BELL TECHNOLOGY GROUP LTD.
U.S.$160,000,000
160,000 Units Consisting of 13% Senior Notes due 2005 and
Warrants to Purchase 563,200 Shares of Common Stock
PURCHASE AGREEMENT
New York, New York
April 24, 1998
ING Baring (U.S.) Securities, Inc.
135 East 57th Street
New York, New York 10022
Ladies and Gentlemen:
Bell Technology Group Ltd., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to ING Baring (U.S.) Securities, Inc. (the "Initial Purchaser") 160,000 units
(collectively, the "Units"), each Unit consisting of $1,000 principal amount of
13% Senior Notes due 2005 (the "Initial Notes") of the Company and one warrant
(each a "Warrant"), each Warrant initially entitling the holder thereof to
purchase 3.52 shares of common stock, par value $0.01 per share (the "Common
Stock"; and such shares of Common Stock underlying the Warrants are herein
referred to as the "Warrant Shares"), of the Company. The Initial Notes are to
be issued pursuant to an Indenture, dated as of April 30, 1998, (the
"Indenture"), between the Company and Marine Midland Bank, as indenture trustee
(the "Trustee"), and the Warrants are to be issued pursuant to a Warrant
Agreement, dated as of April 30, 1998 (the "Warrant Agreement"), between the
Company and Marine Midland Bank, as warrant agent (the "Warrant Agent"). The
Initial Notes and the Warrants will not trade separately until the earliest to
occur of (i) 180 days after the date of issuance; (ii) a Change of Control;
(iii) the occurrence of an Event of Default; (iv) the date on which a
registration statement under the Securities Act of 1933, as amended (the
Securities Act"), with respect to the Initial Notes or an Exchange Offer (as
defined below) for the Initial Notes is declared effective, or (v) such earlier
date as determined by the Initial Purchaser (such earliest date, the "Separation
Date"). The Units, the Initial Notes and the Warrants are more fully described
in the Offering Memorandum referred to
below. The Initial Notes and the 13% Senior Notes due 2005 (the "Exchange
Notes") issuable in exchange therefor pursuant to an effective registration
statement under the Securities Act, as provided in the Registration Rights
Agreement (as defined below), are collectively referred to herein as the
"Notes." The Units, the Notes and the Warrants are collectively referred to
herein as the "Securities." The offering of the Securities by the Company is
referred to herein as the "Offering." Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Indenture and
the Registration Rights Agreement (as defined below), as the case may be.
It is understood that the Initial Purchaser will offer and resell some or
all of the Units in the United States to "qualified institutional buyers" in
reliance on Rule 144A under the Securities Act and may offer and resell a
portion of the Units outside the United States to certain persons in reliance on
Regulation S under the Securities Act. Such persons specified in the preceding
sentence being referred to as the "Eligible Purchasers."
Holders (including subsequent transferees) of the Initial Notes will have
the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"; the form of which is attached as Exhibit A
hereto), to be dated the Delivery Date (as defined in Paragraph 4) and holders
(including subsequent transferees) of the Warrants will have the registration
rights set forth in the warrant registration rights agreement (the "Warrant
Registration Rights Agreement"; the form of which is attached as Exhibit B
hereto), to be dated the Delivery Date for so long as such Notes, Warrants or
any Warrant Shares constitute "Transfer Restricted Securities" (as defined in
each such agreement, respectively). Pursuant to the Registration Rights
Agreement, the Company will file with the Securities and Exchange Commission
(the "Commission"), under the circumstances set forth therein, (i) a
registration statement under the Securities Act (the "Exchange Offer
Registration Statement") relating to the Exchange Notes to be offered in
exchange for the Initial Notes (the "Exchange Offer") and (ii) under certain
conditions, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement") relating to resales by
Holders of the Initial Notes, and will use its best efforts to cause such
registration statements to be declared effective and to consummate the Exchange
Offer.
Pursuant to the Indenture, on the Delivery Date, the Company will deposit
approximately $57 million out of the net proceeds of the Offering into the
Escrow Account (the "Escrow Account") held by the Trustee, for the benefit of
the Holders of the Notes, in such amount as will be sufficient to provide for
payment in full of the first six scheduled interest payments due on the Notes;
such deposit shall be made pursuant to the Escrow and Security Agreement, to be
dated the Delivery Date (the "Escrow Agreement").
This Agreement, the Securities, the Warrant Shares, the Indenture,
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the Warrant Agreement, the Registration Rights Agreement, the Warrant
Registration Rights Agreement and the Escrow Agreement are sometimes referred to
herein collectively as the "Operative Documents."
1. Representations and Warranties. The Company represents, warrants and
agrees to and with the Initial Purchaser that:
(a) The Company has prepared a preliminary confidential offering
memorandum dated March 27, 1998 (the "Preliminary Offering Memorandum"), and a
final confidential offering memorandum dated the date hereof (the "Offering
Memorandum") relating to the Securities. Copies of such Preliminary Offering
Memorandum and such Offering Memorandum have been delivered by the Company to
the Initial Purchaser and the Company has authorized the Initial Purchaser to
distribute copies thereof, in connection with the offering and resale of the
Securities. The Preliminary Offering Memorandum did not, as of its date, and the
Offering Memorandum does not, as of the date hereof, and will not, as of the
Delivery Date, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum and the
Offering Memorandum in reliance upon and in conformity with written information
relating to the Initial Purchaser furnished to the Company by or on behalf of
the Initial Purchaser expressly for inclusion therein. The only information
relating to the Initial Purchaser furnished by the Initial Purchaser to the
Company for inclusion in the Preliminary Offering Memorandum and the Offering
Memorandum is (i) the third full paragraph on page (iv) thereof concerning
stabilization and (ii) the information contained under the caption "Plan of
Distribution."
In addition, the Preliminary Offering Memorandum and the Offering
Memorandum contain all information with regard to the Company and the Securities
which is material in the context of the issue and offering of the Securities
(including all information which, according to the particular nature of the
Company and of the Securities, is necessary to enable investors to make an
informed assessment of the assets and liabilities, financial position, profits
and losses and prospects of the Company and of the rights attaching to the
Securities), such information is true and accurate in all material respects and
is not misleading, the opinions expressed relating thereto are honestly held and
there are no other facts the omission of which makes any such information or the
expression of such opinions misleading in any material respect.
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
power and authority to own, lease and operate its properties and engage in the
business in which it is engaged or proposes to engage in as
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described in the Preliminary Offering Memorandum and the Offering Memorandum.
The Company is duly registered and qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or leasing
of its properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify, individually
or in the aggregate, would not have a material adverse effect on or affecting
the business, assets, properties, condition (financial or other), stockholders'
equity, prospects or results of operations of the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect"). The Company has no subsidiaries
(as defined in the rules and regulations under the Securities Act (the "Rules
and Regulations")) other than NAFT International Ltd., a New York corporation
("NAFT"), PFM Communications, Inc., a New York corporation ("PFMC"), NAFT
Computer Service Corp., a New York corporation ("NCS"), Gamenet Corporation, a
New York corporation ("Gamenet"), and Bluestreak Digital, Inc., a New York
corporation ("Bluestreak;" collectively, the "Subsidiaries"). The Company does
not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity, other than the
Subsidiaries. Each Subsidiary has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
organization, with full power and authority to own, lease and operate its
properties and conduct the business in which it is engaged or proposes to engage
in and is duly registered and qualified as a foreign corporation in good
standing in each jurisdiction where the ownership or leasing of its properties
or the conduct of its business requires such registration or qualification,
except where the failure to so register or qualify, individually or in the
aggregate, would not have a Material Adverse Effect. All of the outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and are owned by the
Company free and clear of any lien, adverse claim, mortgage, pledge, security
interest, charge, equity or other encumbrance (each a "Lien"), except as
described in the Preliminary Offering Memorandum and the Offering Memorandum.
Complete and correct copies of the certificates of incorporation and of the
bylaws (or other organizational or constitutive documents) of the Company and
each of the Subsidiaries, and all amendments thereto, have been delivered to the
Initial Purchaser, and no changes will be made therein subsequent to the date
hereof and prior to the Delivery Date.
(c) The Company has an authorized capitalization as of December 31, 1997
as set forth in the Preliminary Offering Memorandum and the Offering Memorandum
and there has been no material change in its capitalization since that date. All
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws and were not issued in
violation of any preemptive right, resale right, right of first refusal or
similar right. The authorized and outstanding capital
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stock of the Company conforms in all material respects to the description
thereof contained in the Preliminary Offering Memorandum and the Offering
Memorandum (and such description correctly states the substance of the
provisions of the instruments defining the capital stock of the Company). Except
as described in the Preliminary Offering Memorandum and the Offering Memorandum,
there are no outstanding rights (including, without limitation, preemptive or
similar rights), warrants or options to acquire, or instruments convertible into
or exchangeable for, any share of capital stock or other equity interest or
ownership interest in the Company or any of its Subsidiaries or any contract,
commitment, agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock or other equity interest or ownership interest in
the Company or any of its Subsidiaries or any such convertible or exchangeable
securities or instruments or any such rights, warrants or options.
(d) Except as otherwise set forth in the Preliminary Offering Memorandum
and the Offering Memorandum, there is (A) no action, suit or proceeding before
or by any court, arbitrator or governmental agency, body or official, domestic
or foreign, pending or, to the knowledge of the Company, threatened or
contemplated, as to which the Company or any of the Subsidiaries is or will be,
a party or as to which the business, assets or property of the Company or any of
the Subsidiaries is or will be, subject, (B) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency, body
or official, and (C) no injunction, restraining order or order of any nature
that has been issued by a federal or state court or foreign court of competent
jurisdiction to which the Company or any of the Subsidiaries is or will be
subject or affecting the business, assets or property of the Company or any of
the Subsidiaries that could, in the case of clauses (A), (B) and (C),
individually or in the aggregate, have a Material Adverse Effect or adversely
affect the ability of the Company to perform its obligations under the Operative
Documents or be otherwise material in the context of the sale of the Securities.
There are no legal or administrative proceedings, statutes, contracts or
documents concerning the Company or any of the Subsidiaries of a character that
would be required to be described in a registration statement on Form SB-2 under
the Securities Act that is not described in the Preliminary Offering Memorandum
and the Offering Memorandum.
(e) Arthur Andersen LLP (the "Accountants"), who have examined and
performed an audit on the financial statements, together with the related
schedules and notes, of the Company included in the Preliminary Offering
Memorandum and the Offering Memorandum, are independent public accountants
within the meaning of the Securities Act and the Rules and Regulations. The
financial statements of the Company, together with the related notes, included
in the Preliminary Offering Memorandum and the Offering Memorandum, fairly
present the financial position and the results of operations, cash flows and
changes in financial position of the Company and its Subsidiaries purported to
be shown thereby, at the respective dates and for the respective
5
periods to which they apply. All financial statements, together with the related
notes, included in the Preliminary Offering Memorandum and the Offering
Memorandum have been prepared in accordance with generally accepted accounting
principles as in effect in the United States, consistently applied throughout
the periods involved except as may be otherwise stated in the Preliminary
Offering Memorandum and the Offering Memorandum. The selected and summary
financial and statistical data included in the Preliminary Offering Memorandum
and the Offering Memorandum present fairly, in all material respects, the
information shown therein and have been compiled on a basis consistent with the
financial statements presented therein and the books and records of the Company.
There are no other financial statements or schedules of a character that would
be required to be included in a registration statement on Form SB-2 under the
Securities Act that are not included in the Preliminary Offering Memorandum and
the Offering Memorandum.
(f) Subsequent to the respective dates as of which information is given in
the Preliminary Offering Memorandum and the Offering Memorandum, there has not
been (i) any loss or adverse change, or any development which is likely to
result in a loss or adverse change, in or affecting the business, properties,
management, assets, prospects, stockholders' equity, condition (financial or
other), or results of operations of the Company or any of the Subsidiaries, (ii)
any transaction entered into by the Company or any of the Subsidiaries, except
transactions in the ordinary course of business, (iii) any obligation, direct or
contingent, incurred by the Company or any of the Subsidiaries, except
obligations incurred in the ordinary course of business, (iv) any change in the
capital stock or outstanding indebtedness of the Company, or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, which in any case described in (i), (ii), (iii), (iv) or (v) above,
could, individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor any Subsidiary has any material contingent obligation which is
not disclosed in the Preliminary Offering Memorandum and the Offering Memorandum
and which is of a character that would be required to be included in a
registration statement on Form SB-2 under the Securities Act.
(g) Except as otherwise set forth in the Preliminary Offering Memorandum
and the Offering Memorandum, (i) the Company and each of the Subsidiaries have
good and marketable title to all properties and assets described in the
Preliminary Offering Memorandum and the Offering Memorandum as being owned by
it, free and clear of any Lien, except, individually and in the aggregate, Liens
for taxes not yet due and payable and except such as do not materially and
adversely affect the value of such property and assets and do not materially
interfere with the use made or proposed to be made of such property or asset by
the Company or such Subsidiary, (ii) the material agreements to which the
Company and each of the Subsidiaries is a party are legal, valid and binding
agreements, enforceable against the Company or such Subsidiary, as applicable,
in accordance with their terms, except as the
6
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting creditors'
rights generally or by general principles of equity, and, to the best of the
Company's knowledge, the other contracting party or parties thereto are not in
material breach or default under any of such agreements, and (iii) the Company
and the Subsidiaries have valid and enforceable leases for the properties leased
by them, and the Company and each such Subsidiary enjoys peaceful and
undisturbed possession under all such leases with such exceptions as do not
materially interfere with the use thereof made by the Company or such
Subsidiary, and such leases conform in all material respects to the descriptions
thereof, if any, set forth in the Preliminary Offering Memorandum and the
Offering Memorandum.
(h) The Company and each of the Subsidiaries have all requisite power and
authority (corporate and other), and all licenses, certificates, approvals,
consents, concessions, qualifications, orders, registrations, authorizations and
permits from all state, United States, foreign and other governmental and
regulatory agencies, bodies and authorities ("Permits") that are material to the
conduct of the business of the Company and each of the Subsidiaries as such
business is currently conducted and reasonably believes that it will be able to
obtain such Permits that are material to the conduct of the business of the
Company and each of the Subsidiaries as such business is proposed to be
conducted as described in the Preliminary Offering Memorandum and the Offering
Memorandum, except for such Permits the failure of which to hold would not,
individually or in the aggregate, have a Material Adverse Effect, all of which
are valid and in full force and effect (and there is no proceeding pending or,
to the best knowledge of the Company, threatened which may cause any such Permit
to be withdrawn, canceled, suspended or not renewed). The Company and the
Subsidiaries are not in violation of, or in default under, and have fulfilled
and performed all their obligations with respect to such Permits, other than
those obligations which would not, individually or in the aggregate, have a
Material Adverse Effect and no event has occurred which allows or would allow
revocation or termination thereof or result in any material impairment of the
rights of the holder of any such Permit. The Company and the Subsidiaries are
not (i) in violation of their respective certificates of incorporation, as
amended, or bylaws, as amended or (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, deed of trust, bond, note, lease,
license or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries may
be bound or to which any of the property or assets of the Company or any of the
Subsidiaries is subject (each a "Contract"), or in violation of any law, order,
rule, regulation, writ, injunction or decree of any court or governmental
agency, body or authority, except in the case of this clause (ii) for such
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect or adversely affect the ability of the Company to
perform its obligations under the Operative
7
Documents or be otherwise material in the context of the sale of the Securities.
Except as otherwise set forth in the Preliminary Offering Memorandum and the
Offering Memorandum, the Company and each of the Subsidiaries owns or possesses
adequate licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
tradenames, inventions, copyrights, manufacturing processes, formulae, trade
secrets, know-how, franchises, and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures and material
intangible property and assets (collectively, "Intellectual Property") necessary
to the conduct of their business as currently conducted and reasonably believes
that the Company and each of the Subsidiaries will be able to own or possess
adequate licenses or other rights to use all Intellectual Property necessary to
the conduct of their business as proposed to be conducted as described in the
Preliminary Offering Memorandum and the Offering Memorandum. The Company has no
knowledge that it lacks or will be unable to obtain any rights or licenses to
use any of such Intellectual Property. The Preliminary Offering Memorandum and
the Offering Memorandum fairly and accurately describe the Company's rights with
respect to any such Intellectual Property. The Company is not aware of any claim
to the contrary and neither the Company nor any of the Subsidiaries has received
any written notice of infringement or of conflict with asserted rights or claims
of others with respect to any Intellectual Property which could, individually or
in the aggregate, have a Material Adverse Effect.
(i) The Company and each of the Subsidiaries have filed on a timely basis
with the appropriate taxing authorities (or have received an extension for
filing with respect to) all tax returns, reports and other information required
to be filed by it (except where such failure to file would not, individually or
in the aggregate, have a Material Adverse Effect), and each such tax return,
report or other information was, when filed, accurate and complete; and, except
as described in the Preliminary Offering Memorandum and the Offering Memorandum,
each of the Company and the Subsidiaries has duly paid, or has made adequate
provision for, all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, and to the best of the Company's knowledge,
no tax deficiency is currently asserted or contemplated against the Company or
any of the Subsidiaries.
(j) The Company and each of the Subsidiaries maintains insurance of the
types and in the amounts adequate for their business as presently conducted and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering product liability
and real and personal property owned or leased against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(k) Neither the Company nor any of the Subsidiaries is involved
8
in any labor dispute, disturbance, lockout, slowdown or stoppage of employees,
and, to the best knowledge of the Company, no such dispute or disturbance is
threatened or imminent.
(l) The Company and each of the Subsidiaries (i) are in compliance with
any and all applicable United States, state and local environmental laws, rules,
regulations, treaties, statutes and codes promulgated by any and all
governmental bodies and authorities relating to the protection of human health
and safety, the environment or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
their businesses as currently conducted, and (iii) are in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals would not, individually or in the aggregate, have a
Material Adverse Effect. No action, proceeding, revocation proceeding, writ,
injunction or claim is pending or threatened relating to the Environmental Laws
or to the Company's or any of the Subsidiaries' activities involving Hazardous
Materials. "Hazardous Materials" means any material or substance (i) that is
prohibited or regulated by any Environmental Law or (ii) that has been
designated or regulated by any governmental body or authority as radioactive,
toxic, hazardous or otherwise a danger to health, reproduction or the
environment.
(m) To the Company's knowledge, neither the Company nor any of the
Subsidiaries has engaged in the generation, use, manufacture, transportation or
storage of any Hazardous Materials on any of the Company's or any of the
Subsidiaries' properties or former properties, except where such use,
manufacture, transportation or storage is in compliance with Environmental Laws,
or to the extent such activity would not, individually or in the aggregate, have
a Material Adverse Effect. To the Company's knowledge, no Hazardous Materials
have been treated or disposed of on any of the Company's or any of the
Subsidiaries' properties or on properties formerly owned or leased by the
Company or any of the Subsidiaries during the time of such ownership or lease,
except in compliance with Environmental Laws, or those that would not,
individually or in the aggregate, have a Material Adverse Effect.
(n) No payments or inducements were made or given, directly or indirectly,
to any federal or local officials in any jurisdiction by the Company or by any
of the Subsidiaries, by any of their officers, directors, employees or agents
or, to the best knowledge of the Company, by any other person in connection with
any opportunity, agreement, license, permit, certificate, consent, order,
approval, waiver or other authorization relating to the business of the Company
or any of the Subsidiaries, except for such payments or inducements as were
lawful under applicable written laws, rules and regulations, and neither the
Company nor any of the Subsidiaries, nor any director, officer, agent, employee
9
or other person associated with or acting on behalf of the Company or any of the
Subsidiaries, (i) has used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
unlawful rebate, payoff, influence payment, kickback or other unlawful payment
in connection with the business of the Company or the Subsidiaries.
(o) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances 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 generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(p) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company or any of the Subsidiaries to or for the benefit of
any of the officers or directors of the Company or any of the Subsidiaries or
any of the members of the families of any of them, except as disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum.
(q) The execution, delivery and performance by the Company of this
Agreement, the other Operative Documents and the issuance and sale of the
Securities and the consummation of the transactions contemplated herein and
therein have been duly authorized by all necessary corporate action. Neither the
issuance, offer, sale or delivery of the Securities, or the issuance or delivery
of the Warrant Shares upon exercise of the Warrants, the execution, delivery and
performance by the Company of the Operative Documents nor the compliance by the
Company with all the provisions hereof and thereof nor the consummation of the
transactions contemplated thereby and by the Preliminary Offering Memorandum and
the Offering Memorandum, (i) will require any consent, approval, authorization,
waiver or other order of, or registration, qualification or filing with, any
court, regulatory body, administrative agency or other governmental body,
agency, authority or official, except for such consents, approvals,
authorizations, filings or other orders as have been obtained and which are in
full force and effect (and other than those consents, approvals, authorizations,
registrations or filings which are customary in connection with the performance
by the Company of its obligations under the Escrow Agreement, the Registration
Rights Agreement and the Warrant Registration Rights Agreement), (ii) conflicts
with or will conflict with, or constitutes or will constitute a breach of or
10
a default under, any of the terms or provisions of the certificate of
incorporation or by-laws or other organizational or constitutive documents of
the Company or any of the Subsidiaries, or (iii) conflicts with or will conflict
with or constitutes or will constitute a breach of, or a default (or an event
that with notice or the lapse of time or both would constitute a default) or the
loss of any material benefit under, or the termination of, or will result in the
creation or imposition of any Lien upon any property or assets of the Company or
any of the Subsidiaries pursuant to, any Contract nor (iv) violates or conflicts
with or will violate or conflict with any laws, regulations or administrative or
court orders, injunctions, decrees or judgments applicable to the Company or any
of the Subsidiaries or their respective properties or affecting any of their
respective businesses.
(r) This Agreement has been duly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect relating to
or affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and except to the extent that the provisions of Paragraph 7 hereof
may be limited by applicable federal or state securities laws or unenforceable
as against public policy.
(s) The Indenture has been duly authorized, executed and delivered by the
Company and, upon its execution and delivery by the Trustee, will constitute the
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect relating to or affecting creditors'
rights generally and (ii) and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law). The
description of the Indenture in the Preliminary Offering Memorandum and the
Offering Memorandum is accurate in all material respects. The Indenture is in a
form which would meet the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(t) The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company and upon its execution and delivery by the Initial
Purchaser, will be the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by (i) applicable federal or state
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), except to the extent that
rights to indemnification thereunder may be limited by applicable federal or
state
11
securities laws or unenforceable as against public policy. The description of
the Registration Rights Agreement in the Preliminary Offering Memorandum and the
Offering Memorandum is accurate in all material respects.
(u) The Warrant Agreement has been duly authorized, executed and delivered
by the Company and upon its execution and delivery by the Warrant Agent, will be
the legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law). The
description of the Warrant Agreement in the Preliminary Offering Memorandum and
the Offering Memorandum is accurate in all material respects.
(v) The Warrant Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and, upon the execution and delivery
thereof by the Initial Purchaser, will be the legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally, and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and except to the extent that
rights to indemnification thereunder may be limited by applicable federal or
state securities laws or unenforceable as against public policy. The description
of the Warrant Registration Rights Agreement in the Preliminary Offering
Memorandum and the Offering Memorandum is accurate in all material respects.
(w) The Escrow Agreement has been duly authorized, executed and delivered
by the Company and upon the execution and delivery thereof by the Trustee, will
be the legal, valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the enforceability thereof
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law). The
description of the Escrow Agreement in the Preliminary Offering Memorandum and
the Offering Memorandum is accurate in all material respects. Upon the deposit
of a portion of the net proceeds of the Offering on the Delivery Date in the
Escrow Account and the subsequent purchase of the Pledged Securities to be held
in the Escrow Account (such proceeds and Pledged Securities, together, the
"Collateral"), the Company will be the sole beneficial owner of the Collateral
and no Lien will exist upon the Collateral or the Escrow Account (and no right
or option to acquire the same will exist in favor any other person or entity)
except for the Lien in favor of the Trustee for the benefit of the
12
Holders of the Notes, to be created or provided in the Escrow Agreement, which
shall constitute a first priority perfected pledge and security interest in and
to all of the Collateral and the Escrow Account.
(x) The Company has duly and validly authorized the issuance and sale of
the Units. The Initial Notes have been duly and validly authorized for issuance
and sale by the Company as contemplated by this Agreement and, on the Delivery
Date, will have been duly executed by the Company and, when issued,
authenticated and delivered in the manner provided for in this Agreement and the
Indenture against payment of the consideration therefor specified herein and
therein, the Initial Notes will constitute legal, valid and binding obligations
of the Company entitled to the benefits provided by the Indenture and
enforceable against the Company in accordance with their terms, except as the
enforceability thereof may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect relating to
or affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law); and the Initial Notes will constitute direct, senior indebtedness of
the Company and will rank at least pari passu with each other and with all other
present and future unsecured senior indebtedness of the Company. The description
of the Initial Notes in the Preliminary Offering Memorandum and the Offering
Memorandum is accurate in all material respects.
(y) The Company has duly and validly authorized the issuance and sale of
the Warrants and, when issued and executed by the Company and countersigned in
accordance with the terms of the Warrant Agreement and delivered on the Delivery
Date against payment therefor in accordance with the terms hereof and thereof,
the Warrants will be entitled to the benefits of the Warrant Agreement and will
be the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as the enforceability thereof
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to or affecting the
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law). The
description of the Warrants in the Preliminary Offering Memorandum and the
Offering Memorandum is accurate in all material respects. The Warrants are
exercisable into Warrant Shares in accordance with the terms of the Warrant
Agreement. The Company has duly authorized and reserved for issuance the Warrant
Shares and, when issued and paid for upon exercise of the Warrants in accordance
with the terms of such Warrants, the Warrant Shares will be duly and validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights.
(z) The Company has duly and validly authorized the issuance and exchange
of the Exchange Notes and, when issued and authenticated in accordance with the
terms of the Indenture and delivered in accordance with the
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terms of the Exchange Offer, the Registration Rights Agreement and the
Indenture, the Exchange Notes will be entitled to the benefits of the Indenture
and will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as the
enforceability thereof may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law); and the
Exchange Notes will constitute direct, senior indebtedness of the Company and
will rank pari passu with the Initial Notes. The description of the Exchange
Notes in the Preliminary Offering Memorandum and the Offering Memorandum is
accurate in all material respects.
(aa) The Company, is not now, and as a result of the offer and sale of the
Securities in the manner contemplated in this Agreement and the Preliminary
Offering Memorandum and the Offering Memorandum and the application of the net
proceeds of such sale as described in the Preliminary Offering Memorandum and
the Offering Memorandum, will not be, an "investment company", within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), without taking account of any exemption arising out of the number
or type of holders of the Company's securities.
(bb) The Company has not incurred any liability for a fee, commission, or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than the
discount contemplated hereby.
(cc) Neither of the Company nor any of the Subsidiaries or to the
Company's knowledge, any of its or their officers, directors or affiliates (as
defined in Rule 501(b) of Regulation D ("Regulation D") under the Securities
Act) has taken or will take, directly or indirectly, any action designed to
cause or to result in or that has constituted, or might reasonably be expected
to cause or result in or constitute, under the Securities Exchange Act of 1934,
as amended (the Exchange Act"), or otherwise, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities.
(dd) The Company has not distributed and will not distribute prior to the
later of (i) the Delivery Date and (ii) completion of the distribution of the
Securities, any offering material in connection with the offering and sale of
the Securities other than the Preliminary Offering Memorandum and the Offering
Memorandum.
(ee) Neither the Company nor any of the Subsidiaries nor any of their
affiliates (as defined in Regulation D) nor any person acting on its or their
behalf has, directly or indirectly, engaged in or will engage in any directed
selling
14
efforts within the meaning of Regulation S under the Securities Act ("Regulation
S") with respect to the Securities; the Securities offered and sold in reliance
on Regulation S have been and will be offered and sold only in "offshore
transactions" as defined in such Regulation S; the sale of the Securities
pursuant to Regulation S is not part of a plan or scheme to evade the
registration provisions of the Securities Act; the Company, each of the
Subsidiaries and such affiliates and all persons acting on their behalf have
complied with and will comply with the offering restrictions requirements of
Regulation S in connection with offering the Securities outside the United
States; and there is no substantial U.S. market interest (as defined in
Regulation S) in the Company's debt or equity securities.
(ff) The Company is a "reporting issuer," as defined in Rule 902 under the
Securities Act.
(gg) Except as otherwise set forth in this Agreement, the Registration
Rights Agreement, the Warrant Registration Rights Agreement or the Preliminary
Offering Memorandum and the Offering Memorandum, there are no holders of
securities of the Company which by reason of the execution of this Agreement or
any other Operative Document and the consummation of the transactions
contemplated hereby or thereby, have the right to request or demand that the
Company register any of its securities under the Securities Act.
(hh) The Notes and the Warrants will, when issued, satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act and will not be of the
same class (within the meaning of Rule 144A under the Securities Act) as any
security of the Company that is listed on a national securities exchange
registered under Section 6 of the Exchange Act, or that is quoted on an
automated inter-dealer quotation system.
(ii) Neither the Company, the Subsidiaries nor any of their affiliates (as
defined in Regulation D), nor any person acting on its or their behalf has,
directly or indirectly, made offers or sales of any security, or solicited
offers to buy, or otherwise negotiated in respect of, any "security", as defined
in the Securities Act, under circumstances that would require the registration
of the Securities under the Securities Act.
(jj) Neither the Company, the Subsidiaries nor any of their affiliates (as
defined in Regulation D), nor any person acting on its or their behalf, directly
or indirectly, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or
sale of the Securities.
(kk) The Company has been advised by the National Association of
Securities Dealers, Inc. PORTAL Market that the Notes have been designated
PORTAL-eligible securities in accordance with the rules and regulation of the
National Association of Securities Dealers, Inc.
15
(ll) Other than as described in the Preliminary Offering Memorandum and
the Offering Memorandum, there is no tax, duty, levy, impost, deduction, charge
or withholding imposed by any political subdivision or taxing authority by
virtue of the execution, delivery, performance or enforcement, or to ensure the
legality, validity or admissibility into evidence, of this Agreement, the
Indenture or any other Operative Document and neither is it necessary that the
Securities be submitted to, or filed or recorded with, any court or other
authority to ensure such legality, validity, enforceability or admissibility
into evidence.
(mm) All necessary actions, authorizations, conditions and things required
to be taken, given, fulfilled and done by the Company on or prior to the date of
this Agreement, have been, or on the Delivery Date, will have been taken, given,
fulfilled and done in connection with (i) the issue of the Offering Memorandum;
(ii) the execution and delivery of this Agreement and the other Operative
Documents; (iii) the execution, delivery and issuance of the Securities, (iv)
the compliance with all provisions of the Securities, this Agreement, the
Indenture and the other Operative Documents to be performed or complied with by
such date.
2. Purchase and Offering of the Units. On the basis of the
representations, warranties and agreements contained in, and, upon the terms and
subject to conditions of, this Agreement, the Company agrees to issue and sell
to the Initial Purchaser 160,000 Units, and the Initial Purchaser agrees to
purchase and pay for 160,000 Units at a price equal to the issue price of 100%
of the principal amount of the Initial Notes (the "Issue Price"). The sale of
the Units to the Initial Purchaser will be made without registration of the
Units under the Securities Act, in reliance on the exemption therefrom provided
by Section 4(2) of the Securities Act.
3. Commissions and Fees. The Company agrees to pay to the Initial
Purchaser a commission (the "discount") of 3.5% of the principal amount of the
Initial Notes in consideration of the agreement by the Initial Purchaser to
purchase the Units. The Initial Purchaser shall be entitled to deduct such
discount from the Issue Price of the Units referred to Paragraph 2 hereof.
4. Delivery and Payment. Subject to the terms and conditions and in
reliance on the representations, warranties and agreements set forth herein,
payment of the purchase price, less the discount referred to in Paragraph 3 and
the expenses referred to in Paragraph 6, for the Units shall be made by the
Initial Purchaser by wire transfer or by certified or official bank check
payable in U.S. dollars in next-day funds by 11:00 A.M., New York City time, to
the order of the Company or as it may direct, on April 30, 1998 or at such other
date and time as may be determined by agreement between the Company and the
Initial Purchaser. This date and time are sometimes referred to as the "Delivery
Date." Such payment shall be made by the Initial Purchaser against delivery to
it or its order by the Company of one or more duly issued and executed and, if
16
applicable, authenticated, Units in definitive form, registered in the name of
Cede & Co., as nominee of The Depository Trust Company ("DTC"), having an
aggregate amount corresponding to the aggregate amount of the Units sold
(collectively, the "Global Unit"), each Global Unit consisting of $1,000
aggregate principal amount of Initial Notes in definitive form, registered in
the name of Cede & Co., as nominee of DTC (the "Global Note"), and 160,000
Warrants in definitive form to purchase 563,200 shares of Common Stock,
registered in the name of Cede & Co., as nominee of DTC (the "Global Warrant").
The Global Unit shall be made available to the Initial Purchaser for inspection
at least two business days prior to the Delivery Date.
5. Covenants. The Company agrees with the Initial Purchaser as follows:
(a) The Company shall furnish without charge to the Initial Purchaser
promptly on the date hereof, and hereafter from time to time as requested by the
Initial Purchaser, such number of copies of the Offering Memorandum and each
amendment and supplement thereto as the Initial Purchaser may reasonably
request.
(b) If at any time prior to the completion of the distribution of the
Securities, as determined by the Initial Purchaser, any event occurs as a result
of which in the reasonable judgment of the Company or of counsel for the Initial
Purchaser or the Company, the Offering Memorandum, as then amended or
supplemented, would contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading, the
Company will promptly so notify the Initial Purchaser and will forthwith prepare
an appropriate amendment or supplement to the Offering Memorandum as may be
necessary so that the statements in the Offering Memorandum as so amended or
supplemented will not contain any such untrue statement or omit to state any
such material fact or be misleading and will expeditiously furnish to the
Initial Purchaser, without charge, as many copies of such corrected Offering
Memorandum as may be reasonably requested by the Initial Purchaser.
(c) Within a reasonable amount of time prior to any proposed making of any
amendment or supplement to the Offering Memorandum, the Company shall furnish a
copy thereof to the Initial Purchaser for its review and shall not publish or
use any such amendment or supplement without the prior written consent of the
Initial Purchaser.
(d) For so long as the Securities are outstanding, the Company shall
comply with the terms of the Indenture and the other Operative Documents and
shall promptly notify the Initial Purchaser if the Company discovers that any of
its representations, warranties or agreements contained in this Agreement or in
any of the other Operative Documents are not, at any time prior to the
17
completion of the distribution of the Securities (as determined by the Initial
Purchaser), true and correct, or if the Company has at any such time breached
any of its obligations hereunder or thereunder or if any event has occurred that
prevents or would prevent the Company from fulfilling its obligations hereunder
or thereunder and the Company will take such steps as may be reasonably
requested by the Initial Purchaser to remedy or publicize the same.
(e) If, at any time prior to two years after the Delivery Date, the
Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company
shall furnish, as soon as available, to the Initial Purchaser, and, upon the
request of a holder of Securities, to such holder and any prospective purchaser
designated by such holder, copies of the information required to be delivered as
specified in Rule 144A(d)(4) under the Securities Act.
(f) Neither the Company nor any of its affiliates (as defined in
Regulation D) will take, directly or indirectly, any action designed to cause or
to result in or which constitutes or which might reasonably be expected to
cause, result in or constitute, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the offering and distribution of the Securities or any action
prohibited by Regulation M under the Exchange Act.
(g) The Company will endeavor to qualify the Units for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser shall reasonably request and to continue such qualification in effect
so long as reasonably required for resale of the Units by the Initial Purchaser;
provided that the Company shall not be required as a result thereof to file a
general consent to service of process in any jurisdiction. The Company will
promptly advise the Initial Purchaser of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Units
for sale in any jurisdiction or the initiation or threat of any proceeding for
such purpose.
(h) For so long as the Securities are outstanding, the Company will
promptly furnish to the Initial Purchaser copies of all reports or other
communications (financial or other) furnished by the Company or the Trustee to
holders of Securities, and copies of any reports and financial statements
furnished to or filed with the Securities and Exchange Commission (the
"Commission") or any national securities exchange by the Company. This covenant
is intended for the benefit of the holders of the Securities and their
prospective purchasers from time to time.
(i) Neither the Company, its Subsidiaries nor any affiliate (as defined in
Regulation D) will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security the offering of which would be integrated
with the sale of the Securities in a manner which would require the registration
of the Securities under the Securities Act.
18
(j) If requested by the Initial Purchaser, the Company shall use its best
efforts to permit the Securities to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. (the "NASD") relating to trading in the PORTAL Market.
(k) The Company shall, if requested by the Initial Purchaser, use its best
efforts to assist the Initial Purchaser in arranging to cause the Securities to
be eligible for settlement through the facilities of The Depository Trust
Company ("DTC") and agrees to comply with all of the terms and conditions and
all agreements set forth in the representation letters of the Company relating
to the approval of the Securities by DTC for "book entry" transfer and
settlement.
(l) The Company shall not, to the extent permitted by applicable law,
claim voluntarily, and will resist actively any attempts to claim, the benefit
of any usury laws against the Holders of the Notes.
(m) The Company shall apply the net proceeds from the sale of the Units in
the manner described in the Preliminary Offering Memorandum and the Offering
Memorandum under the caption "Use of Proceeds."
(n) The Company shall do and perform all things required or necessary to
be done and performed under this Agreement by it prior to or after the Delivery
Date and satisfy all conditions precedent to the delivery of the Units
hereunder.
(o) The Company shall not distribute prior to the Delivery Date any
offering material in connection with the offering and sale of the Securities
other than the Preliminary Offering Memorandum and the Offering Memorandum.
(p) The Company shall cause the Exchange Offer to be made in the
appropriate form and in accordance with the provisions of the Registration
Rights Agreement, permit registered Exchange Notes to be offered in exchange for
the Initial Notes and comply with all applicable federal and state securities
laws in connection with the Exchange Offer.
(q) The Company shall comply with all of its agreements set forth in the
Indenture, the Registration Rights Agreement, the Warrant Registration Rights
Agreement and the Escrow Agreement and the other Operative Documents.
(r) The Company shall take all such steps as shall be necessary to ensure
that the Company shall not become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act.
19
(s) The Company shall reserve and continue to reserve as long as any
Warrants are outstanding, a sufficient number of Warrant Shares for issuance
upon exercise of the Warrants.
(t) Neither the Company nor any of its Subsidiaries or affiliates (as
defined in Regulation D), nor any person acting on behalf of the Company, such
Subsidiaries, or any such affiliate, has engaged or will engage, directly or
indirectly, in any "directed selling efforts" with respect to the Securities
within the meaning of Regulation S under the Securities Act and the Company, its
Subsidiaries and all such affiliates will comply with the offering restriction
requirements of Regulation S.
(u) The Company shall refuse to register any transfer of the Units,
Warrants or Warrant Shares not made in accordance with Regulation S, pursuant to
registration under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act; provided, however, that if
a foreign law prevents the Company from refusing to register securities
transfers, the Company shall implement other reasonable measures designed to
prevent transfers of the Units, Warrants and Warrant Shares not made in
accordance with Regulation S, pursuant to registration under the Securities Act
or pursuant to an available exemption from the registration requirements of the
Securities Act.
(v) Neither the Company, nor any of its Subsidiaries or affiliates (as
defined in Regulation D), nor any person acting on its or their behalf, directly
or indirectly, has engaged or shall engage in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
any offer or sale of the Securities.
(w) Neither the Company, nor any of its Subsidiaries or affiliates (as
defined in Regulation D), nor any person acting on its or their behalf, shall,
directly or indirectly, make offers or sales of any security, or solicit offers
to buy any security, as defined in the Securities Act, under circumstances that
would require the registration of the Securities under the Securities Act.
(x) The Company will not, nor will it permit any of its Subsidiaries or
affiliates (as defined in Regulation D) to, resell any Securities which have
been acquired by any of them.
(y) The Company, its officers and directors, its Subsidiaries and their
officers and directors and all affiliates (as defined in Regulation D) will not
issue, offer, sell, contract to sell or otherwise dispose of any securities of
the Company, other than Common Stock or options or warrants convertible into
Common Stock, without the consent of the Initial Purchaser until after the 180th
day subsequent to the Delivery Date.
6. Costs and Expenses. The Company agrees (whether or not
20
the transactions contemplated hereby are consummated or this Agreement is
terminated by any party hereto) to bear and pay all costs and expenses
(including any taxes) incident to the authorization, issuance, sale and delivery
of the Securities, relating to the preparation of this Agreement, the other
Operative Documents, the Preliminary Offering Memorandum and the Offering
Memorandum, and to the performance of its obligations hereunder and thereunder
including, without limitation: (i) all costs, expenses and taxes in connection
with the preparation, printing, issue, exchange and delivery of the Securities,
including any stamp, issue or transfer, registration, documentary or withholding
or other similar taxes and duties, including interest and penalties, incident to
the authorization, issuance and sale of the Securities to the Initial Purchaser
and the resale thereof by the Initial Purchaser and the execution and delivery
of the Securities and the other Operative Documents, (ii) all costs and expenses
incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum and the Offering Memorandum, any amendments or supplements
thereto, the Operative Documents and all other documents relating to the
Offering; (iii) all fees and expenses of accountants and counsel for the Company
and other advisors engaged by the Company; (iv) all fees and expenses of the
Trustee and any registrar and paying, transfer, warrant and escrow agents
(including expenses of their legal advisors); (v) the cost of all institutional
and retail marketing or road show meetings, including travel and lodging; (vi)
expenses in connection with the qualification of the Securities for sale in
jurisdictions as contemplated by Paragraph 5(g), including but not limited to
all filing fees paid by counsel for the Initial Purchaser and the preparation of
Blue Sky memorandum and the fees of counsel for the Initial Purchaser relating
thereto; (vii) all listing fees and expenses in connection with any listing of
the Securities on any securities exchange or Nasdaq or for any application for
quotation of the Securities on PORTAL; (viii) the fees and expenses of DTC (and
its nominees, Euroclear and Cedel; and (ix) the fees and costs of counsel for
the Initial Purchaser.
7. Indemnification. (a) The Company shall indemnify and hold harmless the
Initial Purchaser and each director, officer, employee and agent of the Initial
Purchaser and their affiliates (as defined in the Securities Act) and each
person, if any, who controls the Initial Purchaser or its affiliates within the
meaning of the Securities Act or the Exchange Act (each a "Purchaser Indemnified
Party"), from and against any loss, claim, damage or liability, joint or
several, and any action in respect thereof, to which any Purchaser Indemnified
Party may become subject, under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action (i) arises out of, or
is based upon, or relates to, any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Offering Memorandum or the
Offering Memorandum, or in any amendment thereof or supplement thereto, or which
arises out of, or is based upon, the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the
21
circumstances under which they were made, not misleading or (ii) arises out of,
or is based upon, or relates to, any breach of a representation, warranty or
agreement of the Company set forth herein, and shall promptly reimburse each
Purchaser Indemnified Party for all legal and other expenses, as such legal and
other expenses are incurred, by such Purchaser Indemnified Party in
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action; provided, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, or relates to any untrue statement or
alleged untrue statement or omission or alleged omission made in the Preliminary
Offering Memorandum and the Offering Memorandum in reliance upon and in
conformity with written information furnished to the Company relating to the
Initial Purchaser by or on behalf of the Initial Purchaser expressly for
inclusion therein; the Company acknowledges that the only such information is
(i) the third full paragraph on page (iv) thereof concerning stabilization and
(ii) the information contained under the caption "Plan of Distribution". The
foregoing indemnity agreement is in addition to any liability which the Company
may otherwise have to any Purchaser Indemnified Party.
(b) The Initial Purchaser shall indemnify and hold harmless the Company
and each director, officer, employee and agent of the Company and each person
who controls the Company within the meaning of the Securities Act or the
Exchange Act (each a "Company Indemnified Party"), from and against any loss,
claim, damage or liability, joint or several, and any action in respect thereof,
to which any Company Indemnified Party may become subject, under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability or
action (i) arises out of, or is based upon, or relates to any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum and the Offering Memorandum, or in any amendment thereof or
supplement thereto, or (ii) arises out of, or is based upon, or relates to the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company relating to the Initial Purchaser by or on behalf of the Initial
Purchaser expressly for inclusion therein, and shall promptly reimburse such
Company Indemnified Party, as incurred, for any legal and other expenses
incurred by such Company Indemnified Party in investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action.
The foregoing indemnity agreement is in addition to any liability which the
Initial Purchaser may otherwise have to any such Company Indemnified Party.
(c) Promptly after receipt by an indemnified party under this
22
Paragraph 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Paragraph 7, notify the indemnifying party in
writing of the claim or the commencement of the action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Paragraph 7 except to the extent it has
been materially prejudiced by such failure and provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Paragraph 7.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Paragraph 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof at the indemnifying party's expense has been specifically
authorized by the indemnifying party in writing, (ii) such indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party and in the reasonable judgment of such
counsel it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the indemnified party, in which case,
if such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (plus
separate local counsel, if retained by the indemnified party) at any time for
all such indemnified parties, which firm shall be designated in writing by the
Initial Purchaser, if the indemnified parties under this Paragraph 7 are
Purchaser Indemnified Parties, or by the Company, if the indemnified parties
under this Paragraph 7 are Company Indemnified Parties.
(d) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
23
proceeding in respect of which any indemnified party is a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement is for money damages only and includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) If the indemnification provided for in this Paragraph 7 shall for any
reason be unavailable to or insufficient to hold harmless any indemnified party
under Paragraph 7(a) or 7(b) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the aggregate amount paid or payable by such indemnified party as
a result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchaser on the other
from the offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Initial
Purchaser on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchaser on the other
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Securities (obtained by
subtracting accrued interest on the Notes, if any, but before deducting
expenses) received by the Company bear to the total discounts and commissions
received by the Initial Purchaser with respect to such offering. The relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to a material fact
relates to information supplied by the Company on the one hand or the Initial
Purchaser on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Paragraph 7(e) shall be deemed to include, for purposes of this
Paragraph 7(e), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Paragraph 7, each other Purchaser Indemnified Party shall have the same
rights to contribution as the Initial Purchaser, and each other Company
Indemnified Party shall have the same rights to contribution as the Company.
(f) The parties hereto agree that it would not be just or
24
equitable if contribution pursuant to this Paragraph 7 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in Paragraph 7(e). The remedies
provided for in this Paragraph 7 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified party at
law or in equity.
8. Conditions to Obligation of the Initial Purchaser. The obligation of
the Initial Purchaser to purchase the Units is subject to the accuracy, when
made and on the Delivery Date, of the representations and warranties of the
Company contained herein, to the performance by the Company of its obligations
hereunder and under the other Operative Documents to be performed at or prior to
the Delivery Date and to each of the following additional conditions:
(a) The Initial Purchaser shall not have disclosed to the Company on or
prior to the Delivery Date that the Offering Memorandum contains an untrue
statement of a fact which, in its reasonable opinion, is material or omits to
state a fact which, in its reasonable opinion, is material and is necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; the Company shall not have prepared and
distributed any amendment or supplement to the Offering Memorandum either
without prior review by, or over the reasonable objection of, the Initial
Purchaser; and no change shall have occurred in Rule 144A or Regulation S under
the Securities Act (except, in the case of Regulation S, those amendments that
are effective as of April 27, 1998) which in the reasonable judgment of the
Initial Purchaser makes it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Units on the terms and in the manner
contemplated in the Offering Memorandum and herein.
(b) All corporate proceedings and other legal matters incident to the
authorization, form, enforceability and validity of the Operative Documents and
all other legal matters relating thereto and the transactions contemplated
thereby shall be reasonably satisfactory in all respects to the Initial
Purchaser and its counsel, and the Company shall have furnished to the Initial
Purchaser all documents and information that it may reasonably request to enable
it to pass upon such matters.
(c) The Company shall have delivered to the Initial Purchaser a certified
copy of the resolutions of the Board of Directors of the Company (or any
authorized committee thereof, together with the resolutions of the Board of
Directors establishing such committee) approving the creation and issue of the
Securities by the Company on the terms and conditions of the Operative Documents
and approving the terms of this Agreement and authorizing the execution and
delivery of the Operative Documents and all other documents relevant to the
issue of the Securities by the Company.
25
(d) The Company shall have furnished to the Initial Purchaser the opinion
or opinions of Milberg Weiss Bershad Hynes & Lerach LLP, Attorneys at Law,
counsel to the Company, addressed to the Initial Purchaser and dated the
Delivery Date, substantially in the form of Exhibit C hereto.
(e) The Company shall have furnished to the Initial Purchaser on the
Delivery Date a certificate, dated the Delivery Date, of the President and the
Chief Financial Officer of the Company stating that:
(i) The representations and warranties of the Company in this
Agreement and the other Operative Documents are true and correct as of the
Delivery Date; and the Company has complied with all the agreements and
satisfied all the conditions in the Operative Documents on its part to be
performed or satisfied at or prior to the Delivery Date;
(ii) Such persons have carefully examined the Preliminary Offering
Memorandum and the Offering Memorandum and, in their opinion (A) the Preliminary
Offering Memorandum and the Offering Memorandum do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they were made, not misleading and (B) since the date of the Offering
Memorandum, there has occurred no event required to be set forth or described in
an amendment or supplement to the Offering Memorandum which has not been so set
forth; and
(iii) Subsequent to the respective dates as of which financial
information is given in the Offering Memorandum, and except as contemplated in
the Preliminary Offering Memorandum and the Offering Memorandum, there has not
been any material adverse change, or any development involving a prospective
material adverse change, in or affecting the management, assets, condition
(financial or otherwise), earnings, business affairs, stockholders' equity,
results of operations, or prospects of the Company or any of the Subsidiaries.
(f) The Company shall have furnished to the Initial Purchaser on the date
hereof and on the Delivery Date a comfort letter (the "comfort letter") of
Arthur Andersen LLP, addressed to the Initial Purchaser and dated the date
hereof and the Delivery Date, (i) confirming that they are independent public
accountants within the meaning of, and are in compliance with the applicable
requirements relating to the qualification of accountants under, Rule 101 of the
Rules of Conduct of the American Institute of Certified Public Accountants and
(ii) stating, as of the date of the comfort letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum, as of a
date not more than five days prior to the date of the comfort letter), in effect
that:
(i) in their opinion the financial statements examined by
26
them and included in the Offering Memorandum comply in form in all material
respects with the applicable accounting requirements of the Securities Act and
the Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of Interim financial
information as described in Statement of Auditing Standards No. 71, Interim
Financial Information, on the unaudited financial statements included in the
Offering Memorandum;
(iii) on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the Company,
inquiries of officials of the Company who have the responsibility for financial
and accounting matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) any material modifications should be made to such
unaudited financial statements for them to be in conformity with generally
accepted accounting principles;
(B) the unaudited financial statements and summary financial
information included in the Offering Memorandum do not comply in form in all
material respects with the applicable accounting requirements of the Securities
Act and the Rules and Regulations;
(C) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than five days
prior to the date of the letter, there was any change in the capital stock
greater than $150 or any increase in long-term debt of the Company and its
subsidiaries consolidated or, at the date of the latest available balance sheet
read by such accountants, there was any decrease in consolidated net current
assets greater than $1,700,000, as compared with amounts shown on the latest
balance sheet included in the Offering Memorandum, or
(D) for the period from the closing date of the latest income
statement included in the Offering Memorandum to the closing date of the latest
available income statement read by such accountants there were any decreases, as
compared with the corresponding period of the previous year in consolidated net
revenues greater than $500,000;
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Offering Memorandum (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the general
accounting records of the Company and its subsidiaries subject to the internal
controls of the Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained from inquiries,
27
a reading of such general accounting records and other procedures specified in
such letter and have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise specified
in such letter; and
(v) containing such other matters as the Initial Purchaser may
reasonably request.
(g) The Initial Purchaser shall have received the opinion of Chadbourne &
Parke LLP, its counsel, addressed to it and dated the Delivery Date, in form and
substance satisfactory to the Initial Purchaser.
(h) The Units shall have been accepted for settlement through the
facilities of DTC.
(i) At the Delivery Date the certificates for the Units shall have been
duly authorized, executed and delivered by the Company and, in the case of the
Notes, duly authenticated by the Trustee and, in the case of the Warrants, duly
countersigned by the Warrant Agent.
(j) Subsequent to the date of this Agreement, there shall not have
occurred (i) any change, or any development involving a prospective change, in
or affecting the condition (financial or other), management, business,
prospects, assets, stockholders' equity or results of operations of the Company
and its Subsidiaries, considered as one enterprise, not contemplated by the
Preliminary Offering Memorandum or the Offering Memorandum which, in the
judgment of the Initial Purchaser, would materially adversely affect the market
for the Units, or (ii) any event or development relating to or involving the
Company and its Subsidiaries considered as one enterprise or any officer or
director thereof which makes any statement made in the Offering Memorandum
untrue or which, in the opinion of the Company and its counsel or the Initial
Purchaser and its counsel, requires the making of any addition to or change in
the Offering Memorandum in order to state a material fact required by any law to
be stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Offering Memorandum to reflect such
event or development would, in the judgment of the Initial Purchaser, materially
adversely affect the market for the Units, or (iii) any change in the capital
stock of the Company or any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business) from that
set forth or contemplated in the Preliminary Offering Memorandum and the
Offering Memorandum (or any amendment or supplement thereto).
All opinions, letters, evidences and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to Chadbourne & Parke LLP, counsel to the Initial Purchaser.
28
Any certificate or document signed by any officer of the Company and
delivered to the Initial Purchaser, or to its counsel, shall be deemed a
representation and warranty by the Company as to the statements made therein.
If any of the conditions set forth in this Paragraph 8 are not satisfied
on or prior to the Delivery Date, this Agreement and all obligations of the
Initial Purchaser hereunder may be terminated by the Initial Purchaser.
9. Stabilization. The Initial Purchaser may, at its discretion, to the
extent permitted by applicable law, make purchases and sales of the Securities
for its own account in the open market or otherwise for long or short account,
on such terms as it deem advisable in connection with the distribution of the
Securities, with a view to stabilizing or maintaining the market price of the
Securities at a level other than that which might otherwise prevail on the open
market. Such transactions, if commenced, may be discontinued at any time. In
such circumstances, as between the Company, on the one hand, and the Initial
Purchaser, on the other hand, the Initial Purchaser shall act as principal, and
any loss resulting from stabilization shall be borne, and any profit arising
therefrom and any sum received by it shall be beneficially retained, by the
Initial Purchaser for its own account.
10. Termination. The Initial Purchaser, in its absolute discretion, may
terminate this Agreement by notice given to and received by the Company at any
time before payment is made to the Company on the Delivery Date (i) if there has
been, since the respective dates as of which information is given in the
Offering Memorandum, any change which is, in the judgment of the Initial
Purchaser, so material and adverse as to make it impracticable or inadvisable to
proceed with the purchase, sale and delivery of the Units on the terms and in
the manner contemplated by this Agreement or the Offering Memorandum or (ii) if
trading in any securities of the Company has been suspended by the Commission or
a national securities exchange or the NASD, or if trading generally has been
suspended or materially limited on or by the American Stock Exchange, the New
York Stock Exchange or the NASD or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
either of said exchanges or by order of the Commission or of the NASD or any
other governmental authority, or (iii) if a banking moratorium has been declared
by either Federal or New York authorities. In addition, notwithstanding anything
contained in this Agreement, the Initial Purchaser may by notice to the Company
terminate this Agreement at any time before the time on the Delivery Date when
payment would otherwise be due under this Agreement to the Company in respect of
the Units if, in the judgment of the Initial Purchaser, there shall have
occurred such a change in national or international financial, political or
economic conditions or currency exchange rates or exchange controls or any
calamity or crisis as would in its view be likely to prejudice the success of
the offering and distribution of the Units as contemplated by the Offering
Memorandum or dealings in the Units in the
29
secondary market. Upon any termination notice being given under this Paragraph
10, the parties to this Agreement shall (except for the respective liabilities
of the Company and the Initial Purchaser in relation to expenses and
indemnification and contribution as provided in Paragraph 6 and Paragraph 7,
respectively, and except for any liability arising before or in relation to such
termination) be released and discharged from their respective obligations under
this Agreement.
11. Restrictions. The Initial Purchaser represents, warrants and agrees
with the Company that:
(a) The Initial Purchaser is a "qualified institutional buyer" within the
meaning of Rule 144A.
(b) The Initial Purchaser (i) is not acquiring the Units with a view to
any distribution thereof or with any present intention of offering or selling
any of the Units in a transaction that would violate the Securities Act or the
securities laws of any state of the United States or any other applicable
jurisdiction and (ii) will be reoffering and reselling the Units only to (A)
"qualified institutional buyers" within the meaning of Rule 144A in reliance on
an exemption from the registration requirements of the Securities Act provided
by Rule 144A and (B) in "offshore transactions" in reliance upon Regulation S
under the Securities Act.
(c) No form of general solicitation or general advertising (as those terms
are used in Rule 502(c) of Regulation D) has been or will be used by the Initial
Purchaser or any of its representatives in connection with the offer and sale of
any of the Units and none of the Initial Purchaser nor any of its affiliates or
any person acting on its behalf has engaged or will engage in any directed
selling efforts within the meaning of Regulation S with respect to the Units.
(d) The Initial Purchaser further represents and agrees that (i) it has
not offered or sold and will not offer or sell any Units, Notes, or Warrants to
persons in the United Kingdom prior to the expiration of the period of six
months from the issue date of the Units, the Notes, or the Warrants, except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Security Regulations 1995, (ii) it has complied and will comply
with all applicable provisions of the Financial Services Act 1986 with respect
to anything done by them in relation to the Units, the Notes and the Warrants
in, from or otherwise involving the United Kingdom and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Units, the Notes and the
Warrants to a person who is of a kind described in Article 11(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1996 or is
30
a person to whom the document may otherwise lawfully be issued or passed on.
(e) The Initial Purchaser agrees that it will not offer, sell or deliver
any of the Units in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Units in such jurisdictions. The Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
(f) The Initial Purchaser agrees that it has not offered or sold, and it
will not offer or sell, the Securities in the United States or to, or for the
benefit or account of, a U.S. Person (other than a distributor), in each case,
as defined in Rule 902 under the Securities Act (i) as part of its distribution
at any time and (ii) otherwise until (A) in the case of the Initial Notes, 40
days and (B) in the case of the Units, Warrants and Warrant Shares, one year
after the later of the commencement of the offering of the Units pursuant hereto
and the Delivery Date, other than in accordance with Regulation S of the
Securities Act, pursuant to registration under the Securities Act or pursuant to
another exemption from the registration requirements of the Securities Act. The
Initial Purchaser agrees that, (x) during the 40-day or one-year distribution
compliance period, as applicable, it will not cause any advertisement with
respect to any of the Securities (including any "tombstone" advertisement) to be
published in any newspaper or periodical or posted in any public place and will
not issue any circular relating to the Securities, except such advertisements as
are permitted by and include the statements required by Regulation S and (y)
during the one-year distribution compliance period, it will not engage in any
hedging transactions with regard to the Units, Warrants or Warrant Shares unless
in compliance with the Securities Act.
12. Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements and other statements of any person
set forth in or made pursuant to this Agreement shall survive the delivery of
and payment for the Units and shall remain in full force and effect as if made
on the Delivery Date regardless of any investigation made by or on behalf of any
person referred to in Paragraph 7. The provisions of Paragraphs 6 and 7 shall
survive the termination or cancellation of this Agreement.
13. Notices. Any notice or notification in any form to be given hereunder
shall be in writing and shall be delivered in person or sent by telephone or
facsimile transmission (but in the case of a notification by telephone, with
subsequent confirmation by letter or facsimile transmission). Any notice or
notification to the Company shall be addressed to the Company at:
Bell Technology Group Ltd.
31
295 Lafayette Street
New York, New York 10012
Attention: Marc H. Bell, President
Telecopy No: (212) 334-8507
with a copy to:
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, New York 10119
Attention: Arnold N. Bressler, Esq.
Telecopy No: (212) 868-1229
Any notice or notification to the Initial Purchaser shall be addressed to
it at:
ING Baring (U.S.) Securities, Inc.
135 East 57th Street
New York, New York 10022
Attention: Legal Department
Telecopy No: (212) 409-0432
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Lorraine Massaro, Esq.
Telecopy No: (212) 541-5369
Any notice or notification shall (subject to confirmation when required)
take effect at the time of receipt.
14. Benefit. This Agreement shall be binding upon the Initial Purchaser,
the Company and their respective successors. This Agreement and the terms and
provisions hereof are, unless otherwise specified herein, for the sole benefit
of only those persons, except that (a) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of each Purchaser Indemnified Party and (b) the
indemnity agreement of the Initial Purchaser contained in Paragraph 7 hereof
shall be deemed to be for the benefit of each Company Indemnified Party. Nothing
in this Agreement is intended or shall be construed to give any person, other
than the persons referred to in this
32
Paragraph 14, any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein. This Agreement shall not be
assigned by either party hereto without the prior written consent of the other
party hereto.
15. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York. This Agreement may
be executed in one or more counterparts, and if executed in more than one
counterpart, the executed counterparts shall together constitute a single
instrument. The descriptive headings in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. Time shall
be of the essence of this Agreement.
If any provision or portion of any provision of the Agreement, or the
application of any such provision or any portion thereof to any party or
circumstances, shall be held invalid or unenforceable, the remaining portion of
such provision and the remaining portion of such provision and the remaining
provisions of this agreement, and the application of such provision or portion
of such provision as is held invalid or unenforceable to any parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and such remaining portion of such provision and
the remaining provisions of this Agreement shall continue to be valid and in
full force and effect.
If the foregoing is in accordance with the Initial Purchaser's
understanding of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the Initial Purchaser in accordance with its terms.
This Agreement may be signed in counterparts which together shall
constitute one and the same instrument.
Very truly yours,
BELL TECHNOLOGY GROUP LTD.
By:
---------------------------------
Name: Marc H. Bell
Title: President
33
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written.
ING BARING (U.S.) SECURITIES, INC.,
as Initial Purchaser
By:
----------------------------
Name:
Title:
36
EXHIBIT C
Opinion of Counsel for the Company
(a) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
engage in the business in which it is engaged or proposes to engage in as
described in the Preliminary Offering Memorandum and the Offering Memorandum.
The Company is duly registered and qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or leasing
of its properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify would not,
individually or in the aggregate, have a Material Adverse Effect. Each
Subsidiary of the Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of organization,
with full corporate power and authority to own, lease and operate its properties
and engage in the business in which it is engaged or proposes to engage in and
is duly registered and qualified as a foreign corporation in good standing in
each jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such registration or qualification, except
where the failure to so register or qualify would not, individually or in the
aggregate, have a Material Adverse Effect. All of the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable and, to the best knowledge of such
counsel, are owned by the Company free and clear of any Lien, except as
described in the Preliminary Offering Memorandum and the Offering Memorandum.
(b) The execution, delivery and performance by the Company of the
Operative Documents and the issuance and sale of the Securities and the
consummation of the transactions contemplated therein have been duly authorized
by all necessary corporate action. Neither the issuance, offer, sale or delivery
of the Securities, or the issuance or delivery of the Warrant Shares upon
exercise of the Warrants, the execution, delivery and performance by the Company
of the Operative Documents nor the compliance by the Company with all the
provisions thereof nor the consummation of the transactions contemplated thereby
and by the Preliminary Offering Memorandum and the Offering Memorandum, (i) will
require any consent, approval, authorization, waiver or other order of, or
registration, qualification or filing with, any court, regulatory body,
administrative agency, authority or other governmental body, agency or official,
except for such consents, approvals, authorizations, filings or other orders as
have been obtained and which are in full force and effect (and other than those
consents, approvals, authorizations, registrations or filings which are
customary in connection with the performance by the Company of its obligations
under the Escrow Agreement, the Registration
C-1
Rights Agreement and the Warrant Registration Rights Agreement), (ii) conflicts
with or will conflict with, or constitutes or will constitute a breach of or a
default under, any of the terms or provisions of the certificate of
incorporation or by-laws or other organizational or constitutive documents of
the Company or any of the Subsidiaries, or (iii) conflicts with or will conflict
with or constitutes or will constitute a breach of, or a default (or an event
that with notice or the lapse of time or both would constitute a default) or the
loss of any material benefit under, or the termination of, or will result in the
creation or imposition of any Lien upon any property or assets of the Company or
any of the Subsidiaries pursuant to, any material Contract to which the Company
or any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries may be bound or to which any of the property or assets of the
Company or any of the Subsidiaries is subject, nor (iv) to the best of such
counsel's knowledge, violates or conflicts with or will violate or conflict with
any laws, regulations or administrative or court orders, injunctions, decrees or
judgments applicable to the Company or any of the Subsidiaries or their
respective properties or affecting any of their respective businesses.
(c) The Purchase Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and except to the extent that
the provisions of Paragraph 7 thereof may be limited by securities law or
unenforceable as against public policy.
(d) The Indenture has been duly authorized, executed and delivered by the
Company and, upon its execution and delivery by the Trustee will constitute the
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect relating to or affecting creditors'
rights generally and (ii) and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law). The
description of the Indenture in the Preliminary Offering Memorandum and the
Offering Memorandum is accurate in all material respects. The Indenture is in a
form which would meet the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
C-2
(e) The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company and upon its execution and delivery by the Initial
Purchaser, will be the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect relating to
or affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law), except to the extent that rights to indemnification thereunder may
be limited by applicable securities laws or unenforceable as against public
policy. The description of the Registration Rights Agreement in the Preliminary
Offering Memorandum and the Offering Memorandum is accurate in all material
respects.
(f) The Warrant Agreement has been duly authorized, executed and delivered
by the Company and upon its execution and delivery by the Warrant Agent, will be
the legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law). The
description of the Warrant Agreement in the Preliminary Offering Memorandum and
the Offering Memorandum is accurate in all material respects.
(g) The Warrant Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and, upon the execution and delivery
thereof by the Initial Purchaser will be the legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally, and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and except to the extent that
rights to indemnification thereunder may be limited by federal or state
securities laws or public policy relating thereto. The description of the
Warrant Registration Rights Agreement in the Preliminary Offering Memorandum and
the Offering Memorandum is accurate in all material respects.
(h) The Escrow Agreement has been duly authorized, executed and delivered
by the Company and upon the execution and delivery thereof by the Trustee, will
be the legal, valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the enforceability thereof
may be limited by (i) applicable
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bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law). The description of the Escrow
Agreement in the Preliminary Offering Memorandum and the Offering Memorandum is
accurate in all material respects. Upon the deposit of a portion of the net
proceeds of the Offering on the Delivery Date in the Escrow Account and the
subsequent purchase of the Pledged Securities to be held in the Escrow Account
(such proceeds and Pledged Securities together, the "Collateral"), the Company
will be the sole beneficial owner of the Collateral and no Lien will exist upon
the Collateral or the Escrow Account (and no right or option to acquire the same
will exist in favor any other person or entity) except for the Lien in favor of
the Trustee for the benefit of the Holders of the Notes, to be created or
provided in the Escrow Agreement, which shall constitute a first priority
perfected pledge and security interest in and to all of the Collateral and the
Escrow Account.
(i) The Company has duly and validly authorized the issuance and sale of
the Units. The Initial Notes have been duly executed by the Company and when
authenticated and delivered in the manner provided for in the Purchase Agreement
and the Indenture against payment of the consideration therefor specified
therein on the Delivery Date, the Initial Notes will constitute legal, valid and
binding obligations of the Company entitled to the benefits provided by the
Indenture and enforceable against the Company in accordance with their terms,
except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law); and the Notes will constitute
direct, senior indebtedness of the Company and will rank at least pari passu
with each other and with all other present and future unsecured senior
indebtedness of the Company. The description of the Initial Notes in the
Preliminary Offering Memorandum and the Offering Memorandum is accurate in all
material respects.
(j) The Warrants have been duly and validly authorized for issuance and
sale and duly executed by the Company and, when issued and countersigned in
accordance with the terms of the Warrant Agreement and delivered on the Delivery
Date against payment therefor in accordance with the terms hereof and thereof,
the Warrants will be entitled to the benefits of the Warrant Agreement and will
be the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as the enforceability thereof
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating
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to or affecting the creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law). The description of the Warrants in the Preliminary Offering
Memorandum and the Offering Memorandum is accurate in all material respects. The
Warrants are exercisable into Warrant Shares in accordance with the terms of the
Warrant Agreement. The Company has duly authorized and reserved for issuance the
Warrant Shares and, when issued and paid for upon exercise of the Warrants in
accordance with the terms of such Warrants, the Warrant Shares will be duly and
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights.
(k) The Company has duly and validly authorized the issuance and sale of
the Exchange Notes and, when issued and authenticated in accordance with the
terms of the Indenture and delivered in accordance with the terms of the
Exchange Offer, the Registration Rights Agreement and the Indenture, the
Exchange Notes will be entitled to the benefits of the Indenture and will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforceability
thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law); and the Exchange Notes will
constitute direct, senior indebtedness of the Company and will rank pari passu
with the Initial Notes. The description of the Exchange Notes in the Preliminary
Offering Memorandum and the Offering Memorandum is accurate in all material
respects.
(l) All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws and were not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right. The authorized and outstanding capital stock of the
Company conforms in all material respects to the description thereof contained
in the Preliminary Offering Memorandum and the Offering Memorandum (and such
description correctly states the substance of the provisions of the instruments
defining the capital stock of the Company). To the best knowledge of such
counsel, except as described in the Preliminary Offering Memorandum and the
Offering Memorandum, there are no outstanding rights (including, without
limitation, preemptive or similar rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any share of capital stock or
other equity interest or ownership interest in the Company or any of its
Subsidiaries or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock or other
equity interest or ownership interest in the Company
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or any of its Subsidiaries or any such convertible or exchangeable securities or
instruments or any such rights, warrants or options.
(m) Except as otherwise set forth in the Preliminary Offering Memorandum
and the Offering Memorandum, to the best of such counsel's knowledge, there is
(A) no action, suit or proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, pending or
threatened, as to which the Company or any of the Subsidiaries is or will be, a
party or as to which the business, assets or property of the Company or any of
the Subsidiaries is or will be, subject, (B) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency, body
or official, and (C) no injunction, restraining order or order of any nature
that has been issued by a federal or state court or foreign court of competent
jurisdiction to which the Company or any of the Subsidiaries is or will be
subject or affecting the business, assets or property of the Company or any of
the Subsidiaries that could, in the case of clauses (A), (B) and (C),
individually or in the aggregate, have a Material Adverse Effect or adversely
affect the ability of the Company to perform its obligations under the Operative
Documents or be otherwise material in the context of the sale of the Securities.
To the best of such counsel's knowledge, there are no legal or administrative
proceedings, statutes, contracts or documents concerning the Company or any of
the Subsidiaries of a character that would be required to be described in a
registration statement on Form SB-2 under the Securities Act that is not
described in the Preliminary Offering Memorandum and the Offering Memorandum.
(n) Except as otherwise set forth in the Preliminary Offering Memorandum
and the Offering Memorandum, to the best of such counsel's knowledge, (i) the
Company and each of the Subsidiaries have good and marketable title to all
properties and assets described in the Preliminary Offering Memorandum and the
Offering Memorandum as being owned by it, free and clear of any Lien, except,
individually and in the aggregate, Liens for taxes not yet due and payable and
except such as do not materially and adversely affect the value of such property
and assets and do not materially interfere with the use made or proposed to be
made of such property or asset by the Company or such Subsidiary, (ii) the
material agreements to which the Company and each of the Subsidiaries is a party
are legal, valid and binding agreements, enforceable against the Company or such
Subsidiary, as applicable, in accordance with their terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting creditors'
rights generally or by general principles of equity, and it has not come to such
counsel's attention that any of the other contracting party or parties thereto
are in material breach or default under any of such agreements and (iii) the
Company and the Subsidiaries have valid and enforceable leases for the
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properties leased by them, and the Company or such Subsidiary enjoys peaceful
and undisturbed possession under all such leases with such exceptions as do not
materially interfere with the use thereof made by the Company or such
Subsidiary, and such leases conform in all material respects to the descriptions
thereof, if any, set forth in the Preliminary Offering Memorandum and the
Offering Memorandum.
(o) The Company and each of the Subsidiaries have all requisite power and
authority (corporate and other), and all Permits that are material to the
conduct of the business of the Company and each of the Subsidiaries (as such
business is currently conducted and as proposed to be conducted as described in
the Preliminary Offering Memorandum and the Offering Memorandum), except for
such Permits the failure of which to hold would not, individually or in the
aggregate, not have a Material Adverse Effect, or adversely affect the ability
of the Company to perform its obligations under the Operative Documents or be
otherwise material in the context of the sale of the Securities, and all of
which are valid and in full force and effect (and there is no proceeding pending
or, to the best knowledge of such counsel, threatened which may cause any such
Permit to be withdrawn, canceled, suspended or not renewed). To the best of such
counsel's knowledge, the Company and the Subsidiaries are not in violation of,
or in default under, and have fulfilled and performed all their obligations with
respect to such Permits, other than those obligations which would not,
individually or in the aggregate, have a Material Adverse Effect and no event
has occurred which allows or would allow revocation or termination thereof or
result in any material impairment of the rights of the holder of any such
Permit. The Company and the Subsidiaries are not (i) in violation of their
respective certificates of incorporation, as amended, or bylaws, as amended or,
(ii) to the best of such counsel's knowledge, in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
Contract or in violation of any law, order, rule, regulation, writ, injunction
or decree of any court or governmental agency, body or authority, except in the
case of this clause (ii) for such defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect or adversely
affect the ability of the Company to perform its obligations under the Operative
Documents or be otherwise material in the context of the sale of the Securities.
Except as otherwise set forth in the Preliminary Offering Memorandum and the
Offering Memorandum, the Company and each of the Subsidiaries owns or possesses
adequate licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
tradenames, inventions, copyrights, manufacturing processes, formulae, trade
secrets, know-how, franchises, and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures and material
intangible property and assets (collectively, "Intellectual Property") necessary
to the conduct of their business as
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currently conducted and as proposed to be conducted as described in the
Preliminary Offering Memorandum and the Offering Memorandum. The Preliminary
Offering Memorandum and the Offering Memorandum fairly and accurately describe
the Company's rights with respect to the Intellectual Property. Such counsel is
not aware of any claim to the contrary with respect to any Intellectual Property
which could, individually or in the aggregate, have a Material Adverse Effect.
(p) To the best of such counsel's knowledge: the Company and each of the
Subsidiaries have filed on a timely basis with the appropriate taxing
authorities (or have received an extension for filing with respect to) all tax
returns, reports and other information required to be filed by it (except where
such failure to file would not, individually or in the aggregate, have a
Material Adverse Effect), and each such tax return, report or other information
was, when filed, accurate and complete; and, except as described in the
Preliminary Offering Memorandum and the Offering Memorandum, each of the Company
and the Subsidiaries has duly paid, or has made adequate provision for, all
taxes required to be paid by it and any other assessment, fine or penalty levied
against it, no tax deficiency is currently asserted or contemplated against the
Company or any of the Subsidiaries.
(q) The Company, is not now, and as a result of the offer and sale of the
Securities in the manner contemplated in the Purchase Agreement and the
Preliminary Offering Memorandum and the Offering Memorandum and the application
of the net proceeds of such sale as described in the Preliminary Offering
Memorandum and the Offering Memorandum, will not be, an "investment company",
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), without taking account of any exemption arising out
of the number or type of holders of the Company's securities.
(r) To the best of such counsel's knowledge, the Company and each of the
Subsidiaries (i) are in compliance with any and all applicable Environmental
Laws, (ii) has received all permits, licenses or other approvals required of it
under applicable Environmental Laws to conduct their businesses as currently
conducted, and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals would
not, individually or in the aggregate, have a Material Adverse Effect. To the
best of such counsel's knowledge, no action, proceeding, revocation proceeding,
writ, injunction or claim is pending or threatened relating to the Environmental
Laws or to the Company's or any of the Subsidiaries' activities involving
Hazardous Materials. To the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries has engaged in the generation, use,
manufacture, transportation or storage of any Hazardous Materials
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on any of the Company's or any of the Subsidiaries' properties or former
properties, except where such use, manufacture, transportation or storage is in
compliance with Environmental Laws, or to the extent such activity would not,
individually or in the aggregate, have a Material Adverse Effect. To the best of
such counsel's knowledge, no Hazardous Materials have been treated or disposed
of on any of the Company's or any of the Subsidiaries' properties or on
properties formerly owned or leased by the Company or any of the Subsidiaries
during the time of such ownership or lease, except in compliance with
Environmental Laws, or those that would not, individually or in the aggregate,
have a Material Adverse Effect.
(s) To the best of such counsel's knowledge: no payments or inducements
were made or given, directly or indirectly, to any federal or local officials in
any jurisdiction by the Company or by any of the Subsidiaries, by any of their
officers, directors, employees or agents or by any other person in connection
with any opportunity, agreement, license, permit, certificate, consent, order,
approval, waiver or other authorization relating to the business of the Company
or any of the Subsidiaries, except for such payments or inducements as were
lawful under applicable written laws, rules and regulations, and neither the
Company nor any of the Subsidiaries, nor any director, officer, agent, employee
or other person associated with or acting on behalf of the Company or any of the
Subsidiaries, (i) has used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
unlawful rebate, payoff, influence payment, kickback or other unlawful payment
in connection with the business of the Company or the Subsidiaries.
(t) To the best of such counsel's knowledge, neither of the Company nor
any of the Subsidiaries or any of its or their officers, directors or affiliates
(as defined in Regulation D) has taken or will take, directly or indirectly, any
action designed to cause or to result in or that has constituted, or might
reasonably be expected to cause or result in or constitute, under the Exchange
Act, or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities.
(u) To the best of such counsel's knowledge: neither the Company nor any
of the Subsidiaries nor any of their affiliates (as defined in Regulation D) nor
any person acting on its or their behalf has, directly or indirectly, engaged in
or will engage in any directed selling efforts within the meaning of Regulation
S with respect to the Securities; the Securities offered and sold in reliance on
Regulation S have been and will be offered and sold only in "offshore
transactions" as defined in such Regulation S;
C-9
the sale of the Securities pursuant to Regulation S is not part of a plan or
scheme to evade the registration provisions of the Securities Act; the Company,
each of the Subsidiaries and such affiliates and all persons acting on their
behalf have complied with and will comply with the offering restrictions
requirements of Regulation S in connection with offering the Securities outside
the United States.
(v) Except as otherwise set forth in the Operative Documents or the
Preliminary Offering Memorandum and the Offering Memorandum, there are no
holders of securities of the Company which by reason of the execution of any
Operative Document and the consummation of the transactions contemplated
thereby, have the right to request or demand that the Company register any of
its securities under the Securities Act.
(w) The Securities will, when issued, satisfy the eligibility requirements
of Rule 144A(d)(3) under the Securities Act and will not be of the same class
(within the meaning of Rule 144A under the Securities Act) as any security of
the Company that is listed on a national securities exchange registered under
Section 6 of the Exchange Act, or that is quoted on an automated inter-dealer
quotation system.
(x) To the best of such counsel's knowledge, neither the Company, the
Subsidiaries nor any of their affiliates (as defined in Regulation D), nor any
person acting on its or their behalf has, directly or indirectly, made offers or
sales of any security, or solicited offers to buy, or otherwise negotiated in
respect of, any "security", as defined in the Securities Act, under
circumstances that would require the registration of the Securities under the
Securities Act.
(y) Neither the Company, the Subsidiaries nor any of their affiliates (as
defined in of Regulation D), nor any person acting on its or their behalf,
directly or indirectly, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities.
(z) All necessary actions, authorizations, conditions and things required
to be taken, given, fulfilled and done by the Company have been, or will, on the
Delivery Date, have been taken, given, fulfilled and done in connection with (i)
the issue of the Offering Memorandum; (ii) the execution and delivery of the
Global Certificates, and the other Operative Documents; (iii) the execution,
delivery and issuance of the Securities, (iv) and, to the best of such counsel's
knowledge, the compliance with all provisions of the Operative Documents to be
performed or complied with by such date.
Such counsel shall also state that to the best of its knowledge after due
inquiry, the Preliminary Offering Memorandum did not at its date and the
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Offering Memorandum did not at its date and does not at the date hereof, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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