SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 24, 1998
BELL TECHNOLOGY GROUP LTD.
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(Exact name of registrant as specified in charter)
Delaware 1-14168 13-3781263
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(State or other juris- (Commission (IRS Employer
diction of Incorporation) File number) Identification No.)
295 Lafayette Street, 3rd Floor, New York, New York 10012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (212) 334-8500
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On April 24, 1998, Bell Technology Group Ltd. (the "Company") entered into
a Purchase Agreement to sell to ING Baring (U.S.) Securities, Inc. (the "Initial
Purchaser"), 160,000 Units. The purchase closed on April 30, 1998. Each Unit
consists of $1,000 principal amount of 13% Senior Notes due 2005 (the "Notes")
and one warrant (a "Warrant") to purchase 3.52 shares of common stock, $0.01 par
value, of the Company (the "Common Stock").
The Notes are senior unsecured obligations of the Company and mature on
May 1, 2005. Interest on the Notes is payable semi-annually in arrears on May 1
and November 1 of each year commencing November 1, 1998. Concurrently with the
closing, the Company deposited with Marine Midland Bank, as Escrow Agent an
amount of U.S. Government Securities (approximately $57 million), that, together
with the income from the investment thereof, will be sufficient to pay, when due
the first six interest payments on the Notes, with any excess to be retained by
the Company.
Each Warrant entitles the holder to purchase 3.52 shares of Common Stock
of the Company at an exercise price of $14.03 per share, subject to certain
anti-dilution provisions. Unless exercised, the Warrants will automatically
expire on May 1, 2005. The 160,000 Warrants, if exercised in full would entitle
the holders thereof to acquire an aggregate of 563,200 shares of Common Stock of
the Company, representing approximately
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10% of the outstanding Common Stock of the Company on a fully-diluted basis.
The foregoing summary of the transaction is qualified in its entirety by
reference to the full text of the exhibits filed with this Report.
The Company intends to use the net proceeds of the offering to expand its
New York SuperPOP facility and to construct and operate SuperPOPs in London and
San Francisco. The Company also intends to use the net proceeds of the offering
to fund potential acquisitions in its target markets. The Company will use the
balance of the net proceeds to increase its sales, marketing, technical and
administrative personnel and to fund working capital needs.
The Units have not been registered under the Securities Act of 1933, as
amended, or any state securities laws, and unless so registered, may not be
offered or sold in the United States except on the PORTAL System or pursuant to
an exemption from the registration requirements of the Securities Act and
applicable state securities laws.
This Report contains forward-looking statements. Because the Company faces
intense competition in a business characterized by rapidly changing technology,
actual results or outcomes may differ materially from any such forward-looking
statements. Information regarding additional factors that may affect such
statements appear in the Company's publicly filed documents, including its
10-KSB for the year ended September 30,
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1997 and the Company's Registration Statement filed with the Securities and
Exchange Commission on November 6, 1997 (see, in particular, "Risk Factors").
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number
4(a) Purchase Agreement between the Company and the Initial
Purchaser, dated April 24, 1998.
4(b) Indenture between the Company and Marine Midland Bank, as
Trustee, dated as of April 30, 1998.
4(c) Form of $160,000,000 13% Senior Note due May 1, 2005.
4(d) Form of Warrant to purchase 3.52 shares of Common Stock
expiring May 1, 2005.
4(e) Warrant Agreement between the Company and Marine Midland Bank,
as Warrant Agent, dated as of April 30, 1998.
4(f) Registration Rights Agreement between the Company and the
Initial Purchaser, dated as of April 30, 1998.
4(g) Warrant Registration Rights Agreement between the Company and
the Initial Purchaser, dated as of April 30, 1998.
4(h) Escrow and Security Agreement between Marine Midland Bank, as
Escrow Agent, Marine Midland Bank, as Trustee, and the
Company, dated as of April 30, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BELL TECHNOLOGY GROUP LTD.
By Marc H. Bell
---------------------------------
Marc H. Bell, President
and Chief Executive Officer
Dated: May 8, 1998
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EXHIBIT INDEX
Sequentially
Exhibit Description Numbered Page
- ------- ----------- -------------
4(a) Purchase Agreement between the Company and the Initial
Purchaser, dated April 24, 1998.
4(b) Indenture between the Company and Marine Midland Bank,
as Trustee, dated as of April 30, 1998.
4(c) Form of $160,000,000 13% Senior Note due May 1, 2005.
4(d) Form of Warrant to purchase 3.52 shares of Common
Stock expiring May 1, 2005.
4(e) Warrant Agreement between the Company and Marine
Midland Bank, as Warrant Agent, dated as of April 30,
1998.
4(f) Registration Rights Agreement between the Company and
the Initial Purchaser, dated as of April 30, 1998.
4(g) Warrant Registration Rights Agreement between the
Company and the Initial Purchaser, dated as of April
30, 1998.
4(h) Escrow and Security Agreement between Marine Midland
Bank, as Escrow Agent, Marine Midland Bank, as
Trustee, and the Company, dated as of April 30, 1998.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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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<PAGE>
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
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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.
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<PAGE>
(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
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<PAGE>
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
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<PAGE>
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.
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(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.
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(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
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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
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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
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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
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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
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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.
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<PAGE>
(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
<PAGE>
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,
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<PAGE>
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.
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<PAGE>
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
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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
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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.
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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
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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
<PAGE>
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
<PAGE>
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
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<PAGE>
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").
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<PAGE>
(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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<PAGE>
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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<PAGE>
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
C-5
<PAGE>
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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<PAGE>
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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<PAGE>
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
C-8
<PAGE>
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;
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<PAGE>
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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================================================================================
Bell Technology Group Ltd., as Issuer,
and
Marine Midland Bank, as Trustee
INDENTURE
Dated as of April 30, 1998
$160,000,000
13% Senior Notes Due 2005
================================================================================
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939, as amended, and
Indenture, dated as of April 30, 1998
Trust Indenture Indenture Act Section Section
- ------------------------------------- -------
ss. 310 (a)(1)..........................................609
(a)(2)..........................................609
(b)........................................607, 610
ss. 311 (a).............................................613
ss. 312 (a).............................................701
(c).............................................702
ss. 313 (a).............................................703
(c)........................................703, 704
ss. 314 (a).............................................704
(a)(4).........................................1018
(c)(1)..........................................103
(c)(2)..........................................103
(e).............................................103
ss. 315 (a)..........................................601(b)
(b).............................................602
(c)..........................................601(a)
(d).....................................601(c), 603
(e).............................................514
ss. 316 (a)(last sentence)..............................101 ("Outstanding")
(a)(1)(A)..................................502, 512
(a)(1)(B).......................................513
(b).............................................508
(c).............................................105
ss. 317 (a)(1)..........................................503
(a)(2)..........................................504
(b)............................................1003
ss. 318 (a).............................................108
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.......................................................1
Section 102. Other Definitions................................................17
Section 103. Compliance Certificates and Opinions.............................18
Section 104. Form of Documents Delivered to Trustee...........................19
Section 105. Acts of Holders..................................................19
Section 106. Notices, etc., to the Trustee, the Company and any Guarantor.....21
Section 107. Notice to Holders; Waiver........................................21
Section 108. Conflict with Trust Indenture Act................................21
Section 109. Effect of Headings and Table of Contents.........................21
Section 110. Successors and Assigns...........................................22
Section 111. Separability Clause..............................................22
Section 112. Benefits of Indenture............................................22
Section 113. Governing Law....................................................22
Section 114. Legal Holidays...................................................22
Section 115. Independence of Covenants........................................22
Section 116. Schedules and Exhibits...........................................22
Section 117. Counterparts.....................................................22
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally..................................................23
Section 202. Form of Face of Securities.......................................24
Section 203. Form of Reverse of Securities....................................31
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms..................................................38
Section 302. Denominations....................................................38
Section 303. Execution, Authentication, Delivery and Dating...................39
Section 304. Temporary Securities.............................................40
Section 305. Registration, Registration of Transfer and Exchange..............40
Section 306. Book Entry Provisions for Global Securities......................41
Section 307. Special Transfer and Exchange Provisions.........................42
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.................44
Section 309. Payment of Interest; Interest Rights Preserved...................45
Section 310. CUSIP, ISIN and CINS Numbers.....................................46
Section 311. Persons Deemed Owners............................................46
Section 312. Cancellation.....................................................46
Section 313. Computation of Interest..........................................46
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ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant Defeasance.....47
Section 402. Defeasance and Discharge.........................................47
Section 403. Covenant Defeasance..............................................47
Section 404. Conditions to Defeasance or Covenant Defeasance..................47
Section 405. Deposited Money and U.S. Government Obligations to be Held
in Trust; Other Miscellaneous Provisions.......................49
Section 406. Reinstatement....................................................50
ARTICLE FIVE
REMEDIES
Section 501. Events of Default................................................50
Section 502. Acceleration of Maturity; Rescission and Annulment...............52
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee..52
Section 504. Trustee May File Proofs of Claim.................................53
Section 505. Trustee May Enforce Claims without Possession of Securities......54
Section 506. Application of Money Collected...................................54
Section 507. Limitation on Suits..............................................54
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest...................................................55
Section 509. Restoration of Rights and Remedies...............................55
Section 510. Rights and Remedies Cumulative...................................55
Section 511. Delay or Omission Not Waiver.....................................55
Section 512. Control by Holders...............................................56
Section 513. Waiver of Past Defaults..........................................56
Section 514. Undertaking for Costs............................................56
Section 515. Waiver of Stay, Extension or Usury Laws..........................56
Section 516. Remedies Subject to Applicable Law...............................57
ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee................................................57
Section 602. Notice of Defaults...............................................58
Section 603. Certain Rights of Trustee........................................58
Section 604. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof..................59
Section 605. Trustee and Agents May Hold Securities; Collections; etc.........59
Section 606. Money Held in Trust..............................................60
Section 607. Compensation and Indemnification of Trustee and Its Prior Claim..60
Section 608. Conflicting Interests............................................60
Section 609. Trustee Eligibility..............................................60
Section 610. Resignation and Removal; Appointment of Successor Trustee........61
Section 611. Acceptance of Appointment by Successor...........................62
Section 612. Merger, Conversion, Consolidation or Succession to Business......62
Section 613. Preferential Collection of Claims Against Company................63
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders........63
Section 702. Disclosure of Names and Addresses of Holders.....................63
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Section 703. Reports by Trustee...............................................64
Section 704. Reports by Company...............................................64
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS
Section 801. Company and Guarantors May Consolidate, etc., Only on
Certain Terms..................................................65
Section 802. Successor Substituted............................................66
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent
of Holders.....................................................66
Section 902. Supplemental Indentures and Agreements with Consent of Holders...67
Section 903. Execution of Supplemental Indentures and Agreements..............68
Section 904. Effect of Supplemental Indentures................................68
Section 905. Conformity with Trust Indenture Act..............................68
Section 906. Reference in Securities to Supplemental Indentures...............68
Section 907. Notice of Supplemental Indentures................................69
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest......................69
Section 1002. Maintenance of Office or Agency.................................69
Section 1003. Money for Security Payments to be Held in Trust.................69
Section 1004. Corporate Existence.............................................70
Section 1005. Payment of Taxes and Other Claims...............................71
Section 1006. Maintenance of Properties.......................................71
Section 1007. Maintenance of Insurance........................................71
Section 1008. Limitation on Indebtedness......................................71
Section 1009. Limitation on Restricted Payments...............................73
Section 1010. Limitation on Transactions with Affiliates......................76
Section 1011. Limitation on Liens.............................................76
Section 1012. Limitation on Sale of Assets....................................77
Section 1013. Limitation on Issuances of Guarantees of Indebtedness...........78
Section 1014. Purchase of Securities upon a Change of Control.................78
Section 1015. Limitation on Sale and Leaseback Transactions...................81
Section 1016. Limitation on Subsidiary Capital Stock..........................81
Section 1017. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries........................................81
Section 1018. Limitations on Unrestricted Subsidiaries........................82
Section 1019. Provision of Financial Statements...............................82
Section 1020. Statement by Officers as to Default.............................83
Section 1021. Waiver of Certain Covenants.....................................83
Section 1022. Limitation on Business..........................................83
Section 1023. Deposit of Funds with Escrow Agent..............................83
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption............................................84
Section 1102. Applicability of Article........................................84
Section 1103. Election to Redeem; Notice to Trustee...........................84
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Section 1104. Selection by Trustee of Securities to be Redeemed...............84
Section 1105. Notice of Redemption............................................85
Section 1106. Deposit of Redemption Price.....................................86
Section 1107. Securities Payable on Redemption Date...........................86
Section 1108. Securities Redeemed or Purchased in Part........................86
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture.........................86
Section 1202. Application of Trust Money......................................87
ARTICLE THIRTEEN
COLLATERAL AND SECURITY
Section 1301. Escrow Agreement................................................87
Section 1302. Recording and Opinions..........................................88
Section 1303. Release of Collateral...........................................88
Section 1304. Authorization of Actions to be Taken by the Trustee Under
the Escrow Agreement..........................................89
Section 1305. Authorization of Receipt of Funds by the Trustee Under the
Escrow Agreement..............................................89
Section 1306. Termination of Security Interest................................89
EXHIBIT A Regulation S Certificate
EXHIBIT B Restricted Security Certificate
EXHIBIT C Unrestricted Security Certificate
APPENDIX I Form of Transferee Certificate for Series A Securities
APPENDIX II Form of Transferee Certificate for Series B Securities
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INDENTURE, dated as of April 30, 1998, between BELL TECHNOLOGY GROUP
LTD., a Delaware corporation (the "Company"), and MARINE MIDLAND BANK, a New
York banking corporation and trust company, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 13%
Senior Notes due 2005, Series A (the "Series A Securities"), and an issue of 13%
Senior Notes due 2005, Series B (the "Series B Securities" and, together with
the Series A Securities, the "Securities"), of substantially the tenor and
amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture and the Securities;
Pursuant to the terms of a Purchase Agreement, dated as of April 24,
1998, between the Company and ING Baring (U.S.) Securities, Inc., the Company
has agreed to issue and sell 160,000 units (the "Units"), each Unit consisting
of one Series A Security and one warrant ("Warrant") to purchase 3.52 shares of
Common Stock. The Series A Securities and the Warrants included in each Unit
will become separately transferable upon the earliest to occur of (i) 180 days
from the date of issuance of the Securities, (ii) a Change in Control, (iii) the
occurrence of an Event of Default, (iv) the date on which the Registration
Statement or the Exchange Offer Registration Statement is declared effective or
(v) such earlier date as may be determined by the Initial Purchaser (the
"Separation Date").
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of and to
govern indentures qualified under the Trust Indenture Act;
All acts and things necessary have been done to make the Securities,
when duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company and this Indenture a valid
agreement of the Company in accordance with the terms of this Indenture;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
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(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(e) all references to $, US$, dollars or United States dollars shall
refer to the lawful currency of the United States of America; and
(f) all references herein to particular Sections or Articles refer
to this Indenture unless otherwise so indicated.
Certain terms used principally in Article Four are defined in
Article Four.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing
at the time such Person becomes a Subsidiary or (ii) assumed in connection with
the acquisition of assets from such Person, in each case, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition, as the case may be, provided that
Indebtedness of such Person which is redeemed, defeased, retired or otherwise
repaid at the time of or immediately upon consummation of the transactions by
which such Person becomes a Subsidiary or such asset acquisition shall not
constitute Acquired Indebtedness.
"Acquired Person" means, with respect to any specified Person, any
other Person which merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Subsidiary to any other Person, or any acquisition or purchase of Capital Stock
of any other Person by the Company or any Subsidiary, in either case pursuant to
which such Person shall become a Subsidiary or shall be consolidated, merged
with or into the Company or any Subsidiary or (ii) any acquisition by the
Company or any Subsidiary of the assets of any Person which constitute
substantially all of an operating unit or line of business of such Person or
which is otherwise outside of the ordinary course of business of the Company or
such Subsidiary.
"Additional Interest" has the meaning provided in Section 5 of the
Registration Rights Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a
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Global Security or beneficial interest therein, the rules and procedures of the
Depositary for such Global Security to the extent applicable to such transaction
and as in effect at the time of such transfer or transaction.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease
or other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of: (i) any
Capital Stock of any Subsidiary; (ii) all or substantially all of the properties
and assets of any division or line of business of the Company or its
Subsidiaries; or (iii) any other properties or assets of the Company or any
Subsidiary other than in the ordinary course of business. For the purposes of
this definition, the term "Asset Sale" shall not include any transfer of
properties and assets (A) that is governed by the provisions contained in
Article Eight, (B) that is by the Company to any Subsidiary or by any Subsidiary
to the Company or any other Subsidiary in accordance with the terms of this
Indenture, (C) that is of obsolete equipment in the ordinary course of business,
(D) the Fair Market Value of which in the aggregate does not exceed $200,000 in
any transaction or series of related transactions, (E) that is made in
accordance with the provisions described in Section 1009, (F) which constitutes
the granting of any Permitted Lien and (G) in which assets will be transferred
in exchange for one or more like-kind assets; provided that if the Fair Market
Value of the assets to be transferred by the Company or such Subsidiary under
this clause (G), plus the Fair Market Value of any other consideration paid or
credited by the Company or such Subsidiary exceeds $1 million, such transaction
shall require approval of the Board of Directors of the Company.
"Average Life to Stated Maturity" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such principal
payment; by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Board of Directors" means the board of directors of the Company or
any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Security" means any Global Securities bearing the legend
specified in Section 202 evidencing all or part of a series of Securities,
authenticated and delivered to the Depositary for such series or its custodian,
and registered in the name of such Depositary or nominee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions or trust companies in
The City of New York or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law, regulation or executive
order to close.
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"Capital Lease Obligation" of any Person means any obligation of
such Person and its subsidiaries on a consolidated basis under any capital lease
of real or personal property which, in accordance with GAAP, has been recorded
as a capital lease obligation.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of common stock and preferred stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Cash Equivalents" means (i) any evidence of Indebtedness, maturing
not more than one year after the date of acquisition, issued by the United
States of America, or an instrumentality or agency thereof, and guaranteed fully
as to principal, premium, if any, and interest by the United States of America,
(ii) any certificate of deposit, maturing not more than one year after the date
of acquisition, issued by, or time deposit of, a commercial banking institution
that is a member of the Federal Reserve System and that has combined capital and
surplus and undivided profits of not less than $500 million, whose short term
debt has a rating, at the time as of which any investment therein is made, of
"P-1" (or higher) according to Moody's or any successor rating agency or "A-1"
(or higher) according to S&P or any successor rating agency, (iii) commercial
paper, maturing not more than 270 days after the date of acquisition, issued by
a corporation (other than an Affiliate or subsidiary of the Company) organized
and existing under the laws of the United States of America with a rating, at
the time as of which any investment therein is made, of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P and (iv) any money
market deposit accounts issued or offered by a domestic commercial bank having
capital and surplus in excess of $500 million; provided that the short term debt
of such commercial bank has a rating, at the time of Investment, of "P-1" (or
higher) according to Moody's or "A-1" (or higher) according to S&P.
"Change of Control" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have beneficial ownership of all shares that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the Company; (ii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election to such board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved), cease for any
reason to constitute a majority of such Board of Directors then in office; (iii)
the Company consolidates with or merges with or into any Person or conveys,
transfers or leases all or substantially all of its assets to any Person, or any
corporation consolidates with or merges into or with the Company, in any such
event, pursuant to a transaction in which the outstanding Voting Stock of the
Company is changed into or exchanged for cash, securities or other property,
other than any such transaction where the outstanding Voting Stock of the
Company is not changed or exchanged at all (except to the extent necessary to
reflect a change in the jurisdiction of incorporation of the Company or where no
"person" or "group" owns, immediately after such transaction, directly or
indirectly, more than 50% of the total outstanding Voting Stock of the surviving
corporation); or (iv) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" has the meaning provided in Section 6 of the Escrow
Agreement.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Commodity Price Protection Agreement" means any forward contract,
commodity swap, commodity option or other similar financial agreement or
arrangement relating to, or the value of which is dependent upon, fluctuations
in commodity prices.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Company" means Bell Technology Group Ltd., a corporation
incorporated under the laws of the State of Delaware, until a successor Person
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its President, its Chief
Executive Officer, its Chief Financial Officer or a Vice President (regardless
of Vice Presidential designation), and by any one of its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"consolidated" means, consolidated in accordance with GAAP.
"Consolidated Income Tax Expense" of any Person means, for any
period, the provision for federal, state, local and foreign income taxes of such
Person and its consolidated subsidiaries for such period as determined in
accordance with GAAP.
"Consolidated Interest Expense" of any Person means, without
duplication, for any period, the sum of (a) the interest expense of such Person
and its subsidiaries for such period, on a consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net costs
associated with Interest Rate Agreements, Currency Hedging Arrangements and
Commodity Price Protection Agreements (including amortization of discounts),
(iii) the interest portion of any deferred payment obligation, (iv) accrued
interest and (v) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and similar
transactions, plus (b) (i) the interest component of the Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its subsidiaries during such period and (ii) all capitalized interest of
such Person and its subsidiaries, plus (c) the interest expense actually paid by
such Person under any Guaranteed Debt of such Person and any subsidiary of such
Person to the extent not included under clause (a)(iv) above, plus (d) the
aggregate amount for such period of cash or non-cash dividends on any Redeemable
Capital Stock or Preferred Stock of such Person and its subsidiaries, in each
case as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period, the net
income of the Company and any Subsidiary for such period determined on a
consolidated basis in accordance with GAAP, adjusted, to the extent included in
calculating such net income, by excluding, without duplication, (a) other than
for purposes of calculating the Basket, all extraordinary, unusual or
non-recurring gains or losses for such period (net of fees and expenses relating
to the transaction giving rise thereto); (b) other
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than for purposes of calculating the Basket, all gains or losses from the sales
or other dispositions of assets out of the ordinary course of business (net of
taxes, fees and expenses relating to the transaction giving rise thereto) for
such period; (c) that portion of such net income derived from or in respect of
Investments in Persons other than Subsidiaries, except to the extent actually
received in cash by the Company or any Subsidiary (subject, in the case of any
Subsidiary, to the provisions of clause (f) of this definition); (d) the portion
of such net income (or loss) allocable to minority interests in any Person
(other than a Subsidiary) for such period, except to the extent the Company's
allocation portion of such Person's net income for such period is actually
received in cash by the Company or any Subsidiary (subject, in the case of any
Subsidiary, to the provisions of clause (f) of this definition); (e) the net
income (or loss) of any other Person combined with the Company or any Subsidiary
on a "pooling of interests" basis attributable to any period prior to the date
of combination; (f) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is not at the time (regardless of any waiver) permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Subsidiary or its Capital Stock holders; and (g) any gain or
loss, net of taxes realized by such Person upon the termination of any employee
pension benefit plan.
"Consolidated Operating Cash Flow" means, with respect to any
period, Consolidated Net Income for such period increased (without duplication),
to the extent deducted in calculating such Consolidated Net Income, by (a)
Consolidated Income Tax Expense for such period; (b) Consolidated Interest
Expense for such period; and (c) depreciation, amortization and any other
non-cash items for such period (other than any non-cash item which requires the
accrual of, or a reserve for, cash charges for any future period) of the Company
and any Subsidiary, including, without limitation, amortization of capitalized
debt issuance costs for such period, all of the foregoing determined on a
consolidated basis in accordance with GAAP minus non-cash items to the extent
they increase consolidated Net Income (including the partial or entire reversal
of reserves taken in prior periods) for such period.
"Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution of this Indenture is located at 140
Broadway, 12th Floor, New York, New York 10005.
"Cumulative Operating Cash Flow" means, as at any date of
determination, the positive cumulative Consolidated Operating Cash Flow realized
during the period commencing on the original issue date of the Securities and
ending on the last day of the most recent fiscal quarter immediately preceding
the date of determination for which consolidated financial information of the
Company is available or, if such cumulative Consolidated Operating Cash Flow for
such period is negative, the negative amount by which cumulative Consolidated
Operating Cash Flow is less than zero.
"Currency Hedging Arrangements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
foreign exchange contracts, currency swap agreements or other similar agreements
or arrangements designed to protect against the fluctuations in currency values.
"Debt to Annualized Operating Cash Flow Ratio" means, as of the date
of determination, the ratio of (a) the Total Consolidated Indebtedness as of the
date of calculation (the "Determination Date") to (b) two times the Consolidated
Operating Cash Flow for the latest two fiscal quarters for which financial
information is available immediately preceding such Determination Date (the
"Measurement Period"). For purposes of calculating Consolidated Operating Cash
Flow for the Measurement Period immediately prior
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to the relevant Determination Date, (i) any Person that is a Subsidiary on the
Determination Date (or would become a Subsidiary on such Determination Date in
connection with the transaction that requires the determination of such
Consolidated Operating Cash Flow) will be deemed to have been a Subsidiary at
all times during such Measurement Period, (ii) any Person that is not a
Subsidiary on such Determination Date (or would cease to be a Subsidiary on such
Determination Date in connection with the transaction that requires the
determination of such Consolidated Operating Cash Flow) will be deemed not to
have been a Subsidiary at any time during such Measurement Period, and (iii) if
the Company or any Subsidiary shall have in any manner (x) acquired (through an
Acquisition or the commencement of activities constituting such operating
business) or (y) disposed of (by means of an Asset Sale or the termination or
discontinuance of activities constituting such operating business) any operating
business during such Measurement Period or after the end of such period and on
or prior to such Determination Date, such calculation will be made on a pro
forma basis in accordance with GAAP as if, in the case of an Acquisition or the
commencement of activities constituting such operating business, all such
transactions had been consummated prior to the first day of such Measurement
Period (it being understood that in calculating Consolidated Operating Cash Flow
the exclusions set forth in clauses (a) through (g) of the definition of
Consolidated Net Income shall apply to an Acquired Person as if it were a
Subsidiary).
"Default" means any event which is, or after notice or passage of
any time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities issued in the
form of one or more Book-Entry Securities, The Depository Trust Company ("DTC"),
its nominees and successors, or another Person designated as Depositary by the
Company, which must be a clearing agency registered under the Exchange Act.
"Disinterested Director" means, with respect to any transaction or
series of related transactions, a member of the Board of Directors of the
Company who does not have any material direct or indirect financial interest in
or with respect to such transaction or series of related transactions.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or becomes mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or becomes exchangeable for Indebtedness at the option
of the holder thereof, or becomes redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final maturity date of the
Securities; provided such Capital Stock shall only constitute Disqualified Stock
to the extent it so matures or becomes so redeemable or exchangeable on or prior
to the final maturity date of the Securities; provided, further, that any
Capital Stock that would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to the final maturity date of the Securities shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Section 1012 and Section
1014 and such Capital Stock specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Securities as are required to be repurchased
pursuant to Section 1012 and Section 1014.
"Escrow Account" has the meaning set forth in Section 2 of the
Escrow Agreement.
"Escrow Agent" means Marine Midland Bank, as escrow agent under the
Escrow
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Agreement, until a successor replaces it in accordance with the provisions of
the Escrow Agreement and thereafter means such successor.
"Escrow Agreement" means the Escrow and Security Agreement, dated as
of the date hereof, among the Company, the Escrow Agent and the Trustee.
"Escrow Funds" has the meaning specified in the Escrow Agreement.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"Exchange Offer" means the exchange offer by the Company of Series B
Securities for Series A Securities to be effected pursuant to Section 3 of the
Registration Rights Agreement.
"Exchange Offer Registration Statement" means the registration
statement under the Securities Act contemplated by Section 3(a) of the
Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be reasonably expected to be obtained in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy.
Unless otherwise specified, Fair Market Value shall be determined by the Board
of Directors of the Company acting in good faith and shall be evidenced by a
Board Resolution.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, which
are in effect on the date hereof.
"Global Securities" means the Rule 144A Global Securities, the
Regulation S Global Securities and the Series B Global Securities to be issued
as Book-Entry Securities issued to the Depositary in accordance with Section
306.
"Guarantee" means the guarantee by any Guarantor of the Company's
Indenture Obligations.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include endorsements
for collection or deposit, in either case, in the ordinary course of business.
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"Guarantor" means any Subsidiary which is a guarantor of the
Securities, including any Person that is required after the date hereof to
execute a guarantee of the Securities pursuant to Section 1013 until a successor
replaces such party pursuant to the applicable provisions of this Indenture and,
thereafter, shall mean such successor.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of a Person existing at the time
such Person becomes a Subsidiary or is merged or consolidated with or into the
Company or any Subsidiary shall be deemed to be Incurred at such time.
"Indebtedness" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payables
and other accrued current liabilities arising in the ordinary course of
business, (ii) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (unless the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables arising in
the ordinary course of business, (iv) all obligations under Interest Rate
Agreements, Currency Hedging Arrangements or Commodity Price Protection
Agreements of such Person, (v) all Capital Lease Obligations of such Person,
(vi) all Indebtedness referred to in clauses (i) through (v) above of other
Persons and all dividends of other Persons, the payment of which is secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or with respect to property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, (vii) all Redeemable Capital Stock issued by such Person
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued and unpaid dividends, and (viii) any amendment, supplement,
modification, deferral, renewal, extension, refunding or refinancing of any
liability of the types referred to in clauses (i) through (vii) above. For
purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such Fair
Market Value to be determined in good faith by the board of directors of the
issuer of such Redeemable Capital Stock. In no event shall "Indebtedness"
include any trade payable or other current liabilities arising in the ordinary
course of business excluding the current maturity of any obligation which would
otherwise constitute Indebtedness. The amount of any item of Indebtedness shall
be the amount of such Indebtedness properly classified as a liability on a
balance sheet prepared in accordance with GAAP.
"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and any
other obligor
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under this Indenture or under the Securities, including any Guarantor, to pay
principal of, premium, if any, and interest when due and payable, and all other
amounts due or to become due under or in connection with this Indenture, the
Securities and the performance of all other obligations to the Trustee and the
Holders under this Indenture and the Securities, according to the respective
terms thereof.
"Initial Purchaser" means ING Baring (U.S.) Securities, Inc.
"interest" includes Additional Interest, if any.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Interest Rate Agreements" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Internet Service Business" means any business whose principal
business is operating an internet connectivity or internet enhancement service
as it exists from time to time, including, without limitation, dial up or
dedicated internet service, web hosting or co-location services, security
solutions, the provision and development of software in connection therewith,
configuration services, electronic commerce, intranet solutions, data backup and
restoral, business content and collaboration, communications tools or network
equipment products or services (including without limitation, any business
conducted by the Company or any subsidiary on the Issue Date of the Securities),
and any business reasonably related to the foregoing. A good faith determination
by a majority of the Board of Directors as to whether a business meets the
requirements of this definition shall be conclusive, absent manifest error.
"Investment" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase, acquisition or ownership by such Person of any
Capital Stock, bonds, notes, debentures or other securities issued or owned by
any other Person and all other items that would be classified as investments on
a balance sheet prepared in accordance with GAAP.
"Issue Date" means the date on which the Securities are originally
issued under this Indenture.
"Lien" means any mortgage or deed of trust, pledge, lien (statutory
or otherwise), security interest, easement, hypothecation, or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired. A Person shall be deemed to own
subject to a Lien any property which such Person has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement, other than any lease properly
classified as an operating lease under GAAP and intellectual property licensing
arrangements.
"Maturity" means, when used with respect to the Securities, the date
on which the principal of the Securities becomes due and payable as therein
provided or as provided in this Indenture,
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whether at Stated Maturity, the Offer Date or the redemption date and whether by
declaration of acceleration, Offer in respect of Excess Proceeds, Change of
Control Offer in respect of a Change of Control, call for redemption or
otherwise.
"Measurement Period" has the meaning as set forth in the definition
of Debt to Annualized Operating Cash Flow Ratio in this Section 101.
"Moody's" means Moody's Investors Service, Inc. or any successor
rating agency.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
Person, the proceeds thereof (without duplication in respect of all Asset Sales)
in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or Cash Equivalents (except to the extent that
such obligations are financed or sold with recourse to the Company or any
Subsidiary) net of (i) brokerage commissions and other reasonable fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale, (ii) provisions for all taxes payable as a result of such
Asset Sale, (iii) payments made to retire Indebtedness where payment of such
Indebtedness is secured by the assets or properties that are the subject of such
Asset Sale, (iv) amounts required to be paid to any Person (other than the
Company or any Subsidiary) owning a beneficial interest in the assets subject to
the Asset Sale and (v) appropriate amounts to be provided by the Company or any
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an Officers'
Certificate delivered to the Trustee and (b) with respect to any issuance or
sale of Capital Stock or options, warrants or rights to purchase Capital Stock,
or debt securities or Capital Stock that have been converted into or exchanged
for Capital Stock as referred to in Section 1009, the proceeds of such issuance
or sale in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of, or stock or other
assets when disposed of for, cash or Cash Equivalents (except to the extent that
such obligations are financed or sold with recourse to the Company or any
Subsidiary), net of attorney's fees, accountant's fees and brokerage,
consultation, underwriting and other fees and expenses actually incurred in
connection with such issuance or sale (or conversion in the case of debt
securities or Capital Stock that have been converted) and net of taxes paid or
payable as a result thereof.
"Non-U.S. Person" means a Person that is not a "U.S. person" as
defined in Regulation S under the Securities Act.
"Officers' Certificate" means a certificate signed by the President,
the Chief Executive Officer, the Chief Financial Officer or a Vice President
(regardless of Vice Presidential designation), and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company or
any Guarantor, as the case may be, and in form and substance reasonably
satisfactory to, and delivered to, the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, any Guarantor or the Trustee, unless an Opinion of
Independent Counsel is required pursuant to the terms of this Indenture, and who
shall be acceptable to the Trustee, and which opinion shall be in form and
substance reasonably satisfactory to the Trustee.
"Opinion of Independent Counsel" means a written opinion of counsel,
who may be
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regular outside counsel for the Company, but which is issued by a Person who is
not an employee or consultant (other than non-employee legal counsel) of the
Company, or any Guarantor and who shall be reasonably acceptable to the Trustee,
and which opinion shall be in form and substance reasonably satisfactory to the
Trustee.
"Outstanding" when used with respect to the Securities means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities, or portions thereof, theretofore canceled by the
Trustee or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided that if
such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor reasonably
satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in Sections 402 and
403, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and
(d) Securities in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have been
presented to the Trustee and the Company proof reasonably satisfactory to
each of them that such Securities are held by a bona fide purchaser in
whose hands the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor, or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which a
Responsible Officer of the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the reasonable satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company, any Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, any Guarantor or such other obligor.
"Pari Passu Indebtedness" means (a) any Indebtedness of the Company
which ranks pari passu in right of payment to the Securities and (b) with
respect to any Guarantee, Indebtedness which ranks pari passu in right of
payment to such Guarantee.
"Paying Agent" means any Person (including the Company) authorized
by the Company to pay the principal of, premium, if any, or interest on, any
Securities on behalf of the Company.
"Permitted Investment" means (i) Investments in any Wholly Owned
Subsidiary or any
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Person which, as a result of such Investment, (a) becomes a Wholly Owned
Subsidiary or (b) is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, or is liquidated into, the
Company or any Wholly Owned Subsidiary; (ii) Indebtedness of the Company or a
Subsidiary described under clauses (iv) and (vii) of paragraph (b) of Section
1008; (iii) Investments in any of the Securities; (iv) Investments in Cash
Equivalents; (v) Investments acquired by the Company or any Subsidiary in
connection with an Asset Sale permitted under Section 1012 to the extent such
Investments are non-cash proceeds as permitted under such covenant; (vi)
Investments in existence on the date of this Indenture; (vii) guarantees of
Indebtedness of a Wholly Owned Subsidiary given by the Company or another Wholly
Owned Subsidiary and guarantees of Indebtedness of the Company given by any
Subsidiary, in each case, in accordance with the terms of this Indenture; (viii)
any Investment in the Company by any Subsidiary of the Company; provided, that
any such Investment in the form of Indebtedness shall be Subordinated
Indebtedness; (ix) accounts receivable created or acquired in the ordinary
course of business of the Company or any Subsidiary and Investments arising from
transactions by the Company or any Subsidiary with trade creditors or customers
in the ordinary course of business (including any such Investment received
pursuant to any plan of reorganization or similar arrangement pursuant to the
bankruptcy or insolvency of such trade creditors or customers or otherwise in
settlement of a claim); (x) Investments the consideration of which is Capital
Stock of the Company; (xi) stock obligations or securities received in
satisfaction of judgments; (xii) Investments in prepaid expenses, negotiable
instruments held for collection, and lease, utility and workers' compensation,
performance and other similar deposits; and (xiii) any other Investments in an
Internet Service Business in an aggregate amount not to exceed $20 million at
any one time outstanding, paid or contributed. In connection with any assets or
property contributed or transferred to any Person as an Investment, such
property and assets shall be equal to the Fair Market Value (as determined by
the Company's Board of Directors in good faith and evidenced by a Board
Resolution) at the time of such Investment.
"Permitted Lien" means:
(a) any Lien existing as of the date of this Indenture;
(b) any Lien arising by reason of (1) any judgment, decree or order
of any court, so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the
review of such judgment, decree or order shall not have been finally
terminated or the period within which such proceedings may be initiated
shall not have expired; (2) taxes not yet delinquent or which are being
contested in good faith; (3) security for payment of workers' compensation
or other insurance or arising under worker's compensation laws or similar
legislation; (4) good faith deposits in connection with bids, tenders,
leases or contracts (other than contracts evidencing Indebtedness); (5)
zoning restrictions, easements, licenses, reservations, title defects,
rights of others for rights of way, utilities, sewers, electric lines,
telephone or telegraph lines, and other similar purposes, provisions,
covenants, conditions, waivers, restrictions on the use of property or
minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created,
assumed or permitted to exist and arising by, through or under a landlord
or owner of the leased property, with or without consent of the lessee),
none of which materially impairs the use of any parcel of property
material to the operation of the business of the Company or any Subsidiary
or the value of such property for the purpose of such business; (6)
deposits to secure public or statutory obligations, or in lieu of surety
or appeal bonds; or (7) operation of law in favor of landlords, carriers,
warehousemen, bankers, mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which are
not yet delinquent or are being contested in good faith by negotiations or
by appropriate proceedings which suspend the collection thereof;
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(c) any Lien to secure the performance of bids, trade contracts,
leases (including, without limitation, statutory and common law landlord's
liens), statutory obligations, surety and appeal bonds, letters of credit
and other obligations of a like nature and incurred in the ordinary course
of business of the Company or any Subsidiary;
(d) any Lien securing obligations in connection with Indebtedness
permitted under clause (i) of paragraph (b) of Section 1008 which are
incurred or assumed in connection with the acquisition, development or
construction of real or personal, moveable or immovable property within
180 days of such incurrence or assumption; provided that such Liens only
extend to such acquired, developed or constructed property and any
accessories, accessions, additions, replacements and proceeds thereof;
(e) any Lien arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(f) any Lien securing obligations in connection with Indebtedness
permitted in clauses (ii) or (iii) of paragraph (b) of Section 1008;
(g) any Lien in favor of the Company or any Subsidiary;
(h) any Lien securing obligations in connection with Acquired
Indebtedness; provided that any such Lien does not extend to or cover any
property or assets of the Company or any of its Subsidiaries other than
the property or assets of the Acquired Person covered thereby or the
property or assets so acquired;
(i) any Lien in favor of the Trustee for the benefit of the Holders
or the Trustee arising under the provisions in this Indenture or the
Escrow Agreement;
(j) any Lien encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of the
Company or any Subsidiary if and to the extent arising in the ordinary
course of business, including rights of offset and set-off;
(k) any Lien in favor of customs or revenue authorities to secure
payment of customs duties in connection with the importation of goods in
the ordinary course of business;
(l) leases or subleases granted to third Persons not interfering
with the ordinary course of business of the Company or its Subsidiaries;
and
(m) any Lien securing any extension, renewal, refinancing or
replacement, in whole or in part, of any obligation or Indebtedness
described in the foregoing clauses (a) through (d) and (f) through (h) so
long as no additional collateral is granted as security thereby.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the
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purposes of this definition, any Security authenticated and delivered under
Section 308 in exchange for a mutilated Security or in lieu of a lost, destroyed
or stolen Security shall be deemed to evidence the same debt as the mutilated,
lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over the
Capital Stock of any other class of such Person.
"Prospectus" means the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Series A Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Public Equity Offering" means an underwritten offering of Common
Stock of the Company with gross proceeds to the Company of at least $25 million
pursuant to a registration statement that has been declared effective by the
Commission pursuant to the Securities Act (other than a registration statement
on Form S-8 or otherwise relating to equity securities issuable under any
employee benefit plan of the Company).
"Purchase Money Obligation" means any Indebtedness secured by a Lien
on assets related to the business of the Company and any additions and
accessions thereto, which are purchased by the Company at any time after the
Securities are issued; provided that (i) the security agreement or conditional
sales or other title retention contract pursuant to which the Lien on such
assets is created (collectively a "Purchase Money Security Agreement") shall be
entered into within 90 days after the purchase or substantial completion of the
construction of such assets and shall at all times be confined solely to the
assets so purchased or acquired, any additions and accessions thereto and any
proceeds therefrom, (ii) at no time shall the aggregate principal amount of the
outstanding Indebtedness secured thereby be increased, except in connection with
the purchase of additions and accessions thereto and except in respect of fees
and other obligations in respect of such Indebtedness and (iii) (A) the
aggregate outstanding principal amount of Indebtedness secured thereby
(determined on a per asset basis in the case of any additions and accessions)
shall not at the time such Purchase Money Security Agreement is entered into
exceed 100% of the purchase price to the Company of the assets subject thereto
or (B) the Indebtedness secured thereby shall be with recourse solely to the
assets so purchased or acquired, any additions and accessions thereto and any
proceeds therefrom.
"QIB" means a "Qualified Institutional Buyer" as defined in Rule
144A under the Securities Act.
"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
"Redeemable Capital Stock" means any Capital Stock that, either by
its terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed prior to the Stated Maturity of the
principal of the Securities or is redeemable at the option of the holder thereof
at any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such
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Stated Maturity at the option of the holder thereof.
"Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the price at which it
is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between the Company and the Initial
Purchaser.
"Registration Statement" means any registration statement of the
Company which covers any of the Series A Securities or Series B Securities
pursuant to the provisions of the Registration Rights Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 15 or October 15 (whether or not a Business Day)
next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act, as
amended from time to time.
"Regulation S Global Securities" means one or more permanent global
Securities in registered form representing the aggregate principal amount of
Securities sold in reliance on Regulation S under the Securities Act.
"Responsible Officer" when used with respect to the Trustee means
any officer or employee assigned to administer this Indenture or any agent of
the Trustee appointed hereunder, including any vice president, assistant vice
president, secretary, assistant secretary, or any other officer or assistant
officer of the Trustee or any agent of the Trustee appointed hereunder to whom
any corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Rule 144A" means Rule 144A under the Securities Act, as amended
from time to time.
"Rule 144A Global Securities" means one or more permanent global
Securities in registered form representing the aggregate principal amount of
Securities sold in reliance on Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means with respect to any Person,
any direct or indirect arrangement pursuant to which any property (other than
Capital Stock) is sold by such Person or a subsidiary, or, in the case of the
Company, it or a subsidiary, and is thereafter leased back from the purchaser or
transferee thereof by such Person or one of its subsidiaries or, in the case of
the Company, it or one of its Subsidiaries.
"S&P" means Standard & Poor's Rating Group, a division of McGraw
Hill, Inc., or any successor rating agency.
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"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.
"Series B Global Securities" means one or more permanent Global
Securities in registered form representing the aggregate principal amount of
Series B Securities exchanged for Series A Securities pursuant to the Exchange
Offer.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to Section 4 of the Registration Rights
Agreement, which covers all of the Registrable Securities (as defined in the
Registration Rights Agreement) on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the Commission, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 309.
"Stated Maturity" means, when used with respect to any Indebtedness
or any installment of interest thereon, the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest, as the case may be, is due and payable.
"Strategic Investor" means any Person which is (or a controlled
Affiliate of any Person which is or a controlled Affiliate of which is) engaged
principally in the Internet Service Business and which has a Total Market
Capitalization of at least $1.0 billion.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor subordinated in right of payment to the Securities or the Guarantee of
such Guarantor, as the case may be.
"subsidiary" means, with respect to any Person, any corporation,
association or other business entity (i) of which outstanding Capital Stock
having at least the majority of the votes entitled to be cast in the election of
directors is owned, directly or indirectly, by such Person and/or any one or
more subsidiaries of such Person, or (ii) of which at least a majority of voting
interest is owned, directly or indirectly, by such Person and/or one or more
subsidiaries of such Person.
"Subsidiary" means any subsidiary of the Company other than an
Unrestricted Subsidiary.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 308 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Total Consolidated Indebtedness" means, as at any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
the Company and any Subsidiary, on a consolidated basis, outstanding as of such
date of determination, after giving effect to any Incurrence of Indebtedness and
the application of the proceeds therefrom giving rise to such determination.
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"Total Market Capitalization" of any Person means, as of any day of
determination, the sum of (a) the consolidated Indebtedness of such Person and
any subsidiaries on such day, plus (b) the product of (i) the aggregate number
of outstanding shares of common stock of such Person on such day (which shall
not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such Person) and (ii) the average
closing price of such common stock over the 10 consecutive Trading Days ending
not earlier than 10 Trading Days immediately prior to such date of
determination, plus (c) the liquidation value of any outstanding shares of
Preferred Stock of such Person on such day. If no such closing price exists with
respect to shares of any such class, the value of such shares for purposes of
clause (b) of the preceding sentence shall be determined by the Board of
Directors in good faith and evidenced by a Board Resolution filed with the
Trustee. Notwithstanding the foregoing, unless the Person's common stock is
listed on any national securities exchange or on the Nasdaq National Market, the
"Total Market Capitalization" of the Person shall mean, as of any day of
determination, the enterprise value (without duplication) of the Person and any
subsidiaries (including the fair market value of their debt and equity), as
determined by an independent banking firm of national standing with experience
in such valuations and evidenced by a written opinion in customary form filed
with the Trustee; provided that for purposes of any such determination, the
enterprise value of the Person shall be calculated as if the Person were a
publicly held corporation without a controlling stockholder. For purposes of any
such determination, such banking firm's written opinion may state that such fair
market value is no less than a specified amount and such opinion may be as of a
date no earlier than 90 days prior to the date of such determination.
"Trading Day" with respect to a securities exchange or automated
quotation system means a day on which such exchange or system is open for a full
day of trading.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"Unrestricted Subsidiary" means (i) any subsidiary of the Company
that at the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below) and (ii)
any subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any subsidiary of the Company (including any newly
acquired or newly formed subsidiary) to be an Unrestricted Subsidiary if all of
the following conditions apply: (a) neither the Company nor any of its
Subsidiaries provides credit support for Indebtedness of such subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness); (b) such subsidiary is not liable, directly or indirectly, with
respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness; (c)
any Investment in such subsidiary made as a result of designating such
subsidiary an Unrestricted Subsidiary shall not violate the provisions of
Section 1018 and such subsidiary is not party to any agreement, contract,
arrangement or understanding at such time with the Company or any Subsidiary
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the Company; and (d)
such subsidiary does not own any Capital Stock in any Subsidiary of the Company
which is not simultaneously being designated an Unrestricted Subsidiary. Any
such designation by the Board of Directors of the Company shall be evidenced to
the Trustee by filing with the Trustee a Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing conditions and shall be deemed a Restricted Payment
on the date
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of designation in an amount equal to the greater of (1) the net book value of
such Investment or (2) the fair market value of such Investment as determined in
good faith by the Company's Board of Directors. The Board of Directors of the
Company may designate any Unrestricted Subsidiary as a Subsidiary; provided that
(i) immediately after giving effect to such designation, the Company could incur
$1.00 of additional Indebtedness pursuant to Section 1008(a) and (ii) all
Indebtedness of such Subsidiary shall be deemed to be incurred on the date such
Subsidiary becomes a Subsidiary.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted
Subsidiary means Indebtedness of such Unrestricted Subsidiary (i) as to which
neither the Company nor any Subsidiary is directly or indirectly liable (by
virtue of the Company or any such Subsidiary being the primary obligor on,
guarantor of, or otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Subsidiary to any Affiliate, in which case
(unless the incurrence of such Guaranteed Debt resulted in a Restricted Payment
at the time of incurrence) the Company shall be deemed to have made a Restricted
Payment equal to the principal amount of any such Indebtedness to the extent
guaranteed at the time such Affiliate is designated an Unrestricted Subsidiary
and (ii) which, upon the occurrence of a default with respect thereto, does not
result in, or permit any holder of any Indebtedness of the Company or any
Subsidiary to declare, a default on such Indebtedness of the Company or any
Subsidiary or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"U.S. Government Securities" means securities that are direct
obligations of the United States of America, the payment of which its full faith
and credit is pledged.
"Voting Stock" means Capital Stock of the class or classes pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of a corporation (irrespective of whether or not at the time Capital
Stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock
of which is owned by the Company or another Wholly Owned Subsidiary. For the
purposes of this definition, any directors' qualifying shares or investments by
foreign nationals mandated by applicable law shall be disregarded in determining
the ownership of a Subsidiary.
Section 102. Other Definitions.
Term Defined in Section
"Act"......................................................105
"Agent Members"............................................306
"Basket"..................................................1009
"Change of Control Offer".................................1014
"Change of Control Purchase Date".........................1014
"Change of Control Purchase Notice".......................1014
"Change of Control Purchase Price"........................1014
"covenant defeasance"......................................403
"Defaulted Interest".......................................309
"defeasance"...............................................402
"Defeasance Redemption Date"...............................404
"Defeased Securities"......................................401
"Distribution Compliance Period"...........................201
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"Excess Proceeds".........................................1012
"Offer"...................................................1012
"Offer Date"..............................................1012
"Offered Price"...........................................1012
"Pari Passu Debt Amount"..................................1012
"Pari Passu Offer"........................................1012
"Permitted Payment".......................................1009
"Physical Securities"......................................306
"Private Placement Legend".................................202
"Purchase Money Security Agreement"........................101
"Refinancing".............................................1009
"Required Filing Date"....................................1019
"Restricted Payments".....................................1009
"Securities"..........................................Recitals
"Security Amount".........................................1012
"Security Register"........................................305
"Security Registrar".......................................305
"Separation Date".....................................Recitals
"Series A Securities".................................Recitals
"Series B Securities".................................Recitals
"Special Payment Date".....................................309
"Surviving Entity".........................................801
"Surviving Guarantor Entity"...............................801
"Units"...............................................Recitals
"U.S. Government Obligations"..............................404
"Warrants"............................................Recitals
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company and any
Guarantor (if applicable) and any other obligor on the Securities (if
applicable) shall furnish to the Trustee an Officers' Certificate in a form and
substance reasonably acceptable to the Trustee stating that all conditions
precedent, if any, provided for in this Indenture (including any covenant
compliance with which constitutes a condition precedent) relating to the
proposed action have been complied with, and an Opinion of Counsel in form and
substance reasonably acceptable to the Trustee stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the
furnishing of such certificates or opinions is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
individual or firm signing such opinion has read and understands such
covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(c) a statement that, in the opinion of each such individual or such
firm, he or it has made such examination or investigation as is necessary
to enable him or it to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied
with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate of an officer of the Company, any Guarantor or other
obligor on the Securities may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate or
opinion may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company, any Guarantor or other obligor on the Securities stating that the
information with respect to such factual matters is in the possession of the
Company, any Guarantor or other obligor on the Securities, unless such officer
or counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous. Opinions of Counsel required to be delivered to the Trustee may have
qualifications customary for opinions of the type required and counsel
delivering such Opinions of Counsel may rely on certificates of the Company or
government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact, including that various
financial covenants have been complied with.
Any certificate or opinion of an officer of the Company, any
Guarantor or other obligor on the Securities may be based, insofar as it relates
to accounting matters, upon a certificate or opinion of, or representations by,
an accountant or firm of accountants in the employ of the Company, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate or opinion may be based are erroneous. Any
certificate or opinion of any independent firm of public accountants filed with
the Trustee shall contain a statement that such firm is independent with respect
to the Company.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and conclusive
in favor of the Trustee and the Company, if made in the manner provided in
this Section 105.
(b) The ownership of Securities shall be proved by the Security
Register.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Security shall bind every future
Holder of the same Security or the Holder of every Security issued upon
the transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the Trustee,
any Paying Agent or the Company, any Guarantor or any other obligor of the
Securities in reliance thereon, whether or not notation of such action is
made upon such Security.
(d) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other manner
which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix
in advance a record date for the determination of such Holders entitled to
give such request, demand, authorization, direction, notice, consent,
waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding Trust Indenture Act Section 316(c), any such record date
shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not more than 30 days prior to the first
solicitation of Holders generally in connection therewith and no later
than the date such first solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or
after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for purposes of
determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act,
and for this purpose the Securities then Outstanding shall be computed as
of such record date; provided that no such request, demand, authorization,
direction,
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notice, consent, waiver or other Act by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after such record
date.
(f) For purposes of this Indenture, any action by the Holders which
may be taken in writing may be taken by electronic means or as otherwise
reasonably acceptable to the Trustee.
Section 106. Notices, etc., to the Trustee, the Company and any
Guarantor.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any Guarantor or
any other obligor on the Securities shall be sufficient for every purpose
(except as provided in Section 501(c)) hereunder if in writing and mailed,
first-class postage prepaid, or delivered by recognized overnight courier,
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration, or at any other address previously furnished in
writing to the Holders or the Company, any Guarantor or any other obligor
on the Securities by the Trustee; or
(b) the Company or any Guarantor by the Trustee or any Holder shall
be sufficient for every purpose (except as provided in Section 501(c))
hereunder if in writing and mailed, first-class postage prepaid, or
delivered by recognized overnight courier, to the Company or such
Guarantor addressed to 295 Lafayette Street, 3rd Floor, New York, New York
10012, Attention: President or at any other address previously furnished
in writing to the Trustee by the Company or such Guarantor.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, or delivered by
recognized overnight courier, to each Holder affected by such event, at its
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any other method of giving
such notice as shall be reasonably satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
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Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and
the Guarantors shall bind their respective successors and assigns, whether so
expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person (other than the parties hereto and their successors
hereunder, any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 113. Governing Law.
THIS INDENTURE, THE SECURITIES AND ANY GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Maturity or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such Interest Payment Date or Redemption Date, or at
the Maturity or Stated Maturity and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment Date,
Redemption Date, Maturity or Stated Maturity, as the case may be, to the next
succeeding Business Day.
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Section 115. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 116. Schedules and Exhibits.
All schedules and exhibits attached hereto are by this reference
made a part hereof with the same force and effect as if herein set forth in
full.
Section 117. Counterparts.
This Indenture may be executed in any number of counterparts, each
of which shall be deemed an original; but all such counterparts shall together
constitute but one and the same instrument.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of authentication
thereon shall be in substantially the forms set forth in this Article Two, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted hereby and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any securities exchange, any
organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Securities
may be listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Series A Securities offered and sold in reliance on Rule 144A shall
be issued initially in the form of one or more Rule 144A Global Securities,
substantially in the form set forth in Section 202(a), deposited upon issuance
with the Trustee, as custodian for the Depositary, registered in the name of the
Depositary, or its nominee, in each case for credit by the Depositary to an
account of a direct or indirect participant of the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Rule 144A Global Securities may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Series A Securities offered and sold in reliance on Regulation S
shall be issued initially in the form of one or more Regulation S Global
Securities, substantially in the form set forth in Section
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202(a), deposited upon issuance with the Trustee, as custodian for the
Depositary, registered in the name of the Depositary, or its nominee in each
case for credit by the Depositary to an account of a direct or indirect
participant of the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided; provided, however, that upon such deposit
through and including the 40th day (or one year in the event that the Securities
are being sold as a part of a Unit) after the later of the commencement of the
Offering and the original issue date of the Securities (such period through and
including such 40th day (or one year in the event that the Securities are being
sold as a part of a Unit), the "Distribution Compliance Period"), all such
Securities shall be credited to or through accounts maintained at the Depositary
unless exchanged for interests in the Rule 144A Global Securities in accordance
with the transfer and certification requirements described below. The aggregate
principal amount of the Regulation S Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Series B Securities exchanged for Series A Securities shall be
issued initially in the form of one or more Series B Global Securities,
substantially in the form set forth in Section 202(b), deposited upon issuance
with the Trustee, as custodian for the Depositary, registered in the name of the
Depositary or its nominee, in each case for credit by the Depositary to an
account of a direct or indirect participant of the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Series B Global Securities may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Section 202. Form of Face of Securities.
(a) The form of the face of any Series A Securities authenticated
and delivered hereunder shall be substantially as follows:
Unless and until (i) a Series A Security is sold under an
effective Registration Statement or (ii) a Series A Security is
exchanged for a Series B Security in connection with an effective
Registration Statement, in each case pursuant to the Registration
Rights Agreement referred to below, then such Series A Security
shall bear the legend set forth below (the "Private Placement
Legend") on the face thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF REGULATION S UNDER THE
SECURITIES ACT ("REGULATION S"), AND (2) AGREES TO OFFER,
RESELL OR OTHERWISE TRANSFER
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SUCH SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A INSIDE THE UNITED
STATES, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (D) OUTSIDE THE UNITED
STATES PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN AN
OFFSHORE TRANSACTION WITHIN THE MEANING OF AND PURSUANT TO THE
PROVISIONS OF REGULATION S, (E) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (I) PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN
EACH OF THE FOREGOING CASES, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE AND THE HOLDER HEREOF SHALL NOTIFY ANY PURCHASER FROM
IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH ABOVE. AS USED HEREIN, THE TERMS "UNITED STATES,"
"OFFSHORE TRANSACTION," AND "U.S. PERSON" HAVE THE RESPECTIVE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
Prior to the Separation Date, each Series A Security shall
bear the legend set forth below on the face thereof:
THIS SECURITY IS INITIALLY ISSUED AS A PART OF AN ISSUANCE OF
UNITS, EACH OF WHICH CONSISTS OF ONE SERIES A SECURITY AND ONE
WARRANT INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE
3.52 SHARES OF COMMON STOCK, $0.01 PAR VALUE, OF BELL
TECHNOLOGY GROUP LTD. (THE "WARRANTS"). PRIOR TO THE EARLIEST
TO OCCUR OF (i) 180 DAYS FROM THE DATE OF ISSUANCE OF THIS
SECURITY, (ii) A CHANGE IN CONTROL, (iii) THE OCCURRENCE OF AN
EVENT OF DEFAULT, (iv) THE DATE ON WHICH THE REGISTRATION
STATEMENT OR THE EXCHANGE OFFER REGISTRATION STATEMENT IS
DECLARED EFFECTIVE OR (v) SUCH EARLIER DATE AS MAY BE
DETERMINED BY THE INITIAL PURCHASER, THE SERIES A SECURITIES
EVIDENCED BY THIS
27
<PAGE>
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY
FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH,
THE WARRANTS.
[Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
BELL TECHNOLOGY GROUP LTD.
----------
13% SENIOR NOTE DUE 2005, SERIES A
CUSIP NO._________________
No. _____________ $_________________________
Bell Technology Group Ltd., a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to or
registered assigns, the principal sum of United States dollars on May 1, 2005,
at the office or agency of the Company referred to below, and to pay interest
thereon from the date of issuance, or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semiannually on May 1 and
November 1 in each year, commencing November 1, 1998 at the rate of 13% per
annum, subject to adjustments as described in the second following paragraph, in
28
<PAGE>
United States dollars, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.
The Holder of this Series A Security is entitled to the benefits of the
Registration Rights Agreement between the Company and the Initial Purchaser,
dated April 30, 1998 (the "Registration Rights Agreement"), pursuant to which,
subject to the terms and conditions thereof, the Company is obligated to
consummate the Exchange Offer pursuant to which the Holder of this Security
shall have the right to exchange this Security for 13% Senior Notes due 2005,
Series B (herein called the "Series B Securities") in like principal amount as
provided therein. The Series A Securities and the Series B Securities are
together referred to as the "Securities." The Series A Securities shall rank
pari passu in right of payment with the Series B Securities.
In the event that (a) the Exchange Offer Registration Statement is not
filed with the Commission on or prior to the date specified in the Registration
Rights Agreement, (b) the Exchange Offer Registration Statement has not been
declared effective on or prior to the date specified in the Registration Rights
Agreement, (c) the Exchange Offer is not consummated or a Shelf Registration
Statement is not declared effective, in either case, on or prior to the date
specified in the Registration Rights Agreement, or (d) the Shelf Registration
Statement or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales of the
Series A Securities during the periods specified in the Registration Rights
Agreement, without being succeeded immediately by a post-effective amendment to
such Registration Statement that cures such failure and that is itself declared
effective within a five Business Day period after filing such post-effective
amendment (each such event referred to in clauses (a) through (d) above, a
"Registration Default"), then commencing on the day following the date on which
such Registration Default occurs, the interest rate borne by the Series A
Securities shall be increased by one-half of one percent per annum for the 90-
day period following such Registration Default, which rate will increase by
one-half of one percent per annum with respect to each subsequent 90-day period
up to a maximum of one and one half percent (1.50%) per annum until cured
("Additional Interest"). Following the cure of all Registration Defaults, the
accrual of Additional Interest will cease and the interest rate will revert to
the original rate.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture hereinafter referred
to, be paid to the Person in whose name this Security (or any Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid, or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Series A Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Person in whose name this
Security (or any Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by the Indenture not inconsistent with the requirements of such
exchange, all as more fully provided in the Indenture.
Payment of the principal of, premium, if any, and interest on, this
Security, and exchange
29
<PAGE>
or registration of transfer of this Security, will be made at the office or
agency of the Company in The City of New York maintained for that purpose (which
initially will be a corporate trust office of the Trustee located at 140
Broadway, New York, New York 10005), or at such other office or agency as may be
maintained for such purpose, by wire transfer of immediately available funds
unless otherwise provided in the Indenture. Such payment shall be in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof or by the authenticating agent
appointed as provided in the Indenture by manual signature of an authorized
signer, this Security shall not be entitled to any benefit under the Indenture,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers and its
corporate seal to be affixed or reproduced hereon.
Dated:
------------------------
BELL TECHNOLOGY GROUP LTD.
[Seal] By:
-----------------------------------
Title:
Attest:
- --------------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 13% Senior Notes due 2005, Series A referred to in the
within-mentioned Indenture.
MARINE MIDLAND BANK, as Trustee
By:
-----------------------------------
Authorized Signatory
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 1012 or Section 1014, as applicable, of the Indenture, check the Box: _
30
<PAGE>
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 1012 or Section 1014 as applicable, of the Indenture, state
the amount (in original principal amount):
$
------------------------
Date: Your Signature:
------------- --------------------------
(Sign exactly as your name
appears on the other side of this
Security)
Signature Guarantee:
------------------
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
(b) The form of the face of any Series B Securities authenticated and
delivered hereunder shall be substantially as follows:
[Legend if Security is a Global Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307
OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT AND ANY SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST
31
<PAGE>
HEREIN.
BELL TECHNOLOGY GROUP LTD.
----------
13% SENIOR NOTE DUE 2005, SERIES B
CUSIP NO._________________
No. _____________ $_________________________
Bell Technology Group Ltd., a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to or
registered assigns, the principal sum of United States dollars on May 1, 2005,
at the office or agency of the Company referred to below, and to pay interest
thereon from the date of issuance, or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semiannually on May 1 and
November 1 in each year, commencing November 1, 1998 at the rate of 13% per
annum, in United States dollars, until the principal hereof is paid or duly
provided for; provided that to the extent interest has not been paid or duly
provided for with respect to the Series A Security exchanged for this Series B
Security, interest on this Series B Security shall accrue from the most recent
Interest Payment Date to which interest on the Series A Security which was
exchanged for this Series B Security has been paid or duly provided for.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.
This Series B Security was issued pursuant to the Exchange Offer pursuant
to which the 13% Senior Notes due 2005, Series A (herein called the "Series A
Securities") in like principal amount were exchanged for the Series B
Securities. The Series B Securities rank pari passu in right of payment with the
Series A Securities.
In addition, for any period in which the Series A Security exchanged for
this Series B Security was outstanding, in the event that (a) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to the date
specified in the Registration Rights Agreement, (b) the Exchange Offer
Registration Statement has not been declared effective on or prior to the date
specified in the Registration Rights Agreement, (c) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective, in
either case, on or prior to the date specified in the Registration Rights
Agreement the date of original issue of the Series A Security, or (d) the Shelf
Registration Statement or the Exchange Offer Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
resales of the Series A Securities during the periods specified above, without
being succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself declared effective within a
five Business Day period after filing such post-effective amendment (each such
event referred to in clauses (a) through (d) above, a "Registration Default"),
then commencing on the day following the date on which such Registration Default
occurs, the interest rate borne by the Series A Securities shall be increased by
one-half of one percent per annum for the 90-day period following such
Registration Default, which rate will increase by one-half of one percent per
annum with respect to each subsequent 90-day period up to a maximum of one and
one half percent (1.50%) per annum until cured ("Additional Interest").
Following the cure of all Registration Defaults, the accrual of Additional
Interest will cease and the interest rate will revert
32
<PAGE>
to the original rate; provided that, to the extent interest at such increased
interest rate has been paid or duly provided for with respect to the Series A
Security, interest at such increased interest rate, if any, on this Series B
Security shall accrue from the most recent Interest Payment Date to which such
interest on the Series A Security has been paid or duly provided for; provided,
however, that, if after any such reduction in interest rate, a different event
specified in clause (a), (b), (c) or (d) above occurs, the interest rate shall
again be increased pursuant to the foregoing provisions.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture hereinafter referred
to, be paid to the Person in whose name this Security (or any Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid, or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Series B Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Person in whose name this
Security (or any Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in this Indenture.
Payment of the principal of, premium, if any, and interest on, this
Security, and exchange or registration of transfer of the Security, will be made
at the office or agency of the Company in The City of New York maintained for
such purpose (which initially will be a corporate trust office of the Trustee
located at 140 Broadway, New York, New York 10005), or at such other office or
agency as may be maintained for such purpose, or at such other office or agency
as may be maintained for such purpose, or, at the option of the Company, payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register, and provided,
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest on all Global Securities and all other
Securities the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof or by the authenticating agent
appointed as provided in the Indenture by manual signature of an authorized
signer, this Security shall not be entitled to any benefit under the Indenture,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers and its
corporate seal to be affixed or reproduced hereon.
33
<PAGE>
Dated:
------------------
BELL TECHNOLOGY GROUP LTD.
[Seal] By:
-----------------------------------
Title:
Attest:
- ------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 13% Senior Notes due 2005, Series B referred to in the
within-mentioned Indenture.
MARINE MIDLAND BANK, as Trustee
By:
----------------------------------
Authorized Signatory
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 1012 or Section 1014, as applicable, of the Indenture, check the Box:
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 1012 or Section 1014 as applicable, of the Indenture, state
the amount (in original principal amount):
$____________________
Date: Your Signature:
------------------ --------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
-----------------
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
34
<PAGE>
Section 203. Form of Reverse of Securities.
(a) The form of the reverse of the Series A Securities shall be
substantially as follows:
Bell Technology Group Ltd.
13% Senior Note due 2005, Series A
This Security is one of a duly authorized issue of Securities of the
Company designated as its 13% Senior Notes due 2005, Series A (herein
called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to
$160,000,000, issued under and subject to the terms of an indenture (the
"Indenture") dated as of April 30, 1998, between the Company and Marine
Midland Bank, as trustee (the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Guarantors, if any, the Trustee
and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.
The Securities are subject to redemption at any time on or after May
1, 2001, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an
integral multiple thereof, at the following redemption prices (expressed
as percentages of the principal amount), if redeemed during the 12-month
period beginning on May 1, of the years indicated below:
Redemption
Year Price
---- -----
2001.............................................. 106.500%
2002.............................................. 104.333%
2003.............................................. 102.166%
and thereafter at 100% of the principal amount, in each case, together
with accrued and unpaid interest, if any, to the Redemption Date (subject
to the rights of Holders of record on relevant record dates to receive
interest due on an Interest Payment Date).
In addition, at any time on or prior to May 1, 2000, the Company
may, at its option, use the net proceeds of one or more Public Equity
Offerings or the sale of Common Stock (other than Disqualified Stock) of
the Company to a Strategic Investor in a single transaction or in a series
of related transactions, to redeem up to an aggregate of 35% of the
aggregate principal amount of Securities originally issued under the
Indenture at a redemption price equal to 113% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Redemption Date; provided that at
35
<PAGE>
least 65% aggregate principal amount of the initially issued aggregate
principal amount of Securities remains outstanding immediately after the
occurrence of such redemption. In order to effect the foregoing
redemption, the Company must mail a notice of redemption no later than 45
days after the closing of the related Public Equity Offering or sale of
Common Stock to a Strategic Investor and must consummate such redemption
within 60 days of the closing of the Public Equity Offering or sale of
Common Stock to a Strategic Investor.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may require
the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount
equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, pursuant to a Change of Control
Offer in accordance with the procedures set forth in the Indenture.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used
to permanently repay Pari Passu Indebtedness of the Company or invested in
properties or other assets that replace the properties and assets that
were the subject of the Asset Sale and which will be used only in an
Internet Service Business, exceeds a specified amount the Company will be
required to apply such proceeds to the repayment of the Securities and
certain Indebtedness ranking pari passu in right of payment to the
Securities.
In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity
is on or prior to the Redemption Date will be payable to the Holders of
such Securities of record as of the close of business on the relevant
Regular Record Date or Special Record Date referred to on the face hereof.
Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear
interest from and after the Redemption Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities
for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders and certain
amendments which require the consent of all the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Guarantors, if any, and the rights of
the Holders under the Indenture and the Securities and the Guarantees, if
any, at any time by the Company and the Trustee with the consent of the
Holders of at least a majority in aggregate principal amount of the
Securities at the time Outstanding.
36
<PAGE>
The Indenture also contains provisions permitting the Holders of at least
a majority in aggregate principal amount of the Securities (100% of the
Holders in certain circumstances) at the time Outstanding, on behalf of
the Holders of all the Securities, to waive compliance by the Company and
the Guarantors, if any, with certain provisions of the Indenture and the
Securities and the Guarantees, if any, and certain past Defaults under the
Indenture and the Securities and the Guarantees, if any, and their
consequences. Any such consent or waiver by or on behalf of the Holder of
this Security shall be conclusive and binding upon such Holder and upon
all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor, if any, or any other obligor on the Securities (in
the event such Guarantor or such other obligor is obligated to make
payments in respect of the Securities), which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on,
this Security at the times, place, and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of
Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney
duly authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
Certificated securities shall be transferred to all beneficial
holders in exchange for their beneficial interests in the Rule 144A Global
Securities or the Regulation S Global Securities if (x) the Company
notifies the Trustee in writing that the Depositary is unwilling or unable
to continue as depository for such Global Security and a successor
depository is not appointed by the Company within 90 days or (y) the
Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of certificated Series A Securities. Upon any such
issuance, the Trustee is required to register such certificated Series A
Securities in the name of, and cause the same to be delivered to, such
Person or Persons (or the nominee of any thereof). All such certificated
Series A Securities would be required to include the Private Placement
Legend.
Series A Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Series A Securities are
exchangeable for a like aggregate principal amount of Securities of a
differing authorized denomination, as requested by the Holder surrendering
the same.
At any time when the Company is not subject to Sections 13 or 15(d)
of the Exchange Act, upon the written request of a Holder of a Series A
Security, the Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto) to such
37
<PAGE>
Holder or to a prospective purchaser of such Series A Security who such
Holder informs the Company is reasonably believed to be a "Qualified
Institutional Buyer" within the meaning of Rule 144A under the Securities
Act, as the case may be, in order to permit compliance by such Holder with
Rule 144A under the Securities Act.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the
Company, any Guarantor or the Trustee may treat the Person in whose name
this Security is registered as the owner hereof for all purposes, whether
or not this Security is overdue, and neither the Company, any Guarantor,
the Trustee nor any such agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them
in the Indenture.
[The Transferee Certificate, in the form of Appendix I hereto, will
be attached to the Series A Security.]
(b) The form of the reverse of the Series B Securities shall be
substantially as follows:
Bell Technology Group Ltd.
13% Senior Note due 2005, Series B
This Security is one of a duly authorized issue of Securities of the
Company designated as its 13% Senior Notes due 2005, Series B (herein
called the "Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to
$160,000,000, issued under and subject to the terms of an indenture (the
"Indenture") dated as of April 30, 1998, between the Company and Marine
Midland Bank, as trustee (the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Guarantors, if any, the Trustee
and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Indenture contains provisions for defeasance at any time of (a)
the entire Indebtedness on the Securities and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance with certain conditions set forth therein.
38
<PAGE>
The Securities are subject to redemption at any time on or after May
1, 2001, at the option of the Company, in whole or in part, on not less
than 30 nor more than 60 days' prior notice, in amounts of $1,000 or an
integral multiple thereof, at the following redemption prices (expressed
as percentages of the principal amount), if redeemed during the 12-month
period beginning on May 1, of the years indicated below:
Redemption
Year Price
---- -----
2001............................................... 106.500%
2002............................................... 104.333%
2003............................................... 102.166%
and thereafter at 100% of the principal amount, in each case, together
with accrued and unpaid interest, if any, to the Redemption Date (subject
to the rights of Holders of record on relevant record dates to receive
interest due on an Interest Payment Date).
In addition, at any time on or prior to May 1, 2000, the Company
may, at its option, use the net proceeds of one or more Public Equity
Offerings or the sale of Common Stock (other than Disqualified Stock) of
the Company to a Strategic Investor in a single transaction or in a series
of related transactions, to redeem up to an aggregate of 35% of the
aggregate principal amount of Securities originally issued under the
Indenture at a redemption price equal to 113% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Redemption Date; provided that at least 65% aggregate principal amount of
the initially issued aggregate principal amount of Securities remains
outstanding immediately after the occurrence of such redemption. In order
to effect the foregoing redemption, the Company must mail a notice of
redemption no later than 45 days after the closing of the related Public
Equity Offering or sale of Common Stock to a Strategic Investor and must
consummate such redemption within 60 days of the closing of the Public
Equity Offering or sale of Common Stock to a Strategic Investor.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities or portions thereof to be redeemed pro rata,
by lot or by any other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may require
the Company to purchase such Holder's Securities in whole or in part in
integral multiples of $1,000, at a purchase price in cash in an amount
equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, pursuant to Change of Control
Offer and in accordance with the procedures set forth in the Indenture.
Under certain circumstances, in the event the Net Cash Proceeds
received by the Company from any Asset Sale, which proceeds are not used
to permanently repay Pari Passu Indebtedness of the Company or invested in
properties or other assets that replace the properties and assets that
were the subject of the Asset Sale and which will be used only in an
Internet Service Business, exceeds a specified amount, the Company will be
required to apply such proceeds to the repayment of the Securities and
certain Indebtedness ranking pari passu in right of payment to the
Securities.
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In the case of any redemption or repurchase of Securities in
accordance with the Indenture, interest installments whose Stated Maturity
is on or prior to the Redemption Date will be payable to the Holders of
such Securities of record as of the close of business on the relevant
Regular Record Date or Special Record Date referred to on the face hereof.
Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear
interest from and after the Redemption Date.
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities
for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal
amount of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain
amendments permitted without the consent of any Holders and certain
amendments which required the consent of all of the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Guarantors, if any, and the rights of
the Holders under the Indenture and the Securities and the Guarantees, if
any, at any time by the Company and the Trustee with the consent of the
Holders of at least a majority in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of at least a majority in aggregate principal
amount of the Securities (100% of the Holders in certain circumstances) at
the time Outstanding, on behalf of the Holders of all the Securities, to
waive compliance by the Company and the Guarantors, if any, with certain
provisions of the Indenture and the Securities and the Guarantees, if any,
and certain past Defaults under the Indenture and the Securities and the
Guarantees, if any, and their consequences. Any such consent or waiver by
or on behalf of the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent
or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, any Guarantor or any other obligor on the Securities (in the
event such Guarantor or such other obligor is obligated to make payments
in respect of the Securities), which is absolute and unconditional, to pay
the principal of, premium, if any, and interest on, this Security at the
times, place, and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of
Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney
duly authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same
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aggregate principal amount, will be issued to the designated transferee or
transferees.
Certificated securities shall be transferred to all beneficial
holders in exchange for their beneficial interests in the Rule 144A Global
Securities or the Regulation S Global Securities if (x) the Company
notifies the Trustee in writing that the Depositary is unwilling or unable
to continue as depository for such Global Security and a successor
depository is not appointed by the Company within 90 days or (y) the
Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of certificated Series B Securities. Upon any such
issuance, the Trustee is required to register such certificated Series B
Securities in the name of, and cause the same to be delivered to, such
Person or Persons (or the nominee of any thereof).
Series B Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Series B Securities are
exchangeable for a like aggregate principal amount of Securities of a
differing authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, any Guarantor, the Trustee and any agent of the
Company, any Guarantor or the Trustee may treat the Person in whose name
this Security is registered as the owner hereof for all purposes, whether
or not this Security is overdue, and neither the Company, any Guarantor,
the Trustee nor any such agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them
in the Indenture.
[The Transferee Certificate, in the form of Appendix II hereto, will
be attached to the Series B Security.]
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to $160,000,000 in principal
amount of Securities, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
pursuant to Section 303, 304, 305, 306, 307, 308, 906, 1012, 1014 or 1108.
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The Securities shall be known and designated as the "13% Senior Notes due
2005" of the Company. The Stated Maturity of the Securities shall be May 1,
2005, and the Securities shall each bear interest at the rate of 13% per annum,
as such interest rate may be adjusted as set forth in the Securities, from the
date of issuance, or from the most recent Interest Payment Date to which
interest has been paid, payable semiannually on May 1 and November 1, in each
year, commencing November 1, 1998, until the principal thereof is paid or duly
provided for. Interest on any overdue principal, interest (to the extent lawful)
or premium, if any, shall be payable on demand.
Payment of the principal of, premium, if any, and interest on, the
Securities and exchange or registration of transfer of the Securities will be
made at the office or agency of the Company in The City of New York maintained
for such purposes (which initially will be a corporate trust office of the
Trustee located at 140 Broadway, New York, New York 10005), or at such other
office or agency as may be maintained for such purpose, or, at the option of the
Company, payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Security Register,
and provided, that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest on all Global Securities
and all other Securities the Holders of which shall have provided wire transfer
instructions to the Trustee or the Paying Agent prior to the related record
date. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
For all purposes hereunder, the Series A Securities and the Series B
Securities will be treated as one class and are together referred to as the
"Securities." The Series A Securities rank pari passu in right of payment with
the Series B Securities.
The Securities shall be subject to repurchase by the Company pursuant to
an Offer as provided in Section 1012.
Holders shall have the right to require the Company to purchase their
Securities, in whole or in part, in the event of a Change of Control pursuant to
Section 1014.
The Securities shall be redeemable as provided in Article Eleven and in
the Securities.
At the election of the Company, the entire Indebtedness on the Securities
or certain of the Company's obligations and covenants and certain Events of
Default thereunder may be defeased as provided in Article Four.
Section 302. Denominations.
The Securities shall be issuable only in fully registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by one of its
President, its Chief Executive Officer, its Chief Financial Officer or one of
its Vice Presidents under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signatures of any of these
officers on the Securities may be manual or facsimile.
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Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee (with or without Guarantees endorsed thereon) for authentication,
together with a Company Order for the authentication and delivery of such
Securities; and the Trustee in accordance with such Company Order shall
authenticate and make available for delivery such Securities as provided in this
Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security or Guarantee endorsed thereon shall be entitled to any benefit
under this Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication substantially in the
form provided for herein duly executed by the Trustee by manual signature of an
authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
In case the Company or any Guarantor, pursuant to Article Eight, shall, in
a single transaction or through a series of related transactions, be
consolidated or merged with or into any other Person or shall sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets to any Person, and the successor Person resulting from
such consolidation or surviving such merger, or into which the Company or such
Guarantor shall have been merged, or the successor Person which shall have
participated in the sale, assignment, conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Securities authenticated
or delivered prior to such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition may, from time to time, at the request of
the successor Person, be exchanged for other Securities executed in the name of
the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section 303 in exchange or substitution for or
upon registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities authenticated
and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities on behalf of the Trustee. Unless limited by the terms
of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Security Registrar or Paying
Agent to deal with the Company and its Affiliates.
If an officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates such Security such Security shall be valid
nevertheless.
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Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and make available for
delivery, temporary Securities which are printed, lithographed, typewritten or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 1002,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee (in accordance
with a Company Order for the authentication of such Securities) shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause the Trustee to keep, so long as it is the Security
Registrar, at the Corporate Trust Office of the Trustee, or such other office as
the Trustee may designate, a register (the register maintained in such office or
in any other office or agency designated pursuant to Section 1002 being herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as the Security Registrar may prescribe, the Company
shall provide for the registration of Securities and of transfers of Securities.
The Trustee shall initially be the "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided. The
Company may change the Security Registrar or appoint one or more co-Security
Registrars without notice.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated pursuant to Section 1002, the Company shall
execute, and the Trustee shall (in accordance with a Company Order for the
authentication of such Securities) authenticate and make available for delivery,
in the name of the designated transferee or transferees, one or more new
Securities of the same series of any authorized denomination or denominations,
of a like aggregate principal amount.
Furthermore, any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by the
Holder of such Global Security (or its agent), and that ownership of a
beneficial interest in a Security shall be required to be reflected in a book
entry.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall (in accordance with a Company Order
for the authentication of such Securities) authenticate and make available for
delivery, Securities of the same series which the Holder making the exchange is
entitled to receive; provided that no exchange of Series A Securities for Series
B Securities shall occur until a Registration Statement shall have been declared
effective by the Commission pursuant to the terms of the Registration Rights
Agreement and otherwise in
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accordance with the provisions thereof.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer, or
for exchange, repurchase or redemption, shall (if so required by the Company or
the Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer, exchange or redemption of Securities, except for any tax or other
governmental charge that may be imposed in connection therewith, other than
exchanges pursuant to Sections 303, 304, 305, 308, 906, 1012, 1015 or 1108 not
involving any transfer.
Neither the Company nor the Trustee shall be required (a) to issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business 15 days before the mailing of a notice of redemption of
the Securities selected for redemption under Section 1104 and ending at the
close of business on the day of such mailing or (b) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of Securities being redeemed in part.
Every Security shall be subject to the restrictions on transfer provided
in the legend required to be set forth on the face of each Security pursuant to
Section 202, and the restrictions set forth in this Article Three, and the
Holder of each Security, by such Holder's acceptance thereof (or interest
therein), agrees to be bound by such restrictions on transfer.
Except as provided in the preceding paragraph, any Security authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, any Global Security, whether pursuant to this Section 305, Section 304, 308,
906 or 1108 or otherwise, shall also be a Global Security and bear the legend
specified in Section 202.
Section 306. Book Entry Provisions for Global Securities.
(a) Each Global Security initially shall (i) be registered in the
name of the nominee of the Depositary, (ii) be deposited with, or on
behalf of, the Depositary and (iii) bear legends as set forth in Section
202. Members of, or participants in, the Depositary ("Participants") shall
have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary, or the Trustee as its custodian,
or under such Global Security, and the Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by
the Depositary or shall impair, as between the Depositary and its
Participants, the operation of customary practices governing the exercise
of the rights of a beneficial holder of any Security.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may
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be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security
or a nominee thereof unless (i) the Company notifies the Trustee in
writing that the Depositary is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be a clearing agency
registered as such under the Exchange Act, and in either case the Company
fails to appoint a successor Depositary within 90 days thereof or (ii) the
Company, at its option, executes and delivers to the Trustee a Company
Order stating that it elects to cause the issuance of the Securities in
certificated form and that all Global Securities shall be exchanged in
whole for Securities that are not Global Securities (in which case such
exchange shall be effected by the Trustee).
(c) If any Global Security is to be exchanged for other Securities
or canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for
exchange or cancellation as provided in this Article Three. If any Global
Security is to be exchanged for other Securities or canceled in part, or
if another Security is to be exchanged in whole or in part for a
beneficial interest in any Global Security, then either (i) such Global
Security shall be so surrendered for exchange or cancellation as provided
in this Article Three or (ii) the principal amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or canceled, or equal to the principal amount of such other
Security to be so exchanged for a beneficial interest therein, as the case
may be, by means of an appropriate adjustment made on the records of the
Trustee, as Security Registrar, whereupon the Trustee, in accordance with
the Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any
such surrender or adjustment of a Global Security, the Trustee shall,
subject to this Section 306(c) and as otherwise provided in this Article
Three, authenticate and deliver any Securities issuable in exchange for
such Global Security (or any portion thereof) to or upon the order of, and
registered in such names as may be directed by, the Depositary or its
authorized representative. Upon the request of the Trustee in connection
with the occurrence of any of the events specified in the preceding
paragraph, the Company shall promptly make available to the Trustee a
reasonable supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to rely upon any order,
direction or request of the Depositary or its authorized representative
which is given or made pursuant to this Article Three if such order,
direction or request is given or made in accordance with the Applicable
Procedures.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Article Three or otherwise,
shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a
Person other than the Depositary for such Global Security or a nominee
thereof.
(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes
under this Indenture and the Securities, and owners of beneficial
interests in a Global Security shall hold such interests pursuant to the
Applicable Procedures. Accordingly, any such owner's beneficial interest
in a Global Security will be shown only on, and the transfer of such
interest shall be effected only through, records maintained by the
Depositary or its nominee or its Participants.
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Section 307. Special Transfer and Exchange Provisions.
(a) Certain Transfers and Exchanges. Transfers and exchanges of Securities
and beneficial interests in a Global Security of the kinds specified in this
Section 307 shall be made only in accordance with this Section 307.
(i) Rule 144A Global Security to Regulation S Global Security.
If the owner of a beneficial interest in the Rule 144A
Global Security wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial
interest in the Regulation S Global Security, such transfer may be
effected only in accordance with the provisions of this paragraph
and paragraph (b)(iv) below and subject to the Applicable
Procedures. Upon receipt by the Trustee, as Security Registrar, of
(a) an order given by the Depositary or its authorized
representative directing that a beneficial interest in the
Regulation S Global Security in a specified principal amount be
credited to a specified Participant's account and that a beneficial
interest in the Rule 144A Global Security in an equal principal
amount be debited from another specified Participant's account and
(b) a Regulation S Certificate in the form of Exhibit A hereto,
satisfactory to the Trustee and duly executed by the owner of such
beneficial interest in the Rule 144A Global Security or his attorney
duly authorized in writing, then the Trustee, as Security Registrar
but subject to paragraph (b)(iv) below, shall reduce the principal
amount of the Rule 144A Global Security and increase the principal
amount of the Regulation S Global Security by such specified
principal amount as provided in Section 306(c).
(ii) Regulation S Global Security to Rule 144A Global
Security.
If the owner of a beneficial interest in the Regulation
S Global Security wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial
interest in the Rule 144A Global Security, such transfer may be
effected only in accordance with this paragraph (ii) and subject to
the Applicable Procedures. Upon receipt by the Trustee, as Security
Registrar, of (a) an order given by the Depositary or its authorized
representative directing that a beneficial interest in the Rule 144A
Global Security in a specified principal amount be credited to a
specified Participant's account and that a beneficial interest in
the Regulation S Global Security in an equal principal amount be
debited from another specified Participant's account and (b) if such
transfer is to occur during the applicable Distribution Compliance
Period, a Restricted Securities Certificate in the form of Exhibit B
hereto, satisfactory to the Trustee and duly executed by the owner
of such beneficial interest in the Regulation S Global Security or
his attorney duly authorized in writing, then the Trustee, as
Security Registrar, shall reduce the principal amount of the
Regulation S Global Security and increase the principal amount of
the Rule 144A Global Security by such specified principal amount as
provided in Section 306(c).
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(iii) Exchanges between Global Security and Non-Global
Security.
A beneficial interest in a Global Security may be
exchanged for a Security that is not a Global Security as provided
in Section 307(b), provided that, if such interest is a beneficial
interest in the Rule 144A Global Security, or if such interest is a
beneficial interest in the Regulation S Global Security and such
exchange is to occur during the applicable Distribution Compliance
Period, then such interest shall bear the Private Placement Legend
(subject in each case to Section 307(b)).
(b) Private Placement Legends.
Rule 144A Securities and their Successor Securities and Regulation S
Securities and their Successor Securities shall bear a Private Placement
Legend, subject to the following:
(i) subject to the following clauses of this Section 307(b),
a Security or any portion thereof which is exchanged, upon transfer
or otherwise, for a Global Security or any portion thereof shall
bear the Private Placement Legend borne by such Global Security
while represented thereby;
(ii) subject to the following clauses of this Section 307(b),
a new Security which is not a Global Security and is issued in
exchange for another Security (including a Global Security) or any
portion thereof, upon transfer or otherwise, shall bear the Private
Placement Legend borne by such other Security;
(iii) Series B Securities, and all other Securities sold or
otherwise disposed of pursuant to an effective registration
statement under the Securities Act, together with their respective
Successor Securities, shall not bear a Private Placement Legend;
(iv) at any time after a Security may be freely transferred
without registration under the Securities Act or without being
subject to transfer restrictions pursuant to the Securities Act, a
new Security which does not bear a Private Placement Legend may be
issued in exchange for or in lieu of a Security (other than a Global
Security) or any portion thereof which bears such a legend if the
Trustee has received an Unrestricted Securities Certificate
substantially in the form of Exhibit C hereto, satisfactory to the
Trustee and duly executed by the Holder of such legended Security or
his attorney duly authorized in writing, and after such date and
receipt of such certificate, the Trustee shall authenticate and
deliver such a new Security in exchange for or in lieu of such other
Security as provided in this Article Three;
(v) a new Security which does not bear a Private Placement
Legend may be issued in exchange for or in lieu of a Security (other
than a Global Security) or any portion thereof which bears such a
legend if, in the Company's judgment, placing such a legend upon
such new Security is not necessary to ensure compliance with the
registration requirements of the Securities Act, and the Trustee, at
the direction of the Company, shall authenticate and deliver such a
new Security as provided in this Article Three; and
(vi) notwithstanding the foregoing provisions of this Section
307(b), a
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Successor Security of a Security that does not bear a particular
form of Private Placement Legend shall not bear such form of legend
unless the Company has reasonable cause to believe that such
Successor Security is a "restricted security" within the meaning of
Rule 144, in which case the Trustee, at the direction of the
Company, shall authenticate and deliver a new Security bearing a
Private Placement Legend in exchange for such Successor Security as
provided in this Article Three.
By its acceptance of any Security bearing the Private Placement
Legend, each Holder of such a Security acknowledges the restrictions on
transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Security Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 306 or this
Section 307. The Company shall have the right to inspect and make copies
of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the
Security Registrar.
In the event that any amendment to Regulation S becomes effective
during the term of this Indenture which alters the holding period
applicable to the Regulation S Global Securities, all reference in this
Indenture to a holding period for Non-U.S. Persons will be deemed to
include such amendment.
Section 308. Mutilated, Destroyed, Lost and Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee, or (b)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company, any Guarantor or the Trustee, such security or indemnity, in each case,
as may be required by them to save each of them harmless, then, in the absence
of notice to the Company, any Guarantor or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute and upon a
Company Request the Trustee shall authenticate and make available for delivery,
in exchange for any such mutilated Security or in lieu of any such destroyed,
lost or stolen Security, a replacement Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a replacement Security, pay such Security.
Upon the issuance of any replacement Securities under this Section,
the Company may require the payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental charges that may
be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and any Guarantor, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 309. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on the Stated Maturity of such interest shall be paid to the
Person in whose name the Security (or any Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest payment.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on the Stated Maturity of such interest, and interest
on such defaulted interest at the then applicable interest rate borne by the
Securities, to the extent lawful (such defaulted interest and interest thereon
herein collectively called "Defaulted Interest"), shall forthwith cease to be
payable to the Holder on the Regular Record Date; and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in
Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or any relevant Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security and
the date (not less than 30 days after such notice) of the proposed payment
(the "Special Payment Date"), and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
Special Payment Date, such amount when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as provided
in this paragraph (a). Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the Special
Payment Date and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify the
Company in writing of such Special Record Date. In the name and at the
expense of the Company, the Trustee shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder at its address as
it appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date and Special Payment Date therefor
having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities are registered on such Special
Record Date and shall no longer be payable pursuant to the following
paragraph (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by this Indenture not inconsistent with the
requirements of such exchange, if, after written notice given by the
Company to the Trustee of the proposed payment pursuant to this
Subsection, such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 309, each
Security delivered under
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this Indenture upon registration of transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 310. CUSIP, ISIN and CINS Numbers.
The Company in issuing the Securities may use "CUSIP", "ISIN" and
"CINS" numbers (if then generally in use), and the Company, or the Trustee on
behalf of the Company, shall use CUSIP, ISIN or CINS numbers in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
such notice shall state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Securities; and provided further, however,
that failure to use CUSIP, ISIN or CINS numbers in any notice of redemption or
exchange shall not affect the validity or sufficiency of such notice.
Section 311. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, any Guarantor, the Trustee and any agent of the Company, any
Guarantor or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 309) interest on, such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and neither the Company, any Guarantor, the Trustee nor any agent of
the Company, any Guarantor or the Trustee shall be affected by notice to the
contrary.
Section 312. Cancellation.
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already canceled, shall be promptly canceled by it. The Company and any
Guarantor may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company or such
Guarantor may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 312, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee shall be returned to the Company. The
Trustee shall provide the Company a list of all Securities that have been
canceled from time to time as requested by the Company.
Section 313. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time,
with respect to the
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Securities, elect to have either Section 402 or Section 403 be applied to all of
the Outstanding Securities (the "Defeased Securities"), upon compliance with the
conditions set forth below in this Article Four.
Section 402. Defeasance and Discharge.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company, each Guarantor and any other
obligor upon the Securities, if any, shall be deemed to have been discharged
from its obligations with respect to the Defeased Securities on the date the
conditions set forth in Section 404 below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company, each
Guarantor and any other obligor upon the Securities shall be deemed to have paid
and discharged the entire Indebtedness represented by the Defeased Securities,
which shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 405 and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Securities and
this Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company and upon Company Request, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of Defeased Securities to receive payments in respect of the principal
of, premium, if any, and interest on, such Securities, when such payments are
due, (b) the Company's obligations with respect to such Defeased Securities
under Sections 304, 305, 308, 1002 and 1003, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder, including, without limitation,
the Trustee's rights under Section 607, and (d) this Article Four. Subject to
compliance with this Article Four, the Company may exercise its option under
this Section 402 notwithstanding the prior exercise of its option under Section
403 with respect to the Securities.
Section 403. Covenant Defeasance.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company and each Guarantor shall be released
from its obligations under any covenant or provision contained or referred to in
Sections 1005 through 1022, inclusive, and the provisions of clauses (iii) and
(v) of Section 801(a) with respect to the Defeased Securities on and after the
date the conditions set forth in Section 404 below are satisfied (hereinafter,
"covenant defeasance"), and the Defeased Securities shall thereafter be deemed
to be not "Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Defeased Securities, the Company and each
Guarantor may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such Section, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
by reason of any reference in any such Section to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 501(c) but, except as specified above, the
remainder of this Indenture and such Defeased Securities shall be unaffected
thereby.
Section 404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 402 or Section 403 to the Defeased Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically
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pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (1) cash in United States dollars, (2) U.S.
Government Obligations, or (3) a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants or a nationally recognized investment
banking firm selected by the Company expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee to pay and discharge, the principal of, premium, if
any, and interest on, the Defeased Securities, on the Stated Maturity of
such principal or interest (or on any date after May 1, 2003 (such date
being referred to as the "Defeasance Redemption Date"), if at or prior to
electing to exercise either its option applicable to Section 402 or its
option applicable to Section 403, the Company has delivered to the Trustee
an irrevocable notice to redeem the Defeased Securities on the Defeasance
Redemption Date). For this purpose, "U.S. Government Obligations" means
securities that are (I) direct obligations of the United States of America
for the timely payment of which its full faith and credit is pledged or
(II) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account
of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt;
(b) In the case of an election under Section 402, the Company shall
have delivered to the Trustee an Opinion of Independent Counsel in the
United States stating that (1) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (2) since the
date hereof, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Independent Counsel in the United States acceptable to the Trustee shall
confirm that, the Holders of the Outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such defeasance had not occurred;
(c) In the case of an election under Section 403, the Company shall
have delivered to the Trustee an Opinion of Independent Counsel in the
United States acceptable to the Trustee to the effect that the Holders of
the Outstanding Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred;
(d) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Section 501(h) or (i)
is concerned, at any time during the period ending on the 91st day after
the date of deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(e) Such defeasance shall not cause the Trustee for the Securities
to have a conflicting interest for purposes of the Trust Indenture Act
with respect to any other securities of
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the Company or any Guarantor;
(f) Such defeasance shall not result in a breach or violation of, or
constitute a Default under, this Indenture or any other material agreement
or instrument to which the Company, any Guarantor or any Subsidiary is a
party or by which it is bound;
(g) Such defeasance shall not result in the trust arising from such
deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder;
(h) The Company shall have delivered to the Trustee an Opinion of
Independent Counsel in the United States acceptable to the Trustee to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(i) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of the Securities or any Guarantee over
the other creditors of the Company or any Guarantor with the intent of
defeating, hindering, delaying or defrauding creditors of the Company, any
Guarantor or others;
(j) No event or condition shall exist that would prevent the Company
from making payments of the principal of, premium, if any, and interest on
the Securities on the date of such deposit or at any time ending on the
91st day after the date of such deposit; and
(k) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel acceptable to the
Trustee, each stating that all conditions precedent provided for relating
to either the defeasance under Section 402 or under Section 403 (as the
case may be) have been
complied with.
Opinions of Counsel or Opinions of Independent Counsel required to
be delivered under this Section shall be in form and substance reasonably
satisfactory to the Trustee and may have qualifications customary for opinions
of the type required, and counsel delivering such opinions may rely on
certificates of the Company or government or other officials customary for
opinions of the type required, which certificates shall be limited as to matters
of fact, including that various financial covenants have been complied with.
Section 405. Deposited Money and U.S. Government Obligations to be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
United States dollars and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 404 in respect of the
Defeased Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (excluding the Company or
any of its Affiliates acting as Paying Agent), as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds
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except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
imposed, assessed or for the account of the Holders of the Defeased Securities.
Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect such defeasance.
Section 406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or U.S. Government Obligations in accordance with Section 402 or 403, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Securities and any
Guarantor's obligations under any Guarantee shall be revived and reinstated,
with present and prospective effect, as though no deposit had occurred pursuant
to Section 402 or 403, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such United States dollars or U.S.
Government Obligations in accordance with Section 402 or 403, as the case may
be; provided, however, that if the Company makes any payment to the Trustee or
Paying Agent of principal of, premium, if any, or interest on any Security
following the reinstatement of its obligations, the Trustee or Paying Agent
shall promptly pay any such amount to the Holders of the Securities and the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the United States dollars and U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) there shall be a default in the payment of any interest on any
Security when it becomes due and payable, and such default shall continue
for a period of 30 days (provided that such 30 day grace period shall be
inapplicable for the first six interest payments due on the Securities);
(b) there shall be a default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity (upon acceleration,
optional or mandatory redemption, required
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repurchase or otherwise);
(c) (i) there shall be a default in the performance, or breach, of
any covenant or agreement of the Company or any Guarantor under this
Indenture, the Escrow Agreement, the Registration Rights Agreement or any
Guarantee (other than a default in the performance, or breach, of a
covenant or agreement which is specifically dealt with in clause (a), (b)
or in clause (ii), (iii) or (iv) of this clause (c)) and such default or
breach shall continue for a period of 30 days after written notice has
been given, by certified mail, (x) to the Company by the Trustee or (y) to
the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the outstanding Securities; (ii) there shall be a
default in the performance or breach of the provisions of Article Eight;
(iii) the Company shall have failed to make or consummate an Offer in
accordance with the provisions of Section 1012; or (iv) the Company shall
have failed to make or consummate a Change of Control Offer in accordance
with the provisions of Section 1014;
(d) (i) any default by the Company or any Subsidiary in the payment
of the principal, premium, if any, or interest has occurred under any
agreement, indenture or instrument evidencing Indebtedness when the same
shall become due and payable in full and such default shall have continued
after any applicable grace period and shall not have been cured or waived
and, if not already matured at its final maturity in accordance with its
terms, the holder of such Indebtedness shall have the right to accelerate
such Indebtedness or (ii) any event of default as defined in any
agreement, indenture or instrument of the Company evidencing Indebtedness
shall have occurred and the Indebtedness thereunder, if not already
matured at its final maturity in accordance with its terms, shall have
been accelerated, and in the case of (i) or (ii) above, the principal
amount of such Indebtedness aggregates in excess of $5 million;
(e) any Guarantee shall for any reason cease to be, or shall for any
reason be asserted in writing by any Guarantor or the Company not to be,
in full force and effect and enforceable in accordance with its terms,
except to the extent contemplated by this Indenture and any such
Guarantee;
(f) one or more judgments, orders or decrees for the payment of
money in excess of $10 million, either individually or in the aggregate,
shall be rendered against the Company or any Subsidiary or any of their
respective properties which are not paid or covered by financially sound
third-party insurers, and there shall not be discharged and there shall
have been a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of an appeal or
otherwise, shall not be in effect;
(g) any holder or holders of at least $5 million in aggregate
principal amount of Indebtedness of the Company or any Subsidiary after a
default under such Indebtedness shall notify the Trustee of its
commencement of proceedings to foreclose on any assets of the Company or
any Subsidiary that have been pledged to or for the benefit of such holder
or holders to secure such Indebtedness or shall commence proceedings, or
take any action (including by way of set-off), to retain in satisfaction
of such Indebtedness or to collect on, seize, dispose of or apply in
satisfaction of Indebtedness, assets of the Company or any Subsidiary
(including funds on deposit or held pursuant to lock-box and other similar
arrangements);
(h) there shall have been the entry by a court of competent
jurisdiction of (i) a decree or order for relief in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or (ii) a decree or order adjudging the Company
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or any Subsidiary bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or
any Subsidiary under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or any Subsidiary or of any substantial
part of their respective properties, or ordering the winding up or
liquidation of their respective affairs, and any such decree or order for
relief shall continue to be in effect, or any such other decree or order
shall be unstayed and in effect, for a period of 60 consecutive days; or
(i) (i) the Company or any Subsidiary commences a voluntary case or
proceeding under any applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent, (ii) the Company or
any Subsidiary consents to the entry of a decree or order for relief in
respect of the Company or such Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, (iii) the
Company or any Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (iv)
the Company or any Subsidiary (1) consents to the filing of such petition
or the appointment of, or taking possession by, a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the
Company or such Subsidiary or of any substantial part of the Company's
consolidated properties, (2) makes an assignment for the benefit of
creditors or (3) admits in writing its inability to pay its debts
generally as they become due or (v) the Company, any Guarantor or any
Subsidiary takes any corporate action in furtherance of any such actions
in this paragraph (i); or
(j) the Company challenges the Lien on the Collateral under the
Escrow Agreement prior to such time as the Collateral is to be released to
the Company, or the Collateral becomes subject to any Lien other than the
Lien under the Escrow Agreement.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Sections 501(h) and (i) with respect to the Company) shall occur and be
continuing with respect to this Indenture, the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Securities then Outstanding
may, and the Trustee at the request of such Holders shall, declare all unpaid
principal of, premium, if any, and accrued interest on all Securities to be due
and payable, by a notice in writing to the Company (and to the Trustee if given
by the Holders of the Securities) and upon any such declaration, such principal,
premium, if any, and interest shall become due and payable immediately. If an
Event of Default specified in Section 501(h) or (i) occurs with respect to the
Company and is continuing, then all the Securities shall ipso facto become and
be due and payable immediately in an amount equal to the principal amount of the
Securities, together with accrued and unpaid interest, if any, to the date the
Securities become due and payable, without any declaration or other act on the
part of the Trustee or any Holder. Thereupon, the Trustee may, at its
discretion, proceed to protect and enforce the rights of the Holders of the
Securities by appropriate judicial proceedings.
After a declaration of acceleration with respect to the Securities,
but before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter provided in this Article, the Holders of a
majority in aggregate principal amount of the Securities Outstanding, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
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(i) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel,
(ii) all overdue interest on all Outstanding
Securities,
(iii) the principal of and premium, if any, on any Outstanding
Securities which have become due otherwise than by such declaration
of acceleration and interest thereon at a rate borne by the
Securities, and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities;
and
(b) all Events of Default, other than the non-payment of principal
of the Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513. No
such rescission shall affect any subsequent Default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company and each Guarantor covenant that if
(a) there shall be a default in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) there shall be a default in the payment of the principal of or
premium, if any, on any Security at the Stated Maturity thereof, the
Company and such Guarantor will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal and premium, if any, and
interest, with interest upon the overdue principal and premium, if any,
and, to the extent that payment of such interest shall be legally
enforceable, upon overdue installments of interest, at the rate borne by
the Securities; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due the Trustee
under Section 607.
If the Company or any Guarantor, as the case may be, fails to pay
such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Company or any
Guarantor or any other obligor upon the Securities and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, any Guarantor or any other obligor upon the Securities,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture, the Escrow Agreement or any Guarantee by such
appropriate private or judicial proceedings as the Trustee shall deem most
effectual to protect and enforce such rights, including seeking recourse against
any Guarantor pursuant to
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the terms of any Guarantee, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted
herein or therein, or to enforce any other proper remedy, including, without
limitation, seeking recourse against any Guarantor pursuant to the terms of a
Guarantee, or to enforce any other proper remedy, subject however to Section
512. No recovery of any such judgment upon any property of the Company or any
Guarantor shall affect or impair any rights, powers or remedies of the Trustee
or the Holders.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor,
including any Guarantor, upon the Securities or the property of the Company or
of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the whole amount of principal, and
premium, if any, and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any other amounts due
the Trustee under Section 607) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession of
Securities.
All rights of action and claims under this Indenture, the Securities
or the Guarantees may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
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Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article or the
Escrow Agreement or otherwise on behalf of the Holders or the Trustee pursuant
to this Article or the Escrow Agreement or through any proceeding or any
arrangement or restructuring in anticipation or in lieu of any proceeding
contemplated by this Article or the Escrow Agreement shall be applied, subject
to applicable law, in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium, if any, or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities for principal, premium, if any, and interest, in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal, premium, if any, and
interest; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company, provided that all sums due and owing to
the Holders and the Trustee have been paid in full as required by this
Indenture.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as trustee hereunder;
(c) such Holder or Holders have offered to the Trustee an indemnity
satisfactory to the Trustee against the costs, expenses and liabilities to
be incurred in compliance with such request;
(d) the Trustee for 15 days after its receipt of such notice,
request and offer (and if requested, provision) of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 15-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Security or any Guarantee to affect, disturb or prejudice
the rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Security or any Guarantee, except
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in the manner provided in this Indenture and for the equal and ratable benefit
of all the Holders.
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right based on the terms stated herein, which is
absolute and unconditional, to receive payment of the principal of, premium, if
any, and (subject to Section 309) interest on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption or
repurchase, on the Redemption Date or the repurchase date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Guarantee and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, any Guarantor, any other obligor on the Securities, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 512. Control by Holders.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture (including, without limitation, Section 507), the
Escrow Agreement or any Guarantee, expose the
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Trustee to personal liability, or be unduly prejudicial to Holders not
joining therein; and
(b) subject to the provisions of Section 315 of the Trust Indenture
Act, the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all
Outstanding Securities waive any past Default hereunder and its consequences,
except a Default
(a) in the payment of the principal of, premium, if any,
or interest on any Security, or
(b) in respect of a covenant or a provision hereof which under this
Indenture cannot be modified or amended without the consent of the Holder
of each Security Outstanding affected by such modification or amendment.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on, any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any Guarantor
from paying all or any portion of the principal of, premium, if any, or interest
on the Securities contemplated herein or in the Securities or which may affect
the covenants or the performance of this Indenture; and each of the Company and
the Guarantors (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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Section 516. Remedies Subject to Applicable Law.
All rights, remedies and powers provided by this Article Five may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law in the premises, and all the provisions of this
Indenture are intended to be subject to all applicable mandatory provisions of
law which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Indenture invalid, unenforceable or
not entitled to be recorded, registered or filed under the provisions of any
applicable law.
ARTICLE SIX
THE TRUSTEE
Section 601. Duties of Trustee.
Subject to the provisions of Trust Indenture Act Sections 315(a)
through 315(d):
(a) if an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances
in the conduct of his own affairs;
(b) except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse to
the Trustee; and
(2) in the absence of bad faith or willful misconduct on its
part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, on
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture or the Escrow Agreement;
provided, however, that the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture or the Escrow Agreement;
(c) the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this Subsection (c) does not limit the effect of
Subsection (b) of this Section 601;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith, in accordance with a
direction of the Holders of a majority in principal amount of
Outstanding Securities relating to the time, method and place of
conducting
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any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this
Indenture or the Escrow Agreement;
(d) no provision of this Indenture or the Escrow Agreement shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it;
(e) whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to
Subsections (a), (b), (c), (d) and (f) of this Section 601; and
(f) the Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from
other assets except to the extent required by law.
Section 602. Notice of Defaults.
Within 30 days after a Responsible Officer of the Trustee receives
notice of the occurrence of any Default, the Trustee shall transmit by mail to
all Holders and any other Persons entitled to receive reports pursuant to
Section 313(c) of the Trust Indenture Act, as their names and addresses appear
in the Security Register, notice of such Default hereunder known to the Trustee,
unless such Default shall have been cured or waived; provided, however, that,
except in the case of a Default in the payment of the principal of, premium, if
any, or interest on any Security or a Default in complying with any of the
provisions of the Escrow Agreement, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601 hereof and Trust Indenture
Act Sections 315(a) through 315(d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon receipt by it of any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of Indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon
in accordance with such advice or Opinion of Counsel;
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(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or the Escrow Agreement at
the request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other
than any liabilities arising out of the negligence, bad faith or willful
misconduct of the Trustee;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other
paper or document unless requested in writing to do so by the Holders of
not less than a majority in aggregate principal amount of the Securities
then Outstanding; provided that, if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such investigation so
requested by the Holders of not less than 25% in aggregate principal
amount of the Securities Outstanding shall be paid by the Company or, if
paid by the Trustee or any predecessor Trustee, shall be repaid by the
Company upon demand; provided, further, the Trustee in its discretion may
make such further inquiry or investigation into such facts or matters as
it may deem fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
provided, further, that no permissive power, right or remedy conferred
upon the Trustee under this Indenture shall be construed to impose a duty
to exercise such power, right or remedy;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) the Trustee shall not be charged with knowledge of any Default
or Event of Default, of the identity of any Restricted Subsidiary or of
the existence of any Change of Control or Asset Sale unless either (i) a
Responsible Officer shall have actual knowledge thereof, or (ii) the
Trustee shall have received written notice thereof from the Company or any
Holder of the Securities.
Section 604. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture, the Escrow Agreement or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
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Section 605. Trustee and Agents May Hold Securities; Collections;
etc.
The Trustee, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities, with the same rights it would have if it were not the
Trustee, Paying Agent, Security Registrar or such other agent and, subject to
Trust Indenture Act Sections 310 and 311, may otherwise deal with the Company
and receive, collect, hold and retain collections from the Company with the same
rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Except for funds or securities deposited with the
Trustee pursuant to Article Four, the Trustee shall be required to invest all
moneys received by the Trustee, until used or applied as herein provided, in
Cash Equivalents in accordance with the written directions of the Company;
provided, however, that nothing herein shall be deemed to require the Trustee or
any other Person acting as Paying Agent to invest or pay interest on funds held
for the payment of any Securities after the Maturity thereof.
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Section 607. Compensation and Indemnification of Trustee and Its
Prior Claim.
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as the parties
have agreed in accordance with Schedule II attached to the Escrow Agreement for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust) and the Company covenants and agrees to pay or reimburse the Trustee and
each predecessor Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other Persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence, bad faith or
willful misconduct. The Company also covenants and agrees to indemnify the
Trustee and each predecessor Trustee for, and to hold it harmless against, any
claim, loss, liability, tax, assessment or other governmental charge (other than
taxes applicable to the Trustee's compensation hereunder) or expense incurred
without negligence, bad faith or willful misconduct on its part, arising out of
or in connection with the acceptance or administration of this Indenture or the
trusts hereunder and its duties hereunder, including enforcement of this Section
607 and also including any liability which the Trustee may incur as a result of
failure to withhold, pay or report any tax, assessment or other governmental
charge, and the costs and expenses of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligations of the Company under this
Section 607 to compensate and indemnify the Trustee and each predecessor Trustee
and to pay or reimburse the Trustee and each predecessor Trustee for reasonable
expenses, disbursements and advances shall constitute an additional obligation
hereunder and shall survive the satisfaction and discharge of this Indenture and
the resignation or removal of the Trustee and each predecessor Trustee. As
security for the performance of the obligations of the Company under this
Section 607, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities. When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 501(h) or (i) hereof occurs, the expenses and the compensation for
such services (including the fees and expenses of its agents and counsel) are
intended to constitute expenses of administration under any Bankruptcy Law.
Section 608. Conflicting Interests.
The Trustee shall comply with the provisions of Section 310(b) of
the Trust Indenture Act.
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Section 609. Trustee Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a) and which
shall have a combined capital and surplus of at least $100,000,000, to the
extent there is an institution eligible and willing to serve. If the Trustee
does not have a Corporate Trust Office in The City of New York, the Trustee may
appoint an agent in The City of New York reasonably acceptable to the Company to
conduct any activities which the Trustee may be required under this Indenture to
conduct in The City of New York. If such Trustee publishes reports of condition
at least annually, pursuant to law or to the requirements of federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section 609, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
609, the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor
Trustee.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor trustee under Section 611.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice thereof to the Company. Upon
receiving such notice or resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority of the Board
of Directors of the Company, a copy of which shall be delivered to the
resigning Trustee and a copy to the successor trustee. If an instrument of
acceptance by a successor trustee shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may, or any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper, appoint and prescribe a successor
trustee.
(c) The Trustee may be removed at any time for any cause or for no
cause by an Act of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee
and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
Trust Indenture Act Section 310(b) after written request therefor by
the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months,
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a
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bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any
case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has
been a bona fide Holder of a Security for at least six months may,
on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any
cause, the Company, by a Board Resolution, shall promptly appoint a
successor trustee and shall comply with the applicable requirements of
Section 611. If, within 60 days after such resignation, removal or
incapability, or the occurrence of such vacancy, the Company has not
appointed a successor Trustee, a successor trustee shall be appointed by
the Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee.
Such successor trustee so appointed shall forthwith upon its acceptance of
such appointment become the successor trustee and supersede the successor
trustee appointed by the Company. If no successor trustee shall have been
so appointed by the Company or the Holders of the Securities and accepted
appointment in the manner hereinafter provided, the Trustee or the Holder
of any Security who has been a bona fide Holder for at least six months
may, subject to Section 514, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment
of a successor trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor trustee by
mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of Securities as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor
trustee and the address of its Corporate Trust Office or agent hereunder.
Section 611. Acceptance of Appointment by Successor.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor trustee, upon payment of its charges pursuant to Section 607 then
unpaid, such retiring Trustee shall pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
No successor trustee with respect to the Securities shall accept
appointment as provided in this Section 611 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $100,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 609.
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Upon acceptance of appointment by any successor trustee as provided
in this Section 611, the Company shall give notice thereof to the Holders of the
Securities, by mailing such notice to such Holders at their addresses as they
shall appear on the Security Register. If the acceptance of appointment is
substantially contemporaneous with the appointment, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
610. If the Company fails to give such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be given at the expense of the Company.
Section 612. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee (including the trust created by this Indenture), shall
be the successor of the Trustee hereunder, provided that such corporation shall
be eligible under Trust Indenture Act Section 310(a) and this Article Six and
shall have a combined capital and surplus of at least $100,000,000 and have a
Corporate Trust Office or an agent selected in accordance with Section 609,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture; provided
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities in the name of any predecessor Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or other obligor under the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor). A Trustee who has resigned or been
removed shall be subject to Trust Indenture Act Section 311(a) to the extent
indicated therein.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the
Trustee
(a) semiannually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
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(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request,
a list of similar form and content to that in subsection (a) hereof as of
a date not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
Section 702. Disclosure of Names and Addresses of Holders.
Holders may communicate pursuant to Trust Indenture Act Section
312(b) with other Holders with respect to their rights under this Indenture or
the Securities, and the Trustee shall comply with Trust Indenture Act Section
312(b). The Company, the Trustee, the Security Registrar and any other Person
shall have the protection of Trust Indenture Act Section 312(c). Further, every
Holder of Securities, by receiving and holding the same, agrees with the Company
and the Trustee that neither the Company nor the Trustee or any agent of either
of them shall be held accountable by reason of the disclosure of any information
as to the names and addresses of the Holders in accordance with Trust Indenture
Act Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Trust Indenture Act Section 312.
Section 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the
first May 15 after the issuance of Securities, the Trustee, if so required
under the Trust Indenture Act, shall transmit by mail to all Holders, in
the manner and to the extent provided in Trust Indenture Act Section
313(c), a brief report dated as of such May 15 in accordance with and with
respect to the matters required by Trust Indenture Act Section 313(a). The
Trustee shall also transmit by mail to all Holders, in the manner and to
the extent provided in Trust Indenture Act Section 313(c), a brief report
in accordance with and with respect to the matters required by Trust
Indenture Act Section 313(b)(2).
(b) A copy of each report transmitted to Holders pursuant to this
Section 703 shall, at the time of such transmission, be mailed to the
Company and filed with each stock exchange, if any, upon which the
Securities are listed and also with the Commission. The Company will
notify the Trustee promptly if the Securities are listed on any stock
exchange.
Section 704. Reports by Company.
The Company and any Guarantor, as the case may be, shall:
(a) file with the Trustee, within 15 days after the Company or any
Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations prescribe)
which the Company or any Guarantor may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act;
or, if the Company or any Guarantor, as the case may be, is not required
to file information, documents or reports pursuant to either of said
sections, then it shall (i) deliver to the Trustee annual audited
financial statements of the Company and its Subsidiaries,
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prepared on a Consolidated basis in conformity with GAAP, within 120 days
after the end of each fiscal year of the Company, and (ii) file with the
Trustee and, to the extent permitted by law, the Commission, in accordance
with the rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Exchange
Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(b) file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company or any Guarantor, as the case may be, with the conditions
and covenants of this Indenture as are required from time to time by such
rules and regulations (including such information, documents and reports
referred to in Trust Indenture Act Section 314(a)); and
(c) within 15 days after the filing thereof with the Trustee,
transmit by mail to all Holders in the manner and to the extent provided
in Trust Indenture Act Section 313(c), such summaries of any information,
documents and reports required to be filed by the Company or any
Guarantor, as the case may be, pursuant to Section 1020 hereunder and
subsections (a) and (b) of this Section 704 as are required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS
Section 801. Company and Guarantors May Consolidate, etc., Only on
Certain Terms.
(a) The Company will not, in a single transaction or through a
series of related transactions, consolidate with or merge with or into any
other Person or sell, assign, convey, transfer, lease or otherwise dispose
of all or substantially all of its properties and assets to any Person or
group of affiliated Persons, or permit any of its Subsidiaries to enter
into any such transaction or series of related transactions if such
transaction or series of related transactions, in the aggregate, would
result in a sale, assignment, conveyance, transfer, lease or disposition
of all or substantially all of the properties and assets of the Company
and its Subsidiaries on a consolidated basis to any other Person or group
of affiliated Persons, unless at the time and after giving effect thereto:
(i) either (a) the Company will be the continuing corporation
in the case of a consolidation or merger involving the Company or
(b) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person
which acquires by sale, assignment, conveyance, transfer, lease or
disposition all or substantially all of the properties and assets of
the Company and its Subsidiaries on a Consolidated basis (the
"Surviving Entity") will be a corporation duly organized and validly
existing under the laws of the United States of America, any state
thereof or the District of Columbia and such Person expressly
assumes, by a supplemental indenture, in a form reasonably
satisfactory to the Trustee, all the obligations of the Company
under the Securities, this Indenture, the Escrow Agreement and the
Registration Rights
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Agreement, as the case may be, and the Securities, this Indenture,
the Escrow Agreement and the Registration Rights Agreement will
remain in full force and effect as so supplemented;
(ii) immediately before and immediately after giving effect to
such transaction on a pro forma basis (and treating any Indebtedness
not previously an obligation of the Company or any of its
Subsidiaries which becomes the obligation of the Company or any of
its Subsidiaries as a result of such transaction as having been
incurred at the time of such transaction), no Default or Event of
Default will have occurred and be continuing;
(iii) immediately before and immediately after giving effect to
such transaction on a pro forma basis (on the assumption that the
transaction occurred on the first day of the four-quarter period for
which financial statements are available ending immediately prior to
the consummation of such transaction with the appropriate
adjustments with respect to the transaction being included in such
pro forma calculation), the Company (or the Surviving Entity if the
Company is not the continuing obligor hereunder) could incur $1.00
of additional Indebtedness under Section 1008(a);
(iv) at the time of the transaction, each Guarantor, if any,
unless it is the other party to the transactions described above,
will have by supplemental indenture confirmed that its Guarantee
shall apply to such Person's obligations under this Indenture and
under the Securities;
(v) at the time of the transaction if any of the property or
assets of the Company or any of its Subsidiaries would thereupon
become subject to any Lien, the provisions of Section 1011 are
complied with;
(vi) such transaction would not result in the loss, material
impairment or adverse modification or amendment of any authorization
or license of the Company or its Subsidiaries that could have a
material adverse effect on the Company's business, financial
condition or results of operations; and
(vii) at the time of the transaction the Company or the
Surviving Entity will have delivered, or caused to be delivered, to
the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each to
the effect that such consolidation, merger, transfer, sale,
assignment, conveyance, transfer, lease or other transaction and the
supplemental indenture in respect thereof comply with this Indenture
and that all conditions precedent herein provided for relating to
such transaction have been complied with.
(b) Notwithstanding the foregoing, the provisions of Section 801(a)
(iii) shall not apply to (i) a merger or consolidation between the Company
and any of its Subsidiaries or between one or more of its Subsidiaries,
and (ii) a merger or consolidation of the Company into any Person in a
transaction designed solely for the purpose of effecting a change in the
jurisdiction of incorporation of the Company within the United States of
America.
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Section 802. Successor Substituted.
In the event of any transaction (other than a lease) described in
and complying with the conditions listed in Section 801 in which the Company is
not the surviving Person, such surviving Person shall succeed to, and be
substituted for, and may exercise every right and power of, the Company and the
Company shall be discharged from all obligations and covenants under this
Indenture, the Securities, the Escrow Agreement and the Registration Rights
Agreement.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures and Agreements without Consent
of Holders.
Without the consent of any Holders, the Company, the Guarantors, if
any, and any other obligor under the Securities when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto or agreements or other instruments
with respect to any Guarantee, in form and substance satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company or a
Guarantor and the assumption by any such successor of the covenants of the
Company or such Guarantor herein and in the Securities, the Registration
Rights Agreement, the Escrow Agreement and in any Guarantee in accordance
with Article Eight;
(b) to add to the covenants of the Company, any Guarantor or any
other obligor upon the Securities for the benefit of the Holders, or to
surrender any right or power conferred upon the Company or any Guarantor
or any other obligor upon the Securities, as applicable, herein, in the
Securities or in any Guarantee;
(c) to cure any ambiguity, or to correct or supplement any provision
herein or in any supplemental indenture, the Securities or any Guarantee
which may be defective or inconsistent with any other provision herein or
in the Securities or any Guarantee or to make any other provisions with
respect to matters or questions arising under this Indenture, the
Securities or any Guarantee; provided that, in each case, such provisions
shall not adversely affect the interest of the Holders;
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 905 or otherwise;
(e) to add a Guarantor pursuant to the requirements of
Section 1013;
(f) to evidence and provide the acceptance of the appointment of a
successor trustee hereunder; or
(g) to mortgage, pledge, hypothecate or grant a security interest in
favor of the Trustee for the benefit of the Holders as additional security
for the payment and performance of the
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Company's or any Guarantor's Indenture Obligations, in any property, or
assets, including any of which are required to be mortgaged, pledged or
hypothecated, or in which a security interest is required to be granted to
the Trustee pursuant to this Indenture or otherwise.
Section 902. Supplemental Indentures and Agreements with Consent of
Holders.
Except as permitted by Section 901, with the consent of the Holders
of at least a majority in aggregate principal amount of the Outstanding
Securities, by Act of said Holders delivered to the Company, each Guarantor, if
any, and the Trustee, the Company and each Guarantor (if a party thereto) when
authorized by Board Resolutions, and the Trustee may (i) enter into an indenture
or indentures supplemental hereto or agreements or other instruments with
respect to any Guarantee in form and substance satisfactory to the Trustee, for
the purpose of adding any provisions to or amending, modifying or changing in
any manner or eliminating any of the provisions of this Indenture, the
Securities or any Guarantee (including but not limited to, for the purpose of
modifying in any manner the rights of the Holders under this Indenture, the
Securities or any Guarantee) or (ii) waive compliance with any provision in this
Indenture, the Securities or any Guarantee (other than waivers of past Defaults
covered by Section 513 and waivers of covenants which are covered by Section
1021); provided, however, that no such supplemental indenture, agreement or
instrument shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, or change to an earlier date any redemption
date of, or waive a default in the payment of the principal or interest
on, any such Security or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof, or
change the coin or currency in which the principal of any Security or any
premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date);
(b) amend, change or modify the obligation of the Company to make
and consummate an Offer with respect to any Asset Sale or Asset Sales in
accordance with Section 1012 or the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control
in accordance with Section 1014, including, in each case, amending,
changing or modifying any definitions relating thereto;
(c) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver or compliance with certain provisions of this Indenture;
(d) modify any of the provisions of this Section 902 or Section 513
or 1021, except to increase the percentage of such Outstanding Securities
required for any such actions or to provide that certain other provisions
of this Indenture cannot be modified or waived without the consent of the
Holder of each such Security affected thereby;
(e) except as otherwise permitted under Article Eight, consent to
the assignment or transfer by the Company or any Guarantor of any of its
rights and obligations hereunder;
(f) amend or modify any of the provisions of this Indenture in any
manner which subordinates the Securities issued hereunder in right of
payment to any other Indebtedness of the
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Company or which subordinates any Guarantee in right of payment to any
other Indebtedness of the Guarantor issuing such Guarantee; or
(g) modify the provisions of the Escrow Agreement or this Indenture
relating to the Collateral in any manner adverse to the Holders or release
any of the Collateral from the Lien under the Escrow Agreement or permit
any other obligation to be secured by the Collateral.
Upon the written request of the Company and each Guarantor, if any,
accompanied by a copy of Board Resolutions authorizing the execution of any such
supplemental indenture or Guarantee, and upon the filing with the Trustee of
evidence of the consent of Holders as aforesaid, the Trustee shall join with the
Company and each Guarantor in the execution of such supplemental indenture or
Guarantee.
It shall not be necessary for any Act of Holders under this Section
902 to approve the particular form of any proposed supplemental indenture or
Guarantee or agreement or instrument relating to any Guarantee, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures and Agreements.
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Sections 315(a) through 315(d) and Section 603 hereof) shall be
fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate, each complying with Section 103 and stating that the execution of
such supplemental indenture, agreement or instrument is authorized or permitted
by this Indenture. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture, agreement or instrument which affects the
Trustee's own rights, duties or immunities under this Indenture, any Guarantee
or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article Nine
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article Nine may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and each Guarantor and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
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Section 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company, any Guarantor and the
Trustee of any supplemental indenture pursuant to the provisions of Section 902,
the Company shall give notice thereof to the Holders of each Outstanding
Security affected, in the manner provided for in Section 106, setting forth in
general terms the substance of such supplemental indenture. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company shall duly and punctually pay the principal of, premium,
if any, and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company shall maintain an office or agency where Securities may
be represented or surrendered for payment. The Company also will maintain in The
City of New York an office or agency where Securities may be surrendered for
registration of transfer, redemption or exchange and where notices and demands
to or upon the Company in respect of the Securities and this Indenture may be
served. The Corporate Trust Office will be such office or agency of the Company,
unless the Company shall designate and maintain some other office or agency for
one or more of such purposes. The Company will give prompt written notice to the
Trustee of the location and any change in the location of any such offices or
agencies. If at any time the Company shall fail to maintain any such required
offices or agencies or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the office of the Trustee and the Company hereby appoints the Trustee
such agent as its agent to receive all such presentations, surrenders, notices
and demands.
The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes, and may from time
to time rescind such designation. The Company will give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such office or agency.
The Trustee shall initially act as Paying Agent for the Securities.
Section 1003. Money for Security Payments to be Held in Trust.
If the Company or any of its Affiliates shall at any time act as
Paying Agent, it will, on or before each due date of the principal of, premium,
if any, or interest on any of the Securities, segregate and hold in trust for
the benefit of the Holders entitled thereto a sum sufficient to pay the
principal, premium, if any, or interest so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its action or failure so to act.
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If the Company or any of its Affiliates is not acting as Paying
Agent, the Company will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, deposit with a Paying
Agent a sum in same day funds sufficient to pay the principal, premium, if any,
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of such
action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on the Securities in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company or any
Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest on the Securities;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and
disabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
promptly be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), and mail to each such Holder, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such notification,
publication and mailing, any unclaimed balance of such money then remaining will
promptly be repaid to the Company.
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Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect the corporate
existence and related rights and franchises (charter and statutory) of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve any such right or franchise or the corporate existence of
any such Subsidiary if the Board of Directors of the Company shall determine
that the preservation thereof is no longer necessary or desirable in the conduct
of the business of the Company and its Subsidiaries as a whole; provided,
further, however, that the foregoing shall not prohibit a sale, transfer or
conveyance of a Subsidiary or any of the assets of the Company or any Subsidiary
in compliance with the terms of this Indenture.
Section 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, on or before the date the same shall become due and payable, (a) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any of its Subsidiaries shown to be due on any return of the Company or any
of its Subsidiaries or otherwise assessed or upon the income, profits or
property of the Company or any of its Subsidiaries if failure to pay or
discharge the same could reasonably be expected to have a material adverse
effect on the ability of the Company or any Guarantor to perform its obligations
hereunder and (b) all lawful claims for labor, materials and supplies, which, if
unpaid, would by law become a Lien upon the property of the Company or any of
its Subsidiaries, except for any Lien permitted to be incurred under Section
1011, if failure to pay or discharge the same could reasonably be expected to
have a material adverse effect on the ability of the Company or any Guarantor to
perform its obligations hereunder; provided, however, that the Company shall not
be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings properly instituted and
diligently conducted and in respect of which appropriate reserves (in the good
faith judgment of management of the Company) are being maintained in accordance
with GAAP.
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by the Company
or any of its Subsidiaries or used or held for use in the conduct of its
business or the business of any of its Subsidiaries to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the reasonable judgment of the Company may be consistent with sound business
practice and necessary so that the business carried on in connection therewith
may be properly conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the maintenance of any of
such properties if such discontinuance is, in the reasonable judgment of the
Company, desirable in the conduct of its business or the business of any of its
Subsidiaries; provided, further, however, that the foregoing shall not prohibit
a sale, transfer or conveyance of a Subsidiary or any of its properties or
assets in compliance with the terms of this Indenture.
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Section 1007. Maintenance of Insurance.
The Company shall at all times keep all of its and its Subsidiaries'
properties which are of an insurable nature insured with insurers, believed by
the Company in good faith to be financially sound and responsible, against loss
or damage to the extent that property of similar character is usually so insured
by corporations similarly situated and owning like properties in the same
general geographic areas in which the Company and its Subsidiaries operate,
except where the failure to do so could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), earnings,
business affairs or prospects of the Company and its Subsidiaries, taken as a
whole.
Section 1008. Limitation on Indebtedness.
(a) The Company shall not, and shall not cause or permit any
Subsidiary to, directly or indirectly, Incur any Indebtedness (other than
the Securities); provided, however, that the Company may Incur
Indebtedness, and the Company or any Subsidiary may Incur Acquired
Indebtedness, if, at the time of such Incurrence, the Debt to Annualized
Operating Cash Flow Ratio would be less than or equal to 5.5 to 1.0 on or
prior to December 31, 2000, or less than or equal to 5.0 to 1.0 after
December 31, 2000, in each case as determined on a pro forma basis
(including a pro forma application of net proceeds therefrom) as if such
additional Indebtedness had been Incurred at the beginning of the
applicable Measurement Period.
(b) The foregoing limitations of paragraph (a) of this covenant will
not apply to any of the following, each of which shall be given
independent effect:
(i) the Incurrence by the Company or any of its Subsidiaries
of Indebtedness (other than Acquired Indebtedness) consisting of
Capital Lease Obligations, Purchase Money Obligations, mortgage
financings or other obligations incurred for the purpose of
financing all or any part of the purchase price, cost of
construction or improvement of inventory, property, plant or
equipment used or sold in connection with the Internet Service
Business or a credit facility or a master lease arrangement entered
into for the purpose of providing such financing, provided that such
Indebtedness does not exceed the lesser of Fair Market Value or the
purchase price of such inventory, property, plant or equipment at
the time of such Incurrence;
(ii) the Incurrence of Indebtedness of the Company or any of
its Subsidiaries, and any renewals, extensions, substitutions,
refinancings or replacements of such Indebtedness, so long as the
aggregate principal amount of such Indebtedness shall not exceed $35
million outstanding at any one time in the aggregate;
(iii) the Incurrence by the Company of Indebtedness (other than
secured Acquired Indebtedness) in an aggregate principal amount not
to exceed 2.0 times the sum of the Net Cash Proceeds received by the
Company after the date of this Indenture (other than from the
issuance of Disqualified Stock) in connection with any Public Equity
Offerings; provided that such Indebtedness does not mature prior to
the Stated Maturity of the Securities or has an Average Life to
Stated Maturity at least equal to the Securities;
(iv) Indebtedness of the Company or any Subsidiary Incurred in
the ordinary course of business (a) pursuant to Interest Rate
Agreements designed to protect
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the Company or any Subsidiary against fluctuations in interest rates
in respect of Indebtedness of the Company or any Subsidiary as long
as the notional principal amount of such Interest Rate Agreements do
not exceed the aggregate principal amount of such Indebtedness then
outstanding, (b) under any Currency Hedging Arrangements designed to
protect the Company or any Subsidiary against fluctuations in the
value of any currency or (c) under any Commodity Price Protection
Agreements designed to protect the Company or any Subsidiary against
fluctuations in the price of any commodity;
(v) the Incurrence by the Company or any of its Subsidiaries
of Indebtedness in respect of bid, performance or advance payment
bonds and appeal or surety bonds;
(vi) Indebtedness existing on the date of this Indenture;
(vii) the Incurrence of (a) Indebtedness of any Subsidiary
owed to and held by the Company or another Subsidiary and (b)
Indebtedness of the Company owed to and held by any Subsidiary; and
(viii) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "refinancing") of any
Indebtedness described in clauses (i), (ii), (iii), (vi) and (vii)
of this Section 1008(b), including any successive refinancings so
long as the borrower under such refinancing is the Company or, if
not the Company, the same as the borrower of the Indebtedness being
refinanced and the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing plus the
lesser of (I) the stated amount of any premium or other payment
required to be paid in connection with such a refinancing pursuant
to the terms of the Indebtedness being refinanced or (II) the amount
of premium or other payment actually paid at such time to refinance
the Indebtedness, plus, in either case, the amount of expenses of
the Company incurred in connection with such refinancing and, in the
case of any refinancing of Indebtedness that is Subordinated
Indebtedness, such new Indebtedness is made subordinated to the
Securities at least to the same extent as the Indebtedness being
refinanced and such refinancing does not reduce the Average Life to
Stated Maturity or the Stated Maturity of such Subordinated
Indebtedness.
(c) For purposes of determining any particular amount of
Indebtedness under this covenant, Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included;
provided, however, that the foregoing shall not in any way be deemed to
limit the provisions of Section 1013.
(d) For purposes of determining compliance with this Section 1008,
in the event that an item of Indebtedness may be Incurred pursuant to
paragraph (a) of this Section 1008 or by meeting the criteria of one or
more of the types of Indebtedness described in paragraph (b) of this
Section 1008 (or the definitions of the terms used therein), the Company,
in its sole discretion, (i) may classify such item of Indebtedness under
and comply with either of such paragraphs (or any of such definitions), as
applicable, (ii) may classify and divide such item of Indebtedness into
more than one of such paragraphs (or definitions), as applicable, and
(iii) may elect to comply with such paragraphs (or definitions), as
applicable, in any order.
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Section 1009. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any Subsidiary to,
directly or indirectly:
(i) declare or pay any dividend on, or make any distribution
(including, without limitation, any liquidation preference) on any
shares of the Company's Capital Stock (other than dividends or
distributions payable solely in shares of its Qualified Capital
Stock or in options, warrants or other rights to acquire shares of
such Qualified Capital Stock);
(ii) purchase, redeem, defease or otherwise acquire or retire
for value, directly or indirectly, its Capital Stock or any Capital
Stock of any Affiliate of the Company (other than any such Capital
Stock owned by the Company or a Wholly Owned Subsidiary of the
Company) or options, warrants or other rights to acquire such
Capital Stock;
(iii) make any principal payment on, or repurchase, redeem,
defease, retire or otherwise acquire for value, prior to any
scheduled principal payment, sinking fund payment or maturity, any
Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution (including,
without limitation, any liquidation preference) on any Capital Stock
of any Subsidiary to any Person (other than (a) to the Company or
any of its Wholly Owned Subsidiaries or (b) to all holders of
Capital Stock of such Subsidiary on a pro rata basis); or
(v) make any Investment in any Person (other than any
Permitted Investments)
(any of the foregoing actions described in clauses (i) through (v), other
than any such action that is a Permitted Payment (as defined below),
collectively, "Restricted Payments") (the amount of any such Restricted
Payment, if other than cash, as determined by the Board of Directors of
the Company, whose determination shall be conclusive and evidenced by a
Board Resolution), unless (1) immediately before and immediately after
giving effect to such proposed Restricted Payment on a pro forma basis, no
Default or Event of Default shall have occurred and be continuing; (2)
immediately before and immediately after giving effect to such Restricted
Payment on a pro forma basis, the Company could incur $1.00 of additional
Indebtedness under the provisions contained in Section 1008(a); and (3)
after giving effect to the proposed Restricted Payment, the aggregate
amount of all such Restricted Payments declared or made after the date of
the date hereof, does not exceed the sum of the following (the "Basket"):
(A) (i) the Cumulative Operating Cash Flow determined at
the time of such Restricted Payment less (ii) 150% of
cumulative Consolidated Interest Expense determined for the
period (treated as one accounting period) commencing on the
date of the original issue of the Securities and ending on the
last day of the most recent fiscal quarter immediately
preceding the date of such Restricted Payment for which
consolidated financial information of the Company is required
to be available;
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(B) (i) capital contributions to the Company after the
date of this Indenture or (ii) the aggregate Net Cash Proceeds
received after the date of this Indenture by the Company from
the issuance or sale (other than to any of its Subsidiaries)
of Qualified Capital Stock of the Company or any options,
warrants or rights to purchase such Qualified Capital Stock of
the Company (except, in each case, to the extent such proceeds
are used to purchase, redeem or otherwise retire Capital Stock
or Subordinated Indebtedness as set forth below in clause (ii)
or (iii) of paragraph (b) below);
(C) the aggregate Net Cash Proceeds received after the
date of this Indenture by the Company (other than from any of
its Subsidiaries) upon the exercise of any options, warrants
or rights to purchase Qualified Capital Stock of the Company;
(D) the aggregate Net Cash Proceeds received after the
date of this Indenture by the Company from the conversion or
exchange, if any, of debt securities or Redeemable Capital
Stock of the Company or its Subsidiaries into or for Qualified
Capital Stock of the Company plus, to the extent such debt
securities or Redeemable Capital Stock were issued after the
date of this Indenture, the aggregate of Net Cash Proceeds
from their original issuance; and
(E) in the case of the disposition or repayment of any
Investment constituting a Restricted Payment, an amount equal
to the return of capital with respect to such Investment and
the initial amount of such Investment.
(b) Notwithstanding the foregoing, and in the case of clauses (ii)
through (vi) below, so long as no Default or Event of Default shall have
occurred and be continuing, the foregoing provisions of this covenant
shall not prohibit the following actions (each of clauses (i) through
(vii) below being referred to as a "Permitted Payment"):
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at such date of declaration such payment
was permitted by the provisions of paragraph (a) of this Section
1009 and such payment shall have been deemed to have been paid on
such date of declaration and shall not have been deemed a Permitted
Payment for purposes of the calculation required by paragraph (a) of
this Section 1009;
(ii) the repurchase, redemption, or other acquisition or
retirement for value of any shares of any class of Capital Stock of
the Company in exchange for (including any such exchange pursuant to
the exercise of a conversion right or privilege in connection with
which cash is paid in lieu of the issuance of fractional shares or
scrip), or out of the Net Cash Proceeds of a substantially
concurrent issuance and sale for cash (other than to a Subsidiary)
of, other shares of Qualified Capital Stock of the Company; provided
that the Net Cash Proceeds from the issuance of such shares of
Qualified Capital Stock are excluded from clause (v) (3)(B) of
paragraph (a) of this Section 1009;
(iii) the repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any Subordinated
Indebtedness or Redeemable Capital Stock in exchange for, or in an
amount not in excess of the Net Cash Proceeds of, a
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substantially concurrent issuance and sale for cash (other than to
any Subsidiary of the Company) of any Qualified Capital Stock of the
Company, provided that the Net Cash Proceeds from the issuance of
such shares of Qualified Capital Stock are excluded from clause (v)
(3)(B) of paragraph (a) of this Section 1009;
(iv) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of principal of any
Subordinated Indebtedness (other than Redeemable Capital Stock) (a
"refinancing") through the substantially concurrent issuance of new
Subordinated Indebtedness of the Company, provided that any such new
Subordinated Indebtedness (1) shall be in a principal amount that
does not exceed the principal amount so refinanced (or, if such
Subordinated Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, then such lesser amount as of the date of
determination), plus the lesser of (I) the stated amount of any
premium or other payment required to be paid in connection with such
a refinancing pursuant to the terms of the Indebtedness being
refinanced or (II) the amount of premium or other payment actually
paid at such time to refinance the Indebtedness, plus, in either
case, the amount of expenses of the Company incurred in connection
with such refinancing; (2) has an Average Life to Stated Maturity
greater than the remaining Average Life to Stated Maturity of the
Securities; (3) has a Stated Maturity for its final scheduled
principal payment later than the Stated Maturity for the final
scheduled principal payment of the Securities; and (4) is expressly
subordinated in right of payment to the Securities at least to the
same extent as the Subordinated Indebtedness to be refinanced;
(v) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of any Redeemable
Capital Stock through the substantially concurrent issuance of new
Redeemable Capital Stock of the Company, provided that any such new
Redeemable Capital Stock (1) shall have an aggregate liquidation
preference that does not exceed the aggregate liquidation preference
of the amount so refinanced; (2) has an Average Life to Stated
Maturity greater than the remaining Average Life to Stated Maturity
of the Securities; and (3) has a Stated Maturity later than the
Stated Maturity for the final scheduled principal payment of the
Securities;
(vi) the repurchase of shares of, or options to purchase
shares of, common stock of the Company or any of its Subsidiaries
from employees, former employees, directors or former directors of
the Company or any of its Subsidiaries (or permitted transferees of
such employees, former employees, directors or former directors),
pursuant to the terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board
of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such common stock;
provided, however, that the aggregate amount of such repurchases in
any calendar year shall not exceed $500,000 individually and $2.5
million in the aggregate; and
(vii) the repurchase or redemption of warrants to purchase
shares of Common Stock issued in connection with the Company's
initial public offering that are outstanding prior to the Issue Date
of the Securities in an amount which shall not exceed $100,000 in
the aggregate and the repurchase of Common Stock of the Company,
through open market purchases, in an aggregate amount not to exceed
$1,000,000.
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Section 1010. Limitation on Transactions with Affiliates.
The Company will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, enter into any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with or for the benefit of
any Affiliate of the Company unless such transaction or series of related
transactions is entered into in good faith and in writing and (a) such
transaction or series of related transactions is on terms that are no less
favorable to the Company or such Subsidiary, as the case may be, than those that
would be reasonably expected to be available in a comparable transaction in
arm's-length dealings with an unrelated third party, (b) such transaction or
series of related transactions has been approved by a majority of the
Disinterested Directors of the Company, or in the event there is only one
Disinterested Director, by such Disinterested Director, (c) with respect to any
such transaction or series of related transactions involving aggregate value in
excess of $1 million, the Company delivers an Officers' Certificate to the
Trustee certifying that such transaction or series of related transactions
complies with clauses (a) and (b) above, and (d) with respect to any transaction
or series of related transactions involving aggregate value in excess of $2.5
million, such transaction or series of related transactions has been approved by
a majority of the Disinterested Directors of the Company, or in the event there
is only one Disinterested Director, by such Disinterested Director, and the
Company delivers to the Trustee a written opinion of an investment banking firm
of national standing or other recognized independent expert with experience
appraising the terms and conditions of the type of transaction or series of
related transactions for which an opinion is required stating that the
transactions or series of related transactions is fair to the Company or such
Subsidiary from a financial point of view; provided, however, that this
provision shall not apply to: (a) compensation and employee benefit arrangements
with any officer, director or employee of the Company, including under any stock
option or stock incentive plans, in the ordinary course of business; (b) any
transaction solely between or among the Company and/or any Subsidiaries, if such
transaction is otherwise in compliance with this Indenture and is on fair and
reasonable terms; (c) any transaction otherwise permitted by Section 1009; (d)
the execution and delivery of or payments made under any tax sharing agreement
between or among any of the Company and any Subsidiary; (e) licensing or
sublicensing of use of any intellectual property by the Company or any
Subsidiary to any Subsidiary of the Company; provided that the licensor shall
continue to have access to such intellectual property to the extent necessary
for the conduct of its respective business; (f) arrangements between the Company
and any Subsidiary for the purpose of providing services or employees to such
Subsidiary; (g) any transaction entered into for the purpose of granting or
altering registration rights with respect to the Capital Stock of the Company;
and (h) any transaction or series of related transactions entered into prior to
the date hereof.
Section 1011. Limitation on Liens.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, affirm, assume or suffer to exist any
Lien of any kind against or upon any property or assets (including any
intercompany notes) of the Company or any Subsidiary owned on the date hereof
(other than the Escrow Account), or acquired after the date hereof, or any
income or profits therefrom, unless the Securities are directly secured equally
and ratably with (or, in the case of Subordinated Indebtedness, prior or senior
thereto, with the same relative priority as the Securities shall have with
respect to such Subordinated Indebtedness) the obligation or liability secured
by such Lien except for any Permitted Liens.
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Section 1012. Limitation on Sale of Assets.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, whether in a single transaction
or a series of related transactions, consummate an Asset Sale unless (i)
no Default or Event of Default has occurred or would occur as a result
thereof, (ii) at least 75% of the consideration from such Asset Sale is
received in cash or other comparable consideration (as described below),
and (iii) the Company or such Subsidiary receives consideration at the
time of such Asset Sale at least equal to the Fair Market Value of the
shares or assets subject to such Asset Sale (as determined by the Board of
Directors of the Company and evidenced in a Board Resolution delivered to
the Trustee). The following types of consideration shall be deemed
"comparable consideration" for the purposes of this Section 1012: (A) Cash
Equivalents, (B) liabilities (contingent or otherwise) of the Company or a
Subsidiary assumed by the transferee (or its designee) such that the
Company or such Subsidiary has no further liability therefor, and (C) any
securities, notes or other obligations received by the Company or any such
Subsidiary from such transferee that are immediately converted by the
Company or such Subsidiary into cash.
(b) The Company or a Subsidiary may, within 365 days of the Asset
Sale invest the Net Cash Proceeds in properties and other assets that will
be used in the Internet Service Businesses or to permanently repay any
Pari Passu Indebtedness of the Company or any Subsidiary (including the
repurchase of the Securities). The amount of such Net Cash Proceeds not
used or invested within 365 days of the Asset Sale as set forth in this
paragraph (b) constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$5 million, the Company will apply the Excess Proceeds to the repayment of
the Securities and any other Pari Passu Indebtedness of the Company
outstanding with similar provisions requiring the Company to make an offer
to purchase such Indebtedness with the proceeds from any Asset Sale as
follows: (A) the Company will make an offer to purchase (an "Offer") from
all holders of the Securities in accordance with the procedures set forth
in the Indenture in the maximum principal amount (expressed as a multiple
of $1,000) of Securities that may be purchased out of an amount (the
"Security Amount") equal to the product of such Excess Proceeds multiplied
by a fraction, the numerator of which is the outstanding principal amount
of the Securities, and the denominator of which is the sum of the
outstanding principal amount of the Securities and such Pari Passu
Indebtedness (subject to proration in the event such amount is less than
the aggregate Offered Price (as defined herein) of all Securities
tendered) and (B) to the extent required by such Pari Passu Indebtedness
to permanently reduce the principal amount of such Pari Passu
Indebtedness, the Company will make an offer to purchase or otherwise
repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer") in an
amount (the "Pari Passu Debt Amount") equal to the excess of the Excess
Proceeds over the Security Amount; provided that in no event will the
Company be required to make a Pari Passu Offer in a Pari Passu Debt Amount
exceeding the principal amount of such Pari Passu Indebtedness plus the
amount of any premium required to be paid to repurchase such Pari Passu
Indebtedness. The offer price for the Securities will be payable in cash
in an amount equal to 100% of the principal amount of the Securities plus
accrued and unpaid interest, if any, to the date (the "Offer Date") such
Offer is consummated (the "Offered Price"), in accordance with the
procedures set forth herein. To the extent that the aggregate Offered
Price of the Securities tendered pursuant to the Offer is less than the
Security Amount relating thereto or the aggregate amount of Pari Passu
Indebtedness that is purchased in a Pari Passu Offer is less than the Pari
Passu Debt Amount, the Company will use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of
Securities and Pari
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Passu Indebtedness surrendered by holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Securities to be purchased
on a pro rata basis. Upon the completion of the purchase of all the
Securities tendered pursuant to an Offer and the completion of a Pari
Passu Offer, the amount of Excess Proceeds, if any, shall be reset at
zero.
(d) If the Company becomes obligated to make an Offer pursuant to
paragraph (c) immediately above, the Securities and the Pari Passu
Indebtedness shall be purchased by the Company, at the option of the
holders thereof, in whole or in part in integral multiples of $1,000, on a
date that is not earlier than 30 days and not later than 60 days from the
date the notice of the Offer is given to holders, or such later date as
may be necessary for the Company to comply with the requirements under the
Exchange Act.
(e) The Company will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with an Offer.
Section 1013. Limitation on Issuances of Guarantees of Indebtedness.
(a) The Company will not permit any Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become liable with
respect to any Pari Passu Indebtedness or Subordinated Indebtedness of the
Company unless such Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a Guarantee of the
Securities on the same terms as the guarantee of such Indebtedness except
that (A) such guarantee need not be secured unless required pursuant to
Section 1011 and (B) if such Indebtedness is by its terms expressly
subordinated to the Securities, any such assumption, guarantee or other
liability of such Subsidiary with respect to such Indebtedness shall be
subordinated to such Subsidiary's Guarantee of the Securities at least to
the same extent as such Indebtedness is subordinated to the Securities;
provided that this paragraph shall not apply to any guarantee or
assumption of liability of Indebtedness permitted under clauses (i), (ii),
(iv), (v), (vii) and (viii) of paragraph (b) of Section 1008.
(b) Notwithstanding the foregoing paragraph (a) of this covenant,
any Guarantee by a Subsidiary of the Securities shall provide by its terms
that it (and all Liens securing the same) shall be automatically and
unconditionally released and discharged upon any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the
Company's Capital Stock in, or all or substantially all the assets of,
such Subsidiary, which transaction is in compliance with the terms of this
Indenture and pursuant to which transaction such Subsidiary is released
from all guarantees, if any, by it of other Indebtedness of the Company or
any Subsidiaries.
Section 1014. Purchase of Securities upon a Change of Control.
(a) If a Change of Control shall occur at any time, then each Holder
shall have the right to require that the Company purchase such Holder's
Securities in whole or in part in integral multiples of $1,000, at a
purchase price (the "Change of Control Purchase Price") in cash, in an
amount equal to 101% of the principal amount of such Securities or portion
thereof, plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Purchase Date"), pursuant to the offer described
below in this Section 1014 (the "Change of Control Offer") and in
accordance with the other procedures set forth in paragraphs (b), (c), (d)
and (e) of this Section 1014.
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(b) Within 30 days of any Change of Control, the Company shall
notify the Trustee thereof and give written notice (a "Change of Control
Purchase Notice") of such Change of Control to each Holder by first-class
mail, postage prepaid, at his address appearing in the Security Register,
stating among other things:
(1) that a Change of Control has occurred, the date of such
event, and that such Holder has the right to require the Company to
repurchase such Holder's Securities at the Change of Control
Purchase Price;
(2) the circumstances and relevant facts regarding such Change
of Control;
(3) that the Change of Control Offer is being made pursuant to
this Section 1014 and that all Securities properly tendered pursuant
to the Change of Control Offer will be accepted for payment at the
Change of Control Purchase Price;
(4) the Change of Control Purchase Date, which shall be a
Business Day no earlier than 30 days and not later than 60 days from
the date such notice is mailed, or such later date as may be
necessary to comply with any applicable requirements under the
Exchange Act;
(5) the Change of Control Purchase Price;
(6) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002;
(7) that Securities must be surrendered on or prior to the
Change of Control Purchase Date to the Paying Agent at the office of
the Paying Agent or to an office or agency referred to in Section
1002 to collect payment;
(8) that the Change of Control Purchase Price for any Security
which has been properly tendered and not withdrawn will be paid
promptly following the Change of Control Offer Purchase Date;
(9) the procedures that a Holder must follow to accept a
Change of Control Offer or to withdraw such acceptance;
(10) that any Security not tendered will continue to accrue
interest; and
(11) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Securities accepted for
payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Purchase Date.
(c) Upon receipt by the Company of the proper tender of Securities,
the Holder of the Security in respect of which such proper tender was made
shall (unless the tender of such Security is properly withdrawn)
thereafter be entitled to receive solely the Change of Control Purchase
Price with respect to such Security. Upon surrender of any such Security
for purchase in accordance with the foregoing provisions, such Security
shall be paid by the Company at the Change of Control Purchase Price;
provided, however, that installments of interest whose Stated
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Maturity is on or prior to the Change of Control Purchase Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record Dates
according to the terms and the provisions of Section 309. If any Security
tendered for purchase in accordance with the provisions of this Section
1014 shall not be so paid upon surrender thereof, the principal thereof
(and premium, if any, thereon) shall, until paid, bear interest from the
Change of Control Purchase Date at the rate borne by such Security.
Holders electing to have Securities purchased will be required to
surrender such Securities to the Paying Agent at the address specified in
the Change of Control Purchase Notice prior to 5:00 p.m. (New York time)
at least one Business Day prior to the Change of Control Purchase Date.
Any Security that is to be purchased only in part shall be surrendered to
a Paying Agent at the office of such Paying Agent (with, if the Company,
the Security Registrar or the Trustee so requires, due endorsement by, or
a written instrument of transfer in form satisfactory to the Company and
the Security Registrar or the Trustee, as the case may be, duly executed
by, the Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall authenticate
and deliver to the Holder of such Security, without service charge to the
Holder, one or more new Securities of any authorized denomination as
requested by such Holder in an aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Security so
surrendered that is not purchased.
(d) The Company shall (i) not later than the Change of Control
Purchase Date, accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) not later than 10:00 a.m.
(New York time) on the Change of Control Purchase Date, deposit with the
Trustee or with a Paying Agent an amount of money in same day funds (or
New York Clearing House funds if such deposit is made prior to the Change
of Control Purchase Date) sufficient to pay the aggregate Change of
Control Purchase Price of all the Securities or portions thereof which are
to be purchased as of the Change of Control Purchase Date and (iii) not
later than 10:00 a.m. (New York time) on the Change of Control Purchase
Date, deliver to the Paying Agent an Officers' Certificate stating the
aggregate principal amount of Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail or deliver
to Holders of Securities so accepted payment in an amount equal to the
Change of Control Purchase Price of the Securities purchased from each
such Holder, and the Company shall execute and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered.
Any Securities not so accepted shall be promptly mailed or delivered by
the Paying Agent at the Company's expense to the Holder thereof. The
Company will publicly announce the results of the Change of Control Offer
on the Change of Control Purchase Date. For purposes of this Section 1014,
the Company shall choose a Paying Agent which shall not be the Company.
(e) A tender made in response to a Change of Control Purchase Notice
may be withdrawn if the Company or its agent receives, not later than 5:00
p.m. (New York time) one Business Day prior to the Change of Control
Purchase Date, a signed letter, delivered to the address specified in the
change of Control Purchase Notice specifying, as applicable:
(1) the name of the Holder;
(2) the certificate number of the Security in respect of which
such notice of withdrawal is being submitted;
(3) the principal amount of the Security (which shall be
$1,000 or an integral
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multiple thereof) delivered for purchase by the Holder as to which
such notice of withdrawal is being submitted;
(4) a statement that such Holder is withdrawing his election
to have such principal amount of such Security purchased; and
(5) the principal amount, if any, of such Security (which
shall be $1,000 or an integral multiple thereof) that remains
subject to the original Change of Control Purchase Notice and that
has been or will be delivered for purchase by the Company.
(f) Subject to applicable escheat laws, the Trustee and the Paying
Agent shall return to the Company any cash that remains unclaimed,
together with interest or dividends, if any, thereon, held by them for the
payment of the Change of Control Purchase Price; provided, however, that,
(x) to the extent that the aggregate amount of cash deposited by the
Company pursuant to clause (ii) of paragraph (d) above exceeds the
aggregate Change of Control Purchase Price of the Securities or portions
thereof to be purchased, then the Trustee shall hold such excess for the
Company and (y) unless otherwise directed by the Company in writing,
promptly after the Business Day following the Change of Control Purchase
Date the Trustee shall return any such excess to the Company.
(g) The Company shall comply, to the extent applicable, with the
applicable tender offer rules, including Rule 14e-1 under the Exchange
Act, and any other applicable securities laws or regulations in connection
with a Change of Control Offer.
(h) Notwithstanding the foregoing, the Company will not be required
to make a Change of Control Offer if a third party makes the Change of
Control Offer, in the manner, at the times and otherwise in compliance
with the requirements set forth in this Indenture applicable to a Change
of Control Offer made by the Company and purchases all the Securities
validly tendered and not withdrawn under such Change of Control Offer.
Section 1015. Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any Subsidiary of the
Company to, directly or indirectly, enter into, assume or otherwise become
liable with respect to any Sale and Leaseback Transaction with respect to any
property or assets (whether now owned or hereafter acquired), unless (i) the
sale or transfer of such property or assets to be leased is treated as an Asset
Sale and complies with the provisions of Section 1012, (ii) the Company or such
Subsidiary would be entitled under Section 1008 to incur any such Indebtedness
(with the lease obligations being treated as Indebtedness for purposes of
ascertaining compliance with this covenant unless such lease is properly
classified as an operating lease under GAAP) in respect of such Sale and
Leaseback Transaction and (iii) the consideration received by the Company or
such Subsidiary from such transaction is at least equal to the Fair Market Value
of the property being transferred.
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Section 1016. Limitation on Subsidiary Capital Stock.
The Company will not permit (a) any Subsidiary of the Company to
issue any Capital Stock, except for (i) Capital Stock issued or sold to, held by
or transferred to the Company or a Wholly Owned Subsidiary, and (ii) Capital
Stock issued by a Person prior to the time (A) such Person becomes a Subsidiary,
(B) such Person merges with or into a Subsidiary or (C) a Subsidiary merges with
or into such Person; provided that such Capital Stock was not issued or incurred
by such Person in anticipation of the type of transaction contemplated by
subclause (A), (B) or (C), or (b) any Person (other than the Company or a Wholly
Owned Subsidiary) to acquire Capital Stock of any Subsidiary from the Company or
any Subsidiary, except, in the case of clause (a) or (b), (1) upon the
acquisition of all the outstanding Capital Stock of such Subsidiary in
accordance with the terms hereof, (2) if, immediately after giving effect to
such issuance or sale, such Subsidiary would no longer constitute a Subsidiary,
and any Investment in such Person remaining after giving effect to such issuance
or sale would have been permitted to be made under the provisions contained in
Section 1009 if made on the date of such issuance or sale, (3) issuances of
director's qualifying shares, or sales to foreign nationals of shares of Capital
Stock of foreign Subsidiaries, to the extent required by applicable law, (4)
issuances or sales of common stock of a Subsidiary, provided that the Company or
such Subsidiary applies the Net Cash Proceeds, if any, in accordance with the
provisions of this Indenture to the extent applicable, (5) issuances after which
the Company maintains its direct or indirect percentage of beneficial and
economic ownership of such Subsidiary, or (6) issuances in connection with
Acquisitions for the primary purpose of minimizing tax liability to the Company,
any of its Subsidiaries, the Acquired Person or any shareholders of the Acquired
Person.
Section 1017. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise enter into or cause to become
effective any consensual encumbrance or restriction on the ability of any
Subsidiary to (i) pay dividends or make any other distribution on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (ii) pay any Indebtedness owed to the Company or any other
Subsidiary, (iii) make any Investment in the Company or any other Subsidiary or
(iv) transfer any of its properties or assets to the Company or any other
Subsidiary, except for: (a) any encumbrance or restriction, with respect to a
Subsidiary that is not a Subsidiary of the Company on the date of this
Indenture, in existence at the time such Person becomes a Subsidiary of the
Company and not incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary; (b) encumbrances or restrictions (I) by reason of
applicable law, or (II) under this Indenture; (c) customary non-assignment
provisions of any contract or lease entered into in the ordinary course of
business; (d) encumbrances or restrictions imposed pursuant to contracts entered
into in connection with Permitted Liens, but solely to the extent such
encumbrances or restrictions affect property or assets subject to such Permitted
Lien; (e) any encumbrance or restriction imposed pursuant to contracts for the
sale of assets with respect to the assets to be sold pursuant to such contract;
and (f) any encumbrance or restriction existing under any agreement that
extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (a) through (e), or in
this clause (f), provided that the terms and conditions of any such encumbrances
or restrictions are no more restrictive in any material respect than those under
or pursuant to the agreement evidencing the Indebtedness so extended, renewed,
refinanced or replaced.
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Section 1018. Limitations on Unrestricted Subsidiaries.
The Company will not make, and will not permit its Subsidiaries to
make, any Investment in, and will not designate any Subsidiaries as,
Unrestricted Subsidiaries if, at the time thereof, (a) a Default or Event of
Default shall have occurred and be continuing or would occur after giving effect
to such Investment or designation, (b) the aggregate amount of such Investments
would exceed the amount of Restricted Payments then permitted to be made
pursuant to Section 1009, (c) the Company or its Subsidiaries would be
prohibited under this Indenture from making such Investment or designation, or
(d) after giving effect to such Investment or designation, the Company would
exceed the pro forma amount of Indebtedness permitted pursuant to Section 1008.
Any Investments in Unrestricted Subsidiaries permitted to be made pursuant to
this covenant will be treated as a Restricted Payment in calculating the amount
of Restricted Payments made by the Company.
Section 1019. Provision of Financial Statements.
After the earlier to occur of the consummation of the Exchange Offer
or the effectiveness of a Registration Statement relating to the Securities and
the 120th calendar day following the date of original issue of the Securities,
whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange
Act, the Company will, to the extent permitted under the Exchange Act, file with
the Commission the annual reports, quarterly reports and other documents which
the Company would have been required to file with the Commission pursuant to
Sections 13(a) or 15(d) if the Company were so subject, such documents to be
filed with the Commission on or prior to the date (the "Required Filing Date")
by which the Company would have been required so to file such documents if the
Company were so subject. The Company will also in any event (x) within 15 days
of each Required Filing Date (i) transmit by mail to all Holders, as their names
and addresses appear in the Security Register, without cost to such Holders and
(ii) file with the Trustee copies of the annual reports, quarterly reports and
other documents which the Company would have been required to file with the
Commission pursuant to Sections 13(a) or 15(d) of the Exchange Act if the
Company were subject to either of such Sections and (y) if filing such documents
by the Company with the Commission is not permitted under the Exchange Act,
promptly upon written request and payment of the reasonable cost of duplication
and delivery, supply copies of such documents to any prospective Holder at the
Company's cost. If any Guarantor's financial statements would be required to be
included in the financial statements filed or delivered pursuant to this
Indenture if the Company were subject to Section 13(a) or 15(d) of the Exchange
Act, the Company shall include such Guarantor's financial statements in any
filing or delivery pursuant to this Indenture. In addition, so long as any of
the Securities remain outstanding and the Company is not subject to Sections
13(a) or 15(d) of the Exchange Act, the Company will make available to any
prospective purchaser of Securities or beneficial owner of Securities in
connection with any sale thereof the information required by Rule 144A(d)(4)
under the Securities Act, until such time as the Company has either exchanged
the Securities for securities identical in all material respects which have been
registered under the Securities Act or until such time as the Holders thereof
have disposed of such Securities pursuant to an effective registration statement
under the Securities Act.
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Section 1020. Statement by Officers as to Default.
(a) The Company and each Guarantor, if any, will deliver to the
Trustee, on or before a date not more than 120 days after the end of each
fiscal year of the Company ending after the date hereof, and 60 days after
the end of each fiscal quarter ending after the date hereof, a written
statement signed by the principal executive officer, principal financial
officer or principal accounting officer of the Company in his/her capacity
as an officer of the Company, as to compliance herewith, including whether
or not, after a review of the activities of the Company during such year
and of the Company's and each Guarantor's performance under this
Indenture, to the best knowledge, based on such review, of the signers
thereof, the Company and each Guarantor have fulfilled all of their
respective obligations and are in compliance with all conditions and
covenants under this Indenture throughout such year and, if there has been
a Default specifying each Default and the nature and status thereof and
any actions being taken by the Company with respect thereto.
(b) When any Default or Event of Default has occurred and is
continuing, or if the Trustee or any Holder or the trustee for or the
holder of any other evidence of Indebtedness of the Company or any
Subsidiary gives any notice or takes any other action with respect to a
claimed default, the Company shall deliver to the Trustee by registered or
certified mail or facsimile transmission followed by an originally
executed copy of an Officers' Certificate specifying such Default, Event
of Default, notice or other action, the status thereof and what actions
the Company is taking or proposes to take with respect thereto, within
five Business Days after the occurrence of such Default or Event of
Default.
Section 1021. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1006 through 1011, 1012(a), 1013 and
1015 through 1020, if, before or after the time for such compliance, the Holders
of not less than a majority in aggregate principal amount of the Securities at
the time Outstanding shall, by Act of such Holders, waive such compliance in
such instance with such covenant or provision, but no such waiver shall extend
to or affect such covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
Section 1022. Limitation on Business.
The Company will not, and will not permit any of the Subsidiaries
to, engage in a business which is not substantially an Internet Service
Business.
Section 1023. Deposit of Funds with Escrow Agent.
(a) On the Issue Date, the Company shall deposit with the Escrow
Agent funds that together with the proceeds from the investment thereof
will be sufficient to pay the first six scheduled interest payments on the
Securities (including any Additional Interest). All Collateral shall be
held in the Escrow Account until permitted to be disbursed pursuant to the
Escrow Agreement and then shall be disbursed strictly in accordance with
the terms thereof.
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(b) Pending release of the Escrow Funds as provided in the Escrow
Agreement, the Escrow Funds will be invested in U.S. Government Securities
as specifically directed in writing by the Company. Any interest or other
profit resulting from such investment will be deposited in the Escrow
Account.
(c) The Trustee is hereby authorized and directed to enter into the
Escrow Agreement and to perform its duties and obligations thereunder.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Rights of Redemption.
(a) The Securities are subject to redemption at any time on or after
May 1, 2001, at the option of the Company, in whole or in part, subject to
the conditions, and at the Redemption Prices, specified in the form of
Security, together with accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on relevant
Regular Record Dates and Special Record Dates to receive interest due on
relevant Interest Payment Dates and Special Payment Dates).
(b) In addition, at any time prior to May 1, 2000, the Company may,
at its option, use the net proceeds of one or more Public Equity Offering
or the sale of Common Stock (other than Disqualified Stock) of the Company
to a Strategic Investor in a single transaction or in a series of related
transactions, to redeem up to an aggregate of 35% of the aggregate
principal amount of Securities originally issued under this Indenture at a
redemption price equal to 113% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the Redemption Date;
provided that at least 65% aggregate principal amount of Securities
remains outstanding immediately after the occurrence of such redemption.
In order to effect the foregoing redemption, the Company must mail a
notice of redemption no later than 45 days after the closing of the
related Public Equity Offering and must consummate such redemption within
60 days of the closing of the Public Equity Offering.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article Eleven.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Company Order and an Officers' Certificate.
In case of any redemption at the election of the Company, the Company shall, not
less than 45 and not more than 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice period shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal
amount of Securities to be redeemed.
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Section 1104. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed shall be selected not more than 30
days prior to the Redemption Date. The Trustee shall select the Securities or
portions thereof to be redeemed pro rata, by lot or by any other method the
Trustee shall deem fair and reasonable. The amounts to be redeemed shall be
equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 days nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at its address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification of the particular Securities to be redeemed;
(d) in the case of a Security to be redeemed in part, the principal
amount of such Security to be redeemed and that after the Redemption Date
upon surrender of such Security, new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security or portion thereof to be redeemed, and
that (unless the Company shall default in payment of the Redemption Price)
interest thereon shall cease to accrue on and after said date;
(g) the names and addresses of the Paying Agent and the offices or
agencies referred to in Section 1002 where such Securities are to be
surrendered for payment of the Redemption Price;
(h) the CUSIP, ISIN or CINS number, if any, relating to such
Securities; and
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(i) the procedures that a Holder must follow to surrender the
Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company. If the Company
elects to give notice of redemption, it shall provide the Trustee with a
certificate stating that such notice has been given in compliance with the
requirements of this Section 1105.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company or any of its Affiliates
is acting as Paying Agent, segregate and hold in trust as provided in Section
1003) an amount of money in same day funds sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date
or Special Payment Date) accrued interest on, all the Securities or portions
thereof which are to be redeemed on that date. The Paying Agent shall promptly
mail or deliver to Holders of Securities so redeemed payment in an amount equal
to the Redemption Price of the Securities purchased from each such Holder. All
money, if any, earned on funds held in trust by the Trustee or any Paying Agent
prior to the Redemption Date shall be remitted to the Company. For purposes of
this Section 1106, the Company shall choose a Paying Agent which shall not be
the Company.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Holders will be required
to surrender the Securities to be redeemed to the Paying Agent at the address
specified in the notice of redemption at least one Business Day prior to the
Redemption Date. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price together with accrued interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such on the relevant
Regular Record Dates and Special Record Dates according to the terms and the
provisions of Section 309.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by such
Security.
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Section 1108. Securities Redeemed or Purchased in Part.
Any Security which is to be redeemed or purchased only in part shall
be surrendered to the Paying Agent at the office or agency maintained for such
purpose pursuant to Section 1002 (with, if the Company, the Security Registrar
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company, the Security Registrar or the
Trustee, as the case may be, duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing), and the Company shall execute,
and the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to,
and in exchange for, the unredeemed portion of the principal of the Security so
surrendered that is not redeemed or purchased.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and shall cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Securities as expressly provided for herein) as to all Outstanding Securities
hereunder, and the Trustee, upon Company Request and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a) either
(1) all the Securities theretofore authenticated and delivered
(other than (i) lost, stolen or destroyed Securities which have been
replaced or paid as provided in Section 308 or (ii) all Securities
whose payment has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust as provided in Section 1003)
have been delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to the
Trustee for cancellation have become due and payable and the Company
or any Guarantor has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust an amount in United States
dollars sufficient to pay and discharge the entire Indebtedness on
the Securities not theretofore delivered to the Trustee for
cancellation, including the principal of, premium, if any, and
accrued interest on, such Securities at such Maturity, Stated
Maturity or Redemption Date;
(b) the Company or any Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company and any Guarantor; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, in form and substance
reasonably satisfactory to the Trustee, each stating that (i) all
conditions precedent herein relating to the satisfaction and discharge
hereof have been complied with and (ii) such satisfaction and discharge
will not result in a breach or violation of, or
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constitute a default under, this Indenture or any other material
agreement or instrument to which the Company, any Guarantor or any
Subsidiary is a party or by which the Company, any Guarantor or any
Subsidiary is bound.
Notwithstanding the satisfaction and discharge hereof, the
obligations of the Company to the Trustee under Section 606 and, if United
States dollars shall have been deposited with the Trustee pursuant to subclause
(2) of subsection (a) of this Section 1201, the obligations of the Trustee under
Section 1202 and the last paragraph of Section 1003 shall survive.
Section 1202. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
United States dollars deposited with the Trustee pursuant to Section 1201 shall
be held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal of,
premium, if any, and interest on, the Securities for whose payment such United
States dollars have been deposited with the Trustee.
ARTICLE THIRTEEN
COLLATERAL AND SECURITY
Section 1301. Escrow Agreement.
The due and punctual payment of the first six scheduled interest
payments on the Securities and Additional Interest, if any, when and as the same
shall be due and payable on an Interest Payment Date or by acceleration shall be
secured as provided in the Escrow Agreement which the Company and the Trustee
have entered into simultaneously with the execution of this Indenture. Upon the
acceleration of the Maturity of the Securities prior to the payment in full of
the first six scheduled interest payments, the Trustee shall foreclose upon the
Collateral. Each Holder of Securities, by its acceptance thereof, consents and
agrees to the terms of the Escrow Agreement (including, without limitation, the
provisions providing for foreclosure and disbursement of Collateral) as the same
may be in effect or may be amended from time to time in accordance with its
terms and the terms hereof and authorizes and directs the Escrow Agent and the
Trustee to enter into the Escrow Agreement and to perform its obligations and
exercise its rights thereunder in accordance therewith. The Company shall
deliver to the Trustee copies of the Escrow Agreement, and shall do or cause to
be done all such acts and things as may be necessary or proper, or as may be
required by the provisions of the Escrow Agreement, to assure and confirm to the
Trustee the security interest in the Collateral contemplated by the Escrow
Agreement or any part thereof, as from time to time constituted, so as to render
the same available for the security and benefit of this Indenture with respect
to, and of, the Securities, according to the intent and purposes expressed in
the Escrow Agreement. The Company shall take any and all actions reasonably
required to cause the Escrow Agreement to create and maintain (to the extent
possible under applicable law), as security for the obligations of the Company
hereunder, a first priority and exclusive security interest in and on all the
Collateral, in favor of the Trustee for the benefit of the Holders of
Securities, superior to and prior to the rights of all third Persons and subject
to no other Liens. The Trustee shall have no responsibility for perfecting or
maintaining the perfection of the Trustee's security interest in the Collateral
or for filing any instrument, document or notice in any public office at any
time or times.
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Section 1302. Recording and Opinions.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture,
financing statements or other instruments necessary to make effective the
security interest intended to be created by the Escrow Agreement and
reciting the details of such action, or (ii) stating that in the opinion
of such counsel no such action is necessary to make such security interest
effective.
(b) The Company shall furnish to the Trustee on each anniversary of
the Issue Date until the date upon which the balance of Escrow Funds shall
have been reduced to zero, an Opinion of Counsel, dated as of such date,
complying in all respects with Section 314(b) of the Trust Indenture Act.
Section 1303. Release of Collateral.
(a) Subject to paragraphs (b), (c) and (d) of this Section 1303, the
Collateral may be released from the security interest created by the
Escrow Agreement only in accordance with the provisions of the Escrow
Agreement.
(b) Except to the extent that any security interest on proceeds of
Collateral is automatically released by operation of Section 9-306 of the
Uniform Commercial Code or other similar law, no Collateral shall be
released from the security interest created by the Escrow Agreement
pursuant to the provisions of the Escrow Agreement, other than to the
Holders pursuant to the terms thereof.
(c) At any time when an Event of Default shall have occurred and be
continuing and the Maturity of the Securities shall have been accelerated
(whether by declaration or otherwise), no Collateral shall be released
pursuant to the provisions of the Escrow Agreement, and no release of
Collateral in contravention of this Section 1303(c) shall be effective as
against the Holders of Securities, except for the disbursement of all
Escrow Funds (as defined in the Escrow Agreement) and other Collateral to
the Trustee pursuant to Section 6(c) of the Escrow Agreement.
(d) To the extent applicable, the Company shall cause Section 314(d)
of the Trust Indenture Act, relating to the release of property or
securities from the security interest of the Escrow Agreement, to be
complied with.
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Section 1304. Authorization of Actions to be Taken by the
Trustee Under the Escrow Agreement.
Subject to the provisions of Section 601 and Section 603, the
Trustee may, without the consent of the Holders of Securities, on behalf of the
Holders of Securities, take all actions it deems necessary or appropriate in
order to (a) enforce any of the terms of the Escrow Agreement and (b) collect
and receive any and all amounts payable in respect of the obligations of the
Company hereunder. The Trustee shall have power to institute and maintain such
suits and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts that may be unlawful or in violation of the Escrow
Agreement or this Indenture, and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the interests of the
Holders of Securities in the Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest hereunder or be
prejudicial to the interests of the Holders of Securities or of the Trustee).
Section 1305. Authorization of Receipt of Funds by the Trustee Under
the Escrow Agreement.
The Trustee is authorized to receive any funds for the benefit of
the Holders of Securities disbursed under the Escrow Agreement, and to make
further distributions of such funds to the Holders of Securities according to
the provisions of this Indenture.
Section 1306. Termination of Security Interest.
Upon the earliest to occur of (i) the date upon which the balance of
Escrow Funds and other Collateral shall have been reduced to zero, (ii) the
payment of the first six scheduled interest payments on the Securities, (iii)
legal defeasance of all Outstanding Securities pursuant to Section 402 and (iv)
covenant defeasance of all Outstanding Securities pursuant to Section 403, the
Trustee shall, at the written request of the Company, release the security
interest in the Collateral pursuant to this Indenture and the Escrow Agreement
upon the Company's compliance with the provisions of the Trust Indenture Act
pertaining to release of collateral.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
BELL TECHNOLOGY GROUP LTD.
By:
--------------------------------
Name:
Title:
Attest:
- --------------------------------
100
<PAGE>
Name:
Title:
MARINE MIDLAND BANK, as Trustee
By:
--------------------------------
Name:
Title:
101
<PAGE>
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1998, before me personally came __________, to
me known, who, being by me duly sworn, did depose and say that he resides at
_________; that he is _________________of_______________________, a corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto pursuant to authority of the Board of Directors of such
corporation.
-------------------------------------
(NOTARIAL SEAL)
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1998, before me personally came __________, to
me known, who, being by me duly sworn, did depose and say that he resides at
_________; that he is _________________of_______________________, a corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto pursuant to authority of the Board of Directors of such
corporation.
-------------------------------------
(NOTARIAL SEAL)
<PAGE>
EXHIBIT A
REGULATION S CERTIFICATE
(For transfers pursuant to ss. 307(a)(i) of the Indenture)
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, New York 10005
Re: 13% Senior Notes due 2005 of
Bell Technology Group Ltd. (the "Securities")
Reference is made to the Indenture, dated as of April 30, 1998 (the
"Indenture"), among Bell Technology Group Ltd. (the "Company") and Marine
Midland Bank, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to US$_________________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
---------------------------
CERTIFICATE No(s).
---------------------------
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner."
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Regulation S Global Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 904 or Rule 144 under the Securities Act and with all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Specified
Securities, an affiliate of the Company or any such distributor or a
person acting on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
A-1
<PAGE>
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any
person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(ii) the transaction is being executed in, on or through
the facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another
designated offshore securities market described in Section
902(a) of Regulation S and neither the Owner nor any person
acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities, as defined in
Section 2(12) of the Securities Act, or has received a selling
concession, fee or other remuneration in respect of the Specified
Securities, and the transfer is to occur during the Distribution
Compliance Period, then:
(i) neither the Owner nor any person acting on behalf of
the Owner knows that the Transferee of the Specified
Securities is a U.S. person; and
(ii) if the Owner or any person acting on the Owner's
behalf knows that the Transferee is a dealer, as defined in
Section 2(12) of the Securities Act, or is a person receiving
a selling concession, fee or other remuneration in respect of
the Specified Securities, the Owner or a person acting on the
Owner's behalf has sent to the Transferee a confirmation or
other notice stating that the Specified Securities may be
offered and sold during the Distribution Compliance Period
only: (x) in accordance with Regulation S; (y) pursuant to
registration of the Specified Securities under the Securities
Act; or (z) pursuant to an available exemption from the
registration requirements of the Securities Act; and
(F) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144:
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and is being effected in accordance with the applicable
amount, manner of sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
A-2
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchaser.
Dated:
(Print the name of the Undersigned, as such
term is defined in the third paragraph of this
certificate.)
By:
--------------------------
Name:
Title:
(If the Undersigned is a corporation,partnership
or fiduciary, the title of the person signing on
behalf of the Undersigned must be stated.)
A-3
<PAGE>
EXHIBIT B
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to ss. 307(a)(ii) of the Indenture)
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, New York 10005
Re: 13% Senior Notes due 2005 of
Bell Technology Group Ltd. (the "Securities")
Reference is made to the Indenture, dated as of April 30, 1998 (the
"Indenture"), among Bell Technology Group Ltd. (the "Company") and Marine
Midland Bank, as Trustee. Terms used herein and defined in the Indenture or in
Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to US$ principal amount of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
--------------------------
ISIN No(s). If any.
--------------------
CERTIFICATE No(s).
---------------------
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 144A or Rule 144 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably
believe is a "qualified institutional buyer" within the meaning of
Rule 144A, acquiring for its own account or for the account of a
qualified institutional buyer; and
B-1
<PAGE>
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the
Owner may be relying on Rule 144A in connection with the transfer;
and
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and is being effected in accordance with the applicable
amount, manner of sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchasers.
Dated:
(Print the name of the Undersigned, as such
term is defined in the third paragraph of this
certificate.)
By:
--------------------------
Name:
Title:
(If the Undersigned is a corporation,partnership
or fiduciary, the title of the person signing on
behalf of the Undersigned must be stated.)
B-2
<PAGE>
EXHIBIT C
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to ss. 307(b) of the Indenture)
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, New York 10005
Re: 13% Senior Notes due 2005 of
Bell Technology Group Ltd. (the "Securities")
Reference is made to the Indenture, dated as of April 30, 1998 (the
"Indenture"), among Bell Technology Group Ltd. (the "Company") and Marine
Midland Bank, as Trustee. Terms used herein and defined in the Indenture or in
Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used
herein as so defined. This certificate relates to US$ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
-----------------
CERTIFICATE No(s).
------------------
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged
for Securities bearing no Private Placement Legend pursuant to Section 307(b) of
the Indenture. In connection with such exchange, the Owner hereby certifies that
the exchange is occurring after a holding period of at least two years (computed
in accordance with paragraph (d) of Rule 144) has elapsed since the Specified
Securities were last acquired from the Company or from an affiliate of the
Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
C-1
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchasers.
Dated:
(Print the name of the Undersigned, as such
term is defined in the third paragraph of this
certificate.)
By:
--------------------------
Name:
Title:
(If the Undersigned is a corporation,partnership
or fiduciary, the title of the person signing on
behalf of the Undersigned must be stated.)
C-2
<PAGE>
APPENDIX I
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- --------------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)
- --------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing attorney to transfer such Security on the books of the Company
with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL
CERTIFICATES FOR SERIES A SECURITIES EXCEPT
PERMANENT OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Security occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
the end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
|_|(a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
or
|_|(b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Security and
the Indenture.
I-1
<PAGE>
If none of the foregoing boxes is checked, the Trustee or other Security
Registrar shall not be obligated to register this Security in the name of any
Person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 307 of the Indenture
shall have been satisfied.
Date:
--------------------------------------------------------
NOTICE: The signature to this assignment must correspond
with the name as written upon the face of the
within-mentioned instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee:
------------------------------------
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:
-------------------------------------------------
NOTICE: to be executed by an authorized signatory
I-2
<PAGE>
APPENDIX II
FORM OF TRANSFEREE CERTIFICATE
I or we assign and transfer this Security to:
- --------------------------------------------------------------------------------
Please insert social security or other identifying number of assignee
- --------------------------------------------------------------------------------
Print or type name, address and zip code of assignee and irrevocably appoint
[Agent], to transfer this Security on the books of the Company. The Agent may
substitute another to act for him.
Dated Signed
(Sign exactly as name appears on the other
side of this Security)
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17 Ad-15]
II-1
BELL TECHNOLOGY GROUP LTD.
13% SENIOR NOTE DUE 2005, SERIES A
CUSIP NO. 07814VAB8
No. A-1
$160,000,000
Bell Technology Group Ltd., a Delaware corporation (herein called the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of ONE HUNDRED AND SIXTY MILLION
($160,000,000) United States dollars on May 1, 2005, at the office or agency of
the Company referred to below, and to pay interest thereon from the date of
issuance, or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semiannually on May 1 and November 1 in each
year, commencing November 1, 1998 at the rate of 13% per annum, subject to
adjustments as described in the second following paragraph, in United States
dollars, until the principal hereof is paid or duly provided for. Interest shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.
The Holder of this Series A Security is entitled to the benefits of the
Registration Rights Agreement between the Company and the Initial Purchaser,
dated April 30, 1998 (the "Registration Rights Agreement"), pursuant to which,
subject to the terms and conditions thereof, the Company is obligated to
consummate the Exchange Offer pursuant to which the Holder of this Security
shall have the right to exchange this Security for 13% Senior Notes due 2005,
Series B (herein called the "Series B Securities") in like principal amount as
provided therein. The Series A Securities and the Series B Securities are
together referred to as the "Securities." The Series A Securities shall rank
pari passu in right of payment with the Series B Securities.
In the event that (a) the Exchange Offer Registration Statement is not filed
with the Commission on or prior to the date specified in the Registration Rights
Agreement, (b) the Exchange Offer Registration Statement has not been declared
effective on or prior to the date specified in the Registration Rights
Agreement, (c) the Exchange Offer is not consummated or a Shelf Registration
Statement is not declared effective, in either case, on or prior to the date
specified in the Registration Rights Agreement, or (d) the Shelf Registration
Statement or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales of the
Series A Securities during the periods specified in the Registration Rights
Agreement, without being succeeded immediately by a post-effective amendment to
such Registration Statement that cures such failure and that is itself declared
effective within a five Business Day period after filing such post-effective
amendment (each such event referred to in clauses (a) through (d) above, a
"Registration Default"), then commencing on the day following the date on which
such Registration Default occurs, the interest rate borne by the Series A
Securities shall be increased by one-half of one percent per annum for the 90-
day period following such Registration Default, which rate will increase by
one-half of one percent per annum with respect to each subsequent 90-day period
up to a maximum of one and one half percent (1.50%) per annum until cured
("Additional Interest"). Following the cure of all Registration Defaults, the
accrual of Additional Interest will cease and the interest rate will revert to
the original rate.
<PAGE>
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture hereinafter referred
to, be paid to the Person in whose name this Security (or any Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid, or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Series A Securities,
to the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Person in whose name this
Security (or any Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by the Indenture not inconsistent with the requirements of such
exchange, all as more fully provided in the Indenture.
Payment of the principal of, premium, if any, and interest on, this Security,
and exchange or registration of transfer of this Security, will be made at the
office or agency of the Company in The City of New York maintained for that
purpose (which initially will be a corporate trust office of the Trustee located
at 140 Broadway, New York, New York 10005), or at such other office or agency as
may be maintained for such purpose, by wire transfer of immediately available
funds unless otherwise provided in the Indenture. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by the
Trustee referred to on the reverse hereof or by the authenticating agent
appointed as provided in the Indenture by manual signature of an authorized
signer, this Security shall not be entitled to any benefit under the Indenture,
or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signature of its authorized officers and its
corporate seal to be affixed or reproduced hereon.
Dated: April 30, 1998
BELL TECHNOLOGY GROUP LTD.
By:
----------------
Attest: Name:
Title:
- -------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 13% Senior Notes due 2005, Series A referred to in the
within-mentioned Indenture.
MARINE MIDLAND BANK, as Trustee
By:
----------------
Authorized Signatory
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to Section
1012 or Section 1014, as applicable, of the Indenture, check the Box:____
If you wish to have a portion of this Security purchased by the Company pursuant
to Section 1012 or Section 1014 as applicable, of the Indenture, state the
amount (in original principal amount):
$ ------
Date: ____________ Your Signature:_______
(Sign exactly as your name
appears on the other side of this
Security)
Signature Guarantee:__
Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15
<PAGE>
(Reverse of Note)
Bell Technology Group Ltd.
13% Senior Note due 2005, Series A
This Security is one of a duly authorized issue of Securities of the Company
designated as its 13% Senior Notes due 2005, Series A (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $160,000,000, issued under and
subject to the terms of an indenture (the "Indenture") dated as of April 30,
1998, between the Company and Marine Midland Bank, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Guarantors, if any, the Trustee
and the Holders of the Securities, and of the terms upon which the Securities
are, and are to be, authenticated and delivered.
The Indenture contains provisions for defeasance at any time of (a) the entire
Indebtedness on the Securities and (b) certain restrictive covenants and related
Defaults and Events of Default, in each case upon compliance with certain
conditions set forth therein.
The Securities are subject to redemption at any time on or after May 1, 2001, at
the option of the Company, in whole or in part, on not less than 30 nor more
than 60 days' prior notice, in amounts of $1,000 or an integral multiple
thereof, at the following redemption prices (expressed as percentages of the
principal amount), if redeemed during the 12-month period beginning on May 1, of
the years indicated below:
Redemption
Year Price
- ---- -----
2001 106.500%
2002 104.333%
2003 102.166%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
rights of Holders of record on relevant record dates to receive interest due on
an Interest Payment Date).
In addition, at any time on or prior to May 1, 2000, the Company may, at its
option,
<PAGE>
use the net proceeds of one or more Public Equity Offerings or the sale of
Common Stock (other than Disqualified Stock) of the Company to a Strategic
Investor in a single transaction or in a series of related transactions, to
redeem up to an aggregate of 35% of the aggregate principal amount of Securities
originally issued under the Indenture at a redemption price equal to 113% of the
aggregate principal amount thereof, plus accrued and unpaid interest thereon, if
any, to the Redemption Date; provided that at least 65% aggregate principal
amount of the initially issued aggregate principal amount of Securities remains
outstanding immediately after the occurrence of such redemption. In order to
effect the foregoing redemption, the Company must mail a notice of redemption no
later than 45 days after the closing of the related Public Equity Offering or
sale of Common Stock to a Strategic Investor and must consummate such redemption
within 60 days of the closing of the Public Equity Offering or sale of Common
Stock to a Strategic Investor.
If less than all of the Securities are to be redeemed, the Trustee shall select
the Securities or portions thereof to be redeemed pro rata, by lot or by any
other method the Trustee shall deem fair and reasonable.
Upon the occurrence of a Change of Control, each Holder may require the Company
to purchase such Holder's Securities in whole or in part in integral multiples
of $1,000, at a purchase price in cash in an amount equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase, pursuant to a Change of Control Offer in accordance with the
procedures set forth in the Indenture.
Under certain circumstances, in the event the Net Cash Proceeds received by the
Company from any Asset Sale, which proceeds are not used to permanently repay
Pari Passu Indebtedness of the Company or invested in properties or other assets
that replace the properties and assets that were the subject of the Asset Sale
and which will be used only in an Internet Service Business, exceeds a specified
amount the Company will be required to apply such proceeds to the repayment of
the Securities and certain Indebtedness ranking pari passu in right of payment
to the Securities.
In the case of any redemption or repurchase of Securities in accordance with the
Indenture, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities of record as
of the close of business on the relevant Regular Record Date or Special Record
Date referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
In the event of redemption or repurchase of this Security in accordance with the
Indenture in part only, a new Security or Securities for the unredeemed portion
hereof shall be issued in the name of the Holder hereof upon the cancellation
hereof.
<PAGE>
If an Event of Default shall occur and be continuing, the principal amount of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions (including certain amendments
permitted without the consent of any Holders and certain amendments which
require the consent of all the Holders) as therein provided, the amendment
thereof and the modification of the rights and obligations of the Company and
the Guarantors, if any, and the rights of the Holders under the Indenture and
the Securities and the Guarantees, if any, at any time by the Company and the
Trustee with the consent of the Holders of at least a majority in aggregate
principal amount of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of at least a majority in aggregate
principal amount of the Securities (100% of the Holders in certain
circumstances) at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company and the Guarantors, if any, with
certain provisions of the Indenture and the Securities and the Guarantees, if
any, and certain past Defaults under the Indenture and the Securities and the
Guarantees, if any, and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, any Guarantor, if
any, or any other obligor on the Securities (in the event such Guarantor or such
other obligor is obligated to make payments in respect of the Securities), which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on, this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in the Borough of Manhattan, The City of New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or its attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
Certificated securities shall be transferred to all beneficial holders in
exchange for their beneficial interests in the Rule 144A Global Securities or
the Regulation S Global
<PAGE>
Securities if (x) the Company notifies the Trustee in writing that the
Depositary is unwilling or unable to continue as depository for such Global
Security and a successor depository is not appointed by the Company within 90
days or (y) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of certificated Series A Securities. Upon any such
issuance, the Trustee is required to register such certificated Series A
Securities in the name of, and cause the same to be delivered to, such Person or
Persons (or the nominee of any thereof). All such certificated Series A
Securities would be required to include the Private Placement Legend.
Series A Securities in certificated form are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
the Series A Securities are exchangeable for a like aggregate principal amount
of Securities of a differing authorized denomination, as requested by the Holder
surrendering the same.
At any time when the Company is not subject to Sections 13 or 15(d) of the
Exchange Act, upon the written request of a Holder of a Series A Security, the
Company will promptly furnish or cause to be furnished such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto) to such Holder or to a prospective purchaser of such Series A
Security who such Holder informs the Company is reasonably believed to be a
"Qualified Institutional Buyer" within the meaning of Rule 144A under the
Securities Act, as the case may be, in order to permit compliance by such Holder
with Rule 144A under the Securities Act.
No service charge shall be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, any Guarantor, the Trustee and any agent of the Company, any Guarantor
or the Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security is overdue, and
neither the Company, any Guarantor, the Trustee nor any such agent shall be
affected by notice to the contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto
Insert Taxpayer Identification No.
(Please print or typewrite name and address including zip code of assignee)
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing__________________ attorney to transfer such Security on the books
of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL
CERTIFICATES FOR SERIES A SECURITIES EXCEPT
PERMANENT OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Security occurring prior to the date
which is the earlier of the date of an effective Registration Statement or the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
______(a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided by Rule
144A thereunder.
or
______(b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions of
transfer set forth in this Security and the Indenture.
<PAGE>
If none of the foregoing boxes is checked, the Trustee or other Security
Registrar shall not be obligated to register this Security in the name of any
Person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 307 of the Indenture
shall have been satisfied.
Date:
- ------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within-mentioned instrument in every particular,
without alteration or any change whatsoever.
Signature Guarantee:
--------------------
[Signature must be guaranteed by an eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and credit unions) with membership in an
approved guarantee medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15]
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date:
- ------------------------------
NOTICE: to be executed by an authorized signatory
FORM OF WARRANT CERTIFICATE
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR WARRANTS IN DEFINITIVE
FORM, THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. THE DEPOSITORY
TRUST COMPANY ("DTC") (55 WATER STREET, NEW YORK, NEW YORK) SHALL ACT AS THE
DEPOSITARY UNTIL A SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE WARRANT
AGENT. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.(1)
No.
Warrant Certificate
BELL TECHNOLOGY GROUP LTD.
This Warrant Certificate certifies that ________, or its registered
assigns, is the registered holder of Warrants to purchase Common Stock, par
value $.01 (the "Common Stock"), of Bell Technology Group Ltd., a Delaware
corporation (the "Company"). This Warrant Certificate is issued pursuant to the
Warrant Agreement, dated as of April 30, 1998 (the "Warrant Agreement") by and
between the Company and Marine Midland Bank, as Warrant Agent (the "Warrant
Agent"). All capitalized terms not otherwise defined herein shall have the
meanings given to those terms in the Warrant Agreement. Each Warrant entitles
the registered holder, upon exercise at any time commencing at 9:00 a.m., New
York City time, on the Separation Date (as defined in the Warrant Agreement)
until 5:00 p.m., New York City time on the Expiration Date, to receive from the
Company 3.52 fully paid and nonassessable shares of Common Stock (the "Warrant
Shares") at the initial exercise price (the "Exercise Price") of $14.03 per
- ----------
(1) This paragraph is to be included only if the Warrant is in global form.
<PAGE>
share payable in lawful money of the United States of America upon surrender of
this Warrant Certificate and payment of the Exercise Price at the office or
agency of the Warrant Agent, but only subject to the conditions set forth herein
and in the Warrant Agreement referred to on the reverse hereof. The Exercise
Price and number of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.
No Warrant may be exercised before the Separation Date. No Warrant
maybe exercised after 5:00 p.m., New York City time on May 1, 2005, the
Expiration Date, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, Bell Technology Group Ltd. has caused this
Warrant Certificate to be signed by its President and by its Secretary, each by
a signature or a facsimile thereof, and has caused a facsimile of its corporate
seal to be affixed hereunto or imprinted hereon.
Dated:
BELL TECHNOLOGY GROUP LTD.
By:
--------------------------
Name:
Title: President
By:
--------------------------
Name:
Title: Secretary
Countersigned:
MARINE MIDLAND BANK,
as Warrant Agent
2
<PAGE>
By:
-----------------
Authorized Signature
3
<PAGE>
Form of Reverse of Warrant Certificate
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring May 1, 2005 entitling the holder on
exercise to receive shares of Common Stock of the Company, and are issued or to
be issued pursuant to the Warrant Agreement, duly executed and delivered by the
Company to the Warrant Agent, which Warrant Agreement is hereby incorporated by
reference herein and made a part of this instrument and is hereby referred to
for a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company. Capitalized terms used herein
without definition shall have the meanings ascribed to them in the Warrant
Agreement.
The Warrants evidenced by this Warrant Certificate may be exercised
at any time from 9:00 a.m., New York City time, on or after the Separation Date
and until 5:00 p.m., New York City time on the Expiration Date, by surrender to
the Company at the Principal Office of the Warrant Agent of this Warrant
Certificate with the form of election to purchase herein properly completed and
signed, which signature shall be guaranteed by a bank or trust company having an
office or correspondent in the United States or a broker or dealer which is a
member of a registered securities exchange or the National Association of
Securities Dealers, Inc., and upon payment to the Warrant Agent for the account
of the Company of the Exercise Price as adjusted as herein provided, for each of
the Warrant Shares in respect of which such Warrants are then exercised. Payment
of the aggregate Exercise Price shall be made in cash or by certified or
official bank check, payable to the order of the Company. In the alternative,
each holder may exercise its right to receive Warrant Shares (i) on a net basis,
such that without the exchange of any funds, the holder receives that number of
Warrant Shares otherwise issuable upon exercise of its Warrants less that number
of Warrant Shares having a fair market value equal to the aggregate Exercise
Price that would otherwise have been paid by the holder for the Warrant Shares
being issued, (ii) by tendering Notes having an aggregate principal amount, plus
accrued but unpaid interest, if any, thereon, to the date of exercise equal to
the aggregate Exercise Price that would otherwise have been paid by the holder
for the Warrant Shares being issued, or (iii) by a combination of the procedures
in clauses (i) and (ii) above. For purposes of the foregoing sentence, "fair
market value" of the Warrant Shares shall be as determined by the Board of
Directors of the Company in good faith. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or his assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof and/or the number of
shares of
<PAGE>
Common Stock issuable upon the exercise of the Warrants evidenced hereby shall,
subject to certain conditions, be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The Warrant Agreement provides that the Company shall be bound by
certain registration obligations with respect to the Common Stock issuable upon
exercise of the Warrants as set forth in the Warrant Registration Rights
Agreement.
This Warrant Certificate, when surrendered at the Principal Office
of the Warrant Agent by the registered holder hereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purposes of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive shares of Common Stock and
herewith makes payment therefor. The undersigned requests that a certificate for
such shares be registered in the name of______, whose address is ______ and that
such shares be delivered to _______, whose address is _______ . If said number
of shares is less than all of the shares of Common Stock purchasable hereunder,
the undersigned requests that a new Warrant Certificate representing the
remaining balance of such shares be registered in the name of_______, whose
address is _______, and that such Warrant Certificate be delivered to _______,
whose address is _______.
2
<PAGE>
[THE FOLLOWING PROVISION TO BE INCLUDED ONLY ON OFFSHORE
CERTIFICATED WARRANTS]
The undersigned certifies that:
Check One
o (a)(i) it is not a U.S. person (as defined in Rule 902 of
Regulation S under the Securities Act) and the Warrants are
not being exercised on behalf of a U.S. person.
or
o (ii) it is furnishing to the Warrant Agent a written opinion
of counsel to the effect that the Warrants and the Common
Shares issuable upon exercise of the Warrants have been
registered under the Securities Act or are exempt from
registration thereunder.
and (b) if an opinion is not being furnished, the undersigned is located outside
the United States at the time of the exercise hereof.
Dated:
----------------------------
Signature
Signature Guaranteed By:
----------------------------
3
WARRANT AGREEMENT
Dated as of April 30, 1998
by and between
BELL TECHNOLOGY GROUP LTD.
and
MARINE MIDLAND BANK
WARRANT AGREEMENT (this "Agreement") is made and entered into as of
April 30, 1998 by and between BELL TECHNOLOGY GROUP LTD., a Delaware corporation
(the "Company"), and MARINE MIDLAND BANK, as warrant agent (the "Warrant
Agent").
WHEREAS, the Company proposes to issue 160,000 Common Stock purchase
warrants, as hereinafter described (the "Warrants"), to purchase up to an
aggregate of 563,200 shares of Common Stock (as defined below), in connection
with the offering of an aggregate of $160,000,000 in principal amount of the 13%
Senior Notes due 2005 (the "Notes"). Each Warrant entitles the holder thereof to
purchase 3.52 shares of Common Stock. The Notes and Warrants will be sold in
Units (the "Units"), each Unit consisting of $1,000 principal amount of Notes
and one Warrant.
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:
Section 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by or under
<PAGE>
direct or indirect common control with such Person. For purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Commission" means the Securities and Exchange Commission.
"Common Equity Securities" means Common Stock and securities
convertible into, or exercisable or exchangeable for, Common Stock or rights or
options to acquire Common Stock or such other securities, excluding the
Warrants.
"Common Stock" means the common stock, par value $.01 per share, of
the Company, and any other capital stock of the Company into which such common
stock may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution for, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
"Company" means Bell Technology Group Ltd., a Delaware corporation,
and its successors and assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"Exercise Price" means the purchase price per share of Common Stock
to be paid upon the exercise of each Warrant in accordance with the terms
hereof, which price shall initially be $14.03 per share, subject to adjustment
from time to time pursuant to Section 13 hereof.
"Expiration Date" means May 1, 2005.
"Holder" means a Person who is the owner as shown on the Warrant
register maintained by the Warrant Agent.
"Indenture" means the Indenture, dated as of the date hereof,
between the Company and Marine Midland Bank, as trustee.
"Initial Purchaser" means ING Baring (U.S.) Securities, Inc.
"Issue Date" means the date of the initial issuance of the Warrants.
2
<PAGE>
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Principal Office of Warrant Agent" means the Warrant Agent's office
located at 140 Broadway, 12th Floor, New York, New York 10005, or such other
office of the Warrant Agent as the Warrant Agent shall designate from time to
time in writing as its Principal Office for the purposes of this Agreement.
"Registrable Securities" means any of (i) the Warrant Shares and
(ii) any other securities issued or issuable with respect to any Warrant Shares
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise, unless, in each case, such Warrant Shares and securities, if any,
have been offered and sold to the Holder pursuant to an effective Registration
Statement under the Securities Act declared effective prior to the date of
exercisability of the Warrants or the date such Warrant Shares and securities,
if any, may be sold to the public pursuant to Rule 144 without any restriction
on the amount of securities which may be sold by such Holder or the satisfaction
of any condition. As to any particular Registrable Securities held by a Holder,
such securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the exercise or offering of such securities by the
Holder thereof shall have been declared effective under the Securities Act and
such securities shall have been exercised and/or disposed of by such Holder
pursuant to such Registration Statement, (ii) such securities may at the time of
determination be sold to the public pursuant to Rule 144 without any restriction
on the amount of securities which may be sold by such Holder (or any similar
provision then in force, but not Rule 144A) without the lapse of any further
time or the satisfaction of any condition, (iii) such securities shall have been
otherwise transferred by such Holder and new certificates for such securities
not bearing a legend restricting further transfer shall have been delivered by
the Company or its transfer agent and subsequent disposition of such securities
shall not require registration or qualification under the Securities Act or any
similar state law then in force or (iv) such securities shall have ceased to be
outstanding.
"Registration Rights Agreement" means the registration rights
agreement, dated as of the date hereof by and between the Company and the
Initial Purchaser relating to the Notes.
3
<PAGE>
"Rule 144" shall mean Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
"Rule 144A" shall mean Rule 144A promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute and the rules and regulations promulgated thereunder.
"Separation Date" means the earliest to occur of (i) 180 days from
the Issue Date, (ii) in the event a Change in Control (as defined in the
Indenture) occurs, the date the Company mails notices thereof to Holders of the
Notes pursuant to the Indenture, (iii) the occurrence of an Event of Default (as
defined in the Indenture), (iv) the date on which a registration statement with
respect to the Notes or an Exchange Offer (as defined in the Registration Rights
Agreement) for the Notes is declared effective, or (v) such earlier date as may
be determined by the Initial Purchaser.
"Warrant Agent" means Marine Midland Bank or the successor or
successors of such Warrant Agent appointed in accordance with the terms hereof.
"Warrant Registration Rights Agreement" means the registration
rights agreement, dated as of the date hereof by and between the Company and the
Initial Purchaser relating to the Warrants and the Warrant Shares.
"Warrant Shares" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants.
Section 2. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 3. Issuance of Warrants; Warrant Certificates. The Warrants
will be issued in the form of one or more global certificates (the "Global
Warrants"), substantially in the form of Exhibit A. The Global Warrants shall be
deposited on the Issue Date with, or on behalf of,
4
<PAGE>
The Depository Trust Company (the "Depositary") and registered in the name of
Cede & Co., as the Depositary's nominee. Each Global Warrant shall represent
such of the outstanding Warrants as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Warrants
from time to time endorsed thereon and that the aggregate amount of outstanding
Warrants represented thereby may from time to time be reduced or increased, as
appropriate. Upon request, a Holder may receive from the Depositary and the
Warrant Agent Warrants in definitive form (the "Definitive Warrants"),
substantially in the form of Exhibit A (not including footnotes 1 and 2 thereto)
as set forth in Section 7 below. Any certificates (the "Warrant Certificates")
evidencing the Global Warrants or the Definitive Warrants to be delivered
pursuant to this Agreement shall be substantially in the form set forth in
Exhibit A attached hereto.
Section 4. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its President or a Vice President
and by its Secretary or an Assistant Secretary under its corporate seal. Each
such signature upon the Warrant Certificates may be in the form of a facsimile
signature of the present or any future President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been President, Vice President, Secretary
or Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be countersigned and delivered or disposed of, such person
shall have ceased to hold such office. The seal of the Company may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
5
<PAGE>
Section 5. Separation of Warrants. The Notes and Warrants shall not
be separately transferable prior to the Separation Date.
Section 6. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates in a
register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the President, a Vice
President, the Treasurer or the Controller of the Company, initially
countersign, issue and deliver Warrants entitling the Holders thereof to
purchase not more than the number of Warrant Shares referred to above in the
first recital hereof and shall countersign and deliver Warrants as otherwise
provided in this Agreement.
The Company and the Warrant Agent may deem and treat the person in
whose name any Warrant is registered as the absolute owner(s) thereof, for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
Section 7. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement and the
procedures of the Depositary therefor.
(b) Exchange of a Beneficial Interest in a Global Warrant for a
Definitive Warrant.
(i) Any Person having a beneficial interest in a Global Warrant may
upon request exchange such beneficial interest for a Definitive Warrant. Upon
receipt by the Warrant Agent of written instructions or such other form of
instructions as is customary for the Depositary from the Depositary or its
nominee on behalf of any person having a beneficial interest in a Global Warrant
and, in the case of a Registrable Security, the following additional information
and documents (all of which may be submitted by facsimile), as applicable:
(A) if such beneficial interest is being delivered to the
Person designated by the Depositary as being the beneficial owner, a
certification from such beneficial owner to that effect (in substantially the
form
6
<PAGE>
of Exhibit B hereto);
(B) if such beneficial interest is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A) in accordance with
Rule 144A or (2) pursuant to an exemption from registration in accordance with
Rule 144 (and based on an opinion of counsel if the Company or the Warrant Agent
so requests) or (3) pursuant to an effective registration statement under the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto);
(C) if such beneficial interest is being transferred pursuant
to an exemption from registration in accordance with Rule 904 under the
Securities Act (and based on an opinion of counsel if the Company or the Warrant
Agent so requests), a certification to that effect (in substantially the form of
Exhibit B); or
(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company or the Warrant
Agent so requests), a certification to that effect (in substantially the form of
Exhibit B hereto);
then, in accordance with the standing instructions and procedures existing
between the Depositary and the Warrant Agent, the Warrant Agent shall cause the
number of Warrants represented by the Global Warrant to be reduced by the number
of Warrants to be represented by the Definitive Warrants to be issued in
exchange for the interest in the Global Warrant and, following such reduction,
the Company shall execute and the Warrant Agent shall countersign and deliver to
the transferee, as the case may be, a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 7(b) shall be registered
in such names as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Warrant Agent. The
Warrant Agent shall deliver such Definitive Warrants to the Persons in whose
names such Warrants are so registered.
(c) Transfer and Exchange of Definitive Warrants. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
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(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the following requirements are met:
(x) the Definitive Warrants presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Warrant
Agent, duly executed by the Holder thereof or by his attorney, duly
authorized in writing; and
(y) in the case of Registrable Securities, such request shall be
accompanied by the following additional information and documents (all of
which may be submitted by facsimile), as applicable:
(A) if such Registrable Security is being delivered to the
Warrant Agent by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form of Exhibit B hereto);
(B) if such Registrable Security is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A) in
accordance with Rule 144A or (2) pursuant to an exemption from
registration in accordance with Rule 144 (and based on an opinion of
counsel if the Company or the Warrant Agent so requests) or (3)
pursuant to an effective registration statement under the Securities
Act, a certification to that effect (in substantially the form of
Exhibit B hereto);
(C) if such Registrable Security is being transferred pursuant
to an exemption from registration in accordance with Rule 904 under
the Securities Act (and based on an opinion of counsel if the
Company or the Warrant Agent so requests), a certification to that
effect (in substantially the form of Exhibit B hereto); or
(D) if such Registrable Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act (and based on an opinion of counsel if the
Company or the Warrant Agent so requests), a certification to that
effect (in substantially the form of Exhibit B hereto).
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(d) Restrictions on Exchange or Transfer of a Definitive Warrant for
a Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
exchanged for a beneficial interest in a Global Warrant except upon satisfaction
of the requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Warrant Agent, together with:
(i) if such Definitive Warrant is a Registrable Security,
certification from the Holder thereof (in substantially the form of
Exhibit B hereto) to the effect that such Definitive Warrant is being
transferred by such Holder either (A) to a "qualified institutional buyer"
(as defined in Rule 144A) in accordance with Rule 144A (and based on an
opinion of counsel if the Company or the Warrant Agent so requests) or (B)
outside the United States, to a foreign Person in a transaction meeting
the requirements of Rule 904 under the Securities Act (and based on an
opinion of counsel if the Company or the Warrant Agent so requests) who
wishes to take delivery thereof in the form of a beneficial interest in a
Global Warrant; and
(ii) whether or not such Definitive Warrant is a Registrable
Security, written instructions directing the Warrant Agent to make, or to
direct the Depositary to make, an endorsement on the Global Warrant to
reflect an increase in the number of Warrants represented by the Global
Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrants are then outstanding, the Company shall issue and the Warrant
Agent shall countersign a new Global Warrant representing the appropriate number
of Warrants.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
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(f) Countersigning of Definitive Warrants in Absence of Depositary.
If at any time:
(i) the Depositary for the Global Warrants notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for the
Global Warrants and a successor Depositary for the Global Warrants is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Warrant Agent
in writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company shall execute, and the Warrant Agent, upon receipt of written
instructions signed by two officers of the Company, shall countersign and
deliver Definitive Warrants, in an aggregate number equal to the number of
Warrants represented by Global Warrants, in exchange for such Global Warrants.
(g) Legends.
(i) Except for any Registrable Security sold or transferred
(including any Registrable Security represented by a Global Warrant) as
discussed in clause (ii) below, each Warrant Certificate evidencing the
Global Warrants and the Definitive Warrants (and all Warrants issued in
exchange therefor or substitution thereof) and each certificate
representing the Warrant Shares shall bear a legend in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY AND THE
SECURITIES DELIVERED UPON EXERCISE THEREOF MAY NOT BE EXERCISED,
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY AND THE SECURITIES DELIVERED UPON THE
EXERCISE THEREOF IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A. [IF A SECURITY IS SOLD PURSUANT TO
REGULATION S: NO HEDGING TRANSACTIONS INVOLVING THIS SECURITY AND
THE SECURITIES DELIVERED UPON EXERCISE THEREOF MAY BE CONDUCTED
DURING THE ONE-YEAR DISTRIBUTION COMPLIANCE PERIOD FOLLOWING THE
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ISSUE DATE THEREOF UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.]
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE ISSUER THAT (A) SUCH SECURITY AND THE SECURITIES DELIVERED
UPON EXERCISE HEREOF MAY BE EXERCISED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A , (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A
PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT, OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(IN THE CASE OF (b), (c) or (d), UPON AN OPINION OF COUNSEL AND
WRITTEN CERTIFICATION IF THE ISSUER OR WARRANT AGENT, REGISTRAR OR
TRANSFER AGENT FOR THE SECURITIES SO REQUESTS), (2) TO THE ISSUER OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION [IF A
SECURITY IS SOLD PURSUANT TO REGULATION S: (B) THE HOLDER WILL NOT
ENGAGE IN HEDGING TRANSACTIONS WITH REGARD TO THIS SECURITY AND THE
SECURITIES DELIVERED UPON EXERCISE THEREOF DURING THE ONE-YEAR
DISTRIBUTION COMPLIANCE PERIOD FOLLOWING THE ISSUE DATE HEREOF
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT AND (C)] AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY AND THE
SECURITIES DELIVERED UPON EXERCISE HEREOF OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Registrable Security (including
any Registrable Security represented by a Global Warrant) pursuant to an
effective registration statement under the Securities Act, pursuant to
Rule 144(k) or pursuant to an opinion of counsel reasonably satisfactory
to the Company and addressed to the Warrant Agent that no legend is
required:
(A) in the case of any Registrable Security that is a
Definitive Warrant, the Warrant Agent shall permit the Holder
thereof to exchange such
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Registrable Security for a Definitive Warrant that does not bear the
legend set forth in clause (i) above and rescind any restriction on
the transfer of such Registrable Security; and
(B) in the case of any Registrable Security represented by a
Global Warrant, such Registrable Security shall not be required to
bear the legend set forth in clause (i) above but shall continue to
be subject to the provisions of Section 7(c) hereof; provided,
however, that with respect to any request for an exchange of a
Registrable Security that is represented by a Global Warrant for a
Definitive Warrant that does not bear the legend set forth in clause
(i) above, which request is made in reliance upon Rule 144 (and
based upon an opinion of counsel if the Company or the Warrant Agent
so requests), the Holder thereof shall certify in writing to the
Warrant Agent that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of Exhibit B
hereto).
(iii) Each Warrant Certificate issued prior to the Separation Date
shall bear a legend in substantially the following form:
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS A
PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13%
SENIOR NOTE DUE 2005 OF BELL TECHNOLOGY GROUP LTD. (THE "NOTES") AND
ONE WARRANT, INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 3.52
SHARES OF COMMON STOCK, $0.01 PAR VALUE, OF BELL TECHNOLOGY GROUP
LTD. PRIOR TO EARLIEST TO OCCUR OF (i) 180 DAYS FROM THE DATE OF
ISSUANCE OF THIS WARRANT, (ii) IN THE EVENT A CHANGE IN CONTROL (AS
DEFINED IN THE INDENTURE) OCCURS, THE DATE BELL TECHNOLOGY GROUP
LTD. MAILS NOTICES TO HOLDERS OF THE NOTES, (iii) THE OCCURRENCE OF
AN EVENT OF DEFAULT (AS DEFINED IN THE INDENTURE), (iv) THE DATE ON
WHICH A REGISTRATION STATEMENT WITH RESPECT TO THE NOTES OR AN
EXCHANGE OFFER (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) FOR
THE NOTES IS DECLARED EFFECTIVE OR (v) SUCH EARLIER DATE AS MAY BE
DETERMINED BY THE INITIAL PURCHASER, THE WARRANTS EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT
MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE RELATED
NOTES.
(h) Cancellation of Global Warrant. At such time as all beneficial
interests in Global Warrants have either been
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exchanged for Definitive Warrants, redeemed, repurchased or cancelled, all
Global Warrants shall be returned to or retained and cancelled by the Warrant
Agent.
(i) Obligations with respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent is hereby authorized to countersign,
in accordance with the provisions of Section 6 and this Section 7,
Definitive Warrants and Global Warrants as required pursuant to the
provisions of this Section 7. Notwithstanding anything to the contrary
contained herein, the Company shall refuse to register any transfer of the
Warrants 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 Warrants
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.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration of transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to the
same benefits under this Warrant Agreement, as the Definitive Warrants or
Global Warrants surrendered upon such registration of transfer or
exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the person
in whose name any Warrant is registered as the absolute owner of such
Warrant and neither the Warrant Agent, nor the Company shall be affected
by notice to the contrary.
(iv) No service charge shall be made to a Holder for any
registration of transfer or exchange.
Section 8. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Warrant Holder shall have the right, which may be
exercised at any time and from time to time, in whole or in part, commencing at
9:00 a.m., New York City time, on the Separation Date and ending at 5:00 p.m.,
New York City time, on the Expiration Date, to receive from the Company the
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number of fully paid and nonassessable Warrant Shares which the Holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
Exercise Price then in effect for such Warrant Shares; provided, however, that
no Warrant Holder shall be entitled to exercise such Holder's Warrants at any
time, unless, at the time of exercise, (i) a registration statement under the
Securities Act relating to the Warrant Shares has been filed with, and declared
effective by, the Commission, and no stop order suspending the effectiveness of
such registration statement has been issued by the Commission or (ii) the
issuance of the Warrant Shares is permitted pursuant to an exemption from the
registration requirements of the Securities Act. Subject to the provisions of
the following paragraph of this Section 8, each Warrant not exercised prior to
5:00 p.m., New York City time, on the Expiration Date shall become void and all
rights thereunder and all rights in respect thereof under this Agreement shall
cease as of such time. No adjustments as to dividends will be made upon exercise
of the Warrants.
The Company shall give notice not less than 90, and not more than
120, days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
5:00 p.m., New York City time, on the Expiration Date. If the Company fails to
give such notice, the Warrants will not expire until 90 days after the Company
gives such notice, provided, however, in no event will Holders be entitled to
any damages or other remedy for the Company's failure to give such notice other
than any such extension.
A Warrant may be exercised upon surrender to the Company at the
Principal Office of the Warrant Agent of the certificate or certificates
evidencing the Warrant to be exercised with the form of election to purchase on
the reverse thereof properly completed and signed, which signature shall be
guaranteed by a bank or trust company having an office or correspondent in the
United States or a broker or dealer which is a member of a registered securities
exchange or the National Association of Securities Dealers, Inc., and upon
payment to the Warrant Agent for the account of the Company of the Exercise
Price as adjusted as herein provided, for each of the Warrant Shares in respect
of which such Warrant is then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by certified or official bank check, payable to the
order of the Company. In the alternative, each Holder may exercise its right to
receive Warrant Shares (i) on a net basis, such that without the exchange of any
funds, the Holder receives that number of Warrant Shares otherwise issuable upon
exercise of its Warrants less that number of Warrant Shares having a fair market
value equal to the
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aggregate Exercise Price that would otherwise have been paid by the Holder for
the Warrant Shares being issued, (ii) by tendering Notes having an aggregate
principal amount, plus accrued but unpaid interest, if any, thereon, to the date
of exercise equal to the aggregate Exercise Price that would otherwise have been
paid by the Holder for the Warrant Shares being issued, or (iii) by a
combination of the procedures in clauses (i) and (ii). For purposes of the
foregoing sentence, "fair market value" of the Warrant Shares shall be as
determined by the Board of Directors of the Company in good faith and evidenced
by a resolution thereof. The Company shall notify the Warrant Agent in writing
of any such determination of fair market value. The exercise of Warrants by
Holders of beneficial interests in Global Warrants shall be effected in
accordance with this Agreement and the procedures of the Depositary therefor.
Subject to the provisions of Section 9 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above, the Warrant Agent
shall thereupon promptly notify the Company, and the Company shall promptly
transfer to the Holder of such Warrant a certificate or certificates for the
appropriate number of Warrant Shares or other securities or property (including
any money) to which the Holder is entitled, registered or otherwise placed in,
or payable to the order of, such name or names as may be directed in writing by
the Holder, and shall deliver such certificate or certificates representing the
Warrant Shares and any other securities or property (including any money) to the
Person or Persons entitled to receive the same, together with an amount in cash
in lieu of any fraction of a share as provided in Section 15. Any such
certificate or certificates representing the Warrant Shares shall be deemed to
have been issued and any Person so designated to be named therein shall be
deemed to have become a Holder of record of such Warrant Shares as of the later
of the date of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Separation Date,
at the election of the Holders thereof, either in full or from time to time in
part and, in the event that a certificate evidencing Warrants is exercised in
respect of fewer than all of the Warrant Shares issuable on such exercise at any
time prior to the date of expiration of the Warrants, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the Warrant
Agent is hereby irrevocably authorized to countersign and to deliver the
required new Warrant Certificate or Certificates pursuant to the provisions of
this Section and of Section 4 hereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such
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<PAGE>
purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall
then be disposed of by the Warrant Agent in accordance with its customary
procedures. The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and promptly pay to the Company all monies received by the
Warrant Agent for the purchase of the Warrant Shares through the exercise of
such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder by or from the Company available for
inspection by the Holders during normal business hours at its Principal Office.
The Company shall supply the Warrant Agent from time to time with such numbers
of copies of this Agreement as the Warrant Agent may request.
Section 9. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants and to any separation of the Warrants from the Notes;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue of
any Warrant Certificates or any certificates for Warrant Shares in a name other
than that of the Holder of a Warrant Certificate surrendered upon the exercise
of a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 10. Mutilated or Missing Warrant Certificates. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and, if requested, indemnity reasonably
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
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Section 11. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free from any preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The transfer agent for the Common Stock (the "Transfer Agent") and
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Warrant
Agent is hereby irrevocably authorized to requisition from time to time from
such Transfer Agent the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply such Transfer Agent with duly executed certificates for
such purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 15. The Company will furnish such Transfer Agent
a copy of all notices of adjustments and certificates related thereto,
transmitted to each Holder of the Warrants pursuant to Section 16 hereof. The
Warrant Agent hereby agrees that it will not issue any stock certificates
delivered hereunder other than upon the exercise of Warrants in accordance with
the terms of this Agreement and, promptly after the issuance of any such stock
certificates, to notify the Transfer Agent of such issuance.
Before taking any action which would cause an adjustment pursuant to
Section 13 hereof that would reduce the Exercise Price below the then par value
(if any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants in accordance with the terms of this Agreement
(including the payment of the Exercise Price) will, upon issue, be duly and
validly issued, fully paid, nonassessable, and free of preemptive rights and
Liens.
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Section 12. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets (including, without limitation,
the Nasdaq National or SmallCap Markets) within the United States of America, if
any, on which other shares of Common Stock are then listed. Upon the listing of
such Warrant Shares, the Company shall notify the Warrant Agent in writing. The
Company will obtain and keep all required permits and records in connection with
such listing.
Section 13. Adjustment of Exercise Price and Number of Warrant
Shares Issuable. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
(as set forth in the notices required by Section 16 hereof) as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect and the number of
Warrant Shares issuable upon exercise of each Warrant immediately prior to such
action shall be adjusted so that the Holder of any Warrant thereafter exercised
shall be entitled to receive the number of shares of capital stock of the
Company which such Holder would have owned immediately following such action had
such Warrant been exercised immediately prior thereto. Any adjustment made
pursuant to this paragraph shall become effective immediately after the record
date in the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this paragraph, the Holder of
any Warrant thereafter exercised shall become entitled to receive shares of two
or more classes of capital stock of the Company, the Board of Directors of the
Company (whose determination shall be conclusive and evidenced by a Board
resolution) shall determine the allocation of the adjusted Exercise Price
between or among shares of such classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
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other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
then outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of all or substantially all of the assets of the Company, then, as a
condition of such reclassification, change, consolidation, merger, sale or
conveyance, the Company or such a successor or purchasing corporation, as the
case may be, shall forthwith make lawful and adequate provision whereby the
Holder of each Warrant then outstanding shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a Holder of the number of shares of
Common Stock issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and enter
into a supplemental warrant agreement so providing. Such provisions shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 13. If the issuer of
securities deliverable upon exercise of Warrants under the supplemental warrant
agreement is an affiliate of the formed, surviving or transferee corporation,
that issuer shall join in the supplemental warrant agreement. The above
provisions of this paragraph (b) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(c) Issuance of Options or Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, distribute or otherwise grant in any manner (including by assumption) to
all holders of the Common Stock any rights to subscribe for or to purchase, or
any warrants or options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (any such rights,
warrants or options being herein called "Options" and any such convertible or
exchangeable stock or securities being herein called "Convertible Securities")
or any Convertible Securities (other than upon exercise of any Option), whether
or not such Options or the rights to convert or exchange such Convertible
Securities are immediately exercisable, and if the price per share at which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing
(i) the aggregate amount,
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if any, received or receivable by the Company as consideration for the issuance,
sale, distribution or granting of such Options or any such Convertible Security,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Options or upon conversion or
exchange of all such Convertible Securities, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of all Convertible Securities issuable upon the exercise of all such Options)
shall be less than the current market price per share of Common Stock on the
record date for the issuance, sale, distribution or granting of such Options or
Convertible Securities (any such event being herein called a "Distribution"),
then, effective upon such Distribution, (I) the Exercise Price shall be reduced
to the price (calculated to the nearest 1/1,000 of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Distribution
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Distribution multiplied by the current market price
per share of Common Stock on the date of such Distribution plus (ii) the
consideration, if any, received by the Company upon such Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately after
such Distribution multiplied by (B) the current market price per share of Common
Stock on the record date for such Distribution and (II) the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall be increased to
a number determined by multiplying the number of shares of Common Stock so
purchasable immediately prior to the record date for such Distribution by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (I) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. For purposes of the foregoing, the total maximum number of
shares of Common Stock issuable upon exercise of all such Options or upon
conversion or exchange of all such Convertible Securities or upon the conversion
or exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options shall be deemed to have been issued as of
the date of such Distribution and thereafter shall be deemed to be outstanding
and the Company shall be deemed to have received as consideration therefor such
price per share,
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determined as provided above. Except as provided in paragraphs (i) and (j)
below, no additional adjustment of the Exercise Price shall be made upon the
actual exercise of such Options or upon conversion or exchange of the
Convertible Securities or upon the conversion or exchange of the Convertible
Securities issuable upon the exercise of such Options.
(d) Dividends and Distributions. In the event the Company shall, at
any time or from time to time after the date hereof, distribute to all the
holders of Common Stock any dividend or other distribution of cash, evidences of
its indebtedness, other securities or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Options or Convertible
Securities and (ii) any cash dividend that, when added to all other cash
dividends paid in the one year prior to the declaration date of such dividend
(excluding any such other dividend included in a previous adjustment of the
Exercise Price pursuant to this paragraph (d) and excluding any cash dividends
or other cash distributions from current or retained earnings), does not exceed
5% of the current market price per share of Common Stock on such declaration
date), or any options, warrants or other rights to subscribe for or purchase any
of the foregoing, then (A) the Exercise Price shall be decreased to a price
determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which shall be the current market price per share of Common Stock
on the record date for such distribution less the sum of (X) the cash portion,
if any, of such distribution per share of Common Stock outstanding (exclusive of
any treasury shares) on the record date for such distribution plus (Y) the then
fair market value (as determined in good faith by the Board of Directors of the
Company) per share of Common Stock outstanding (exclusive of any treasury
shares) on the record date for such distribution of that portion, if any, of
such distribution consisting of evidences of indebtedness, other securities,
properties, assets, options, warrants or subscription or purchase rights, and
the denominator of which shall be such current market price per share of Common
Stock and (B) the number of shares of Common Stock purchasable upon the exercise
of each Warrant shall be increased to a number determined by multiplying the
number of shares of Common Stock so purchasable immediately prior to the record
date for such distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to the adjustment required by clause
(A) of this sentence and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment. The adjustments required by this
paragraph (d) shall be made whenever any such distribution occurs retroactive to
the record date for the determination of stockholders entitled to receive such
distribution.
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(e) Current Market Price. For the purpose of any computation of
current market price under this Section 13 and Section 15, the current market
price per share of Common Stock at any date shall be (x) for purposes of Section
15, the closing price on the business day immediately prior to the exercise of
the applicable Warrant pursuant to Section 8 and (y) in all other cases, the
average of the daily closing prices for the shorter of (i) the 20 consecutive
trading days ending on the last full trading day on the exchange or market
specified in the second succeeding sentence prior to the Time of Determination
(as defined below) and (ii) the period commencing on the date next succeeding
the first public announcement of the issuance, sale, distribution or granting in
question through such last full trading day prior to the Time of Determination.
The term "Time of Determination" as used herein shall be the time and date of
the earlier to occur of (A) the date as of which the current market price is to
be computed and (B) the last full trading day on such exchange or market before
the commencement of "ex-dividend" trading in the Common Stock relating to the
event giving rise to the adjustment required by paragraph (a), (b), (c) or (d)
above. The closing price for any day shall be the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for such day, in each
case (1) on the principal national securities exchange on which the shares of
Common Stock are listed or to which such shares are admitted to trading or (2)
if the Common Stock is not listed or admitted to trading on a national
securities exchange, in the over-the-counter market as reported by Nasdaq
National or SmallCap Markets or any comparable system or (3) if the Common Stock
is not listed on Nasdaq National or SmallCap Markets or a comparable system, as
furnished by two members of the NASD selected from time to time in good faith by
the Board of Directors of the Company for that purpose. In the absence of all of
the foregoing, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this paragraph (e),
the current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company and evidenced
by a Board resolution.
(f) Certain Distributions. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities, then,
for purposes of paragraph (c) above, such Options or Convertible Securities
shall be deemed to have been issued or sold without consideration.
(g) Consideration Received. If any shares of Common Stock, Options
or Convertible Securities shall be
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<PAGE>
issued, sold or distributed for a consideration other than cash, the amount of
the consideration other than cash received by the Company in respect thereof
shall be deemed to be the then fair market value of such consideration (as
determined in good faith by the Board of Directors of the Company and evidenced
by a Board resolution). If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
without consideration; provided, however, that if such Options have an exercise
price equal to or greater than the current market price of the Common Stock on
the date of issuance of such Options, then such Options shall be deemed to have
been issued for consideration equal to such exercise price.
(h) Deferral of Certain Adjustments. No adjustment to the Exercise
Price (including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one percent
of the Exercise Price; provided that any adjustments which by reason of this
paragraph (h) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment need be made for a
change in the par value of the Common Stock. All calculations under this Section
shall be made to the nearest 1/1,000 of one cent or to the nearest 1/1000 of a
share, as the case may be.
(i) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) or (d) above, or the rate at
which any Convertible Securities referred to in paragraph (c) or (d) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 13), the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Exercise Price and number of shares of Common Stock so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price,
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<PAGE>
additional consideration or conversion rate, as the case may be, but only with
respect to such Options and Convertible Securities as then remain outstanding.
(j) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall have been made pursuant to paragraph
(c), (d) or (i) above or this paragraph (j), any Options or Convertible
Securities shall have expired unexercised, the number of such shares so
purchasable shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock deemed to have been issued in connection with such
Options or Convertible Securities were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such Options or Convertible
Securities and (ii) such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale, distribution or granting of all such Options or Convertible
Securities, whether or not exercised; provided that no such readjustment shall
have the effect of decreasing the number of such shares so purchasable by an
amount (calculated by adjusting such decrease to account for all other
adjustments made pursuant to this Section 13 following the date of the original
adjustment referred to above) in excess of the amount of the adjustment
initially made in respect of the issuance, sale, distribution or granting of
such Options or Convertible Securities.
(k) Other Adjustments. In the event that at any time, as a result of
an adjustment made pursuant to this Section 13, the Holders shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Exercise Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this Section 13.
Section 14. Statement on Warrants. Irrespective of any adjustment in
the number or kind of shares issuable upon the exercise of the Warrants or the
Exercise Price, Warrants theretofore or thereafter issued may continue to
express the same number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
Section 15. Fractional Interest. The Company
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<PAGE>
shall not be required to issue fractional shares of Common Stock on the exercise
of Warrants. If more than one Warrant shall be presented for exercise in full at
the same time by the same Holder, the number of full shares of Common Stock
which shall be issuable upon such exercise shall be computed on the basis of the
aggregate number of shares of Common Stock acquirable on exercise of the
Warrants so presented. If any fraction of a share of Common Stock would, except
for the provisions of this Section, be issuable on the exercise of any Warrant
(or specified portion thereof), the Company shall direct the Transfer Agent to
pay an amount in cash calculated by it equal to (i) the then current market
price per share multiplied by such fraction computed to the nearest whole cent,
less (ii) an amount equal to the Exercise Price multiplied by such fraction
computed to the nearest whole cent. The Holders, by their acceptance of the
Warrant Certificates, expressly waive any and all rights to receive any fraction
of a share of Common Stock or a stock certificate representing a fraction of a
share of Common Stock.
Section 16. Notices to Warrant Holders and the Warrant Agent. Upon
any adjustment of the Exercise Price pursuant to Section 13, the Company shall
promptly thereafter (i) cause to be filed with the Warrant Agent a certificate
executed by the Chief Financial Officer of the Company setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall be conclusive evidence,
absent manifest error, of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered Holders of the Warrants at his
address appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid. The Warrant Agent shall be entitled to rely
on the above-referenced certificate and shall be under no duty or responsibility
with respect to any such certificate, except to exhibit the same from time to
time to any Holder desiring an inspection thereof during reasonable business
hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require any adjustment of the number of shares of Common Stock or other stock or
property issuable on exercise of the Warrants or the Exercise Price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value (or the kind or amount) of any shares of Common Stock or other stock or
property which may be issuable on exercise of the
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<PAGE>
Warrants. The Warrant Agent shall not be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other common stock or property upon the
exercise of any Warrant.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other
than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock
or distributions referred to in Section 13 hereof); or
(c) of any consolidation or merger to which the Company is a party
for which approval of any shareholders of the Company is required and
following which the shareholders of the Company before such consolidation
or merger no longer hold at least 50% of the outstanding capital stock of
the Company following the merger or consolidation, or of the conveyance or
transfer of all or substantially all of the properties and assets of the
Company, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock, or other transaction that would result
in a change in control; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any other action that would require
an adjustment of the Exercise Price or the number of Warrant Shares
pursuant to Section 13;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered Holders of the Warrants at such Holder's
address appearing on the Warrant register, at least 20 days (or 10 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by
26
<PAGE>
first-class mail, postage prepaid, a written notice stating (i) the date as of
which the holders of record of shares of Common Stock to be entitled to receive
any such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer for
shares of Common Stock, or (iii) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up or change
of control is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up or change of control. The
failure to give the notice required by this Section 16 or any defect therein
shall not affect the legality or validity of any distribution, right, option,
warrant, consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up, or change of control or the vote upon any action. Nothing
contained in this Agreement or in any of the Warrant Certificates shall be
construed as conferring upon the Holders thereof the right to vote or to consent
or to receive notice as shareholders in respect of the meetings of shareholders
or the election of Directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
Section 17. Merger, Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Warrant Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor warrant agent under the provisions of Section 19. Any such
successor Warrant Agent shall promptly cause notice of its succession as Warrant
Agent to be mailed (by first-class mail, postage prepaid) to each Holder at such
Holder's last address as shown on the register maintained by the Warrant Agent
pursuant to this Agreement. In case at the time such successor to the Warrant
Agent shall succeed to the agency created by this Agreement, and in case at that
time any of the Warrant Certificates shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent, and in case at that time any of
the Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant
27
<PAGE>
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor to the Warrant Agent, and in all such cases such Warrant
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
Section 18. Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes
no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution
of the Warrant Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the
Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
Holder of any Warrants in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or the
advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any Holder of any Warrants for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice,
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<PAGE>
resolution, waiver, consent, order, certificate, or other paper, document
or instrument believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature reasonably incurred by the Warrant Agent in the execution of this
Agreement and to indemnify the Warrant Agent and save it harmless against
any and all liabilities, including judgments, reasonable costs and counsel
fees, for anything done or omitted by the Warrant Agent in the execution
of this Agreement except as a result of its negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Holders of Warrants
shall furnish the Warrant Agent with reasonable security and indemnity for
any costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as it may
consider proper, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may
be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by
the Warrant Agent shall be brought in its name as Warrant Agent and any
recovery of judgment shall be for the ratable benefit of the Holders of
the Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be
29
<PAGE>
determined solely by the provisions hereof. The Warrant Agent shall not be
liable for anything which it may do or refrain from doing in connection
with this Agreement except for its own negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of any Warrants to make or cause to be made
any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or
to determine whether any facts exist which may require any of such
adjustments, or with respect to the nature or extent of any such
adjustments, when made, or with respect to the method employed in making
the same. The Warrant Agent shall not be accountable with respect to the
validity or value or the kind or amount of any Warrant Shares or of any
securities or property which may at any time be issued or delivered upon
the exercise of any Warrant or with respect to whether any such Warrant
Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.
(j) In no event shall the Warrant Agent be liable hereunder for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Warrant Agent has
been advised of the likelihood of such loss or damage and regardless of
the form of action. No provision in this Agreement shall require the
Warrant Agent to risk or expend its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder.
Section 19. Resignation and Removal of Warrant Agent; Appointment of
Successor. No resignation or removal of the Warrant Agent and no appointment of
a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence or willful misconduct) after giving written notice to the Company.
The Company may remove the Warrant Agent upon written notice, and the Warrant
Agent shall thereupon in like manner be discharged from all further duties and
liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the
Company's expense, cause to be mailed (by first-class mail, postage prepaid) to
each Holder of a Warrant at his last address as shown on the register of the
Company maintained by the Warrant Agent a copy of said notice of resignation or
notice of removal, as the case may
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<PAGE>
be. Upon such resignation or removal, the Company shall appoint in writing a new
warrant agent. If the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such resignation by
the resigning Warrant Agent or after such removal, then the resigning or removed
Warrant Agent or the Holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a new warrant agent. Any new warrant agent,
whether appointed by the Company or by such a court, shall be a corporation
doing business under the laws of the United States or any state thereof, in good
standing and having a combined capital and surplus of not less than
$100,000,000. The combined capital and surplus of any such new warrant agent
shall be deemed to be the combined capital and surplus as set forth in the most
recent annual report of its condition published by such warrant agent prior to
its appointment, provided that such reports are published at least annually
pursuant to law or to the requirements of a federal or state supervising or
examining authority. After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
Section 20. Registration. The Company acknowledges that Holders of
Warrants shall have the registration rights set forth in the Warrant
Registration Rights Agreement.
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<PAGE>
Section 21. Reports.
(a) So long as any of the Warrants remain outstanding, the Company
shall cause copies of all quarterly and annual financial reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act ("SEC Reports") to be filed with the Warrant Agent and
mailed to the Holders of the Warrants at their addresses appearing in the
register of Warrant Holders maintained by the Warrant Agent, in each case,
within 15 days of filing with the Commission. If the Company is not subject to
the requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
nevertheless continue to cause SEC Reports, comparable to those which it would
be required to file pursuant to Section 13 or 15(d) of the Exchange Act if it
were subject to the requirements of either such Section, to be so filed with the
Commission (but only if the Commission permits such filings) and with the
Warrant Agent and mailed to the Holders of the Warrants, in each case, within
the same time periods as would have applied (including under the preceding
sentence) had the Company been subject to the requirements of Section 13 or
15(d) of the Exchange Act.
(b) The Company shall provide the Warrant Agent with a sufficient
number of copies of all SEC Reports that the Warrant Agent may be required to
deliver to the Holders of the Warrants under this Section 21.
(c) The Warrant Agent shall not be responsible for reviewing any
reports filed with it by the Company pursuant to this Section 21.
Section 22. Rule 144A. .The Company hereby agrees with each Holder,
for so long as any Registrable Securities remain outstanding and the Company is
not subject to Section 13(a) or 15(d) of the Exchange Act, to make available,
upon request of any Holder of Registrable Securities, to any Holder or
beneficial owner of Registrable Securities in connection with any sale thereof
and any prospective purchaser of such Registrable Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.
Section 23. Notices to Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the Holder of any Warrants to or on the Company shall be sufficiently given
or
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made when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent), as follows:
Bell Technology Group Ltd.
295 Lafayette Street
New York, New York 10012
Telecopy: (212) 334-8509
Telephone: (212) 334-8500
Attention: Marc H. Bell, President
with a copy to:
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, New York 10119
Telecopy: (212) 868-1229
Telephone: (212) 594-5300
Attention: Arnold N. Bressler, Esq.
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or
by the Holder(s) of any Warrants to the Warrant Agent shall be sufficiently
given when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) to the Warrant Agent as follows:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department
Section 24. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any Holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of the Holders of Warrants. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of Holders shall require the written consent of
33
<PAGE>
Holders representing a majority of the then outstanding Warrants (excluding
Warrants held by the Company or any of its Affiliates); provided, however, that
the consent of each Holder of a Warrant affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided for in Section 13 hereof). The
Warrant Agent shall be entitled to receive and, subject to Section 18, shall be
fully protected in relying upon, an officers' certificate and opinion of counsel
as conclusive evidence that any such amendment or supplement is authorized or
permitted hereunder, that it does or does not, as the case may be, require the
written consent of Holders to be effective hereunder, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms.
Section 25. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 26. Termination. This Agreement (other than any party's
obligations with respect to Warrants previously exercised and with respect to
indemnification or any other payment then owed to Warrant Agent under Section
18) shall terminate at 5:00 p.m., New York City time on the Expiration Date.
Section 27. Governing Law. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 28. Benefits of This Agreement.
(a) Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Warrant Agent and the Holders of the Warrants
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the Holders of the Warrants.
(b) Prior to the exercise of the Warrants, no Holder of a Warrants,
as such, shall be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to receive dividends or subscription
rights, the right to vote, to consent, to exercise any preemptive right, to
receive any notice of meetings of
34
<PAGE>
stockholders for the election of directors of the Company or any other matter or
to receive any notice of any proceedings of the Company, except as may be
specifically provided for herein. The Holders of the Warrants are not entitled
to share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs.
(c) All rights of action in respect of this Agreement are vested in
the Holders of the Warrants, and any Holder of any Warrant, without the consent
of the Warrant Agent or the Holder of any other Warrant, may, on such Holder's
own behalf and for such Holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such Holder's rights hereunder, including the right
to exercise, exchange or surrender for purchase such Holder's Warrants in the
manner provided in this Agreement.
Section 29. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
BELL TECHNOLOGY GROUP LTD.
By:
------------------------
Name:
Title:
MARINE MIDLAND BANK,
as Warrant Agent
By:
------------------------
Name:
Title:
35
<PAGE>
Exhibit A
<PAGE>
Exhibit B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: _____________Warrants to Purchase Common Stock (the "Warrants") of Bell
Technology Group Ltd.
This Certificate relates to _______ Warrants held in*_______ book-entry or
definitive form by ___________ (the "Transferor").
The Transferor:
|_| has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant(s) held by the
depositary a Warrant or Warrants in definitive, registered form equal to its
beneficial interest in such Global Warrant(s) (or the portion thereof indicated
above); or
|_| has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrant(s).
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and that the transfer of each
such Warrant does not require registration under the Securities Act of 1933, as
amended (the "Securities Act"), because:
|_| Each such Warrant is being acquired for the Transferor's own account
without transfer.
|_| Each such Warrant is being transferred (i) to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act), in
reliance on Rule 144A or (ii) pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (and, in the case of clause
(ii), based on an opinion of counsel and written certification if the Company or
the Warrant Agent so requests).
- ----------
* Check applicable box.
B-1
<PAGE>
|_| Each such Warrant is being transferred (i) in accordance with Rule 144
under the Securities Act (and based on an opinion of counsel if the Company or
the Warrant Agent so requests) or (ii) pursuant to an effective registration
statement under the Securities Act.
|_| Each such Warrant is being transferred in reliance on and in
compliance with another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company or the Warrant
Agent so requests).
[INSERT NAME OF TRANSFEROR]
By:
------------------------
Name:
------------------------
Title:
------------------------
B-2
WARRANT AGREEMENT
Dated as of April 30, 1998
by and between
BELL TECHNOLOGY GROUP LTD.
and
MARINE MIDLAND BANK
WARRANT AGREEMENT (this "Agreement") is made and entered into as of
April 30, 1998 by and between BELL TECHNOLOGY GROUP LTD., a Delaware corporation
(the "Company"), and MARINE MIDLAND BANK, as warrant agent (the "Warrant
Agent").
WHEREAS, the Company proposes to issue 160,000 Common Stock purchase
warrants, as hereinafter described (the "Warrants"), to purchase up to an
aggregate of 563,200 shares of Common Stock (as defined below), in connection
with the offering of an aggregate of $160,000,000 in principal amount of the 13%
Senior Notes due 2005 (the "Notes"). Each Warrant entitles the holder thereof to
purchase 3.52 shares of Common Stock. The Notes and Warrants will be sold in
Units (the "Units"), each Unit consisting of $1,000 principal amount of Notes
and one Warrant.
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:
Section 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by or under
<PAGE>
direct or indirect common control with such Person. For purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Commission" means the Securities and Exchange Commission.
"Common Equity Securities" means Common Stock and securities
convertible into, or exercisable or exchangeable for, Common Stock or rights or
options to acquire Common Stock or such other securities, excluding the
Warrants.
"Common Stock" means the common stock, par value $.01 per share, of
the Company, and any other capital stock of the Company into which such common
stock may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution for, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
"Company" means Bell Technology Group Ltd., a Delaware corporation,
and its successors and assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"Exercise Price" means the purchase price per share of Common Stock
to be paid upon the exercise of each Warrant in accordance with the terms
hereof, which price shall initially be $14.03 per share, subject to adjustment
from time to time pursuant to Section 13 hereof.
"Expiration Date" means May 1, 2005.
"Holder" means a Person who is the owner as shown on the Warrant
register maintained by the Warrant Agent.
"Indenture" means the Indenture, dated as of the date hereof,
between the Company and Marine Midland Bank, as trustee.
"Initial Purchaser" means ING Baring (U.S.) Securities, Inc.
"Issue Date" means the date of the initial issuance of the Warrants.
2
<PAGE>
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Principal Office of Warrant Agent" means the Warrant Agent's office
located at 140 Broadway, 12th Floor, New York, New York 10005, or such other
office of the Warrant Agent as the Warrant Agent shall designate from time to
time in writing as its Principal Office for the purposes of this Agreement.
"Registrable Securities" means any of (i) the Warrant Shares and
(ii) any other securities issued or issuable with respect to any Warrant Shares
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise, unless, in each case, such Warrant Shares and securities, if any,
have been offered and sold to the Holder pursuant to an effective Registration
Statement under the Securities Act declared effective prior to the date of
exercisability of the Warrants or the date such Warrant Shares and securities,
if any, may be sold to the public pursuant to Rule 144 without any restriction
on the amount of securities which may be sold by such Holder or the satisfaction
of any condition. As to any particular Registrable Securities held by a Holder,
such securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the exercise or offering of such securities by the
Holder thereof shall have been declared effective under the Securities Act and
such securities shall have been exercised and/or disposed of by such Holder
pursuant to such Registration Statement, (ii) such securities may at the time of
determination be sold to the public pursuant to Rule 144 without any restriction
on the amount of securities which may be sold by such Holder (or any similar
provision then in force, but not Rule 144A) without the lapse of any further
time or the satisfaction of any condition, (iii) such securities shall have been
otherwise transferred by such Holder and new certificates for such securities
not bearing a legend restricting further transfer shall have been delivered by
the Company or its transfer agent and subsequent disposition of such securities
shall not require registration or qualification under the Securities Act or any
similar state law then in force or (iv) such securities shall have ceased to be
outstanding.
"Registration Rights Agreement" means the registration rights
agreement, dated as of the date hereof by and between the Company and the
Initial Purchaser relating to the Notes.
3
<PAGE>
"Rule 144" shall mean Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
"Rule 144A" shall mean Rule 144A promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute and the rules and regulations promulgated thereunder.
"Separation Date" means the earliest to occur of (i) 180 days from
the Issue Date, (ii) in the event a Change in Control (as defined in the
Indenture) occurs, the date the Company mails notices thereof to Holders of the
Notes pursuant to the Indenture, (iii) the occurrence of an Event of Default (as
defined in the Indenture), (iv) the date on which a registration statement with
respect to the Notes or an Exchange Offer (as defined in the Registration Rights
Agreement) for the Notes is declared effective, or (v) such earlier date as may
be determined by the Initial Purchaser.
"Warrant Agent" means Marine Midland Bank or the successor or
successors of such Warrant Agent appointed in accordance with the terms hereof.
"Warrant Registration Rights Agreement" means the registration
rights agreement, dated as of the date hereof by and between the Company and the
Initial Purchaser relating to the Warrants and the Warrant Shares.
"Warrant Shares" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants.
Section 2. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 3. Issuance of Warrants; Warrant Certificates. The Warrants
will be issued in the form of one or more global certificates (the "Global
Warrants"), substantially in the form of Exhibit A. The Global Warrants shall be
deposited on the Issue Date with, or on behalf of,
4
<PAGE>
The Depository Trust Company (the "Depositary") and registered in the name of
Cede & Co., as the Depositary's nominee. Each Global Warrant shall represent
such of the outstanding Warrants as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Warrants
from time to time endorsed thereon and that the aggregate amount of outstanding
Warrants represented thereby may from time to time be reduced or increased, as
appropriate. Upon request, a Holder may receive from the Depositary and the
Warrant Agent Warrants in definitive form (the "Definitive Warrants"),
substantially in the form of Exhibit A (not including footnotes 1 and 2 thereto)
as set forth in Section 7 below. Any certificates (the "Warrant Certificates")
evidencing the Global Warrants or the Definitive Warrants to be delivered
pursuant to this Agreement shall be substantially in the form set forth in
Exhibit A attached hereto.
Section 4. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its President or a Vice President
and by its Secretary or an Assistant Secretary under its corporate seal. Each
such signature upon the Warrant Certificates may be in the form of a facsimile
signature of the present or any future President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been President, Vice President, Secretary
or Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be countersigned and delivered or disposed of, such person
shall have ceased to hold such office. The seal of the Company may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
5
<PAGE>
Section 5. Separation of Warrants. The Notes and Warrants shall not
be separately transferable prior to the Separation Date.
Section 6. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates in a
register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the President, a Vice
President, the Treasurer or the Controller of the Company, initially
countersign, issue and deliver Warrants entitling the Holders thereof to
purchase not more than the number of Warrant Shares referred to above in the
first recital hereof and shall countersign and deliver Warrants as otherwise
provided in this Agreement.
The Company and the Warrant Agent may deem and treat the person in
whose name any Warrant is registered as the absolute owner(s) thereof, for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
Section 7. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement and the
procedures of the Depositary therefor.
(b) Exchange of a Beneficial Interest in a Global Warrant for a
Definitive Warrant.
(i) Any Person having a beneficial interest in a Global Warrant may
upon request exchange such beneficial interest for a Definitive Warrant. Upon
receipt by the Warrant Agent of written instructions or such other form of
instructions as is customary for the Depositary from the Depositary or its
nominee on behalf of any person having a beneficial interest in a Global Warrant
and, in the case of a Registrable Security, the following additional information
and documents (all of which may be submitted by facsimile), as applicable:
(A) if such beneficial interest is being delivered to the
Person designated by the Depositary as being the beneficial owner, a
certification from such beneficial owner to that effect (in substantially the
form
6
<PAGE>
of Exhibit B hereto);
(B) if such beneficial interest is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A) in accordance with
Rule 144A or (2) pursuant to an exemption from registration in accordance with
Rule 144 (and based on an opinion of counsel if the Company or the Warrant Agent
so requests) or (3) pursuant to an effective registration statement under the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto);
(C) if such beneficial interest is being transferred pursuant
to an exemption from registration in accordance with Rule 904 under the
Securities Act (and based on an opinion of counsel if the Company or the Warrant
Agent so requests), a certification to that effect (in substantially the form of
Exhibit B); or
(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company or the Warrant
Agent so requests), a certification to that effect (in substantially the form of
Exhibit B hereto);
then, in accordance with the standing instructions and procedures existing
between the Depositary and the Warrant Agent, the Warrant Agent shall cause the
number of Warrants represented by the Global Warrant to be reduced by the number
of Warrants to be represented by the Definitive Warrants to be issued in
exchange for the interest in the Global Warrant and, following such reduction,
the Company shall execute and the Warrant Agent shall countersign and deliver to
the transferee, as the case may be, a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 7(b) shall be registered
in such names as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Warrant Agent. The
Warrant Agent shall deliver such Definitive Warrants to the Persons in whose
names such Warrants are so registered.
(c) Transfer and Exchange of Definitive Warrants. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
7
<PAGE>
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the following requirements are met:
(x) the Definitive Warrants presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Warrant
Agent, duly executed by the Holder thereof or by his attorney, duly
authorized in writing; and
(y) in the case of Registrable Securities, such request shall be
accompanied by the following additional information and documents (all of
which may be submitted by facsimile), as applicable:
(A) if such Registrable Security is being delivered to the
Warrant Agent by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form of Exhibit B hereto);
(B) if such Registrable Security is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A) in
accordance with Rule 144A or (2) pursuant to an exemption from
registration in accordance with Rule 144 (and based on an opinion of
counsel if the Company or the Warrant Agent so requests) or (3)
pursuant to an effective registration statement under the Securities
Act, a certification to that effect (in substantially the form of
Exhibit B hereto);
(C) if such Registrable Security is being transferred pursuant
to an exemption from registration in accordance with Rule 904 under
the Securities Act (and based on an opinion of counsel if the
Company or the Warrant Agent so requests), a certification to that
effect (in substantially the form of Exhibit B hereto); or
(D) if such Registrable Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act (and based on an opinion of counsel if the
Company or the Warrant Agent so requests), a certification to that
effect (in substantially the form of Exhibit B hereto).
8
<PAGE>
(d) Restrictions on Exchange or Transfer of a Definitive Warrant for
a Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
exchanged for a beneficial interest in a Global Warrant except upon satisfaction
of the requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Warrant Agent, together with:
(i) if such Definitive Warrant is a Registrable Security,
certification from the Holder thereof (in substantially the form of
Exhibit B hereto) to the effect that such Definitive Warrant is being
transferred by such Holder either (A) to a "qualified institutional buyer"
(as defined in Rule 144A) in accordance with Rule 144A (and based on an
opinion of counsel if the Company or the Warrant Agent so requests) or (B)
outside the United States, to a foreign Person in a transaction meeting
the requirements of Rule 904 under the Securities Act (and based on an
opinion of counsel if the Company or the Warrant Agent so requests) who
wishes to take delivery thereof in the form of a beneficial interest in a
Global Warrant; and
(ii) whether or not such Definitive Warrant is a Registrable
Security, written instructions directing the Warrant Agent to make, or to
direct the Depositary to make, an endorsement on the Global Warrant to
reflect an increase in the number of Warrants represented by the Global
Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrants are then outstanding, the Company shall issue and the Warrant
Agent shall countersign a new Global Warrant representing the appropriate number
of Warrants.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
9
<PAGE>
(f) Countersigning of Definitive Warrants in Absence of Depositary.
If at any time:
(i) the Depositary for the Global Warrants notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for the
Global Warrants and a successor Depositary for the Global Warrants is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Warrant Agent
in writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company shall execute, and the Warrant Agent, upon receipt of written
instructions signed by two officers of the Company, shall countersign and
deliver Definitive Warrants, in an aggregate number equal to the number of
Warrants represented by Global Warrants, in exchange for such Global Warrants.
(g) Legends.
(i) Except for any Registrable Security sold or transferred
(including any Registrable Security represented by a Global Warrant) as
discussed in clause (ii) below, each Warrant Certificate evidencing the
Global Warrants and the Definitive Warrants (and all Warrants issued in
exchange therefor or substitution thereof) and each certificate
representing the Warrant Shares shall bear a legend in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY AND THE
SECURITIES DELIVERED UPON EXERCISE THEREOF MAY NOT BE EXERCISED,
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY AND THE SECURITIES DELIVERED UPON THE
EXERCISE THEREOF IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A. [IF A SECURITY IS SOLD PURSUANT TO
REGULATION S: NO HEDGING TRANSACTIONS INVOLVING THIS SECURITY AND
THE SECURITIES DELIVERED UPON EXERCISE THEREOF MAY BE CONDUCTED
DURING THE ONE-YEAR DISTRIBUTION COMPLIANCE PERIOD FOLLOWING THE
10
<PAGE>
ISSUE DATE THEREOF UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.]
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE ISSUER THAT (A) SUCH SECURITY AND THE SECURITIES DELIVERED
UPON EXERCISE HEREOF MAY BE EXERCISED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A , (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A
PERSON THAT IS NOT A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT, OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(IN THE CASE OF (b), (c) or (d), UPON AN OPINION OF COUNSEL AND
WRITTEN CERTIFICATION IF THE ISSUER OR WARRANT AGENT, REGISTRAR OR
TRANSFER AGENT FOR THE SECURITIES SO REQUESTS), (2) TO THE ISSUER OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION [IF A
SECURITY IS SOLD PURSUANT TO REGULATION S: (B) THE HOLDER WILL NOT
ENGAGE IN HEDGING TRANSACTIONS WITH REGARD TO THIS SECURITY AND THE
SECURITIES DELIVERED UPON EXERCISE THEREOF DURING THE ONE-YEAR
DISTRIBUTION COMPLIANCE PERIOD FOLLOWING THE ISSUE DATE HEREOF
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT AND (C)] AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY AND THE
SECURITIES DELIVERED UPON EXERCISE HEREOF OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Registrable Security (including
any Registrable Security represented by a Global Warrant) pursuant to an
effective registration statement under the Securities Act, pursuant to
Rule 144(k) or pursuant to an opinion of counsel reasonably satisfactory
to the Company and addressed to the Warrant Agent that no legend is
required:
(A) in the case of any Registrable Security that is a
Definitive Warrant, the Warrant Agent shall permit the Holder
thereof to exchange such
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Registrable Security for a Definitive Warrant that does not bear the
legend set forth in clause (i) above and rescind any restriction on
the transfer of such Registrable Security; and
(B) in the case of any Registrable Security represented by a
Global Warrant, such Registrable Security shall not be required to
bear the legend set forth in clause (i) above but shall continue to
be subject to the provisions of Section 7(c) hereof; provided,
however, that with respect to any request for an exchange of a
Registrable Security that is represented by a Global Warrant for a
Definitive Warrant that does not bear the legend set forth in clause
(i) above, which request is made in reliance upon Rule 144 (and
based upon an opinion of counsel if the Company or the Warrant Agent
so requests), the Holder thereof shall certify in writing to the
Warrant Agent that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of Exhibit B
hereto).
(iii) Each Warrant Certificate issued prior to the Separation Date
shall bear a legend in substantially the following form:
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS A
PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13%
SENIOR NOTE DUE 2005 OF BELL TECHNOLOGY GROUP LTD. (THE "NOTES") AND
ONE WARRANT, INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 3.52
SHARES OF COMMON STOCK, $0.01 PAR VALUE, OF BELL TECHNOLOGY GROUP
LTD. PRIOR TO EARLIEST TO OCCUR OF (i) 180 DAYS FROM THE DATE OF
ISSUANCE OF THIS WARRANT, (ii) IN THE EVENT A CHANGE IN CONTROL (AS
DEFINED IN THE INDENTURE) OCCURS, THE DATE BELL TECHNOLOGY GROUP
LTD. MAILS NOTICES TO HOLDERS OF THE NOTES, (iii) THE OCCURRENCE OF
AN EVENT OF DEFAULT (AS DEFINED IN THE INDENTURE), (iv) THE DATE ON
WHICH A REGISTRATION STATEMENT WITH RESPECT TO THE NOTES OR AN
EXCHANGE OFFER (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) FOR
THE NOTES IS DECLARED EFFECTIVE OR (v) SUCH EARLIER DATE AS MAY BE
DETERMINED BY THE INITIAL PURCHASER, THE WARRANTS EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT
MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE RELATED
NOTES.
(h) Cancellation of Global Warrant. At such time as all beneficial
interests in Global Warrants have either been
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exchanged for Definitive Warrants, redeemed, repurchased or cancelled, all
Global Warrants shall be returned to or retained and cancelled by the Warrant
Agent.
(i) Obligations with respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent is hereby authorized to countersign,
in accordance with the provisions of Section 6 and this Section 7,
Definitive Warrants and Global Warrants as required pursuant to the
provisions of this Section 7. Notwithstanding anything to the contrary
contained herein, the Company shall refuse to register any transfer of the
Warrants 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 Warrants
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.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration of transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to the
same benefits under this Warrant Agreement, as the Definitive Warrants or
Global Warrants surrendered upon such registration of transfer or
exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the person
in whose name any Warrant is registered as the absolute owner of such
Warrant and neither the Warrant Agent, nor the Company shall be affected
by notice to the contrary.
(iv) No service charge shall be made to a Holder for any
registration of transfer or exchange.
Section 8. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Warrant Holder shall have the right, which may be
exercised at any time and from time to time, in whole or in part, commencing at
9:00 a.m., New York City time, on the Separation Date and ending at 5:00 p.m.,
New York City time, on the Expiration Date, to receive from the Company the
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number of fully paid and nonassessable Warrant Shares which the Holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
Exercise Price then in effect for such Warrant Shares; provided, however, that
no Warrant Holder shall be entitled to exercise such Holder's Warrants at any
time, unless, at the time of exercise, (i) a registration statement under the
Securities Act relating to the Warrant Shares has been filed with, and declared
effective by, the Commission, and no stop order suspending the effectiveness of
such registration statement has been issued by the Commission or (ii) the
issuance of the Warrant Shares is permitted pursuant to an exemption from the
registration requirements of the Securities Act. Subject to the provisions of
the following paragraph of this Section 8, each Warrant not exercised prior to
5:00 p.m., New York City time, on the Expiration Date shall become void and all
rights thereunder and all rights in respect thereof under this Agreement shall
cease as of such time. No adjustments as to dividends will be made upon exercise
of the Warrants.
The Company shall give notice not less than 90, and not more than
120, days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
5:00 p.m., New York City time, on the Expiration Date. If the Company fails to
give such notice, the Warrants will not expire until 90 days after the Company
gives such notice, provided, however, in no event will Holders be entitled to
any damages or other remedy for the Company's failure to give such notice other
than any such extension.
A Warrant may be exercised upon surrender to the Company at the
Principal Office of the Warrant Agent of the certificate or certificates
evidencing the Warrant to be exercised with the form of election to purchase on
the reverse thereof properly completed and signed, which signature shall be
guaranteed by a bank or trust company having an office or correspondent in the
United States or a broker or dealer which is a member of a registered securities
exchange or the National Association of Securities Dealers, Inc., and upon
payment to the Warrant Agent for the account of the Company of the Exercise
Price as adjusted as herein provided, for each of the Warrant Shares in respect
of which such Warrant is then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by certified or official bank check, payable to the
order of the Company. In the alternative, each Holder may exercise its right to
receive Warrant Shares (i) on a net basis, such that without the exchange of any
funds, the Holder receives that number of Warrant Shares otherwise issuable upon
exercise of its Warrants less that number of Warrant Shares having a fair market
value equal to the
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aggregate Exercise Price that would otherwise have been paid by the Holder for
the Warrant Shares being issued, (ii) by tendering Notes having an aggregate
principal amount, plus accrued but unpaid interest, if any, thereon, to the date
of exercise equal to the aggregate Exercise Price that would otherwise have been
paid by the Holder for the Warrant Shares being issued, or (iii) by a
combination of the procedures in clauses (i) and (ii). For purposes of the
foregoing sentence, "fair market value" of the Warrant Shares shall be as
determined by the Board of Directors of the Company in good faith and evidenced
by a resolution thereof. The Company shall notify the Warrant Agent in writing
of any such determination of fair market value. The exercise of Warrants by
Holders of beneficial interests in Global Warrants shall be effected in
accordance with this Agreement and the procedures of the Depositary therefor.
Subject to the provisions of Section 9 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above, the Warrant Agent
shall thereupon promptly notify the Company, and the Company shall promptly
transfer to the Holder of such Warrant a certificate or certificates for the
appropriate number of Warrant Shares or other securities or property (including
any money) to which the Holder is entitled, registered or otherwise placed in,
or payable to the order of, such name or names as may be directed in writing by
the Holder, and shall deliver such certificate or certificates representing the
Warrant Shares and any other securities or property (including any money) to the
Person or Persons entitled to receive the same, together with an amount in cash
in lieu of any fraction of a share as provided in Section 15. Any such
certificate or certificates representing the Warrant Shares shall be deemed to
have been issued and any Person so designated to be named therein shall be
deemed to have become a Holder of record of such Warrant Shares as of the later
of the date of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Separation Date,
at the election of the Holders thereof, either in full or from time to time in
part and, in the event that a certificate evidencing Warrants is exercised in
respect of fewer than all of the Warrant Shares issuable on such exercise at any
time prior to the date of expiration of the Warrants, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the Warrant
Agent is hereby irrevocably authorized to countersign and to deliver the
required new Warrant Certificate or Certificates pursuant to the provisions of
this Section and of Section 4 hereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such
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<PAGE>
purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall
then be disposed of by the Warrant Agent in accordance with its customary
procedures. The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and promptly pay to the Company all monies received by the
Warrant Agent for the purchase of the Warrant Shares through the exercise of
such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder by or from the Company available for
inspection by the Holders during normal business hours at its Principal Office.
The Company shall supply the Warrant Agent from time to time with such numbers
of copies of this Agreement as the Warrant Agent may request.
Section 9. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants and to any separation of the Warrants from the Notes;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue of
any Warrant Certificates or any certificates for Warrant Shares in a name other
than that of the Holder of a Warrant Certificate surrendered upon the exercise
of a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 10. Mutilated or Missing Warrant Certificates. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and, if requested, indemnity reasonably
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
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<PAGE>
Section 11. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free from any preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The transfer agent for the Common Stock (the "Transfer Agent") and
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Warrant
Agent is hereby irrevocably authorized to requisition from time to time from
such Transfer Agent the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply such Transfer Agent with duly executed certificates for
such purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 15. The Company will furnish such Transfer Agent
a copy of all notices of adjustments and certificates related thereto,
transmitted to each Holder of the Warrants pursuant to Section 16 hereof. The
Warrant Agent hereby agrees that it will not issue any stock certificates
delivered hereunder other than upon the exercise of Warrants in accordance with
the terms of this Agreement and, promptly after the issuance of any such stock
certificates, to notify the Transfer Agent of such issuance.
Before taking any action which would cause an adjustment pursuant to
Section 13 hereof that would reduce the Exercise Price below the then par value
(if any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants in accordance with the terms of this Agreement
(including the payment of the Exercise Price) will, upon issue, be duly and
validly issued, fully paid, nonassessable, and free of preemptive rights and
Liens.
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Section 12. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets (including, without limitation,
the Nasdaq National or SmallCap Markets) within the United States of America, if
any, on which other shares of Common Stock are then listed. Upon the listing of
such Warrant Shares, the Company shall notify the Warrant Agent in writing. The
Company will obtain and keep all required permits and records in connection with
such listing.
Section 13. Adjustment of Exercise Price and Number of Warrant
Shares Issuable. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
(as set forth in the notices required by Section 16 hereof) as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect and the number of
Warrant Shares issuable upon exercise of each Warrant immediately prior to such
action shall be adjusted so that the Holder of any Warrant thereafter exercised
shall be entitled to receive the number of shares of capital stock of the
Company which such Holder would have owned immediately following such action had
such Warrant been exercised immediately prior thereto. Any adjustment made
pursuant to this paragraph shall become effective immediately after the record
date in the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this paragraph, the Holder of
any Warrant thereafter exercised shall become entitled to receive shares of two
or more classes of capital stock of the Company, the Board of Directors of the
Company (whose determination shall be conclusive and evidenced by a Board
resolution) shall determine the allocation of the adjusted Exercise Price
between or among shares of such classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
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other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
then outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of all or substantially all of the assets of the Company, then, as a
condition of such reclassification, change, consolidation, merger, sale or
conveyance, the Company or such a successor or purchasing corporation, as the
case may be, shall forthwith make lawful and adequate provision whereby the
Holder of each Warrant then outstanding shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a Holder of the number of shares of
Common Stock issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and enter
into a supplemental warrant agreement so providing. Such provisions shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 13. If the issuer of
securities deliverable upon exercise of Warrants under the supplemental warrant
agreement is an affiliate of the formed, surviving or transferee corporation,
that issuer shall join in the supplemental warrant agreement. The above
provisions of this paragraph (b) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(c) Issuance of Options or Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, distribute or otherwise grant in any manner (including by assumption) to
all holders of the Common Stock any rights to subscribe for or to purchase, or
any warrants or options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (any such rights,
warrants or options being herein called "Options" and any such convertible or
exchangeable stock or securities being herein called "Convertible Securities")
or any Convertible Securities (other than upon exercise of any Option), whether
or not such Options or the rights to convert or exchange such Convertible
Securities are immediately exercisable, and if the price per share at which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing
(i) the aggregate amount,
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<PAGE>
if any, received or receivable by the Company as consideration for the issuance,
sale, distribution or granting of such Options or any such Convertible Security,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Options or upon conversion or
exchange of all such Convertible Securities, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of all Convertible Securities issuable upon the exercise of all such Options)
shall be less than the current market price per share of Common Stock on the
record date for the issuance, sale, distribution or granting of such Options or
Convertible Securities (any such event being herein called a "Distribution"),
then, effective upon such Distribution, (I) the Exercise Price shall be reduced
to the price (calculated to the nearest 1/1,000 of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Distribution
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Distribution multiplied by the current market price
per share of Common Stock on the date of such Distribution plus (ii) the
consideration, if any, received by the Company upon such Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately after
such Distribution multiplied by (B) the current market price per share of Common
Stock on the record date for such Distribution and (II) the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall be increased to
a number determined by multiplying the number of shares of Common Stock so
purchasable immediately prior to the record date for such Distribution by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (I) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. For purposes of the foregoing, the total maximum number of
shares of Common Stock issuable upon exercise of all such Options or upon
conversion or exchange of all such Convertible Securities or upon the conversion
or exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options shall be deemed to have been issued as of
the date of such Distribution and thereafter shall be deemed to be outstanding
and the Company shall be deemed to have received as consideration therefor such
price per share,
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<PAGE>
determined as provided above. Except as provided in paragraphs (i) and (j)
below, no additional adjustment of the Exercise Price shall be made upon the
actual exercise of such Options or upon conversion or exchange of the
Convertible Securities or upon the conversion or exchange of the Convertible
Securities issuable upon the exercise of such Options.
(d) Dividends and Distributions. In the event the Company shall, at
any time or from time to time after the date hereof, distribute to all the
holders of Common Stock any dividend or other distribution of cash, evidences of
its indebtedness, other securities or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Options or Convertible
Securities and (ii) any cash dividend that, when added to all other cash
dividends paid in the one year prior to the declaration date of such dividend
(excluding any such other dividend included in a previous adjustment of the
Exercise Price pursuant to this paragraph (d) and excluding any cash dividends
or other cash distributions from current or retained earnings), does not exceed
5% of the current market price per share of Common Stock on such declaration
date), or any options, warrants or other rights to subscribe for or purchase any
of the foregoing, then (A) the Exercise Price shall be decreased to a price
determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which shall be the current market price per share of Common Stock
on the record date for such distribution less the sum of (X) the cash portion,
if any, of such distribution per share of Common Stock outstanding (exclusive of
any treasury shares) on the record date for such distribution plus (Y) the then
fair market value (as determined in good faith by the Board of Directors of the
Company) per share of Common Stock outstanding (exclusive of any treasury
shares) on the record date for such distribution of that portion, if any, of
such distribution consisting of evidences of indebtedness, other securities,
properties, assets, options, warrants or subscription or purchase rights, and
the denominator of which shall be such current market price per share of Common
Stock and (B) the number of shares of Common Stock purchasable upon the exercise
of each Warrant shall be increased to a number determined by multiplying the
number of shares of Common Stock so purchasable immediately prior to the record
date for such distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to the adjustment required by clause
(A) of this sentence and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment. The adjustments required by this
paragraph (d) shall be made whenever any such distribution occurs retroactive to
the record date for the determination of stockholders entitled to receive such
distribution.
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(e) Current Market Price. For the purpose of any computation of
current market price under this Section 13 and Section 15, the current market
price per share of Common Stock at any date shall be (x) for purposes of Section
15, the closing price on the business day immediately prior to the exercise of
the applicable Warrant pursuant to Section 8 and (y) in all other cases, the
average of the daily closing prices for the shorter of (i) the 20 consecutive
trading days ending on the last full trading day on the exchange or market
specified in the second succeeding sentence prior to the Time of Determination
(as defined below) and (ii) the period commencing on the date next succeeding
the first public announcement of the issuance, sale, distribution or granting in
question through such last full trading day prior to the Time of Determination.
The term "Time of Determination" as used herein shall be the time and date of
the earlier to occur of (A) the date as of which the current market price is to
be computed and (B) the last full trading day on such exchange or market before
the commencement of "ex-dividend" trading in the Common Stock relating to the
event giving rise to the adjustment required by paragraph (a), (b), (c) or (d)
above. The closing price for any day shall be the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for such day, in each
case (1) on the principal national securities exchange on which the shares of
Common Stock are listed or to which such shares are admitted to trading or (2)
if the Common Stock is not listed or admitted to trading on a national
securities exchange, in the over-the-counter market as reported by Nasdaq
National or SmallCap Markets or any comparable system or (3) if the Common Stock
is not listed on Nasdaq National or SmallCap Markets or a comparable system, as
furnished by two members of the NASD selected from time to time in good faith by
the Board of Directors of the Company for that purpose. In the absence of all of
the foregoing, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this paragraph (e),
the current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company and evidenced
by a Board resolution.
(f) Certain Distributions. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities, then,
for purposes of paragraph (c) above, such Options or Convertible Securities
shall be deemed to have been issued or sold without consideration.
(g) Consideration Received. If any shares of Common Stock, Options
or Convertible Securities shall be
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issued, sold or distributed for a consideration other than cash, the amount of
the consideration other than cash received by the Company in respect thereof
shall be deemed to be the then fair market value of such consideration (as
determined in good faith by the Board of Directors of the Company and evidenced
by a Board resolution). If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
without consideration; provided, however, that if such Options have an exercise
price equal to or greater than the current market price of the Common Stock on
the date of issuance of such Options, then such Options shall be deemed to have
been issued for consideration equal to such exercise price.
(h) Deferral of Certain Adjustments. No adjustment to the Exercise
Price (including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one percent
of the Exercise Price; provided that any adjustments which by reason of this
paragraph (h) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment need be made for a
change in the par value of the Common Stock. All calculations under this Section
shall be made to the nearest 1/1,000 of one cent or to the nearest 1/1000 of a
share, as the case may be.
(i) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) or (d) above, or the rate at
which any Convertible Securities referred to in paragraph (c) or (d) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 13), the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Exercise Price and number of shares of Common Stock so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price,
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additional consideration or conversion rate, as the case may be, but only with
respect to such Options and Convertible Securities as then remain outstanding.
(j) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall have been made pursuant to paragraph
(c), (d) or (i) above or this paragraph (j), any Options or Convertible
Securities shall have expired unexercised, the number of such shares so
purchasable shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock deemed to have been issued in connection with such
Options or Convertible Securities were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such Options or Convertible
Securities and (ii) such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale, distribution or granting of all such Options or Convertible
Securities, whether or not exercised; provided that no such readjustment shall
have the effect of decreasing the number of such shares so purchasable by an
amount (calculated by adjusting such decrease to account for all other
adjustments made pursuant to this Section 13 following the date of the original
adjustment referred to above) in excess of the amount of the adjustment
initially made in respect of the issuance, sale, distribution or granting of
such Options or Convertible Securities.
(k) Other Adjustments. In the event that at any time, as a result of
an adjustment made pursuant to this Section 13, the Holders shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Exercise Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this Section 13.
Section 14. Statement on Warrants. Irrespective of any adjustment in
the number or kind of shares issuable upon the exercise of the Warrants or the
Exercise Price, Warrants theretofore or thereafter issued may continue to
express the same number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
Section 15. Fractional Interest. The Company
24
<PAGE>
shall not be required to issue fractional shares of Common Stock on the exercise
of Warrants. If more than one Warrant shall be presented for exercise in full at
the same time by the same Holder, the number of full shares of Common Stock
which shall be issuable upon such exercise shall be computed on the basis of the
aggregate number of shares of Common Stock acquirable on exercise of the
Warrants so presented. If any fraction of a share of Common Stock would, except
for the provisions of this Section, be issuable on the exercise of any Warrant
(or specified portion thereof), the Company shall direct the Transfer Agent to
pay an amount in cash calculated by it equal to (i) the then current market
price per share multiplied by such fraction computed to the nearest whole cent,
less (ii) an amount equal to the Exercise Price multiplied by such fraction
computed to the nearest whole cent. The Holders, by their acceptance of the
Warrant Certificates, expressly waive any and all rights to receive any fraction
of a share of Common Stock or a stock certificate representing a fraction of a
share of Common Stock.
Section 16. Notices to Warrant Holders and the Warrant Agent. Upon
any adjustment of the Exercise Price pursuant to Section 13, the Company shall
promptly thereafter (i) cause to be filed with the Warrant Agent a certificate
executed by the Chief Financial Officer of the Company setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall be conclusive evidence,
absent manifest error, of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered Holders of the Warrants at his
address appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid. The Warrant Agent shall be entitled to rely
on the above-referenced certificate and shall be under no duty or responsibility
with respect to any such certificate, except to exhibit the same from time to
time to any Holder desiring an inspection thereof during reasonable business
hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require any adjustment of the number of shares of Common Stock or other stock or
property issuable on exercise of the Warrants or the Exercise Price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value (or the kind or amount) of any shares of Common Stock or other stock or
property which may be issuable on exercise of the
25
<PAGE>
Warrants. The Warrant Agent shall not be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other common stock or property upon the
exercise of any Warrant.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other
than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock
or distributions referred to in Section 13 hereof); or
(c) of any consolidation or merger to which the Company is a party
for which approval of any shareholders of the Company is required and
following which the shareholders of the Company before such consolidation
or merger no longer hold at least 50% of the outstanding capital stock of
the Company following the merger or consolidation, or of the conveyance or
transfer of all or substantially all of the properties and assets of the
Company, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange
offer for shares of Common Stock, or other transaction that would result
in a change in control; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any other action that would require
an adjustment of the Exercise Price or the number of Warrant Shares
pursuant to Section 13;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered Holders of the Warrants at such Holder's
address appearing on the Warrant register, at least 20 days (or 10 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by
26
<PAGE>
first-class mail, postage prepaid, a written notice stating (i) the date as of
which the holders of record of shares of Common Stock to be entitled to receive
any such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer for
shares of Common Stock, or (iii) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up or change
of control is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up or change of control. The
failure to give the notice required by this Section 16 or any defect therein
shall not affect the legality or validity of any distribution, right, option,
warrant, consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up, or change of control or the vote upon any action. Nothing
contained in this Agreement or in any of the Warrant Certificates shall be
construed as conferring upon the Holders thereof the right to vote or to consent
or to receive notice as shareholders in respect of the meetings of shareholders
or the election of Directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
Section 17. Merger, Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Warrant Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor warrant agent under the provisions of Section 19. Any such
successor Warrant Agent shall promptly cause notice of its succession as Warrant
Agent to be mailed (by first-class mail, postage prepaid) to each Holder at such
Holder's last address as shown on the register maintained by the Warrant Agent
pursuant to this Agreement. In case at the time such successor to the Warrant
Agent shall succeed to the agency created by this Agreement, and in case at that
time any of the Warrant Certificates shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent, and in case at that time any of
the Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant
27
<PAGE>
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor to the Warrant Agent, and in all such cases such Warrant
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
Section 18. Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes
no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution
of the Warrant Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the
Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
Holder of any Warrants in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the opinion or the
advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any Holder of any Warrants for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice,
28
<PAGE>
resolution, waiver, consent, order, certificate, or other paper, document
or instrument believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature reasonably incurred by the Warrant Agent in the execution of this
Agreement and to indemnify the Warrant Agent and save it harmless against
any and all liabilities, including judgments, reasonable costs and counsel
fees, for anything done or omitted by the Warrant Agent in the execution
of this Agreement except as a result of its negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Holders of Warrants
shall furnish the Warrant Agent with reasonable security and indemnity for
any costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as it may
consider proper, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may
be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by
the Warrant Agent shall be brought in its name as Warrant Agent and any
recovery of judgment shall be for the ratable benefit of the Holders of
the Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be
29
<PAGE>
determined solely by the provisions hereof. The Warrant Agent shall not be
liable for anything which it may do or refrain from doing in connection
with this Agreement except for its own negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of any Warrants to make or cause to be made
any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or
to determine whether any facts exist which may require any of such
adjustments, or with respect to the nature or extent of any such
adjustments, when made, or with respect to the method employed in making
the same. The Warrant Agent shall not be accountable with respect to the
validity or value or the kind or amount of any Warrant Shares or of any
securities or property which may at any time be issued or delivered upon
the exercise of any Warrant or with respect to whether any such Warrant
Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.
(j) In no event shall the Warrant Agent be liable hereunder for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Warrant Agent has
been advised of the likelihood of such loss or damage and regardless of
the form of action. No provision in this Agreement shall require the
Warrant Agent to risk or expend its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder.
Section 19. Resignation and Removal of Warrant Agent; Appointment of
Successor. No resignation or removal of the Warrant Agent and no appointment of
a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence or willful misconduct) after giving written notice to the Company.
The Company may remove the Warrant Agent upon written notice, and the Warrant
Agent shall thereupon in like manner be discharged from all further duties and
liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the
Company's expense, cause to be mailed (by first-class mail, postage prepaid) to
each Holder of a Warrant at his last address as shown on the register of the
Company maintained by the Warrant Agent a copy of said notice of resignation or
notice of removal, as the case may
30
<PAGE>
be. Upon such resignation or removal, the Company shall appoint in writing a new
warrant agent. If the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such resignation by
the resigning Warrant Agent or after such removal, then the resigning or removed
Warrant Agent or the Holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a new warrant agent. Any new warrant agent,
whether appointed by the Company or by such a court, shall be a corporation
doing business under the laws of the United States or any state thereof, in good
standing and having a combined capital and surplus of not less than
$100,000,000. The combined capital and surplus of any such new warrant agent
shall be deemed to be the combined capital and surplus as set forth in the most
recent annual report of its condition published by such warrant agent prior to
its appointment, provided that such reports are published at least annually
pursuant to law or to the requirements of a federal or state supervising or
examining authority. After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
Section 20. Registration. The Company acknowledges that Holders of
Warrants shall have the registration rights set forth in the Warrant
Registration Rights Agreement.
31
<PAGE>
Section 21. Reports.
(a) So long as any of the Warrants remain outstanding, the Company
shall cause copies of all quarterly and annual financial reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act ("SEC Reports") to be filed with the Warrant Agent and
mailed to the Holders of the Warrants at their addresses appearing in the
register of Warrant Holders maintained by the Warrant Agent, in each case,
within 15 days of filing with the Commission. If the Company is not subject to
the requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
nevertheless continue to cause SEC Reports, comparable to those which it would
be required to file pursuant to Section 13 or 15(d) of the Exchange Act if it
were subject to the requirements of either such Section, to be so filed with the
Commission (but only if the Commission permits such filings) and with the
Warrant Agent and mailed to the Holders of the Warrants, in each case, within
the same time periods as would have applied (including under the preceding
sentence) had the Company been subject to the requirements of Section 13 or
15(d) of the Exchange Act.
(b) The Company shall provide the Warrant Agent with a sufficient
number of copies of all SEC Reports that the Warrant Agent may be required to
deliver to the Holders of the Warrants under this Section 21.
(c) The Warrant Agent shall not be responsible for reviewing any
reports filed with it by the Company pursuant to this Section 21.
Section 22. Rule 144A. .The Company hereby agrees with each Holder,
for so long as any Registrable Securities remain outstanding and the Company is
not subject to Section 13(a) or 15(d) of the Exchange Act, to make available,
upon request of any Holder of Registrable Securities, to any Holder or
beneficial owner of Registrable Securities in connection with any sale thereof
and any prospective purchaser of such Registrable Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.
Section 23. Notices to Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the Holder of any Warrants to or on the Company shall be sufficiently given
or
32
<PAGE>
made when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent), as follows:
Bell Technology Group Ltd.
295 Lafayette Street
New York, New York 10012
Telecopy: (212) 334-8509
Telephone: (212) 334-8500
Attention: Marc H. Bell, President
with a copy to:
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, New York 10119
Telecopy: (212) 868-1229
Telephone: (212) 594-5300
Attention: Arnold N. Bressler, Esq.
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or
by the Holder(s) of any Warrants to the Warrant Agent shall be sufficiently
given when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) to the Warrant Agent as follows:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department
Section 24. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any Holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of the Holders of Warrants. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of Holders shall require the written consent of
33
<PAGE>
Holders representing a majority of the then outstanding Warrants (excluding
Warrants held by the Company or any of its Affiliates); provided, however, that
the consent of each Holder of a Warrant affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided for in Section 13 hereof). The
Warrant Agent shall be entitled to receive and, subject to Section 18, shall be
fully protected in relying upon, an officers' certificate and opinion of counsel
as conclusive evidence that any such amendment or supplement is authorized or
permitted hereunder, that it does or does not, as the case may be, require the
written consent of Holders to be effective hereunder, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms.
Section 25. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 26. Termination. This Agreement (other than any party's
obligations with respect to Warrants previously exercised and with respect to
indemnification or any other payment then owed to Warrant Agent under Section
18) shall terminate at 5:00 p.m., New York City time on the Expiration Date.
Section 27. Governing Law. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 28. Benefits of This Agreement.
(a) Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Warrant Agent and the Holders of the Warrants
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the Holders of the Warrants.
(b) Prior to the exercise of the Warrants, no Holder of a Warrants,
as such, shall be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to receive dividends or subscription
rights, the right to vote, to consent, to exercise any preemptive right, to
receive any notice of meetings of
34
<PAGE>
stockholders for the election of directors of the Company or any other matter or
to receive any notice of any proceedings of the Company, except as may be
specifically provided for herein. The Holders of the Warrants are not entitled
to share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs.
(c) All rights of action in respect of this Agreement are vested in
the Holders of the Warrants, and any Holder of any Warrant, without the consent
of the Warrant Agent or the Holder of any other Warrant, may, on such Holder's
own behalf and for such Holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such Holder's rights hereunder, including the right
to exercise, exchange or surrender for purchase such Holder's Warrants in the
manner provided in this Agreement.
Section 29. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
BELL TECHNOLOGY GROUP LTD.
By:
------------------------
Name:
Title:
MARINE MIDLAND BANK,
as Warrant Agent
By:
------------------------
Name:
Title:
35
<PAGE>
Exhibit A
<PAGE>
Exhibit B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: _____________Warrants to Purchase Common Stock (the "Warrants") of Bell
Technology Group Ltd.
This Certificate relates to _______ Warrants held in*_______ book-entry or
definitive form by ___________ (the "Transferor").
The Transferor:
|_| has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant(s) held by the
depositary a Warrant or Warrants in definitive, registered form equal to its
beneficial interest in such Global Warrant(s) (or the portion thereof indicated
above); or
|_| has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrant(s).
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and that the transfer of each
such Warrant does not require registration under the Securities Act of 1933, as
amended (the "Securities Act"), because:
|_| Each such Warrant is being acquired for the Transferor's own account
without transfer.
|_| Each such Warrant is being transferred (i) to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act), in
reliance on Rule 144A or (ii) pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (and, in the case of clause
(ii), based on an opinion of counsel and written certification if the Company or
the Warrant Agent so requests).
- ----------
* Check applicable box.
B-1
<PAGE>
|_| Each such Warrant is being transferred (i) in accordance with Rule 144
under the Securities Act (and based on an opinion of counsel if the Company or
the Warrant Agent so requests) or (ii) pursuant to an effective registration
statement under the Securities Act.
|_| Each such Warrant is being transferred in reliance on and in
compliance with another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company or the Warrant
Agent so requests).
[INSERT NAME OF TRANSFEROR]
By:
------------------------
Name:
------------------------
Title:
------------------------
B-2
Exhibit 4(f)
REGISTRATION RIGHTS AGREEMENT
$160,000,000
13% Senior Notes due 2005
Dated as of April 30, 1998
by and between
BELL TECHNOLOGY GROUP LTD.
and
ING BARING (U.S.) SECURITIES, INC.
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of April 30, 1998, by and between BELL TECHNOLOGY GROUP LTD., a
Delaware corporation (the "Company"), and ING BARING (U.S.) SECURITIES, INC.
(the "Initial Purchaser"), whom has agreed to purchase the Company's 13% Senior
Notes due 2005 (the "Notes") pursuant to the Purchase Agreement (as defined
below).
WHEREAS, in order to induce the Initial Purchaser to purchase the
Notes, pursuant to the Purchase Agreement, dated as of April 24, 1998 (the
"Purchase Agreement"), by and between the Company and the Initial Purchaser, the
Company has agreed to provide the registration rights set forth in this
Agreement, and the execution and delivery of this Agreement is a condition to
the obligation of the Initial Purchaser set forth in Section 8 of the Purchase
Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and of the
premises and mutual agreement herein set forth, the parties hereto hereby agree
as follows:
Section 1. Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Act" means the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations promulgated
thereunder.
"Broker-Dealer" means any broker or dealer registered under the
Exchange Act.
"Broker-Dealer Transfer Restricted Securities" means Exchange Notes
that are acquired by a Broker-Dealer in the Exchange Offer in exchange for Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Notes acquired
directly from the Company or any of its affiliates).
"Business Day" means any day except a Saturday, Sunday or other day
in The City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act.
"Consummated" with respect to an Exchange Offer, shall mean the
occurrence of (a) the filing and effectiveness under the Act of the Exchange
Offer Registration Statement relating to the Exchange Notes to be issued in the
Exchange Offer, (b) the maintenance of such Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 3(b) hereof and (c) the delivery
by the Company to the Registrar
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under the Indenture of Exchange Notes in the same aggregate principal amount as
the aggregate principal amount of Notes tendered by Holders thereof pursuant to
the Exchange Offer.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"Exchange Notes" means the Company's 13% Senior Notes due 2005 to be
issued pursuant to the Indenture.
"Exchange Offer" means the registration by the Company under the Act
of the Exchange Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
"Exchange Offer Registration Statement" means the Registration
Statement relating to the Exchange Offer, including the related Prospectus.
"Exempt Resales" means the transactions in which the Initial
Purchaser proposes to sell the Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, or pursuant to
offers and sales that occur outside the United States to persons other than U.S.
persons within the meaning of Regulation S under the Act.
"Holders" has the meaning ascribed to such term in Section 2 hereof.
"Indenture" means the Indenture, dated the Issue Date, between the
Company and Marine Midland Bank, as trustee (the "Trustee"), pursuant to which
the Senior Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms
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thereof.
"Interest Payment Date" has the meaning ascribed to such term in the
Indenture and the Senior Notes.
"Issue Date" means the date hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"Offering Memorandum" means the final offering memorandum, dated
April 24, 1998, relating to the Company and the Notes.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
"Preliminary Offering Memorandum" means the preliminary offering
memorandum, dated March 27, 1998, relating to the Company and the Notes.
"Private Exchange" has the meaning ascribed to such term in Section
3(e) hereof.
"Private Exchange Notes" has the meaning ascribed to such term in
Section 3(e) hereof.
"Prospectus" means the prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
"Registration Default" has the meaning ascribed to such term in
Section 5 hereof.
"Registration Statement" means any registration statement of the
Company and filed under the Act relating to (a) an offering of Exchange Notes
pursuant to an Exchange
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Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) which is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Restricted Broker-Dealer" means any Broker-Dealer which holds
Broker-Dealer Transfer Restricted Securities.
"Senior Notes" means the Notes, the Exchange Notes and the Private
Exchange Notes.
"Shelf Registration Statement" has the meaning ascribed to such term
in Section 4 hereof.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date
of the Indenture, and the rules and regulations promulgated thereunder as of
such date.
"Transfer Restricted Securities" means each Note until the earliest
to occur of (i) the date on which such Note is exchanged by a person other than
a Broker-Dealer for an Exchange Note in the Exchange Offer, (ii) following the
exchange by a Broker-Dealer in the Exchange Offer of a Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such Broker-Dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Note is effectively registered under the Act and disposed of
in accordance with the Shelf Registration Statement or (iv) the date on which
such Note is distributed to the public pursuant to Rule 144 under the Act.
"Underwritten Registration or Underwritten Offering" means a
registration under the Act in which securities of the Company are sold to an
underwriter for reoffering to the public.
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Section 2. Holders. A Person is deemed to be a holder of Transfer
Restricted Securities (each, a "Holder") whenever such Person owns Transfer
Restricted Securities.
Section 3. Registered Exchange Offer.
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause to be filed with the Commission as
soon as practicable after the Issue Date, but in no event later than 60 days
after the Issue Date, the Exchange Offer Registration Statement, (ii) use its
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 105 days
after the Issue Date, (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause such Exchange Offer Registration Statement to become
effective, (B) file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Exchange Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Exchange Notes to be offered in
exchange for the Notes that are Transfer Restricted Securities and to permit
sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration
Statement to be effective continuously, and shall keep the Exchange Offer open,
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be
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less than 20 Business Days. The Company shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Senior Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use its best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Restricted Broker-Dealer who holds Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Notes (other than Transfer Restricted Securities
acquired directly from the Company) pursuant to the Exchange Offer; however,
such Broker-Dealer may be deemed to be an "underwriter" within the meaning of
the Act and must, therefore, deliver a prospectus meeting the requirements of
the Act in connection with its initial sale of each Exchange Note received by
such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement
may be satisfied by the delivery by such Broker-Dealer of the Prospectus
contained in the Exchange Offer Registration Statement. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales of Broker- Dealer Transfer Restricted Securities by Restricted
Broker-Dealers that the Commission may require in order to permit such sales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer
except to the extent required by the Commission.
(d) The Company shall use its best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer
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Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that
such Registration Statement conforms with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission as announced
from time to time, for a period expiring on the earlier of (i) the date that all
Holders of Transfer Restricted Securities have sold such securities and (ii) 180
days from the date on which the Exchange Offer Registration Statement is
declared effective.
(e) If, upon Consummation of the Exchange Offer, the Initial
Purchaser holds Notes acquired by it as part of its initial distribution, the
Company, simultaneously with the delivery of the Exchange Notes pursuant to the
Exchange Offer, shall issue and deliver to the Initial Purchaser upon the
written request of the Initial Purchaser, in exchange (the "Private Exchange")
for the Notes held by the Initial Purchaser, a like principal amount of debt
securities of the Company issued under the Indenture and identical in all
material respects (including the existence of restrictions on transfer under the
Act and the securities laws of the several states of the United States but
excluding provisions relating to the matters described in Section 5 hereof) to
the Notes (the "Private Exchange Notes").
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Section 4. Shelf Registration.
(a) Shelf Registration. If (i) the Company is not required to file
the Exchange Offer Registration Statement with respect to the Senior Notes or
permitted to Consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a)(i) below have been complied with) or (ii) any Holder of Transfer
Restricted Securities notifies the Company within 20 Business Days following the
Consummation of the Exchange Offer that (A) such Holder is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Senior
Notes acquired directly from the Company or an affiliate of the Company, then
the Company shall:
(x) cause to be filed on or prior to (1) in the case of a
Registration Statement filed pursuant to clause (i) above, 45 days after the
date on which the Company determines that it is not required to file the
Exchange Offer Registration Statement and in any event, within 150 days after
the Issue Date and (2) in the case of a Registration Statement filed pursuant to
clause (ii) above, 45 days after the date on which the Company receives the
notice specified in clause (ii) above, a shelf registration statement pursuant
to Rule 415 under the Act, (which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration Statement")),
relating to all Transfer Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b) hereof, and
(y) use its best efforts to cause such Shelf Registration Statement
to become effective on or prior to (1) in the case of a Registration Statement
filed pursuant to clause (i) above, 105 days after the date on which the
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Company becomes obligated to file such Shelf Registration Statement (and in any
event, within 255 days after the Issue Date), and (2) in the case of a
Registration Statement filed pursuant to clause (ii) above, 105 days after the
date on which the Company receives the notice specified in clause (ii) above.
If, after the Company has filed an Exchange Offer Registration Statement which
satisfies the requirements of Section 3(a) above, the Company is required to
file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law or Commission
policy, then the filing of the Exchange Offer Registration Statement shall be
deemed to satisfy the requirements of clause (x) above. Such an event shall have
no effect on the requirements of this clause (y), or on the Effectiveness Target
Date as defined in Section 5 below.
The Company shall use its best efforts to keep the Shelf
Registration Statement referred to in this Section 4(a) continuously effective,
supplemented and amended as required by the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that it is available for sales of
Transfer Restricted Securities by the Holders thereof entitled to the benefit of
this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period expiring on the earlier of (i) the
date that all Holders of Transfer Restricted Securities have sold such
securities and (ii) 365 days from the date on which the Shelf Registration
Statement is declared effective.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 Business Days after receipt of a request
therefor, such information specified in Item 507 of Regulation S-B or S-K, as
applicable, under the Act for use in connection with any
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Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. No Holder of Transfer Restricted Securities shall be entitled to
Additional Interest pursuant to Section 5 hereof unless and until such Holder
shall have provided all such information required to be provided by such Holder
for inclusion therein. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company, for so long as the
Registration Statement is effective, all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
Section 5. Additional Interest. If (i) the Company fails to file any
of the Registration Statements required by this Agreement on or before the date
specified for such filing in this Agreement, (ii) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Target Effectiveness Date"), (iii) the
Company fails to Consummate the Exchange Offer within 30 Business Days of the
Target Effectiveness Date with respect to the Exchange Offer Registration
Statement or (iv) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in this Agreement without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective within a five Business
Day period after filing such post-effective amendment (each such event referred
to in clauses (i) through (iv) above, a "Registration Default"), then commencing
on the day following the date on which such Registration Default occurs, the
interest rate borne by the Senior Notes shall be increased by one-half of one
percent per annum for the 90-day period following such Registration Default,
which rate will increase by one-half of one percent per annum with respect to
each subsequent 90-day period up to a maximum of one and one half percent
(1.50%) per annum until such
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Registration Default is cured ("Additional Interest"). Following the cure of all
Registration Defaults, the accrual of Additional Interest will cease and the
interest rate will revert to the original rate.
All accrued Additional Interest shall be paid to Cede & Co., as
nominee of the Depository Trust Company (the "Global Security Holder") by wire
transfer of immediately available funds or by federal funds check and to Holders
of Definitive Securities by mailing checks to their registered addresses by the
Company on each Interest Payment Date. All obligations of the Company set forth
in the preceding paragraph that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such security shall have been satisfied in full.
Section 6. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, such that in the reasonable opinion of counsel to the Company there
is a substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company hereby agrees to seek a no-action
letter or other favorable decision from the Commission allowing the
Company to Consummate an Exchange Offer for the Notes. The Company hereby
agrees to pursue the issuance of such a decision to the Commission staff
level. In connection with the foregoing, the Company
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<PAGE>
hereby agrees to take such other actions as are requested by the
Commission or otherwise required in connection with the issuance of such
decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases,
if any, upon which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursuing a resolution by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation of the Exchange Offer, a written representation
to the Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the effect
that (A) it is not an affiliate of the Company, (B) it is not engaged in,
and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the Exchange Notes to
be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes
in its ordinary course of business. Each Holder hereby acknowledges and
agrees that any Broker-Dealer and any such Holder using the Exchange Offer
to participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on the
date of this Agreement rely on the position of the Commission enunciated
in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital
Holdings Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and similar
no-action letters (including, if applicable, any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the registration
and prospectus delivery requirements of the Act in connection with a
secondary resale
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transaction and that such a secondary resale transaction must be covered
by an effective registration statement containing the selling security
holder information required by Item 507 or 508, as applicable, of
Regulation S-B or S-K, as applicable, if the resales are of Exchange Notes
obtained by such Holder in exchange for Notes acquired by such Holder
directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co.,
Inc. (available June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a representation that
the Company has not entered into any arrangement or understanding with any
Person to distribute the Exchange Notes to be received in the Exchange
Offer and that, to the best of the Company's information and belief, each
Holder participating in the Exchange Offer is acquiring the Exchange Notes
in its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the Exchange Notes
received in the Exchange Offer and (C) any other undertaking or
representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with
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the Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement and the related Prospectus, to the
extent that the same are required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the
Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale
of Transfer Restricted Securities during the period required by this
Agreement, the Company shall file promptly an appropriate amendment to
such Registration Statement, (1) in the case of clause (A), correcting any
such misstatement or omission, and (2) in the case of either clause (A) or
(B), use its best efforts to cause such amendment to be declared effective
and such Registration Statement and the related Prospectus to become
usable for their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, or such
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shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424 and 430A, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriters, if any, and selling Holders promptly
and, if requested by such Persons, confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any Registration Statement
or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light
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<PAGE>
of the circumstances under which they were made, not misleading. If at any
time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(iv) make available to each selling Holder named in any Registration
Statement or Prospectus and each of the underwriters in connection with
such sale, if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or Prospectus
(including all documents incorporated by reference after the initial
filing of such Registration Statement), substantially in the form proposed
to be filed, which documents will be subject to the review and comment of
such Holders and underwriters in connection with such sale, if any, for a
period of at least five Business Days, and the Company will not file any
such Registration Statement or Prospectus or any amendment or supplement
to any such Registration Statement or Prospectus (including all such
documents incorporated by reference) to which the selling Holders of the
Transfer Restricted Securities covered by such Registration Statement or
the underwriters in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have reasonably objected
to such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission or fails to comply with the applicable
requirements of the Act;
(v) promptly upon the filing of any document that
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is to be incorporated by reference into a Registration Statement or
Prospectus, make available copies of such document to the selling Holders
and to the underwriter(s) in connection with such sale, if any, make the
Company's representatives available for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement and any attorney or accountant retained by
such selling Holders or any of such underwriters, all financial and other
records, pertinent corporate documents and properties of the Company as
reasonably requested by such Holders and cause the Company's officers,
directors and employees to supply all information reasonably requested by
any such Holder, underwriter, attorney or accountant in connection with
such Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness; provided
that any person to whom information is provided under this clause (vi)
agrees in writing to maintain the confidentiality of such information to
the extent such information is not in the public domain;
(vii) if requested by any selling Holders or the underwriters in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such
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underwriters, the purchase price being paid therefor and any other terms
of the offering of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies,
if so requested by the Holders of a majority in aggregate principal amount
of Senior Notes covered thereby or the underwriters, if any;
(ix) furnish to each selling Holder and each of the underwriters in
connection with such sale, if any, without charge, at least one copy of
the Registration Statement, as first filed with the Commission, and of
each amendment thereto, and make available all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(x) deliver to each selling Holder and each of the underwriters, if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use of
the Prospectus and any amendment or supplement thereto by each of the
selling Holders and each of the underwriters, if any, in connection with
the offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including, unless not required
pursuant to Section 10 hereof, an underwriting agreement) and make such
representations and warranties and take all such other actions in
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connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by any
Holder of Transfer Restricted Securities or underwriter in connection with
any sale or resale pursuant to any Registration Statement contemplated by
this Agreement, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
Underwritten Registration, the Company shall:
(A) furnish to each selling Holder and each underwriter, if
any, upon the effectiveness of the Shelf Registration Statement and
to each Restricted Broker-Dealer upon consummation of the Exchange
Offer:
(1) a certificate, dated the date of effectiveness of
the Shelf Registration Statement or the date of Consummation
of the Exchange Offer, as the case may be, signed by (x) the
President or any Vice President and (y) a principal financial
or accounting officer of the Company, confirming with respect
to the Prospectus or any purchase or underwriting agreement
and the Transfer Restricted Securities, as of the date
thereof, the matters set forth in paragraphs (i), (ii) and
(iii) of Section 8(e) of the Purchase Agreement;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement or the date of Consummation of
the Exchange Offer, as the case may be, of counsel for the
Company, covering (i) due authorization and enforceability of
the Notes and the Exchange Notes, (ii) a statement to the
effect that such counsel has participated in conferences with
officers and other
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representatives of the Company and representatives of the
independent public accountants for the Company and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness
of such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by officers and
other representatives of the Company and without independent
check or verification), no facts came to such counsel's
attention that caused such counsel to believe that the
applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective, and, in the case of the Exchange Offer
Registration Statement, as of the date of Consummation,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
that the Prospectus contained in such Registration Statement
as of its date and, in the case of the opinion dated the date
of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading and (iii) such
other matters of the type customarily covered in opinions of
counsel for an issuer in connection with similar securities
offerings, as may reasonably be requested by such parties.
Without limiting the foregoing, such counsel may state further
that such counsel assumes
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<PAGE>
no responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial,
statistical and accounting data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
(3) if the registration is a registration in which
securities of the Company are sold to an underwriter for
reoffering to the public, obtain a customary comfort letter,
dated as of the date of effectiveness of the Shelf
Registration Statement, addressed to the Board of Directors of
the Company or any underwriter from the Company's independent
accountants, in the customary form and covering matters of the
type customarily covered in comfort letters to boards of
directors in underwritten offerings;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all parties
to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clause
(A) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company pursuant to this
clause (xi), if any.
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent
22
<PAGE>
required thereunder, and if at any time the representations and warranties of
the Company contemplated in (A)(1) above cease to be true and correct, the
Company shall so advise the underwriters, if any, and selling Holders promptly
and if requested by such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriters, if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities
or Blue Sky laws of such jurisdictions as the selling Holders or
underwriters, if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the applicable Registration
Statement; provided, however, that the Company shall not be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it is
not now so subject;
(xiii) issue, upon the request of any Holder of Notes covered by any
Shelf Registration Statement contemplated by this Agreement, Exchange
Notes having an aggregate principal amount equal to the aggregate
principal amount of Notes surrendered to the Company by such Holder in
exchange therefor or being sold by such Holder; such Exchange Notes to be
registered in the name of such Holder or in the name of the purchasers of
such Exchange Notes; in return, the Notes held by such Holder shall be
surrendered to the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted Securities
that will result in such
23
<PAGE>
securities no longer being Transfer Restricted Securities, cooperate with
the selling Holders and the underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and
such names as the Holders or the underwriters, if any, may request at
least two Business Days prior to such sale of Transfer Restricted
Securities;
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriters, if
any, to consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xii) above;
(xvi) if any fact or event contemplated by Section 6(c)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering
such Transfer Restricted Securities and provide the Trustee under the
Indenture with printed certificates for the Transfer Restricted Securities
which are in a form eligible for deposit with the Depository Trust
Company;
24
<PAGE>
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of
the NASD, and use its best efforts to cause such Registration Statement to
become effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer Restricted
Securities;
(xix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders with regard to any applicable Registration Statement,
as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xx) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement, and, in connection therewith, cooperate with the Trustee
and the Holders of Senior Notes to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance with
the terms of the TIA; and execute and use its best efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by
25
<PAGE>
the Holders of a majority in aggregate principal amount of Notes or the
managing underwriters, if any; and
(xxii) provide promptly to each Holder upon written request each
document filed with the Commission pursuant to the requirements of Section
13 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 6(c)(iii)(D)
hereof, such Holder will forthwith discontinue the disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice. In the event the Company shall give any such notice, the
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 6(c)(iii)(D) hereof to and including the date when each
selling Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice.
Section 7. Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Agreement will be borne by the
Company, regardless of whether a Registration Statement becomes effective,
26
<PAGE>
including without limitation: (i) all registration and filing fees and expenses
(including filings made with the NASD (including, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel, as may be
required by the rules and regulations of the NASD)); (ii) all fees and expenses
of compliance with federal securities and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing certificates for the Senior
Notes and printing of Prospectuses), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Company and one
legal counsel for the Holders of Transfer Restricted Securities to be selected
by a majority of such holders; (v) all application and filing fees in connection
with listing the Senior Notes on a national exchange or automated quotation
system if required hereunder; and (vi) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
27
<PAGE>
Section 8. Indemnification.
28
<PAGE>
(a) The Company agrees to indemnify and hold harmless (i) each
Holder, (ii) each person, if any, who controls a Holder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person to the fullest extent lawful, from and
against any and all losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or a Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent, but only to the extent, that
(i) any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information relating to a Holder furnished to the Company by or on behalf of
such Holder expressly for use therein and (ii) the foregoing indemnity with
respect to any untrue statement contained in or omitted from a Registration
Statement or the Prospectus shall not inure to a Holder (or any person
controlling such Holder), from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Senior Notes which are
the subject thereof if it is finally judicially determined that such loss,
liability, claim, damage or expense resulted solely
29
<PAGE>
from the fact that the Holder sold Senior Notes to a person to whom there was
not sent or given, at or prior to the written confirmation of such sale, a copy
of the Registration Statement or the Prospectus, as amended or supplemented, and
(x) the Company shall have previously and timely furnished sufficient copies of
the Registration Statement or Prospectus, as so amended or supplemented, to such
Holder in accordance with this Agreement and (y) the Registration Statement or
Prospectus, as so amended or supplemented, would have corrected such untrue
statement or omission of a material fact. This indemnity agreement will be in
addition to any liability which the Company may otherwise have, including, under
this Agreement.
(b) Each Holder, severally and not jointly, agrees to indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against any losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or a Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only
to the extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written
30
<PAGE>
information relating to such Holder furnished to the Company by or on behalf of
such Holder expressly for use therein. This indemnity will be in addition to any
liability which a Holder may otherwise have, including under this Agreement. In
no event, however, shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon its sale of the Senior Notes giving rise to such indemnification
obligation.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to
31
<PAGE>
one or all of the indemnifying parties, in which case the indemnifying party or
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party or of which events such fees and expenses of counsel
shall be borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above, shall only be liable for
the legal expenses of one counsel (in addition to any local counsel) for all
indemnified parties in each jurisdiction in which any claim or action is
brought. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its prior written consent, provided, however, that such consent
was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which
the indemnification provided for in this Section 8 is for any reason held to be
unavailable from the Company or is insufficient to hold harmless a party
indemnified thereunder, the Company and each Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from persons,
other than the Holders, who may also be liable for contribution, including
persons who control the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to which the Company and any Holder may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Company from the offering of Senior Notes and any such Holder
from its sale of Senior Notes or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in this Section 8, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative
32
<PAGE>
fault of the Company and the Holders in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and any Holder shall be deemed to be in the
same proportion as (x) the total proceeds from the offering of the Senior Notes
(net of discounts but before deducting expenses) received by the Company and (y)
the total proceeds received by such Holder upon its sale of Senior Notes which
give rise to the indemnification obligation, respectively. The relative fault of
the Company and of the Holder shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) no Holder shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of its Senior Notes exceeds the sum of (A)
the amount paid by such Holder for such Senior Notes plus (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8, (A)
each person, if any, who controls a Holder within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act and (B) the respective officers,
directors, partners, employees, representatives and agents of a Holder or any
controlling person shall have the same rights to
33
<PAGE>
contribution as such Holder, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as the Company, subject in and (ii)
of this Section 8(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 8, notify such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its prior written consent; provided, however, that such written consent
was not unreasonably withheld.
Section 9. Rule 144A. The Company hereby agrees with each Holder,
for so long as any Transfer Restricted Securities remain outstanding, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
Section 10. Underwritten Registrations. In the event a Shelf
Registration Statement is required to be filed by the Company, the Holders of
Transfer Restricted Securities included or required to be included in such Shelf
Registration Statement may elect to sell their Transfer Restricted Securities
pursuant to an Underwritten Registration; provided, however, that in no event
shall such Underwritten Registration be commenced if a period of less than 180
days has elapsed since the consummation of the most recent Underwritten
Registration hereunder. No Holder may participate in any Underwritten
Registration hereunder
34
<PAGE>
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.
Section 11. Selection of Underwriters. In an Underwritten Offering,
the investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company. Such investment bankers and managers are
referred to herein as the "underwriters."
Section 12. Miscellaneous.
(a) Remedies. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages (including the liquidated damages contemplated hereby) would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that conflicts with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof, except where a waiver with
35
<PAGE>
respect thereto has been obtained prior to the date of effectiveness of any
registration statement required under this Agreement.
(c) Adjustments Affecting the Senior Notes. The Company will not
take any action, or permit any change to occur, with respect to the Senior Notes
that would materially adversely affect the ability of the Holders to Consummate
any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities, and the consent of the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities shall be
binding on every Holder of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities that are subject to such
Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
36
<PAGE>
Bell Technology Group Ltd.
295 Lafayette Street
New York, New York 10012
Telecopier No.: (212) 334-8509
Attention: Marc H. Bell, President
With a copy to:
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, New York 10119
Telecopier No.: (212) 868-1229
Attention: Arnold N. Bressler, Esq.
All such notices and communications shall be deemed to have been
duly given at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall
37
<PAGE>
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
BELL TECHNOLOGY GROUP LTD.
By: ______________________________
38
<PAGE>
Name:
Title:
The foregoing Registration
Rights Agreement is hereby
confirmed and accepted as of
date first above written.
ING BARING (U.S.) SECURITIES, INC.
By: ______________________________
Name:
Title:
39
WARRANT REGISTRATION RIGHTS AGREEMENT
Dated as of April 30, 1998
by and among
BELL TECHNOLOGY GROUP LTD.
and
ING BARING (U.S.) SECURITIES, INC.
THIS WARRANT REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made and entered into as of April 30, 1998, by and between BELL TECHNOLOGY GROUP
LTD., a Delaware corporation (the "Company"), and ING BARING (U.S.) SECURITIES,
INC. (the "Initial Purchaser").
WHEREAS, this Agreement is made pursuant to the Purchase Agreement,
dated as of April 24, 1998, by and between the Company and the Initial Purchaser
(the "Purchase Agreement"), relating to, among other things, the sale by the
Company to the Initial Purchaser of an aggregate of 160,000 Units, consisting in
the aggregate of (i) $160,000,000 principal amount at maturity of 13% Senior
Notes due 2005 (the "Notes") and (ii) 160,000 Warrants (the "Unit Warrants"),
each representing the right to purchase initially 3.52 shares of Common Stock,
par value $.01 per share, of the Company (the "Common Stock").
WHEREAS, the Warrants have been issued pursuant to the Warrant
Agreement dated as of the date hereof by and between the Company and Marine
Midland Bank, as warrant agent (the "Warrant Agreement").
WHEREAS, in order to induce the Initial Purchaser to enter into the
Purchase Agreement, the Company has agreed to provide to the Initial Purchaser
and the Holders (as defined herein), among other things, the registration rights
for the Warrant Shares (as defined herein) set forth in this Agreement, and the
execution and delivery of this Agreement is a condition to the obligations of
the Initial Purchaser under the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing
<PAGE>
and the premises and mutual agreements herein set forth, the parties hereto
hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Advice" has the meaning ascribed to such term in the last paragraph
of Section 4 hereof.
"Black Out Period" has the meaning ascribed to such term in Section
2.3(b) hereof.
"Business Day" shall mean a day that is not a Legal Holiday.
"Common Stock" has the meaning ascribed to such term in the preamble
hereof.
"Company" shall have the meaning ascribed to that term in the
preamble hereof and shall also include the Company's permitted successors and
assigns.
"Demand Registration" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"DTC" has the meaning ascribed to such term in Section 4(i) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and regulations
promulgated thereunder.
"Expiration Date" has the meaning ascribed to such term in the
Warrant Agreement.
"Holder" shall mean the Initial Purchaser, for so long as it owns
any Warrants or Warrant Shares, and each of its successors, assigns and direct
and indirect transferees who become registered owners of such Warrants or
Warrant Shares.
"Included Securities" has the meaning ascribed to such term in
Section 2.1(a) hereof.
"indemnified party" has the meaning ascribed to such term in Section
5(c) hereof.
"indemnifying party" has the meaning ascribed to such term in
Section 5(c) hereof.
"Indenture" means the Indenture, of even date herewith, between the
Company and Marine Midland Bank, as
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Trustee, pursuant to which the Notes are issued.
"Initial Purchaser" has the meaning ascribed to such term in the
preamble hereof.
"Inspectors" has the meaning ascribed to such term in Section 4(n)
hereof.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
banking institutions in the City of New York are authorized or required by law,
regulation or executive order to remain closed.
"Notes" has the meaning ascribed to such term in the preamble
hereof.
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Piggy-Back Registration" has the meaning ascribed to such term in
Section 2.2 hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning ascribed to such term in the
preamble hereof.
"Registrable Securities" means any of (i) the Warrant Shares and
(ii) any other securities issued or issuable with respect to any Warrant Shares
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise, unless, in each case, such Warrant Shares and securities, if any,
have been offered and sold to the Holder pursuant to an effective Registration
Statement under the Securities Act declared effective prior to the
exercisability of the Warrants or such Warrant Shares and securities, if any,
may be sold to the public pursuant to Rule 144 without any restriction on the
amount of securities which may be sold by such Holder or the satisfaction of any
condition. As to any particular Registrable Securities held by a Holder, such
securities shall cease to be Registrable Securities when (i) a
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Registration Statement with respect to the exercise or offering of such
securities by the Holder thereof shall have been declared effective under the
Securities Act and such securities shall have been exercised and/or disposed of
by such Holder pursuant to such Registration Statement, (ii) such securities may
at the time of determination be sold to the public pursuant to Rule 144 without
any restriction on the amount of securities which may be sold by such Holder (or
any similar provision then in force, but not Rule 144A) promulgated under the
Securities Act without the lapse of any further time or the satisfaction of any
condition, (iii) such securities shall have been otherwise transferred by such
Holder and new certificates for such securities not bearing a legend restricting
further transfer shall have been delivered by the Company or its transfer agent
and subsequent disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state securities or blue
sky laws then in force or (iv) such securities shall have ceased to be
outstanding.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, all SEC and stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees and expenses, fees and expenses of
compliance with state securities or blue sky laws (including, without
limitation, reasonable fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities), printing
expenses, messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified public accountants, the
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities (but not including any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable Securities by
Holders of such Registrable Securities) and other reasonable out-of-pocket
expenses of Holders (including the fees and expenses of one counsel for the
Holders to be selected by a majority of such Holders).
"Registration Statement" shall mean any appropriate registration
statement of the Company filed with the SEC pursuant to the Securities Act which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Requisite Securities" shall mean a number of Registrable Securities
equal to not less than 25% of the Registrable Securities held in the aggregate
by all Holders;
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provided, however, that with respect to any action to be taken at the request of
the Holders of the Registrable Securities prior to such time as the Warrants
have expired pursuant to the terms thereof and of the Warrant Agreement, each
Warrant outstanding shall be deemed to represent that number of Registrable
Securities for which such Warrant would be then exercisable (without giving
effect to the cashless (net) exercise feature referred to in the Warrant
Agreement).
"Rule 144" shall mean Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
"Rule 144A" shall mean Rule 144A promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations
promulgated thereunder.
"Selling Holder" shall mean a Holder who is selling Registrable
Securities in accordance with the provisions of Section 2.1 or 2.2 hereof.
"Warrants" has the meaning ascribed to such term in the preamble
hereof.
"Warrant Agent" means Marine Midland Bank, and any successor Warrant
Agent for the Warrants pursuant to the Warrant Agreement.
"Warrant Agreement" has the meaning ascribed to such term in the
preamble hereof.
"Warrant Shares" means the shares of Common Stock delivered or
deliverable upon exercise of the Warrants.
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Section 2. Registration Rights.
Section 2.1. Demand Registration.
(a) General. At any time and from time to time after the first
anniversary of the date of the Warrant Agreement, Holders owning, individually
or in the aggregate, not less than the Requisite Securities may make a written
request, on (subject to Sections 2.1(b), 2.1(e) and 2.3(a)) no more than three
occasions (each, a "Demand Registration"), that the Company register the resale
of the Warrant Shares, under the Securities Act. The Company shall file with the
SEC and use its best efforts to cause to become effective under the Securities
Act a Registration Statement with respect to such Registrable Securities within
(i) 60 days of receipt of such written request for a Demand Registration if the
Company is then eligible to register an offering pursuant to Form S-3 under the
Securities Act; (ii) 90 days of receipt of such written request for a Demand
Registration if the Company is not then eligible to register an offering
pursuant to Form S-3 under the Securities Act but is then qualified as a
reporting company under the Exchange Act; or (iii) 180 days of receipt of such
written request for a Demand Registration in any other case. Any such request
will specify the number of Registrable Securities proposed to be sold and will
also specify the intended method of disposition thereof. The Company shall give
written notice of such registration request to all other Holders of Registrable
Securities within 15 Business Days after the receipt thereof. Within 10 days
after receipt by any Holder of Registrable Securities of such notice from the
Company, such Holder may request in writing that such Holder's Registrable
Securities be included in such Registration Statement and the Company shall
include in such Registration Statement the Registrable Securities of any such
Holder requested to be so included (the "Included Securities"). Each such
request by such other Holders shall specify the number of Included Securities
proposed to be sold and the intended method of disposition thereof. Subject to
Sections 2.1(b), 2.1(e) and 2.3(a) hereof, the Company shall be required to
register Registrable Securities pursuant to this Section 2.1(a) on a maximum of
three separate occasions.
Subject to Section 2.1(e) hereof, no other securities of the Company
except (i) Registrable Securities held by any Holder, (ii) equity securities to
be offered and sold for the account of the Company and (iii) any equity
securities of the Company held by and any Person having "piggy-back"
registration rights pursuant to any contractual obligation of the Company shall
be included in a Demand Registration. The inclusion of any such securities for
the account of the Company or any other Person shall be on the same terms as
that of the Registrable Securities.
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(b) Effective Registration. A Registration Statement will not be
deemed to have been effected as a Demand Registration unless it has been
declared effective by the SEC and the Company has complied in all material
respects with all of its obligations under this Agreement with respect thereto;
provided, however, that if, after such Registration Statement has become
effective, the offering of Registrable Securities pursuant to such Registration
Statement is or becomes the subject of any stop order, injunction or other order
or requirement of the SEC or any other governmental or administrative agency or
court that prevents, restrains or otherwise limits the sale of Registrable
Securities pursuant to such Registration Statement for any reason not
attributable to any Holder participating in such registration and such restraint
is not lifted within 60 days after being imposed, such Registration Statement
will be deemed not to have been effected. If (i) a registration requested
pursuant to this Section 2.1 is deemed not to have been effected or (ii) a
Demand Registration does not remain effective under the Securities Act until at
least the earlier of (A) an aggregate of six months after the effective date
thereof or (B) the consummation of the distribution by the Holders of all of the
Registrable Securities covered thereby, then such registration shall not count
towards determining if the Company has satisfied its obligation to effect three
Demand Registrations pursuant to this Section 2.1. For purposes of calculating
the six month period referred to in the preceding sentence, any period of time
during which such Registration Statement was not in effect shall be excluded.
The Holders of Registrable Securities shall be permitted to withdraw all or any
part of the Registrable Securities from a Demand Registration at any time prior
to the effective date of such Demand Registration; provided, however, that
should the Holders of Registrable Securities remaining after such withdrawal
own, individually or in the aggregate, less than the Requisite Securities, the
Company shall have the right to terminate or withdraw any registration initiated
by it under Section 2.1 prior to the effectiveness of such registration.
(c) Restrictions on Sale by Holders. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Registration Statement
filed pursuant to Section 2.1 and are to be sold by the Holder thereunder
agrees, if and to the extent reasonably requested by the managing underwriter or
underwriters in an underwritten offering of common stock or common equivalents
the gross proceeds of which equal at least $35.0 million, not to effect any
public sale or distribution of Registrable Securities of the Company of the same
class as any securities included in such Registration Statement, including a
sale pursuant to Rule 144 (except as part of such underwritten offering), during
the 10-day period prior
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to, and during the 180-day period beginning on, the closing date of each
underwritten offering made pursuant to such Registration Statement, to the
extent timely notified in writing by the Company or such managing underwriter or
underwriters.
The foregoing provisions of Section 2.1(c) shall not apply to any
Holder of Registrable Securities if such Holder is prevented by an applicable
statute or regulation from entering into any such agreement; provided, however,
that any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or distribution of any
Registrable Securities commencing on the date of sale of such Registrable
Securities unless it has provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(d) Underwritten Registrations. If any of the Registrable Securities
covered by a Demand Registration are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Company and will be reasonably acceptable
to the Holders of not less than a majority of the Registrable Securities to be
sold thereunder. The Company shall obtain the consent of a majority of the
Holders of Registrable Securities in order for the third registration pursuant
to Section 2.1(a) to be an underwritten offering.
No Holder of Registrable Securities may participate in any
underwritten registration pursuant to a Registration Statement filed under this
Agreement unless such Holder (a) agrees to (i) sell such Holder's Registrable
Securities on the basis provided in and in compliance with the underwriting
arrangements and (ii) comply with Rules 101, 102 and 104 of Regulation M
promulgated under the Exchange Act and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
(e) Priority in Demand Registration. In a registration pursuant to
Section 2.1 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders who have requested such Demand
Registration or who have sought inclusion therein that in such underwriter's or
underwriters' opinion the total number of securities which the Selling Holders
and any other Person entitled to participate in such registration pursuant to
Section 2.1(a) hereof intend to include in such offering is such as to adversely
affect the success of such offering, including the
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price at which such securities can be sold, then the Company will be required to
include in such registration only the amount of securities which it is so
advised should be included in such registration. In such event, securities shall
be registered in such registration in the following order of priority: (i)
first, the securities which have been requested to be included in such
registration by the Holders of Registrable Securities and the securities of
other Persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments of the Company (pro rata based on the amount of
securities held by the Holders of Registrable Securities and such Persons), and
(ii) second, provided that no securities sought to be included by the Holders or
any other Person sought to be included therein have been excluded from such
registration, securities to be offered and sold for the account of the Company.
If 25% or more of the Registrable Securities which the Holders have
requested to be included in a registration statement pursuant to Section 2.1
hereof have been excluded from such registration statement pursuant to the
provisions of the foregoing paragraph, then such registration shall not count
towards determining whether the Company has satisfied its obligation to effect
three Demand Registrations pursuant to Section 2.1 hereof.
Section 2.2. Piggy-Back Registration.
(a) General. If at any time after the first anniversary date of the
Warrant Agreement the Company proposes to file a Registration Statement under
the Securities Act with respect to an offering by the Company for its own
account or for the account of any of its security holders of any class of its
common equity securities (other than (i) a Registration Statement on Form S-4 or
S-8 (or any substitute form that may be adopted by the SEC or other form of
limited purpose), (ii) a Registration Statement filed in connection with an
exchange offer or offering of securities solely to the Company's existing
security holders, or (iii) a Registration Statement filed pursuant to the
exercise of "demand" registration rights of existing security holders pursuant
to a contractual commitment of the Company) then the Company shall give written
notice of such proposed filing to the Holders of Registrable Securities as soon
as practicable (but in no event fewer than 15 days before the anticipated filing
date or 10 days if the Company is subject to filing reports under the Exchange
Act and able to use Form S-3 under the Securities Act), and such notice shall
offer such Holders the opportunity to register such number of shares of
Registrable Securities as each such Holder may request in writing not later than
5 days prior to the anticipated filing date of the Registration Statement after
receipt of
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such written notice from the Company (which request shall specify the
Registrable Securities intended to be disposed of by such Selling Holder and the
intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its best efforts to keep such Piggy-Back Registration
continuously effective under the Securities Act until at least the earlier of
(A) 90 days after the effective date thereof or (B) the consummation of the
distribution by the Holders of all of the Registrable Securities covered
thereby. The Company shall use its commercially reasonable efforts to cause the
managing underwriter or underwriters, if any, of such proposed offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company or any other security holder included therein, subject
to the restrictions set forth in Section 2.2(b), and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Selling Holder shall have the right to
withdraw its request for inclusion of its Registrable Securities in any
Registration Statement pursuant to this Section 2.2 by giving timely written
notice to the Company of its request to withdraw. The Company may withdraw a
Piggy-Back Registration at any time prior to the time it becomes effective or
the Company may elect to delay the registration; provided, however, that the
Company shall give prompt written notice thereof to participating Selling
Holders. The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2.2,
and each Holder of Registrable Securities shall pay all underwriting discounts
and commissions and transfer taxes, if any, relating to the sale or disposition
of such Holder's Registrable Securities pursuant to a Registration Statement
effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration pursuant to Section 2.1 hereof, and no
failure to effect a registration under this Section 2.2 and to complete the sale
of securities registered thereunder in connection therewith shall relieve the
Company of any other obligation under this Agreement.
(b) Priority in Piggy-Back Registration. In a registration pursuant
to Section 2.2 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders requesting inclusion in such
offering that in such underwriter's or underwriters' opinion the total number of
securities which the Company, the Selling Holders and any other Persons
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desiring to participate in such registration intend to include in such offering
is such as to adversely affect the success of such offering, including the price
at which such securities can be sold, then the Company will be required to
include in such registration only the amount of securities which it is so
advised should be included in such registration. In such event, securities shall
be registered in such offering in the following order of priority: (i) first,
the securities which the Company proposes to register, and (ii) second, provided
that no securities sought to be included by the Company have been excluded from
such registration, the securities which have been requested to be included in
such registration by the Holders of Registrable Securities and other Persons
entitled to exercise "piggy-back" registration rights pursuant to contractual
commitments of the Company (pro rata based on the amount of securities held by
the Holders of Registrable Securities requesting such inclusion and such
Persons).
If, as a result of the provisions of this Section 2.2(b), any
Selling Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Selling Holder has requested to be included,
such Selling Holder may elect to withdraw his request to include Registrable
Securities in such registration.
Section 2.3. Limitations, Conditions and Qualifications to
Obligations Under Registration Covenants. The obligations of the Company set
forth in Sections 2.1 and 2.2 hereof are subject to each of the following
limitations, conditions and qualifications:
(a) Subject to the next sentence of this paragraph, the Company
shall be entitled to postpone, for a reasonable period of time, the filing or
effectiveness of, or suspend the rights of any Holders to make sales pursuant
to, any Registration Statement otherwise required to be prepared, filed and made
and kept effective by it pursuant to Section 2.1 or 2.2 thereunder; provided,
however, that the duration of such postponement or suspension may not exceed the
earlier to occur of (A) 15 days after the cessation of the circumstances
described in the next sentence of this paragraph on which such postponement or
suspension is based or (B) 90 days after the date of the determination of the
Board of Directors referred to in the next sentence, and the duration of such
postponement or suspension shall be excluded from the calculation of the six
month period described in Section 2.1(b). Such postponement or suspension may be
effected only if the Board of Directors of the Company determines reasonably and
in good faith that the filing or effectiveness of, or sales pursuant to, such
Registration Statement would materially impede, delay or interfere with any
material financing, offer or sale of securities, acquisition, corporate
reorganization or other
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significant transaction involving the Company or any of its Subsidiaries which
material financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction is under active consideration at
the time of such postponement or suspension; provided, however, that the Company
shall not be entitled to such postponement or suspension more than twice in any
twelve-month period. If the Company shall so postpone the filing of a
Registration Statement it shall, as promptly as possible, deliver a certificate
signed by the Chief Executive Officer or President of the Company to the Selling
Holders as to such determination, and the Selling Holders shall (y) have the
right, in the case of a postponement of the filing or effectiveness of a
Registration Statement, upon the affirmative vote of the Holders of not less
than a majority of the Registrable Securities to be included in such
Registration Statement, to withdraw the request for registration by giving
written notice to the Company within 10 days after receipt of such notice or (z)
in the case of a suspension of the right to make sales, receive an extension of
the registration period equal to the number of days of the suspension. Any
Demand Registration as to which the withdrawal election referred to in the
preceding sentence has been effected shall not be counted for purposes of the
three Demand Registrations the Company is required to effect pursuant to Section
2.1 hereof.
(b) The Company shall not be required by this Agreement to file a
registration statement with respect to a Demand Registration during the period
starting with the date of filing of, and within 120 days immediately following,
the effective date of any registration statement under the Securities Act
pertaining to a firmly underwritten offering of equity securities of the Company
for its own account; provided that this clause (b) shall not apply from and
after December 15, 2003.
(c) The Company shall not be required by this Agreement to file a
registration statement with respect to a Demand Registration during the period
starting with the date of notice of a proper demand for the registration of
Common Stock of the Company, pursuant to a firmly underwritten offering, for the
account of any security holder of the Company in accordance with the terms of
the contractual arrangements governing such registration, and ending at the
earlier of:
(i) the withdrawal of any such registration statement or the request
to file such registration statement by the security holder requesting such
registration; or
(ii) 90 days after the effective date of any such registration
statement; provided, however, that the Company shall not be entitled to invoke
this clause (c) more than
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once during any 12-month period.
(d) The Company's obligations shall be subject to the obligations of
the Selling Holders, which the Selling Holders acknowledge, to furnish all
information and materials required of such Selling Holders and to take any and
all actions required of such Selling Holders as may be required under applicable
federal and state securities laws and regulations to permit the Company to
comply with all applicable requirements of the SEC and to obtain any
acceleration of the effective date of such Registration Statement; and
(e) The Company shall not be obligated to cause any special audit to
be undertaken in connection with any registration pursuant to this Agreement
unless such audit is required by the SEC or requested by the underwriters with
respect to such registration.
Section 2.4. Restrictions on Sale by the Company and Others. The
Company covenants and agrees that (i) it shall not, and that it shall not cause
or permit any of its subsidiaries to, effect any public sale or distribution of
any securities of the same class as any of the Registrable Securities or any
securities convertible into or exchangeable or exercisable for such securities
(or any option or other right for such securities), other than any Common Stock
and/or options, warrants or other Common Stock purchase rights, and the Common
Stock issued pursuant to such option, warrants or other rights, to employees,
officers or directors of, or consultants or advisors to the Company or any
subsidiary pursuant to stock purchase or stock option plans or other
arrangements that are approved by the Board of Directors of the Company, during
the 10-day period prior to, and during the 180-day period beginning on, the
commencement of any underwritten offering of Registrable Securities pursuant to
a Demand Registration which has been requested pursuant to this Agreement, prior
to the Company or any of its subsidiaries publicly announcing its intention to
effect any such public sale or distribution; and (ii) the Company will not, and
the Company will not cause or permit any subsidiary of the Company to, after the
date hereof, enter into any agreement or contract that conflicts with or limits
or prohibits the full and timely exercise by the Holders of Registrable
Securities of the rights herein to request a Demand Registration or to join in
any Piggy-Back Registration subject to the other terms and provisions hereof.
Section 2.5. Rule 144 and Rule 144A. The Company covenants that it
will file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations adopted by the SEC thereunder in
a timely manner and, if at any time the Company is not
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required to file such reports, it will, upon the request of any Holder or
beneficial owner of Registrable Securities, make available such information
necessary to permit sales pursuant to Rule 144A under the Securities Act. The
Company further covenants that it will take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144(k) and Rule 144A under the Securities Act, as such
Rules may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC (it being expressly understood that the foregoing
shall not create any obligation on the part of the Company to file periodic
reports or other reports under the Exchange Act at any time that it is not then
required to file such reports pursuant to the Exchange Act). Upon the request of
any Holder of Registrable Securities, the Company will in a timely manner
deliver to such Holder a written statement as to whether it has complied with
such information requirements.
Section 3. "Market Stand-Off" Agreement.
(a) Each Holder hereby agrees that it shall not, to the extent
requested by a managing underwriter of common stock or common equivalents of the
Company, sell or otherwise transfer or dispose of any Registrable Securities of
the Company then owned by such Holder (other than to donees or partners of the
Holder who agree to be similarly bound) for up to 180 days following the date of
the final Prospectus in connection with each Registration Statement of the
Company filed under the Securities Act; provided, however, that such agreement
(i) shall not be applicable to Registrable Securities sold pursuant to such
registration, and (ii) shall only be applicable if the managing underwriters
request such agreement from each Holder.
(b) In order to enforce the foregoing covenant, the Company shall
have the right to impose stop transfer instructions with respect to the
Registrable Securities (and the Registrable Securities of every other person
subject to the foregoing restriction) until the end of such period. The
provisions of this Section 3 shall be binding upon any transferee of any
Registrable Securities.
Section 4. Registration Procedures. In connection with the
obligations of the Company with respect to any Registration Statement pursuant
to Sections 2.1, 2.2 and 2.5 hereof, the Company shall, except as otherwise
provided:
(a) Prepare and file with the SEC as soon as practicable each such
Registration Statement (but in any
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event on or prior to the date of filing thereof required under this Agreement)
and cause such Registration Statement to become effective and remain effective
as provided herein; provided, however, that before filing any such Registration
Statement or any Prospectus (for registrations pursuant to Sections 2.1 and 2.2
hereof) or any amendments or supplements thereto (only for registrations
pursuant to Section 2.1 hereof), the Company shall make available to the Holders
of the Registrable Securities covered by such Registration Statement, and the
managing underwriter or underwriters, if any, copies of all such documents
proposed to be filed, which documents will be subject to the review and comment
of such Holders and underwriters in connection with such sale, if any, for a
period of at least five Business Days, and the Company will not file any such
Registration Statement or any amendment or supplement to any such Registration
Statement (including all such documents incorporated by reference) to which the
Holders of the Registrable Securities covered by such Registration Statement or
the underwriters in connection with such sale, if any, shall reasonably object
within five Business Days after the receipt thereof. A participating Holder or
underwriter, if any, shall be deemed to have reasonably objected to such filing
if such Registration Statement, amendment or supplement, as applicable, as
proposed to be filed, contains a material misstatement or omission or fails to
comply with the applicable requirements of the Securities Act;
(b) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods prescribed
hereby; cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
and comply with the provisions of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities, their counsel and
the managing underwriter or underwriters, if any, promptly (but in any event
within two (2) Business Days), and confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration
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Statement or post-effective amendment including financial statements and
schedules and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
or threatening of any proceedings for that purpose, (iii) of the receipt by the
Company of any notification with respect to (A) the suspension of the
qualification or exemption from qualification of the Registration Statement or
any of the Registrable Securities covered thereby for offer or sale in any
jurisdiction, or (B) the initiation of any proceeding for such purpose, (iv) of
the happening of any event, the existence of any condition or information
becoming known that requires the making of any changes in such Registration
Statement, Prospectus or documents so that, in the case of such Registration
Statement, it will conform in all material respects with the requirements of the
Securities Act and it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, not misleading, and that in the case of the
Prospectus, it will conform in all material respects with the requirements of
the Securities Act and it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (v) of the Company's reasonable
determination that a post-effective amendment to such Registration Statement
would be appropriate.
(d) Use commercially reasonable efforts to prevent the issuance of
any order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities covered thereby for sale in any jurisdiction, and, if any such order
is issued, to obtain the withdrawal of any such order at the earliest
practicable moment.
(e) If requested by the managing underwriter or underwriters, if
any, or the Holders of a majority of the Registrable Securities being sold in
connection with an underwritten offering (only for registrations pursuant to
Section 2.1 hereof), (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters, if any, or such Holders reasonably request to be included therein
to comply with applicable law, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated
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in such prospectus supplement or post effective amendment, and (iii) supplement
or make amendments to such Registration Statement.
(f) Furnish to each Holder of Registrable Securities who so requests
and to counsel for the Holders of Registrable Securities and each managing
underwriter, if any, without charge, upon request, one conformed copy of the
Registration Statement and each post effective amendment thereto, including
financial statements and schedules, and of all documents incorporated or deemed
to be incorporated therein by reference and all exhibits (including exhibits
incorporated by reference).
(g) Deliver to each Holder of Registrable Securities, their counsel
and each underwriter, if any, without charge, as many copies of each Prospectus
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and, subject to the last paragraph of this
Section 4, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders of Registrable Securities
and the underwriter or underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, to register or
qualify, and cooperate with the Holders of Registrable Securities, the
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of, such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
the managing underwriter or underwriters reasonably request in writing, or, in
the event of a non-underwritten offering, as the Holders of a majority of the
Registrable Securities may request; provided, however, that where Registrable
Securities are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
4(h); keep each such registration or qualification (or exemption therefrom)
effective during the effectiveness period and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the securities covered thereby; provided, however, that the Company will not be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
(C) become subject to taxation in any jurisdiction where it is not then
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so subject.
(i) Cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends whatsoever
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two business days prior to any sale of
Registrable Securities in a firm commitment underwritten public offering.
(j) Pay all Registration Expenses in connection with the
registrations requested pursuant to Sections 2.1 and 2.2 hereof. Each Holder of
Registrable Securities shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to a Registration Statement requested pursuant
to Section 2.1.
(k) Upon the occurrence of any event contemplated by Section
4(c)(iv) or 4(c)(v) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and, subject to Section 4(a) hereof, file such with the
SEC so that, as thereafter delivered to the purchasers of Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Prior to the effective date of a Registration Statement, (i)
provide the registrar for the Registrable Securities with certificates for such
securities in a form eligible for deposit with DTC and (ii) provide a CUSIP
number for such securities.
(m) If the offering provided for herein is conducted by means of an
underwriting, enter into an underwriting agreement in form, scope and substance
as is customary in underwritten offerings and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or disposition of such Registrable
Securities in any underwritten offering to be made of the Registrable Securities
in accordance with this Agreement, and in such connection, (i) make such
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representations and warranties to the underwriter or underwriters, with respect
to the business of the Company and the subsidiaries of the Company, and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) use reasonable
efforts to obtain an opinion of counsel to the Company, addressed to the
underwriter or underwriters covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by underwriters; (iii) use reasonable efforts to obtain "cold comfort"
letters from the independent certified public accountants of the Company (and,
if applicable, the subsidiaries of the Company) and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement, addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and such other
matters as reasonably requested by the managing underwriter or underwriters and
as permitted by the Statement of Auditing Standards No. 72; and (iv) if an
underwriting agreement is entered into, the same shall contain customary
indemnification provisions and procedures with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required thereunder.
(n) Make available for inspection by a representative of the Holders
of Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney or accountant
retained by such representative of the Holders or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable business
hours, at the Inspector's expense, all financial and other records, pertinent
corporate documents and properties of the Company and the subsidiaries of the
Company as reasonably requested by the Inspector, and cause the officers,
directors and employees of the Company and the subsidiaries of the Company to
supply all information in each case reasonably requested by any such Inspector
in connection with such Registration Statement; provided, however, that all such
information shall be kept confidential by such Inspector and shall not be used
for any purpose other than as contemplated hereby, except to the extent that (i)
the disclosure of such information is necessary or advisable to avoid or correct
a misstatement or
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<PAGE>
omission in the Registration Statement or in any Prospectus; provided, however,
that prior notice is given to the Company, and the Company's legal counsel and
such Holder's legal counsel concur that disclosure is required, (ii) the release
of such information is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, (iii) disclosure of such information is
necessary or advisable in connection with any action, claim, suit or proceeding,
directly or indirectly, involving or potentially involving such Inspector and
arising out of, based upon, relating to or involving this Agreement or any of
the transactions contemplated hereby or arising hereunder; provided, however,
that prior notice shall be provided as soon as practicable to the Company of the
potential disclosure of any information by such Inspector pursuant to clauses
(ii) or (iii) of this sentence to permit the Company to obtain a protective
order (or waive the provisions of this paragraph (n)) and that such Inspector
shall take all actions as are reasonably necessary to protect the
confidentiality of such information (if practicable) to the extent such action
is otherwise not inconsistent with, an impairment of or in derogation of the
rights and interests of the Holder or any Inspector, or (iv) such information
has been made generally available to the public.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than
forty-five (45) days after the end of any 12-month period (or ninety (90) days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to an underwriter or to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to an underwriter or to underwriters
in such an offering, commencing on the first day of the first fiscal quarter of
the Company after the effective date of the relevant Registration Statement,
which statements shall cover said 12-month periods.
(p) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed.
(q) Cooperate with the Selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends and
registered in such names as the Selling Holders may reasonably request at least
two business days prior to
20
<PAGE>
the closing of any sale of Registrable Securities.
Each seller of Registrable Securities as to which any registration
is being effected agrees, as a condition to the registration obligations with
respect to such seller provided herein, to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
to comply with the Securities Act and other applicable law. The Company may
exclude from such registration the Registrable Securities of any seller for so
long as such seller fails to furnish such information within a reasonable time
after receiving such request. If the identity of a seller of Registrable
Securities is to be disclosed in the Registration Statement, such seller shall
be permitted to include all information regarding such seller as it shall
reasonably request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii),
4(c)(iv), or 4(c)(v) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by the Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(k) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed, and has received copies of any amendments or
supplements thereto, and, if so directed by the Company, such Holder will, at
the Company's expense, deliver to the Company all copies, other than permanent
file copies, then in such Holder's actual possession of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice;
provided, however, that nothing herein shall create any obligation on the part
of any Holder to undertake unreasonable efforts to retrieve or return any such
Prospectus not within the actual possession or control of such Holder. In the
event the Company shall give any such notice, the period of time for which a
Registration Statement is required thereunder to be effective shall be extended
by the number of days during such periods from and including the date of the
giving of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 4(k)
hereof or (y) the Advice.
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Section 5. Indemnification and Contribution.
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(a) The Company agrees to indemnify and hold harmless each Holder,
its officers and directors, and each Person, if any, who controls such Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, or is under common control with, or is controlled by, such
Holder, from and against all losses, claims, damages and liabilities (including,
without limitation, and subject to clause (c) of this Section 5 below, the
reasonable legal fees and other reasonable out-of-pocket expenses actually
incurred by any Holder or any such controlling or affiliated Person in
connection with any suit, action or proceeding or any claim asserted), caused
by, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (or any
amendment thereto) pursuant to which Registrable Securities were registered
under the Securities Act, or caused by any omission or alleged omission to state
in any such Registration Statement a material fact required to be stated therein
or necessary to make the statements therein not misleading, or caused by any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state in any such preliminary prospectus or
Prospectus a material fact required to be stated in any such preliminary
prospectus or Prospectus or necessary to make the statements in any such
preliminary prospectus or Prospectus in light of the circumstances under which
they were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Holder furnished to the Company in writing by such
Holder expressly for use in any such Registration Statement, Preliminary
Prospectus or Prospectus; provided, however, that the Company shall not be
required to indemnify any such Person if such untrue statement or omission or
alleged untrue statement or omission was contained or made in any preliminary
prospectus and corrected in the Prospectus, or any amendment or supplement
thereto and the Prospectus does not contain any other untrue statement or
omission or alleged untrue statement or omission of a material fact that was the
subject matter of the related proceeding and any such loss, liability, claim,
damage or expense suffered or incurred by such indemnified Person resulted from
any action, claim or suit by any Person who purchased Registrable Securities
which are the subject thereof from such indemnified Person and it is established
in the related proceeding that such indemnified Person failed to deliver or
provide a copy of the Prospectus (as amended or supplemented) to such Person
with or prior to the confirmation of the sale of such Registrable Securities
sold
23
<PAGE>
to such Person if required by applicable law, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 4 hereof or as a result of the failure
of the Company to provide such Prospectus.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign any Registration
Statement, and each Person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Holder, but
only with reference to information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in any Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto). The liability of any Holder under this paragraph shall in
no event exceed the proceeds received by such Holder from sales of Registrable
Securities giving rise to such obligations.
(c) In case any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either paragraph
(a) or (b) above, such Person (the "indemnified party") shall promptly notify
the Person against which such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred of such counsel relating to such proceeding;
provided, however, that the failure to so notify the indemnifying party shall
not relieve it of any obligation or liability which it may have thereunder or
otherwise unless the indemnifying party has been materially prejudiced by such
failure. In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the contrary, (ii) the
indemnifying party shall have failed to retain within a reasonable period of
time counsel reasonably satisfactory to such indemnified party or parties or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both such indemnified party or parties and the indemnifying parties or
any affiliate of the indemnifying parties or such indemnified parties and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between the
24
<PAGE>
indemnifying party or parties and the indemnified party or parties. It is
understood that the indemnifying parties shall not, in connection with any one
such proceeding or separate but substantially similar or related proceedings in
the same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for such
indemnified party or parties and that all such fees and expenses shall be
reimbursed within reasonable time of the request after the incurrence thereof.
Any such separate firm for the Holders and such control Persons of the Holders
shall be designated in writing by Holders who sold a majority in interest of
Registrable Securities sold by all such Holders and shall be reasonably
acceptable to the Company and any such separate firm for the Company, its
directors, its officers and such control Persons of the Company shall be
designated in writing by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its prior written consent
(which consent shall not be unreasonably withheld or delayed) but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify and hold harmless the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement or compliance of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party, or indemnity could
have been sought thereunder by such indemnified party, unless such settlement or
compliance involves only the payment of money damages that are actually paid by
the indemnifying party or includes an unconditional written release of such
indemnified party in form and substance reasonably satisfactory to such
indemnified party of such indemnified party from all liability or claims that
are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 5 is unavailable to, or insufficient to hold harmless, an
indemnified party in respect of any losses, claims, damages or liabilities, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Company on the one hand and the Holders on the other hand from the offering
of such Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable
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<PAGE>
law, not only such relative benefits but also the relative fault of the Company
on the one hand and the Holders on the other hand in connection with the
statements or omissions or alleged statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Holders on the other shall be deemed to
be in the same proportion as the total proceeds from the offering (net of
discounts and commissions but before deducting expenses) of the Warrants sold
pursuant to the Purchase Agreement received by the Company bears to the total
proceeds received by such Holder from the sale of Registrable Securities, as the
case may be. The relative fault of the Company on the one hand and the Holders
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 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 Section 5(d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in Section 5(d) above shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses actually incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, in no event shall a Holder be required to
contribute any amount in excess of the amount by which proceeds received by such
Holder from sales of Registrable Securities exceeds the amount of any damages
that such Holder has otherwise been required to pay or has paid by reason of
such untrue or alleged untrue statement or omission or alleged omission. 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. The remedies provided
for in this Section 5 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.
(f) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 5 shall
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<PAGE>
be paid by the indemnifying party to the indemnified party as such losses,
claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section 5 and the representations and
warranties of the Company set forth in this Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of any Holder or any person who controls a Holder, the Company, their
respective directors or officers or any person controlling the Company and (ii)
any termination of this Agreement.
Section 6. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents and warrants
to the Holders that it has not entered into nor will the Company on or after the
date of this Agreement enter into, or cause or permit any of its subsidiaries to
enter into, any agreement which is inconsistent with the rights granted to the
Holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The rights granted to the Holders thereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities, if any, under
any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company consents and the
Company has obtained the prior written consent of Holders of not less than a
majority in number of the then outstanding Warrants and Registrable Securities
not resold to the public for the purpose of adding any provision to or changing
in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the Holders of the outstanding Warrants;
provided, however, that Section 5 hereof and this Section 6(b) may not be
amended, modified or supplemented without the prior written consent of each
Holder (including any Person who was a Holder of Registrable Securities disposed
of pursuant to any Registration Statement) affected by such amendment,
modification or supplement. Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders of Registrable Securities whose securities are being sold pursuant to
a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable
Securities may be given the Company and by the Holders of not less than a
majority of the Registrable Securities proposed to be sold by such Holders
pursuant to such Registration Statement.
(c) Notices. All notices and other
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communications provided for or permitted thereunder shall be made in writing by
hand delivery, registered first-class mail, telex, telecopier, or any courier
guaranteeing overnight delivery, (i) if to a Holder, at the most current address
of Holder as set forth in the register for the Warrants or the Warrant Shares,
which address initially is, with respect to the Initial Purchaser, the address
set forth in the Purchase Agreement; and (ii) if to the Company, initially at
the address set forth below the Company's name on the signature pages hereto and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
A copy of all notices and other communications under this Section
6(c) shall be delivered to Milberg Weiss Bershad Hynes & Lerach LLP, One
Pennsylvania Plaza, New York, NY 10119, Attention: Arnold N. Bressler, Esq.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged, if telecopied; and on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of any Holder shall
acquire Warrants and/or Registrable Securities, in any manner, whether by
operation of law or otherwise, such Warrants and/or Registrable Securities shall
be held subject to all of the terms of this Agreement, and by taking and holding
such Warrants and/or Registrable Securities such Person shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement and such Person shall be entitled to receive the
benefits hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE
28
<PAGE>
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits itself and its property in any legal action or proceeding relating
to this Agreement or for recognition and enforcement of any judgment in respect
hereof, to the non-exclusive jurisdiction of the courts of the State of New York
and the courts of the United States of America for the Southern District of New
York, and appellate courts thereof, and consents and agrees to such action or
proceeding being brought in such courts; and (ii) waives any objection that it
may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in any inconvenient
court and agrees not to plead or claim the same.
(h) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(i) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Warrant Agreement is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. This Agreement, the Purchase
Agreement and the Warrant Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
(j) Attorneys' Fees. As between the parties to this Agreement, in
any action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to its
costs and expenses and any other available remedy.
(k) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of
29
<PAGE>
a specified percentage of Registrable Securities or Warrants is required
thereunder, Registrable Securities or Warrants held by the Company or by any of
its affiliates (as such term is defined in Rule 405 under the Securities Act)
shall not be counted (in either the numerator or the denominator) in determining
whether such consent or approval was given by the Holders of such required
percentage.
(l) Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein, in the Purchase Agreement or granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
BELL TECHNOLOGY GROUP LTD.
By: _____________________________
Name:
Title:
Address for Notices:
Bell Technology Group Ltd.
295 Lafayette Street
3rd Floor
New York, New York 10012
Attention: Marc H. Bell
ING BARING (U.S.) SECURITIES, INC.
By: _____________________________
Name:
Title:
Address for Notices:
135 East 57th Street
New York, New York 10022
Attention: Legal Department
30
ESCROW AND SECURITY AGREEMENT
Dated as of April 30, 1998
by and among
MARINE MIDLAND BANK
(as Escrow Agent),
MARINE MIDLAND BANK
(as Trustee)
and
BELL TECHNOLOGY GROUP LTD.
THIS ESCROW AND SECURITY AGREEMENT (this "Escrow Agreement" or this
"Agreement"), dated as of April 30, 1998, is made by and among MARINE MIDLAND
BANK, as escrow agent (in such capacity, "Escrow Agent") and "securities
intermediary" as defined in Article 8 of the Uniform Commercial Code of the
State of New York (in such capacity, the "Securities Intermediary"), MARINE
MIDLAND BANK, as Trustee (in such capacity, "Trustee") under the Indenture (as
defined herein), and BELL TECHNOLOGY GROUP LTD., a Delaware corporation (the
"Company").
WHEREAS, pursuant to the Indenture, dated as of the date hereof (the
"Indenture"), between the Company and Trustee, the Company is issuing
$160,000,000 aggregate principal amount of 13% Senior Notes due 2005 (the
"Securities").
WHEREAS, as security for its obligations under the Securities and
the Indenture, the Company hereby grants to the Trustee for the benefit of the
Holders of the Securities, a security interest in and lien upon the Escrow
Account and the other Collateral (each as defined herein).
WHEREAS, the parties have entered into this Agreement in order to
set forth the conditions upon which,
<PAGE>
and the manner in which, Collateral will be disbursed from the Escrow Account
and released from the security interest and lien described above.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Indenture. In addition to
any other defined terms used herein, the following terms shall constitute
defined terms for purposes of this Agreement and shall have the meanings set
forth below:
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such specified Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "affiliated,"
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applied" means that disbursed funds have been applied (i) to the
payment of interest on the Securities, (ii) pursuant to Section 3(c) hereof, or
(iii) pursuant to Section 6(b)(iii) hereof.
"Available Funds" means, at any date, (A) the sum of (i) the Pledged
Securities and any funds or U.S. Government Securities on deposit in the Escrow
Account, and (ii) interest earned or dividends paid on the Pledged Securities
and any funds or U.S. Government Securities on deposit in the Escrow Account,
less (B) the aggregate disbursements made prior to such date pursuant to this
Agreement.
"Beneficiaries" has the meaning ascribed to such term in Section
2(b).
"Collateral" has the meaning ascribed to such term in Section 6(a).
"Escrow Account" shall mean the escrow account established pursuant
to Section 2.
"Escrow Account Statement" has the meaning ascribed to such term in
Section 2(f).
"Escrow Funds" has the meaning ascribed to such
2
<PAGE>
term in Section 6(c).
"funds" means cash, revenues and other funds.
"Initial Escrow Amount" shall mean $57 million.
"Interest" has, other than for purposes of Section 2(d)(iii), the
meaning set forth in the Indenture.
"Payment Notice and Disbursement Request" means a notice sent by the
Company to Escrow Agent requesting a disbursement of funds from the Escrow
Account, in substantially the form of Exhibit A hereto. Each Payment Notice and
Disbursement Request shall be signed by an officer of the Company.
"Pledged Securities" means the U.S. Government Securities, as more
fully described on Schedule I attached hereto, deposited into the Escrow
Account. The scheduled payments of principal and interest on the Pledged
Securities must be sufficient to provide for the payment in full of the interest
due on the Securities on the first six scheduled Interest Payment Dates under
the Indenture.
"Secured Obligations" has the meaning ascribed to such term in
Section 6(a).
"U.S. Government Securities" means non-callable securities that are
direct obligations of the United States of America for the payment of which
obligations its full faith and credit is pledged.
Section 2. Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Company and Trustee hereby
appoint Escrow Agent, and Escrow Agent hereby accepts appointment, as escrow
agent and Securities Intermediary, under the terms and conditions of this
Agreement. The term "Escrow Agent" shall include the capacity of Securities
Intermediary unless otherwise specified.
(b) Establishment of Escrow Account.
(i) On the Issue Date for the Securities, Escrow Agent shall
establish an escrow account entitled the "Escrow Account pledged by Bell
Technology Group Ltd. to Marine Midland Bank, as Trustee under an Indenture
between Bell Technology Group Ltd. and Marine Midland Bank dated as of April 30,
1998" (the "Escrow Account") at the office of the Escrow Agent located at 140
Broadway, 12th Floor, New York, New York 10005. The Escrow Account shall be a
"securities account" as such term is defined in Section 8-501(a) of the
3
<PAGE>
New York Uniform Commercial Code (the "NY-UCC"). All property, including,
without limitation, funds, the Initial Escrow Amount, Pledged Securities and any
U.S. Government Securities accepted by Escrow Agent pursuant to this Agreement
shall be held subject to the pledge in favor of Trustee, as the secured party
hereunder for the ratable benefit of the Holders of the Securities (such
Holders, collectively, the "Beneficiaries"). All such funds shall be held in the
Escrow Account until disbursed or paid in accordance with the terms hereof. The
Escrow Account and all property held therein, including, without limitation,
funds, the Initial Escrow Amount, the Pledged Securities and any U.S. Government
Securities held by Escrow Agent, shall be under the sole dominion and exclusive
control of Escrow Agent on behalf of and for the sole benefit of Trustee for the
ratable benefit of the Beneficiaries.
(ii) On the Issue Date, the Company shall deliver, or cause the
delivery of, the Initial Escrow Amount to Escrow Agent for deposit into the
Escrow Account against Escrow Agent's written acknowledgment and receipt of the
Initial Escrow Amount. Escrow Agent shall forthwith purchase, or cause to be
purchased, the Pledged Securities, with all or a portion of the Initial Escrow
Amount. The Pledged Securities shall be held by Escrow Agent and deposited into
the Escrow Account subject to the pledge in favor of Trustee for the ratable
benefit of the Beneficiaries. All payments of interest and principal on the
Pledged Securities shall be deposited into the Escrow Account to be paid or
disbursed in accordance with the terms hereof or, to the extent permitted by
Section 2(d) hereof, reinvested in U.S. Government Securities.
(c) Escrow Agent Compensation. (i) The Company shall pay to Escrow
Agent such compensation for services to be performed by it under this Agreement
as the Company and Escrow Agent have agreed in accordance with Schedule II
attached hereto. Escrow Agent shall be paid any compensation owed to it directly
by the Company and shall not disburse from the Escrow Account any such amounts
nor shall Escrow Agent have any interest in the Escrow Account or the other
Collateral with respect to such amounts, whether by right of set-off or
otherwise.
(ii) The Company shall reimburse Escrow Agent upon request for all
reasonable expenses, disbursements, and advances incurred or made by Escrow
Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel.
Escrow Agent shall be paid any such expenses owed to it directly by the Company
and shall not disburse from the Escrow Account any such amounts nor shall Escrow
Agent have any interest in the Escrow Account or the
4
<PAGE>
other Collateral with respect to such amounts, whether by right of set-off or
otherwise.
(d) Investment of Funds in Escrow Account. Any funds on deposit in
the Escrow Account which are not invested may be invested and reinvested only
upon the following terms and conditions:
(i) Acceptable Investments. The funds deposited in the Escrow
Account on the date hereof shall be invested by Escrow Agent in the Collateral
described in Schedule I. All other funds deposited or held in the Escrow Account
at any time shall be invested by Escrow Agent in U.S. Government Securities in
accordance with Trustee's written instructions from time to time to Escrow
Agent; provided, that Trustee's written instructions to Escrow Agent shall be
satisfied by delivery by Trustee to Escrow Agent of written investment
designations of the Company and so long as (1) the Company shall only designate
investments of funds in U.S. Government Securities maturing in an amount
sufficient to and/or generating interest income sufficient to, when added to the
balance of funds held in the Escrow Account, provide for the payment of interest
on the outstanding Securities on each of the first six scheduled Interest
Payment Dates under the Indenture and (2) any such written instruction shall
specify the particular investment to be made, shall state that such investment
is authorized to be made hereby and in particular satisfies the requirements of
the preceding clause (1) of this proviso, shall contain the certification
referred to in Section 2(d)(ii), if required, and shall be executed by an
officer of the Company.
Neither Escrow Agent nor Trustee shall have any responsibility
for determining whether Collateral held in the Escrow Account in accordance with
the Company's instruction complies with the requirements of this clause (i). All
U.S. Government Securities shall be assigned to and held in the possession of
Escrow Agent for the benefit of Trustee for the ratable benefit of the
Beneficiaries, with such guarantees as are customary, except that U.S.
Government Securities maintained in book entry form with a Federal Reserve Bank
shall be transferred to a book entry account in the name of Escrow Agent at the
Federal Reserve Bank that includes only U.S. Government Securities held by
Escrow Agent for its customers and segregated by separate recordation in the
books and records of Escrow Agent. Escrow Agent shall not be liable for losses
on any investments made by it pursuant to and in compliance with such written
instructions. In the absence of instructions from Trustee that meet the
requirements of this Section 2(d)(i), Escrow Agent shall have no obligation to
invest funds held in the Escrow Account.
5
<PAGE>
(ii) Security Interest in Investments. No investment of funds
in the Escrow Account shall be made at the request of the Company unless the
Company has certified to Escrow Agent and Trustee that, upon such investment,
Escrow Agent will have a first priority perfected security interest in the
applicable investment.
If such a certificate as to a class of investments has been
provided to Escrow Agent and Trustee, a certificate need not be issued with
respect to individual investments in securities in that class if the certificate
applicable to the class remains accurate with respect to such individual
investments, which continued accuracy Escrow Agent and Trustee may conclusively
assume. Promptly following the date of this Agreement, and on each anniversary
of the date of this Agreement until the date upon which the balance of the
Available Funds shall have been reduced to zero, the Company shall furnish to
each of Trustee and Escrow Agent an Opinion of Counsel to the Company, dated
each such date as applicable, which opinion shall meet the requirements of
Section 314(b) of the United States Trust Indenture Act of 1939, as amended (the
"TIA"), and shall comply with Section 1302 of the Indenture.
(iii) Interest and Dividends. All interest earned and
dividends paid on the Pledged Securities or any funds invested in U.S.
Government Securities shall be deposited in the Escrow Account as additional
Collateral and, if not required to be disbursed in accordance with the terms
hereof, subject to Section 6, shall be reinvested in accordance with the terms
hereof at Trustee's written instruction.
(iv) Limitation on Escrow Agent's Responsibilities. Escrow
Agent's sole responsibilities under this Section 2 shall be (A) to retain
possession of certificated U.S. Government Securities (except, however, that
Escrow Agent may surrender possession to the issuer of any such U.S. Government
Securities for the purposes of effecting assignment, crediting interest, or
reinvesting such security or reducing such security to cash) and to be the
registered or designated owner of the Pledged Securities and any U.S. Government
Securities which are not certificated, (B) to follow Trustee's written
instructions given in accordance with Section 2(d)(i) and the other provisions
of this Agreement; (C) to invest and reinvest funds pursuant to this Section
2(d) and (D) to use reasonable efforts to reduce to cash such U.S. Government
Securities as may be required to fund any disbursement or payment in accordance
with Section 3. In connection with clause (A) above, Escrow Agent will maintain
continuous possession in the jurisdiction of its principal place of business of
certificated U.S. Government Securities and cash
6
<PAGE>
included in the Collateral and will cause the Pledged Securities and any
uncertificated U.S. Government Securities to be registered in the book-entry
system of, and transferred to an account of Escrow Agent or a sub-agent of
Escrow Agent at, any Federal Reserve Bank and to have an appropriate notation
entered into the books and records of the applicable intermediary or custodian
that such securities are subject to the security interest referred to herein.
Except as provided in Section 6, Escrow Agent shall have no other
responsibilities with respect to perfecting or maintaining the perfection of the
security interest in the Collateral and shall not be required to file any
instrument, document or notice in any public office at any time or times. In
connection with clause (D) above and subject to the following sentence, Escrow
Agent shall not be required to reduce to cash any U.S. Government Securities to
fund any disbursement or payment in accordance with Section 3 in the absence of
written instructions signed by an officer of Trustee specifying the particular
investment to liquidate; provided, that Trustee's written instructions to Escrow
Agent shall be satisfied by delivery by Trustee to Escrow Agent of written
liquidation designations of the Company. If no such written instructions are
received, Escrow Agent may liquidate those U.S. Government Securities having the
nearest maturity.
(e) Substitution of Escrow Agent. Escrow Agent may resign by giving
no less than 15 Business Days prior written notice to the Company and Trustee,
unless a shorter period shall be acceptable to the Company and Trustee. Such
resignation shall take effect upon the later to occur of (i) delivery of all
funds, the Pledged Securities and any U.S. Government Securities maintained by
Escrow Agent hereunder and copies of all books, records, plans and other
Collateral and documents in Escrow Agent's possession relating thereto or this
Agreement to a successor escrow agent mutually approved by the Company and
Trustee (which approvals shall not be unreasonably withheld or delayed) and the
taking of such other steps as may be necessary to give the successor escrow
agent a first priority perfected security interest in the Pledged Securities and
(ii) the Company, Trustee and such successor escrow agent entering into this
Agreement or any written successor agreement no less favorable to the interests
of the Holders of the Securities and Trustee than this Agreement; and Escrow
Agent shall thereupon be discharged of all obligations under this Agreement and
shall have no further duties, obligations or responsibilities in connection
herewith, except as set forth in Section 4. If a successor escrow agent has not
been appointed or has not accepted such appointment within 20 Business Days
after notice of resignation is given to the Company, Escrow Agent may apply to a
court of competent jurisdiction for the appointment of a successor escrow agent.
7
<PAGE>
(f) Escrow Account Statement. At least 30 days prior to each
Interest Payment Date, Escrow Agent shall deliver to the Company and Trustee a
statement setting forth with reasonable particularity the balance of funds then
in the Escrow Account and the manner in which such funds are invested ("Escrow
Account Statement"). The parties hereto irrevocably instruct Escrow Agent that
on or promptly following the first date upon which the balance in the Escrow
Account (including the holdings of all U.S. Government Securities) is reduced to
zero, Escrow Agent shall deliver to the Company and to Trustee a notice that the
balance in the Escrow Account has been reduced to zero.
Section 3. Disbursements.
(a) Payment Notice and Disbursement Request; Disbursements. No later
than the fifth Business Day prior to an Interest Payment Date, the Company may
submit to Escrow Agent, with a copy to Trustee, a completed Payment Notice and
Disbursement Request substantially in the form of Exhibit A hereto.
Escrow Agent's disbursement pursuant to any Payment Notice and
Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3(b). Provided such Payment Notice and
Disbursement Request is not rejected by it for failure to satisfy such
conditions, Escrow Agent, as soon as reasonably practicable on the Interest
Payment Date, but in no event later than 10:00 a.m. (New York City time) on the
Interest Payment Date, shall disburse the funds requested in such Payment Notice
and Disbursement Request by wire or book-entry transfer of immediately available
funds to the account of Trustee for the benefit of the Beneficiaries. Escrow
Agent shall notify Trustee and the Company as soon as reasonably possible (but
not later than one (1) Business Day from the date of receipt of the Payment
Notice and Disbursement Request) if any Payment Notice and Disbursement Request
is rejected and the reason(s) therefor. In the event such rejection is based
upon nonsatisfaction of the condition in Section 3(b)(i), the Company may, no
later than one Business Day after it is notified of such rejection thereupon
resubmit the Payment Notice and Disbursement Request with appropriate changes.
(b) Conditions Precedent to Disbursement. Escrow Agent's payment of
any disbursement shall be made only if: (i) the Company shall have submitted, in
accordance with the provisions of Section 3(a), a completed Payment Notice and
Disbursement Request to Escrow Agent substantially in the form of Exhibit A with
blanks appropriately filled in, and (ii) Escrow Agent shall not have received
any notice from Trustee that as a result of an Event of Default the
8
<PAGE>
indebtedness represented by the Securities has been accelerated and has become
due and payable (in which event Escrow Agent shall apply all Available Funds as
required by Section 6(b)(iii)).
(c) The Company Payments. If the Company makes any interest payment
or portion of an interest payment on the Securities from a source of funds other
than the Escrow Account (the "Company Funds"), the Company may, after payment in
full of such interest payment, and so long as no Default or Event of Default
under the Indenture shall have occurred and be continuing, request Trustee, and
Trustee shall direct Escrow Agent to release to the Company or at the direction
of the Company an amount of funds from the Escrow Account less than or equal to
the amount of the Company Funds so expended; provided, however, that neither
Trustee nor Escrow Agent shall have any obligation under this Agreement to
independently verify whether any Default or Event of Default under the Indenture
shall have occurred. Upon receipt of a proper written request from the Company
(including the certificate described in the following sentence) and so long as
no Default or Event of Default shall have occurred or would occur as a result
thereof, Trustee shall direct Escrow Agent to pay over to the Company the
requested amount. Concurrently with any request by the Company to Trustee for
release of funds pursuant to this Section 3(c), the Company will deliver to
Trustee a certificate signed by an authorized signatory of the Company stating
that such release has been duly authorized by all necessary corporate action,
and does not contravene, or constitute a default under, any provision of
applicable law or regulation or of the Certificate of Incorporation of the
Company or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company or result in the creation or imposition of
any Lien on any assets of the Company and also stating that no Default or Event
of Default has occurred or would occur under the Indenture as a result thereof.
(d) If at any time the principal of and interest on the Collateral
exceeds 100% of the amount sufficient, in the written opinion of a nationally
recognized firm of independent accountants selected by the Company and delivered
to Escrow Agent and Trustee, to provide for payment in full of the interest on
Outstanding Securities on each of the first six scheduled Interest Payment Dates
under the Indenture (or, in the event one or more interest payments have been
made thereon, an amount sufficient to provide for the payment in full of any and
all interest payments on the Securities then remaining), Trustee shall, upon the
Company's properly executed written request together with a written
certification from the Company to the effect set forth in Section 3(c) above,
direct Escrow
9
<PAGE>
Agent to release any such overfunded amount to the Company or to such other
party as the Company may direct. The Company may request Trustee to direct
Escrow Agent to pay, or cause the payment, over to the Company or the Company's
designee, as the case may be, any such overfunded amount, only so long as no
Default or Event of Default shall have occurred and be continuing under the
Indenture.
Section 4. Limitation of Escrow Agent's Liability; Responsibilities
of Escrow Agent. Escrow Agent's responsibility and liability under this
Agreement shall be limited as follows: (i) Escrow Agent does not represent,
warrant or guaranty to the Holders of the Securities from time to time the
performance of the Company; (ii) Escrow Agent shall have no responsibility to
the Company or the Holders of the Securities or Trustee from time to time as a
consequence of performance or non-performance by Escrow Agent hereunder, except
for any bad faith, gross negligence or willful misconduct of Escrow Agent; (iii)
the Company shall remain solely responsible for all aspects of the Company's
business and conduct; and (iv) Escrow Agent is not obligated to supervise,
inspect or inform the Company or any third party of any matter referred to
above. In no event shall Escrow Agent be liable (i) for acting in accordance
with or relying upon any instruction, notice, demand, certificate or document
permitted hereunder from the Company or any entity acting on behalf of the
Company unless Escrow Agent shall have knowledge directly contrary thereto, (ii)
for any consequential, punitive or special damages, (iii) for the acts or
omissions of its nominees, correspondents, designees, subagents or
subcustodians, (iv) for an amount in excess of the value of the Escrow Account,
valued as of the date of deposit or (v) for the validity, sufficiency or
priority of this Agreement or any Collateral or other security furnished hereby.
No implied covenants or obligations shall be inferred from this
Agreement against Escrow Agent, nor shall Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any Collateral held by it
hereunder, including without limitation any liability for any delay not
resulting from negligence or willful misconduct in such investment, reinvestment
or liquidation, or for any loss of principal or income incident to any such
delay.
Escrow Agent shall be entitled to rely upon any judicial or
administrative order or judgment, upon any opinion of counsel or upon any
certification, instruction,
10
<PAGE>
notice, or other writing delivered to it by the Company or Trustee in compliance
with the provisions of this Agreement without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of service thereof unless Escrow Agent shall have knowledge directly
contrary thereto. Escrow Agent may act in reliance upon any instrument
comporting with the provisions of this Agreement or signature believed by it to
be genuine and may assume that any person purporting to give notice or receipt
or advice or make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so unless Escrow Agent shall
have knowledge directly contrary thereto.
At any time Escrow Agent may request in writing an instruction in
writing from Trustee (other than any disbursement pursuant to Section
6(b)(iii)), and may at its own option include in such request the course of
action it proposes to take and the date on which it proposes to act, regarding
any matter arising in connection with its duties and obligations hereunder;
provided, however, that Escrow Agent shall state in such request that it
believes in good faith that such proposed course of action is consistent with
another identified provision of this Agreement. Escrow Agent shall not be liable
to the Company or Trustee for acting without Trustee's consent in accordance
with such a proposal on or after the date specified therein if (i) the specified
date is at least four Business Days after Trustee receives Escrow Agent's
request for instructions and its proposed course of action, and (ii) prior to so
acting, Escrow Agent has not received the written instructions requested from
Trustee. Trustee may request in writing an instruction in writing from the
Company in connection with any request by Escrow Agent for written instructions
from Trustee in accordance with the foregoing.
At the expense of the Company, Escrow Agent may act pursuant to the
advice of counsel chosen by it with respect to any matter relating to this
Agreement and (subject to clause (ii) of the first paragraph of this Section 4)
shall not be liable for any action taken or omitted in accordance with such
advice.
Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement
with respect to any funds, securities or property deposited hereunder, Escrow
Agent shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds, securities or
11
<PAGE>
property, and Escrow Agent shall not be or become liable for its failure or
refusal to comply with conflicting claims, demands or instructions. Escrow Agent
shall be entitled to refuse to act until either any conflicting or adverse
claims or demands shall have been finally determined by a court of competent
jurisdiction or settled by agreement between the conflicting claimants as
evidenced in a writing, satisfactory to Escrow Agent, or Escrow Agent shall have
received security or an indemnity satisfactory to Escrow Agent sufficient to
save Escrow Agent harmless from and against any and all loss, liability or
expense which Escrow Agent may incur by reason of its acting. Escrow Agent may
in addition elect in its sole option to commence an interpleader action or seek
other judicial relief or orders as Escrow Agent may deem necessary. The costs
and expenses (including reasonable attorney's fees and expenses) incurred in
connection with such proceedings shall be paid by, and shall be deemed an
obligation of the Company.
No provision of this Agreement shall require Escrow Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
Escrow Agent shall not incur any liability for not performing any
act or fulfilling any duty, obligation or responsibility hereunder by reason of
any occurrence beyond the control of Escrow Agent (including but not limited to
any act or provision of any present or future law or regulation or governmental
authority, any act of God or war, or the unavailability of the Federal Reserve
Bank wire or telex or other wire or communication facility).
Section 5. Indemnity. The Company shall indemnify, hold harmless and
defend Trustee and Escrow Agent and their respective directors, officers,
agents, employees and controlling persons, from and against any and all claims,
actions, obligations, liabilities and expenses, including reasonable defense
costs, reasonable investigative fees and costs, reasonable legal fees, and
claims for damages, arising from Trustee's or Escrow Agent's performance or
non-performance, or in connection with Escrow Agent's acceptance of appointment
as Escrow Agent under this Agreement, except to the extent that such liability,
expense or claim is solely and directly attributable to the bad faith, gross
negligence or willful misconduct of any of the foregoing persons. The provisions
of this Section 5 shall survive any termination, satisfaction or discharge of
this Agreement as well as the resignation or removal of Escrow Agent or Trustee.
Section 6. Grant of Security Interest; Instructions to Escrow Agent.
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(a) The Company hereby irrevocably grants a first priority perfected
security interest in, security entitlement and Lien on, and pledges to Trustee
for the ratable benefit of the Beneficiaries, all of the Company's right, title
and interest in the Escrow Account, and all property now or hereafter placed or
deposited in, or delivered to Escrow Agent for placement or deposit in, the
Escrow Account, including, without limitation, the Pledged Securities, all cash,
revenues and other funds held in the Escrow Account, all U.S. Government
Securities and other securities, financial assets and investment property held
in the Escrow Account by (or otherwise maintained in the name of) Escrow Agent
pursuant to Section 2, and all income thereon and proceeds thereof as well as
all rights of the Company under this Agreement (the Escrow Account and such
other items, collectively, the "Collateral"), in order to secure all obligations
and indebtedness of the Company under the Indenture, the Securities, this
Agreement and any other obligation, now or hereafter arising, of every kind and
nature, owed by the Company under the Indenture or the Securities to the Holders
of the Securities or to Trustee (the "Secured Obligations"). Escrow Agent hereby
acknowledges Trustee's security interest and Lien as set forth above. The
Company shall take all actions necessary on its part to insure the continuance
of a first priority security interest in the Collateral in favor of Trustee in
order to secure all such obligations and indebtedness.
(b) The Company and Trustee hereby irrevocably instruct Escrow Agent
to, and Escrow Agent shall:
(i)(A) maintain sole dominion and exclusive control over the
Collateral for the benefit of Trustee for the ratable benefit of the
Beneficiaries to the extent specifically required herein, (B) maintain, or cause
its agent within the jurisdiction of its principal place of business to
maintain, possession of all certificated U.S. Government Securities purchased
hereunder that are physically possessed by Escrow Agent in order for Trustee for
the ratable benefit of the Beneficiaries to enjoy a continuous perfected first
priority security interest therein under the law of the State of New York (the
Company hereby agreeing that in the event any certificated U.S. Government
Securities are in the possession of the Company or a third party, the Company
shall deliver all such certificates to Escrow Agent), (C) comply with all
directions furnished by the Company to Escrow Agent to enjoy a continuous
perfected first priority security interest under any applicable Federal or State
of New York law in all U.S. Government Securities purchased hereunder that are
not certificated and (D) maintain the Collateral free and clear of all liens,
security interests, safekeeping or other charges, demands and claims against the
Company, Escrow
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Agent or Trustee of any nature now or hereafter existing in favor of anyone
other than Trustee (other than tax liens for taxes not yet due and payable);
(ii) promptly notify Trustee if Escrow Agent receives written
notice that any Person other than Escrow Agent has a Lien or security interest
upon any portion of the Collateral other than as permitted in clause (i) of this
Section 6(b); and
(iii) in addition to disbursing amounts held hereunder
pursuant to any Payment Notice and Disbursement Requests given to it pursuant to
Section 3, upon receipt of written notice from Trustee of the acceleration of
the maturity of the Securities, and direction from Trustee to disburse all
Available Funds to Trustee, as promptly as practicable, disburse all funds held
in the Escrow Account to Trustee and transfer title to all U.S. Government
Securities held by Escrow Agent hereunder to Trustee. In addition, upon an Event
of Default under the Indenture and for so long as such Event of Default
continues, Trustee may, and Escrow Agent shall on behalf of Trustee when
instructed by Trustee, exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party under the NY-UCC or other applicable
law, and Trustee may, and Escrow Agent shall on behalf of Trustee when
instructed by Trustee, also upon obtaining possession of the Collateral as set
forth herein, without notice to the Company except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of Trustee's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Trustee may
deem commercially reasonable. The Company acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale. The Company agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to the
Company of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Trustee
shall not be obligated to make any sale regardless of notice of sale having been
given. Trustee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
The Lien and security interest provided for by this Section 6
shall automatically terminate and cease as to, and shall not extend or apply to,
and Trustee and Escrow Agent shall have no security interest in, any funds
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disbursed by Escrow Agent whether for payment of interest or to the Company
pursuant to this Agreement to the extent not inconsistent with the terms hereof.
Notwithstanding any other provision contained in this Agreement, and except to
the extent it is acting in its capacity as securities intermediary, Escrow Agent
shall act solely as Trustee's agent in connection with its duties under this
Section 6 or any other duties herein relating to the Escrow Account or the
Pledged Securities or any of the other Collateral. Escrow Agent shall not have
any right to receive compensation from Trustee and shall have no authority to
obligate Trustee or to compromise or pledge Trustee's security interest
hereunder. Accordingly, Escrow Agent is hereby directed to cooperate with
Trustee in the exercise of its rights in the Collateral provided for herein.
(c) Any money and U.S. Government Securities collected by Trustee
pursuant to Section 6(b)(iii) shall be applied as provided in the Indenture.
(d) The Company will execute and deliver or cause to be executed and
delivered, or use its best efforts to procure, all stock powers, proxies,
assignments, instruments and other documents, deliver any instruments to Trustee
and take any other actions that are necessary or desirable to perfect, continue
the perfection of, or protect the first priority of Trustee's security interest
in and to the Collateral, to protect the Collateral against the rights, claims,
or interests of third persons or to effect the purposes of this Agreement and
the Indenture. The Company also hereby authorizes Trustee to file any financing
or continuation statements with respect to the Collateral without the signature
of the Company (to the extent permitted by applicable law). The Company will pay
all reasonable costs incurred in connection with any of the foregoing. It is
expressly understood and agreed that Trustee has no duty to determine whether to
file or record, or to actually file or record, any document or instrument
relating to Collateral.
(e) The Company hereby appoints Trustee as its attorney-in-fact with
full power of substitution to do any act which the Company is obligated
hereunder to do, and Trustee may, but shall not be obligated to, exercise such
rights as the Company might exercise with respect to the Collateral and take any
action in the Company's name to protect Trustee's security interest hereunder.
(f) If at any time Escrow Agent shall receive an "entitlement order"
(within the meaning of Section 8-102(a)(8) of the NY-UCC) issued by Trustee and
relating to the Escrow Account, Escrow Agent shall comply with such entitlement
order without further consent by the Company or
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any other Person.
Section 7. Termination. This Agreement and the security interest in
the Collateral evidenced by this Agreement shall terminate automatically and be
of no further force or effect upon the payment in full in cash, as certified by
Trustee to Escrow Agent, of all interest (including any Additional Interest) due
through the sixth scheduled Interest Payment Date under the Indenture and the
remaining Collateral, if any, shall promptly be paid over and transferred to the
Company; provided, however, that the obligations of the Company under Section
2(c) and Section 5 (and any existing claims thereunder) shall survive
termination of this Agreement and the resignation of Escrow Agent and Trustee.
However, after a period of five years after the termination of this Agreement,
in the event the Collateral has not been applied to pay any amounts owed
pursuant to Section 2(c) or 5, Escrow Agent shall, pursuant to a certificate of
an officer of the Company, reassign and redeliver to the Company all of the
Collateral hereunder that has not been sold, disposed of, retained or applied by
Escrow Agent in accordance with the terms of this Agreement and the Indenture.
Such reassignment and delivery shall be without representation or warranty by or
recourse to Escrow Agent in its capacity as such, except as to the absence of
any Liens on the Collateral created by or arising through Escrow Agent, and
shall be at the sole expense of the Company.
Section 8. Representations and Warranties. The Company hereby
represents and warrants that:
(a) The execution, delivery and performance by the Company of this
Agreement are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
Certificate of Incorporation or By-laws of the Company or of any material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Company or result in the creation or imposition of any Lien on any assets of
the Company, except for the security interests granted under this Agreement.
(b) The Company is the beneficial owner of the Collateral, free and
clear of any Lien or claims of any person or entity (except for the security
interest, granted under this Agreement). No financing statement covering the
Collateral is on file in any public office other than the financing statements,
if any, filed pursuant to this Agreement.
(c) This Agreement has been duly executed and
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delivered by the Company and assuming the due authorization and valid execution
and delivery of this Agreement by Trustee and Escrow Agent, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, (ii) general
principles of equity and commercial reasonableness or, (iii) the rights to
indemnification hereunder that may be limited by U.S. federal and state
securities laws and public policy considerations.
(d) Upon the delivery to Escrow Agent of the certificates or
instruments, if any, representing the Collateral and the filing of financing
statements, if any, required by the NY-UCC, and the transfer and pledge to
Escrow Agent of the Collateral and the acquisition by Escrow Agent of a security
entitlement thereto in accordance with Section 6, the pledge of the Collateral
pursuant to this Agreement creates a valid and perfected first priority security
interest in and to the Collateral, securing the payment of the Secured
Obligations for the benefit of the Beneficiaries.
(e) No consent of any other Person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the pledge by the
Company of the Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Company (except for any filings
necessary to perfect Liens on the Collateral) or (ii) for the exercise by
Trustee or Escrow Agent of the rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except, in
each case, as may be required in connection with the disposition of any of the
Collateral by laws affecting the offering and sale of securities.
(f) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this Agreement or
any of the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations T,
U and X of the Board of Governors of the Federal Reserve System).
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Section 9. Covenants. The Company covenants and agrees with the
Beneficiaries from and after the date of this Agreement until the earlier of
payment in full in cash of (A) all interest due through the sixth scheduled
Interest Payment Date under the Indenture or (B) all obligations due and owing
under the Indenture and the Securities in the event such obligations become due
and payable prior to the payment of the first six scheduled interest payments on
the Securities:
(a) The Company agrees that it will not (i) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral (except for the Lien created pursuant to or permitted
under this Agreement) and at all times will be the sole beneficial owner of the
Collateral.
(b) The Company agrees that it will not (i) enter into any agreement
or understanding that restricts or inhibits Escrow Agent's or Trustee's rights
or remedies hereunder, including, without limitation, Trustee's right to sell or
otherwise dispose of the Collateral other than any agreement with the Trustee or
(ii) fail to pay or discharge any tax, assessment or levy of any nature not
later than five days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with regard to the Collateral.
Section 10. Power of Attorney. In addition to all of the powers
granted to Trustee pursuant to the Indenture, the Company hereby appoints and
constitutes Trustee as the Company's attorney-in-fact to exercise to the fullest
extent permitted by law all of the following powers upon and at any time after
the occurrence and during the continuance of an Event of Default: (i) collection
of proceeds of any Collateral; (ii) conveyance of any item of Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens under
Section 6; (iv) making of any payments or taking any acts under Section 11; and
(v) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by Trustee in its sole discretion, and such payments made by
Trustee to become the obligations of the Company to Trustee, due and payable
immediately upon demand. Trustee's authority hereunder shall include, without
limitation, the authority to endorse and negotiate any checks or instruments
representing proceeds of Collateral in the name of the Company, execute and give
receipt for any certificate of ownership or any document constituting
Collateral, transfer title to any item of Collateral, sign the Company's name on
all financing statements (to the
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extent permitted by applicable law) or any other documents deemed necessary or
appropriate by Trustee to preserve, protect or perfect its security interest in
the Collateral and to file the same, prepare, file and sign the Company's name
on any notice of Lien, to take any other actions arising from or incident to the
powers granted to Trustee or Escrow Agent in this Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Company.
Section 11. Trustee May Perform. If the Company fails to perform any
agreement contained herein, Trustee may itself perform, but shall not be
obligated to, or cause performance of, such agreement, and the reasonable
expenses of Trustee incurred in connection therewith shall be payable by the
Company under Section 13 hereof.
Section 12. No Assumption of Duties; Reasonable Care. The rights and
powers granted to Trustee or Escrow Agent hereunder are being granted in order
to preserve and protect Trustee's security interest in and to the Collateral
granted hereby and shall not be interpreted to, and shall not, impose any duties
on Trustee or Escrow Agent in connection therewith other than those expressly
imposed under applicable law. Except as provided by applicable law or by the
Indenture, Trustee or Escrow Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which Trustee or
Escrow Agent, as the case may be, accords similar property in similar
situations, it being understood that neither Trustee nor Escrow Agent shall have
any responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not Trustee or Escrow Agent has or is deemed to have
knowledge of such matters or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Collateral; provided, however, that
nothing contained in this Agreement shall relieve Escrow Agent of any
responsibilities as a securities intermediary under applicable law. The Trustee
is entering into this Agreement solely in its capacity as Trustee under the
Indenture, and not in its individual capacity, and shall be entitled to the
rights, protections and exculpations furnished to it under the Indenture,
including, without limitation, Article 6 thereof, in addition to (and not in
limitation of) any rights, protections or exculpations furnished to it under
this Agreement. The Escrow Agent will at all times during the term of this
Agreement treat the Company as the "entitlement holder" as defined in Article 8
of the NY-UCC with respect to the Escrow Account and that part of the Collateral
which constitutes "security entitlements" as defined in Article 8 of the NY-UCC.
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Section 13. Expenses. The Company will upon demand pay to Trustee
and Escrow Agent the amount of any and all reasonable expenses, including,
without limitation, the reasonable fees, expenses and disbursements of its
counsel, experts and agents retained by Trustee or Escrow Agent that Trustee or
Escrow Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Beneficiaries hereunder, or (iv) the
failure by the Company to perform or observe any of the provisions hereof.
Section 14. Security Interest Absolute. All rights of the
Beneficiaries and security interests hereunder, and all obligations of the
Company hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Securities or the
Indenture or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or nonperfection of any Liens
on any other collateral for all or any of the Secured Obligations; or
(d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company in respect of the Secured Obligations or of this
Agreement.
Section 15. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Invalidity. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid
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provision shall be construed as if it were written so as to effectuate, to the
maximum extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of the other parties. Notwithstanding the
foregoing, this Agreement shall inure to and be binding upon the parties and
their successors and permitted assigns.
(d) Benefit. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; provided, however, that the Beneficiaries (including Holders of the
Securities) and their assigns shall be entitled to the benefits hereof and to
enforce this Agreement.
(e) Time. Time is of the essence with respect to each provision of
this Agreement.
(f) Entire Agreement; Amendments. This Agreement and the Indenture
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings and
commitments, whether oral or written. Any amendment or waiver of any provision
of this Agreement and any consent to any departure by the Company from any
provision of this Agreement shall be effective only if made or duly given in
compliance with all of the terms and provisions of the Indenture, and none of
Escrow Agent, Trustee or any Holder of Securities shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of Escrow Agent,
Trustee or any Holder of Securities to exercise, or delay in exercising, any
right, power or privilege hereunder shall not operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Escrow
Agent, Trustee or any Holder of Securities of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy that
Escrow Agent, Trustee or such Holder of Securities would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
(g) Notices. All notices and other
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communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been duly given and received
when actually received, including: (a) on the day of hand delivery; (b) three
Business Days following the day sent, when sent by United States certified mail,
postage and certification fee prepaid, return receipt requested, addressed as
set forth below; (c) when transmitted by telecopy with verbal confirmation of
receipt by the telecopy operator to the telecopy number set forth below; or (d)
one Business Day following the day timely delivered to a next-day air courier
addressed as set forth below:
To Escrow Agent:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department
Telecopy: (212) 658-6425
Telephone: (212) 658-6563
To Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Department
Telecopy: (212) 658-6425
Telephone: (212) 658-6563
To the Company:
Bell Technology Group Ltd.
295 Lafayette Street
New York, New York 10012
Attention: Marc H. Bell, President
Telecopy: (212) 334-8509
Telephone: (212) 334-8500
with a copy to:
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, New York 10119
Telecopy: (212) 868-1229
Telephone: (212) 594-5300
Attention: Arnold N. Bressler, Esq.
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
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(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE
LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY,
ESCROW AGENT, TRUSTEE AND THE HOLDERS OF SECURITIES IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT TRUSTEE SHALL, IN ITS CAPACITY AS
TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SECURITIES, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY
OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH
(AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS
THE CASE MAY BE) TO ENABLE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF TRUSTEE. THE COMPANY AGREES
THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS IN ANY
PROCEEDING BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH TRUSTEE HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS.
(iii) THE COMPANY, ESCROW AGENT AND TRUSTEE EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF ESCROW
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AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES SHALL HAVE ANY LIABILITY TO THE
COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON
ESCROW AGENT, TRUSTEE OR SUCH HOLDER OF SECURITIES, AS THE CASE MAY BE, THAT
SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF ESCROW AGENT,
TRUSTEE OR SUCH HOLDER OF SECURITIES, AS THE CASE MAY BE, CONSTITUTING BAD
FAITH, NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF NOTICE
AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF
SECURITIES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO
REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY
UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
ESCROW AGENT, TRUSTEE OR ANY HOLDER OF SECURITIES, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION,
THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE
HAND AND ESCROW AGENT, TRUSTEE AND/OR THE HOLDERS OF SECURITIES ON THE OTHER
HAND.
(k) No Adverse Interpretation of Other Agreements. This Agreement
may not be used to interpret another pledge, security or debt agreement of the
Company or any subsidiary thereof. No such pledge, security or debt agreement
may be used to interpret this Agreement.
(l) Benefits of Agreement. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
(m) Interpretation of Agreement. All terms not defined herein or in
the Indenture shall have the meaning set forth in the applicable provisions of
the NY-UCC, except where the context otherwise requires. To the extent a term
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or provision of this Agreement conflicts with the Indenture, the Indenture shall
control with respect to the subject matter of such term or provision. Acceptance
of or acquiescence in a course of performance rendered under this Agreement
shall not be relevant to determine the meaning of this Agreement even though the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
(n) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall, except for Section 5 which shall survive,
terminate only upon the termination of this Agreement.
(o) Waivers. The Company waives presentment and demand for payment
of any of the Secured Obligations, protest and notice of dishonor or default
with respect to any of the Secured Obligations, and all other notices to which
the Company might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
(p) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company (i)
acknowledges that it has, by separate written instruments, designated and
appointed Milberg Weiss Bershad Hynes & Lerach LLP, One Pennsylvania Plaza, New
York, NY 10119 (and any successor entity, "Agent"), as its authorized agent upon
which process may be served in any suit or proceeding arising out of or relating
to this Agreement that may be instituted in any federal or state court in the
Borough of Manhattan, City of New York, State of New York and represents and
warrants that Agent has accepted such designation, (ii) submits to the
jurisdiction of any such court in any such suit or proceeding and (iii) agrees
that service of process upon Agent and written notice of said service to the
Company in accordance with the provisions of this Agreement shall be deemed in
every respect effective service of process upon the Company in any such suit or
proceeding. The Company further agrees to take any and all action, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of Agent in full force
and effect for as long as any of the Securities remain outstanding; provided,
however, that the Company may, and to the extent Agent ceases to be able to be
served on the basis contemplated herein shall, by written notice to Escrow Agent
and Trustee, designate such additional or alternative agent for service of
process that (i) maintains an office located in the Borough of Manhattan, City
of New York, State of New York, and (ii) is either (x) United States counsel for
the Company or (y) a corporate service company which acts as
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agent for service of process for other Persons in the ordinary course of its
business. Such written notice shall identify the name of such agent for service
of process and the address of the office of such agent for service of process in
the Borough of Manhattan, City of New York, State of New York.
To the extent that the Company has or hereafter may acquire any
immunity from jurisdiction of any court of any jurisdiction in which the Company
owns or leases property or assets or the United States or the State of New York,
or from any legal process (whether through service of notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property and assets or this Agreement, the Indenture,
the Escrow Account or the other Collateral or actions to enforce judgments in
respect of any thereof, the Company hereby irrevocably waives such immunity in
respect of its
26
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obligations under the above-referenced documents, to the extent permitted by
law.
IN WITNESS WHEREOF, the parties have executed and delivered this
Escrow Agreement as of the day first above written.
MARINE MIDLAND BANK,
as Escrow Agent
By:_________________________________
Name:
Title:
MARINE MIDLAND BANK,
as Trustee
By:_________________________________
Name:
Title:
BELL TECHNOLOGY GROUP LTD.
By:_________________________________
Name: Marc H. Bell
Title: President
27
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SCHEDULE I
PLEDGED SECURITIES
INTEREST DUE
ON FIRST 6
INTEREST
SECURITY MATURITY CUSIP YIELD PRICE COST PAYMENT DATES
- -------- -------- ----- ----- ----- ---- -------------
Total Purchase Price:
