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EXHIBIT 4.8
AGREEMENT TO EXCHANGE AND CONSENT
AGREEMENT TO EXCHANGE AND CONSENT (the "Agreement"), dated as
of October 12, 1999 by and among World Access, Inc., a Delaware corporation
(the "Company"), FaciliCom International, Inc., a Delaware corporation
("FaciliCom"), and each of the holders (a "Noteholder") of FaciliCom's
outstanding 10.5% Senior Notes due 2008 (the "FaciliCom Notes") listed on
Schedule I hereto.
WITNESSETH
WHEREAS, FaciliCom and the Company and certain other parties
have entered into an Agreement and Plan of Merger (the "Merger Agreement"),
dated August 17, 1999, which provides for, among other things, the merger of
FaciliCom with and into the Company (the "Merger");
WHEREAS, in connection with the Merger, the Company proposes
(i) to exchange (A) $1,000 principal amount of its 13.25% Senior Notes due 2008
(the "Exchange Notes"), (B) such number of shares of the Company's common
stock, par value $0.01 per share (the "Exchange Shares"), having a market value
of $50 (determined as set forth below), and (C) a payment (the "Cash Payment")
of $10 in cash for each $1,000 principal amount of FaciliCom Notes tendered and
accepted by the Company for exchange (collectively, the "Exchange"), and (ii)
to seek the consent of the holders of the FaciliCom Notes to certain amendments
described in Exhibit A attached hereto (the "Amendments") to the FaciliCom
Indenture (as defined below), such Amendments to be set forth in a Second
Supplemental Indenture to the FaciliCom Indenture (the "Second Supplemental
Indenture") (collectively, the "Consent"); and
WHEREAS, it is a condition to the consummation of the
Exchange and Consent that (i) the Merger shall have been consummated and (ii)
the holders of at least a majority of the aggregate principal amount of the
FaciliCom Notes shall have tendered their FaciliCom Notes in the Exchange (and
such tenders shall have been accepted by the Company) and shall have agreed to
the Consent;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises, covenants and conditions hereinafter contained, the parties
agree as follows:
1. Agreement to Exchange.
(a) At the Closing (as defined in the Merger Agreement) and
subject only to (i) the simultaneous consummation of the Merger and the Consent
and (ii) the declaration by the Securities and Exchange Commission (the "SEC")
of the effectiveness of the Exchange Offer Registration Statement (as defined
below), each Noteholder hereby agrees to, and to direct its nominee to,
exchange all of such Noteholder's FaciliCom Notes listed on Schedule I hereto,
together with any other FaciliCom Notes the beneficial ownership (as defined
below) of which is acquired by such Noteholder during the period from and
including the date hereof through and including the date on which this
Agreement is terminated pursuant to Section 10.9 hereof
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(collectively, the "Subject Notes"), for (A) Exchange Notes, which shall have
terms substantially similar to the terms of the FaciliCom Notes, except that
such Exchange Notes shall contain the terms specified in the Summary of Terms
attached hereto as Exhibit B, (B) for Exchange Shares and (C) for the Cash
Payment, each on the basis set forth above in the second Whereas clause of this
Agreement. For purposes of this Agreement, "beneficial ownership" or
"beneficially owned" shall have the meaning ascribed to those terms by Section
13 under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act").
The Exchange Notes and the Exchange Shares will be registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant
to a Registration Statement on Form S-4 (the "Exchange Offer Registration
Statement") and the Exchange Notes will be issued pursuant to an indenture (the
"Exchange Indenture") between the Company and a trustee (the "Trustee"), which
indenture will be substantially similar to the FaciliCom Indenture, except that
it shall reflect the Summary of Terms. The exchange offer as described in this
paragraph (a) shall be referred to as the "Registered Exchange Offer." All
holders of FaciliCom Notes will be eligible to participate in the Registered
Exchange Offer, notwithstanding that not all such holders are parties to this
Agreement.
(b) The number of Exchange Shares that each holder of FaciliCom
Notes shall be entitled to receive shall be calculated by multiplying the
aggregate principal amount of such holder's tendered and accepted FaciliCom
Notes by 0.05 and by dividing such product by the Market Price (as defined
below) of the Exchange Shares and rounding to the nearest whole number. "Market
Price" shall mean the average closing price of the Exchange Shares on Nasdaq
over the five consecutive trading days up to and including the trading day
prior to the last full trading day before Closing.
(c) Delivery of the Exchange Notes, Exchange Shares and Cash
Payment to each Noteholder whose FaciliCom Notes shall have been tendered and
accepted by the Company shall be made on the Closing Date (as defined in the
Merger Agreement). Exchange Notes and Exchange Shares shall be registered in
the name of the registered holder of the applicable FaciliCom Notes.
2. Consent. At the Closing and subject only to the simultaneous
consummation of (i) the Merger and (ii) the Exchange, each Noteholder hereby
agrees to consent, and agrees to cause its nominee as record holder of all
Subject Notes beneficially owned by it to consent, to the Amendments and to
direct the FaciliCom Trustee to execute and deliver on behalf of the
Noteholders on the Closing Date, immediately prior to the Closing, the Second
Supplemental Indenture, pursuant to Section 902 of the FaciliCom Indenture,
dated as of January 28, 1998, among FaciliCom and State Street Bank and Trust
Company (the "FaciliCom Trustee"), as amended by the First Supplemental
Indenture thereto (the "FaciliCom Indenture"), such Consent to be effective
with respect to all of such Noteholder's Subject Notes as of the time
immediately prior to the Closing. Each holder of FaciliCom Notes who tenders
FaciliCom Notes in exchange
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for the Exchange Notes in the Registered Exchange Offer shall by such action be
deemed to have agreed to the Consent.
3. Representations and Warranties of the Noteholder. Each Noteholder
hereby represents and warrants to the Company and FaciliCom with respect to
itself only that:
3.1 Authority. The Noteholder has all necessary power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Noteholder and the consummation by such
Noteholder of the transactions contemplated hereby have been duly and validly
authorized by all corporate proceedings on its part as are necessary to
authorize this Agreement or to consummate such transactions. This Agreement has
been duly and validly executed and delivered by the Noteholder and, assuming
the due authorization, execution and delivery by the other parties hereto,
constitutes its legal, valid and binding obligation, enforceable against such
Noteholder in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
3.2 No Conflict.
(a) The execution and delivery of this Agreement by the
Noteholder do not, and the performance of this Agreement by such Noteholder
shall not, (i) conflict with or violate its organizational documents, (ii)
conflict with or violate any agreement, arrangement, law, rule, regulation,
order, judgment or decree to which it is a party or by which it is (or the
Subject Notes held of record or beneficially owned by it are) bound or affected
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the Subject Notes
held of record or beneficially owned by such Noteholder pursuant to any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which it is a party or by which
it is (or the Subject Notes held of record or beneficially owned by it are)
bound or affected, except, in the case of clauses (ii) and (iii) of this
Section 3.2, for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay the performance by the Noteholder
of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by the
Noteholder do not, and the performance of this Agreement by such Noteholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental entity except for applicable
requirements, if any, of the Exchange Act and except where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay the performance by the
Noteholder of its obligations under this Agreement.
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3.3 Title to the FaciliCom Notes. As of the date hereof, the
Noteholder is the record or beneficial owner of the FaciliCom Notes listed
beside its name on Schedule I hereto. The FaciliCom Notes listed on Schedule I
hereto are all the FaciliCom Notes either held of record or beneficially owned
by the Noteholder. The Noteholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the FaciliCom Notes
held of record or beneficially owned by such Noteholder. The FaciliCom Notes
listed on Schedule I hereto are owned and all other Subject Notes will be owned
by the Noteholder free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, charges and other
encumbrances of any nature whatsoever (collectively, "Liens"), other than Liens
arising as a result of this Agreement.
3.4 Investment Purposes. The Noteholder is agreeing to exchange
its Subject Notes and shall receive Exchange Notes and pursuant to the
Registered Exchange Offer for its own account solely for the purpose of
investment and not with a view to, or for offer or sale in connection with, any
distribution of the Exchange Notes in violation of the Securities Act. The
Noteholder has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of the Exchange and Consent
and an investment in the Exchange Notes and is able to bear the economic risk
of such investment.
4. Representations and Warranties of FaciliCom and the Company. Each of
FaciliCom and the Company hereby represents and warrants to each of the
Noteholders with respect to itself only that:
4.1 Authority. Each of FaciliCom and the Company has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by each of FaciliCom and the
Company and the consummation by each of FaciliCom and the Company of the
transactions contemplated hereby have been duly and validly authorized by all
corporate proceedings on its part as are necessary to authorize this Agreement
or to consummate such transactions. This Agreement has been duly and validly
executed and delivered by each of FaciliCom and the Company and, assuming the
due authorization, execution and delivery by the other parties hereto,
constitutes its legal, valid and binding obligation, enforceable against each
of FaciliCom and the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
4.2 No Conflict.
(a) The execution and delivery of this Agreement by each of
FaciliCom and the Company do not, and the performance of this Agreement by each
of FaciliCom and the Company shall not, (i) conflict with or violate its
organizational documents, (ii) conflict with or
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violate any agreement, arrangement, law, rule, regulation, order, judgment or
decree to which it is a party or by which it is bound or affected or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which it is a party or by which its assets or properties are
bound or affected, except, in the case of clause (ii) and (iii) of this Section
4.2, for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay the performance by each of
FaciliCom and the Company of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by each of
FaciliCom and the Company do not, and the performance of this Agreement by each
of FaciliCom and the Company shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
entity, except for (i) applicable requirements, if any, of the Exchange Act,
the Securities Act or any applicable blue sky or state securities laws, (ii)
any consent, approval, authorization, permit, filing or notification required
in connection with the Merger and (iii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by each of FaciliCom
and the Company of its obligations under this Agreement.
5. Transfer of Title. Other than pursuant to the Exchange, each Noteholder
hereby covenants and agrees that it will not, prior to the termination of this
Agreement, either directly or indirectly, offer or otherwise agree to sell,
assign, pledge, hypothecate, transfer, exchange, or dispose of any Subject
Notes, owned either directly or indirectly by it or with respect to which each
such Noteholder has the power of disposition, whether now or hereafter
acquired, without the prior written consent of FaciliCom and the Company,
unless the person or entity to whom such Subject Notes have been sold,
assigned, pledged, hypothecated, transferred, exchanged or disposed agrees to
be bound by this Agreement as if a party hereto pursuant to an agreement in
form and substance reasonably satisfactory to FaciliCom and the Company. Each
Noteholder hereby agrees and consents to the entry of stop transfer
instructions by FaciliCom or the FaciliCom Trustee, as the case may be, against
the transfer of any Subject Notes inconsistent with the terms of this Section
5.
6. Registered Exchange Offer.
6.1 Registration Statement. Each of the Company and FaciliCom
agrees that it will use its reasonable best efforts to prepare, and have
declared effective by the SEC, the Exchange Offer Registration Statement.
6.2 Registered Exchange Offer. In connection with the Registered
Exchange Offer, the Company will:
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(a) after the Exchange Offer Registration Statement has
been declared effective by the SEC, mail to each Noteholder a copy of the
prospectus forming part of the Exchange Offer Registration Statement, together
with an appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less
than 20 business days (or longer, if required by applicable law) after the date
on which notice of the Registered Exchange Offer is first mailed to the holders
of FaciliCom Notes;
(c) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of Manhattan, The City
of New York;
(d) permit holders of FaciliCom Notes to withdraw
tendered FaciliCom Notes at any time prior to the close of business, New York
City time, on the last business day on which the Registered Exchange Offer
shall remain open; and
(e) otherwise comply in all respects with all laws that
are applicable to the Registered Exchange Offer.
After the close of the Registered Exchange Offer and subject
to the consummation of the Merger and the Consent, the Company shall:
(a) accept for exchange all FaciliCom Notes tendered and
not validly withdrawn pursuant to the Registered Exchange Offer;
(b) deliver to or deposit with the FaciliCom Trustee for
cancellation all FaciliCom Notes so accepted for exchange;
(c) cause the Trustee for the Exchange Notes to
authenticate and deliver to each Noteholder Exchange Notes with an equal
principal amount to the FaciliCom Notes of such Noteholder so accepted for
exchange; and
(d) issue the number of Exchange Shares and deliver the
amount of the Cash Payment determined as provided for herein to each holder of
FaciliCom Notes accepted for exchange.
6.3 Additional Representations. Each Noteholder
participating in the Registered Exchange Offer shall be required to represent
to the Company that at the time of the consummation of the Registered Exchange
Offer (i) any Exchange Notes received by such Noteholder will be acquired in
the ordinary course of such Noteholder's business, (ii) such Noteholder will
have no arrangements or understanding with any person to participate in and is
not participating in, and does not intend to participate in, the distribution
of the Exchange Notes within the meaning of the Securities Act and (iii) such
Noteholder is not an affiliate (as defined in Rule 405 under the Securities
Act) of the Company.
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7. Escrow Agreement. Upon the consummation of the Merger and the Exchange
and Consent, (i) funds held in the escrow account previously established for
the FaciliCom Notes shall be held for the benefit of the holders of the
FaciliCom Notes and the Exchange Notes on a pro rata basis determined by
reference to the aggregate principal amount of FaciliCom Notes exchanged for
Exchange Notes and (ii) interest payments on the FaciliCom Notes and Exchange
Notes shall be paid out of that portion of the funds held in such escrow
account that are held for the benefit of the holders of the FaciliCom Notes and
Exchange Notes, respectively, until exhausted.
8. Miscellaneous.
8.1 Permission to Disclose. Each Noteholder hereby agrees and
consents to the disclosure by the Company and FaciliCom of this Agreement in
connection with the Merger and the Registered Exchange Offer or as otherwise
required by law (except that such Noteholder's name will not be disclosed in
any press release, filing or other notice or report unless required by law or
the SEC).
8.2 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
8.3 Entire Agreement. Subject to the consummation of the Exchange
and the Consent, this Agreement constitutes the entire agreement between the
Company, FaciliCom and the Noteholders party hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between the Company, FaciliCom and the Noteholders party
hereto with respect to the subject matter hereof.
8.4 Amendment. This Agreement may not be amended and no other
actions may be taken under this Agreement except by an instrument in writing
signed by the Company, FaciliCom and each of the holders of the Subject Notes
covered by this Agreement.
8.5 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereby shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable
law in a mutually acceptable manner in order that the terms of this Agreement
remain as originally contemplated.
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8.6 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made and shall be effective upon receipt, if delivered personally, upon
receipt of a transmission confirmation if sent by facsimile (with a confirming
copy sent by overnight courier) and on the next business day if sent by Federal
Express, United Parcel Service, Express Mail or other reputable overnight
courier to the parties at the following addresses (or at such other address for
a party as shall be specified by notice):
If to the Noteholders, to the addresses specified on Schedule I.
If to the Company, to:
Mark Gergel
World Access, Inc.
945 East Paces Ferry Road
Suite 2200
Atlanta, GA 30326
Facsimile: (404) 261-6190
with a copy to:
Leonard Silverstein, Esq.
Long Aldridge & Norman
303 Peachtree Street, N.E.
Atlanta, GA 30308
Telephone: (404) 527-4000
Fax: (404) 527-4198
If to FaciliCom, to:
Christopher King
FaciliCom International, Inc.
1401 New York Avenue, NW
8th floor
Washington, DC
Telephone: (404) 527-4000
Fax: (404) 527-4198
with a copy to:
Alan Klein, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, N.Y. 10017-3454
Facsimile: (212) 455-2502
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8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state.
8.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
8.9 Termination. This Agreement shall terminate on the first to
occur of (x) a written agreement to terminate of the Company, FaciliCom and the
Noteholders party hereto, (y) termination of the Merger Agreement in accordance
with its terms or (z) February 28, 2000, unless in any such case it is extended
by the Company, FaciliCom and each of the Noteholders party hereto. Upon
termination, this Agreement shall be of no further force and effect among the
parties except for the provisions of Section 8.10 which shall survive the
termination of this Agreement.
8.10 Fees and Expenses. Each party shall bear its own expenses,
including the fees and expenses of accountants, financial or other advisors or
representatives engaged by it, incurred in connection with this Agreement and
the transactions contemplated hereby.
8.11 Survival of Consents, Representations and Warranties. The
consents, representations and warranties contained in or made pursuant to this
Agreement shall survive the Closing.
8.12 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors or assigns.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its respective officers thereunto duly authorized all
as of the date first above written
WORLD ACCESS, INC.
By: /s/ W. Tod Chmar
-----------------------------------------------
Name: W. Tod Chmar
Title: EVP
FACILICOM INTERNATIONAL, INC.
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By: /s/ Christopher S. King
-----------------------------------------------
Name: Christopher S. King
Title: CFO
MORGAN STANLEY DEAN WITTER DIVERSIFIED
INCOME TRUST
By: /s/ Peter Avelar
-----------------------------------------------
Name: Peter Avelar
Title: Their Vice President
MORGAN STANLEY DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES - THE
DIVERSIFIED INCOME PORTFOLIO
By: /s/ Peter Avelar
-----------------------------------------------
Name: Peter Avelar
Title: Their Vice President
MORGAN STANLEY HIGH INCOME ADVANTAGE
TRUST
By: /s/ Peter Avelar
-----------------------------------------------
Name: Peter Avelar
Title: Their Vice President
MORGAN STANLEY HIGH INCOME ADVANTAGE
TRUST II
By: /s/ Peter Avelar
-----------------------------------------------
Name: Peter Avelar
Title: Their Vice President
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MORGAN STANLEY HIGH INCOME ADVANTAGE
TRUST III
By: /s/ Peter Avelar
-----------------------------------------------
Name: Peter Avelar
Title: Their Vice President
MORGAN STANLEY DEAN WITTER VARIABLE
INVESTMENT SERIES - HIGH YIELD PORTFOLIO
By: /s/ Peter Avelar
-----------------------------------------------
Name: Peter Avelar
Title: Their Vice President
MORGAN STANLEY DEAN WITTER HIGH YIELD
SECURITIES, INC.
By: /s/ Peter Avelar
-----------------------------------------------
Name: Peter Avelar
Title: Their Vice President
MANAGED HIGH INCOME PORTFOLIO
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
SMITH BARNEY INCOME FUNDS -
DIVERSIFIED STRATEGIC INCOME FUND
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
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SMITH BARNEY INCOME FUNDS - HIGH
INCOME FUND
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
SMITH BARNEY INCOME FUNDS -
BALANCED FUND
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
HIGH INCOME OPPORTUNITY FUND INC.
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
GREENWICH STREET SERIES FUND -
DIVERSIFIED STRATEGIC INCOME FUND
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
ZENIX INCOME FUND
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
TRAVELERS SERIES FUND INC. - SMITH
BARNEY HIGH INCOME PORTFOLIO
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
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USA HIGH YIELD FUND N.V.
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
SALOMON BROTHERS GLOBAL
HORIZONS INVESTMENT SERIES -
DIVERSIFIED STRATEGIC INCOME FUND
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
NOMURA GLOBAL INVESTMENT FUND -
DIVERSIFIED BOND FUND
By: /s/ Cornelius J. Mack
-----------------------------------------------
Name: Cornelius J. Mack
Title: Director
J.& W. SELIGMAN & CO., AS INVESTMENT
ADVISOR FOR SELIGMAN GLOBAL HORIZON
FUNDS, SELIGMAN HIGH YIELD BOND SERIES AND
CERTAIN OTHER INSTITUTIONAL CLIENTS
By: /s/ Daniel J. Charleston
-----------------------------------------------
Name: Daniel J. Charleston
Title: Managing Director
SUN AMERICA, INC.
By: /s/ Rafael Fogel
-----------------------------------------------
Name: Rafael Fogel
Title: As Agent
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PUTNAM HIGH YIELD ADVANTAGE FUND
By: /s/ John R. Verani
-----------------------------------------------
Name: John R. Verani
Title: Vice President
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SCHEDULE I
1. Morgan Stanley Dean Witter Diversified Income Trust
2 World Trade Center
72nd Floor
New York, NY 10048
Beneficial ownership: $6,400,000
2. Morgan Stanley Dean Witter Select Dimensions Investment Series - The
Diversified Income Portfolio
2 World Trade Center
72nd Floor
New York, NY 10048
Beneficial ownership: $600,000
3. Morgan Stanley High Income Advantage Trust
2 World Trade Center
72nd Floor
New York, NY 10048
Beneficial ownership: $2,000,000
4. Morgan Stanley High Income Advantage Trust II
2 World Trade Center
72nd Floor
New York, NY 10048
Beneficial ownership: $3,000,000
5. Morgan Stanley High Income Advantage Trust III
2 World Trade Center
72nd Floor
New York, NY 10048
Beneficial ownership: $1,000,000
6. Morgan Stanley Dean Witter Variable Investment Series - High
Yield Portfolio
2 World Trade Center
72nd Floor
New York, NY 10048
Beneficial ownership: $5,000,000
7. Morgan Stanley Dean Witter High Yield Securities, Inc.
2 World Trade Center
New York, NY 10048
Beneficial ownership: $30,000,000
8. Managed High Income Portfolio
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $4,615,000
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9. Smith Barney Income Funds - Diversified Strategic Income Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $8,505,000
10. Smith Barney Income Funds - High Income Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $17,390,000
11. Smith Barney Income Funds - Balanced Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $2,375,000
12. High Income Opportunity Fund Inc.
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $6,575,000
13. Greenwich Street Series Fund - Diversified Strategic Income Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $247,500
14. Zenix Income Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $1,200,000
15. Travelers Series Fund Inc. - Smith Barney High Income Portfolio
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $1,375,000
16. USA High Yield Fund N.V.
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $655,000
17. Salomon Brothers Global Horizons Investment
Series - Diversified Strategic Income Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $125,000
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18. Nomura Global Investment Fund - Diversified Bond Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013
Beneficial ownership: $135,000
19. J.& W. Seligman & Co., as investment advisor for
Seligman Global Horizon Funds, Seligman High Yield
Bond Series and certain other institutional clients
100 Park Avenue, 7th Floor
New York, NY 10017
Beneficial ownership: $34,600,000
20. Sun America, Inc.
1999 Avenue of the Stars 38th Floor
Los Angeles, CA
Beneficial ownership: $21,500,000
21. Putnam
One Post Office Square
Boston, MA 02109
Beneficial ownership: $21,000,000
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EXHIBIT A
The following is a summary of the proposed amendments to the FaciliCom
Indenture:
Elimination in their entirety of the following Sections:
- Section 801: Company may consolidate, etc., only on certain terms.
- Section 1002: Maintenance of Office or Agency covenant.
- Section 1003: Money for Note Payments to Be held in Trust covenant.
- Section 1004: Corporate Existence covenant.
- Section 1005: Payment of Taxes and Other Claims covenant.
- Section 1006: Maintenance of Properties covenant.
- Section 1007: Insurance covenant.
- Section 1008: Statement by Officers as to Default covenant.
- Section 1009: Provision of Financial Statements and Reports covenant.
- Section 1010: Repurchase of Notes upon Change of Control covenant.
- Section 1011: Limitation on Indebtedness covenant.
- Section 1012: Limitation on Restricted Payments covenant.
- Section 1013: Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries covenant.
- Section 1014: Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries covenant.
- Section 1015: Limitation on Transactions with Stockholders and
Affiliates covenant.
- Sections 1016: Limitation on Liens covenant.
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- Sections 1017: Limitation on Asset Sales covenant.
- Section 1018: Limitation on Issuance of Guarantees of Indebtedness by
Restricted Subsidiaries covenant.
- Section 1019: Business of the Company; Restriction on Transfers of
Existing Business covenant.
- Section 1020: Limitation on Investments in Unrestricted Subsidiaries
covenant.
- Section 1021: Limitation on Sale-Leaseback Transactions covenant.
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EXHIBIT B
SUMMARY OF TERMS OF EXCHANGE INDENTURE
Terms The Exchange Indenture will be the same in all
material respects as the FaciliCom Indenture, except
as set forth below. Additional technical and
conforming changes will also be made to the Exchange
Indenture.
Issuer World Access, Inc. (the "Company")
Interest Interest on the Exchange Notes will payable
semi-annually, in cash, at a rate of 13.25% per annum
on each interest payment date. Accrued interest on
the FaciliCom Notes through the date of consummation
of the Registered Exchange Offer will be paid, along
with accrued interest on the Exchange Notes from the
date following the consummation of the Registered
Exchange Offer to the date of the first regularly
scheduled interest payment date of the FaciliCom
Notes following such consummation (the "First
Interest Payment Date"), in cash, on such First
Interest Payment Date.
Optional Redemption The Exchange Notes will be redeemable, at the
election of the Company, in whole or in part, at any
time and from time to time, on or after January 15,
2003, upon not less than 30 nor more than 60 days'
notice at the Redemption Prices (expressed in
percentages of principal amount thereof), if redeemed
during the 12-month period commencing on January 15
of the years set forth below plus, in each case,
accrued and unpaid interest thereon, if any, to the
date of redemption:
Redemption
Year Price
---- ----------
2003 106.625%
2004 104.417%
2005 102.208%
2006 (and thereafter) 100.000%
On and after the redemption date, interest shall
cease to accrue on the Exchange Notes.
Covenants and Definitions
Set forth below is a summary of the covenants and definitions which will
be revised in the Exchange Indenture. The provisions which have been changed
have been marked against the versions thereof contained in the FaciliCom
Indenture. The new provisions have been
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underscored and the deleted provisions have been struck through. Additional
technical and conforming changes may also be made.
SECTION 1011. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness; provided, however, that the
Company may Incur Indebtedness if immediately thereafter the ratio of (i) the
aggregate principal amount (or accreted value, as the case may be) of
Indebtedness of the Company and its Restricted Subsidiaries on a consolidated
basis outstanding as of the Transaction Date to (ii) the Pro Forma Consolidated
Cash Flow for the preceding two full fiscal quarters multiplied by two,
determined on a pro forma basis as if any such Indebtedness had been Incurred
and the proceeds thereof had been applied at the beginning of such two fiscal
quarters, would be greater than zero and less than 5 to 1.
(b) The foregoing limitations of paragraph (a) of this covenant
will not apply to any of the following Indebtedness ("Permitted Indebtedness"),
each of which shall be given independent effect:
(i) Indebtedness of the Company evidenced by the FaciliCom
Notes and the Notes;
(ii) Indebtedness of FaciliCom or any of its Restricted
Subsidiaries outstanding on the Original Issue Date;
(iii) Indebtedness of the Company or any Restricted
Subsidiary under one or more Credit Facilities, in an aggregate principal
amount at any one time outstanding not to exceed the greater of (x) $35
135.0 million and (y) 80% of Eligible Accounts Receivable at any one time
outstanding, subject to any permanent reductions required by any other
terms of this Indenture;
(iv) Indebtedness of the Company or any Restricted Subsidiary
Incurred to finance the cost (including the cost of design, development,
construction, acquisition, installation or integration) of
Telecommunications Assets;
(v) Indebtedness of a Restricted Subsidiary owed to and held
by the Company or another Restricted Subsidiary, except that (A) any
transfer of such Indebtedness by the Company or a Restricted Subsidiary
(other than to the Company or another Restricted Subsidiary) or (B) the
sale, transfer or other disposition by the Company or any Restricted
Subsidiary of Capital of a Restricted Subsidiary which is owed
Indebtedness of another Restricted Subsidiary shall, in each case, be an
Incurrence of Indebtedness by such Restricted Subsidiary, subject to the
other provisions of this Indenture;
(vi) Indebtedness of the Company owed to and held by a
Restricted Subsidiary which is unsecured and subordinated in right to the
payment and performance to the obligations of the Company under this
Indenture and the Notes, except that the limitations of paragraph (a) of
this Section 1011 shall apply to such Indebtedness at such time as (A) any
transfer of such Indebtedness by a Restricted Subsidiary (other than to
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another Restricted Subsidiary) and (B) the sale, transfer or other
disposition by the Company or any Restricted Subsidiary of Capital Stock
of a Restricted Subsidiary which is owed such Indebtedness, subject to
other provisions of this Indenture;
(vii) Indebtedness of the Company or a Restricted Subsidiary
issued in exchange for, or the net proceeds of which are used to refinance
(whether by amendment, renewal, extension or refunding), then outstanding
Indebtedness of the Company or a Restricted Subsidiary, other than
Indebtedness Incurred under clauses (iii), (v), (vi), (viii), (ix), (xi)
and (xii) of this paragraph, and any refinancing thereof in an amount not
to exceed the amount so refinanced or refunded (plus premiums, accrued
interest, and reasonable fees and expenses); provided that such new
Indebtedness shall only be permitted under this clause (vii) if (A) in
case the Notes are refinanced in part or the Indebtedness to be refinanced
is pari passu with the Notes, such new Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such new
Indebtedness is issued, or remains outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Notes,
(B) in case the Indebtedness to be refinanced is subordinated in right of
payment to the Notes, such new Indebtedness, by its terms or by the terms
of any agreement or instrument pursuant to which such new Indebtedness is
issued or remains outstanding is expressly made subordinate in right of
payment to the Notes at least to the extent that the Indebtedness to be
refinanced is subordinated to the Notes and (C) such new Indebtedness,
determined as of the date of Incurrence of such new Indebtedness, does not
mature prior to the Stated Maturity of the Indebtedness to be refinanced
or refunded, and the Average Life of such new Indebtedness is at least
equal to the remaining Average Life of the Indebtedness to be refinanced
or refunded; and provided further that in no event may Indebtedness of the
Company be refinanced by means of any Indebtedness of any Restricted
Subsidiary pursuant to this clause (vii);
(viii) Indebtedness of (x) the Company not to exceed, at any
one time outstanding, 2.00 times the Net Cash Proceeds from the issuance
and sale, other than to a Subsidiary, of Common Stock (other than
Redeemable Stock) of the Company (less the amount of such proceeds used to
make Restricted Payments as provided in clause (iii) or (iv) of the second
paragraph of Section 1012) and (y) the Company or Acquired Indebtedness of
a Restricted Subsidiary not to exceed, at one time outstanding, the fair
market value of any Telecommunications Assets acquired by the Company in
exchange for Common Stock of the Company issued after the Issue Date;
provided, however, that in determining the fair market value of any such
Telecommunications Assets so acquired, if the estimated fair market value
of such Telecommunications Assets exceeds (A) $2.0 million (as estimated
in good faith by the Board Of Directors), then the fair market value of
such Telecommunications Assets will be determined by a majority of the
Board of Directors of the Company, which determination will be evidenced
by a resolution thereof, and (B) $10.0 million (as estimated in good faith
by the Board of Directors), then the Company shall deliver the Trustee a
written appraisal as to the fair market value of such Telecommunications
Assets prepared by a nationally recognized investment banking or public
accounting firm (or, if no nationally recognized investment banking or
public
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accounting firm is qualified to prepare such an appraisal, by a nationally
recognized appraisal firm); and provided further that such Indebtedness
does not mature prior to the Stated Maturity of the Notes and the Average
Life of such Indebtedness is longer than that of the Notes;
(ix) Indebtedness of the Company or any Restricted
Subsidiary (A) in respect of performance, surety or appeal bonds or
letters of credit supporting trade payables, in each case provided in the
ordinary course of business, (B) under Currency Agreements and Interest
Rate Agreements covering Indebtedness of the Company; provided that such
agreements do not increase the Indebtedness of the obligor outstanding at
any time other than as a result of fluctuations in foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder, and (C) arising from agreements providing
for indemnification, adjustment of purchase price or similar obligations,
or from Guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary of the Company (other than Guarantees of Indebtedness Incurred
by any Person acquiring all or any portion of such business assets or
Restricted Subsidiary for the purpose of financing such acquisition), in a
principal amount not to exceed the gross proceeds actually received by the
Company or any Restricted Subsidiary in connection with such disposition;
(x) Indebtedness of the Company, to the extent that the net
proceeds thereof are promptly (A) used to repurchase Notes tendered in a
Change of Control Offer or (B) deposited to defease all of the Notes
pursuant to Article Thirteen;
(xi) Indebtedness of a Restricted Subsidiary represented by
a Guarantee of the Notes permitted by and made in accordance with Section
1018; and
(xii) Indebtedness of the Company or any Restricted
Subsidiary in addition to that permitted to be incurred pursuant to
clauses (i) through (xi) above in an aggregate principal amount not in
excess of $10 million (or, to the extent not denominated in United States
dollars, the United States Dollar Equivalent thereof) at any one time
outstanding; and
(xiii) Indebtedness of the Company existing upon the
consummation of the merger of FaciliCom with and into the Company;
(c) For purposes of determining any particular amount of
Indebtedness under this Section 1011, Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included; provided,
however, that the foregoing shall not in any way be deemed to limit the
provisions of Section 1018. For purposes of determining compliance with this
Section 1011, in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness
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5
described in the above clauses, the Company, in its sole discretion may, at the
time of such Incurrence, (i) classify such item of Indebtedness under and
comply with either of paragraph (a) or (b) of this covenant (or any of such
definitions), as applicable, (ii) classify and divide such item of Indebtedness
into more than one of such paragraphs (or definitions), as applicable, and
(iii) elect to comply with such paragraphs (or definitions), as applicable in
any order.
SECTION 1012. Limitation on Restricted Payments.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, (i) (A) declare or pay any dividend or make any
distribution in respect of the Company's Capital Stock to the Holders thereof
(other than dividends or distributions payable solely in shares of Capital
Stock (other than Redeemable Stock) of the Company or in options, warrants or
other rights to acquire such shares of Capital Stock) or (B) declare or pay any
dividend or make any distribution in respect of the Capital Stock of any
Restricted Subsidiary to any Person other than dividends and distributions
payable to the Company or any Restricted Subsidiary or to all holders of
Capital Stock of such Restricted Subsidiary on a pro rata basis; (ii) purchase,
redeem, retire or otherwise acquire for value any shares of Capital Stock of
the Company (including options, variants or other rights to acquire such shares
of Capital Stock) held by any Person or any shares of Capital Stock of any
Restricted Subsidiary (including options, warrants and other rights to acquire
such shares of Capital Stock) held by any Affiliate of the Company (other than
a wholly owned Restricted Subsidiary) or any holder (or any Affiliate thereof)
of 5% or more of the Company's Capital Stock; (iii) make any voluntary or
optional principal payment, or voluntary or optional redemption, repurchase,
defeasance, or other acquisition or retirement for value, of Indebtedness of
the Company that is subordinated in right of payment to the Notes; or (iv) make
any Investment, other than a Permitted Investment, in any Person (such payments
or any other actions described in clauses (i) through (iv) being collectively
"Restricted Payments") if, at the time of, and after giving effect to, the
proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing;
(B) the Company could not Incur at least $1.00 of Indebtedness
under paragraph (a) of Section 1011; and
(C) the aggregate amount of all Restricted Payments declared or
made from and after the Closing Date would exceed the sum of:
(1) Cumulative Consolidated Cash flow minus 200% of Cumulative
Consolidated Fixed Charges;
(2) 100% of the aggregate Net Cash Proceeds from the issue or
sale to a Person, which is not a Subsidiary of the Company, of
Capital Stock of the Company (other than Redeemable Stock) or of debt
securities of the Company which have been converted into or exchanged
for such Capital Stock (except to
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the extent such Net Cash Proceeds are used to Incur new Indebtedness
outstanding pursuant to clause (viii) of paragraph (b) of Section
1011); and
(3) to the extent any Permitted Investment that was made after
the Closing Date is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (i) the cash return of capital with respect
to such Permitted Investment (less the cost of disposition, if any)
and (ii) the initial amount of such Permitted Investment.
The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof
if, at said date of declaration, such payment would comply with the foregoing
paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of payment
to the Notes including a premium, if any, and accrued and unpaid interest and
Liquidated Damages, if any, with the net proceeds of, or in exchange for,
Indebtedness Incurred under clause (viii) of paragraph (b) of Section 1011;
(iii) the repurchase, redemption or other acquisition of Capital Stock of the
Company in exchange for, or out of the Net Cash Proceeds of a substantially
concurrent (A) capital contribution to the Company or (B) offering of, shares
of Capital Stock (other than Redeemable Stock) of the Company (except to the
extent such proceeds are used to incur new Indebtedness outstanding pursuant to
clause (viii) of paragraph (b) of Section 1011); (iv) the Acquisition of
Indebtedness of the Company which is subordinated in right of payment to the
Notes in exchange for, or out of the proceeds of, a substantially concurrent
(A) capital contribution to the Company or (B) offering of, shares of the
Capital Stock of the Company (other than Redeemable Stock) (except to the
extent such proceeds are used to incur new Indebtedness outstanding pursuant to
clause (viii) of paragraph (b) of Section 1011); (v) payments or distributions
to dissenting stockholders in accordance with applicable law, pursuant to or in
connection with a consolidation, merger or transfer of assets that complies
with Article Eight; (vi) the declaration or payment of any dividend or
distribution in respect of, and in accordance with the terms of, the Company's
(A) 50,000 outstanding shares of 4.25% Cumulative Senior Perpetual Convertible
Preferred Stock, Series A, par value $0.01 per share (the "Senior Preferred
Stock"), and, in the event that The 1818 Fund III, L.P. ("The 1818 Fund")
exercises its option to purchase up to 20,000 additional shares of Senior
Preferred Stock, then such additional shares as well and (B) 23,174 outstanding
shares of 4.25% Cumulative Junior Convertible Preferred Stock, Series B, par
value $0.01 per share (the "Junior Preferred Stock"); (vii) the conversion of
the Senior Preferred Stock, the Junior Preferred Stock or the Company's
Convertible Preferred Stock, Series C, par value $0.01 per share, into Capital
Stock of the Company in accordance with the terms of such preferred stock and
(vi) (viii) other Restricted Payments not to exceed $2 million; provided that,
except in the case of clause (i), no Default or Event of Default shall have
occurred and be continuing or occur as a consequence of the actions or payments
set forth therein.
Each Restricted Payment permitted pursuant to the immediately
preceding paragraph (other than the Restricted Payment referred to in clause
(ii) thereof) and the Net Cash Proceeds from any capital contributions to the
Company or issuance of Capital Stock referred to in clauses
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(iii) and (iv) of the immediately preceding paragraph, shall be included in
calculating whether the conditions of clause (C) of the first paragraph of this
Section 1012 have been met with respect to any subsequent Restricted Payments.
In the event the proceeds of an issuance of Capital Stock of the Company are
used for the redemption, repurchase or other acquisition of the Notes, then the
Net Cash Proceeds of such issuance shall be included in clause (C) of the first
paragraph of this Section 1012 only to the extent such proceeds are not used
for such redemption, repurchase or other acquisition of the Notes.
Section 1013. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
So long as any of the Notes are Outstanding, the Company shall not, and
shall not permit any Restricted Subsidiary to, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any Restricted Subsidiary to do any one of the
following:
(i) pay dividends or make any other distribution permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by
the Company or any other Restricted Subsidiary;
(ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary;
(iii) make loans or advances to the Company or any other Restricted
Subsidiary; or
(iv) transfer any of its property or assets to the Company or any other
Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Exchange Date in this Indenture or any
other agreements or instruments in effect on the Closing Exchange Date,
and any extensions, refinancings, renewals or replacements of such
agreements; provided that the encumbrances and restrictions in any such
extensions, refinancings, renewals or replacements are no less favorable
in any material respect to the Holders than those encumbrances or
restrictions that are then in effect and that are being extended,
refinanced, renewed or replaced;
(ii) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if the encumbrance or
restriction applies only in the event of a default with respect to a
financial covenant contained in such Indebtedness or agreement and such
encumbrance or restriction is not materially more disadvantageous to the
Holders than is customary in comparable financing (as determined by the
Company)
27
8
and the Company determines that any such encumbrance or restriction will
not materially affect the Company's ability to make principal or interest
payments on the Notes;
(iii) existing under or by reason of applicable law;
(iv) existing with respect to any Person or the property or assets
of such Person acquired by the Company or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any
Person or the property or assets of any Person other than such Person or
the property or assets of such Person so acquired;
(v) in the case of clause (iv) of the first paragraph of this
Section 1013, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is, or is subject to,
a lease, purchase mortgage obligation, license, conveyance or contract or
similar property or asset, (B) existing by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Company or any restricted Subsidiary not
otherwise prohibited by this Indenture or (C) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that do
not, individually or in the aggregate, detract from the value of property
or assets of the Company or any Restricted Subsidiary in any manner
material to the Company or any Restricted Subsidiary; or
(vi) with respect to a Restricted Subsidiary and imposed pursuant to
an agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock of, or property and asserts of,
such Restricted Subsidiary. Nothing contained in this Section 1013 shall
prevent the Company or any Restricted Subsidiary from (1) creating,
incurring, assuming or suffering to exist any Liens otherwise permitted in
Section 1016 or (2) restricting the sale or other disposition of property
or assets of the Company or any of its Restricted Subsidiaries that secure
Indebtedness of the Company or any of its Restricted Subsidiaries.
SECTION 1015. Limitation on Transactions with Stockholders and Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or
assets, or the rendering of any service) with any holder (or any Affiliate of
such holder) of 5% or more of any class of Capital Stock of the Company or any
Restricted Subsidiary or with any Affiliate of the Company or any Restricted
Subsidiary, unless the following conditions have been met:
(i) such transaction or series of transactions is on terms no less
favorable to the Company or such Restricted Subsidiary than those that
could be obtained in a comparable arm's length transaction with a person
that is not such a holder or an Affiliate;
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(ii) if such transaction or series of transactions involves aggregate
consideration in excess of $2.0 million, then such transaction or series
of transactions is approved by a majority of the Board of Directors of the
Company and is evidenced by a resolution therein; and
(iii) if such transaction or series of transactions involves
aggregate consideration in exceeds of $10.0 million, then the Company or
such Restricted Subsidiary shall deliver to the Trustee a written opinion
as to the fairness to the Company or such Restricted Subsidiary of such
transaction from a financial point of view from a nationally recognized
investment banking firm (or, if an investment banking firm is generally
not qualified to give such an opinion, by a nationally recognized
appraisal firm or accounting firm).
The foregoing limitation does not limit, and will not apply to (i) any
transaction between the Company and any of its Restricted Subsidiaries or
between Restricted Subsidiaries; (ii) the payment of reasonable and customary
regular fees to directors of the Company who are not employees of the Company;
(iii) any Restricted Payments not prohibited by Section 1012; (iv) loans and
advances to officers or employees of the Company and its Subsidiaries not
exceeding at any one time outstanding $1.5 million in the aggregate, made in
the ordinary course of business; and (v) arrangements with TMG, Armstrong
and/or its subsidiaries existing on the date of this the Original Indenture and
listed on Schedule A attached thereto as such arrangements may be extended or
renewed; provided that the terms of any arrangement altered by any such
extension or renewal may not be altered in a manner adverse to the Company or
the Holders of the Notes; (vi) the issuance of up to 20,000 additional shares
of Senior Preferred Stock to The 1818 Fund pursuant to an option agreement
existing on the date of this Indenture; (vii) the sale to and purchase by the
Company from MCI WorldCom, Inc. and its Affiliates of telecommunications
services and equipment in the ordinary course of business; and (viii) the
issuance and sale by the Company of Common Stock.
SECTION 1017. Limitation on Asset Sales.
The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Sale unless (i) the Company or the Restricted Subsidiary, as the
case may be, receives consideration at the time of such sale or other
disposition at least equal to the fair market value of the assets sold or
disposed of as determined by the good faith judgment of the Board of Directors
evidenced by a Board Resolution and (ii) at least 80% of the consideration
received for such sale or other disposition consists of cash or cash
equivalents or the assumption of unsubordinated Indebtedness; provided that any
securities, notes or other obligations issued by an Investment Grade Company
with a Total Equity Market Capitalization in excess of $25 billion determined
at the time any commitment to effect any such Asset Sale is entered into that
are received by the Company or the Restricted Subsidiary, as the case may be,
that are converted within 180 days thereof into cash or cash equivalents shall
be deemed to be cash or cash equivalents; provided further that the amount of
cash or cash equivalents realized upon the sale of any such securities,
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notes or other obligations must be included within the amount of Net Cash
Proceeds for purposes of clause (i)(B) of the next paragraph.
The Company shall, or shall cause the relevant Restricted Subsidiary to,
within 270 days after the date of receipt of the Net Cash Proceeds from an
Asset Sale, (i) (A) apply an amount equal to such Net Cash Proceeds to
permanently repay unsubordinated Indebtedness of the Company or Indebtedness of
any Restricted Subsidiary, in each case owing to a Person other than the
Company or any of its Restricted Subsidiaries or (B) if the Net Cash Proceeds
from such Asset Sale exceed $15 million, apply an amount equal to such Net Cash
Proceeds to make an offer to purchase (an "Offer to Purchase") from the Holders
on a pro rata basis an aggregate principal amount of Notes equal to such Net
Cash Proceeds, at a purchase price equal to 100% of the principal amount of the
Notes, plus, in each case, accrued and unpaid interest to the date of purchase
and less the product of (a) the Market Value per share of the Common Stock of
the Company and (b) the number of shares (including any portion of a share) of
such Common Stock determined by dividing $50 by the Market Price of the Common
Stock for each $1,000 in principal amount of Notes accepted for purchase by the
Company (the "Offer to Purchase Payment"), provided that the Company shall not
be obligated to make any Offer to Purchase after it has made one or more Offers
to Purchase, which offer or offers, in the aggregate, were for an aggregate
principal amount of Notes equal to the aggregate principal amount of Notes
issued on the Exchange Date (regardless of the actual aggregate principal
amount of Notes actually tendered in such Offer or Offers to Purchase), or (C)
if the Company has made sufficient Offers to Purchase such that it has
satisfied its obligation as described in the final proviso to clause (B),
invest an equal amount, or the amount not so applied pursuant to clause (A), in
property or assets of a nature or type or that are used in a business (or in a
company having property and assets of a nature or type, or engaged in a
business) similar or related to the nature or type of the property and assets
of, or the business of, the Company and its Restricted Subsidiaries existing on
the date of such investment (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) and (ii) apply (no later than the end of the 270-day period
referred to above) such excess Net Cash Proceeds (to the extent not applied
pursuant to clause (i)) as provided in the following paragraphs of this Section
1017. The amount of such Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 270-day period referred to above in the
preceding sentence and not applied as so required by the end of such period
shall constitute "Excess Proceeds".
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below) totals at least $10.0 million, the Company must, not later than the 30th
Business Day thereafter, make an offer (an "Excess Proceeds Offer") to purchase
from the Holders on a pro rata basis an aggregate principal amount of Notes
equal to the Excess Proceeds on such date, at a purchase price equal to 100% of
the principal amount of the Notes, plus, in each case, accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase less the
product of (a) the Market Value per share of the Common Stock of the Company
and (b) the number of shares (including any portion of a share) of such Common
Stock determined by dividing $50 by the Market Price of the Common Stock
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for each $1,000 in principal amount of Notes accepted for purchase by the
Company (the "Excess Proceeds Payment").
The Company shall commence an Offer to Purchase or an Excess Proceeds
Offer by mailing a notice to the Trustee and each Holder stating: (i) that the
Offer to Purchase or Excess Proceeds Offer, as applicable, is being made
pursuant to this Section 1017 and that all Notes validly tendered will be
accepted for payment on a pro rata basis; (ii) the purchase price and the date
of purchase (which shall be a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed) (the "Excess Proceeds Offer
Payment Date"); (iii) that any Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless the Company defaults in the
payment of the Offer to Purchase Payment or the Excess Proceeds Payment, as
applicable, any Note accepted for payment pursuant to the Offer to Purchase or
the Excess Proceeds Offer, as applicable, shall cease to accrue interest and
Liquidated Damages, if any, on and after the applicable Offer Excess Proceeds
Payment Date; (v) that Holders electing to have a Note purchased pursuant to
the Offer to Purchase or the Excess Proceeds Offer, as applicable, will be
required to surrender the Note together with the form entitled "Option of the
Holder to Elect Purchase" on the reverse side of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the applicable Offer Excess
Payment Payment Date; (vi) that Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on
the third Business Day immediately preceding the applicable Offer Excess
Proceeds Payment Date, a telegram, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of Notes delivered for
purchase and a statement that such Holder is withdrawing his election to have
such Notes purchased; and (vii) that Holders whose Notes are being purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, provided that each Note purchased
and each new Note issued shall be in a principal amount of $1,000 or integral
multiples thereof.
On the applicable Offer Excess Proceeds Payment Date, the Company shall
(i) accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to the Offer to Purchase or the Excess Proceeds Offer, as applicable;
(ii) deposit with the Paying Agent money sufficient to pay the purchase price
of all Notes or portions thereof so accepted; and (iii) deliver, or cause to be
delivered, to the Trustee all Notes or portions thereof so accepted together
with an Officer's Certificate specifying the Notes or portions thereof accepted
for payment by the Company. The Paying Agent shall promptly mail to the Holders
of Notes so accepted payment in an amount equal to the purchase price, and the
Trustee shall upon Company Order promptly authenticate and mail to such Holders
a new Note equal in principal amount to any unpurchased portion of the Note
surrendered; provided that each Note purchased and each new Note issued shall
be in a principal amount of $1,000 or integral multiples thereof. With respect
to any Excess Proceeds Offer, to To the extent that the aggregate principal
amount of Notes tendered is less than the Excess Proceeds, the Company may use
any remaining Excess Proceeds for general corporate purposes. The Company shall
publicly announce the results of the Excess Proceeds Offer as soon as
practicable after the Excess Proceeds Payment Date. For purposes of this
Section 1017, the Trustee shall act as the Paying Agent.
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The Company shall comply with Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable, in the event that such Excess Proceeds are
received by the Company undertakes an Offer to Purchase or Excess Proceeds
Offer under this Section 1017. and the Company is required to repurchase Notes
as described above.
"Exchange Date" means the date of the consummation of the registered
exchange offer pursuant to which holders of the FaciliCom Notes tendered such
notes in exchange for the Notes issued by the Company pursuant to this
Indenture.
"FaciliCom" means FaciliCom International, Inc., a Delaware
corporation.
"FaciliCom Notes" means the 10 1/2% Senior Notes due 2008 issued by
FaciliCom pursuant to the Original Indenture.
"Investment Grade Company" means a Person whose debt securities are
rated BBB- or higher by Standard & Poor's Ratings Service. Inc. or Baa3 or
higher by Moody's Investor Service, Inc. (or an equivalent rating by another
nationally recognized rating agency acceptable to the Holders).
"Market Price" means, on any given day, the average closing price of
the shares of the Company's Common Stock on the principal trading market of
such Common Stock over the five consecutive trading days up to and including
the day of such valuation.
"Market Value" means the average of the closing price of the
applicable security on such security's principal trading market over the five
consecutive trading days up to and including the trading day prior to the last
full trading day before the initiation of any Offer to Purchase described in
clause (i) (B) or the time any commitment to effect an Asset Sale is entered
into as described in the preceding paragraph.
"Original Indenture" means the Indenture, dated as of January 28,
1998, among FaciliCom and State Street Bank and Trust Company, as supplemented
by the First Supplemental Indenture thereto, pursuant to which FaciliCom issued
the FaciliCom Notes.
"Original Issue Date" means January 28, 1998, the date FaciliCom
issued the FaciliCom Notes.
"Permitted Business" means any business involving voice, data and
other telecommunications services or equipment.
"Telecommunications Assets" means, with respect to any person,
equipment used in the telecommunications business or ownership rights with
respect to IRUs, MAOUs or minimum investment units (or similar ownership
interests) in fiber optic cable and international or domestic
telecommunications switches or other transmission facilities (or Common Stock
of a
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Person that becomes a Restricted Subsidiary, the Assets of which consist
primarily of any such Telecommunications Assets), in each case purchased or
acquired through Indebtedness, provided that such Indebtedness does not exceed
the Fair Market Value of such assets, by the Company or a Restricted Subsidiary
after the Closing Date.
"Total Equity Market Capitalization" of any Person means, as of any
date of determination, the product of (i) the aggregate number of outstanding
shares of Common Stock of such Person on such date on a fully-diluted basis and
(ii) the average closing price of such Common Stock over the five consecutive
trading days immediately preceding such date. If no closing price exists with
respect to shares of any such class, the value of such shares shall be
determined by the Board of Directors in good faith and evidenced by a
resolution of the Board of Directors filed with the Trustee.