Document:

SVR-6.30.13-EX10.5

Execution Version

INCREMENTAL COMMITMENT AMENDMENT
INCREMENTAL COMMITMENT AMENDMENT, dated as of June 28, 2013 (this “Incremental Commitment Amendment”), to the Credit Agreement referred to below among Syniverse Holdings, Inc., a Delaware corporation (together with its successors and assigns, the “Borrower”), Buccaneer Holdings, Inc. (“Holdings”), the Guarantors, the Tranche B Term Lenders (as defined in Section 2(b)(i) hereof) that constitute Additional Lenders and the Administrative Agent (as defined below).
RECITALS
WHEREAS, the Borrower has entered into that certain Credit Agreement, dated as of April 23, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, Holdings, Barclays Bank PLC, as administrative agent (in such capacity, the “Administrative Agent”), swingline lender and L/C issuer, and the several lenders party thereto from time to time; 
WHEREAS, the Borrower (as successor by Merger (as defined below) to Syniverse Magellan Finance, LLC (the “Initial Borrower”)), is party to that certain delayed draw term loan credit agreement, dated as of February 4, 2013 (as amended on May 28, 2013, and as further amended, amended and restated, supplemented or otherwise modified from time to time, the “Delayed Draw Credit Agreement”), among the Borrower, Barclays Bank PLC, as administrative agent and the several lenders party thereto from time to time, pursuant to which the Initial Borrower borrowed $700,000,000 in term loans (the “Delayed Draw Term Loans”) to finance the acquisition of WP Roaming III S.à r.l. (the “Acquisition”);
WHEREAS, following completion of the Acquisition, the Initial Borrower merged with and into the Borrower, with the Borrower being the surviving corporation of the merger (the “Merger”);
WHEREAS, the Borrower intends to refinance the Delayed Draw Term Loans with Incremental Term Loans under the Credit Agreement on the date hereof (the “Delayed Draw Refinancing”);
WHEREAS, pursuant to and in accordance with Section 2.14 of the Credit Agreement, the Borrower has requested that Incremental Term Loan Commitments in an aggregate principal amount of $700,000,000 be made available to the Borrower, and the Tranche B Term Lenders and the Administrative Agent have agreed, upon the terms and subject to the conditions set forth herein, (a) that the Tranche B Term Lenders will make Incremental Loans in the form of the Tranche B Term Loans (as defined below), (b) that the proceeds of the Tranche B Term Loans will be used to consummate the Delayed Draw Refinancing and (c) to amend the Credit Agreement as provided herein without the consent or approval of any other Lender, as permitted by Sections 2.14(d) and 10.01 thereof.
NOW, THEREFORE, in consideration of the covenants and agreements contained herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1.Defined Terms.  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Section 2.    Amendment of the Credit Agreement.
(a)    The Tranche B Term Loans shall be deemed to be “Incremental Term Loans”, the Tranche B Term Lenders shall be deemed to be “Additional Lenders”, the “Tranche B Term Loan Commitments” shall be deemed to be “Incremental Term Loan Commitments” and this Incremental Commitment Amendment shall be deemed to be an “Incremental Commitment Amendment” and a “Loan Document”, in each case, for all purposes of the Credit Agreement and the other Loan Documents.  The Borrower and the Administrative Agent hereby consent, pursuant to Section 10.07(b) of the Credit Agreement, to the inclusion as an “Additional Lender” of each Tranche B Term Lender that is party to this Incremental Commitment Amendment that is not an existing Lender, Affiliate of an existing Lender or an Approved Fund.
(b)    Section 1.01 of the Credit Agreement is hereby amended as follows:
(i)    by adding the following new definitions, to appear in proper alphabetical order:
“Delayed Draw Refinancing” has the meaning specified in the First Incremental Amendment.
“First Incremental Amendment” means the Incremental Commitment Amendment, dated as of June 28, 2013, by and among the Borrower, Holdings, the Guarantors, the Tranche B Term Lenders and the Administrative Agent.
“First Incremental Amendment Closing Date” means the date on which all the conditions precedent set forth in Section 3 of the First Incremental Amendment shall be satisfied or waived.
“Tranche B Term Borrowing” means a borrowing consisting of simultaneous Tranche B Term Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Tranche B Term Lenders pursuant to Section 2.01(c).
“Tranche B Term Lender” means, at any time, (a) prior to the First Incremental Amendment Closing Date, any Lender having a Tranche B Term Loan Commitment at such time and (b) at any time after the First Incremental Amendment Closing Date, any Lender having a Tranche B Term Loan outstanding hereunder.
“Tranche B Term Loan” has the meaning specified in Section 2.01(c), collectively the “Tranche B Term Loans”.
“Tranche B Term Loan Commitment” means, as to any Lender, its obligation to make Tranche B Term Loans to the Borrower pursuant to Section 2.01(c) in an aggregate amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name in Schedule 2.01(c) under the heading “Tranche B Term Loan Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Tranche B Term Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time; collectively, as to all Lenders, the “Tranche B Term Loan Commitments”.  The initial aggregate amount of the Tranche B Term Loan Commitments on the First Incremental Amendment Closing Date is $700,000,000.
“Tranche B Term Facility” means, at any time, (a) prior to the First Incremental Amendment Closing Date, the aggregate Tranche B Term Commitments of all Tranche B Term Lenders at such time, and (b) thereafter, the aggregate Tranche B Term Loans of all Tranche B Term Lenders at such time.
(ii)    by amending and restating clause (a) of the definition of “Applicable Rate” in Section 1.01 of the Credit Agreement as follows:
“(a) (i) with respect to the Initial Term Loans, 3.75% per annum for Eurodollar Rate Loans, and 2.75% per annum for Base Rate Loans and (ii) with respect to the Tranche B Term Loans, 3.00% per annum for Eurodollar Rate Loans, and 2.00% per annum for Base Rate Loans; and”
(iii)    by inserting the words “and the applicable Base Rate in respect of Tranche B Term Loans shall at no time be less than 2.00% per annum.” after the words “2.25% per annum” in the definition of “Base Rate” in Section 1.01 of the Credit Agreement. 
(iv)    by amending and restating the definition of “Borrowing” in Section 1.01 of the Credit Agreement as follows:
‘“Borrowing” means a Revolving Credit Borrowing, a Swing Line Borrowing, a Term Borrowing or a Tranche B Term Borrowing, as the context may require.”
(v)    by amending and restating the definition of “Committed Loan Notice” in Section 1.01 of the Credit Agreement as follows:
““Committed Loan Notice” means a notice of (a) a Term Borrowing, (b) a Tranche B Term Borrowing, (c) a Revolving Credit Borrowing, (d) a conversion of Loans from one Type to the other, or (e) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A-1.”
(vi)    by inserting the words “, a Tranche B Term Loan Commitment” after the words “Term Loan Commitment” in the definition of “Commitment” in Section 1.01 of the Credit Agreement.
(vii)    by inserting the words “and the applicable Eurodollar Rate in respect of Tranche B Term Loans shall at no time be less than 1.00% per annum.” after the words “1.25% per annum” in the definition of “Eurodollar Rate” in Section 1.01 of the Credit Agreement.
(viii)    by amending the definition of “Loan Documents”  in Section 1.01 of the Credit Agreement by replacing “and” with a comma (“,”) and adding “and (vi) the First Incremental Amendment” after the phrase “(v) the Fee Letter”.
(ix)    by amending the definition of “Maturity Date” by adding the phrase “and the Tranche B Term Loans” after the phrase “the Initial Term Loans” in clause (b) thereof.
(x)    by amending the definition of “Repricing Transaction” in Section 1.01 of the Credit Agreement by deleting each instance of “Initial Term Loans” therein and replacing it with “Tranche B Term Loans”;
(xi)    by amending the definition of “Required Lenders” in Section 1.01 of the Credit Agreement to (i) remove the word “and” after the phrase “aggregate unused Term Commitments”, (ii) insert the phrase “and (d) aggregate unused Tranche B Term Loan Commitments” after the phrase “(c) aggregate unused Revolving Credit Commitments” and (iii)  insert the phrase “, unused Tranche B Term Loan Commitments” after the phrase “unused Term Commitments” in the proviso thereto;
(c)    Section 2.01 of the Credit Agreement is hereby amended and restated by inserting the following new clause (c):
(c)    The Tranche B Term Borrowing.  (i)  Subject to the terms and conditions set forth herein and in the First Incremental Amendment, each Tranche B Term Lender severally agrees to make a single loan to the Borrower on the First Incremental Amendment Closing Date in an amount not to exceed such Tranche B Term Lender’s Tranche B Term Commitment (the “Tranche B Term Loans”).  The Tranche B Term Borrowing shall consist of Tranche B Term Loans made simultaneously by the Tranche B Term Lenders in accordance with their respective Tranche B Term Commitments.  Amounts borrowed under this Section 2.01(c) and subsequently repaid or prepaid may not be reborrowed.  Tranche B Term Loans may be Base Rate Loans or Eurodollar Rate Loans as further provided herein.
(d)    Section 2.02(a) of the Credit Agreement is hereby amended as follows:
(i)    by amending and restating the two sentences thereof as follows:
“Each Term Borrowing, each Tranche B Term Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans or Revolving Credit Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent.  Each such notice must be in writing and must be received by the Administrative Agent not later than other than in the case of the Tranche B Term Borrowing on the First Incremental Amendment Closing Date, (i) 11:00 a.m. (New York City time) (x) three (3) Business Days prior to the requested date of any Borrowing of, conversion of Base Rate Loans to, or continuation of, Eurodollar Rate Loans, or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (y) one (1) Business Day prior to the requested date of any Borrowing of Base Rate Loans; provided, however, that if the Borrower wishes to request Eurodollar Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period,” the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. (New York City time) five (5) Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the Appropriate Lenders of such request and determine whether the requested Interest Period is acceptable to all of them and not later than 10:00 a.m. (New York City time) three Business Days before the requested date of such Borrowing, conversion or continuation, the Administrative Agent shall notify the Borrower whether or not the requested Interest Period has been consented to by all the Lenders and (ii) solely in the case of the Tranche B Term Borrowing on the First Incremental Amendment Closing Date, 3:00 p.m. (New York City time) on the First Incremental Amendment Closing Date.”
(ii)    by amending and restating the sixth sentence thereof as follows:
“Each Committed Loan Notice shall specify (i) whether the Borrower is requesting a Term Borrowing, a Tranche B Term Borrowing, a Revolving Credit Borrowing, a conversion of Term Loans, Tranche B Term Loans or Revolving Credit Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Term Loans or Revolving Credit Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto; provided that, with respect to the Tranche B Term Loans, such Loans shall be Eurodollar Rate Loans which shall be deemed to have an initial Interest Period identical to the interest period of the Delayed Draw Term Loans (as defined in the First Incremental Amendment) outstanding immediately prior to the First Incremental Amendment Closing Date.”
(e)    Section 2.02(b) of the Credit Agreement is hereby amended by amending and restating the second sentence thereof with the following: “In the case of a Term Borrowing, Tranche B Term Borrowing, or a Revolving Credit Borrowing, each Appropriate Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 11:00 a.m. (New York City time) (or 1:00 p.m. (New York City time) in the case of Base Rate Loans) on the Business Day specified in the applicable Committed Loan Notice; provided that solely in the case of the Tranche B Term Borrowing on the First Incremental Amendment Closing Date, each Appropriate Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 5:00 p.m. (New York City time).”
(f)    Section 2.02(e) of the Credit Agreement is hereby amended by inserting the words “, all Tranche B Term Borrowings” after the words “all Term Borrowings”.
(g)    Section 2.05(a)(iv) of the Credit Agreement is hereby amended by replacing each instance of “Initial Term Loans” with the words “Tranche B Term Loans” and by replacing “Closing Date” with “First Incremental Amendment Closing Date”.
(h)    Section 2.06 of the Credit Agreement is hereby amended as follows:
(a)    by inserting the phrase “, the Tranche B Term Commitments,” after each instance of the phrase “Term Commitments,” in clause (a) thereof.
(b)    by inserting the phrase “, unused portions of the Tranche B Term Commitments” after the phrase “unused portions of Term Commitments” in the first sentence of clause (c) thereof.
(i)    Section 2.07 of the Credit Agreement is hereby by inserting the following as new clause (d) thereof:
“(d)    Tranche B Term Loans.  The Borrower shall repay to the Administrative Agent for the ratable account of the Tranche B Term Lenders the aggregate principal amount of all Tranche B Term Loans outstanding in consecutive quarterly installments beginning with the end of the first full fiscal quarter commencing after the First Incremental Amendment Closing Date, in amounts equal to the following percentages of the amount of the Tranche B Term Loans made on the First Incremental Amendment Closing Date (which installments shall, to the extent applicable, be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.05, or be increased as a result of any increase in the amount of Term Loans pursuant to Supplemental Term Loan Commitments (such increased amortization payments to be calculated in the same manner (and on the same basis) as the schedule set forth below for the Tranche B Term Loans made as of the First Incremental Amendment Closing Date)):
	
		
	Date
	Amount

	Each March 31, June 30, September 30 and December 31 occurring on or after the end of the first full fiscal quarter following the First Incremental Amendment Closing Date and prior to the Maturity Date
	0.25%

	Maturity Date for Term Facility
	All unpaid aggregate principal amounts of any outstanding Tranche B Term Loans”

(j)    Section 2.14(d) of the Credit Agreement is hereby amended by:
(a)    amending and restating clause (iv) thereof as follows:
“(iv) the interest rate margins and (subject to Section 2.14(d)(iii)(a)) amortization schedule applicable to the loans made pursuant to the Incremental Commitments shall be determined by the Borrower and the applicable Additional Lenders; provided that in the event that the applicable interest rate margins for any term loans incurred by the Borrower under any New Term Facilities are higher than the applicable interest rate margin for the Initial Term Loans or the Tranche B Term Loans by more than 50 basis points, then the Applicable Rate for the Initial Term Loans and/or the Tranche B Term Loans, as applicable, shall be increased to the extent necessary so that the applicable interest rate margin for the Initial Term Loans and/or the Tranche B Term Loans, as applicable, is equal to the applicable interest rate margins for such New Term Facilities minus 50 basis points; provided, further, that in determining the applicable interest rate margins for the Initial Term Loans, Tranche B Term Loans and the New Term Facilities, (A) original issue discount (“OID”) or upfront fees payable generally to all participating Additional Lenders in lieu of OID (which shall be deemed to constitute like amounts of OID) payable by the Borrower to the Lenders under the Initial Term Loans, Tranche B Term Loans or any New Term Facilities in the initial primary syndication thereof shall be included (with OID being equated to interest based on an assumed four-year life to maturity); (B) any arrangement, structuring or other fees payable in connection with the New Term Facilities that are not shared with all Additional Lenders providing such New Term Facilities shall be excluded; (C) any amendments to the Applicable Rate on the Initial Term Loans or the Tranche B Term Loans that became effective subsequent to the Closing Date or the First Incremental Amendment Closing Date, as applicable, but prior to the time of such New Term Facilities shall also be included in such calculations and (D) if the New Term Facilities include an interest rate floor greater than the interest rate floor applicable to the Initial Term Loans or the Tranche B Term Loans, as applicable, such increased amount shall be equated to the applicable interest rate margin for purposes of determining whether an increase to the Applicable Rate for the Initial Term Loans or the Tranche B Term Loans, as applicable, shall be required, to the extent an increase in the interest rate floor for the Initial Term Loans or the Tranche B Term Loans, as applicable, would cause an increase in the interest rate then in effect thereunder, and in such case the interest rate floor (but not the Applicable Rate) applicable to the Initial Term Loans or the Tranche B Term Loans, as applicable, set forth in the last sentence of the definition of Eurodollar Rate and Base Rate, respectively, shall be increased by such amount;”
(b)    inserting the following sentence as the last sentence thereof:
“For the avoidance of doubt, the Tranche B Term Loans shall be deemed to be “Incremental Term Loans”, the Tranche B Term Lenders shall be deemed to be “Additional Lenders” and the First Incremental Amendment shall be deemed to be an “Incremental Commitment Amendment”, in each case, for all purposes of the Credit Agreement and the other Loan Documents.”
(k)    Section 5.07 of the Credit Agreement is hereby amended by inserting the following phrase after the words “Investments permitted hereunder”:
“and, in respect of the Tranche B Term Loans, consummating the Delayed Draw Refinancing”.
(l)    Section 6.11 of the Credit Agreement is hereby amended by inserting the following phrase after the words “Investments permitted hereunder”:
“and, in respect of the Tranche B Term Loans, consummating the Delayed Draw Refinancing”.
(m)    The Schedules to the Credit Agreement are hereby amended by adding as new Schedule 2.01(c) Annex I hereto.
Section 3.    Conditions to Extension of Credit.  The obligations of each Tranche B Term Lender to make a Tranche B Term Loan are subject to the satisfaction or waiver of the following conditions:
(b)    The Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles or “.pdf” or “tiff” files (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, if applicable, each dated as of the First Incremental Amendment Closing Date (or, in the case of certificates of governmental officials, a recent date before the First Incremental Amendment Closing Date), each in form and substance reasonably satisfactory to the Administrative Agent, and each accompanied by their respective required schedules and other attachments:
(i)    this Incremental Commitment Amendment executed and delivered by a duly authorized officer of the Borrower and each Tranche B Term Lender; 
(ii)    such customary certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of the Borrower, the Subsidiary Guarantors and Holdings as the Administrative Agent may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Incremental Commitment Amendment and the other Loan Documents to which each of the Borrower, the Subsidiary Guarantors and Holdings is a party or is to be a party;
(iii)    such documents and certifications (including, without limitation, Organization Documents and good standing certificates) as the Administrative Agent may reasonably require to evidence that each of the Borrower, the Subsidiary Guarantors and Holdings is duly organized or formed, and that each of the Borrower, the Subsidiary Guarantors and Holdings is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to be so qualified could not reasonably be expected to have a Material Adverse Effect; and
(iv)    a Note executed by the Borrower in favor of each Lender that has requested a Note no later than five Business Days prior to the First Incremental Amendment Closing Date.
(c)    The conditions in Section 4.02 of the Credit Agreement have been satisfied or waived.
Without limiting the generality of the provisions of Section 9.03 of the Credit Agreement, for purposes of determining compliance with the conditions specified in this Section 3, each Tranche B Term Lender that has funded any portion of a Tranche B Term Loan on or after the First Incremental Amendment Closing Date, or has signed this Incremental Commitment Agreement on or after the First Incremental Amendment Closing Date, shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Tranche B Term Lender unless the Administrative Agent shall have received notice from such Tranche B Term Lender prior to the proposed First Incremental Amendment Closing Date specifying its objection thereto.
Section 4.    Representations and Warranties.  To induce the other parties hereto to enter into this Incremental Commitment Amendment and the Tranche B Term Lenders to make the Tranche B Term Loans, each of the Borrower, Holdings and each other Guarantor hereby represents and warrants, on the First Incremental Amendment Closing Date, to the Administrative Agent and each Tranche B Term Lender that:
(a)    the execution, delivery and performance by such Loan Party of this Incremental Commitment Amendment is within such Loan Party’s corporate or other powers, has been duly authorized by all necessary corporate or other organizational action, and does not (i) contravene the terms of any of such Loan Party’s Organization Documents, (ii) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment (except for Indebtedness to be repaid on the First Incremental Amendment Closing Date in connection with the Delayed Draw Refinancing) to be made under (A) any Contractual Obligation to which such Loan Party is a party or by which such Loan Party or the properties of such Loan Party are affected or (B) any material order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Loan Party or its property is subject; or (iii) violate any material Law; in each case, except with respect to any violation, breach or contravention or payment (but not creation of Liens) referred to in clause (ii) or (iii) to the extent that such violation, conflict, breach, contravention or payment could not reasonably be expected to have a Material Adverse Effect;
(b)    this Incremental Commitment Amendment and the Credit Agreement, as amended hereby, each constitute a legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and by general equitable principles;
(c)    all representations and warranties of the Borrower and each other Loan Party contained in Article V of the Credit Agreement and any other Loan Document shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality) on and as of the First Incremental Amendment Closing Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality) as of such earlier date, and except that for purposes of this Section 4(c), the representations and warranties contained in Sections 5.05(a), (b), (c) and (e) of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(a), (b) and (c) of the Credit Agreement, respectively; and
(d)    no Default shall exist, or would result from the Borrowing of Tranche B Term Loans on the First Incremental Amendment Closing Date or from the application of the proceeds therefrom.
Section 5.    Lender Consents and Authorization.
(a)    Each Tranche B Term Lender (i) represents and warrants that it is legally authorized to enter into this Incremental Commitment Amendment; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 5.05 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Incremental Commitment Amendment; (iii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iv) appoints and authorizes each applicable Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to each such Agent, as applicable, by the terms thereof, together with such powers as are incidental thereto; (v) hereby affirms the acknowledgements and representations of such Tranche B Term Lender as a Lender contained in Section 9.06 of the Credit Agreement; and (vi) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with the terms of the Credit Agreement all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender, including its obligations pursuant to Section 10.07 of the Credit Agreement.
(b)    Each Tranche B Term Lender acknowledges and agrees that upon its execution of this Incremental Commitment Amendment that such Tranche B Term Lender shall on and as of the First Incremental Amendment Closing Date become an “Additional Lender” and a “Lender” under, and for all purposes of, the Credit Agreement and the other Loan Documents, shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.
(c)    Each Tranche B Term Lender has delivered or shall deliver herewith to the Borrower and the Administrative Agent such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such Tranche B Term Lender may be required to deliver to the Borrower and the Administrative Agent pursuant to Section 10.15 of the Credit Agreement.
(d)    For purposes of the Credit Agreement, the initial notice address of such Tranche B Term Lender shall be as set forth in Annex I hereto.
(e)    Upon execution, delivery and effectiveness hereof, the Administrative Agent will record the Tranche B Term Loans made by such Tranche B Term Lender in the Register.
(f)    Each Tranche B Term Lender, in its capacity as a lender under the Delayed Draw Credit Agreement, hereby waives any amounts owing in respect of any Eurodollar Rate Loan pursuant to Section 3.05 of the Delayed Draw Credit Agreement.
Section 6.    Effects on Loan Documents; Acknowledgement.
(a)    Except as expressly set forth herein, this Incremental Commitment Amendment shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement or any other Loan Document.  Each and every term, condition, obligation, covenant and agreement contained in the Credit Agreement or any other Loan Document is hereby ratified and re-affirmed in all respects and shall continue in full force and effect and nothing herein can or may be construed as a novation thereof.  The Borrower reaffirms its obligations under the Loan Documents to which it is party.  This Incremental Commitment Amendment shall constitute a “Loan Document” for purposes of the Credit Agreement and from and after the First Incremental Amendment Closing Date, all references to the Credit Agreement in any Loan Document and all references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, shall, unless expressly provided otherwise, refer to the Credit Agreement as amended by this Incremental Commitment Amendment.  The Borrower hereby consents to this Incremental Commitment Amendment and confirms that all obligations of the Borrower under the Loan Documents to which it is a party shall continue to apply to the Credit Agreement, as amended hereby.
(b)    Without limiting the foregoing, each of the Loan Parties to the Holdings Guaranty, the Subsidiary Guaranty and the Security Agreement, in each case as amended, supplemented or otherwise modified from time to time, hereby (i) acknowledges and agrees that the Tranche B Term Loans are “Loans” and the Tranche B Term Lenders are “Lenders”, (ii) acknowledges and agrees that all of its obligations under the Holdings Guaranty, the Subsidiary Guaranty and the Security Agreement and the other Collateral Documents to which it is a party are reaffirmed and remain in full force and effect on a continuous basis, (iii) reaffirms each Lien granted by each Loan Party to the Administrative Agent for the benefit of the Secured Parties (including the Tranche B Term Lenders) and reaffirms the guaranties made pursuant to the Holdings Guaranty and the Subsidiary Guaranty, as applicable, (iv) acknowledges and agrees that the grants of security interests by and the guaranties of the Loan Parties contained in the Holdings Guaranty and the Subsidiary Guaranty, as applicable, in the Security Agreement and the other Collateral Documents are, and shall remain, in full force and effect after giving effect to the Incremental Amendment, and (v) agrees that the Guaranteed Obligations (as defined in the Holdings Guaranty and the Subsidiary Guaranty, as applicable, and the Secured Obligations (as defined in the Security Agreement) include, among other things and without limitation, the prompt and complete payment and performance by the Borrower when due and payable (whether at the stated maturity, by acceleration or otherwise) of principal and interest on, the Tranche B Term Loans.
Section 7.    Expenses.  The Borrower shall pay all reasonable out-of-pocket costs and expenses of the Administrative Agent incurred in connection with the preparation, negotiation, execution and delivery of this Incremental Commitment Amendment and the other instruments and documents to be delivered hereunder, if any (including the reasonable fees, disbursements and other charges of Latham & Watkins LLP, counsel for the Administrative Agent, and, if necessary, one local counsel in each relevant jurisdiction).
Section 8.    Counterparts.  This Incremental Commitment Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument.  Delivery of an executed counterpart of a signature page of this Incremental Commitment Amendment by facsimile or any other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
Section 9.    Applicable Law.  THIS INCREMENTAL COMMITMENT AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS INCREMENTAL COMMITMENT AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
Section 10.    Headings.  The headings of this Incremental Commitment Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Incremental Commitment Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written.
SYNIVERSE HOLDINGS, INC.
By:    /s/ David W. Hitchcock     
    Name:  David W. Hitchcock 
    Title:    Chief Financial officer and 
             Administrative Officer
BUCCANEER HOLDINGS, INC.
By:    /s/ David W. Hitchcock     
    Name:  David W. Hitchcock 
    Title:    Chief Financial officer and 
             Administrative Officer
SYNIVERSE TECHNOLOGIES, LLC
By:    /s/ David W. Hitchcock     
    Name:  David W. Hitchcock 
    Title:    Chief Financial officer and 
             Administrative Officer
SYNIVERSE ICX CORPORATION
By:    /s/ David W. Hitchcock     
    Name:  David W. Hitchcock 
    Title:    Chief Financial officer and 
             Chief Administrative Officer
THE RAPID ROAMING COMPANY
By:    /s/ David W. Hitchcock     
    Name:  David W. Hitchcock 
    Title:    Chief Financial officer and 
             
BARCLAYS BANK PLC, 
as Administrative Agent and a Lender 
 
 
By:    /s/ Ritam Bhalla     
    Name:  Ritam Bhalla 
    Title:    Director
The undersigned Additional Lender hereby irrevocably and unconditionally approves this Incremental Commitment Amendment and consents to loan Tranche B Term Loans to the Borrower in an amount equal to 100% of the aggregate principal amount of the outstanding Initial Term Loans (under and as defined in the Delayed Draw Credit Agreement) of such Additional Lender.  

IN WITNESS WHEREOF, the undersigned has caused this Incremental Commitment Amendment to be executed and delivered by a duly authorized officer as of the date first written above.

____(type name of the legal entity)______, 
as an Additional Lender 

By:    
Name:    
Title:    

If a second signature is necessary:
By:    
Name:    
Title:

Lender Signatures on file with Administrative Agent.

ANNEX I 
 
Schedule 2.01(c)
On file with Administrative Agent.ex10-1.htm

Exhibit 10.1

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: November 1, 2012

$ 35,000

8% CONVERTIBLE UNSECURED PROMISSORY NOTE

DUE May 1, 2013

THIS 8% CONVERTIBLE UNSECURED PROMISSORY NOTE is one of a series of duly authorized and validly issued 8% Convertible Unsecured Promissory Notes of Drinks Americas Holdings, Ltd., a Delaware corporation (the “Company”), designated as its 8% Promissory Notes due May 1, 2013 (this note, the “Note” and, collectively with the other notes of such series, the “Notes”).

FOR VALUE RECEIVED, the Company promises to pay to World Wide Beverage Imports, LLC., or its registered assigns (the “Holder”), the principal sum of $ 35,000 on May 1, 2013 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate then outstanding principal amount of this Note in accordance with the provisions hereof.  This Note is subject to the following additional provisions:

Section 1.                      Definitions.  For the purposes hereof, in addition to the terms defined elsewhere in this Note, the following terms shall have the following meanings:

“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X), if any thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary 

 

  

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thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

“Business Day” means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of California are authorized or required by law or other governmental action to close.

“Common Stock” shall mean the Company’s common stock, par value $0.001 per share.

“Common Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Event of Default” shall have the meaning set forth in Section 6(a).

 “Original Issue Date” means the date of the first issuance of the Note, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Note.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

Section 2.                      Interest.

a) Payment of Interest in Cash.  Cash interest payable on this Note shall compound annually and accrue at the annual rate of eight percent (8%) from the Original Issue Date.  Interest shall be payable on the Maturity Date, accelerated or otherwise, or sooner as described below.

 

  

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b) Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made.

c) Late Fee.  All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser of 17% per annum or the maximum rate permitted by applicable law which shall accrue daily from the date such interest is due hereunder through and including the date of actual payment in full.

d) Prepayment.  Upon 30-days prior written notice to the Holder, during which period the Holder may convert the Note pursuant to Section 4 below, the Company may prepay any portion of the principal amount of this Note without the consent of the Holder, provided, however, upon such prepayment of the principal amount, the Holder shall receive a warrant to purchase the amount of shares of Common Stock equal to the amount of shares of Common Stock issuable upon conversion of the principal amount prepaid multiplied by 25% and such warrant shall be exercisable at a price equal to the Conversion Price, as defined below. Interest on any principal amount prepaid in accordance with this Section 2(d) will be due and payable on the date of such prepayment of principal.

Section 3.                      Registration of Transfers and Exchanges.

a) Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same.  No service charge will be payable for such registration of transfer or exchange.

b) Investment Representations. This Note has been issued subject the representation of the original Holder that the original Holder (i) is an “accredited investor” as defined in Rule 501 under the Securities Act; (ii) has a preexisting personal or business relationship with the Company or one or more of its directors, officers or control persons; (iii) is, by reason of Holder’s business or financial experience, capable of evaluating the risks and merits of this investment and of protecting Holder’s own interests in connection with an investment in this Note; (iv) has evaluated the merits and risks of such investment and is able to bear the economic risk of an investment in this Note and, at the present time, is able to afford a complete loss of such investment; (v) is not purchasing this Note as a result of any advertisement, article, notice or other communication regarding this Note published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement; and (vi) had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the business, properties and financial condition of the Company and to obtain additional information (to the extent the Company possessed such information or could acquire it 

 

  

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without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access.

Section 4.                      Conversion.

 

a) Voluntary Conversion. At any time after the first anniversary of the Original Issue Date and until the Note is no longer outstanding, the Note shall be convertible, in whole or in part, into shares of Common Stock (the “Conversion Shares”) at the option of the Holder (subject to the conversion limitations set forth in Section 4(e) hereof).  The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”).  If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been so converted or paid. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion.  The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s).  The Company may deliver an objection to any Notice of Conversion within two (2) Business Days of delivery of such Notice of Conversion.  The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

 

b) Conversion Price.  The conversion price, subject to Section 6(b) of this Note, in effect on any Conversion Date shall be equal to the lesser of (i) the closing price of the Common Stock on the Original Issue Date; or (ii) the closing price of the Common Stock on the date immediately prior to the Conversion Date (the “Conversion Price”).

c) Mandatory Conversion.  The Principal shall be converted into Common Shares at the Conversion Price (a "Mandatory Conversion") on the date (the "Mandatory Conversion Date") which the closing price for the Common Stock exceeds $2.00 for ten (10) consecutive trading days.

d) Mechanics of Conversion.

 

i.           Conversion Shares Issuable Upon Conversion of Principal Amount.  The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the Conversion Price.

 

  

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ii.           Delivery of Certificate. Not later than twenty Business Days after each Conversion Date, the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares representing the number of Conversion Shares being acquired upon the conversion of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.

iii.           Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

iv.           Transfer Taxes and Expenses.  The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.  The Company shall pay all transfer agent fees required for same-day processing of any Notice of Conversion.

e) Holder’s Conversion Limitations.  The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes) beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 4(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder 

 

  

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that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.  To the extent that the limitation contained in this Section 4(e) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination.  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.

For purposes of this Section 4(e), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the Securities and Exchange Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Business Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder.  The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(e) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.  The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to 

 

  

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properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.

	
Section 5.

	
Certain Adjustments.

 

a) Stock Dividends and Stock Splits.  If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of the Notes or in respect of the Additional Shares), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Reorganization, Reclassification, Consolidation, Merger, Sale; Company Not Survivor.  If any capital reorganization, reclassification of the capital stock of the Company, combination, continuation, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition (i.e. license, lease or contractual arrangement) of all or substantially all of the assets to another corporation shall be effected by the Company, then, as a condition of such reorganization, reclassification, combination, continuation, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion of the Note, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of shares of Common Stock equal to the number of shares of Common Stock immediately theretofore issuable upon conversion of the Note, had such reorganization, reclassification, combination, continuation, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of Holder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Conversion Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof.   The provisions of this paragraph 5(b) shall similarly apply to successive reorganizations, 

 

  

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reclassifications, combinations, continuations, consolidations, mergers, sales, transfers or other dispositions.

c) Calculations.  All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

d) Notice to the Holder.

i.           Adjustment to Conversion Price.  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii.           Notice to Allow Conversion by Holder.  If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, or (D) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or (y) if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.

Section 6.                                    Events of Default.

a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

i. any default in the payment of (A) the principal amount of any Note or (B) interest or other amounts owing to a Holder on any Note, as and when the 

 

  

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same shall become due and payable (whether on the Maturity Date or by acceleration or otherwise) which default is not cured within 7 days;

ii. the Company shall fail to observe or perform any other covenant or agreement contained in the Notes which failure is not cured, if possible to cure, within 10 days after notice of such failure sent by the Holder or by any other Holder to the Company;

iii. the Company or any Significant Subsidiary shall be subject to a Bankruptcy Event.

b) Remedies Upon Event of Default.

i. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash.  Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser of 17% per annum or the maximum rate permitted under applicable law.  Upon the payment in full of the amount owed under this Section 6(b), the Holder shall promptly surrender this Note to or as directed by the Company.  In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 6(b).  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

ii. If any Event of Default occurs and is continuing beyond any applicable grade period, the Conversion Price shall be equal to the Variable Conversion Price (as defined herein)(subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 62% multiplied by the Market Price (as defined herein) (representing a discount rate of 38%). “Market Price” means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the Over-

 

  

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the-Counter Market, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTCQB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded, provided, however, that at no time, notwithstanding the occurrence of an Event of Default, may the Conversion Price be less than par value of Common Stock.

Section 7.                      Other Rights of the Holder.

a) No Rights of Set-Off.  The Company acknowledges and agrees that the principal sum and the other obligations hereunder shall be paid, satisfied and discharged to the Holder without regard to such dealings as may from time to time occur as between any one or more of the Holder, the Company and any other person and without regard to such equities or rights of set-off or counterclaim which may from time to time exist between any one or more of the Holder, the Company or any other person, and that the principal sum and other obligations hereof shall be paid without regard to any equities between the Company and the Holder hereof or any set-off or cross-claims and the receipt of the Holder for the payment of the principal sum will be a good discharge to the Company in respect thereof.

b) No Merger.  Neither the taking of any judgment nor the exercise of any rights hereunder shall operate to extinguish the obligation of the Company to pay the monies under this Note and shall not operate as a merger of any covenant in this Note, and the acceptance of any payment shall not constitute or create a novation, and the taking of a judgment or judgments under a covenant herein contained shall not operate as a merger of those covenants and affect the Holder's right to interest under this Note.

Section 8.                      Miscellaneous.

a) Notices.  Any and all notices or other communications or deliveries to be provided by the Company or the Holder shall be made in accordance with the Purchase Agreement.

 

  

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b) Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed.  This Note is a direct debt obligation of the Company.

c) Lost or Mutilated Note.  If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.

d) Jurisdiction.  This Note and all issues arising out of this Note  will be governed by and construed solely and exclusively under and pursuant to the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. Any action brought concerning the transactions contemplated by this Note shall be brought only in the civil or state courts of California or in the federal courts located in the State of California.

e) Waiver.  Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.  The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver by the Company or the Holder must be in writing.

f) Severability.  If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

  

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g) Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

h) Headings.  The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.

*********************

 

 

 

(Signature Page Follows)

 

 

 

  

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

	
DRINKS AMERICAS HOLDINGS, LTD.

 

 

	
By: /s/ Timothy J. Owens                             

     Name: Timothy J. Owens

     Title:  CEO

 

 

 

  

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