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Exhibit 10.45
SUBORDINATION AND INTERCREDITOR
AGREEMENT
This
SUBORDINATION AND INTERCREDITOR AGREEMENT (this "
Agreement "), dated as of January 5, 2007 is among
TERREMARK WORLDWIDE, INC. , a Delaware corporation ( the
"Company "); NAP OF THE AMERICAS, INC.; NAP OF THE
AMERICAS/WEST, INC.; OPTICAL COMMUNICATIONS, INC.; PARK WEST
TELECOMMUNICATIONS INVESTORS, INC.; SPECTRUM TELECOMMUNICATIONS
CORP.; TECOTA SERVICES CORP.; TERREMARK FINANCIAL SERVICES, INC.;
TERREMARK FORTUNE HOUSE #1, INC.; TERREMARK LATIN AMERICA, INC.;
TERREMARK MANAGEMENT SERVICES, INC.; TERREMARK REALTY, INC.;
TERREMARK TECHNOLOGY CONTRACTORS, INC.; TERRREMARK TRADEMARK
HOLDINGS, INC.; TERRENAP DATA CENTERS, INC. ; TERRENAP
SERVICES, INC.; TERREMARK FEDERAL GROUP, INC. ; and
TERREMARK EUROPE, INC. (each, a " Guarantor " and,
collectively, the " Guarantors "), FALCON MEZZANINE
PARTNERS, LP (" Falcon "), STICHTING PENSIOENFONDS
VOOR DE GEZOND-HEID, GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN
(" SPM "), STICHTING PENSIOENFONDS ABP ("
ABP " and, together with Falcon and SPM, the " Senior
Creditors "), FMP AGENCY SERVICES, LLC (the "Senior Agent"),
CREDIT SUISSE, INTERNATIONAL (" Subordinated Creditor ") and
THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee under the
Indenture (as hereinafter defined) (" Subordinated Agent
").
R E C I T A L S
A.
The Company, Senior Agent and the Senior Creditors have entered
into a Purchase Agreement dated December 31, 2004 (as the same
may be amended, supplemented, restated or otherwise modified and in
effect from time to time including, without limitation, as amended
on the date hereof, the " Senior Purchase Agreement "),
pursuant to which, among other things, Senior Creditors have
purchased $30,000,000 aggregate principal amount of Senior Secured
Notes due 2009 (as the same may be amended, supplemented, restated
or otherwise modified and in effect from time to time as permitted
hereunder and including any notes issued in exchange or
substitution therefore or replacement thereof, each individually a
" Senior Note " and collectively the " Senior Notes
").
B.
The Company, the Guarantors, Subordinated Creditor, and Credit
Suisse, Cayman Islands Branch have entered into a Purchase
Agreement of even date herewith (as the same may be amended,
supplemented, restated or otherwise modified and in effect from
time to time as permitted hereunder, the " Subordinated Purchase
Agreement ") pursuant to which, among other things, the
Subordinated Creditor has extended credit to the Company as
evidenced by certain Senior Subordinated Convertible Notes due 2009
issued by the Company in favor of the Subordinated Creditor in the
original aggregate principal amount of $4,000,000 (as the same may
be amended, supplemented, restated or otherwise modified and in
effect from time to time as permitted hereunder and including any
notes issued in exchange or substitution therefor or replacement
thereof, each individually a " Subordinated Note " and
collectively the " Subordinated Notes ").
C.
The Company and Subordinated Agent have entered into an Indenture
of even date herewith (as the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time as
permitted hereunder, the " Indenture ") pursuant to which,
among other things, the Subordinated Notes were issued by the
Company in favor of the Subordinated Creditor.
D.
As an inducement to and as one of the conditions precedent to the
agreement of the Senior Creditors to consent to the transactions
contemplated by the Subordinated Purchase Agreement and Indenture,
Senior Agent, and Senior Creditors have required the execution and
delivery of this Agreement by the Subordinated Creditor, the
Subordinated Agent and the Obligors (as herinafter defined).
NOW,
THEREFORE, in order to induce Senior Agent and Senior Creditors to
consent to the transactions contemplated by the Subordinated
Purchase Agreement and the Indenture, and for other good and
valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the parties hereto hereby agree as follows:
1. Definitions
. All capitalized terms used but not elsewhere defined in this
Agreement (including the preamble and recitals hereto) shall have
the respective meanings ascribed to such terms in the Senior
Purchase Agreement as in effect on the date hereof. The following
terms shall have the following meanings in this Agreement:
Bankruptcy Code
means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.), as amended and in effect from time to time and
the regulations issued from time to time thereunder.
Basic Documents
shall have (and each capitalized term used therein shall have) the
meaning ascribed to such term in the Senior Purchase Agreement, as
in effect on the date hereof.
Enforcement Action
is defined in subsection 2.7(b) .
Lien shall mean any
mortgage, deed of trust, pledge, hypothecation, assignment, charge
or deposit arrangement, encumbrance, lien (statutory or otherwise)
or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever and any contingent or
other agreement to provide any of the foregoing.
Obligor shall mean
the Company and each other Person that guarantees or grants a Lien
on any of its Property to secure the payment, observance or
performance of all or any part of the Senior Indebtedness,
including, without limitation, the Guarantors.
Paid in Full or
Payment in Full shall mean the payment in full in
cash of all Senior Indebtedness and termination of all commitments
to lend under the Basic Documents and Permitted Refinancing Debt
Documents. Senior Indebtedness shall be considered to be
outstanding whenever any commitment to make loans or otherwise
extend credit under the Senior Purchase Agreement or Permitted
Refinancing Debt Documents is outstanding.
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Permitted
Refinancing shall mean any refinancing of the Senior
Indebtedness under the Basic Documents; provided , that the
financing documentation entered into by Obligors in connection with
such Permitted Refinancing constitutes Permitted Refinancing Debt
Documents and the aggregate principal amount of such refinancing
does not exceed the maximum principal amount of Senior Indebtedness
permitted under the definition thereof.
Permitted Refinancing Debt
Documents shall mean any financing documentation which
replaces the Basic Documents and pursuant to which the Senior
Indebtedness under the Basic Documents is refinanced, as such
financing documentation may be amended, supplemented, restated or
otherwise modified and in effect from time to time as permitted
hereunder, but specifically excluding any such financing
documentation to the extent that it contains, either initially or
by amendment or other modification, any terms, conditions,
covenants or defaults other than those which (a) then exist in
the Basic Documents or (b) could be included in the Basic
Documents by an amendment or other modification that would not be
prohibited by the terms of this Agreement.
Permitted Subordinated
Indebtedness Payments shall mean:
(a) interest payments on account
of the Subordinated Indebtedness evidenced by the Subordinated
Notes but only to the extent made on a paid-in-kind or accretion
basis (and not made in cash);
(b) the accrual (and not payment
in cash) of default interest on Subordinated Indebtedness evidenced
by the Subordinated Notes;
(c) the payment of fees on the
date hereof pursuant to the Subordinated Purchase Agreement to the
extent made in shares of common stock of the Company (the " Fee
Shares ");
(d) the payment in cash of
liquidated damages, if any, pursuant to that certain Registration
Rights Agreement dated the date hereof by and among the Obligors
and Credit Suisse International related to the Fee Shares; and
(e) reimbursement under the
Subordinated Purchase Agreement for the reasonable and documented
out-of-pocket costs and expenses of the holders of the Subordinated
Notes pursuant to the terms of the Subordinated Purchase Agreement
either (1) incurred in connection with the negotiation,
execution or delivery of the Subordinated Purchase Agreement and
paid within 30 days of the date hereof or (2) incurred in
connection with the enforcement of the Subordinated Purchase
Agreement or otherwise in an aggregate not to exceed $100,000;
in each instance, to the extent
then due and payable in accordance with the terms of the
Subordinated Indebtedness Documents.
Person shall mean
an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
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Proceeding is
defined in subsection 2.3.
Property shall
mean, with respect to any Person, all property and interests in
property of such Person, whether real, personal or mixed, whether
now owned or existing or hereafter acquired or arising and
wheresoever located.
Related Fund shall
mean, with respect to any holder of Subordinated Indebtedness,
(a) any fund, trust or similar entity that invests in
commercial loans in the ordinary course of business and is advised,
managed or serviced by (i) such holder, (ii) an affiliate
of such holder, (iii) the same investment advisor that manages
such holder or (iv) an affiliate of an investment advisor that
manages such holder, or (b) any finance company, insurance
company or other financial institution which temporarily warehouses
loans for such holder or any Person described in clause (a)
above.
Reorganization Subordinated
Securities shall mean any (a) equity securities of the
Company or any of its subsidiaries and (b) notes or other debt
securities issued in substitution of all or any portion of the
Subordinated Indebtedness that are subordinated, including in right
of payment, to the Senior Indebtedness (or any notes or other
securities issued in substitution of all or any portion of the
Senior Indebtedness) at least to the same extent and, in the case
of clause (b), on substantially the same terms that the
Subordinated Indebtedness is subordinated to the Senior
Indebtedness pursuant to the terms of this Agreement, and which
securities have maturities and other terms no less advantageous to
Obligors and Senior Creditors than the terms contained in the
Subordinated Indebtedness Documents.
Required Holders
shall have the meaning ascribed to such term in the Senior Purchase
Agreement; provided , that, after the consummation of any
Permitted Refinancing, the term "Required Holders" shall mean the
holders of Senior Indebtedness having the right and/or ability
under the Permitted Refinancing Debt Documents to effectuate the
waiver, amendment, granting of consent or other matter in
question.
Senior Agent shall
have the meaning ascribed to such term in the preamble of this
Agreement; provided , that, after the consummation of any
Permitted Refinancing, the term "Senior Agent" shall refer to any
Person appointed by the holders of the Senior Indebtedness as agent
for themselves for the purposes of this Agreement.
Senior Covenant
Default shall mean any "Default" or "Event of Default"
under the Senior Purchase Agreement or Permitted Refinancing Debt
Documents, other than a Senior Payment Default.
Senior Creditor or Senior
Creditors shall mean any "Noteholder" or the "Noteholders,"
respectively, as such terms are defined in the Senior Purchase
Agreement; provided , that, after the consummation of any
Permitted Refinancing, such terms shall refer to any holder or all
of the holders, respectively, of the Senior Indebtedness.
Senior Creditor
Collateral shall mean all of the assets and property of any
Obligor, whether real, personal. mixed, with respect to which a
Lien is granted or purported to be granted as security for any
Senior Indebtedness.
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Senior Default
Notice shall mean a written notice from Senior Agent or any
Senior Creditor to Subordinated Agent and the Company pursuant to
which the Subordinated Agent is notified of the existence of a
Senior Covenant Default.
Senior Indebtedness
shall mean all Indebtedness, liabilities and other obligations of
any and every kind and nature now existing or hereafter arising,
contingent or otherwise, of any Obligor or any other Person under,
in connection with, or evidenced or secured by the Senior Purchase
Agreement or any of the other Basic Documents, including, without
limitation, all such Obligations to pay (i) principal,
(ii) interest or premium (including interest accruing after
the commencement of any Proceeding, whether or not constituting an
allowed claim in such Proceeding), (iii) fees,
(iv) costs, expenses and other amounts related to any
indemnity against loss, damage or liability, (v) any other
monetary obligation, and all such Indebtedness, obligations and
liabilities incurred with respect to Permitted Refinancings,
together with any amendments, restatements, modifications, renewals
or extensions of any thereof permitted hereunder; provided ,
that, in no event shall the principal amount of the Senior
Indebtedness exceed the sum of (a) $30,000,000, reduced by the
amount of any principal repayments and permanent commitment
reductions under the Senior Purchase Agreement or any Permitted
Refinancing Debt Documents, to the extent that such repayments and
reductions may not be reborrowed (specifically excluding, however,
any such repayments and commitment reductions occurring in
connection with any Permitted Refinancing), plus
(b) costs and expenses incurred following the occurrence of a
Senior Payment Default or Senior Covenant Default, as the case may
be, by or for the account of the holders of Senior Indebtedness (or
any representatives thereof) to preserve or protect any Senior
Creditor Collateral, plus (c) the amount of interest
that is capitalized and added to the principal amount of the Senior
Notes in accordance with the terms thereof.
Senior Payment
Default shall mean a Default or Event of Default described
in Section 10.01(a) or (b) of the Senior Purchase
Agreement or any corresponding provision in the Permitted
Refinancing Debt Documents or any other Default or Event of Default
resulting from the failure of any Obligor to pay, on a timely
basis, any principal interest, premium, fees or other obligations
under any Basic Document or Permitted Refinancing Debt Document,
including, without limitation, in each case, any default in payment
of Senior Indebtedness after acceleration thereof.
Subordinated
Creditor shall mean the Subordinated Creditor that is a
signatory to this Agreement and any other holder of the
Subordinated Note(s) or any other Subordinated Indebtedness from
time to time.
Subordinated
Default shall mean a default in the payment of the
Subordinated Indebtedness, or performance of any term, covenant or
condition contained in the Subordinated Indebtedness Documents or
the occurrence of any other event or condition constituting a
default or event of default under the Subordinated Indebtedness
Documents.
Subordinated Default
Notice shall mean a written notice to Senior Agent and the
Company from Subordinated Agent or the Subordinated Creditor
pursuant to which Sen
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ior Agent is notified of the existence of a Subordinated
Default, which notice incorporates a reasonably detailed
description of such Subordinated Default.
Subordinated
Indebtedness shall mean all Indebtedness, liabilities and
other obligations of any and every kind and nature now existing or
hereafter arising, contingent or otherwise, of any Obligor or any
other Person under, in connection with, or evidenced by any of the
Subordinated Indebtedness Documents, in each case including,
without limitation, obligations to pay (i) principal,
(ii) interest or premium (including interest accruing after
the commencement of any Proceeding, whether or not constituting an
allowed claim in such Proceeding, and any premium payable with
respect to any prepayment of the Subordinated Indebtedness pursuant
to the Subordinated Indebtedness Documents), (iii) fees,
(iv) costs, expenses and other amounts related to any
indemnity against loss, damage or liability, and (v) any other
monetary obligation.
Subordinated Indebtedness
Documents shall mean the Subordinated Notes, Subordinated
Purchase Agreement, Indenture, any guaranty with respect to the
Subordinated Indebtedness, and all other agreements, documents and
instruments evidencing or pertaining to any portion of the
Subordinated Indebtedness, as amended, supplemented, restated or
otherwise modified and in effect from time to time as permitted
hereunder.
The definitions in Section 1
shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The
words "include", "includes" and "including", and words of similar
import, shall not be limiting and shall be deemed to be followed by
the phrase "without limitation". The word "will" shall be construed
to have the same meaning and effect as the word "shall". The words
"asset" and "property" shall be construed as having the same
meaning and effect and to refer to any and all rights and interests
in tangible and intangible assets and properties of any kind
whatsoever, whether real, personal or mixed, including cash,
securities, equity interests, accounts and contract rights. The
words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision of this Agreement
unless the context shall otherwise require. Any reference to a
Person, shall be deemed to include a reference to such
Person’s successors and assigns (including any debtor in
possession and any other Person to which substantially all of the
assets of such Person are transferred). All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require.
2. Subordination of
Subordinated Indebtedness to Senior Indebtedness .
2.1 Subordination .
The payment of any and all of the Subordinated Indebtedness hereby
expressly is subordinated, to the extent and in the manner set
forth herein, to the Payment in Full of the Senior Indebtedness.
Each holder of Senior Indebtedness, whether now outstanding or
hereafter arising, shall be deemed to have acquired Senior
Indebtedness in reliance
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upon the provisions contained herein. Nothing in this Agreement
shall apply to claims of, or payments to, the Subordinated Agent,
solely in its capacity as Trustee and not for the benefit of any
Subordinated Creditor, under or pursuant to any provision of the
Indenture.
2.2 Restriction on
Payments . Notwithstanding any provision of the
Subordinated Indebtedness Documents to the contrary and in addition
to any other limitations set forth herein or therein, no payment
(whether made in cash, securities, other than any Reorganization
Subordinated Securities, or other Property or by set-off) of
principal, interest, premium or any other amount due with respect
to the Subordinated Indebtedness shall be made or received, and
neither Subordinated Agent nor the Subordinated Creditor shall
exercise any right of set-off or recoupment with respect to any
Subordinated Indebtedness, until all of the Senior Indebtedness is
Paid in Full; provided , that, except as provided in the
immediately succeeding sentence or in subsection 2.3 , the
Company may make and Subordinated Agent and the Subordinated
Creditor may accept and retain Permitted Subordinated Indebtedness
Payments and provided , further , that the Company
may make and Subordinated Agent may accept and retain payments to
the Subordinated Agent contemplated by subsection 2.1 .
Notwithstanding the foregoing, no Obligor may make, and neither
Subordinated Agent nor the Subordinated Creditor may accept or
retain, any payment of principal, interest, premium or any other
amount with respect to the Subordinated Indebtedness (other than
any payment made solely in Reorganization Subordinated Securities
or payments made to the Subordinated Agent as contemplated in
subsection 2.1 ) if, at the time of such payment or, with
respect to clause (a) below, immediately after giving effect
thereto:
(a) a Senior Payment Default
exists; or
(b) subject to the penultimate
sentence of this subsection 2.2 , the Subordinated Agent and
the Subordinated Creditor shall have received a Senior Default
Notice from Senior Agent or any Senior Creditor stating that a
Senior Covenant Default exists or would be created by the making of
such payment.
The
Company may resume Permitted Subordinated Indebtedness Payments
(and may make any Permitted Subordinated Indebtedness Payments
missed due to the application of clauses (a) or (b)
of this subsection 2.2 ), and Subordinated Agent and
Subordinated Creditor may accept and retain such Permitted
Subordinated Indebtedness Payments:
(1) in the case of a Senior
Payment Default referred to in clause (a) of this
subsection 2.2 , upon a cure or waiver (as evidenced by a
written waiver from Senior Agent or the Senior Creditors to the
Company) thereof in accordance with the terms of the Senior
Purchase Agreement or Permitted Refinancing Debt Documents; or
(2) in the case of a Senior
Covenant Default referred to in clause (b) of this
subsection 2.2 , upon the earlier to occur of (x) the
cure or waiver (as evidenced by a written waiver from Senior Agent
or the Senior Creditors to the Company) of all such Senior Covenant
Defaults in accordance with the terms of the Senior Purchase
Agreement or Permitted Refinancing Debt Documents, and (y) the
expiration of 180 days from the date on which the Senior
Default Notice was received.
Notwithstanding any provision of
this subsection 2.2 to the contrary:
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(A) the Company shall not be
prohibited from making, and Subordinated Agent and Subordinated
Creditor shall not be prohibited from accepting and retaining,
Permitted Subordinated Indebtedness Payments by virtue of the
payment blockage effected by clause (b) of this
subsection 2.2 for more than an aggregate of 180 days
within any period of 360 consecutive days;
(B) no Senior Covenant Default
existing on the date any notice is given pursuant to clause
(b) of this subsection 2.2 shall, unless the same shall
have ceased to exist for a period of at least 60 consecutive days,
be used as a basis for any subsequent such notice (for purposes of
this paragraph, breaches of the same financial covenant for
consecutive periods shall constitute separate and distinct Senior
Covenant Defaults); and
(C) Senior Agent and the Senior
Creditors shall not deliver more than three (3) Senior Default
Notices, in the aggregate, prior to the termination of this
Agreement.
The
provisions of this subsection 2.2 shall not apply to any
payment with respect to which subsection 2.3 would be
applicable.
2.3 Proceedings . In
the event of any insolvency, bankruptcy, receivership,
custodianship, liquidation, reorganization, assignment for the
benefit of creditors or other proceeding for the liquidation,
dissolution or other winding up of any Obligor or any of its
Subsidiaries or any of their respective Property (a "
Proceeding "): (i) all Senior Indebtedness first shall
be Paid in Full before any payment (whether made in cash,
securities or other Property) of or with respect to the
Subordinated Indebtedness shall be made in such Proceeding (other
than a distribution of Reorganization Subordinated Securities);
(ii) any payment which, but for the terms hereof, otherwise
would be payable or deliverable in such Proceeding in respect of
the Subordinated Indebtedness (other than a distribution of
Reorganization Subordinated Securities), shall be paid or delivered
directly to Senior Agent (to be held and/or applied by Senior Agent
in accordance with the terms of the Senior Purchase Agreement or
the Permitted Refinancing Debt Documents) until all Senior
Indebtedness is Paid in Full, and Subordinated Agent and the
Subordinated Creditor each irrevocably authorizes, empowers and
directs all receivers, trustees, liquidators, custodians,
conservators and others having authority in the premises to effect
all such payments and deliveries, and Subordinated Agent and the
Subordinated Creditor each also irrevocably authorizes, empowers
and directs Senior Agent to demand, sue for, collect and receive
every such payment or distribution; (iii) Subordinated Agent
and the Subordinated Creditor each agrees to execute and deliver to
Senior Agent or its representative, at the Company’s sole
cost and expense, all such further instruments confirming the
authorization referred to in the foregoing clause (ii) as
Senior Agent may reasonably request; and (iv) Subordinated
Agent and the Subordinated Creditor each hereby irrevocably
authorizes, empowers and appoints Senior Agent its agent and
attorney-in-fact to execute, verify,
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