WAIVER AND FIRST AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT
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THIS WAIVER AND FIRST AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT (the
"Amendment"), dated as of December 17, 1999, among XXXXXXX COMMUNICATIONS
CORPORATION, as the Issuer, PRIORITY INTERNATIONAL COMMUNICATIONS, INC., ATN
COMMUNICATIONS, INC., INCOMEX, INC. and MCC ACQUISITION CORP., as Guarantors,
and NEW VALLEY CORPORATION, as purchaser.
W I T N E S S E T H:
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RECITALS:
A. The Issuer, the Guarantors and the Purchaser have entered into a
certain Note and Warrant Purchase Agreement, dated as of June 21, 1999 (the
"Note Purchase Agreement").
B. The Issuer, the Guarantors and the Purchaser have entered into a
certain Security Agreement, dated as of August 21, 1999 (the "Security
Agreement"; capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Note Purchase Agreement or the
Security Agreement).
B. The Issuer, the Guarantors and the Purchaser desire to amend the
Note Purchase Agreement to make various changes thereto, and the Purchaser has
agreed to so amend the Note Purchase Agreement on the terms and condition set
forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendment to Section 2.4. Section 2.4 of the Note Purchase
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Agreement is hereby amended by replacing such Section in its entirety with the
following:
Section 2.4. Maturity of the Notes; Prepayments.
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(a) The outstanding principal amount of the Notes, together with
accrued and unpaid interest thereon, shall become due and payable on the
seventeenth (17th) day of each month (each, a "Monthly Payment Date") as set
forth below:
Monthly Payment Date Monthly Principal Payment
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January 17, 2000 $200,000
February 17, 2000 $200,000
March 17, 2000 $200,000
April 17, 2000 $200,000
May 17, 2000 $200,000
June 17, 2000 $1,000,000
(b) Upon the occurrence of a Financing Transaction, the
outstanding principal amount of all Notes shall be due and payable in an amount
equal to the lesser of (i) the outstanding principal amount of the Notes and
(ii) the aggregate gross cash proceeds from such Financing Event.
(c) The Issuer may prepay the Notes in whole or in part at any
time, provided that (i) the Issuer provides at least one (1) days' prior written
notice to the Purchasers of such proposed prepayment, and (ii) such prepayment
is accompanied by all accrued and unpaid interest on the amount prepaid to the
date of prepayment.
SECTION 2. Amendment to Section 3.2. Section 3.2 of the Note Purchase
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Agreement is hereby amended by replacing such Section in its entirety with the
following:
Section 3.2. Default Rate of Interest. If the Issuer shall fail to pay
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on the due date therefor, whether on the Monthly Payment Date, by acceleration
or otherwise, any principal owing under the Notes, then, in lieu of the interest
rate otherwise applicable, interest shall accrue on such unpaid principal from
the due date to but excluding the date on which such principal is paid in full
at a rate per annum equal to fourteen percent (14%) (interest accruing pursuant
to this Section 3.2, the "Default Rate"). Interest calculated at the Default
Rate shall be due and payable upon demand by the Purchasers.
SECTION 3. Amendment to Article 3 of the Note Purchase Agreement.
Article 3 of the Note Purchase Agreement is hereby amended by inserting the
following new Section 3.6:
Section 3.6. Conversion of Notes. The Notes are convertible into
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shares of Common Stock of the Issuer at the option of the Purchaser pursuant to
the terms and conditions of this Section 3.6.
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Section 3.6.1. Right to Convert.
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Subject to and upon compliance with the provisions of this Section 3.6, the
Purchaser shall have the right, at his option, at any time before the close of
business on the last Business Day prior to the Maturity Date, to convert the
outstanding principal amount of any such Note, or any portion of such principal
amount which is $1,000 or an integral multiple thereof, into that number of
fully paid and non-assessable shares of Common Stock (as such shares shall then
be constituted) obtained by dividing the principal amount of the Note or portion
thereof surrendered for conversion by the Conversion Price in effect at such
time, by surrender of the Note so to be converted in whole or in part in the
manner provided in Section 3.6.2. the Purchaser is not entitled to any rights of
a Purchaser of Common Stock until the Purchaser has converted his Notes to
Common Stock, and only to the extent such Notes are deemed to have been
converted to Common Stock under this Section 3.6.
Section 3.6.2. Exercise of Conversion Privilege; Issuance of Common
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Stock on Conversion.
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In order to exercise the conversion privilege with respect to any Note, the
Purchaser shall surrender such Note, duly endorsed, to the Issuer, and shall
give written notice of conversion to the Issuer that the Purchaser elects to
convert such Note or the portion thereof specified in said notice. Such notice
shall also state the name or names (with address or addresses) in which the
certificate or certificates for shares of Common Stock which shall be issuable
on such conversion shall be issued. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Issuer duly executed by, the
Purchaser or his duly authorized attorney.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Purchaser (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Issuer shall issue and shall deliver to
such Purchaser a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such Note or portion thereof in
accordance with the provisions of this Section 3.6 and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 3.6.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
the Issuer shall execute and deliver to the Purchaser of the Note so
surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.
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Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 3.6.2. have been satisfied as to such Note (or portion thereof),
and the Person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the Purchaser of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Issuer shall be closed shall constitute the Person in whose name
the certificates are to be issued as the record Purchaser thereof for all
purposes on the next succeeding day on which such stock transfer books are open,
but such conversion shall be at the Conversion Price in effect on the date upon
which such Note shall be surrendered.
Section 3.6.3. Cash Payments in Lieu of Fractional Shares.
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No fractional share of Common Stock or scrip representing fractional shares
shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same Purchaser, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered. If any fractional share of stock
would be issuable upon the conversion of any Note or Notes, the Issuer shall
make an adjustment and payment therefor in cash at the current market value
thereof to the Purchaser of Notes. The current market value of a share of
Common Stock shall be the Closing Price on the last Trading Day prior to the day
on which the Notes (or specified portions thereof) are deemed to have been
converted.
Section 3.6.4. Conversion Price.
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Subject to adjustment as provided in this Section 3.6, the conversion price
shall be $3.00 (herein called the "Conversion Price").
Section 3.6.5. Effect on Reclassification, Consolidation, Merger or
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Sale.
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In the event of (i) any reclassification or change of outstanding
shares of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of subdivision
or combination), (ii) any consolidation, merger or combination of the Issuer
with another corporation or entity as a result of which holders of shares of
Common Stock shall be entitled to receive securities or other property
(including cash) with respect to or in exchange for such shares or (iii) any
sale or conveyance of the property of the Issuer as, or substantially as, an
entirety to any other corporation or entity as a result of which holders of
shares of Common Stock shall be entitled to receive securities or other property
(including cash) with respect to or in exchange for such shares, then the Issuer
or the successor or purchasing corporation or entity, as the case may be, shall
enter into a supplemental agreement providing that the
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Notes shall be convertible into the kind and amount of securities or other
property (including cash) receivable upon such reclassification, exchange,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares issuable upon conversion of the Notes immediately prior to such
reclassification, exchange, consolidation, merger, combination, sale or
conveyance. Such supplemental agreement shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 3.6. The above provision of this Section 3.6.5 shall
similarly apply to successive reclassifications, exchanges, consolidations,
mergers, combinations, sales or conveyances.
Section 3.6.6. Registration Rights.
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All shares of Common Stock issued upon conversion of the Notes shall be
treated as Warrant Shares for purposes of the Registration Rights Agreement.
SECTION 4. Amendment to Section 8.2(a). Section 8.2(a) of the Note
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Purchase Agreement is hereby amended by replacing such Section in its entirety
with the following:
Section 8.2. Remedies on Default. (a) Upon the occurrence and during
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the continuation of an Event of Default (other than an Event of Default
described in clause (d) or (e) of Section 8.1 hereof), the Requisite Purchasers
may declare any or all amounts payable by the Issuer under the Notes to be
forthwith due and payable and the same shall thereupon become immediately due
and payable without demand, presentment, protest or further notice of any kind,
all of which are hereby expressly waived.
SECTION 5. Amendment to Exhibit A. Exhibit A to the Note Purchase
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Agreement is hereby amended by replacing such Exhibit A with the Exhibit A-1
attached hereto.
SECTION 6. Waiver. The Purchaser hereby waives any and all Defaults or
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Events of Default existing as of the date hereof arising pursuant to Section 2.4
of the Note Purchase Agreement or arising with respect to any transaction or
event disclosed in any filing made by the Issuer with the Securities and
Exchange Commission on or before the date hereof. After giving effect to the
Waivers set forth herein, the Issuer hereby represents and warrants to Purchaser
that all Representations and Warranties set forth in Article 5 of the Note
Purchase Agreement are true and correct as if made on the date hereof, other
than with respect to any event or transaction disclosed in any filing made by
the Issuer with the Securities and Exchange Commission, and acknowledges that
the Issuer is in compliance with all of the terms and conditions of the Note
Purchase Agreement. In reliance on such representation and warranty and
acknowledgement, the Purchaser hereby acknowledges that, as of the date hereof,
no other Default or Event of Default exists.
SECTION 7. Continuing Effectiveness of Note Purchase Agreement. The
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Note Purchase Agreement and each of the other Transaction Documents shall remain
in full force and
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effect in accordance with their respective terms, except as expressly amended or
modified by this Amendment.
SECTION 8. Cost and Expenses. The Issuer agrees to pay all
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out-of-pocket expenses of the Purchaser for the negotiation, preparation,
execution and delivery of this Amendment (including fees and expenses of counsel
to the Purchaser).
SECTION 9. Effectiveness. This Amendment shall become effective upon
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the prior or concurrent receipt by the Purchaser of a copy of this Amendment,
duly executed by each of the Issuer and the Purchaser, a copy of the
Participation Agreement, duly executed by the Purchaser and MCC Investment
Company, LLC and payment to the Purchaser of all amounts required to be paid as
of the date hereof pursuant to the terms of the Participation Agreement, a duly
executed Amended and Restated Fixed Rate Senior Note Due June 17, 2000, and
payment of all accrued and unpaid fees and expenses reimbursable to New Valley
pursuant to the terms of the Participation Agreement, including but not limited
to fees and expenses of King & Spalding in the amount of $44,195.05 paid
pursuant to the wire instructions set forth on Schedule 1 hereto.
SECTION 10. Headings. The various headings of this Amendment are
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inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provision hereof.
SECTION 11. Counterparts. This Amendment may be executed by the
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parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Amendment shall become effective when counterparts hereof
executed on behalf of the Issuer and the Purchaser (or notice thereof
satisfactory to the Purchaser) shall have been received by the Purchaser and
notice thereof shall have been given by the Purchaser to the Issuer.
SECTION 12. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
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CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF IOWA.
SECTION 13. Successors and Assigns. This Amendment shall be binding
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upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Issuer may not assign or
transfer its rights or obligations hereunder or under the Note Purchase
Agreement except in accordance with the terms of the Note Purchase Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
ISSUER:
XXXXXXX COMMUNICATION CORPORATION
By/s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Vice President and CFO
GUARANTORS:
PRIORITY INTERNATIONAL COMMUNICATIONS, INC.
By/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman
ATN COMMUNICATIONS, INC.
By/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman
INCOMEX, INC.
By/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman
(SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT)
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MCC ACQUISITION CORP.
By/s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman
PURCHASER:
NEW VALLEY CORPORATION
By/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
(SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT)
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