Exhibit 10.1
NOTE PURCHASE
AGREEMENT
by
and
among
Cogent Communications Group,
Inc.
and
Columbia Ventures
Corporation
Dated as of February 24, 2005
TABLE OF CONTENTS
i
ii
NOTE PURCHASE
AGREEMENT
THIS NOTE PURCHASE AGREEMENT (the
“Agreement”) is entered into as of the 24th day
of February, 2005, by and among Cogent Communications Group, Inc.,
a Delaware corporation (the “Company”), and Columbia
Ventures Corporation, a Washington State corporation (the
“Purchaser”).
RECITALS
:
A.
Upon the terms and subject to the
conditions set forth in this Agreement, the Company proposes to
issue and sell its Subordinated Promissory Note (the
“Note”) to the Purchaser and to obtain from the
Purchaser the loans as contemplated thereby.
B.
The Purchaser desires to purchase
from the Company the Note and to make the Loan as contemplated
thereby, as set forth on Schedule 1 hereto.
AGREEMENT
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth herein and for good
and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto hereby agree as
follows:
1.1
Definitions.
As used in this Agreement, and
unless the context requires a different meaning, the following
terms have the meanings indicated:
“ Contractual
Obligation ” means any contract or agreement by which a
Person is bound or to which its assets are subject.
“ Governmental
Authority ” means the government of any nation, state,
city, locality or other political subdivision of any thereof, any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
“ Person ” means
any individual, firm, corporation, partnership, trust, incorporated
or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind, and shall
include any successor (by merger or otherwise) of such
entity.
“ Requirements of Law
” means, as to any Person, the provisions of the Certificate
of Incorporation and By-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, regulation,
right, privilege, qualification, license or franchise, order,
judgment, or determination of an arbitrator or a court or other
Governmental Authority, in each case, applicable or binding upon
such Person or
any of its property or to which such Person or
any of its property is subject or applicable to any or all of the
transactions contemplated by or referred to in the Transaction
Documents.
“ Securities Act
” means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder.
“ Transaction Documents
” means collectively, this Agreement and the Note.
“ Transaction Expenses
” means the fixed sum of $5,000.00 to cover
out-of-pocket (i) legal expenses incurred by the Purchaser in
connection with the negotiation and preparation of the Transaction
Documents, the consummation of the transactions contemplated
thereby and preparation for any of the foregoing, including,
without limitation, travel expenses, reasonable fees, charges and
disbursements of counsel and any similar or related legal costs and
legal expenses; and (ii) other expenses incurred by the Purchaser
in connection with the negotiation, preparation and consummation of
the Transaction Document and the transactions contemplated
thereby.
2.1
Notes.
On or before the Closing Date, the
Board of Directors of the Company will authorize the issuance and
sale of the Note as contemplated hereby.
2.2
Purchase and Sale of the
Note.
Upon the terms and subject to the
conditions herein contained, on February 24, 2005 or such other day
as the parties may mutually agree (the “Closing Date”),
the Company shall issue to the Purchaser, and the Purchaser shall
acquire from the Company, the note (the “Note” )
in the form of Exhibit A hereto and in the principal amount
shown on Schedule 1 hereto.
2.3
Closing.
The closing of the sale to and
purchase by the Purchaser of the Note (the “Closing”)
shall occur at 11 o’clock A.M., local time on the Closing
Date. At the Closing, the Company shall deliver to the
Purchaser the Note, free and clear of any Liens of any nature
whatsoever, registered in such Purchaser’s name.
2
2.4
The Loan.
Subject to the terms and conditions
herein contained, at the Closing the Purchaser shall make a loan to
the Company (by wire transfer of immediately available funds) in
the amount set forth opposite its name on Schedule 1.
2.5
Fees and Expenses.
Concurrently with or as promptly as
practicable after the Closing, the Company shall reimburse the
Purchaser for the Transaction Expenses, which payment shall be made
by wire transfer of immediately available funds to an account or
accounts designated by the Purchaser.
The obligation of the Purchaser to
purchase the Note, to make its loan and to perform any of its
obligations hereunder (unless otherwise specified) shall be subject
to the satisfaction of the following conditions on or before the
Closing Date:
3.1
Representations and
Warranties.
The representations and warranties
of the Company contained in Section 5 hereof shall be true and
correct in all material respects at and as of that date, as if made
at and as of such date.
3.2
Compliance with Terms and Conditions
of this Agreement.
The Company shall have performed and
complied with all of the agreements and conditions set forth herein
that are required to be performed or complied with by the Company
on or before that date.
3.3
Delivery of the Note.
The Company shall have delivered to
the Purchaser the Note.
3.4
Documents.
The Purchaser shall have received
true, complete and correct copies of such documents and such other
information as it may have reasonably requested in connection with
or
3
relating to the sale of the Note and the
transactions required to be performed by the Transaction
Documents.
3.5
Purchase Permitted By Applicable
Laws.
The acquisition of and payment for
the Note to be acquired by the Purchaser hereunder and the
consummation of this Agreement (a) shall not be prohibited by any
Requirements of Law, and (b) shall not conflict with or be
prohibited by any Contractual Obligation of the Company.
3.6
Consents and Approvals.
All requisite consents, exemptions,
authorizations, or other actions by, or notices to, or filings
with, Governmental Authorities and other Persons in respect of all
Requirements of Law and with respect to Contractual Obligations of
the Company necessary or required in connection with the execution,
delivery or performance by the Company of this Agreement shall have
been obtained and be in full force and effect and all waiting
periods shall have lapsed without extension or the imposition of
any conditions or restrictions.
3.7
No Material Judgment or
Order.
There shall not be any judgment or
order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any
Requirement of Law which, in the reasonable judgment of the
Purchaser, would (i) prohibit the purchase of the Note hereunder,
(ii) subject the Purchaser to any penalty if the Note were to be
purchased hereunder, or (iii) question the validity or legality of
the transactions required to be performed under this
Agreement.
The obligation of the Company to
issue and sell the Note and the other obligations of the Company
hereunder shall be subject to the satisfaction of the following
conditions on or before the Closing Date:
4.1
Representations and
Warranties.
The representations and warranties
of the Purchaser contained in Section 6 hereof shall be true and
correct in all material respects at and as of the Closing Date as
if made at and as of such date.
4
4.2
Compliance with this
Agreement.
The Purchaser shall have performed
and complied with all of the agreements and conditions set forth
herein that are required to be performed or complied with by the
Purchaser on or before the Closing Date.
4.3
Issuance Permitted by Applicable
Laws.
The issuance of the Note hereunder
and the consummation of this Agreement (a) shall not be prohibited
by any Requirements of Law, and (b) shall not conflict with or be
prohibited by any Contractual Obligations of the
Purchaser.
The Purchaser shall have made the
loan as set forth in Section 2.4 hereof.
4.5
Consents and Approvals.
All consents, exemptions,
authorizations, or other actions by, or notices to, or filings
with, Governmental Authorities and other Persons in respect of all
Requirements of Law and with respect to those material Contractual
Obligations of the Purchaser necessary or required in connection
with the execution, delivery or performance by the Purchaser shall
have been obtained and be in full force and effect and all waiting
periods shall have lapsed without extension or imposition of any
conditions or restrictions.
4.6
No Material Judgment or
Order.
There shall not be any judgment or
order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any
Requirements of Law which, in the reasonable judgment of the
Company would (i) prohibit the sale of the Note or the consummation
of the other transactions hereunder, (ii) subject the Company to
any penalty if the Note were to be sold hereunder or (iii) question
the validity or legality of the transactions required to be
performed under this Agreement.
Except as set forth in the Company
Disclosure Schedule attached hereto (the “ Company
Disclosure Schedule ”), the Company represents and
warrants to the Purchasers as follows:
5.1
Organization, Good Standing and
Qualification.
The Company is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be
conducted.
5
5.2
Authorization.
The Company has all requisite
corporate power and corporate authority to enter into this
Agreement and to consummate all acts related to the issuance of the
Note. The execution, delivery and performance by the Company
of the Transaction Documents and the consummation by the Company of
the issuance of the Note and the other transactions contemplated
hereby have been duly authorized by all necessary corporate action
on the part of the Company and no further consent or authorization
is required by the Company or its Boards of Directors or
stockholders. The Transaction Documents have been duly
executed and delivered by the Company and each Transaction Document
constitutes a valid and binding agreement of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.3
No Conflicts.
(a)
The execution,
delivery and performance of this Agreement by the Company, the
performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby
will not:
(i)
result in a
violation of the certificate of incorporation or bylaws of the
Company;
(ii)
conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
or incremental, additional or varied rights under, any material
agreement, indenture or instrument (including, without limitation,
any stock option, employee stock purchase or similar plan or any
employment or similar agreement) to which the Company is a party
(including, without limitation, triggering the application of any
change of control or similar provision (whether “single
trigger” or “double trigger”), any right of
redemption or conversion or any anti-dilution provision or similar
rights);
(iii)
result in the
creation or imposition of any lien, encumbrance, claim, security
interest or restriction whatsoever upon any of the properties
or assets of the Company; or
(iv)
result in a
violation of any Requirements of Law.
(b)
The Company is
not required to obtain any consent, authorization or order of, or
make any filing or registration with, any foreign, federal, state
or local government or governmental agency, department, or body in
order for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement in accordance with the
terms hereof.
6
5.4
Legal Proceedings.
Except as disclosed in the SEC
Filings (as defined below), there is no material legal or
governmental proceeding pending or, to the knowledge of the
Company, threatened or contemplated to which the Company is or may
be a party or of which the business or property of the Company is
or may be subject.
5.5
No Violations.
Except as disclosed in the SEC
Filings, the Company is not in violation of its certificate of
incorporation or its by-laws, in violation of any law,
administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to
the Company, which violation, individually or in the aggregate,
would have a material adverse effect on the business or financial
condition of the Company, or in default in any material respect in
the performance of any obligation, agreement or condition contained
in any material bond, debenture, note or any other evidence of
indebtedness in any indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company is a party or by which
the Company is bound or by which the properties of the Company are
bound or affected.
5.6
Governmental Permits,
Etc.
Except as disclosed in the SEC
Filings, the Company has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal,
state or local government or governmental agency, department, or
body that are currently necessary for the operation of the business
of the Company as currently conducted, the absence of which would
have a material adverse effect on the business or operations of the
Company.
5.7
Additional Information.
(i)
Except as
disclosed in the Company Disclosure Schedule, the Company has filed
in a timely manner all documents that the Company was required to
file (i) under the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”) and (ii) under the Securities
Act, as of the date hereof. The following documents
(including all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference)
(collectively, the “ SEC Filings ”) complied in
all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, as of their respective
filing dates, and the information contained therein was true and
correct in all material respects as of the date of such documents,
and each of the following documents as of the date thereof did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading:
a.
the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2003;
b.
all other documents filed by the
Company with the Securities and Exchange Commission (the “
SEC ”) since the filing of the Annual Report on
Form
7
10-K for the fiscal year ended December 31,
2003, including the Company’s Quarterly Report on Form 10-Q
for the fiscal quarters ended March 31, 2004, June 30, 2004, and
September 30, 2004, and pursuant to the reporting requirements of
the Exchange Act;
(ii)
As of their
respective dates, the financial statements of the Company included
in the SEC Filings and the additional financial statements of the
Company and the related notes, provided to the Purchaser by
the Company, if any, complied as to form (and will comply as to
form) in all material respects with U.S. generally accepted
accounting principles (“ GAAP ”) and the
published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in
accordance with GAAP, consistently applied, during the periods
involved (except in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or
summary statements or as otherwise, in each case, may be permitted
by the SEC on Form 10-Q under the Exchange Act) and fairly present
in all material respects the consolidated financial position of the
Company as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). Ernst & Young LLP, which has examined
certain of such financial statements, is an independent certified
public accounting firm within the meaning of the Securities
Act.
(iii)
Since December
31, 2003, except as specified in the SEC Filings, the Company has
not incurred or suffered any liability or obligation, matured or
unmatured, contingent or otherwise, except in the ordinary course
of business and except any such liability or obligation that has
not had and could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the business or
financial condition of the Company. Without limiting the
foregoing, except as specified in the SEC Filings, the Company has
no material liabilities or obligations that would reasonably be
expected to be disclosed in order to comply with Section 13(j) of
the Exchange Act or an equivalent provision under the Securities
Act or any proposed rules promulgated by the SEC thereunder,
including the rules regarding contractual commitments and
contingent liabilities and commitments proposed in SEC Release No.
33-8144; 34-46767.
5.8
No Integrated Offering.
Neither the Company, nor any person
acting on its behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of
the Note under the Securities Act or cause this offering of the
Note to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, under the rules
and regulations of the American Stock Exchange, nor will the
Company take any action or steps that would require registration of
the Note under the Securities Act or cause the offering of the Note
to be integrated with other offerings.
8
5.9
Internal Accounting
Controls.
The Company maintains a system of
internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
and liability accountability, (iii) access to assets or incurrence
of liability is permitted only in accordance with
management’s general or specific authorization and (iv) the
reported accountability for its assets is compared with existing
assets at reasonable intervals.
5.10
Private Placement.
The offer, sale and issuance of the
Note as contemplated by this Agreement is exempt from the
registration requirements of the Securities Act and all applicable
state securities laws.
5.11
Corporate Documents.
The Certificate and Bylaws of the
Company are in the form provided to counsel for the
Purchaser.
The Purchaser, hereby represents and
warrants to the Company as of the date hereof as
follows:
6.1
Corporate Existence and
Authority.
The Purchaser is a corporation
(a) duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation, (b) has all requisite
power and authority to own its assets and operate its business, and
(c) has all requisite power and authority to execute, deliver and
perform its obligations under each of the Transaction
Documents.
6.2
Organization; Authorization; No
Contravention.
The execution, delivery and
performance by the Purchaser of the Transaction Documents and the
consummation of the transactions contemplated thereby, including,
without limitation, the acquisition of the Note: (a) is
within the Purchaser’s corporate power and authority and has
been duly authorized by all necessary action on the part of the
Purchaser; does not conflict with or contravene the terms of the
Purchaser’s charter or by-laws; and (c) will not violate,
conflict with or result in any material breach or contravention of
(i) any Contractual Obligation of the Purchaser, or (ii) the
Requirements of Law or any order or decree applicable to the
Purchaser.
9
6.3
Binding Effect.
The Transaction Documents, when
executed and delivered by the Purchaser, will constitutes the
legal, valid and binding obligation of the Purchaser, enforceable
against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors’ rights generally
, or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
6.4
Purchase for Own
Account.
The Note is being or will be
acquired by the Purchaser for its own account and with no intention
of distributing or reselling such security or any part thereof in
any transaction that would be in violation of the securities laws
of the United States of America, or any state, without prejudice,
however, to the rights of the Purchaser at all times to sell or
otherwise dispose of all or any part of such Note under an
effective registration statement under the Securities Act, or under
an exemption from such registration available under the Securities
Act, and subject, nevertheless, to the disposition of such
Purchaser’s property being at all times within its
control. If the Purchaser should in the future decide to
dispose of the Note or any part thereof, the Purchaser understands
and agrees that it may do so only in compliance with the Securities
Act and applicable state securities laws, as then in effect.
The Purchaser agrees to the imprinting, so long as required by law,
of a legend on certificate representing the Note to the
following effect:
“THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
“
6.5
Financial Condition.
The Purchaser’s financial
condition is such that it is able to bear the risk of holding the
Note for an indefinite period of time and can bear the loss of its
entire investment in the Note. The Purchaser has such
knowledge and experience in financial and business matters and in
making high risk investments of this type that it is capable of
evaluating the merits and risks of the purchase of the
Note.
10
6.6
Receipt of Information.
The Purchaser has been furnished
access to the business records of the Company and such additional
information and documents as such Purchaser has requested and has
been afforded an opportunity to ask questions of and receive
answers from representatives of the Company concerning the terms
and condition of this Agreement, the purchase of the Note, the
prospective operations, market potential, capitalization, financial
conditions, and prospects of the business to be conducted by the
Company, and all other matters deemed relevant by the
Purchaser.
6.7
Broker’s, Finder’s or
Similar Fees.
There are no brokerage commissions,
finder’s fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchaser or any
action taken by the Purchaser.
6.8
Governmental Authorization: Third
Party Consents.
No approval, consent, compliance,
exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority or any other Person in
respect of any Requirements of Law, and no lapse of a waiting
period under any Requirements of Law, is necessary or required in
connection with the execution, delivery or performance by such
Purchaser (including, without limitation, the acquisition of the
Note) or enforcement against such Purchaser of this Agreement or
the other Transaction Documents or the transactions contemplated
thereby.
6.9
Litigation.
No Actions are pending, or to the
best knowledge of the Purchaser, threatened relating to or
affecting the transactions required to be performed by the
Purchaser under the Transaction Documents.
7.1
Survival of Representations and
Warranties.
All of the representations and
warranties made herein shall survive the Closing.
11
7.2
Notices.
All notices, demands and other
communications provided for or permitted hereunder shall be made in
writing and shall be by registered or certified first-class mail,
return receipt requested, courier service or personal delivery or
via facsimile:
(a)
if to
Purchaser:
Columbia Ventures
Corporation
203 SE Park Plaza Drive
Suite 270
Vancouver, WA 98684
Attn: General
Counsel
Fax: (360)
816-1841
(b)
if to the
Company:
Cogent Communications
Group,
