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TELSCAPE INTERNATIONAL, INC.
INTERLINK COMMUNICATIONS, INC.
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SECURITIES PURCHASE AGREEMENT
Dated as of May 5, 1999
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Increasing Rate Senior Bridge Notes due May 6, 2000
Warrants to Purchase Shares of Common Stock
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of May 5, 1999 (this
"AGREEMENT"), is among TELSCAPE INTERNATIONAL, INC., a Texas corporation
("TELSCAPE"), INTERLINK COMMUNICATIONS, INC., a Delaware corporation
("INTERLINK," Telscape and Interlink being collectively referred to as the
"COMPANY"), each of the lenders which is a signatory hereto (individually, a
"LENDER" and, collectively, the "LENDERS"), and CAHILL, WARNOCK, STRATEGIC
PARTNERS FUND, L.P., a Delaware limited partnership, as agent for the Lenders
(in such capacity, together with its successors in such capacity, the "Agent").
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
SECTION 1 ISSUANCE OF SECURITIES.
SECTION 1.1 AUTHORIZATION. The Company has (a) duly authorized the
issue of its Increasing Rate Senior Bridge Notes due May 6, 2000, in the
aggregate principal amount of up to US$6,850,000 (individually, a "NOTE" and,
collectively, the "NOTES"), substantially in the form of EXHIBIT A hereto, and
(b) the issuance of warrants (the "WARRANTS") to purchase an aggregate of up to
256,315 shares of common stock of Telscape, US $.001 par value per share (the
"COMMON STOCK"), subject to adjustment, substantially in the form of EXHIBIT B
hereto. The Notes shall mature, shall bear interest, shall be payable and shall
be otherwise as provided herein and in EXHIBIT A. Each Lender shall receive a
Note payable to such Lender in a principal amount equal to the amount set forth
opposite such Lender's name on the signature pages hereof and otherwise duly
completed. The Warrants shall be exercisable, transferable and subject to
adjustment and shall be otherwise as provided herein and in EXHIBIT B. Each
Lender shall receive Warrants in an amount equal to the amount set forth
opposite such Lender's name on the signature pages hereof. The Notes, the
Warrants, the Warrant Shares (as defined in the Warrants) and certificates and
other instruments from time to time evidencing the same, are herein sometimes
collectively called the "SECURITIES."
SECTION 1.2 PURCHASE AND SALE OF THE SECURITIES; THE CLOSING. In
reliance upon the representations of the Company contained in SECTION 1.5 hereof
and subject to the terms and conditions set forth herein, the Lenders shall
purchase the Securities from the Company and the Company shall sell the
Securities to the Lenders for an aggregate purchase price of US$6,850,000 (the
"PURCHASE PRICE"). The closing (the "CLOSING") of the Lenders' purchase of the
Securities shall be held at 10:00 a.m., Baltimore time on May 7, 1999 (the
"CLOSING DATE"), at the offices of the Agent, Xxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, XX 00000, or at such other time or place as the parties hereto may
mutually agree.
On the Closing Date, the Company will deliver to the Lenders the
Notes in the aggregate principal amount specified above, and the Warrants,
registered in the Lenders' respective name or in the name(s) of their respective
nominee(s), as may be specified by each Lender upon five (5) Business Days'
advance written notice to the Company, duly executed and dated the Closing Date,
against the Lenders' delivery to the Company (or to persons at the direction of
the Company) of immediately available funds in the amount of the Purchase Price
(net of any costs or expenses to be paid by the Company to the Lenders or to the
Agent or their counsel pursuant to SECTION 3.17 of this
Agreement). For purposes of this Agreement, "BUSINESS DAY" shall mean any day,
except a Saturday, Sunday or other day on which commercial banks in the State of
Maryland are authorized or required by law to close.
SECTION 1.3 THE NOTES.
(A) RATE OF INTEREST. Subject to modification pursuant to
SECTION 1.3 (C) below, each Note shall bear interest from the Closing Date on
the unpaid principal amount of the Note from time to time outstanding at a rate
per annum equal to eight percent (8%) (such rate, as increased as provided in
this Agreement, the "INTEREST RATE"). From and after November 7, 1999, the
Interest Rate shall increase to a rate per annum equal to nine percent (9%). The
Interest Rate shall increase by an additional one percent (1%) on the seventh
(7th) day of each month after November, 1999.
(B) PAYMENT OF INTEREST. Interest shall be calculated in
arrears through the last day of each month and shall be due and payable in
arrears in monthly installments on the last Business Day of each month,
commencing with May 28, 1999, and ending on May 6, 2000 (the "MATURITY Date").
The Company may request, by delivering, in each instance, a written request to
the Agent at least three (3) Business Days prior to the Maturity Date or the
extended Maturity Date, that Lenders extend the Maturity Date for up to two (2)
additional thirty (30) day periods. The Agent (with the consent of all of the
Lenders, in their sole discretion) shall grant such request or (if fewer than
all Lenders consent) shall deny such request.
(C) COMPUTATION OF INTEREST. Interest shall be computed on
each Note on the basis of a 365 or 366-day year, as the case may be, and the
actual number of days elapsed in any period, including the Closing Date but
excluding the date by which payment is deemed, pursuant to SECTION 1.3(g), to
have been received. Except as permitted pursuant to SECTION 1.3(b), any
principal or interest payment due on each Note which is not paid when due,
whether at stated maturity, by notice of acceleration or otherwise, shall bear
interest (calculated in the manner set forth above) at a rate equal to the
then-current Interest Rate plus an additional five percent (5%) per annum.
(D) PAYMENT OF PRINCIPAL. The outstanding principal balance of
each Note shall be due and payable in full on the Maturity Date .
(E) PREPAYMENTS.
(I) OPTIONAL. The Company may, from time to time,
prepay the Notes, in whole or in part, so long as each partial prepayment of
principal on the Notes is equal to or greater than US$50,000 and the Company has
given the Lenders one (1) or more Business Days written notice of such optional
prepayment. Any such optional prepayment of principal shall be without premium
or penalty. Each prepayment of principal under this SECTION shall be accompanied
by all interest then accrued and unpaid on the principal so prepaid. Any
principal prepaid pursuant to this SECTION shall be in addition to, and not in
lieu of, all payments otherwise required to be paid under the Notes and this
Agreement at the time of such prepayment.
(II) MANDATORY. Unless otherwise agreed to by all
of the Lenders, the Company shall prepay the Notes immediately upon receipt, and
to the extent, of the net financing
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proceeds in excess of $50,000 actually received by the Company in the event that
the Company completes any financing transaction (other than the transactions set
forth in the proviso in SECTION 3.5) whatsoever from and after the Closing Date,
including without limitation any public or private placements of debt or equity
and any financing from Lucent Technologies, Inc.
(F) [INTENTIONALLY LEFT BLANK.]
(G) GENERAL PAYMENT PROVISIONS. (1) The Company shall make
each payment which it owes under the Notes or this Agreement not later than 3:00
p.m., Baltimore, Maryland time, on the date such payment becomes due and
payable, in lawful money of the United States of America, without set-off,
deduction or counterclaim, and in immediately available funds sent by wire
transfer to the Agent in accordance with its written payment instructions
received by the Company no later than five (5) Business Days prior to such
payment date. Any payment received by the Agent after such time shall be deemed
to have been made on the next following Business Day. Should any such payment
become due and payable on a day other than a Business Day, the maturity of such
payment shall be the next Business Day. Any amount received by the Agent,
whether as an interest payment, principal payment or principal prepayment from
or on behalf of the Company, shall be applied as follows in descending order of
priority: (i) to all costs, fees and expenses of the Agent and any Lender
(including reasonable attorneys' fees) incurred in connection with this
Agreement or in enforcing any obligations of, or in collecting any payments
from, any obligor hereunder or under the Securities; (ii) to interest which has
accrued on past due payments hereunder; (iii) to interest that is currently due
and payable on the Notes; (iv) to payment of principal on the Notes currently
due and payable; (v) to the payment of past due principal on the Notes; and (vi)
to the prepayment of principal due under the Notes.
(2)(A) The Agent agrees to act as the Lenders' sole managing
agent with respect to the Notes and shall take such action as may be reasonably
necessary to administer, monitor, and collect and disburse payments of principal
and interest on the Notes.
(B) The Agent shall be an agent of the Lenders with respect to
all proceeds of any kind paid to or received by the Agent, by or on behalf of
the Company under the Notes or any other Loan Document.
(C) The Agent shall keep customary books and records relating
to the Notes and such books and records shall be available for the Lenders'
inspection during the Agent's normal business hours. The Agent agrees to deliver
to each Lender such documentation relating to the Notes as each Lender shall
reasonably request from time to time.
(D) Promptly upon the Agent's receipt from the Company of any
statement, report or other information that the Company is required to deliver
to the Agent or the Lenders by the terms of the Loan Documents, the Agent shall
deliver a complete and correct copy of the same to each Lender.
(E) The Agent shall hold the originals of, and shall have
delivered concurrently herewith to each Lender copies, of the Loan Documents.
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(F) The Agent shall receive all payments on account of
principal and interest and all other sums payable pursuant to the Notes and the
other Loan Documents. Promptly upon the receipt thereof by the Agent, whether by
payment from the Company or otherwise, the Agent will transfer to each Lender,
such Lender's pro rata portion of (i) any and all interest payments hereafter
made on the Notes, (ii) any principal payments made on the Notes, (iii) any
amount received by Agent from the Company in reimbursement of expenses incurred
by the Lenders, and (iv) all other sums payable by the Company pursuant to any
of the Loan Documents.
(G) Each of the Lenders will, on written demand, reimburse the
Agent of their respective pro rata share of any and all reasonable costs,
expenses and disbursements which may be incurred or made by the Agent in
connection with its action in its capacity as the Agent. Except as expressly set
forth in this Agreement, the Agent shall have no obligation to the Lenders, and
in no event shall the Agent be deemed to be a fiduciary for the Lenders.
(H) NO FURTHER OBLIGATION. Other than the payment of the
Purchase Price, which payment is subject to the terms and conditions hereof, and
notwithstanding whether or not the Company has repaid such amounts in whole or
in part, the Agent and the Lenders shall have no obligation whatsoever to lend,
advance or otherwise pay any other monies to or on behalf of the Company.
SECTION 1.4 THE WARRANTS.
Concurrently herewith, Telscape and the Lenders are entering into
the Warrants, pursuant to which Telscape shall execute and deliver to each
Lender a Warrant on the Closing Date. The Warrants shall be dated as of the
Closing Date and shall only be exercisable from and after such date for the
purchase of shares of Common Stock. In the event that a Lender's Note has not
been repaid in full on or before certain dates, as set forth in such Lender's
Warrant, such Lender's Warrant shall become exercisable for the purchase of
additional shares of Common Stock, as set forth in such Lender's Warrant.
SECTION 1.5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Lender that on the date
hereof and as of the Closing Date:
(a) Each of Telscape and Interlink is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas or Delaware, as the case may be, and is duly qualified as a foreign
corporation in each jurisdiction in which the character of the properties owned
or held under lease by it or the nature of the business transacted by it
requires such qualification. The Company has all requisite power to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement, the Securities and all other documents and agreements contemplated
hereby and thereby, and to perform the provisions hereof and thereof and to
consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance of this Agreement,
the Securities, and all other documents and agreements contemplated hereby and
thereby, and the consummation of the transactions contemplated hereby or
thereby, have been duly authorized and
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approved by the Company. This Agreement, the Securities, and all other documents
and agreements contemplated hereby and thereby have each been duly authorized,
executed and delivered by, and each is the valid and binding obligation of, the
Company enforceable against the Company in accordance with its terms, except as
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws or by legal or equitable principles relating to or
limiting creditors' rights generally.
(c) Except as set forth in SCHEDULE 1.5(C) hereto or as set
forth in Telscape's most recent Securities Exchange Act of 1934 (as amended, the
"EXCHANGE ACT") filings with the Securities and Exchange Commission (the "SEC"),
copies of which have been provided to the Lenders by the Company, the Company
has no actual knowledge of any fact that materially adversely affects, or could
reasonably be expected to materially adversely affect, the business, prospects,
properties, assets, operations or financial condition of the Company, or the
ability of the Company to perform its respective obligations under this
Agreement, the Securities or any other documents or agreements contemplated
hereby and thereby.
(d) On the Closing Date, the authorized capital stock of
Telscape will consist of 25,000,000 shares of Common Stock, 5,000,000 shares of
preferred stock and 1,000,000 shares of series A preferred stock. As of the
Closing Date, Telscape has issued and outstanding 6,462,842 shares of Common
Stock, no shares of preferred stock and no shares of series A preferred stock.
The Common Stock and any Warrant Shares issued pursuant to the Warrants were or
will, when issued, be duly and validly issued, fully paid and nonassessable. On
the Closing Date, the authorized capital stock of Interlink will consist of: (1)
600,000 shares of common stock, 10,500 shares of which are issued and
outstanding, none of such issued and outstanding shares are owned by Telscape,
and (2) 89,500 shares of convertible participating preferred stock, all of which
are issued and outstanding and are owned, legally and beneficially, by Telscape.
Except as set forth in SCHEDULE 1.5(D) hereto, there are no other outstanding
options, warrants or similar rights of any person to acquire any of the capital
stock of the Company and the Company has no contingent obligations to issue
additional shares. Except as set forth in SCHEDULE 1.5(D) hereto, the Company is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its capital stock or other securities or
obligation evidencing the right of any holder thereof to purchase any of its
capital stock or other securities.
(e) The consummation of the transactions contemplated by this
Agreement and the performance of the terms and provisions of this Agreement, the
Securities and any other documents or agreements contemplated hereby and thereby
will not (i) contravene, result in any breach of, or constitute a default under
any indenture, mortgage, deed of trust, bank loan or credit agreement, corporate
charter, by-laws or other material agreement or instrument to which the Company
is a party or by which the Company or any of its properties is bound, (ii)
conflict with or result in a breach of any of the terms, conditions or
provisions of any order of any court, arbitrator or Federal, State, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign (collectively, "GOVERNMENTAL PERSON")
applicable to the Company or (iii) violate any material provision of any statute
or other law, rule or regulation of any Governmental Person applicable to the
Company.
(f) Except as set forth in SCHEDULE 1.5(F) hereto, no consent,
approval or
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authorization of, or registration, filing or declaration with, any person or
entity is required for the issuance of the Securities or the valid execution and
delivery of the Securities or for the performance by the Company of this
Agreement, the Securities, and any other documents or agreements contemplated
hereby and thereby, other than the filings, registrations or qualifications
under the securities laws or "blue sky" laws of any State that may be required
to be made or obtained in connection with the offer, issuance, sale or delivery
of the Securities or any interest therein.
(g) The Company possesses all material licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names and
any other tangible or intangible or intellectual property rights, or rights
thereto, required to conduct its business substantially as now conducted and as
currently proposed to be conducted, without actual knowledge of conflict with
the rights of others. The Company has not directly or indirectly, created,
incurred, assumed or permitted to exist any Lien (as hereinafter defined) on any
such intellectual property.
(h) No employee benefit plan established or maintained by the
Company or to which the Company has made contributions is subject to Part 3 of
Subtitle B of Title 1 of the Employee Retirement Income Security Act of 1974, as
amended, or Section 412 of the Internal Revenue Code of 1986, as amended.
(i) Neither the Company nor anyone acting on its behalf has
offered the Securities, or any interest or participation therein, for sale to or
solicited any offer to buy the Securities, or any interest or participation
therein, from, or otherwise approached or negotiated in respect thereof with,
any person other than the Agent and the Lenders, and its partners, officers,
affiliates and representatives. Neither the Company nor anyone acting on its
behalf has taken and will not take any action that would require the offer,
issuance or sale of the Securities or any interest or participation therein to
be registered under Section 5 of the Securities Act of 1933 (as amended, the
"SECURITIES ACT"), or applicable state securities laws. The Company has not
authorized or appointed any person to act on its behalf in connection with the
offering of the Securities. No broker or finder (other than Imperial Capital,
LLC and Strategic Growth International, Inc.) has acted for the Company in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder (other than Imperial Capital, LLC and Strategic Growth
International, Inc.) is entitled to any brokerage or finder's fees or other
commission in respect of such transaction based in any way on agreements,
arrangements or understandings made by or on behalf of the Company. All fees
owed to Imperial Capital, LLC and Strategic Growth International, Inc. in
connection with the transactions contemplated by this Agreement will be paid
when due by the Company.
(j) No part of the proceeds from the sale of the Securities
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any Amargin stock" within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). The assets of the Company do not include any margin stock, and the
Company does not have any present intention of acquiring any margin stock.
(k) The Company is not an investment company subject to
registration under the Investment Company Act of 1940, as amended.
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(l) At Closing, the Lenders shall acquire good and marketable
title to the Securities free and clear of all covenants, conditions,
restrictions, liens, pledges, charges, encumbrances, options and adverse claims
or rights of any kind whatsoever.
(m) Except for Indebtedness incurred in the ordinary course of
business not in excess of US$10,000 in the aggregate or as otherwise disclosed
in SCHEDULE 1.5(M), the Company has no outstanding Indebtedness of any kind
(including contingent obligations, tax assessments and unusual forward or
long-term commitments). For purposes of this Agreement, "INDEBTEDNESS" shall
mean any obligation for borrowed money (other than the Company's obligations to
the Lenders in connection herewith and the obligations contemplated in SECTION
2.7), including without limitation (A) any obligation owed for all or any part
of the purchase price of property, services or other assets or for the cost of
property or other assets constructed or of improvements thereto, (B) accounts
payable included in current liabilities outstanding for more than one hundred
twenty (120) days and incurred in respect of property purchased in the ordinary
course of business, (C) any obligations secured by any lien in respect of
property even though the person owning the property has not assumed or become
liable for the payment of such obligation, (D) any guarantee with respect to any
of the foregoing indebtedness of another person, and (E) obligations in respect
of letters of credit.
(n) Except as set forth in SCHEDULE 1.5(N) hereto, there are
no material (i) actions, suits or legal, equitable, arbitrative or
administrative proceedings pending, or to the knowledge of the Company,
threatened against the Company and (ii) judgements, injunctions, writs, rulings
or orders by any Governmental Person against the Company or its directors or
officers.
(o) Neither the Company nor any of its officers, directors,
employees or agents (or stockholders, distributors, representatives or other
persons acting on the express, implied or apparent authority of Company) have
paid, given or received or have offered or promised to pay, give or receive, any
bribe or other unlawful, questionable or unusual payment of money or other thing
of value, any extraordinary discount, or any other unlawful or unusual
inducement, to or from any person, business association or governmental official
or entity in the United States or elsewhere in connection with or in furtherance
of the business of Company (including, without limitation, any offer, payment or
promise to pay money or other thing of value (i) to any foreign official or
political party (or official thereof) for the purposes of influencing any act,
decision or omission in order to assist Company in obtaining business for or
with, or directing business to, any person, or (ii) to any person, while knowing
that all or a portion of such money or other thing of value will be offered,
given or promised to any such official or party for such purposes). The business
of Company is not in any manner dependent upon the making or receipt of such
payments, discounts or other inducements.
(p) Telscape has registered its Common Stock pursuant to
Section 12(b) or 12(g) of the Exchange Act and is in full compliance with all
reporting requirements of the Exchange Act, and Telscape has maintained all
requirements for the continued listing or quotation of its Common Stock, and
such Common Stock is currently listed or quoted on the Principal Market. As of
the date hereof, the Principal Market is the NASDAQ National Market.
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(q) The Company has furnished or made available or will
furnish and make available prior to the Closing Date to the Lenders true and
correct copies of the Company's articles or certificate of incorporation, as
amended and in effect on the date hereof, and the Company's by-laws, as amended
and in effect on the date hereof.
(r) As of their respective dates, all registration statements,
reports and documents, including proxy statements filed by or on behalf of
Telscape with the SEC pursuant to the Securities Act or Exchange Act (the "SEC
DOCUMENTS") complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and rules and
regulations of the SEC promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted 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. The financial statements of Telscape included in the SEC
Documents comply as to form in all material respects with generally accepted
accounting principles, consistently applied, and the published rules and
regulations of the SEC or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of Telscape as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(s) Since December 31, 1998, no material adverse effect on the
business, operations, properties, prospects, or financial condition of Telscape
("MATERIAL ADVERSE EFFECT") has occurred or exists with respect to Telscape or
its subsidiaries.
(t) Telscape and its subsidiaries have no liabilities or
obligations which are material, individually or in the aggregate, and are not
disclosed in the SEC Documents or otherwise publicly announced, other than those
incurred in the ordinary course of Telscape's or its subsidiaries' respective
businesses since the filing of Telscape's most recent SEC Document, and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on Telscape or upon any of its subsidiaries.
(u) Since the filing of Telscape's most recent SEC Document,
no event or circumstance has occurred or exists with respect to Telscape or its
subsidiaries or their respective businesses, properties, prospects, operations
or financial condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by Telscape
but which has not been so publicly announced or disclosed in the SEC.
SECTION 1.6 REPRESENTATIONS AND WARRANTIES OF THE LENDERS.
Each Lender represents and warrants to the Company that on the date
hereof and as of the Closing Date:
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(a) Such Lender has all requisite power to execute and deliver this
Agreement, and all other documents and agreements contemplated hereby and
thereby, and to perform the provisions hereof and thereof and to consummate the
transactions contemplated hereby and thereby.
(b) The execution, delivery and performance of this Agreement, and
all other documents and agreements contemplated hereby and thereby, and the
consummation of the transactions contemplated hereby or thereby, have been duly
authorized and approved by such Lender. This Agreement, and all other documents
and agreements contemplated hereby and thereby have each been duly authorized,
executed and delivered by, and each is the valid and binding obligation of, such
Lender enforceable against such Lender in accordance with its terms, except as
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws or by legal or equitable principles relating to or
limiting creditors' rights generally.
(c) Such Lender is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended.
(d) Such Lender acknowledges that the securities being acquired by
it are not being acquired pursuant to a transaction registered under the
Securities Act of 1933, as amended, in that the issuance of the securities does
not involve any public offering.
(e) Such Lender represents that it is acquiring the securities for
investment for its own account, and not with a view to distribution.
(f) Without limiting the representations and warranties contained in
the Loan Documents (as defined below) such Lender has received from the Company
access to information as it deems necessary for the purchase of the securities.
(g) Such Lender will not sell or otherwise transfer the securities
without registration of such securities under the Securities Act of 1933, as
amended, or an exemption therefrom, and fully understands and agrees that such
Lender must bear the economic risk of its purchase for an indefinite period of
time.
(h) Such Lender represents that it is willing and able to bear the
economic risk of its investment in the Securities issued hereunder, and has no
need for liquidity with respect thereto, is able to sustain a complete loss of
its investment, and purchasing such securities for its own account for
investment and not with a view for resale or distribution thereof except in
compliance with the Securities Act of 1933, as amended.
SECTION 2 CONDITIONS TO OBLIGATIONS OF THE LENDERS. The obligations of the
Lenders to purchase and pay for the Securities on the Closing Date shall be
subject to the satisfaction on or before the Closing Date of the conditions
hereinafter set forth:
SECTION 2.1 PROCEEDINGS SATISFACTORY. All proceedings taken on or
prior to the Closing Date in connection with the issuance of the Securities and
the consummation of the transactions contemplated hereby and all documents and
papers relating thereto shall be satisfactory in form and substance to the
Agent, the Lenders and their counsel.
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SECTION 2.2 REPRESENTATIONS TRUE. All representations and warranties
of the Company contained herein shall be true and correct in all respects on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date; the Company shall have
performed in all respects all agreements on its part required to be performed
under this Agreement on or prior to the Closing Date; and no Event of Default
(as hereinafter defined) shall have occurred and be continuing on and as of the
Closing Date.
SECTION 2.3 THE PURCHASE BY THE LENDERS PERMITTED BY APPLICABLE
LAWS. The sale by the Company and the payment for the Securities to be purchased
by the Lenders (i) shall not be prohibited by any applicable law or governmental
regulation, release, interpretation or opinion, (ii) shall not subject the Agent
or any Lender to any penalty under or pursuant to any applicable law or
governmental regulation, and (iii) shall be permitted by the laws and
regulations of the jurisdictions to which the Agent or any Lender is subject.
SECTION 2.4 [INTENTIONALLY LEFT BLANK.]
SECTION 2.5 EXECUTION AND DELIVERY OF DOCUMENTS; GRANTING OF
SECURITY INTEREST. The Lenders shall have received the following at its offices,
duly executed and delivered and in form and substance satisfactory to the Agent,
the Lenders and their counsel: the Notes and the Warrants, and such other
documents and information as the Agent or any Lender may reasonably request in
connection herewith, including without limitation, (a) a Security Agreement in
the form of EXHIBIT C hereto, (b) an Omnibus Certificate, substantially in the
form of EXHIBIT D hereto, (c) an opinion of counsel to the Company reasonably
acceptable to the Agent and the Lenders, including without limitation opinions
addressing the Company's capitalization and the granting and perfection of
security interests pursuant to the Security Agreement in all relevant
jurisdictions and (d) executed lien releases, releasing all liens and security
interests securing any indebtedness owning by the Company or any of its
affiliates to Xxxxxx Xxxxxxxx Capital, LLC. The Security Agreement, and the
Omnibus Certificate together with this Agreement, the Notes and the Warrants are
sometimes collectively referred to herein as the "LOAN DOCUMENTS."
SECTION 2.6 DUE DILIGENCE. The Agent and each Lender shall have
completed their due diligence investigation of the Company and the transactions
contemplated and shall have found, in their sole and absolute discretion, no
state of affairs or circumstances unsatisfactory to the Agent or any Lender.
SECTION 3 COVENANTS. The Company covenants and agrees that on and after
the date hereof, so long as the Note shall be outstanding:
SECTION 3.1 PAYMENT OF THE NOTE. The Company shall pay the principal
of and interest on the Notes on the dates and in the manner provided in the
Notes and this Agreement. The obligation of the Company described in the
preceding sentence is absolute and unconditional, irrespective of any tax or
accounting treatment of such obligation including without limitation any
documentary stamp, transfer, ad valorem or other taxes assessed by any
jurisdiction in connection with this transaction.
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SECTION 3.2 STAY, EXTENSION AND USURY LAWS. The Company agrees (to
the extent it may lawfully do so) that it will not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law or any usury law or other law that would prohibit or
forgive the Company from paying all or a portion of the principal of, or
interest on, any Note as contemplated herein, wherever enacted, now or at any
time hereinafter in force, or that may materially affect the covenants or the
performance of this Agreement in any manner inconsistent with the provisions of
this Agreement. The Company expressly waives all benefit or advantage of any
such law. If a court of competent jurisdiction prescribes that the Company may
not waive its rights to take the benefit or advantage of any stay or extension
law or any usury law or other law in accordance with the prior sentence, then
the obligation to pay interest on each Note shall be reduced to the maximum
legal limit under applicable law governing the interest payable in connection
with such Note, and any amount of interest paid by the Company that is deemed
illegal shall be deemed to have been a prepayment of principal on such Note.
SECTION 3.3 CORPORATE EXISTENCE. The Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence, as the case may be, in accordance with the rights (charter
and statutory), licenses and franchises of the Company.
SECTION 3.4 TAXES. The Company shall pay prior to delinquency all
taxes, assessments and governmental levies that may be imposed upon the Company,
except as contested in good faith and by appropriate proceedings.
SECTION 3.5 LIMITATIONS ON INDEBTEDNESS. Without the prior written
consent of all of the Lenders, which consent may not be unreasonably withheld or
denied , the Company shall not, and shall not permit its consolidated
subsidiaries to, directly or indirectly, create, incur, assume, suffer to exist
or otherwise in any manner become liable or commit to become liable for any
Indebtedness other than the Company's obligations to the Agent and the Lenders
in connection herewith and Indebtedness incurred in the ordinary course of
business not in excess of US$10,000 in the aggregate; provided, however, that
(i) debt incurred for the purchase of the Securities hereunder, (ii) debt
incurred solely for the purpose of leasing, or financing all or any part of the
cost of acquiring, personal property for the Company and/or its consolidated
subsidiaries not to exceed $13 million in the aggregate, (iii) replacement or
renewal of any debt outstanding at the Closing Date hereof, (iv) advances under
revolving credit agreements not to exceed $2 million at any one time
outstanding, and (v) a subordinated bridge financing in the aggregate amount of
up to $4 million with Preferred Capital and/or certain of its affiliates, and
certain of the Company's officers and/or directors, shall be permitted
hereunder. Notwithstanding the foregoing, should all of the Lenders consent to
the Company's incurring of any Indebtedness (other than Indebtedness described
in the immediately preceding sentence), the net proceeds of such Indebtedness
shall be applied as a mandatory prepayment of principal of the Notes in
accordance with SECTION 1.3(E) hereof.
SECTION 3.6 LIMITATIONS ON LIENS. The Company shall not directly or
indirectly, create, incur, assume or permit to exist or otherwise cause or
permit to become effective any mortgage, lien, pledge, charge, security interest
or other encumbrance in or on, or any interest or title of any vendor, lessor,
lender or other secured party to or of the Company under any conditional sale or
other title retention agreement or capital lease with respect to, any property
or asset of the Company, or the signing or filing of a financing statement that
names the Company as debtor, or the signing of any security agreement
authorizing any other party as the secured party thereunder to file
11
any financing statement (collectively, a "Lien"), other than Liens created
pursuant to the Loan Documents, Liens otherwise approved in writing by all of
the Lenders (in their sole discretion), and Liens securing the transactions
referred to in CLAUSES (I) -(IV) of the proviso of SECTION 3.5.
SECTION 3.7 LIMITATION ON ACTIVITIES. The Company shall not, and
shall not permit any of its 50% or greater owned subsidiaries to, engage in any
business or investment activities other than those necessary for, incident to,
connected with or arising out of the Company's principal activities in the
telecommunications industry.
SECTION 3.8 LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. The Company
shall not make any payment to or investment in, or enter into any transaction
with, any Affiliate, including without limitation the purchase, sale or exchange
of property or the rendering of any service, except transactions entered into
with Affiliates (a) in the ordinary course of business, (b) on terms and
conditions substantially similar to those that the Company would have received
in an "arm's length" transaction with a third party and (c) related to the
Company's principal activities. For purposes of this Agreement, "AFFILIATE"
shall mean any other person controlling or controlled by or under common control
with such specified person. For the purposes of this definition, "CONTROL" when
used with respect to any specified person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing.
Notwithstanding anything to the contrary in the Loan Documents, the Company
shall be permitted to enter into the bridge loan referred to in the proviso of
SECTION 3.5.
SECTION 3.9 CHANGE IN CONTROL. Except with the written consent of
all of the Lenders, the Company shall not merge or consolidate with or into, or
sell, transfer, lease or convey all or substantially all of its assets to, any
person or into another corporation or entity, or otherwise permit any person or
group to acquire direct or indirect beneficial ownership of 50% or more of the
outstanding capital stock of the Company.
SECTION 3.10 MAINTENANCE OF PROPERTIES. The Company shall maintain,
preserve, protect and keep its properties in good repair, working order and
condition (ordinary wear and tear excepted), and make necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times materially consistent with past
practices of the Company.
SECTION 3.11 MAINTENANCE OF INSURANCE. The Company shall maintain
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which the Company operates.
SECTION 3.12 SALE OF ASSETS. The Company shall not sell, lease,
transfer or dispose of any of its interest in its respective properties or
assets, whether real, personal or mixed, or tangible or intangible, other than
in the ordinary course of business consistent with prudent business practice
(which includes the disposition in a commercially reasonable manner of equipment
and inventory that is obsolete).
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SECTION 3.13 REPURCHASE OF SECURITIES. Except with the written
consent of all of the Lenders (which may be granted or withheld in their sole
discretion), the Company shall not repurchase or otherwise acquire or retire any
of its capital stock or other securities or obligation evidencing the right of
any holder thereof to purchase any of its capital stock or other securities in
an aggregate amount in excess of US$10,000.00; provided, however, that any and
all amounts owing to Deere Park Capital Management, LLC, not to exceed
$5,000,000, shall be specifically excluded from this restriction.
SECTION 3.14 REPORTING; INSPECTION. Within 45 days after each
month-end, commencing with month-end March, 1999, the Company shall provide to
each Lender a written certificate signed by the Company's President, containing
the following: (a) copies of all reports and other written information which the
Company delivers to its securityholders during such month; (b) copies of all of
the Company's internally prepared balance sheets, profit and loss statements and
cash flow statements for such month, all prepared in conformity with generally
accepted accounting principles except for the absence of footnotes and for
regularly recurring periodic adjustments; and (c) such other information as the
Agent or any Lender may reasonably request from time to time, including without
limitation the ability to communicate orally and in writing with officers and
directors of the Company. In addition, each of the Agent and the Lenders, at
their expense, shall have the right to inspect the Company's properties and to
examine its books and records, all at reasonable times and upon reasonable
notice to the Company.
SECTION 3.15 COMPLIANCE WITH LAWS. The Company shall comply in all
material respects with all applicable laws, statutes and regulations of any
Governmental Person, a violation of which would have a material adverse effect
on the financial condition, operations, business, profits, prospects or
properties of the Company or the validity or enforceability of this Agreement,
the Securities or any other documents or agreements contemplated hereby or
thereby or any of the transactions contemplated hereby or thereby.
SECTION 3.16 PAYMENT OF EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, the Company shall promptly pay
to the Agent and the Lenders all reasonable costs and out-of-pocket expenses
incurred by any of them, including without limitation reasonable attorneys'
fees, incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement and the Securities, any administration costs in
connection therewith, and defense or enforcement costs related thereto. On the
Closing Date, the Company shall pay to the Agent and the Lenders all reasonable
costs and out-of-pocket expenses of any of them, including, without limitation,
the reasonable fees, office charges and expenses of Nida & Xxxxxxx, counsel to
the Company, by directing the Lenders to pay themselves and such entities on the
Closing Date out of the Purchase Price.
SECTION 3.17 [INTENTIONALLY LEFT BLANK.]
SECTION 3.18 USE OF PROCEEDS. On the Closing Date, the Company shall
pay in full all indebtedness owing to Xxxxxx Xxxxxxxx Capital, LLC.
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SECTION 3.19 RESTRICTED PAYMENTS. The Company shall not, directly or
indirectly, declare or make any Restricted Payment (as defined below).
"RESTRICTED PAYMENT" means any dividend or distribution (in cash, property or
obligations) on any shares of any class of capital stock (now or hereafter
outstanding) of the Company and any warrants, options or other rights with
respect to any shares of any class of capital stock of the Company (other than
pursuant to the Loan Documents).
SECTION 4 EVENTS OF DEFAULT; REMEDIES.
SECTION 4.1 EVENTS OF DEFAULT DEFINED; ACCELERATION OF MATURITY. If
any of the following events ("EVENTS OF Default") shall occur and be continuing
(for any reason whatsoever and whether it shall be voluntary or involuntary or
by operation of law or otherwise):
A. default shall be made in the payment of the principal of, or
interest on, the Note when and as the same shall become due and payable, whether
at stated maturity, by acceleration, upon a mandatory prepayment due date or
otherwise, and such default is not cured within five (5) Business Days; or
B. default shall be made in the performance or observance of any
covenant, agreement or condition contained herein or in any of the other Loan
Documents, and such default shall have continued for a period of five (5)
Business Days; or
C. the Company shall (1) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property and assets, (2) be
generally unable to pay its debts as such debts become due, (3) make a general
assignment for the benefit of its creditors, (4) commence a voluntary case under
the United States Bankruptcy Code or similar law or regulation (as now or
hereafter in effect), (5) file a petition seeking to take advantage of any other
law providing for the relief of debtors, (6) fail to controvert in a timely or
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under such Bankruptcy Code or other law or regulation, (7)
dissolve, (8) take any corporate action under any applicable law analogous to
any of the foregoing, or (9) take any corporate action for the purpose of
effecting any of the foregoing; or
D. a proceeding or case shall be commenced, without the application
or consent of the Company in any court of competent jurisdiction, seeking (1)
the liquidation, reorganization, dissolution, winding up or composition or
readjustment of its debts, (2) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or for all or any substantial part of
its assets, or (3) similar relief in respect of the Company, under any law
providing for the relief of debtors, and such proceeding or case shall continue
undismissed, or unstayed and in effect, for a period of sixty (60) days; or an
order for relief shall be entered in an involuntary case under the United States
Bankruptcy Code or other similar law or regulation, against the Company; or
action under the laws of any jurisdiction affecting the Company analogous to any
of the foregoing shall be taken with respect to the Company and shall continue
unstayed and in effect for any period of sixty (60) days; or
14
E. final judgment for the payment of money shall be rendered by a
court of competent jurisdiction against the Company and the Company shall not
discharge the same or provide for its discharge in accordance with its terms, or
procure a stay of execution thereof within sixty (60) days from the date of
entry thereof and within said period of sixty (60) days, or such longer period
during which execution of such judgment shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal, and such
judgment together with all other such judgments shall exceed in the aggregate
US$250,000; or
F. any representation or warranty made by the Company in this
Agreement, any other Loan Document or any other documents or agreements
contemplated hereby and thereby or in any certificate or other instrument
delivered hereunder or pursuant hereto or in connection with any provision
hereof shall be false or incorrect in any material respect on the date as of
which made;
then (x) upon the occurrence of any Event of Default described in SUBSECTION C
OR D, the unpaid principal amount of the Notes, together with the interest
accrued thereon and all other amounts payable by the Company hereunder, shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company or (y) upon the occurrence of any other Event of Default,
the Lenders may, by notice to the Company, declare the unpaid principal amount
of the Notes to be, and the same shall forthwith become, due and payable,
together with the interest accrued thereon and all other amounts payable by the
Company hereunder.
SECTION 4.2 SUITS FOR ENFORCEMENT. If any Event of Default shall
have occurred and be continuing, the Agent and the Lenders may proceed to
protect and enforce their rights against the Company, either by suit in equity
or by action at law, or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the exercise of
any power granted in this Agreement, or the Agent and the Lenders may proceed to
enforce the payment by the Company of all sums due upon the Note or to enforce
any other legal or equitable right of the Agent and/or any Lender.
The Company covenants that, if it shall default in the making of any
payment due under any Note or in the performance or observance of any agreement
contained in this Agreement, it will pay to the Agent and the Lenders such
further amounts, to the extent lawful, to cover any reasonable costs and
expenses of collection or of otherwise enforcing their respective rights,
including without limitation the reasonable counsel fees and costs and expenses
incurred in connection with any restructuring, negotiation, refinancing,
workout, bankruptcy or other similar transaction or proceeding. The obligations
set forth in this paragraph shall survive the payment in full of the Notes.
SECTION 4.3 REMEDIES CUMULATIVE. No remedy herein conferred upon the
Agent or any Lender 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.
SECTION 4.4 REMEDIES NOT WAIVED. No course of dealing between the
Company and any other person and no delay or failure in exercising any rights
hereunder or under the Note in respect thereof shall operate as a waiver of any
rights of the Agent or any Lender.
15
SECTION 5 TAXES.
The Company will pay all taxes (including interest and penalties),
other than taxes imposed on the income of the Agent and the Lenders, which may
be payable in respect of the execution and delivery of this Agreement or of the
execution and delivery (but not the transfer) of any of the Securities or of any
amendment of, or waiver or consent under or with respect to, this Agreement or
of any of the Securities and will save the Agent and the Lenders and all
subsequent holders of the Securities harmless against any loss or liability
resulting from nonpayment or delay in payment of any such tax. The obligations
of the Company under this Section shall survive the payment of the Notes.
SECTION 6 MISCELLANEOUS.
SECTION 6.1 INDEMNIFICATION. The Company agrees to indemnify, defend
and hold harmless the Agent, the Lenders and their respective successors,
assigns, heirs, subsidiaries, Affiliates and all of the officers, directors,
employees, partners and agents (including attorneys and accountants) of each of
the aforementioned persons or entities, and each of them, from and against any
and all losses, claims, damages, liabilities, expenses, demands, causes of
action, suits, debts, obligations, rights, promises, acts, agreements and
damages of any kind or nature whatsoever, whether at law or in equity, whether
known or unknown, foreseen or unforeseen, heretofore or hereafter arising out
of, relating to, connected with or incidental to the failure of any
representation or warranty made by the Company or in any other documents or
agreements contemplated hereby or the failure of the Company to comply in all
material respects with the covenants contained in this Agreement or in any other
documents or agreements contemplated hereby. The indemnification set forth
herein shall in no way limit, impair or otherwise have any effect on the
indemnification provisions set forth in any agreement between Imperial Capital,
LLC and the Company.
SECTION 6.2 RELIANCE ON AND SURVIVAL OF REPRESENTATIONS. All
representations, warranties, covenants and agreements of the Company herein
shall be deemed to be material and to have been relied upon by the Agent and the
Lenders and shall survive the execution and delivery of this Agreement and of
the Securities, for so long as the Notes remain outstanding.
SECTION 6.3 SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of and be enforceable by the Company, the Agent, the
Lenders and each of their respective successors and assigns, and, in addition,
shall inure to the benefit of and be enforceable by each person who shall from
time to time be a holder of the Note. The Agent and the Lenders shall be
permitted to transfer the Securities in accordance with their terms and in
accordance with applicable restrictions under applicable federal and state
securities laws.
SECTION 6.4 NOTICES. All notices and other communications provided
for in this Agreement shall be in writing and delivered by registered or
certified mail, postage prepaid, or delivered by overnight courier (for next
Business Day delivery) or telecopied, addressed as follows, or at such other
address as any of the parties hereto may hereafter designate by notice to the
other parties given in accordance with this SECTION:
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1) if to the Company:
Telscape International, Inc.
Interlink Communications, Inc.
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, President of Telscape and
Vice President of Interlink
Telephone: (000) 000-0000, ext. 222
Telecopier: (000) 000-0000
With a copy of any notice to:
Nida & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: C. Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
2) if to the Agent:
Cahill, Warnock, Strategic Partners Fund, L.P.
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy of any notice to:
Xxxxx & Xxxxxxx
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
3) If to any Lender, to:
the Address for Notices set forth below such Lender's
name on the signature pages hereof
Any such notice or communication shall be deemed to have been duly
given on the fifth day after being so mailed, the next Business Day after
delivery by overnight courier, when received when sent by telecopy or upon
receipt when delivered personally.
17
SECTION 6.5 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. Signatures may be
exchanged by telecopy, with original signatures to follow. Each of the parties
hereto agrees that it will be bound by its own telecopied signature and that it
accepts the telecopied signatures of the other parties to this Agreement. The
original signature pages shall be forwarded to the Agent or its counsel and the
Agent or its counsel will provide all of the parties hereto with a copy of the
entire Agreement.
SECTION 6.6 AMENDMENTS. This Agreement may only be amended by a
writing duly executed by the parties hereto.
SECTION 6.7 SEVERABILITY. If any term or provision of this Agreement
or any other document executed in connection herewith shall be determined to be
illegal or unenforceable, all other terms and provisions hereof and thereof
shall nevertheless remain effective and shall be enforced to the fullest extent
permitted by applicable law.
SECTION 6.8 GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY SELECTED IN A DOCUMENT
OR SECURITY, THIS AGREEMENT AND THE SECURITIES AND ALL AMENDMENTS, SUPPLEMENTS,
WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS ITSELF TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE
STATE OF MARYLAND AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE
UPON IT IN ANY LEGAL PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER
MARYLAND OR FEDERAL LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE COMPANY SHALL APPOINT AN AGENT FOR SERVICE OF PROCESS IN
MARYLAND AND SHALL NOTIFY THE AGENT AND THE LENDERS OF ANY FUTURE CHANGE
THEREIN.
SECTION 6.9 ENTIRE AGREEMENT. This Agreement contains the entire
Agreement of the parties hereto with respect to the transactions contemplated
hereby and supersedes all previous oral and written, and all previous
contemporaneous oral negotiations, commitments and understandings.
SECTION 6.10 FURTHER ASSURANCES. The Company agrees promptly to
execute and deliver such documents and to take such other acts as are reasonably
necessary to effectuate the purposes of this Agreement.
SECTION 6.11 HEADINGS. The headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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SECTION 6.12 WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT AND THE
LENDERS EACH HEREBY AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE
SECURITIES OR ANY OTHER AGREEMENTS RELATING TO THE SECURITIES OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. NOTWITHSTANDING
ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
THE SECURITIES OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE SECURITIES.
SECTION 6.13 ASSIGNMENTS AND PARTICIPATIONS. The Company may not
assign its rights or obligations hereunder or under the Notes without the prior
written consent of all of the Lenders. Each Lender may assign all or any portion
of its Note or its other Securities without the prior consent of the Company.
Each Lender may sell or agree to sell to one or more other persons a
participation in all or any part of any of its Note or its other Securities
without the prior consent of the Company. Upon surrender of any Note or other
Securities of a Lender, the Company shall execute and deliver one or more
substitute notes, warrants or other securities in such denominations and of a
like aggregate unpaid principal amount or other amount issued to such Lender
and/or to such Lender's designated transferee or transferees. Each Lender may
furnish any information in the possession of such Lender concerning the Company,
or any of its respective subsidiaries, from time to time to assignees and
participants (including prospective assignees and participants).
SECTION 7. APPOINTMENT OF AGENT.
SECTION 7.1 APPOINTMENT OF AGENT.
(A) AGENT. Each Lender hereby appoints the Agent as agent to act for
and on behalf of such Lender and the other Lenders under or pursuant to this
Agreement and the other Loan Documents, and the Agent hereby accepts such
appointment. The Agent is authorized to act on behalf of each Lender in (i)
exercising rights and remedies with respect to the collateral under the Loan
Documents (the "COLLATERAL"), including taking, holding and disposing of the
Collateral, or with respect to any other matter under any of the Loan Documents,
(ii) giving notices or instructions to the Company, (iii) receiving information
from or notices by the Company, and (iv) communicating to the Company
determinations required or permitted to be made under this Agreement or any
other Loan Document. The Agent may, on behalf of each Lender, take any other
action which such Lender is entitled to take hereunder or under any of the Loan
Documents. Such appointment of the Agent as Agent shall not, however, impair or
modify any rights, obligations or duties which the Agent or any affiliate of the
Agent may otherwise have with respect to any Lender. In its administration of
this Agreement and the other Loan Documents, except to the extent to which
another standard applies to the Agent by reason of any other document between
the Agent and any Lender, the Agent will exercise the same care that it
exercises in the administration or handling of transactions for its own account,
subject, however, to SUBSECTION (G) below.
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(B) REQUISITE LENDERS. Except with respect to any matters expressly
provided for by this Agreement, the Notes, the Security Documents or any other
Loan Documents, each Lender agrees that the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and each Lender agrees that the Agent shall be fully
protected in so acting or refraining from acting) upon the written instructions
of the Requisite Lenders (as defined below). For the purpose hereof, the
"REQUISITE LENDERS" shall mean, at any time, the all of the Lenders holding the
outstanding principal amount of the Notes. The Requisite Lenders may, in their
reasonable discretion, remove the Agent and then select a new Agent to fulfill,
in accordance with the terms hereof, the role of the Agent. All powers of the
Agent shall be exercised for the benefit of all Lenders and in accordance with
the directions of the Requisite Lenders. The Agent shall take every reasonable
action to implement the Requisite Lenders' directions. If any Note is ever held
by any Person other than the original Lenders in accordance herewith, the Agent
may insist on the execution of any agency agreement among all holders of Notes,
in form satisfactory to the Agent and providing for satisfactory
indemnification, before carrying out any further actions under the Loan
Documents.
(C) LIMITATION OF DUTIES AND FIDUCIARY RELATIONSHIP. The Agent shall
not have any duties or responsibilities, except those expressly set forth in
this Agreement and the other Loan Documents. The Agent shall not have any
fiduciary relationship with any Lender arising under this Agreement and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents
against the Agent.
(D) DISTRIBUTION OF PROCEEDS. The Lenders shall share in the
proceeds obtained by the Agent and in any other benefit either arising under the
Loan Documents or obtained by the Agent in connection therewith, in the relative
proportions which the amounts then owed by the Company to each of the Lenders
bear to the total amount then owed by the Company to all of the Lenders;
provided that the Agent shall be the first to be reimbursed for all costs and
expenses incurred in its capacity as the Agent. The duties undertaken by the
Agent have been undertaken as an accommodation to the Lenders and, accordingly,
the Agent shall not be compensated for its services hereunder.
(E) WRITTEN DIRECTIONS. The Agent may at any time request written
directions from all the Lenders with respect to (i) any interpretation of this
Agreement and the other Loan Documents, or (ii) any action to be taken or not to
be taken hereunder or thereunder and may withhold any action until such
directions have been received from the Requisite Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a direction of the Requisite Lenders under the
terms of this Agreement and such request and any action taken or withheld
pursuant to such direction shall be binding upon all the Lenders.
(F) AGENTS AND ATTORNEYS. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys selected by the Agent, using reasonable care. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys so
selected. The Agent shall be entitled to the advice of counsel concerning all
matters pertaining to its duties hereunder.
(G) LIMITATION OF LIABILITY. The Agent and its officers, directors,
employees, agents, attorneys-in-fact and affiliates shall not:
20
(i) be liable for any action taken or omitted to be taken by any
of such Persons or for any error in judgment under or in connection with
this Agreement and the other Loan Documents, except for any such Person's
gross negligence or willful misconduct; or
(ii) be responsible in any manner to any Lender or any other
Person for any failure of any other party to perform its obligations under
this Agreement and the other Loan Documents.
(H) RELIANCE UPON DOCUMENTATION. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or any telephone
conversation believed, respectively, by the Agent to be genuine and correct and
to have been signed, sent, made or spoken by the proper person or persons, and
upon the advice and statements of legal counsel, independent accountants and
other experts selected, respectively, by the Agent.
(I) RELIANCE BY THE COMPANY. Each Lender agrees that, prior to the
delivery to the Company of a notice of the removal or termination of the Agent
as Agent as set forth below, the Company shall be entitled to rely on the
Agent's or any subsequent Agent's authority to act on behalf of each Lender in
all dealings with the Agent (or any such subsequent Agent) with respect to the
Loan Documents. The Company shall be protected in relying on actions,
communications, notices and terminations relating thereto or required or
permitted thereunder by the Agent. The Company shall discharge its obligations
under this Agreement and the Loan Documents by delivering payments, notices and
other information to the Agent. In the event of the removal of the Agent and the
appointment of a successor Agent by the Lenders, the Company shall not be
required to recognize any such removal or appointment unless and until the
Company shall have received a writing setting forth such removal and appointment
executed by the Requisite Lenders, and the Company shall be entitled to rely on
such writing as being genuine and what it purports to be without any necessity
of any investigation whatsoever.
[Signature pages follow.]
21
IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the
date first set forth above.
THE COMPANY:
TELSCAPE INTERNATIONAL, INC.,
a Texas corporation
By: ________________________________
Name: Xxxx X. Xxxxx
Title: President
INTERLINK COMMUNICATIONS, INC.,
a Delaware corporation
By: ________________________________
Name: Xxxx X. Xxxxx
Title: Vice President
AGENT AND LENDERS:
PURCHASE PRICE: $4,737,500 CAHILL, WARNOCK, STRATEGIC PARTNERS
FUND, L.P., a Delaware limited partnership,
as Agent and as a Lender
NOTE AMOUNT: $4,737,500
WARRANTS: 177,268 By: Cahill, Warnock, Strategic Partners, L.P.,
its general partner
By: ____________________________
Name: Xxxxx X. Xxxxxxx
Title: General Partner
PURCHASE PRICE: $262,500 STRATEGIC ASSOCIATES, L.P., a Delaware limited
partnership, as a Lender
NOTE AMOUNT: $262,500
By: Xxxxxx, Xxxxxxx & Company, LLC,
WARRANTS: 9,823 its general partner
By: ____________________________
Name: Xxxxx X. Xxxxxxx
Title: Managing Partner
ADDRESS FOR NOTICES:
Cahill, Warnock, Strategic Partners Fund, L.P.
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
PURCHASE PRICE: $500,000 SIENA CAPITAL PARTNERS, L.P.,
a California limited partnership, as a Lender
NOTE AMOUNT: $500,000
By: Charleville Capital, L.P., a California
limited partnership
WARRANTS: 18,709 its general partner
By: Aneis Advisors, Inc., a California
corporation its general partner
By: __________________________________
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President
PURCHASE PRICE: $150,000 THE AVALON TOTAL RETURN FUND, L.P.
as a Lender
NOTE AMOUNT: $150,000
By: ______________________________
WARRANTS: 5,613 Name: ________________________
Title: _______________________
PURCHASE PRICE: $100,000 OLD POINTE PARTNERS, L.P.,
as a Lender
NOTE AMOUNT: $100,000
WARRANTS: 3,742 By: _____________________________
Name: ______________________
Title: _____________________
PURCHASE PRICE: $50,000 XXXXXXX XXXXXXX
an individual, as a Lender
NOTE AMOUNT: $50,000
By: ____________________________
WARRANTS: 1,871 Xxxxxxx Xxxxxxx
ADDRESS FOR NOTICES:
Imperial Capital, LLC
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Facsimile: 000-000-0000
PURCHASE PRICE: $50,000 ST. XXXXX CAPITAL, LLC,
a Virginia limited liability company,
as a Lender
NOTE AMOUNT: $50,000
By: ____________________________
WARRANTS: 1,871 Name: Xxxx Xxxxxxxx
Title: _______________________
ADDRESS FOR NOTICES:
St. Xxxxx Capital, LLC
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
PURCHASE PRICE: $1,000,000 E. XXXXX XXXXX
an individual, as a Lender
NOTE AMOUNT: $1,000,000
By: ____________________________
WARRANTS: 37,418 E. Xxxxx Xxxxx
ADDRESS FOR NOTICES:
Telscape International, Inc.
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: E. Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
EXHIBIT A
FORM OF NOTE
EXHIBIT A
THIS NOTE HAS BEEN ISSUED PURSUANT TO THAT CERTAIN SECURITIES PURCHASE
AGREEMENT, DATED AS OF MAY 5, 1999, AMONG THE MAKERS (AS DEFINED BELOW), THE
LENDER (AS DEFINED BELOW) AND CERTAIN OTHER PARTIES (THE "SECURITIES PURCHASE
AGREEMENT"). THIS NOTE IS SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THE
SECURITIES PURCHASE AGREEMENT AND IS ENTITLED TO THE BENEFITS THEREOF. ALL TERMS
NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANING GIVEN TO SUCH TERMS IN THE
SECURITIES PURCHASE AGREEMENT.
THE SECURITY REPRESENTED BY THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE ABSENCE OF (1) AN
EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT TO
THIS NOTE UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES
LAWS OR (2) AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
______________
INCREASING RATE SECURED PROMISSORY NOTE
______________
TELSCAPE INTERNATIONAL, INC.
US$___________ INTERLINK COMMUNICATIONS, INC.
May 7, 1999
FOR VALUE RECEIVED, the undersigned, TELSCAPE INTERNATIONAL, INC., a
Texas corporation ("TELSCAPE"), and INTERLINK COMMUNICATIONS, INC., a Delaware
corporation ("INTERLINK," Telscape and Interlink being collectively referred to
as the "COMPANY"), hereby jointly and severally promise to pay to the order of
____________________ (the "LENDER") or its assigns (the "Holder"), the principal
sum of ____________________________ (US$_______) (or so much thereof as shall
remain outstanding) on May 6, 2000 (the "MATURITY DATE"). Subject to
modification, this Note shall bear interest from the date hereof on the unpaid
principal amount hereof from time to time outstanding at a rate per annum equal
to eight percent (8%) (such rate, as increased as provided in this Note, the
"INTEREST RATE"). From and after November 7, 1999, the Interest Rate shall
increase to a rate per annum equal to nine percent (9%). The Interest Rate shall
increase by an additional one percent (1%) on the seventh (7th) day of each
month after November, 1999.
Interest shall be calculated in arrears through the last day of
each month and shall be due and payable in arrears in monthly installments on
the last Business Day of each month, commencing with May 28, 1999 and
terminating on the Maturity Date. "BUSINESS DAY" shall mean any day, except a
Saturday, Sunday or other day or which commercial banks in the State of Maryland
are authorized or required by law to close.
Interest shall be computed on this Note on the basis of a 365 or
366-day year, as the case may be, and the actual number of days elapsed in any
period, including the date hereof but excluding the date by which the Holder is
deemed, pursuant to the Securities Purchase Agreement, to have received payment.
Any principal or interest payment due on this Note which is not paid when due,
whether at stated maturity, by notice of acceleration or otherwise, shall bear
interest (calculated in the manner set forth above) at a rate equal to the
then-current Interest Rate plus an additional five percent (5%) per annum.
The outstanding principal balance of this Note shall be due and
payable on the Maturity Date.
This Note is secured by, and entitled to the benefits provided in,
that certain Security Agreement, by and between Interlink and the Agent, dated
as of May 5, 1999.
The Makers may, from time to time, prepay this Note, in whole or in
part, so long as each partial prepayment of principal is equal to or greater
than US$50,000.00 and the Company has given the Holder one (1) or more Business
Days written notice of such optional prepayment. Any such optional prepayment of
principal shall be without premium or penalty. Each prepayment of principal
under this Note shall be accompanied by all interest then accrued and unpaid on
the principal so prepaid. Any principal prepaid shall be in addition to, and not
in lieu of, all payments otherwise required to be paid hereunder and under the
Securities Purchase Agreement at the time of such prepayment.
Unless otherwise agreed to by the Lender, the Makers shall (i)
prepay the outstanding principal balance of this Note, together with accrued but
unpaid interest thereon and all sums to become owing hereunder upon the
occurrence of any event of default under the Securities Purchase Agreement and
(ii) prepay this Note and the other notes issued pursuant to the Securities
Purchase Agreement, pro rata, to the extent of net financing proceeds in excess
of US$50,000.00 actually received by the Company in the event that the Company
completes any financing transaction (other than the transactions referred to in
the proviso of SECTION 3.5 of the Securities Purchase Agreement), including
without limitation any public or private placements of debt or equity and any
financing from Lucent Technologies, Inc.
Payments of principal, premium (if any) and interest are to be made
in lawful money of the United States of America.
The Company and all other parties whatsoever liable for payment of
any amounts due or to become due under the terms of this Note, hereby waive
presentment for payment, protest and demand, any notice of protest or demand,
and any other indulgences or forbearances of any kind whatsoever.
-2-
INCREASING RATE SECURED PROMISSORY NOTE
Subject to compliance with applicable federal and state securities
laws, the Holder may sell, assign and otherwise transfer all or portions of, and
participations in, the Holder's interest in this Note from time to time. The
Company hereby agrees to execute and deliver to the Holder such documents,
interests and agreements as the Holder deems necessary or desirable to effect
such transfer. Upon surrender of this Note for registration of transfer or
assignment, duly endorsed, or accompanied by a written instrument of transfer or
assignment duly executed by the registered Holder or such Holder's attorney duly
authorized in writing, one or more new Notes for a like principal amount will be
issued to, and, at the option of the Holder, registered in the name of, the
transferee(s) or assignee(s). The Company shall treat the person who holds this
Note as the owner hereof for all purposes whatsoever.
The Company may not assign its rights or obligations hereunder
without the prior written consent of the Holder. The Holder may assign all or
any portion of this Note without the prior consent of the Company. The Holder
may sell or agree to sell to one or more other persons a participation in all or
any part of any of this Note without the prior consent of the Company. Upon
surrender of this Note, the Company shall execute and deliver one or more
substitute notes in such denominations and of a like aggregate unpaid principal
amount issued to the Holder and/or to the Holder's designated transferee or
transferees.
The Company acknowledges and warrants that the debt evidenced hereby
is a "commercial loan" within the meaning of Title 12 of the Commercial Law
Article of the Annotated Code of Maryland (1990 ed.). The Company warrants that
all loan proceeds will be used solely to carry on a business or commercial
enterprise.
The obligations of all persons and entities comprising the "Company"
hereunder shall be joint and several.
-3-
INCREASING RATE SECURED PROMISSORY NOTE
This Note is governed by and shall be construed in accordance with
the laws of the State of Maryland but not including the choice of law rules
thereof.
TELSCAPE INTERNATIONAL, INC.,
a Texas corporation
By: ___________________________
Name: Xxxx X. Xxxxx
Title: President
INTERLINK COMMUNICATIONS, INC.,
a Delaware corporation
By: ___________________________
Name: Xxxx X. Xxxxx
Title: Vice President
-4-
INCREASING RATE SECURED PROMISSORY NOTE
EXHIBIT B
FORM OF WARRANTS
EXHIBIT B
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, TRANSFERRED OR OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
Warrant A-___
May 7, 1999
Warrant to Purchase _________ Shares of Common Stock of
Telscape International, Inc.
Telscape International, Inc., a Texas corporation (the "COMPANY"), hereby
acknowledges that ______________________ ("INVESTOR"), or any other Warrant
Holder is entitled, on the terms and conditions set forth below, to purchase
from the Company, at any time after the date hereof and continuing for three
years thereafter, the above number of fully paid and nonassessable shares of
Common Stock, par value $0.001 per share, of the Company (the "COMMON STOCK") at
the Purchase Price (hereinafter defined), as the same may be adjusted pursuant
to SECTION 5 herein.
1. DEFINITIONS. All terms not otherwise defined herein shall have the
meanings given such terms in the Agreement.
(a) "AGREEMENT" shall mean the Securities Purchase Agreement of even
date herewith between the Company and the Investor.
(b) "INVESTOR" shall mean ______________________________.
(c) "PURCHASE PRICE" shall be $6.6813 per share.
(d) "WARRANT HOLDER" shall mean the Investor or any permitted assignee
of all or any portion of this Warrant.
(e) "WARRANT SHARES" shall mean the shares of Common Stock or other
securities issuable upon exercise of this Warrant.
(f) Other capitalized terms used herein which are defined in the
Agreement shall have the same meanings herein as therein.
2. EXERCISE OR EXCHANGE OF WARRANT.
(a) This Warrant may be exercised by the Warrant Holder, in whole or
in part, at any time and from time to time by surrender of this Warrant,
together with the form of exercise attached hereto as Exhibit A (the "EXERCISE
FORM") duly executed by Warrant Holder, together with the full Purchase Price
(as defined in SECTION 1) for each share of Common Stock as to which this
Warrant is exercised, to the Company at the address set forth in SECTION 15
hereof. At the option of the Warrant Holder, payment of the Purchase Price may
be made either by (i) certified check payable to the order of the Company, (ii)
surrender of certificates then held representing, or deduction from the number
of shares issuable upon exercise of this Warrant, of that number of shares which
has an aggregate fair market value (as defined below) on the date of exercise
equal to the aggregate Purchase Price for all shares to be purchased pursuant to
this Warrant or (iii) by any combination of the foregoing methods.
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares for which
this Warrant is exercised, and the Company, at its expense, shall forthwith
issue and deliver to or upon the order of the Warrant Holder a new Warrant of
like tenor in the name of the Warrant Holder or as the Warrant Holder may
request, reflecting such adjusted Warrant Shares.
(b) The "DATE OF EXERCISE" of the Warrant shall be the date that the
completed Exercise Form is delivered to the Company, together with the original
Warrant and payment in full of the Purchase Price.
3. DELIVERY OF STOCK CERTIFICATES.
(a) Subject to the terms and conditions of this Warrant, as soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within five (5) Business Days (as defined in the Securities Purchase
Agreement) thereafter, the Company at its expense (including, without
limitation, the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Warrant Holder, or as the Warrant
Holder may lawfully direct, a certificate or certificates for the number of
fully paid and non-assessable shares of Common Stock to which the Warrant Holder
shall be entitled on such exercise, together with any other stock or other
securities or property (including cash, where applicable) to which the Warrant
Holder is entitled upon such exercise in accordance with the provisions hereof.
(b) This Warrant may not be exercised as to fractional shares of
Common Stock. In the event that the exercise of this Warrant, in full or in
part, would result in the issuance of any fractional share of Common Stock, then
in such event the Warrant Holder shall be entitled to cash equal to the fair
market value of such fractional share. For purposes of this Warrant, "FAIR
MARKET VALUE" shall equal the closing bid price of the Common Stock on the
Nasdaq National Market or Small-Cap Market, the American Stock Exchange or the
New York Stock Exchange, whichever is the principal trading exchange or market
-2-
for the Common Stock (the "PRINCIPAL MARKET") on the date of exercise hereof, or
if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq National Market or Small-Cap Market,
the closing bid price on the over-the-counter market as furnished by any New
York Stock Exchange member firm that makes a market in the Common Stock
reasonably selected from time to time by the Company for that purpose, or, if
the Common Stock is not traded over-the-counter and the average price cannot be
determined as contemplated above, the fair market value of the Common Stock
shall be as reasonably determined in good faith by the Company's Board of
Directors.
4. COVENANTS OF THE COMPANY.
(a) The Company shall take all necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, including,
without limitation, the notification of the Principal Market, for the legal and
valid issuance of this Warrant and the Warrant Shares to the Warrant Holder.
(b) From the date hereof through the last date on which this Warrant
is exercisable, the Company shall take all steps necessary and within its
control to insure that the Common Stock remains listed or quoted on the
Principal Market and shall not amend its Articles of Incorporation or By-Laws so
as to adversely affect any rights of the Warrant Holder under this Warrant;
provided, however, that increasing the number of authorized shares shall not be
deemed a material adverse effect.
(c) The Company shall at all times reserve and keep available, solely
for issuance and delivery as Warrant Shares hereunder, such shares of Common
Stock as shall from time to time be issuable as Warrant Shares.
(d) The Warrant Shares, when issued in accordance with the terms
hereof; will be duly authorized and, when paid for or issued in accordance with
the terms hereof, shall be validly issued, fully paid and non-assessable. The
Company has authorized and reserved for issuance to the Warrant Holder the
requisite number of shares of Common Stock to be issued pursuant to this
Warrant.
(e) With a view to making available to the Warrant Holder the benefits
of Rule 144 promulgated under the Securities Act ("RULE 144") and any other rule
or regulation of the Securities and Exchange Commission (the "SEC"), that may at
any time permit Warrant Holder to sell securities of the Company to the public
without registration, the Company agrees to use its best efforts to: (i) make
and keep public information available, as those terms are understood and defined
in Rule 144, at all times; and (ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of and kind
of securities purchasable upon exercise of this Warrant and the Purchase Price
shall be subject to adjustment from time to time as follows:
-3-
(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the Company
shall at any time after the date hereof but prior to the expiration of this
Warrant subdivide its outstanding securities as to which purchase rights under
this Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant exist, the
number of Warrant Shares as to which this Warrant is exercisable as of the date
of such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the Purchase Price, but the aggregate purchase price payable for the
total number of Warrant Shares purchasable under this Warrant as of such date
shall remain the same.
(b) STOCK DIVIDEND. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in Common
Stock or other securities or rights convertible into or exchangeable for Common
Stock ("COMMON STOCK EQUIVALENTS"), without payment of any consideration by
holders of Common Stock for the additional shares of Common Stock or the Common
Stock Equivalents (including the additional shares of Common Stock issuable upon
exercise or conversion thereof), then the number of shares of Common Stock for
which this Warrant may be exercised shall be increased as of the record date (or
the date of such dividend distribution if no record date is set) for determining
which holders of Common Stock shall be entitled to receive such dividends, in
proportion to the increase in the number of outstanding shares (and shares of
Common Stock issuable upon conversion of all such securities convertible into
Common Stock) of Common Stock as a result of such dividend, and the Purchase
Price shall be adjusted so that the aggregate amount payable for the purchase of
all the Warrant Shares issuable hereunder immediately after the record date (or
on the date of such distribution, if applicable), for such dividend shall equal
the aggregate amount so payable).
(c) OTHER DISTRIBUTIONS. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of a
dissolution or liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any of its assets without payment
of any consideration by holders of Common Stock (other than cash, Common Stock
or securities convertible into or exchangeable for Common Stock), then, in any
such case, the Warrant Holder shall be entitled to receive, upon exercise of
this Warrant, with respect to each share of Common Stock issuable upon such
exercise, the amount of cash or evidences of indebtedness or other securities or
assets which such Warrant Holder would have been entitled to receive with
respect to each such share of Common Stock as a result of the happening of such
event had this Warrant been exercised immediately prior to the record date or
other date determining the shareholders entitled to participate in such
distribution (the "DETERMINATION DATE").
(d) MERGER, CONSOLIDATION, ETC. If at any time after the date hereof
there shall be a merger or consolidation of the Company with or into, or a
transfer of all or substantially all of the assets of the Company to, another
entity (a "CONSOLIDATION EVENT"), then the Warrant Holder shall be entitled to
receive upon such transfer, merger or
-4-
consolidation becoming effective, and upon payment of the aggregate Purchase
Price then in effect, the number of shares or other securities or property of
the Company or of the successor corporation resulting from such merger or
consolidation, which would have been received by Warrant Holder for the shares
of stock subject to this Warrant had this Warrant been exercised immediately
prior to such transfer, merger or consolidation becoming effective or to the
applicable record date thereof, as the case may be. The Company shall not effect
any Consolidation Event unless the resulting successor or acquiring entity (if
not the Company) assumes by written instrument the obligation to deliver to the
Warrant Holder such shares of stock and/or securities as the Warrant Holder is
entitled to receive had this Warrant been exercised in accordance with the
foregoing.
(e) RECLASSIFICATION, ETC. If at any time after the date hereof there
shall be a reclassification of any securities as to which purchase rights under
this Warrant exist, into the same or a different number of securities of any
other class or classes, then the Warrant Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Purchase Price then in effect, the number of shares or other
securities or property resulting from such reorganization or reclassification,
which would have been received by the Warrant Holder for the shares of stock
subject to this Warrant had this Warrant at such time been exercised.
(f) PURCHASE PRICE ADJUSTMENT. In the event that the Company issues or
sells any Common Stock or securities which are convertible into or exchangeable
for its Common Stock or any convertible securities, or any warrants or other
rights to subscribe for or to purchase or any options for the purchase of its
Common Stock or any such convertible securities (other than issuance of shares
of Common Stock upon conversion thereof, shares or options issued or which may
be issued to employees, directors or consultants pursuant to the Company's stock
option or stock purchase plans as of the date hereof or shares issued upon
exercise of options, warrants or rights outstanding as of the date hereof) at an
effective purchase price per share which is (i) less than the Purchase Price
then in effect and more than fifteen percent (15%) less than the fair market
value (as hereinabove defined) of the Common Stock on the trading day next
preceding such issue or sale OR (ii) less than the Purchase Price IF AND ONLY IF
the Notes have not been prepaid in full within three (3) months of the Closing
Date, then in each such case, the Purchase Price in effect immediately prior to
such issue or sale shall be reduced effective concurrently with such issue or
sale to an amount determined by multiplying the Purchase Price then in effect by
a fraction, (x) the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue or sale,
including, without duplication, those deemed to have been issued under the
Warrants plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would purchase
at (A) such fair market value then in effect (if CLAUSE (I) above applies), or
(B) the Purchase Price (if CLAUSE (II) above applies), and (y) the denominator
of which shall be the number of shares of Common Stock of the Company
outstanding immediately after such issue or sale including, without duplication,
those deemed to have been issued under the Warrants. For purposes of the
foregoing fraction, Common Stock outstanding shall include, without limitation,
any equity offerings then outstanding, whether
-5-
or not they are exercisable or convertible when such fraction is to be
determined. Notwithstanding the foregoing provisions of this SECTION 5(F),
CLAUSE (I) of this SECTION 5(F) shall not apply if the requirements of CLAUSE
(II) of this SECTION 5(F) are met.
The foregoing price adjustment shall not apply to the issuance of shares of
Common Stock which may be issued upon exercise of options under the Company's
employee or director stock option plans, upon the conversion or exchange of
convertible or exchangeable securities or upon the exercise of warrants, or
other rights, which options, convertible or exchangeable securities, warrants or
other rights are outstanding on the date of execution and delivery of this
Warrant.
The number of shares which may be purchased shall be increased
proportionately to any reduction in Purchase Price pursuant to this paragraph
5(f), so that after such adjustments the aggregate Purchase Price payable
hereunder for the increased number of shares of Common Stock shall be the same
as the aggregate Purchase Price in effect immediately prior to such adjustments.
Notwithstanding anything else contained in this Warrant to the contrary,
there shall be no adjustment of the Purchase Price or the number of shares of
Common Stock issuable pursuant to the exercise of this Warrant in the event that
during the term of this Warrant, the Company issues shares of Common Stock, or
securities convertible into Common Stock to the Purchaser.
(g) ADJUSTMENTS; ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event
that at any time, as a result of an adjustment made pursuant to this SECTION 5,
the Warrant Holder shall, upon exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this SECTION 5.
6. REGISTRATION RIGHTS.
(a) "PIGGYBACK" REGISTRATION RIGHTS. If at any time after the date hereof
the Company shall determine to register under the Securities Act (including
pursuant to a demand of any security holder of the Company exercising
registration rights) any of its Common Stock (except pursuant to the
registration statement on Form S-3 filed with the SEC on April 30, 1999 (file
No. 333-77443), securities to be issued solely in connection with any
acquisition of any entity or business, shares issuable solely pursuant to
employee benefit plans eligible for registration on SEC Form S-8 or shares to be
registered on any registration form that does not permit secondary sales), it
shall send to each Lender and to each of the Warrant Holder(s) written notice of
such determination at least thirty (30) days prior to each such filing and, if
within twenty (20) days after receipt of such notice, any Warrant Holder shall
so request in writing, the Company shall use its best efforts to include in such
registration statement (to the extent permitted by
-6-
applicable regulation) all or any part of the Warrant Shares (collectively
referred to in this SECTION 6 as "REGISTRABLE SECURITIES") that such Warrant
Holder requests to be registered, provided, however, that if, in connection with
any offering involving an underwriting of Common Stock to be issued by the
Company, the managing underwriter shall impose a limitation on the amount of
Registrable Securities included in any such registration statement, then, to the
extent that any Registrable Securities remain available for registration after
the underwriter's cutback, the Company shall be obligated to include in such
registration statement with respect to each Warrant Holder requesting inclusion
only the product of : (i) the number of Registrable Securities with respect to
which such Warrant Holder has requested inclusion hereunder and (ii) such
Warrant Holder's pro rata share of the sum of all Registrable Securities
permitted to be registered and all other securities of the Company, the holders
of which Registrable Securities and other securities have requested that such
securities be registered. Any Registrable Securities which are included in any
underwritten offering under this SECTION 6(A) shall be sold upon such terms as
the managing underwriters shall reasonably request but in any event shall be
upon terms not less favorable than those upon which any other selling security
holder shall sell any of its securities. If any Warrant Holder disapproves of
the terms of such underwriting, such Warrant Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter. The Company
shall use its best efforts to cause the managing underwriter or underwriters of
a proposed underwritten offering (the "COMPANY UNDERWRITER") to permit the
Warrant Holders who have requested to participate in the registration for such
offering to include such Registrable Securities in such offering on the same
terms and conditions as the securities of the Company included therein.
Notwithstanding the foregoing, if the Company Underwriter delivers a written
opinion to the Warrant Holders that the total amount or kind of securities which
they, the Company and any other Persons intend to include in such offering (the
"TOTAL SECURITIES") is sufficiently large so as to prevent the Company from
effecting a successful offering of the Total Securities, then the amount or kind
of securities to be offered for the account of any members of management shall
be reduced pro rata to the extent necessary to reduce the Total Securities to
the amount recommended by the Company Underwriter, and if the amount or kind of
Total Securities is still sufficiently large so as to prevent the Company from
effecting a successful offering of the Total Securities, then the amount or kind
of securities to be offered for the account of the Warrant Holders and any other
Persons shall be reduced pro rata to the extent necessary to reduce the Total
Securities to the amount recommended by the Company Underwriter. Notwithstanding
the provisions of this SECTION 6(A), the Company shall have the right, at any
time after it shall have given written notice pursuant to this SECTION 6(A)
(irrespective of whether a written request for inclusion of Registrable
Securities shall have been made), to elect not to file any such proposed
registration statement or to withdraw the same after the filing and prior to the
effective date thereof whether or not any Warrant Holder has elected to include
securities in such registration.
(b) EFFECTIVENESS. If necessary to permit distribution of the
Registrable Securities, the Company shall use its best efforts to maintain the
effectiveness for up to one (1) year of the registration pursuant to which any
of the
-7-
Registrable Securities are being offered, and from time to time will amend or
supplement such registration statement and the prospectus contained therein as
and to the extent necessary to comply with the Securities Act and any applicable
state securities statute or regulation. Notwithstanding the foregoing, if the
registration by the Company of the resale of Registrable Securities is eligible
for SEC Form S-3 or any successor to such form, the Company shall use its best
efforts to maintain the effectiveness of the registration until all registered
Registrable Securities are sold. Each Warrant Holder shall notify the Company
promptly of the completion of the offering of its Registrable Securities under
any such effective registration statement.
If requested by the Company or a representative of the underwriters
of Common Stock (or other securities) of the Company, each Warrant Holder shall
not sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such Warrant Holder (other than those
included in registration) for a period specified by the representative of the
underwriters, not to exceed one hundred eighty (180) days following the
effective date of a registration statement of the Company filed under the
Securities Act for the Company's initial public offering of the Company's Common
Stock.
(c) FURTHER OBLIGATIONS OF THE COMPANY. Whenever, under the preceding
provisions of this SECTION 6, the Company is required hereunder to register
Registrable Securities, it agrees that it shall also do the following:
(i) Furnish to each selling Holder such copies of each preliminary and
final prospectus and any other documents as such Warrant Holder may reasonably
request to facilitate the public offering of its Registrable Securities;
(ii) Use its best efforts to register or qualify the Registrable
Securities to be registered pursuant to this SECTION 6 under the applicable
securities or blue sky laws of such jurisdictions as any selling Warrant Holder
may reasonably request;
(iii) Furnish to each selling Warrant Holder: (A) a signed counterpart of
an opinion of counsel for the Company, dated the effective date of the
registration statement; and (B) a copy of any "comfort" letters signed by the
Company's independent public accountants who have examined and reported on the
Company's financial statements included in the registration statement, covering
substantially the same matters as are customarily covered in opinions of
issuer's counsel and in accountants' "comfort" letters delivered to the
underwriters in underwritten public offerings of securities;
(iv) Permit each selling Warrant Holder or such Warrant Holder's counsel
or other representatives to inspect and copy such corporate documents and
records as may reasonably be requested by them in connection with such
registration; and
-8-
(v) Furnish to each selling Warrant Holder, upon request, a copy of all
documents filed and all correspondence from or to the Commission in connection
with any such offering.
(d) EXPENSES. Except for underwriters' discounts and brokerage commissions
allocable to the Registrable Securities, the Company shall bear all costs and
expenses of each registration contemplated in this SECTION 6, including, but not
limited to, printing, legal and accounting fees and expenses, SEC and NASD
filing fees and blue sky fees and expenses in any jurisdiction in which the
securities to be offered are to be registered or qualified.
(e) TRANSFER OF REGISTRATION RIGHTS. The registration rights of the
Warrant Holders of Registrable Securities under this SECTION 6 shall inure to
the benefit of and be exercisable by any transferee of Registrable Securities.
7. INDEMNIFICATION.
(a) The Company agrees to defend, indemnify and hold harmless each Lender,
each other Warrant Holder, any underwriter(s) and their respective directors,
officers, employees, attorneys and agents, as well as each other Person (if any)
controlling any of the foregoing Persons within the meaning of Section 15 of the
Securities Act, or Section 20 of the Exchange Act, from and against any and all
claims, liabilities, losses and expenses (including, without limitation, the
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any of them, any of their
respective directors, officers, employees, attorneys and agents, or any such
control Person, under the Securities Act, the Exchange Act or any other statute
or at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are related directly or indirectly
to: (i) the Warrants or the Warrant Shares, (ii) any registration statement or
prospectus, (iii) any alleged untrue statement of any material fact contained,
on the effective date thereof, in any registration statement under which such
securities were registered under the Securities Act or the Exchange Act, or in
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (iv) any alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such Persons for any legal or any
other expenses reasonably incurred by such Persons in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any alleged untrue statement or alleged omission made in such registration
statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such respective Person
specifically for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
indemnified Person, and shall survive the transfer of such securities by such
Person.
-9-
Promptly after receipt of notice of the commencement of any action in respect of
which indemnity may be sought against the Company, the Company shall assume the
defense of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to the party seeking indemnity hereunder) and
the payment of expenses insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the Company. The
Company shall not, except with the approval of each party being indemnified
under this SECTION 7(A), consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the parties being so indemnified of a release from
all liability in respect to such claim or litigation.
(b) Each Warrant Holder agrees to defend, indemnify and hold harmless the
Company, any underwriter(s) and their respective directors, officers, employees,
attorneys and agents, as well as each other Person (if any) controlling any of
the foregoing Persons within the meaning of Section 15 of the Securities Act, or
Section 20 of the Exchange Act, from and against any and all claims,
liabilities, losses and expenses (including, without limitation, the
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any of them, any of their
respective directors, officers, employees, attorneys and agents, or any such
control Person, under the Securities Act, the Exchange Act or any other statute
or at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are related directly or indirectly
to: (i) any alleged untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under which this Warrant
or the Warrant Shares were registered under the Securities Act or the Exchange
Act, or in any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (ii) any alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company or the underwriter by such Warrant Holder or a person acting on its
behalf specifically for inclusion therein, and shall reimburse such Persons for
any legal or any other expenses reasonably incurred by such Persons in
connection with investigating or defending any such loss, claim, damage,
liability or action. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any such indemnified
Person, and shall survive the transfer of such securities by such Warrant
Holder. Promptly after receipt of notice of the commencement of any action in
respect of which indemnity may be sought against such Warrant Holder, such
Warrant Holder shall assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to the party seeking
indemnity hereunder) and the payment of expenses insofar as such action shall
relate to any alleged liability in respect of which indemnity may be sought
against such Warrant Holder. Such Warrant Holder shall not, except with the
approval of each party being indemnified under this SECTION 7(B), consent to
entry of any judgment or enter into any settlement that does not include
-10-
as an unconditional term thereof the giving by the claimant or plaintiff to the
parties being so indemnified of a release from all liability in respect to such
claim or litigation.
8. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant Holder against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
9. NOTICE OF ADJUSTMENTS; NOTICES. Whenever the Purchase Price or number of
Warrant Shares purchasable hereunder shall be adjusted pursuant to SECTION 5
hereof, the Company shall execute and deliver (by first class mail, postage
prepaid) to the Warrant Holder a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated and the Purchase Price and number
of shares purchasable hereunder after giving effect to such adjustment.
10. RIGHTS AS SHAREHOLDER. Prior to exercise of this Warrant, the Warrant
Holder shall not be entitled to any rights as a shareholder of the Company with
respect to the Warrant Shares, including (without limitation) the right to vote
such shares, receive dividends or other distributions thereon or be notified of
stockholder meetings. However, in the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Company shall mail to each Warrant
Holder, at least 10 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
11. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of the Warrant and,
in the case of any such loss, theft or destruction of the Warrant, upon delivery
of an indemnity agreement or security reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
12. CONSENT TO JURISDICTION. THE COMPANY (I) HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
-00-
XXXXXXXX XXXXX LOCATED IN THE CITY OF BALTIMORE OR ANY STATE COURT LOCATED IN
THE CITY OF BALTIMORE, MARYLAND FOR THE PURPOSES OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT AND (II) HEREBY WAIVES,
AND AGREES NOT TO ASSERT IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT
IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY CONSENTS TO PROCESS
BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO
SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND
AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS
AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
13. ENTIRE AGREEMENT; AMENDMENTS. This Warrant and the Agreement contain the
entire understanding of the parties with respect to the matters covered hereby
and thereby. No provision of this Warrant may be waived or amended other than by
a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
14. RESTRICTED SECURITIES.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has been issued
in a transaction exempt from the registration requirements of the Securities Act
in reliance upon the provisions of Section 4(2) of the Securities Act of 1933.
This Warrant and the Warrant Shares issuable upon exercise of this Warrant may
not be resold except pursuant to an effective registration statement or an
exemption to the registration requirements of the Securities Act and applicable
state laws.
(b) LEGEND. The Warrant and any Warrant Shares issued upon exercise
thereof (until a registration statement has been declared effective by the SEC
with respect to the Warrant Shares, at which time, such legend shall be removed,
and the Warrant Shares shall be freely tradeable), shall bear the following
legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
-12-
(c) ASSIGNMENT. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Warrant Holder may sell,
transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in
part. The Warrant Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as Exhibit B,
indicating the person or persons to whom the Warrant shall be assigned and the
respective number of warrants to be assigned to each assignee. The Company shall
effect the assignment within ten (10) days, and shall deliver to the assignee(s)
designated by the Warrant Holder after delivery to the Company of the original
Warrant or Warrants for cancellation, a Warrant or Warrants of like tenor and
terms for the appropriate number of shares.
15. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
to the Company: Telscape International, Inc.
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, President
Facsimile No.: (000) 000-0000
to the Warrant Holder: __________________________________
__________________________________
Attn: ____________________________
Facsimile: _______________________
Either party hereto may from time to time change its address or facsimile
number for notices under this SECTION 15 by giving at least 10 days prior
written notice of such changed address or facsimile number to the other party
hereto.
16. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the State of Maryland. The headings in this Warrant are
for purposes of reference only, and shall not
-13-
limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
17. SURVIVAL. The provisions of SECTIONS 6 and 7 shall survive the exercise
or expiration of this Warrant, and the Company shall confirm such survival in
writing if the Warrant Holder requests such confirmation upon exercise or
expiration of this Warrant in its entirety.
TELSCAPE INTERNATIONAL, INC.
By: _______________________________
Xxxx X. Xxxxx
President
-14-
EXHIBIT B
EXHIBIT A
FORM OF WARRANT EXERCISE
I/we hereby exercise Telscape International, Inc. (the "Company")
Common Stock Purchases Warrant #_________________.
(a) Number of Shares of the Company common stock covered
in Purchase Warrant #______________ __________________
(b) Total Exercise price (____________ per share) $_________________
________________________________ ____________________________________
Signature Employment Identification Number
________________________________
Name (please print)
________________________________________________________________________
Address
________________________________________________________________________
________________________________________
Telephone Number
________________________________ ____________________________________
Signature Employment Identification No.
________________________________________
Name (please print)
________________________________________________________________________
Address
________________________________________________________________________
________________________________________
Telephone Number
I wish to register my shares of the Company common stock as follows:
a. ( ) Individual Ownership
b. ( ) Husband and Wife as Community Property
c. ( ) Joint Tenants w/Right to Survivorship (JTRS)
d. ( ) Tenants in Common
e. ( ) Other_________________________________
Dated:___________________________________, 19__.
EXHIBIT B
FORM OF ASSIGNMENT
(To be executed by the registered Warrant Holder desiring to transfer
the Warrant)
FOR VALUED RECEIVED, the undersigned holder of the attached Warrant hereby
sells, assigns and transfers unto the persons below named the right to purchase
______________ shares of the Common Stock of TELSCAPE INTERNATIONAL, INC.
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint ______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated:
_____________________________
Signature
Fill in for new Registration of Warrant:
____________________________________________
Name
____________________________________________
Address
____________________________________________
Please print name and address of assignee
(including zip code number)
NOTICE: The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
-2-
EXHIBIT C
FORM OF SECURITY AGREEMENT
EXHIBIT C
*****************************************************************
SECURITY AGREEMENT
Dated as of May 5, 1999
between
INTERLINK COMMUNICATIONS, INC.
and
CAHILL, WARNOCK, STRATEGIC PARTNERS FUND, L.P.,
as Agent
*****************************************************************
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of May 5, 1999 (this "AGREEMENT"),
is made between INTERLINK COMMUNICATIONS, INC., a Delaware corporation (the
"COMPANY"), and CAHILL, WARNOCK, STRATEGIC PARTNERS FUND, L.P., a Delaware
limited partnership, as agent for the Lenders referred to below (in such
capacity, together with its successors in such capacity, the "AGENT").
The Securities Purchase Agreement, dated as of May 5, 1999 (the
"SECURITIES PURCHASE AGREEMENT"), among Telscape International, Inc., a Texas
corporation ("TELSCAPE"), the Company, each of the lenders signatory thereto
(individually, a "LENDER" and, collectively, the "LENDERS"), and the Agent,
provides, subject to its terms and conditions, for the purchase of secured
promissory notes by the Lenders from Telscape and the Company. It is a condition
to the obligations of Lenders under the Securities Purchase Agreement that the
Company shall have executed and delivered, and granted the Liens provided for
in, this Agreement.
To induce Lenders to enter into, and to purchase the secured
promissory notes under, the Securities Purchase Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company has agreed to pledge and grant a security interest in
the Collateral as security for the Secured Obligations. Accordingly, the Company
agrees with Agent as follows:
Section 1. DEFINITIONS AND INTERPRETATION.
1.01 CERTAIN DEFINED TERMS. Unless otherwise defined, all
capitalized terms used in this Agreement that are defined in the Securities
Purchase Agreement (including those terms incorporated by reference) shall have
the respective meanings assigned to them in the Securities Purchase Agreement.
In addition, the following terms shall have the following meanings under this
Agreement:
"ACCOUNTS" shall have the meaning assigned to that term in SECTION
2.01(B).
"COLLATERAL" shall have the meaning assigned to that term in SECTION
2.01.
"COPYRIGHT COLLATERAL" shall mean all Copyrights, whether now owned
or hereafter acquired by the Company, including each Copyright identified in
ANNEX 2.
"COPYRIGHTS"shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all renewals and
extensions of all copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or hereafter coming into
existence, (i) to all income, royalties, damages and other payments (including
in respect
-2-
of all past, present or future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to xxx for all past, present
and future infringements with respect to any of the foregoing and (iii)
otherwise accruing under or pertaining to any of the foregoing throughout the
world.
"DOCUMENTS" shall have the meaning assigned to that term in SECTION
2.01(F).
"EQUIPMENT" shall have the meaning assigned to that term in SECTION
2.01(E).
"GOVERNMENTAL PERSON" shall mean any Federal, state, municipal,
local, territorial or other governmental department, commission, board, bureau,
agency, regulatory authority, instrumentality, judicial or administrative body,
domestic or foreign.
"INSTRUMENTS" shall have the meaning assigned to that term in
SECTION 2.01(C).
"INTELLECTUAL PROPERTY" shall mean all Copyright Collateral, all
Patent Collateral and all Trademark Collateral, together with (a) all
inventions, processes, production methods, proprietary information, know-how and
trade secrets; (b) all licenses or user or other agreements granted to the
Company with respect to any of the foregoing, in each case whether now or
hereafter owned or used, including the licenses or other agreements with respect
to the Copyright Collateral, the Patent Collateral or the Trademark Collateral
listed in ANNEX 5; (c) all information, customer lists, identification of
suppliers, data, plans, blueprints, specifications, designs, drawings, recorded
knowledge, surveys, engineering reports, test reports, manuals, materials
standards, processing standards, performance standards, catalogs, computer and
automatic machinery software and programs; (d) all field repair data, sales data
and other information relating to sales or service of products now or hereafter
manufactured; (e) all accounting information and all media in which or on which
any information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such information,
knowledge, records or data; (f) the approvals of any Governmental Person now
held or hereafter obtained by the Company in respect of any of the foregoing;
and (g) all causes of action, claims and warranties now owned or hereafter
acquired by the Company in respect of any of the foregoing. It is understood
that Intellectual Property shall include all of the foregoing owned or acquired
by the Company on a worldwide basis.
"INVENTORY" shall have the meaning assigned to that term in SECTION
2.01(D).
"PATENT COLLATERAL" shall mean all Patents, whether now owned or
hereafter acquired by the Company, including each Patent identified in ANNEX 3.
"PATENTS" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to xxx for all past, present and future
-3-
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"SECURED OBLIGATIONS" shall mean (a) the payment and performance of
the Notes by the Company and/or Telscape and (b) any and all obligations of the
Company and/or Telscape for the performance of the agreements, covenants and
undertakings of the Company and/or Telscape under or in respect of the Loan
Documents.
"TRADEMARK COLLATERAL" shall mean all Trademarks, whether now owned
or hereafter acquired by the Company, including each Trademark identified in
ANNEX 4. Notwithstanding the foregoing, the Trademark Collateral shall not
include any Trademark which would be rendered invalid, abandoned, void or
unenforceable by reason of its being included as part of the Trademark
Collateral.
"TRADEMARKS" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service xxxx registrations
and applications for trademark and service xxxx registrations, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present and future infringements)
now or hereafter due or payable under or with respect to any of the foregoing,
(ii) to xxx for all past, present and future infringements with respect to any
of the foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service xxxx.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as
in effect in the State of Maryland from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
Section 1.02 INTERPRETATION. In this Agreement, unless otherwise
indicated, the singular includes the plural and plural the singular; words
importing either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement; references
-4-
to agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to such instruments
(without, however, limiting any prohibition on any such amendments, extensions
and other modifications by the terms of any Loan Document); and references to
persons include their respective permitted successors and assigns and, in the
case of Governmental Persons, persons succeeding to their respective functions
and capacities.
Section 2. COLLATERAL.
2.01 GRANT. As collateral security for the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, the Company hereby pledges and grants to
Agent a security interest in all of the Company's right, title and interest in
and to the following property, whether now owned or hereafter acquired by the
Company and whether now existing or hereafter coming into existence
(collectively, the "COLLATERAL"):
(a) [Intentionally left blank]
(b) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of the Company constituting a right to the payment of
money, whether or not earned by performance, including all moneys due and to
become due to the Company in repayment of any loans or advances, in payment for
goods (including Inventory and Equipment) sold or leased or for services
rendered, in payment of tax refunds and in payment of any guarantee of any of
the foregoing (collectively, the "ACCOUNTS");
(c) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of the Company evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts (collectively, the
"Instruments");
(d) all inventory (as defined in the Uniform Commercial Code) and
all other goods of the Company that are held by the Company for sale, lease or
furnishing under a contract of service (including to its subsidiaries or
affiliates), that are so leased or furnished or that constitute raw materials,
work in process or material used or consumed in its business, including all
spare parts and related supplies, all goods obtained by the Company in exchange
for any such goods, all products made or processed from any such goods and all
substances, if any, commingled with or added to any such goods (collectively,
the "INVENTORY");
(e) all equipment (as defined in the Uniform Commercial Code) and
all other goods of the Company that are used or bought for use primarily in its
business, including all spare parts and related supplies, all goods obtained by
the Company in exchange for any such goods, all substances, if any, commingled
with or added to such goods and all upgrades and other improvements to such
goods, in each case to the extent not constituting Inventory (collectively, the
"EQUIPMENT");
(f) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of the Company covering, evidencing or representing
Inventory or Equipment (collectively, the "DOCUMENTS");
-5-
(g) all contracts and other agreements of the Company relating to
the sale or other disposition of all or any part of the Inventory, Equipment or
Documents and all rights, warranties, claims and benefits of the Company against
any person arising out of, relating to or in connection with all or any part of
the Inventory, Equipment or Documents of the Company, including any such rights,
warranties, claims or benefits against any person storing or transporting any
such Inventory or Equipment or issuing any such Documents;
(h) all other accounts or general intangibles of the Company not
constituting Accounts, including, to the extent related to all or any part of
the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of the Company or any computer bureau or service
company from time to time acting for the Company;
(i) all other tangible and intangible property of the Company,
including all Intellectual Property; and
(j) all proceeds and products in whatever form of all or any part of
the other Collateral, including all proceeds of insurance and all condemnation
awards and all other compensation for any casualty with respect to all or any
part of the other Collateral (together with all rights to recover and proceed
with respect to the same), and all accessories to, substitutions for and
replacements of all or any part of the other Collateral.
2.02 INTELLECTUAL PROPERTY. For the purpose of enabling Agent to
exercise its rights, remedies, powers and privileges under SECTION 6 at such
time or times as Agent shall be lawfully entitled to exercise such rights,
remedies, powers and privileges, and for no other purpose, the Company hereby
grants to Agent, to the extent assignable, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to the Company) to
use, assign, license or sublicense any of the Intellectual Property of the
Company, together with reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout of such items.
2.03 PERFECTION. Concurrently with the execution and delivery of
this Agreement, the Company shall (i) file such financing statements and other
documents in such offices as shall be necessary or as Agent may request to
perfect and establish the priority of the Liens granted by this Agreement, (ii)
deliver and pledge to Agent any and all Instruments, endorsed or accompanied by
such instruments of assignment and transfer in such form and substance as Agent
may request, and (iii) take all such other actions as shall be necessary or as
Agent may request to perfect and establish the priority of the Liens granted by
this Agreement.
-6-
2.04 PRESERVATION AND PROTECTION OF SECURITY Interests. The
Company shall:
(a) [Intentionally left blank]
(b) upon the acquisition after the Closing Date by the Company of
any Instrument, promptly deliver and pledge to Agent all such Instruments,
endorsed or accompanied by such instruments of assignment and transfer in such
form and substance as Agent may request;
(c) upon the acquisition after the Closing Date by the Company of
any Equipment covered by a certificate of title or ownership, promptly cause
Agent to be listed as the lienholder on such certificate of title and within 30
days of the acquisition of such Equipment deliver evidence of the same to Agent;
(d) upon the Company's acquiring, or otherwise becoming entitled to
the benefits of, any Copyright (or copyrightable material), Patent (or
patentable invention), Trademark (or associated goodwill) or other Intellectual
Property or upon or prior to the Company's filing, either directly or through
any agent, licensee or other designee, of any application with any Governmental
Person for any Copyright, Patent, Trademark, or other Intellectual Property, in
each case after the Closing Date, execute and deliver such contracts, agreements
and other instruments as Agent may request to evidence, validate, perfect and
establish the priority of the Liens granted by this Agreement in such and any
related Intellectual Property and, if requested by Agent, amend ANNEX 2, 3 or 4
(as the case may be) to reflect the inclusion of any such Intellectual Property
as part of the Collateral (it being understood that the failure to amend any
such Annex shall not affect the Liens granted by this Agreement on any such
Intellectual Property); and
(e) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any and
all approvals of Governmental Persons and take any and all steps that may be
necessary or as Agent may request to create, perfect, establish the priority of,
or to preserve the validity, perfection or priority of, the Liens granted by
this Agreement or to enable Agent to exercise and enforce its rights, remedies,
powers and privileges under this Agreement with respect to such Liens.
2.05 ATTORNEY-IN-FACT.
(a) Subject to the rights of the Company under SECTIONS 2.06, 2.07,
2.08 and 2.09, Agent is hereby appointed the attorney-in-fact of the Company for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instruments which Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, to preserve the validity,
perfection and priority of the Liens granted by this Agreement and, following
any Event of Default, to exercise its rights, remedies, powers and privileges
under this Agreement. This appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the foregoing,
Agent shall be entitled under this Agreement upon the occurrence and
continuation of any
-7-
Event of Default (i) to ask, demand, collect, xxx for, recover, receive and give
receipt and discharge for amounts due and to become due under and in respect of
all or any part of the Collateral; (ii) to receive, endorse and collect any
Instruments or other drafts, instruments, documents and chattel paper in
connection with clause (i) above (including any draft or check representing the
proceeds of insurance or the return of unearned premiums); (iii) to file any
claims or take any action or proceeding that Agent may deem necessary or
advisable for the collection of all or any part of the Collateral, including the
collection of any compensation due and to become due under any contract or
agreement with respect to all or any part of the Collateral; and (iv) to
execute, in connection with any sale or disposition of the collateral under
SECTION 6, any endorsements, assignments, bills of sale or other instruments of
conveyance or transfer with respect to all or any part of the Collateral.
(b) Without limiting the rights and powers of Agent under SECTION
2.05(A), the Company hereby appoints Agent as its attorney-in-fact, effective
the Closing Date and terminating upon the termination of this Agreement, for the
purpose of (i) filing such applications with such state agencies and (ii)
executing such other documents and instruments on behalf of, and taking such
other action in the name of, the Company as Agent may deem necessary or
advisable to accomplish the purposes of this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest.
2.06 [Intentionally left blank]
2.07 USE OF INTELLECTUAL PROPERTY. Subject to such action not
otherwise constituting an Event of Default and so long as no Event of Default
shall have occurred and be continuing, the Company will be permitted to exploit,
use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the
business of the Company. In furtherance of the foregoing, so long as no Event of
Default shall have occurred and be continuing, Agent shall from time to time,
upon the request of the Company, execute and deliver any instruments,
certificates or other documents, in the form so requested, which the Company
shall have certified are appropriate (in its judgment) to allow it to take any
action permitted above (including relinquishment of the license provided
pursuant to SECTION 2.02 as to any specific Intellectual Property). The exercise
of rights, remedies, powers and privileges under SECTION 6 by Agent shall not
terminate the rights of the holders of any licenses or sublicenses theretofore
granted by the Company in accordance with the first sentence of this SECTION
2.07.
2.08 INSTRUMENTS. So long as no Event of Default shall have occurred
and be continuing, the Company may retain for collection in the ordinary course
of business any Instruments obtained by it in the ordinary course of business,
and Agent shall, promptly upon the request, and at the expense of, the Company,
make appropriate arrangements for making any Instruments pledged by the Company
available to the Company for purposes of presentation, collection or renewal.
Any such arrangement shall be effected, to the extent deemed appropriate by
Agent, against trust receipt or like document.
-8-
2.09 USE OF COLLATERAL. So long as no Event of Default shall have
occurred and be continuing, the Company shall, in addition to its rights under
SECTIONS 2.06, 2.07 and 2.08 in respect of the Collateral contemplated in those
sections, be entitled to use and possess the other Collateral and to exercise
its rights, title and interest in all contracts, agreements, licenses and
approvals of Governmental Persons, subject to the rights, remedies, powers and
privileges of Agent under SECTIONS 3 and 6 and to such use, possession or
exercise not otherwise constituting an Event of Default.
2.10 RIGHTS AND OBLIGATIONS.
(a) The Company shall remain liable to perform its duties and
obligations under the contracts and agreements included in the Collateral in
accordance with their respective terms to the same extent as if this Agreement
had not been executed and delivered. The exercise by Agent of any right, remedy,
power or privilege in respect of this Agreement shall not release the Company
from any of its duties and obligations under such contracts and agreements.
Agent shall have no duty, obligation or liability under such contracts and
agreements or in respect to any approval of any Governmental Persons included in
the Collateral by reason of this Agreement or any other Loan Document, nor shall
Agent be obligated to perform any of the duties or obligations of the Company
under any such contract or agreement or any such approval of any Governmental
Persons or to take any action to collect or enforce any claim (for payment)
under any such contract or agreement or approval of any Governmental Persons.
(b) No Lien granted by this Agreement in the Company's right, title
and interest in any contract, agreement or approval of any Governmental Person
shall be deemed to be a consent by Agent to any such contract, agreement or
approval of any Governmental Person.
(c) No reference in this Agreement to proceeds or to the sale or
other disposition of Collateral shall authorize the Company to sell or otherwise
dispose of any Collateral except to the extent otherwise expressly permitted by
the terms of any Loan Document.
(d) Agent shall not be required to take steps necessary to preserve
any rights against prior parties to any part of the Collateral.
2.11 TERMINATION. When all Secured Obligations shall have been paid
in full, this Agreement shall terminate, and Agent shall forthwith cause to be
assigned, transferred and delivered, against receipt but without any recourse,
warranty or representation whatsoever, any remaining Collateral and money
received in respect of the Collateral, to or on the order of the Company and to
be released, canceled and granted back all licenses and rights referred to in
SECTION 2.02. Agent shall also execute and deliver to the Company upon such
termination such Uniform Commercial Code termination statements, and such other
documentation as shall be reasonably requested by the
-9-
Company's to effect the termination and release of the Liens granted by this
Agreement on the Collateral.
Section 3. CERTAIN PROCEEDS.
3.01 NOTICE TO ACCOUNT DEBTORS. If any Event of Default shall have
occurred and be continuing, the Company shall, upon request of Agent, promptly
notify (and the Company hereby authorizes Agent so to notify) each account
debtor in respect of any Accounts or Instruments that such Collateral has been
assigned to Agent under this Agreement and that any payments due or to become
due in respect of such Collateral are to be made directly to Agent.
3.02 PROCEEDS HELD IN TRUST. If any Event of Default shall have
occurred and be continuing, the Company agrees that if the proceeds of any
Collateral (including payments made in respect of Accounts and Instruments)
shall be received by it, all such proceeds shall be held in trust by the Company
for and as the property of Agent and shall not be commingled with any other
funds or property of the Company.
Section 4. REPRESENTATIONS AND WARRANTIES. As of the Closing Date,
the Company represents and warrants to Agent as follows:
4.01 TITLE. The Company is the sole beneficial owner of the
Collateral in which it purports to xxxxx x Xxxx pursuant to this Agreement, and
such Collateral is free and clear of all Liens. The Liens granted by this
Agreement in favor of Agent have attached and constitute a perfected security
interest in all of such Collateral (other than Intellectual Property registered
or otherwise located outside of the United States of America) prior to all other
Liens.
4.02 [Intentionally left blank]
4.03 INTELLECTUAL PROPERTY.
(a) ANNEXES 2, 3 and 4 set forth completely and correctly all
Copyrights, Patents and Trademarks owned by the Company on the Closing Date;
except pursuant to licenses and other user agreements entered into by the
Company in the ordinary course of business and listed in ANNEX 5, the Company
owns and possesses the right to use, and has done nothing to authorize or enable
any other Person to use, any Copyright, Patent or Trademark listed in ANNEX 2, 3
or 4; all registrations listed in ANNEXES 2, 3 and 4 are valid and in full force
and effect; and, except as may be set forth in ANNEX 5, the Company owns and
possesses the right to use all Copyrights, Patents and Trademarks listed in
ANNEXES 2, 3 and 4;
(b) ANNEX 5 sets forth completely and correctly all licenses and
other user agreements included in the Intellectual Property on the Closing Date;
-10-
(c) To the Company's knowledge, (i) except as set forth in ANNEX 5,
there is no violation by others of any right of the Company with respect to any
Copyright, Patent or Trademark listed in ANNEX 2, 3 or 4 and (ii) the Company is
not infringing in any respect upon any Copyright, Patent or Trademark of any
other Person; and no proceedings have been instituted, are pending against the
Company or, to the Company's knowledge, have been threatened against, and no
claim has been received by, the Company, alleging any such violation, except as
may be set forth in ANNEX 5; and
(d) The Company does not own any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
Section 5. COVENANTS.
5.01 BOOKS AND RECORDS. The Company shall:
(a) keep full and accurate books and records relating to the
Collateral and stamp or otherwise xxxx such books and records in such manner as
Agent may reasonably require in order to reflect the Liens granted by this
Agreement;
(b) furnish to Agent from time to time (but, unless any Event of
Default shall have occurred and be continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Copyright Collateral, the Patent Collateral and the Trademark Collateral and
such other reports in connection with the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, as Agent may reasonably request, all in
reasonable detail;
(c) prior to filing, either directly or through an agent, licensee
or other designee, any application for any Copyright, Patent or Trademark,
furnish to Agent prompt notice of such proposed filing; and
(d) permit representatives of Agent, upon reasonable notice, at any
time during normal business hours to inspect and make abstracts from its books
and records pertaining to the Collateral, permit representatives of Agent to be
present at the Company's place of business to receive copies of all
communications and remittances relating to the Collateral and forward copies of
any notices or communications received by the Company with respect to the
Collateral, all in such manner as Agent may request. The Company agrees to pay
the reasonable cost of any such inspection conducted at any time that an Event
of Default or event which, with the giving of notice or the passage of time, or
both, would constitute an Event of Default (up to a maximum amount of $5,000 for
any such inspection) which has occurred and is continuing.
5.02 REMOVALS, ETC. Without at least 30 days' prior written notice
to Agent, the Company shall not: (i) maintain any of its books and records with
respect to the Collateral at any office or maintain its principal place of
business at any place, or permit any Inventory or Equipment
-11-
to be located anywhere, other than at the address initially indicated for
notices to it under SECTION 7 or at one of the locations identified in ANNEX 6
or in transit from one of such locations to another; (ii) change its corporate
name, or the name under which it does business, from the name shown on the
signature pages to this Agreement.
5.03 SALES AND OTHER LIENS. The Company shall not dispose of any
Collateral, create, incur, assume or suffer to exist any Lien upon any
Collateral or file or suffer to be on file or authorize to be filed, in any
jurisdiction, any financing statement or like instrument with respect to all or
any part of the Collateral in which Agent is not named as the sole secured party
for its own benefit.
5.04 [Intentionally left blank]
5.05 INTELLECTUAL PROPERTY.
(a) The Company (either itself or through licensees) will, for each
Trademark, (i) to the extent consistent with past practice and good business
judgment, continue to use such Trademark on each and every trademark class of
goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force and
effect free from any claim of abandonment for nonuse, (ii) maintain as in the
past the quality of products and services offered under such Trademark, (iii)
employ such Trademark with the appropriate notice of registration and (iv) not
(and not permit any licensee or sublicensee to) do any act or knowingly omit to
do any act whereby any Trademark material to the conduct of its business may
become invalidated.
(b) The Company (either itself or through licensees) will not do any
act or knowingly omit to do any act whereby any Patent material to the conduct
of its business may become abandoned or dedicated.
(c) The Company shall notify Agent immediately if it knows or has
reason to know that any Intellectual Property material to the conduct of its
business may become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding before any Governmental Person) regarding the
Company's ownership of any Intellectual Property material to its business, its
right to copyright, patent or register the same (as the case may be), or its
right to keep, use and maintain the same.
(d) The Company will take all necessary steps that are consistent
with good business practices in any proceeding before any appropriate
Governmental Person to maintain and pursue each application relating to any
Intellectual Property (and to obtain the relevant registrations) and to maintain
each registration material to the conduct of its business, including payment of
maintenance fees, filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings.
-12-
(e) In the event that any Intellectual Property material to the
conduct of its business is infringed, misappropriated or diluted by a third
party, the Company shall notify Agent within (10) days after it learns of such
event and shall, if consistent with good business practice, promptly xxx for
infringement, misappropriation or dilution, seek temporary restraints and
preliminary injunctive relief to the extent practicable, seek to recover any and
all damages for such infringement, misappropriation or dilution and take such
other actions as are appropriate under the circumstances to protect such
Collateral.
(f) The Company shall, through counsel acceptable to Agent,
prosecute diligently any application for any Intellectual Property pending as of
the date of this Agreement or thereafter made until the termination of this
Agreement, make application on uncopyrighted but copyrightable material,
unpatented but patentable inventions and unregistered but registerable
Trademarks and preserve and maintain all rights in applications for any
Intellectual Property; PROVIDED, HOWEVER, that the Company shall have no
obligation to make any such application if making such application would be
unnecessary or imprudent in the good faith business judgment of the Company. Any
expenses incurred in connection with such an application shall be borne by the
Company. The Company shall not abandon any right to file an application for any
Intellectual Property or any pending such application in the United States
without the consent of Agent, which consent shall not be unreasonably withheld.
(g) Agent shall have the right but shall in no way be obligated to
bring suit in its own name to enforce the Copyrights, Patents and Trademarks and
any license under such Intellectual Property, in which event the Company shall,
at the request of Agent, do any and all lawful acts and execute and deliver any
and all proper documents required by Agent in aid of such enforcement action.
5.06 FURTHER ASSURANCES. The Company agrees that, from time to time
upon the written request of Agent, the Company will execute and deliver such
further documents and do such other acts and things as Agent may reasonably
request in order fully to effect the purposes of this Agreement.
Section 6. REMEDIES.
6.01 EVENTS OF DEFAULT, ETC. If any Event of Default shall have
occurred:
(a) Agent in its discretion may require the Company to, and the
Company shall, assemble the Collateral owned by it at such place or places,
reasonably convenient to both Agent and the Company, designated in Agent's
request;
-13-
(b) Agent in its discretion may make any reasonable compromise or
settlement it deems desirable with respect to any of the Collateral and may
extend the time of payment, arrange for payment in installments, or otherwise
modify the terms of, all or any part of the Collateral;
(c) Agent in its discretion may, in its name or in the name of the
Company or otherwise, demand, xxx for, collect or receive any money or property
at any time payable or receivable on account of or in exchange for all or any
part of the Collateral, but shall be under no obligation to do so;
(d) Agent in its discretion may, upon ten business days prior
written notice to the Company of the time and place, with respect to all or any
part of the Collateral which shall then be or shall thereafter come into the
possession, custody or control of Agent or any of its agents, sell, lease or
otherwise dispose of all or any part of such Collateral, at such place or places
as Agent deems best, for cash, for credit or for future delivery (without
thereby assuming any credit risk) and at public or private sale, without demand
of performance or notice of intention to effect any such disposition or of time
or place of any such sale (except such notice as is required above or by
applicable statute and cannot be waived), and Agent or any other person may be
the purchaser, lessee or recipient of any or all of the Collateral so disposed
of at any public sale (or, to the extent permitted by law, at any private sale)
and thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or
otherwise), of the Company, any such demand, notice and right or equity being
hereby expressly waived and released. In the event of any sale, license or other
disposition of any of the Trademark Collateral, the goodwill connected with and
symbolized by the Trademark Collateral subject to such disposition shall be
included, and the Company shall supply to Agent or its designee, for inclusion
in such sale, assignment or other disposition, all Intellectual Property
relating to such Trademark Collateral. Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned; and
(e) Agent shall have, and in its discretion may exercise, all of the
rights, remedies, powers and privileges with respect to the Collateral of a
secured party under the Uniform Commercial Code (whether or not the Uniform
Commercial Code is in effect in the jurisdiction where such rights, remedies,
powers and privileges are asserted) and such additional rights, remedies, powers
and privileges to which a secured party is entitled under the laws in effect in
any jurisdiction where any rights, remedies, powers and privileges in respect of
this Agreement or the Collateral may be asserted, including the right, to the
maximum extent permitted by law, to exercise all voting, consensual and other
powers of ownership pertaining to the Collateral as if Agent were the sole and
absolute owner of the Collateral (and the Company agrees to take all such action
as may be appropriate to give effect to such right).
-14-
The proceeds of, and other realization upon, the Collateral by virtue of
the exercise of remedies under this SECTION 6.01 and of the exercise of the
license granted to Agent in SECTION 2.02 shall be applied in accordance with
SECTION 6.04.
6.02 DEFICIENCY. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under SECTION 6.01 and of the
exercise of the license granted by Agent in SECTION 2.02 are insufficient to
cover the costs and expenses of such exercise and the payment in full of the
other Secured Obligations, the Company's shall remain liable for any deficiency.
6.03 PRIVATE SALE.
(a) Agent shall incur no liability as a result of the sale, lease or
other disposition of all or any part of the Collateral at any private sale
pursuant to SECTION 6.01 conducted in a commercially reasonable manner. The
Company hereby waives any claims against Agent arising by reason of the fact
that the price at which the Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if Agent accepts
the first offer received and does not offer the Collateral to more than one
offeree.
(b) [Intentionally left blank]
6.04 APPLICATION OF PROCEEDS. Except as otherwise expressly provided
in this Agreement and except as provided below in this SECTION 6.04, the
proceeds of, or other realization upon, all or any part of the Collateral by
virtue of the exercise of remedies under SECTION 6.01 or of the exercise of the
license granted in SECTION 2.02, and any other cash at the time held by Agent
under SECTION 3 or this SECTION 6, shall be applied by Agent:
FIRST, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of Agent, the
fees and expenses of its agents and counsel and all other expenses incurred and
advances made by Agent in that connection;
NEXT, to the payment in full of the remaining Secured
Obligations in such manner as Agent may determine; and
FINALLY, to the payment to the Company, or its respective successors
or assigns, or as a court of competent jurisdiction may direct, of any surplus
then remaining.
As used in this SECTION 6, "PROCEEDS" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Company or any issuer of,
or account debtor or other obligor to the Company on, any of the Collateral.
-15-
Section 7. MISCELLANEOUS.
7.01 WAIVER. No failure on the part of Agent to exercise and no
delay in exercising, and no course of dealing with respect to, any right,
remedy, power or privilege under this Agreement shall operate as a waiver of
such right, remedy, power or privilege, nor shall any single or partial exercise
of any right, remedy, power or privilege under this Agreement preclude any other
or further exercise of any such right, remedy, power or privilege or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
7.02 NOTICES. All notices and other communications provided for in
this Agreement shall be in writing and delivered by registered or certified
mail, postage prepaid, or delivered by overnight courier (for next Business Day
delivery) or telecopied, addressed as follows, or at such other address as any
of the parties hereto may hereafter designate by notice to the other parties
given in accordance with this SECTION:
1) if to the Company:
Interlink Communications, Inc.
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 0000
Attn: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy of any notice to:
Nida & Xxxxxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: C. Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
2) if to Agent:
Xxxxxx, Xxxxxxx & Company, LLC
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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With a copy of any notice to:
Xxxxx & Xxxxxxx
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any such notice or communication shall be deemed to have been duly
given on the fifth day after being so mailed, the next Business Day after
delivery by overnight courier, when received when sent by telecopy or upon
receipt when delivered personally.
7.03 EXPENSES, ETC. The Company agrees to pay or to reimburse Agent
for all reasonable costs and expenses (including reasonable attorney's fees and
expenses) that may be incurred by Agent in any effort to enforce any of the
provisions of SECTION 6 or any of the obligations of the Company in respect of
the Collateral or in connection with (a) the preservation of the Lien of, or the
rights of Agent under this Agreement or (b) any actual or attempted sale, lease,
disposition, exchange, collection, compromise, settlement or other realization
in respect of, or care of, the Collateral, including all such costs and expenses
(and reasonable attorney's fees and expenses) incurred in any bankruptcy,
reorganization, workout or other similar proceeding.
7.04 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. Signatures may be
exchanged by telecopy, with original signatures to follow. Each of the parties
hereto agrees that it will be bound by its own telecopied signature and that it
accepts the telecopied signatures of the other parties to this Agreement. The
original signature pages shall be forwarded to Agent or its counsel and Agent or
its counsel will provide all of the parties hereto with a copy of the entire
Agreement.
7.05 AMENDMENTS. This Agreement may only be amended by a writing
duly executed by the parties hereto.
7.06 SEVERABILITY. If any term or provision of this Agreement or any
other document executed in connection herewith shall be determined to be illegal
or unenforceable, all other terms and provisions hereof and thereof shall
nevertheless remain effective and shall be enforced to the fullest extent
permitted by applicable law.
7.07 GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT THAT
THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY SELECTED IN A DOCUMENT OR
-17-
SECURITY, THIS AGREEMENT AND THE SECURITIES AND ALL AMENDMENTS, SUPPLEMENTS,
WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MARYLAND WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING
IN THE STATE OF MARYLAND AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE
MADE UPON IT IN ANY LEGAL PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER
MARYLAND OR FEDERAL LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE COMPANY SHALL APPOINT AN AGENT FOR SERVICE OF PROCESS IN
MARYLAND AND SHALL NOTIFY AGENT IN WRITING OF SUCH APPOINTMENT AND ANY FUTURE
CHANGE THEREIN.
7.08 ENTIRE AGREEMENT. This Agreement contains the entire Agreement
of the parties hereto with respect to the transactions contemplated hereby and
supersedes all previous oral and written, and all previous contemporaneous oral
negotiations, commitments and understandings.
7.09 FURTHER ASSURANCES. The Company agrees promptly to execute and
deliver such documents and to take such other acts as are reasonably necessary
to effectuate the purposes of this Agreement.
7.10 HEADINGS. The headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
7.11 WAIVER OF JURY TRIAL. THE COMPANY AND AGENT EACH HEREBY AGREE
TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR ANY OTHER
AGREEMENTS RELATING TO THE SECURITIES OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE SECURITIES OR ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE SECURITIES.
7.12 SUCCESSOR AND ASSIGNS; ASSIGNMENT. This Agreement shall not be
assignable by the Company. This Agreement may be assigned by the Agent to its
successor as Agent pursuant
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to the provisions of the Securities Purchase Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
[Signature Page Follows]
-19-
IN WITNESS WHEREOF, the parties hereto execute this Agreement as of
the date first set forth above.
AGENT:
CAHILL, WARNOCK, STRATEGIC PARTNERS
FUND, L.P., a Delaware limited partnership, as Agent
By: Cahill, Warnock, Strategic Partners, L.P.,
its general partner
By: ____________________________
Name: Xxxxx X. Xxxxxxx
Title: General Partner
THE COMPANY:
INTERLINK COMMUNICATIONS, INC.,
a Delaware corporation
By: ___________________________________
Name: Xx. Xxxx Xxxxx
Title: Vice President
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ANNEX 1
[INTENTIONALLY LEFT BLANK]
ANNEX 1 TO SECURITY AGREEMENT
ANNEX 2
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
TITLE DATE FILED REGISTRATION NO. EFFECTIVE DATE
--------------------------------------------------------------------------------
ANNEX 2 TO SECURITY AGREEMENT
ANNEX 3
LIST OF PATENTS AND PATENT APPLICATIONS
FILE PATENT COUNTRY REGISTRATION NO. DATE
--------------------------------------------------------------------------------
ANNEX 3 TO SECURITY AGREEMENT
ANNEX 4
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE XXXX REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE XXXX REGISTRATIONS
U.S. TRADEMARKS
------------------
APPLICATION (A)
REGISTRATION (R) REGISTRATION
XXXX OR SERIES NO.(S) OR FILING DATE
-----------------------------------------------------------------
ANNEX 4 TO SECURITY AGREEMENT
FOREIGN TRADEMARKS
-----------------------
APPLICATION (A) REGISTRATION OR
XXXX REGISTRATION (R) COUNTRY FILING DATE (F)
----------------------------------------------------------------------------
-2-
ANNEX 4 TO SECURITY AGREEMENT
ANNEX 5
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
ANNEX 5 TO SECURITY AGREEMENT
ANNEX 6
LIST OF LOCATIONS
ANNEX 6 TO SECURITY AGREEMENT
EXHIBIT D
OMNIBUS CERTIFICATE
SCHEDULE 1.5(C)
SCHEDULE 1.5(D)
SCHEDULE 1.5(M)
