options or convertible securities so offered) would purchase at the
Current Market Price per share of Common Stock on such date, and of which
(y) the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock offered (or into which the warrants, options or convertible
securities so offered are convertible).
(C) If, after the First Closing Date, the Company declares a
distribution payable in securities of other Persons, evidences of
indebtedness issued by the Company or other Persons, or assets (including
cash dividends), then in each such case the Conversion Price shall be
adjusted to the amount determined by multiplying the Conversion Price in
effect immediately prior to the date of such distribution by a fraction of
which the numerator shall be the Current Market Price per share of the
Common Stock on the record date mentioned below (which will be prior to
the distribution) less the then Fair Market Value of the portion of the
securities, evidences of indebtedness, or assets so distributed applicable
to one share of Common Stock, and of which the denominator shall be such
Current Market Price per share of Common Stock. Such adjustment shall
become effec-
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tive immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(D) Notwithstanding any of the other provisions of this Section 9.1,
no adjustment shall be made to the Conversion Price as a result of any
of the following:
(I) the grant of options, warrants, or rights to purchase
Common Stock to employees, officers or directors of the Company
under option plans and agreements approved by the Company's
Governing Body with an exercise price per share of not less than the
Current Market Price of the Common Stock on the date such option,
warrant or other right is issued;
(II) without duplication of clause (I) above, the issuance of
securities upon exercise or conversion of options, warrants, rights
or other securities that are outstanding on the First Closing Date;
and
(III) the issuance of securities for which an adjustment is
made under another provision of this Section 9.1(v).
(E) The following rules shall apply for purposes of this Section
9.1(v):
(I) in the case of the issuance or sale of Common Stock for
cash, the consideration shall be deemed to be the amount of cash
paid therefor before deducting any reasonable discounts,
commissions, or other expenses allowed, paid, or incurred by the
Company for any underwriting or otherwise in connection with the
issuance and sale thereof.
(II) In the case of the issuance or sale of Common Stock for a
consideration in whole or in part other than cash, the
consideration other than cash shall be valued at the Fair Market
Value thereof.
(III) In the case of the issuance or sale of options or
warrants to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for
Common Stock, or options or warrants to purchase or rights to
subscribe for such convertible or exchangeable securities, the
following provisions shall apply for all purposes of this Section
9.1(v):
(a) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability, including without
limitation, the passage of time, but without taking into
account potential antidilution adjustments) of such options or
warrants to purchase or rights to subscribe for Common Stock
shall be deemed to have been issued at the time such options,
warrants, or rights were issued and for consideration equal to
the consideration (determined in the manner provided in this
Section 9.1(v)(E)), if any, received by the Company upon the
issuance of such options, warrants, or rights plus the minimum
exercise price provided in such options, warrants, or
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rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(b) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange (assuming
the satisfaction of any conditions to convertibility or
exchangeability, including, without limitation, the passage of
time, but without taking into account potential antidilution
adjustments) for any such convertible or exchangeable
securities or upon the exercise of options or warrants to
purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the
time such securities were issued or such options, warrants, or
rights were issued and for a consideration equal to the
consideration, if any, received by the Company for any such
securities or options, warrants, or rights, plus the minimum
additional consideration, if any, to be received by the
Company (without taking into account potential antidilution
adjustments) upon the conversion or exchange of such
securities or upon the exercise of such options, warrants, or
rights and subsequent conversion or exchange of the underlying
convertible or exchangeable securities, as appropriate (the
consideration in each case to be determined in the manner
provided in this Section 9.1(v)(E)).
(c) In the event of any change in the number of shares
of Common Stock deliverable or in the consideration payable to
the Company upon exercise of such options, warrants, or
rights with respect to either Common Stock or such
convertible or exchangeable securities or upon conversion of
or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting
from the antidilution provisions thereof, the Conversion
Price, to the extent in any way affected by or computed using
such options, warrants, rights, or securities, shall be
recomputed to reflect such change, but no further adjustment
shall be made for the actual issuance of Common Stock or any
payment of such consideration upon the exercise of any such
options, warrants, or rights or the conversion or exchange of
such securities.
(D) Upon the expiration of any such options, warrants,
or rights with respect to either Common Stock or such
convertible or exchangeable securities or the termination of
any such rights to convert or exchange, the Conversion Price,
to the extent in any way affected by or computed using such
options, warrants, rights, or securities shall be recomputed
to reflect the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options,
warrants, or rights with respect to Common Stock, upon the
conversion or exchange of such securities, or the number of
shares of Common Stock issuable upon conversion or exchange of
the convertible or exchangeable securities that were actually
issued upon exercise of options, warrants or rights related to
such securities.
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(e) The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to
Sections 9.1(v)(E)(III)(a) and (b) shall be appropriately
adjusted to reflect any change, termination, or expiration of
the type described in either Sections 9.1(v)(E)(III)(c) or
(d).
(f) No adjustment of the Conversion Price shall be made
in an amount less than 1/100th of one cent per share; provided
that any adjustments that are not required to be made by
reason of this sentence shall be carried forward and shall be
taken into account in any subsequent adjustment made.
(vi) FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued upon the conversion of any Note or Notes but instead upon conversion
at the option of the exercising Noteholder either (i) fractional shares shall be
rounded up to the nearest whole share and the exercising Noteholder shall pay to
the Company the portion of the Conversion Price per share represented by such
fractional share or (ii) the Company shall pay to the exercising Noteholder
the portion of the Current Market Price per share of Common Stock representing
such fractional share. If more than one such Note is surrendered for conversion
at the same time by the same Noteholder, the number of full shares that are
issuable upon the conversion thereof shall be computed on the basis of the
aggregate number of Notes so surrendered.
(vii) MERGERS; ETC. If there is (i) any consolidation, merger, or
conversion to which the Company is a party, other than a consolidation or a
merger that does not result in any reclassification or exchange of, or change
in, outstanding shares of the Common Stock, (ii) any sale or conveyance to
another Person of all or substantially all of the assets of the Company, or
(iii) any other event that causes the holders of Common Stock to receive a
different or additional kind or amount of shares of stock or other securities or
other property (other than an event for which an adjustment in the kind and
amount of shares of stock or other securities or other property for which the
Notes are convertible is otherwise made pursuant to this Section 9.1), then the
holder of each Note then outstanding shall have the right upon conversion
pursuant to the terms hereof to receive the kind and amount of shares of stock
and other securities and property receivable upon such consolidation, merger,
sale, conveyance, or other event by a holder of the number of shares of Common
Stock issuable upon conversion of such share immediately prior to such
consolidation, merger, sale, conveyance, or other event, subject to adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 9.1. The provisions of this Section 9.1 (vii) shall
similarly apply to successive consolidations, mergers, conversions, sales,
conveyances, and other events.
(viii) RESERVES. The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issuance upon conversion
of the Notes, such number of shares of Common Stock as shall be issuable upon
the conversion of all such outstanding shares, provided that nothing contained
herein shall be construed to preclude the Company from satisfying its
obligations in respect of the conversion of Notes by delivery of shares of
Common Stock that are held in the treasury of the Company.
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(ix) CONVERSION SHARES. The shares of Common Stock and other
securities issued upon conversion of Notes and any other securities into which
the Common Stock or other such securities are changed, reclassified, split,
combined, or converted or for which they are exchanged by amendment to the
Certificate of Incorporation or by consolidation, merger, or otherwise, and
any securities paid as a dividend thereon are collectively called the "NOTES
CONVERSION SHARES." Appropriate adjustment shall be made to this Section 9.1,
including the term "COMMON STOCK," to give effect to each such change,
reclassification, split, combination, conversion, exchange, or dividend.
(x) TRANSFER TAXES. The Company shall pay any and all documentary,
stamp, issue or transfer taxes, and any other similar taxes payable in respect
of the issue or delivery of shares of Common Stock upon conversion of Notes
pursuant hereto; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock in a name other than that of the
holder of the Notes to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Company the amount of any such tax or has established, to the reasonable
satisfaction of the Company, that such tax has been paid.
(xi) NO ADJUSTMENT LESS THAN PAR VALUE. No adjustment in the
Conversion Price shall reduce the Conversion Price below the then par value of
the Common Stock.
(xii) NOTICE OF ADJUSTMENT. Whenever the Conversion Price or
conversion privilege is adjusted, the Company shall promptly mail to Noteholders
a notice of the adjustment briefly stating the facts requiring the adjustment
and the manner of computing it.
(xiii) Notice of Certain Transactions. In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company consolidates or merges with, or transfers all
or substantially all of its property and assets to, another
corporation and shareholders of the Company must approve the
transaction; or
(3) there is a dissolution or liquidation of the Company,
the Company shall mail to the Noteholders a notice stating the proposed record
or effective date, as the case may be. The Company shall mail the notice at
least ten days before such date.
SECTION 10. SUBSIDIARY GUARANTEES
10.1. SUBSIDIARY GUARANTEES.
Each of the Subsidiary Guarantors hereby, jointly and severally,
unconditionally guarantees, to each Noteholder, irrespective of the validity and
enforceability of this Agreement, the Notes or the obligations of the Company
hereunder or thereunder, that: (a) the principal of and premium and interest, on
the Notes shall be promptly paid in full when due, whether at
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Stated Maturity, by acceleration, redemption or otherwise, and interest on the
overdue principal of (and any premium) and interest on the Notes, if any, if
lawful, and all other Obligations of the Company to the Noteholders hereunder or
thereunder shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
shall be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Subsidiary Guarantors shall
be jointly and severally obligated to pay the same immediately. Each Subsidiary
Guarantor hereby agrees that its Obligations under its Subsidiary Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Agreement, the absence of any action to
enforce the same, any waiver or consent by any Noteholder with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Subsidiary Guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Subsidiary
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes and this Agreement.
If any Noteholder is required by any court or otherwise to return to
the Company or Subsidiary Guarantors, or any Custodian, trustee, liquidator or
other similar official acting in relation to either the Company or Guarantors,
any amount paid by such Noteholder, the Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Subsidiary Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Noteholders in respect of any Obligations
guaranteed hereby until payment in full of all Obligations guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between the Subsidiary
Guarantors, on the one hand, and the Noteholders, on the other hand, (a) the
Maturity of the Obligations guaranteed hereby may be accelerated as provided in
Section 8 for the purposes of this Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the Obligations guaranteed hereby and (b) in the event of any declaration of
acceleration of such Obligations as provided in Section 8, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The
Subsidiary Guarantors shall have the right to seek contribution from any
non-paying Subsidiary Guarantor so long as the exercise of such right does not
impair the rights of the Noteholders under the Subsidiary Guarantees.
10.2. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
To evidence its Subsidiary Guarantee set forth in Section 10.1, each
Guarantor hereby agrees that this Agreement and a Subsidiary Guarantee in the
form of Exhibit B hereto shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents and, to the extent not a party to this
Agreement on the date hereof, each Guarantor shall execute and deliver to the
Noteholders a Supplemental Agreement to this Agreement in the form of Exhibit E
and a Subsidiary Guarantee in the form of Exhibit B hereto, pursuant to which
such Subsidiary
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shall become a Subsidiary Guarantor under this Section 10 and shall guarantee
the Obligations of the Company under this Agreement and the Notes.
If an officer whose signature is on this Agreement or on a
Subsidiary Guarantee or Supplemental Agreement no longer holds that office at
the time the Company executes and delivers the Note on which a Subsidiary
Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The
execution and delivery of any Note by the Company shall constitute due delivery
of the Subsidiary Guarantee set forth in this Agreement on behalf of the
Guarantors. Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 10.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
10.3. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
No Subsidiary Guarantor may alter its corporate, capital or legal
structure or enter into any transaction of merger or consolidation (whether or
not such Subsidiary Guarantor is the surviving Person) with another corporation,
Person or entity (other than the Company or another Subsidiary Guarantor)
unless:
(a) subject to the provisions of Section 10.4 hereof, the Person
formed by or surviving any such alteration or transaction (if other than
such Subsidiary Guarantor) unconditionally assumes all the Obligations
under the Subsidiary Guarantee of such Subsidiary Guarantor pursuant to
a Supplemental Agreement; and
(b) immediately after giving effect to such transaction, no
Potential Event of Default or Event of Default exists.
Notwithstanding the foregoing, no Subsidiary Guarantor shall be permitted to
consolidate with or merge with or into (whether or not such Subsidiary Guarantor
is the surviving Person), another corporation, Person or entity pursuant to the
preceding sentence if such consolidation or merger would not be permitted by
Section 7.7 hereof.
In case of any such alteration or transaction and upon the
assumption by the successor corporation, by Supplemental Agreement, executed
and delivered to the Noteholders and satisfactory in form to the Noteholders, of
the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Agreement to be
performed by the Subsidiary Guarantor, such successor corporation shall succeed
to and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Subsidiary Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company. All the Subsidiary Guarantees so issued shall
in all respects have the same legal rank and benefit under this Agreement as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Agreement as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
Except as set forth in Section 7 hereof, nothing contained in this
Agreement or in any of the Notes shall prevent any alteration, merger or
consolidation of a Subsidiary Guarantor
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with or into the Company, or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company.
10.4. RELEASES OF SUBSIDIARY GUARANTEES.
In the event of (i) a sale or other disposition of all of the assets
of any Subsidiary Guarantor, by way of merger, consolidation or otherwise or
(ii) a sale or other disposition of all of the Capital Stock of any Subsidiary
Guarantor in each case in a transaction that complies with this Agreement, such
Subsidiary Guarantor (in the event of a sale or other disposition, by way of
such a merger, consolidation, distribution or otherwise, of all of the Capital
Stock of such Subsidiary Guarantor) or the corporation acquiring the property
(in the event of a sale or other disposition of all of the assets of such
Subsidiary Guarantor) will be released and relieved of any Obligations under
its Subsidiary Guarantee; provided that the net proceeds of such sale or other
disposition shall be applied in accordance with the provisions of Section 7.7
hereof. Any Subsidiary Guarantor not released from its Obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of
and interest on the Notes and for the other Obligations of any Subsidiary
Guarantor under this Agreement as provided in this Section 10.
10.5. SUBSIDIARY GUARANTEES SUBORDINATE TO GUARANTOR SENIOR
OBLIGATIONS.
Each Subsidiary Guarantor covenants and agrees, and each Noteholder,
by his acceptance of a Note, likewise covenants and agrees, that the
Obligations of each Subsidiary Guarantor hereunder and under its Subsidiary
Guarantee are hereby expressly made subordinate and junior in right of payment
to the prior Payment in Full of all Guarantor Senior Obligations. The provisions
of this Section 10 shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any Guarantor Senior Obligations is
rescinded, subordinated, invalidated, disallowed or must otherwise be returned
by the applicable Administrative Agent or a holder of Guarantor Senior
Obligations for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of a Subsidiary Guarantor or any other
Person), all as though such payment had not been made.
10.6. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to any Subsidiary Guarantor or to
its creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of any Subsidiary Guarantor, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshaling of assets and liabilities of
any Subsidiary Guarantor, then and in any such event specified in clause (a),
(b) or (c) above (each such event, if any, herein sometimes referred to as a
"GUARANTOR PROCEEDING") or a Proceeding (as hereinafter defined) with respect to
the Company until the holders of Guarantor Senior Obligations have received
and retained Payment in Full of all Guarantor Senior Obligations and Senior
Obligations (including any interest accruing on or after the filing of any
Guarantor Proceeding relating to such Subsidiary Guarantor, whether or not
allowed in such Guarantor Proceeding and any interest accruing on or after the
filing of any Proceeding relating to the Company, whether or not al-
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lowed in such Proceeding), the Noteholders shall not be entitled to receive any
payment or distribution of any kind or character, whether in cash, property or
securities, on account of any Obligations in respect of the Subsidiary
Guarantee of such Subsidiary Guarantor or on account of any purchase or other
acquisition of Notes (including any repurchase of any Notes made or required
to be made in connection with a Change of Control Offer, an Excess Proceeds
Offer or otherwise) by the Company, any Subsidiary Guarantor or any Subsidiary
of a Subsidiary Guarantor (all such payments, distributions, purchases,
repurchases and acquisitions herein referred to, individually and collectively,
as a "GUARANTEE PAYMENT"), and to that end each Administrative Agent on behalf
of the holders of Guarantor Senior Obligations, as their interests may appear,
shall be entitled to receive, for application to the payment thereof, any
Guarantee Payment which may be payable or deliverable in respect of any
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee in any
such Guarantor Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 10.6, any Noteholder shall have received any Guarantee Payment before
all Guarantor Senior Obligations or Senior Obligations are Paid in Full, then
in such event (i) such Guarantee Payment shall be paid over or delivered
forthwith to the Administrative Agents, or if otherwise required by applicable
law, to the trustee in bankruptcy or other Person making payment or distribution
of assets of the Company, in each case for the application to the Payment in
Full of all Guarantor Senior Obligations remaining unpaid and, after Payment
in Full of such Guarantor Senior Obligations, to the Payment in Full of all
other Senior Obligations remaining unpaid, to the extent necessary to Pay in
Full all such Senior Obligations, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Obligations, and (ii) until so
turned over, the same shall be held in trust by such Noteholder as the property
of the Administrative Agents and the holders of the Guarantor Senior
Obligations.
For purposes of this Section 10 only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or other
securities or Indebtedness of any Subsidiary Guarantor provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or of any other corporation provided for by such plan of
reorganization or readjustment which stock or securities or Indebtedness are
subordinated in right of payment to all then outstanding Guarantor Senior
Obligations and the Senior Obligations to substantially the same extent as, or
to a greater extent than, the Subsidiary Guarantees of the Subsidiary Guarantors
are so subordinated as provided in this Section 10. The consolidation of any
Subsidiary Guarantor. with, or the merger of any Subsidiary Guarantor into,
another Person or the liquidation or dissolution of any Subsidiary Guarantor
following the conveyance or transfer of all or substantially all of its
properties and assets as an entirety to another Person upon the terms and
conditions set forth in Section 10.3 shall not be deemed a Guarantor Proceeding
for the purposes of this Section 10.6 if the Person formed by such
consolidation or into which such Subsidiary Guarantor is merged or the Person
which acquires by conveyance or transfer such properties and assets, as the case
may be, shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions set forth in Section 10.3.
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10.7. NO PAYMENT WHEN GUARANTOR SENIOR OBLIGATIONS IN DEFAULT.
In the event that any Guarantor Senior Payment Default (as defined
below) or Senior Payment Default (as defined below in Section 11) shall have
occurred and be continuing, then no Guarantee Payment shall be made by any
Subsidiary Guarantor and no Guarantee Payment shall be received or subject to
this Section 10.7 retained by any Noteholder unless and until such Guarantor
Senior Payment Default or Senior Payment Default shall have been cured or waived
or shall have ceased to exist or all amounts then due and payable in respect of
the Guarantor Senior Obligations and Senior Obligations shall have been Paid
in Full. "GUARANTOR SENIOR PAYMENT DEFAULT" means any default by any
Subsidiary Guarantor in the payment of any of the Guarantor Senior Obligations
when due, whether at the due date of any such payment or by declaration of
acceleration, prepayment or call for redemption or otherwise.
Upon the occurrence of a Guarantor Senior Non-Payment Default (as
defined below) or a Senior Non-Payment Default (as defined below in Section 11)
and receipt of written notice by the Company of the occurrence of such
default from the applicable Administrative Agent or any holder of Senior
Obligations which is the subject of such default, no Guarantee Payment shall be
made by any Subsidiary Guarantor or received or, subject to this Section 10.7
retained by any Noteholder during a period (the "GUARANTOR PAYMENT BLOCKAGE
PERIOD") commencing on the date of the receipt by the Company of such notice
from the applicable Administrative Agent or any holder of Senior Obligations
and ending on the earlier of (i) the date on which such Guarantor Senior
Non-Payment Default or Senior Non-Payment Default, as the case may be, shall
have been cured or waived or ceased to exist or all Senior Obligations which
were the subject of such Guarantor Senior Non-Payment Default shall have been
Paid in Full, and (ii) the 180th day after the date of the receipt of such
notice. No Guarantor Senior Non-Payment Default or Senior Non-Payment Default
that existed or was continuing on the date of the commencement of a Guarantor
Payment Blockage Period may be made the basis of the commencement of a
subsequent Guarantor Payment Blockage Period whether or not within a period of
360 consecutive days, unless such Guarantor Senior Non-Payment Default shall
have been cured for a period of not less than 90 consecutive days, provided that
it is expressly understood and agreed that each failure to comply with any
financial covenant test shall be deemed to constitute for the purposes of this
section a separate default that shall commence on the applicable test date and
which shall not be cured until compliance is demonstrated on a subsequent test
date. In any event, notwithstanding the foregoing, there shall be a total of at
least 180 days (either consecutive or non-consecutive) during each 360-day
period when no Payment Blockage Period or Guarantee Payment Blockage Period is
in effect. "GUARANTOR SENIOR NON-PAYMENT DEFAULT" means the occurrence or
existence and continuance of an event of default with respect to Guarantor
Senior Obligations, other than a Guarantor Senior Payment Default, that permits
the holders of the Senior Obligations (or a trustee or other agent on behalf of
the holders thereof) then to declare such Guarantor Senior Obligations due and
payable prior to the date on which it would otherwise become due and payable.
The failure to make any payment under a Subsidiary Guarantee by
reason of the provisions of this Section 10.7 will not be construed as
preventing the occurrence of an Event of Default with respect to the Notes
arising from any such failure to make payment. Upon termination of any
Guarantor Payment Blockage Period and Senior Blockage Period the applicable
Guarantor shall resume making any and all required payments in respect of its
Subsidiary Guar-
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▇▇▇▇▇, including any missed payments unless such payments are otherwise
prohibited pursuant to the terms of Sections 10 or 11.
If any Subsidiary Guarantor shall make any Guarantee Payment, or any
Noteholder shall receive any such payment, in each case in violation of any of
the foregoing provisions of this Section 10.7, and if such fact shall, at or
prior to the time of such Guarantee Payment, have been made known to the
Noteholder Representative of any given Noteholder, then in such event (i) such
Guarantee Payment shall be paid over and delivered forthwith to the
Administrative Agents in the same form received for the application to the
Payment in Full of all Guarantor Senior Obligations remaining unpaid and, after
Payment in Full of such Guarantor Senior Obligations, to the Payment in Full of
all other Senior Obligations remaining unpaid, and (ii) until so turned over,
the same shall be held in trust by such Noteholder as the property of the
Administrative Agents and the holders of the Guarantor Senior Obligations.
A Noteholder shall be deemed to have received notice of the
existence of a Guarantor Senior Payment Default or Guarantor Senior
Non-Payment Default, AS the case may be, if the Company, any Subsidiary
Guarantor or any Administrative Agent or holder of Guarantor Senior Obligations
or Senior Obligations shall have provided notice to the Noteholder
Representative of such Noteholder in accordance with Section 12.6 of this
Agreement. As of the date of this Agreement, notices to a Noteholder
Representative shall be delivered by any means permitted by Section 12.6 to the
address of such Noteholder Representative set forth on the signature pages of
this Agreement and the Company, each Subsidiary Guarantor, each Administrative
Agent and each holder of Senior Obligations and Guarantor Senior Obligations
shall be entitled to rely on such address information notwithstanding any change
therein, including without limitation, as a result of the transfer or assignment
of any Notes until such time as the relevant Noteholder or Noteholder
Representative, as the case may be, notifies the Company and each Administrative
Agent in writing of such a change. Each of the Company, the Subsidiary
Guarantors, each Administrative Agent and each holder of Guarantor Senior
Obligations agrees that notices from a Noteholder or a Noteholder Representative
shall be effective against the Company and each Subsidiary Guarantor if
delivered in any manner described in Section 12.6 to the address of the Company
set forth therein and shall be effective against an Administrative Agent and a
holder of Senior Obligations and Guarantor Senior Obligations if delivered in
any manner described in Section 12.6 to the address of such Administrative
Agent and holder set forth in Schedule 10.8 of this Agreement or such other
address as such Administrative Agent may notify such persons in writing.
For the avoidance of doubt, (i) the limitations on the maximum
number of Noteholder Representatives as set forth in the definition of
Noteholder Representative shall apply in all cases for purposes of delivery of
notices by an Administrative Agent or holders of the Guarantor Senior
Obligations under this Section 10.7 and elsewhere in this Agreement, and (ii)
notices delivered to a Noteholder Representative shall bind all Noteholders
represented by such Noteholder Representative; however, if notices shall be
delivered to all Noteholder Representatives, then all Noteholders shall be
bound (including any Noteholders that do not have a Noteholder Representative
due to the limitation on the number of Noteholder Representatives that
Noteholders may have at any time as set forth in the definition of Noteholder
Representative).
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The provisions of this Section 10.7 shall not apply to any Guarantee
Payment with respect to which Section 10.6 would be applicable.
10.8. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in Section 10.7 or elsewhere in this Agreement or
in any of the Subsidiary Guarantees shall prevent (a) any Subsidiary Guarantor,
at any time except during the pendency of any Guarantor Proceeding referred to
in Section 10.6 or under the conditions described in Section 10.7, from making
Guarantee Payments, or (b) at any time, except during the pendency of any
Guarantor Proceeding referred to in Section 10.6, the retention of such
Guarantee Payment by any Noteholder, if at the time of such Guarantee Payment
the applicable Noteholder Representative has not been notified of a Guarantor
Senior Payment Default or Guarantor Senior Non-Payment Default in accordance
with Section 10.7.
10.9. SUBROGATION TO RIGHTS OF HOLDERS OF GUARANTOR SENIOR OBLIGATIONS.
Only after the Payment in Full of all Guarantor Senior Obligations
of any Subsidiary Guarantor and all Senior Obligations, the Noteholders shall
be subrogated to the rights of the holders of such Guarantor Senior Obligations
to receive payments and distributions of cash, property and securities
applicable to such Guarantor Senior Obligations. For purposes of such
subrogation, no payments or distributions to the holders of the Guarantor Senior
Obligations of a Subsidiary Guarantor of any cash, property or securities to
which the Noteholders would be entitled except for the provisions of this
Section 10, and no payments over pursuant to the provisions of this Section 10
to the holders of Guarantor Senior Obligations by Noteholders, shall, as among
such Subsidiary Guarantor, its creditors other than holders of Guarantor Senior
Obligations of such Subsidiary Guarantor and the Noteholders, be deemed to be a
payment or distribution by such Subsidiary Guarantor to or on account of the
Guarantor Senior Obligations of such Subsidiary Guarantor.
10.10. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Section 10 are and are intended solely for
the purpose of defining the relative rights of the Noteholders on the one hand
and each Administrative Agent and the holders of Guarantor Senior Obligations on
the other hand. Nothing contained in this Section 10 or elsewhere in this
Agreement or in the Subsidiary Guarantees is intended to or shall (a) impair, as
among a Subsidiary Guarantor, its creditors other than holders of Guarantor
Senior Obligations of such Subsidiary Guarantor and the Noteholders, the
Obligation of such Subsidiary Guarantor under its Subsidiary Guarantee, which is
absolute and unconditional (and which, subject to the rights under this
Section 10 and Section 11 is intended to rank equally with all other general
unsecured Obligations of such Subsidiary Guarantor), to pay to the Noteholders
the principal of (and premium, if any) and interest on the Notes as and when
the same shall become due and payable in accordance with their terms; or (b)
affect the relative rights against such Subsidiary Guarantor of the
Noteholders and creditors of such Guarantor other than the holders of Guarantor
Senior Obligations; or (c) subject to the restrictions set forth in this Section
10 and Section 11, prevent any Noteholder from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement.
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10.11. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Guarantor Senior
Obligations to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of any
Subsidiary Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by any Guarantor or any Noteholder with the
terms, provisions and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Guarantor Senior Obligations may at any time and from
time to time, without the consent of or notice to the Noteholders, without
incurring responsibility to the Noteholders and without impairing or releasing
the subordination or standstill provided in this Section 10 and Section 11 or
the obligations hereunder of the Noteholders to the holders of Guarantor Senior
Obligations, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter,
Guarantor Senior Obligations, the Senior Obligations or otherwise amend or
supplement in any manner Guarantor Senior Obligations, the Senior Obligations
or any instrument evidencing the same or any agreement under which Guarantor
Senior Obligations or the Senior Obligations are outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Guarantor Senior Obligations or the Senior Obligations; (iii)
release any Person liable in any manner for the collection of Guarantor Senior
Obligations or the Senior Obligations; (iv) settle or compromise any such
Guarantor Senior Obligations, the Senior Obligations or any other liability of
any obligor of such Guarantor Senior Obligations or the Senior Obligations to
such holder of any security therefor or any liability issued in respect thereof
and apply any sums by whomsoever paid and however realized to any liability
(including, without limitation, payment of any of the Guarantor Senior
Obligations or the Senior Obligations) in any manner or order; (v) fail to take
or to record or otherwise perfect, for any reason or for no reason, any lien or
security interest securing such Guarantor Senior Obligations or the Senior
Obligations by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or any other
Person, elect any remedy and otherwise deal freely with any obligor and any
security for such Guarantor Senior Obligations, such Senior Obligations or any
liability of any obligor to the holders of such Guarantor Senior Obligations,
such Senior Obligations or any liability issued in respect of such Guarantor
Senior Obligations or such Senior Obligations; and (vi) exercise or refrain from
exercising any rights against the Company, any Subsidiary Guarantor or any other
Person.
10.12. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets or securities of a
Subsidiary Guarantor referred to in this Section 10, the Noteholders shall be
entitled to rely upon (i) any order or decree entered by any court of
competent jurisdiction in which such Guarantor Proceeding is pending, (ii) a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian or as signee for the benefit of creditors making such payment or
distribution delivered to the Noteholders, and (iii) with respect to any given
Senior Obligations or Guarantor Senior Obligations, any certificate of the
Administrative Agent for, or holders of, such Senior Obligations and Guar-
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antor Senior Obligations in each case, delivered to the Noteholders, for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Guarantor Senior Obligations and other
Indebtedness of such Subsidiary Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 10.
10.13. RELIANCE BY HOLDERS OF GUARANTOR SENIOR OBLIGATIONS ON
SUBORDINATION PROVISIONS.
Each Noteholder, by accepting such Note, acknowledges and agrees
that the subordination and standstill provisions set forth in Section 10 and
Section 11 are intended to be an inducement and a consideration to each holder
of any Guarantor Senior Obligations, whether such Guarantor Senior Obligations
were created or acquired before or after the issuance of the Note, to acquire
and continue to hold, or to continue to hold, such Guarantor Senior Obligations
and such holder of such Guarantor Senior Obligations shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Guarantor Senior Obligations.
If a proper claim or proof of debt in the form required in such
proceeding is not filed by or on behalf of all Noteholders prior to 10 days
before the expiration of the time to file such claims or proofs, then each
Administrative Agent is hereby authorized, and shall have the right (without any
duty), to file an appropriate claim on behalf of the Noteholders and, subject to
this Section 10.13, to take such other action as may be reasonably necessary to
effectuate the foregoing. Each Noteholder shall provide to each Administrative
Agent and the holders of Guarantor Senior Obligations all information and
documents reasonably necessary to present claims or seek enforcement as
aforesaid and the Noteholders hereby irrevocably authorize, empower and
appoint each Administrative Agent as attorney-in-fact for such Noteholders to
take any and all actions permitted by this paragraph to be taken by each
Administrative Agent and such holders of Senior Obligations. Notwithstanding the
foregoing, no Administrative Agent or holder of Guarantor Senior Obligations
shall be entitled to vote the claim of any Noteholder.
10.14. LIMITATION ON GUARANTOR LIABILITY.
Each Subsidiary Guarantor, and by its acceptance of the Notes, each
Noteholder, hereby confirms that it is the intention of all such parties that
the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Subsidiary Guarantee. To
effectuate the foregoing intention, the Noteholders and the Subsidiary
Guarantors hereby irrevocably agree that the Obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee and this Section 10 shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Subsidiary Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the Obligations of such other
Subsidiary Guarantor under this Section 10, result in the Obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
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SECTION 11. SUBORDINATION OF NOTES
11.1. NOTES SUBORDINATE TO SENIOR OBLIGATIONS.
The Company covenants and agrees, and each Noteholder, by his
acceptance thereof, likewise covenants and agrees, the payment of the principal
of (and premium, if any) and interest and all other amounts under the Notes and
all other Obligations under the Notes (including without limitation, any
obligation of the Company to repurchase any Notes made or required to be made in
connection with a Change of Control Offer, an Excess Proceeds Offer or
otherwise) are hereby expressly made subordinate and junior in right of payment
to the prior Payment in Full of all Senior Obligations. The provisions of this
Section 11 shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Senior Obligations is rescinded,
subordinated, invalidated, disallowed or must otherwise be returned by the
applicable Administrative Agent or any holder of Senior Obligations for any
reason whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Company or any other Person), all as though such payment
had not been made.
11.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshaling of assets and liabilities of the Company, then
and in any such event specified in clause (a), (b) or (c) above (each such
event, if any, herein sometimes referred to as a "PROCEEDING")until the holders
of Senior Obligations have received and retained Payment in Full of all Senior
Obligations (including any interest accruing on or after the filing of any
Proceeding relating to the Company, whether or not allowed in such Proceeding),
the Noteholders shall not be entitled to receive any payment or distribution
of any kind or character, whether in cash, property or securities, on account of
any of the Obligations in respect of the Notes or on account of any purchase or
other acquisition of Notes (including any repurchase of any Notes made or
required to be made in connection with a Change of Control Offer, an Excess
Proceeds Offer or otherwise) by the Company or any Subsidiary of the Company
(all such payments, distributions, purchases, repurchases and acquisitions
herein referred to, individually and collectively, as a "NOTES PAYMENT"), and to
that end each Administrative Agent on behalf of the holders of Senior
Obligations, as their interests may appear, shall be entitled to receive, for
application to the payment thereof, any Notes Payment which may be payable or
deliverable in respect of any of the Obligations in respect of the Notes in
any such Proceeding.
The failure to make any payment on the Notes by reason of the
provisions of this Section 11.2 will not be construed as preventing the
occurrence of an Event of Default with respect to the Notes arising from any
such failure to make payment. Upon termination of any Payment Blockage Period
the Company shall resume making any and all required payments in respect of the
Notes, including any missed payments unless such payments are otherwise
prohibited pursuant to the terms of Sections 10 or 11.
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In the event that, notwithstanding the foregoing provisions of this
Section 11.2, any Noteholder shall have received any Notes Payment before all
Senior Obligations are Paid in Full, then and in such event (i) such Notes
Payment shall be paid over or delivered forthwith to the Administrative Agents
or, if otherwise required by applicable law, to the trustee in bankruptcy or
other Person making payment or distribution of assets of the Company, in each
case for the application to the Payment in Full of all Senior Obligations
remaining unpaid, to the extent necessary to Pay in Full all such Senior
Obligations, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Obligations, and (ii) until so turned over, the same
shall be held in trust by such Noteholder as the property of each Administrative
Agent and the holders of the Senior Obligations.
For purposes of this Section 11 only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or other
securities or Indebtedness of the Company provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or of any other corporation provided for by such plan of
reorganization or readjustment which stock or securities or Indebtedness are
subordinated in right of payment to all then outstanding Guarantor Senior
Obligations and Senior Obligations to substantially the same extent as, or to a
greater extent than, the Notes are so subordinated as provided in this Section
11. The merger or consolidation of another Person into the Company upon the
terms and conditions set forth in Section 7.7 shall not be deemed a Proceeding
for the purposes of this Section 11.2 if the merger or consolidation complies
with the conditions set forth in Section 7.7.
11.3. NO PAYMENT WHEN SENIOR OBLIGATIONS IN DEFAULT.
In the event that any Senior Payment Default (as defined below)
shall have occurred and be continuing, then no Notes Payment shall be made
unless and until such Senior Payment Default shall have been cured or waived or
shall have ceased to exist or all amounts then due and payable in respect of
Senior Obligations shall have been Paid in Full. "SENIOR PAYMENT DEFAULT" means
any default in the payment of any of the Senior Obligations when due, whether at
the due date of any such payment or by declaration of acceleration, prepayment
or call for redemption or otherwise.
Upon the occurrence of a Senior Non-Payment Default (as defined
below) and receipt of written notice by the Company of the occurrence of such
Senior Non-Payment Default from the applicable Administrative Agent or any
holder of Senior Obligations which is the subject of such Senior Non-Payment
Default, no Notes Payments shall be made during a period (the "PAYMENT BLOCKAGE
PERIOD") commencing on the date of the receipt by the Company of such notice
from the applicable Administrative Agent or any holder of Senior Obligations and
ending on the earlier of (i) the date on which such Senior Non-Payment Default
shall have been cured or waived or ceased to exist or all Senior Obligations
which were the subject of such Senior Non-Payment Default shall have been Paid
in Full and (ii) the 180th day after the date of the receipt of such notice.
No Senior Non-Payment Default that existed or was continuing on the date of the
commencement of a Payment Blockage Period may be made the basis of the
commencement of a subsequent Payment Blockage Period whether or not within a
period of 360 consecutive days, unless such Senior Non-Payment Default shall
have been cured for a period of not less
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than 90 consecutive days; provided that it is expressly understood and agreed
that each failure to comply with any financial covenant test shall be deemed to
constitute for the purposes of this section a separate default that shall
commence on the applicable test date and which shall not be cured until
compliance is demonstrated on a subsequent test date. In any event,
notwithstanding the foregoing, there shall be a total of at least 180 days
(either consecutive or non-consecutive) during each 360-day period when no
Payment Blockage Period or Guarantor Payment Blockage Period is in effect.
"SENIOR NON-PAYMENT DEFAULT" means the occurrence or existence and continuance
of an event of default with respect to Senior Obligations, other than a Senior
Payment Default, that permits the holders of the Senior Obligations (or a
trustee or other agent on behalf of the holders thereof) then to declare such
Senior Obligations due and payable prior to the date on which it would otherwise
become due and payable.
If the Company shall make any Notes Payment to any Noteholder or any
Noteholder shall receive any Notes Payment in violation of this Section 11.3,
and if such fact shall, at or prior to the time of such Notes Payment, have been
made known to the Noteholder Representative of any given Noteholder, then (i)
such Notes Payment shall be paid over and delivered forthwith to the
Administrative Agents in the same form received for the application to the
Payment in Full of all Senior Obligations remaining unpaid, and (ii) until so
turned over, the same shall be held in trust by such Noteholder as the property
of the Administrative Agent and the holders of the Senior Obligations.
A Noteholder shall be deemed to have received notice of the
existence of a Senior Payment Default or Senior Non-Payment Default, as the case
may be, if the Company, any Subsidiary Guarantor or any Administrative Agent
or holder of Guarantor Senior Obligations or Senior Obligations shall have
provided notice to the Noteholder Representative of such Noteholder in
accordance with Section 12.6 of this Agreement. As of the date of this
Agreement, notices to a Noteholder Representative shall be delivered by any
means permitted by Section 12.6 to the address of such Noteholder Representative
set forth on the signature pages of this Agreement and the Company, each
Subsidiary Guarantor, each Administrative Agent and each holder of Senior
Obligations and Guarantor Senior Obligations shall be entitled to rely on such
address information notwithstanding any change therein, including without
limitation, as a result of the transfer or assignment of any Notes until such
time as the relevant Noteholder or Noteholder Representative, as the case may
be, notifies the Company and each Administrative Agent in writing of such a
change. Each of the Company, the Subsidiary Guarantors, each Administrative
Agent and each holder of Senior Obligations agrees that notices from a
Noteholder or a Noteholder Representative shall be effective against the
Company and each Subsidiary Guarantor if delivered in any manner described in
Section 12.6 to the address of the Company set forth therein and shall be
effective against an Administrative Agent and a holder of Senior Obligations and
Guarantor Senior Obligations if delivered in any manner described in Section
12.6 to the address of such Administrative Agent and holder set forth in
Schedule 10.8 of this Agreement or such other address as such Administrative
Agent may notify such persons in writing.
For the avoidance of doubt, (i) the limitation on the maximum number
of Noteholder Representatives as set forth in the definition of Noteholder
Representative shall apply in all cases for purposes of delivery of notices by
an Administrative Agent or holders of the Senior Obligations under this Section
11.3 and elsewhere in this Agreement, and (ii) notices delivered to a Noteholder
Representative shall bind all Noteholders represented by such Noteholder Repre-
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sentative; however, if notices shall be delivered to all Noteholder
Representatives, then all Noteholders shall be bound (including any
Noteholders that do not have a Noteholder Representative due to the limitation
on the number of Noteholder Representatives that Noteholders may have at any
time as set forth in the definition of Noteholder Representative).
The provisions of this Section 11.3 shall not apply to any Notes
Payment with respect to which Section 11.2 would be applicable.
11.4. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in Section 11.4 or elsewhere in this Agreement or
in any of the Notes shall prevent (a) the Company, at any time except during the
pendency of any Proceeding referred to in Section 11.2 or under the conditions
described in Section 11.3, from making Notes Payments, or (b) at any time,
except during the pendency of any Proceeding referred to in Section 11.2, the
retention of such Notes Payments by any Noteholder, if at the time of such Notes
Payment the applicable Noteholder Representative has not been notified of a
Senior Payment Default or Senior Non-Payment Default in accordance with Section
11.3.
11.5. LIMITATION OR ENFORCEMENT OF REMEDIES, ETC.
Notwithstanding any provision to the contrary contained in this
Agreement, any Notes or any other Purchase Document, prior to the Payment in
Full of all of the Senior Obligations and Guarantor Senior Obligations, the
Noteholders shall not, without the prior written consent of each
Administrative Agent (which consent may be granted or withheld in such
Administrative Agent's sole and absolute discretion): (a) ask for, demand,
accelerate the maturity of, or take any other action to compel any payment of,
all or any payment of any of the Notes; (b) ▇▇▇ for, take, receive or possess,
realize or foreclose upon, repossess, sell or otherwise dispose, liquidate, or
otherwise restrict or interfere with the use of, any collateral, property or
assets of any Credit Party or any of their Subsidiaries; or (c) commence or
pursue any judicial, arbitral or other proceeding or legal action of any kind,
seeking injunctive or other equitable relief to prohibit, limit or impair the
commencement or pursuit by any Administrative Agent or any holder of Senior
Obligations, of any of its rights or remedies against any Credit Party or
Subsidiary or Affiliate of any Credit Party, any of its collateral under or in
connection with any Credit Agreement or the Motorola Distributor Documents, as
applicable, or otherwise available under applicable law, or (d) institute or
commencement of a bankruptcy case, liquidation or similar proceeding, or other
judicial, arbitral or other proceeding or exercise or attempt to exercise any
rights or remedies whether arising under this Agreement, any other Purchase
Agreement or under applicable law against any Credit Party or any of their
Subsidiaries, in each case under clauses (a) through (d) inclusive of this
Section 11.5 whether by setoff, recoupment or any other manner, direct or
indirect, until (i) in the case of clauses (b) and (c) of this Section 11.5, the
Payment in Full of all Senior Obligations and Guarantor Senior Obligations, and
(ii) in the case of clauses (a) and (d) of this Section 11.5, the occurrence of
a Standstill Termination Event. For purposes of the foregoing, a "STANDSTILL
TERMINATION EVENT" shall be deemed to occur (i) in the case of the occurrence of
any Event of Default described in Section 8.2 (to the extent such Event of
Default results from the acceleration of the Indebtedness outstanding under any
Credit Agreement or the Obligations under any of the Motorola Distributor
Documents and such acceleration shall not have been rescinded by the requisite
holders of Senior Obligations under such Credit Agreement or the Mo-
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▇▇▇▇▇▇ Distributor Documents), 8.6 or 8.7, immediately upon such occurrence; and
(ii) in the case of the occurrence of any other Event of Default, on the 120th
day following the occurrence of such Event of Default.
11.6. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR OBLIGATIONS.
Only after the Payment in Full of all Senior Obligations of the
Company and its Subsidiaries, the Noteholders shall be subrogated to the rights
of the holders of Senior Obligations to receive payments and distributions of
cash, property and securities applicable to such Senior Obligations. For
purposes of such subrogation, no payments or distributions to the holders of
the Senior Obligations of the Company and its Subsidiaries of any cash, property
or securities to which the Noteholders would be entitled except for the
provisions of this Section 11, and no payments over pursuant to the provisions
of this Section 11 to the holders of Senior Obligations by Noteholders, shall,
as among the Company and its Subsidiaries, its creditors other than holders of
Senior Obligations and the Noteholders, be deemed to be a payment or
distribution by the Company and its Subsidiaries to or on account of the Senior
Obligations of the Company and its Subsidiaries.
11.7. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Section 11 are and are intended solely for
the purpose of defining the relative rights of the Noteholders on the one hand
and each Administrative Agent and holders of Senior Obligations on the other
hand. Nothing contained in this Section 11 or elsewhere in this Agreement or in
the Notes is intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Obligations and the Noteholders, the
Obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under Section 10 and Section 11 is intended to rank
equally with all other general unsecured Obligations of the Company), to pay
to the Noteholders the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against the Company of the Noteholders
and creditors of the Company other than the holders of Senior Obligations; or
(c) subject to the restrictions set forth in Section 10 and Section 11, prevent
any Noteholder from exercising all remedies otherwise permitted by applicable
law upon default under this Agreement.
11.8. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Obligations
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company or any Noteholder with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Obligations may at any time and from time to
time, without the consent of or notice to the Noteholders, without incurring
responsibility to the Noteholders and without impairing or releasing the
subordination provided in this Section 11 or the Obligations hereunder of the
Note-
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holders to the holders of Senior Obligations or Guarantor Senior Obligations, do
any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior
Obligations or Guarantor Senior Obligations, or otherwise amend or supplement,
restate, replace, refinance, or otherwise modify in any manner the Senior
Obligations or Guarantor Senior Obligations, any instrument evidencing the same
or any agreement under which the Senior Obligations or Guarantor Senior
Obligations are outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Obligations or
Guarantor Senior Obligations; (iii) release any Person liable in any manner for
the collection of Senior Obligations or Guarantor Senior Obligations; (iv)
settle or compromise any such Senior Obligations, the Guarantor Senior
Obligations or any other liability of any obligor of such Senior Obligations
or Guarantor Senior Obligations to such holder of any security therefor or any
liability issued in respect thereof and apply any sums by whomsoever paid and
however realized to any liability (including, without limitation, payment of any
of the Senior Obligations or Guarantor Senior Obligations) in any manner or
order; (v) fail to take or to record or otherwise perfect, for any reason or for
no reason, any lien or security interest securing such Senior Obligations or
such Guarantor Senior Obligations by whomsoever granted, exercise or delay in or
refrain from exercising any right or remedy against any obligor or any guarantor
or any other Person, elect any remedy and otherwise deal freely with any obligor
and any security for such Senior Obligations, such Guarantor Senior Obligations,
or any liability of any obligor to the holders of such Senior Obligations, such
Guarantor Senior Obligations or any liability issued in respect of such Senior
Obligations; and (vi) exercise or refrain from exercising any rights against the
Company, any Credit Party or any other Person.
11.9. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets or securities of the
Company referred to in this Section 11, the Noteholders shall be entitled to
rely upon (i) any order or decree entered by any court of competent jurisdiction
in which such Proceeding is pending, (ii) a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors making such payment or distribution, and (iii) with respect to any
given Senior Obligations, any certificate of the Administrative Agent for, or
holder of, such Senior Obligation, in each case delivered to the Noteholders,
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Obligations and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Section 11.
11.10. RESTRICTIONS ON AMENDMENT.
The provisions of Section 10 and Section 11 are for the benefit of
each Administrative Agent and the holders from time to time of Guarantor
Senior Obligations and the Senior Obligations, and each Administrative Agent and
such holders of Guarantor Senior Obligations and Senior Obligations are third
party beneficiaries hereof. Without the prior written consent of each
Administrative Agent (which consent may be granted or withheld by such
Administrative Agent in its sole and absolute discretion), the Noteholders and
the Company shall not (and the Company shall not permit any of the Company's
Subsidiaries to), amend or otherwise change the terms of this Agreement, any
Notes, any Subsidiary Guarantee, any Obligations of any Credit
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Party, or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to (i) increase the
interest rate on the Notes (other than to the extent that such additional
interest is payable solely through the issuance of additional Notes in a
principal amount equal to the amount of such additional interest), (ii) change
(to earlier dates) any dates upon which payments of principal, premium, fees or
interest are due on the Notes, (iii) change any event of default or condition to
an event of default with respect thereto (other than to eliminate any such event
of default or increase any grace period related thereto), (iv) change the
redemption, prepayment, repurchase, conversion or defeasance provisions thereof,
(v) change the standstill or subordination provisions set forth in the Notes,
the Subsidiary Guarantees or in Sections 10 and 11 hereof (or any defined
terms used in the Notes, the Subsidiary Guarantees or said Sections), or
change or amend this Section (or any defined terms used in this Section), (vi)
require or result in any Credit Party or any of their Subsidiaries or Affiliates
granting any pledge, security interest or other Lien on any of their property or
assets (including the stock of the Company) to secure any of the Subordinated
Indebtedness, (vii) change, amend or add any financial covenant, other material
covenant, or event of default in any Purchase Document in a manner that would be
more restrictive on any Credit Party than any comparable covenant then in effect
under the Credit Agreements or the Motorola Distributor Documents, or (viii)
increase materially the Obligations of any Credit Party or to confer any
additional rights on the holders of such Subordinated Indebtedness (or a trustee
or other representative on their behalf) which would be adverse to the Company
or the holders of Senior Obligations.
11.11. RELIANCE BY HOLDERS OF SENIOR OBLIGATIONS ON SUBORDINATION
PROVISIONS.
Each Noteholder, by accepting such Note, acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Obligations, whether
such Senior Obligations were created or acquired before or after the issuance of
the Note, to acquire and continue to hold, or to continue to hold, such Senior
Obligations and such holder of such Senior Obligations shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Obligations.
If a proper claim or proof of debt in the form required in any
proceeding (including any Guarantor Proceeding or Proceeding) is not filed by
or on behalf of all Noteholders prior to 10 days before the expiration of the
time to file such claims or proofs, then each Administrative Agent is hereby
authorized, and shall have the right (without any duty), to file an appropriate
claim on behalf of the Noteholders and to, subject to this Section 11.11, take
such other action as may be reasonably necessary to effectuate the foregoing.
Each Noteholder shall provide to each Administrative Agent and the holders of
Senior Obligations all information and documents reasonably necessary to
present claims or seek enforcement as aforesaid and the Noteholders hereby
irrevocably authorize, empower and appoint each Administrative Agent as
attorney-in-fact for such Noteholders to take any and all actions permitted by
this paragraph to be taken by each Administrative Agent and such holders of
Senior Obligations. Notwithstanding the foregoing, no Administrative Agent or
holder of Senior Obligations shall be entitled to vote the claim of any
Noteholder.
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SECTION 12. MISCELLANEOUS
12.1. SUCCESSORS AND ASSIGNS.
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 Securityholder) whether so expressed or not; provided, however, that
the Company may not assign and transfer any of its rights or obligations without
the prior written consent of the other parties hereto and each such
Securityholder.
Subject to Section 11, nothing in this Agreement or in the Notes or
Subsidiary Guarantees, 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 Notes or Subsidiary Guarantees or Purchased Preferred Stock any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Each Securityholder may furnish any information concerning the
Company and the Company's Subsidiaries in the possession of that holder from
time to time to assignees and participants (including prospective assignees and
participants), subject to Section 12.15.
12.2. EXPENSES.
(a) Whether or not the transactions contemplated hereby shall be
consummated, the Company and each Subsidiary Guarantor jointly and severally
agree to pay promptly, (i) all the actual and reasonable costs and expenses of
negotiation and preparation of the Purchase Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for the Company (including any opinions
requested by the Purchasers as to any legal matters arising hereunder) and of
the Company's performance of and compliance with all agreements and conditions
on its part to be performed or complied with under this Agreement and the other
Purchase Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable fees,
expenses and disbursements of one counsel to the Securityholders (selected by
the Required Holders (or Purchasers purchasing a majority of the Purchased
Securities for the period prior to the applicable Closing Date)) in connection
with the negotiation, preparation, execution and administration of the Purchase
Documents and any consents, amendments, waivers or other modifications thereto
and any other documents or matters requested by the Company; (iv) all of the
Purchasers' out-of-pocket costs and expenses incurred in connection with their
due diligence; (v) all other actual and reasonable costs and expenses incurred
by the Securityholders in connection with the negotiation, preparation and
execution of the Purchase Documents and any consents, amendments, waivers or
other modifications thereto and the transactions contemplated thereby; provided
that the Company and the Subsidiary Guarantors shall not be obligated to
reimburse the Purchasers for any such costs and expenses incurred on or prior to
the First Closing Date to the extent they exceed $350,000.
(b) From and after the First Closing Date, subject to the
limitations set forth in Sections 10 and 11, the Company and each Subsidiary
Guarantor jointly and severally agree to
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pay (i) after the occurrence of an Event of Default or default under the terms
of the Purchased Preferred Stock, all costs and expenses, including reasonable
attorneys' fees (including allocated costs of internal counsel) and fees, costs
and expenses of accountants, advisors and consultants, incurred by the
Purchasers and Preferred Holders and their counsel relating to efforts to
evaluate or assess any Credit Party, its business or financial condition; and
(ii) all costs and expenses, including reasonable attorneys' fees (including
allocated costs of internal counsel), fees, costs and expenses of accountants,
advisors and consultants and costs of settlement, incurred by each Purchaser
and Preferred Holder in enforcing any obligations of the Company or any
Subsidiary or in collecting any payments due from any Credit Party hereunder or
under the other Purchase Documents by reason of such Event of Default or other
default (including in connection with the enforcement of the Purchase Documents)
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
12.3. INDEMNITY.
In addition to the payment of expenses pursuant to Section 12.2,
whether or not the transactions contemplated hereby shall be consummated, the
Company and each Subsidiary Guarantor jointly and severally agrees to defend
(subject to Indemnitees' selection of counsel), indemnify, pay and hold harmless
each Purchaser and Securityholder, and the officers, directors, employees,
agents and Affiliates of each Purchaser and Securityholder (collectively called
the "INDEMNITEES"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that the Company and the Subsidiary Guarantors
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise from
the gross negligence or willful misconduct of that Indemnitee as determined by
a final judgment of a court of competent jurisdiction. The rights of Noteholders
under this Section 12.3 shall be subject to Sections 10 and 11.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any
and all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including
Environmental Claims), costs (including the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous
Materials Activity), expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of (i) this Agreement, the other Purchase Documents or the
Related Agreements or the transactions contemplated hereby or thereby (including
Purchasers' agreement to purchase the Purchased Securities here- under or the
use or intended use of the proceeds thereof as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Government Authority or any enforcement of any of the Purchase Documents
(including the enforcement of any Sub-
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sidiary Guarantee)), (ii) the statements contained in the commitment letter
delivered by any Purchaser to or for the benefit of the Company with respect
thereto, or (iii) any Environmental Claim or any Hazardous Materials Activity
relating to or arising from, directly or indirectly, any past or present
activity, operation, land ownership, or practice of the Company or any of the
Company's Subsidiaries; provided that Indemnified Liabilities shall not include
any consequential or punitive damages.
To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in this Section 12.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, the Company and the
Subsidiary Guarantors jointly and severally shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.
12.4. AMENDMENTS AND WAIVERS.
Subject to the provisions of Section 11.10, this Agreement may be
amended, and the observance of any term hereof may be waived (either
retroactively or prospectively) with (and only with) the written consent of the
Company and the Required Holders (or, if prior to the First Closing Date, the
Purchasers); provided, however, that no such amendment or waiver may, without
the prior written consent of each Noteholder affected thereby (or the Purchasers
if prior to the First Closing Date) (i) subject any Noteholder to any additional
obligation, (ii) reduce the principal of (or premium, if any) or rate of
interest on any Note or change the date on which any Notes may be subject to
redemption or repurchase or reduce the redemption or repurchase price therefor,
(iii) change the date fixed for any payment of principal of (or premium, if any)
or interest on any Note, (iv) change the percentage of the aggregate principal
amount of the Notes the holders of which shall be required to consent or take
any other action under this Section 12.4 or any other provision of this
Agreement, (v) amend or waive the provisions of (a) Section 6.10 following the
occurrence of a Change of Control or (b) Section 6.11 or 7.7 following the
maturity of the Company's obligation to make an Excess Proceeds Offer and in the
case of each of clauses (a) and (b), any of the definitions used in such
Sections, (vi) adversely affect the ranking of the Notes or any Subsidiary
Guarantee, (vii) change the currency in which amounts due under the Notes are
payable, or (viii) release any Subsidiary Guarantor from its Subsidiary
Guarantee other than in accordance with the terms of this Agreement. No
amendment or waiver of this Agreement will extend to or affect any obligation,
covenant, agreement, Potential Event of Default or Event of Default not
expressly amended or waived or thereby impair any right consequent thereon. As
used herein, the term this "Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented; and provided,
further, that any such amendment or waiver that applies only to one or more
specified Noteholders and not to all Noteholders shall not be binding upon such
specified Noteholder(s) without the prior written consent of such specified
Notesholder(s).
12.5. INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if
a particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not
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avoid the occurrence of an Event of Default or Potential Event of Default if
such action is taken or condition exists.
12.6. NOTICES; EFFECTIVENESS OF SIGNATURES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such Person in a written
notice delivered to the other parties hereto. Electronic mail may be used to
distribute routine communications, such as financial statements and other
information; provided, however, that no signature with respect to any notice,
request, agreement, waiver, amendment or other document or any notice that is
intended to have binding effect may be sent by electronic mail.
Purchase Documents and notices under the Purchase Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable law, have the same force
and effect as an original copy with manual signatures and shall be binding on
all Credit Parties and Purchasers.
12.7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the issuance of the
Notes hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the obligations of the Company under this Section 12 and the
Purchasers under Section 12.13 will survive the payment or transfer of any Note
or Purchased Preferred Stock, the enforcement, amendment or waiver of any
provision of this Agreement and the termination of this Agreement.
12.8. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any Purchaser or Securityholder
in the exercise of any power, right or privilege hereunder or under any other
Purchase Document shall impair such power, right or privilege or be construed to
be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Purchase Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
12.9. SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the
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remaining provisions or obligations, or of such provision or obligation in any
other jurisdiction, shall not in any way be affected or impaired thereby.
12.10. OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF SECURITYHOLDERS'
RIGHTS.
The obligations of Purchasers and Securityholders hereunder are
several and no Purchaser or Securityholder shall be responsible for the
obligations of any other Purchaser or Securityholder hereunder. Nothing
contained herein or in any other Purchase Document, and no action taken by any
Purchaser or Securityholder pursuant hereto or thereto, shall be deemed to
constitute the Purchasers and Securityholders and the Company as a partnership,
an association, a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Purchaser or Securityholder shall be a separate
and independent debt, and each Purchaser and Securityholder shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Purchaser or Securityholder to be joined as an
additional party in any proceeding for such purpose.
12.11. APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
12.12. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER PURCHASE DOCUMENT, OR ANY
OBLIGATIONS HEREUNDER OR THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY
EXECUTING AND DELIVERING THIS AGREEMENT, THE COMPANY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND ANY OBJECTION TO
VENUE;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 12.6;
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(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE PURCHASERS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 12.13 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
12.13. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER PURCHASE DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 12.13 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
PURCHASE DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
12.14. CONFIDENTIALITY.
Each Purchaser and Securityholder shall hold all non-public
information obtained pursuant to the requirements of this Agreement that has
been identified in writing as confidential by the Company in accordance with
such Purchaser's and holder's customary procedures for handling confidential
information of this nature and in accordance with safe and sound practices
-108-
of Institutional Investors, it being understood and agreed by the Company that
in any event a Purchaser or Securityholder may make disclosures (a) to its
Affiliates and its Affiliates' directors, officers, employees, agents and
partners and members, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such information and instructed to keep
such information confidential), (b) to the extent requested by any Government
Authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f)subject to an agreement containing provisions substantially the
same as those of this Section 12.14, to (i) any transferee of, or any
prospective transferee of, any of its Purchased Securities or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative transaction relating to obligations of the Company, (g)
with the consent of the Company, (h) to the extent such information (1) becomes
publicly available other than as a result of a breach of this Section 12.14, or
(2) becomes available to a Purchaser or Securityholder on a non- confidential
basis from a source other than the Company, or (3) to the National Association
of Insurance Commissioners or any other similar organization or any nationally
recognized rating agency that requires access to information about a Purchaser's
or Securityholder's or its Affiliates' investment portfolio in connection with
ratings issued with respect to such Purchaser or Securityholder or its
Affiliates and that no written or oral communications from counsel to a
Purchaser or Securityholder and no information that is or is designated as
privileged or as attorney work product may be disclosed to any Person unless
such Person is a Purchaser or Securityholder and (i) and with respect to each
Purchaser and Securityholder that is an investment fund, to actual or
prospective investors in such fund or any future fund that may be established by
such Purchaser or Securityholder or its Affiliates; provided that, unless
specifically prohibited by applicable law or order of Governmental Authority,
each Purchaser and Securityholder shall notify the Company of any request by any
Government Authority or representative thereof (other than any such request in
connection with any examination of the financial condition of such Purchaser or
Securityholder by such Government Authority) for disclosure of any such
non-public information prior to disclosure of such information; and provided,
further, that in no event shall any Purchaser or Securityholder be obligated or
required to return any materials furnished by the Company or any of the
Company's Subsidiaries.
Notwithstanding anything to contrary herein, the Company and each
Purchaser and Securityholder (and each of its employees, representatives and
agents) is permitted to disclose to any and all Persons, without limitation of
any kind, the tax treatment and tax structure of the transactions contemplated
by the Purchase Documents, and all materials of any kind (including opinions
and other tax analyses) that are provided to the Company or such Purchaser or
Securityholder related to such tax treatment or tax structure. In this regard,
the Company and each Purchaser and Securityholder acknowledge and agree that the
Company's or such Purchaser's or Securityholder's disclosure of the tax
treatment or tax structure of such transactions is not limited in any way by an
express or implied understanding or agreement, oral or written (whether or not
such agreement or understanding is legally binding). Furthermore, the Company
and each Purchaser and Securityholder acknowledge and agree that they do not
know or have reason to know that their use or disclosure of information relating
to the structure or tax aspects of the transac-
-109-
tions contemplated by the Purchase Documents is limited in any other manner for
the benefit of any other Person.
12.15. COUNTERPARTS: EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by the Company
and the Purchasers of written or telephonic notification of such execution and
authorization of delivery thereof.
12.16. LIMITATION OF LIABILITY.
To the extent permitted by law, the Company shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with or as a result of this
Agreement, any other Purchase Document, any transaction contemplated by the
Purchase Documents, any Note or the use of proceeds thereof.
12.17. FURTHER ASSURANCES.
Each Credit Party agrees that from time to time, it shall, at its
expense, promptly execute and deliver, or cause to be executed and delivered,
all further agreements, documents and instruments, and do or cause to be done
all further acts as may be necessary or desirable, or that the Required Holders
may request, in order to effectuate the provisions or purposes of, this
Agreement or any of the other Purchase Documents and to enable the Noteholders
to exercise and enforce their rights and remedies under this Agreement or any of
the other Purchase Documents.
12.18. INCORPORATION.
All Exhibits and Schedules attached hereto are incorporated as part
of this Agreement as if fully set forth herein.
[Remainder of page intentionally left blank]
-110-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
THE COMPANY: BRIGHTSTAR CORP.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
Notice Address:
Brightstar Corp.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
GUARANTORS: BRIGHTSTAR US, INC.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Secretary
S-1
PURCHASERS: FALCON MEZZANINE PARTNERS, LP
By: Falcon Mezzanine Investments, LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Notice Address:
Falcon Mezzanine Partners, LP
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
-2-
PRUDENTIAL CAPITAL PARTNERS L.P.
By: Prudential Capital Group, L.P.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Notice Address:
Prudential Capital Partners L.P.
c/o Prudential Capital Group
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
-3-
PRUDENTIAL CAPITAL PARTNERS
MANAGEMENT FUND, L.P.
By: Prudential Investment Management, Inc.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Notice Address:
Prudential Capital Partners Management
Fund, L.P.
c/o Prudential Capital Group
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
-4-
[***]
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President, Grandview Capital
Mgmt LLC
as Investment Advizor
Notice Address:
[***]
c/o Grandview Capital Management, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-5-
ARROW INVESTMENT PARTNERS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President, Grandview Capital
Mgmt LLC
as Investment Advizor
Notice Address:
Arrow Investment Partners
c/o Grandview Capital Management, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-6-
RCG CARPATHIA MASTER FUND, LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
Notice Address:
RCG Carpathia Master Fund, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
With a copy to:
RCG Carpathia Master Fund, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-7-
EXHIBIT A
[FORM OF]
NOTE
SEE TAB 6
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 DECEMBER 30,200(pound) (THE
"PURCHASE AGREEMENT"), AMONG BRIGHTSTAR CORP. (THE "COMPANY"), THE GUARANTORS
NAMED THEREIN AND THE PURCHASERS NAMED THEREIN. A COPY OF SUCH PURCHASE
AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN SECTION 11 OF THE
PURCHASE AGREEMENT TO "SENIOR OBLIGATIONS" AS SUCH TERM IS DEFINED IN THE
PURCHASE AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE
HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE PURCHASE
AGREEMENT.
THE SHARES EVIDENCED HEREBY ARE SUBJECT TO THE STOCKHOLDERS'
AGREEMENT OF THE CORPORATION DATED DECEMBER 30, 2003, AS MAY BE AMENDED FROM
TIME TO TIME (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE
CORPORATION), WHICH CONTAINS RESTRICTIONS ON THE TRANSFERABILITY OF THE SHARES
EVIDENCED HEREBY, AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON
ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY
ALL THE PROVISIONS OF SAID STOCKHOLDERS' AGREEMENT.
10.5% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2008
PPN No. 10947 AA 9 $10,283,400.81
No. 1
BRIGHTSTAR CORP., a corporation duly organized and existing under
the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Purchase Agreement), for value received, hereby
promises to pay to FALCON MEZZANINE PARTNERS, LP, or registered assigns, the
principal sum of TEN MILLION TWO HUNDRED EIGHTY-THREE THOUSAND FOUR HUNDRED
DOLLARS AND EIGHTY-ONE CENTS ($10,283,400.81) on December 31, 2008 (the "Stated
Maturity").
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.
-2-
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: December 30, 2003
BRIGHTSTAR CORP.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name:
Title:
-3-
[Reverse of Note]
1. GENERAL. This Note is one of a duly authorized issue of Notes of
the Company designated as its 10.5% Convertible Senior Subordinated Notes due
2008 (herein called the "Notes"), limited in aggregate principal amount to
$31,750,000, issued pursuant to the Purchase Agreement, dated as of December 30,
2003 (herein called the "Purchase Agreement"), among the Company, the Guarantors
named therein and the Purchasers named therein, to which Purchase Agreement and
all amendments thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company and the Noteholders and of the terms upon which the Notes are issued
and delivered. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Purchase Agreement.
Principal on this Note shall be payable only against surrender
therefor (except as set forth in Section 3.11 of the Purchase Agreement), while
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 Noteholder shall designate by written instructions received by
the Company no less than 15 days prior to any applicable Interest Payment Date,
which wire instruction shall continue in effect until such time as the
Noteholder otherwise notifies the Company or such Noteholder no longer is the
registered owner of this Note.
2. CERTAIN WAIVERS. The Company unconditionally waives (i) any
rights to presentment, demand, protest or (except as expressly required hereby)
notice of any kind, and (ii) any rights or rescission, setoff, counterclaim or
defense to payment under the Notes or otherwise that the Company may have or
claim against any Noteholder.
3. INTEREST. The Company promises to pay cash interest on the
principal amount of this Note from the date of issuance of this Note (or any
Predecessor Note) or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, quarterly in arrears on March 31,
June 30, September 30 and December 31 in each year commencing March 31, 2004
and at final maturity (each, an "Interest Payment Date") at the rate of 10.5%
per annum, until the principal hereof is paid.
To the extent that the payment of such interest shall be legally
enforceable, any principal of, or premium or installment of interest on, this
Note which is overdue shall bear interest at the rate of 2% per annum in excess
of the rate of interest then borne by the Notes ("default interest") from the
date such amounts are due until they are paid, and the entire amount of such
default interest shall be payable in cash. The Company shall pay interest on
overdue principal and premium and on overdue installments of interest from time
to time on demand.
Interest on this Note shall be computed on the basis of a 360-day
year of twelve 30-day months. If any Interest Payment Date falls on a date which
is not a Business Day, interest due on such Interest Payment Date shall be paid
on the Business Day immediately following such Interest Payment Date, provided,
however, that such interest payment shall not include any interest accruing
after such Interest Payment Date.
-4-
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 (or one
or more Predecessor Notes) 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 issue date.
4. CONVERSION.
4.1. Right to Convert. Each Noteholder may at any time and from time
to time convert all or any portion of any Note or Notes held by such Noteholder
into such number of fully paid and nonassessable shares of Common Stock as
determined by dividing the principal amount of the Note or Notes (or portion
thereof) to be converted by the Conversion Price at the Conversion Price then in
effect. Such conversion right shall be exercised by the surrender of the Note or
Notes to be converted to the Company, accompanied by written notice to the
Company of such Noteholder's election to convert.
The Company may convert the Notes in whole but not in part into shares of
Common Stock at the Conversion Price then in effect as set forth in the Purchase
Agreement.
4.2. Conversion Price. The initial Conversion Price is $8.00 per
share, subject to adjustment under certain circumstances as described in the
Purchase Agreement.
4.3. Interest on the Converted Notes. The holder of any Note or
Notes (or portion thereof) that is converted at a time that there is accrued
and unpaid interest on such Note or Notes (or portion thereof) shall continue to
be entitled to receive such accrued and unpaid interest notwithstanding the
conversion thereof (but such Note or Notes (or portion thereof) so converted
shall not accrue interest after the date of conversion), the payment of which
interest shall be made on the immediately succeeding Interest Payment Date.
4.4. Adjustment to Number of Shares. The number of shares of Common
Stock issuable upon conversion of each Note shall be adjusted from time to time
as described in Section 9.l(v) of the Purchase Agreement.
5. SUBORDINATION. This Note is subject to the terms of Section 11 of
the Purchase Agreement and this Note is issued subject to the provisions of the
Purchase Agreement. Each Noteholder, by accepting the same, agrees to and shall
be bound by such provisions.
6. EVENTS OF DEFAULT. If an Event of Default shall occur and be
continuing, the principal of all the Notes may be declared due and payable in
the manner and with the effect provided in the Purchase Agreement.
7. OFFERS TO PURCHASE NOTES; NO OPTIONAL REDEMPTION. The Purchase
Agreement provides that, subject to certain conditions, if (i) certain Excess
Proceeds are available to the Company as a result of Asset Sales or (ii) a
Change of Control occurs, the Company
-5-
shall he required to make an offer to purchase all or a specified portion of the
Notes as provided for in the Purchase Agreement. The Company shall not be
entitled to optionally redeem the Notes at any time.
8. AMENDMENTS, MODIFICATIONS AND WAIVERS. The Purchase Agreement
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and certain rights
of the Noteholders under the Purchase Agreement at any time by the Company with
the consent of the holders of a majority in aggregate principal amount of the
Notes at the time outstanding. The Purchase Agreement also contains provisions
permitting the Noteholders of specified percentages in the aggregate principal
amount of the Notes at the time outstanding, on behalf of the Noteholders of all
the Notes, to waive compliance by the Company 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 Noteholder and upon all future Noteholders 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.
9. REGISTRATION OF TRANSFER. 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 Company, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Company duly executed by, the holder hereof or his attorney duly authorized
in writing, and thereupon one 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. 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 Company 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 Company and any agent of the Company 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 Company nor any such agent shall be affected by
notice to the contrary.
10. MISCELLANEOUS. All terms used in this Note which are defined in
the 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
(INCLUDING SECTION 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE
-6-
THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.
-7-
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by
the Company pursuant to Section 6.10 or 6.11 of the Purchase Agreement, check
the box:
[ ]
If you want to elect to have only a part of the principal amount of
this Note purchased by the Company pursuant to Section 6.10 or 6.11 of the
Purchase 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
Note Registrar in addition to, or in substitution for,
STAMP, SEMP or MSP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
-8-
EXHIBIT B
[FORM OF]
SUBSIDIARY GUARANTEE
SEE TAB 6
SUBSIDIARY GUARANTEE
THE OBLIGATIONS OF THE SUBSIDIARY GUARANTOR TO THE HOLDERS OF NOTES
PURSUANT TO THIS SUBSIDIARY GUARANTEE AND THE PURCHASE AGREEMENT, DATED AS OF
DECEMBER 30,2003, AMONG BRIGHTSTAR CORP. (THE "COMPANY"). THE SUBSIDIARY
GUARANTORS NAMED THEREIN AND THE PURCHASERS NAMED THEREIN (THE "PURCHASE
AGREEMENT) ARE EXPRESSLY SET FORTH IN SECTION 10 OF THE PURCHASE; AGREEMENT, AND
REFERENCE IS HEREBY MADE TO SUCH PURCHASE AGREEMENT FOR THE PRECISE TERMS OF
THIS SUBSIDIARY GUARANTEE. THE TERMS OF THE PURCHASE AGREEMENT, INCLUDING
WITHOUT LIMITATION SECTION 10, ARE INCORPORATED HEREIN BY REFERENCE.
The Subsidiary Guarantor hereby, jointly and severally, together
with all other Subsidiary Guarantors unconditionally guarantees to each
Noteholder, irrespective of the validity and enforceability of the Purchase
Agreement, the Notes or the obligations of the Company thereunder, that: (a) the
principal of and premium and interest on the Notes shall be promptly paid in
full when due, subject to any applicable grace period, whether at Stated
Maturity, by acceleration or otherwise, and interest on the overdue principal of
(and any premium) and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Noteholders thereunder shall be promptly paid
in full or performed, all in accordance with the terms thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, that the same shall be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due, subject to any applicable grace period, of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Subsidiary Guarantor together with all other Subsidiary Guarantors shall be
jointly and severally obligated to pay the same immediately. The Subsidiary
Guarantor hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or the
Purchase Agreement, the absence of any action to enforce the same, any waiver or
consent by any Noteholder with respect to any provisions thereof, the recovery
of any judgment against the Company, any action to enforce the same or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Subsidiary Guarantor. The Subsidiary Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that, subject to Section 10 of the Purchase Agreement, this
Subsidiary Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and the Purchase Agreement
If any Noteholder is required by any court or otherwise to return to
the Company or the Subsidiary Guarantor, or any Custodian, trustee, liquidator
or other similar official acting in relation to either the Company or the
Subsidiary Guarantor, any amount paid by the Company or the Subsidiary Guarantor
to such Noteholder, this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect as to such amount only.
The Subsidiary Guarantor agrees
that it shall not be entitled to any right of subrogation in relation to the
Noteholders in respect of any obligations guaranteed hereby. The Subsidiary
Guarantor further agrees that, as between the Subsidiary Guarantor, on the one
hand, and the Noteholders, on the other hand, (a) the Maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 8 of the
Purchase Agreement for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby and (b) in the
event of any declaration of acceleration of such obligations as provided in
Section 8 of the Purchase Agreement, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Subsidiary Guarantor for
the purpose of this Subsidiary Guarantee. The Subsidiary Guarantor shall have
the right to see contribution from any nonpaying Subsidiary Guarantor so long as
the exercise of such right does not in pair the rights of the Noteholders under
the Subsidiary Guarantees.
The obligations of the Subsidiary Guarantor under this Subsidiary
Guarantee are subject to the subordination terms of Section 10 of the Purchase
Agreement
The Subsidiary Guarantor, and by its acceptance of Notes, each
Noteholder, hereby confirms that it is the intention of all such parties that
this Subsidiary Guarantee not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any Subsidiary Guarantee. To effectuate the foregoing intention,
the Noteholders and the Subsidiary Guarantor hereby irrevocably agree that the
obligations of the Subsidiary Guarantor under this Subsidiary Guarantee and
Section 10 of the Purchase Agreement shall be limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of the Subsidiary Guarantor that are relevant under such laws,
and after giving effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Subsidiary Guarantor in
respect of the obligations of such other Subsidiary Guarantor under Section 10
of the Purchase Agreement, result in the obligations of such Subsidiary
Guarantor under this Subsidiary Guarantee not constituting a fraudulent transfer
or conveyance.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon the Subsidiary Guarantor and its
respective successors and assigns to the extent set forth in the Purchase
Agreement until full and final payment of all of the Company's obligations under
the Notes and the Purchase Agreement and shall inure to the benefit of the
Noteholders and their permitted successors and assigns and, in the event of any
permitted transfer or assignment of rights by any Noteholder, the rights and
privileges herein conferred upon that party shall automatically extend to and be
vested in such permitted transferee or assignee, all subject to the terms and
conditions hereof and of Section 10 of the Purchase Agreement. Notwithstanding
the foregoing, if the Subsidiary Guarantor satisfies the provisions of Section
10.4 of the Purchase Agreement, such Subsidiary Guarantor shall be released of
its obligations hereunder.
THIS SUBSIDIARY GUARANTEE 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 THE
STATE OF NEW YORK THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Capitalized terms used herein have the same meanings given in the
Purchase Agreement unless otherwise indicated
IN WITNESS WHEREOF, Brightstar US, Inc. has caused this Guarantee to
be executed by its duly authorized officers as of December 30, 2003.
BRIGHTSTAR US INC.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Secretary
EXHIBIT C
[FORM OF]
CERTIFICATE OF DESIGNATIONS
SEE TAB 17
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CERTIFICATE OF DESIGNATION
OF THE POWERS, PREFERENCES
AND RELATIVE,
PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF 8.0%
SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK, SERIES A, AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Brightstar Corp. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Corporation (the "Board of Directors") by its Certificate of Incorporation, as
amended (hereinafter referred to as the "Certificate of Incorporation"), and
pursuant to the provisions of Section 151 of the DGCL, said Board of Directors,
by unanimous written consent dated December 29,2003, duly approved and adopted
the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by the Corporation's Certificate of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance of
8.0% Senior Cumulative Convertible Preferred Stock, Series A, par value
$0.0001 per share, with an initial stated value of $8.00 per share,
consisting of 3,750,000 shares, having the designations, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth in
the Certificate of Incorporation and in this Resolution as follows:
(a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Corporation a class of Preferred Stock
designated as the "8.0% Senior Cumulative Convertible Preferred Stock, Series
A." The number of shares constituting such class shall be 3,750,000 and are
referred to herein as the "Convertible Preferred 'Stock." The liquidation
preference of the Convertible Preferred Stock shall be $8.00 per share as
adjusted for each stock combination, split or recapitalization with respect to
such share (the "Liquidation Amount").
(b) Rank. The Convertible Preferred Stock shall, with respect to
dividend distributions and distributions upon liquidation, winding up or
dissolution of the Corporation, rank (i) senior to all classes of Common Stock
and to each other class of Capital Stock of the Corporation or series of
Preferred Stock of the Corporation existing or hereafter created the terms of
which do not expressly provide that it ranks senior to, or on a parity with, the
Convertible
Preferred Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution of the Corporation (collectively referred to,
together with all classes of Common Stock of the Corporation, as "Junior
Securities"): (ii) on a parity with any class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created
the terms of which expressly provide that such class or series will rank on a
parity with the Convertible Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution (collectively
referred to as "Parity Securities"'), provided that any such Parity Securities
that were not approved by the Holders in accordance with paragraph (g)(ii)
hereof shall be deemed to be Junior Securities and not Parity Securities; and
(iii) junior to each other class of Capital Stock of the Corporation or series
of Preferred Stock of the Corporation hereafter created the terms of which
expressly provide that such class or series will rank senior to the Convertible
Preferred Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution of the Corporation (collectively referred to as
"Senior Securities"), provided that any such Senior Securities that were not
approved by the Holders in accordance with paragraph (g)(ii) hereof shall be
deemed to be Junior Securities and not Senior Securities.
(c) Dividends.
(i) From the Issue Date thereof, (A) the Holders of the outstanding
shares of Convertible Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors, out of funds legally available therefor,
dividends on each share of Convertible Preferred Stock at a rate per annum equal
to, except as set forth below, 8.0% of the Liquidation Amount per share of the
Convertible Preferred Stock and (B) in the event that the Corporation shall
declare a dividend or make any other distribution (including, without
limitation, in cash, in Capital Stock (which shall include, without limitation,
any options, warrants, convertible securities or other rights to acquire Capital
Stock of the Corporation, whether or not pursuant to a shareholder rights plan,
"poison pill" or similar arrangement) or other property or assets) on or with
respect to shares of any class of Common Stock of the Corporation, then the
Board of Directors shall declare, and the Holder of each share of Convertible
Preferred Stock shall be entitled to receive in respect of each share of
Convertible Preferred Stock, a dividend or distribution in an amount equal to
the amount of such dividend or distribution received by a holder of the number
of shares of Common Stock for which such share of Convertible Preferred Stock is
convertible on the date of the payment of such dividend to holders of Common
Stock. All dividends provided for in clause (A) above shall be cumulative,
whether or not earned or declared, accruing on a daily basis from the Issue Date
of such shares; provided that not less than one-half (1/2) of the amount of such
dividends shall be payable (provided that such cash payment is not then
prohibited under the DGCL, any other applicable law, or the terms of any Covered
Indebtedness) in cash quarterly in arrears on each Dividend Payment Date,
commencing on March 31,2004; provided further, that (x) if as of any Dividend
Payment Date the Corporation shall have failed to pay in cash at least one-half
(1/2) of the dividends due and payable on such date, including, without
limitation, if such
-2-
dividends have not been declared by the Board of Directors or if funds therefor
are not legally available or are not permitted by applicable law or any Covered
Indebtedness (a "Payment Default"), then the dividend rate on each share of
Convertible Preferred Stock shall increase to a rate per annum equal to 10.0% of
the Liquidation Amount per share of the Convertible Preferred Stock effective as
of the first day of the Dividend Period for such Dividend Payment Date to which
such Payment Default relates, (y) if any Protective Default shall have occurred,
the per annum dividend rate shall increase to a rate per annum equal to 10.0% of
the Liquidation Amount per share of the Convertible Preferred Stock effective on
the date of such Protective Default and continuing during the continuance of
such Protective Default and (z) if any shares of Convertible Preferred Stock
shall remain outstanding (an "Outside Date Default") on September 30, 2009 (the
"Outside Date"), the dividend rate on each share of Convertible Preferred Stock
shall increase by 1.0% per annum on the Outside Date and shall increase by an
additional 1.0% per annum on each 30th calendar day thereafter up to a maximum
dividend rate of 15.0% per annum until such time as no shares of Convertible
Preferred Stock shall remain outstanding. After the date on which such Payment
Default, in the case of clause (x) above, and/or Protective Default, in the case
of clause (y) above, as the case may be, ceases to exist, the dividend rate
will revert to the rate originally borne by the Convertible Preferred Stock on
the First Issue Date. The increase in the dividend rate provided for above (i)
shall be the exclusive remedy of the Holders in the case of a Payment Default
and (ii) shall not be the exclusive remedy at law or in equity of the Holders of
the Convertible Preferred Stock for any Protective Default or Outside Date
Default and shall in no way be deemed a waiver of such Protective Default or
Outside Date Default or be deemed to validate any action underlying any such
Protective Default or Outside Date Default.
In the event that the Corporation shall not have funds legally
available for, or is otherwise prohibited by either (A) the DGCL or any other
applicable law, or (B) the terms of any Covered Indebtedness to pay any amounts
under this paragraph, the obligation to pay such amounts shall be carried
forward and fulfilled when such funds are legally available and the Corporation
is permitted to do so under the DGCL and any other applicable law and the terms
of any Covered Indebtedness. All unpaid dividends will compound on a quarterly
basis on each Dividend Payment Date at a rate per annum equal to the then
applicable dividend rate.
Each dividend shall be payable to the Holders of record as they
appear on the stock books of the Corporation on the Dividend Record Date
immediately preceding the related Dividend Payment Date; provided that any
dividend or distribution payable pursuant to clause (B) above of the first
paragraph of this paragraph (c)(i) shall be paid to the Holders of shares of
record as they appear on the stock books and the Corporation on the record date
applicable to holders of Common Stock and shall be paid to the Holders of
Convertible Preferred Stock at the same time such dividend or distribution is
made to holders of Common Stock, provided that such cash payment to all holders
of Common Stock is not then prohibited under the DGCL, any other applicable law,
or the terms of any Covered Indebtedness.
-3-
(ii) All dividends paid with respect to shares of the Convertible
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rate to the
Holders entitled thereto.
(iii) (A) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any Parity
Securities for any period unless (1)full cumulative dividends have been or
contemporaneously are declared and paid in full, or declared and a sum in cash
set apart sufficient for such payment, on the Convertible Preferred Stock for
all Dividend Periods terminating on or prior to the date of payment of such full
dividends on such Parity Securities and (2) such payment is in compliance with
paragraph (m)(i) hereof. If any dividends are not so paid, all dividends
declared upon shares of the Convertible Preferred Stock and any other Parity
Securities shall be declared Pro rata so that the amount of dividends declared
per share on the Convertible Preferred Stock and such Parity Securities shall in
all cases bear to each other the same ratio that accrued dividends per share on
the Convertible Preferred Stock and such Parity Securities bear to each other.
(B) So long as any share of the Convertible Preferred Stock is
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend on any of the Junior Securities, or make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or
any warrants, rights, calls or options exercisable for or convertible into any
of the Junior Securities whether in cash, obligations or shares of the
Corporation or other property, and shall not permit any corporation or other
entity directly or indirectly controlled by the Corporation to purchase or
redeem any of the Junior Securities or any such warrants, rights, calls or
options (other than in exchange for Junior Securities) unless (1) full
cumulative dividends determined in accordance herewith on the Convertible
Preferred Stock have been paid in full for all full quarterly dividend periods
ended prior to the date of such payment and (2)such payment is in compliance
with paragraph (m)(i) hereof.
(C) So long as any share of the Convertible Preferred Stock is
outstanding, the Corporation shall not (except with respect to dividends as
permitted by paragraph (c)(iii)(A)) make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Parity Securities or any warrants,
rights, calls or options exercisable for or convertible into any of the Parity
Securities whether in cash, obligations or shares of the Corporation or other
property, and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the Parity
Securities or any such warrants, rights, calls or options unless (1) full
cumulative dividends determined in accordance herewith on the Convertible
Preferred Stock have been or contemporaneously are paid in full for all full
quarterly dividend periods ending prior to the date of such payment and (2) such
payment is in compliance with paragraph (m)(i) hereof.
-4-
(iv) Dividends payable on the Convertible Preferred Stock for any
period less than a year shall be computed on the basis of a 360-day year of
twelve 30-day months and, for periods not involving a full calendar month, the
actual number of days elapsed (not to exceed 30 days).
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation (a "Liquidation
Event"), the Holders of shares of Convertible Preferred Stock shall be entitled
to be paid (provided that such cash payment is not then prohibited under the
DGCL, any other applicable law, or the terms of any Covered Indebtedness) out of
the assets of the Corporation available for distribution to its stockholders an
amount in cash equal to the sum of (A) the greater of (x) the Liquidation Amount
for each share of Convertible Preferred Stock outstanding or (y) the amount they
would be entitled to receive as if all of the shares of Convertible Preferred
Stock had been converted into Common Stock as of the date immediately prior to
the date fixed for determination of stockholders entitled to receive a
distribution in such Liquidation Event, plus (B) an amount in cash equal to
accumulated and unpaid dividends thereon to the date fixed for liquidation,
dissolution, winding up, merger, consolidation, reorganization, sale,
assignment, conveyance, transfer, lease or disposition, as the case may be
(including an amount equal to a prorated dividend for the period from the last
Dividend Payment Date to such date) before any distribution shall be made or any
assets distributed in respect of Junior Securities to the holders of any Junior
Securities including, without limitation, Common Stock of the Corporation (the
"Liquidation Payment").
(ii) If upon any Liquidation Event, the amounts payable with respect
to the Convertible Preferred Stock under paragraph (d)(i) above are not paid in
full, the Holders of the Convertible Preferred Stock and Parity Securities will
share equally and ratably in any distribution of assets of the Corporation
first in proportion to the full liquidation preference to which each is entitled
until such preferences are paid in full, and then in proportion to their
respective amounts of accumulated but unpaid dividends.
(iii) (A) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation, nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding-up
of the affairs of the Corporation.
(e) [Reserved].
-5-
(f) Conversion and Anti-Dilution Provisions.
(i) Holders' Right to Convert. The Holder of any share of
Convertible Preferred Stock may at any time and from time to time convert such
share into such number of fully paid and nonassessable shares of Common Stock as
determined by dividing the Liquidation Amount by the Conversion Price. Such
conversion right shall be exercised by the surrender of the shares to be
converted to the Corporation, accompanied by written notice to the Corporation
of such Holder's election to convert.
(ii) Corporation's Right to Convert. The Corporation may convert the
outstanding Convertible Preferred Stock in whole but not in part with each share
of Convertible Preferred Stock converting into such number of fully paid and
non-assessable shares of Common Stock as determined by dividing the
Liquidation Amount by the Conversion Price then in effect:
(A) if the Corporation consummates an underwritten initial public
offering of the Common Stock of the Corporation (1) pursuant to an
effective registration statement filed with the Commission in accordance
with the Securities Act (whether alone or in conjunction with a secondary
public offering), resulting in gross proceeds of at least $50,000,000 and
(2)(a) if such offering occurs prior to the first anniversary of the First
Issue Date, the shares of Common Stock sold in such offering are sold at a
price to the public of at least 150% of the Conversion Price then in
effect; provided that prior to or simultaneous with such conversion, the
Holders and Noteholders receive in the aggregate on a pro rate basis at
least $30,000,000 in cash in consideration for Conversion Shares (valued
at the price to the public referred to in this clause (2)(a)) or (b) the
shares of Common Stock sold in such offering are sold at a price to the
public of at least 200% of the Conversion Price then in effect (either
event described under (2)(a) and (2)(b) above a "Qualifying IPO"), or
(B) upon the occurrence of a Liquidation Event, so long as the value
of the cash consideration to be paid to the Holders in respect of their
Conversion Shares is at least equal to 200% of the Liquidation Amount of
the Convertible Preferred Stock plus accumulated and unpaid dividends
thereon.
(iii) (A) To convert a share of Convertible Preferred Stock into
shares of Common Stock pursuant to this paragraph (f), the Holder of such share
of Convertible Preferred Stock must surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Convertible Preferred Stock, and give written notice to the
Corporation at its principal corporate office of the election to convert such
shares, and, if desired, the name of such Holder's nominee in which the
certificates for Common Stock issued upon such conversion are to be issued;
provided, however, that if a Holder delivers a notice of conversion after the
Outside Date then such Holder may make its conversion contingent upon the
consummation of one or more events and such Holder's shares of
-6-
Convertible Preferred Stock shall not be deemed to be converted until
immediately prior to the consummation of such event(s) (but solely for purposes
of determining any record date for the stockholders of the Corporation entitled
to participate in such event(s), such conversion shall be deemed to have
occurred immediately prior to such record date). The Corporation shall, as soon
as practicable after such surrender (and following the effectiveness of such
conversion, in the case of a conditional conversion), issue and deliver at such
office to such Holder of Convertible Preferred Stock, or to the nominee or
nominees of such Holder, a certificate or certificates for the number of shares
of Common Stock to which such Holder is entitled as a result of such conversion.
Such conversion shall be deemed to have been immediately prior to the close of
business on the date notice of conversion is received by the Corporation if
the conversion is made pursuant to subparagraph (f)(i), or immediately prior to
the close of business on the date notice of conversion is received by the
Holders if the conversion is made pursuant to subparagraph (f)(ii), and upon the
effectiveness of such conversion on such date, all rights of the Holder of such
shares of Convertible Preferred Stock as a Holder of such shares shall cease at
such time, and the Person(s) in whose name(s) the certificates for such shares
of Common Stock are to be issued shall be treated for all purposes as having
become the record holders) thereof at such time; provided, however, that if a
Holder delivers a notice of conversion pursuant to paragraph (f)(i) after the
Outside Date then, if such Holder shall have elected to make its conversion
contingent upon the consummation of one or more events, such conversion shall
not be effective until immediately prior to the consummation of such event(s)
(but solely for purposes of determining any record date for the stockholders of
the Corporation entitled to participate in such event(s), such conversion shall
be deemed to have occurred immediately prior to such record date), it being
understood that if such event(s) is/are not consummated in accordance with the
terms of such conditional conversion then such conversion shall not be effective
unless consented to in writing by such Holder.
(B) In the event of a conversion pursuant to subparagraph (f)(ii),
upon the date of receipt of notice by each Holder from the Corporation of its
election to convert all of the outstanding Shares of Convertible Preferred
Stock, the outstanding shares of Convertible Preferred Stock shall be converted
automatically without any further action by the Holders of such shares or any
other Person and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; provided, however, that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares of Convertible Preferred Stock are either delivered to
the Corporation or its transfer agent, as provided below, or the Holder notifies
the Corporation or its transfer agent that such certificates have been lost,
stolen, or destroyed and executes an agreement satisfactory to the Corporation
to indemnify the Corporation from any loss incurred by it in connection with
such certificates. Upon the occurrence of such conversion of Convertible
Preferred Stock, the Holders of Convertible Preferred Stock shall surrender the
certificates representing such shares at the office of the Corporation or any
transfer agent for Convertible Preferred Stock or provide an indemnity agreement
as described above. Thereupon, there shall be issued and delivered to such
Holder
-7-
promptly at such office and in its name as shown on such surrendered certificate
or certificates (or as contemplated by such indemnity agreement), a certificate
or certificates for the number of shares of Common Stock into which the shares
of Convertible Preferred Stock surrendered were convertible on the date on which
such conversion occurred, and any declared and unpaid dividends shall be paid in
accordance with the provisions of clause (iv) below.
(iv) Dividends on Converted Stock. The Holder of any share of
Convertible Preferred Stock that is converted at a time that there are
accumulated and unpaid dividends on such shares shall continue to be entitled
to receive such dividends notwithstanding the conversion thereof(but such
shares shall not accumulated dividends after the date of conversion), the
payment of which dividends shall be subject to the same preference and priority
as would apply if the shares of Convertible Preferred Stock on which such
dividends accrued were outstanding; provided that if on the date of such
conversion, the Corporation shall be entitled to pay dividends on such converted
shares of Convertible Preferred Stock in accordance with the DGCL then the
Corporation shall declare and pay (provided that such cash payment is not then
prohibited under the terms of any Covered Indebtedness) such dividends on such
converted shares of Convertible Preferred Stock to the maximum extent permitted
by the DGCL (and such Covered Indebtedness) no later than five Business Days
following the date of the conversion of such shares of Convertible Preferred
Stock.
(v) Adjustments to Number of Shares. The number of shares of Common
Stock issuable upon conversion of each share of Convertible Preferred Stock
shall be adjusted from time to time as follows:
(A) If, after the First Issue Date, the Corporation (I) pays a
dividend or makes a distribution on its Common Stock in shares of its
Capital Stock, (If) subdivides its outstanding shares of Common Stock into
a greater number of shares, (III) combines its outstanding shares of
Common Stock into a smaller number of shares, or (IV) issues by
rectification of its shares of Common Stock any shares of Capital Stock of
the Corporation (including any reclassification in connection with a
merger or consolidation in which the Corporation is the surviving
corporation), then the number of shares of Common Stock issuable upon
conversion of each share of Convertible Preferred Stock shall be adjusted
so that the holder of any share of the Convertible Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number and kind of shares of Capital Stock that such holder would have
owned immediately following such action had such share been converted
immediately prior thereto and the Conversion Price shall be appropriately
adjusted to reflect any such event. An adjustment made pursuant to this
subparagraph (f)(v)(A) shall become effective immediately after the record
in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination, or reclassification.
-8-
(B) If, after the First Issue Date, the Corporation issues or sells
any shares of Common Stock or is deemed to have issued or sold any shares
of its Common Stock (including Common Stock deemed to have been issued or
sold pursuant to sub-paragraph (f)(v)(E)(III)) as a result of the
issuance of any options, warrants or convertible securities for
consideration of less than the Current Market Price, then the Conversion
Price shall be reduced so that the same shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to such
date by a fraction of which (x) the numerator shall be the number of
shares of Common Stock outstanding on such date plus the number of shares
which the aggregate offering price of the total number of shares of
Common Stock so issued or sold (or deemed issued or sold) (or the
aggregate conversion price or exercise price of the warrants, options or
convertible securities so issued or sold (or deemed issued or sold)) would
purchase at the Current Market Price per share of Common Stock on such
date, and of which (y) the denominator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock issued or sold (or deemed issued or sold) (or into
which the warrants, options or convertible securities so issued or sold
(or deemed issued or sold) are convertible).
(C) If, after the First Issue Date, the Corporation declares a
distribution payable in securities of other Persons, evidences of
indebtedness issued by the Corporation or other Persons, or assets
(excluding cash dividends), then in each such case the Conversion Price
shall be adjusted to the amount determined by multiplying the Conversion
Price in effect immediately prior to the date of such distribution by a
fraction of which the numerator shall be the Current Market Price per
share of the Common Stock on the record date mentioned below (which will
be prior to the distribution) less the then Fair Market Value of the
portion of the securities, evidences of indebtedness, or assets so
distributed applicable to one share of Common Stock, and of which the
denominator shall be such Current Market Price per share of Common Stock.
Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such
distribution.
(D) Notwithstanding any of the other provisions of this subparagraph
(f)(v), no adjustment shall be made to the Conversion Price as a result of
any of the following:
(I) the grant of options, warrants, or rights to purchase
Common Stock to employees, officers or directors of the Corporation
under option plans and agreements approved by the Corporation's
Board of Directors with an exercise price per share of not less than
the Current Market Price of the Common Stock on the date such
option, warrant or other right is issued;
-9-
(II) without duplication of clause (I) above, the issuance of
securities upon exercise or conversion of options, warrants, rights
or other securities that are outstanding on the First Issue Date;
and
(III) the issuance of securities for which an adjustment is
made under another provision of this subparagraph (f)(v).
(E) The following rules shall apply for purposes of this
subparagraph (f)(v):
(I) In the case of the issuance or sale of Common Stock for
cash, the consideration shall be deemed to be the amount of cash
paid therefor before deducting any reasonable discounts,
commissions, or other expenses allowed, paid, or incurred by the
Corporation for any underwriting or otherwise in connection with the
issuance and sale thereof.
(II) In the case of the issuance or sale of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be valued at the Fair Market Value thereof.
(III) In the case of the issuance or sale of options or
warrants to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for
Common Stock, or options or warrants to purchase or rights to
subscribe for such convertible or exchangeable securities, the
following provisions shall apply for all purposes of this
subparagraph (f)(v):
(a) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability, including without
limitation, the passage of time, but without taking into
account potential antidilution adjustments) of such options or
warrants to purchase or rights to subscribe for Common Stock
shall be deemed to have been issued at the time such options,
warrants, or rights were issued and for consideration equal to
the consideration (determined in the manner provided in this
subparagraph (f)(v)(E)), if any, received by the Corporation
upon the issuance of such options, warrants, or rights plus
the minimum exercise price provided in such options, warrants,
or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(b) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange (assuming
the sat-
-10-
isfaction of any conditions to convertibility or
exchangeability, including, without limitation, the passage of
time, but without taking into account potential antidilution
adjustments) for any such convertible or exchangeable
securities or upon the exercise of options or warrants to
purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities were issued or such options, warrants, or rights
were issued and for a consideration equal to the
consideration, if any, received by the Corporation for any
such securities or options, warrants, or rights, plus the
minimum additional consideration, if any, to be received by
the Corporation (without taking into account potential
antidilution adjustments) upon the conversion or exchange of
such securities or upon the exercise of such options,
warrants, or rights and subsequent conversion or exchange of
the underlying convertible or exchangeable securities, as
appropriate (the consideration in each case to be determined
in the manner provided in this subparagraph (f)(v)(E)).
(c) In the event of any change in the number of shares
of Common Stock deliverable or in the consideration payable to
the Corporation upon exercise of such options, warrants, or
rights with respect to either Common Stock or such convertible
or exchangeable securities or upon conversion of or in
exchange for such convertible or exchangeable securities,
including, but not limited to, a change resulting from the
antidilution provisions thereof, the Conversion Price, to the
extent in any way affected by or computed using such options,
warrants, rights, or securities, shall be recomputed to
reflect such change, but no further adjustment shall be made
for the actual issuance of Common Stock or any payment of such
consideration upon the exercise of any such options, warrants,
or rights or the conversion or exchange of such securities.
(d) Upon the expiration of any such options, warrants,
or rights with respect to either Common Stock or such
convertible or exchangeable securities or the termination of
any such rights to convert or exchange, the Conversion Price,
to the extent in any way affected by or computed using such
options, warrants, rights, or securities shall be recomputed
to reflect the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options,
warrants, or rights with respect to Common Stock, upon the
conversion or exchange of such securities, or the number of
shares of Common Stock issuable upon conversion or exchange of
the convertible or exchange-
-11-
able securities that were actually issued upon exercise of
options, warrants or rights related to such securities.
(e) The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to
subparagraphs (f)(v)(E)(III)(a) and (b) shall be appropriately
adjusted to reflect any change, termination, or expiration of
the type described in either subparagraph (f)(v)(E)(III)(c) or
(d).
(f) No adjustment of the Conversion Price shall be made
in an amount less than l/100th of one cent per share; provided
that any adjustments that are not required to be made by
reason of this sentence shall be carried forward and shall be
taken into account in any subsequent adjustment made.
(vi) Fractional Shares. No fractional shares of Common Stock shall
be issued upon the conversion of any share or shares of Convertible Preferred
Stock but instead, upon conversion, at the option of the exercising Holder
either (i) fractional shares shall be rounded up to the nearest whole share and
the exercising Holder shall pay to the Corporation the portion of the Conversion
Price per share represented by such fractional share or (ii) the Corporation
shall pay to the exercising Holder the portion of the Current Market Price per
share represented by such fractional share. If more than one such share of
Convertible Preferred Stock is surrendered for conversion at the same time by
the same holder, the number of full shares that are issuable upon the conversion
thereof shall be computed on the basis of the aggregate number of shares so
surrendered.
(vii) Mergers; Etc. If there is (i) any consolidation, merger, or
conversion to which the Corporation is a party, other than a consolidation or a
merger that does not result in any reclassification or exchange of, or change
in, outstanding shares of the Common Stock, (ii) any sale or conveyance to
another Person of all or substantially all of the assets of the Corporation, or
(iii) any other event that causes the holders of Common Stock to receive a
different or additional kind or amount of shares of stock or other securities or
other property (other than an event for which an adjustment in the kind and
amount of shares of stock or other securities or other property for which the
Convertible Preferred Stock is convertible is otherwise made pursuant to this
paragraph (f)), then the holder of each share of Convertible Preferred Stock
then outstanding shall have the right upon conversion pursuant to the terms
hereof to receive the kind and amount of shares of stock and other securities
and property receivable upon such consolidation, merger, sale, conveyance, or
other event by a holder of the number of shares of Common Stock issuable upon
conversion of such share immediately prior to such consolidation, merger, sale,
conveyance, or other event, subject to adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
-12-
paragraph (f). The provisions of this subparagraph (f)(vii) shall similarly
apply to successive consolidations, mergers, conversions, sales, conveyances,
and other events.
(viii) Reserves. The Corporation covenants that it will at all times
reserve and keep available, solely for the purpose of issuance upon conversion
of the shares of Convertible Preferred Stock, such number of shares of Common
Stock as shall be issuable upon the conversion of all such outstanding shares,
provided that nothing contained herein shall be construed to preclude the
Corporation from satisfying its obligations in respect of the conversion of
shares of Convertible Preferred Stock by delivery of shares of Common Stock that
are held in the treasury of the Corporation.
(ix) Preferred Conversion Shares. The shares of Common Stock and
other securities issued upon conversion of Convertible Preferred Stock and any
other securities into which the Common Stock or other such securities are
changed, reclassified, split, combined, or converted or for which they are
exchanged by amendment to the Certificate of Incorporation or by consolidation,
merger, or otherwise, and any securities paid as a dividend thereon are
collectively called the "Preferred Conversion Shares." Appropriate adjustment
shall be made to this Certificate of Designation, including the term "Common
Stock," to give effect to each such change, reclassification, split,
combination, conversion, exchange, or dividend.
(x) Transfer Taxes. The Corporation shall pay any and all
documentary, stamp, issue or transfer taxes, and any other similar taxes payable
in respect of the issue or delivery of shares of Common Stock upon conversion of
shares of Convertible Preferred Stock pursuant hereto; provided, however, that
the Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of the shares of Convertible
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
(xi) No Adjustment Less than Par Value. No adjustment in the
Conversion Price shall reduce the Conversion Price below the then par value of
the Common Stock.
(xii) Notice of Adjustment. Whenever the Conversion Price or
conversion privilege is adjusted, the Corporation shall promptly mail to Holders
a notice of the adjustment briefly stating the facts requiring the adjustment
and the manner of computing it.
(xiii) Notice of Certain Transactions. In the event that:
(A) the Corporation takes any action which would require an
adjustment in the Conversion Price;
-13-
(B) the Corporation proposes to consolidate or merge with, or
transfer all or substantially all of its property and assets to, another
Person and shareholders of the Corporation must approve the transaction;
or
(C) there is a proposed Liquidation Event with respect to the
Corporation,
the Corporation shall mail to the Holders a notice stating the proposed record
or effective date, as the case may be. The Corporation shall mail the notice at
least ten days before such record or effective date, whichever is first.
(g) Voting Rights.
(i) Generally. The Holders of Convertible Preferred Stock shall have
the right to receive notice of any meeting of holders of Common Stock or
Convertible Preferred Stock and to vote upon any matter submitted to a vote of
the holders of Common Stock or Convertible Preferred Stock. Except as otherwise
expressly set forth in the Certificate of Incorporation of the Corporation
(including the Certificate of Designation of which this Certificate of
Designation will form a part and all other Certificates of Designation with
respect to other classes or series of securities), the holders of Convertible
Preferred Stock shall vote on each matter submitted to them with the holders of
all other classes and series of Capital Stock entitled to vote on such matter,
taken together as a single class.
(ii) Special Matters. For so long as at least 66 2/3% of the shares
of Convertible Preferred Stock issued under this Certificate of Designation
remain outstanding, the Corporation may not effect any of the following without
the consent and approval of the holders of a majority of the outstanding shares
of Convertible Preferred Stock, voting or consenting, as the case may be, as one
class, separately from the holders of each other class and series of securities
of the Corporation, in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting:
(1) the authorization or issuance of (or reclassification of
any Junior Securities to) any class of (or the amendment of any
terms of) Parity Securities;
(2) the authorization or issuance of (or reclassification of
any Junior Securities or Parity Securities to) any class of (or the
amendment of any terms of) Senior Securities;
(3) the amendment or waiver of any of the terms of its
Certificate of Incorporation or this Certificate of Designation so
as to affect (whether by merger, consolidation or otherwise) the
specified rights, powers, preferences, or voting rights of the
Convertible Preferred Stock, including any action to in-
-14-
crease or decrease the number of authorized shares of Convertible
Preferred Stock;
(4) the authorization of any Liquidation Event or Change of
Control if after giving effect to such Liquidation Event or Change
of Control the Holders of Convertible Preferred Stock will be
entitled to receive in respect of their Conversion Shares less than
the sum of (x)(I) 150% of the Conversion Price per share if such
Liquidation Event or Change of Control is consummated on or prior to
the first anniversary of the First Issue Date or (II) 200% of the
Conversion Price per share if such Liquidation Event or Change of
Control is consummated on or prior to the third anniversary of the
First Issue Date, and (y) accumulated but unpaid dividends to the
payment date for such Liquidation Event or Change of Control;
provided, however, that in the case of any Liquidation Event or
Change of Control that satisfies the requirements of clause (x)(I)
above (but not clause (x)(II)), then prior to or simultaneous with
such Liquidation Event or Change of Control, the Holders and
Noteholders shall have received in the aggregate on a pro rata basis
at least $30,000,000 in cash in consideration for Conversion Shares
(valued at the same valuation as the Common Stock in such
Liquidation Event or Change of Control);
(5) the authorization of any Restricted Junior Payment; and
(6) the commencement of any voluntary liquidation, winding-up
or dissolution of the Corporation.
Notwithstanding the foregoing, without the consent of each Holder of
Convertible Preferred Stock, no such amendment or waiver of the Certificate of
Incorporation or this Certificate of Designation (whether by merger,
consolidation or otherwise) may (i) subject any Holder to any additional
obligation, (ii) reduce the Liquidation Amount of or dividend rate on the
Convertible Preferred Stock, (iii) postpone the date fixed for any payment of
the Liquidation Amount, or any dividends or other payments in respect of the
Convertible Preferred Stock, (iv) change the percentage of the shares of
Convertible Preferred Stock the Holders of which shall be required to consent or
take any other action under this paragraph (g) or any other provision of this
Certificate of Designation, (v) adversely effect the conversion rights of the
Convertible Preferred Stock or (vi) adversely effect the ranking of the
Convertible Preferred Stock.
(iii) Consolidation, Merger or Sale of Assets. Without the
affirmative vote or consent of the Required Holders, voting or consenting, as
the case may be, as a separate class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting, the
Corporation shall not, in a single transaction or series of related
transactions, consolidate with or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets (other than any such sale, assignment,
-15-
transfer, lease, conveyance or other disposition, (collectively, a "Transfer")
occurring following the occurrence of and during the continuance of an "event of
default" under any item of Covered Indebtedness if (i) such Transfer is not to
an Affiliate of the Corporation or any stockholder thereof, (ii) the Corporation
receives proceeds at least equal to the Fair Market Value of the assets
Transferred and (iii) 'such proceeds consist of at least 80% cash or Cash
Equivalents) to, another Person unless: (I) at or prior to the consummation of
such transaction all of the then outstanding shares of the Convertible Preferred
Stock are repurchased pursuant to paragraphs (f) or (1) or converted in
accordance with paragraph (f), or (II) (A) either (1) the Corporation is the
continuing Person or (2) the Person (if other than the Corporation) formed by
such consolidation or into which the Corporation is merged or to which the
properties and assets of the Corporation are sold, assigned, transferred,
leased, conveyed or otherwise disposed of shall be a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume all of the obligations of the
Corporation under this Certificate of Designation and the obligations hereunder
and thereunder shall remain in full force and effect; (B) if the Corporation is
not the surviving Person, the Convertible Preferred Stock shall be converted
into or exchanged for and shall become shares of such successor, transferee or
resulting Person, having in respect of such successor, transferee or resulting
Person the same powers, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions
thereon, and ranking in relation to all other Capital Stock then outstanding,
that the Convertible Preferred Stock had immediately prior to such transaction;
and (C) immediately after giving effect to such transaction (including any
Indebtedness incurred or anticipated to be incurred in connection with the
transaction), no Payment Default, Protective Default or Outside Date Default
have occurred or be continuing.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related transactions) of
all or substantially all of the properties or assets of one or more Subsidiaries
of the Corporation, the Capital Stock of which constitutes all or substantially
all of the properties and assets of the Corporation, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Corporation.
(iv) Number of Votes. In any case in which the holders of the
Convertible Preferred Stock shall be entitled to vote pursuant to this
Certificate of Designation or pursuant to Delaware law, each holder of
Convertible Preferred Stock entitled to vote with respect to such matter shall
be entitled to vote, with respect to each share of such Convertible Preferred
Stock, the number of votes that equals the number of shares of Common Stock into
which such share of Convertible Preferred Stock is then convertible.
(h) Conversion or Exchange. The Holders of shares of Convertible Preferred
Stock shall not have any rights hereunder to convert such shares into or
exchange such shares
-16-
for shares of any other class or classes or of any other series of any class or
classes of Capital Stock of the Corporation other than as provided in this
Certificate of Designation.
(i) Reissuance of Convertible Preferred Stock. Shares of Convertible
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged, shall (upon compliance with any
applicable provisions of the laws of Delaware) have the status of authorized and
unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock; provided
that any issuance of such shares of Preferred Stock must be in compliance with
the terms hereof.
(j) Business Day. If any payment, redemption or exchange shall be required
by the terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(k) Notices. Unless otherwise provided in this Certificate of Designation
or by applicable law, all notices, requests, demands, and other communications
shall be in writing and shall be personally delivered, delivered by facsimile or
courier service, or mailed, certified with first class postage prepaid, to the
address set forth on the books of the Corporation, in the case of communications
to a stockholder, and to the registered office of the Corporation in the State
of Delaware with a copy to the chief executive offices of the Corporation at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: Chief Executive
Officer, for all communications to the Corporation. Each such notice, request,
demand, or other communication shall be deemed to have been given and received
(whether actually received or not) on the date of actual delivery thereof, if
personally delivered or delivered by facsimile transmission (if receipt is
confirmed at the time of such transmission by telephone), or on the third day
following the date of mailing, if mailed in accordance with this paragraph (k),
or on the day specified for delivery to the courier service (if such day is one
on which the courier service will give normal assurances that such specified
delivery will be made). Any notice, request, demand, or other communication
given otherwise than in accordance with this paragraph (k) shall be deemed to
have been given on the date actually received. Any stockholder may change its
address for purposes of this .paragraph (k) by giving written notice of such
change to the Corporation in the manner herein above provided. Whenever any
notice is required to be given by law or by this Certificate of Designation, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
notice.
(l) Change of Control.
(i) Upon the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Corporation shall make an
offer to purchase (the "Change of Control Offer") the outstanding shares of
Convertible Preferred Stock at a purchase price equal to 101% of the Liquidation
Amount thereof, plus, without duplication,
-17-
an amount in cash equal to all accumulated and unpaid dividends thereon
(including an amount in cash equal to a prorated dividend for the period from
the immediately preceding Dividend Payment Date to the Change of Control Payment
Date) (the "Change of Control Purchase Price").
(ii) Within 5 days of the occurrence of a Change of Control, the
Corporation also shall send by first-class mail, postage prepaid, to each Holder
of Convertible Preferred Stock, at the address appearing in the register
maintained by the Corporation or the transfer agent for the Convertible
Preferred Stock, a notice stating:
(a) that the Change of Control Offer is being made pursuant to
this paragraph (1) (provided that such payment is then permitted by
the DGCL, other applicable law and the terms of Covered
Indebtedness) and that all of the Convertible Preferred Stock
tendered will be accepted for payment, and otherwise subject to the
terms and conditions set forth herein;
(b) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 30 days nor later
than 45 days from the date such notice is mailed (the "Change of
Control Payment Date"));
(c) that any of the Convertible Preferred Stock not tendered
will continue to accumulate dividends;
(d) that, unless the Corporation defaults in the payment of
the Change of Control Purchase Price (whether or not the Corporation
is then permitted to make such payment), any of the Convertible
Preferred Stock accepted for payment pursuant to the Change of
Control Offer shall cease to accumulate dividends after the Change
of Control Payment Date;
(e) that Holders accepting the offer to have their Convertible
Preferred Stock purchased pursuant to a Change of Control Offer
will be required to surrender their certificates representing the
Convertible Preferred Stock to the Corporation, properly endorsed
for transfer together with such customary documents as the
Corporation and the transfer agent may reasonably require, in the
manner and at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control
Payment Date;
(f) that Holders whose shares of Convertible Preferred Stock
are being purchased only in part will be issued new certificates
representing the number of shares of Convertible Preferred Stock
equal to the unpurchased portion of the certificates surrendered;
and
-18-
(g) any other reasonable procedures that a Holder must follow
to accept a Change of Control Offer.
(iii) The Corporation will 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 shares of Convertible Preferred Stock pursuant to a
Change of Control Offer. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this paragraph (l), the
Corporation will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this paragraph (l) by
virtue thereof.
(iv) On the Change of Control Payment Date, the Corporation shall
(A) accept for payment the shares of Convertible Preferred Stock validly
tendered pursuant to the Change of Control Offer, (B) promptly mail to the
Holders of shares so accepted the Change of Control Purchase Price therefor in
cash and (C) cancel and retire each surrendered certificate and execute a new
certificate representing that number of shares of Convertible Preferred Stock
equal to any unpurchased shares represented by a certificate surrendered. Unless
the Corporation defaults in the payment for the shares of Convertible Preferred
Stock tendered pursuant to the Change of Control Offer (whether or not the
Corporation is then permitted to make such a payment), dividends shall cease to
accumulate with respect to the shares of Convertible Preferred Stock tendered
and all rights of Holders of such tendered shares shall terminate, except for
the right to receive payment therefor, on the Change of Control Payment Date.
(m) Negative Covenants.
(i) Restricted Junior Payments. The Corporation shall not, and shall
not permit any of the Corporation's Subsidiaries to, directly or indirectly,
declare, order, pay, make or set apart any sum for any Restricted Junior
Payment; provided that so long as no Payment Default, Protective Default or
Outside Date Default shall have occurred and be continuing or shall be caused
thereby:
(a) the Corporation may redeem or repurchase Capital Stock or
options, warrants or other rights therefor (collectively, "Equity
Interests") from (i) officers, employees and directors of the
Corporation or any Subsidiary (or their estates) upon the death,
permanent disability, retirement or termination of employment of any
such Person or otherwise in accordance with any stock option plan
or any employee stock ownership plan maintained by the Corporation
or any of its Subsidiaries and (ii) other holders of Capital Stock
in the Corporation so long as the purpose of such purchase is to
acquire common stock for reissuance to new officers, employees and
directors (or their estates) of the Corporation or any Subsidiary to
the extent so reissued within 12 months after any such purchase;
provided that in all such cases the aggregate amount of all cash
-19-
paid in respect of all such shares so redeemed or repurchased less
net cash proceeds from the sale of any such redeemed or repurchased
shares does not exceed $5,000,000 in the aggregate from and after
the First Issue Date;
(b) the Corporation may make payments to the Holders in
respect of their shares of Convertible Preferred Stock in accordance
with the terms of this Certificate of Designation;
(c) the Corporation may make payments of dividends on Senior
Securities or Parity Securities issued in accordance with the terms
of this Certificate of Designation and in accordance with the terms
of such Senior Securities and Parity Securities approved by the
Holders in accordance with this Certificate of Designation; and
(d) the Corporation may pay from the proceeds of the issuance
of the Notes and the Convertible Preferred Stock to R. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (i) on the First Issue Date dividends
not to exceed $2,940,000 in the aggregate and (ii) additional
dividends in an aggregate amount not to exceed $2,935,000 at any
time following the refinancings of both of the Credit Agreements.
(ii) Investments; Acquisitions. The Corporation shall not, and shall
not permit any of the Corporation's Subsidiaries to, directly or indirectly,
make or own any Investment in any Person, including any Joint Venture, or
acquire, by purchase or otherwise, all or substantially all the business,
property or fixed assets of, or Capital Stock or other ownership interest of any
Person, or any division or line of business of any Person except:
(a) the Corporation and the Corporation's Subsidiaries may
make and own Investments in Cash Equivalents;
(b) the Corporation and its Subsidiaries may make Investments
in the Corporation or any other Subsidiary or any other Person if,
as a result of such Investment, such Person becomes a Subsidiary of
the Corporation;
(c) the Corporation and its Subsidiaries may make intercompany
loans to one another;
(d) the Corporation and each Subsidiary may acquire and own In
vestments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business and consistent
with past practices;
-20-
(e) the Corporation and each Subsidiary may make deposits in
the ordinary course of business consistent with past practices to
secure the performance of leases;
(f) the Corporation may (x) purchase Capital Stock to the
extent permitted under paragraph (m)(i)(a) and (y) acquire and hold
obligations of one or more officers or other employees of the
Corporation or any of its Subsidiaries in connection with such
officers' or employees' acquisition of shares of common stock of the
Corporation, so long as no cash is paid by the Corporation or any
of its Subsidiaries to such officers or employees in connection with
the acquisition of any such obligations and such obligations are
recourse obligations of such officers or other employees;
(g) the Corporation may make loans and advances to employees
and officers of the Corporation and its Subsidiaries in the ordinary
course of business not to exceed $1,000,000 in the aggregate at any
one time outstanding;
(h) the Corporation and its Subsidiaries may hold Investments
which consist of trade accounts receivable of the Corporation or
such Subsidiary created in the ordinary course of business;
(i) the Corporation and its Subsidiaries may make Investments
represented by Hedge Agreements made in the ordinary course of
business and not for speculative purposes; and
(j) the Corporation and its Subsidiaries may make Investments
in Joint Ventures and Unrestricted Subsidiaries; provided that the
amount of all such Investments does not exceed $10,000,000 in the
aggregate for all such Investments since the First Issue Date.
(iii) Limitations on Unrestricted Subsidiaries. The Corporation may
designate after the First Issue Date any Subsidiary as an "Unrestricted
Subsidiary" under this Certificate of Designation (a "Designation") only if:
(a) no Payment Default, Protective Default or Outside Date
Default shall have occurred and be continuing at the time of or
after giving effect to such Designation; and
(b) the Corporation would be permitted to make an Investment
at the time of Designation (assuming the effectiveness of such
Designation) pursuant to the provision described under paragraph
(m)(ii)(j) above in an amount
-21-
(the "Designation Amount") equal to the Fair Market Value of the
Corporation's interest in such Subsidiary on such date.
The Corporation shall not, and shall not cause or permit any
Subsidiary to, at any time (x) provide credit support for or subject any of its
property or assets (other than the Capital Stock of any Unrestricted Subsidiary)
to the satisfaction of any indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
indebtedness), (y) be directly or indirectly liable for any indebtedness of any
Unrestricted Subsidiary or (z) be directly or indirectly liable for any
indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the occurrence
of a default with respect to any indebtedness of any Unrestricted Subsidiary
(including any right to take enforcement action against such Unrestricted
Subsidiary). All Subsidiaries of Unrestricted Subsidiaries shall automatically
be deemed to be Unrestricted Subsidiaries.
The Corporation may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if no Payment Default, Protective
Default or Outside Date Default shall have occurred and be continuing at the
time of and after giving effect to such Revocation.
All Designations and Revocations must be evidenced by resolutions of
the Board of Directors of the Corporation delivered to each Holder certifying
compliance with the foregoing provisions.
(iv) Notice of Default. Promptly, but in any event within ten (10)
Business Days, after any officer of the Corporation becomes aware of the
existence of any Payment Default, Protective Default or Outside Date Default or
that any Person has given any notice or taken any other action with respect to a
claimed Payment Default, Protective Default or Outside Date Default, a written
notice thereof to the Holders specifying the nature and existence thereof and
what action the Corporation is taking or proposes to take with respect thereto.
(n) Definitions. As used in this Certificate of Designation, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Affiliate" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract
or otherwise. For purposes of this definition, a Person shall be deemed to
be "controlled by" a Person if such Person possesses, di-
-22-
rectly or indirectly, power to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person.
"Board of Directors" shall have the meaning provided in the first
paragraph of this Certificate of Designation.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a
day on which banking institutions located in such state are authorized or
required by law or other governmental action to close.
"Capital Stock" means (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership,
partnership interests (whether general or limited), (iv) in the case of a
limited liability company, membership interests, and (v) 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, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States Government or
(b) issued by any agency of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (ii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having,
at the time of the acquisition thereof, the highest rating obtainable from
either Standard & Poor's Corporation ("S&P") or ▇▇▇▇▇'▇ Investors Service,
Inc. "Moody's"); (iii) commercial paper maturing no more than one year
from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1
from Moody's; (iv) certificates of deposit or bankers' acceptances
maturing within one year after such date and issued or accepted by any
commercial bank organized under the laws of the United States of America
or any state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has capital, surplus and undivided
profits aggregating at least $500,000 and which issues (or the parent of
which issues) certificates of deposit or commercial paper with a ranking
described in clause (iii) above; and (v) shares of any money market mutual
fund that (a) invests solely in the types of investments referred to in
clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
-23-
"Certificate of Designation" means this Certificate of Designation
creating the Convertible Preferred Stock.
"Certificate of Incorporation" shall have the meaning provided in
the first paragraph of this Certificate of Designation.
"Change of Control" means the occurrence of any of the following
events (whether or not approved by the Governing Body of the Corporation):
(i) the Permitted Holders cease to beneficially own (as
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) at least a majority of both (x)
the total voting power of the Corporation's Voting Stock and (y)
the total economic ownership of the then outstanding Common Stock of
the Corporation;
(ii) any transaction or series of related transactions
(including but not limited to a merger or reorganization) which
results in holders of the Corporation's Capital Stock outstanding
prior to such event owning less than 50% of either (x) the total
voting power of the then outstanding Voting Stock of the Corporation
or (y) the total economic ownership of the then outstanding Common
Stock of the Corporation;
(iii) the Corporation consolidates with or merges with or into
any Person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any
Person unless holders of the Corporation's Capital Stock outstanding
prior to such event own at least 50% of the surviving or purchasing
entity;
(iv) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Governing Body
of the Corporation (together with any new directors whose election
to such board or whose nomination for election by the stockholders
of the Corporation was approved by a vote of a majority of the
directors 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) cease for any reason to
constitute a majority of such Governing Body then in office;
(v) any order, judgment or decree shall be entered against the
Corporation decreeing the dissolution or split-up of the Corporation
and such order shall remain undischarged or unstayed for a period in
excess of 60 days; or
(vi) the occurrence of any "change of control" under the
Notes.
-24-
"Change of Control Date" shall have the meaning provided in
paragraph (1).
"Change of Control Offer" shall have the meaning provided in
paragraph (1).
"Change of Control Payment Date" shall have the meaning provided in
paragraph (1).
"Change of Control Purchase Price" shall have the meaning provided
in paragraph (1).
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any
time after the First Issue Date 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 the Corporation's Common Stock, par value
$0.01, per share.
"Conversion Price" means $8.00, and shall be subject to adjustment
as provided herein.
"Conversion Shares" means, collectively, the Notes Conversion Shares
and the Preferred Conversion Shares.
"Convertible Preferred Stock" shall have the meaning provided in
paragraph (a).
"Corporation" shall have the meaning provided in the first paragraph
of this Certificate of Designation.
"Covered Indebtedness" shall mean the Credit Agreements and the
Motorola Distributor Documents.
"Credit Agreement" means each of (i) that certain Credit Agreement
dated as of June 12, 2002 among the Corporation, Brightstar US, Inc. and
General Electric Capital Corporation; and (ii) that certain Credit
Agreement dated as of December 12, 2002 by and among Brightstar Corp.
Chile Limitada, S.R.L., an entity organized under the laws of Chile,
Brightstar Guatemala, S.A., an entity organized under the laws of
Guatemala, Brightstar El Salvador, S.A., an entity organized under the
laws of El Salvador, Brightstar Uruguay, S.A., an entity organized under
the laws of Uruguay, Brightstar De Paraguay, S. de ▇.▇, an entity
organized under the laws of Paraguay, Brightstar de Venezuela, C.A., an
entity organized under the laws of Venezuela, Brightstar Dominicana, S.A.,
an entity organized under the laws of the Dominican Re-
-25-
public, Brightstar Peru, S.R.L., an entity organized under the laws of
Peru, Brightstar de Mexico, S.A. de C.V., an entity organized under the
laws of Mexico, Soluciones Inteligentes Para El ▇▇▇▇▇▇▇ Movil, S.A. de
C.V., an entity organized under the laws of Mexico, and Brightstar de
Argentina, S.A., an entity organized under the laws of Argentina, and
Ocean Bank, each as in effect at the First Issue Date, including any
related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, in each case as such
agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including
any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available
borrowings thereunder or adding Subsidiaries of the Corporation as
additional borrowers or guarantors thereunder) 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, lender or group of
lenders.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement to which the Corporation or any of the
Corporation's Subsidiaries are a party.
"Current Market Price" per share of Common Stock on any date means:
(i) if the Common Stock is not registered under the Exchange
Act, or if the Common Stock is so registered and the closing price
cannot be determined as set forth in clause (ii) below, (A) the
value of the Common Stock determined by the unanimous vote or
consent of the Board of Directors of the Corporation and certified
in a board resolution, or (B) if the Board of Directors of the
Corporation is unable or unwilling to unanimously agree on such
value within a period of 30 days, the value of the Common Stock as
determined by an Independent Financial Advisor, or
(ii) if the Common Stock is registered under the Exchange Act,
the Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices for each
trading day during the period commencing 15 trading days before such
date and ending on the date one trading day prior to the day in
question. The "closing price" on any trading day shall mean the
reported closing price on such day on the New York Stock Exchange or
on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if the Common Stock is
not listed or admitted to trading on such exchange, then the average
of the reported closing bid and asked prices in the over-the-counter
market as reported on NASDAQ or a similar reporting service or, if
no such quotations are available
-26-
the fair market price as determined by clause (i) above. A "trading
day" is a day on which the New York Stock Exchange, principal
national securities exchange, or over-the-counter market, as
appropriate, is open for trading.
"Designation" shall have the meaning provided in paragraph (m)(iii).
"Designation Amount" shall have the meaning provided in paragraph
(m)(iii).
"DGCL" means the General Corporation Law of the State of Delaware.
"Dividend Payment Date" means each March 31, June 30, September 30
and December 31 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each quarterly period from a Dividend Payment Date to the next succeeding
Dividend Payment Date (but without including such Dividend Payment Date).
"Dividend Record Date" means each March 15, June 15, September 15
and December 15 of each year.
"Equity Interest" shall have the meaning provided in paragraph
(m)(i).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length transaction, for
cash, between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy. "Fair Market
Value" shall be determined (A) by the unanimous vote or consent of the
Board of Directors of the Corporation and certified in a board resolution,
or (B) if the Board of Directors of the Corporation is unable or unwilling
to unanimously agree on such value within a period of 30 days, the "Fair
Market Value" shall be determined by an Independent Financial Advisor.
"First Issue Date" means December 30, 2003.
"Governing Body" means the board of directors or other body having
the power to direct or cause the direction of the management and policies
of a Person that is a corporation, partnership, trust or limited liability
company.
"Hedge Agreement" means (i) an Interest Rate Agreement designed to
hedge against fluctuations in interest rates, (ii) any Currency Agreement
designed to hedge against fluctuations in currency values, and (iii) any
other agreement or arrangement to which the Corporation or any of the
Corporation's Subsidiaries is a party which
-27-
▇▇▇▇▇▇ against or is based upon fluctuations in the value of the equity
securities of any Person, or any equity forward agreements or similar
agreements or arrangements.
"Holder" means a holder of shares of Convertible Preferred Stock as
reflected in the register maintained by the Corporation or the transfer
agent for the Convertible Preferred Stock.
"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 Corporation or any of its Subsidiaries or Affiliates, (ii)
which, in the judgment of the Governing Body of the Corporation, is
otherwise independent and qualified to perform the task for which it is to
be engaged and (iii) which is acceptable to the Required Holders.
"Initial Dividend Period" means, with respect to any share of
Convertible Preferred Stock, the dividend period commencing on the Issue
Date of such share of Convertible Preferred Stock and ending on March
31, 2004.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement to which the Corporation or any of the
Corporation's Subsidiaries is a party.
"Investment" means (i) any direct or indirect purchase or other
acquisition by the Corporation or any of the Corporation's Subsidiaries
of, or of a beneficial interest in, any securities of any other Person
(including any Subsidiary of the Corporation), (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by the
Corporation or any Subsidiary of the Corporation from any Person other
than the Corporation or any of the Corporation's Subsidiaries, of any
equity securities of such Subsidiary, (iii) any direct or indirect loan,
advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by the Corporation or any of
the Corporation's Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other Person in the
ordinary course of business, or (iv) Interest Rate Agreements or Currency
Agreements not constituting Hedge Agreements. The amount of any Investment
shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such
Investment.
-28-
"Issue Date" means, with respect to any share of Convertible
Preferred Stock, the date of issuance of such share of Convertible
Preferred Stock.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form, which
does not constitute a Subsidiary; provided that in no event shall any
corporate Subsidiary of any Person be considered to be a Joint Venture to
which such Person is a party.
"Junior Securities" shall have the meaning provided in paragraph
(b).
"Liquidation Amount" shall have the meaning provided in paragraph
(a).
"Liquidation Event" shall have the meaning provided in paragraph
(d)(i).
"Liquidation Payment" shall have the meaning provided in paragraph
(d)(i).
"Motorola" means, collectively, Motorola, Inc., a Delaware
corporation, and all of its Subsidiaries and Affiliates.
"Motorola Distribution Agreement" means, collectively, the Motorola
Latin America Distribution Agreement, the Motorola Mexico Distribution
Agreement, the Motorola US Distribution Agreement and any other agreements
pursuant to which the Corporation or any of its Subsidiaries are appointed
to act as a distributor on behalf of Motorola, as any of the foregoing may
be amended, supplemented or restated from time to time.
"Motorola Distributor Documents" means, collectively, the Motorola
Distribution Agreement, the Motorola Endorsement Agreement, the Motorola
Security Agreement and any other agreements, instruments or other
documents under which any of the Motorola Liens are granted or any of the
Motorola Obligations created, evidenced, guaranteed or secured and any
modifications, restatements or refinancings thereof or replacements
therefore.
"Motorola Endorsement Agreement" means, collectively, that certain
Agreement, dated as of July 30, 2001, entered into between Motorola de
Mexico, S.A. and Brightstar de Mexico, S.A. de C.V., and any other
agreements pursuant to which the Corporation and/or any of its
Subsidiaries agree to sell, endorse and/or assign any of their accounts
receivable to Motorola, as any of the foregoing are amended, supplemented
or restated from time to time
"Motorola Latin America Distribution Agreement" means that certain
Distribution Agreement, effective as of June 1, 2000, entered into between
Motorola, Inc. and the Corporation, as amended and restated by that
certain Amended and Restated
-29-
Distribution Agreement, effective as of October 9, 2003, and as the same
may be further amended, supplemented or restated from time to time.
"Motorola Liens" means any and all liens which may be now or
hereafter granted to Motorola by the Corporation or any of its
Subsidiaries or Affiliates pursuant to the Motorola Distributor Documents
or otherwise to secure any and all of the Motorola Obligations.
"Motorola Mexico Distribution Agreement" means that certain
Distribution Agreement, effective as of July 30, 2001, entered into
between Motorola de Mexico, S.A. and Brightstar de Mexico, S.A. de C.V.,
as the same may be amended, supplemented or restated from time to time.
"Motorola Obligations" shall mean the obligations as such term is
defined in the Motorola Parent Security Agreement and all other
indebtedness, fees, interest, expenses and other obligations from time to
time owing by one or more of the Borrowers to Motorola under the Motorola
Distributor Documents or any other transaction documents described
therein.
"Motorola Parent Security Agreement" means that certain Security
Agreement dated as of June 21, 2001 by the Corporation in favor of
Motorola, Inc., as amended, supplemented or restated from time to time.
"Motorola Security Agreement" means, collectively, the Motorola
Parent Security Agreement, the Motorola US Security Agreement and all
other documents pursuant to which any of the Motorola Liens are created,
as any of the foregoing may be amended, supplemented or restated from time
to time.
"Motorola US Distribution Agreement" means that certain Distribution
Agreement, effective as of November 20, 2003, entered into between
Motorola, Inc. and Brightstar US, Inc., as the same may be amended,
supplemented or restated from time to time.
"Motorola US Security Agreement" means that certain Security
Agreement dated as of May 24, 2002 by Brightstar US, Inc., in favor of
Motorola, Inc., as amended, supplemented or restated from time to time.
"Noteholder" means a Person in whose name a Note is registered on
the security register of the Corporation.
"Notes" means the up to $31,750,000 in aggregate principal amount of
10.5% Convertible Senior Subordinated Notes due December 31, 2008 of the
Corporation issued pursuant to the Purchase Agreement dated December
30, 2003.
-30-
"Notes Conversion Shares" means the shares of Common Stock and other
securities issued upon conversion of Notes and any other securities into
which the Common Stock or other such securities are changed, reclassified,
split, combined, or converted or for which they are exchanged by amendment
to the Certificate of Incorporation or by consolidation, merger, or
otherwise, and any securities paid as a dividend thereon.
"Outside Date" shall have the meaning provided in paragraph (c).
"Outside Date Default" shall have the meaning provided in paragraph
(c).
"Parity Securities" shall have the meaning provided in paragraph (b)
"Payment Default" shall have the meaning provided in paragraph
(c)(i).
"Permitted Holders" means collectively R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, his
spouse, children or other lineal descendants (whether adoptive or
biological) and any revocable or irrevocable inter vivos or testamentary
trust or the probate estate of any such individual, so long as one or more
of the foregoing individuals is the principal beneficiary of such trust or
probate estate.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments (whether federal, state or local, domestic or foreign, and
including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.
"Preferred Conversion Shares" shall have the meaning provided in
paragraph (f)(ix).
"Preferred Stock" means, with respect to any Person, Capital Stock
of any class or classes (however designated) of such Person which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Capital Stock of any other class of such
Person.
"Protective Default" means the failure by the Corporation to comply
with any of the provisions of this Certificate of Designation including,
without limitation, paragraph (g), whether or not compliance is at such
time permitted by the DGCL, other applicable law or the terms of other
instruments or agreements to which the Corporation is a party or otherwise
subject (including, without limitation, Covered Indebted-
-31-
ness). For purposes of this Certificate of Designation, a Payment Default
and an Outside Date Default shall not constitute a Protective Default.
"Qualifying IPO" shall have the meaning provided in paragraph
(f)(ii).
"Required Holders" means the Holders of a majority of the then
outstanding shares of Convertible Preferred Stock.
"Resolution" shall have the meaning provided in the first paragraph
of this Certificate of Designation.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of the Corporation or any of the Corporation's Subsidiaries
now or hereafter outstanding, except a dividend payable solely in shares
of that class of Capital Stock to the holders of that class and a dividend
payable by any of the Corporation's Subsidiaries to the Corporation or any
Subsidiary of the Corporation, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of Capital Stock of the
Corporation or any of the Corporation's Subsidiaries now or hereafter
outstanding and (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
any shares of any class of Capital Stock of the Corporation or any of the
Corporation's Subsidiaries now or hereafter outstanding.
"Revocation" shall have the meaning provided in paragraph (m)(iii).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Senior Securities" shall have the meaning provided in paragraph
(b).
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, Joint Venture or
other business entity of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to
the occurrence of any contingency) to vote in the election of the members
of the Governing Body is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of
that Person or a combination thereof. For purposes of this Agreement, an
"Unrestricted Subsidiary" of the Corporation shall be deemed not to be
a "Subsidiary" of the Corporation.
"Transfer" shall have the meaning provided in paragraph (g)(iii).
-32-
"Unrestricted Subsidiary" means each Subsidiary of the Corporation
designated as such pursuant to and in compliance with paragraph (m)(iii).
Any such designation may be revoked by a resolution of the Board of
Directors of the Corporation delivered to the Holders, subject to the
provisions of such paragraph (m)(iii).
"Voting Stock" means any class or classes of Capital Stock pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors,
managers or trustees of any Person (irrespective of whether or not, at the
time, stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency).
-33-
IN WITNESS WHEREOF, said Corporation has caused this Certificate of
Designation to be signed by R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, its Chief Executive Officer, this
29th day of December, 2003.
BRIGHTSTAR CORP.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
-34-
EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) I am the duly elected Chief Financial Officer of Brightstar
Corp., a Delaware corporation (the "COMPANY");
(2) I have reviewed the terms of that certain Purchase Agreement
dated as of December 30, 2003, as amended, supplemented or otherwise modified to
the date hereof (said Purchase Agreement, as so amended, supplemented or
otherwise modified, being the "PURCHASE AGREEMENT", the terms defined therein
and not otherwise defined in this Certificate (including Attachment No. 1
annexed hereto and made a part hereof) being used in this Certificate as therein
defined), by and among the Company, the Purchasers and the Subsidiary Guarantors
listed therein, and the terms of the other Purchase Documents, and I have made,
or have caused to be made under my supervision, a review in reasonable detail of
the transactions and condition of the Company and the Subsidiary Guarantors
during the accounting period covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did not
disclose, and we have no knowledge of, the existence of any condition or event
which constitutes an Event of Default or Potential Event of Default at the end
of or, with respect to any Event of Default or Potential Event of Default other
than under Section 8.3 of the Purchase Agreement in respect of a violation of
Section 7.6 of the Purchase Agreement, during the accounting period covered by
the attached financial statements or as of the date of this Certificate[, except
as set forth below].
[Set forth [below] [in a separate attachment to this Certificate]
are all exceptions to paragraph (3) above, listing in detail the nature of the
condition or event, the period during which it has existed and the action which
the Company has taken, is taking, or proposes to take with respect to each such
condition or event:
_______________________________________________________________________________]
The foregoing certifications, together with the computations set
forth in Attachment No. 1 annexed hereto and made a part hereof and the
financial statements delivered with this Certificate in support hereof, are made
and delivered this _______________ day of _________________,________ pursuant to
Section 6.2(iv) of the Purchase Agreement.
BRIGHTSTAR CORP.
By: ________________________
Name:
Title:
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of _______________,_____ and pertains to the period from
__________________,_____ to _______________,_____. Section references herein
relate to Sections of the Purchase Agreement.
A. INDEBTEDNESS
1. Indebtedness under Credit Agreements permitted under Section 7. l(i) $ -----------
2. Maximum permitted under Section 7.1(i) $ 100,000,000
B. INVESTMENTS
1. Aggregate Investments by the Company permitted under Section 7.3(vii): $ ------------
2. Maximum aggregate permitted under Section 7.3(vii): $ 1,000,000
3. Aggregate equity Investments in Joint Ventures and Unrestricted
Subsidiaries permitted under Section 7.3(x): $ ------------
4. Maximum aggregate permitted under Section 7.3(x); $ 10,000,000
D. CONTINGENT OBLIGATIONS
1. Contingent Obligations permitted under Section 7.4(vii): $ ------------
2. Maximum permitted under Section 7.4(vii): $ 10,000,000
E. Restricted Junior Payments
1. Aggregate redemption or repurchase of Equity Interests
under Section 7.5(ii)(a) from and after the Closing Date: $ ------------
2. Net cash proceeds from sale of redeemed/repurchased Equity
Interests under Section 7.5(ii)(a) from and after the
Closing Date: $ ------------
3. Net aggregate redemption or repurchase of Equity Interests
under Section 7.5(ii)(a) from and after the Closing Date
(E.I-E.2): $ ------------
4. Maximum aggregate permitted under Section 7.5(ii)(a) from
and after the Closing Date: $ 5,000,000
F. MINIMUM CASH INTEREST COVERAGE RATIO (For the four-Fiscal Quarter
period ending ______________,________)
1. Consolidated Net Income: $ ------------
2. Consolidated Interest Expense: $ ------------
3. Provisions for taxes based on Federal, state, local and
foreign income: $ ------------
4. Total depreciation expense: $ ------------
5. Total amortization expense: $ ------------
6. Other non-recurring and non-cash items reducing Consolidated
Net Income: $ ------------
7. Other non-recurring and non-cash items increasing
Consolidated Net Income: $ ------------
8. Consolidated EBITDA (1+2+3+4+5+6+7+8+9-10): $ ------------
9. Interest Coverage Ratio (F.11 ):(F.2): ----:1.00
10. Minimum ratio required under Section 7.6A: ----:1.00
G. MAXIMUM TOTAL LEVERAGE RATIO (as of_________,_____)
1. Consolidated Total Debt: $ ------------
2. Aggregate outstanding balance of factored accounts receivable $ ------------
3. Consolidated EBITDA (F.11 above): $ ------------
4. Total Leverage Ratio (G.2):(G.3): ----:1.00
5. Maximum ratio permitted under Section 7.6B: ----:1.00
EXHIBIT E
FORM OF SUPPLEMENTAL AGREEMENT
SUPPLEMENTAL AGREEMENT (this "supplemental Agreement"), dated as of
[ ], 2003 by and between (the "New Guarantor") and Brightstar Corp.
(the "Company").
WITNESSETH:
WHEREAS, the Company and the Purchasers named therein have each
heretofore executed and delivered to each other a Purchase Agreement (the
"Purchase Agreement"), dated as of December 30, 2003 providing for the issuance
and sale by the Company to the Purchasers of an aggregate principal amount of up
to $31,750,000 of Convertible Senior Subordinated Notes (the "Notes"); and
WHEREAS, Section 10.2 of the Purchase Agreement provides that under
certain circumstances the Company is required to cause the New Guarantor to
execute and deliver to the Noteholders a supplemental agreement pursuant to
which the New Guarantor shall unconditionally guarantee all of the Company's
obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and
conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor covenants and agrees for the equal and ratable benefit of the
Noteholders as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Purchase Agreement.
2. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees, jointly
and severally with all other Subsidiary Guarantors, to unconditionally guarantee
the Company's obligations under the Notes on the terms and subject to the
conditions set forth in Section 10 of the Purchase Agreement and to be bound by
all other applicable provisions of the Purchase Agreement.
3. INTENDED THIRD PARTY BENEFICIARIES. The Noteholders from time to
time of the Notes are intended third party beneficiaries of this Supplemental
Agreement and the terms and provisions of this Supplemental Agreement may not be
amended, except for modified exceptions provided for in the Purchase Agreement.
4. EFFECTIVENESS. This Supplemental Agreement shall be effective
upon execution by the parties hereto.
5. GOVERNING LAW. THIS SUPPLEMENTAL AGREEMENT 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 (INCLUDING SECTION 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF THE STATE OF NEW YORK THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
6. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement.
7. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
[NEW GUARANTOR]
By: ____________________________
Name:
Title:
EXHIBIT F-l
[FORM OF]
MANAGEMENT RIGHTS AGREEMENT - FALCON
SEE TAB 3
BRIGHTSTAR CORP.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
December 30, 2003
FALCON MEZZANINE PARTNERS, LP
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Brightstar Corp. (the "Company") hereby agrees that for so long as
Falcon Mezzanine Partners, LP (the "Purchaser") continues to hold any securities
of the Company, the Company shall:
1. Provide the Purchaser or its designated representative with (i) the right
to inspect and copy the books and records of the Company and its
subsidiaries, (ii) copies of all audited financial statements of the
Company and its subsidiaries and (iii) copies of all materials provided to
the Company's and its subsidiaries' board of directors (the "Board of
Directors");
2. Make appropriate officers and/or directors of the Company and its
subsidiaries available periodically for consultation with the Purchaser
or its designated representative with respect to matters relating to the
business and affairs of the Company and its subsidiaries including,
without limitation, significant changes in management personnel and
compensation of employees, introduction of new products or new lines of
business, important acquisition or dispositions of plants and equipment,
significant research and development programs, the purchasing or selling
of important trademarks, licenses or concessions or the proposed
commencement or compromise of significant litigation;
3. Inform the Purchaser or its designated representative in advance with
respect to any significant corporate actions, including, without
limitation, extraordinary dividends, mergers, acquisitions or dispositions
of assets, issuances of significant amounts of debt, or equity and
material amendments to the certificate of incorporation or by laws or
other applicable organizational documents of the Company and its
subsidiaries and to provide the Purchaser or its designated representative
with the right to consult with the Company and its subsidiaries with
respect to such actions;
4. If at such time the Purchaser is not entitled to or has not designated one
or more members of the Board of Directors of the Company, allow Purchaser
the right to attend meetings of the Board of Directors of the Company and
its subsidiaries as an observer
and shall receive notice of such meetings in accordance with the Company's
and its subsidiaries' bylaws or other applicable organizational documents
and copies of Board of Directors' materials distributed to any member of
each Board of Directors. The Company's failure to provide any such notice
shall not in any way affect the validity of any meeting to the Board of
Directors or any action taken at any such meeting. Reasonable costs and
expenses incurred by the Purchaser's observer for the purpose of attending
Board of Directors' meetings and conducting other Company or subsidiary
business will be borne by the Company; and
5. Provide the Purchaser or its designated representative with such other
rights of consultation as may reasonably be determined by the Purchaser to
be necessary to qualify its investment in the Company as a "venture
capital investment" for purposes of the United States Department of Labor
Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(i) (the "Plan
Asset Regulation").
The Company agrees to consider, in good faith, the recommendations of the
Purchaser or its designated representative in connection with the matters on
which it is consulted as described above, recognizing that the ultimate
discretion with respect to all such matters shall be retained by the Company.
In the event the Purchaser transfers all or any portion of its
investment in the Company to an affiliated entity that is intended to qualify as
a venture capital operating company under the United States Department of Labor
Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(i), such transferee
shall be afforded the same rights with respect to the Company and its
subsidiaries afforded to the Purchaser hereunder and shall be treated, for such
purposes, as a third party beneficiary hereunder.
Kindly acknowledge your agreement with the foregoing by executing
this agreement where indicated below.
Very truly yours,
BRIGHTSTAR CORP.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: CHIEF EXECUTIVE OFFICER
FALCON MEZZANINE PARTNERS, LP
By: Falcon Mezzanine Investments, LLC,
its General Partner
By: ________________________________
Name:
Title:
Kindly acknowledge your agreement with the foregoing by executing
this agreement where indicated below.
Very truly yours,
BRIGHTSTAR CORP.
By: ___________________________
Name:
Title:
FALCON MEZZANINE PARTNERS, LP
By: Falcon Mezzanine Investments, LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EXHIBIT F-2
[FORM OF]
MANAGEMENT RIGHTS AGREEMENT - PRUDENTIAL
SEE TAB 4
BRIGHTSTAR CORP.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
December 30, 2003
PRUDENTIAL CAPITAL PARTNERS, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
Brightstar Corp. (the "Company") hereby agrees that for so long as
Prudential Capital Partners, L.P. (the "Purchaser") continues to hold any
securities of the Company, the Company shall:
1. Provide the Purchaser or its designated representative with (i) the right
to inspect and copy the books and records of the Company and its
subsidiaries, (ii) copies of all audited financial statements of the
Company and its subsidiaries and (iii) copies of all materials provided to
the Company's and its subsidiaries' board of directors (the "Board of
Directors");
2. Make appropriate officers and/or directors of the Company and its
subsidiaries available periodically for consultation with the Purchaser
or its designated representative with respect to matters relating to the
business and affairs of the Company and its subsidiaries including,
without limitation, significant changes in management personnel and
compensation of employees, introduction of new products or new lines of
business, important acquisition or dispositions of plants and equipment,
significant research and development programs, the purchasing or selling
of important trademarks, licenses or concessions or the proposed
commencement or compromise of significant litigation;
3. Inform the Purchaser or its designated representative in advance with
respect to any significant corporate actions, including, without
limitation, extraordinary dividends, mergers, acquisitions or dispositions
of assets, issuances of significant amounts of debt, or equity and
material amendments to the certificate of incorporation or by laws or
other applicable organizational documents of the Company and its
subsidiaries and to provide the Purchaser or its designated representative
with the right to consult with the Company and its subsidiaries with
respect to such actions;
4. If at such time the Purchaser is not entitled to or has not designated one
or more members of the Board of Directors of the Company, allow Purchaser
the right to attend meetings of the Board of Directors of the Company and
its subsidiaries as an observer
and shall receive notice of such meetings in accordance with the Company's
and its subsidiaries' bylaws or other applicable organizational documents
and copies of Board of Directors' materials distributed to any member of
each Board of Directors. The Company's failure to provide any such notice
shall not in any way affect the validity of any meeting to the Board of
Directors or any action taken at any such meeting. Reasonable costs and
expenses incurred by the Purchaser's observer for the purpose of attending
Board of Directors' meetings and conducting other Company or subsidiary
business will be borne by the Company; and
5. Provide the Purchaser or its designated representative with such other
rights of consultation as may reasonably be determined by the Purchaser to
be necessary to qualify its investment in the Company as a "venture
capital investment" for purposes of the United States Department of Labor
Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(i) (the "Plan
Asset Regulation").
The Company agrees to consider, in good faith, the recommendations of the
Purchaser or its designated representative in connection with the matters on
which it is consulted as described above, recognizing that the ultimate
discretion with respect to all such matters shall be retained by the Company.
In the event the Purchaser transfers all or any portion of its
investment in the Company to an affiliated entity that is intended to qualify as
a venture capital operating company under the United States Department of Labor
Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(i), such transferee
shall be afforded the same rights with respect to the Company and its
subsidiaries afforded to the Purchaser hereunder and shall be treated, for such
purposes, as a third party beneficiary hereunder.
Kindly acknowledge your agreement with the foregoing by executing
this agreement where indicated below.
Very truly yours,
BRIGHTSTAR CORP.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
PRUDENTIAL CAPITAL PARTNERS, L.P.
By: Presidential Capital Group, L.P.
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
EXHIBIT F-3
[FORM OF]
MANAGEMENT RIGHTS AGREEMENT - [***]/ARROW
SEE TAB 5
BRIGHTSTAR CORP.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
December 30, 2003
ARROW INVESTMENT PARTNERS,
[***]
c/o Grandview Capital Management, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
Brightstar Corp. (the "Company") hereby agrees that for so long as
either of Arrow Investment Partners or [***] (each a "Purchaser" and
collectively, the "Purchasers") continues to hold any securities of the Company,
the Company shall provide each such Purchaser or its designated representative
with copies of all materials provided to the Company's and its subsidiaries'
board of directors, except to the extent that the Company reasonably determines
that such materials constitute privileged communications and that the
distribution of such materials would constitute a waiver of such privilege.
Kindly acknowledge your agreement with the foregoing by executing
this agreement where indicated below.
Very truly yours,
BRIGHTSTAR CORP.
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
ARROW INVESTMENT PARTNERS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President, Grandview Capital Mgmt LLC
as Investment Advisor
[***]
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President, Grandview Capital Mgmt LLC
as Investment Advisor
EXHIBIT G
[FORM OF]
OPINION OF ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
SEE TAB 12
-9-
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP Miami Center 20th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
December 30, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇▇▇
305.539.3300
▇▇▇.▇▇.▇▇▇
Falcon Mezzanine Partners, LP Prudential Capital Partners, L.P.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ c/o Prudential Capital Group
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Prudential Capital Partners [***]
Management Fund, L.P. c/o Grandview Capital Management LLC
c/o Prudential Capital Group ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Arrow Investment Partners PCG Carpathia Master Fund, Ltd.
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Management LLC ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as special counsel to Brightstar Corp., a Delaware
corporation ("COMPANY") and Brightstar US, Inc., a Florida corporation (the
"SUBSIDIARY GUARANTOR"), in connection with that certain Purchase Agreement
dated as of December 30, 2003 (the "PURCHASE AGREEMENT") among the Company, the
Subsidiary Guarantor and the Purchasers (as defined therein). Capitalized terms
used herein, but not otherwise defined herein, shall have the meanings ascribed
to such terms in the Purchase Agreement. This opinion is delivered to you
pursuant to Section 4.6 of the Purchase Agreement and Exhibit G thereto.
In rendering the opinions set forth herein, we have examined originals or
photostatic or certified copies of the following documents:
(i) Certificate of Incorporation and Bylaws of Company;
(ii) Articles of Incorporation and Bylaws of the Subsidiary Guarantor;
(iii) Purchase Agreement;
(iv) Certificate of Designation;
(v) Notes;
(vi) Subsidiary Guarantees;
(vii) VCOC Agreements; and
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Falcon Mezzanine Partners, LP
December 30, 2003
Page 2
(viii) such other agreements, instruments and documents, and such
questions of law as we have deemed necessary or appropriate to
enable us to render the opinions expressed below.
The documents listed in clauses (iii) through (vii) above are hereinafter
referred to collectively as the "TRANSACTION DOCUMENTS".
Additionally, we have examined originals or copies, certified to our
satisfaction, of such certificates of public officials and officers or other
representatives of the Company and the Subsidiary Guarantor and we have made
such inquiries of officers or other representatives of the Company and the
Subsidiary Guarantor as we have deemed relevant or necessary, as the basis
for the opinions set forth herein.
In rendering the opinions expressed below, we have, with your consent,
assumed that the signatures of Persons signing all documents in connection
with which such opinions are rendered are genuine (other than Persons signing
on behalf of the Company and the Subsidiary Guarantor), all documents
submitted to us as originals or duplicate originals are authentic and all
documents submitted to us as copies, whether certified or not, conform to
authentic original documents. Additionally, we have, with your consent,
assumed and relied upon, the following:
(a) the accuracy and completeness of all certificates and other
statements, documents and records reviewed by us, and the accuracy and
completeness of all representations, warranties, schedules and exhibits
contained in the Transaction Documents, with respect to the factual matters
set forth therein;
(b) the legal capacity of all natural persons; and
(c) all parties to the documents reviewed by us (other than the Company
and the Subsidiary Guarantor) are duly organized, validly existing and in
good standing under the laws of all jurisdictions where they are conducting
their businesses or otherwise required to be so qualified, and have full
power and authority to execute, deliver and perform their duties under such
documents and all such documents have been duly authorized, executed and
delivered by such parties.
Whenever our opinion with respect to the existence or absence of facts
is indicated to be based on our knowledge or awareness, we are referring to
the actual present knowledge of the particular attorneys who have represented
the Company or the Subsidiary Guarantor during the course of our
representation of the Company and the Subsidiary Guarantor in connection with
the Transaction Documents. Except as expressly set forth herein, we have not
undertaken any independent investigation, examination or inquiry to determine
the existence or absence of any facts (and have not caused the review of any
court file or indices) and no inference as to our
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Falcon Mezzanine Partners, LP
December 30, 2003
Page 3
knowledge concerning any facts should be drawn as a result of the limited
representation undertaken by us.
Based upon the foregoing and subject to the qualifications stated
herein, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and is licensed or
qualified, and is in good standing, as a foreign corporation in the State of
Florida.
2. The Subsidiary Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Florida, and is
licensed or qualified, and is in good standing, as a foreign corporation in
the State of Illinois.
3. Each of the Company and the Subsidiary Guarantor has the requisite
corporate power and authority to own, pledge, mortgage and operate its
properties, to lease any properties it operates under lease, to conduct its
business as presently conducted and to execute and deliver each of the
Transaction Documents to which it is a party.
4. Each of the Company and the Subsidiary Guarantor (a) has the
corporate power to execute, deliver, and perform its obligations under the
Transaction Documents to which it is a party, (b) has taken all corporate
action necessary to authorize the execution, delivery, and performance of the
Transaction Documents to which it is a party, and (c) has duly executed and
delivered the Transaction Documents to which it is a party.
5. We note that the Transaction Documents (except for the Certificate
of Designation which is to be governed by and construed in accordance with
the General Corporation Law of the State of Delaware) provide that they are
to be governed by and construed in accordance with the law of the State of
New York. That provision will be given effect under the law of Florida,
except to the extent that the application of New York law is contrary to a
fundamental public policy of the State of Florida. If the Transaction
Documents (other than the Certificate of Designation) were governed by and
construed under the law of the States of Florida or New York, and the
substantive laws of States of Florida or New York apply, each of the
Transaction Documents (other than the Certificate of Designation) would be a
valid and binding obligation of the Company and the Subsidiary Guarantors,
enforceable against the Company and the Subsidiary Guarantors in accordance
with its terms. Assuming the Certificate of Designation is governed by and
construed under the General Law of the State of Delaware, the Certificate of
Designation will be a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
6. Neither the execution and delivery by the Company of the Transaction
Documents to which it is a party, nor the consummation by the Company of the
transactions
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December 30,2003
Page 4
contemplated thereby: (i) violates any provision of the Company's Certificate
of Incorporation or Bylaws; (ii) violates the General Corporation Law of the
State of Delaware or any applicable statute, rule, or regulation of the
States of Florida or New York, or the United States; (Hi) to our knowledge,
results in the breach of, or constitutes a default under, or requires any
consent under, any indenture, loan agreement, mortgage, deed of trust, lease
or other agreement to which the Company is a party or by which it or any of
its properties are bound; (iv) to our knowledge, results in the creation or
imposition of any lien upon any of the property of the Company under any
indenture, mortgage, loan agreement, deed of trust, lease or other agreement
described in clause (iii) above; or (v) requires the consent or approval of,
or any filing or registration with any Government Authority under the General
Corporation Law of the State of Delaware or any statute, rule, or regulation
of the States of Florida or New York, or the United States other than (a)
those which have been obtained, (b) any consents, approvals or filings
required in connection with the exercise by the Purchasers of certain
remedies under the Transaction Documents to the extent required pursuant to
the terms thereof, and (c) any filings required under the Securities Act of
1933, or the rules or regulations promulgated thereunder, for purposes of
exempting the transactions contemplated under the Purchase Agreement from
registration under Section 4(2) of the Act.
7. Neither the execution and delivery by a Subsidiary Guarantor of the
Transaction Documents to which it is a party, nor the consummation by such
Subsidiary Guarantor of the transactions contemplated thereby: (i) violates
any provision of such Subsidiary Guarantor's Articles of Incorporation or its
Bylaws; (ii) violates any applicable statute, rule, or regulation of the
States of Florida or New York or the United States; (iii) to our knowledge,
results in the breach of, or constitutes a default under, or requires any
consent under, any indenture, loan agreement, mortgage, deed of trust, lease
or other agreement to which such Subsidiary Guarantor is a party or by which
it or any of its properties are bound; (iv) to our knowledge, results in the
creation or imposition of any lien upon any of the property of such
Subsidiary Guarantor under any indenture, mortgage, loan agreement, deed of
trust, lease or other agreement described in clause (iii) above; or (v)
requires the consent or approval of, or any filing or registration with any
Government Authority under any statute, rule, or regulation of the States of
Florida or New York, or the United States other than (a) those which have
been obtained, and (b) any consents, approvals or filings required in
connection with the exercise by the Purchasers of certain remedies under the
Transaction Documents to the extent required pursuant to the terms thereof.
8. To our knowledge, except as disclosed in the Transaction Documents
or the schedules thereto, there are no judgments outstanding against the
Company that would have a material adverse effect on the Company's
consolidated financial condition or business
9. The Purchased Preferred Stock are duly authorized. When issued and
sold in accordance with the Purchase Agreement, the Purchased Preferred Stock
will be validly
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Falcon Mezzanine Partners, LP
December 30, 2003
Page 5
issued, fully paid, and nonassessable and free of any preemptive rights. Upon
the effectiveness of the filing of the Certificate of Designation with the
Secretary of State of the State of Delaware, the Holders of shares of
Purchased Preferred Stock will have the rights set forth in the Certificate
of Designation. The Company has reserved a sufficient number of shares of
Common Stock for issuance upon conversion of the shares of Purchased
Preferred Stock and the Notes at the initial conversion price and conversion
rate thereof.
10. Based on your representations, warranties and covenants set forth
in the Transaction Documents, the Purchased Securities may be issued to you
without registration under the Securities Act of 1933.
11. Assuming the proceeds from the Notes and the Purchased Preferred
Stock are applied by the Company in accordance with section "2.4 Use of
Proceeds" of the Purchase Agreement, the use of proceeds from the Notes and
the Purchased Preferred Stock will not violate Regulations U, T or X issued
by the Board of Governors of the Federal Reserve System.
The opinions as expressed herein are subject to the following
qualifications:
Our opinion concerning the legality, validity, binding effect and
enforceability of the Transaction Documents means that (a) the Transaction
Documents constitute effective contracts under applicable law, (b) the
Transaction Documents are not invalid in their entirety because of a specific
statutory prohibition or public policy and are not subject in their entirety
to a contractual defense, and (c) some remedy is available if the Company or
a Subsidiary Guarantor is in material default under the Transaction
Documents. That opinion does not mean that (a) any particular remedy is
available upon a material default, or (b) every provision of the Transaction
Documents will be upheld or enforced in any or each circumstance by a court.
Furthermore, the validity, binding effect and enforceability of the
Transaction Documents may be limited or otherwise affected by (a) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar statutes, rules, regulations or other laws affecting the enforcement
of creditors' rights and remedies generally, and (b) the unavailability of,
or limitation on the availability of, a particular right or remedy (whether
in a proceeding in equity or at law) because of an equitable principle or a
requirement as to commercial reasonableness, conscionability or good faith.
We express no opinion as to any provision in the Transaction Documents:
(i) that purports to release, exculpate or exempt a party from, or require
indemnification or contribution of a party for, liability for its own
negligence or misconduct; (ii) the effect of which is governed by laws other
than (x) the laws of the States of New York or Florida or (y) the General
Business Corporation Law of the State of Delaware; (Hi) that purports to
require that amendments to any agreement be in writing; (iv) relating to
powers of attorney, severability or set-off; (v) that purports to restrict
access exclusively to any particular courts; or (vi) providing that decisions
by a party are conclusive or may be made in its sole discretion.
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Falcon Mezzanine Partners, LP
December 30, 2003
Page 6
The opinions expressed herein are based and are limited to the laws of
the States of Florida and New York, the General Business Corporation Law of
the State of Delaware and any applicable federal laws of the United States of
America, and we express no opinion with respect to the laws of any other
state or jurisdiction. Except as expressly set forth in this opinion letter,
we are not opining on specialized laws that are not customarily covered in
opinion letters of this kind, such as tax, insolvency, antitrust, pension,
employee benefit, environmental, intellectual property, banking, insurance
labor, health and safety, and securities laws.
This opinion letter is solely for the benefit of the addressees hereof
in connection with the execution and delivery of the Purchase Agreement. This
opinion letter may not be relied upon in any manner by any other person and
may not be disclosed, quoted, filed with a governmental agency or otherwise
referred to without our prior written consent.
Very truly yours,
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
/s/ ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
--------------------------
EXHIBIT H
[FORM OF]
OFFICER'S CERTIFICATE
SEE TAB 8
-10-
SOLVENCY CERTIFICATE
This Solvency Certificate is being delivered pursuant to Section 4.9 of
the Purchase Agreement dated as of December 30, 2003 (the "Purchase Agreement"),
among BRIGHTSTAR CORP., a Delaware corporation (the "Company"), the Subsidiary
Guarantors listed therein and the Purchasers listed therein. Terms used herein
without definition shall have the meanings assigned to such terms in the
Purchase Agreement.
Solely in my capacity as Chief Financial Officer of the Company, I hereby
certify that immediately following the consummation of the transactions
contemplated by the Purchase Documents:
A. I am familiar with the historical and current financial condition of
the Company and the Subsidiary Guarantors.
B. The fair value of the assets of the Company and each Subsidiary
Guarantor, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise;
C. The present fair saleable value of the property of the Company and each
Subsidiary Guarantor will be greater than the amount that will be required to
pay the probable liability of its debts and other liabilities, subordinated,
contingent, or otherwise, as such debts and other liabilities become absolute
and matured;
D. The Company and each Subsidiary Guarantor will be able to pay its debts
and liabilities, subordinated, contingent, or otherwise, as such debts and
liabilities become absolute and matured;
E. The Company and each Subsidiary Guarantor will not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.
[Signature Page Follows]
IN WITNESS WHEREOF, I have executed this Certificate on behalf of the
Company this 30th day of December, 2003.
BRIGHTSTAR CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
EXHIBIT I
[FORM OF]
CONSENT OF GENERAL ELECTRIC
CAPITAL CORPORATION
SEE TAB 19
-11-
FIFTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND WAIVER
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND WAIVER (this
"AMENDMENT") is made effective as of December 30, 2003, by and among BRIGHTSTAR
CORP., a Delaware corporation ("PARENT"), BRIGHTSTAR US, INC., a Florida
corporation ("BRIGHTSTAR US" and collectively with Parent sometimes referred to
as "BORROWERS" and each a "BORROWER"), and GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation ("LENDER").
WITNESSETH:
WHEREAS, Lender and Borrowers are parties to that certain Credit
Agreement, dated as of June 12, 2002, as amended by (i) that certain First
Amendment to Credit Agreement, dated as of July 10, 2002 (ii) that certain
Second Amendment to Credit Agreement, dated as of December 30, 2002 (iii) that
certain Third Amendment and Wavier to Credit Agreement, dated as of May 30, 2003
and (iv) that certain Fourth Amendment to Credit Agreement and Consent, dated as
of November 30, 2003 (as so amended and as the same may be further amended,
supplemented and modified from time to time, the "CREDIT AGREEMENT"; capitalized
terms used herein have the meanings given in the Credit Agreement except as
otherwise expressly defined herein), pursuant to which Lender has agreed to
provide to Borrowers certain loans and other extensions of credit subject to the
terms and conditions thereof; and
WHEREAS, pursuant to a Purchase Agreement to be entered into among
Parent, certain of its Subsidiaries as guarantors and the Purchasers signatory
thereto, substantially in the form of Exhibit A attached hereto (the "PURCHASE
AGREEMENT"), Parent desires to issue and sell (i) up to $31,750,000 in aggregate
principal amount of its 10.5% convertible senior subordinated notes
(collectively, the "SUBORDINATED NOTES"; and the subordinated Indebtedness
incurred by the issuance of such Subordinated Notes being referred to herein as
the "SUBORDINATED INDEBTEDNESS"), which notes shall be substantially in the form
of Exhibit B attached hereto, and (ii) its 8.0% Senior Cumulative Convertible
Preferred Stock, Series A, par value $0.0001 per share, with an aggregate stated
value of $30,000,000 (the "SERIES A PREFERRED STOCK"; together with the
Subordinated Notes referred to herein collectively as the "JUNIOR SECURITIES")
having the powers, preferences, rights, qualifications, limitations and
restrictions as set forth in that certain Certificate of Designation of the
Powers, Preferences and Relative, Participating Optional and Other Special
Rights of 8.0% Senior Cumulative Convertible Preferred Stock, Series A, and
Qualifications, Limitations and Restrictions Thereof, substantially in the form
of Exhibit C attached hereto (the "CERTIFICATE OF DESIGNATION"); and
WHEREAS, the Subordinated Indebtedness will be guaranteed by one or
more Domestic Subsidiaries of Parent (referred to herein collectively as
"SUBORDINATED NOTE GUARANTORS"), pursuant to a Subsidiary Guarantee,
substantially in the form of Exhibit D attached hereto (the "SUBORDINATED NOTE
GUARANTEE"); and
WHEREAS, Borrowers have requested that Lender grant its consent to
the following transactions (which transactions are referred to herein
collectively as the "TRANSACTIONS"): (i) the entering into by Parent and
Subordinated Note Guarantors of the
Purchase Agreement and the issuance and sale by Parent pursuant thereto of (A)
the Subordinated Notes for a cash purchase price of $31,750,000 and (B) the
Series A Preferred Stock for a cash purchase price of $30,000,000 (such
transactions referred to herein as the "PURCHASE TRANSACTION"); (ii) the
incurrence by Parent of the Subordinated Indebtedness under the Subordinated
Notes in an aggregate principal amount not to exceed $31,750,000; (iii) the
guarantee by the Subordinated Note Guarantors of the Subordinated Indebtedness
pursuant to the Subordinated Note Guarantee in an aggregate principal amount not
to exceed $31,750,000, and (iv) the use by Parent of the proceeds of the Junior
Securities to: (A) make a one time Restricted Payment of $5,875,000 to purchase
a portion of the outstanding Common Stock of Parent owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
representing 22% percent of the outstanding Common Stock of Parent on the date
of this Amendment (such transaction is referred to herein as the "▇▇▇▇▇▇▇▇
REPURCHASE TRANSACTION"), (B) make a one time Restricted Payment in the form of
a cash dividend to ▇▇▇▇ ▇. ▇▇▇▇▇▇ in an aggregate amount not to exceed
$2,940,000 (the "▇▇▇▇▇▇ DIVIDEND"), (C) repay in full the outstanding principal
amount of the Revolving Loan (without any commitment reduction in connection
therewith) on the date of this Amendment, together with all accrued interest and
fees thereof, and all outstanding fees and expenses (including attorneys fees)
owing to Lender and its counsel (the "LENDER PAYDOWN"), (D) to the extent any
proceeds remain after giving effect to the Transactions described in clauses (A)
through (C) of this paragraph and any payment of transaction fees and costs in
connection with the Purchase Transaction on the Fifth Amendment Effective Date,
repay outstanding indebtedness to Ocean Bank owing under the Ocean Bank Notes on
the date of this Amendment (the "OB PAYDOWN"); and (E) to the extent any
proceeds remain after giving effect to the Transactions described in clauses (A)
through (D) of this paragraph and any payment of transaction fees and costs in
connection with the Purchase Transaction on the Fifth Amendment Effective Date,
fund the working capital needs and for general corporate purposes, in each case,
of the Borrowers; and
WHEREAS, subject to the terms and conditions of this Amendment set
forth below, Lender is willing to consent to the Transactions; and
WHEREAS, as of the date hereof, a Default and Event of Default
exists due to the failure on the part of the Borrowers to comply with (i)
Section 6.1 of the Credit Agreement by forming Brightstar Puerto Rico, Inc., a
Puerto Rico corporation and wholly-owned Domestic Subsidiary of Parent
("BRIGHTSTAR PUERTO RICO") and (ii) Section 8.1(q) of the Credit Agreement
(such Defaults and Event of Defaults in clauses (i) and (ii) being referred to
herein collectively as the "SPECIFIED DEFAULTS"); and
WHEREAS, Borrowers have requested that Lender waive the Specified
Defaults and Lender is willing to grant such waiver in accordance with and
subject to the terms and conditions of this Amendment; and
WHEREAS, in connection with the proposed Transactions, Borrowers and
Lender desire to amend the Credit Agreement in certain respects in accordance
with and subject to the terms and conditions of this Amendment.
-2-
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. LENDER CONSENT. In reliance upon the representations, warranties and
covenants of the Borrowers set forth in this Amendment and subject to the terms
and conditions of this Amendment, Lender hereby consents to the consummation of
the Transactions on or about the date hereof; provided, however, that such
consent shall be null and void ab initio and of no force and effect unless each
of the following conditions are satisfied in full and continue to remain
satisfied at all times after the date of this Amendment: (i) on the date of this
Amendment, Lender shall have received a fully executed copy of the Purchase
Agreement, the Subordinated Notes, the Certificate of Designation and the
Subsidiary Guarantee and each such document shall be substantially the same form
as the form of such document attached hereto as Exhibit A, Exhibit B, Exhibit C
and Exhibit D, as applicable; (ii) (A) upon the consummation of the Purchase
Transaction to occur on the Fifth Amendment Effective Date, the Parent shall
have received not less than $57,250,000 (less all transaction fees and costs
relating to the Purchase Transaction that are due and payable on the closing
date of the Purchase Transaction) in cash proceeds from the issuance and sale of
the Subordinated Notes and the issuance and sale of the Series A Preferred
Stock, and (B) upon the occurrence of the Second Closing Date, if it occurs, the
Parent shall have received up to $4,500,000 (less all transaction fees and costs
relating to the Purchase Transaction that are due and payable on the Second
Closing Date) in cash proceeds from the issuance and sale of additional the
Subordinated Notes and/or the issuance and sale of additional Series A Preferred
Stock; (iii) the aggregate outstanding principal amount of Subordinated
Indebtedness under the Subordinated Notes shall not at any time exceed
$31,750,000 less the principal amount of any principal repayments in respect of
the Subordinated Notes; (iv) the aggregate outstanding principal amount of
Subordinated Indebtedness guaranteed by the Subordinated Note Guarantors under
the Subordinated Note Guarantee shall not at any time exceed $31,750,000 less
the principal amount of any principal repayments in respect of the Subordinated
Notes; (v) Parent shall have used the net proceeds (after deducting all
transaction expenses to be paid on the Fifth Amendment Effective Date and
identified on the Sources and Uses Statement) of the Junior Securities on the
Fifth Amendment Effective Date to: (A) consummate in full the ▇▇▇▇▇▇▇▇
Repurchase Transaction, (B) pay the ▇▇▇▇▇▇ Dividend, (C) make the Lender Paydown
and (D) to the extent there are proceeds available therefor (such proceeds
referred to herein as "EXCESS PROCEEDS"), make the OB Paydown; and (vi) Parent
shall have used the net proceeds (after deducting all transaction expenses to be
paid on the Second Closing Date and identified on the Sources and Uses
Statement) received by the issuance and sale of any Junior Securities on the
Second Closing Date to repay the outstanding principal amount of the Revolving
Loan (without any commitment reduction in connection therewith) on the Second
Closing Date, together with all accrued interest and fees thereof, and all
outstanding fees and expenses (including attorneys fees) owing to Lender and its
counsel. Borrowers hereby authorize and direct Lender to wire any Excess
Proceeds received on or about the Fifth Amendment Effective Date to Ocean Bank
in connection with the OB Paydown.
2. WAIVER OF SPECIFIED DEFAULTS. Subject to the terms and conditions of
this Amendment, Lender hereby waives the Specified Defaults.
-3-
3. AMENDMENTS TO CREDIT AGREEMENT. Subject to the terms and conditions of
this Amendment, the Credit Agreement is hereby amended as follows:
(A) Section 1 of the Credit Agreement is hereby amended by adding
the following new Section 1.18 at the end thereof:
1.18 Additional Borrowers. The Borrower Representative
may request in writing from time to time that any Domestic
Subsidiary of Parent be allowed to become a Borrower under
this Agreement (each, an "Additional Borrower"); provided that
such Domestic Subsidiary shall not become an Additional
Borrower unless and until each and every of the following
conditions precedent with respect to such Domestic Subsidiary
have been satisfied or provided for in a manner reasonably
satisfactory to Lender or waived in writing by Lender: (a)
such Domestic Subsidiary shall have been formed by Parent, (b)
the Lender shall have consented in writing to the formation of
such Domestic Subsidiary and to such Domestic Subsidiary's
becoming an Additional Borrower, (c) no Default or Event of
Default shall exist at the time of or after giving effect to
such Domestic Subsidiary's formation or becoming an Additional
Borrower, and (e) the Lender shall have received the following
documents with respect to such Domestic Subsidiary (each duly
executed and delivered by the appropriate Persons specified
below and to be in form and substance satisfactory to Lender):
(i) a Joinder Agreement in the form of Exhibit 1.18 duly
executed by such Domestic Subsidiary (each, a "Joinder
Agreement"), together with a Confirmation in the form attached
to the Joinder Agreement duly executed by Borrowers and
Guarantors (ii) a Revolving Note in favor of Lender in the
form of Exhibit 1.1(a)(i) duly executed by such Domestic
Subsidiary, (iii) a Security Agreement in favor of Lender duly
executed by such Domestic Subsidiary, (iv) an Incumbency
Certificate, certified by the corporate secretary or assistant
secretary of such Domestic Subsidiary, together with certified
copies of the certificate of incorporation or equivalent,
bylaws and board resolutions of such Domestic Subsidiary
approving the Joinder Agreement and joinder of the Credit
Agreement and other Loan Documents, (v) a good standing
certificate in the Domestic Subsidiary's jurisdiction of
incorporation and for each additional jurisdiction where it is
qualified to do business, (vi) UCC, tax, lien and judgment
searches showing no Liens on the assets of such Domestic
Subsidiary other than Permitted Encumbrances, (vii) landlord's
agreements, mortgage agreements and bailee letters pursuant to
Section 5.9, and (viii) such other documents, certificates,
instruments and information from such Domestic Subsidiary and
any other applicable Credit Parties, as Lender may reasonably
request in order to evidence the joinder of such Domestic
Subsidiary as an Additional Borrower or to enforce, perfect or
otherwise give public notice of the first Liens granted in
favor of Lender in all real, personal, tangible or intangible
property of such Domestic Subsidiary now existing or hereafter
acquired.
-4-
(B) Section 1.3(c) of the Credit Agreement is hereby amended by
deleting the last sentence thereof in its entirety and replacing it with
the following new sentence to read in its entirety as follows:
The Revolving Loan Commitments shall be permanently reduced by
the amount of prepayments made pursuant to Section 1.3(b)(ii)
in connection with asset dispositions, but shall not be
permanently reduced by the amount of any prepayments made
pursuant to Section 1.3(b)(ii) in connection with the
incurrence of Indebtedness or made pursuant to Section
1.3(b)(iii).
(C) Section 4.1 of the Credit Agreement is hereby amended by adding
a new clause (c) thereto to read in its entirety as follows:
(c) Borrowers shall deliver to Lender immediately upon
receipt thereof a copy of any of the following notices (i)
notice of any default or event of default under the Purchase
Agreement or the Subordinated Notes, (ii) notice of any event
or condition that would require (with the passage of time or
the giving of such notice) any Borrower to purchase, redeem or
retire all or any portion of the Subordinated Notes or the
Series A Preferred Stock, including, without limitation, any
notice of Change of Control or Excess Proceeds Offer (as such
terms are defined in the Purchase Agreement) and any notice of
Change of Control (as such term is defined in the Certificate
of Designations) and (iii) any blockage notice or other notice
or communication received by any Borrower from the holders of
"Senior Obligations" or "Guarantor Senior Obligations" (as
such terms are defined in the Purchase Agreement).
(D) Section 6.3(a) of the Credit Agreement is hereby amended by
deleting the word "and" appearing at the end of clause (viii) thereof,
deleting the period at the end of clause (ix) thereof and replacing it
with a semicolon, and adding the following new clauses (x) and (xi) at the
end thereof to read in their entireties as follows:
(x) the unsecured Indebtedness of Parent under the
Subordinated Notes in an aggregate outstanding principal
amount not to exceed at any time $31,750,000 less the amount
of any principal repayments of Indebtedness under the
Subordinated Notes, provided that such Indebtedness shall at
all times on and after the Fifth Amendment Effective Date be
subordinate to the Obligations pursuant to the terms of
Purchase Agreement and the Notes, each as in effect on the
Fifth Amendment Effective Date; and (xi) unsecured
Indebtedness consisting of Subordinated Note Guarantee issued
by one or more Domestic Subsidiaries of Parent of the
Subordinated Notes provided that (A) the aggregate outstanding
principal amount of all Indebtedness guaranteed pursuant to
the Subordinated Note Guarantee shall not exceed $31,750,000
less the amount of any principal repayments of Indebtedness
under the Subordinated Notes, and (B) the obligations of each
Domestic Subsidiary under such Subordinated Note Guarantee
shall
-5-
at all times on and after the Fifth Amendment Effective
Date be subordinate to the Obligations pursuant to the
terms of Purchase Agreement and the Subordinated Note
Guarantee, each as in effect on the Fifth Amendment
Effective Date.
(E) Section 6.5 of the Credit Agreement is hereby amended by
deleting clauses (b) and (c) thereof in their entirety and replacing said
clauses with the following new clause (b) and (c) to read in their
entirety as follows:
(b) make any change in its capital structure as
described in Disclosure Schedule (3.8), including the
issuance or sale of any shares of Stock, warrants or
other securities convertible into Stock or any revision
of the terms of its outstanding Stock (but Lender shall
not unreasonably withhold its consent to any change in
the capital structure of any Foreign Subsidiary);
provided that (i) the Parent may issue or sell shares of
its Stock for cash in an initial public offering or
otherwise so long as (A) the proceeds thereof are
applied in prepayment of the Obligations as required by
Section 1.3(b)(iii), and (B) no Change of Control occurs
after giving effect thereto, (ii) the Parent may issue
Series A Preferred Stock on the Fifth Amendment
Effective Date and on the Second Closing Date in
connection with the Transaction (as defined in the Fifth
Amendment) provided that all of the conditions to the
Lender consent in Section 1 of the Fifth Amendment have
been satisfied, (iii) the Parent may issue its common
stock to any holder of Series A Preferred Stock in order
to effectuate any conversion by such holder of all or a
portion of Series A Preferred Stock owned by it into
common stock of the Parent after the Fifth Amendment
Effective Date, and (iv) the Parent may issue its common
stock to any holder of Subordinated Notes in order to
effectuate any conversion by such holder of all or a
portion of Subordinated Notes owned by it into common
stock of the Parent after the Fifth Amendment Effective
Date, or (c) amend its charter (including, without
limitation, the Certificate of Designation) or bylaws.
(F) The following new Section 6.20 is hereby added at the end of
Section 6 to read in its entirety as follows:
6.20 Restrictions on Amendment of Subordinated
Debt Documents. Without the prior written consent of
Lender, no Credit Party shall enter into, or authorize
or approve, any amendment, supplement, restatement or
other modification of any the Subordinated Debt
Documents that would (a) adversely affect Lender in any
manner, or (b) have the effect, directly or indirectly,
of (i) modifying in any manner the subordination
provisions in Section 10 and Section 11 of the Purchase
Agreement, or any defined terms, or definitions of
terms, used in Section 10 or Section 11 of the Purchase
Agreement, (ii) modify any of the subordination
provisions or legends concerning subordination contained
in the Subordinated Notes or the Subordinated Note
Guarantee, (iii)
-6-
shortening the maturity date of the Subordinated Debt
evidenced by the Subordinated Notes or any scheduled
payment date for fees or interest in respect thereof,
(iii) increasing the principal amount of or the interest
rate (other than to the extent that such additional
interest is payable solely through the issuance of
additional Subordinated Notes in a principal amount
equal to the amount of such additional interest) or any
fees accruing in respect of the Subordinated Debt
evidenced by the Subordinated Notes, (iv) modifying the
definition of "Change in Control" in the Purchase
Agreement or the Certificate of Designation, or (v)
modifying any optional or mandatory repayment provisions
in the Subordinated Debt Documents.
(G) Section 6.14 of the Credit Agreement is hereby amended by
deleting the word "and" appearing at the end of clause (c) thereof,
deleting the period at the end of clause (d) thereof and replacing it
with "; and" and adding the following new clause (d) at the end thereof to
read in its entirety as follows:
(d) Parent may make regularly scheduled payments of
accrued interest on the Subordinated Notes, and the
Domestic Subsidiaries of Parent may make regularly
scheduled payments of accrued interest on the
Subordinated Notes pursuant to the Subordinated Note
Guarantee, in each case so long as (i) no Default or
Event of Default under Section 8.1(a) has occurred and
is continuing or would result therefrom, (ii) no Event
of Default under Section 8.1(h) or (i) has occurred and
is continuing or would result therefrom, (iii) no Event
of Default under Section 8 (other than Section 8.1(a),
(h) and (i)) has occurred and is continuing or would
result therefrom, and (iv) such payment is not otherwise
prohibited pursuant to the terms of the subordination
provisions contained in the Purchase Agreement as in
effect on the Fifth Amendment Effective Date (and as
amended or otherwise modified from time to the extent
such amendment or modification is consented to in
writing by Lender).
(H) Section 8.1 is hereby amended by deleting clause (o) thereof and
substituting a new clause (o) to read in its entirety as follows:
(o) [Reserved]
(I) Section 8.1 is hereby further amended by adding the following
new clauses (r), (s), (t), (u) and (v) at the end of said Section to read
in their entireties as follows:
(r) The occurrence of any "Event of Default" under
and as defined in the Purchase Agreement.
(s) The occurrence of any "Change of Control" under
and as defined in the Purchase Agreement or the Certificate of
Designation.
-7-
(t) Any license, authorization, approval or other
similar action by any Government Authority existing as of the
Fifth Amendment Effective Date as to Parent or any of Parent's
Subsidiaries, the failure or removal of which could reasonably
be expected to result in a Material Adverse Effect shall cease
to be in full force and effect as to Parent or such
Subsidiary.
(u) The indictment or threatened indictment of Parent or
any of Parent's Subsidiaries under any criminal statute, or
commencement or threatened commencement of criminal or civil
proceedings against Parent or any of Parent's Subsidiaries,
pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any of the
property of Parent or such Subsidiary.
(v) The failure of Parent by January 31, 2004 to deliver
to Lender (i) a favorable opinion of United States counsel to
Brightstar Puerto Rico and Parent regarding the enforceability
of the Joinder Agreement, the Revolving Note and the Security
Agreement executed and delivered by Brightstar Puerto Rico, in
form and substance satisfactory to Lender, (ii) a favorable
opinion of local Puerto Rico counsel to Brightstar Puerto
Rico, with respect to due incorporation, due authorization,
execution and delivery, perfection, no conflicts and such
other matters as Lender may reasonably request, all in the
form and substance satisfactory to Lender, (iii) lien searches
conducted in such filing offices as may be specified by Lender
and by a search company acceptable to Lender and demonstrating
to Lender's satisfaction that no Liens exist against
Brightstar Puerto Rico other than Liens permitted by the
Credit Agreement and (iv) deposit account control agreements
in form and substance satisfactory to Lender, duly executed by
Lender, Brightstar Puerto Rico and the applicable depository
bank with respect to each deposit account into which proceeds
of Inventory or Accounts of Brightstar Puerto Rico are
deposited.
(J) The definition of "Restricted Payment" in Annex A of the Credit
Agreement is hereby amended by deleting the "and" appearing at the end of
clause (e) thereof, deleting the period at the end of clause (f) thereof
and replacing it with "; and" and adding a new clause (g) at the end
thereof to read in its entirety as follows:
(g) any payment or prepayment of principal of, premium, if
any, or interest, fees or other charges on or with respect to,
and any redemption, purchase, retirement, defeasance, sinking
fund or similar payment and any claim for rescission with
respect to, any Subordinated Debt.
(K) Annex A of the Credit Agreement is further amended by adding the
following new definitions in their appropriate alphabetical order:
-8-
"Additional Borrower" shall have the meaning ascribed thereto
in Section 1.18.
"Certificate of Designation" shall mean Parent's Certificate
of Designation of the Powers, Preferences and Relative,
Participating Optional and other Special Rights of 8.0% Senior
Cumulative Convertible Preferred Stock, Series A, and
Qualifications, Limitations and Restrictions Thereof, which governs
the rights, powers and privileges of the Series A Preferred Stock.
"Fifth Amendment" shall mean that certain Fifth Amendment to
Credit Agreement, Consent and Waiver dated as of the Fifth Amendment
Effective Date, by and among Borrowers and Lender.
"Fifth Amendment Effective Date" shall mean December 30, 2003.
"Joinder Agreement" shall have the meaning ascribed thereto in
Section 1.18.
"Mortgages" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral
assignments of leases or other real estate security documents
delivered by any Credit Party to Lender, each in form and substance
satisfactory to Lender.
"Purchase Agreement" shall mean that certain Purchase
Agreement dated as of December 30, 2003, among Parent, certain
Domestic Subsidiaries of Parent as guarantors and the purchasers
signatory thereto.
"Second Closing Date" shall have the meaning assigned to such
term in the Purchase Agreement as in effect on the Fifth Amendment
Effective Date.
"Series A Preferred Stock" shall mean Parent's 8.0% Senior
Cumulative Convertible Preferred Stock, Series A, par value $0.01
per share.
"Stock Pledge Agreement" shall mean any pledge agreements
entered into by any Credit Party in favor of Lender pledging any
Stock owned by such Credit Party, each in form and substance
satisfactory to Lender.
"Subordinated Debt" means (a) the Indebtedness of Parent and
its Subsidiaries under the Senior Subordinated Note Documents, and
(b) any other Indebtedness of any Credit Party subordinated to the
Obligations in a manner and form satisfactory to Lender in its sole
discretion, as to right and time of payment and as to any other
rights and remedies thereunder.
-9-
"Subordinated Debt Documents" shall mean, collectively,
the Purchase Agreement, the Subordinated Notes and the
Subordinated Note Guarantee.
"Subordinated Note Guarantee" shall mean that certain
Subsidiary Guarantee dated on or about December 30, 2003,
executed and delivered by certain Domestic Subsidiaries of
Parent in favor of the holders of the Subordinated Notes.
"Subordinated Notes" shall mean Parent's 10.5%
Convertible Senior Subordinated Notes in the initial aggregate
stated principal amount of $31,750,000 due December 31, 2008,
issued pursuant to the Purchase Agreement on the Fifth
Amendment Effective Date and on the Second Closing Date.
(L) Annex A of the Credit Agreement is hereby further amended by
deleting the definitions of "Borrowers", "Borrower", "Collateral
Documents", "Loan Documents" and "Security Agreement" in their entirety
and replacing each such definition with the following new respective
definition in the appropriate alphabetical order:
"Borrowers" and "Borrower" shall have the respective
meanings ascribed thereto in the preamble to the Agreement,
and shall include any Person that becomes an Additional
Borrower after the Closing Date pursuant to and in accordance
with Section 1.18.
"Collateral Documents" means the Security Agreement,
Stock Pledge Agreement, the Mortgages, the Credit Insurance
Assignment and all similar agreements entered into
guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.
"Loan Documents" means the Agreement, the Notes, the
Collateral Documents, the Guaranties and all other agreements,
instruments, documents and certificates identified in the
Closing Checklist executed and delivered to, or in favor of,
Lender and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, any Joinder
Agreement, and all other written matter whether heretofore,
now or hereafter executed by or on behalf of any Credit Party,
or any employee of any Credit Party, and delivered to Lender
in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any
other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and
shall refer to the Agreement as the same may be in effect at
any and all times such reference becomes operative.
"Security Agreement" means the Security Agreement of
even date herewith entered into among Lender and each Credit
Party that is a
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signatory thereto, together with any other Security Agreement
now or hereafter entered into by any Credit Party in favor of
Lender.
(M) Annex G of the Credit Agreement is hereby amended by adding
the following new paragraphs (g) and (h) at the end thereof to read in
their entireties as follows:
(g) Parent not permit the Cash Interest Expense
Coverage Ratio (as defined below) for any four-Fiscal Quarter
period ending on any date set forth below to be less than the
correlative ratio indicated:
MINIMUM CASH INTEREST COVERAGE
PERIOD RATIO
------ ------------------------------
December 31, 2003 2.75 to 1.00
March 31, 2004 2.75 to 1.00
June 30, 2004 2.75 to 1.00
September 30, 2004 2.75 to 1.00
December 31, 2004 2.75 to 1.00
March 31, 2005 3.05 to 1.00
June 30, 2005 3.05 to 1.00
September 30, 2005 3.05 to 1.00
December 31, 2005 3.05 to 1.00
March 31, 2006 and the 3.30 to 1.00
last day of each Fiscal
Quarter thereafter
Solely for purposes of determining compliance with the
financial covenant set forth above in this paragraph (g), the
term "Cash Interest Expense Coverage Ratio" (together with any
defined terms used therein) shall have the meaning ascribed
to such term in the Purchase Agreement, as amended,
supplemented, restated or modified from time to time.
(h) Parent not permit the Consolidated Total Leverage
Ratio (as defined below) at any time during any period set
forth below to exceed the correlative ratio indicated:
FISCAL QUARTER MAXIMUM TOTAL LEVERAGE RATIO
-------------- ----------------------------
March 31, 2004 4.75 to 1.00
June 30, 2004 4.75 to 1.00
September 30, 2004 4.75 to 1.00
December 31, 2004 4.75 to 1.00
March 31, 2005 4.75 to 1.00
June 30, 2005 3.60 to 1.00
September 30, 2005 3.60 to 1.00
December 31, 2005 3.60 to 1.00
March 31, 2006 3.60 to 1.00
June 30, 2006 and each Fiscal 2.75 to 1.00
Quarter thereafter
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Solely for purposes of determining compliance with the
financial covenant set forth above in this paragraph (h), the
term "Consolidated Total Leverage Ratio" (together with any
defined terms used therein) shall have the meaning ascribed to
such term in the Purchase Agreement, as amended, supplemented,
restated or modified from time to time.
(N) The Credit Agreement is further amended by incorporating new
Exhibit 1.18 in the form attached to this Amendment as an exhibit to the
Credit Agreement.
4. AMENDMENT FEE. In consideration for entering into this Amendment,
Borrowers hereby covenant and agree to pay to Lender on January 2, 2004 an
amendment fee in the amount of $75,000 (the "AMENDMENT FEE"). Borrowers agree
that Lender shall charge the Revolving Loan for such Amendment Fee on such date
and if for any reason Lender is unable to charge the Revolving Loan for such
Amendment Fee, including without limitation insufficient Borrowing Availability,
an immediate Event of Default under the Credit Agreement shall be deemed to have
occurred. Borrowers further acknowledge and agree that a reserve in the amount
of such Amendment Fee will be imposed against Borrowers Borrowing Availability
until such time as the Amendment Fee has been paid to Lender.
5. NO OTHER CONSENTS, WAIVERS, AMENDMENTS. ETC. Except for the consents
expressly set forth and referred to in Section 1 above, the waiver expressly set
forth in Section 2 above and the amendments set forth in Section 3 above, the
Credit Agreement shall remain unchanged and in full force and effect. Nothing in
this Amendment is intended, or shall be construed, to constitute a novation or
an accord and satisfaction of any of either Borrower's Obligations or to modify,
affect or impair the perfection or continuity of Lender's security interests in,
security titles to or other liens on any collateral for the Obligations. The
consents set forth in Section 1 above relate solely to the Transactions and
nothing in this Amendment is intended, or shall be construed, to be Lender
consent to any other transaction. The waiver set forth in Section 2 above
relates solely to the Specified Defaults and nothing in this Amendment is
intended, or shall be construed, to be Lender's waiver of any other Default or
Event of Default.
6. REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
Amendment, Borrowers do hereby warrant, represent and covenant to Lender that:
(a) each representation or warranty of Borrowers set forth in the Credit
Agreement is hereby restated and reaffirmed as true and correct on and as of the
date hereof as if such representation or warranty were made on and as of the
date hereof (except to the extent that any such representation or warranty
expressly relates to a prior specific date or period), and no Default or Event
of Default has occurred and is continuing as of this date under the Credit
Agreement after giving effect to this Amendment, including the consent contained
in Section 1 hereto and the waiver contained in Section 2 hereto; (b) Borrowers
have the power and are duly authorized to enter into, deliver and perform this
Amendment and this Amendment is the legal, valid and binding obligation of
Borrowers enforceable against them in accordance with its terms; (c) except for
the guarantee granted by certain Domestic Subsidiaries of Parent pursuant to the
Subordinated Note Guarantee,
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no Subsidiary or Affiliate of any Credit Party or any other Person or entity has
guaranteed or granted any credit support in respect of the obligations of Parent
under the Subordinated Debt Documents; (d) the obligations of Parent under the
Subordinated Debt Documents are unsecured and no Borrower or any Subsidiary or
Affiliate thereof or any other Person or entity has granted a Lien upon any of
its assets to secure payment of the obligations of Parent under the Subordinated
Debt Documents or the obligations of any Subsidiary of Parent under the
Subordinated Note Guarantee.
7. RATIFICATION AND ACKNOWLEDGMENT. Borrowers hereby ratify and
reaffirm each and every term, covenant and condition set forth in the Credit
Agreement and all other documents delivered by such company in connection
therewith (including without limitation the other Loan Documents to which
Borrowers are a party), effective as of the date hereof.
8. ACKNOWLEDGEMENT AND AGREEMENT OF BORROWERS. To induce Lender to
enter into this Amendment, Borrowers hereby acknowledge and agree that, as of
the date hereof (a) there exists no right of offset, defense or counterclaim in
favor of Borrowers as against Lender with respect to the obligations of
Borrowers to Lender under the Credit Agreement or the other Loan Documents,
either with or without giving effect to this Amendment, and (b) Lender has
performed all obligations and duties owed to Borrowers through the date hereof.
In consideration of the mutual covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Borrower, for itself and on behalf of all present and former
officers, directors, stockholders, agents, employees, predecessors,
subsidiaries, affiliates, successors and assigns (all of the foregoing hereafter
collectively referred to as "RELEASORS") have fully and forever remised,
released and discharged and do hereby fully and forever remise, release and
discharge Lender, and each and all of its respective subsidiaries and affiliated
corporations, companies, divisions, predecessors, successors and assigns, and
each of its respective directors, officers, employees, attorneys, accountants,
consultants, and other agents, of and from all manner of actions, cause and
causes of action, suits, debts, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
judgments, executions, claims and demands of whatsoever, whether or not
concealed or hidden, arising out of or relating to any matter, cause or thing
whatsoever, which the Releasors, jointly or severally, have had, may have had,
or now have, or which the Releasors, jointly or severally, hereafter can, shall
or may have, for or by reason of any matter, cause or thing whatsoever, whenever
arising, to and including the date of this Amendment.
9. CONDITION PRECEDENT TO EFFECTIVENESS OF THIS AMENDMENT. The
effectiveness of this Amendment, including the consent provided in Section 1,
the waiver provided in Section 2 and the amendments provided in Section 3, are
subject to the satisfaction of each of the following conditions precedent:
(a) Lender shall have received this Amendment duly executed and
delivered, in one or more counterparts, by Borrowers and consented to in
writing by the Guarantors;
(b) Lender shall have received true, correct and complete copies
of (i) the fully-executed Purchase Agreement, the Subordinated Notes, the
Certificate of Designation and the Subsidiary Guarantee and such documents
shall be in substantially the same form as the forms of such documents
attached hereto as Exhibit A, Exhibit B,
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Exhibit C and Exhibit D, respectively, (ii) all annexes, exhibits,
agreements and schedules relating thereto, in each case in form and
substance satisfactory to Lender;
(c) Lender shall have received evidence satisfactory to Lender
that the amendment to Parent's articles of incorporation required by the
Certificate of Designation has been duly authorized by the Board of
Directors and the shareholders of Parent and is effective, valid and
enforceable under Delaware law;
(d) Lender shall have received evidence satisfactory to it that
except for the granting of Lender's consent as provided in Section 1 of
this Amendment, all of the conditions to closing set forth in Section 4 of
the Purchase Agreement shall have been fully satisfied or waived by the
requisite purchasers thereunder,
(e) Lender shall have received evidence satisfactory to it that
the Borrowers have obtained all required consents and approvals of all
Persons, including requisite Governmental Authorities, to the execution,
delivery and performance of the Subordinated Debt Documents and the
Certificate of Designation and all other certificates, documents and
agreements executed in connection therewith or related thereto;
(f) Lender shall have received a sources and uses statement, in
form and substance satisfactory to Lender and certified by the Chief
Financial Officer of Parent as true, correct and complete ("SOURCES AND
USES STATEMENT") (i) showing sources and uses of all monies in connection
with the Transactions and (ii) demonstrating that the proceeds received by
Parent from the Purchase Transaction will be applied by Parent as provided
in Section 1(v) of this Amendment and (iii) stating (A) current accounts
payable owing to Motorola after giving effect to the Transactions, (B)
current balance under all receivables factoring lines of Parent and its
Subsidiaries and amount of remaining unrestricted borrowing availability
thereunder and (C) current principal balance of loans and other extensions
of credit by Ocean Bank to Parent and its Subsidiaries and the amount of
unrestricted borrowing availability thereunder;
(g) Lender shall have received a certificate of the Chief
Financial Officer of Parent, in form and substance satisfactory to Lender,
certifying and demonstrating that prior to and after immediately giving
effect to the Transactions (including, without limitation, the incurrence
of the Subordinated Indebtedness) (A) each Credit Party is and will be
Solvent and (B) Borrowers are in compliance with the financial covenants
in Annex G (as amended by this Amendment) as of the most recently ended
Fiscal Month (on a pro forma basis after giving effect to the
Transactions) and such certificate shall be accompanied by Projections, in
form and substance satisfactory to Lender, showing compliance with the
Financial Covenants set forth in Annex G for each applicable fiscal period
for the period of twelve consecutive Fiscal Months commencing on the first
day of the first full calendar month after the Fifth Amendment Effective
Date;
(h) a Joinder Agreement, in the form attached hereto and
incorporated into the Credit Agreement as Exhibit 1.18, duly executed by
Brightstar Puerto Rico;
(i) a Stock Pledge Agreement, duly executed and delivered by
Parent in favor of Lender, together with stock certificates and stock
powers duly endorsed in blank with
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respect to the shares of Brightstar Puerto Rico pledged pursuant to such
stock pledge agreement;
(j) a Security Agreement, duly executed and delivered by
Brightstar Puerto Rico in favor of Lender;
(k) a Revolving Note, duly executed and delivered by Brightstar
Puerto Rico in favor of Lender;
(l) a secretary certificate for Brightstar Puerto Rico, together
with the following attachments (A) Resolutions adopted by the Board of
Directors of Brightstar Puerto Rico in form and substance satisfactory to
Lender, (B) Brightstar Puerto Rico's charter documents, certified by the
Department of State of Puerto Rico and (C) Brightstar Puerto Rico's
bylaws;
(m) a good standing certificate obtained from the Department of
State of Puerto Rico;
(n) a perfection certificate, prepared and executed by Brightstar
Puerto Rico;
(o) UCC-1 financing statement naming Brightstar Puerto Rico as
debtor and Lender as secured party shall have been filed in all
jurisdictions necessary to perfect Lender's first priority lien in all of
the assets of Brightstar Puerto Rico under the aforesaid Security
Agreement;
(p) Lender shall have received the Lender Paydown;
(q) such other documents, certificates, instruments and
information as Lender may reasonably request;
(r) Lender and its counsel, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, shall have
received payment from Borrowers of all outstanding fees, costs and
expenses as required pursuant to Section 12 of this Amendment.
10. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICTS OF LAWS.
12. COSTS AND EXPENSES. Borrowers absolutely and unconditionally agree
to reimburse Lender for all fees, costs and expenses, including all reasonable
fees and expenses of all of its counsel, advisors and other professional and
service providers, incurred in connection with (i) the review and negotiation of
the Subordinated Debt Documents and the Certificate of Designations, and (ii)
the preparation, negotiation, execution and delivery of this Amendment and any
other Loan Documents or other agreements prepared, negotiated, executed or
delivered in connection with this Amendment or transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY BLANK; NEXT PAGE IS SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
Credit Agreement, Consent and Waiver to be duly executed and delivered as of the
day and year specified at the beginning hereof.
BORROWERS:
BRIGHTSTAR CORP.
BY: /s/
---------------------------
NAME:
TITLE: CHIEF FINANCIAL OFFICER
BRIGHTSTAR US,INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
NAME: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
TITLE: SECRETARY
LENDER:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Duly Authorized Signatory
[Signature page to Fifth Amendment to Credit Agreement, Consent and Waiver]
CONSENT
The undersigned do hereby consent to the execution, delivery and
performance of the within and foregoing Fifth Amendment to Credit Agreement,
Consent and Waiver, and hereby ratify all the provisions of each of the
Guaranties and any other Loan Documents to which they are parties and confirm
that all provisions of each such document are in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of the
day and year first above set forth.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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[Signature page to Fifth Amendment to Credit Agreement, Consent and Waiver]
EXHIBIT J
[FORM OF]
CONSENT OF MOTOROLA, INC.
SEE TAB 20
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AMENDMENT AND CONSENT TO FALCON TRANSACTIONS
THIS AMENDMENT AND CONSENT TO FALCON TRANSACTIONS (this "Consent"), is
entered into effective as of December 30, 2003, by and among MOTOROLA, INC., a
Delaware corporation ("Motorola"), BRIGHTSTAR CORP., a Delaware corporation
("Brightstar"), and the other persons and entities whose names appear on the
signature pages of this Consent (such other persons and entities, together with
Brightstar, are collectively referred to in this consent as the "Brightstar
Parties"). Capitalized terms used but not defined in this Consent have the
meanings ascribed to them in the Brightstar Security Agreement referred to
below.
Preliminary Statements
A. Brightstar is a distributor on behalf of Motorola and, to secure the
payment and performance of the Obligations, Brightstar, among other
things, executed and delivered a Security Agreement in favor of Motorola
dated as of June 21, 2001 (as amended and in effect on the date of this
Consent, the "Brightstar Security Agreement").
B. Brightstar proposes to enter into a Purchase Agreement along with certain
of its Subsidiaries as guarantors and the Purchasers signatory thereto,
substantially in the form previously provided to Motorola (the "Purchase
Agreement"), pursuant to which Brightstar will issue and sell (i) up to
$31,750,000 in aggregate principal amount of its 10.5% convertible senior
subordinated notes (such notes to be guaranteed by certain of Brightstar's
Subsidiary specified in the Purchase Agreement), and (ii) its 8.0% Senior
Cumulative Convertible Preferred Stock, Series A, par value $0.0001 per
share, with an aggregate stated value of $30,000,000 having the powers,
preferences, rights, qualifications, limitations and restrictions as set
forth in that certain Certificate of Designation of the Powers,
Preferences and Relative, Participating Optional and Other Special Rights
of 8.0% Senior Cumulative Convertible Preferred Stock, Series A, and
Qualifications, Limitations and Restrictions Thereof, substantially in the
form previously provided to Motorola (the "Certificate of Designation"
and, together with the Purchase Agreement, the "Falcon
Documents").
C. Brightstar has requested that Motorola consent to the execution, delivery
and performance by Brightstar and its Subsidiaries of the Falcon Documents
and the transactions expressly provided for therein (collectively, the
"Falcon Transactions").
D. Motorola is willing to consent to the Falcon Transactions, but only on the
terms and under the conditions set forth in this Consent.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Motorola agrees as follows:
1. Amendment to Brightstar Security Agreement. Subject to the terms and
conditions of this Consent, the Brightstar Security Agreement is hereby amended
by adding immediately before the section captioned "ATTORNEYS' FEES AND OTHER
COSTS OF COLLECTION" appearing on page six thereof, the following:
PREFERRED STOCK. Debtor has created, authorized and provided
for the issuance of 8.0% Senior Cumulative Convertible Preferred
Stock, Series A, par value $0.0001 per share, with an aggregate
stated value of $30,000,000 having the powers, preferences, rights,
qualifications, limitations and restrictions as set forth in that
certain
Amendment and Consent to Falcon Transactions - Page 1
Certificate of Designation of the Powers, Preferences and Relative,
Participating Optional and Other Special Rights of 8.0% Senior
Cumulative Convertible Preferred Stock, Series A, and
Qualifications, Limitations and Restrictions Thereof (the
"Certificate of Designation"). Debtor agrees that no (i) dividend or
distribution; (ii) "Liquidation Payment"; (iii) "Change of Control
Offer"; or (iv) payment of any "Change of Control Price" (as each of
those terms are defined in the Certificate of Designation) shall be
made pursuant to the Certificate of Designation if a Default or
Event of Default under any of the Transaction Documents has occurred
and is continuing or would result from any of the foregoing unless
and until such Default or Event of Default has been cured or
expressly waived by Secured Party.
PAYMENT RESTRICTIONS. Debtor shall not, and shall not permit
any of its Subsidiaries to, (i) pay any dividends on or make any
other distributions in respect of any stock or other equity
interests of Debtor or such Subsidiary or redeem or otherwise
acquire any such stock or other equity interests (including, without
limitation, the Pledged Shares, the Convertible Preferred Stock, and
the Conversion Shares) or (ii) make any payment or prepayment of the
principal of, premium, if any, or interest, fees or other charges on
or with respect to, or any redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any
indebtedness or other obligation that is by its terms subordinate to
any of the Obligations (including, without limitation, Debtor's
10.5% Convertible Senior Subordinated Notes due December 31, 2008
(the "Notes"); provided that so long as no Default or Event of
Default under any of the Transaction Documents has occurred and is
continuing or would result therefrom, Debtor may, to the extent not
otherwise prohibited by the terms thereof (x) make regularly
scheduled payments of interest on (and, at maturity, may pay the
principal of) the Notes, and (y) pay the dividends provided for in
Section (c) of the Certificate of Designation.
2. Amendment to the ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ Pledge. Subject to the terms and
conditions of this Consent, the ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ Pledge is hereby amended by (a)
deleting the reference to 1,125 shares of capital stock in Section 2.2 and
replacing it with a reference to 20,869,213 shares of capital stock; and (b)
amending the second paragraph of Section 4 in its entirety to read as follows:
The Pledgor covenants and agrees with the Secured Party that
it will not permit the issuance of any additional shares of capital
Stock of BRIGHTSTAR, except for (a) shares of Convertible Preferred
Stock (as defined in that certain Certificate of Designation of the
Powers, Preferences and Relative, Participating Optional and Other
Special Rights of 8.0% Senior Cumulative Convertible Preferred
Stock, Series A, and Qualifications, Limitations and Restrictions
Thereof as in effect on December 30, 2003 (the "Certificate of
Designation"), (b) the Conversion Shares (as defined in the
Certificate of Designation), and (c) options granted to employees
other than Pledgor which shall not exceed 10% of BRIGHTSTAR's
outstanding capital Stock and voting rights, without the prior
written consent of the Secured Party, which consent shall not be
unreasonably withheld.
Amendment and Consent to Falcon Transactions - Page 2
3. Amendment to the Omnibus Amendment. Subject to the terms and
conditions of this Consent, the Omnibus Amendment entered into as of May
24,2002, by and among Motorola and the Brightstar Parties (the "Omnibus
Amendment") is hereby amended by (a) deleting those references in Section 11 to
the "▇▇▇▇▇▇ Guaranty" and replacing them with the "▇▇▇▇▇▇ Pledge"; and (b)
adding the following new Events of Default in Section 14 after subsection (m),
and renumbering the existing subsections accordingly, as follows:
(n) the occurrence of any "Change in Control" as defined either (i)
in the Purchase Agreement dated as of December 30, 2003 and entered
into by and among Brightstar, certain of its Subsidiaries as
guarantors and the Purchasers signatory thereto regarding
Brightstar's 10.5% Convertible Senior Subordinated Notes due
December 31, 2008 (the "Purchase Agreement") or (ii) Brightstar's
Certificate of Designation of the Powers, Preferences and Relative,
Participating Optional and Other Special Rights of 8.0% Senior
Cumulative Convertible Preferred Stock, Series A, and
Qualifications, Limitations and Restrictions Thereof (the
"Certificate of Designation");
(o) any amendment to the Purchase Agreement or the Certificate of
Designation;
4. Consent to Falcon Transactions. Motorola hereby consents to
Brightstar and its Subsidiaries executing and delivering the Falcon Documents
and consummating the Falcon Transactions (including, without limitation, (a)
issuing the Convertible Preferred Stock and the Conversion Shares (as those
terms are defined in the Falcon Documents), (b) consummating the ▇▇▇▇▇▇▇▇
Redemption (as defined in the Falcon Documents) and (c) paying the First Closing
Dividends (as defined in the Falcon Documents)); provided, that this consent is
expressly conditioned upon the Falcon Transactions being consummated strictly in
accordance with the terms of the Falcon Documents (including, without
limitation, the receipt and use by Brightstar of the proceeds as specifically
specified therein)
5. Notices. Brightstar agrees to deliver to Motorola immediately upon
receipt thereof a copy of any of the following notices (i) notice of any default
or event of default under the Purchase Agreement (or the notes issued
thereunder), (ii) notice of any event or condition that would require (with the
passage of time or the giving of such notice) any of the Covered Parties to
purchase, redeem or retire all or any portion of the notes issued under the
Purchase Agreement or the stock issued under the Certificate of Designation,
including, without limitation, any notice of Change of Control or Excess
Proceeds Offer (as such terms are defined in the Purchase Agreement) and any
notice of Change of Control (as such term is defined in the Certificate of
Designations) and (iii) any blockage notice or other notice or communication
received by any of the Covered Parties from the holders of "Senior Obligations"
or "Guarantor Senior Obligations" (as such terms are defined in the Purchase
Agreement).
6. No Other Amendments: No Waiver, Except as expressly provided herein,
each of the Transaction Documents remains in full force and effect and is
binding on the parties thereto in accordance with their respective terms.
Nothing in this Consent constitutes a waiver by Motorola of any Default or Event
of Default that may exist on the date hereof, and nothing in this release
requires Motorola to waive any Default or Event of Default that may arise
hereafter.
7. Conditions Precedent to Amendment. Unless and to the extent Motorola
waives the benefits of this sentence by giving written notice thereof to
Brightstar, Motorola shall have no duties under this Consent, nor shall any
release, termination, extension, waiver or other concession by Motorola under
this Consent be effective, in each case until Motorola has (a) received a pledge
of new stock
Amendment and Consent to Falcon Transactions - Page 3
certificates for 19,825,752 shares of capital stock of Brightstar from
▇▇▇▇ ▇. ▇▇▇▇▇▇ (together with stock powers executed in blank); (b) received a
pledge of new stock certificates for 1,043,461 shares of capital stock of
Brightstar from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (together with stock powers executed in
blank); and (c) received fully executed originals of this Consent.
8. Representations and Warranties. Each of the Brightstar Parties
represents and warrants to Motorola as follows: (a) if it not a natural person,
it is duly organized and validly existing and, whether or not a natural person,
has full power and authority to enter into this Consent and any documents or
transactions contemplated hereby and to pay and perform all obligations in
respect of each of the foregoing; (b) the execution, delivery and performance by
such Brightstar Party of this Consent and any documents or transactions
contemplated hereby do not violate or conflict with, or require any consent
under, (i) if not a natural person, the certificate of incorporation, by-laws,
or any other agreement or document relating to the existence of such Brightstar
Party or its authority to act, (ii) any agreement or instrument to which such
Brightstar Party is a party or by which it or any of its properties is bound,
(iii) any court order, judicial proceeding or any administrative or arbitral
order or decree, or (iv) any applicable law, rule or regulation; and (c) no
authorization, approval or consent of or by, and no notice to or filing or
registration with, any governmental authority or any other person is necessary
for such Brightstar Party to enter into this Consent or any document or
transaction contemplated hereby or to perform its obligations with respect to
each of the foregoing.
9. Reaffirmation of Transaction Documents. Each of the Brightstar
Parties reaffirms its obligations under each of the Transaction Documents to
which it is a party or by which it is bound, and represents, warrants and
covenants to Motorola, as a material inducement to Motorola to enter into this
Consent and the transactions contemplated hereby, that: (a) such Brightstar
Party has no (and, in any event, hereby waives any) defense, claim or right of
setoff in respect of any of the Transaction Documents or the actions or
inactions of Motorola; and (b) all representations and warranties made by such
Brightstar Party in the Transaction Documents are true and complete on the date
hereof as if made on the date hereof.
10. Consent of Guarantors and Pledgors. To induce Motorola to enter into
this Consent, each of the Brightstar Parties that has provided a guaranty
covering or is otherwise ever deemed to be a surety for any of the Obligations
(each such Brightstar Party being a "Guarantor" and each guaranty or other
document by which such Brightstar Party is or is ever deemed to be a surety
being a "Guaranty") and each of the Brightstar Parties that has pledged or
granted a security interest or other lien in any of its assets to secure payment
or performance of any of the Obligations (each such Brightstar Party being a
"Pledgor" and each document by which such pledge, security interest or other
lien is evidenced being a "Pledge Agreement"), each Guarantor and ▇▇▇▇▇▇▇ (a)
consents to Motorola, Brightstar and the other Brightstar Parties entering into
this Amendment; (b) agrees that the execution, delivery and performance of this
Consent and any documents or transactions contemplated thereby shall not
discharge, limit or otherwise impair the obligations of such Guarantor under
such Guarantor's Guaranty or the obligations of such Pledgor under such
Pledgor's Pledge Agreement; (c) agrees that such Guarantor's Guaranty and such
Pledgor's Pledge Agreement is and remains in full force and effect and is
enforceable against such Guarantor or such Pledgor, as applicable, in accordance
with its terms (except to the extent modified by this Consent); (d) waives any
defense, claim or right of setoff such Guarantor or Pledgor may have in respect
of such Guarantor's Guaranty, such Pledgor's Pledge Agreement, the other
Transaction Documents or the actions or inactions of Motorola; and (e) agrees
that Motorola has no duty to give such Guarantor or Pledgor notice of or obtain
such Guarantor's or such Pledgor's consent to the transactions described in this
Consent, and that Motorola's giving of notice to such Guarantor or such Pledgor
and obtaining such Guarantor's or such Pledgor's consent in this instance shall
not impose any similar or other duty upon Motorola in any future matter or
transaction.
Amendment and Consent to Falcon Transactions - Page 4
11. Governing Law. This Consent hall be governed by the laws of the
State of Florida without regard to any choice of law rule thereof
12. Counterparts: Fax Signatures. This Consent may be executed in one or
more counterparts and by different parties thereto, all of which counterparts,
when taken together, shall constitute but one agreement. This Consent may be
validly executed and delivered by facsimile or other electronic transmission and
any such execution or delivery shall be fully effective as if executed and
delivered in person.
[Signature pages follow]
Amendment and Consent to Falcon Transactions - Page 5
IN WITNESS WHEREOF, the parties have entered into this consent effective
as of the date first above written.
Motorola, Inc, a Delaware Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: PCS Latin America, Director of Fianance, Motorola
Inc.
Brightstar Corp., a Delaware Corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
Brightstar US, Inc., a Florida Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Secretary
/s/ ▇▇▇▇ ▇ ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇ ▇ ▇▇▇▇▇▇, an Individual
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an Individual
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an Individual
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an Individual
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, an Individual
Amendment and Consent to Falcon Transactions - Signature Page
Brightstar Corp. Chile Limitada, S.R.L.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar Guatcmala,S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar El Salvador, S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar Uruguay, S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar De Paraguay, S.A de ▇.▇.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar De Venezuela, C.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Amendment and Consent to Falcon Transactions - Signature Page
Brightstar Domincana S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar de Mexico S.A. de C.V.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar de Argentina, S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Brightstar Peru, S.R.I.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Representative
Amendment and Consent to Falcon Transactions - Signature Page
EXHIBIT K
[FORM OF]
CONSENT OF OCEAN BANK
SEE TAB 21
-13-
FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT
DATED AS OF: DECEMBER 29, 2003
This FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT ("this Amendment") is
made and entered into as of the date set forth above by and among BRIGHTSTAR
CORP. CHILE LIMITADA, S.R.L., an entity organized under the laws of Chile,
BRIGHTSTAR GUATEMALA, S.A., an entity organized under the laws of Guatemala,
BRIGHTSTAR EL SALVADOR, S.A., an entity organized under the laws of El Salvador,
BRIGHTSTAR URUGUAY, S.A., an entity organized under the laws of Uruguay,
BRIGHTSTAR DE PARAGUAY, S. de ▇.▇., an entity organized under the laws of
Paraguay, BRIGHTSTAR DE VENEZUELA, C.A., an entity organized under the laws of
Venezuela, BRIGHTSTAR DOMINICANA, S.A., an entity organized under the laws of
the Dominican Republic, BRIGHTSTAR PERU, S.R.L., an entity organized under the
laws of Peru, BRIGHTSTAR DE MEXICO, S.A. de C.V., an entity organized under the
laws of Mexico, and BRIGHTSTAR DE ARGENTINA, S.A., an entity organized under the
laws of Argentina, (collectively, the "Borrowers", each a "Borrower") and OCEAN
BANK, a state bank organized under the laws of Florida ("Lender"). For good and
valuable consideration, the receipt of which is hereby acknowledged, Borrowers
and Lender hereby agree as follows:
RECITALS
A. Lender and Borrowers are parties to that certain Credit Agreement, dated
as of December 12, 2002, by and among Borrowers and Lender, as heretofore
amended (the "Credit Agreement"). Unless otherwise defined herein, the
capitalized terms used but not defined herein shall be used herein as defined in
the Credit Agreement except that, as used in this Amendment, "herein," "hereof,"
"hereunder" and words of similar import refer to this Amendment.
B. Pursuant to a Purchase Agreement to be entered into among Brightstar
Corporation (hereinafter, the "Corporate Guarantor"), certain of its
Subsidiaries as guarantors and the Purchasers signatory thereto, substantially
in the form of Exhibit A attached hereto (the "Purchase Agreement"), the
Corporate Guarantor desires to issue and sell (i) up to $31,750,000 in aggregate
principal amount of its 10.5% convertible senior subordinated notes
(collectively, the "Subordinated Notes"; and the subordinated Indebtedness
incurred by the issuance of such Subordinated Notes being referred to herein as
the "Subordinated Indebtedness"), which notes shall be substantially in the form
of Exhibit B attached hereto, and (ii) its 8.0% Senior Cumulative Convertible
Preferred Stock. Series A, par value $0.01 per share, with an aggregate stated
value of up to $30,000,000 (the "Series A Preferred Stock"; together with the
Subordinated Notes referred to herein collectively as the "Junior Securities")
having the powers, preferences, rights, qualifications, limitations and
restrictions as set forth in that certain Certificate of Designation of the
Powers, Preferences and Relative, Participating Optional and Other
1
Special Rights of 8.0% Senior Cumulative Convertible Preferred Stock, Series A,
and Qualifications, Limitations and Restrictions Thereof, substantially in the
form of Exhibit C attached hereto (the "Certificate of Designation").
C. The Subordinated Indebtedness will be guaranteed by one or more domestic
subsidiaries of the Corporate Guarantor (referred to herein collectively as
"Subordinated Note Guarantors"), pursuant to a Subsidiary Guarantee,
substantially in the form of Exhibit D attached hereto (the "Subordinated Note
Guarantee").
D. Borrowers have requested that Lender grant its consent to the transactions
contemplated under the Purchase Agreement and the Certificate of Designation.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereby agree
as follows:
CONSENT AND AMENDMENT
1. Lender Consent. In reliance upon the representations, warranties and
covenants of the Borrowers set forth in this Amendment and subject to the
terms and conditions of this Amendment, Lender hereby consents to the
consummation of the Transactions on or about the date hereof; provided, however,
that the consent set forth herein shall be null and void and of no force and
effect unless each of the conditions set forth in Section 7 of this Amendment
are satisfied in full and continue to remain satisfied at all times after the
date of this Amendment and the Corporate Guarantor shall have used the proceeds
of the Junior Securities on the date of this Amendment in accordance with the
Purchase Agreement and the sources and uses statement referred to in Section
7(d).
2. Amendments to Credit Agreement. Subject to the terms and conditions of
this Amendment, the Credit Agreement is hereby amended as follows:
A. Section 1.1 of the Credit Agreement is hereby amended by changing
the following definition to read as follows:
"Ultimate Commitment Termination Date" shall mean March 31,2004.
B. Section 2.2 of the Credit Agreement is hereby amended by adding the
following at the end:
"The Borrowing Base Certificates may be delivered by the Corporate
Guarantor, on behalf of each Borrower."
3. Facility Fee. As consideration for extending the Ultimate Commitment
Termination Date, Borrowers shall pay to Lender a facility fee in the amount of
$82,000.
2
4. Representations and Warranties. To induce Lender to. enter into this
Amendment, Borrowers do hereby warrant, represent and covenant to Lender that:
(a) each representation or warranty of Borrowers set forth in the Credit
Agreement is hereby restated and reaffirmed as true and correct on and as of the
date hereof as if such representation or warranty were made on and as of the
date hereof (except to the extent that any such representation or warranty
expressly relates to a prior specific date or period), and no Default or Event
of Default has occurred and is continuing as of this date under the Credit
Agreement after giving effect to this Amendment; (b) Borrowers have the power
and are duly authorized to enter into, deliver and perform this Amendment and
this Amendment is the legal, valid and binding obligation of Borrowers
enforceable against them in accordance with its terms; (c) except for the
guarantee granted by certain domestic subsidiaries of Corporate Guarantor
pursuant to the Subordinated Note Guarantee, no Subsidiary or Affiliate of any
Credit Party or any other Person or entity has guaranteed or granted any credit
support in respect of the obligations of Corporate Guarantor under the
Subordinated Debt Documents; (d) the obligations of Corporate Guarantor under
the Subordinated Debt Documents are unsecured and no Borrower or any Subsidiary
or Affiliate thereof or any other Person or entity has granted a Lien upon any
of its assets to secure payment of the obligations of Corporate Guarantor under
the Subordinated Debt Documents or the obligations of any Subsidiary of
Corporate Guarantor under the Subordinated Note Guarantee.
5. Documentary Stamp Tax. It is the position of Borrowers and Lender that
neither documentary stamp tax nor intangible tax is due to the State of Florida
with respect to this Amendment, this Amendment made in connection with an
international banking transaction as defined in Section 199.023(11) Florida
Statutes. However, in the event the State of Florida does require documentary
stamp or intangible taxes to be paid as a result of this Amendment, Borrowers
shall pay them, including any interest or penalties imposed in connection with
them, and shall, jointly and severally, indemnify and hold Lender harmless from
and against any liability (including interest and penalties) Lender may incur in
connection with them. In general, Borrowers shall pay (or, if appropriate,
reimburse) Lender on demand the amount of any and all attorneys' fees,
documentary stamp tax, intangible tax and other costs and expenses relating to
this Amendment and the transactions contemplated hereby and hereby authorize
Lender to make one or more Advances to pay any such costs and expenses or to
deduct the amount thereof from any requested Advance or account of any Borrower
with Lender.
6. Acknowledgement and Agreement of Borrowers. To induce Lender to enter into
this Amendment, Borrowers hereby acknowledge and agree that, as of the date
hereof (a) there exists no right of offset, defense or counterclaim in favor of
Borrowers as against Lender with respect to the obligations of Borrowers to
Lender under the Credit Agreement or the other Loan Documents, either with or
without giving effect to this Amendment, and (b) Lender has performed all
obligations and duties owed to Borrowers through the date hereof. In
consideration of the mutual covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Borrower, for itself and on behalf of all present and former
officers, directors, stockholders, agents, employees, predecessors,
subsidiaries, affiliates,
3
successors and assigns (all of the foregoing hereafter collectively referred to
as "Releasors") have fully and forever remised, released and discharged and do
hereby fully and forever remise, release and discharge Lender, and each and all
of its respective subsidiaries and affiliated corporations, companies,
divisions, predecessors, successors and assigns, and each of its respective
directors, officers, employees, attorneys, accountants, consultants, and other
agents, of and from all manner of actions, cause and causes of action, suits,
debts, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, judgments,
executions, claims and demands of whatsoever, whether or not concealed or
hidden, arising out of or relating to any matter, cause or thing whatsoever,
which the Releasors, jointly or severally, have had, may have had, or now have,
or which the Releasors, jointly or severally, hereafter can, shall or may have,
for or by reason of any matter, cause or thing whatsoever, whenever arising, to
and including the date of this Amendment.
7. Condition Precedent to Effectiveness of this Amendment. The effectiveness
of this Amendment, including the consent provided in Section 1 and the
amendments provided in Section 2, are subject to the satisfaction of each of the
following conditions precedent:
(a) Lender shall have received this Amendment duly executed and
delivered, in one or more counterparts, by Borrowers;
(b) Lender shall have received true, correct and complete copies of (i)
the fully-executed Purchase Agreement, the Subordinated Notes, the Certificate
of Designation and the Subsidiary Guarantee and such documents shall be in
substantially the same form as the forms of such documents attached hereto as
Exhibit A, Exhibit B, Exhibit C and Exhibit D, respectively, (ii) all annexes,
exhibits, agreements and schedules relating thereto, in each case in form and
substance satisfactory to Lender;
(c) Lender shall have received evidence satisfactory to it that except
for the granting of Lender's consent as provided in Section 1 of this Amendment,
all of the conditions to closing set forth in Section 4 of the Purchase
Agreement shall have been fully satisfied or waived by the requisite purchasers
thereunder;
(d) Lender shall have received a sources and uses statement, in form and
substance satisfactory to Lender and certified by the Chief Financial Officer of
Corporate Guarantor as true, correct and complete (i) showing sources and uses
of all monies in connection with the Transactions;
(e) Lender shall have received a fully executed Consent and
Reaffirmation, substantially in the form of Exhibit E hereto;
(f) Lender and its U.S. legal counsel, ▇▇▇▇▇▇ & ▇▇▇▇▇, LLF, shall have
received payment from Borrowers of all outstanding fees, costs and expenses as
required pursuant to Section 2 and Section 8 of this Amendment; and
4
(g) Lender shall have received such other documents, certificates,
instruments and information as Lender may reasonably request.
8. Costs and Expenses. Borrowers absolutely and unconditionally agree to
reimburse Lender for all fees, costs and expenses, including all reasonable fees
and expenses of all of its legal counsel, advisors and other professional and
service providers, incurred in connection with (i) the review and negotiation of
the Subordinated Debt Documents and the Certificate of Designations, and (ii)
the preparation, negotiation,, execution and delivery of this Amendment and any
other Loan Documents or other agreements prepared, negotiated, executed or
delivered in connection with this Amendment or transactions contemplated hereby.
9. Counterparts. This Amendment may be executed by the parties hereto in
several counterparts, each of which will be deemed to be an original and all of
which shall constitute together but one and the same agreement.
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
hereof.
OCEAN BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
BRIGHTSTAR CORP. CHILE LIMITADA, S.R.L.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHTSTAR GUATEMALA, S.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHTSTAR EL SALVADOR, S.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHSTAR URUGUAY, S.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇. DE ▇.▇.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHTSTAR DE VENEZUELA, C.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHTSTAR DOMINICANA, S.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHTSTAR DE MEXICO, S.A. DE C.V.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHTSTAR DE ARGENTINA, S.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
BRIGHTSTAR PERU, S.R.L.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
7
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 29 day of
December,2003 by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as Sr. Vice-President of, and on
behalf of,OCEAN BANK, a Florida-chartered bank. He/She is personally
known to me or produced the following as identification: ________________.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Notary Public, State of Florida
Print Name: ___________________________
My commission expires:
[SEAL]
8
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of
December, 2003 by _________________ as _________________ of, and on behalf
of,OCEAN BANK, a Florida-chartered bank. He/She is personally known to me
or produced the following as identification: _______________________.
_______________________________________
Notary Public, State of Florida
Print Name: ___________________________
My commission expires:
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of
December,2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of,
BRIGHTSTAR CORP. CHILE LIMITADA, S.R.L., an entity organized under the
laws of Chile. He/She is personally known to me or produced the following
as identification: _______________________.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of
December, 2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of,
BRIGHTSTAR GUATEMALA, S.A., an entity organized under the laws of
Guatemala. He/She is personally known to me or produced the following
as identification:_______________________.
[SEAL]
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
8
MY Commission expires:
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of
December, 2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of,
BRIGHTSTAR EL SALVADOR, S.A., an entity organized under the laws of El
Salvador. He/She is personally known to me or produced the following as
identification: _______________________.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of
December, 2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of,
BRIGHTSTAR URUGUAY, S.A., an entity organized under the laws of Uruguay.
He/She is personally known to me or produced the following as
identification: _______________________.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of
December, 2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of,
BRIGHTSTAR DE PARAGUAY, S. DE ▇.▇., an entity organized under the laws of
Paraguay. He/She is personally known to me or produced the following as
identification: _______________________.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Notary Public State of florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires
[SEAL]
9
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of, BRIGHTSTAR DE
VENEZUELA, C.A., an entity organized under the laws of Venezuela. He/She is
personally known to me or produced the following as identification:
_______________________________________.
-s- ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[NOTARY PUBLIC STAMP]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of, BRIGHTSTAR
DOMINICANA, S.A., an entity organized under the laws of the Dominican Republic.
He/She is personally known to me or produced the following as identification:
_______________________________________.
-s- ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[NOTARY PUBLIC STAMP]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as President of, and on behalf of, BRIGHTSTAR DE
MEXICO, S.A. DE C.V., an entity organized under the laws of Mexico. He/She is
personally known to me or produced the following as identification:
_______________________________________.
-s- ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[NOTARY PUBLIC STAMP]
10
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as _________ of, and on behalf of, BRIGHTSTAR DE
ARGENTINA, S.A., an entity organized under the laws of Argentina. He/She is
personally known to me or produced the following as identification:
_______________________________________.
-s- ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[NOTARY PUBLIC STAMP]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as _________ of, and on behalf of, BRIGHTSTAR PERU,
S.R.L., an entity organized under the laws of Peru. He/She is personally known
to me or produced the following as identification:
_______________________________________.
-s- ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[NOTARY PUBLIC STAMP]
11
CONSENT AND REAFFIRMATION
DATED AS OF: DECEMBER 24, 2003
Each of the undersigned Guarantors hereby acknowledges receipt of a copy of the
foregoing Amendment to Credit Agreement and Consent dated as of December 24,
2003 (the "Amendment"), by and among the Borrowers named therein and Ocean Bank,
as Lender. Capitalized terms used and not defined herein shall be used herein as
defined in the Amendment.
Each of the undersigned Guarantors hereby (A) consents to the extension of the
Ultimate Commitment Termination Date, and all other modifications contemplated
by the Amendment, (B) acknowledges and agrees that the Guaranty of such
Guarantor remains in full force and effect, and (C) reaffirms and ratifies all
the terms and conditions of the Guaranty of such Guarantor, including (without
limitation) the unconditional guaranty of the punctual payment when due, whether
at stated maturity, by acceleration or otherwise, of all obligations of all or
any of the Borrowers now or hereafter existing under or evidenced by the Credit
Agreement, whether for principal, interest, fees, expenses or otherwise, and all
other obligations of all or any of the Borrowers to the Lender, whether now
existing or hereafter arising, whether contingent or absolute, and whether joint
or several.
BRIGHTSTAR CORP.
By: -s- ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-s- ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-s- ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
1
December 23, 2003
CONSENT AND REAFFIRMATION
DATED AS OF: DECEMBER 24, 2003
Each of the undersigned Guarantors hereby acknowledges receipt of a copy of the
foregoing Amendment to Credit Agreement and Consent dated as of December 24,
2003 (the "Amendment"), by and among the Borrowers named therein and Ocean Bank,
as Lender. Capitalized terms used and not defined herein shall be used herein as
defined in the Amendment.
Each of the undersigned Guarantors hereby (A) consents to the extension of the
Ultimate Commitment Termination Date, and all other modifications contemplated
by the Amendment, (B) acknowledges and agrees that the Guaranty of such
Guarantor remains in full force and effect, and (C) reaffirms and ratifies all
the terms and conditions of the Guaranty of such Guarantor, including (without
limitation) the unconditional guaranty of the punctual payment when due, whether
at stated maturity, by acceleration or otherwise, of all obligations of all or
any of the Borrowers now or hereafter existing under or evidenced by the Credit
Agreement, whether for principal, interest, fees, expenses or otherwise, and all
other obligations of all or any of the Borrowers to the Lender, whether now
existing or hereafter arising, whether contingent or absolute, and whether joint
or several.
BRIGHTSTAR CORP.
By:
----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-s- ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
- Page 4
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-s- ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
2
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by____________ as ______________of, and on behalf of, BRIGHTSTAR CORP., a
corporation organized under the laws of the State of Delaware, U.S.A. He/She is
personally known to me or produced the following as identification:
______________________________________.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this____day of December,
2003 by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇. He is personally known to me or produced the
following as identification:
______________________________________.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this_____day of December,
2003 by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇. She is personally known to me or produced the following
as identification:
______________________________________.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
3
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. She is personally known to me or produced the following
as identification:
______________________________________.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
STATE OF FLORIDA )
) SS:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 24 day of December,
2003 by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. He is personally known to me or produced the following
as identification:
______________________________________.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Notary Public, State of Florida
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
My commission expires:
[SEAL]
4
SCHEDULE A-1
INFORMATION RELATING TO PURCHASERS -- FIRST CLOSING DATE
Number of Shares of
Aggregate Principal Initial Purchased
Amount of Initial Notes Preferred Stock to be
Name of Purchaser to be Purchased Purchased
---------------------------------------- ----------------------- ----------------------
Falcon Mezzanine Partners, LP
Account Information:
Bank: Investors Bank & Trust Company
Boston, MA
ABA #: ▇▇▇-▇▇▇-▇▇▇
Account#: ▇▇▇-▇▇▇-▇▇▇
Account Name: Receipts
Reference: Fund 77718 - Brightstar, Inc. $10,283,400.81 1,214,574.899
-------------- -------------
Prudential Capital Partners, L.P.
Account Information:
Bank: The Bank of New York
ABA#: ▇▇▇-▇▇▇-▇▇▇
Account #: 890-▇▇▇▇▇▇▇ $ 9,953,830.91 1,175,649.321
-------------- -------------
Prudential Capital Partners Management
Fund, L.P.
Account Information:
Bank: The Bank of New York
ABA#: ▇▇▇-▇▇▇-▇▇▇
Account #: ▇▇▇-▇▇▇▇-▇▇▇ $ 329,569.90 38,925.578
-------------- -------------
[***]
Account Information: $ 5,080,000.00 600,000.000
-------------- -------------
Arrow Investment Partners
Account Information: $ 61,700.41 7,287.449
-------------- -------------
SCH. A-1-1
Number of Shares of
Aggregate Principal Initial Purchased
Amount of Initial Notes Preferred Stock to be
Name of Purchaser to be Purchased Purchased
---------------------------------------- ----------------------- ----------------------
RCG Carpathia Master Fund, Ltd.
Account Information: $3,727,732.79 440,283.401
-------------- -------------
Total........................... $29,436,234.82 3,476,720.648 Shares
SCH. A-1-2
SCHEDULE A-2
INFORMATION RELATING TO PURCHASERS -- SECOND CLOSING DATE
Aggregate Principal Number of Shares of
Amount of Additional Additional Purchased
Notes Preferred Stock to be
Name of Purchaser to be Purchased Purchased
------------------------------------------------ -------------------- ------------------------
Falcon Mezzanine Partners, LP $1,156,882.59 136,639.676
------------- -----------
Prudential Capital Partners, L.P. $1,119,805.99 132,260.546
------------- -----------
Prudential Capital Partners Management Fund, L.P. $ 37,076.62 4,379.127
------------- -----------
Total ....... ... ... ...... . . $2,313.765.20 273,279.349 Shares
------------- -----------
SCH. A-2-1