EXECUTION COPY
SAVVIS
SAVVIS COMMUNICATIONS CORPORATION
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SECURITIES PURCHASE AGREEMENT
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MAY 16, 2001
TABLE OF CONTENTS
PAGE
ARTICLE I Authorization and Sale of the Notes............................................................................2
Section 1.01. Authorization..............................................................................2
Section 1.02. Sale of Notes..............................................................................2
Section 1.03. Closings; Deliveries.......................................................................4
(a) Closing....................................................................................4
(b) Closing Deliveries.........................................................................4
(c) Grant of Security..........................................................................4
Section 1.04. Description of the Notes...................................................................4
(a) Conversion of Notes into Common Stock......................................................4
(b) Automatic Conversion of Notes into Preferred Stock.........................................5
(c) Redemption.................................................................................6
(i) At Maturity.....................................................................6
(ii) Upon Change of Control..........................................................6
(d) Prepayment.................................................................................6
(e) Interest...................................................................................7
(i) Payment.........................................................................7
(ii) Default in Payment..............................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................................7
Section 2.01. Organization and Qualification.............................................................7
Section 2.02. Subsidiaries...............................................................................7
Section 2.03. Capitalization.............................................................................8
Section 2.04. Authorization of Agreements, etc...........................................................8
Section 2.05. Validity..................................................................................10
Section 2.06. Governmental Approvals....................................................................10
Section 2.07. Financial Statements......................................................................10
Section 2.08. SEC Filings...............................................................................11
Section 2.09. Absence of Certain Changes or Events......................................................11
Section 2.10. Actions Pending...........................................................................12
Section 2.11. Compliance with Law; Permits..............................................................12
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TABLE OF CONTENTS
(CONTINUED)
Section 2.12. Contracts.................................................................................12
Section 2.13. Offering of the Notes.....................................................................13
Section 2.14. Related-Party Transactions................................................................13
Section 2.15. Brokers...................................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................13
Section 3.01. Organization..............................................................................13
Section 3.02. Authorization.............................................................................13
Section 3.03. Validity..................................................................................14
Section 3.04. Investment Representations................................................................14
Section 3.05. Governmental Approvals....................................................................14
ARTICLE IV COVENANTS OF THE COMPANY......................................................................................14
Section 4.01. Operation of Business.....................................................................14
Section 4.02. Access to Information.....................................................................15
Section 4.03. Agreement to Take Necessary and Desirable Actions.........................................15
Section 4.04. Compliance with Conditions; Commercially Reasonable Efforts...............................15
Section 4.05. Consents and Approvals....................................................................15
Section 4.06. Reservation of Shares.....................................................................16
Section 4.07. Listing of Shares.........................................................................16
Section 4.08. Use of Proceeds...........................................................................16
ARTICLE V COVENANTS OF THE PURCHASER....................................................................................16
Section 5.01. Agreement to Take Necessary and Desirable Actions.........................................16
Section 5.02. Compliance with Conditions; Commercially Reasonable Efforts...............................16
Section 5.03. Consents and Approvals....................................................................16
ARTICLE VI CONDITIONS PRECEDENT..........................................................................................17
Section 6.01. Initial Closing...........................................................................17
(a) Conditions Precedent to the Obligations of the Purchaser in the Initial Closing...........17
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TABLE OF CONTENTS
(CONTINUED)
(i) Representations and Warranties to Be True and Correct..........................17
(ii) Performance....................................................................17
(iii) All Proceedings to Be Satisfactory.............................................17
(iv) Legal Proceedings..............................................................17
(v) No Material Adverse Effect.....................................................17
(vi) Opinions of Counsel............................................................18
(vii) Ancillary Agreements...........................................................18
(viii) Mortgage.......................................................................18
(ix) Indebtedness and Security Interest Waiver......................................18
(x) Compliance Certificate.........................................................18
(b) Conditions Precedent to the Obligations of the Company in the Initial Closing.............18
(i) Representations and Warranties to Be True and Correct..........................18
(ii) Performance....................................................................18
(iii) All Proceedings to Be Satisfactory.............................................18
(iv) Legal Proceedings..............................................................18
(v) Ancillary Agreements...........................................................19
Section 6.02. Subsequent Closings.......................................................................19
(a) Conditions Precedent to the Obligations of the Purchaser in subsequent Closings...........19
(i) Representations and Warranties to Be True and Correct..........................19
(ii) Performance....................................................................19
(iii) All Proceedings to Be Satisfactory.............................................19
(iv) Legal Proceedings..............................................................19
(v) No Default.....................................................................19
(vi) Network Services Agreement.....................................................20
(vii) Cure of Defaults...............................................................20
(viii) Compliance Certificate.........................................................20
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TABLE OF CONTENTS
(CONTINUED)
(ix) Opinions of Counsel............................................................20
(b) Condition Precedent to the Obligations of the Company in subsequent Closings..............20
(i) Representations and Warranties to Be True and Correct..........................20
ARTICLE VII SURVIVAL OF REPRESENTATIONS; INDEMNITY.........................................................20
Section 7.01. Survival of Representations...............................................................20
Section 7.02. General Indemnity.........................................................................20
Section 7.03. Conditions of Indemnification.............................................................21
ARTICLE VIII MISCELLANEOUS..................................................................................22
Section 8.01. Restrictive Legends.......................................................................22
Section 8.02. Survival of Agreements....................................................................22
Section 8.03. Parties in Interest.......................................................................22
Section 8.04. Notices...................................................................................22
Section 8.05. Further Assurances........................................................................23
Section 8.06. Entire Agreement; Assignment..............................................................23
Section 8.07. Press Releases and Public Announcements...................................................23
Section 8.08. Termination...............................................................................24
Section 8.09. Counterparts..............................................................................24
Section 8.10. Governing Law.............................................................................24
Section 8.11. Amendments and Waivers....................................................................25
Section 8.12. Taxes.....................................................................................25
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SECURITIES PURCHASE AGREEMENT, dated as of May 16, 2001
(this "Agreement"), by and between SAVVIS COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company") and REUTERS HOLDINGS SWITZERLAND SA, a societe
anonyme organized under the laws of Switzerland (the "Purchaser").
WHEREAS, the Company desires to sell to the Purchaser, and
the Purchaser desires to purchase from the Company, on the terms and subject to
the conditions set forth herein, the principal amount of 12% Convertible Senior
Secured Notes of the Company set forth opposite the Purchaser's name on Schedule
I hereto, in substantially the form of Exhibit A hereto (together with the notes
to be issued as payment-in-kind interest thereunder, the "Notes");
WHEREAS, in order to induce the Purchaser to purchase the
Notes, the Company has agreed to grant to the Purchaser certain registration
rights with respect to the shares of the Company's Common Stock, $.01 par value
("Common Stock") issuable upon conversion of the Notes (the "Conversion Shares")
or upon conversion of preferred stock of the Company issuable upon conversion of
the Notes as set forth herein; and
WHEREAS, the Purchaser desires to enter into this Agreement
to acquire the Notes on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement mutually agree as follows:
ARTICLE I
Authorization and Sale of the Notes.
SECTION 1.01. Authorization. The Company has authorized the
sale and issuance of the Notes pursuant to the terms of this Agreement.
SECTION 1.02. Sale of Notes.
(a) From the date of this Agreement and on the third
business day prior to the first business day of each calendar month hereafter
through and including August 1, 2001 (subject to extension pursuant to Section
1.02(c) hereof), the Company may deliver to the Purchaser, prior to 10:00 am on
such date, a funding request notice (a "Funding Request") consisting of the
following: (i) a request for a certain sum of funds not to exceed, for each
calendar month, the amount for such month set forth on Schedule I, (ii) a
statement that such funds shall be used to pay expenses of the Company and its
subsidiaries in accordance with a cash flow projection of the Company through
August 31, 2001, to be provided to the Purchaser on the date of this Agreement
(including the supplement to such projections to be delivered to the Purchaser
no later than August 1, 2001 covering the cash flow projections of the Company
through October 21, 2001, the "Cash Flow Projection"), (iii) confirmation that
the representations and warranties of the Company contained in Article II hereof
are true and correct in all material respects as of the date of such Funding
Request, except in any such case that would not have a Material Adverse Effect
(as defined in Section 2.01 herein), and that the Company has fulfilled all
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conditions and performed all of its obligations hereunder with respect to such
Funding Request, (iv) confirmation that no Event of Default (as defined in the
Notes) has occurred and is continuing, or is about to occur to the best of the
Company's knowledge with respect to Notes outstanding, and (v) the proposed
Closing Date for the delivery of the requested funds, which date shall not be
earlier than the third business day after the date of such Funding Request. Each
Funding Request shall be for an amount up to the proposed Maximum Funding Amount
for such month set forth immediately opposite Purchaser's name and below such
month on attached Schedule I, and in no event may the aggregate amount of all
Funding Requests exceed the total purchase price for all Notes set forth on
Schedule I.
(b) Upon receipt of a Funding Request in proper form as set
forth pursuant to Section 1.02(a) above, subject to Article VI hereof, the
Purchaser shall then purchase Notes in satisfaction of the Funding Request for
the aggregate principal amount of Notes requested (the "Purchase Price") at a
Closing (as defined below) and notify the Company of the Closing Date (as
defined below) of such purchase, which shall not be later than the third
business day following receipt of the Funding Request by the Purchaser provided,
however, that the first Closing (the "Initial Closing") shall take place on the
date hereof or as soon as practicable hereafter (such date, the "Initial Closing
Date").
(c) In the event that the Closing (as defined in the Bridge
Purchase Agreement, the "Bridge Purchase Agreement Closing") pursuant to the
purchase agreement (the "Bridge Purchase Agreement") between Reuters America
Inc. ("Reuters") and Bridge Information Systems, Inc. ("Bridge"), providing for
the acquisition of certain of the assets of Bridge by Reuters, has not been
consummated and the Bridge Purchase Agreement has not been terminated by 11:59
p.m., New York time, on August 31, 2001, the Company may deliver a Funding
Request pursuant to the terms of Section 1.02(a) hereof on September 1, 2001 and
a Closing will occur, subject to satisfaction of all applicable conditions of
Section 6.02 hereof, on September 4, 2001, and, if the Bridge Purchase Agreement
Closing has not been consummated and the Bridge Purchase Agreement has not been
terminated by 11:59 p.m., New York time, on September 30, 2001, the Company may
deliver a Funding Request pursuant to the terms of Section 1.02(a) hereof on
October 1, 2001 and a Closing will occur, subject to satisfaction of all
applicable conditions of Section 6.02 hereof, on October 1, 2001, for up to the
amounts set forth on Schedule I for such months.
(d) Notwithstanding the foregoing, from the date of this
Agreement through October 31, 2001, in the event the Company proposes to execute
any capital-raising or financing transaction involving an investment in
securities of the Company, the Purchaser shall receive notice of such
transaction, summaries of its principal terms and copies of all documents
related to such transaction at the same time and in the same manner as such
materials are provided to potential participants therein. The Purchaser shall
have the right to participate in such transaction on the same terms as the other
participants therein, for an amount up to the Purchaser's unfunded Maximum
Funding Amount set forth opposite the Purchaser's name on attached Schedule I in
satisfaction and release of the Purchaser's funding obligation with respect to
the amount of such participation in the purchase of Notes hereunder.
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SECTION 1.03. Closings; Deliveries.
(a) Closing. Except as contemplated pursuant to Section
1.04(b) hereof, the closing of the purchase and sale of Notes pursuant to a
Funding Request shall take place from time to time (each such date of Closing, a
"Closing Date") in one or more closings (each, a "Closing") by the Purchaser
pursuant to Section 1.02 hereof, provided that the satisfaction (or waiver) of
all the conditions herein have been satisfied, at 10:00 a.m. New York time on
the date of such Closing, at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other time and place as
the Company and the Purchaser may agree. The Closing may be accomplished by
facsimile transmission to the respective offices of counsel for the parties
hereto of the requisite documents, duly executed where required, with originals
to be delivered by overnight courier service on the next business day following
the Closing.
(b) Closing Deliveries. At each Closing, subject to the
terms and conditions hereof, the Company will deliver to the Purchaser a Note or
Notes, executed by the Company evidencing an obligation by the Company to pay a
principal amount equal to the Purchase Price, in such denominations and in such
name or names as the Purchaser may designate by notice to the Company, dated the
date of the Closing, against payment of the Purchase Price therefor by wire
transfer in immediately available funds to an account specified by the Company.
Such Purchase Price paid at the Closing shall be delivered and accepted as full
and complete payment against the Notes.
(c) Grant of Security. Simultaneous with the execution and
delivery of this Agreement, as security for the amounts owed or to be owed
evidenced by the Notes, the Company's subsidiary will execute the Deed (as
defined in Section 2.04(a)).
SECTION 1.04. Description of the Notes.
(a) Conversion of Notes into Common Stock. From and after
the date of issuance of each Note, subject to Section 1.04(b) below, all or a
portion of the principal amount of the Notes shall, at any time and at the
option of the Purchaser, be convertible into a number of shares of Common Stock,
calculated by dividing the portion of the principal amount of such Notes to be
converted (together with any accrued and unpaid interest on such portion of the
principal amount) by (i) for Notes issued pursuant to the initial Closing, $1.35
and (ii) for Notes issued pursuant to subsequent Closings, the closing bid price
(the "Closing Bid") of the Common Stock on the Nasdaq Stock Market for the
trading day immediately preceding the date of execution of the Network Services
Agreement Term Sheet (as defined in Section 6.02(a)(vi)) (in each case, subject
to equitable adjustment for stock splits, stock dividends, recapitalizations,
reorganizations or other similar events, the "Common Stock Conversion Price")
with the proportional value of any fractional shares resulting therefrom paid by
the Company in cash to the Purchaser upon conversion; provided, however, that
with respect to clause (ii) of this sentence, if the Closing Bid is lower than
$1.35, the Common Stock Conversion Price shall be $1.35, and if the Closing Bid
is greater than $1.92, the Common Stock Conversion Price shall be $1.92. The
Purchaser will give the Company at least 10 business days notice of its
intention to convert all or a portion of the principal amount of the Notes into
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Common Stock, except if such conversion follows a notice of prepayment pursuant
to Section 1.04(d) hereof. The Company shall present and deliver certificates
evidencing the proper number of shares of Common Stock to the Purchaser, in such
denominations and in such name or names as the Purchaser may designate by notice
to the Company, to the Purchaser, at a time and place mutually agreeable to the
Purchaser and the Company, in exchange for delivery of its Note or Notes to the
Company. Upon receipt of such Note in exchange for such certificate or
certificates of Common Stock, the Company shall cancel and destroy such Note or
Notes, and such Note or Notes shall thereafter be null, void and of no effect.
If any of the principal amount of any Note tendered to the Company pursuant to
this Section 1.04(a) shall remain unconverted and outstanding following the
issuance of such Common Stock, the Company shall execute and deliver to the
Purchaser at the same time and in the same manner as the certificate evidencing
the Purchaser's Common Stock is delivered, a replacement note that shall be
identical in all respects as the Note or Notes tendered to the Company, except
that the principal amount shall be reduced by the principal amount converted to
Common Stock. Any Notes issued pursuant to a Funding Request that is delivered
after the automatic conversion of a previously-issued Note pursuant to Section
1.04(b) hereof shall be convertible, at the Purchaser's option, into Purchaser
Conversion Preferred (as defined below).
(b) Automatic Conversion of Notes into Preferred Stock.
Simultaneous with the Company raising an aggregate of $50,000,000 (the
"Conversion Amount") in cash through the issuance of convertible preferred stock
prior to the Maturity Date (as defined below), excluding the Notes and PIK
Notes, but including shares issued upon conversion of up to $20,000,000
aggregate principal amount of the Company's 10% Convertible Senior Secured Notes
due February 20, 2006 issued to affiliates of Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
("▇▇▇▇▇ ▇▇▇▇▇▇") (excluding any notes issued to ▇▇▇▇▇ ▇▇▇▇▇▇ in kind for
interest on such notes), all of the principal amount of the Notes then
outstanding, together with any PIK Notes (as defined below), Notes then-payable
in kind for accrued and unpaid interest as of such date and Notes to be
purchased on such date by the Purchaser, subject to satisfaction of all
applicable conditions set forth in Section 6.02 herein, at a special Closing
with a Purchase Price equal to the difference between $30,000,000 and the
aggregate Purchase Price paid by the Purchaser pursuant to all Closings
completed pursuant to this Agreement as of such date (it being understood that
on such date, the Purchaser shall deliver such Purchase Price by wire transfer
of immediately available funds to the Company), shall be converted into a number
of shares of convertible preferred stock ("Purchaser Conversion Preferred")
having the same rights, preferences, privileges and restrictions as shares
issued (the "Recent Equity Financing Shares") pursuant to the Company's most
recent preferred stock financing (the "Recent Equity Financing"), except that
the initial conversion price of such Purchaser Conversion Preferred shall be the
lesser of (i) the initial conversion price of the Recent Equity Financing
Shares, (ii) the initial conversion price of shares issued pursuant to any
financing which comprises a portion of the Conversion Amount (excluding shares
issued upon conversion of the notes previously issued to ▇▇▇▇▇ ▇▇▇▇▇▇ referred
to above), and (iii) the Common Stock Conversion Price. The Purchaser Conversion
Preferred shall be of the same class, but separate series, as the Recent Equity
Financing Shares. The proportional value of any fractional shares resulting from
the issuance of Purchaser Conversion Preferred shall be paid by the Company in
cash to the Purchaser. Notwithstanding the foregoing, the following actions by
the Company shall not be aggregated in calculating the Conversion Amount: (i)
the issuance of any shares of Common Stock pursuant to a stock option plan
approved by the Company's Board of Directors, (ii) the issuance of stock,
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warrants or other securities or rights to persons or entities with which the
Company has bona fide business relationships provided such issuances are for
other than primarily equity financing purposes, provided, that in any such case
(involving the foregoing clauses (i) or (ii)) such issuance has been approved by
a majority of the members of the Company's Board of Directors. The Company will
provide the Purchaser with at least 10 business days notice in advance of an
expected closing of an equity financing which will result in the raising of the
Conversion Amount, noting the time and place of such event. The Company shall
present and deliver certificates evidencing the proper number of Purchaser
Conversion Preferred to the Purchaser, in such denominations and in such name or
names as the Purchaser may designate by notice to the Company, to Purchaser at
the closing of the Recent Equity Financing in exchange for delivery of its Notes
to the Company. Upon receipt of such Notes in exchange for such certificate or
certificates of stock evidencing the proper number of Purchaser Conversion
Preferred, the Company shall cancel and destroy such Note or Notes, and such
Note or Notes shall thereafter be null, void and of no effect. An opinion or
opinions of counsel substantially similar to the opinions to be rendered
pursuant to Section 6.01(a)(vi) hereof, reasonably satisfactory to the
Purchaser, will be provided regarding the issuance of the Purchaser Conversion
Preferred upon the issuance of such securities.
(c) Redemption.
(i) At Maturity. On May 1, 2005 (the "Maturity Date"), all
of the outstanding principal amount (together with any accrued and unpaid
interest on the principal amount) of the Notes shall be due and payable.
(ii) Upon Change of Control. At any time that Notes are
outstanding, the Company shall notify the Purchaser at least 10 business days
prior to a record date of a transaction which would result in a Change of
Control (as defined in the Notes) of the Company. Upon receipt of such notice,
the Purchaser shall have the right to require the Company (i) to redeem any or
all of the Notes, including the PIK Notes (as defined below), at a cash price
equal to 100% of the principal amount of such Notes, plus all accrued and unpaid
interest and the Applicable Premium Amount (as defined in the Notes) as of the
effective date of the Change of Control, or (ii) to convert the principal amount
of any or all Notes (at the Purchaser's option), including the PIK Notes and the
Applicable Premium Amount (as defined in the Notes), into shares of Common
Stock, determined by dividing the aggregate principal amount of such Notes to be
converted by the Common Stock Conversion Price, with the proportional value of
any fractional shares resulting therefrom paid by the Company in cash to the
Purchaser.
(d) Prepayment. From and after the first anniversary of the
final Closing, the Company shall have the right to prepay all, but not less than
all, of the Notes in one transaction, with all accrued and unpaid interest to
the date of repayment at any time without premium or penalty. The Company shall
notify the Purchaser of its intent to prepay the principal amount of the Notes
at least 10 business days prior to the date of such prepayment. The Purchaser
shall have the right at any time prior to the third business day prior to the
date of prepayment to convert its Notes pursuant to Section 1.04(a) hereof.
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(e) Interest.
(i) Payment. From and after the issuance of Notes, holders
of record of the Notes shall be entitled to receive interest at a rate of 12%
per annum, compounded and payable quarterly, on the principal amount of the
Notes including any issued and outstanding PIK Notes (as defined below). Until
August 1, 2004 (the "PIK Crossover Date"), at the discretion of the Company, any
and all interest payments are payable, from the date of issuance of such Notes
in the form of additional Notes ("PIK Notes") with a face amount equal to the
interest owed at that time, in lieu of cash. From and after the PIK Crossover
Date, holders of record of the Notes shall be entitled to receive interest at a
rate of 12% per annum, compounded and payable quarterly, on the principal amount
of the Notes, in cash only, the first of such payments due on the last day of
the first calendar quarter after the PIK Crossover Date. Any payment of interest
covering a period which includes the PIK Crossover Date shall be payable, for
the portion of such period before the PIK Crossover Date, in PIK Notes. When
issued, the PIK Notes will have the same rights and privileges as the Notes
issued at any Closing.
(ii) Default in Payment. Interest on the Notes, including
PIK Notes, if issued, shall accrue from and after the date of initial issuance
thereof. To the extent that interest remains unpaid ten (10) business days after
the applicable interest payment date, interest shall accrue on the Notes at a
rate of 14% per annum until paid and shall be a continuing obligation of the
Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as of the
date hereof and on the Closing Date, as follows:
SECTION 2.01. Organization and Qualification. The Company
is a corporation validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as it
is now being conducted. The Company is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have a material adverse effect on the properties, assets, financial
condition, operating results, business or prospects of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
SECTION 2.02. Subsidiaries. Except for the Subsidiaries
disclosed in the Company SEC Filings (as defined in Section 2.08), the Company
does not own, beneficially or of record, directly or indirectly, any capital
stock or other ownership interest in any other Person. SAVVIS Communications
Corporation, a Missouri corporation ("SAVVIS Missouri") is a corporation validly
existing and in good standing under the laws of Missouri. Global Network Assets,
LLC, a Delaware limited liability company ("Global LLC"), is a limited liability
company, duly formed, validly existing and in good standing under the laws of
Delaware. Each of SAVVIS Missouri and Global LLC has all requisite power and
authority to own or lease and operate its properties and assets and to carry out
its business as it is now being conducted. Each of SAVVIS Missouri and Global
LLC is duly qualified as a foreign corporation to do business, and is in good
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standing, in each jurisdiction in which the character of its properties owned or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not have a Material Adverse
Effect. As used in this Agreement, (i) "Person" means any corporation,
partnership, limited liability company, trust, joint venture or other entity and
(ii) "Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof. SAVVIS Missouri and Global LLC are the Company's only Significant
Subsidiaries (as defined in Rule 1-02(w) of Regulation S-X).
SECTION 2.03. Capitalization. (a) On the date hereof the
authorized capital stock of the Company consists of 250,000,000 shares of Common
Stock and 50,000,000 shares of Preferred Stock, $.01 par value ("Preferred
Stock"). As of the date hereof, 93,844,039 shares of Common Stock and no shares
of Preferred Stock were issued and outstanding, all of which shares of Common
Stock were duly authorized and validly issued and are fully paid and
nonassessable.
(b) As of the date hereof, except for options granted
pursuant to the Company's stock option plan (the "Stock Option Plan") to
purchase an aggregate 8,852,063 shares of Common Stock and except as set forth
on Schedule 2.03(b), no subscription, warrant, option, convertible security,
stock appreciation or other right (contingent or other) to purchase or acquire
any shares of any class of capital stock of the Company or any of its
Subsidiaries is authorized or outstanding, and (except as otherwise expressly
contemplated by this Agreement) there is not any commitment of the Company or
any of its Subsidiaries to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of its capital stock, any
evidences of indebtedness or assets.
SECTION 2.04. Authorization of Agreements, etc. (a) Except
as set forth on Schedule 2.04 and subject to Section 2.04(b), each of (i) the
execution and delivery by the Company of this Agreement, the Notes, the Amended
and Restated Registration Rights Agreement, dated as of the Closing Date (the
"Registration Rights Agreement"), among the Company and the Purchaser, in
substantially the form attached hereto as Exhibit B, and the Missouri Future
Advance Deed of Trust and Security Agreement, in substantially the form attached
hereto as Exhibit C, dated as of May 11, 2001, between the Company's subsidiary
and the Purchaser, (the "Deed," and collectively with the Registration Rights
Agreement, the "Ancillary Agreements"), (ii) the performance by the Company of
its obligations hereunder and thereunder, and (iii) the issuance, sale and
delivery by the Company of the Notes has been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, any rule or regulation of the National
Association of Securities Dealers, Inc., the Nasdaq stock market or any rule of
any other securities exchange under which the Company may be subject, the
Certificate of Incorporation or Bylaws of the Company, or any provision of any
indenture, agreement or other instrument to which the Company or any of its
properties or assets is bound, or conflict with, result in a breach of or
8
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any liens, claims, charges, restrictions, rights of others,
security interests, prior assignments or other encumbrances (collectively,
"Claims") in favor of any third Person upon any of the assets of the Company or
any of its Subsidiaries, except that no representation is made as to the
compliance of the indemnification or contribution provisions of the Registration
Rights Agreement with law or public policy.
(b) The parties acknowledge that the Board of Directors of
the Company is treating each possible sale of Notes hereunder as a separate
transaction, and has only approved the transactions contemplated by this
Agreement which will not result in the Purchaser, together with its affiliates,
becoming the "beneficial owner" (as defined in Section 203 of the Delaware
General Corporation Law, "DGCL 203") of 15% or more of the outstanding voting
stock of the Company or becoming an "interested stockholder" as defined in such
Section. Any sale of Notes in accordance with Section 1 hereof that would result
in the Purchaser becoming the beneficial owner of 15% or more of the Company's
outstanding voting stock or becoming an interested stockholder (an "Interested
Stockholder Transaction") will require further approval of the Company's Board
of Directors beyond what has been received as of the date of execution of this
Agreement, and nothing herein shall be deemed to constitute a representation by
the Company that any Interested Stockholder Transaction has been approved by its
Board of Directors or an agreement by the Company that any such further approval
will be granted. The parties acknowledge that the Purchaser or an affiliate of
the Purchaser has acquired an option from Bridge to acquire and/or vote shares
of the Company's common stock held by Bridge, which option is limited to the
number of shares as would not at the time make the Purchaser and its affiliates
an interested stockholder under DGCL 203. It is the intention of the parties
that the beneficial ownership by the Purchaser or its affiliates of outstanding
voting stock of the Company under such option will be reduced simultaneously
with Notes being sold hereunder, so that the combined effect of the sale of
Notes and existence of such option will not result in the Purchaser or any of
its affiliates becoming an interested stockholder under DGCL 203, provided,
however, that this sentence shall cease to be of any further force or effect if
the Purchaser hereafter becomes an interested stockholder with the approval of
the Company's Board of Directors. Notwithstanding the foregoing, it is
understood and agreed that no securities will be issued pursuant to this
Agreement, including securities issued upon conversion of securities issued
pursuant to this Agreement, in any form unless such issuance has been approved
by the Board of Directors of the Company. The conversion of any securities
issued hereby into Conversion Shares or Purchaser Conversion Preferred, as
described herein, has been or will be approved by the Board of Directors of the
Company, and the Purchaser (and any successors or assigns) may rely on such
approval in the conversion of such securities. In addition, any adjustment to
the outstanding voting stock of the Company by the Company which would result in
the Purchaser or its affiliates beneficially owning 15% or more of the Company's
outstanding voting stock (determined in accordance with DGCL 203) will be
approved by the Board of Directors of the Company, including for purposes of
DGCL 203.
(c) The issuance, sale and delivery of the Notes to the
Purchaser hereunder are not subject to any preemptive rights of stockholders of
the Company or to any right of first refusal or other similar right in favor of
any Person.
9
(d) The Conversion Shares have been duly authorized by the
Company and, when issued in accordance with the provisions of the Notes, will be
validly issued, fully paid and nonassessable shares of Common Stock. The
issuance, sale and delivery of the Conversion Shares to the Purchaser are not
and upon conversion of the Notes will not be subject to any preemptive rights of
stockholders of the Company or to any right of first refusal or other similar
right in favor of any Person.
SECTION 2.05. Validity. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms. Each of the Notes and the Ancillary Agreements, when executed
and delivered by the Company as provided in this Agreement, will constitute the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that no representation is made as
to (i) the enforceability of the indemnification or contribution provisions of
the Registration Rights Agreement and (ii) the enforceability of this Agreement
or the Registration Rights Agreement to the extent that their enforceability may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforceability of creditors' rights generally or by
general equitable principles.
SECTION 2.06. Governmental Approvals. Subject to the
accuracy of the representations and warranties of the Purchaser set forth in
Article III hereof and except for applicable filings, if any, required by
applicable federal and state securities laws and listing regulations, no
registration or filing with, or consent or approval of, or other action by, any
federal, state or other governmental agency or instrumentality or securities
exchange (each, a "Governmental Authority") is or will be necessary for the
valid execution, delivery and performance of this Agreement, the Ancillary
Agreements, or the issuance and delivery of the Conversion Shares.
SECTION 2.07. Financial Statements.
(a) The Company has furnished to the Purchaser the
unaudited consolidated balance sheet of the Company and its subsidiaries as of
March 31, 2001 (the "Interim Balance Sheet") and the related consolidated
statements of operations, stockholders' equity and cash flows for the three
months then ended. All such financial statements (including any related
schedules and/or notes) have been prepared in accordance with generally accepted
accounting principles in the United States ("GAAP") consistently applied and
consistent with prior periods, except for normal year-end adjustments and the
absence of footnotes. Such Interim Balance Sheet fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
as of its date, and such statements of operations, stockholders' equity and cash
flows fairly present in all material respects the consolidated results of
operations, stockholders' equity and cash flows of the Company and its
subsidiaries for the three months ended the date of the Interim Balance Sheet.
(b) The Company has furnished the Purchaser with the Cash
Flow Projection. The Cash Flow Projection fairly presents, in all material
respects, management's good faith estimate of cash flows and expenses of the
Company for the covered period, is based on assumptions that management believes
in good faith to be appropriate.
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(c) Except as and to the extent (i) reflected on the
Interim Balance Sheet (including the notes thereto), (ii) incurred since the
date of the Interim Balance Sheet in the ordinary course of business consistent
with past practice, or (iii) set forth on Schedule 2.07 hereto, neither the
Company nor any of its subsidiaries has any material liabilities or obligations
of any kind or nature, whether known or unknown, secured or unsecured, absolute,
accrued, contingent or otherwise, and whether due or to become due, that would
be required to be reflected on a balance sheet, or the notes thereto, prepared
in accordance with GAAP. Except as set forth on Schedule 2.07, since the date of
the Interim Balance Sheet, neither the Company nor any of its subsidiaries has
suffered any Material Adverse Effect.
SECTION 2.08. SEC Filings. The Company has filed all forms,
reports and documents required to be filed with the Securities and Exchange
Commission (the "SEC") as of the date of this Agreement, and the Company has
made available to the Purchaser, as filed with the SEC, complete and accurate
copies of (i) the Annual Report of the Company on Form 10-K for the year ended
December 31, 2000, and (ii) all other reports, statements and registration
statements (including, but not limited to, Current Reports on Form 8-K and
Quarterly Report on Form 10-Q) filed by the Company with the SEC since December
31, 2000, in each case including, but not limited to, all amendments and
supplements (collectively, the "Company SEC Filings"). The Company SEC Filings
(excluding any financial statements or schedules included therein, which are
covered by the representations and warranties of the Company in Section 2.07(a))
(i) were prepared in compliance with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations thereunder, and
the rules and regulations thereunder, as the case may be, and (ii) did not at
the time of filing (or if amended, supplemented or superseded by a filing prior
to the date hereof, on the date of that filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 2.09. Absence of Certain Changes or Events. Except
as set forth on Schedule 2.09 hereto and except as otherwise expressly
contemplated by this Agreement, since the date of the Interim Balance Sheet,
neither the Company nor any of its subsidiaries has (i) issued any stock, bonds
or other corporate securities, (ii) borrowed or refinanced any indebtedness for
borrowed money other than borrowings under the Amended and Restated Credit
Agreement dated as of September 5, 2000 (the "Credit Agreement"), among the
Company, Savvis Communications Corporation, a Missouri Corporation, Nortel
Networks Inc., as Administrative Agent, and the lenders named therein, (iii)
discharged or satisfied any material Claim or incurred or paid any obligation or
liability (absolute or contingent) other than current liabilities shown on the
Interim Balance Sheet and current liabilities incurred since the date of such
balance sheet in the ordinary course of business consistent with past practice,
(iv) in the case of the Company only, declared or made any payment or
distribution to stockholders, or purchased or redeemed any shares of its capital
stock or other securities, or (v) except in connection with this Agreement and
the transactions contemplated hereby, entered into any agreement, letter of
intent or similar undertaking to take any of the actions listed in clauses (i)
through (iv) above.
11
SECTION 2.10. Actions Pending. Except as set forth in the
Company SEC Filings and as set forth on Schedule 2.10, there is no action, suit,
investigation or proceeding pending or, to the best knowledge of the Company,
threatened against or affecting the Company to which its property is subject,
before any court or by or before any governmental body or arbitration board or
tribunal, which the Company would be required to disclose pursuant to Item 1 of
Part II of Form 10-Q if such Form 10-Q were required to be filed on and as of
the date hereof. For the purposes of this Agreement, the term "best knowledge of
the Company" shall mean the actual knowledge of the executive officers of the
Company.
SECTION 2.11. Compliance with Law; Permits. Neither the
Company nor any of its subsidiaries is in default in any respect under any order
or decree of any court, governmental authority, arbitrator or arbitration board
or tribunal or under any laws, ordinances, governmental rules or regulations to
which the Company or any of such subsidiaries or any of their respective
properties or assets is subject, except where such default would not have a
Material Adverse Effect. The Company possesses all permits, authorizations,
approvals, registrations, variances and licenses ("Permits") necessary for the
Company or its subsidiaries to own, use and maintain their properties and assets
or required for the conduct of its business in substantially the same manner as
it is currently conducted, except where the failure to possess any such Permit
would not have a Material Adverse Effect. Except to the extent the failure of
any of the following to be correct would not have a Material Adverse Effect,
each Permit is in full force and effect, and no proceeding is pending or, to the
best knowledge of the Company, threatened to modify, suspend, revoke or
otherwise limit any Permit, and no administrative or governmental actions have
been taken or, to the best knowledge of the Company, threatened in connection
with the expiration or renewal of any Permit.
SECTION 2.12. Contracts. Except as disclosed in the Company
SEC Filings and as set forth on Schedule 2.12, there are no contracts or
agreements that are material to the conduct of the Company's business or to the
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, that the Company would be required to disclose
pursuant to paragraph 10 of Item 601 of Regulation S-K if a Form 10-Q were
required to be filed on and as of the date hereof. Except as set forth on
Schedule 2.12, each of the agreements (collectively, the "Material Agreements")
disclosed as an exhibit in the Company SEC Filings in response to paragraph 10
of Item 601 of Regulation S-K under which there are continuing rights or
obligations is a valid and enforceable obligation of the Company and, to the
best knowledge of the Company, of the other parties thereto, except where the
failure to be valid or enforceable would not have a Material Adverse Effect and
provided that no representation is made as to the enforceability of such
agreements to the extent that their enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforceability of creditors' rights generally or by general equitable
principles. Except as disclosed on Schedule 2.12, to the best knowledge of the
Company, the Company has not been notified in writing of any claim that any
Material Agreement is not valid and enforceable in accordance with its terms for
the periods stated therein (other than where such enforceability is in violation
of public policy or law), or that there is under any such contract any existing
default or event of default or event that with notice or lapse of time or both
would constitute such a default, except any such failure to be valid or
enforceable and any such defaults that, in the aggregate, would not have a
Material Adverse Effect.
12
SECTION 2.13. Offering of the Notes. Assuming the accuracy
of the representations and warranties of the Purchaser set forth in Article III
hereof, neither the Company nor any person acting on the Company's behalf has
taken or will take any action (including, but not limited to, any offer,
issuance or sale of any securities of the Company under circumstances which
might require the integration of such transactions with the sale of the Notes
under the Securities Act or the rules and regulations of the SEC thereunder)
which would subject the offering, issuance or sale of the Notes to the Purchaser
pursuant to this Agreement to the registration provisions of the Securities Act.
SECTION 2.14. Related-Party Transactions. Except (i) as set
forth in the Company SEC Filings, (ii) as set forth on Schedule 2.14, or (iii)
as contemplated hereby, there are no existing material arrangements or proposed
material transactions between the Company and any Person or entity that the
Company would be required to disclose pursuant to Item 404 of Regulation S-K of
the SEC if a proxy statement of the Company were required to be filed on or as
of the date hereof, other than arrangements or transactions between the Company
and the Purchaser.
SECTION 2.15. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by the
Company directly with the Purchaser, without the intervention of any other
Person on behalf of the Company in such manner as to give rise to any valid
claim by any other Person against the Purchaser for a finder's fee, brokerage
commission or similar payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company, as of
the date hereof and on the Closing Date as follows:
SECTION 3.01. Organization. The Purchaser is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate authority to
operate its properties and assets and to carry on its business as it is now
being conducted.
SECTION 3.02. Authorization. The execution, delivery and
performance by the Purchaser of this Agreement and the Ancillary Agreements, and
the purchase and receipt by the Purchaser of the Notes being acquired by it
hereunder, have been duly authorized by all requisite action on the part of the
Purchaser and will not violate any provision of law, any order of any court or
other agency of government, the charter or other governing documents of the
Purchaser, or any provision of any indenture, agreement or other instrument by
which the Purchaser or any of the Purchaser's properties or assets are bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any liens, claims, charges,
restrictions, rights of others, security interests, prior assignments or other
encumbrances in favor of any third Person upon any of the properties or assets
of the Purchaser.
13
SECTION 3.03. Validity. This Agreement has been duly
executed and delivered by the Purchaser and constitutes the legal, valid and
binding obligation of such Purchaser, enforceable against the Purchaser in
accordance with its terms. Each of the Ancillary Agreements, when executed and
delivered in accordance with this Agreement, will constitute the legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
SECTION 3.04. Investment Representations.
(a) The Purchaser is acquiring the Notes being purchased by
the Purchaser hereunder for the Purchaser's own account, for investment, and not
with a view toward the resale or distribution thereof.
(b) The Purchaser understands that he, she or it, as the
case may be, must bear the economic risk of the Purchaser's investment for an
indefinite period of time, because the Notes and, when issued upon conversion of
Notes, the Conversion Shares are not registered under the Securities Act or any
applicable state securities laws and may not be resold unless subsequently
registered under the Securities Act and such other laws or unless an exemption
from such registration is available.
(c) The Purchaser has the ability to bear the economic
risks of the investment in the Notes being purchased hereunder for an indefinite
period of time. The Purchaser further acknowledges that he, she or it, as the
case may be, has received copies of the Company SEC Filings and has had the
opportunity to ask questions of, and receive answers from, officers of the
Company with respect to the business and financial condition of the Company and
the terms and conditions of the offering of the Notes and to obtain additional
information necessary to verify such information or can acquire it without
unreasonable effort or expense.
(d) The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of its investment in the Notes. The Purchaser further
represents that he, she or it, as the case may be, is an "accredited investor"
as such term is defined in Rule 501 of Regulation D of the SEC under the
Securities Act with respect to its purchase of the Notes.
SECTION 3.05. Governmental Approvals. No registration or
filing with, or consent or approval of, or other action by, any Governmental
Authority is or will be necessary by the Purchaser for the valid execution,
delivery and performance of this Agreement and the Ancillary Agreements.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Operation of Business. From the date hereof
until the Initial Closing Date, except as expressly provided for in this
Agreement or as consented to by the Purchaser, the Company shall not:
14
(a) amend its certificate of incorporation or bylaws or
comparable organizational documents;
(b) split, combine or reclassify any shares of the
Company's Common Stock;
(c) declare or pay any dividend or distribution (whether in
cash, stock or property) in respect of its Common Stock;
(d) take any action, or knowingly omit to take any action,
that would, or that would reasonably be expected to, result in (A) any of the
representations and warranties of the Company set forth in Article III becoming
untrue, (B) any of the conditions to the obligations of the Purchaser set forth
in Section 6.02 not being satisfied, or (C) the operation of the business of the
Company or its Subsidiaries outside the ordinary course of business consistent
with past practice, giving due regard to the Company's financial condition,
including but not limited to the filing for bankruptcy by Bridge, the Company's
cash funding requirements and the Company's current management of its trade
payables; and
(e) enter into any agreement or commitment to do any of the
foregoing.
SECTION 4.02. Access to Information. From the date hereof
until the Closing Date, the Company will (a) furnish to the Purchaser and its
authorized representatives such financial and operating data and other
information relating to the Company and its Subsidiaries as such Persons may
reasonably request and (b) instruct its counsel, independent accountants and
financial advisors to cooperate with the Purchaser and its authorized
representatives in its investigation of the Company. Any investigation pursuant
to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the Company.
SECTION 4.03. Agreement to Take Necessary and Desirable
Actions. The Company shall (a) subject to the satisfaction of the conditions set
forth in Section 6.02, execute and deliver this Agreement and the Ancillary
Agreements and such other documents, certificates, agreements and other
writings, and (b) take such other actions, in each case, as may be necessary or
reasonably requested by the Purchaser in order to consummate or implement the
issuance, sale and delivery of the Notes to the Purchaser in accordance with the
terms of this Agreement.
SECTION 4.04. Compliance with Conditions; Commercially
Reasonable Efforts. The Company shall use all commercially reasonable efforts to
cause all conditions precedent to the obligations of the Company and the
Purchaser to be satisfied. Upon the terms and subject to the conditions of this
Agreement, the Company will use all commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable consistent with applicable laws to consummate and
make effective in the most expeditious manner practicable the issuance, sale and
delivery of the Notes to the Purchaser in accordance with the terms of this
Agreement.
SECTION 4.05. Consents and Approvals. The Company (a) shall
use all commercially reasonable efforts to obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Authorities, and of
all other Persons required in connection with the execution, delivery and
15
performance of this Agreement, the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby (including, without limitation,
obtaining any stockholder approval referred to in Schedule 2.04); and (b) shall
diligently assist and cooperate with the Purchaser in preparing and filing all
documents required to be submitted by the Purchaser to any Governmental
Authority in connection with the issuance, sale and delivery of the Notes to the
Purchaser (which assistance and cooperation shall include, without limitation,
timely furnishing to the Purchaser all information concerning the Company and
its Subsidiaries that counsel to the Purchaser reasonably determines is required
to be included in such documents or would be helpful in obtaining any such
required consent, waiver, authorization or approval).
SECTION 4.06. Reservation of Shares. For so long as any of
the Notes are outstanding, the Company shall keep reserved for issuance a
sufficient number of shares of Common Stock to satisfy its conversion
obligations thereunder.
SECTION 4.07. Listing of Shares. The Company shall use all
commercially reasonable efforts to cause the Conversion Shares issuable upon
conversion of the Notes to be listed or otherwise eligible for trading on the
Nasdaq National Market or such other exchange or market at which the Common
Stock is traded at the time of conversion.
SECTION 4.08. Use of Proceeds. The Company shall use the
aggregate proceeds to be received upon issuance of the Notes for working capital
and general corporate purposes.
ARTICLE V
COVENANTS OF THE PURCHASER
SECTION 5.01. Agreement to Take Necessary and Desirable
Actions. The Purchaser shall (a) subject to the satisfaction of the conditions
set forth in Section 6.01, execute and deliver each of this Agreement and the
Ancillary Agreements and such other documents, certificates, agreements and
other writings and (b) take such other actions as may be necessary or reasonably
requested by the Company in order to consummate or implement the issuance, sale
and delivery of the Notes to the Purchaser in accordance with the terms of this
Agreement.
SECTION 5.02. Compliance with Conditions; Commercially
Reasonable Efforts. The Purchaser will use all commercially reasonable efforts
to cause all of the obligations imposed upon it in this Agreement to be duly
complied with, and to cause all conditions precedent to the obligations of the
Company and the Purchaser to be satisfied. Upon the terms and subject to the
conditions of this Agreement, the Purchaser will use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with applicable law
to consummate and make effective in the most expeditious manner practicable the
issuance, sale and delivery of the Notes to the Purchaser in accordance with the
terms of this Agreement.
SECTION 5.03. Consents and Approvals. The Purchaser (a)
shall use all commercially reasonable efforts to obtain all necessary consents,
waivers, authorizations and approvals of all Governmental Authorities, and of
all other Persons required in connection with the execution, delivery and
16
performance of this Agreement and the Registration Rights Agreement or the
consummation of transactions contemplated hereby or thereby and (b) shall
diligently assist and cooperate with the Company in preparing and filing all
documents required to be submitted by the Company to any Governmental Authority
in connection with such transactions (which assistance and cooperation shall
include, without limitation, timely furnishing to the Company all information
concerning the Purchaser that counsel to the Company reasonably determines is
required to be included in such documents or would be helpful in obtaining any
such required consent, waiver, authorization or approval).
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Initial Closing.
(a) Conditions Precedent to the Obligations of the
Purchaser in the Initial Closing. With regard to the Initial Closing, the
obligations of the Purchaser hereunder are, at their option, subject to the
satisfaction of the following conditions:
(i) Representations and Warranties to Be True and Correct.
The representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of such date.
(ii) Performance. The Company shall have performed and
complied in all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or on the
Closing Date.
(iii) All Proceedings to Be Satisfactory. All corporate and
other proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby,
including, but not limited to, any such requirements of the Marketplace Rules of
the Nasdaq National Market and those set forth in Schedule 2.04, shall have been
taken or obtained by the Company, and all documents incident thereto shall be
satisfactory in form and substance to the Purchaser and their counsel.
(iv) Legal Proceedings. On the Initial Closing Date, no
preliminary or permanent injunction or other order, decree or ruling issued by
any court of competent jurisdiction nor any statute, rule, regulation or order
entered, promulgated or enacted by any governmental, regulatory or
administrative agency or authority, or national securities exchange shall be in
effect that would prevent the consummation of the transactions contemplated by
this Agreement.
(v) No Material Adverse Effect. Except for the effects of
the matters referred to in Sections 2.07 and 2.09 or disclosed in Schedules
2.07, 2.09 or the Cash Flow Projection, since April 17, 2001, the date on which
the Company filed its Annual Report on Form 10-K for the year ended December 31,
2000, there shall have been no Material Adverse Effect.
17
(vi) Opinions of Counsel. The Purchaser shall have received
from ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., opinions dated the
Initial Closing Date, covering customary matters and otherwise reasonably
satisfactory in form and substance to the Purchaser and their counsel.
(vii) Ancillary Agreements. The Company shall have executed
and delivered each of the Ancillary Agreements, and all third party consents
(including the consent of lenders of the Company's subsidiaries, if necessary)
and all other documents and agreements necessary to make the Ancillary
Agreements effective in accordance with their terms shall have been obtained and
shall be effective.
(viii) Mortgage. The Company shall have executed and
delivered the Deed and such document shall have been filed with and accepted by
the proper Governmental Authorities.
(ix) Indebtedness and Security Interest Waiver. Any
restrictions on the incurrence of indebtedness or the granting of a security
interest by the Company pursuant to any agreement to which the Company is a
party, including but not limited to any agreement with (i) Nortel Networks Inc.,
(ii) General Electric Capital Corporation or (iii) ▇▇▇▇▇ ▇▇▇▇▇▇ shall have been
waived on terms satisfactory to the Purchaser to enable the Company to
consummate the transactions to be effected at the Initial Closing contemplated
by this Agreement.
(x) Compliance Certificate. There shall have been delivered
to the Purchaser a certificate dated as of the Initial Closing, signed by an
executive officer of the Company, certifying that the conditions specified in
Sections 6.01(a)(i), (ii), (iii), (iv), (v), (viii) and (ix) have been
fulfilled.
(b) Conditions Precedent to the Obligations of the Company
in the Initial Closing. With regard to the Initial Closing, the obligations of
the Company hereunder are, at its option, subject to the satisfaction of the
following conditions:
(i) Representations and Warranties to Be True and Correct.
The representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects on the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date.
(ii) Performance. The Purchaser shall have performed and
complied in all material respects with all agreements and conditions contained
herein required to be performed or complied with by them prior to or on the
Closing Date.
(iii) All Proceedings to Be Satisfactory. All proceedings
to be taken by the Purchaser and all waivers and consents to be obtained by the
Purchaser in connection with the transactions contemplated hereby shall have
been taken or obtained by the Purchaser and all documents incident thereto shall
be satisfactory in form and substance to the Company and its counsel.
(iv) Legal Proceedings. On such Closing Date, no
preliminary or permanent injunction or other order, decree or ruling issued by
18
any court of competent jurisdiction nor any statute, rule, regulation or order
entered, promulgated or enacted by any governmental, regulatory or
administrative agency or authority, or national securities exchange shall be in
effect that would prevent the consummation of the transactions contemplated by
this Agreement.
(v) Ancillary Agreements. The Purchaser shall have executed
and delivered each of the Ancillary Agreements.
SECTION 6.02. Subsequent Closings.
(a) Conditions Precedent to the Obligations of the
Purchaser in subsequent Closings. With regard to all Closings after the Initial
Closing, including the June 2001 Closing, the obligations of the Purchaser
hereunder are, at their option, subject to the satisfaction of the following
conditions:
(i) Representations and Warranties to Be True and Correct.
The representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on such Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of such date, except in any such case that would not have a
Material Adverse Effect.
(ii) Performance. The Company shall have performed and
complied in all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or on such
Closing Date.
(iii) All Proceedings to Be Satisfactory. All corporate and
other proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated hereby,
including, but not limited to, any such requirements of the Marketplace Rules of
the Nasdaq National Market and those set forth in Schedule 2.04, shall have been
taken or obtained by the Company, and all documents incident thereto shall be
satisfactory in form and substance to the Purchaser and their counsel. Also, if
the satisfaction by Reuters of the Funding Request relating to such Closing
would cause Reuters and/or its affiliates to become an "interested stockholder"
for purposes of DGCL 203, Reuters shall not be required to complete such Closing
unless it receives evidence reasonably satisfactory to it, including resolutions
of Company's Board of Directors and an opinion of counsel to the Company, to the
effect that the transactions contemplated by such subsequent Closing have been
approved by the Company's Board of Directors, including for purposes of DGCL
203.
(iv) Legal Proceedings. On such Closing Date, no
preliminary or permanent injunction or other order, decree or ruling issued by
any court of competent jurisdiction nor any statute, rule, regulation or order
entered, promulgated or enacted by any governmental, regulatory or
administrative agency or authority, or national securities exchange shall be in
effect that would prevent the consummation of the transactions to be effected at
such Closing contemplated by this Agreement.
(v) No Default. No Event of Default (as defined in the
Notes) shall have occurred and be continuing with respect to the Notes
outstanding.
19
(vi) Network Services Agreement. Reuters Limited and the
Company shall have executed a term sheet (the "Network Services Agreement Term
Sheet"), in form and substance satisfactory to Reuters Limited, for an agreement
(a "Network Services Agreement") for supply by the Company to Reuters Limited of
certain data transport network services and the operation, management and
maintenance thereof.
(vii) Cure of Defaults. Any default or event of default
occurring and continuing as of the date of such Closing pursuant to any
agreement to which the Company is a party with (i) Nortel Networks Inc., (ii)
General Electric Capital Corporation or (iii) ▇▇▇▇▇ ▇▇▇▇▇▇ shall have been cured
or waived on terms satisfactory to the Purchaser.
(viii) Compliance Certificate. There shall have been
delivered to the Purchaser a certificate dated as of the date of such Closing,
signed by an executive officer of the Company, certifying that the conditions
specified in Sections 6.02(a)(i), (ii), (iii), (iv), (v) and (vii) have been
fulfilled.
(ix) Opinions of Counsel. The Purchaser shall have received
from ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., opinions dated as of
the date of such Closing, covering customary matters and otherwise reasonably
satisfactory in form and substance to the Purchaser and their counsel.
(b) Condition Precedent to the Obligations of the Company
in subsequent Closings. With regard to Closings subsequent to the Initial
Closing, the obligations of the Company hereunder are, at their option, subject
to the satisfaction of the following condition:
(i) Representations and Warranties to Be True and Correct.
The representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects on the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNITY
SECTION 7.01. Survival of Representations. Subject as set
forth below, all representations and warranties made by any party hereto in this
Agreement or pursuant hereto shall survive for the period commencing on the date
hereof and ending on the first anniversary of the last Closing.
SECTION 7.02. General Indemnity. (a) Subject to the terms
and conditions of this Article VII, the Company hereby agrees to indemnify,
defend and hold the Purchaser and its affiliates harmless from and against all
demands, claims, actions or causes of action, assessments, losses (including,
but not limited to, diminution in value of the Notes or Conversion Shares),
damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and expenses (collectively,
"Damages"), asserted against, resulting to, imposed upon or incurred by the
Purchaser by reason of or resulting from a breach of any representation,
warranty or covenant of the Company contained in or made pursuant to this
Agreement.
20
(b) Subject to the terms and conditions of this Article
VII, the Purchaser hereby agrees to indemnify, defend and hold the Company
harmless from and against all Damages asserted against, resulting to, imposed
upon or incurred by the Company by reason of or resulting from a breach of any
representation, warranty or covenant of the Purchaser contained in or made
pursuant to this Agreement.
SECTION 7.03. Conditions of Indemnification. The respective
several obligations and liabilities of the Purchaser, on the one hand, and the
Company, on the other hand (the "indemnifying party"), to the other (the "party
to be indemnified") under Section 7.02 hereof with respect to claims resulting
from the assertion of liability by third parties shall be subject to the
following terms and conditions:
(a) within 20 days after receipt of notice of commencement
of any action or the assertion in writing of any claim by a third party, the
party to be indemnified shall give the indemnifying party written notice thereof
together with a copy of such claim, process or other legal pleading, and the
indemnifying party shall have the right to undertake the defense thereof by
representatives of its own choosing;
(b) in the event that the indemnifying party, by the 30th
day after receipt of notice of any such claim (or, if earlier, by the tenth day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the Person asserting such claim),
does not elect to defend against such claim, the party to be indemnified will
(upon further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the indemnifying party, subject to the right of the indemnifying
party to assume the defense of such claim at any time prior to settlement,
compromise or final determination thereof, provided that the indemnifying party
shall be given at least 15 days prior written notice of the effectiveness of any
such proposed settlement or compromise;
(c) anything in this Section 7.03 to the contrary
notwithstanding (i) if there is a reasonable probability that a claim may
materially and adversely affect the indemnifying party other than as a result of
money damages or other money payments, the indemnifying party shall have the
right, at its own cost and expense, to compromise or settle such claim, but (ii)
the indemnifying party shall not, without the prior written consent of the party
to be indemnified, settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the party to be indemnified a release from all
liability in respect of such claim; and
(d) in connection with any such indemnification, the
indemnified party will cooperate in all reasonable requests of the indemnifying
party.
21
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Restrictive Legends. Each Note and each
certificate representing the Conversion Shares and any shares of capital stock
received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon or otherwise, and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall be stamped or otherwise imprinted with the legends required to
be borne by such securities by the Registration Rights Agreement, except as
expressly provided in such agreement.
SECTION 8.02. Survival of Agreements. Except as
specifically limited as provided in Section 7.01 hereto, all covenants,
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the issuance, sale and delivery of
the Notes pursuant hereto, notwithstanding any investigation made at any time by
or on behalf of any party hereto. All statements contained in any certificate or
other instrument delivered by the Company hereunder shall be deemed to
constitute representations and warranties made by the Company.
SECTION 8.03. Parties in Interest. All covenants and
agreements contained in this Agreement by or on behalf of any party hereto shall
bind and inure to the benefit of the respective successors and permitted assigns
of such party hereto whether so expressed or not.
SECTION 8.04. Notices. Any notice or other communications
required or permitted hereunder shall be deemed to be sufficient if contained in
a written instrument delivered in person or duly sent by first class certified
mail, postage prepaid, by nationally recognized overnight courier, or by
facsimile addressed to such party at the address or facsimile number set forth
below or such other address or facsimile number as may hereafter be designated
in writing by the addressee to the addressor listing all parties:
if to the Company, to:
SAVVIS Communications Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
SAVVIS Communications Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
22
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
if to the Purchaser, to the address set forth under the
Purchaser's name on Schedule I hereto.
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of mailing, on the fifth business day following the date of such
mailing, (c) in the case of delivery by overnight courier, on the business day
following the date of delivery to such courier, and (d) in the case of
facsimile, when received.
SECTION 8.05. Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement.
SECTION 8.06. Entire Agreement; Assignment. This Agreement
(including, but not limited to, the Schedules and Exhibits thereto) constitutes
the entire agreement of the parties with respect to the subject matter hereof
and may not be amended or modified nor any provisions waived except in a writing
signed by the Company and the Purchaser. This Agreement shall not be assigned
without the consent of the other parties hereto, except that notwithstanding
anything to the contrary contained herein, the Purchaser may assign all or any
portion of such Notes and the related rights and obligations hereunder to any
parent, subsidiary, successor, assign or affiliate. It is understood and agreed
that, in the event of such assignment, each of such transferee shall, at such
time, agree to be a "Purchaser" for all purposes of this Agreement, and the
Purchaser shall not be released from its liabilities under this Agreement.
SECTION 8.07. Press Releases and Public Announcements. The
Company and the Purchaser shall use reasonable best efforts to agree upon the
form, content and timing of a public announcement regarding the terms of this
Agreement promptly upon execution hereof. All other public announcements or
disclosures relating to this Agreement shall be made only if mutually agreed
upon by the Company and the Purchaser, except to the extent such disclosure is,
23
in the opinion of the Company's or the Purchaser's legal counsel, required by
law or by regulation of any applicable national stock exchange or any
SEC-recognized trading market or equivalent foreign exchange or trading market;
provided that any such required disclosure shall only be made, to the extent
consistent with law and regulation of any applicable national stock exchange or
SEC-recognized trading market or equivalent foreign exchange or trading market,
after consultation with the Purchaser or the Company, as applicable. The Company
and the Purchaser further agree that notwithstanding the foregoing, neither the
Company nor the Purchaser (or any affiliate) shall make any press release or
public disclosure whatsoever with respect the terms or status of the negotiation
of any possible Network Services Agreement between the Company and Reuters
Limited, unless such agreement has been executed by the parties thereto, and
only then upon mutual agreement of such parties.
SECTION 8.08. Termination. (a) This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of the Company and the
Purchaser; or
(ii) by either the Company or the Purchaser if consummation
of the transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or Governmental Authority having
competent jurisdiction.
The party desiring to terminate this Agreement pursuant to
Section 8.08(a)(ii) hereof shall promptly give notice of such termination to the
other party.
(b) If this Agreement is terminated as permitted by this
Section 8.08, such termination shall be without liability of either party (or
any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obligations of the other
party, (ii) failure to perform a covenant of this Agreement or (iii) breach by
either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all losses incurred or
suffered by the other party as a result of such failure or breach. The
provisions of Sections 8.02, 8.03, 8.04, 8.07, 8.10 and 8.11 shall survive any
termination hereof pursuant to this Section 8.08.
SECTION 8.09. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
SECTION 8.10. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
24
SECTION 8.11. Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor will
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege, nor will any
waiving of any right power or privilege operate to waive any other subsequent
right, power or privilege. The rights and remedies herein provided will be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8.12. Taxes. Each party hereto acknowledges that it
is responsible for the payment of its own taxes including filing of
corresponding tax returns and submission of any form or other document relating
to the imposition of such taxes. Failure to provide any such form or document
may result in payments hereunder being made net of an amount necessary to
satisfy applicable withholding tax requirements.
[signature page follows]
25
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Agreement as of the day and year first above written.
SAVVIS COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President,
General Counsel
REUTERS HOLDINGS SWITZERLAND SA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Attorney-in-Fact
26
SCHEDULE I
Maximum Funding Amounts
------------------------------- ------------ ------------ ----------- ------------ --------------- -------------- -----------
Name and Address of Purchaser May 2001 June 2001 July 2001 August 2001 September 2001* October 2001* Total
------------------------------- ------------ ------------ ----------- ------------ --------------- -------------- -----------
Reuters Holdings Switzerland SA
c/o Reuters America Inc.
The Reuters Building
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -▇▇▇▇ ▇▇. $10,000,000 $10,000,000 $7,500,000 $2,500,000 $7,500,000 $7,500,000 $45,000,000
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ -----------
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-------------------------------- ------------ ------------ ----------- ------------ -------------- -------------- -----------
*See Section 1.02(c ) for conditions upon which Funding Requests may be
presented to the Purchaser in September 2001 and October 2001.
SCHEDULE 2.03(B)
CONVERTIBLE SECURITIES
----------------------
$20,000,000 aggregate principal amount of the Company's 10%
Convertible Senior Secured Notes due February 20, 2006 (the "Notes"), including
Notes issued as payment-in-kind interest thereunder.
SCHEDULE 2.04
AUTHORIZATION OF AGREEMENT
--------------------------
1. The consent of the Company's lenders under the Credit Agreement (as
defined in Section 2.09).
2. The consent of individuals and entities affiliated with Welsh ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ under the Missouri Future Advance Deed of Trust and
Security Agreement dated as of February 19, 2001.
3. The Board of Directors of the Company has only approved the
transactions contemplated by the Agreement for up to the lesser of
(i) $30,000,000 aggregate principal amount of Notes, and (ii) such
maximum aggregate principal amount of Notes that are convertible into
less than 15% of the outstanding voting stock of the Company, and
therefore any funding in accordance with Section 1 of the Agreement
that would result in the Purchaser owning 15% or more of the
Company's outstanding voting stock will require further approval by
the Company's Board of Directors.
4. The approval of the Company's stockholders of the issuance of the
Purchaser Conversion Preferred, if such approval is required under
the Market Place Rules of the Nasdaq Stock Market or any other
applicable rules or regulations of the National Association of
Securities Dealers, Inc.
SCHEDULE 2.07
1. On April 18, 2001, Winstar Communications Inc., along with certain of
its subsidiaries, voluntarily filed for protection under Chapter 11
of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the
District of Delaware. As a result of the breach by Winstar Wireless,
Inc. ("Winstar") of the terms of the Master Agreement, dated as of
June 30, 2000, between SAVVIS Missouri and Winstar, as amended, the
Company on April 17, 2001 sent a contractual termination letter to
Winstar. Because of the resulting abandonment of the deployment of
the wireless network technology, the Company may have to record a
write down to net realizable value of certain of its purchased
equipment from Winstar that was intended for deployment on the
Company's network. Should the full write down be necessary, the
amount has been tentatively estimated to be approximately $29
million.
2. The Company has terminated its Contract for Colocation Services in
Dallas, Texas, Medford, Massachusetts, Miami, Florida and Vienna,
Virginia with ▇▇▇▇.▇▇▇ (the "▇▇▇▇.▇▇▇ Agreement"). ▇▇▇▇.▇▇▇ has
notified the Company that it owes ▇▇▇▇.▇▇▇ a total amount of
$1,597,816.23 under the ▇▇▇▇.▇▇▇ Agreement, representing amounts past
due and the remaining contract value of the canceled ▇▇▇▇.▇▇▇
Agreement.
3. A mechanics lien for a debt of approximately $73,400 has been filed
on SAVVIS Missouri's data center in San Francisco resulting from a
nonpayment by SAVVIS Missouri relative to certain construction at
such data center, which lien may constitute a default by SAVVIS
Missouri under its lease at such data center.
4. Various mechanic's and materialmen's liens have been filed against
the Hazelwood Data Center in Missouri for a total debt of
approximately $2.7 million.
5. The Company has received notification from the Nasdaq Stock Market
that its Common Stock has failed to maintain a minimum closing bid
price of $1.00 per share for 30 consecutive trading days.
6. The Company and/or SAVVIS Missouri have entered into arrangements
with a number of vendors in connection with the late payment of
invoices.
7. Bridge's international subsidiaries have failed to make payments due
under various network services agreements relating thereto.
8. Bridge's filing for bankruptcy.
9. The cash situation of the Company as reflected on the Cash Flow
Projection.
10. A lien has been filed against SAVVIS Missouri's facility in Herndon,
Virginia in regard of a disputed payment of $60,000.
11. Any other events of default or alleged events of default under any
leases of real estate by Company and/or SAVVIS Missouri to the extent
such event of default or alleged event of default occurred on or
prior to the date of this Agreement and/or matters under any such
leases occurring on or prior to the date of this Agreement which,
with the passage of time, would constitute an event of default or
alleged event of default under such leases.
12. The filing of any mechanic's or materialmen's liens against or
otherwise encumbering any of the Mortgaged Property (as defined in
the Deed of Trust by SAVVIS Missouri in favor of Purchaser dated as
of May 16, 2001) arising out of the construction by or for the
benefit of SAVVIS Missouri of the Building (as defined in such Deed
of Trust) to the extent of any of such construction completed as of
the date of this Agreement.
13. Any insolvency of the Company or SAVVIS Missouri (it being understood
that neither the Company nor SAVVIS Missouri are acknowledging or
confirming the existence of any such insolvency nor shall they be
deemed to be waiving any right to dispute any assertion that one or
either of them were, prior to the date of this Agreement, insolvent).
Neither the Company nor SAVVIS Missouri are acknowledging or admitting the
validity of claims or assertion by any person or entity against the Company
and/or SAVVIS Missouri concerning any of the foregoing matters.
2
SCHEDULE 2.09
1. Stipulation and Order, dated April 9, 2001, by and among the Company,
AT&T Corp., Bridge and its related debtor entities.
2. Stipulation and Order, dated March 22, 2001, by and among the
Company, Sprint Communications Company L.P., Bridge and its related
debtor entities.
3. Stipulation and Order, dated March 23, 2001 by and among the Company,
MCI/WorldCom Communications Corporation and certain of its
affiliates, Bridge and its related debtor entities.
4. Stipulation and Order, dated March 22, 2001 between Bridge and the
Company.
5. Agreement Regarding the Supplemental Terms of the Interim SAVVIS
Financing as Approved by the May 3, ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Court for the Eastern District of Missouri (relating to
the note to Bridge and amounts owed by Bridge to the Company under
the network services agreement) (the "Agreement Regarding
Supplemental Terms").
SCHEDULE 2.10
1. On April 27, 2001, a complaint was filed by MHI DC, Inc. in the
United States District Court for the Eastern District of Virginia for
an amount of $867,000 in compensatory damages, plus pre-judgment
interest, costs and alternative or additional relief, including
attorneys' fees.
2. On May 10, 2001, a summons was filed by Heritage Exhibits, an Iowa
corporation, in the District Court of ▇▇▇▇▇ County, Nevada concerning
one of the Company's exhibit booths, requesting monetary relief in
excess of $40,000 for outstanding invoices.
3. Sprint has filed a Motion for an Order Permitting Termination of
Agreement with the Company in the United States Bankruptcy Court for
the Eastern District of Missouri (Case No. 01-0141593-393).
SCHEDULE 2.12
CONTRACTS
---------
1. Events of Default (as defined in the Credit Agreement), including
payment defaults, have occurred under the Credit Agreement.
2. The Company has failed to make payments due under the Sublease
Agreement, dated as of February 18, 2000, between the Company and
Bridge.
3. SAVVIS Missouri has failed to make payments due under the Ground
Lease Agreement, dated as of February 18, 2000, between SAVVIS
Missouri and Bridge Data Company.
4. The Company has failed to make payments due under its capital lease
facility with General Electric Capital Corporation.
5. Bridge is in default under the Network Services Agreement, dated
February 18, 2000, between the Company and Bridge.
6. Bridge's international subsidiaries have failed to make payments due
under various network services agreements relating thereto.
7. Bridge has breached certain of its covenants under the Master
Establishment and Transition Agreement, dated February 9, 2000,
between the Company and Bridge (the "MEAT Agreement"). The Company
does not intend to purchase the Call Assets (as such term is defined
in the MEAT Agreement) from Bridge.
8. The Company owes Bridge approximately $23 million under a term note
due February 18, 2001, which it intends to set-off, if permitted by
applicable law, against Bridge's indebtedness to the Company as of
February 15, 2001, the date of Bridge's bankruptcy filing.
9. The enforceability of all agreements with Bridge is affected by the
bankruptcy of Bridge.
10. The Company is in default under the Managed Network Agreement, dated
August 23, 1995, between Sprint Communications Company L.P. and
Bridge Data Company, as amended. Sprint Communications Company, L.P.
has filed a Motion for an Order Permitting Termination of Agreement
with the Company in the United States Bankruptcy Court for the
Eastern District of Missouri (Case No. 01-0141593-393).
11. The Company is late in making payments due under the Service
Agreement, dated August 15, 1996, between the Company and IXC
Carrier, Inc., as amended.
12. There is a dispute concerning payments under the Long Haul IRU
Agreement, dated as of August 2, 2000, between SAVVIS Missouri and
Level 3 Communications, LLC.
13. There is a dispute concerning payments under the Metro IRU Agreement,
dated as of August 2, 2000, between SAVVIS Missouri and Level 3
Communications, LLC.
14. The Company has received notice from Kiel Center Partners, L.P. a
Missouri limited partnership ("Kiel") with respect to the Naming
Rights Agreement, dated as of August 17, 2000, by and among Kiel, the
Company and Bridge, alleging that an Event of Default (as defined
therein) has occurred thereunder.
15. Winstar has breached the terms of the Master Agreement, dated as of
June 30, 2000, between SAVVIS Missouri and Winstar.
16. The Company is in default under the Company's 10% Convertible Senior
Secured Notes due February 20, 2006.
17. The Company has failed to make payments due under the Master Lease
Agreement Number 9029, Schedule No. 04, dated July 31, 1997, between
the Company and Ascend Credit Corporation.
18. A mechanics lien for a debt of approximately $73,400 has been filed
on SAVVIS Missouri's data center in San Francisco, resulting from
nonpayment by SAVVIS Missouri relative to certain construction at
such Data Center, which lien may constitute an event of default under
the Lease, dated as of February 29, 2000, between SAVVIS Missouri and
the United States Postal Service.
19. Various mechanic's and materialmen's liens have been filed against
the Hazelwood Data Center in Missouri for a total debt of
approximately $2.7 million.
20. A lien has been filed against SAVVIS Missouri's facility in Herndon,
Virginia in regard of a disputed payment of $60,000.
21. SAVVIS Missouri has received a notice alleging that it is in default
under the Lease, dated September 2000, between SAVVIS Missouri and
▇▇▇▇▇▇ Telecom Center, LLC, relating to property located on ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
22. The Company is in a dispute concerning payments under the Lease,
dated March 3, 2000, between SAVVIS Missouri and WXIII/FAR Yale Real
Estate Limited Partnership, relating to property located on ▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
23. The ▇▇▇▇.▇▇▇ Agreement has been terminated. ▇▇▇▇.▇▇▇ has notified the
Company that it owes ▇▇▇▇.▇▇▇ a total amount of $1,597,816.23 under
2
the ▇▇▇▇.▇▇▇ Agreement, representing amounts past due and the
remaining contract value of the canceled ▇▇▇▇.▇▇▇ Agreement.
24. Any other events of default or alleged events of default under any
leases of real estate by Company and/or SAVVIS Missouri to the extent
such event of default or alleged event of default occurred on or
prior to the date of this Agreement and/or matters under any such
leases occurring on or prior to the date of this Agreement which,
with the passage of time, would constitute an event of default or
alleged event of default under such leases.
25. The filing of any mechanic's or materialmen's liens against or
otherwise encumbering any of the Mortgaged Property (as defined in
the Deed of Trust by SAVVIS Missouri in favor of Purchase dated as of
May 16, 2001) arising out of the construction by or for the benefit
of SAVVIS Missouri of the Building (as defined in such Deed of Trust)
to the extent of any of such construction completed as of the date of
this Agreement.
26. Any insolvency of Company or SAVVIS Missouri (it being understood
that neither the Company nor SAVVIS Missouri are acknowledging or
confirming the existence of any such insolvency or waiver nor shall
they be deemed to be waiving any right to dispute any assertion that
one or either of them were, prior to the date of this Agreement, or
are as of the date of this Agreement, insolvent).
Neither the Company nor SAVVIS Missouri are acknowledging or admitting the
validity of claims or assertion by any person or entity against the Company
and/or SAVVIS Missouri concerning any of the foregoing matters.
Material Contracts To Be Filed:
-------------------------------
1. Stipulation and Order, dated March 23, 2001 between Bridge and the
Company.
2. Modification of Missouri Future Advance Deed of Trust and Security
Agreement, dated as of February 19, 2001, among SAVVIS Missouri,
Welsh ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII, L.P. and WCAS Management
Corporation.
3. Reuters Network Services Term Sheet.
4. Agreement Regarding Supplemental Terms.
5. First Amendment To Amended And Restated Credit Agreement by and among
the Company, SAVVIS Missouri, each of the undersigned Lenders (as
therein defined) and Nortel Networks Inc.
3
SCHEDULE 2.14
Stipulation and Order, dated March 23, 2001 between Bridge and the Company.
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE CORPORATION, AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS NOTE IS BEING
ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID"): (1) THE ISSUE PRICE IS THE NOTE'S
STATED PRINCIPAL AMOUNT; (2) THE ISSUE DATE IS __________, 2001; (3) THE YIELD
TO MATURITY (COMPOUNDED QUARTERLY) IS ___%; AND (4) THE AMOUNT OF THE ORIGINAL
ISSUE DISCOUNT IS [$insert total interest to be paid on the Note through
Maturity] (NOT INCLUDING ANY OID WITH RESPECT TO ADDITIONAL NOTES ISSUED IN LIEU
OF CASH INTEREST PAYMENTS).
SAVVIS COMMUNICATIONS CORPORATION
12% Convertible Senior Secured Note
due May 1, 2005
Registered ▇-▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
$___________ __________, 2001
SAVVIS COMMUNICATIONS CORPORATION, a Delaware corporation
(hereinafter called the "Corporation"), for value received, hereby promises to
pay Reuters Holdings Switzerland SA, or registered assigns (the "Holder"), the
principal sum of ____________________________ ($____________), in a single
installment on May 1, 2005 (the "Maturity Date"), or the next preceding Business
Day (as defined below) with interest (computed on the basis of a 360-day year)
from the date hereof on the unpaid principal amount hereof. Such interest shall
accrue at the rate of 12% per annum, compounded on a quarterly basis, payable on
the first day of February, May, August and November of each year (each such day
being an "Interest Payment Date") commencing on August 1, 2001, by, at the
option of the Corporation, (i) the payment of cash to the Holder or, (ii) until
August 1, 2004, the issuance of an additional Note or Notes (each a "PIK Note")
by the Corporation in favor of the Holder, in substantially the form hereof, in
a principal amount equal to the interest payable to such holder on such Interest
Payment Date, until the principal amount hereof shall have become due and
payable, whether at maturity or by acceleration or otherwise, and thereafter at
the rate of 14% per annum on any overdue principal amount and (to the extent
permitted by applicable law) on any overdue interest until paid.
The payment of principal and interest on this Note shall be
in such currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts.
NY2:\1040601\09\M@XL09!.DOC\69812.0235
If for any reason one or more PIK Notes shall not be
delivered in accordance herewith, interest on the unpaid principal of each PIK
Note shall accrue from the Interest Payment Date in respect of which such PIK
Note should have been issued until repayment in cash of the principal and
payment in cash of all accrued interest in full. Interest shall accrue on this
Note such that the aggregate interest due and payable on the Maturity Date and
on each Interest Payment Date would be the same as if all PIK Notes not issued
had been issued in accordance with the terms of this Note, and the principal
payable on the Maturity Date with respect to this Note shall be an amount equal
to the sum of the principal outstanding hereunder and the aggregate principal
which would be outstanding if the PIK Notes not issued had been issued in
accordance with the terms of this Note.
For purposes of this Note, "Business Day" shall mean any
day other than a Saturday, Sunday or a legal holiday under the laws of the State
of New York.
1. NOTES AND SECURITY. This Note is issued pursuant to the
Securities Purchase Agreement, dated as of May 16, 2001 (the "Purchase
Agreement"), by and between the Corporation and Reuters Holdings Switzerland SA,
a societe anonyme organized under the laws of Switzerland, providing for, among
other things, the issuance of 12% Convertible Senior Secured Notes due May 1,
2005 in the aggregate principal amount not to exceed $45,000,000 (such 12%
Convertible Senior Secured Notes are referred to herein collectively as the
"Notes"). All payments of principal and interest on this Note shall be secured
pursuant to the terms of that certain Missouri Future Advance Deed of Trust and
Security Agreement, dated as of May 11, 2001, as amended or supplemented from
time to time between the Corporation's subsidiary, Savvis Communications
Corporation, a Missouri corporation, and the other parties thereto. Capitalized
terms used herein but not otherwise defined shall have the meaning ascribed to
them in the Purchase Agreement.
2. TRANSFER OR EXCHANGE OF NOTES. The Corporation shall
keep at its office or agency maintained as provided in subsection (a) of Section
9 a register in which the Corporation shall provide for the registration of
Notes and for the registration of transfer and exchange of Notes. The holder of
this Note may, at its option, and either in person or by duly authorized
attorney, surrender the same for registration of transfer or exchange at the
office or agency of the Corporation maintained as provided in subsection (a) of
Section 9, and, without expense to such holder (except for taxes or governmental
charges imposed in connection therewith), receive in exchange therefore a Note
or Notes in such denomination or denominations as such holder may request (but
in any event in denominations of not less than $1,000 principal amount, dated as
of the date to which interest has been paid on the Note or Notes so surrendered
for transfer or exchange, for the same aggregate principal amount as the then
unpaid principal amount of the Note or Notes so surrendered for transfer or
exchange, and registered in the name of such person or persons as may be
designated by such holder. Every Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or shall be accompanied by a
written instrument of transfer, satisfactory in form to the Corporation, duly
executed by the holder of such Note or his attorney, duly authorized in writing.
Every Note so made and delivered in exchange for this Note shall in all other
2
respects be in the same form and have the same terms as this Note. No transfer
or exchange of any Note shall be valid unless made in the foregoing manner at
such office or agency.
3. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon
receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction or mutilation of this Note, and, in the case of any such loss, theft
or destruction, upon receipt of an affidavit of loss from the holder hereof
reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation will
make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.
4. PERSONS DEEMED OWNERS; HOLDERS. The Corporation may deem
and treat the person in whose name any Note is registered as the owner and
holder of such Note for the purpose of receiving payment of principal and
premium, if any, and interest on such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue. With respect to any Note
at any time outstanding, the term "holder," as used herein, shall be deemed to
mean the person in whose name such Note is registered as aforesaid at such time.
5. EARLY REDEMPTION.
(a) Upon Change of Control. The Corporation shall notify
the Holder at least 10 business days prior to a record date of a transaction
which would result in a Change of Control (as defined below) of the Corporation.
Upon receipt of such notice, the Holder shall have the right to require the
Corporation (i) to redeem any or all of this Note, including the PIK Notes (as
defined below), at a cash price equal to 100% of the principal amount of this
Note, plus all accrued and unpaid interest and the Applicable Premium Amount (as
defined below) as of the effective date of the Change of Control, or (ii) to
convert the principal amount of any or all of this Note (at the Holder's
option), including the PIK Notes and the Applicable Premium Amount (as defined
below), into shares of Common Stock, determined by dividing the aggregate
principal amount of this Note to be converted by the Common Stock Conversion
Price, with the proportional value of any fractional shares resulting therefrom
paid by the Corporation in cash to the Purchaser.
(b) Optional Prepayment by the Corporation. From and after
the first anniversary of the final Closing, the Corporation shall have the right
to prepay the entire principal amount, and only the entire principal amount, of
the Note, with all accrued and unpaid interest to the date of prepayment, at any
time without premium or penalty, upon at least 10 Business Days' notice of the
date of prepayment. The Holder shall have the right at any time prior to the
third business day prior to date of prepayment to convert this Note pursuant to
Section 15 hereof.
(c) Certain Definitions. As used herein, the following
terms shall have the following meanings:
3
"Applicable Premium Amount" shall mean, with respect to
this Note, as of any specified date prior to May 1, 2005, an amount
equal to the interest that would have accrued on the outstanding
principal amount of this Note during the period beginning on such
date fixed and ending on May 1, 2005.
"Change of Control" shall mean the consummation by the
Corporation of (x) a merger or consolidation with or into any other
entity (other than a merger or consolidation in which (1) at least
50% of the voting capital stock of the Corporation (or the surviving
or resulting entity, if other than the Corporation) outstanding
immediately after the effective date of such merger is owned of
record or beneficially by persons who owned voting capital stock of
the Corporation immediately prior to such merger or consolidation and
in substantially the same proportions in which such stock was held
immediately prior to such merger or consolidation and such persons
continue to have the right to elect a majority of the Board of
Directors of the Corporation, (2) immediately after the effective
date of such merger or consolidation a majority of the seats on the
Corporation's Board of Directors are held by persons who were
directors of the Corporation immediately prior to such effective
date, and (3) no Event of Default shall have occurred as a result of
the consummation thereof), or (y) any sale, lease or other disposal
of all or substantially all of its assets and properties as an
entirety in a single transaction or series of related transactions to
an unaffiliated third party purchaser or purchasers, or (z) a
transaction or series of related transactions in which a majority of
the outstanding capital stock of the Corporation shall be acquired by
an unaffiliated third party or parties.
6. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Corporation
shall give written notice of any prepayment of this Note pursuant to Section 5
not less than 10 days prior to the date fixed for such prepayment. Such notice
shall include a reasonably-detailed description of the consideration, if any, to
be received by holders of Common Stock in connection with the related Change of
Control and a calculation of the Applicable Premium Amount to be paid in respect
of such prepayment. Such notice of prepayment and all other notices to be given
to any holder of this Note shall be given by registered or certified mail to the
person in whose name this Note is registered at its address designated on the
register maintained by the Corporation on the date of mailing such notice of
prepayment or other notice. Unless the holder elects prior to such date fixed
for prepayment to convert this Note pursuant to Section 15 hereof, upon notice
of prepayment being given as aforesaid, the Corporation covenants and agrees
that it will prepay, on the date therein fixed for prepayment, the entire
principal amount hereof together with interest accrued hereon and Applicable
Premium Amount hereon to the date fixed for such prepayment. Notwithstanding the
foregoing, any such notice may specify that the obligation to make such
prepayment is conditional upon the closing of the transaction requiring such
prepayment, and, unless a notice of conversion delivered pursuant to Section 15
states to the contrary, any notice of conversion given while such a transaction
is pending shall also be conditional upon the closing of such transaction, and
no prepayment shall be required and no conversion shall be effected, unless and
until such transaction is consummated.
4
7. INTEREST AND PREMIUM AFTER DATE FIXED FOR PREPAYMENT. If
this Note is to be prepaid pursuant to Section 5 hereof, this Note shall (unless
the provisions of the last sentence of Section 6 become applicable) cease to
bear interest on and after the date fixed for such prepayment unless, upon
presentation for the purpose, the Corporation shall fail to pay this Note, in
which event the principal amount of this Note, and, so far as may be lawful, any
overdue installment of interest or overdue Applicable Premium Amount, shall bear
interest on and after the date fixed for such prepayment and until paid at the
rate per annum provided herein for overdue principal.
8. SURRENDER OF NOTES; NOTATION THEREON. As a condition to
obtaining any payment of or receiving any shares issuable upon the conversion of
all or any portion of the principal amount of this Note, the Corporation may
require the holder hereof to surrender this Note, and in such event the
Corporation will execute and deliver at the expense of the Corporation, upon
such surrender, a new Note registered in the name of such person or persons as
may be designated by such holder for the principal amount of this Note then
remaining unpaid and not converted pursuant to Section 15 hereof, dated as of
the date to which interest has been paid on the principal amount of this Note
then remaining unpaid, or may require the holder to present this Note to the
Corporation for notation hereon of the conversion of the portion of the
principal amount of this Note so converted.
9. AFFIRMATIVE COVENANTS. The Corporation covenants and
agrees that, so long as any Note shall be outstanding:
(a) Maintenance of Office. The Corporation will maintain an
office or agency in Herndon, Virginia (or such other place in the United States
of America as the Corporation may designate in writing to the registered holder
hereof), where the Notes may be presented for registration of transfer and for
exchange as herein provided, where notices and demands to or upon the
Corporation in respect of the Notes may be served and where, at the option of
the holders thereof, the Notes may be presented for payment. Until the
Corporation otherwise notifies the holders of the Notes, said office shall be
the principal office of the Corporation in Herndon, Virginia.
(b) Payment of Taxes. The Corporation will promptly pay and
discharge or cause to be paid and discharged, before the same shall become in
default, all lawful taxes and assessments imposed upon the Corporation or any
subsidiary or upon the income and profits of the Corporation or any subsidiary,
or upon any property, real, personal or mixed, belonging to the Corporation or
any subsidiary, or upon any part thereof by the United States or any State
thereof, as well as all lawful claims for labor, materials and supplies, which,
if unpaid, would become a lien or charge upon such property or any part thereof;
provided, however, that the Corporation shall not be required to pay and
discharge or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim (i) so long as both (x) the Corporation has set aside
adequate reserves for such tax, assessment, charge, levy or claim and (y) the
5
Corporation shall be contesting the validity thereof in good faith by
appropriate proceedings or the Corporation shall, in its good faith judgment,
deem the validity thereof to be questionable and the party to whom such tax,
assessment, charge, levy or claim is allegedly owed shall not have made written
demand for the payment thereof or (ii) where the failure to pay or discharge
would not have a material adverse effect on the properties, assets, financial
condition, operating results, business or prospects of the Corporation and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(c) Corporate Existence. The Corporation will do or cause
to be done all things necessary and lawful to preserve and keep in full force
and effect its corporate existence, rights and franchises under the laws of the
United States or any State thereof; provided, however, that nothing in this
subsection (c) shall prevent a consolidation or merger of, or a sale, transfer
or disposition of all or any substantial part of the property and assets of, the
Corporation, or the abandonment or termination of any rights or franchises of
the Corporation, if such abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of the Corporation
or would not have a Material Adverse Effect.
(d) Maintenance of Property. The Corporation will at all
times maintain and keep, or cause to be maintained and kept, in good repair,
working order and condition all significant properties of the Corporation used
in the conduct of the business of the Corporation, and will from time to time
make or cause to be made all needful and proper repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this subsection (d) shall require the making
of any repair or renewal or the continuance of the operation and maintenance of
any property or the retention of any assets, if such action (or inaction) is, in
the good faith business judgment of the Corporation, in the best interests of
the Corporation or would not have a Material Adverse Effect.
(e) Insurance. The Corporation will keep adequately
insured, by financially sound and reputable insurers, all property of a
character usually insured by corporations engaged in the same or a similar
business similarly situated against loss or damage of the kinds customarily
insured against by such corporations and carry, with financially sound and
reputable insurers, such other insurance (including, without limitation,
liability insurance) in such amounts as are available at reasonable expense and
to the extent believed necessary in the good faith business judgment of the
Corporation.
(f) Keeping of Books. The Corporation will at all times
keep proper books of record and account in which proper entries will be made of
its transactions in accordance with generally accepted accounting principles
consistently applied.
(g) Notice of Default. If any one or more events which
constitute, or which with notice or lapse of time or both would constitute, an
Event of Default under Section 11 shall occur, or if the holder of any Note
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse of time or both
6
constitute such an Event or that such demand has been made or that any such
action has been taken, give notice to the holder of this Note, specifying the
nature of such event or of such demand or action, as the case may be; provided,
however, that if such event, in the good faith judgment of the Corporation, will
be cured within ten Business Days after the Corporation has knowledge that such
event would, with or without notice or lapse of time or both, constitute such an
Event of Default, no such notice need be given if such Event of Default shall be
cured within such ten-day period.
(h) Information Covenants. The Corporation will furnish
each Holder:
(i) Annual Financial Statements. As soon as available, and
in any event within 90 days after the close of each fiscal year of
the Corporation, a consolidated balance sheet and income statement of
the Corporation, as of the end of such fiscal year, together with
related consolidated statements of operations and retained earnings
and of cash flows for such fiscal year, setting forth in comparative
form consolidated figures for the preceding fiscal year, all such
financial information described above to be in reasonable form and
detail and audited by independent certified public accountants of
recognized national standing and whose opinion shall be to the effect
that such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") (except for changes
with which such accountants concur) and shall not be limited as to
the scope of the audit or qualified as to the status of the
Corporation as a going concern;
(ii) Quarterly Financial Statements. As soon as available,
and in any event within 45 days after the close of each of the first
three fiscal quarters of each fiscal year of the Corporation, a
consolidated balance sheet and income statement of the Corporation,
as of the end of such fiscal quarter, together with related
consolidated statements of operations and retained earnings and of
cash flows for such fiscal quarter, in each case setting forth in
comparative form consolidated figures for the corresponding period of
the preceding fiscal year or the end of the fiscal year, as presented
by the Corporation in the Company SEC Filings, all such financial
information described above to be in reasonable form and detail, and
accompanied by a certificate of an executive officer of the
Corporation to the effect that such quarterly financial statements
fairly present in all material respects the financial condition of
the Corporation and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end audit
adjustments;
(iii) Monthly Financial Information. A consolidated balance
sheet and income statement of the Corporation as of the end of each
month, together with related consolidated statements of cash flow, by
the twentieth (20th) calendar day of each fiscal month, with respect
to the preceding fiscal month; provided, however, at the end of each
of the first three fiscal quarters of the fiscal year, the
Corporation shall provide such consolidated balance sheet, income
statement and statement of cash flow by the forty-fifth (45th)
calendar day after the end of such fiscal quarter; and provided
further, at the end of the fourth fiscal quarter of such fiscal year,
the Corporation shall provide such consolidated statements by the
ninetieth (90th) calendar day after the end of the fiscal year. The
7
monthly financial statements shall be accompanied by a certificate of
an executive officer of the Corporation to the effect that such
monthly financial statements fairly present in all material respects
the financial condition of the Corporation and have been prepared in
accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments;
(iv) Annual Business Plan and Budgets. No later than the
twenty-fifth (25th) calendar day prior to the end of each fiscal year
of the Corporation, an annual business forecast of the Corporation
containing, among other things, projected financial statements for
the next fiscal year, financial and operating budgets and cash flow
projections on a monthly basis (collectively, the "Annual Budget");
together with appropriate supporting details; as soon as possible,
but in no event later than forty-five (45) days after the close of
each of the first three fiscal quarters and ninety (90) days after
the close of each fiscal year, a statement in which the actual
results of such fiscal quarter are compared with the most recent
forecasts for such fiscal quarter; and as soon as available, any
material revisions to the Annual Budget;
(v) Reports. Promptly upon transmission or receipt thereof,
copies of any filings and registrations with, and reports to or from,
the Securities and Exchange Commission, or any successor agency, and
copies of all financial statements, proxy statements, notices and
reports as the Corporation shall send to its shareholders or to a
holder of any indebtedness owed by the Corporation in its capacity as
such a holder; provided, however, that notwithstanding the foregoing,
the Corporation will not furnish to any Holder any material
non-public information regarding the Corporation unless such Holder
shall have signed a confidentiality agreement reasonably acceptable
to the Corporation agreeing to maintain such information confidential
and to refrain from trading in the Common Stock until the Corporation
has advised such Holder, or such Holder otherwise discovers, that
such information has ceased to be material or has been disclosed to
the public.
10. MODIFICATION BY HOLDERS; WAIVER. The Corporation may,
with the written consent of the holders of not less than 66 2/3% in principal
amount of the Notes then outstanding, modify the terms and provisions of the
Notes or the rights of the holders of the Notes or the obligations of the
Corporation thereunder, and the observance by the Corporation of any term or
provision of the Notes may be waived with the written consent of the holders of
not less than 66 2/3% in principal amount of the Notes then outstanding;
provided, however, that no such modification or waiver shall:
(a) change the maturity of any Note or reduce the principal
amount thereof or reduce the rate or extend the time of payment of
interest thereon or reduce the amount or change the time of payment
of premium payable on any prepayment thereof without the consent of
the holder of each Note so affected; or
(b) give any Note any preference over any other Note; or
8
(c) reduce the applicable aforesaid percentages of Notes,
the consent of the holders of which is required for any such
modification.
Any such modification or waiver shall apply equally to all
the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Corporation, whether or
not such Note shall have been marked to indicate such modification or waiver,
but any Note issued thereafter shall bear a notation referring to any such
modification or waiver. Promptly after obtaining the written consent of the
holders as herein provided, the Corporation shall transmit a copy of such
modification or waiver to all the holders of the Notes at the time outstanding.
11. EVENTS OF DEFAULT. If any one or more of the following
events, herein called "Events of Default," shall occur, for any reason
whatsoever, and whether such occurrence shall, on the part of the Corporation,
be voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal
of any Note or the premium thereon, if any, when and as the same
shall become due and payable, whether at maturity or at a date fixed
for prepayment or by acceleration or otherwise; or
(b) default shall be made in the payment of any installment
of interest on any Note according to its terms when and as the same
shall become due and payable and such default shall continue for a
period of 15 days; or
(c) (i) commencement of a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) filing a
petition seeking to take advantage of any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
winding-up or composition for adjustment of debts, (iii) consenting
to or failing to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such
bankruptcy laws or other laws, (iv) applying for or consenting to, or
failing to contest to, in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admitting in writing its
inability to pay its debts as they become due, (vi) making a general
assignment for the benefit of creditors, or (vii) taking any
corporate action for the purpose of authorizing any of the foregoing;
or
(d) the entry of a decree or order by any court of
competent jurisdiction in respect of the Corporation or any material
subsidiary granting (i) relief in any involuntary case under the
federal bankruptcy laws (as now or hereafter in effect) or under any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii)
appointment of a trustee, receiver, custodian, liquidator or the like
9
for the Corporation or any material subsidiary or for all or any
substantial part of their respective assets, domestic or foreign, and
such case or proceeding shall continue undismissed or unstayed for a
period of 60 consecutive days; or
(e) (i) a default by the Corporation in any material
respect shall have occurred in any covenant to which the Corporation
is subject in the Purchase Agreement or any Ancillary Document (as
defined in the Purchase Agreement) or (ii) a payment default (other
than any payment defaults disclosed in the Purchase Agreement
including those payment defaults related to agreements with which the
Company is a party with Nortel Networks Inc. or General Electric
Capital Corporation (the "Specified Defaults"), provided, that such
Specified Defaults are waived within 10 days of the date hereof (or
such later date as the Network Services Term Sheet is executed) and
then only for so long as such waivers shall be in effect) shall have
occurred or acceleration of the payment of the indebtedness (other
than acceleration solely in response to any events of default
disclosed in the Purchase Agreement) shall have been commenced under
any agreement or document evidencing indebtedness of the Corporation;
then, the holder or holders of at least a majority in aggregate principal amount
of the Notes at the time outstanding may, at its or their option, by written
notice to the Corporation, declare all the Notes to be, and all the Notes shall
thereupon be and become, forthwith due and payable together with interest
accrued thereon without presentment, demand, protest or further notice of any
kind, all of which are expressly waived to the extent permitted by law;
provided, however, that, upon the occurrence and during the continuance of any
of the events specified in subsections (a) or (b) of this Section 11, the holder
of any Note at the time outstanding may, at its option by notice in writing to
the Corporation, declare any Note or Notes then held by it to be, and such Note
or Notes shall thereupon be and become, forthwith due and payable together with
interest accrued thereon without presentment, demand, protest or further notice
of any kind, all of which are expressly waived to the extent permitted by law.
Notwithstanding the foregoing, nothing in this Section 11 shall impair the right
of the holder of this Note to convert all or any portion of this Note into
Common Stock in accordance with the provisions of Section 15 hereof.
At any time after any declaration of acceleration has been
made as provided in this Section 11, the holders of at least 66-2/3% in
principal amount of the Notes then outstanding may, by notice to the
Corporation, rescind such declaration and its consequences if the Corporation
has paid all overdue installments of interest on the Notes and all principal
(and premium, if any) that has become due otherwise than by such declaration of
acceleration; and all other defaults and Events of Default (other than
nonpayments of principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have been waived
pursuant to this paragraph; provided, however, that no such rescission shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.
Without limiting the foregoing, the Corporation hereby
waives any right to trial by jury in any legal proceeding related in any way to
this Note or the Notes and agrees that any such proceeding may, if the holder so
elects, be brought and enforced in any state or, if applicable federal court,
10
located in New York City in the Borough of Manhattan and the Corporation hereby
waives any objection to jurisdiction or venue in any such proceeding commenced
in such court. The Corporation further agrees that any process required to be
served on it for purposes of any such proceeding may be served on it, with the
same effect as personal service on it within the State of Delaware, by
registered mail addressed to it at its office or agency set forth in Section 19
for purposes of notices hereunder.
12. SUITS FOR ENFORCEMENT. In case any one or more of the
Events of Default specified in Section 11 of this Note shall happen and be
continuing, the holder of this Note may proceed to protect and enforce its
rights by suit in equity, action at law and/or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Note or in aid of the exercise of any power granted in this Note, or may
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of the holder of this Note.
In case of any default under any Note, the Corporation will
pay to the holder thereof such amounts as shall be sufficient to cover the
out-of-pocket costs and expenses of such holder due to said default, including,
without limitation, collection costs and reasonable attorneys' fees, to the
extent actually incurred.
13. REMEDIES CUMULATIVE. No remedy herein conferred upon
the holder of this Note is intended to be exclusive of any other remedy and each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise.
14. REMEDIES NOT WAIVED. No course of dealing between the
Corporation and the holders of this Note or any delay on the part of the holder
hereof in exercising any rights hereunder shall operate as a waiver of any right
of any holder of this Note.
15. CONVERSION.
(a) Conversion of this Note into Common Stock. All or a
portion of the principal amount of this Note shall, at any time and at the
option of the Holder, be convertible into a number of shares of Common Stock,
calculated by dividing the portion of the principal amount of such Notes to be
converted (together with any accrued and unpaid interest on such portion of the
principal amount) by $_____ (subject to equitable adjustment for stock splits,
stock dividends, recapitalizations, reorganizations or other similar events, the
"Common Stock Conversion Price" or "Conversion Price") with the proportional
value of any fractional shares resulting therefrom paid by the Corporation in
cash to the Holder upon conversion. The Holder will give the Corporation at
least 10 business days notice of its intention to convert all or a portion of
the principal amount of the Notes into Common Stock, except if such conversion
follows a notice of prepayment pursuant to Section 5(b) hereof. The Corporation
shall present and deliver certificates evidencing the proper number of shares of
Common Stock to the Holder, in such denominations and in such name or names as
the Holder may designate by notice to the Corporation, to each Holder, at a time
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and place mutually agreeable to the Holder and the Corporation, in exchange for
delivery of this Note to the Corporation. Upon receipt of this Note in exchange
for such certificate or certificates of Common Stock, the Corporation shall
cancel and destroy this Note, and this Note shall thereafter be null, void and
of no effect. If any of the principal amount of Note tendered to the Corporation
pursuant to this Section 15(a) shall remain unconverted and outstanding
following the issuance of such Common Stock, the Corporation shall execute and
deliver to the Holder at the same time and in the same manner as the certificate
evidencing such Holder's Common Stock is delivered, a replacement note that
shall be identical in all respects as this Note, except that the principal
amount shall be reduced by the principal amount of this Note converted to Common
Stock. If this Note has been issued pursuant to a Funding Request that is
delivered after the automatic conversion of a previously-issued Note pursuant to
Section 1.04(b) thereof, it shall be convertible into Purchaser Conversion
Preferred (as defined below).
(b) Automatic Conversion of this Note into Preferred Stock.
Simultaneous with the Corporation raising an aggregate of $50,000,000 (the
"Conversion Amount") in cash through the issuance of convertible preferred stock
prior to the Maturity Date, excluding the Notes and PIK Notes, but including
shares issued upon conversion of up to $20,000,000 aggregate principal amount of
the Corporation's 10% Convertible Senior Secured Notes due February 20, 2006
issued to affiliates of Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ("▇▇▇▇▇ ▇▇▇▇▇▇")
(excluding any notes issued to ▇▇▇▇▇ ▇▇▇▇▇▇ in kind for interest on such notes),
all of the principal amount of this Note, together with any PIK Notes, Notes
then-payable in kind for accrued and unpaid interest as of such date and Notes
to be purchased on such date by the Purchaser, subject to satisfaction of all
applicable conditions set forth in Section 6.02 of the Purchase Agreement, at a
special Closing on such date with a Purchase Price equal to the difference
between $30,000,000 and the aggregate Purchase Price paid by the Purchaser
pursuant to all Closings completed pursuant to this Agreement as of such date
pursuant to the terms of the Purchase Agreement (collectively, the "Purchaser
Conversion Notes"), shall be converted into a number of shares of convertible
preferred stock ("Purchaser Conversion Preferred") having the same rights,
preferences, privileges and restrictions as shares issued (the "Recent Equity
Financing Shares") pursuant to the Corporation's most recent preferred stock
financing (the "Recent Equity Financing"), except that the initial conversion
price of such Purchaser Conversion Preferred shall be the lesser of (i) the
initial conversion price of the Recent Equity Financing Shares, (ii) the initial
conversion price of shares issued pursuant to any financing which comprises a
portion of the Conversion Amount (excluding shares issued upon conversion of the
notes previously issued to ▇▇▇▇▇ ▇▇▇▇▇▇ referred to above), and (iii) the Common
Stock Conversion Price. The Purchaser Conversion Preferred shall be of the same
class, but separate series, as the Recent Equity Financing Shares. The
proportional value of any fractional shares resulting from the issuance of
Purchaser Conversion Preferred shall be paid by the Corporation in cash to the
Purchaser. Notwithstanding the foregoing, the following actions by the
Corporation shall not be aggregated in calculating the Conversion Amount: (i)
the issuance of any shares of Common Stock pursuant to a stock option plan
approved by the Corporation's Board of Directors, (ii) the issuance of stock,
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warrants or other securities or rights to persons or entities with which the
Corporation has bona fide business relationships provided such issuances are for
other than primarily equity financing purposes, provided that in any such case
(involving the foregoing clauses (i) or (ii)) such issuance has been approved by
a majority of the members of the Corporation's Board of Directors. The
Corporation will provide the Holder with at least 10 business days notice in
advance of an expected closing of an equity financing which will result in the
raising of the Conversion Amount, noting the time and place of such event. The
Corporation shall present and deliver certificates evidencing the proper number
of Recent Equity Financing Shares to the Holder, in such denominations and in
such name or names as the Holder may designate by notice to the Corporation, to
the Holder at the closing of the Recent Equity Financing in exchange for
delivery of this Note to the Corporation. Upon receipt of this Note in exchange
for such certificate or certificates of stock evidencing the proper number of
Recent Equity Financing Shares, the Corporation shall cancel and destroy this
Note or Notes, and this Note or Notes shall thereafter be null, void and of no
effect.
(c) Conversion Prior to Optional Prepayment. In the event
the holder of this Note receives a notice from the Corporation in accordance
with Section 5(b) that the Corporation intends to optionally prepay the Note,
the holder of this Note shall have the option, prior to the consummation of such
prepayment, to convert all or portion of the unpaid principal amount of this
Note together with a corresponding portion of the accrued interest hereon into
shares of Common Stock in accordance with the terms of paragraph (a) above. The
holder shall exercise such right of conversion by giving written notice to the
Corporation in accordance with paragraph (a) above prior to the date of such
prepayment referred to in the Corporation's notice to the holder in accordance
with Section 6.
(d) Issuance of Certificates; Time Conversion Effected.
Promptly after (i) the receipt of the written notice referred to in paragraph
(a) above or (ii) the occurrence of the events described in paragraph (b) above,
as the case may be, and surrender of this Note, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock or preferred stock, as the case may be,
issuable upon the conversion of such unpaid principal amount of this Note
together with interest and any Applicable Premium Amount. To the extent
permitted by law, such conversion shall be deemed to have been effected as of
the close of business on the date on which this Note shall have been surrendered
as aforesaid, and at such time the rights of the holder of this Note, to the
extent of the principal amount thereof and any other amounts to be converted,
shall cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock, or preferred stock, as the case may be,
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.
(e) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of the principal amount of
this Note or any portion thereof, and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. In case of the conversion of only a portion of the unpaid
principal amount of this Note, the holder hereof, at its option, may require the
Corporation to execute and deliver at the expense of the Corporation (other than
for transfer taxes, if any), upon surrender of this Note, a new Note registered
13
in the name of such person or persons as may be designated by such holder for
the principal amount of this Note then remaining unpaid, dated as of the date to
which interest has been paid on the principal amount of this Note then remaining
unpaid, or may present this Note to the Corporation for notation hereon of the
payment of the portion of the principal amount of this Note so converted. If any
fractional interest in a share of Common Stock or preferred stock, as the case
may be, would, except for the provisions of the first sentence of this paragraph
(e), be deliverable upon any such conversion, the Corporation, in lieu of
delivering the fractional share thereof, shall pay to the holder surrendering
this Note for conversion an amount in cash equal to such fractional interest
multiplied by the Conversion Price then in effect.
(f) Adjustment of Conversion Price upon Issuance of Common
Shares. If and whenever the Corporation shall issue or sell, or is in accordance
with subparagraphs (i) through (vii) deemed to have issued or sold, any shares
of its Common Stock for a consideration per share less than the Conversion Price
in effect immediately prior to the time of such issue or sale, then, forthwith
upon such issue or sale, the Conversion Price shall be reduced to the price
(calculated to the nearest cent) determined by dividing (x) an amount equal to
the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (including as outstanding all shares of Common Stock
issuable upon conversion of outstanding Notes) multiplied by the then existing
Conversion Price, and (2) the consideration, if any, received by the Corporation
upon such issue or sale, by (y) the total number of shares of Common Stock
outstanding immediately after such issue or sale (including as outstanding all
shares of Common Stock issuable upon conversion of outstanding Notes).
No adjustment of the Conversion Price, however, shall be
made in an amount less than $.01 per share, and any such lesser adjustment shall
be carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward
shall amount to $.01 per share or more.
For purposes of this subparagraph (f), the following
subparagraphs (i) to (vii) shall also be applicable:
(i) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe
for or to purchase, or any options for the purchase of, Common
Stock or any stock or securities convertible into or
exchangeable for Common Stock (such rights or options being
herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible
Securities") whether or not such Options, or the right to
convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or
upon conversion or exchange of such Convertible Securities
(determined by dividing (x) the total amount, if any, received
or receivable by the Corporation as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the
14
exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon
the conversion or exchange thereof, by (y) the total maximum
number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
Options) shall be less than the Conversion Price in effect
immediately prior to the time of the granting of such Options,
then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion
or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the
date of granting of such Options and thereafter shall be
deemed to be outstanding. Except as otherwise provided in
subparagraph (iii), no adjustment of the Conversion Price
shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such Options or
upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities. If at the end of the
period during which such Options or Convertible Securities are
exercisable not all Options or Convertible Securities shall
have been exercised or converted, the adjusted Conversion
Price shall be immediately readjusted to what it would have
been based upon the number of additional shares of Common
Stock actually issued in respect of such Options and
Convertible Securities.
(ii) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (x) the total amount
received or receivable by the Corporation as consideration for
the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Conversion
Price in effect immediately prior to the time of such issue or
sale, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (1) except as otherwise provided in
subparagraph (iii) below, no adjustment of the Conversion
Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities and
(2) if any such issue or sale of such Convertible Securities
is made upon exercise of any Option to purchase any such
Convertible Securities for which adjustments of the Conversion
Price have been or are to be made pursuant to other provisions
of this paragraph (f), no further adjustment of the Conversion
Price shall be made by reason of such issue or sale. If at the
end of the period during which such Convertible Securities are
convertible not all Convertible Securities shall have been
converted, the adjusted Conversion Price shall be immediately
readjusted to what it would have been based upon the number of
15
additional shares of Common Stock actually issued in respect
of such Convertible Securities.
(iii) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in
subparagraph (i), the additional consideration, if any,
payable upon the conversion or exchange of any Convertible
Securities referred to in subparagraph (i) or (ii), or the
rate at which any Convertible Securities referred to in
subparagraph (i) or (ii) are convertible into or exchangeable
for Common Stock shall change at any time (other than under or
by reason of provisions designed to protect against dilution),
the Conversion Price in effect at the time of such event shall
forthwith be readjusted to the Conversion Price which would
have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted,
issued or sold; and on the expiration of any such Option or
termination of any such right to convert or exchange such
Convertible Securities, the Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price
which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration or
termination, never been issued, and the Common Stock issuable
thereunder shall no longer be deemed to be outstanding. If the
purchase price provided for in any such Option referred to in
subparagraph (i) or the rate at which any Convertible
Securities referred to in subparagraph (i) or (ii) are
convertible into or exchangeable for Common Stock shall be
reduced at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then, in
case of the delivery of Common Stock upon the exercise of any
such Option or upon conversion or exchange of any such
Convertible Securities, the Conversion Price then in effect
hereunder shall forthwith be adjusted to such respective
amount as would have been obtained had such Option or
Convertible Securities never been issued as to such Common
Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if as
a result of such adjustment the Conversion Price then in
effect hereunder is thereby reduced.
(iv) Stock Dividends. Without duplication of the adjustment
contemplated by clause (g) below, in case the Corporation
shall declare a dividend or make any other distribution upon
any stock of the Corporation payable in Common Stock, Options
or Convertible Securities, any Common Stock, Options or
Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(v) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefore shall be
deemed to be the amount received by the Corporation therefore,
without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any shares of
16
Common Stock, Options or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of
Directors of the Corporation, without deduction of any
expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the
Corporation, together compromising one integral transaction in
which no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to have
been issued without consideration.
(vi) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of
entitling them (x) to receive a dividend or other distribution
payable in Common Stock, Options or Convertible Securities, or
(y) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or
the date of the granting of such right of subscription or
purchase, as the case may be.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned
or held by or for the account of the Corporation, and the
disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of this paragraph (f).
Notwithstanding anything to the contrary contained in this paragraph (f),
paragraph (f) is subject to the prior approval of the Corporation's
shareholders, which the Corporation shall seek to obtain as promptly as
practicable, if such shareholder approval would be required under the
Marketplace Rules of the Nasdaq National Market (the "NASDAQ") if paragraph (f)
were to otherwise operate in accordance with its terms, unless the NASDAQ has
waived such requirement.
(g) Subdivision or Combination of Stock. In case the
Corporation shall at any time declare a dividend or make any other distribution
upon any stock of the Corporation payable in Common Stock or subdivide its
outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Corporation shall be combined into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
(h) Certain Issues of Stock Excepted. Anything herein to
the contrary notwithstanding, the Corporation shall not make any adjustment of
the Conversion Price in the case of (i) the issuance of shares of Common Stock
upon conversion of Notes; (ii) the issuance of Options or shares of Common Stock
to employees, directors or consultants of the Corporation or its subsidiaries,
either directly or pursuant to Options, pursuant to plans or arrangements
17
approved by the Board of Directors (or Compensation Committee thereof) of the
Corporation; (iii) the issuance of shares of Common Stock in respect of any
Convertible Securities or Options issued by the Corporation prior to the date of
this Note; or (iv) the issuance of shares of Common Stock in connection with any
acquisition, merger, consolidation, or other business combination transaction.
(i) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a Note shall
thereafter have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock of the
Corporation immediately theretofore receivable upon the conversion of such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore so receivable had
such reorganization or reclassification not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without limitation
provisions for adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of such conversion rights
(including an immediate adjustment, by reason of such reorganization or
reclassification, of the Conversion Price to the value for the Common Stock
reflected by the terms of such reorganization or reclassification if the value
so reflected is less than the Conversion Price in effect immediately prior to
such reorganization or reclassification). In the event of a merger or
consolidation of the Corporation as a result of which a greater or lesser number
of shares of Common Stock of the surviving corporation are issuable to holders
of Common Stock of the Corporation outstanding immediately prior to such merger
or consolidation, the Conversion Price in effect immediately prior to such
merger or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock of
the Corporation. The Corporation will not effect any such consolidation, merger,
or any sale of all or substantially all of its assets or properties, unless
prior to the consummation thereof the successor corporation or other entity (if
other than the Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume, by written instrument executed
and mailed or delivered to each holder of Notes at the last address of such
holder appearing on the books of the Corporation, the obligation to deliver to
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to receive.
(j) Notice of Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, addressed to each holder
of Notes at the address of such holder as set forth in the register maintained
by the Corporation for the registration of transfer and exchange of Notes, which
18
notice shall state the Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
(k) Other Notices. In case at any time:
(i) the Corporation shall declare any dividend upon its
Common Stock payable in cash or stock or make any other distribution
to the holders of its Common Stock;
(ii) the Corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of
any class or other rights;
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with, or a sale of all or
substantially all its assets to, another corporation or other entity;
or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, addressed to each holder of Notes at the address of
such holder as set forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes, (A) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (B) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (A) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (B) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
(l) Stock to Be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock or its treasury
shares, solely for the purpose of issue upon the conversion of the Notes as
herein provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of the unpaid principal amount of all outstanding Notes. The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation covenants that it will
from time to time take all such action within its control as may be requisite to
assure that the par value per share of the Common Stock is at all times equal to
or less than the effective Conversion Price. The Corporation will take all such
19
action as may be necessary to assure that all such shares of Common Stock may be
so issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common Stock of
the Corporation may be listed. The Corporation will not take any action which
results in any adjustment of the Conversion Price if the total number of shares
of Common Stock issued and issuable after such action upon conversion of the
Notes would exceed the total number of shares of Common Stock then authorized by
the Corporation's Certificate of Incorporation.
(m) Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of the Notes shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Note the principal amount of which is
being converted.
(n) Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Note or of any shares of Common
Stock issued or issuable upon the conversion of any Note in any manner which
interferes with the timely conversion of such Note.
(o) Definition of Common Stock. As used in this Section 15,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, $.01 par value, as constituted on the date hereof, and shall also
include any capital stock of any class of the Corporation thereafter authorized
which shall not be limited to a fixed sum or percentage of par value in respect
of the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
16. COVENANTS BIND SUCCESSORS AND ASSIGNS. All the
covenants, stipulations, promises and agreements in this Note contained by or on
behalf of the Corporation shall bind its successors and assigns, whether so
expressed or not.
17. GOVERNING LAW. This Note shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
18. HEADINGS. The headings of the Sections and subsections
of this Note are inserted for convenience only and do not constitute a part of
this Note.
19. NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class certified mail,
postage prepaid, by nationally recognized overnight courier, or by facsimile
addressed to such party at the address or facsimile number set forth below or
such other address or facsimile number as may hereafter be designated in writing
by the addressee to the addressor listing all parties:
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if to the Corporation, to
SAVVIS Communications Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to
SAVVIS Communication Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
with a copy to
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
if to the holder of this Note, to the address of such
holder listed on Schedule I of the Purchase Agreement or such other
address as the holder shall have provided to the Corporation in
writing;
with a copy to
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of mailing, on the fifth business day following the date of such
mailing, (c) in the case of delivery by overnight courier, on the business day
following the date of delivery to such courier, and (d) in the case of
facsimile, when received.
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IN WITNESS WHEREOF, SAVVIS Communications Corporation has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.
SAVVIS COMMUNICATIONS CORPORATION
By
------------------------------------
Name:
Title:
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