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EXHIBIT 10.39
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SECURITIES EXCHANGE AGREEMENT
among
iBASIS, INC.
iBASIS GLOBAL, INC.
iBASIS SECURITIES CORPORATION
JMG TRITON OFFSHORE FUND LIMITED CITCO
AND EACH OTHER EXCHANGING HOLDER THAT BECOMES A
PARTY HERETO PURSUANT TO A JOINDER AGREEMENT
and
U.S. BANK NATIONAL ASSOCIATION, AS COLLATERAL AGENT
Dated as of February 21, 2003
11.5% SENIOR SECURED NOTES DUE 2005
WARRANTS TO PURCHASE COMMON SHARES
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TABLE OF CONTENTS
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1. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.......................................................................1
2. PURCHASE AND SALE OF THE SECURITIES.............................................................................12
2.1. PURCHASE AND SALE OF THE NOTES TO THE EXCHANGER..........................................................12
2.2. PURCHASE AND SALE OF THE WARRANTS TO THE EXCHANGER.......................................................12
2.3. SUBSEQUENT EXCHANGES.....................................................................................12
2.4. NOTE TERMS...............................................................................................12
2.5. FORM OF SECURITIES.......................................................................................13
2.6. DEPOSITARY...............................................................................................13
2.7. PURCHASE PRICE FOR SECURITIES............................................................................13
2.8. CLOSING..................................................................................................13
3. INTEREST........................................................................................................13
3.1. RATE OF INTEREST.........................................................................................14
3.2. DEFAULT INTEREST.........................................................................................14
3.3. INTEREST ACCRUAL AND COMPUTATION.........................................................................14
4. PAYMENTS........................................................................................................14
4.1. PAYMENTS.................................................................................................14
4.2. VOLUNTARY PREPAYMENTS....................................................................................14
4.3. MANDATORY PREPAYMENTS....................................................................................15
4.4. NET PAYMENTS.............................................................................................15
5. CONDITIONS PRECEDENT TO THE PURCHASE OF THE SECURITIES..........................................................17
5.1. ISSUANCE OF SECURITIES; CONTEMPORANEOUS INVESTMENT.......................................................17
5.2. CORPORATE PROCEEDINGS....................................................................................17
5.3. MATERIAL ADVERSE EFFECT, ETC.............................................................................17
5.4. LITIGATION...............................................................................................18
5.5. APPROVALS................................................................................................18
5.6. GUARANTEE................................................................................................18
5.7. COLLATERAL DOCUMENTS.....................................................................................18
5.8. FISCAL AGENCY AGREEMENT..................................................................................18
5.9. WARRANT AGREEMENT........................................................................................18
5.10. INTERCREDITOR AGREEMENT..................................................................................18
5.11. DTC ELIGIBILITY..........................................................................................18
5.12. CUSIP NUMBER.............................................................................................18
5.13. CAPITALIZATION...........................................................................................18
5.14. SENIOR LENDER POSSESSION OF STOCK CERTIFICATES...........................................................19
5.15. NO DEFAULT; REPRESENTATIONS AND WARRANTIES...............................................................19
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5.16. ACCRUED INTEREST UNDER CONVERTIBLE NOTES.................................................................19
6. FEES............................................................................................................19
7. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS..................................................................19
7.1. CORPORATE STATUS.........................................................................................19
7.2. CORPORATE POWER AND AUTHORITY............................................................................20
7.3. NO VIOLATION.............................................................................................20
7.4. CAPITALIZATION...........................................................................................20
7.5. LITIGATION...............................................................................................20
7.6. MARGIN REGULATIONS.......................................................................................21
7.7. GOVERNMENTAL APPROVALS...................................................................................21
7.8. INVESTMENT COMPANY ACT...................................................................................21
7.9. PUBLIC UTILITY HOLDING COMPANY ACT.......................................................................21
7.10. CONFORMITY TO SECURITIES ACT AND EXCHANGE ACT; NO MISSTATEMENT OR OMISSION...............................21
7.11. FINANCIAL CONDITION; FINANCIAL STATEMENTS................................................................21
7.12. NO MATERIAL ADVERSE CHANGES..............................................................................22
7.13. TAX RETURNS AND PAYMENTS.................................................................................22
7.14. SUBSIDIARIES.............................................................................................22
7.15. INTELLECTUAL PROPERTY....................................................................................22
7.16. PROPERTIES...............................................................................................22
7.17. LABOR RELATIONS..........................................................................................23
7.18. COMPLIANCE WITH STATUTES, ETC............................................................................23
7.19. ERISA....................................................................................................23
8. EXCHANGING HOLDER REPRESENTATIONS...............................................................................23
8.1. AUTHORIZATION; NO CONTRAVENTION..........................................................................24
8.2. BINDING EFFECT...........................................................................................24
8.3. NO LEGAL BAR.............................................................................................24
8.4. PURCHASE FOR OWN ACCOUNT.................................................................................24
8.5. ACCREDITED INVESTOR......................................................................................24
8.6. RESTRICTED SECURITIES....................................................................................24
8.7. FINANCIAL CONDITION......................................................................................24
8.8. EXPERIENCE...............................................................................................24
8.9. LEGEND...................................................................................................25
8.10. SUBORDINATION LEGENDS....................................................................................25
8.11. ERISA....................................................................................................25
8.12. BROKER'S, FINDER'S OR SIMILAR FEES.......................................................................25
8.13. GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT..........................................................26
8.14. NO SOLICITATION..........................................................................................26
8.15. ACCESS TO INFORMATION; UNDUE PRESSURE....................................................................26
8.16. NO MINIMUM EXCHANGE......................................................................................26
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9. CONTINUING COVENANTS............................................................................................27
9.1. NEWLY CREATED ENTITY.....................................................................................27
9.2. SEC FILINGS AND REPORTS..................................................................................27
9.3. REPURCHASE OF CONVERTIBLE SUBORDINATED NOTES.............................................................27
9.4. EXCHANGE OF CONVERTIBLE NOTES............................................................................27
9.5. NON-PUBLIC INFORMATION...................................................................................27
9.6. INSURANCE................................................................................................28
9.7. LITIGATION COOPERATION...................................................................................28
9.8. BANKING RELATIONSHIP.....................................................................................28
9.9. SUBORDINATION OF INSIDE DEBT.............................................................................28
9.10. SUBORDINATION AGREEMENTS.................................................................................28
9.11. FURTHER ASSURANCES.......................................................................................29
10. CONTINGENT COVENANTS............................................................................................30
11. EVENTS OF DEFAULT; REMEDIES.....................................................................................30
11.1. EVENTS OF DEFAULT........................................................................................30
11.2. CERTAIN ACTIONS FOLLOWING AN EVENT OF DEFAULT............................................................32
11.3. ANNULMENT OF EVENTS OF DEFAULT...........................................................................33
11.4. WAIVERS..................................................................................................33
11.5. ACCELERATION FOLLOWING AN EVENT OF DEFAULT UNDER THE SENIOR LOAN AGREEMENT...............................34
12. COLLATERAL AGENT................................................................................................34
12.1. APPOINTMENT OF COLLATERAL AGENT..........................................................................34
12.2. ACTIONS BY THE COLLATERAL AGENT..........................................................................34
12.3. EXECUTION OF ADDITIONAL DOCUMENTS........................................................................34
12.4. INFORMATION REGARDING OBLIGORS, ETC......................................................................35
12.5. CONCERNING THE COLLATERAL AGENT..........................................................................35
12.6. COLLATERAL AGENT INDEMNITY...............................................................................36
12.7. COLLATERAL AGENT'S RESIGNATION OR REMOVAL................................................................37
12.8. MERGER, CONVERSION OR CONSOLIDATION......................................................................37
12.9. REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL AGENT...................................................38
13. PRIOR CLAIMS EXTINGUISHED.......................................................................................38
14. GENERAL.........................................................................................................38
14.1. PAYMENT OF EXPENSES, ETC.................................................................................38
14.2. NOTICES..................................................................................................39
14.3. ASSIGNMENTS; PARTICIPATIONS..............................................................................40
14.4. AMENDMENT OR WAIVER......................................................................................40
14.5. NO WAIVER; REMEDIES CUMULATIVE...........................................................................40
14.6. NO STRICT CONSTRUCTION...................................................................................41
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14.7. CALCULATIONS; COMPUTATIONS...............................................................................41
14.8. INTERPRETATION; GOVERNING LAW; ETC.......................................................................41
14.9. WAIVER OF JURY TRIAL.....................................................................................42
14.10. COUNTERPARTS.............................................................................................42
14.11. EXECUTION................................................................................................42
14.12. HEADINGS DESCRIPTIVE.....................................................................................43
14.13. SURVIVAL.................................................................................................43
14.14. BENEFIT OF AGREEMENT.....................................................................................43
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EXHIBITS
Exhibit A Form of Joinder Agreement
Exhibit B Form of Warrant and Registration Rights Agreement
Exhibit 5.2 Form of Officer's Certificate
Exhibit 5.6 Form of Guarantee
Schedule 1.1 Permitted Liens
Schedule 7.14 Subsidiaries
Schedule 7.19 ERISA Plans
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This SECURITIES EXCHANGE AGREEMENT, dated as of February 21, 2003 (this
"AGREEMENT"), is among iBasis, Inc., a Delaware corporation (the "COMPANY"),
iBasis Global, Inc., a Delaware corporation ("iBASIS GLOBAL", and together with
the Company, the "BORROWER"), iBasis Securities corporation, a Massachusetts
corporation (the "GUARANTOR"), JMG Triton Offshore Limited CITCO (the
"EXCHANGER"), and such other holders of Convertible Notes that from time to time
become parties to this Agreement in accordance with the terms hereof and who
exchange Convertible Notes for Notes and Warrants in accordance with the terms
hereof and such Joinder Agreement (collectively with the Exchanger, the
"EXCHANGING HOLDERS") and U.S. Bank National Association as Collateral Agent for
the Holders (with its successors and assigns, the "COLLATERAL AGENT"). The
parties hereto agree as follows:
RECITALS: Pursuant to this Agreement, the Exchanger is exchanging an aggregate
principal amount of $7,950,000 of the Company's 5 3/4% Convertible Subordinated
Notes due 2005 (the "CONVERTIBLE NOTES") for (a) an aggregate principal amount
of $3,975,000 of the Borrower's 11.5% Senior Secured Notes due 2005 and (b)
warrants (the "WARRANTS") exercisable for an aggregate of 727,627 shares of
Common Stock, $0.001 par value, of the Company (the "COMMON STOCK"). The Notes
mature on January 15, 2005. The Notes are guaranteed by each of the Borrower's
Domestic Subsidiaries identified on the signature pages hereof, and are secured
by second priority liens on substantially all the assets (including the stock of
Subsidiaries) of the Borrower. Prior to the purchase and sale of the Notes and
the Warrants pursuant to this Agreement, the Borrower has entered into a credit
agreement (as amended, restated or supplemented from time to time, the "SENIOR
LOAN AGREEMENT") among Borrower and Silicon Valley Bank. The Notes and Warrants
to be purchased thereunder are collectively referred to as the "Securities".
From and after the date hereof, additional holders of Convertible Notes may
become party to this Agreement pursuant to the execution and delivery of a
Joinder Agreement in the form of EXHIBIT A hereto, an executed counterpart copy
of which shall be provided to and acknowledged by the Collateral Agent (each, a
"JOINDER AGREEMENT") pursuant to which such holders may exchange such
Convertible Notes for Notes and Warrants in accordance with the terms hereof and
of such Joinder Agreement.
1. DEFINITIONS; CERTAIN RULES OF CONSTRUCTION. Certain capitalized
terms are used in this Agreement and in the other Documents with the specific
meanings defined below in this Section 1. Except as otherwise explicitly
specified to the contrary or unless the context clearly requires otherwise, (a)
the capitalized term "Section" refers to sections of this Agreement, (b) the
capitalized term "Exhibit" refers to exhibits to this Agreement, (c) references
to a particular Section include all subsections thereof, (d) the word
"including" shall be construed as "including without limitation", (e) accounting
terms not otherwise defined herein have the meaning provided under GAAP, (f)
references to a particular statute or regulation include all rules and
regulations thereunder and any successor statute, regulation or rules, in each
case as from time to time in effect, (g) references to a particular Person
include such Person's successors and assigns to the extent not prohibited by
this Agreement and the other Documents and (h) references to "Dollars" or "$"
mean United States Funds. References to "the date hereof" mean the date first
set forth above.
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"ACCUMULATED FUNDING DEFICIENCY" shall have the meaning provided in section
302 of ERISA.
"ADDITIONAL DOCUMENTS" is defined in Section 12.3.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling (including all directors and officers of such Person),
controlled by, or under direct or indirect common control with such Person. A
Person shall be deemed to control a corporation if such Person possesses,
directly or indirectly, the power (a) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (b) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"AGGREGATE PREPAYMENT AMOUNT" means, as of any date, the sum of (a) the
Notes and (b) accrued and unpaid interest, and all other amounts due, in respect
of the Notes being prepaid on and as of such date.
"AGREEMENT" is defined in the recitals hereto.
"APPLICABLE ACCELERATION" is defined in Section 11.5.
"AUTHORIZED OFFICER" means any senior officer of the Borrower designated in
writing to the Holders by the Borrower, in each case to the extent acceptable to
the Required Holders.
"BANKRUPTCY CODE" is defined in Section 11.1.5.
"BANKRUPTCY DEFAULT" means an Event of Default referred to in Section
11.1.5.
"BENEFIT PLAN" means an employee pension benefit plan as defined in section
3(2) of ERISA (other than a Multiemployer Plan) for which the funding
requirements under section 412 of the Code or section 302 of ERISA is, or within
the immediately preceding six years was, in whole or in part, the responsibility
of the Company, any of its Subsidiaries or any ERISA Affiliate.
"BOOK-ENTRY SECURITY" is defined in Section 2.5.
"BORROWER" is defined in the preamble to this Agreement.
"BUSINESS DAY" means any day, excluding Saturday, Sunday and any day which
shall be in New York, New York or Boston, Massachusetts a legal holiday or a day
on which banking institutions are authorized by law or other governmental
actions to close.
"CAPITALIZED LEASE" means any lease which is required to be capitalized on
the balance sheet of the lessee in accordance with GAAP, including Statement
Nos. 13 and 98 of the Financial Accounting Standards Board.
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"CAPITALIZED LEASE OBLIGATIONS" means the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP, including Statement Nos.
13 and 98 of the Financial Accounting Standards Board.
"CHANGE OF CONTROL" means one or more of the following events: (a) any
"person" or "group" (as such terms are used in sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act) of shares representing more than 50% of the
combined voting power of the then outstanding securities entitled to vote
generally in elections of directors of the Company (the "VOTING STOCK"); (b)
approval by stockholders of the Company of any plan or proposal for the
liquidation, dissolution or winding up of the Company; (c) the Company (i)
consolidates with or merges into any other corporation or any other corporation
merges into the Company, and in the case of any such transaction, the
outstanding Common Stock of the Company is changed or exchanged into other
assets or securities as a result, unless the stockholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least 51% of the combined voting power of the
outstanding voting securities of the corporation resulting from such transaction
in substantially the same proportion as their ownership of the Voting Stock
immediately before such transaction, or (ii) conveys, transfers or leases all or
substantially all of its assets to any person; or (d) any time Continuing
Directors do not constitute a majority of the Board of Directors of the company
(or, if applicable, a successor corporation to the Company); provided that a
Change of Control shall not be deemed to have occurred if, in the case of a
merger or consolidation otherwise constituting a Change in Control, all of the
consideration (excluding cash payments for fractional shares) in such merger or
consolidation constituting the Change in Control consists of common stock traded
on a United States national securities exchange or quoted on the Nasdaq National
Market (or which will be so traded or quoted when issued or exchanged in
connection with such Change in Control) and as a result of such transaction or
transactions all Convertible Notes become convertible solely into such common
stock.
"CLOSING DATE" means the date on which the Exchanger purchases Securities
pursuant to this Agreement.
"CODE" means the Internal Revenue Code of 1986.
"COLLATERAL AGENT" is defined in the preamble to this Agreement.
"COLLATERAL DOCUMENTS" means each of (a) the Security Agreement, (b) the
Subordination Agreement and (c) such other documents as may be entered into to
secure the payment and performance of the Obligations under the Credit
Documents.
"COMMON STOCK" is defined in the recitals hereto.
"COMPANY" is defined the preamble to this Agreement.
"CONTINUING DIRECTOR" means at any date a member of the Company's Board of
Directors (a) who was a member of such board on the date hereof or (b) who was
nominated or elected by
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at least a majority of the directors who were Continuing Directors at the time
of such nomination or election or whose election to the Company's Board of
Directors was recommended or endorsed by at least a majority of the directors
who were Continuing Directors at the time of such nomination or election or such
lesser number comprising a majority of a nominating committee if authority for
such nominations or elections has been delegated to a nominating committee whose
authority and composition have been approved by at least a majority of the
directors who were continuing directors at the time such committee was formed.
(Under this definition, if the Board of Directors of the Company as of the date
of this Agreement were to approve a new director or directors and then resign,
no Change in Control would occur even though the current Board of Directors
would thereafter cease to be in office).
"CONTROL" means, with respect to any Person, the possession, directly or
indirectly, of the power to (a) vote 10% or more of the Capital Securities
having ordinary voting power for the election of directors of such Person or (b)
direct or cause the direction of management and policies of such Person, whether
through the ownership of voting Capital Securities, by contact or otherwise,
either alone or in conjunction with others. The words "Controlling" and
"Controlled" have correlative meanings.
"CONVERTIBLE NOTES INDENTURE" means the Indenture dated as of March 15,
2000 between the Company and The Bank of New York, as trustee, governing the
Convertible Notes (as amended, modified or supplemented from time to time).
"CONVERTIBLE NOTES" is defined in the recitals hereto.
"CREDIT DOCUMENTS" means each of this Agreement, the Fiscal Agency
Agreement, the Notes, the Guarantee, the Intercreditor Agreement and the
Collateral Documents.
"CREDIT FACILITY" means the credit facility created under the Senior Loan
Agreement in an aggregate maximum principal amount not to exceed $40,000,000, as
reduced from time to time by permanent reductions thereto, and any refinancing
or renewal of such Indebtedness, which in no event shall exceed $40,000,000.
"CREDIT SECURITY" means all assets now or from time to time hereafter
subjected to a security interest, mortgage or charge (or intended or required so
to be subjected pursuant to the Collateral Documents or any other Credit
Document) to secure the payment or performance of any of the Obligations.
"DEFAULT" means any event or condition which with notice or lapse of time,
or both, would constitute an Event of Default.
"DEMAND HOLDERS" means Holders holding Notes in an outstanding principal
amount greater than 25% of the total outstanding principal amount of all Notes.
"DEPOSITARY" means the depositary appointed pursuant to Section 2.6, to
which the Notes and Warrants in typewritten form representing Book-Entry
Securities are delivered on the Closing Date pursuant to Section 2.6.
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"DOCUMENTS" means each of the Credit Documents, the Warrant and the Warrant
Agreement.
"DOMESTIC SUBSIDIARIES" means the Subsidiaries of the Borrower organized
under the laws of, or domesticated in, the United States of America or the
states or governmental districts thereof.
"EFFECTIVE DATE" is defined in Section 14.11.
"EQUIPMENT" means all of the Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in the Borrower's operations or owned by the Borrower and any
interest in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any Person required to be aggregated with the
Borrower or any Subsidiary of the Borrower under sections 414(b), (c), (m) or
(o) of the Code.
"EVENT OF DEFAULT" is defined in Section 11.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE ACT REPORTS" means the Company's reports filed with the SEC since
December 31, 2000 pursuant to Section 13 of the Exchange Act.
"EXCHANGING HOLDERS" means the Exchanger and any other holders of
Convertible Notes who become parties to this Agreement pursuant to the execution
and delivery of a Joinder Agreement with the Company an executed counterpart
copy of which shall be provided to and acknowledged by the Collateral Agent in
writing, and who exchange Convertible Notes for Notes and Warrants in accordance
with the terms hereof and such Joinder Agreement.
"FISCAL AGENCY AGREEMENT" means that Fiscal Agency Agreement dated as of
January 30, 2003, between the Company and the Fiscal Agent, as amended by that
certain Amendment No. 1 to Fiscal Agency Agreement of even date herewith between
the Company and the Fiscal Agent (and as it may be further amended, modified or
supplemented from time to time in accordance with its terms).
"FISCAL AGENT" means U.S. Bank National Association.
"FOREIGN SUBSIDIARY" means a Subsidiary of the Borrower other than a
Domestic Subsidiary.
"GAAP" means generally accepted accounting principles in effect within the
United States of America, consistently applied.
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"GLOBAL SECURITY" is defined in Section 2.5.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GOVERNING DOCUMENTS" means, as to any Person, the certificate or articles
of incorporation and by-laws or other organizational or governing documents of
such Person.
"GUARANTOR" means each of the Domestic Subsidiaries of the Borrower.
"GUARANTEE" is defined in Section 5.6.
"HOLDER" means the Person or Persons in whose name a Note is registered at
any time, and, for purposes solely of Section 4.4, the Person or Persons for
whose benefit a Note registered to the Depositary is held as reflected on the
transfer records of the Depositary at any time.
"INTEREST PAYMENT DATE" means the 15th day of each of July and January.
"INDEBTEDNESS" means with respect to any Person, all obligations,
contingent or otherwise, which in accordance with GAAP are required to be
classified upon the balance sheet of such specified Person as liabilities, but
in any event including (without duplication) the following:
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind;
(b) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments or upon which interest charges are customarily paid;
(c) all obligations of such Person for the deferred purchase price of
property or services, except current accounts payable arising in the ordinary
course of business and not overdue beyond such period as is commercially
reasonable for such Person's business;
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person and all
Capitalized Lease Obligations;
(e) all payment obligations of such Person with respect to interest rate or
currency protection agreements;
(f) all obligations of such Person as an account party under any letter of
credit or in respect of bankers' acceptances;
(g) all obligations of any third party secured by property or assets of
such Person (regardless of whether or not such Person is liable for repayment of
such obligations);
(h) all guarantees of such Person, including existing guarantees for lease
obligations;
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(i) all reimbursement obligations of such Person under letters of credit;
and
(j) the redemption price of all redeemable equity securities of such
Person, but only to the extent that such securities are redeemable at the option
of the holder, or require sinking funds or similar payments, at any time prior
to the Maturity Date.
"INTERCREDITOR AGREEMENT" means the Collateral Agency and Intercreditor
Agreement of even date herewith, between the Symphony Funds identified on the
signature pages hereto, the Exchanging Holders from time to time party thereto
and the Collateral Agent (as amended, modified or supplemented from time to
time).
"INVENTORY" means all of the Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease (including without
limitation all raw materials, work in process, finished goods and goods in
transit), and all materials and supplies of every kind, nature and description
which are or might be used or consumed in the Borrower's business or used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of such goods, merchandise or other personal property, and all
warehouse receipts, documents of title and other documents representing any of
the foregoing.
"INVESTMENT" means, with respect to any specified Person:
(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any other
Person;
(b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person;
(c) any guarantee of the obligations of any other Person;
(d) any acquisition of all, or any division or similar operating
unit of, the business of any other Person or the assets comprising such
business, division or unit; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e) shall be
included in the term "Investment" whether they are made or acquired by purchase,
exchange, issuance of stock or other securities, merger, reorganization or any
other method; PROVIDED, HOWEVER, that the term "Investment" shall not include
(i) trade and customer accounts receivable for property leased, goods furnished
or services rendered in the ordinary course of business and payable within one
year in accordance with customary trade terms, (ii) deposits, advances or
prepayments to suppliers for property leased or licensed, goods furnished and
services rendered in the ordinary course of business, (iii) advances to
employees for relocation and travel expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
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satisfaction or enforcement of Indebtedness or claims due to such specified
Person or as security for any such Indebtedness or claim or (v) demand deposits
in banks or similar financial institutions.
"JOINDER AGREEMENT" is defined in the Recitals paragraph appearing on the
first page of this Agreement.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the nature
thereof).
"MARGIN STOCK" is defined in Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the present or
future business, assets, operations, prospects or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole.
"MATURITY DATE" means January 15, 2005.
"MAXIMUM EXCHANGE AMOUNT" means the aggregate principal amount of
Convertible Notes equal to $19,350,000 LESS the aggregate principal amount of
Convertible Notes exchanged from time to time pursuant to any Permitted
Exchanges occurring after the date hereof which do not violate Section 9.4
herein.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in section
4001(a)(3) of ERISA (a) which is, or within the immediately preceding six years
was, contributed to by the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate or (b) with respect to which the Borrower or any Subsidiary of the
Borrower may incur any liability.
"NET ASSET SALE PROCEEDS" means the cash proceeds of the sale or
disposition of assets (including any Equipment and by way of merger, but not
including the proceeds of any sale of finished Inventory in the ordinary course
of business permitted by Section 10(iv)), and the cash proceeds of any insurance
payments or condemnation awards on account of the destruction or loss of
property, by the Borrower or any of its Subsidiaries after the Closing Date, net
of (a) any Indebtedness permitted by Section 5.5 (Senior Loan Agreement) or
Section 9.10 (purchase money indebtedness and capitalized leases) in each case
secured by assets being sold in such transaction required to be paid from such
proceeds, (b) income taxes that, as estimated by the Borrower in good faith,
will be required to be paid by the Borrower or any of its Subsidiaries in cash
as a result of, and within 16 months after, such sale or disposition (provided
that any such amounts that are not actually paid in taxes within such period
shall automatically become Net Asset Sale Proceeds), (c) reasonable reserves for
liabilities, indemnification, escrows and purchase price adjustments resulting
from the sale of assets, (d) transfer, sales, use and other similar taxes
payable in connection with such sale or disposition, (e) all reasonable expenses
of the Borrower or any of its Subsidiaries payable in connection with the sale
or disposition and (f) the amount of such proceeds applied to mandatory
prepayments under the Senior Loan Agreement.
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"NOTE PREPAYMENT PRICE" is defined in Section 4.2.
"NOTES" means up to $28,750,000 aggregate principal amount of the
Borrower's 11.5% Senior Secured Notes due 2005, issued pursuant to the Symphony
Exchange Agreement or this Agreement (including Notes that may be issued
pursuant to any Joinder Agreement as part of a Permitted Exchange in which such
Notes are issued without violating Section 9.4 herein).
"OBLIGATIONS" means any and all present and future liabilities, obligations
and Indebtedness of the Borrower and any of its Subsidiaries or any other
Obligor owing to the Collateral Agent or any Holder (or any Affiliate of a
Holder or Collateral Agent) under or in connection with this Agreement or any
other Credit Document, including, without limitation, obligations in respect of
principal, interest, prepayment premium and all other reimbursement obligations
under the Notes, all fees, charges, indemnities and expenses from time to time
owing hereunder or under any other Credit Document (all whether accruing before
or after a Bankruptcy Default and regardless of whether allowed as a claim in
bankruptcy or similar proceedings).
"OBLIGOR" means the Borrower, each Guarantor and each other Person
guaranteeing or providing collateral for the Obligations.
"PERMITTED EXCHANGE" is defined in Section 9.3.
"PERMITTED INVESTMENTS" means the following: (i) subject to compliance with
the terms of Section 9.1 and the Collateral Documents, immaterial Investments,
loans and advances by the Company to Wholly Owned Subsidiaries of the Company
(including newly created or acquired Wholly Owned Subsidiaries) which are
guarantors of the Senior Subordinated Notes, (ii) Investments in commercial
paper and loan participations maturing in 270 days or less from the date of
issuance which at the time of acquisition are rated at least A-1 by S&P or
Prime-1 by Moody's; (iii) Investments in securities of or guaranteed by the
United States of America or agencies thereof, or securities issued by foreign
governments of comparable credit quality maturing within one year of
acquisition; (iv) Investments in bank instruments maturing within one year after
their acquisition issued by banks which are rated at least A-2/A by S&P; and (v)
repurchase agreements, having terms of less than 90 days, for government
obligations of the type specified above with a commercial bank or trust company
which is rated at least A-2/A by S&P.
"PERMITTED LIENS" means the following: (i) Liens incurred in connection
with the Credit Facility; (ii) purchase money security interests in, or leases
of, specific items of Equipment existing on the date hereof and described on
SCHEDULE 1.1; (iii) Liens on account of future purchase money security interests
in, or Capitalized Leases of, specific items of Equipment, in each case incurred
in the ordinary course of business, and in each case secured solely by the
Equipment to which the Lien relates; (iv) Liens securing obligations incurred in
connection with any exchange of Convertible Notes for new securities in a
transaction not prohibited by Section 9.4, (v) Liens for taxes not yet payable;
(vi) additional security interests and Liens consented to in writing by the
Required Holders, which consent shall not be unreasonably withheld; (vii)
security interests being terminated substantially concurrently with this
Agreement; (viii) Liens of materialmen, mechanics, warehousemen, carriers, or
other similar Liens arising in the ordinary course of business and securing
obligations which are not delinquent or are otherwise being
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contested in good faith and by appropriate proceedings; (ix) Liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described above in clauses (i), (ii) or (iii)
above, provided that any extension, renewal or replacement Lien is limited to
the property encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; and (x)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. Each of the Holders
will have the right to require, as a condition to its consent under subsection
(vi) above, that the holder of the additional security interest or Lien sign an
intercreditor agreement on a customary form, acknowledging that the security
interest is subordinate to the security interest in favor of the Holders, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that the Borrower agrees that
any uncured event of default in any obligation secured by the subordinate
security interest shall also constitute an Event of Default under this
Agreement.
"PERSON" means any individual, partnership, joint venture, limited
liability company, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"PLAN" means any employee benefit plan, program or arrangement, whether
oral or written, maintained or contributed to by the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate, or with respect to which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate may incur liability.
"PROHIBITED TRANSACTION" means any transaction that is prohibited under
Code section 4975 or ERISA section 406 and not exempt under Code section 4975 or
ERISA section 408.
"REGISTRATION STATEMENTS" means the Company's registration statements filed
with the SEC since December 31, 2001 pursuant to the Securities Act.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System.
"REPORTABLE EVENT" means any of the events described in section 4043 of
ERISA.
"REQUIRED HOLDERS" means Holders holding Notes in an outstanding principal
amount greater than 50% of the total outstanding principal amount of all Notes.
"REQUIREMENT OF LAW" means, as to any Person, the Governing Documents of
such Person, and any law, treaty, rule, regulation, direction, ordinance,
criterion or guideline or determination of a court or other Governmental
Authority or determination of an arbitrator, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"SEC" means the U.S. Securities and Exchange Commission.
"SEC REPORTS" means the Exchange Act Reports and the Registration
Statements.
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"SECURITIES" is defined in the recitals hereto.
"SECURITIES ACT" means the Securities Act of 1933.
"SECURITY AGREEMENT" means the Security Agreement dated as of the date
hereof among the Borrower, the Guarantor and the Collateral Agent, as amended,
restated or supplemented from time to time in accordance with the terms thereof.
"SENIOR LENDER" means Silicon Valley Bank, a California chartered bank.
"SENIOR LOAN AGREEMENT" is defined in the recitals hereto.
"SENIOR LOAN EVENT OF DEFAULT" is defined in Section 11.5.
"SENIOR LOANS" means the Loans and Letters of Credits under and as defined
in the Senior Loan Agreement.
"SUBORDINATION AGREEMENT" means the Subordination Agreement dated as of the
January 30, 2003 among the Senior Lender, the Symphony Funds, as Holders of the
then existing Notes, and the Collateral Agent, as amended, restated or
supplemented from time to time in accordance with the terms thereof.
"SUBSIDIARY" means with respect to any Person at any time, (a) any other
Person the accounts of which would be consolidated with those of such first
Person in its consolidated financial statements as of such time, and (b) any
other Person (i) which is, at such time, Controlled by, or (ii) Capital
Securities of which having ordinary voting power to elect a majority of the
board of directors (or other persons having similar functions), or other
ownership interest of which ordinarily constituting a majority voting interest,
are at such time, directly or indirectly, owned or Controlled by, in the case of
each of clauses (i) and (ii), such first Person or one or more of its
Subsidiaries or by such first Person and one or more of its Subsidiaries. Unless
otherwise expressly provided, all references herein to "Subsidiary" means a
Subsidiary of the Company.
"SYMPHONY EXCHANGE AGREEMENT" means that certain Securities Exchange
Agreement dated as of January 30, 2003, by and among the Borrower, the
Guarantor, the Symphony Funds identified on the signature pages thereto and the
Collateral Agent.
"TAX BENEFIT" is defined in Section 4.4.3.
"TAXES" is defined in Section 4.4.1.
"TERMINATION EVENT" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan; (b) the withdrawal of the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate from a Benefit Plan during a
plan year in which such entity was a "substantial employer" as defined in
section 4001(a)(2) of ERISA; (c) the providing of notice of intent to terminate
a Benefit Plan in a distress termination described in section 4041(c) of ERISA
or the treatment of any amendment as a termination under section 4041(e) of
ERISA; (d) the institution
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by the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan;
(e) any event or condition (i) that might constitute grounds under section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Benefit Plan or Multiemployer Plan, or (ii) that may result in termination
of a Multiemployer Plan pursuant to section 4041A of ERISA; or (f) the partial
or complete withdrawal within the meaning of sections 4203 and 4205 of ERISA, of
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.
"UCC" means the Uniform Commercial Code as in effect in The Commonwealth of
Massachusetts.
"U.S." means the United States of America.
"WARRANT AGREEMENT" means the Amended and Restated Warrant and Registration
Rights Agreement of even date herewith, between the Company and U.S. Bank
National Association, as Warrant Agent, in substantially in the form of EXHIBIT
B (as amended, modified or supplemented from time to time).
"WARRANTS" is defined in the recitals hereto.
"IN WRITING" means any form of written communication or a communication by
means of telex, facsimile transmission, telegraph or cable.
2. PURCHASE AND SALE OF THE SECURITIES.
2.1. PURCHASE AND SALE OF THE NOTES TO THE EXCHANGER.
Subject to the terms and conditions hereof, the Borrower agrees that it will
issue and sell to the Exchanger, and the Exchanger agrees that it will acquire
from the Borrower, on the Closing Date, Notes in the aggregate principal amount
of $3,975,000.
2.2. PURCHASE AND SALE OF THE WARRANTS TO THE EXCHANGER.
Subject to the terms and conditions hereof, the Borrower agrees that it will
issue and sell to the Exchanger, and the Exchanger agrees that it will acquire
from the Borrower, on the Closing Date, Warrants to purchase an aggregate
727,627 shares of Common Stock.
2.3. SUBSEQUENT EXCHANGES. From time to time after the
Closing Date, the Company and any other holders of Convertible Notes who become
party to this Agreement pursuant to the execution and delivery of a Joinder
Agreement may exchange such Exchanging Holders' Convertible Notes for Notes and
Warrants in accordance with the terms hereof and of such Joinder Agreement.
2.4. NOTE TERMS. Each Note issued pursuant to this
Agreement to each Holder shall (a) be executed by the Borrower, (b) be payable
to the order of such Holder and be dated the date of issuance thereof, (c) be in
a stated principal amount of $3,975,000, in the case of the Exchanger, or in the
stated amount set forth for such Holder in the applicable Joinder
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Agreement, (d) mature on the Maturity Date, (e) bear interest as provided in
Section 3, and (f) be entitled to the benefits of this Agreement and the other
Credit Documents.
2.5. FORM OF SECURITIES. Each Note or Warrant issued
pursuant to this Agreement, as applicable, will be issued only in fully
registered form and will initially be represented by a global note or global
warrant (each a "GLOBAL SECURITY") registered in the name of the Depositary or
its nominee, and delivered to the Fiscal Agent, as custodian for the Depositary
and recorded in the book-entry system maintained by the Depositary (a
"BOOK-ENTRY SECURITY"). No beneficial owner of an interest in the Notes or the
Warrants issued pursuant to this Agreement will be entitled to receive a
certificate representing such Note or Warrant, as applicable, except as provided
in the Fiscal Agency Agreement or the Warrant Agreement, as applicable.
2.6. DEPOSITARY. The Depositary for the Notes and the
Warrants shall initially be The Depository Trust Company and such Notes and
Warrants shall be registered in the name of Cede & Co., its nominee, and shall
bear a legend in substantially the following form:
"Unless this Certificate is presented by an authorized
representative of the Depository Trust Company, a New York corporation
("DTC"), to the Issuer or its agent for registration of transfer, exchange,
or payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or to such other entity as
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has any interest
herein."
The Depositary shall at all times be a "clearing corporation" as defined in
section 8-102(3) of the UCC or any successor provision thereto.
2.7. PURCHASE PRICE FOR SECURITIES. The purchase price
to the Exchanger for the Securities is the Convertible Notes being exchanged in
connection herewith in the aggregate principal amount of $7,950,000. The
purchase price to each other Exchanging Holder for the Securities purchased by
it hereunder shall be the principal amount of Convertible Notes exchanged by
such Exchanging Holder as set forth in the applicable Joinder Agreement.
2.8. CLOSING. Unless otherwise agreed among the Borrower
and the Exchanger, the purchase and issuance of the Securities shall take place
on the Closing Date at the offices of Bingham McCutchen LLP, 150 Federal Street,
Boston, Massachusetts 02110, at 10:00 a.m., local time. On the Closing Date, the
Borrower shall deliver the Securities to be issued by it to the Exchanger
against delivery by the Exchanger of the consideration therefor. Any subsequent
closings will take place at the dates (each, a "SUBSEQUENT CLOSING DATE") and
places specified in the applicable Joinder Agreement.
3. INTEREST.
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3.1. RATE OF INTEREST. The principal amount of each Note
shall bear interest from January 30, 2003 until maturity (whether by
acceleration or otherwise) at 11.5% per annum. Interest shall be payable in full
in cash in accordance with Section 3.3.
3.2. DEFAULT INTEREST. All overdue principal, any
premium on and, to the extent permitted by applicable law, overdue interest in
respect of any Note shall bear interest at a rate per annum equal to 2% in
excess of the interest rate otherwise applicable to such Note.
3.3. INTEREST ACCRUAL AND COMPUTATION. Interest shall
accrue on each Note from and including the date of issuance thereof to but
excluding the date of any repayment thereof and shall be payable in cash
semi-annually in arrears on each Interest Payment Date, on any prepayment (on
the principal amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand. All computations of interest
hereunder shall be made on the actual number of days elapsed over a year of 360
days.
4. PAYMENTS.
4.1. PAYMENTS. All payments owing under this Agreement,
any Note or any other Credit Document to a Holder shall be paid directly by the
Borrower in immediately available funds by wire transfer to the Fiscal Agent for
payment to the Holders pursuant to the Fiscal Agency Agreement. The Borrower
shall cause all such amounts to be deposited with the Fiscal Agent not later
than the Business Day immediately prior to the date on which such amounts are
required to be paid to the Holders.
4.2. VOLUNTARY PREPAYMENTS. The Borrower shall have the
right to prepay the Notes, in whole or in part, at any time and from time to
time, prior to the Maturity Date. The Notes shall be prepaid at the following
prepayment prices (expressed in percentages of the outstanding principal amount
of the Note, as the case may be, being prepaid) plus accrued and unpaid interest
on such prepaid principal amount to the prepayment date, MINUS the number of
percentage points reflected by the product of (a) 10.1695 and (b) the difference
between (i) the average closing trading price of the Common Stock for the five
trading days immediately prior to, but not including, the date of such
prepayment and (ii) the Common Stock price denoted below in the column titled
"Minimum Common Stock Price" (the "NOTE PREPAYMENT PRICE"); PROVIDED, HOWEVER,
that in no event shall the Note Prepayment Price be less than 100% of the
outstanding principal amount of the Notes to be prepaid, plus accrued and unpaid
interest on such principal amount to the prepayment date:
<Table>
<Caption>
PERCENTAGE OF MINIMUM
OUTSTANDING COMMON
DATE OF PREPAYMENT PRINCIPAL AMOUNT STOCK PRICE
- ------------------ ---------------- -----------
After Prior To and Including
- ----- ----------------------
January 15, 2003 July 15, 2003 123.0000% $ 2.25
July 15, 2003 January 15, 2004 117.2500% $ 3.50
January 15, 2004 July 15, 2004 111.5000% $ 4.25
July 15, 2004 January 15, 2005 105.7500% $ 5.00
</Table>
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Each prepayment under this Section 4.2 shall be made on the following terms and
conditions: (a) the Borrower shall give each Holder written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay the
Notes and the amount of such prepayment, which notice shall be given by the
Borrower at least 30 days prior to the date of such prepayment, (b) each partial
prepayment shall be in an aggregate principal amount of at least $100,000, and
(c) each prepayment shall be allocated PRO RATA among all the Holders holding
the Notes being prepaid.
4.3. MANDATORY PREPAYMENTS.
4.3.1. Subject to Section 4.3.2, upon receipt of
any Net Asset Sale Proceeds in excess of $250,000 (or, if a Default or an Event
of Default shall then exist, regardless of amount) by the Borrower or any of its
Subsidiaries, which in each such case does not result in a Change of Control,
the Borrower shall, within one Business Day, pay (or cause its Subsidiary
receiving such proceeds to pay) to the Holders as a prepayment of the Notes to
be applied as provided in this Section 4.3 an amount determined by the Borrower
that is the lesser of (a) the amount of such Net Asset Sale Proceeds and (b) the
Aggregate Prepayment Amount (excluding any portion of such Net Asset Sale
Proceeds which so long as no Default or Event of Default exists, (x) in the case
of proceeds of business interruption insurance, is used in the ordinary course
of the Borrower's and its Subsidiaries' business and (y) in the case of proceeds
of casualty insurance, is applied for the purpose of replacing, repairing,
restoring or rebuilding the relevant tangible property).
4.3.2. Upon a Change of Control, the Borrower
shall, within one Business Day, make an offer to prepay all of the Notes then
outstanding at the Note Prepayment Price set forth in Section 4.2.
4.3.3. All prepayments pursuant to this Section 4.3
shall be applied PRO RATA among the Holders holding the Notes being prepaid.
4.3.4. Notwithstanding anything to the contrary in
this Agreement or the Symphony Exchange Agreement, in no event shall the
Borrower be required to make any prepayments pursuant to this Section 4.3 and
Section 4.3 of the Symphony Exchange Agreement in connection with a particular
sale or disposition of assets by the Borrower in an aggregate amount in excess
of the Net Asset Proceeds of such sale or disposition of assets.
4.4. NET PAYMENTS.
4.4.1. All payments made by the Company hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.4.2, all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but excluding
any tax imposed on or measured by the net income or net profits, or franchise
taxes imposed in lieu of net income or
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net profit taxes, of a Holder pursuant to the laws of the jurisdiction in which
it is organized or the jurisdiction in which the principal office or applicable
lending office of such Holder, is located or any subdivision thereof) and all
interest, penalties or similar liabilities with respect to such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "TAXES"). Subject to Section 4.4.2, if any
Taxes are so levied or imposed, the Borrower agrees to pay promptly the full
amount of such Taxes. The Borrower will furnish to the affected Holder within 60
days (or as soon thereafter as available) after the date the payment of any
Taxes is due pursuant to applicable law, certified copies of tax receipts
evidencing such payment by the Borrower or, if such receipts are not obtainable,
other evidence of such payments by the Borrower reasonably satisfactory to such
affected Holder. The Borrower agrees to indemnify and hold harmless each Holder,
and reimburse such Holder within 30 days after its written request, for the
amount of any Taxes so levied or imposed and paid by such Holder.
4.4.2. If any Holder is not created or organized
in, or under the laws of, the United States of America or any state thereof,
such Holder shall deliver to the Borrower such duly executed forms and
statements from time to time as may be necessary so that such Holder is entitled
to receive payments of the Obligations payable to it without deduction or
withholding of any United States federal income taxes, to the extent such
exemption is available to such Holder. If no such exemption is available at the
time a Holder acquires any Note (or any beneficial interest therein) or if at
any time the Borrower has not received all forms and statements (including any
renewals thereof) required to be provided by any Holder pursuant to this Section
4.4.2, Section 4.4.1 above shall not apply with respect to any amount of United
States federal income taxes required to be withheld from payments of the
Obligations to such Holder.
4.4.3. If the Borrower pays any additional amount
under this Section 4.4 to a Holder and such Holder determines in its sole and
absolute discretion that it has actually received or realized in connection
therewith any refund or any reduction of, or credit against, its Tax liabilities
in or with respect to the taxable year in which the additional amount is paid (a
"TAX BENEFIT"), such Holder shall promptly, but in no event later than 30 days
following the receipt of any such refund or 30 days following the earlier of the
filing of the applicable Tax return or the payment of the applicable Taxes, pay
to the Borrower an amount that such Holder shall, in its sole and absolute
discretion, determine is equal to the net benefit, after tax, which was obtained
by the Holder in such year as a consequence of such Tax Benefit; PROVIDED,
HOWEVER, that (a) any Holder may determine, in its sole and absolute discretion
consistent with the policies of such Holder, whether to seek a Tax Benefit; (b)
any Taxes that are imposed on a Holder as a result of a disallowance or
reduction (including through the expiration of any tax credit carryover or
carryback of such Holder that otherwise would not have expired) of any Tax
Benefit with respect to which such Holder has made a payment to the Borrower
pursuant to this Section 4.4.3 shall be treated as a Tax for which the Borrower
is obligated to indemnify such Holder pursuant to this Section 4.4 without any
exclusions or defenses; (c) nothing in this Section 4.4.3 shall require any
Holder to disclose any confidential information to the Borrower (including its
tax returns); and (d) no Holder shall be required to pay any amounts pursuant to
this Section 4.4.3 at any time when a Default or Event of Default exists.
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5. CONDITIONS PRECEDENT TO THE PURCHASE OF THE SECURITIES. The
obligations of the Exchanger to purchase and pay for the Securities as of the
Closing Date, and of any additional Exchanging Holders to purchase and pay for
any Securities as of a Subsequent Closing Date, are subject to the satisfaction,
prior to or on the Closing Date or such Subsequent Closing Date, as the case may
be, of the following conditions:
5.1. ISSUANCE OF SECURITIES; CONTEMPORANEOUS INVESTMENT.
(a) The Effective Date shall have occurred, (b) there shall have been delivered
to the Depositary a Note executed by the Borrower in the amount, maturity and as
otherwise provided herein, and (c) there shall have been delivered to the
Depositary a Warrant to purchase the number of shares of Common Stock as
provided herein.
5.2. CORPORATE PROCEEDINGS.
(a) The Exchanging Holder shall have received a
certificate from the Borrower and such other Obligors requested by the
Exchanging Holder, dated the Closing Date or such Subsequent Closing Date,
signed by the chairman, a vice chairman, the president, any vice president
or representative director of such Obligor in the form of EXHIBIT 5.2 with
appropriate insertions and deletions, together with (i) copies of the
certificate of incorporation, by-laws or other organizational documents of
each such Obligor, (ii) the resolutions of each Obligor referred to in such
certificate and all of the foregoing (including each such certificate of
incorporation and by-laws) shall be in form and substance reasonably
satisfactory to the Exchanging Holder and (iii) a certification that all of
the applicable conditions precedent set forth in Sections 5.2, 5.4, 5.5 and
5.6 shall have been satisfied as of such date.
(b) On the Closing Date or such Subsequent Closing
Date, all corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this
Agreement and each other Document shall be reasonably satisfactory in form
and substance to the Exchanging Holder, and the Exchanging Holder shall
have received all information and copies of all certificates, documents and
papers, including good standing certificates and any other records of
corporate proceedings and governmental approvals, if any, which the
Exchanging Holder may have reasonably requested in connection therewith,
such documents and papers, where appropriate, to be certified by proper
corporate or governmental authorities.
5.3. MATERIAL ADVERSE EFFECT, ETC. From September 30,
2002 to the Closing Date, nothing shall have occurred (and the Exchanging Holder
shall not have become aware of any facts or conditions not previously known)
which the Exchanging Holder shall determine has, or is reasonably likely to
have, (a) a material adverse effect on the rights or remedies of the Holders or
the Exchanging Holder hereunder or under any other Document, or on the ability
of the Obligors taken as a whole to perform their obligations under the
Documents or (b) a Material Adverse Effect.
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5.4. LITIGATION. There shall be no actions, suits or
proceedings pending or threatened (a) with respect to any Document or (b) which
the Exchanger shall determine is reasonably likely to have (i) a Material
Adverse Effect or (ii) a material adverse effect on the rights or remedies of
the Holders or the Exchanging Holder hereunder or under any other Document or on
the ability of the Obligors taken as a whole to perform their obligations under
the Documents.
5.5. APPROVALS. The Obligors shall have received all
authorizations, consents, approvals, licenses, franchises, permits and
certificates by or of all governmental and third parties, in each case necessary
for the issuance of the Securities and for the execution and delivery of the
Documents to which they are parties, and all of the foregoing shall be in full
force and effect on the Closing Date or such Subsequent Closing Date, as the
case may be.
5.6. GUARANTEE. The Borrower and each Domestic
Subsidiary (other than Ivanet, LLC and iBasis Holdings, Inc.) in existence on
the Closing Date or such Subsequent Closing Date, as the case may be, shall have
duly authorized, executed and delivered a Guarantee in the form of EXHIBIT 5.6
with respect to the Notes (as modified, amended or supplemented from time to
time in accordance with the terms hereof and thereof, the "GUARANTEE"), and each
Guarantee shall be in full force and effect.
5.7. COLLATERAL DOCUMENTS. Each Obligor, as appropriate,
shall have duly authorized, executed and delivered to the Exchanging Holder each
of the Collateral Documents, together with such other agreements and documents
contemplated thereunder, each in form and substance reasonably satisfactory to
the Exchanging Holder. The Exchanging Holder shall have received evidence that
all actions necessary or, in the reasonable opinion of the Exchanging Holder,
desirable, to perfect the security interests created by each of the Collateral
Documents have been taken.
5.8. FISCAL AGENCY AGREEMENT. The Fiscal Agency
Agreement shall have been duly executed and delivered by the parties thereto.
5.9. WARRANT AGREEMENT. The Warrant Agreement shall have
been duly executed and delivered by all of the parties thereto.
5.10. INTERCREDITOR AGREEMENT. The Intercreditor
Agreement shall have been duly executed and delivered by all of the parties
thereto.
5.11. DTC ELIGIBILITY. The Notes and Warrants shall have
become eligible for DTC book-entry delivery services.
5.12. CUSIP NUMBER. The Borrower shall have obtained
CUSIP Numbers for each of the Notes and the Warrants.
5.13. CAPITALIZATION. The Company shall deliver evidence
furnished by Equiserve as to the authorized and issued and outstanding Common
Stock of the Company as of the Closing Date.
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5.14. SENIOR LENDER POSSESSION OF STOCK CERTIFICATES. The
Senior Lender (or its agent) shall have taken physical possession of the stock
or other certificates representing (i) all issued and outstanding equity of each
Domestic Subsidiary and (ii) 65% of the issued and outstanding equity of each
Foreign Subsidiary, together in each case with appropriate undated stock or
other transfer powers, duly executed by the holder of such equity in blank.
5.15. NO DEFAULT; REPRESENTATIONS AND WARRANTIES. On the
Closing Date or such Subsequent Closing Date, as the case may be, and after
giving effect to the transactions contemplated hereby or by applicable Joinder
Agreement, (a) there shall exist no Default or Event of Default and (b) all
representations and warranties made by any Obligor contained herein or in the
other Credit Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made on
and as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date.
5.16. ACCRUED INTEREST UNDER CONVERTIBLE NOTES. On the
Closing Date or such Subsequent Closing Date, as the case may be, the Borrower
shall have paid to the Exchanging Holder an amount in cash equal to the amount
of accrued and unpaid interest on the Convertible Notes being surrendered in
exchange pursuant to Section 2.7 as of January 30, 2003 (with it being agreed by
the Borrower and the Exchanging Holder that no payment shall be due with respect
to any interest accrued or accruing on such surrendered Convertible Notes after
January 30, 2003).
All of the certificates, legal opinions and other documents and papers
referred to in Section 5, unless otherwise specified, shall be delivered to the
Exchanging Holder and shall be reasonably satisfactory in form and substance to
the Exchanging Holder.
6. FEES. The Borrower shall have paid to the Exchanger and its
representatives all reasonable costs, fees and expenses, and all other
compensation contemplated by this Agreement and the other Documents (including
reasonable legal fees and expenses); PROVIDED, HOWEVER, that the Borrower's
reimbursement obligations pursuant to this Section 6 shall not exceed, in the
aggregate, $10,000.
7. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS. In order to induce
the Exchanging Holders and the Collateral Agent to enter into this Agreement and
to purchase the Securities, each of the Obligors jointly and severally makes the
following representations and warranties, all of which shall survive the
execution and delivery of this Agreement and the purchase of the Securities:
7.1. CORPORATE STATUS. Each Obligor and each of its
Subsidiaries (a) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (b) has
duly qualified to do business and is in good standing in each jurisdiction where
it is required to be so qualified and where the failure to be so qualified is
reasonably likely to have a Material Adverse Effect.
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7.2. CORPORATE POWER AND AUTHORITY. Each Obligor has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Documents to which it is a party. Each Obligor has duly executed and delivered
to the Exchanging Holders each Document to which it is a party and each such
Document constitutes the legal, valid and binding obligation of such Person
enforceable in accordance with its terms.
7.3. NO VIOLATION. Neither the execution, delivery and
performance by any Obligor of the Documents to which it is a party nor
compliance with the terms and provisions thereof (a) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, except as
would not have a Material Adverse Effect, (b) will conflict or be inconsistent
with or result in any breach of, any of the material terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of such Obligor pursuant to the terms of, any
indenture, mortgage, deed of trust, agreement or other instrument to which such
Person is a party or by which it or any of its property or assets are bound or
to which it may be subject or (c) will violate any provision of the certificate
of incorporation, by-laws or other organizational document of such Obligor.
7.4. CAPITALIZATION. As of January 30, 2003, the
authorized capital stock of the Company consists of 85,000,000 shares of Common
Stock, of which 45,785,055 are issued and outstanding as of the Closing Date. As
of the Closing Date, (i) 2,542,035 of Common Stock were reserved for future
issuance pursuant to outstanding options issued by the Company, (ii) 337,500
shares of Common Stock were reserved for future issuance pursuant to outstanding
warrants issued by the Company and (iii) 1,027,397 shares of Common Stock were
reserved for future issuance upon conversion of the Convertible Notes. Except as
set forth above and for the exercise rights of the Warrants and the conversion
rights of the Convertible Notes, after giving effect to the transactions
contemplated by this Agreement, and except as set forth on SCHEDULE 7.4, there
will be no other outstanding options, warrants, rights (including conversion or
preemptive rights) or any agreement for the purchase or acquisition from the
Company of any shares of the Company's capital stock or voting agreements with
respect to equity of the Company. All shares of the capital stock of the Company
subject to issuance as aforesaid, including the Warrants, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. There are no obligations, contingent or otherwise, of the Company
to repurchase, redeem or otherwise acquire any shares of Common Stock or to
provide funds to or make any investment (in the form of a loan, capital
contribution, guaranty or otherwise) in any other entity. None of the
outstanding shares of capital stock of the Company were issued in violation of
the Securities Act or any state securities laws.
7.5. LITIGATION. Except as disclosed in the SEC Reports,
no actions, suits or proceedings are pending or, to the best of each Obligor's
knowledge, threatened that are reasonably likely to have (a) a Material Adverse
Effect or (b) a material adverse effect on the
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rights or remedies of the Holders or the Exchanging Holders or on the ability of
the Obligors taken as a whole to perform their obligations under the Documents.
7.6. MARGIN REGULATIONS. Neither the sale of any
Securities, nor the use of the proceeds thereof, will violate Regulation T, U or
X of the Board of Governors of the Federal Reserve System and no part of the
proceeds from the sale of the Securities will be used to purchase or carry any
Margin Stock or to extend credit for the purpose of purchasing or carrying any
Margin Stock.
7.7. GOVERNMENTAL APPROVALS. Except for any required
filings and recordings which have been made and are in full force and effect, no
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, is
required to authorize or is required in connection with (a) the execution,
delivery and performance of any Document or (b) the legality, validity, binding
effect or enforceability of any Document.
7.8. INVESTMENT COMPANY ACT. None of the Obligors is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940.
7.9. PUBLIC UTILITY HOLDING COMPANY ACT. None of the
Obligors is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935.
7.10. CONFORMITY TO SECURITIES ACT AND EXCHANGE ACT; NO
MISSTATEMENT OR OMISSION. Each of the SEC Reports as of the date it was filed
with the SEC in the case of filings under the Exchange Act or declared effective
in the case of the Registration Statements, complied in all material respects
with the applicable requirements of the Securities Act or the Exchange Act and
the respective rules and regulations of the SEC thereunder and did not contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading.
7.11. FINANCIAL CONDITION; FINANCIAL STATEMENTS. The
financial statements and supporting schedules included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001, and in the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002, June 30,
2002 and September 30, 2002 and in any Registration Statements or other SEC
Reports, in each case filed with the SEC, are complete and correct in all
material respects and present fairly the consolidated financial position of the
Company and its Subsidiaries as of the dates specified and the consolidated
results of their operations for the periods specified, in each case, in
conformity with generally accepted accounting principles applied on a consistent
basis during the periods involved, except as indicated therein or in the notes
thereto.
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7.12. NO MATERIAL ADVERSE CHANGES. Since September 30,
2002 and except in connection with the exchange consummated pursuant to the
Symphony Exchange Agreement and the exchanges contemplated by this Agreement,
(a) there has been no Material Adverse Effect; (b) except as contemplated by
this Agreement or described in the SEC Reports, there has been no transaction
entered into by the Company or any of its Subsidiaries other than transactions
in the ordinary course of business or transactions which would not, individually
or in the aggregate, have a Material Adverse Effect; (c) there have not been any
changes in the Borrower's authorized capital or, other than the borrowing made
by the Borrower under the Senior Loan Agreement, any material increases in the
debt of the Borrower and its Subsidiaries taken as a whole; and (d) there has
been no actual or, to the knowledge of the Borrower, threatened revocation of,
or default under, any material contract to which the Borrower or any of its
Subsidiaries is a party, except as would not have a Material Adverse Effect.
7.13. TAX RETURNS AND PAYMENTS. Each of the Borrower and
each of its Subsidiaries has filed all federal income tax returns and all other
material domestic and foreign tax returns required to be filed by it and has
paid all material taxes and assessments payable by it which have become due,
except for those contested in good faith and adequately reserved against (in the
good faith determination of the Borrower), all of which, to the extent
outstanding on the Closing Date, have been disclosed by the Company in the SEC
Reports. Each of the Borrower and each of its Subsidiaries has paid, or has
provided adequate reserves (in the good faith judgment of the Borrower) for the
payment of, all material federal, state and foreign taxes that are not yet due
and payable for all fiscal years, including the current fiscal year, to date. No
action, suit, proceeding, investigation, audit or claim is now pending or, to
the knowledge of the Borrower or its Subsidiaries, threatened by any authority
regarding any taxes relating to the Borrower or any of its Subsidiaries which is
reasonably likely to have a Material Adverse Effect. As of the Closing Date,
neither the Borrower nor any of its Subsidiaries has entered into an agreement
or waiver or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of taxes of the
Borrower or any of its Subsidiaries.
7.14. SUBSIDIARIES. As of the Closing Date, the Company
has no directly held Subsidiary other than iBasis Global, iBasis Securities
Corporation, and iBasis Speech Solutions, Inc., and such Subsidiaries have no
Subsidiaries other than those listed on SCHEDULE 7.14.
7.15. INTELLECTUAL PROPERTY. The Borrower and each of its
Subsidiaries have obtained all material patents, trademarks, service marks,
trade names, copyrights, licenses and other rights, free from materially
burdensome restrictions, that are necessary for the operation of their
businesses taken as a whole as presently conducted, except for those for which
the failure to obtain is not reasonably likely to have a Material Adverse
Effect.
7.16. PROPERTIES. The Borrower and each of its
Subsidiaries have good and valid title to all material properties owned by them,
including all such properties reflected in their balance sheets included in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
2002, free and clear of all Liens, other than (a) as referred to in such balance
sheet or in the notes thereto or (b) otherwise permitted by Section 9.10.
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7.17. LABOR RELATIONS. No Obligor is engaged in any
unfair labor practice that is reasonably likely to have a Material Adverse
Effect. No unfair labor practice complaint is pending against any Obligor or, to
the best of its knowledge, threatened against any of them, before the National
Labor Relations Board or similar foreign labor relations authority, and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any Obligor or, to the best of its
knowledge, threatened against any of them. No strike, labor dispute, slowdown or
stoppage is pending against any Obligor or, to the best of its knowledge,
threatened against any Obligor. No union representation question exists with
respect to the employees of any Obligor and no union organizing activities are
taking place, except with respect to any matter specified above, either
individually or in the aggregate, which is not reasonably likely to have a
Material Adverse Effect.
7.18. COMPLIANCE WITH STATUTES, ETC.
7.18.1. Each Obligor is in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental authorities, domestic or foreign, in respect of the conduct of
its business and the ownership of its property, except such non-compliance as is
not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.
7.18.2. Except as has been disclosed by the Company in the
SEC Reports, no Obligor has (a) any material liability of which any Obligor has
knowledge or reasonably should have knowledge in connection with any release,
generation, storage, use, transportation, disposal or other handling of any
hazardous or toxic waste, substance or constituent material into the
environment, or (b) received any written notice, letter or other indication of
potential liability arising from the release, generation, storage, use,
transportation, disposal or other handling of any hazardous or toxic waste,
substance or constituent material into the environment.
7.18.3. To the best of each Obligor's knowledge, except as
has been disclosed by the Company in the SEC Reports, none of the operations of
the Company or any of its Subsidiaries is the subject of any federal or state or
foreign investigation evaluating whether such Person disposed of any hazardous
or toxic waste, substance or constituent material at any site that may require
remedial action, or any federal or state or foreign investigation evaluating
whether any remedial action is needed to respond to a release of any hazardous
or toxic waste, substance or constituent material into the environment.
7.19. ERISA. Neither the Borrower, any Subsidiary of the
Borrower nor any ERISA Affiliate maintains or contributes to any Plan other than
those listed on SCHEDULE 7.19.
8. EXCHANGING HOLDER REPRESENTATIONS. Each Exchanging Holder,
severally but not jointly, represents and warrants only as to itself as follows:
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8.1. AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by it of this Agreement and any Joinder Agreement, as
applicable,: (a) is within its power and authority and has been duly authorized
by all necessary action and (b) does not contravene the terms of its
organizational documents or any amendment thereof.
8.2. BINDING EFFECT. This Agreement and the applicable
Joinder Agreement, as the case may be, has been duly executed and delivered by
it and this Agreement and such Joinder Agreement constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
8.3. NO LEGAL BAR. The execution, delivery and
performance of this Agreement and the applicable Joinder Agreement, as the case
may be, by it will not violate any Requirement of Law applicable to it.
8.4. PURCHASE FOR OWN ACCOUNT. The Securities to be
acquired by it pursuant to this Agreement are being acquired for its own account
and with no intention of distributing or reselling such securities or any part
thereof in any transaction that would violate the securities laws of the United
States of America, or any state thereof, without prejudice, however, to its
right at all times to sell or otherwise dispose of all or any part of its
Securities, under an effective registration statement under the Securities Act,
or under an exemption from such registration available under the Securities Act,
and subject, nevertheless, to the disposition of its property being at all times
within its control.
8.5. ACCREDITED INVESTOR. Such Exchanging Holder is an
"accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act, by virtue, INTER ALIA, of its being a
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the Warrants or the shares of Common Stock
issuable upon exercise of the Warrants, with total assets in excess of
$5,000,000.
8.6. RESTRICTED SECURITIES. Such Exchanging Holder
understands that the Warrants acquired by it may not be sold, transferred or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Warrants or an available exemption from registration
under the Securities Act, the Warrants must be held indefinitely. In the absence
of a registration statement covering the Warrants, such Exchanging Holder will
sell, transfer or otherwise dispose of the Warrants only in a manner consistent
with its representations and agreements set forth herein.
8.7. FINANCIAL CONDITION. Such Exchanging Holder's
financial condition is such that it is able to bear the risk of holding the
Securities acquired by it for an indefinite period of time and can bear the loss
of its entire investment in the Securities.
8.8. EXPERIENCE. Such Exchanging Holder has such
knowledge and experience in financial and business matters and in making
high-risk investments of the type such as the
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Securities that it is capable of evaluating the merits and risks of the
acquisition of the Securities.
8.9. LEGEND. Such Exchanging Holder understands that the
certificates evidencing the Securities may bear a legend substantially in the
following form:
"[THIS SECURITY] [THE NOTE EVIDENCED HEREBY] HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2)
AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS [SECURITY] [NOTE] EXCEPT (A) TO THE
ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR (C) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER) AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS [SECURITY] [NOTE] IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND."
8.10. SUBORDINATION LEGENDS. Such Exchanging Holder
understands that the Notes will bear legends substantially in the following
form:
"THE TERMS OF THIS NOTE ARE SUBJECT TO THAT CERTAIN SUBORDINATION AGREEMENT
DATED AS OF JANUARY 30, 2003, AMONG SILICON VALLEY BANK, THE CREDITORS NAMED
THEREIN AND U.S. BANK NATIONAL ASSOCIATION, AS COLLATERAL AGENT AND FISCAL
AGENT, AS THE SAME MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME."
"THE TERMS OF THIS NOTE ARE FURTHER SUBJECT TO THAT CERTAIN COLLATERAL
AGENCY AND INTERCREDITOR AGREEMENT DATED AS OF FEBRUARY 21, 2003, AMONG THE
SYMPHONY FUNDS NAMED THEREIN, THE EXCHANGING HOLDERS NAMED THEREIN AND U.S. BANK
NATIONAL ASSOCIATION, AS COLLATERAL AGENT, AS THE SAME MAY BE AMENDED, MODIFIED
OR SUPPLEMENTED FROM TIME TO TIME."
8.11. ERISA. No part of the funds used by it to purchase
the Securities hereunder constitutes assets of an "employee benefit plan" (as
defined in section 3(3) of ERISA) or "plan" (as defined in section 4975 of the
Code).
8.12. BROKER'S, FINDER'S OR SIMILAR FEES. No brokerage
commissions, finder's fees or similar fees or commissions are payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with it or any action taken by it. Such Exchanging
Holder hereby indemnifies each other party against and
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agrees that it will hold each such party harmless from any claim, demand or
liability for any such brokerage commissions, finder's fees or similar fees or
commissions alleged to have been incurred by such Exchanging Holder with respect
to the transactions contemplated hereby.
8.13. GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT. No
approval, consent, compliance, exemption, authorization or other action by, or
notice to or filing with, any Governmental Authority or any other Person in
respect of any Requirement of Law, and no lapse of a waiting period under a
Requirement of Law, is required in connection with the execution, delivery or
performance by it of this Agreement or the transactions contemplated hereby.
8.14. NO SOLICITATION. Each Exchanging Holder hereby
acknowledges and agrees that it was not solicited to exchange its Convertible
Notes by the Borrower or any agent of the Borrower. Each Exchanging Holder
hereby further acknowledges and agrees that it initiated the negotiations that
have led to the execution and delivery of this Agreement and any Joiner
Agreement and the closing of the transactions contemplated hereby or thereby.
8.15. ACCESS TO INFORMATION; UNDUE PRESSURE. Each
Exchanging Holder hereby acknowledges and agrees that it had sufficient access
to adequate information relevant to this Agreement and the transactions
contemplated hereby and has had ample time to negotiate the terms of this
Agreement or the applicable Joinder Agreement, as the case may be, and consider
its investment decision regarding the exchange of the Convertible Notes for new
Securities as contemplated hereby or thereby. In addition, each Exchanging
Holder hereby further acknowledges and agrees that at no time during the
negotiation or execution of this Agreement was such Exchanging Holder told that
any counter-offer made by the Borrower was scheduled to expire by any particular
date. Furthermore, such Exchanging Holder hereby further acknowledges and agrees
that it has not experienced any pressure from the Borrower or any of its
Affiliates or agents to exchange its Convertible Notes for new Securities.
8.16. NO MINIMUM EXCHANGE. Each Exchanging Holder hereby
acknowledges and agrees that it understands that the execution of this Agreement
and the closing of the transactions contemplated hereby, including the exchange
of the Convertible Notes, is not contingent upon the exchange of a minimum
number or aggregate principal amount of Convertible Notes.
8.17. EXCHANGING HOLDERS SUBJECT TO SUBORDINATION
AGREEMENT, INTERCREDITOR AGREEMENT, ETC. Each Exchanging Holder hereby
acknowledges and agrees, including each Exchanging Holder who is a party to a
Joinder Agreement (who by the execution and delivery thereof shall be deemed to
acknowledge and agree), that it shall be bound by and subject to the terms of
the Subordination Agreement and the other Credit Documents, as each of the same
may be amended, modified or supplemented in accordance with its terms from time
to time. Without limiting the foregoing, each Exchanging Holder who is a party
to a Joinder Agreement shall, by the execution and delivery thereof, be deemed
to become a party to this Agreement and to the Intercreditor Agreement.
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9. CONTINUING COVENANTS. The Borrower covenants and agrees that for
so long as this Agreement is in effect and until each of the Notes and all other
Obligations incurred hereunder are paid in full, the Borrower will comply with
the following provisions and make the following representations and warranties:
9.1. NEWLY CREATED ENTITY. The Borrower shall (a) cause
any newly created Domestic Subsidiary (or any existing Domestic Subsidiary that
is not presently a Guarantor, but whose assets have a fair market value
exceeding $1,000,000) to become a Guarantor and pledge its assets (including its
stock) to secure the Obligations hereunder and (b) use reasonable efforts to
pledge all of its interest in a newly created joint venture to secure the
Obligations hereunder.
9.2. SEC FILINGS AND REPORTS. The Company will timely
file all documents required to be filed with the SEC pursuant to section 13 or
15 of the Exchange Act, and shall provide to the Collateral Agent within one day
of making any filing with the SEC copies, copies of all such documents,
including all financial statements of the Company filed with the SEC, and all
supplemental information packages given to securities analysts or investors.
9.3. REPURCHASE OF CONVERTIBLE SUBORDINATED NOTES. Other
than in connection with an exchange of Convertible Notes at an exchange rate
less than or equal to (a) $0.50 of principal amount of each new note to be
issued in connection therewith and (b) warrants to purchase 0.101695 shares of
Common Stock to be issued in connection therewith in exchange for each $1 of
principal amount of Convertible Notes to be exchanged, whereby any new
securities issued by the Borrower in connection with such exchange are not
senior to the Securities and do not otherwise have terms (taken as a whole) more
favorable to the holders thereof than the terms governing the Securities (a
"PERMITTED EXCHANGE"), from and after the Closing Date, except as contemplated
by this Agreement, the Borrower shall not repay principal of any outstanding
Convertible Note, and shall not repurchase or otherwise acquire (including in
any exchange or other acquisition of Convertible Notes in whole or in part for
other debt securities) any outstanding Convertible Note, at a purchase price
greater than 35% of the outstanding principal amount of such Convertible Note.
9.4. EXCHANGE OF CONVERTIBLE NOTES. In addition to the
limitations set forth in Section 9.3, prior to July 30, 2003, the Borrower shall
not effect any exchange of Convertible Notes other than pursuant to Permitted
Exchanges for up to the Maximum Exchange Amount of Convertible Notes. Any new
securities issued by the Company pursuant to a Permitted Exchange shall be in
minimum denominations of $1,000 principal amount and integral multiples in
excess thereof. The Borrower shall not effect any exchange of Convertible Notes
for new debt securities to be issued by the Borrower or any Affiliate of the
Borrower after July 30, 2003.
9.5. NON-PUBLIC INFORMATION. Except, in accordance with,
or as required by, the Credit Documents, Borrower will not furnish to any Holder
or any Exchanging Holder any non-public, confidential information regarding the
Company or any of its Subsidiaries.
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9.6. INSURANCE. The Borrower shall, at all times insure
all of the tangible Credit Security and carry such other business insurance in
such form and amounts as are customary and necessary for the operation of its
business, and the Borrower shall provide evidence of such insurance to the
Collateral Agent, of which evidence the Collateral Agent shall provide copies to
any Holder upon its written request therefor. All such insurance policies shall
name the Collateral Agent as an additional loss payee, and shall contain a
lenders loss payee endorsement in form reasonably acceptable to the Collateral
Agent.
9.7. LITIGATION COOPERATION. Should any suit or
proceeding be instituted by or against the Holders, the Exchanging Holders or
the Collateral Agent by a third party with respect to any Credit Security or in
any manner relating to the Borrower, the Borrower shall, without expense to the
Holders, the Exchanging Holders or the Collateral Agent, make available the
Borrower and its officers, employees and agents and the Borrower's books and
records, to the extent that the Holders or the Exchanging Holders, as
applicable, may deem them reasonably necessary in order to prosecute or defend
any such suit or proceeding by such third party.
9.8. BANKING RELATIONSHIP. In order for the Holders to
properly monitor their arrangement with the Borrower, the Borrower shall at all
times during the term of this Agreement maintain all of its depository,
operating and securities accounts at institutions which are have agreed to a
form of deposit account control agreement reasonably acceptable to the Holders.
9.9. SUBORDINATION OF INSIDE DEBT. All present and
future Indebtedness of the Company to its officers, directors and shareholders
other than to any lender under the Credit Facility ("INSIDE DEBT") shall, at all
times, be subordinated to the Obligations pursuant to a subordination agreement
on in form and substance satisfactory to the Required Holders. The Company
represents and warrants that there is no Inside Debt presently outstanding.
Prior to incurring any Inside Debt in the future, the Company shall cause the
person to whom such Inside Debt will be owed to execute and deliver to the
Holders and the Collateral Agent a subordination agreement in form and substance
satisfactory to the Holders and the Collateral Agent.
9.10. SUBORDINATION AGREEMENTS. The Borrower represents
and warrants that, other than the Senior Loans, the Convertible Notes, the Notes
and indebtedness secured by Permitted Liens or otherwise incurred in the
ordinary course of business, the Borrower has no Indebtedness for money
borrowed. Prior to incurring any additional indebtedness, other than in
connection with the Credit Facility or pursuant to any exchange of Convertible
Notes for new securities in a transaction not prohibited by Section 9.4, the
Borrower shall cause each new creditor to execute and deliver to the Holders and
the Collateral Agent a subordination agreement subordinating to the Obligations
the Indebtedness of the Borrower to any such creditor. The Borrower represents
that none of the existing subordinated debt outstanding under the Convertible
Notes Indenture is currently secured by any assets or property of the Borrower.
In addition, as further described in Section 10, the Borrower covenants that at
no time will any of the subordinated debt be secured by its assets or property.
Notwithstanding the foregoing, the Convertible Notes may be exchanged for new
securities pursuant to transactions
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not prohibited by Section 9.3 or Section 9.4, and such Indebtedness shall be
permitted hereunder and Liens securing such Indebtedness shall automatically be
deemed a "Permitted Lien" hereunder. The Borrower acknowledges and agrees that
the Obligations are and shall at all times constitute "Designated Senior
Indebtedness" of the Borrower with respect to each of its subordinated
creditors, including, without limitation, those subordinated creditors party to,
or who are entitled to the benefits of, the Convertible Notes Indenture. The
Borrower hereby represents, warrants and certifies that it has, on or about the
date hereof, delivered to the Trustee under the Convertible Notes Indenture a
notice in accordance with the terms of the Convertible Notes Indenture to
confirm that the Obligations constitute Designated Senior Indebtedness
thereunder. The Borrower hereby agrees that it will not materially modify any of
the terms and conditions of the Convertible Notes Indenture without the Required
Holders' prior written consent in each instance. Other than in connection with
any exchange of Convertible Notes for new securities in transactions not
prohibited by Section 9.3 or Section 9.4, the Borrower shall not make any
payments of any kind (including, without limitation, pursuant to section 13.1 of
the Convertible Notes Indenture) to, or for the benefit of, any of the
subordinated debt holders or the Trustee under the Convertible Notes Indenture
without the prior written consent of the Required Holders in each instance;
PROVIDED, HOWEVER, that the Company shall be permitted to pay the compensation
expenses of the Trustee (as such term is defined in the Convertible Notes
Indenture) in accordance with section 8.6 of the Convertible Notes Indenture,
and prior to the occurrence of an Event of Default, the Company may make
regularly scheduled payments of interest in accordance with the terms of the
Convertible Notes Indenture and may consummate one or more exchanges of
Convertible Notes pursuant to transactions not prohibited by Section 9.3 or
Section 9.4.
9.11. FURTHER ASSURANCES. The Borrower agrees, at its
expense, on request by any of the Holders, to execute all documents and take all
actions, as the Holders or the Collateral Agent may deem reasonably necessary or
useful in order to perfect and maintain the Holders' perfected security interest
in the Credit Security, and in order to fully consummate the transactions
contemplated by this Agreement.
10. CONTINGENT COVENANTS. The Borrower makes the following
representations and warranties and covenants and agrees that, following the
termination or material modification (in the reasonable discretion of the
Required Holders) of the Senior Loan Agreement (PROVIDED, HOWEVER, that neither
a refinancing or renewal of such Indebtedness incurred pursuant to the Senior
Loan Agreement of up to $40,000,000 nor any amendment or modification to the
financial covenants contained in the Senior Loan Agreement shall, in and of
itself, constitute a termination or material modification of the Senior Loan
Agreement), for so long as this Agreement is in effect and until each of the
Notes and all other Obligations incurred hereunder are paid in full, the
Borrower shall not, without the Required Holders' prior written consent (which
consent will not be unreasonably withheld or delayed), do any of the following:
(i) merge or consolidate with another corporation or entity if such merger or
consolidation results in a Change of Control; PROVIDED, HOWEVER, that iBasis
Global and the Guarantor may (x) merge into the Company or (y) merge together;
(ii) acquire any assets, except in the ordinary course of business; (iii) enter
into any other transaction outside the ordinary course of business; (iv) sell or
transfer any Credit Security, except for the sale of finished Inventory in the
ordinary course of the Borrower's business, and except for the sale of obsolete
or unneeded Equipment in the ordinary course of
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business; (v) store any Inventory or other Credit Security with any warehouseman
or other third party other than in the ordinary course of business; (vi) other
than the sale of finished Inventory in the ordinary course of Borrower's
business in accordance with Section 10(iv) above, sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis; (vii)
other than as permitted by the Senior Loan Agreement or the Security Agreement
or pursuant to transactions not prohibited by Section 9.4, use any of its assets
as security for any Indebtedness; (viii) other than travel advances and similar
loans to employees made in the ordinary course of business and the payment of
salaries and the granting of other employee benefits in the ordinary course of
business, make any loans of any money or transfer any of its assets, including
loans and transfers to its Affiliates; (ix) other than under the Senior Loan
Agreement, the Notes or in accordance with Sections 9.3 and 9.4, incur any debts
outside the ordinary course of business; (x) guarantee or otherwise become
liable with respect to the obligations of another party or entity; (xi) enter
into any Lien with respect to a Capitalized Lease other than a Permitted Lien;
(xii) pay or declare any dividends on Borrower's stock (except for dividends
payable solely in stock of the Borrower and dividends payable by iBasis Global
to the Company); (xiii) other than a cashless or "net" exercise of employee
stock options pursuant to plans existing on the date hereof or otherwise
approved by Borrower's board of directors, redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of the Borrower's stock; (xiv) enter into
any agreement that restricts dividends to be paid by any Subsidiary of the
Borrower; (xv) make any change in the Borrower's capital structure which would
have a material adverse effect on the Borrower or on the prospect of repayment
of the Obligations; (xvi) make any Investment other than Permitted Investments;
or (xvii) dissolve or elect to dissolve. Transactions permitted by the foregoing
provisions of this Section 10 are only permitted if no Default or Event of
Default would occur as a result of such transaction. Notwithstanding anything to
the contrary contained in this Section 10, nothing in this Section 10 shall
prohibit the Borrower from repurchasing Convertible Notes or exchanging new
securities for Convertible Notes in accordance with Sections 9.3 and 9.4, and
the consummation of such transactions shall not be deemed to result in a breach
of this Section 10.
11. EVENTS OF DEFAULT; REMEDIES.
11.1. EVENTS OF DEFAULT. The following events are
referred to as "EVENTS OF DEFAULT":
11.1.1. PAYMENTS. The Borrower shall (a) default in the
payment when due of any principal of the Notes or (b) default, and such default
shall continue for three or more Business Days, in the payment when due of any
interest on the Notes or any other amounts owing hereunder or under any other
Credit Document.
11.1.2. REPRESENTATIONS, ETC. Any representation, warranty
or certification made by any Obligor herein or in any other Credit Document or
in any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove to be untrue in any material respect as of the
date made or deemed made.
11.1.3. COVENANTS. Any Obligor shall (a) default in the due
performance or observance by it of any covenant or agreement contained in
Section 9 or Section 10, or (b)
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default in the due performance or observance by it of any covenant or agreement
(other than those referred to in Sections 11.1.1 or clause (a) of this Section
11.1.3) contained in this Agreement or any other Credit Document and such
default shall continue unremedied for a period of at least 30 days after written
notice to the defaulting party by the Demand Holders or the Collateral Agent.
11.1.4. DEFAULT UNDER OTHER AGREEMENTS. The Borrower or any
of its Subsidiaries shall (a) default in payment of the principal of any
Indebtedness (other than the Obligations) at the final maturity thereof beyond
the period of grace, if any, applicable thereto; or (b) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause any such Indebtedness
to become due prior to its stated maturity; or (c) any such Indebtedness of the
Borrower or any of its Subsidiaries shall be declared to be due and payable
prior to the stated maturity thereof; or (d) an event of default under the
Senior Loan Agreement occurs and is continuing or (e) an event of default under
the Convertible Notes Indenture occurs and is continuing; PROVIDED, HOWEVER,
that it shall not constitute an Event of Default pursuant to this Section 11.1.4
unless the aggregate amount of all Indebtedness referred to in clauses (a), (b)
and (c) above exceeds at any one time $2,500,000 individually or in the
aggregate.
11.1.5. BANKRUPTCY, ETC. The Borrower or any of its
Subsidiaries shall commence a voluntary case under Title 11 of the United States
Code (the "BANKRUPTCY CODE"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the Borrower or any of
its Subsidiaries; or the Borrower or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries; or any such proceeding is commenced against the Borrower or
any of its Subsidiaries which remains undismissed for a period of 60 days; or
the Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; the Borrower or any of its Subsidiaries suffers any appointment of any
custodian or receiver for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the Borrower or any of its
Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by the Borrower or any of its Subsidiaries for the
purpose of effecting any of the foregoing.
11.1.6. ERISA. (a) Any Termination Event shall occur with
respect to any Benefit Plan of the Borrower, any of its Subsidiaries or any
ERISA Affiliate, (b) any Accumulated Funding Deficiency, whether or not waived,
shall exist with respect to any such Benefit Plan, (c) any Person shall engage
in any Prohibited Transaction involving any such Benefit Plan, (d) the Borrower,
any of its Subsidiaries or any ERISA Affiliate shall be in "default" (as defined
in ERISA section 4219(c)(5)) with respect to payments owing to any such
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Benefit Plan that is a Multiemployer Plan as a result of such Person's complete
or partial withdrawal (as described in ERISA sections 4203 or 4205) therefrom,
(e) the Borrower, any of its Subsidiaries or any ERISA Affiliate shall fail to
pay when due an amount that is payable by it to the PBGC or to any such Benefit
Plan under Title IV of ERISA, (f) a proceeding shall be instituted by a
fiduciary of any such Benefit Plan against the Borrower, any of its Subsidiaries
or any ERISA Affiliate to enforce ERISA section 515 and such proceeding shall
not have been dismissed within 30 days thereafter or (g) any other event or
condition shall occur or exist with respect to any such Benefit Plan, except
that no event or condition referred to in clauses (a) through (g) shall
constitute an Event of Default if it, together with all other such events or
conditions at the time existing, has not subjected, and in the reasonable
determination of the Demand Holders will not subject, the Borrower or any of its
Subsidiaries to any liability that, alone or in the aggregate with all such
liabilities for all such Persons, exceeds $2,500,000.
11.1.7. ENFORCEABILITY, ETC. Any Credit Document shall
cease for any reason (other than the scheduled termination thereof in accordance
with its terms) to be enforceable in accordance with its terms or in full force
and effect; or any party to any Credit Document (other than one or more of the
Exchanging Holders) shall so assert in a judicial or similar proceeding; or the
security interests created by any Credit Document shall cease to be enforceable
and of the same effect and priority purported to be created thereby; or any
Guarantor or any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such Guarantee or any Guarantor
shall default in the due performance or observance of any covenant or agreement
on its part to be performed pursuant to such Guarantee and such default (other
than a payment default) shall continue unremedied for a period of at least 30
days after written notice to the defaulting party by any Holder or the
Collateral Agent.
11.1.8. JUDGMENTS. A final judgment (a) which, with other
outstanding final judgments against the Borrower and its Subsidiaries, exceeds
an aggregate of $2,500,000 in excess of applicable insurance coverage shall be
rendered against the Borrower or any of its Subsidiaries, or (b) which grants
injunctive relief that results, or creates a material risk of resulting, in a
Material Adverse Effect and in either case if (i) within 30 days after entry
thereof, such judgment shall not have been discharged or execution thereof
stayed pending appeal or (ii) within 30 days after the expiration of any such
stay, such judgment shall not have been discharge.
11.2. CERTAIN ACTIONS FOLLOWING AN EVENT OF DEFAULT.
11.2.1. SPECIFIC PERFORMANCE; EXERCISE OF RIGHTS. Upon the
occurrence and during the continuance of an Event of Default, but only at the
written direction of the Demand Holders, the Collateral Agent shall proceed to
protect and enforce the Holders' rights by suit in equity, action at law and/or
other appropriate proceeding, either for specific performance of any covenant or
condition contained in this Agreement or any other Credit Document or in any
instrument or assignment delivered to the Holders pursuant to this Agreement or
any other Credit Document, or in aid of the exercise of any power granted in
this Agreement or any other Credit Document or any such instrument or
assignment.
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11.2.2. ACCELERATION. Upon the occurrence and during the
continuance of an Event of Default and upon the written request of the Demand
Holders, the Collateral Agent shall by notice in writing to the Borrower declare
all or any part of the unpaid balance of the Obligations then outstanding to be
immediately due and payable; PROVIDED, HOWEVER, that if a Bankruptcy Default
shall have occurred, the unpaid balance of the Obligations shall automatically
become immediately due and payable.
11.2.3. ENFORCEMENT OF PAYMENT; CREDIT SECURITY; SETOFF.
Upon the occurrence and during the continuance of an Event of Default, but only
at the written direction of the Demand Holders, the Collateral Agent shall
proceed to enforce payment of the Obligations in such manner as the Demand
Holders may elect and to realize upon any and all rights of the Holders under
the Credit Documents. The Holders may offset and apply toward the payment of the
Obligations (and/or toward the curing of any Event of Default) any Indebtedness
from the Holders to the respective Obligors, regardless of the adequacy of any
security for the Obligations. The Holders shall have no duty to determine the
adequacy of any such security in connection with any such offset.
11.2.4. CUMULATIVE REMEDIES. To the extent not prohibited
by applicable law which cannot be waived, all of the Holders' rights hereunder
and under each other Credit Document shall be cumulative.
11.3. ANNULMENT OF EVENTS OF DEFAULT. Once an Event of
Default has occurred, such Event of Default shall be deemed to exist and be
continuing for all purposes of the Credit Documents until the Required Holders
or the Collateral Agent (with the consent of the Required Holders) shall have
waived such Event of Default in writing, stating in writing that the same has
been cured to such Holders' reasonable satisfaction or entered into an amendment
to this Agreement which by its express terms cures such Event of Default, at
which time such Event of Default shall no longer be deemed to exist or to have
continued. No such action by the Holders or the Collateral Agent shall extend to
or affect any subsequent Event of Default or impair any rights of the Holders
upon the occurrence thereof.
11.4. WAIVERS. To the extent that any such waiver is not
prohibited by the provisions of applicable law that cannot be waived, each of
the Obligors waives:
(a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by this Agreement or any
other Credit Document), protests, notices of protest and notices of
dishonor;
(b) any requirement of diligence or promptness on the part of
the Collateral Agent or any Holder in the enforcement of its rights under
this Agreement or any other Credit Document;
(c) any and all notices of every kind and description which may
be required to be given by any statute or rule of law; and
(d) any defense (other than indefeasible payment in full) which
it may now or
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hereafter have with respect to its liability under this Agreement or any
other Credit Document or with respect to the Obligations.
11.5. ACCELERATION FOLLOWING AN EVENT OF DEFAULT UNDER
THE SENIOR LOAN AGREEMENT. In the event of a declaration of acceleration by the
Demand Holders (an "APPLICABLE ACCELERATION") because an Event of Default set
forth in Section 11.1.4 above has occurred and is continuing under the Senior
Loan Agreement (a "SENIOR LOAN EVENT OF DEFAULT") such Applicable Acceleration
shall be automatically annulled if the holders of such Senior Loans have waived
such Senior Loan Event of Default within 20 days thereafter and if (a) the
annulment of such Senior Loan Event of Default would not conflict with any
judgment or decree of a court of competent jurisdiction and (b) all existing
Events of Default, except the non-payment of principal or interest on the Notes
hereunder which shall have become due solely because of such Applicable
Acceleration, have been cured or waived.
12. COLLATERAL AGENT.
12.1. APPOINTMENT OF COLLATERAL AGENT. Each of the
Exchanging Holders hereby appoints and authorizes the Collateral Agent to act
for them as their collateral agent in connection with the transactions
contemplated by this Agreement and the other Credit Documents on the terms set
forth herein and therein, and hereby agrees that all actions in connection with
the Credit Security and the enforcement or exercise of any remedies in respect
of the Obligations shall be taken by the Collateral Agent pursuant to this
Agreement and the Intercreditor Agreement on behalf of the Holders.
12.2. ACTIONS BY THE COLLATERAL AGENT. The Collateral
Agent shall not take any action under this Agreement or the other Credit
Documents, including the enforcement or exercise of any remedies in respect of
the Obligations, and shall not be obligated to take any such action, except to
the extent expressly specified in a written notice received by the Collateral
Agent signed by the Required Holders (or, pursuant to Sections 11.2 or 11.5
only, signed by the Demand Holders); PROVIDED, HOWEVER, that the Collateral
Agent may execute releases and other collateral termination documents with
respect to assets disposed of by the Obligors as permitted by Section 10. All
actions taken by the Collateral Agent in accordance with this Section 12.2 shall
be binding upon all Holders; PROVIDED, HOWEVER, that the foregoing shall not be
deemed a waiver of any Holder's rights against any other party hereto with
respect to the taking of such action.
12.3. EXECUTION OF ADDITIONAL DOCUMENTS. The Collateral
Agent is hereby directed and authorized to execute and deliver each of the
following documents (collectively, the "ADDITIONAL DOCUMENTS"): each Guarantee,
the Subordination Agreement, the Security Agreement, the Intercreditor
Agreement, the other Collateral Documents and any subsequent joinder agreements,
amendments, modifications or supplements to any of the foregoing. Each of the
Exchanging Holders hereby consents to and accepts the terms of each of the
Additional Documents and the execution and delivery thereof by the Collateral
Agent. Whether or not so stated therein, in entering into any such Additional
Documents, and in performing or observing any of the terms of any such
Additional Documents, and otherwise in respect of any matter arising under or in
respect of any such Additional Documents, the
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Collateral Agent shall enjoy and shall be protected by each of the rights,
immunities, indemnities and other protections set forth in this Agreement; and
any obligations, duties or liabilities to which the Collateral Agent may be or
become subject under or in respect of any such Additional Documents shall be
subject to and limited by the terms of this Agreement (including, without
limitation, the terms of this Section 12). In no event shall the Collateral
Agent have any liability under any such Additional Documents that it would not
have, nor shall the Collateral Agent be obligated to take any action thereunder
that it would not be required to take, under the terms of this Agreement. It is
hereby expressly acknowledged that the Collateral Agent has not evaluated nor
negotiated any of the terms of this Agreement or any such Additional Documents
on behalf of the Exchanging Holders, has not performed any investigation of
otherwise advised the Exchanging Holders in respect of this Agreement or any
such Additional Documents and has no responsibility for terms of this Agreement
or any such Additional Documents, or the sufficiency or validity hereof or
thereof. The Collateral Agent is further authorized and directed to execute,
upon the request of Borrower, such amendments to the Collateral Documents and
such other instruments including, but not limited to, intercreditor agreements
in such form as may be reasonably requested by the Borrower, as may be necessary
to secure, on a pari passu basis (as to seniority and priority) with the
security interests granted to new Holders in connection with this Agreement, the
obligations of the Borrower, in respect of new securities issued by the Company
pursuant to exchange transactions not prohibited by Section 9.4.
12.4. INFORMATION REGARDING OBLIGORS, ETC. Each of the
Exchanging Holders expressly waives any duty which may now or hereafter exist on
the part of the Collateral Agent to disclose to the Exchanging Holders any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of the Obligors or their
Affiliates or their properties or management, whether now or hereafter known by
the Collateral Agent other than matters related to the disposition of the Credit
Security. Each of the Exchanging Holders represents, warrants and agrees that it
assumes sole responsibility for obtaining from the Obligors all information
concerning this Agreement and all other Credit Documents and all other
information as to the Obligors and their Affiliates or their properties or
management as such Exchanging Holder deems necessary or desirable.
12.5. CONCERNING THE COLLATERAL AGENT.
12.5.1. ACTION IN GOOD FAITH, ETC. The Collateral Agent and
its officers, directors, employees and agents shall be under no duty to act
except as expressly set forth in Section 12.2 and shall have no liability to the
Holders for any action or failure to act taken or suffered without willful
misconduct or gross negligence. The Collateral Agent shall in all cases be
entitled to rely, and shall not be liable to the Holders for any action taken in
reliance, on instructions given to the Collateral Agent in accordance with
Section 12.2.
12.5.2. NO IMPLIED DUTIES, ETC. The Collateral Agent shall
have and may exercise such powers as are specifically delegated to the
Collateral Agent under this Agreement together with all other powers as may be
incidental thereto. The Collateral Agent shall have no implied duties to any
Person or any obligation to take any action under this Agreement or any
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other Collateral Document except for any action specifically provided for in
this Agreement or any other Collateral Document to be taken by the Collateral
Agent.
12.5.3. VALIDITY, ETC. The Collateral Agent shall not be
responsible to any Holder (a) for the legality, validity, enforceability or
effectiveness of this Agreement or any Credit Document, (b) for any recitals,
reports, representations, warranties or statements contained in or made in
connection with this Agreement or any Credit Document, (c) for the existence or
value of any assets included in the Credit Security, (d) for the effectiveness
of any lien purported to be included in the Credit Security or (e) for the
specification or failure to specify any particular assets to be included in the
Credit Security.
12.5.4. COMPLIANCE. The Collateral Agent shall not be
obligated to ascertain or inquire as to the performance or observance of any of
the terms of this Agreement or any Collateral Document, including the occurrence
of any Event of Default.
12.5.5. EMPLOYMENT OF AGENTS AND COUNSEL. The Collateral
Agent may execute any of its duties as Collateral Agent under this Agreement by
or through employees, agents and attorneys-in-fact and shall not be responsible
to any Holder or any Obligor (except as to money or securities received by the
Collateral Agent or the Collateral Agent's authorized agents) for the default or
misconduct of any such agents or attorneys-in-fact selected by the Collateral
Agent with reasonable care. The Collateral Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and shall be reimbursed by the Obligors for all reasonable
attorneys' fees and costs incurred in connection with its responsibilities
hereunder.
12.5.6. RELIANCE ON DOCUMENTS AND COUNSEL. The Collateral
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any affidavit, certificate, cablegram, consent, instrument, letter, notice,
order, document, statement, facsimile, telegram, telex or teletype message or
writing believed in good faith by the Collateral Agent to be genuine and correct
and to have been signed, sent or made by the Person in question, including
without limitation any telephonic or oral statement made by such Person and,
with respect to legal matters, upon the opinion of counsel selected by the
Collateral Agent.
12.5.7. COLLATERAL AGENT'S REIMBURSEMENT. Each of the
Holders shall, jointly and severally, reimburse the Collateral Agent for any
expenses not reimbursed by the Obligors within 30 days (without limiting their
obligations to make such reimbursement): (a) for which the Collateral Agent is
entitled to reimbursement by the Obligors under this Agreement, and (b) after
the occurrence of an Event of Default, for any other expenses incurred by the
Collateral Agent on their behalf in connection with the enforcement of their
rights under this Agreement or any other Collateral Document.
12.6. COLLATERAL AGENT INDEMNITY. The Holders shall,
jointly and severally, be responsible for indemnifying and holding harmless the
Collateral Agent and its directors, officers, employees, agents, professional
advisers and representatives (to the extent that the Collateral Agent is not
indemnified by the Obligors, and without in any way limiting the Obligations of
the Obligors so to indemnify the Collateral Agent pursuant to Section 14.1
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or any other Credit Document) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against the Collateral Agent and its
directors, officers, employees, agents, professional advisers and
representatives relating to or arising out of this Agreement, the Credit
Security, any other Collateral Document, the transactions contemplated hereby or
thereby, or any action taken or omitted by the Collateral Agent in connection
with any of the foregoing, PROVIDED, HOWEVER, that the foregoing shall not
extend to actions or omissions which are taken by the Collateral Agent with
gross negligence or willful misconduct. The foregoing indemnity shall survive
the expiration of this Agreement or any of the agreements evidencing the
Obligations. All amounts due under this Section 12.6 shall be immediately
payable on written demand therefor.
12.7. COLLATERAL AGENT'S RESIGNATION OR REMOVAL. The
Collateral Agent may resign at any time by giving at least 60 days' prior
written notice of its intention to do so to each of the Holders and to the
Borrower and upon the appointment by the Required Holders of a successor
Collateral Agent reasonably satisfactory to the Borrower; PROVIDED, HOWEVER, if
at the time of such appointment, an Event of Default shall have occurred, the
consent of the Borrower to the appointment of a successor Collateral Agent shall
not be required. If no successor Collateral Agent shall have been so appointed
and shall have accepted such appointment within 45 days after the retiring
Collateral Agent's giving of such notice of resignation, then the retiring
Collateral Agent may with the consent of the Borrower, which consent shall not
be unreasonably withheld, appoint a successor Collateral Agent which shall be a
bank or a trust company organized under the laws of the United States of America
or any state thereof and having a combined capital, surplus and undivided profit
of at least $100,000,000; PROVIDED, HOWEVER, if at the time of such appointment,
an Event of Default shall have occurred, the consent of the Borrower to the
appointment of a successor Collateral Agent shall not be required. Any
Collateral Agent may be removed upon the written request of the Required
Holders, which request shall also appoint a successor Collateral Agent
reasonably satisfactory to the Borrower; PROVIDED, HOWEVER, if at the time of
such appointment, an Event of Default shall have occurred, the consent of the
Borrower to the appointment of a successor Collateral Agent shall not be
required. Upon the appointment of a new Collateral Agent hereunder, the term
"Collateral Agent" shall for all purposes of this Agreement and any other
Collateral Document thereafter mean such successor. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, or the removal
hereunder of any Collateral Agent, the provisions of this Agreement or any other
Collateral Document shall continue to inure to the benefit of such Collateral
Agent as to any actions taken or omitted to be taken by it while it was
Collateral Agent under this Agreement or any other Collateral Document.
12.8. MERGER, CONVERSION OR CONSOLIDATION. Any
corporation into which the Collateral Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Collateral Agent shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Collateral Agent, shall be the successor of the Collateral Agent
hereunder; PROVIDED that such corporation shall be otherwise qualified and
eligible under this Agreement, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
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12.9. REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL
AGENT. The Collateral Agent represents and warrants to each of the other parties
hereto that:
12.9.1. AUTHORITY. It has all necessary power and has taken
all necessary action to enter into and perform this Agreement and to make this
Agreement the legal, valid, binding and enforceable obligation it purports to
be.
12.9.2. AUTHORIZATION AND ENFORCEABILITY. It has taken all
corporate action required to execute, deliver and perform this Agreement and
each Additional Document to which it is party. Each of this Agreement and each
Additional Document constitutes its legal, valid and binding obligation and is
enforceable against the Collateral Agent in accordance with their respective
terms.
12.9.3. NO LEGAL OBSTACLE TO AGREEMENT. Neither the
execution and delivery of this Agreement nor the consummation of any transaction
contemplated hereby nor the fulfillment of the terms hereof or of any other
agreement or instrument referred to herein has constituted or resulted in, or
will constitute or result in, a breach of the provisions of any agreement,
instrument, deed or lease to which it is a party or by which it is bound or of
its charter or by-laws, or the violation of any law, judgment, decree or
governmental or administrative order, rule or regulation applicable to it. No
approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by the Collateral Agent in connection with the execution,
delivery and performance of this Agreement.
13. PRIOR CLAIMS EXTINGUISHED. Except for the obligations to be
performed by the Borrower and the other Obligors on or after the date hereof as
expressly stated in this Agreement and the other Credit Documents, each of the
Exchanging Holders unconditionally releases, waives and forever discharges any
and all liabilities, obligations, duties, promises or indebtedness of any kind
of the Company or any other Obligor to such Exchanging Holder on account of any
past or presently existing condition, act, omission, event, contract, liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind which relates in any manner to the Convertible Notes being
exchanged in connection herewith, the Convertible Notes Indenture, but solely
with respect to the Convertible Notes being exchanged herewith, or any other
document executed in connection therewith, but solely with respect to the
Convertible Notes being exchanged herewith.
14. GENERAL.
14.1. PAYMENT OF EXPENSES, ETC. The Borrower agrees: (a)
subject to the provisions of Section 6 hereof and whether or not the
transactions herein contemplated are consummated, to pay its share of all
reasonable out-of-pocket costs and expenses of the Exchanging Holders and the
Collateral Agent in connection with the negotiation, preparation, execution and
delivery of the Credit Documents and the documents and instruments referred to
therein and any amendment, waiver or consent relating thereto, together with, in
each case, the reasonable fees and disbursements of counsel for the Exchanging
Holders and the Collateral Agent and any enforcement (whether through
negotiations, legal process or otherwise) of the
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Credit Documents and the documents and instruments referred to therein
(including the reasonable fees and disbursements of counsel for the Exchanging
Holders and the Collateral Agent); (b) to pay the fees of the Collateral Agent
as separately agreed to by the Collateral Agent and the Borrower; (c) to pay and
hold each of the Exchanging Holders and Holders harmless from and against any
and all present and future stamp and other similar taxes with respect to the
foregoing matters and save each of the Exchanging Holders and Holders harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Exchanging
Holder or Holder, as applicable) to pay such taxes; and (d) to indemnify each
Exchanging Holder, each Holder, the Collateral Agent and their respective
officers, directors, employees, representatives, partners, counsel, advisors and
agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them with respect to
the entering into and/or performance of any Document or the consummation of any
transactions contemplated in any Document (including as a result of, or arising
out of, any investigation, litigation or other proceeding or preparation of a
defense in connection therewith (whether or not any Exchanging Holder, any
Holder or the Collateral Agent is a party thereto and whether or not any such
investigation, litigation or other proceeding is between or among any Exchanging
Holder, any Holder, or the Collateral Agent any Obligor or any third Person or
otherwise)), and in each case including the reasonable fees and disbursements of
counsel, but excluding in each case any such losses, liabilities, claims,
damages or expenses to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified.
14.2. NOTICES. Except as otherwise expressly provided
herein, all notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed delivered (a) two business
days after being sent by registered or certified mail, return receipt requested,
postage prepaid or (b) one business day after being sent via a reputable
nationwide overnight courier service guaranteeing next business day delivery, in
each case to the intended recipient as set forth below:
If to the Borrower, at 20 Second Avenue, Burlington, MA 01803, Attention:
Chief Financial Officer, or at such other address or addresses as may have been
furnished in writing by the Company to the Holders and the Collateral Agent,
with a copy to Johan V. Brigham, Bingham McCutchen LLP, 1900 University Avenue,
East Palo Alto, CA 94303-2223; and
If to the Exchanger, at JMG Capital Partners, 1 Sansome Street, 39th Floor,
San Francisco, CA 94104, Attention: David Rubinstein, or at such other address
or addresses as may have been furnished to the Borrower and the Collateral Agent
in writing by the Exchanger: and
If to any other Exchanging Holder, at the address set forth in the
applicable Joinder Agreement or at such other address or addresses as may have
been furnished to the Borrower in writing by such Exchanging Holder.
If to the Collateral Agent, at One Federal Street, 3rd Floor, Boston, MA
02110, Attention: Corporate Trust Services, Re: iBasis, with a copy to Robert J.
Coughlin, Esq., Nixon Peabody LLP, 101 Federal Street, Boston, MA 02110; or at
such other address or addresses as may have been furnished to the Borrower and
the Exchanging Holders by the Collateral Agent.
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Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including personal delivery,
messenger service, facsimile, first class mail or electronic mail), but no such
notice, request, consent or other communication shall be deemed to have been
duly given unless and until it is actually received by the party for whom it is
intended. Any party may change the address to which notices, requests, consents
or other communications hereunder are to be delivered by giving the other
parties notice in the manner set forth in this Section 14.2.
14.3. ASSIGNMENTS; PARTICIPATIONS.
14.3.1. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; PROVIDED, HOWEVER, that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of each Holder.
14.4. AMENDMENT OR WAIVER. Neither this Agreement nor any
other Document nor any terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Obligors party thereto and the Required
Holders, and unless an executed copy thereof has been provided to and
acknowledged in writing by the Collateral Agent (and, in the case of any other
Document, subject to any other requirements applicable to such amendment,
change, waiver, discharge or termination set forth in such Document; PROVIDED,
HOWEVER, that no such change, waiver, discharge or termination shall, without
the consent of each Holder directly affected thereby, (a) extend the Maturity
Date (any waiver of any prepayment of, or the method of application of any
prepayment of, the Notes shall not constitute any such extension), or reduce the
rate or extend the time of payment of interest (other than as a result of
waiving the applicability of any post-default increase in interest rates)
thereon, or reduce the principal amount thereof, (b) amend, modify or waive any
provision of this Section 14.4, (c) reduce the percentage specified in, or
otherwise modify, the definition of "Required Holders" or "Demand Holders", (d)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement, (e) establish any new obligations for any
Holder not relating to the subject matter of the Agreement or (f) release all or
substantially all the collateral or guarantees with respect to the Obligations;
PROVIDED, FURTHER, HOWEVER, that no change, waiver, discharge or termination
that alters the rights, immunities or duties of the Collateral Agent shall take
effect without its express written consent. Notwithstanding anything to the
contrary in this Agreement, all Holders of Notes shall be deemed to be
third-party beneficiaries of all of the provisions of this Agreement that relate
to Holders of Notes, including but not limited to any provisions that may only
be waived or consented to by the "Requisite Holders", or that may be initiated
only by the "Demand Holders", with such groups being determined for all purposes
of this Agreement with regard to all Holders of Notes, whether issued pursuant
to this Agreement, the Symphony Exchange Agreement, or otherwise.
14.5. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay
on the part of any Exchanging Holder, any Holder or Collateral Agent in
exercising any right, power or privilege hereunder or under any other Document
and no course of dealing between any Obligor, Collateral Agent and any Holder or
Exchanging Holder shall operate as a waiver
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thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which a Holder or
Exchanging Holder would otherwise have. No notice to or demand on any Obligor in
any case shall entitle any Obligor to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Holders or the Exchanging Holders to any other or further action in any
circumstances without notice or demand.
14.6. NO STRICT CONSTRUCTION. The parties have
participated jointly in the negotiation and drafting of this Agreement and the
other Documents with counsel sophisticated in financing transactions. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement and the other Documents shall be construed as if drafted jointly by
the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement and the other Documents.
14.7. CALCULATIONS; COMPUTATIONS. The financial
statements to be furnished to the Holders pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as set forth in the notes thereto or as otherwise disclosed in
writing by the Borrower to the Holders).
14.8. INTERPRETATION; GOVERNING LAW; ETC.
14.8.1. Time is (and shall be) of the essence in this
Agreement and the other Documents. All covenants, agreements, representations
and warranties made in this Agreement or any other Document or in certificates
delivered pursuant hereto or thereto shall be deemed to have been relied on by
each Exchanging Holder and the Collateral Agent, notwithstanding any
investigation made by any such party on its behalf, and shall survive the
execution and delivery to each such party hereof and thereof. The invalidity or
unenforceability of any provision hereof shall not affect the validity or
enforceability of any other provision hereof, and any invalid or unenforceable
provision shall be modified so as to be enforced to the maximum extent of its
validity or enforceability. This Agreement and the other Documents constitute
the entire understanding of the parties with respect to the subject matter
hereof and thereof and supersede all prior and contemporaneous understandings
and agreements, whether written or oral.
14.8.2. This Agreement, and any issue, claim or proceeding
arising out of or relating to this Agreement or any other Document or the
conduct of the parties hereto, whether now existing or hereafter arising and
whether in contract, tort or otherwise, shall be governed by, and shall be
construed and enforced in accordance with, the laws of The Commonwealth of
Massachusetts, without regard to the principles of conflicts of laws. Any legal
action or proceeding with respect to this Agreement or any other Document may be
brought in any state or federal court sitting in the Commonwealth of
Massachusetts, and, by execution and delivery of this Agreement and the other
Documents, as applicable, each Obligor irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts for such action or proceeding. Each Obligor
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further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to each Obligor at its
address for notices pursuant to Section 14.2, such service to become effective
15 days after such mailing. Nothing herein shall affect the right of any Holder
or Exchanging Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any Obligor in any other
jurisdiction.
14.8.3. Each Obligor irrevocably waives any objection which
it may now or hereafter have to the venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Document brought in the courts referred to in Section 14.8.2 above and further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
14.8.4. Each of the parties to this Agreement waives to the
extent not prohibited by applicable law that cannot be waived any right it may
have to claim or recover in any legal action or proceeding any special,
exemplary, punitive or consequential damages.
14.9. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH OF THE PARTIES HERETO WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE
SUBJECT MATTER HEREOF OR THEREOF OR ANY OBLIGATION OR IN ANY WAY CONNECTED WITH
THE DEALINGS OF THE EXCHANGING HOLDERS, THE HOLDERS OR THE COLLATERAL AGENT, THE
BORROWER OR ANY OTHER OBLIGOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT, TORT OR
OTHERWISE. Each of the Borrower and the other Obligors acknowledges that it has
been informed by the Exchanging Holders that the foregoing sentence constitutes
a material inducement upon which each of the Exchanging Holders and Collateral
Agent has relied and will rely in entering into this Agreement and any other
Document. Any party hereto may file an original counterpart or a copy of this
Agreement with any court as written evidence of the consent of each of the
parties hereto to the waiver of their rights to trial by jury.
14.10. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower, the Collateral Agent, each Holder and each Exchanging Holder.
14.11. EXECUTION. This Agreement shall become effective on
the date (the "EFFECTIVE DATE") on which each of the Borrower, each other
Obligor, the Collateral Agent and the Exchanger shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to one
another. With respect to each Joinder Agreement, such
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agreement's "Effective Date" shall be the date on which each of the applicable
Exchanging Holders and the Collateral Agent shall have signed a copy of such
Joinder Agreement (whether the same or different copies) and shall have
delivered the same to one another.
14.12. HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
14.13. SURVIVAL. All indemnities set forth herein
including, without limitation, in Sections 12.6 or 14.1, shall survive the
execution and delivery of this Agreement and the purchase, sale and repayment of
the Notes.
14.14. BENEFIT OF AGREEMENT. Each beneficial holder of the
Notes shall be entitled to the benefits of, and subject to the obligations of, a
Holder under this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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Each of the parties hereto has caused a counterpart of this Agreement to be
duly executed and delivered as of the date first above written.
THE BORROWER:
iBASIS, INC.
By: /s/ Ofer Gneezy
----------------------------------
Name: Ofer Gneezy
Title: President & Chief Executive
Officer
iBASIS GLOBAL, INC.
By: /s/ Richard Tennant
----------------------------------
Name: Richard Tennant
Title: Treasurer and Chief
Financial Officer
THE GUARANTOR:
iBASIS SECURITIES CORPORATION
By: /s/ Gordon VanderBrug
----------------------------------
Name: Gordon VanderBrug
Title: Executive Vice President
<Page>
THE EXCHANGING HOLDERS:
JMG TRITON OFFSHORE FUND LIMITED CITCO
By: /s/ David Rubinstein
-----------------------------------
Name: David Rubinstein
Title: Portfolio Manager
<Page>
THE COLLATERAL AGENT:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ John A. Brennan
-----------------------------------
Name: John A. Brennan
Title: Trust Officer
<Page>
EXHIBIT A
FORM OF JOINDER AGREEMENT
<Page>
EXHIBIT B
FORM OF WARRANT AND REGISTRATION RIGHTS AGREEMENT
2.1B
<Page>
EXHIBIT 5.2
FORM OF OFFICER'S CERTIFICATE
5.3
<Page>
EXHIBIT 5.6
FORM OF GUARANTEE
5.9