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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(AMENDMENT NO. 3)
------------------------------
SAVVIS COMMUNICATIONS CORPORATION
(Name of Issuer)
Common Stock, par value $.01 per share 805423 10 0
(Title of class of securities) (CUSIP number)
Nancy C. Gardner, Esq.
REUTERS AMERICA INC.
Acting General Counsel
The Reuters Building
3 Times Square
New York, New York 10036
(646) 223-4203
(Name, address and telephone number of person authorized
to receive notices and communications)
June 1, 2001
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 10 Pages)
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CUSIP No. 805423 10 0 13D Page 2 of 10
- ------------------------------------------------------------- ---------------------------------------------------------
- ------------------------ --------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON REUTERS GROUP PLC
I.R.S. IDENTIFICATION NO. IRS NO.
OF ABOVE PERSON
- ------------------------ --------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [X]
(b) [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------ --------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: Not Applicable
- ------------------------ --------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: England and Wales
- ------------------------ --------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 0
NUMBER OF
SHARES
------------------- --------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 16,298,827
OWNED BY (see Item 5)
------------------- --------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
------------------- --------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 14.99%
(see Item 5)
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14 TYPE OF REPORTING PERSON: HC; CO
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- ------------------------------------------------------------- ---------------------------------------------------------
CUSIP No. 805423 10 0 13D Page 3 of 10
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1 NAME OF REPORTING PERSON REUTERS AMERICA INC.
I.R.S. IDENTIFICATION NO. IRS NO. 13-3320829
OF ABOVE PERSON
- ------------------------ --------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [X]
(b) [ ]
- ------------------------ ------------------------------------------------------------------------------------ -------------------
3 SEC USE ONLY
- ------------------------ --------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO; WC
- ------------------------ --------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
- ------------------------ --------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 0
NUMBER OF
SHARES
------------------- --------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 16,298,827
OWNED BY (see Item 5)
------------------- --------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
------------------- --------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 14.99%
(see Item 5)
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14 TYPE OF REPORTING PERSON: CO
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CUSIP No. 805423 10 0 13D Page 4 of 10
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1 NAME OF REPORTING PERSON REUTERS S.A.
I.R.S. IDENTIFICATION NO. IRS NO.
OF ABOVE PERSON
- ------------------------ --------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [X]
(b) [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------ --------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO; WC
- ------------------------ --------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Switzerland
- ------------------------ --------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 0
NUMBER OF
SHARES
------------------- --------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 16,298,827
OWNED BY (see Item 5)
------------------- --------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
------------------- --------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 14.99%
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
- ------------------------ --------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------- ---------------------------------------------------------
CUSIP No. 805423 10 0 13D Page 5 of 10
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1 NAME OF REPORTING PERSON REUTERSS HOLDINGS SWITZERLAND SA
I.R.S. IDENTIFICATION NO. IRS NO.
OF ABOVE PERSON
- ------------------------ --------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [X]
(b) [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------ --------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: WC
- ------------------------ --------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Switzerland
- ------------------------ --------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER: 0
NUMBER OF
SHARES
------------------- --------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 16,298,827
OWNED BY (see Item 5)
------------------- --------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
------------------- --------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 16,298,827
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ]
- ------------------------ --------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 14.99%
(see Item 5)
- ------------------------ --------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
- ------------------------ --------------------------------------------------------------------------------------------------------
This Amendment No. 3 amends the Schedule 13D dated May 14,
2001, as amended, filed by Reuters Group PLC ("RGPLC"), Reuters America Inc.
("RAM"), Reuters S.A. ("RSA") and Reuters Holdings Switzerland SA ("RHSSA" and,
collectively with RGPLC, RAM and RSA, the "Reporting Persons"), with respect to
the common stock, par value $.01 per share ("Common Stock"), of SAVVIS
Communications Corporation ("Savvis").
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is hereby amended and supplemented as follows:
The consideration for the purchase of the Notes at the
Second Closing (as defined below) was the payment of $10 million in cash by
RHSSA pursuant to the Securities Purchase Agreement. RHSSA used working capital
to purchase such Notes and expects to use working capital for the purchase of
any additional Notes.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended and supplemented as follows:
On June 1, 2001, RHSSA and Savvis completed an additional
closing under the Securities Purchase Agreement in which RHSSA subscribed for
and purchased from Savvis $10 million aggregate principal amount of the Notes
(the "Second Closing"). A copy of the Note issued to RHSSA at the Second Closing
is attached hereto as Exhibit 12 and is incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The responses of the Reporting Persons to Rows (11)
through (13) of the cover pages of this Amendment No. 3 are incorporated herein
by reference. As of June 1, 2001, RGPLC beneficially owned in the aggregate
16,298,827 shares of Common Stock, representing approximately one share less
than 15% of the outstanding shares of Common Stock (the outstanding shares of
Common Stock, 108,658,853, being determined, in accordance with Rule 13d-3(d)(1)
under the Exchange Act, equal to the sum of (i) 93,844,039 shares, based on the
representation made by Savvis under the Securities Purchase Agreement, (ii)
RHSSA's right to acquire 7,407,407 shares of Common Stock upon conversion of the
Notes purchased by it at the Initial Closing and (iii) RHSSA's right to acquire
7,407,407 shares of Common Stock upon conversion of the Notes purchased by it at
the Second Closing).
The Savvis Stock Option gives RAM and RSA (collectively,
"Reuters") the right to acquire an aggregate of 45,483,702 shares of Common
Stock from Bridge subject to certain limitations discussed below. In addition,
the Notes issued at the Initial Closing and the Second Closing give RHSSA the
right to acquire upon conversion 14,814,814 shares of Common Stock, representing
13.63% of the outstanding shares of Common Stock (the outstanding shares of
Common Stock, 108,658,853, being determined in accordance with Rule 13d-3(d)(1)
under the Exchange Act as set forth above).
6
Currently, however, under the terms of the Savvis Stock
Option Agreement, Reuters may only exercise the Savvis Stock Option with respect
to such number of shares of Common Stock as would not result in Reuters becoming
an "interested stockholder" as defined in Section 203 of the DGCL (i.e., the
beneficial owner of 15% of the outstanding Common Stock as determined in
accordance with Section 203 of the DGCL). As a result, because the Notes
currently represent beneficial ownership by RHSSA of 14,814,814 shares of Common
Stock (or 13.63% of the outstanding Common Stock (determined in accordance with
Section 203 of the DGCL)), the Savvis Stock Option is currently exercisable by
Reuters for 1,484,013 shares (or 1.36% of the outstanding Common Stock
(determined in accordance with Rule 13d-3(d)(1) under the Exchange Act)). The
number of shares of Common Stock which are able to be purchased by Reuters under
the terms of the Savvis Stock Option will fluctuate depending on the total
number of shares of Common Stock outstanding from time to time and the number of
shares otherwise beneficially owned by Reuters as determined under Section 203
of the DGCL, including as a result of any further issuance of Notes which are
convertible into shares of Common Stock.
The Savvis Stock Option Agreement also gives Reuters the
right to vote the shares of Common Stock subject to the Savvis Stock Option.
However, this voting right covers the lesser of (x) the number of shares for
which the Savvis Stock Option is exercisable and (y) unless and until any
requisite filing under the HSR Act has been made and the waiting period with
respect thereto has expired, such number of shares that may be acquired by
Reuters without the making of a filing under the HSR Act.
Except as disclosed in this Item 5(a), none of the
Reporting Persons beneficially owns, nor, to the best of their knowledge, none
of their directors or executive officers beneficially owns, any shares of Common
Stock.
(b) The responses of the Reporting Persons to (i) Rows (7) through
(10) of the cover pages of this Amendment No. 3 and (ii) Item 5(a) hereof are
incorporated herein by reference.
(c) Except as disclosed in Item 4 hereof, none of the Reporting
Persons, nor, to the best of their knowledge, any of their directors or
executive officers, has effected any transaction in the Common Stock of Savvis
since the most recent filing on Schedule 13D.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Item 6 is hereby amended and supplemented as follows:
The response to Item 4 hereof is incorporated herein by
reference.
7
RHSSA has been issued the Note purchased at the Second
Closing. The Note issued at the Second Closing is attached hereto as Exhibit 12.
On May 31, 2001, RHSSA and Savvis amended the Securities
Purchase Agreement and the Note issued at the Initial Closing (the "First
Amendment"). A copy of the First Amendment is attached hereto as Exhibit 13.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 12. $10,000,000 principal amount, 12% Convertible Senior
Secured Note due May 1, 2005 of SAVVIS Communications
Corporation in favor of Reuters Holdings Switzerland
SA.
Exhibit 13. First Amendment to the Securities Purchase Agreement,
by and between SAVVIS Communications Corporation and
Reuters Holdings Switzerland SA, dated as of May 31,
2001.
8
SIGNATURES
After reasonable inquiry and to the best knowledge and
belief of the undersigned, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
Date: June 4, 2001
REUTERS GROUP PLC
By: /s/ Stephen P. Lehman
----------------------------------------
Name: Stephen P. Lehman
Title: Attorney-in-fact
REUTERS AMERICA INC.
By: /s/ Stephen P. Lehman
----------------------------------------
Name: Stephen P. Lehman
Title: Vice President
REUTERS S.A.
By: /s/ Stephen P. Lehman
----------------------------------------
Name: Stephen P. Lehman
Title: Attorney-in-fact
REUTERS HOLDINGS SWITZERLAND SA
By: /s/ Stephen P. Lehman
----------------------------------------
Name: Stephen P. Lehman
Title: Attorney-in-fact
9
EXHIBIT INDEX
-------------
Exhibit 12. $10,000,000 principal amount, 12% Convertible Senior
Secured Note due May 1, 2005 of SAVVIS Communications
Corporation in favor of Reuters Holdings Switzerland
SA.
Exhibit 13. First Amendment to the Securities Purchase Agreement,
by and between SAVVIS Communications Corporation and
Reuters Holdings Switzerland SA, dated as of May 31,
2001.
10
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE CORPORATION, AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS NOTE IS BEING
ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID"): (1) THE ISSUE PRICE IS THE NOTE'S
STATED PRINCIPAL AMOUNT; (2) THE ISSUE DATE IS JUNE 1, 2001; (3) THE YIELD TO
MATURITY (COMPOUNDED QUARTERLY) IS 12%; AND (4) THE AMOUNT OF THE ORIGINAL ISSUE
DISCOUNT IS $4,700,000.00 (NOT INCLUDING ANY OID WITH RESPECT TO ADDITIONAL
NOTES ISSUED IN LIEU OF CASH INTEREST PAYMENTS).
SAVVIS COMMUNICATIONS CORPORATION
12% Convertible Senior Secured Note
due May 1, 2005
Registered S-02 New York, New York
$10,000,000.00 June 1, 2001
SAVVIS COMMUNICATIONS CORPORATION, a Delaware corporation
(hereinafter called the "Corporation"), for value received, hereby promises to
pay Reuters Holdings Switzerland SA, or registered assigns (the "Holder"), the
principal sum of TEN MILLION DOLLARS AND NO CENTS ($10,000,000.00), in a single
installment on May 1, 2005 (the "Maturity Date"), or the next preceding Business
Day (as defined below) with interest (computed on the basis of a 360-day year)
from the date hereof on the unpaid principal amount hereof. Such interest shall
accrue at the rate of 12% per annum, compounded on a quarterly basis, payable on
the first day of February, May, August and November of each year (each such day
being an "Interest Payment Date") commencing on August 1, 2001, by, at the
option of the Corporation, (i) the payment of cash to the Holder or, (ii) until
August 1, 2004, the issuance of an additional Note or Notes (each a "PIK Note")
by the Corporation in favor of the Holder, in substantially the form hereof, in
a principal amount equal to the interest payable to such holder on such Interest
Payment Date, until the principal amount hereof shall have become due and
payable, whether at maturity or by acceleration or otherwise, and thereafter at
the rate of 14% per annum on any overdue principal amount and (to the extent
permitted by applicable law) on any overdue interest until paid.
The payment of principal and interest on this Note shall be
in such currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.
NY2:\1049420\02\mhqk02!.DOC\69812.0235
If for any reason one or more PIK Notes shall not be
delivered in accordance herewith, interest on the unpaid principal of each PIK
Note shall accrue from the Interest Payment Date in respect of which such PIK
Note should have been issued until repayment in cash of the principal and
payment in cash of all accrued interest in full. Interest shall accrue on this
Note such that the aggregate interest due and payable on the Maturity Date and
on each Interest Payment Date would be the same as if all PIK Notes not issued
had been issued in accordance with the terms of this Note, and the principal
payable on the Maturity Date with respect to this Note shall be an amount equal
to the sum of the principal outstanding hereunder and the aggregate principal
which would be outstanding if the PIK Notes not issued had been issued in
accordance with the terms of this Note.
For purposes of this Note, "Business Day" shall mean any
day other than a Saturday, Sunday or a legal holiday under the laws of the
State of New York.
1. NOTES AND SECURITY. This Note is issued pursuant to the
Securities Purchase Agreement, dated as of May 16, 2001 (the "Purchase
Agreement"), by and between the Corporation and Reuters Holdings Switzerland SA,
a societe anonyme organized under the laws of Switzerland, providing for, among
other things, the issuance of 12% Convertible Senior Secured Notes due May 1,
2005 in the aggregate principal amount not to exceed $45,000,000 (such 12%
Convertible Senior Secured Notes are referred to herein collectively as the
"Notes"). All payments of principal and interest on this Note shall be secured
pursuant to the terms of that certain Missouri Future Advance Deed of Trust and
Security Agreement, dated as of May 11, 2001, as amended or supplemented from
time to time between the Corporation's subsidiary, Savvis Communications
Corporation, a Missouri corporation, and the other parties thereto. Capitalized
terms used herein but not otherwise defined shall have the meaning ascribed to
them in the Purchase Agreement.
2. TRANSFER OR EXCHANGE OF NOTES. The Corporation shall
keep at its office or agency maintained as provided in subsection (a) of Section
9 a register in which the Corporation shall provide for the registration of
Notes and for the registration of transfer and exchange of Notes. The holder of
this Note may, at its option, and either in person or by duly authorized
attorney, surrender the same for registration of transfer or exchange at the
office or agency of the Corporation maintained as provided in subsection (a) of
Section 9, and, without expense to such holder (except for taxes or governmental
charges imposed in connection therewith), receive in exchange therefore a Note
or Notes in such denomination or denominations as such holder may request (but
in any event in denominations of not less than $1,000 principal amount, dated as
of the date to which interest has been paid on the Note or Notes so surrendered
for transfer or exchange, for the same aggregate principal amount as the then
unpaid principal amount of the Note or Notes so surrendered for transfer or
exchange, and registered in the name of such person or persons as may be
designated by such holder. Every Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or shall be accompanied by a
2
written instrument of transfer, satisfactory in form to the Corporation, duly
executed by the holder of such Note or his attorney, duly authorized in writing.
Every Note so made and delivered in exchange for this Note shall in all other
respects be in the same form and have the same terms as this Note. No transfer
or exchange of any Note shall be valid unless made in the foregoing manner at
such office or agency.
3. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon
receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction or mutilation of this Note, and, in the case of any such loss, theft
or destruction, upon receipt of an affidavit of loss from the holder hereof
reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation will
make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.
4. PERSONS DEEMED OWNERS; HOLDERS. The Corporation may deem
and treat the person in whose name any Note is registered as the owner and
holder of such Note for the purpose of receiving payment of principal and
premium, if any, and interest on such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue. With respect to any Note
at any time outstanding, the term "holder," as used herein, shall be deemed to
mean the person in whose name such Note is registered as aforesaid at such time.
5. EARLY REDEMPTION.
(a) Upon Change of Control. The Corporation shall notify
the Holder at least 10 business days prior to a record date of a transaction
which would result in a Change of Control (as defined below) of the Corporation.
Upon receipt of such notice, the Holder shall have the right to require the
Corporation (i) to redeem any or all of this Note, including the PIK Notes (as
defined below), at a cash price equal to 100% of the principal amount of this
Note, plus all accrued and unpaid interest and the Applicable Premium Amount (as
defined below) as of the effective date of the Change of Control, or (ii) to
convert the principal amount of any or all of this Note (at the Holder's
option), including the PIK Notes and the Applicable Premium Amount (as defined
below), into shares of Common Stock, determined by dividing the aggregate
principal amount of this Note to be converted by the Common Stock Conversion
Price, with the proportional value of any fractional shares resulting therefrom
paid by the Corporation in cash to the Purchaser.
(b) Optional Prepayment by the Corporation. From and after
the first anniversary of the final Closing, the Corporation shall have the right
to prepay the entire principal amount, and only the entire principal amount, of
the Note, with all accrued and unpaid interest to the date of prepayment, at any
time without premium or penalty, upon at least 10 Business Days' notice of the
date of prepayment. The Holder shall have the right at any time prior to the
third business day prior to date of prepayment to convert this Note pursuant to
Section 15 hereof.
(c) Certain Definitions. As used herein, the following
terms shall have the following meanings:
3
"Applicable Premium Amount" shall mean, with respect to
this Note, as of any specified date prior to May 1, 2005, an amount
equal to the interest that would have accrued on the outstanding
principal amount of this Note during the period beginning on such
date fixed and ending on May 1, 2005.
"Change of Control" shall mean the consummation by the
Corporation of (x) a merger or consolidation with or into any other
entity (other than a merger or consolidation in which (1) at least
50% of the voting capital stock of the Corporation (or the surviving
or resulting entity, if other than the Corporation) outstanding
immediately after the effective date of such merger is owned of
record or beneficially by persons who owned voting capital stock of
the Corporation immediately prior to such merger or consolidation and
in substantially the same proportions in which such stock was held
immediately prior to such merger or consolidation and such persons
continue to have the right to elect a majority of the Board of
Directors of the Corporation, (2) immediately after the effective
date of such merger or consolidation a majority of the seats on the
Corporation's Board of Directors are held by persons who were
directors of the Corporation immediately prior to such effective
date, and (3) no Event of Default shall have occurred as a result of
the consummation thereof), or (y) any sale, lease or other disposal
of all or substantially all of its assets and properties as an
entirety in a single transaction or series of related transactions to
an unaffiliated third party purchaser or purchasers, or (z) a
transaction or series of related transactions in which a majority of
the outstanding capital stock of the Corporation shall be acquired by
an unaffiliated third party or parties.
6. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Corporation
shall give written notice of any prepayment of this Note pursuant to Section 5
not less than 10 days prior to the date fixed for such prepayment. Such notice
shall include a reasonably-detailed description of the consideration, if any, to
be received by holders of Common Stock in connection with the related Change of
Control and a calculation of the Applicable Premium Amount to be paid in respect
of such prepayment. Such notice of prepayment and all other notices to be given
to any holder of this Note shall be given by registered or certified mail to the
person in whose name this Note is registered at its address designated on the
register maintained by the Corporation on the date of mailing such notice of
prepayment or other notice. Unless the holder elects prior to such date fixed
for prepayment to convert this Note pursuant to Section 15 hereof, upon notice
of prepayment being given as aforesaid, the Corporation covenants and agrees
that it will prepay, on the date therein fixed for prepayment, the entire
principal amount hereof together with interest accrued hereon and Applicable
Premium Amount hereon to the date fixed for such prepayment. Notwithstanding the
foregoing, any such notice may specify that the obligation to make such
prepayment is conditional upon the closing of the transaction requiring such
prepayment, and, unless a notice of conversion delivered pursuant to Section 15
states to the contrary, any notice of conversion given while such a transaction
is pending shall also be conditional upon the closing of such transaction, and
no prepayment shall be required and no conversion shall be effected, unless and
until such transaction is consummated.
4
7. INTEREST AND PREMIUM AFTER DATE FIXED FOR PREPAYMENT. If
this Note is to be prepaid pursuant to Section 5 hereof, this Note shall (unless
the provisions of the last sentence of Section 6 become applicable) cease to
bear interest on and after the date fixed for such prepayment unless, upon
presentation for the purpose, the Corporation shall fail to pay this Note, in
which event the principal amount of this Note, and, so far as may be lawful, any
overdue installment of interest or overdue Applicable Premium Amount, shall bear
interest on and after the date fixed for such prepayment and until paid at the
rate per annum provided herein for overdue principal.
8. SURRENDER OF NOTES; NOTATION THEREON. As a condition to
obtaining any payment of or receiving any shares issuable upon the conversion of
all or any portion of the principal amount of this Note, the Corporation may
require the holder hereof to surrender this Note, and in such event the
Corporation will execute and deliver at the expense of the Corporation, upon
such surrender, a new Note registered in the name of such person or persons as
may be designated by such holder for the principal amount of this Note then
remaining unpaid and not converted pursuant to Section 15 hereof, dated as of
the date to which interest has been paid on the principal amount of this Note
then remaining unpaid, or may require the holder to present this Note to the
Corporation for notation hereon of the conversion of the portion of the
principal amount of this Note so converted.
9. AFFIRMATIVE COVENANTS. The Corporation covenants and
agrees that, so long as any Note shall be outstanding:
(a) Maintenance of Office. The Corporation will maintain an
office or agency in Herndon, Virginia (or such other place in the United States
of America as the Corporation may designate in writing to the registered holder
hereof), where the Notes may be presented for registration of transfer and for
exchange as herein provided, where notices and demands to or upon the
Corporation in respect of the Notes may be served and where, at the option of
the holders thereof, the Notes may be presented for payment. Until the
Corporation otherwise notifies the holders of the Notes, said office shall be
the principal office of the Corporation in Herndon, Virginia.
(b) Payment of Taxes. The Corporation will promptly pay and
discharge or cause to be paid and discharged, before the same shall become in
default, all lawful taxes and assessments imposed upon the Corporation or any
subsidiary or upon the income and profits of the Corporation or any subsidiary,
or upon any property, real, personal or mixed, belonging to the Corporation or
any subsidiary, or upon any part thereof by the United States or any State
thereof, as well as all lawful claims for labor, materials and supplies, which,
if unpaid, would become a lien or charge upon such property or any part thereof;
provided, however, that the Corporation shall not be required to pay and
discharge or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim (i) so long as both (x) the Corporation has set aside
adequate reserves for such tax, assessment, charge, levy or claim and (y) the
Corporation shall be contesting the validity thereof in good faith by
appropriate proceedings or the Corporation shall, in its good faith judgment,
5
deem the validity thereof to be questionable and the party to whom such tax,
assessment, charge, levy or claim is allegedly owed shall not have made written
demand for the payment thereof or (ii) where the failure to pay or discharge
would not have a material adverse effect on the properties, assets, financial
condition, operating results, business or prospects of the Corporation and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(c) Corporate Existence. The Corporation will do or cause
to be done all things necessary and lawful to preserve and keep in full force
and effect its corporate existence, rights and franchises under the laws of the
United States or any State thereof; provided, however, that nothing in this
subsection (c) shall prevent a consolidation or merger of, or a sale, transfer
or disposition of all or any substantial part of the property and assets of, the
Corporation, or the abandonment or termination of any rights or franchises of
the Corporation, if such abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of the Corporation
or would not have a Material Adverse Effect.
(d) Maintenance of Property. The Corporation will at all
times maintain and keep, or cause to be maintained and kept, in good repair,
working order and condition all significant properties of the Corporation used
in the conduct of the business of the Corporation, and will from time to time
make or cause to be made all needful and proper repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this subsection (d) shall require the making
of any repair or renewal or the continuance of the operation and maintenance of
any property or the retention of any assets, if such action (or inaction) is, in
the good faith business judgment of the Corporation, in the best interests of
the Corporation or would not have a Material Adverse Effect.
(e) Insurance. The Corporation will keep adequately
insured, by financially sound and reputable insurers, all property of a
character usually insured by corporations engaged in the same or a similar
business similarly situated against loss or damage of the kinds customarily
insured against by such corporations and carry, with financially sound and
reputable insurers, such other insurance (including, without limitation,
liability insurance) in such amounts as are available at reasonable expense and
to the extent believed necessary in the good faith business judgment of the
Corporation.
(f) Keeping of Books. The Corporation will at all times
keep proper books of record and account in which proper entries will be made of
its transactions in accordance with generally accepted accounting principles
consistently applied.
(g) Notice of Default. If any one or more events which
constitute, or which with notice or lapse of time or both would constitute, an
Event of Default under Section 11 shall occur, or if the holder of any Note
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse of time or both
constitute such an Event or that such demand has been made or that any such
action has been taken, give notice to the holder of this Note, specifying the
6
nature of such event or of such demand or action, as the case may be; provided,
however, that if such event, in the good faith judgment of the Corporation, will
be cured within ten Business Days after the Corporation has knowledge that such
event would, with or without notice or lapse of time or both, constitute such an
Event of Default, no such notice need be given if such Event of Default shall be
cured within such ten-day period.
(h) Information Covenants. The Corporation will furnish
each Holder:
(i) Annual Financial Statements. As soon as available, and
in any event within 90 days after the close of each fiscal year of
the Corporation, a consolidated balance sheet and income statement of
the Corporation, as of the end of such fiscal year, together with
related consolidated statements of operations and retained earnings
and of cash flows for such fiscal year, setting forth in comparative
form consolidated figures for the preceding fiscal year, all such
financial information described above to be in reasonable form and
detail and audited by independent certified public accountants of
recognized national standing and whose opinion shall be to the effect
that such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") (except for changes
with which such accountants concur) and shall not be limited as to
the scope of the audit or qualified as to the status of the
Corporation as a going concern;
(ii) Quarterly Financial Statements. As soon as available,
and in any event within 45 days after the close of each of the first
three fiscal quarters of each fiscal year of the Corporation, a
consolidated balance sheet and income statement of the Corporation,
as of the end of such fiscal quarter, together with related
consolidated statements of operations and retained earnings and of
cash flows for such fiscal quarter, in each case setting forth in
comparative form consolidated figures for the corresponding period of
the preceding fiscal year or the end of the fiscal year, as presented
by the Corporation in the Company SEC Filings, all such financial
information described above to be in reasonable form and detail, and
accompanied by a certificate of an executive officer of the
Corporation to the effect that such quarterly financial statements
fairly present in all material respects the financial condition of
the Corporation and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end audit
adjustments;
(iii) Monthly Financial Information. A consolidated balance
sheet and income statement of the Corporation as of the end of each
month, together with related consolidated statements of cash flow, by
the twentieth (20th) calendar day of each fiscal month, with respect
to the preceding fiscal month; provided, however, at the end of each
of the first three fiscal quarters of the fiscal year, the
Corporation shall provide such consolidated balance sheet, income
statement and statement of cash flow by the forty-fifth (45th)
calendar day after the end of such fiscal quarter; and provided
further, at the end of the fourth fiscal quarter of such fiscal year,
the Corporation shall provide such consolidated statements by the
ninetieth (90th) calendar day after the end of the fiscal year. The
monthly financial statements shall be accompanied by a certificate of
7
an executive officer of the Corporation to the effect that such
monthly financial statements fairly present in all material respects
the financial condition of the Corporation and have been prepared in
accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments;
(iv) Annual Business Plan and Budgets. No later than the
twenty-fifth (25th) calendar day prior to the end of each fiscal year
of the Corporation, an annual business forecast of the Corporation
containing, among other things, projected financial statements for
the next fiscal year, financial and operating budgets and cash flow
projections on a monthly basis (collectively, the "Annual Budget");
together with appropriate supporting details; as soon as possible,
but in no event later than forty-five (45) days after the close of
each of the first three fiscal quarters and ninety (90) days after
the close of each fiscal year, a statement in which the actual
results of such fiscal quarter are compared with the most recent
forecasts for such fiscal quarter; and as soon as available, any
material revisions to the Annual Budget;
(v) Reports. Promptly upon transmission or receipt thereof,
copies of any filings and registrations with, and reports to or from,
the Securities and Exchange Commission, or any successor agency, and
copies of all financial statements, proxy statements, notices and
reports as the Corporation shall send to its shareholders or to a
holder of any indebtedness owed by the Corporation in its capacity as
such a holder; provided, however, that notwithstanding the foregoing,
the Corporation will not furnish to any Holder any material
non-public information regarding the Corporation unless such Holder
shall have signed a confidentiality agreement reasonably acceptable
to the Corporation agreeing to maintain such information confidential
and to refrain from trading in the Common Stock until the Corporation
has advised such Holder, or such Holder otherwise discovers, that
such information has ceased to be material or has been disclosed to
the public.
10. MODIFICATION BY HOLDERS; WAIVER. The Corporation may,
with the written consent of the holders of not less than 66 2/3% in principal
amount of the Notes then outstanding, modify the terms and provisions of the
Notes or the rights of the holders of the Notes or the obligations of the
Corporation thereunder, and the observance by the Corporation of any term or
provision of the Notes may be waived with the written consent of the holders of
not less than 66 2/3% in principal amount of the Notes then outstanding;
provided, however, that no such modification or waiver shall:
(a) change the maturity of any Note or reduce the principal
amount thereof or reduce the rate or extend the time of payment of
interest thereon or reduce the amount or change the time of payment
of premium payable on any prepayment thereof without the consent of
the holder of each Note so affected; or
(b) give any Note any preference over any other Note; or
8
(c) reduce the applicable aforesaid percentages of Notes,
the consent of the holders of which is required for any such modification.
Any such modification or waiver shall apply equally to all
the holders of the Notes and shall be binding upon them, upon each future
holder of any Note and upon the Corporation, whether or not such Note shall have
been marked to indicate such modification or waiver, but any Note issued
thereafter shall bear a notation referring to any such modification or waiver.
Promptly after obtaining the written consent of the holders as herein provided,
the Corporation shall transmit a copy of such modification or waiver to all the
holders of the Notes at the time outstanding.
11. EVENTS OF DEFAULT. If any one or more of the following
events, herein called "Events of Default," shall occur, for any reason
whatsoever, and whether such occurrence shall, on the part of the Corporation,
be voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal
of any Note or the premium thereon, if any, when and as the same
shall become due and payable, whether at maturity or at a date fixed
for prepayment or by acceleration or otherwise; or
(b) default shall be made in the payment of any installment
of interest on any Note according to its terms when and as the same
shall become due and payable and such default shall continue for a
period of 15 days; or
(c) (i) commencement of a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) filing a
petition seeking to take advantage of any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
winding-up or composition for adjustment of debts, (iii) consenting
to or failing to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such
bankruptcy laws or other laws, (iv) applying for or consenting to, or
failing to contest to, in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admitting in writing its
inability to pay its debts as they become due, (vi) making a general
assignment for the benefit of creditors, or (vii) taking any
corporate action for the purpose of authorizing any of the foregoing;
or
(d) the entry of a decree or order by any court of
competent jurisdiction in respect of the Corporation or any material
subsidiary granting (i) relief in any involuntary case under the
federal bankruptcy laws (as now or hereafter in effect) or under any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii)
appointment of a trustee, receiver, custodian, liquidator or the like
for the Corporation or any material subsidiary or for all or any
substantial part of their respective assets, domestic or foreign, and
9
such case or proceeding shall continue undismissed or unstayed for a
period of 60 consecutive days; or
(e) (i) a default by the Corporation in any material
respect shall have occurred in any covenant to which the Corporation
is subject in the Purchase Agreement or any Ancillary Document (as
defined in the Purchase Agreement) or (ii) a payment default (other
than any payment defaults disclosed in the Purchase Agreement
including those payment defaults related to agreements with which the
Company is a party with Nortel Networks Inc. or General Electric
Capital Corporation (the "Specified Defaults"), provided, that such
Specified Defaults are waived within 10 days of the date hereof (or
such later date as the Network Services Term Sheet is executed) and
then only for so long as such waivers shall be in effect) shall have
occurred or acceleration of the payment of the indebtedness (other
than acceleration solely in response to any events of default
disclosed in the Purchase Agreement) shall have been commenced under
any agreement or document evidencing indebtedness of the Corporation;
then, the holder or holders of at least a majority in aggregate principal amount
of the Notes at the time outstanding may, at its or their option, by written
notice to the Corporation, declare all the Notes to be, and all the Notes shall
thereupon be and become, forthwith due and payable together with interest
accrued thereon without presentment, demand, protest or further notice of any
kind, all of which are expressly waived to the extent permitted by law;
provided, however, that, upon the occurrence and during the continuance of any
of the events specified in subsections (a) or (b) of this Section 11, the holder
of any Note at the time outstanding may, at its option by notice in writing to
the Corporation, declare any Note or Notes then held by it to be, and such Note
or Notes shall thereupon be and become, forthwith due and payable together with
interest accrued thereon without presentment, demand, protest or further notice
of any kind, all of which are expressly waived to the extent permitted by law.
Notwithstanding the foregoing, nothing in this Section 11 shall impair the right
of the holder of this Note to convert all or any portion of this Note into
Common Stock in accordance with the provisions of Section 15 hereof.
At any time after any declaration of acceleration has been
made as provided in this Section 11, the holders of at least 66-2/3% in
principal amount of the Notes then outstanding may, by notice to the
Corporation, rescind such declaration and its consequences if the Corporation
has paid all overdue installments of interest on the Notes and all principal
(and premium, if any) that has become due otherwise than by such declaration of
acceleration; and all other defaults and Events of Default (other than
nonpayments of principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have been waived
pursuant to this paragraph; provided, however, that no such rescission shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.
Without limiting the foregoing, the Corporation hereby
waives any right to trial by jury in any legal proceeding related in any way
to this Note or the Notes and agrees that any such proceeding may, if the holder
so elects, be brought and enforced in any state or, if applicable federal court,
located in New York City in the Borough of Manhattan and the Corporation hereby
10
waives any objection to jurisdiction or venue in any such proceeding commenced
in such court. The Corporation further agrees that any process required to be
served on it for purposes of any such proceeding may be served on it, with the
same effect as personal service on it within the State of Delaware, by
registered mail addressed to it at its office or agency set forth in Section 19
for purposes of notices hereunder.
12. SUITS FOR ENFORCEMENT. In case any one or more of the
Events of Default specified in Section 11 of this Note shall happen and be
continuing, the holder of this Note may proceed to protect and enforce its
rights by suit in equity, action at law and/or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Note or in aid of the exercise of any power granted in this Note, or may
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of the holder of this Note.
In case of any default under any Note, the Corporation will
pay to the holder thereof such amounts as shall be sufficient to cover the
out-of-pocket costs and expenses of such holder due to said default, including,
without limitation, collection costs and reasonable attorneys' fees, to the
extent actually incurred.
13. REMEDIES CUMULATIVE. No remedy herein conferred upon
the holder of this Note is intended to be exclusive of any other remedy and each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise.
14. REMEDIES NOT WAIVED. No course of dealing between the
Corporation and the holders of this Note or any delay on the part of the holder
hereof in exercising any rights hereunder shall operate as a waiver of any right
of any holder of this Note.
15. CONVERSION.
(a) Conversion of this Note into Common Stock. All or a
portion of the principal amount of this Note shall, at any time and at the
option of the Holder, be convertible into a number of shares of Common Stock,
calculated by dividing the portion of the principal amount of such Notes to be
converted (together with any accrued and unpaid interest on such portion of the
principal amount) by $1.35 (subject to equitable adjustment for stock splits,
stock dividends, recapitalizations, reorganizations or other similar events, the
"Common Stock Conversion Price" or "Conversion Price") with the proportional
value of any fractional shares resulting therefrom paid by the Corporation in
cash to the Holder upon conversion. The Holder will give the Corporation at
least 10 business days notice of its intention to convert all or a portion of
the principal amount of the Notes into Common Stock, except if such conversion
follows a notice of prepayment pursuant to Section 5(b) hereof. The Corporation
shall present and deliver certificates evidencing the proper number of shares of
Common Stock to the Holder, in such denominations and in such name or names as
11
the Holder may designate by notice to the Corporation, to each Holder, at a time
and place mutually agreeable to the Holder and the Corporation, in exchange for
delivery of this Note to the Corporation. Upon receipt of this Note in exchange
for such certificate or certificates of Common Stock, the Corporation shall
cancel and destroy this Note, and this Note shall thereafter be null, void and
of no effect. If any of the principal amount of Note tendered to the Corporation
pursuant to this Section 15(a) shall remain unconverted and outstanding
following the issuance of such Common Stock, the Corporation shall execute and
deliver to the Holder at the same time and in the same manner as the certificate
evidencing such Holder's Common Stock is delivered, a replacement note that
shall be identical in all respects as this Note, except that the principal
amount shall be reduced by the principal amount of this Note converted to Common
Stock. If this Note has been issued pursuant to a Funding Request that is
delivered after the automatic conversion of a previously-issued Note pursuant to
Section 1.04(b) thereof, it shall be convertible into Purchaser Conversion
Preferred (as defined below). Upon notice from the Holder of its intention to
convert all or a portion of the principal amount of this Note pursuant to this
Section 15(a) which would require the Holder and the Corporation to file
applications or notices with any Governmental Authority (as defined in Section
2.06 of the Purchase Agreement), including pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Holder and
the Corporation shall file such applications or notices as soon as practicable
and comply promptly with any requests for additional information or documentary
material relating to such applications or notices. The delivery by the Holder to
the Corporation of a notice to file such applications or notices with a
Governmental Authority shall in no way obligate the Holder to convert any
principal amount of this Note.
(b) Automatic Conversion of this Note into Preferred Stock.
Simultaneous with the Corporation raising an aggregate of $50,000,000 (the
"Conversion Amount") in cash through the issuance of convertible preferred stock
prior to the Maturity Date, excluding the Notes and PIK Notes, but including
shares issued upon conversion of up to $20,000,000 aggregate principal amount of
the Corporation's 10% Convertible Senior Secured Notes due February 20, 2006
issued to affiliates of Welsh, Carson, Anderson & Stowe ("Welsh Carson")
(excluding any notes issued to Welsh Carson in kind for interest on such notes),
all of the principal amount of this Note, together with any PIK Notes, Notes
then-payable in kind for accrued and unpaid interest as of such date and Notes
to be purchased on such date by the Purchaser, subject to satisfaction of all
applicable conditions set forth in Section 6.02 of the Purchase Agreement, at a
special Closing on such date with a Purchase Price equal to the difference
between $30,000,000 and the aggregate Purchase Price paid by the Purchaser
pursuant to all Closings completed pursuant to this Agreement as of such date
pursuant to the terms of the Purchase Agreement (collectively, the "Purchaser
Conversion Notes"), shall be converted into shares of convertible preferred
stock ("Purchaser Conversion Preferred") on the same terms (including purchase
price) as, and having the same rights, preferences, privileges and restrictions
as shares issued (the "Recent Equity Financing Shares") pursuant to the
Corporation's most recent preferred stock financing (the "Recent Equity
Financing"), except that the initial conversion price of such Purchaser
Conversion Preferred shall be the equivalent of the lesser of (i) the initial
conversion price of the Recent Equity Financing Shares, (ii) the initial
conversion price of shares issued pursuant to any financing which comprises a
portion of the Conversion Amount (excluding shares issued upon conversion of the
notes previously issued to Welsh Carson referred to above), and (iii) the Common
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Stock Conversion Price. The Purchaser Conversion Preferred shall be of the same
class, but separate series, as the Recent Equity Financing Shares. The
proportional value of any fractional shares resulting from the issuance of
Purchaser Conversion Preferred shall be paid by the Corporation in cash to the
Purchaser. Notwithstanding the foregoing, the following actions by the
Corporation shall not be aggregated in calculating the Conversion Amount: (i)
the issuance of any shares of Common Stock pursuant to a stock option plan
approved by the Corporation's Board of Directors, (ii) the issuance of stock,
warrants or other securities or rights to persons or entities with which the
Corporation has bona fide business relationships provided such issuances are for
other than primarily equity financing purposes, provided that in any such case
(involving the foregoing clauses (i) or (ii)) such issuance has been approved by
a majority of the members of the Corporation's Board of Directors. The
Corporation will provide the Holder with at least 10 business days notice in
advance of an expected closing of an equity financing which will result in the
raising of the Conversion Amount, noting the time and place of such event. The
Corporation shall present and deliver certificates evidencing the proper number
of Recent Equity Financing Shares to the Holder, in such denominations and in
such name or names as the Holder may designate by notice to the Corporation, to
the Holder at the closing of the Recent Equity Financing in exchange for
delivery of this Note to the Corporation. Upon receipt of this Note in exchange
for such certificate or certificates of stock evidencing the proper number of
Recent Equity Financing Shares, the Corporation shall cancel and destroy this
Note or Notes, and this Note or Notes shall thereafter be null, void and of no
effect. In the event that conversion of all or a portion of the principal amount
of this Note into Purchaser Conversion Preferred pursuant to this Section 15(b)
requires the Holder and the Corporation to file applications or notices with any
Governmental Authority (as defined in Section 2.06 of the Purchase Agreement),
including pursuant to the HSR Act, the Holder and the Corporation shall file
such applications or notices as soon as practicable upon receipt of notice of an
expected closing of an equity financing which will result in the raising of the
Conversion Amount. In such event, such conversion shall be effected only to the
extent and in such amounts not prohibited by any Governmental Authority or
applicable law until authorization from such Governmental Authority and/or
relief under applicable law shall be obtained (which may take the form of
obtaining a favorable ruling from such Governmental Authority, or the expiration
or early termination of any applicable waiting periods), at which time any
remaining unconverted Notes subject to conversion pursuant to this Section 15(b)
shall be converted into Purchaser Conversion Preferred.
(c) Conversion Prior to Optional Prepayment. In the event
the holder of this Note receives a notice from the Corporation in accordance
with Section 5(b) that the Corporation intends to optionally prepay the Note,
the holder of this Note shall have the option, prior to the consummation of such
prepayment, to convert all or portion of the unpaid principal amount of this
Note together with a corresponding portion of the accrued interest hereon into
shares of Common Stock in accordance with the terms of paragraph (a) above. The
holder shall exercise such right of conversion by giving written notice to the
Corporation in accordance with paragraph (a) above prior to the date of such
prepayment referred to in the Corporation's notice to the holder in accordance
with Section 6.
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(d) Issuance of Certificates; Time Conversion Effected.
Promptly after (i) the receipt of the written notice referred to in paragraph
(a) above or (ii) the occurrence of the events described in paragraph (b) above,
as the case may be, and surrender of this Note, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock or preferred stock, as the case may be,
issuable upon the conversion of such unpaid principal amount of this Note
together with interest and any Applicable Premium Amount. To the extent
permitted by law, such conversion shall be deemed to have been effected as of
the close of business on the date on which this Note shall have been surrendered
as aforesaid, and at such time the rights of the holder of this Note, to the
extent of the principal amount thereof and any other amounts to be converted,
shall cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock, or preferred stock, as the case may be,
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.
(e) Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of the principal amount of
this Note or any portion thereof, and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. In case of the conversion of only a portion of the unpaid
principal amount of this Note, the holder hereof, at its option, may require the
Corporation to execute and deliver at the expense of the Corporation (other than
for transfer taxes, if any), upon surrender of this Note, a new Note registered
in the name of such person or persons as may be designated by such holder for
the principal amount of this Note then remaining unpaid, dated as of the date to
which interest has been paid on the principal amount of this Note then remaining
unpaid, or may present this Note to the Corporation for notation hereon of the
payment of the portion of the principal amount of this Note so converted. If any
fractional interest in a share of Common Stock or preferred stock, as the case
may be, would, except for the provisions of the first sentence of this paragraph
(e), be deliverable upon any such conversion, the Corporation, in lieu of
delivering the fractional share thereof, shall pay to the holder surrendering
this Note for conversion an amount in cash equal to such fractional interest
multiplied by the Conversion Price then in effect.
(f) Adjustment of Conversion Price upon Issuance of Common
Shares. If and whenever the Corporation shall issue or sell, or is in accordance
with subparagraphs (i) through (vii) deemed to have issued or sold, any shares
of its Common Stock for a consideration per share less than the Conversion Price
in effect immediately prior to the time of such issue or sale, then, forthwith
upon such issue or sale, the Conversion Price shall be reduced to the price
(calculated to the nearest cent) determined by dividing (x) an amount equal to
the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (including as outstanding all shares of Common Stock
issuable upon conversion of outstanding Notes) multiplied by the then existing
Conversion Price, and (2) the consideration, if any, received by the Corporation
upon such issue or sale, by (y) the total number of shares of Common Stock
outstanding immediately after such issue or sale (including as outstanding all
shares of Common Stock issuable upon conversion of outstanding Notes).
14
No adjustment of the Conversion Price, however, shall be
made in an amount less than $.01 per share, and any such lesser adjustment
shall be carried forward and shall be made at the time and together with the
next subsequent adjustment which together with any adjustments so carried
forward shall amount to $.01 per share or more.
For purposes of this subparagraph (f), the following
subparagraphs (i) to (vii) shall also be applicable:
(i) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or
to purchase, or any options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such Options, or the right
to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities (determined by
dividing (x) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus
the minimum aggregate amount of additional consideration payable to
the Corporation upon the exercise of all such Options, plus, in the
case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the
Conversion Price in effect immediately prior to the time of the
granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been issued for such price per share as of
the date of granting of such Options and thereafter shall be deemed
to be outstanding. Except as otherwise provided in subparagraph
(iii), no adjustment of the Conversion Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities
upon exercise of such Options or upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities. If
at the end of the period during which such Options or Convertible
Securities are exercisable not all Options or Convertible Securities
shall have been exercised or converted, the adjusted Conversion Price
shall be immediately readjusted to what it would have been based upon
the number of additional shares of Common Stock actually issued in
respect of such Options and Convertible Securities.
(ii) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
15
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange
(determined by dividing (x) the total amount received or receivable
by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the Conversion
Price in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be
deemed to have been issued for such price per share as of the date of
the issue or sale of such Convertible Securities and thereafter shall
be deemed to be outstanding, provided that (1) except as otherwise
provided in subparagraph (iii) below, no adjustment of the Conversion
Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and (2) if any
such issue or sale of such Convertible Securities is made upon
exercise of any Option to purchase any such Convertible Securities
for which adjustments of the Conversion Price have been or are to be
made pursuant to other provisions of this paragraph (f), no further
adjustment of the Conversion Price shall be made by reason of such
issue or sale. If at the end of the period during which such
Convertible Securities are convertible not all Convertible Securities
shall have been converted, the adjusted Conversion Price shall be
immediately readjusted to what it would have been based upon the
number of additional shares of Common Stock actually issued in
respect of such Convertible Securities.
(iii) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in subparagraph (i), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
(i) or (ii), or the rate at which any Convertible Securities referred
to in subparagraph (i) or (ii) are convertible into or exchangeable
for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution), the
Conversion Price in effect at the time of such event shall forthwith
be readjusted to the Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold; and on the expiration of any such
Option or termination of any such right to convert or exchange such
Convertible Securities, the Conversion Price then in effect hereunder
shall forthwith be increased to the Conversion Price which would have
been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been
issued, and the Common Stock issuable thereunder shall no longer be
deemed to be outstanding. If the purchase price provided for in any
such Option referred to in subparagraph (i) or the rate at which any
Convertible Securities referred to in subparagraph (i) or (ii) are
convertible into or exchangeable for Common Stock shall be reduced at
16
any time under or by reason of provisions with respect thereto
designed to protect against dilution, then, in case of the delivery
of Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities, the
Conversion Price then in effect hereunder shall forthwith be adjusted
to such respective amount as would have been obtained had such Option
or Convertible Securities never been issued as to such Common Stock
and had adjustments been made upon the issuance of the shares of
Common Stock delivered as aforesaid, but only if as a result of such
adjustment the Conversion Price then in effect hereunder is thereby
reduced.
(iv) Stock Dividends. Without duplication of the adjustment
contemplated by clause (g) below, in case the Corporation shall
declare a dividend or make any other distribution upon any stock of
the Corporation payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without consideration.
(v) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefore shall be deemed to be the
amount received by the Corporation therefore, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors
of the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any Options shall be
issued in connection with the issue and sale of other securities of
the Corporation, together compromising one integral transaction in
which no specific consideration is allocated to such Options by the
parties thereto, such Options shall be deemed to have been issued
without consideration.
(vi) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of
entitling them (x) to receive a dividend or other distribution
payable in Common Stock, Options or Convertible Securities, or (y) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held
by or for the account of the Corporation, and the disposition of any
17
such shares shall be considered an issue or sale of Common Stock for
the purposes of this paragraph (f).
Notwithstanding anything to the contrary contained in this paragraph (f),
paragraph (f) is subject to the prior approval of the Corporation's
shareholders, which the Corporation shall seek to obtain as promptly as
practicable, if such shareholder approval would be required under the
Marketplace Rules of the Nasdaq National Market (the "NASDAQ") if paragraph (f)
were to otherwise operate in accordance with its terms, unless the NASDAQ has
waived such requirement.
(g) Subdivision or Combination of Stock. In case the
Corporation shall at any time declare a dividend or make any other distribution
upon any stock of the Corporation payable in Common Stock or subdivide its
outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Corporation shall be combined into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
(h) Certain Issues of Stock Excepted. Anything herein to
the contrary notwithstanding, the Corporation shall not make any adjustment of
the Conversion Price in the case of (i) the issuance of shares of Common Stock
upon conversion of Notes; (ii) the issuance of Options or shares of Common Stock
to employees, directors or consultants of the Corporation or its subsidiaries,
either directly or pursuant to Options, pursuant to plans or arrangements
approved by the Board of Directors (or Compensation Committee thereof) of the
Corporation; (iii) the issuance of shares of Common Stock in respect of any
Convertible Securities or Options issued by the Corporation prior to the date of
this Note; or (iv) the issuance of shares of Common Stock in connection with any
acquisition, merger, consolidation, or other business combination transaction.
(i) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a Note shall
thereafter have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock of the
Corporation immediately theretofore receivable upon the conversion of such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore so receivable had
such reorganization or reclassification not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without limitation
provisions for adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of such conversion rights
(including an immediate adjustment, by reason of such reorganization or
18
reclassification, of the Conversion Price to the value for the Common Stock
reflected by the terms of such reorganization or reclassification if the value
so reflected is less than the Conversion Price in effect immediately prior to
such reorganization or reclassification). In the event of a merger or
consolidation of the Corporation as a result of which a greater or lesser number
of shares of Common Stock of the surviving corporation are issuable to holders
of Common Stock of the Corporation outstanding immediately prior to such merger
or consolidation, the Conversion Price in effect immediately prior to such
merger or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock of
the Corporation. The Corporation will not effect any such consolidation, merger,
or any sale of all or substantially all of its assets or properties, unless
prior to the consummation thereof the successor corporation or other entity (if
other than the Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume, by written instrument executed
and mailed or delivered to each holder of Notes at the last address of such
holder appearing on the books of the Corporation, the obligation to deliver to
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to receive.
(j) Notice of Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, addressed to each holder
of Notes at the address of such holder as set forth in the register maintained
by the Corporation for the registration of transfer and exchange of Notes, which
notice shall state the Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
(k) Other Notices. In case at any time:
(i) the Corporation shall declare any dividend upon its
Common Stock payable in cash or stock or make any other distribution
to the holders of its Common Stock;
(ii) the Corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of
any class or other rights;
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with, or a sale of all or
substantially all its assets to, another corporation or other entity;
or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, addressed to each holder of Notes at the address of
such holder as set forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes, (A) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
19
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (B) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (A) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (B) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
(l) Stock to Be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock or its treasury
shares, solely for the purpose of issue upon the conversion of the Notes as
herein provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of the unpaid principal amount of all outstanding Notes. The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation covenants that it will
from time to time take all such action within its control as may be requisite to
assure that the par value per share of the Common Stock is at all times equal to
or less than the effective Conversion Price. The Corporation will take all such
action as may be necessary to assure that all such shares of Common Stock may be
so issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common Stock of
the Corporation may be listed. The Corporation will not take any action which
results in any adjustment of the Conversion Price if the total number of shares
of Common Stock issued and issuable after such action upon conversion of the
Notes would exceed the total number of shares of Common Stock then authorized by
the Corporation's Certificate of Incorporation.
(m) Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of the Notes shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Note the principal amount of which is
being converted.
(n) Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Note or of any shares of Common
Stock issued or issuable upon the conversion of any Note in any manner which
interferes with the timely conversion of such Note.
(o) Definition of Common Stock. As used in this Section 15,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, $.01 par value, as constituted on the date hereof, and shall also
include any capital stock of any class of the Corporation thereafter authorized
which shall not be limited to a fixed sum or percentage of par value in respect
of the rights of the holders thereof to participate in dividends or in the
20
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
16. COVENANTS BIND SUCCESSORS AND ASSIGNS. All the
covenants, stipulations, promises and agreements in this Note contained by or on
behalf of the Corporation shall bind its successors and assigns, whether so
expressed or not.
17. GOVERNING LAW. This Note shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
18. HEADINGS. The headings of the Sections and subsections
of this Note are inserted for convenience only and do not constitute a part of
this Note.
19. NOTICES. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by first class certified mail,
postage prepaid, by nationally recognized overnight courier, or by facsimile
addressed to such party at the address or facsimile number set forth below or
such other address or facsimile number as may hereafter be designated in writing
by the addressee to the addressor listing all parties:
if to the Corporation, to
SAVVIS Communications Corporation
12851 Worldgate Drive
Herndon, Virginia 20170
Fax: (703) 234-8315
Attention: Ms. Nancy Lysinger
with a copy to
SAVVIS Communication Corporation
717 Office Parkway
St. Louis, MO 63141
Fax: (314) 468-7550
Attention: Steven M. Gallant, Esq.
with a copy to
Hogan & Hartson L.L.P.
885 Third Avenue, 26th Floor
New York, New York 10022
Fax: (212) 409-9801
Attention: Christine M. Pallares, Esq.
21
if to the holder of this Note, to the address of such
holder listed on Schedule I of the Purchase Agreement or such other
address as the holder shall have provided to the Corporation in
writing;
with a copy to
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Fax: (212) 310-8007
Attention: David E. Zeltner, Esq.
or, in any case, at such other address or addresses as shall have been furnished
in writing by such party to the other parties hereto. All such notices,
requests, consents and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of mailing, on the fifth business day following the date of such
mailing, (c) in the case of delivery by overnight courier, on the business day
following the date of delivery to such courier, and (d) in the case of
facsimile, when received.
22
IN WITNESS WHEREOF, SAVVIS Communications Corporation has
caused this Note to be signed in its corporate name by one of its officers
thereunto duly authorized and to be dated as of the day and year first above
written.
SAVVIS COMMUNICATIONS CORPORATION
By: /s/ Steven M. Gallant
-------------------------------------
Name: Steven M. Gallant
Title: Vice President,
General Counsel
23
EXECUTION COPY
FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
FIRST AMENDMENT, DATED AS OF MAY 31, 2001 (this "Amendment") TO
SECURITIES PURCHASE AGREEMENT, by and between SAVVIS Communications Corporation,
a Delaware corporation (the "Company"), and Reuters Holdings Switzerland SA, a
societe anonyme organized under the laws of Switzerland (the "Purchaser").
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, the Company and the Purchaser are parties to into a
Securities Purchase Agreement, dated as of May 16, 2001 (the "Agreement")
pursuant to which the Purchaser agreed to purchase, on certain dates and subject
to satisfaction of certain conditions set forth in the Agreement, up to
$45,000,000 aggregate principal amount of the Company's 12% Convertible Senior
Secured Notes (together with the notes to be issued as payment-in-kind interest
thereunder, the "Notes") in the form attached as Exhibit A to the Agreement (the
"Form of Note");
WHEREAS, capitalized terms used herein and not otherwise defined
shall have the same meaning as such terms are used in the Agreement;
WHEREAS, on May 16, 2001, the Purchaser purchased a Note (the "May
2001 Note") from the Company and the Company sold the May 2001 Note to the
Purchaser with a principal amount of $10,000,000 in exchange for a cash payment
of like amount to the Company;
WHEREAS, the Notes may be converted into the Company's common stock
at any time at the option of the holders thereof ("Voluntary Conversion");
WHEREAS, upon the Company's raising certain funds through the
issuance of convertible preferred stock as set forth in Section 1.04(b) of the
Agreement, and upon satisfaction of certain other conditions as set forth in the
Agreement, the outstanding Notes will be converted automatically into a series
of the Company's convertible preferred stock ("Automatic Conversion");
WHEREAS, it may be necessary, prior to Voluntary Conversion or
Automatic Conversion, for the Purchaser and/or the Company to file applications
or notices with a Governmental Authority, including pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and to await a
favorable ruling from such Governmental Authority, or the expiration or early
termination of any applicable waiting periods;
WHEREAS, pursuant to any such application or notice, the Purchaser
and the Company desire to comply promptly with any requests for additional
information or documentary material; and
WHEREAS, the Company and the Purchaser desire to amend the Agreement,
the Form of Note and the May 2001 Note to reflect the foregoing.
NOW, THEREFORE, in consideration of the foregoing promises and the
following promises, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
SECTION 1. Amendment to the Agreement.
1.1 The following sentences are added to the end of Section 1.04(a)
of the Agreement:
"Upon notice from the Purchaser of its intention to convert a
principal amount of Notes pursuant to this Section 1.04(a) which
would require the Purchaser and the Company to file applications or
notices with any Governmental Authority (as defined in Section 2.06
hereof), including pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Purchaser
and the Company shall file such applications or notices as soon as
practicable and comply promptly with any requests for additional
information or documentary material relating to such applications or
notices. The delivery by the Purchaser to the Company of a notice to
file such applications or notices with a Governmental Authority shall
in no way obligate the Purchaser to convert any principal amount of
such Notes."
1.2 Section 1.04(b) of the Agreement is hereby amended and restated
as follows:
"(b) Automatic Conversion of Notes into Preferred Stock. Simultaneous
with the Company raising an aggregate of $50,000,000 (the "Conversion
Amount") in cash through the issuance of convertible preferred stock
prior to the Maturity Date (as defined below), excluding the Notes
and PIK Notes, but including shares issued upon conversion of up to
$20,000,000 aggregate principal amount of the Company's 10%
Convertible Senior Secured Notes due February 20, 2006 issued to
affiliates of Welsh, Carson, Anderson & Stowe ("Welsh Carson")
(excluding any notes issued to Welsh Carson in kind for interest on
such notes), all of the principal amount of the Notes then
outstanding, together with any PIK Notes (as defined below), Notes
then-payable in kind for accrued and unpaid interest as of such date
and Notes to be purchased on such date by the Purchaser, subject to
satisfaction of all applicable conditions set forth in Section 6.02
2
herein, at a special Closing with a Purchase Price equal to the
difference between $30,000,000 and the aggregate Purchase Price paid
by the Purchaser pursuant to all Closings completed pursuant to this
Agreement as of such date (it being understood that on such date, the
Purchaser shall deliver such Purchase Price by wire transfer of
immediately available funds to the Company), shall be converted into
shares of convertible preferred stock ("Purchaser Conversion
Preferred") on the same terms (including purchase price) as, and
having the same rights, preferences, privileges and restrictions as
shares issued (the "Recent Equity Financing Shares") pursuant to the
Company's most recent preferred stock financing (the "Recent Equity
Financing"), except that the initial conversion price of such
Purchaser Conversion Preferred shall be the equivalent of the lesser
of (i) the initial conversion price of the Recent Equity Financing
Shares, (ii) the initial conversion price of shares issued pursuant
to any financing which comprises a portion of the Conversion Amount
(excluding shares issued upon conversion of the notes previously
issued to Welsh Carson referred to above), and (iii) the Common Stock
Conversion Price. The Purchaser Conversion Preferred shall be of the
same class, but separate series, as the Recent Equity Financing
Shares. The proportional value of any fractional shares resulting
from the issuance of Purchaser Conversion Preferred shall be paid by
the Company in cash to the Purchaser. Notwithstanding the foregoing,
the following actions by the Company shall not be aggregated in
calculating the Conversion Amount: (i) the issuance of any shares of
Common Stock pursuant to a stock option plan approved by the
Company's Board of Directors, (ii) the issuance of stock, warrants or
other securities or rights to persons or entities with which the
Company has bona fide business relationships provided such issuances
are for other than primarily equity financing purposes, provided,
that in any such case (involving the foregoing clauses (i) or (ii))
such issuance has been approved by a majority of the members of the
Company's Board of Directors. The Company will provide the Purchaser
with at least 10 business days notice in advance of an expected
closing of an equity financing which will result in the raising of
the Conversion Amount, noting the time and place of such event. The
Company shall present and deliver certificates evidencing the proper
number of Purchaser Conversion Preferred to the Purchaser, in such
denominations and in such name or names as the Purchaser may
designate by notice to the Company, to Purchaser at the closing of
the Recent Equity Financing in exchange for delivery of its Notes to
the Company. Upon receipt of such Notes in exchange for such
certificate or certificates of stock evidencing the proper number of
Purchaser Conversion Preferred, the Company shall cancel and destroy
such Note or Notes, and such Note or Notes shall thereafter be null,
void and of no effect. An opinion or opinions of counsel
substantially similar to the opinions to be rendered pursuant to
3
Section 6.01(a)(vi) hereof, reasonably satisfactory to the Purchaser,
will be provided regarding the issuance of the Purchaser Conversion
Preferred upon the issuance of such securities. In the event that
conversion of all or a portion of the principal amount of the Notes
into Purchaser Conversion Preferred pursuant to this Section 1.04(b)
requires the Purchaser and the Company to file applications or
notices with any Governmental Authority (as defined in Section 2.06
hereof), including pursuant to the HSR Act, the Purchaser and the
Company shall file such applications or notices as soon as
practicable upon receipt of notice of an expected closing of an
equity financing which will result in the raising of the Conversion
Amount. In such event, such conversion shall be effected only to the
extent and in such amounts not prohibited by any Governmental
Authority or applicable law, until authorization from such
Governmental Authority and/or relief under applicable law shall be
obtained (which may take the form of obtaining a favorable ruling
from such Governmental Authority, or the expiration or early
termination of any applicable waiting periods), at which time any
remaining unconverted Notes subject to conversion pursuant to this
Section 1.04(b) shall be converted into Purchaser Conversion
Preferred."
SECTION 2. Amendments to the Form of Note and May 2001 Note.
2.1 The following sentences are added to the end of Section 15(a) of
both the Form of Note and the May 2001 Note:
"Upon notice from the Holder of its intention to convert all or a
portion of the principal amount of this Note pursuant to this Section
15(a) which would require the Holder and the Corporation to file
applications or notices with any Governmental Authority (as defined
in Section 2.06 of the Purchase Agreement), including pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), the Holder and the Corporation shall file such
applications or notices as soon as practicable and comply promptly
with any requests for additional information or documentary material
relating to such applications or notices. The delivery by the Holder
to the Corporation of a notice to file such applications or notices
with a Governmental Authority shall in no way obligate the Holder to
convert any principal amount of this Note."
2.2 Section 15(b) of both the Form of Note and the May 2001 Note are
amended and restated as follows:
"(b) Automatic Conversion of this Note into Preferred Stock.
Simultaneous with the Corporation raising an aggregate of $50,000,000
(the "Conversion Amount") in cash through the issuance of convertible
preferred stock prior to the Maturity Date, excluding the Notes and
PIK Notes, but including shares issued upon conversion of up to
4
$20,000,000 aggregate principal amount of the Corporation's 10%
Convertible Senior Secured Notes due February 20, 2006 issued to
affiliates of Welsh, Carson, Anderson & Stowe ("Welsh Carson")
(excluding any notes issued to Welsh Carson in kind for interest on
such notes), all of the principal amount of this Note, together with
any PIK Notes, Notes then-payable in kind for accrued and unpaid
interest as of such date and Notes to be purchased on such date by
the Purchaser, subject to satisfaction of all applicable conditions
set forth in Section 6.02 of the Purchase Agreement, at a special
Closing on such date with a Purchase Price equal to the difference
between $30,000,000 and the aggregate Purchase Price paid by the
Purchaser pursuant to all Closings completed pursuant to this
Agreement as of such date pursuant to the terms of the Purchase
Agreement (collectively, the "Purchaser Conversion Notes"), shall be
converted into shares of convertible preferred stock ("Purchaser
Conversion Preferred") on the same terms (including purchase price)
as, and having the same rights, preferences, privileges and
restrictions as shares issued (the "Recent Equity Financing Shares")
pursuant to the Corporation's most recent preferred stock financing
(the "Recent Equity Financing"), except that the initial conversion
price of such Purchaser Conversion Preferred shall be the equivalent
of the lesser of (i) the initial conversion price of the Recent
Equity Financing Shares, (ii) the initial conversion price of shares
issued pursuant to any financing which comprises a portion of the
Conversion Amount (excluding shares issued upon conversion of the
notes previously issued to Welsh Carson referred to above), and (iii)
the Common Stock Conversion Price. The Purchaser Conversion Preferred
shall be of the same class, but separate series, as the Recent Equity
Financing Shares. The proportional value of any fractional shares
resulting from the issuance of Purchaser Conversion Preferred shall
be paid by the Corporation in cash to the Purchaser. Notwithstanding
the foregoing, the following actions by the Corporation shall not be
aggregated in calculating the Conversion Amount: (i) the issuance of
any shares of Common Stock pursuant to a stock option plan approved
by the Corporation's Board of Directors, (ii) the issuance of stock,
warrants or other securities or rights to persons or entities with
which the Corporation has bona fide business relationships provided
such issuances are for other than primarily equity financing
purposes, provided that in any such case (involving the foregoing
clauses (i) or (ii)) such issuance has been approved by a majority of
the members of the Corporation's Board of Directors. The Corporation
will provide the Holder with at least 10 business days notice in
advance of an expected closing of an equity financing which will
result in the raising of the Conversion Amount, noting the time and
place of such event. The Corporation shall present and deliver
certificates evidencing the proper number of Recent Equity Financing
Shares to the Holder, in such denominations and in such name or names
5
as the Holder may designate by notice to the Corporation, to the
Holder at the closing of the Recent Equity Financing in exchange for
delivery of this Note to the Corporation. Upon receipt of this Note
in exchange for such certificate or certificates of stock evidencing
the proper number of Recent Equity Financing Shares, the Corporation
shall cancel and destroy this Note or Notes, and this Note or Notes
shall thereafter be null, void and of no effect. In the event that
conversion of all or a portion of the principal amount of this Note
into Purchaser Conversion Preferred pursuant to this Section 15(b)
requires the Holder and the Corporation to file applications or
notices with any Governmental Authority (as defined in Section 2.06
of the Purchase Agreement), including pursuant to the HSR Act, the
Holder and the Corporation shall file such applications or notices as
soon as practicable upon receipt of notice of an expected closing of
an equity financing which will result in the raising of the
Conversion Amount. In such event, such conversion shall be effected
only to the extent and in such amounts not prohibited by any
Governmental Authority or applicable law until authorization from
such Governmental Authority and/or relief under applicable law shall
be obtained (which may take the form of obtaining a favorable ruling
from such Governmental Authority, or the expiration or early
termination of any applicable waiting periods), at which time any
remaining unconverted Notes subject to conversion pursuant to this
Section 15(b) shall be converted into Purchaser Conversion
Preferred."
SECTION 3. Miscellaneous.
3.1 Execution.This Amendment may be executed in counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall
together constitute but on and the same instrument.
3.2 Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New York.
3.3 Full Force and Effect. As amended hereby, the Agreement
(including the Form of Note) and the May 2001 Note remain in full force and
effect in accordance with their terms and all future references to the Agreement
(including the Form of Note) or the May 2001 Note shall mean the Agreement
(including the Form of Note) and the May 2001 Note, in each case as amended
hereby.
[signature page follows]
6
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Amendment as of the day and year first above written.
SAVVIS COMMUNICATIONS CORPORATION
By: /s/ Steven M. Gallant
-------------------------------------
Name: Steven M. Gallant
Title: Vice President,
General Counsel
REUTERS HOLDINGS SWITZERLAND SA
By: /s/ Devin Wenig
-------------------------------------
Name: Devin Wenig
Title: Attorney-in-Fact
7
