<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13d-2(a)
WESTOWER CORPORATION
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(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
96121E101
--------------------------
(CUSIP Number)
PETER S. SARTORIUS, ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
JUNE 1, 1998
-----------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e),13d-1(f) or 13d-1(g) check the following box
[_].
Note. Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
<PAGE>
SCHEDULE 13D
CUSIP NO. 96121E101 PAGE 2 OF 6
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
BET ASSOCIATES, L.P.
23-2957243
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF
639,281 SHARES OF COMMON STOCK UNDERLYING CURRENTLY
SHARES CONVERTIBLE NOTES AND EXERCISABLE WARRANTS.
-----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY - 0 - SHARES
-----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 639,281 SHARES OF COMMON STOCK UNDERLYING CURRENTLY
CONVERTIBLE NOTES AND EXERCISABLE WARRANTS.
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
- 0 - SHARES
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
639,281 SHARES OF COMMON STOCK UNDERLYING CURRENTLY CONVERTIBLE NOTES AND
EXERCISABLE WARRANTS.
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.7%
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14 TYPE OF REPORTING PERSON*
PN
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D
CUSIP NO. 96121E101 PAGE 3 OF 6
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
BRUCE E. TOLL
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
BK, PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
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7 SOLE VOTING POWER
NUMBER OF
639,281 SHARES OF COMMON STOCK UNDERLYING CURRENTLY
SHARES CONVERTIBLE NOTES AND EXERCISABLE WARRANTS.
174,000 SHARES OF COMMON STOCK.
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY - 0 - SHARES
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 639,281 SHARES OF COMMON STOCK UNDERLYING CURRENTLY
CONVERTIBLE NOTES AND EXERCISABLE WARRANTS.
174,000 SHARES OF COMMON STOCK.
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
- 0 - SHARES
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
813,281 SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP NO. 96121E101 PAGE 4 OF 6
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock (the "Common Stock") of
Westower Corporation, a Washington corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 7001 N.E. 40th Avenue, Vancouver,
Washington 98661.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed by (i) BET Associates, L.P., a
Delaware limited partnership ("BET"), with respect to shares beneficially owned
by it; and (ii) Bruce E. Toll with respect to shares beneficially owned by (a)
Mr. Toll, (b) BET, and (c) The Bruce E. & Robbi S. Toll Foundation, a charitable
trust (the "Toll Foundation"). Mr. Toll is the sole member of BRU LLC, a
Delaware limited liability company ("BRU"), which is the sole general partner of
BET. Mr. Toll is also the trustee of the Toll Foundation. Mr. Toll and BET are
sometimes referred to herein as the "Filing Persons." Any disclosure herein
with respect to persons other than the Filing Persons are made on information
and belief after making inquiry to the appropriate party.
(b) The business address of each of the Filing Persons is: 3101
Philmont Avenue, Huntingdon Valley, Pennsylvania 19006.
(c) The principal business of BET is to invest in the Issuer. Mr.
Toll's principal occupation is as President of Toll Brothers Inc., a publicly-
traded company engaged primarily in the business of developing and constructing
residential real estate.
(d) During the last five years, none of the persons referred to in
paragraph (a) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) During the last five years, none of the persons referred to in
paragraph (a) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Mr. Toll is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
On May 11, 1998, BET entered into a Purchase Agreement (the
"Agreement") with the Issuer pursuant to which BET agreed, subject to the
satisfaction of certain conditions, to purchase, for a price of $14,850,000, 7%
convertible senior subordinated notes in the aggregate principal amount of
$15,000,000 (the "Notes"), presently convertible into 599,821 shares of Common
Stock (the "Note Conversion Shares") at a conversion price of $25.03 per share,
and warrants (the "Warrants") exerciseable for 40,000 shares of Common Stock
(the "Warrant Conversion Shares," and, together with the Note Conversion Shares,
collectively, the "Conversion Shares") at an exercise price of $23.00 per share.
The transaction was completed on June 1, 1998. BET used funds contributed by
its partners, principally BRU, to purchase the Notes and the Warrants.
$12,000,000 of the funds contributed by BRU were borrowed by Mr. Toll from
CoreStates Bank, N.A., and subsequently contributed to BRU.
Mr. Toll purchased through brokers' transactions 55,800 shares of
Common Stock for his own account and 10,000 shares of Common Stock for the
account of the Toll Foundation. Mr. Toll also acquired 108,200 shares of Common
Stock pursuant to the exercise of certain publicly-traded warrants of the Issuer
on April 29, 1998 at an exercise price of $9.00
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SCHEDULE 13D
CUSIP NO. 96121E101 PAGE 5 OF 6
per share. All of the shares of Common Stock acquired by Mr. Toll or the Toll
Foundation referred to in this paragraph are sometimes referred to herein
collectively as the "Toll Shares."
ITEM 4. PURPOSE OF TRANSACTION.
The Filing Persons have acquired the Notes, the Warrants and the Toll
Shares for investment purposes and intend to evaluate the performance of such
securities as an investment in the ordinary course of business.
(d) The Agreement provides that the holders of a majority of the
aggregate unpaid principal amount of the Notes can nominate one designee to the
Issuer's Board of Directors. BET, which currently holds all of the aggregate
unpaid principal amount of the Notes, does not at this time intend to so
nominate a designee, but may exercise this right in the future.
Except as provided above, none of the Filing Persons has any plans or
proposals which relate to, or could result in, any of the matters referred to in
paragraphs (a) through (j), inclusive, of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) BET beneficially owns 639,281 shares of Common Stock, which
constitutes 10.7% of the Common Stock outstanding (based upon 5,341,871 shares
of Common Stock outstanding as reflected in the Issuer's Annual Report on Form
10-KSB for the fiscal year ended February 28, 1998 and including as outstanding
the Conversion Shares). Mr. Toll beneficially owns 813,281 shares of Common
Stock, which constitutes 13.6% of the Common Stock outstanding (based upon
5,341,871 shares of Common Stock outstanding as reflected in the Issuer's Annual
Report on Form 10-KSB for the fiscal year ended February 28, 1998 and including
as outstanding the Conversion Shares). Such securities were acquired pursuant to
the transactions described in Item 3.
(b) BET has sole voting power and power to dispose of the Conversion
Shares. Mr. Toll has sole voting power and power to dispose of the Conversion
Shares and the Toll Shares.
(c) See Item 3.
ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See Items 3 and 4.
Pursuant to the Agreement, the Issuer granted certain registration
rights to holders of the Notes and the Warrants with respect to the Conversion
Shares, and any shares issued as a dividend or other distribution with respect
to, or in exchange for or in replacement of, such shares. These rights include
certain shelf, demand and "piggy-back" registration rights as set forth in the
Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Purchase Agreement between Westower Corporation and BET
Associates, L.P., dated May 11, 1998, including as exhibits
thereto the Form of Note and the Form of Warrant.
<PAGE>
SCHEDULE 13D
CUSIP NO. 96121E101 PAGE 6 OF 6
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 11, 1998
BET ASSOCIATES, L.P.
By: BRU LLC
Its General Partner
By: /s/ Bruce E. Toll
-----------------------
Bruce E. Toll
Member
/s/ Bruce E. Toll
------------------------
Bruce E. Toll
<PAGE>
EXHIBIT 1
PURCHASE AGREEMENT
BETWEEN
WESTOWER CORPORATION
AND
BET ASSOCIATES, L.P.
DATED AS OF MAY 11, 1998
RELATING TO:
$15,000,000
7% CONVERTIBLE SENIOR SUBORDINATED NOTES
DUE APRIL 30, 2007
AND
WARRANTS TO PURCHASE 40,000
SHARES OF COMMON STOCK
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. SALE AND PURCHASE OF NOTES AND WARRANTS............................ 1
SECTION 2. THE CLOSING........................................................ 1
SECTION 3. DEFINITIONS........................................................ 2
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... 15
4.1. Corporate Existence, Power and Authority........................... 15
4.2. Stock.............................................................. 16
4.3. Subsidiaries....................................................... 17
4.4. Business........................................................... 17
4.5. No Defaults or Conflicts........................................... 17
4.6. Disclosure Materials; Other Information............................ 18
4.7. Litigation......................................................... 19
4.8. Taxes.............................................................. 19
4.9. ERISA.............................................................. 19
4.10. Legal Compliance................................................... 20
4.11. Permits, Licenses and Approvals.................................... 20
4.12. Patents, Trademarks and Other Rights............................... 20
4.13. Status Under Certain Statutes...................................... 20
4.14. Key Employees...................................................... 21
4.15. Properties......................................................... 21
4.16. Suppliers and Customers............................................ 21
4.17. Environmental Compliance........................................... 21
4.18. Indebtedness....................................................... 22
4.19. Disaster........................................................... 23
4.20. No Burdensome Agreements........................................... 23
4.21. Offering of Notes and Warrants..................................... 23
SECTION 5. REPRESENTATIONS AND COVENANTS OF THE PURCHASER..................... 23
SECTION 6. CONVERSION......................................................... 24
6.1. Conversion......................................................... 24
6.2. Mechanics of Conversion............................................ 24
6.3. Current Conversion Price........................................... 26
6.4. Adjustment of Conversion Price..................................... 26
6.5. Company's Consolidation or Merger.................................. 31
6.6. Notice to Holders of Notes......................................... 32
SECTION 7. PREPAYMENTS AND REPAYMENTS......................................... 32
</TABLE>
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<TABLE>
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7.1. Mandatory Prepayments.............................................. 32
7.2. Optional Prepayments............................................... 33
7.3. Mandatory Repayment Upon Change of Control Event................... 34
7.4. Miscellaneous...................................................... 34
SECTION 8. AFFIRMATIVE COVENANTS.............................................. 35
8.1. Use of Proceeds.................................................... 35
8.2. Financial Information.............................................. 35
8.3. Compliance Certificates............................................ 37
8.4. Communication with Accountants..................................... 37
8.5. Inspection......................................................... 37
8.6. Maintenance of Existence, Properties and Franchises; Compliance with
Law; Taxes; Insurance.............................................. 37
8.7. Office for Payment, Exchange and Registration...................... 38
8.8. Notices............................................................ 38
8.9. Payment of Dividends by Subsidiaries............................... 39
8.10. Board Representation............................................... 40
8.11. Environmental Matters.............................................. 40
8.12. Reservation of Shares.............................................. 41
8.13. Listing of Shares.................................................. 41
8.14. Securities Exchange Act Registration............................... 41
8.15. Delivery of Information for Rule 144A Transactions................. 41
SECTION 9. NEGATIVE COVENANTS................................................. 41
9.1. Net Worth.......................................................... 41
9.2. Restricted Payments................................................ 42
9.3. Sale of Substantial Portion of Assets; Subsidiaries................ 42
9.4. Permitted Indebtedness............................................. 42
9.5. Certain Ratios..................................................... 43
9.6. No Change in Business.............................................. 44
9.7. Consolidation or Merger........................................... 44
9.8. HSR Act............................................................ 44
9.9. Transactions with Affiliates....................................... 44
9.10. Liens, Etc......................................................... 45
9.11. Sales and Lease-Backs.............................................. 46
9.12. No Restrictions on Dividends....................................... 46
9.13. Private Placement Status........................................... 46
9.14. No Dilution or Impairment; No Changes in Capital Stock............. 46
SECTION 10. SUBORDINATION...................................................... 47
10.1. Agreement to Be Bound.............................................. 47
10.2. Priority of Senior Indebtedness.................................... 47
10.3. Liquidation; Dissolution; Bankruptcy............................... 48
</TABLE>
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<TABLE>
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10.4. No Prejudice or Impairment; Reinstatement.......................... 49
10.5. Subrogation........................................................ 50
10.6. Obligations Unaffected............................................. 50
10.7. Definition of Senior Indebtedness.................................. 50
10.8. Effectiveness of Acceleration of Notes and Exercise of Remedies.... 51
SECTION 11. CONDITIONS TO PURCHASER'S OBLIGATIONS.............................. 51
11.1. Commitment for Revolving Credit Facility........................... 51
11.2. Accuracy of Representations and Warranties......................... 51
11.3. Compliance with Agreements; No Defaults............................ 52
11.4. Officers' Certificate.............................................. 52
11.5. Proceedings........................................................ 52
11.6. Opinion of Counsel................................................. 52
11.7. Other Documents and Opinions....................................... 52
11.8. Audited Financial Statements....................................... 52
SECTION 12. AMENDMENT; WAIVER; CONSENT......................................... 52
SECTION 13. EXCHANGE OF NOTES; ACCRUED INTEREST; CANCELLATION
OF SURRENDERED NOTES; REPLACEMENT.................................. 54
SECTION 14. DEFAULTS........................................................... 55
SECTION 15. REMEDIES........................................................... 57
SECTION 16. RESTRICTIONS ON TRANSFER........................................... 58
SECTION 17. REGISTRATION RIGHTS................................................ 59
17.1. Registration at the Request of Holders............................. 59
17.2. Piggyback Rights................................................... 60
17.3. Expenses........................................................... 61
17.4. Procedures......................................................... 62
17.5. Provision of Documents............................................. 64
17.6. Indemnification.................................................... 64
17.7. Certain Limitations in Connection with Future Grants of
Registration Rights................................................ 65
17.8. Holdback........................................................... 66
SECTION 18. EXPENSES........................................................... 66
SECTION 19. HOME OFFICE PAYMENTS............................................... 68
SECTION 20. NOTICES............................................................ 68
</TABLE>
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<TABLE>
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SECTION 21. MISCELLANEOUS...................................................... 69
21.1. Entire Agreement................................................... 69
21.2. Survival........................................................... 69
21.3. Counterparts....................................................... 69
21.4. Headings........................................................... 70
21.5. Binding Effect, Benefit and Assignment............................. 70
21.6. Severability....................................................... 70
21.7. Governing Law...................................................... 70
21.8. Currency........................................................... 70
21.9. Late Payments...................................................... 70
21.10. Co-obligors........................................................ 71
21.11. Consent to Jurisdiction and Service of Process..................... 72
21.12. Waiver of Jury Trial............................................... 72
</TABLE>
Exhibit A - Form of Note
Exhibit B - Form of Warrant
Exhibit C - Disclosure Schedule
Exhibit D - Opinion of Counsel to the Company
Exhibit E - Joinder for Co-obligor Subsidiaries
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<PAGE>
PURCHASE AGREEMENT dated as of May 11, 1998 by and between WESTOWER CORPORATION,
a Washington corporation (the "Company"), and BET ASSOCIATES, L.P., a Delaware
-------
limited partnership (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. SALE AND PURCHASE OF NOTES AND WARRANTS
(a) The Company agrees to sell to the Purchaser and, subject to the
terms and conditions hereof and in reliance upon the representations and
warranties of the Company contained herein or made pursuant hereto, the
Purchaser agrees to purchase from the Company on the Closing Date specified in
Section 2 hereof, a Note or Notes in the aggregate principal amount of
$15,000,000 and Warrants to purchase 40,000 shares of the Company's Common
Stock. The aggregate purchase price to be paid to the Company by the Purchaser
for such Notes and Warrants is $14,850,000, of which 99.9% shall be allocated to
the Notes and 0.1% to the Warrants.
(b) As used herein, "Notes" means $15,000,000 aggregate principal
-----
amount of the Company's 7% Convertible Senior Subordinated Notes Due April 30,
2007 issued pursuant to this Purchase Agreement. Each Note will be
substantially in the form set forth as Exhibit A hereto. The Notes shall be
---------
convertible into shares of Common Stock at the conversion price of $25.03 per
share of Common Stock, subject to adjustment under Section 6 hereof. Interest
on the Notes shall accrue from the Closing Date and shall be payable quarterly
on the last day of January, April, July and October of each year, commencing
July 31, 1998, at the interest rates and in the manner specified herein and in
the form of Note. As used herein, "Warrants" means the warrants to purchase
--------
40,000 shares of Common Stock issued pursuant to this Purchase Agreement. Each
Warrant shall be substantially in the form set forth in Exhibit B hereto. The
Warrants shall be exercisable at a price of $23.00 per share, subject to
adjustment as provided in the form of Warrant.
SECTION 2. THE CLOSING
(a) Subject to the terms and conditions hereof, the closing of the
purchase and sale of the Notes and Warrants to be purchased by the Purchaser
(the "Closing") will take place at the offices of Morgan, Lewis & Bockius LLP,
-------
2000 One Logan Square, Philadelphia, Pennsylvania at 1:00 P.M., local time, on
May 11, 1998 or such other time and date as shall be mutually agreed to by the
Company and the Purchaser. Such time and date are herein referred to as the
"Closing Date".
- -------------
<PAGE>
(b) Subject to the terms and conditions hereof, on the Closing Date
(i) the Company will deliver to the Purchaser the Notes registered in the name
of the Purchaser in the form of a single Note in the denomination of $15,000,000
or such other Authorized Denomination as may be specified by the Purchaser and
the Warrants registered in the name of the Purchaser in the form of a single
Warrant or such other denomination as may be specified by the Purchaser and (ii)
the Purchaser will deliver to the Company by wire transfer of immediately
available funds an amount equal to the purchase price for such Notes and
Warrants (as specified in Section 1(a) hereof).
SECTION 3. DEFINITIONS
(a) For purposes of this Agreement, the Notes and the Warrants, the
following definitions shall apply (such definitions to be equally applicable to
both the singular and plural forms of the terms defined):
"Additional Amount" has the meaning set forth in Section 14(b)
-----------------
hereof.
"Additional Common Stock" has the meaning set forth in Section
-----------------------
6.4(c) hereof.
"Affiliate", when used with respect to any Person, means (i) if such
---------
Person is a corporation, any officer or director thereof and any Person
which is, directly or indirectly, the beneficial owner (by itself or as
part of any group) of more than ten percent (10%) of any class of any
equity security (within the meaning of the Securities Exchange Act)
thereof, and, if such beneficial owner is a partnership, any general
partner thereof, or if such beneficial owner is a corporation, any Person
controlling, controlled by or under common control with such beneficial
owner, or any officer or director of such beneficial owner or of any
corporation occupying any such control relationship, (ii) if such Person is
a partnership, any general partner thereof, and (iii) any other Person
which, directly or indirectly, controls or is controlled by or is under
common control with such Person. For purposes of this definition,
"control" (including the correlative terms "controlling", "controlled by"
and "under common control with"), with respect to any Person, shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or by contract or otherwise; provided
--------
that no lender or agent for the lenders under the Revolving Credit Facility
shall be deemed to be an Affiliate of the Company.
"Authorized Denomination" with respect to the Notes means a
-----------------------
principal amount of at least $2,000,000 multiplied by the percentage, if
any, of the original principal of the Notes that shall have been converted
or prepaid.
"Available Fund" means, as of any date, an amount equal to the sum
--------------
of (i) fifty percent (50%) of the Consolidated Net Income of the Company
calculated for the period (taken as one accounting period) commencing on
March 1, 1998 and terminating at the
-2-
<PAGE>
end of the Company's most recently completed fiscal quarter preceding such
date and (ii) the Available Proceeds.
"Available Proceeds" means an amount equal to the net cash proceeds to
------------------
the Company raised after March 1, 1998 in all underwritten public offerings
or private placements of the Company's capital stock or warrants (other
than the Warrants) to purchase shares of capital stock (net of any
brokers', dealers', placement agents' and underwriters' fees and
commissions and other offering or placement expenses), (ii) the proceeds
from the exercise of options or warrants to purchase capital stock and
(iii) the amount of Indebtedness that is converted into or exchanged for
capital stock of the company.
"Board" or "Board of Directors" means, with respect to any Person
----- ------------------
which is a corporation, a business trust or other entity, the board of
directors or other group, however designated, which is charged with legal
responsibility for the management of such Person, or any committee of such
board of directors or group, however designated, which is authorized to
exercise the power of such board or group in respect of the matter in
question.
"Business Day" means any day, other than a Saturday, Sunday or legal
------------
holiday, on which banks in the location of the office of the Company
provided for in Section 8.7 hereof are open for business.
"Capital Expenditures" means, for any period, amounts added or
--------------------
required to be added to the property, plant and equipment or other fixed
assets account on the Consolidated balance sheet of the Company and its
Subsidiaries, prepared in accordance with GAAP, in respect of (a) the
acquisition, construction, improvement or replacement of land, buildings,
machinery, equipment, leaseholds and any other real or personal property,
(b) to the extent not included in clause (a) above, materials, contract
labor and direct labor relating thereto (excluding amounts properly
expensed as repairs and maintenance in accordance with GAAP) and (c)
software development costs to the extent not expensed; provided, however,
-------- -------
that Capital Expenditures shall not include the purchase price for the
acquisition of another Person (or substantially all the assets of another
Person) as a going concern; provided, however, that "Capital Expenditures"
-------- -------
shall not include (i) Tower acquisition costs permitted by the Revolving
Credit Facility or (ii) prior to April 30, 2000 Tower construction costs
permitted by the Revolving Credit Facility.
"Capitalized Leases" means any lease to which the Company or a
------------------
Subsidiary is party as lessee, or by which it is bound, under which it
leases any property (real, personal or mixed) from any lessor other than
the Company or a Subsidiary and which is required to be capitalized in
accordance with GAAP.
"Change of Control Event" means the occurrence of any of the following
-----------------------
events:
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<PAGE>
(a) any person or group (within the meaning of Section 13(d)(3) of the
Securities Exchange Act, whether or not the Company has any capital
stock subject to such Section) together with any affiliates and
associates of any such person or member of such group (within the
meaning of Rule 12b-2 under the Securities Exchange Act, whether or
not the Company has any capital stock subject to such Section), shall
at any time beneficially own (within the meaning of Rule 13d-3 under
the Securities Exchange Act, whether or not the Company has any
capital stock subject to such Section) shares of Common Stock of the
Company which represents in excess of either (A) fifty percent (50%)
of the total votes entitled to be cast by all outstanding shares of
the Common Stock of the Company or (B) fifty percent (50%) of all
outstanding shares of the Common Stock of the Company; provided that a
--------
Change of Control Event shall not be deemed to have occurred under
this clause (a) (without limiting the application of clause (b), (c)
or (d) below), solely by reason of such beneficial ownership of over
fifty percent (50%) under the preceding clause (A) or (B) being held
by one or more persons who on the date of this Agreement are both (x)
officers or directors of the Company and (y) beneficially own on a
fully diluted basis at least one percent (1%) of the shares of the
Company's outstanding Common Stock on the Closing Date; or
(b) a consolidation or merger involving the Company in which shares of
the resulting or surviving corporation representing 50% or more of the
voting power of such corporation are owned by Persons other than
Persons who were shareholders of the Company prior to such
consolidation or merger; or
(c) the sale, lease, transfer or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries in a single transaction or series of related
transactions; or
(d) at any time, a majority of the members of the Board of Directors
of the Company are persons other than persons each of whom was both
(i) nominated as a director for his or her then current term by the
Company's Board of Directors and was recommended by the Board to the
Company's shareholders for election as a member of the Board and (ii)
a member of the Board for all (or the latter part) of the term
immediately prior to his or her then current term as a member of the
Board (except that a person chosen by the Board as a successor to a
director who died in office or resigned from the Board because of a
disability or for any other reason, shall be deemed to have satisfied
this clause (ii)); provided that a director elected pursuant to
--------
Section 8.10 hereof shall be disregarded for purposes of this
paragraph (d).
"Closing" has the meaning set forth in Section 2 hereof.
-------
-4-
<PAGE>
"Closing Date" has the meaning set forth in Section 2 hereof.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
regulations and interpretations thereunder.
"Commission" means the Securities and Exchange Commission and any
----------
other similar or successor agency of the federal government administering
the Securities Act or the Securities Exchange Act.
"Common Stock" means the common stock, par value $.01 per share, of
------------
the Company and the stock of any class into which the then authorized
Common Stock shall be changed by reclassification or otherwise.
"Company" means Westower Corporation, a Washington corporation, its
-------
successors and assigns.
"Consolidated," when used with reference to any term, mean that term
------------
as applied to the accounts of the Company (or other specified Person) and
all of its Subsidiaries (or other specified group of Persons), or such of
its Subsidiaries as may be specified, consolidated (or combined) in
accordance with GAAP and with appropriate deductions for minority interests
in Subsidiaries.
"Consolidated Adjusted EBITDA" means, for any period, the total of
----------------------------
Consolidated EBITDA minus Consolidated Tower Cash Flow plus Consolidated
----- ----
Annualized Tower Cash Flow.
"Consolidated Annualized Tower Cash Flow" means, for any fiscal
---------------------------------------
quarter, the product of (a) Consolidated Tower Cash Flow multiplied by (b)
four.
"Consolidated EBITDA" means, for any period, the total of:
-------------------
(a) Consolidated Net Income;
plus (b) all amounts deducted in computing such Consolidated Net Income
----
in respect of:
(i) depreciation, amortization and other noncash charges,
including deferred taxes but not including reserves,
(ii) Consolidated Interest Expense, and
(iii) taxes based upon or measured by net income that are
actually paid in cash during such period,
-5-
<PAGE>
minus (c) all amounts included in Consolidated Net Income in respect of
-----
deferred income tax benefits.
"Consolidated Fixed Charges" means, for any period, the sum of:
--------------------------
(a) Consolidated Interest Expense,
plus (b) cash Taxes paid,
----
plus (c) the aggregate amount of all mandatory scheduled payments,
---- mandatory scheduled prepayments, sinking fund payments and mandatory
reductions in revolving loans as a result of mandatory reductions in
revolving credit availability, all with respect to Financing Debt of
the Company and its Subsidiaries in accordance with GAAP on a
Consolidated basis, including payments in the nature of principal
under Capitalized Leases, but in no event including contingent
prepayments required by the Revolving Credit Facility.
plus (d) any mandatory dividends paid or payable in cash by the Company
---- or any of its Subsidiaries to third parties,
plus (e) Capital Expenditures.
----
"Consolidated Interest Expense" means, for any period, the total of:
-----------------------------
(a) the aggregate amount of interest, including commitment fees,
payments in the nature of interest under Capitalized Leases and net
payments under Interest Rate Protection Agreements, accrued by the Company
and its Subsidiaries (whether such interest is reflected as an item of
expense or capitalized) in accordance in accordance with GAAP on a
Consolidated basis,
minus (b) to the extent otherwise included in clause (a) above, the
----- amortization of deferred financing fees and costs, original issue
discount relating to Indebtedness and accrued interest on
Indebtedness not paid in cash to the extent permitted by the terms,
including subordination terms, of such Indebtedness (including PIK
Interest),
plus (c) actual cash payments with respect to accrued and unpaid interest
---- (including PIK Interest) that has previously reduced Consolidated
Interest Expense pursuant to clause (b) above.
"Consolidated Net Income" means, for any period, the net income (or
-----------------------
loss) of the Company and its Subsidiaries, determined in accordance with
GAAP on a Consolidated basis; provided, however, that in the event during
-------- -------
such period the Company and its
-6-
<PAGE>
Subsidiaries make an acquisition permitted by the Revolving Credit Facility
(whether through stock purchase, asset purchase, merger or consolidation),
Consolidated Net Income shall include the income (or loss) of such acquired
Person (or acquired assets) accrued during such period prior to the date of
such acquisition; and provided, further, however, that Consolidated Net
-------- ------- -------
Income shall not include:
(a) except as provided in the preceding proviso, the income (or loss)
of any Person (other than a Subsidiary) in which the Company or any of its
Subsidiaries has an ownership interest; provided, however, that (i)
-------- -------
Consolidated Net Income shall include amounts in respect of the income of
such Person when actually received in cash by the Company or such
Subsidiary in the form of dividends or similar Distributions and (ii)
Consolidated Net Income shall be reduced by the aggregate amount of all
Investments, regardless of the form thereof, made by the Company or any of
its Subsidiaries in such Person for the purpose of funding any deficit or
loss of such Person;
(b) all amounts included in computing such net income (or loss) in
respect of the retirement of any Indebtedness or equity at less than face
value after February 28, 1998;
(c) extraordinary and nonrecurring gains;
(d) the income of any Subsidiary to the extent the payment of such
income in the form of a Distribution or repayment of Indebtedness to the
Company or a Wholly Owned Subsidiary is not permitted, whether on account
of any Charter or By-law restriction, any agreement, instrument, deed or
lease or any law, statute, judgment, decree or governmental order, rule or
regulation applicable to such Subsidiary; and
(e) any after-tax gains or losses attributable to returned surplus
assets of any Plan.
"Consolidated Net Worth" means, as of any date as of which the amount
----------------------
thereof is to be determined, (i) all amounts in respect of the Company's
capital stock, plus the amounts of additional paid-in capital, retained
earnings and other items designated as part of the Company's stockholders'
equity (without including treasury stock of the Company and any Preferred
Stock of the Company which is referred to in clause (v) of the definition
herein of Indebtedness), all of which would appear as such on a
consolidated balance sheet of the Company and its Subsidiaries as of such
date prepared in accordance with GAAP consistently applied.
"Consolidated Total Debt" means, at any date, all Financing Debt of
-----------------------
the Company and its Subsidiaries on a Consolidated basis.
-7-
<PAGE>
"Consolidated Tower Cash Flow" means, for any period, the remainder of
----------------------------
(a) Consolidated Tower Revenues minus (b) the costs of revenues earned
-----
and selling, general and administrative expenses (but not Capital
Expenditures) associated with the maintenance and operation of Towers.
"Consolidated Tower Revenues" means, for any period:
---------------------------
(a) the net operating revenues (after reductions for discounts,
commissions and bad debt reserves) of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, generated from
existing, acquired or constructed Towers, minus
-----
(b) any proceeds included in such net operating revenues from the
sale, refinancing, condemnation or destruction of any assets.
The word "conversion" has the meaning set forth in Section 6.1(b)
----------
hereof.
The phrase "conversion price" has the meaning set forth in Section 6.3
----------------
hereof.
"Co-obligor Subsidiaries" has the meaning set forth in Section 21.10
-----------------------
hereof.
The phrase "current conversion price" has the meaning set forth in
------------------------
Section 6.3 hereof.
"Disclosure Material" has the meaning set forth in Section 4.6(a)
-------------------
hereof.
"Disclosure Schedule" means the schedule attached as Exhibit C to this
------------------- ---------
Purchase Agreement. Each entry on the Disclosure Schedule shall refer to
the particular section of this Purchase Agreement to which such entry
relates.
"Distributions on Common Stock" has the meaning set forth in Section
-----------------------------
6.4(b) hereof.
"Environmental Lien" has the meaning set forth in Section 8.12(a)
------------------
hereof.
"ERISA" has the meaning set forth in Section 4.9(a) hereof.
-----
"Event of Default" has the meaning set forth in Section 14 hereof.
----------------
"Financing Debt" means each of the items described in clauses (a)
--------------
through (f) of the definition of the term "Indebtedness" and, without
duplication, any Guarantees of such items.
-8-
<PAGE>
"GAAP" means generally accepted accounting principles as from time to
----
time in effect, including the statements and interpretations of the United
States Financial Accounting Standards Board; provided, however, for
-------- -------
purposes of compliance with Section 9 and the related definitions, "GAAP"
means such principles as in effect on February 28, 1998, as applied by the
Company and its Subsidiaries in the preparation of the most recent
financial statements referred to in Section 4.6(a), that in the event of a
change in generally accepted accounting principles after such date, either
the Company or the Majority Noteholders may request a change in the
definition of "GAAP", in which case the parties hereto shall negotiate in
good faith with respect to an amendment of this Purchase Agreement
implementing such change.
"Guarantee" means, with respect to the Company (or other specified
---------
Person):
(a) any guarantee by the Company (or such specified Person) of the
payment or performance of, or any contingent obligation by the Company (or
such specified Person) in respect of, any Indebtedness or other obligation
of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Company (or such
specified Person) including any binding "comfort letter" or "keep well
agreement" written by the Company (or such specified Person), to a creditor
or prospective creditor of such primary obligor, to (i) pay the
Indebtedness of such primary obligor, (ii) purchase an obligation owned by
such primary obligor, (iii) pay for the purchase or lease of assets or
services regardless of the actual delivery thereof or (iv) maintain the
capital, working capital, solvency or general financial condition of such
primary obligor;
(c) any liability of the Company (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
(d) any liability of the Company (or such specified Person), as a
joint venture of a joint venture in respect of Indebtedness or other
obligations of such joint venture;
(e) any liability of the Company (or such specified Person) with
respect to the tax liability of others as a member of a group (other than a
group consisting solely of the Company and its Subsidiaries) that is
consolidated for tax purposes; and
(f) reimbursement obligations, whether contingent or matured, of the
Company (or such specified Person) with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and Interest
Rate Protection Agreements,
in each case whether or not any of the foregoing are reflected on the
balance sheet of the Company (or such specified Person) or in a footnote
thereto; provided, however, that the term "Guarantee" shall not include
-------- -------
endorsements for collection or deposit in the ordinary
-9-
<PAGE>
course of business. The amount of any Guarantee and the amount of
Indebtedness resulting from such Guarantee shall be the maximum amount that
the guarantor may become obligated to pay in respect of the obligations
(whether or note such obligations are outstanding at the time of
computation).
"HSR Act" has the meaning set forth in Section 6.1(a) hereof.
-------
"Hazardous Materials" means any pollutant, toxic substance, hazardous
-------------------
waste, material, compound, element or chemical identified as such or
determined to be hazardous or toxic by a governmental agency under the
Comprehensive Environmental Response Compensation and Liability Act
(CERCLA), 42 U.S.C. 9601 et seq., the Resource Conservation and Recovery
------
Act (RCRA), 42 U.S.C. 6901 et seq., the Toxic Substances Control Act
------
(TSCA), 15 U.S.C. 2601 et seq., the Water Pollution Control Act (CWA), 33
------
U.S.C. 1251 et seq., the Clean Air Act (CAA), 42 U.S.C. 7501 et seq., the
------
Occupational Safety and Health Act (OSHA), 29 U.S.C. 655 and any other
federal, state, local or municipal laws, statutes, ordinances, codes, rules
or regulations imposing liability or establishing standards of conduct for
environmental protection. The term "Hazardous Materials" shall also
include raw materials used or stored by the Company, building components
(including but not limited to asbestos-containing materials) and
manufactured products containing Hazardous Materials.
"Indebtedness" means all obligations, contingent or otherwise, which
------------
in accordance with GAAP are required to be classified upon the Consolidated
balance sheet of the Company (or other specified Person) as liabilities,
but in any event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets, services or securities,
including related noncom petition, consulting and stock repurchase
obligations (other than ordinary trade accounts payable within six months
after the incurrence thereof in the ordinary course of business);
(e) mandatory redemption or dividend rights on capital stock (or other
equity);
(f) reimbursement obligations, whether contingent or matured, with
respect to letters of credit, bankers acceptances, surety bonds, other
financial guarantees and Interest Rate Protection Agreements (without
duplication of other Indebtedness supported or guaranteed thereby);
-10-
<PAGE>
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and payable out
of the proceeds of or production from property;
(i) liabilities secured by any Lien existing on property owned or
acquired by the Company (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
"Investment" means, with respect to any Person, (i) any loan, advance
----------
or extension of credit by such Person to, and any contributions to the
capital of, any other Person, (ii) any Guaranty by such Person or (iii)
any interest in any capital stock or other securities of any other Person.
"Interest Rate Protection Agreement" means any interest rate swap,
----------------------------------
interest rate cap, interest rate hedge or other contractual arrangement
that converts variable interest rates into fixed interest rates, fixed
interest rates into variable interest rates or other similar arrangements.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security interest of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same
effect as any of the foregoing, any assignment or other conveyance of any
right to receive income and any assignment of receivables with recourse
against the assignor), any filing of a financing statement as debtor under
the Uniform Commercial Code or any similar statute and any agreement to
give or make any of the foregoing.
"Majority Noteholders" means the holder or holders, at the time, of at
--------------------
least a majority of the aggregate principal amount of the Notes then
outstanding.
"Market Price" has the meaning set forth in Section 6.4(g) hereof.
------------
"Material Adverse Effect" means a material adverse effect on the
-----------------------
assets, properties, liabilities, business, affairs, results of operations
or condition (financial or otherwise) of the Company and its Subsidiaries
on a consolidated basis.
"Note" or "Notes" has the meaning set forth in Section 1(b) hereof.
---- -----
"Outstanding" or "outstanding" means, when used with reference to the
----------- -----------
Notes as of a particular time, all Notes theretofore duly issued except (i)
Notes theretofore reported
-11-
<PAGE>
as lost, stolen, mutilated or destroyed or surrendered for transfer,
exchange or replacement, in respect of which new or replacement Notes have
been issued by the Company, (ii) Notes theretofore paid in full and (iii)
Notes theretofore canceled by the Company, whether upon conversion of a
Note in whole or in part or otherwise; except that for the purpose of
determining whether holders of the requisite principal amount of Notes have
made or concurred in any declaration, waiver, consent, approval, notice,
annulment of acceleration or other communication under this Agreement or
under any Notes, Notes registered in the name of, as well as Notes owned
beneficially by, the Company, any Subsidiary or any of their Affiliates
shall not be deemed to be outstanding.
"Payment Blockage Period" has the meaning set forth in Section 10.2(b)
-----------------------
hereof.
"Permitted Liens" means (i) Liens for taxes not yet due or Liens for
---------------
taxes being contested in good faith and by appropriate proceedings, for
which adequate reserves have been established, and provided that any
proceedings commenced for the enforcement of such Liens have been duly
suspended, (ii) Liens in respect of property or assets of the Company or
any Subsidiary imposed by law (such as carriers', warehousemen's,
landlords' and mechanics' liens), which were incurred in the ordinary
course of business and, in each case, were not incurred in connection with
the borrowing of money, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Company or any
Subsidiary and (y) which either relate to sums not yet delinquent or are
being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or
assets subject to such Lien, provided that adequate reserves have been
established for any such Liens being contested, (iii) pledges or deposits
(other than any Lien imposed by ERISA) in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
social security legislation, (iv) easements, rights-of-way and minor
defects or irregularities in title not interfering in any material respect
with the ordinary conduct of the business of the Company or any of its
Subsidiaries and (v) Liens securing the performance of bids, tenders,
contracts, statutory obligations, surety, customs and appeal bonds and
other obligations of like nature, incurred as an incident to and in the
ordinary course of business and not to secure the repayment of borrowed
money.
"Person" or "person" means an individual, corporation, partnership,
------ ------
firm, association, joint venture, trust, unincorporated organization,
government, governmental body, agency, political subdivision or other
entity.
"PIK Interest" means any accrued interest payments on Financing Debt
------------
that are postponed or made through the issuance of "payment-in-kind" notes
or other similar securities (including book-entry accrual with respect to
such postponed interest payments), all in accordance with the terms of such
Financing Debt; provided, however, that in no event shall PIK Interest
-------- -------
include payments made with cash or Cash Equivalents.
-12-
<PAGE>
"Post-Default Advances" means loans or other extensions of credit
---------------------
under the Revolving Credit Facility that are made pursuant to a workout,
forbearance or similar agreement entered into following the occurrence of
an event of default under the Revolving Credit Facility.
"Potential Default" means a condition or event which, with notice or
-----------------
lapse of time or both, would constitute an Event of Default.
"Preferred Stock" means any class of the capital stock of a
---------------
corporation (whether or not convertible into any other class of such
capital stock) which has any right, whether absolute or contingent, to
receive dividends or other distributions of the assets of such corporation
(including, without limitation, amounts payable in the event of the
voluntary or involuntary liquidation, dissolution or winding-up of such
corporation), which right is superior to the rights of another class of the
capital stock of such corporation.
"Prepayment Premium" has the meaning set forth in Section 7.3(a)
------------------
hereof.
"Purchase Agreement" means this Purchase Agreement (together with
------------------
exhibits and schedules) as from time to time supplemented or amended or as
the terms hereof may be waived.
"Purchaser" means BET Associates, L.P., a Delaware limited
---------
partnership, its successors and assigns.
"Registration Demand" has the meaning set forth in Section 17.1(b)
-------------------
hereof.
"Restricted Payment" means (i) every dividend or other distribution
------------------
paid, made or declared by the Company or any Subsidiary on or in respect of
any class of its capital stock, (ii) every payment in connection with the
redemption, purchase, retirement or other acquisition by or on behalf of
the Company or any Subsidiary of any shares of the Company's or a
Subsidiary's capital stock, whether or not owned by the Company or any
Subsidiary, (iii) any prepayments or repayments of principal made on
Indebtedness expressly subordinated to the Notes of the Company or of a
Subsidiary (unless such payments are scheduled, or are at maturity, in each
case on the dates established for such payments at the time such
Indebtedness was incurred) and (iv) every payment by or on behalf of the
Company or any Subsidiary (whether as repayment or prepayment of principal
or as interest or otherwise) on or with respect to (A) any obligation to
repay money borrowed owing to any Affiliate of the Company or of any
Subsidiary, or (B) any obligation, to any Person, of any Affiliate of the
Company or of any Subsidiary, which obligation is assumed or guaranteed by
the Company or a Subsidiary; provided, however, (a) that the restrictions
-------- -------
of the foregoing clauses (i) and (ii) shall not apply to any dividend,
distribution or other payment on or in respect of capital stock of the
Company to the extent payable in shares of the capital stock of the
Company, (b) that none of the
-13-
<PAGE>
foregoing clauses shall apply to any payments from a Subsidiary to the
Company or from a Subsidiary to a wholly-owned Subsidiary (including,
without limitation, dividends and other distributions), (c) that none of
the foregoing clauses shall apply to any purchases by the Company from a
wholly-owned Subsidiary of additional capital stock of such wholly-owned
Subsidiary, (d) that none of the foregoing clauses shall apply to the
redemption of the Company's Redeemable Common Stock Purchase Warrants
pursuant to the Warrant Agreement dated October 14, 1997 between the
Company and American Stock Transfer & Trust Company, (e) that none of the
foregoing clauses shall apply to any payments, distributions or other
transfers or actions on or with respect to the Notes, Warrants or to
holders of Notes under the Purchase Agreement and (f) none of the foregoing
clauses shall apply to Indebtedness of the Company to a wholly-owned
Subsidiary. For purposes of this definition, "capital stock" shall also
include warrants and other rights and options to acquire shares of capital
stock (whether upon exercise, conversion, exchange or otherwise).
"Revolving Credit Facility" means the credit facility contemplated by
-------------------------
the commitment letter dated April 9, 1998 from BankBoston, N.A. and
BancBoston Securities Inc. to the Company providing for loans and other
extensions of credit in an aggregate principal amount of $75,000,000, as it
may be amended or modified from time to time (including to increase the
maximum aggregate principal amount thereof), and any replacements,
refinancings or extensions of such credit facility with the same or a
different lender or group of lenders.
"Rule 144" means (i) Rule 144 under the Securities Act as such Rule is
--------
in effect from time to time, and (ii) any successor rule, regulation or
law, as in effect from time to time.
"Rule 144A" means (i) Rule 144A under the Securities Act as such Rule
---------
is in effect from time to time and (ii) any successor rule, regulation or
law, as in effect from time to time.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, and the rules, regulations and interpretations thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
-----------------------
as amended from time to time, and the rules, regulations and
interpretations thereunder.
"Senior Indebtedness" has the meaning set forth in Section 10.7
-------------------
hereof.
"Share" or "Shares" shall mean the shares of Common Stock obtained or
----- ------
obtainable upon conversion of Notes and exercise of the Warrants and shall
also include any capital stock or other securities into which such shares
of Common Stock are changed and any capital stock or other securities
resulting from or comprising a
-14-
<PAGE>
reclassification, combination or subdivision of, or a stock dividend on,
such Shares. In the event that any Shares are sold either in a public
offering pursuant to a registration statement under Section 6 of the
Securities Act or pursuant to Rule 144, then the transferees of such Shares
shall not be entitled to any benefits under this Agreement with respect to
such Shares and such Shares shall no longer be considered to be "Shares"
for purposes of Section 17 hereof or any consent or waiver provision of
this Agreement.
"Subsidiary" means any corporation, association or other entity of
----------
which more than 50% of the total voting power of shares of stock or other
equity interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is, at the time as of which any determination is being made, owned
or controlled, directly or indirectly, by the Company or one or more of its
Subsidiaries, or both. References herein to a "wholly-owned Subsidiary"
-----------------------
mean a Subsidiary all of whose outstanding capital stock (and any rights of
any kind to acquire such capital stock) is owned by the Company or another
wholly-owned Subsidiary, except only for directors' qualifying shares which
represent a minority interest in such Subsidiary and which are required or
deemed advisable with respect to any Subsidiary organized under the laws of
a jurisdiction outside of the United States (and provided that any
directors holding such directors' qualifying shares are nominated, and can
be removed, by the Company or another wholly-owned Subsidiary).
"Towers" means towers for wireless telecommunications and broadcast
------
carriers.
"Warrants" has the meaning set forth in Section 1(b) hereof.
--------
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows as
of the date hereof and as of the Closing Date:
4.1. Corporate Existence, Power and Authority.
----------------------------------------
(a) The Company and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its state or
other jurisdiction of incorporation. The Company and each Subsidiary is duly
qualified, licensed and authorized to do business and is in good standing in
each jurisdiction in which it owns or leases any material property or in which
the conduct of its business requires it to so qualify or be so licensed, except
for such jurisdictions where the failure to so qualify or be so licensed would
not have a Material Adverse Effect.
(b) No proceeding has been commenced looking toward the dissolution
or merger of the Company or any Subsidiary or the amendment of its respective
certificate or articles of incorporation (or similar governing documents with
respect to a Subsidiary organized under the laws of a jurisdiction outside of
the United States). Neither the Company nor any Subsidiary
-15-
<PAGE>
is in violation in any respect of its certificate or articles of incorporation
or by-laws (or similar governing documents with respect to a Subsidiary
organized under the laws of a jurisdiction outside of the United States).
(c) The Company and each Subsidiary has all requisite corporate
power, authority and legal right to own or to hold under lease and to operate
the properties it owns or holds and to conduct its business as now being
conducted.
(d) The Company has all requisite power, authority and legal right to
execute, deliver, enter into, consummate and perform this Purchase Agreement,
the Notes and the Warrants, including, without limitation, the issuance by the
Company of the Notes, the Warrants and the Shares as contemplated herein and
therein. The execution, delivery and performance of the Purchase Agreement, the
Notes and the Warrants by the Company (including, without limitation, the
issuance by the Company of the Notes, the Warrants and the Shares as
contemplated herein and therein) have been duly authorized by all required
corporate and other actions. The Purchase Agreement constitutes, and the Notes
and Warrants when issued will constitute, the legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to the rights of creditors generally. The Shares when
issued will be duly authorized, validly issued, fully paid and non-assessable.
4.2. Stock.
-----
(a) The authorized capital stock of the Company consists of
15,000,000 shares of Common Stock. On May 11, 1998, 5,341,871 shares were
outstanding, and all such outstanding shares were duly authorized, validly
issued and outstanding and fully paid and non-assessable.
(b) The only shares of Common Stock reserved for issuance by the
Company (i) are shares to be issued upon conversion of the Notes, (ii) shares to
be issued upon exercise of the Warrants, (iii) 1,179,008 shares issuable upon
exercise of the Company's Redeemable Common Stock Purchase Warrants issued on
October 20, 1997 and (iv) 240,000 shares issuable upon exercise of outstanding
underwriters' warrants and (v) 573,963 shares reserved for issuance under the
Company's employee stock option plan, of which options to purchase 573,963
shares were granted and outstanding as of May 11, 1998.
(c) Except as described in Section 4.2(b) or as disclosed on the
Disclosure Schedule, there are no outstanding options, warrants, rights,
convertible securities or other agreements or plans under which the Company may
become obligated to issue, sell or transfer shares of its capital stock or other
securities.
(d) Except as disclosed on the Disclosure Schedule, there are no
outstanding registration rights with respect to any capital stock of the Company
or of any Subsidiary.
-16-
<PAGE>
4.3. Subsidiaries.
------------
(a) The only Subsidiaries of the Company on the Closing Date will be
those set forth on the Disclosure Schedule. Such Subsidiaries are wholly-owned
except as set forth on the Disclosure Schedule. Neither the Company nor any
Subsidiary has any Investments in any other Person, except as described on the
Disclosure Schedule.
(b) All outstanding capital stock of the Subsidiaries has been duly
authorized and validly issued and is fully paid and non-assessable and, except
as disclosed on the Disclosure Schedule hereto, is owned beneficially and of
record by the Company free and clear of all Liens, encumbrances, security
interests, pledges, options or claims of any kind. Except as disclosed on the
Disclosure Schedule, there are no outstanding options, warrants, rights,
convertible securities or other agreements or plans under which any Subsidiary
may become obligated to issue, sell or transfer shares of its capital stock or
other securities.
(c) Except as described on the Disclosure Schedule, no Subsidiary of
the Company is subject to any agreement, order or similar restriction that may
affect or limit the ability of such Subsidiary to pay dividends to the Company.
4.4. Business. The Company and its Subsidiaries are engaged solely in
--------
the business described in the Disclosure Material. Neither the Company nor any
of its Subsidiaries currently engages in, or has any intention of engaging in,
any other business except as described in the Disclosure Material.
4.5. No Defaults or Conflicts.
------------------------
(a) No Event of Default or Potential Default has occurred and is
continuing.
(b) Neither the Company nor any of the Subsidiaries is in violation
or default under any indenture, agreement or instrument to which it is a party
or by which it or its properties may be bound where the violation or default
could reasonably be expected to have a Material Adverse Effect.
(c) The execution, delivery and performance by the Company of the
Purchase Agreement, the Notes, the Warrants and any of the transactions
contemplated hereby (including, without limitation, the issuance of the Notes,
the Warrants and the Shares as contemplated herein and therein) does not and
will not (i) violate or conflict with, with or without the giving of notice or
the passage of time or both, any provision of (A) the respective articles or
certificates of incorporation or by-laws of the Company or any of its
Subsidiaries (or similar governing documents) or (B) any law, rule, regulation,
order, judgment, writ, injunction, decree, agreement, indenture or other
instrument applicable to the Company or any of its Subsidiaries or any of their
respective properties, (ii) result in the creation of any security interest or
Lien upon any of the Company's or any Subsidiary's properties, assets or
revenues, (iii) require the consent, waiver,
-17-
<PAGE>
approval, order or authorization of, or declaration, registration, qualification
or filing with, any Person (whether or not a governmental authority and
including, without limitation, any shareholder approval), except listing of the
Shares on the American Stock Exchange or (iv) cause antidilution clauses of any
outstanding securities to become operative or give rise to any preemptive
rights.
4.6. Disclosure Materials; Other Information.
---------------------------------------
(a) The Company has previously furnished to the Purchaser the
following material (the "Disclosure Material"): (i) consolidated financial
-------------------
statements of the Company consisting of consolidated balance sheets as of
February 28, 1998 and February 28, 1997 and the related consolidated statements
of income, changes in stockholders' equity and cash flows for the three fiscal
years ended February 28, 1998, February 28, 1997 and February 29, 1996 and the
related notes thereto, which, in the case of statements at February 28, 1997 and
February 29, 1996 and for the years then ended, have been certified by Moss
Adams LLP, independent certified accountants; (iii) the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended November 30, 1997 as filed with
the Commission under the Securities Exchange Act; and (iv) the Confidential
Offering Memorandum of the Company dated March 1998 regarding the proposed
issuance of the Notes. The financial statements referred to in the preceding
sentence (i) fairly present the financial condition of the Company and its
Subsidiaries as of the respective dates thereof and the results of the
operations of the Company and its Subsidiaries for such periods and have been
prepared in accordance with generally accepted accounting principles
consistently applied.
(b) Since February 28, 1998 there has been no material adverse
change in the assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects of the Company.
(c) Neither the Company nor any of the Subsidiaries is aware of any
material liabilities, contingent or otherwise, of the Company or the
Subsidiaries that have not been disclosed in the financial statements referred
to in Section 4.6(a) above or otherwise disclosed in the Disclosure Material
other than liabilities arising in the ordinary course of business since February
28, 1998 of the same nature shown on the balance sheet as of that date.
(d) The financial projections included in the Disclosure Material
conform with the internal operating forecasts of the Company and its
Subsidiaries, are mathematically accurate, were based on assumptions that the
Company in good faith believed to have been reasonable when made and have been
prepared in good faith.
(e) None of the Disclosure Material contained as of its date or
contains on the date hereof an untrue statement of a material fact or omitted or
omits to state any material fact necessary in order to make the statements made,
in light of the circumstances under which they were and are made, not
misleading;
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<PAGE>
(f) There is no fact known to the Company or any of the Subsidiaries
which is not in the Disclosure Material which could reasonably be expected to
have a Material Adverse Effect.
4.7. Litigation. Except as set forth in the Disclosure Schedule,
----------
there is no action, suit, proceeding, investigation or claim pending or, to the
knowledge of the Company or the Subsidiaries, threatened in law, equity or
otherwise before any court, administrative agency or arbitrator which either (i)
questions the validity of the Purchase Agreement, the Notes, the Warrants or the
Shares or any action taken or to be taken pursuant hereto or thereto or (ii)
could reasonably be expected to have a Material Adverse Effect.
4.8. Taxes. The Company and each Subsidiary has filed all federal,
-----
state, local and other tax returns and reports, and any other material returns
and reports with any governmental authorities (federal, state or local),
required to be filed by it. The Company and each Subsidiary has paid or caused
to be paid all taxes (including interest and penalties) that are due and
payable, except those which are being contested by it in good faith by
appropriate proceedings and in respect of which adequate reserves are being
maintained on its books in accordance with generally accepted accounting
principles consistently applied. Neither the Company nor any Subsidiary has any
material liabilities for taxes other than those incurred in the ordinary course
of business and in respect of which adequate reserves are being maintained by it
in accordance with generally accepted accounting principles consistently
applied.
4.9. ERISA. The Company and each Subsidiary is in compliance in all
-----
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and interpretations
thereunder (collectively "ERISA"). Neither the Company nor any Subsidiary has
-----
engaged in any "prohibited transaction" which would subject it to a tax or
penalty on prohibited transactions imposed by ERISA or by the Code. With respect
to each such plan (other than any multi-employer plan) that is intended to meet
the qualification requirements of Section 401(a) of ERISA, all amendments have
been adopted and all other steps have been taken that are required to have been
adopted or taken as of the date hereof in order to maintain the continuing
qualified status of such plan, and the continuing exemption of any trust funding
or forming part of such plan, from the date of establishment of such plan to the
date hereof. No liability to the Pension Benefit Guaranty Corporation has been
or is expected to be incurred with respect to any such plan. There has been no
"reportable event", as defined in ERISA, with respect to any such plan, and no
event or condition exists which presents a material risk of termination of any
such plan by the Pension Benefit Guaranty Corporation.
4.10. Legal Compliance.
----------------
(a) The Company and each Subsidiary has complied with all applicable
laws, rules, regulations, orders, licenses, judgments, writs, injunctions,
decrees or demands, except to the extent that failure to comply would not have a
Material Adverse Effect.
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<PAGE>
(b) There are no adverse orders, judgments, writs, injunctions,
decrees or demands of any court or administrative body, domestic or foreign, or
of any other governmental agency or instrumentality, domestic or foreign,
outstanding against the Company or any Subsidiary.
4.11. Permits, Licenses and Approvals. The Company and each
-------------------------------
Subsidiary possesses such franchises, licenses, permits, consents, approvals and
other authority (governmental or otherwise) from any Person as are necessary for
the conduct of its business as now being conducted and (to the best of the
knowledge of the Company and its Subsidiaries, the Company and its Subsidiaries
will be able to obtain such franchises, licenses, permits, consents, approvals
and other authority (governmental or otherwise) as may be necessary for the
conduct of its business as proposed to be conducted) and none is in default in
any material respects under any of such franchises, licenses, permits, consents,
approvals or other authority, except for (i) any failures to possess a
franchise, license, permit, consent, approval or other authority or (ii) any
such defaults which (in the case of clause (i) or (ii)) do not and will not
(individually or in the aggregate) have a Material Adverse Effect.
4.12. Patents, Trademarks and Other Rights. The Company and each
------------------------------------
Subsidiary possesses all patents, patent rights, trademarks, trademark rights,
trade names, and trade name rights (each of which is listed on the Disclosure
Schedule) and copyrights as are necessary to conduct its business as now being
conducted and as proposed to be conducted, except for any failures to possess a
patent, patent right, trademark, trademark right, trade name, trade name right
or copyright which failures (individually or in the aggregate) do not and could
not reasonably be expected to have a Material Adverse Effect. To the best of
the knowledge of the Company and its Subsidiaries, the activities and conduct of
business by the Company and each Subsidiary do not conflict with or infringe
upon any intellectual property rights of others, and neither the Company nor any
Subsidiary has received any notice that any such claim of conflict or
infringement has been asserted by any Person.
4.13. Status Under Certain Statutes. Neither the Company nor any
-----------------------------
Subsidiary is: (i) a "public utility company" or a "holding company", or an
"affiliate" or a "subsidiary company" of a "holding company", or an "affiliate"
of such a "subsidiary company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, (ii) a "public utility" as defined in
the Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person", as such terms are defined in the Investment Company Act of 1940, as
amended.
4.14. Key Employees. The Company and each Subsidiary has good
-------------
relationships with its employees and has not had and does not expect any
substantial labor problems. Neither the Company nor any Subsidiary has any
knowledge as to any intentions of any key employee or any key group of employees
to leave the employ of the Company or any Subsidiary.
-20-
<PAGE>
4.15. Properties. Except as set forth on the Disclosure Schedule,
----------
the Company and each Subsidiary has good and marketable title to its real
property, all of which is described on the Disclosure Schedule, and good title
to or a valid leasehold interest in, each of its other properties. Certain real
property used by the Company or the Subsidiaries in the conduct of their
respective businesses is held under lease (as identified on the Disclosure
Schedule), and neither the Company nor any Subsidiary is aware of any pending or
threatened claim or action by any lessor of any such property to terminate any
such lease. None of the properties owned or leased by the Company or any
Subsidiary is subject to any Liens, which might materially and adversely affect
the assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company on a consolidated
basis.
4.16. Suppliers and Customers.
-----------------------
(a) (i) To the best of the Company's knowledge, the Company and
each Subsidiary has adequate sources of supply for its business as currently
conducted and as proposed to be conducted, (ii) each has satisfactory
relationships with all of its material sources of supply of goods and services
and (iii) each does not anticipate any material problem with any such material
sources of supply.
(b) To the best of the Company's knowledge, the Company and each
Subsidiary has satisfactory relationships with all of its material customers and
each does not anticipate any material problems with any of them.
(c) Neither the Company nor any Subsidiary has any knowledge that
the customer base of the Company and its Subsidiaries might materially decrease.
4.17. Environmental Compliance.
------------------------
(a) To the best of the knowledge of the Company and its
Subsidiaries, there is no Hazardous Material about or in, in material violation
of law, any real property owned or leased by the Company or any Subsidiary.
(b) To the best of the knowledge of the Company and its
Subsidiaries, there is no (and has not been any) off-site disposal or on-site
disposal at any locations currently or formerly owned or occupied by the Company
or any Subsidiary as a result of which disposal there would exist a risk that
the Company or any Subsidiary would incur a material liability (determined on a
consolidated basis) or obligation under federal, state or local environmental or
other laws, regulations or ordinances.
(c) To the best of the knowledge of the Company and its
Subsidiaries, neither the Company nor any Subsidiary nor any prior or present
owner, operator, tenant, subtenant or invitee of any of the real property
(including improvements) currently or formerly owned or occupied by the Company
or any Subsidiary has:
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<PAGE>
(i) used, installed, stored, spilled, released, transported,
disposed of or discharged any Hazardous Material upon, into, beneath, from
or affecting such real property (including improvements) in violation of
applicable law, or
(ii) received any verbal or written notice, citation, subpoena,
summons, complaint or other correspondence or communication from any person
with respect to the presence of Hazardous Material upon, into, beneath, or
emanating from or affecting any of the real property (including
improvements) currently or formerly owned or occupied by the Company or any
Subsidiary which (in case of clause (i) and/or (ii)) would (individually or
in the aggregate) result in a liability or obligation on the part of the
Company or any Subsidiary, unless such liability or obligation would not
have a material adverse effect on the assets, properties, liabilities,
business, affairs, results of operation, condition (financial or otherwise)
or prospects of the Company on a consolidated basis.
(d) To the best of the knowledge of the Company and its
Subsidiaries, there has been no intentional or unintentional, gradual or sudden,
release, disposal or discharge upon, into or beneath the real property
(including improvements) currently or formerly owned or occupied by the Company
or any Subsidiary, that has caused or is causing soil or groundwater
contamination which under applicable environmental laws, regulations or
ordinances requires investigation or remediation or otherwise creates a material
liability or obligation (determined on a consolidated basis) on the part of the
Company or any Subsidiary.
(e) The representations and warranties set forth in this Section
4.17 are made to the knowledge of the Company without inquiry.
4.18. Indebtedness. The Disclosure Schedule sets forth (i) the amount
------------
of all Indebtedness of the Company or any Subsidiary outstanding on the date of
this Agreement, (ii) any Lien with respect to such Indebtedness and (iii) a
brief description of each instrument or agreement governing such Indebtedness.
The Company has delivered to the Purchaser a complete and correct copy of each
such instrument or agreement (including all amendments, supplements or
modifications thereto). No default in payment or to the knowledge of the
Company any other material default exists with respect to or under any such
Indebtedness or any instrument or agreement relating thereto.
4.19. Disaster. Neither the business nor the properties of the
--------
Company or its Subsidiaries is currently affected (or has been affected at any
time since February 28, 1998) by any fire, explosion, accident, strike, lockout
or other dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other casualty (whether or not covered by insurance), which
could reasonably be expected to have a Material Adverse Effect.
4.20. No Burdensome Agreements. To the best of the knowledge of the
------------------------
Company and its Subsidiaries, neither the Company nor its Subsidiaries is a
party to, or bound by, any commitment, contract or agreement, which commitment,
contract or agreement, when taken
-22-
<PAGE>
as a whole, materially adversely affects, or in the future would reasonably be
expected to materially adversely affect, the assets, properties, business,
affairs, results of operations, condition (financial or otherwise) or prospects
of the Company on a consolidated basis.
4.21. Offering of Notes and Warrants. Neither the Company, nor any
------------------------------
Subsidiary, nor any agent or other Person acting on its behalf has, directly or
indirectly, (i) offered any of the Notes, Warrants or any similar security of
the Company (A) by any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) or (B) for sale to
or solicited offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any Person other than the Purchaser and
certain institutional investors each of which the Company reasonably believed
was an "accredited investor" within the meaning of Regulation D under the
Securities Act or (ii) done or caused to be done (or has omitted to do or to
cause to be done) any act which act (or which omission) would result in bringing
the issuance or sale of the Notes, Warrants or Shares within the provisions of
Section 5 of the Securities Act.
SECTION 5. REPRESENTATIONS AND COVENANTS OF THE PURCHASER
(a) The Purchaser hereby makes the representations and warranties to
the Company contained in this Section 5(a), as of the date hereof and as of the
Closing Date hereunder. The Purchaser has all requisite power, authority and
legal right to execute, deliver, enter into, consummate and perform this
Purchase Agreement. The execution, delivery and performance of this Purchase
Agreement by the Purchaser have been duly authorized by all required partnership
actions. The Purchaser has duly executed and delivered this Purchase Agreement,
and this Purchase Agreement constitutes the legal, valid and binding obligation
of the Purchaser, enforceable against the Purchaser in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to the rights of creditors generally.
(b) The Purchaser hereby represents to the Company (as of the date
hereof and as of the Closing Date hereunder) that the Purchaser is capable of
evaluating the risk of its investment in the Notes, the Warrants and the Shares
being purchased by it and is able to bear the economic risk of such investment,
that it is purchasing the Notes, the Warrants and the Shares to be purchased by
it for its own account, that it understands that the Notes, the Warrants and the
Shares are "restricted securities" as such term is used in the Securities Act
and therefore cannot be resold unless they are registered under the Securities
Act or an exemption from registration is available, and that the Notes and
Warrants are being purchased by the Purchaser for investment and not with a
present view to any distribution thereof in violation of applicable securities
laws. It is understood that the disposition of the Purchaser's property shall
at all times be within the Purchaser's control. If the Purchaser should in the
future decide to dispose of any of its Notes, Warrants or Shares, it is
understood that it may do so but only in Authorized Denominations (in the case
of the Notes) and in compliance with the Securities Act, applicable securities
laws and
-23-
<PAGE>
this Purchase Agreement. The Purchaser hereby represents to the Company that the
Purchaser is an "accredited investor" as defined in Rule 501(a) under the
Securities Act.
SECTION 6. CONVERSION
6.1. Conversion.
----------
(a) The holder of a Note shall have the right, at the option of such
holder, at any time and from time to time to convert, subject to the terms and
provisions of this Section 6, the unpaid principal amount of the Note or any
portion thereof, and any accrued and unpaid interest on such Note, into fully
paid and non-assessable Shares. Such conversion of Notes to Shares shall be
made at an amount per Share (of principal of such Notes and/or of accrued and
unpaid interest if specified by the holder) which is equal to the then current
conversion price, as further described below. Every Note shall continue to be
convertible, in whole or in part, (i) even though the Company or a holder may
have given notice of prepayment with respect to such Note or any part thereof
pursuant to Section 7 hereof, so long as such Note and the holder's election to
convert shall have been delivered to the Company pursuant to Section 6.2(a)
hereof on or prior to the date fixed for such prepayment and (ii) whether or not
a mandatory, optional or special optional prepayment is due on any Note on any
date following such conversion. In the event that any holder of a Note is
required to file notice of the acquisition of Shares under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as heretofore or hereafter amended (the "HSR
Act"), such election may state that it is conditional upon the expiration or
early termination of the waiting period under the HSR Act.
(b) For convenience, the conversion pursuant to this Section 6 of
all or a portion of the principal amount of a Note (and/or of accrued and unpaid
interest if elected by the holder) into Shares is herein sometimes referred to
as the "conversion" of the Note.
----------
6.2. Mechanics of Conversion.
-----------------------
(a) Surrender, Election and Payment. The then unpaid principal
-------------------------------
amount of each Note (and/or any accrued and unpaid interest on such Note) may be
converted by the holder thereof, in whole or in part, during normal business
hours on any Business Day by surrender of the Note, accompanied by written
evidence of the holder's election to convert the Note or portion thereof, to the
Company at its office designated pursuant to Section 8.7 hereof (or, if such
conversion is in connection with an underwritten public offering of Shares, at
the location at which the underwriting agreement requires that such Shares be
delivered). Payment of the conversion price for the Shares specified in such
election shall be made by applying an aggregate amount of principal of Notes
and/or, if elected by the holder, of accrued and unpaid interest equal to the
amount obtained by multiplying (i) the number of Shares specified in such
election by (ii) the then current conversion price. Such holder shall thereupon
be entitled to receive the number of Shares specified in such election (plus
cash in lieu of any fractional share as provided in Section 6.2(c) hereof).
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<PAGE>
(b) Effective Date. Each conversion of a Note pursuant to Section
--------------
6.2(a) hereof shall be deemed to have been effected immediately prior to the
close of business on the Business Day on which such Note shall have been
surrendered to the Company as provided in Section 6.2(a) hereof (except that if
such conversion is in connection with an underwritten public offering of Shares,
then such conversion shall be deemed to have been effected upon such surrender),
and such conversion shall be at the current conversion price in effect at such
time. On each such day that the conversion of a Note is deemed effected, the
person or persons in whose name or names any certificate or certificates for
Shares are issuable upon such conversion, as provided in Section 6.2(c) hereof,
shall be deemed to have become the holder or holders of record thereof.
Notwithstanding the foregoing, if conversion is conditional upon the expiration
or earlier termination of the waiting period under the HSR Act, the person shall
not be deemed the holder unless and until such waiting period shall have
terminated or expired.
(c) Share Certificates and Cash for Fractional Shares. As promptly as
-------------------------------------------------
practicable after the conversion of a Note, in whole or in part, and in any
event within five (5) Business Days thereafter (unless such conversion is in
connection with an underwritten public offering of Shares, in which event
concurrently with such conversion), the Company at its expense (including the
payment by it of any applicable issue, stamp or other taxes, other than any
income taxes) will cause to be issued in the name of and delivered to the holder
thereof or, subject to Section 16 hereof, as such holder may direct, a
certificate or certificates for the number of Shares to which such holder shall
be entitled upon such conversion plus, in lieu of any fractional share to which
such holder would otherwise be entitled, cash in an amount equal to the same
fraction of the Market Price per Share (determined in accordance with Section
6.4(g) hereof) on the Business Day next preceding the date of such conversion.
(d) Acknowledgment of Obligation. The Company will, at the time of or
----------------------------
at any time after each conversion of a Note, upon the request of the holder
thereof or of any Shares issued upon such conversion, acknowledge in writing its
continuing obligation to afford to such holder all rights (including, without
limitation, any rights to registration of any such Shares pursuant to this
Agreement) to which such holder shall continue to be entitled under this
Agreement and the Notes; provided that if any such holder shall fail to make any
--------
such request, the failure shall not affect the continuing obligation of the
Company to afford such rights to such holder.
(e) Payment of Accrued Interest. Within three (3) Business Days after
---------------------------
receipt of any Note and an election to convert all or a portion of the principal
amount of such Note under Section 6.2(a) hereof, the Company will pay to the
holder of such Note any unpaid interest, accrued to the date of conversion of
such Note, on the principal amount so converted, except to the extent that the
amount of such interest has also been converted into Shares.
(f) Minimum Amount of Conversion. Each conversion of a Note or Notes
----------------------------
by a holder shall involve the conversion of at least $100,000 aggregate
principal amount of Notes or, if less, the total aggregate principal amount of
Notes then held by such holder.
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<PAGE>
6.3. Current Conversion Price. The term "conversion price" shall mean
------------------------ ----------------
initially $25.03 per Share, subject to adjustment as set forth in Section 6.4
hereof. The term "current conversion price" as used herein shall mean the
------------------------
conversion price, as the same may be adjusted from time to time as hereinafter
provided, in effect at any given time. In determining the current conversion
price, the result shall be expressed to the nearest $0.0001, but any such lesser
amount shall be carried forward and shall be considered at the time of (and
together with) the next subsequent adjustment which, together with any
adjustments to be carried forward, shall amount to $0.0001 per Share or more.
6.4. Adjustment of Conversion Price. The conversion price shall be
------------------------------
subject to adjustment, from time to time, as follows:
(a) Adjustments for Stock Dividends, Recapitalizations, Etc. In case
--------------------------------------------------------
the Company shall, after the Closing Date, (i) pay a stock dividend or make a
distribution (on or in respect of its Common Stock) in shares of its Common
Stock, (ii) subdivide the outstanding shares of its Common Stock, (iii) combine
the outstanding shares of its Common Stock into a smaller number of shares, or
(iv) issue by reclassification of shares of its Common Stock, any shares of
capital stock of the Company, then, in any such case, the current conversion
price in effect immediately prior to such action shall be adjusted to a price
such that if the holder of a Note were to convert such Note in full immediately
after such action, such holder would be entitled to receive the number of shares
of capital stock of the Company which he would have owned immediately following
such action had such Note been converted immediately prior thereto (with any
record date requirement being deemed to have been satisfied), and, in any such
case, such conversion price shall thereafter be subject to further adjustments
under this Section 6. An adjustment made pursuant to this subsection (a) shall
become effective retroactively immediately after the record date in the case of
a dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(b) Adjustments for Certain Other Distributions. In case the Company
-------------------------------------------
shall, after the Closing Date, fix a record date for the making of a
distribution to holders of its Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of (i) assets, (ii) evidences of indebtedness or other
securities (except for its Common Stock) of the Company or of any entity other
than the Company or (iii) subscription rights, options or warrants to purchase
any of the foregoing assets or securities, whether or not such rights, options
or warrants are immediately exercisable (all such distributions referred to in
clauses (i), (ii) and (iii) being hereinafter collectively referred to as
"Distributions on Common Stock"), then the current conversion price then in
- ------------------------------
effect prior to such action shall be adjusted to subtract therefrom the fair
value of such assets, evidences of indebtedness or subscription rights, options
or warrants so distributed allocable to one share of Common Stock, as determined
in good faith by the Company's Board of Directors.
(c) Adjustments for Issuances of Additional Stock. Subject to the
---------------------------------------------
exceptions referred to in Section 6.4(e) hereof, in case the Company shall at
any time or from time to time
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<PAGE>
after the Closing Date issue (in a transaction to which Section 6.4(a) or 6.4(b)
is not applicable) any additional shares of the Company's Common Stock
("Additional Common Stock"), for a consideration per share either (i) less than
-----------------------
the then current Market Price per share of the Company's Common Stock
(determined as provided in Section 6.4(g) hereof) immediately prior to the
issuance of such Additional Common Stock, or (ii) without consideration, then
(in the case of either clause (i) or (ii)), and thereafter successively upon
each such issuance, the current conversion price shall forthwith be reduced to a
price equal to the price determined by multiplying such current conversion price
by a fraction, of which the numerator shall be (i) the number of shares of the
Company's Common Stock outstanding immediately prior to such issuance (on a
fully diluted basis) plus (ii) the number of shares of the Company's Common
Stock which the aggregate amount of consideration, if any, received by the
Company upon issuance of the Additional Common Stock, would purchase at the then
current Market Price per share of the Company's Common Stock, and (2) the
denominator shall be (i) the number of shares of the Company's Common Stock
outstanding immediately prior to such issuance (on a fully diluted basis) plus
(ii) the number of shares of Additional Common Stock, provided, however, that
-------- -------
such adjustment shall be made only if such adjustment results in a current
conversion price less than the current conversion price in effect immediately
prior to the issuance of such Additional Common Stock.
(d) Certain Rules in Applying the Adjustment for Additional Stock
-------------------------------------------------------------
Issuances. For purposes of any adjustment as provided in Section 6.4(c) hereof,
- ---------
the following provisions shall also be applicable:
(i) Cash Consideration. In case of the issuance of Additional Common
------------------
Stock for cash, the consideration received by the Company therefor shall be
deemed to be the net cash proceeds received by the Company for such
Additional Common Stock after deducting any commissions or other expenses
paid or incurred by the Company for any underwriting of, or otherwise in
connection with the issuance of, such Additional Common Stock.
(ii) Non-Cash Consideration. In case of the issuance of Additional
----------------------
Common Stock for a consideration other than cash, or a consideration a part
of which shall be other than cash, the amount of the consideration other
than cash so received or to be received by the Company shall be deemed to
be the value of such consideration at the time of its receipt by the
Company as determined in good faith by the Board of Directors of the
Company, except that where the non-cash consideration consists of the
cancellation, surrender or exchange of outstanding obligations of the
Company (or where such obligations are otherwise converted into shares of
the Company's Common Stock), the value of the non-cash consideration shall
be deemed to be the principal amount of the obligations canceled,
surrendered, satisfied, exchanged or converted. If the Company receives
consideration, part or all of which consists of publicly traded securities
(i.e., in lieu of cash), the value of such non-cash consideration shall be
----
the aggregate market value
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<PAGE>
of such securities (based on the latest reported sale price regular way) as
of the close of the day immediately preceding the date of their receipt by
the Company.
(iii) Options, Warrants, Convertibles, Etc. In case of the issuance,
------------------------------------
whether by distribution or sale to holders of its Common Stock or to
others, by the Company of (i) any security (other than the Notes) that is
convertible into Common Stock or (ii) any rights, options or warrants to
purchase the Company's Common Stock (other than the Warrants and except as
stated in Section 6.4(e) hereof), if inclusion thereof in calculating
adjustments under this Section 6.4 would result in a current conversion
price lower than if excluded, the Company shall be deemed to have issued,
for the consideration described below, the number of shares of the
Company's Common Stock into which such convertible security may be
converted when first convertible, or the number of shares of the Company's
Common Stock deliverable upon the exercise of such rights, options or
warrants when first exercisable, as the case may be (and such shares shall
be deemed to be Additional Common Stock for purposes of Section 6.4(c)
hereof). The consideration deemed to be received by the Company at the time
of the issuance of such convertible securities or such rights, options or
warrants shall be the consideration so received determined as provided in
Section 6.4(d)(i) and (ii) hereof after deducting any commissions or other
expenses paid or incurred by the Company for any underwriting of, or
otherwise in connection with, the issuance of such convertible securities
or rights, options or warrants, plus (x) any consideration or adjustment
payment to be received by the Company in connection with such conversion
or, as applicable, (y) the aggregate price at which shares of the Company's
Common Stock are to be delivered upon the exercise of such rights, options
or warrants when first exercisable (or, if no price is specified and such
shares are to be delivered at an option price related to the market value
of the subject Common Stock, an aggregate option price bearing the same
relation to the market value of the subject Common Stock at the time such
rights, options or warrants were granted). If, subsequently, (1) such
number of shares into which such convertible security is convertible, or
which are deliverable upon the exercise of such rights, options or
warrants, is increased or (2) the conversion or exercise price of such
convertible security, rights, options or warrants is decreased, then the
calculations under the preceding two sentences (and any resulting
adjustment to the current conversion price under Section 6.4(c) hereof)
with respect to such convertible security, rights, options or warrants, as
the case may be, shall be recalculated as of the time of such issuance but
giving effect to such changes (but any such recalculation shall not result
in the current conversion price being higher than that which would be
calculated without regard to such issuance). On the expiration or
termination of such rights, options or warrants, or rights to convert, the
conversion price hereunder shall be readjusted (up or down as the case may
be) to such current conversion price as would have been obtained had the
adjustments made with respect to the issuance of such rights, options,
warrants or convertible securities been made upon the basis of the delivery
of only the number of shares of the Company's Common Stock actually
delivered upon the exercise of such rights, options or warrants or upon the
conversion of any such securities and at the actual exercise or conversion
prices (but any such recalculation shall
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<PAGE>
not result in the current conversion price being higher than that which
would be calculated without regard to such issuance).
(iv) Number of Shares Outstanding. The number of shares of the
----------------------------
Company's Common Stock as at the time outstanding shall exclude all shares
of the Company's Common Stock then owned or held by or for the account of
the Company or any Subsidiary but shall include the aggregate number of
shares of the Company's Common Stock at the time deliverable in respect of
the convertible securities, rights, options and warrants referred to in
Section 6.4(d)(iii) and 6.4(e) hereof; provided that to the extent that
--------
such rights, options, warrants or conversion privileges are not exercised,
such shares of the Company's Common Stock shall be deemed to be outstanding
only until the expiration dates of the rights, warrants, options or
conversion privileges or the prior cancellation thereof.
(e) Exclusions from the Adjustment for Additional Stock Issuances.
-------------------------------------------------------------
No adjustment of the current conversion price under Section 6.4(c) or 6.4(h)
hereof shall be made as a result of or in connection with:
(i) the issuance of Shares upon conversion of the Notes or exercise
of the Warrants or the issuance of the Notes and the Warrants;
(ii) the issuance of the Company's Common Stock to officers,
employees, directors and consultants of the Company or any Subsidiary, or
the grant to or exercise by any such persons of options to purchase Common
Stock of the Company, all (x) as part of incentive compensation for such
persons and (y) pursuant to the Company's stock option plans described on
the Disclosure Schedule or other incentive plans, in each case adopted by
the Company's Board of Directors, with approval by a majority of the
Company's independent directors, and approved by the Company's
stockholders; or
(iii) the issuance of the Company's Common Stock upon exercise of the
warrants and underwriters' warrants to purchase Common Stock described in
Section 4.2 hereof or on the Disclosure Schedule.
(f) Accountant's Certification. Whenever the current conversion
--------------------------
price is adjusted as provided in this Section 6.4, the Company will promptly
obtain a certificate of a firm of independent public accountants of recognized
national standing selected by the Board of Directors of the Company (who may be
the regular auditors of the Company) setting forth the current conversion price
as so adjusted, the computation of such adjustment and a brief statement of the
facts accounting for such adjustment, and will mail to the holders of the Notes
a copy of such certificate from such firm of independent public accountants.
(g) Determination of Market Price. For the purpose of any
-----------------------------
computation under this Agreement, the current "Market Price" per share of the
------------
Company's Common Stock on any
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<PAGE>
date shall be deemed to be the average of the daily closing prices for the
thirty (30) consecutive trading dates commencing forty five (45) trading days
before such date. The closing price for each day shall be the last reported sale
price regular way or, in case no such sale takes place on such day, the average
of the closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Company's Common Stock is listed or
admitted to trading or the Nasdaq National Market, or if the Company's Common
Stock is not listed or admitted to trading on any national securities exchange
or the Nasdaq National Market, the average of the highest reported bid and
lowest reported asked prices as furnished by the National Association of
Securities Dealers Inc., Automated Quotation System, or comparable system. If
the closing price cannot be so determined, then the closing price shall be
determined (x) by the written agreement of the Company and the holders of Notes
representing a majority of the Shares then obtainable from the conversion of
outstanding Notes, or (y) in the event that no such agreement is reached within
twenty (20) days after the event giving rise to the need to determine the
closing price, by the agreement of two arbitrators, one of whom shall be
selected by the Company and the other of whom shall be selected by the Majority
Noteholders.
(h) Antidilution Adjustments under Other Securities. Without limiting
-----------------------------------------------
any other rights available hereunder to the holders of Notes, if there is an
antidilution adjustment (x) under any security which is convertible into Common
Stock of the Company issued after the date hereof (except for the Notes and the
Warrants or securities described in Section 6.4(e)) or (y) under any right,
option or warrant to purchase Common Stock of the Company whether issued after
the date hereof which (in the case of clause (x) or (y)) results in a reduction
in the exercise or purchase price with respect to such security, right, option
or warrant or results in an increase in the number of shares obtainable under
such security, right, option or warrant, then an adjustment shall be made under
this Section 6.4(h) to the current conversion price hereunder. Any such
adjustment under this Section 6.4(h) shall be whichever of the following results
in a lower current conversion price: (A) a reduction in the current conversion
price equal to the percentage reduction in such exercise or purchase price with
respect to such security, right, option or warrant or (B) a reduction in the
current conversion price which will result in the same percentage increase in
the number of Shares available under this Section 6 as the percentage increase
in the number of shares available under such security, right, option or warrant.
Any such adjustment under this Section 6.4(h) shall only be made if it would
result in a lower current conversion price than that which would be determined
pursuant to any other antidilution adjustment otherwise required under this
Section 6 as a result of the event or circumstance which triggered the
adjustment to the security, right, option or warrant described in clause (x) or
(y) above (and if any such adjustment is so made under this Section 6.4(h), then
such other antidilution adjustment otherwise required under this Section 6 shall
not be made as a result of such event or circumstance).
(i) Other Adjustments. In case any event shall occur as to which any
-----------------
of the provisions of this Section 6.4 are not strictly applicable but the
failure to make any adjustment would not fairly protect the conversion rights
represented by the Notes in accordance with the essential intent and principles
of this Section 6.4, then, in each such case, the Company shall
-30-
<PAGE>
appoint a firm of independent public accountants of recognized national standing
selected by the Board of Directors of the Company (who may be the regular
auditors of the Company), which shall give their opinion upon the adjustment, if
any, on a basis consistent with the essential intent and principles established
in this Section 6.4, necessary to preserve, without dilution, the conversion
rights represented by the Notes. Upon receipt of such opinion, the Company will
promptly mail copies thereof to the holders of the Notes and shall make the
adjustments described therein.
(j) Meaning of "Issuance". References in this Agreement to
---------------------
"issuances" of stock by the Company include issuances by the Company of
previously unissued shares and issuances or other transfers by the Company of
treasury stock.
6.5. Company's Consolidation or Merger. Without limiting Section 9
---------------------------------
hereof, if the Company shall at any time consolidate with or merge with or into
another Person or the Company shall sell, transfer or lease all or substantially
all of its assets, or the Company shall change its Common Stock into property or
other securities, then, in any such case, the holder of a Note shall thereupon
(and thereafter) be entitled to receive, upon the conversion of such Note, in
whole or in part, the securities or other property to which (and upon the same
terms and with the same rights as) a holder of the number of Shares deliverable
upon conversion of such Note would have been entitled if such conversion had
occurred immediately prior to such consolidation or merger, such sale of assets
or such change (with any record date requirement being deemed to have been
satisfied), and such conversion rights shall thereafter continue to be subject
to further adjustments under Section 6.4 hereof. The Company shall take such
steps in connection with such consolidation or merger, such sale of assets or
such change as may be necessary to assure such holder that the provisions of the
Notes and the Purchase Agreement (including, without limitation, Section 17
hereof) shall thereafter be applicable in relation to any securities or property
thereafter deliverable upon the conversion of the Notes, including, but not
limited to, obtaining a written obligation to supply such securities or property
upon such conversion and to be so bound by the Notes.
6.6. Notice to Holders of Notes. In case at any time
--------------------------
(a) the Company shall take any action which would require an
adjustment in the current conversion price pursuant to Section 6.4;
(b) there shall be any reorganization, reclassification or change of
the Company's Common Stock (other than a change in par value or from par value
to no par value or from no par value to par value), or any consolidation or
merger to which the Company is a party and for which approval of any
stockholders of the Company is required, or any sale, transfer or lease of all
or substantially all of the assets of the Company; or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
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<PAGE>
then, in any one or more of such cases, the Company shall give written notice to
the holders of the Notes, not less than twenty (20) days before any record date
or other date set for definitive action, of the date on which such action,
distribution, reorganization, reclassification, change, sale, transfer, lease,
consolidation, merger, dissolution, liquidation or winding-up shall take place,
as the case may be. Such notice shall also set forth such facts as shall
indicate the effect of any such action (to the extent such effect may be known
at the date of such notice) on the current conversion price and the kind and
amount of the shares and other securities and property deliverable upon
conversion of the Notes. Such notice shall also specify any date as of which the
holders of the Common Stock of record shall be entitled to exchange their Common
Stock for securities or other property deliverable upon any such reorganization,
reclassification, change, sale, transfer, lease, consolidation, merger,
dissolution, liquidation or winding-up, as the case may be.
SECTION 7. PREPAYMENTS AND REPAYMENTS
7.1. Mandatory Prepayments. The Company agrees that it shall prepay,
---------------------
at a price equal to the principal amount thereof, without premium, $3,000,000
aggregate principal amount of Notes on each of April 30 and October 31,
beginning April 30, 2005, to and including October 31, 2006, and shall pay in
full the remaining principal amount of all Notes then outstanding on the
maturity date of April 30, 2007. Upon any prepayment of the principal amount of
any Notes under this Section 7.1, the Company shall also pay the holder or
holders of any such Notes any accrued and unpaid interest to the date of
prepayment (or repayment). If, on any such prepayment date, the aggregate
principal amount of the Notes outstanding is less than the amount required to be
prepaid on such date, the Company shall prepay all Notes in full. The aggregate
principal amount of each prepayment of Notes pursuant to this Section 7.1 shall
be allocated among all Notes at the time outstanding, in proportion, as nearly
as practicable, to the respective unpaid principal amounts of such Notes. The
Company's obligation to prepay the Notes under this Section 7.1 in the amounts
required by this Section 7.1 shall be fixed until there is no longer any
remaining aggregate principal amount of outstanding Notes, and the Company shall
not receive any credit or offset with respect to such obligation as a result of
any prepayment under Section 7.2, hereof or as a result of any partial
conversion under Section 6 hereof (so that any such prepayments under Section
7.2 or any such partial conversions are applied to the principal amount of Notes
in inverse order of maturity). The Company shall give the holders of Notes
written notice of each scheduled prepayment under this Section 7.1(a) at least
thirty (30) and not more than sixty (60) days prior to the scheduled prepayment
date for such prepayment.
7.2. Optional Prepayments.
--------------------
(a) Subject to the other provisions of this Section 7.2, (i) at any
time on or after April 30, 2000, the Company may prepay all or part of the
principal amount of outstanding Notes at a price equal to (1) the aggregate
principal amount of the Notes to be prepaid, plus (2) all accrued and unpaid
interest on the principal amount of the Notes to be prepaid, plus (3) a
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<PAGE>
premium (the "Prepayment Premium") equal to the following applicable percentage
------------------
of the principal amount being prepaid (based upon the period in which the
prepayment is made):
<TABLE>
<CAPTION>
Period in which Prepayment is Made Percentage
- ---------------------------------- -----------
<S> <C>
April 30, 2000 through April 29, 2001 8%
April 30, 2001 through April 29, 2002 6%
April 30, 2002 through April 29, 2003 4%
April 30, 2003 through April 29, 2004 2%
On or after April 30, 2004 0%
</TABLE>
Notwithstanding the foregoing, no Prepayment Premium shall be payable under this
Section 7.2(a) if the closing price (determined in accordance with Section
6.4(g) hereof) of the Common Stock is at least $31.29 on each trading day for
any period of thirty (30) consecutive trading days commencing on or after April
30, 2000.
(b) The right of the Company to prepay Notes pursuant to this Section
7.2 shall be conditioned upon its giving notice of prepayment, signed by its
President and Treasurer, to the holders of Notes not less than thirty (30) days
and not more than sixty (60) days prior to the date upon which the prepayment is
to be made specifying (i) the registered holder of each Note to be prepaid, (ii)
the aggregate principal amount being prepaid, (iii) the date of such prepayment,
(iv) the accrued and unpaid interest (to but not including the date upon which
the prepayment is to be made) and (v) the calculation of the Prepayment Premium
with respect to such prepayment; provided, however, in order for such notice to
--------
be effective and to be deemed given, it must include a statement from the
Company that either no consents from any holders of any Senior Indebtedness are
necessary for any such prepayment or all necessary consents have been obtained
and without such statement such notice shall not be effective and shall not be
deemed to be given and the Company may not prepay the Notes in accordance with
such notice under this Section 7.2, and neither any such statement nor this
proviso shall, in and of itself, impose any obligation or liability on any
holder of Notes relative to any holder of Senior Indebtedness. Notice of
prepayment under this Section 7.2 having been so given, the aggregate principal
amount of the Notes so specified in such notice, all accrued and unpaid interest
thereon and the Prepayment Premium on such aggregate principal amount, shall all
become due and payable on the specified prepayment date.
(c) If any prepayment under Section 7.1 or this Section 7.2 does not
repay in full the aggregate principal amount of all Notes then outstanding, then
the aggregate amount of such prepayment of the principal amount of Notes shall
be allocated among all Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts of such Notes.
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<PAGE>
7.3 Mandatory Repayment Upon Change of Control Event. In the event
------------------------------------------------
of the occurrence of a Change of Control Event, the Company shall notify the
holders of the Notes as soon as practicable and in any event within five (5)
Business Days thereafter, and the holders of the Notes shall thereafter for a
period of sixty (60) days have the right to demand repayment of all or part of
the Notes by the Company at a price equal to the principal amount thereof plus
accrued interest to date of payment. Payment by the Company shall occur not
later than ten (10) days after receipt of notice demanding repayment.
7.4 Miscellaneous.
-------------
(a) Nothing in this Section 7 shall in any way limit or affect the
rights or remedies of a holder of Notes, or the covenants and obligations of the
Company, whether under Section 8, 9 or 14 or any other provision of this
Agreement.
(b) If any prepayment (or repayment) date under this Section 7 is not
a Business Day, such prepayment (or repayment) shall be made on the next
succeeding Business Day.
(c) Neither the Company nor any Subsidiary shall repurchase any
outstanding Notes unless the Company either (i) offers to purchase all then
outstanding Notes or (ii) offers to purchase Notes from the holders in
proportion to the respective unpaid principal amount of Notes held by each
holder. In any such repurchase by the Company, if all Notes are not being
repurchased, then the amount of Notes to be repurchased shall be allocated among
all Notes held by holders which accept the Company's repurchase offer so that
the Notes are repurchased from such holders in proportion to the respective
unpaid principal amount of Notes held by each such holder which accepts the
Company's offer (or in such other proportion as agreed by all such holders who
accept the Company's offer). Nothing in this Section 7.4(c) shall (i) obligate a
holder of Notes to accept the Company's repurchase offer or (ii) prevent the
Company from prepaying Notes in accordance with the terms of (and this Section
7.4(c) shall not apply to) Section 7.1 or Section 7.2 of this Purchase
Agreement.
SECTION 8. AFFIRMATIVE COVENANTS
The Company covenants and agrees as follows:
8.1 Use of Proceeds. The Company will use the net proceeds realized
---------------
from the sale of the Notes and the Warrants (i) to facilitate growth through
acquisition, including the acquisition of existing and build-to-suit wireless,
broadcasting, paging, ESMR and other towers and the acquisition of
infrastructure building and services companies related to the Company's core
business; and (ii) for general corporate purposes. No portion of such proceeds
will be used for the purpose, whether immediate, incidental or ultimate, of
buying or carrying, within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, as amended from time to time, any "margin stock"
as defined in said Regulation U, as amended from time to
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<PAGE>
time, or for the purpose of purchasing, carrying or trading in securities within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, as amended from time to time, or for the purpose of reducing or retiring
any indebtedness which both (i) was originally incurred to purchase any such
margin stock or other securities and (ii) was directly or indirectly secured by
such margin stock or other securities. None of the assets of the Company or any
Subsidiary includes any such "margin stock," and neither the Company nor any
Subsidiary has any present intention of acquiring any such "margin stock."
8.2 Financial Information.
---------------------
(a) The Company will maintain, and cause each Subsidiary to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in accordance
with generally accepted accounting principles consistently applied.
(b) The Company will deliver the following to each holder of a Note,
Warrant or Shares:
(i) as soon as practicable and in any event within one hundred twenty
(120) days after the close of each fiscal year of the Company, (x) a
Consolidated balance sheet of the Company and its Subsidiaries as of the
end of such fiscal year, (y) Consolidated statements of income and
Consolidated statements of changes in shareholders' equity and cash flows
for the Company and its Subsidiaries for such fiscal year (all in
reasonable detail) and, in the case of Consolidated financial statements,
comparative figures for the immediately preceding fiscal year, all such
balance sheets and statements to be in reasonable detail and certified
(without qualification as to the scope or manner of the audit) by Moss
Adams LLP or other independent public accountants of recognized national
standing selected by the Company and (z) in reasonable detail, management's
discussion and analysis of the results of operations and the financial
condition of the Company and its Subsidiaries as of the end of the year
covered by the financial statements;
(ii) as soon as practicable, and in any event within forty-five (45)
days after the close of each of the first three (3) fiscal quarters of the
Company, (x) the internally prepared Consolidated balance sheet of the
Company and its Subsidiaries as of the end of such fiscal quarter, (y)
Consolidated statements of income of changes in shareholders' equity and of
cash flows of the Company and its Subsidiaries for such fiscal quarter and
for the portion of the fiscal year then ended (all in reasonable detail)
and comparative figures for the same period in the preceding fiscal year
and (z) in reasonable detail, management's discussion and analysis of the
results of operations and the financial condition of the Company and its
Subsidiaries as of the end of the period covered by the financial
statements;
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<PAGE>
(iii) as soon as practicable, copies of any annual, special or interim
audit reports or management or comment letters with respect to the Company
or its Subsidiaries or their operations submitted to the Company by
independent public accountants;
(iv) soon as practicable, copies (x) of all financial statements,
proxy material or reports sent to the Company's or any Subsidiary's
stockholders, (y) of any public or press releases and (z) of all reports or
registration statements filed with the Commission pursuant to the
Securities Act or the Securities Exchange Act;
(v) as soon as practicable and without duplication of any of the
above items, any other materials furnished to holders of Senior
Indebtedness (including without limitation any compliance certificates
furnished in respect of such Senior Indebtedness); and
(vi) as soon as practicable, such other information, as may
reasonably be requested by a holder of Notes, regarding the assets,
properties, liabilities, business, affairs, results of operations or
condition (financial or otherwise) of the Company or any Subsidiary.
All such financial statements shall be prepared in accordance with generally
accepted accounting principles consistently applied (except for any change in
accounting principles specified in the accompanying certificate and except that
any interim financial statements may omit notes and may be subject to normal
year-end adjustments).
(c) Without limiting any other provisions of this Section 8.2, the
Company agrees that, if requested in writing by any holder of Notes, Warrants or
Shares, it will not deliver to such holder (until otherwise instructed by such
holder) (x) any non-public information or non-public materials regarding the
Company or any Subsidiary (whether such information or materials is described in
this Section 8.2 or otherwise) and (y) any information (whether or not included
in clause (x)) which such holder specifies that it does not want to receive.
8.3 Compliance Certificates. All financial statements delivered
-----------------------
pursuant to Section 8.2(b)(i) or (ii) shall be accompanied by a certificate of
the chief financial officer or the chief executive officer of the Company
stating that to the knowledge of the signer no Event of Default or Potential
Default exists, or, if any such Event of Default or Potential Default shall
exist, the nature and period of existence thereof. Each certificate of the chief
financial officer or the chief executive officer shall in addition state, if
there exists an Event of Default or a Potential Default, what the Company
proposes to do with respect thereto. Each certificate of the chief financial
officer or the chief executive officer accompanying financial statements
delivered pursuant to this Section 8.3 shall in addition set forth in reasonable
detail the computations necessary to establish compliance with Sections 9.1, 9.3
and 9.5 hereof.
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<PAGE>
8.4 Communication with Accountants. The Company (on behalf of itself
------------------------------
and each of its Subsidiaries) hereby authorizes the Purchaser to communicate
directly with the independent certified public accountants for the Company or
any Subsidiary and authorizes such accountants to disclose to the Purchaser any
and all financial statements and any other information of any kind that they may
have with respect to the assets, properties, liabilities, business, affairs,
results of operations, condition (financial or otherwise) or prospects of the
Company or any Subsidiary; provided that the Purchaser shall inform the Company
--------
in advance of any such communications by the Purchaser with such accountants and
shall give the Company a reasonable opportunity to participate in any
conversations between such accountants and the Purchaser and provided that such
communication is not more than once a year. The Company shall deliver a letter
addressed to such accountants instructing them to comply with the provisions of
this Section 8.4.
8.5 Inspection. At the request of one or more holders of at least
----------
$5,000,000 of Notes (not more than once in any calendar year unless a Potential
Default or Event of Default exists), the Company will permit such holder (or
holders) and any authorized representative of such holder (or holders) to visit
and inspect any of the properties of the Company and its Subsidiaries, to
examine their respective books and records and to discuss with their officers
their books and records and the assets, properties, liabilities, business,
affairs, results of operations or condition (financial or otherwise) of the
Company or any Subsidiary, all at such reasonable times and as often as may be
reasonably requested.
8.6 Maintenance of Existence, Properties and Franchises; Compliance
---------------------------------------------------------------
with Law; Taxes; Insurance. The Company will, and will cause each Subsidiary
- --------------------------
to:
(a) maintain their respective corporate existence, rights and other
franchises in full force and effect; provided that the Company may terminate the
--------
corporate existence of any Subsidiary, or permit the termination or abandonment
of rights or other franchises, if in the opinion of the Company it is no longer
in the Company's best interests to maintain such existence, rights or other
franchises and such termination or abandonment will not be prejudicial in any
material respect to the holders of the Notes;
(b) maintain their respective tangible assets in good repair, working
order and condition so far as reasonably necessary or advantageous to the proper
carrying on of their respective businesses;
(c) comply in all material respects with all applicable laws and with
all applicable orders, rules, rulings, certificates, licenses, regulations,
demands, judgments, writs, injunctions and decrees, the noncompliance with which
could reasonably be expected to have a Material Adverse Effect;
(d) pay promptly when due all taxes, fees, assessments and other
governmental charges imposed upon their respective properties, assets or income
and all claims or indebtedness
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<PAGE>
(including, without limitation, materialmen's, vendor's, workmen's and like
claims) which might become a Lien upon such properties or assets; provided that
--------
payment of any such tax, fee, assessment, charge, claim or indebtedness shall
not be necessary so long as it is being contested on good faith by appropriate
proceedings and failure to make such payment will not have a material adverse
effect on the assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects of the Company on a
consolidated basis; and
(e) keep insured, by financially sound and reputable insurers, all
their respective properties of a character customarily insured by entities
similarly situated, against loss or damage of the kinds and in amounts
customarily insured against by such entities and with such deductibles or
coinsurance as is customary.
8.7 Office for Payment, Exchange and Registration. So long as any of
---------------------------------------------
the Notes is outstanding, the Company will maintain an office or agency where
Notes may be presented for payment, exchange, conversion or registration of
transfer as provided in this Agreement. Such office or agency initially shall be
the office of the Company set forth in Section 20 hereof, which place may from
time to time be changed by notice to the holders of all Notes then outstanding.
8.8 Notices. The Company will give notice to all holders of Notes
-------
promptly after an executive officer, the treasurer or chief accounting officer
of the Company learns (other than by notice from all of such holders) of the
existence of any of the following:
(a) any Event of Default or any Potential Default;
(b) any default under any other Indebtedness (or under any indenture,
mortgage or other agreement relating to any Indebtedness) in excess of
$1,000,000 in respect of which the Company or any Subsidiary is liable;
(c) any action or proceeding which has been commenced or threatened
against the Company or any of its Subsidiaries and which, if adversely
determined, could reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the assets, properties, liabilities,
business, affairs, results of operations or condition (financial or otherwise)
of the Company on a consolidated basis or the ability of the Company to perform
its obligations under the Purchase Agreement or the Notes;
(d) any dispute which may exist between the Company or any of its
Subsidiaries and any governmental regulatory body which could reasonably be
expected to, individually or in the aggregate, materially adversely affect the
normal business operations of the Company or any of its Subsidiaries or the
assets, properties, liabilities, business, affairs, results of operations or
condition (financial or otherwise) of the Company on a consolidated basis or the
ability of the Company to perform its obligations under the Purchase Agreement
or the Notes; and
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<PAGE>
(e) any (i) "reportable event" (as such term is defined in Section
4043(b) of ERISA), (ii) "complete withdrawal" or "partial withdrawal" (within
the meaning of Sections 4203 and 4205 of ERISA) from a multi-employer plan (as
defined in Section 3(37) of ERISA) or (iii) "prohibited transaction" (as such
term is defined in Section 406 of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended) in connection with any employee benefit pension plan
(as defined in Section 3(2) of ERISA), maintained or contributed to (or required
to be maintained or contributed to) by the Company, any Subsidiary of the
Company or any other Person treated with the Company as a single employer
pursuant to Section 414(b), (c), (m) or (o) of the Code (including, without
limitation, any multi-employer plan), or any trust created thereunder, which in
the case of clause (i), (ii) or (iii) may, either individually or in the
aggregate, result in a liability which would materially adversely affect the
assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company on a consolidated
basis or the ability of the Company to perform its obligations under the
Purchase Agreement or the Notes.
Such notice (i) with respect to (a) or (b), shall specify the nature and period
of existence of any such Potential Default, Event of Default or other default
and what the Company proposes to do with respect thereto and (ii) with respect
to (c), (d) or (e), shall specify the nature of any such matter referred to in
such clause, what action the Company or any Subsidiary proposes to take with
respect thereto and what action any other relevant Person is taking or proposes
to take with respect thereto.
8.9 Payment of Dividends by Subsidiaries. The Company will cause its
------------------------------------
Subsidiaries to pay dividends or make other distributions or advances to the
Company, to the extent of funds legally available therefor and to the extent
permitted by the Revolving Credit Facility, in sufficient amounts and at
sufficient times to enable the Company to have sufficient earnings and funds to
pay on a timely basis all amounts due with respect to Senior Indebtedness and
the Notes and any other amounts due under this Agreement.
8.10 Board Representation. Upon written request, the Majority
--------------------
Noteholders shall have the right to nominate a person for election to the
Company's Board, and the Company will use its best efforts to facilitate the
election to the Company's Board of such person.
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<PAGE>
8.11 Environmental Matters.
---------------------
(a) The Company and each Subsidiary shall keep any property either
owned or occupied by the Company or any Subsidiary free and clear of any Liens
imposed for failure to comply with any environmental laws, regulations or
ordinances (each, an "Environmental Lien"), and the Company and each Subsidiary,
------------------
as the case may be, shall keep all such property in material compliance with all
environmental laws, regulations and ordinances; provided, however, the Company
-------- -------
or any Subsidiary shall have the right at its cost and expense, and acting in
good faith, to contest, object or appeal by appropriate legal proceeding the
validity of any Environmental Lien.
(b) The Company will defend, indemnify and hold harmless each current,
former and future holder of Notes, its employees, officers, directors,
stockholders, partners, agents, representatives and assigns, from and against
any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits and claims, joint or several, and any costs, disbursements and expenses
(including reasonable attorneys' fees and expenses and reasonable costs of
investigation) of whatever kind or nature, known or unknown, contingent or
otherwise, arising out of or in any way related to (i) the presence, disposal,
release, removal, discharge, storage or transportation of any Hazardous Material
upon, into, from or affecting any real property (including improvements) owned
or occupied (or formerly owned or occupied) by the Company or any Subsidiary;
and (ii) any judicial or administrative action, suit or proceeding, actual or
threatened, relating to Hazardous Material upon, in, from or affecting any real
property (including improvements) owned or occupied (or formerly owned or
occupied) by the Company or any Subsidiary; and (iii) any violation of any
environmental law, regulation or ordinance by the Company or any Subsidiary or
any of their agents, tenants, subtenants or invitees; and (iv) the imposition of
any Environmental Lien for the recovery of costs expended in the investigation,
study or remediation of any environmental liability of (or asserted against) the
Company or any Subsidiary. This Section 8.11(b) and Section 8.11(c) below shall
survive any payment, conversion or transfer of Notes and any termination of this
Agreement.
(c) To the extent that the Company or any Subsidiary is strictly
liable without regard to fault under any environmental law, regulation or
ordinance, the Company's obligation to the holders of Notes under any of the
indemnification provisions of this Purchase Agreement shall likewise be strict
without regard to fault with respect to the violation of any environmental law,
regulation or ordinance which results in any liability to any of the indemnified
persons referred to in Section 8.11(b) above.
8.12 Reservation of Shares. The Company shall at all times keep
---------------------
reserved, free from preemptive rights, out of its authorized Common Stock a
number of shares of Common Stock sufficient to provide for the exercise of the
rights of purchase represented by the conversion rights provided in Section 6
hereof and the exercise rights provided in the Warrants.
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<PAGE>
8.13 Listing of Shares. If any shares of the Company's Common Stock
-----------------
are listed on any national securities exchange, then the Company will take such
action as may be necessary, from time to time, to obtain approval for the
listing of all outstanding Shares on such exchange.
8.14 Securities Exchange Act Registration.
------------------------------------
(a) The Company will maintain effective a registration statement
(containing such information and documents as the Commission shall specify and
otherwise complying with the Securities Exchange Act), under Section 12(b) or
Section 12(g), whichever is applicable, of the Securities Exchange Act, with
respect to the Common Stock of the Company, and the Company will file on time
such information, documents and reports as the Commission may require or
prescribe for companies whose stock has been registered pursuant to such Section
12(b) or Section 12(g), whichever is applicable.
(b) The Company will, upon the request of any holder of Notes,
Warrants or Shares, make whatever other filings with the Commission, or
otherwise make generally available to the public such financial and other
information, as any such holder may deem reasonably necessary or desirable in
order to enable such holder to be permitted to sell Shares pursuant to the
provisions of Rule 144.
8.15 Delivery of Information for Rule 144A Transactions. If a holder
--------------------------------------------------
of Notes, Warrants or Shares proposes to transfer any such Notes, Warrants or
Shares pursuant to Rule 144A under the Securities Act (as in effect from time to
time), the Company agrees to provide (upon the request of such holder or the
prospective transferee) to such holder and (if requested) to the prospective
transferee any financial or other information concerning the Company and its
Subsidiaries which is required to be delivered to any transferee of such Notes,
Warrants or Shares pursuant to such Rule 144A.
SECTION 9. NEGATIVE COVENANTS
The Company further covenants and agrees as follows:
9.1 Net Worth. The Company will not permit its Consolidated Net
---------
Worth at any time to be less than the sum of (i) $10,000,000 and (ii) the
Available Fund.
9.2 Restricted Payments. Neither the Company nor any Subsidiary will
-------------------
declare or make or permit to be declared or made any Restricted Payment;
provided, however, that the Company may repurchase shares of its Common Stock
- -------- -------
(or repurchase options to purchase shares of its Common Stock) or pay (or
repurchase) stock appreciation rights granted by the Company, as long as each of
the following three conditions is satisfied: (i) such shares, options or stock
appreciation rights are outstanding under, and such repurchase or payment is
made pursuant to, the Company's incentive plans approved by its Board of
Directors with the concurrence of a
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<PAGE>
majority of the Company's independent directors, (ii) when such repurchase or
payment is made there exists no Event of Default or Potential Default, both
immediately before and immediately after giving effect to such Investment and
(iii) such repurchase or payment is permitted under the terms of any Senior
Indebtedness (and under any agreement under which any Senior Indebtedness is
outstanding).
9.3 Sale of Substantial Portion of Assets; Subsidiaries.
---------------------------------------------------
(a) Neither the Company nor any Subsidiary will sell, transfer, lease
or otherwise dispose of any assets to any Person (other than to the Company or
to a wholly-owned Subsidiary, other than leases of towers to operators and users
in the ordinary course of business, and other than assets consisting of
inventory being disposed of in the ordinary course of business and other than
assets which are, contemporaneously with such disposition (or within one hundred
eighty (180) days thereafter), being replaced with other substantially similar
(or improved) assets which are used by the Company or any Subsidiary for
substantially the same purpose as the assets being replaced) to the extent the
aggregate assets so sold, transferred, leased or disposed of during the twelve
(12) month period ending on such sale, transfer, lease or disposition (i) had an
aggregate book value of fifteen percent (15%) or more of the consolidated total
assets of the Company and its Subsidiaries at the end of the most recent fiscal
quarter preceding such sale, transfer, lease or disposition or (ii) accounted
for fifteen percent (15%) or more of the consolidated revenues of the Company
and its Subsidiaries as shown on the consolidated income statement of the
Company for the most recent fiscal quarter or the then preceding fiscal year;
(b) Neither the Company nor any Subsidiary will sell, transfer or
otherwise dispose of any capital stock of any Subsidiary, except to the Company
or to another Subsidiary; provided, however, that this Section 9.3(b) shall not
-------- -------
prevent the Company or a Subsidiary from selling, transferring or otherwise
disposing of the capital stock of a Subsidiary if such sale, transfer or other
disposition does not violate Section 9.3(a) hereof.
(c) The Company will not create or permit the creation of any Lien on
any shares of the stock of any Subsidiary except Liens to secure amounts due
under the Revolving Credit Facility.
9.4 Permitted Indebtedness. Neither the Company nor any Subsidiary
----------------------
will create, incur or assume any Indebtedness other than:
(a) Indebtedness represented by or incurred under the Notes and the
Purchase Agreement and the Revolving Credit Facility;
(b) Indebtedness incurred to prepay or repay in full the remaining
outstanding principal amount of Notes and all other amounts due thereon or under
the Purchase Agreement;
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<PAGE>
(c) Indebtedness existing on the Closing Date and identified on the
Disclosure Schedule;
(d) Indebtedness incurred solely as an extension, renewal, refinancing
or replacement of Indebtedness of the Company or of its Subsidiaries under
clause (iii) above (but excluding any Indebtedness under clause (iii) above to
the extent such Indebtedness is repaid with the proceeds from the sale of the
Notes and Warrants), provided that any such extension, renewal or refinancing
(A) shall be on terms which on balance are substantially as favorable to the
Company (or the relevant Subsidiary) as the terms of such existing Indebtedness
(other than changes in the amount of the interest rate and other than the
imposition of additional Liens permitted by Section 9.10(f) hereof) and (B)
shall not be in a greater principal amount or have a shorter average life or
earlier maturity than such existing Indebtedness;
(e) Indebtedness in an aggregate principal amount outstanding not
exceeding $20,000,000 incurred solely to finance the purchase price of
additional towers and related facilities and equipment;
(f) Interest Rate Protection Agreements required by the Revolving
Credit Facility or incurred for hedging purposes in the ordinary course of
business; and
(g) Additional Indebtedness in an amount which , together with sale
and leaseback obligations permitted under Section 9.11, does not exceed
$2,000,000.
9.5 Certain Ratios.
--------------
(a) Funded Debt Ratio. The Company will not permit the ratio as of
-----------------
the end of any fiscal quarter (measured on a trailing four quarter basis) of the
Company of (i) Consolidated Total Debt to (ii) Consolidated Adjusted EBITDA, to
be more than the amount set forth in the table below for the period indicated:
<TABLE>
<CAPTION>
Period Ending Ratio
- ------------- -----
<S> <C>
Prior to May 31, 2000 7.00 to 1.00
June 1, 2000 through May 31, 2001 6.50 to 1.00
June 1, 2001 and thereafter 6.00 to 1.00
</TABLE>
(b) Interest Expense Ratio. The Company will not permit the ratio
----------------------
as of the end of any fiscal quarter (measured on a trailing four quarter basis)
of the Company of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest
Expense, to be less than 1.50 to 1.00.
(c) Fixed Coverage Ratio. Commencing May 31, 2001, the Company will
--------------------
not permit the ratio as of the end of any fiscal quarter (measured on a trailing
four quarter basis) of
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<PAGE>
the Company of (i) Consolidated EBITDA to (ii) Consolidated Fixed Charges, to be
less than 1.00 to 1.00.
9.6 No Change in Business. Neither the Company nor any of its
---------------------
Subsidiaries will change substantially the character of its business as
conducted on the Closing Date as represented in Section 4.4 hereof and described
in the Disclosure Material.
9.7 Consolidation or Merger. The Company will not consolidate with
------------------------
or merge with or into any other Person, unless:
(a) at the time of effectiveness of the transaction no Event of
Default or Potential Default has occurred and is continuing and immediately
after the effectiveness of the transaction no Event of Default or Potential
Default will exist;
(b) the surviving Person is a corporation organized under the laws of
a state of the United States; and
(c) if such surviving Person is a corporation other than the Company,
all liabilities and obligations of the Company under the Purchase Agreement, the
Notes and the Warrants shall remain in effect and shall have been expressly
assumed by such surviving Person (pursuant to a document in form and substance
reasonably satisfactory to the Purchaser and its counsel) as if such surviving
Person were the "Company" hereunder and thereunder.
If the Company is party to a merger as a result of which a Change of Control
Event occurs, the holders of Notes shall have the right to require the Company
to repay the Notes as provided in Section 7.3 hereof
9.8 HSR Act. When and if requested to do so by any holder of the
-------
Notes, the Company will (i) promptly furnish to such holder information as may
be requested to allow such holder to comply with the HSR Act and (ii) make any
filing that may be required of the Company under the HSR Act.
9.9 Transactions with Affiliates. The Company will not, and will not
----------------------------
permit any Subsidiary to, directly or indirectly, enter into any transaction or
agreement (including, without limitation, the purchase, sale, distribution,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company or of any Subsidiary, other than a wholly-owned
Subsidiary of the Company, unless such transaction, agreement or general
arrangement (a) is approved by the Board with the concurrence of a majority of
the independent directors and (b) is on terms that are no less favorable to the
Company or such Subsidiary, as the case may be, than those which might be
obtained at the time of such transaction from a Person who is not such an
Affiliate; provided, however, that this Section 9.9 shall not limit, or be
-------- -------
applicable to, (i) employment arrangements with (and general salary and benefit
compensation for) any individual who is an employee of the Company or any
Subsidiary if such arrangements
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<PAGE>
are approved by the Board and (ii) the payment of reasonable and customary
regular fees to directors of the Company who are not employees of the Company.
9.10 Liens, Etc. The Company will not create or suffer to exist, or
----------
permit any of its Subsidiaries to create or suffer to exist, any Lien upon or
with respect to any of its assets, properties or income, other than the
following:
(a) Liens securing amounts payable under the Revolving Credit
Facility;
(b) purchase money liens or purchase money security interests upon or
in any property acquired or held by the Company or any Subsidiary in the
ordinary course of business to secure the purchase price of such property or to
secure Indebtedness incurred and used solely for the purpose of financing the
acquisition of such property, provided that the principal amount of Indebtedness
--------
secured by each such lien or interest in each item of property shall not exceed
the cost of the item subject thereto and that any such lien or interest shall
not apply to any other property, assets or income of the Company or any
Subsidiary;
(c) Liens existing on such property at the time of its acquisition by
the Company or a Subsidiary (other than any such Lien created in contemplation
of such acquisition);
(d) Liens on real property of the Company or a Subsidiary which Liens
are incurred to finance the acquisition of, or construction on, such real
property and which real property is part of the office, building or plant
facilities of the Company or its Subsidiaries, including surrounding real
property, provided that any such real property referred to in this clause (iii)
is acquired or developed in the ordinary course of the business of the Company
or its Subsidiaries and not for purposes of investment;
(e) Liens existing on the date hereof and described on the Disclosure
Schedule;
(f) Liens incurred pursuant to the refinancing of obligations secured
by Liens permitted by clauses (b) through (e) above, provided that such Liens
shall secure new obligations not in excess of the outstanding principal amount
of such obligations being refinanced and that such Liens shall encumber only
such portions of the property, assets and income of the Company or any
Subsidiaries as were previously encumbered by Liens securing such obligations
being refinanced (except that in the refinancing or renewal of Senior
Indebtedness from banks the Company or a Subsidiary may grant Liens on
additional property or assets); and
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<PAGE>
(g) Permitted Liens.
9.11 Sales and Lease-Backs. The Company will not and will not permit
---------------------
any Subsidiary to directly or indirectly become or remain liable as lessee or as
guarantor or other surety with respect to any lease of any property whether real
or personal or mixed or whether now owned or hereafter acquired which the
Company or any Subsidiary has sold or transferred or intends to sell or transfer
to any other Person except to the extent additional Indebtedness could be
incurred under Section 9.4(g).
9.12 No Restrictions on Dividends. Neither the Company nor any
----------------------------
Subsidiary will create (or permit to exist) any consensual restrictions (whether
by agreement or otherwise) that may affect or limit the ability of any
Subsidiary to pay dividends or to make other distributions of any or all of its
assets to the Company or to any Subsidiary except the Revolving Credit Facility.
9.13 Private Placement Status. Neither the Company nor any agent nor
------------------------
other Person acting on the Company's behalf will do or cause to be done (or will
omit to do or to cause to be done) any act which act (or which omission) would
result in bringing the issuance or sale of the Notes or Shares within the
provisions of Section 5 of the Securities Act (other than in accordance with a
registration and qualification of Shares under Section 17 hereof).
9.14 No Dilution or Impairment; No Changes in Capital Stock. The
------------------------------------------------------
Company will not, by amendment of its certificate of incorporation or through
any consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Purchase
Agreement, the Notes or the Warrants. The Company will at all times in good
faith assist in the carrying out of all such terms, and in the taking of all
such action, as may be necessary or appropriate in order to protect the rights
of the holders of Notes and Warrants (as such rights are set forth in the Notes,
the Warrants and the Purchase Agreement, including without limitation Section 6
of the Purchase Agreement) against dilution or other impairment. Without
limiting the generality of the foregoing, the Company (a) will not permit the
par value or the determined or stated value of any shares of Common Stock
receivable upon the conversion of the Notes or exercise of the Warrants to
exceed the amount payable therefor upon such conversion or exercise, (b) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of the
Company's Common Stock free from all taxes, Liens and charges with respect to
the issue thereof, upon the conversion of the Notes from time to time
outstanding, (c) will not take any action which results in any adjustment of the
current conversion price under the Purchase Agreement or exercise price under
the Warrants if the total number of shares of the Company's Common Stock (or
other securities), issuable after the action upon the conversion of all of the
then outstanding Notes and exercise of all of the then outstanding Warrants
would exceed the total number of shares of Common Stock (or other securities)
then authorized by the Company's certificate of incorporation and available for
the purpose of issuance upon such conversion and exercise and (d) will not have
any
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<PAGE>
authorized Common Stock (and will not issue any Common Stock) other than its
existing authorized Common Stock, except that the Company may increase the
number of such authorized shares of its Common Stock as long as such additional
shares have the same terms as those shares authorized as of the date hereof.
SECTION 10. SUBORDINATION
10.1 Agreement to Be Bound. All Notes shall, to the extent and in the
---------------------
manner hereinafter set forth, be subordinated and subject in right of payment to
the prior payment in full in cash of all Senior Indebtedness. Each holder of a
Note, whether upon original issue or upon transfer or assignment thereof, by its
acceptance thereof agrees that the Notes shall be subject to the provisions
contained in this Section 10. The subordination provisions of this Section 10
shall be for the benefit of the holders of the Senior Indebtedness, may be
enforced directly by such holders and may not be amended without the consent of
such holders.
10.2 Priority of Senior Indebtedness.
-------------------------------
(a) Upon the acceleration of the maturity of any Senior Indebtedness,
all amounts due or to become due in connection therewith shall first be paid in
full in cash before any payment is made by the Company (or any assets are
applied voluntarily or involuntarily, other than through conversion under
Section 6 hereof) on account of principal of, premium, if any, or interest on,
or otherwise in connection with the Notes (except pursuant to Section 18(b)
hereof); provided that this sentence shall no longer be applicable if such
--------
acceleration is rescinded or annulled or such Senior Indebtedness is no longer
outstanding.
(b) No payment on account of principal of, premium, if any, or
interest on, or otherwise in connection with the Notes (except pursuant to
Section 18(b) hereof), shall be made, and no assets shall be applied to the
purchase or other acquisition or retirement of the Notes (other than pursuant to
Section 6 hereof), for so long as there exists an event of default involving
failure to pay when due any Senior Indebtedness or for a period (the "Payment
-------
Blockage Period") of up to one hundred eighty (180) days after both of the
- ---------------
following have occurred: (A) there exists and is continuing an event of default
on any Senior Indebtedness and (B) written notice of such event of default shall
have been given (by the Company or by holders of such Senior Indebtedness) to
the holders of Notes, stating that this Section 10.2(b) is therefore applicable;
provided that any Payment Blockage Period arising as a result of this Section
- --------
10.2 shall terminate immediately upon the waiver or cure of such event of
default or if such Senior Indebtedness is no longer outstanding; provided,
--------
further, that in any three hundred sixty (360) consecutive day period the
- -------
aggregate number of days in all Payment Blockage Periods shall not exceed one
hundred eighty (180) days; provided, further, that no event of default on Senior
-------- -------
Indebtedness resulting in a Payment Blockage Period may constitute the basis for
a subsequent Payment Blockage Period unless the event of default has been cured
or waived for a period of at least ninety (90) days. As used in this paragraph,
an "event of default" is an event of default (x) as defined in any Senior
Indebtedness or in the instrument under which the same is outstanding and
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<PAGE>
(y) which would permit the acceleration of such Senior Indebtedness prior to its
maturity. Any notice to be given to holders of Notes under this Section 10.2(b)
shall be deemed properly given if given using the addresses for holders of Notes
provided pursuant to Section 20 hereof.
(c) In the event that any money, property or securities is received by
the holder of a Note in violation of this Section 10.2 or Section 10.3 hereof,
the holder thereof shall hold the same in trust for the benefit of the holders
of Senior Indebtedness, and shall deliver the same in kind to the Company.
10.3 Liquidation; Dissolution; Bankruptcy.
------------------------------------
(a) Upon any payment or distribution of assets of the Company (whether
in cash, property or securities) to creditors upon any dissolution or winding-up
or total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, or in any bankruptcy, insolvency, receivership or
similar proceeding regarding the Company, all amounts due or to become due upon
all Senior Indebtedness then outstanding shall first be paid in full in cash
before the holders of the Notes shall be entitled to receive any assets so paid
or distributed in respect thereof (but without restricting the rights of holders
under Section 6 hereof); provided that with respect to the foregoing, the
--------
holders of Notes may receive (and shall be entitled to retain) securities which
are subordinate to (at least to the extent that the Notes are subordinate to
Senior Indebtedness pursuant to the terms hereof) the payment of all Senior
Indebtedness then outstanding. Upon any such dissolution or winding-up or
liquidation, reorganization or other proceeding, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the holders of the Notes would be entitled, except for
these provisions, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution directly to the holders of Senior Indebtedness which was then
outstanding (pro rata to each of such holders on the basis of the respective
--- ----
amounts (to the extent known) of Senior Indebtedness then held by such holders
or their representatives), to the extent necessary to pay all such Senior
Indebtedness which was then outstanding in full in cash, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the holders of the
Notes (but subject to the proviso to the preceding sentence).
(b) Each holder of Notes by its acceptance hereof (x) irrevocably
authorizes and empowers (but without imposing any obligation on) each holder of
any Senior Indebtedness at the time outstanding, under (and only under) the
circumstances set forth in Section 10.3(a), if the holder of Notes shall fail to
do so prior to twenty (20) days before the expiration of the time to do so, to
file and prove all claims of such holder for its ratable share of payments or
distributions in respect of the Notes which are required to be paid or delivered
to the holders of Senior Indebtedness as provided in Section 10.3(a), in the
name of each such holder of the Notes or otherwise, as such holder of Senior
Indebtedness may determine to be necessary or appropriate for the enforcement of
the provisions of Section 10.3(a), and the holder of Notes may amend any
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<PAGE>
such claims regarding the Notes before or after such twentieth (20th) day (but
not in a manner inconsistent with the rights of holders of Senior Indebtedness
under this Section 10 other than this Section 10.3(b)) whether such claims are
filed by such holder of Notes or are filed, pursuant to this Section 10.3(b), by
any holder of Senior Indebtedness; and (y) under (and only under) the
circumstances set forth in Section 10.3(a), agrees to execute and deliver to
each holder of Senior Indebtedness all such further instruments confirming the
authorization hereinabove set forth, and all such powers of attorney, proofs of
claim, assignments of claim and other instruments, and to take all such other
action, as may be reasonably requested by such holder in order to enable such
holder to enforce all claims upon or in respect of such Note holder's ratable
share of payments or distributions in respect of the Notes. Nothing in this
Section 10.3(b), or any other provision hereof, shall give or be construed to
give the holder of any Senior Indebtedness any right to vote any Note, or any
related claim, or any portion of such Note or such claim, or to exercise any
approval rights, whether in connection with any resolution, arrangement, plan of
reorganization, compromise, settlement, election of trustees or otherwise.
Holders of Senior Indebtedness shall not create any liability to any person on
the part of any holders of Notes in connection with the exercise of any rights
granted under this Section 10.3(b).
10.4 No Prejudice or Impairment; Reinstatement.
-----------------------------------------
(a) No right of any present or future holders of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired (i) by any act or failure to act on the part
of the Company, including without limitation any merger or consolidation of the
Company into or with any other Person, or any sale, lease or transfer of any or
all of the assets of the Company to any other Person, (ii) by any act (in good
faith) or failure (in good faith) to act by any such holder of Senior
Indebtedness, including, without limitation, the failure by such holder to
perfect a security interest in any security for the payment of Senior
Indebtedness or (iii) by any noncompliance by the Company with the terms and
provisions of any Note or this Purchase Agreement (but subject to clause (iv) of
Section 10.7 hereof) regardless of any knowledge thereof which any such holder
may have or be otherwise charged with. The holders of the Senior Indebtedness
may, without in any way affecting the subordination hereunder, at any time or
from time to time and in their absolute discretion, change the manner, place,
time or other terms of payment of, or renew or alter, any Senior Indebtedness,
or amend, modify or supplement any agreement or instrument governing or
evidencing such Senior Indebtedness or any other document referred to therein,
or exercise or refrain from exercising any of their rights under the Senior
Indebtedness, including, without limitation, waiver of default thereunder and
release of any collateral securing such Senior Indebtedness, all without notice
to or assent from the holders of the Notes. The absence of any notice to, or
knowledge by, any holder of Notes of the existence or occurrence of any of the
matters or events set forth in this paragraph (a) shall not impair or otherwise
affect the rights of the holders of Senior Indebtedness against holders of Notes
under the subordination provisions of this Section 10.
(b) The provisions of this Section 10 shall continue to be effective,
or be reinstated, as the case may be, if at any time any payment in respect of
any Senior Indebtedness is
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rescinded or must otherwise be restored or returned by the holders of such
Senior Indebtedness upon the occurrence of any event described in Section 10.3
hereof, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Company or any
substantial part of its property, all as though such payment had not been made.
10.5 Subrogation. Subject to the payment in full in cash of all
-----------
Senior Indebtedness, the holders of the Notes shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
assets of the Company made on the Senior Indebtedness until the principal of,
premium, if any, and interest on (and any other amounts due with respect to) the
Notes and all other amounts due under this Agreement shall be paid in full;
provided that any holder of any Note shall have the right, in its sole
- --------
discretion, to waive such subrogation rights without affecting such holder's
rights with respect to any Note held by such holder or under this Agreement
(which rights shall continue in full force and effect). For the purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the holders of the Notes would be
entitled except for the provisions of this Section 10 shall, as among the
Company, its creditors other than the holders of Senior Indebtedness, and the
holders of Notes, be deemed to be a payment by the Company to or on account of
Senior Indebtedness, it being understood that these provisions in this Section
10 are, and are intended, solely for the purpose of defining the relative rights
of the holders of the Notes, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
10.6 Obligations Unaffected. Nothing contained in this Section 10 is
----------------------
intended to or shall impair as among the Company, its creditors other than the
holders of Senior Indebtedness, and the holders of the Notes, the obligation of
the Company, which shall be absolute and unconditional, to pay to the holders of
the Notes the principal of, premium, if any, and interest on the Notes, as and
when the same shall become due and payable in accordance with their terms, or to
affect the relative rights of the holders of the Notes and creditors of the
Company other than the holders of Senior Indebtedness. Nothing herein shall
prevent any holder of the Notes from exercising any remedies otherwise permitted
by applicable law upon the occurrence of an Event of Default, subject to the
rights, if any, under these provisions of the holders of Senior Indebtedness,
and nothing herein shall prevent the conversion of the Notes (or any part
thereof) in accordance with the Notes and the Purchase Agreement.
10.7 Definition of Senior Indebtedness. The term "Senior
--------------------------------- ------
Indebtedness" shall mean the principal of, premium, if any, and interest
(including, without limitation, all interest on the Senior Indebtedness accruing
after the commencement of any insolvency, liquidation or other proceeding of the
type referred to in Section 10.3 hereof and any additional interest that would
have accrued but for the commencement of such proceeding whether or not the
claim for such interest is allowed under applicable law) on Indebtedness
outstanding under the Revolving Credit Facility and related obligations
thereunder in respect of letters of credit, Interest Rate Protection Agreements,
indemnities, fees and expenses; the term "Senior Indebtedness" shall not include
-------------------
the principal of loans or the amount of letter of credit obligations under the
Revolving Credit Facility in excess of $75,000,000 except (a) to the extent that
no Event of Default or Potential Default
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shall exist at the date of incurrence of such incremental Indebtedness or would
be caused thereby or (b) such loans or amounts constitute Post-Default Advances
and do not exceed in the aggregate twenty-five percent (25%) of the maximum
amount of the Revolving Credit Facility without taking into account such Post-
Default Advances.
10.8 Effectiveness of Acceleration of Notes and Exercise of Remedies.
---------------------------------------------------------------
(a) Until the Senior Indebtedness under the Revolving Credit Facility
shall have been paid in full in cash, any declaration that all or any portion of
the unpaid principal amount of the Notes shall be due and payable shall not be
effective and holders of Notes shall not initiate any action to seek or enforce
collection or enforcement of any Notes, including initiating or joining in the
filing of a petition seeking a bankruptcy proceeding of the Company, until the
earliest of (i) any insolvency, bankruptcy, receivership, assignment for the
benefit of creditors, reorganization, arrangement with creditors or similar
proceeding of or regarding the Company, or any dissolution, winding-up,
liquidation or marshaling of the assets and liabilities of the Company shall
have been commenced by or against the Company, (ii) the acceleration of the
maturity of any Senior Indebtedness or any initiation of any judicial
proceedings by the holders of any Senior Indebtedness to collect such Senior
Indebtedness, (iii) the expiration of one hundred and eighty(180) days following
occurrence of an Event of Default hereunder (provided such Event of Default is
continuing) or (iv) either (x) the Company or any Subsidiary commences a
liquidation of assets or (y) holders of such Senior Indebtedness seek to
realize, or foreclose on, any security interest in capital stock or other assets
of the Company or any Subsidiary securing such Senior Indebtedness.
(b) Except as provided in Section 10.8(a) hereof, nothing contained in
this Section 10 will limit the right of a holder of Notes to take any action to
accelerate the maturity of any Note or to pursue any rights or remedies under
any Note or the Purchase Agreement.
SECTION 11. CONDITIONS TO PURCHASER'S OBLIGATIONS
The Purchaser's obligation to purchase the Notes and Warrants hereunder is
subject to satisfaction of the following conditions at the Closing (any of which
may be waived by the Purchaser):
11.1 Commitment for Revolving Credit Facility. The commitment letter
----------------------------------------
dated April 9, 1998 for the Revolving Credit Facility shall be in full force and
effect and the Purchaser shall have received confirmation in writing to that
effect from the Company, BankBoston, N.A. and BancBoston Securities Inc.
11.2 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Company herein or in any certificate or document delivered
pursuant hereto shall be correct and complete on and as of the Closing Date with
the same effect as though made
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on and as of the Closing Date (after giving effect to the transactions
contemplated by this Purchase Agreement).
11.3 Compliance with Agreements; No Defaults. The Company shall have
---------------------------------------
performed and complied in all material respects with all agreements, covenants
and conditions contained in this Purchase Agreement, the Notes and the Warrants
and any other document contemplated hereby or thereby which are required to be
performed or complied with by the Company on or before the Closing Date. On the
Closing Date (after giving effect to the transactions contemplated hereby),
there shall be no Event of Default or Potential Default.
11.4 Officers' Certificate. The Purchaser shall have received a
---------------------
certificate dated the Closing Date and signed by the chief executive officer
and chief financial officer of the Company, to the effect that the conditions of
Sections 11.2 and 11.3 have been satisfied.
11.5 Proceedings. All corporate and other proceedings in connection
-----------
with the transactions contemplated by the Purchase Agreement, the Notes and the
Warrants, and all documents incident thereto, shall be in form and substance
satisfactory to the Purchaser and its counsel, and the Purchaser shall have
received all such originals or certified or other copies of such documents as
the Purchaser or its counsel may reasonably request.
11.6 Opinion of Counsel. The Purchaser shall have received an
------------------
opinion dated the Closing Date and addressed to the Purchaser of Perkins Coie,
counsel for the Company. Such opinion shall be in form and substance
satisfactory to the Purchaser and to the effect set forth in Exhibit D hereto.
---------
11.7 Other Documents and Opinions. The Purchaser shall have received
----------------------------
such other documents and opinions, in form and substance satisfactory to the
Purchaser and its counsel, relating to matters incident to the transactions
contemplated hereby as the Purchaser may reasonably request.
11.8 Audited Financial Statements. The Company shall have delivered
----------------------------
to the Purchaser the Company's financial statements for the fiscal year ended
February 28, 1998 certified by Moss Adams LLP substantially in the form
previously provided to the Purchaser.
SECTION 12. AMENDMENT; WAIVER; CONSENT
(a) (i) This Purchase Agreement and the Notes may be amended (or any
provision hereof or thereof waived) only with the written consent of the
Majority Noteholders and (ii) the Warrants may only be amended (or any provision
thereof waived) only with the written consent of the holders of a majority
thereof; provided, that no such amendment or waiver shall (1) change the fixed
--------
maturity of any Note, reduce the rate or change the time of payment of interest
thereon, reduce the principal amount thereof, reduce any premium thereon, change
the currency in which payments are to be made, change the conversion provisions
of Section 6 hereof, change the
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prepayment provisions of Section 7 hereof, change the provisions of Section 15
or 18 hereof or change the registration rights under Section 17 hereof, without
the consent of the holder of the Note (or of Shares issued upon conversion of
the Notes in the case of a change to Section 17 or 18 hereof) so affected, (2)
reduce the aforesaid percentage of Notes, the holders of which are required to
consent to any such amendment or waiver, without the consent of the holders of
all the Notes then outstanding, (3) increase the percentage of the amount of the
Notes, the holders of which may declare the Notes to be due and payable under
Section 14 hereof, without the consent of the holders of all the Notes then
outstanding or (4) amend Section 10 hereof without the consent of the holders of
a majority of the Senior Indebtedness ; and provided, further, that no amendment
-------- -------
to the Warrant shall (x) change the expiration date of any Warrant, change the
exercise provisions of Sections 4 and 6 thereof or change the registration
rights under Section 17 or 18 hereof without the consent of the holder of the
Warrant (or of Shares issued upon exercise of the Warrants in the case of a
change to Section 17 or 18 hereof) or (y) reduce the aforesaid percentage of
Warrants the holders of which are required to consent to any such amendment or
waiver without the consent of holders of such Warrants then outstanding.
(b) The Company agrees that all holders of Notes or Shares shall be
notified by the Company in advance of any proposed amendment or waiver under
Section 12(a)(i), but failure to give such notice shall not in any way affect
the validity of any such amendment or waiver. In addition, promptly after
obtaining the written consent of the holders herein provided, the Company shall
transmit a copy of any amendment or waiver which has been adopted to all holders
of Notes, Warrants or Shares then outstanding, but failure to transmit copies
shall not in any way affect the validity of any such amendment or waiver.
(c) The Company and each holder of a Note, Warrant or Share then or
thereafter outstanding shall be bound by any amendment or waiver effected in
accordance with the provisions of this Section 12, whether or not any such Note
or Warrant shall have been marked to indicate such modification, but any Note or
Warrant issued thereafter shall bear a notation as to any such modification (but
the failure to bear any such notation shall not affect the validity of any such
subsequently issued Note or Warrant, which shall be enforceable in accordance
with its terms subject to any such modification).
(d) Any provision of this Agreement relating to the consent,
determination, decision or waiver of a holder or holders of Notes or Shares or
of the Majority Noteholders, as the case may be, means such holder's or Majority
Noteholders', as the case may be, consent, determination, decision or waiver, as
the case may be, in such holder's or Majority Noteholders', as the case may be,
sole discretion.
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SECTION 13. EXCHANGE OF NOTES; ACCRUED INTEREST; CANCELLATION OF SURRENDERED
NOTES; REPLACEMENT
(a) Subject to Section 16 hereof, at any time at the request of any
holder of one or more of the Notes to the Company at its office provided under
Section 8.7 hereof, the Company at its expense (except for any transfer tax or
any other tax arising out of the exchange) will issue and deliver to or upon the
order of the holder in exchange therefor new Notes, in such denomination or
denominations as such holder may request (which must be in denominations of
$100,000 or any larger multiple of $100,000, plus one Note in a lesser
denomination, if required), in aggregate principal amount equal to the unpaid
principal amount of the Note or Notes surrendered and substantially in the form
thereof, dated as of the date to which interest has been paid on the Note or
Notes surrendered (or, if no interest has yet been so paid thereon, then dated
the date of the Note or Notes so surrendered) and payable to such person or
persons or order as may be designated by such holder. Any such new Note shall
bear any notation required by Section 12 hereof.
(b) In the event that any Note is surrendered to the Company upon the
conversion of all or a portion of any Note, or upon a prepayment under Section 7
hereof, the Company shall pay all accrued and unpaid interest on such Note or
such portion thereof (unless such interest is converted) and thereupon interest
shall cease to accrue upon that portion of the principal amount of such Note
which was used for conversion or which was prepaid, and the right to receive,
and any right or obligation to make, any prepayment on such portion of the
principal amount pursuant to Section 7 hereof shall terminate all upon the date
of such conversion or prepayment and upon presentation and surrender of such
Note to the Company.
(c) Upon the conversion in whole or in part of any Note or upon any
prepayment under Section 7 hereof, if only a portion of the principal amount of
a Note is used in such conversion or is prepaid, then such Note shall be
surrendered to the Company and the Company shall simultaneously execute and
deliver to or on the order of the holder thereof, at the expense of the Company,
a new Note or Notes in principal amount equal to the unused or unpaid portion of
such Note.
(d) All Notes or portions thereof which have been converted, or which
have been prepaid under Section 7 hereof, shall be canceled by the Company and
no Notes shall be issued in lieu of the principal amount so converted or
prepaid.
(e) Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Note and, in the case of any such loss,
theft or destruction, upon delivery of an indemnity agreement reasonably
satisfactory to the Company (if requested by the Company and unsecured in the
case of the Purchaser or an institutional holder), or in the case of any such
mutilation, upon surrender of such Note (which surrendered Note shall be
canceled by the Company), the Company will issue a new Note of like tenor in
lieu of such lost, stolen,
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destroyed or mutilated Note as if the lost, stolen, destroyed or mutilated Note
were then surrendered for exchange.
SECTION 14. DEFAULTS
(a) Any of the following shall constitute an "Event of Default":
----------------
(i) the Company defaults in the payment (whether or not such payment
is prohibited under Section 10 hereof) of (A) any part of the principal of
or premium, if any, on any Note, when the same shall become due and
payable, whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise, and such default in the payment of principal or
premium shall have continued for five (5) Business Days or (B) the interest
on any Note, when the same shall become due and payable, and such default
in the payment of interest shall have continued for ten (10) Business Days;
or
(ii) the Company defaults in the performance of any of the covenants
contained in Section 8.6(a), 8.8, 8.12, 9.1, 9.2, 9.3, 9.4, 9.5, 9.7, 9.8,
9.9, 9.10 or 9.11 hereof and such default continues unremedied for fifteen
(15) days; or
(iii) the Company defaults in the performance of any of the covenants
contained in Section 8.2, 8.13 or 8.15, and such default continues
unremedied for thirty (30) days; or
(iv) the Company defaults in the performance of any other agreement
or covenant contained in the Purchase Agreement or the Notes and such
default shall not have been remedied within thirty (30) days after written
notice thereof shall have been given to the Company by any holder or
holders of the Notes (the Company to give forthwith to all other holders of
the Notes at the time outstanding written notice of the receipt of such
notice, specifying the default referred to therein); or
(v) any representation or warranty by the Company herein or in any
certificate delivered by the Company pursuant hereto proves to have been
incorrect in any material respect when made; or
(vi) the maturity of Indebtedness of the Company or any Subsidiary in
excess of $1,000,000 in the aggregate shall have been accelerated as a
result of an event of default under any indenture, agreement or instrument
evidencing such Indebtedness or under which there is at the time
outstanding such Indebtedness; or
(vii) a final judgment or order which, either alone or together with
other final judgments or orders against the Company and its Subsidiaries,
exceeds an aggregate of $1,000,000 is rendered by a court of competent
jurisdiction against the Company or any Subsidiary and such judgment or
order shall have continued undischarged or unstayed for sixty (60) days
after entry thereof; or
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(viii) the Company or any Subsidiary shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts; or a receiver or trustee is appointed for the Company or any
Subsidiary or for substantially all of its assets and, if appointed without
its consent, such appointment is not discharged or stayed within sixty (60)
days; or proceedings under any law relating to bankruptcy, insolvency or
the reorganization or relief of debtors are instituted by or against the
Company or any Subsidiary, and, if contested by it, are not dismissed or
stayed within sixty (60) days; or any writ of attachment or execution or
any similar process is issued or levied against the Company or any
Subsidiary or any significant part of its property and is not released,
stayed, bonded or vacated within sixty (60) days after its issue or levy;
or the Company or any Subsidiary takes corporate action in furtherance of
any of the foregoing.
(b) If an Event of Default occurs pursuant to any of clauses (i)
through (vii) of Section 14(a) hereof, then and in each such event any holder or
holders of Notes which, at the time, holds or hold at least sixty percent (60%)
in aggregate principal amount of the Notes then outstanding may at any time
(unless all Events of Default shall theretofore have been waived or remedied) at
its or their option, by written notice or notices to the Company, declare all
the Notes then held by such holder or holders to be due and payable. Upon any
such declaration all Notes held by such holder or holders shall forthwith
immediately mature and become due and payable, or upon the occurrence of an
Event of Default pursuant to clause (viii) of Section 14(a) hereof (in which
case no declaration is required), all Notes shall forthwith immediately mature
and become due and payable; in each case (referred to in this sentence) the
payments then due and payable on such Notes shall consist of the entire unpaid
principal amount thereof, together with interest accrued thereon and an amount
equal to the "Additional Amount" (as defined below); all of the foregoing shall
occur without presentment, demand, protest or notice, all of which are hereby
waived. "Additional Amount" shall mean, with respect to any Note, as of the date
-----------------
of repayment of such Note after such acceleration, an amount equal to the
Prepayment Premium that would be payable if the Company had elected to prepay
such Note pursuant to Section 7.3 hereof at the time of such acceleration.
However, the foregoing acceleration rights are subject to the following:
(i) if, at any time after the principal of any Notes shall so become
due and payable and prior to the date of maturity stated in the Notes, all
arrears of principal (excluding any principal which would not then be due
and payable if the acceleration had not occurred) and interest on the Notes
(with interest at the rate specified in the Notes on any overdue principal
and any overdue premium and, to the extent legally enforceable, on any
overdue interest) shall be paid to the holders of Notes by or for the
account of the Company, then the Majority Noteholders, by written notice or
notices to the Company, may waive such Event of Default and its
consequences and rescind or annul any such declaration, but no such waiver
shall extend to or affect any subsequent Event of Default or impair any
right or remedy resulting therefrom;
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(ii) if any holder or holders of Notes which, at the time, holds or
hold at least sixty percent (60%) in aggregate principal amount of the
Notes then outstanding exercises the above rights of acceleration, then the
Company shall notify each other holder of Notes of the fact of such
acceleration and each other holder shall, without limiting any other rights
hereunder, (A) have the right for thirty (30) days after such notice from
the Company to accelerate its own Notes based on the Event or Events of
Default on which such acceleration was based (regardless of whether such
Event or Events of Default are then continuing), unless at the time there
are no outstanding Events of Default and any acceleration of any Notes has
been rescinded or (B) be deemed automatically (without any action by such
holder) to have accelerated its Notes if such holder has not received such
notice of an acceleration from the Company within ten (10) days after such
acceleration; provided that any such automatic acceleration may take place
--------
regardless of whether the Event or Events of Default on which the initial
acceleration was based are then continuing but such automatic acceleration
shall not take place if at the time any and all accelerations of any Notes
have been rescinded or annulled pursuant to subparagraph (i) above or
otherwise;
(iii) any holder may at any time rescind and annul any acceleration
with respect to its own Notes; and
(iv) if any holder of a Note shall give any notice or take any other
action with respect to a claimed Potential Default or Event of Default, the
Company, forthwith upon receipt of such notice or obtaining knowledge of
such other action, will give written notice thereof to all other holders of
the Notes then outstanding, describing such notice or other action and the
nature of the claimed Potential Default or Event of Default.
SECTION 15. REMEDIES
(a) In case any one or more Events of Default shall occur and be
continuing, then any holder or holders of Notes which, at the time, holds or
hold at least sixty percent (60%) in aggregate principal amount of the Notes
then outstanding may proceed to protect and enforce the rights of such holder or
holders by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in
such Note or Notes for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any power granted hereby or
thereby or by law or for any other remedy (including, without limitation,
damages). Each holder of a Note or Notes may at all times pursue any remedies to
collect payment upon a default in any payment of any kind due such holder,
notwithstanding Section 14 hereof, but the maturity of all Notes may be
accelerated upon an Event of Default only in the manner set forth in Section
14(b) hereof. Nothing herein limits the rights and remedies of holders of
Shares.
(b) In case of a default in the payment of any principal of, premium,
if any, or interest on any Note, or default in the observance of any other
agreement or covenant of the
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Company in a Purchase Agreement or in a Note, the Company will pay to the holder
thereof or party thereto, in addition to any interest or premium otherwise
required, such further amount as shall be sufficient to cover any and all costs
and expenses of enforcement and collection including, without limitation,
reasonable attorneys' fees and expenses (whether or not any suit or action is
instituted and including without limitation those fees and expenses permitted by
statutory law and/or incurred at trial, on appeal, on petition for review, in
arbitration or mediation or in a bankruptcy proceeding).
(c) No course of dealing and no delay on the part of any holder of any
Note, Warrant or the Share or the Purchaser in exercising any rights or remedies
shall operate as a waiver thereof or otherwise prejudice such holder's or
party's rights. No right or remedy conferred hereby or by any Note shall be
exclusive of any other right or remedy referred to herein or therein or
available at law, in equity, by statute or otherwise.
(d) The Purchaser shall, in addition to other remedies provided by
law, have the right and remedy to have the provisions of this Agreement
(including without limitation Sections 6 and 17 hereof) specifically enforced by
any court having equity jurisdiction, it being acknowledged and agreed that any
breach or threatened breach of the provisions of this Agreement (including
without limitation Sections 6 and 17 hereof) will cause irreparable injury to
the Purchaser and that money damages will not provide an adequate remedy.
Nothing contained herein shall be construed as prohibiting the Purchaser from
pursuing any other remedies available to the Purchaser for such breach or
threatened breach, including, without limitation, the recovery of damages from
the Company.
SECTION 16. RESTRICTIONS ON TRANSFER
(a) Each holder of a Note or Warrant by acceptance thereof agrees that
it will not sell or otherwise dispose of any Notes, Warrants or Shares unless
(i) such Notes, Warrants or Shares have been registered under the Securities Act
and, to the extent required, under any applicable state securities laws, or (ii)
such Notes, Warrants or Shares are sold in accordance with the applicable
requirements and limitations of Rule 144 or Rule 144A and any applicable state
securities laws, or (iii) the Company has been furnished with an opinion or
opinions from counsel to such holder (which counsel and opinion(s) shall be
reasonably satisfactory to the Company and which counsel may be inside counsel
of such holder) to the effect that registration under the Securities Act is not
required for the transfer as proposed (which opinion may be conditioned upon the
transferee's assuming the obligations of a holder of Notes, Warrants or Shares
under this Section) or (iv) the Company has been furnished with a letter from
the Division of Corporate Finance of the Commission to the effect that such
Division would not recommend any action to the Commission if such proposed
transfer were effected without a registration statement effective under the
Securities Act. The Company agrees that within five (5) Business Days after
receipt of any opinion referred to in (iii) above, it will notify the holder
supplying such opinion whether such opinion is satisfactory to the Company's
counsel. Notes may be transferred only in Authorized Denominations.
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(b) The Company may endorse on all Notes, Warrants and Share
certificates a legend stating or referring to the transfer restrictions
contained in paragraph (a) above; provided that no such legend shall be endorsed
--------
on any Notes, Warrants or Share certificates which, when issued, are no longer
subject to the restrictions of this Section 16; provided, further, that if a
-------- -------
transfer is made pursuant to clause (i), (ii) (other than pursuant to Rule 144A)
or (iv) of paragraph (a) or if an opinion of counsel provided pursuant to clause
(iii) of paragraph (a) concludes that the legend is no longer necessary, the
Company will deliver upon transfer Notes, Warrants or Share certificates, as the
case may be, without such legends.
SECTION 17. REGISTRATION RIGHTS
17.1 Registration at the Request of Holders.
--------------------------------------
(a) The Company agrees that upon receipt by the Company of a
Registration Demand satisfying the conditions under Section 17.1(b) hereof, the
Company will (A) promptly (at least thirty (30) days prior to the filing date)
give written notice of the proposed registration to each holder of a Note,
Warrant or Share, and (B) with reasonable promptness, and in any case not later
than sixty (60) days after receipt by the Company of the Registration Demand,
file a registration statement with the Commission relating to the Shares as to
which registration is requested in the Registration Demand; provided that the
--------
Company shall not be required to file a registration statement prior to the
first anniversary of the Closing Date. The Company shall use its best efforts to
make such registration statement become effective and to qualify the same under
the Blue Sky laws of such states as may be requested; provided, however, that
-------- -------
with respect to compliance with Blue Sky laws, the Company shall not be
obligated to qualify as a foreign corporation or as a dealer in securities or to
execute or file any general consent to service of process under the laws of any
such state where it is not so subject. The Company shall also include under such
registration statement (and in such state qualifications) any Shares requested
to be so included by any other holder of Notes, Warrants or Shares by written
notice delivered to the Company within thirty (30) days after the sending of the
notice provided for in (A) above.
(b) A "Registration Demand" shall be a written notice from one or
-------------------
more holders of Notes, Warrants or Shares stating that such holder or holders
desire to sell some or all of their Shares under circumstances requiring
registration under the Securities Act and requesting that the Company effect
registration with respect to some or all of the Shares issued or issuable after
conversion of Notes or Warrants, by such holder or holders; provided that such
--------
holder or holders giving such notice hold Notes, Warrants or Shares
representing, or entitling the holder thereof to obtain upon conversion or
exercise, in the aggregate not less than one-half ( 1/2) of the sum of the
number of Shares then obtainable upon conversion or exercise of all outstanding
Notes and Warrants.
(c) The Company shall be obligated to effect registration and
qualification pursuant to this Section 17.1 no more than two times. Subject to
the immediately following proviso, the Company may, upon written notice to the
holder or holders giving a Registration
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Demand, require such holder or holders to withdraw such Registration Demand upon
the good faith determination by the Company that such postponement is necessary
to avoid disclosure of non-public information or as a result of a pending
financial transaction (in which case, the holders may not give another
Registration Demand for a period of up to ninety (90) days, as specified by the
Company in such notice). The Company may only give such a notice where the
giving of such a notice has been specifically approved by the Company's Board of
Directors. Upon receipt of any such written notice from the Company, such
Registration Demand shall be deemed to be rescinded and retracted (subject to
being given again after any holdback period specified in such notice in
accordance with the second preceding sentence) and shall not be counted as, or
deemed or considered to be or to have been, a Registration Demand for any
purpose.
(d) If the holder or holders who gave the Registration Demand under
this Section 17.1 inform the Company by written notice that they are withdrawing
their Registration Demand and promptly pay all of the Company's out-of-pocket
expenses (including without limitation fees and expenses of the Company's
counsel) with respect to such registration and qualification incurred to the
date the notice is given under this Section 17.1(d), then the registration
statement need not be filed and the whole effort will not count as a
registration and qualification (or an exercise of rights) under this Section
17.1.
17.2 Piggyback Rights.
----------------
(a) If the Company shall at any time propose to file a registration
statement under the Securities Act for any sales of shares of the Company's
Common Stock (or any warrants, units, convertibles, rights or other securities
related or linked to any shares of the Company's Common Stock) on behalf of the
Company or otherwise, the Company shall give written notice of such registration
no later than thirty (30) days before its filing with the Commission to all
holders of Notes, Warrants or Shares; provided that registrations relating
--------
solely to securities to be issued by the Company in connection with any
acquisition, employee stock option or employee stock purchase or savings plan on
Form S-4 or S-8 (or successor Forms) under the Securities Act shall not be
subject to this Section 17.2. If holders of Notes, Warrants or Shares so request
within thirty (30) days, the Company shall include in any such registration the
Shares held or to be held after conversion of Notes and exercise of Warrants by
such holders and requested to be included in such registration. However, the
Company shall not be obligated to so include the Shares to the extent any
underwriter or underwriters of such securities being otherwise registered by the
Company shall determine in good faith that the inclusion of such Shares would
jeopardize the successful sale of such other securities proposed to be sold by
such underwriter or underwriters, in which case holders of Notes, Warrants or
Shares desiring to participate in such registration shall be entitled to
participate in any such reduced number of Shares (if any) which may be included
in such registration (along with other holders of Common Stock exercising
piggyback rights with respect to such registration) in proportion to their
relative holdings of the Company's Common Stock (whether held directly or
through the right to obtain Shares upon the conversion of Notes and exercise of
Warrants held by such holders); provided, however, that the holders of Notes,
-------- -------
Warrants or Shares desiring to include Shares in such
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registration shall have a priority over other holders of shares of Common Stock
of the Company in exercising piggyback rights so that the registration shall
include up to fifty percent (50%) of the Shares then held or obtainable by all
holders of Notes or Shares before including any shares of the Company's Common
Stock other than Shares. Holders of Notes, Warrants or Shares desiring to
participate in any registration rights under this Section 17.2 shall be entitled
to participate (as among themselves) pro rata in proportion to their relative
--- ----
holdings of Shares (whether such Shares are held directly or through the right
to obtain such Shares upon conversion of Notes or exercise of Warrants held by
such holders). The obligations and rights of the Company and the holders under
this Section 17.2 shall not affect in any way their obligations and rights under
Section 17.1 hereof.
(b) The Company may propose including Common Stock to be publicly
offered and sold by it in any registration statement to be filed pursuant to a
Registration Demand under Section 17.1. If, in the written opinion of any
underwriters selected for the proposed offering, the inclusion of the securities
proposed to be offered and sold by both the Company and the holders of Notes,
Warrants or Shares would jeopardize the success of the offering, the selling
holders may elect (i) to exclude the amount of securities (up to all of the
securities) proposed to be sold by the Company which, in the opinion of such
underwriters, would jeopardize the success of the offering by the selling
holders or (ii) to convert their proposed offering to an offering pursuant to
this Section 17.2. If the selling holders elect to convert the offering to one
under this Section 17.2, then such registration shall not be deemed (or counted
as) a registration and qualification (or an exercise of rights) under Section
17.1 hereof.
17.3 Expenses. Subject to the limitations contained in this Section
--------
17.3 and except as otherwise specifically provided in this Section 17, the
entire costs and expenses of registration and qualification pursuant to Section
17.1 hereof and of registration and qualifications pursuant to Section 17.2
hereof shall be borne by the Company. Such costs and expenses shall include,
without limitation, the fees and expenses of counsel for the Company and of its
accountants, all other costs, fees and expenses of the Company incident to the
preparation, printing, registration and filing under the Securities Act of the
registration statement and all amendments and supplements thereto (but in
connection with any registration and qualification pursuant to Section 17.2
hereof, filing fees with the Commission or any state regulatory authorities
related to the sale of Shares sold in such registration and qualification shall
be for the account of the holders selling those Shares), the fees and expenses
of one counsel to the holders of Notes, Warrants or Shares relating to such
registration and qualification, the cost of furnishing copies of each
preliminary prospectus, each final prospectus and each amendment or supplement
thereto to underwriters, dealers and other purchasers of the Shares and the
costs and expenses (including fees and disbursements of counsel) incurred in
connection with the qualification of the Shares under the Blue Sky laws of
various jurisdictions; provided, however, that if any jurisdiction in which the
-------- -------
Company shall qualify or register in connection with the proposed sale of the
Shares shall require that expenses incurred in connection with the qualification
or registration of such Shares in that jurisdiction be borne in whole or in part
by the holders selling those Shares, then such expenses shall be payable by such
holders pro rata to the extent required by such jurisdiction.
--- ----
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In the event that any such holder is required by any such applicable
jurisdiction to bear such expense, the Company shall promptly reimburse such
holder for the amount paid therefor if not prohibited by applicable law. The
Company shall not be required to pay the underwriting discounts with respect to
Shares being registered under Section 17.1 or under Section 17.2 hereof (unless,
in the case of Section 17.2, the Company pays underwriting discounts for any
other selling shareholder).
17.4 Procedures.
----------
(a) In the case of each registration or qualification pursuant to
Section 17.1 or 17.2, the Company will keep all holders of Notes, Warrants or
Shares advised in writing as to the initiation of proceedings for such
registration and qualification and as to the completion thereof, and will advise
any such holder, upon request, of the progress of such proceedings.
(b) At the Company's expense, the Company will keep each registration
and qualification under this Section 17 effective (and in compliance with the
Securities Act) by such action as may be necessary or appropriate (but no more
than ninety (90) days, unless the registration statement is on Form S-3 or its
equivalent) after the effective date of such registration statement, including,
without limitation, the filing of post-effective amendments and supplements to
any registration statement or prospectus necessary to keep the registration
statement current and the further qualification under any applicable Blue Sky or
other state securities laws to permit such sale or distribution, all as
requested by such holder or holders. The Company will immediately notify each
holder on whose behalf Shares have been registered pursuant to this Section 17,
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. In such event, the
Company will promptly amend the registration statement, as appropriate, or, if
the Board of Directors determines that amendment of the registration statement
at such time would be contrary to the best interests of the Company, the Company
will so advise the holder on behalf of whom Shares are registered, and the
Company may delay the filing of an amendment for a period of up to ninety (90)
days (which period, plus a further period of thirty (30) days, shall be added to
the period for which the Company is required to keep the registration statement
effective).
(c) The Company will furnish to each holder on whose behalf Shares
have been registered pursuant to this Section 17 in connection with any
underwritten public offering, a signed counterpart, addressed to such holder, of
(i) an opinion of counsel for the Company, dated the effective date of such
registration statement, and (ii) a so-called "cold comfort" letter signed by the
independent public accountants who have certified the Company's financial
statements included in such registration statement, and such opinion of counsel
and accountants' letter shall cover substantially the same matters with respect
to such registration statement (and the prospectus included therein) and, in the
case of such accountants' letter, with respect to events
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subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in connection with underwritten public offerings of securities, or
shall be in such other form as is received by the underwriter or underwriters in
connection with such registration.
(d) Without limiting any other provision hereof, in connection with
any registration of Shares under this Section 17, the Company will use its best
efforts to comply with the Securities Act, the Securities Exchange Act and all
applicable rules and regulations of the Commission, and will make generally
available to its securities holders, as soon as reasonably practicable, an
earnings statement covering a period of at least twelve (12) months, beginning
with the first month of the first fiscal quarter after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(e) In connection with any registration of Shares under this Section
17, the Company will, if requested by the underwriters for any Shares included
in such registration, enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, provisions relating to
indemnification and contribution. The holders on whose behalf Shares are to be
distributed by such underwriters shall be parties to any such underwriting
agreement, and the representations and warranties by, and the other agreements
on the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such holders of Notes, Warrants or
Shares. Such underwriting agreement shall also comply with Section 17.6 hereof.
(f) If the Company at any time proposes to register any of its
securities under the Securities Act, other than pursuant to a request made under
Section 17.1 hereof, whether or not for sale for its own account, and such
securities are to be distributed by or through one or more underwriters, then
the Company will make reasonable efforts, if requested by any holder of Notes,
Warrants or Shares who requests registration of Shares in connection therewith
pursuant to Section 17.2 hereof, to arrange for such underwriters to include
such Shares among the securities to be distributed by or through such
underwriters.
(g) In connection with the preparation and filing of each registration
statement registering Shares under this Section 17, the Company will give the
holders of Notes, Warrants or Shares on whose behalf such Shares are to be so
registered and their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers, its counsel and the independent
public accountants who have certified its financial statements, as shall be
necessary, in the opinion of such holders or such underwriters or their
respective counsel,
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in order to conduct a reasonable and diligent investigation within the meaning
of the Securities Act. Without limiting the foregoing, each registration
statement, prospectus, amendment, supplement or any other document filed with
respect to a registration under this Section 17 shall be subject to review and
reasonable approval by the holders registering Shares in such registration and
by their counsel.
17.5 Provision of Documents. The Company will, at the expense of the
----------------------
Company, furnish to each holder of Notes, Warrants or Shares on whose behalf the
registration of Shares has been effected, such number of registration
statements, prospectuses, offering circulars and other documents incident to any
registration or qualification referred to in Section 17.1 or 17.2 as such holder
from time to time may reasonably request.
17.6 Indemnification. The Company will indemnify and hold harmless
---------------
each holder of Notes, Warrants or Shares and any underwriter (as defined in the
Securities Act) for such holder and each person, if any, who controls the holder
or underwriter within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several, and expenses (including
reasonable attorneys' fees and expenses and reasonable costs of investigation)
to which the holder or underwriter or such controlling person may be subject,
under the Securities Act or otherwise, insofar as any thereof arise out of or
are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained in (i) any registration statement under which such
Shares were registered under the Securities Act pursuant to Section 17.1 or 17.2
hereof, any prospectus or preliminary prospectus contained therein, or any
amendment or supplement thereto, or (ii) any other document incident to the
registration of the Shares under the Securities Act or the qualification of the
Shares under any state securities laws applicable to the Company, or (b) the
omission or alleged omission to state in any item referred to in the preceding
clause (a) a material fact required to be stated therein or necessary to make
the statements therein not misleading or (c) any violation or alleged violation
by the Company of the Securities Act, the Securities Exchange Act or any other
federal or state securities law, rule or regulation applicable to the Company
and relating to action or inaction by the Company in connection with any such
registration or qualification, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
alleged untrue statement or omission or alleged omission based upon information
furnished to the Company in writing by such holder or by any underwriter for
such holder expressly for use therein (with respect to which information such
holder or underwriter shall so indemnify and hold harmless the Company, any
underwriter for the Company and each person, if any, who controls the Company or
such underwriter within the meaning of the Securities Act). The foregoing is
subject to the condition that, insofar as the foregoing indemnities relate to
any untrue statement, alleged untrue statement, omission or alleged omission
made in any preliminary prospectus but eliminated or remedied in the final
prospectus (or in any amendment or supplement thereto):
(i) the above indemnity obligations of the Company shall not inure to
the benefit of any underwriter (or to the benefit of any person who
controls such underwriter within the meaning of the Securities Act), and/or
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(ii) any above indemnity obligations of a holder of Notes, Warrants or
Shares shall not inure to the benefit of the Company or any underwriter (or
to the benefit of any person who controls the Company or such underwriter
within the meaning of the Securities Act),
if a copy of the final prospectus (or such amendment or supplement thereto) was
not sent or given at or prior to the time such action is required by the
Securities Act and if delivery of such final prospectus would have eliminated
(or been a sufficient defense to) any liability of such indemnified person with
respect to such statement or omission in such preliminary prospectus.
The Company will enter into an underwriting agreement with the underwriter or
underwriters for any offering registered under the Securities Act pursuant to
Section 17.1 or 17.2 hereof and with the holders of Notes, Warrants or Shares
selling Shares pursuant to such offering, and such underwriting agreement shall
contain customary provisions with respect to indemnification and contribution
which shall, at a minimum, provide the indemnification set forth above.
17.7 Certain Limitations in Connection with Future Grants of
-------------------------------------------------------
Registration Rights.
- -------------------
(a) From and after the date of this Agreement, the Company shall not
enter into any agreement with any holder or prospective holder of any of its
Common Stock providing for the granting to such holder of demand registration
rights unless such agreement includes provisions to the effect that (i) the
Company will give the holders of Notes, Warrants or Shares notice at least
thirty (30) days prior to the filing of a registration statement pursuant to the
exercise of such rights and (ii) notwithstanding Section 17.2 hereof, if a
holder of Notes, Warrants or Shares requests inclusion of Shares (whether such
Shares are held directly or through the right to obtain such Shares upon the
conversion of Notes or exercise of Warrants held by such holder) and requests
priority for such Shares in such registration statement within thirty (30) days
after receipt of such notice and such holders have not previously made two (2)
Registration Demands under Section 17.1 hereof, then such holder's Shares
requested to be so included will be given priority over the securities sought to
be registered by the holders of such demand registration rights if marketing
factors require a limitation on the number of securities to be included in such
registration statement (and such registration shall be deemed a demand
registration under Section 17.1 hereof). If a holder of Notes, Warrants or
Shares requests inclusion of its Shares (whether such Shares are held directly
or through the right to obtain such Shares upon conversion of Notes or exercise
of Warrants held by such holder), but does not request such priority for such
Shares in such registration, then such Shares shall be included in such
registration statement in the manner described in Section 17.2 hereof.
(b) From and after the date of this Agreement, the Company shall not
enter into any agreement with any holder or prospective holder of any of its
Common Stock providing for the granting to such holder of incidental or
"piggyback" registration rights unless such agreement includes provisions to the
effect that, in the case of a registered underwritten public
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offering of the Company's Common Stock to which Section 17.1 or Section 17.2
hereof applies, such agreement gives the following priority to holders of Notes,
Warrants or Shares if marketing factors require a limitation on the number of
securities of the Company to be sold by selling shareholders to be included in
such offering:
(i) holders of Notes, Warrants or Shares shall have the right to
include in each registration to which Section 17.1 hereof applies, all
Shares they desire to include;
(ii) holders of Notes, Warrants or Shares shall have the right to
include in each registration to which Section 17.2 hereof applies, up to
fifty percent (50%) of the Shares then held;
(iii) then other holders of securities of the Company having piggyback
registration rights shall have the right to include further securities in
such registration in proportion to their relative holdings of shares of
Common Stock of the Company (whether held directly or obtainable upon
conversion or the exercise of warrants or other rights).
17.8 Holdback. The Company and each holder of Notes or Shares agrees
--------
not to offer, sell, contract to sell or otherwise dispose of any of their
respective shares of the Company's Common Stock within seven (7) days before or
ninety (90) days after the date of any final prospectus relating to any
underwritten public offering of the Company's Common Stock on behalf of the
Company or otherwise, in each case except pursuant to such prospectus or with
the written consent of the underwriter or underwriters for such offering;
provided, however, that this Section 17.8 shall apply only with respect to
- -------- -------
public offerings in which such holder has participated or has had an opportunity
to participate under Section 17.1 or 17.2.
SECTION 18. EXPENSES
(a) Whether or not the transactions herein contemplated are
consummated, the Company will pay (i) the reasonable costs and expenses of the
preparation and production of the Purchase Agreement and the issuance of the
Notes, Warrants and the Shares and the furnishing of all opinions by counsel for
the Company, (ii) the reasonable fees and disbursements of Morgan, Lewis &
Bockius LLP in connection with the Purchase Agreement, the Notes, the Warrants
and the transactions contemplated hereby and thereby (whether or not a closing
occurs hereunder and if a closing occurs the Company will make such payment on
the Closing Date) up to $35,000 plus disbursements, (iii) the reasonable fees
and expenses of any investment banker, broker or finder engaged by or on behalf
of (or acting for) the Company in connection with the Purchase Agreements or any
of the transactions contemplated hereby or thereby, (iv) the reasonable travel
expenses incurred by any Purchaser prior to the Closing Date in connection with
due diligence or negotiation of the terms of the Purchase Agreement, and (v) the
reasonable expenses incurred by any holder in connection with its exercise of
any rights of inspection under Section 8.5 hereof (but each holder's right to
expense reimbursement under this clause (v) shall only apply to (x) one (1) of
such holder's visits to the Company's facilities per year plus (y) all exercises
of inspection
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rights at any time when a Potential Default or Event of Default has occurred).
The obligations of the Company under this Section 18 shall survive the closing
hereunder, the payment, conversion or cancellation of the Notes, exercise or
cancellation of the Warrants and the termination of the Purchase Agreement.
(b) In addition to all other sums due hereunder or provided for in
this Agreement, the Company shall pay to the Purchaser or its agents,
respectively, an amount sufficient to indemnify such persons (net of any taxes
on any indemnity payments) against all reasonable costs and expenses (including
reasonable attorneys' fees and expenses and reasonable costs of investigation)
and damages and liabilities incurred by the Purchaser or its agents pursuant to
any investigation or proceeding against any or all of the Company, the
Purchaser, or their agents, arising out of or in connection with the Purchase
Agreement, the Notes or the Warrants (or any transaction contemplated hereby or
thereby or any other document or instrument executed herewith or therewith or
pursuant hereto or thereto), whether or not the transactions contemplated by
this Purchase Agreement are consummated, which investigation or proceeding
requires the participation of the Purchaser or its agents or is commenced or
filed against the Purchaser or its agents because of the Purchase Agreement, the
Notes or the Warrants or any of the transactions contemplated hereby or thereby
(or any other document or instrument executed herewith or therewith or
pursuant hereto or thereto), other than any investigation or proceeding (x) in
which it is finally determined that there was gross negligence or willful
misconduct on the part of the Purchaser or its agents which was not taken by
them in reliance upon any of the Company's representations, warranties,
covenants or agreements in the Purchase Agreement, the Notes or the Warrants or
in any other documents or instruments contemplated hereby or thereby or executed
herewith or therewith or pursuant hereto or thereto, (y) which relates to
disputes among a Purchaser and its own partners, shareholders or beneficiaries
or (z) which relates to a Purchaser's disposition of Notes, Warrants or Shares
and the conduct of the Purchaser or its agents giving rise to such investigation
or proceeding was not taken by them in reliance upon any of the Company's
representations, warranties, covenants or agreements in the Purchase Agreement,
the Notes or the Warrants or in any other documents or instruments contemplated
hereby or thereby or executed herewith or therewith or pursuant hereto or
thereto. The Company shall assume the defense, and shall have its counsel
represent the Purchaser and such agents, in connection with investigating,
defending or preparing to defend any such action, suit, claim or proceeding
(including any inquiry or investigation); provided, however, that the Purchaser,
-------- -------
or any such agent, shall have the right (without releasing the Company from any
of its obligations hereunder) to employ its own counsel and either to direct its
own defense or to participate in the Company's defense, but the fees and
expenses of such counsel shall be at the expense of such person unless (i) the
employment of such counsel shall have been authorized in writing by the Company
in connection with such defense or (ii) the Company shall not have provided its
counsel to take charge of such defense or (iii) the Purchaser, or such agent of
the Purchaser, shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to the Company, then in any of such events referred to in clauses (i),
(ii) or (iii) such counsel fees and expenses (but only for one counsel for the
Purchaser and its agents) shall be borne by the Company. Any settlement of any
such action, suit, claim or
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proceeding shall require the consent of both the Company and such indemnified
person (neither of which shall unreasonably withhold its consent).
(c) The Company agrees to pay, or to cause to be paid, all
documentary, stamp and other similar taxes levied under the laws of the United
States of America or any state or local taxing authority thereof or therein in
connection with the issuance and sale of the Notes and the execution and
delivery of the Purchase Agreements and any other documents or instruments
contemplated hereby or thereby and any modification of any of the Notes or the
Purchase Agreements or any such other documents or instruments and will hold the
Purchaser harmless without limitation as to time against any and all liabilities
with respect to all such taxes.
(d) The obligations of the Company under this Section 18 shall survive
the closing hereunder, the payment, conversion or cancellation of the Notes,
exercise or cancellation of the Warrants and the termination of the Purchase
Agreement.
SECTION 19. HOME OFFICE PAYMENTS
As long as the Purchaser or any payee named in the Notes delivered to
the Purchaser on the Closing Date, or any institutional holder which is a direct
or indirect transferee from the Purchaser or such payee, shall be the holder of
any Note, the Company will make payments (whether at maturity, upon mandatory or
optional prepayment, or otherwise) of principal, interest and premium, if any,
(i) by check payable to the order of the holder of any such Note duly mailed or
delivered to the Purchaser at such address as the Purchaser or such other holder
may designate in writing, or (ii) if requested by the Purchaser or such other
holder, by wire transfer to the Purchaser's or such other holder's (or its
nominee's) account at any bank or trust company in the United States of America,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. If the Purchaser has provided an address for payments by wire
transfer, then the Purchaser shall be deemed to have requested wire transfer
payments under the preceding clause (ii). All such payments shall be made in
federal or other immediately available funds.
SECTION 20. NOTICES
Unless otherwise expressly specified or permitted by the terms hereof,
all notices, requests, demands, consents and other communications hereunder or
with respect to any Note or Warrant shall be in writing and shall be delivered
by hand or shall be sent by or telecopy (confirmed by registered, certified or
overnight mail or courier, postage and delivery charges prepaid), to the
following addresses:
(a) if to the Purchaser, at c/o Bruce E. Toll, 1477 Rydal Road, Rydal,
PA 19046, or at such other address as may have been furnished to the Company by
the Purchaser in writing; or
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(b) if to any other holder of a Note or Warrant, at such address as
the payee or registered holder thereof shall have designated to the Company in
writing; or
(c) if to the Company, at 7001 N.E. 40th Avenue, Vancouver, Washington
98661, or at such other address as may have been furnished in writing by the
Company to the Purchaser and to the other holders of Notes and Warrants.
Whenever any notice is required to be given hereunder, such notice shall be
deemed given and such requirement satisfied only when such notice is delivered
or, if sent by telecopier, when received, unless otherwise expressly specified
or permitted by the terms hereof.
SECTION 21. MISCELLANEOUS
21.1 Entire Agreement. The Purchase Agreement and, upon the closing
----------------
hereunder, the Notes and Warrants issued hereunder, together with any further
agreements entered into by the Purchaser and the Company at the closing
hereunder, contain the entire agreement among the Purchaser and the Company, and
supersede any prior oral or written agreements, commitments, terms or
understandings, regarding the subject matter hereof.
21.2 Survival. All agreements, representations and warranties
--------
contained in this Agreement, the Notes, the Warrants or any document or
certificate delivered pursuant hereto or thereto shall survive, and shall
continue in effect following, the execution and delivery of the Purchase
Agreement, the closings hereunder and thereunder, any investigation at any time
made by the Purchaser or on its behalf or by any other Person, the issuance,
sale and delivery of the Notes and the Warrants, any disposition thereof and any
payment, conversion or cancellation of the Notes and any exercise or
cancellation of the Warrants. All statements contained in any certificate or
other document delivered by or on behalf of the Company pursuant hereto shall
constitute representations and warranties by the Company hereunder.
21.3 Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument, and all signatures need not appear on any one
counterpart.
21.4 Headings. The headings and captions in this Agreement and the
--------
table of contents are for convenience of reference only and shall not define,
limit or otherwise affect any of the terms or provisions hereof.
21.5 Binding Effect, Benefit and Assignment.
--------------------------------------
(a) The terms of this Agreement shall be binding upon, and inure to
the benefit of, the parties and their respective successors and permitted
assigns whether so expressed or not.
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(b) The Company may not assign any of its obligations, duties or
rights under this Agreement, or under the Notes or Warrants issued hereunder,
except with the Purchaser's consent.
(c) In addition to any assignment by operation of law, the Purchaser
may assign, in whole or in part, any or all of its rights (and/or obligations)
under this Agreement or under the Notes or Warrants to any permitted transferee
of any or all of its Notes, Warrants or Shares, and (unless such assignment
expressly provides otherwise) any such assignment shall not diminish the rights
the Purchaser would otherwise have under this Agreement or with respect to any
remaining Notes, Warrants or Shares held by the Purchaser; provided that Notes
--------
may be transferred only in Authorized Denominations.
21.6 Severability. Any provision hereof or of the Notes, or Warrants
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
thereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereby waive any
provision of law which may render any provision hereof prohibited or
unenforceable in any respect.
21.7 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Washington (other than
any conflict of laws rule which might result in the application of the laws of
any other jurisdiction).
21.8 Currency. All payments under this Agreement, the Notes or
--------
Warrants shall be made in lawful money of the United States of America.
21.9 Late Payments. If the Company fails to pay any amount required
-------------
to be paid to a holder of Notes or a party under this Agreement, within twenty
(20) days after notice from such holder or such party demanding such payment,
then the Company agrees to pay such holder or such party interest on any such
overdue amount at the Default Rate (as defined in the Notes) from the date of
such notice from such holder or such party until such overdue amount is paid in
full; provided that this Section 21.9 shall not apply to overdue payments with
--------
respect to the Notes, to the extent the Notes already provide that such overdue
payments shall bear interest at the Default Rate.
21.10 Co-obligors.
-----------
(a) Any wholly-owned Subsidiary of the Company (subject to the proviso
to Section 21.10(c) hereof) that may exist on or after the date hereof and that
is incorporated under the laws of a state of the United States (collectively,
the "Co-obligor Subsidiaries") shall, to the maximum extent permitted by law, be
-----------------------
jointly and severally liable together with the Company for the payment of
principal of and interest and premium, if any, on the Notes, and for the
observance
-70-
<PAGE>
and compliance with all of the Company's other covenants and agreements in the
Purchase Agreement (other than issuance or registration of the Shares) and the
Notes. The obligations of each Co-obligor Subsidiary are direct obligations and
each Co-obligor Subsidiary waives any requirement that any Purchaser resort to
or exhaust any right to take any action against the Company or any other Co-
obligor Subsidiary before proceeding with any action against any Co-obligor
Subsidiary.
(b) Nothing in this Section 21.10, and no condition or circumstance
relating to any Co-obligor Subsidiary, shall in any way limit or reduce the
obligations of the Company under the Purchase Agreement or the Notes. Without
limiting the foregoing, the obligations of the Company and each Co-obligor
Subsidiary with respect to the Purchase Agreement and the Notes shall be
unconditional, without regard to (i) any lack of enforceability of any of such
obligations, (ii) any change of the time, place or manner of payment, or any
other term, or any settlement or compromise, of any such obligations or of any
rights with respect thereto, (iii) any law, regulation or order of any
jurisdiction affecting any term of any such obligations or of any Purchaser's
rights with respect thereto and (iv) any other circumstances (other than payment
in full of all obligations to the Purchaser under the Purchase Agreement and all
of the Notes) which might otherwise constitute a defense available to, or a
discharge of, the Company or any Co-obligor Subsidiary.
(c) The Company agrees that if the Company has now or at any time in
the future any wholly-owned Subsidiaries incorporated under the laws of a state
of the United States, each such additional wholly-owned Subsidiary of the
Company shall upon execution of this Purchase Agreement by the Company or at the
time it becomes a wholly-owned Subsidiary (i) become a Co-obligor Subsidiary
under this Agreement and (ii) sign a joinder to this Agreement in the form
attached hereto as Exhibit E confirming its agreement to, and obligations under,
---------
this Agreement; provided that any such Subsidiary which is acquired by the
--------
Company or another Subsidiary in the future and which is not permitted to be a
Co-obligor Subsidiary hereunder under the terms of a loan agreement to which it
is a party and which was not entered into in contemplation of, or in connection
with, such acquisition, need not become a Co-obligor Subsidiary.
(d) Notwithstanding any other provision hereof, the liability of any
Co-obligor Subsidiary hereunder shall not exceed the maximum amount payable by
such Co-obligor Subsidiary without giving rise to the right of any person to
avoid such liability pursuant to any federal or state law relating to fraudulent
transfers or other similar laws.
(e) All notices, requests, demands, consents and other communications
hereunder or under any Note to or from the Company or any or all of the Co-
obligor Subsidiaries shall be communicated to or from the Company, and the
Purchaser shall be entitled to rely on any communications to or from the Company
as being to or from and authorized by all of the Co-obligor Subsidiaries.
-71-
<PAGE>
21.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE COMPANY AND
----------------------------------------------
EACH CO-OBLIGOR SUBSIDIARY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE STATE OF WASHINGTON AND IRREVOCABLY AGREES
THAT, SUBJECT TO THE ELECTION, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT OR THE NOTES MAY BE LITIGATED IN SUCH COURTS. THE COMPANY AND EACH CO-
OBLIGOR SUBSIDIARY ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENT, AND IRREVOCABLY
AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY (SUBJECT TO ANY APPEAL
AVAILABLE WITH RESPECT TO SUCH JUDGMENT) IN CONNECTION WITH THIS AGREEMENT OR
THE NOTES. THE CO-OBLIGOR SUBSIDIARIES HEREBY IRREVOCABLY APPOINT THE COMPANY
TO SERVE AS THEIR AGENT, TO RECEIVE ON THEIR BEHALF SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
THE COMPANY AND EACH CO-OBLIGOR SUBSIDIARY TO BE EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT. THE COMPANY AND EACH CO-OBLIGOR SUBSIDIARY HEREBY AGREE THAT
SERVICE UPON THE COMPANY BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE AND SERVICE
OF PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE PURCHASER TO BRING
PROCEEDINGS OR OBTAIN OR ENFORCE JUDGMENTS AGAINST THE COMPANY OR ANY CO-OBLIGOR
SUBSIDIARY IN THE COURTS OF ANY OTHER JURISDICTION.
21.12 WAIVER OF JURY TRIAL. THE COMPANY AND EACH CO-OBLIGOR
--------------------
SUBSIDIARY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT THE NOTES THE
WARRANTS OR THE SHARES, OR ANY DEALINGS AMONG THEM RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION. THE COMPANY AND EACH CO-OBLIGOR SUBSIDIARY ALSO
WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS
WAIVER, BE REQUIRED OF THE PURCHASER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR TO THE NOTES OR THE WARRANTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
-72-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
WESTOWER CORPORATION
By:_______________________________
Name:
Title:
Accepted and agreed to as of the date first above
written by the undersigned Purchaser:
BET ASSOCIATES, L.P.
By: BRU LLC
Its General Partner
By:____________________________
Bruce E. Toll
Member
-73-
<PAGE>
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY APPLICABLE LAW OR REGULATION OF ANY STATE AND IS NOT TRANSFERABLE
EXCEPT UPON THE CONDITIONS SPECIFIED IN SECTION 16 OF THE PURCHASE AGREEMENT
REFERRED TO HEREIN.
WESTOWER CORPORATION
7% CONVERTIBLE SENIOR SUBORDINATED NOTE
DUE APRIL 30, 2007
DATED:
FOR VALUE RECEIVED, the undersigned Westower Corporation, a Washington
corporation (herein, together with any successor, referred to as the "Company"),
-------
hereby promises to pay to ____________or registered assigns, the principal sum
of ___________ ($_______) on April 30, 2007, with interest (computed on the
basis of a 360 day year) on the unpaid balance of such principal sum from the
date hereof at the interest rate of 7% per annum, payable quarterly on the last
day of January, April, July and October of each year, commencing July 31, 1998
(which first interest payment shall be for the period from and including [THE
CLOSING DATE] through and including July 31, 1998), until the entire principal
amount hereof shall have become due and payable, whether at maturity or at a
date fixed for prepayment or by acceleration or declaration or otherwise, and at
the Default Rate on any overdue installment of principal (including any overdue
prepayment of principal) and on any overdue premium and (to the extent permitted
by law) on any overdue installment of interest until paid (whether or not any
subordination provision or other circumstance prevents such payment). The
"Default Rate" shall be a per annum interest rate equal to the lesser of (A) the
greater of (x) 9% or (y) the sum of 2% plus the rate published from time to time
by The Wall Street Journal in the "Money Rates" section or any replacement of
-----------------------
such section as the prime rate and (B) the highest rate permitted by law.
If any payment of interest due hereunder becomes due and payable on a day
which is not a Business Day (as defined in the Purchase Agreement referred to
below), the due date thereof shall be the next preceding day which is a Business
Day, and the interest payable on such next preceding Business Day shall be the
interest which would otherwise have been payable on the due date which was not a
Business Day.
<PAGE>
Payments of principal and interest shall be made in lawful money of the
United States of America as provided in the Purchase Agreement referred to
below, to the address or account designated by the holder hereof for such
purpose.
This Note is issued pursuant to Purchase Agreement dated as of May 11, 1998
between the Company and BET Associates, L.P. (the "Purchase Agreement").
------------------
This Note is subject to the provisions of and is entitled to the benefits
of the Purchase Agreement. The Purchase Agreement provides, inter alia, for
----- ----
prepayments of principal upon the terms set forth therein. In addition, the
payment of the principal of, premium, if any, and interest on this Note is
subordinated in right of payment to the prior payment in full of certain other
obligations of the Company to the extent and in the manner set forth in the
Purchase Agreement. Each holder of this Note, by accepting the same, agrees to
and shall be bound by the provisions of the Purchase Agreement.
This Note is transferable only upon the terms and conditions specified in
the Purchase Agreement.
In case an Event of Default (as defined in the Purchase Agreement) shall
occur and be continuing, the principal of this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
The principal amount of this Note (and, if elected by the holder, accrued
and unpaid interest hereon) can be converted, in whole or in part, at the option
of the holder, to purchase Common Stock, $.01 par value per share, of the
Company in the manner, and upon the terms and conditions, including, without
limitation, antidilution provisions, provided in the Purchase Agreement.
This Note is subordinated to Senior Indebtedness as provided in Section 10
of the Purchase Agreement.
No reference herein to the Purchase Agreement and no provision hereof or
thereof shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal hereof and interest hereon at the
respective times and places specified herein and in the Purchase Agreement, but
the maturity of all Notes may be accelerated upon an Event of Default only in
the manner set forth in Section 14(b) of the Purchase Agreement.
This Note is delivered in and shall be construed and enforced in accordance
with and governed by the laws of the State of Washington (other than any
conflict of laws rules which might result in the application of the laws of any
other jurisdiction).
Subject to the provisions of Section 16 of the Purchase Agreement, the
Company may treat the person in whose name this Note is registered as the owner
and holder of this Note for the
A-2
<PAGE>
purpose of receiving payment of principal of, premium, if any, and interest on
this Note and for all other purposes whatsoever, and the Company shall not be
affected by any notice to the contrary (except that the Company shall comply
with the provisions of Section 13 of the Purchase Agreement regarding the
issuance of a new Note or Notes to permitted transferees).
IN WITNESS WHEREOF, Westower Corporation has caused this Note to be dated
and to be executed and issued on its behalf by its duly authorized officer.
WESTOWER CORPORATION
By_________________________________
Name:
Title:
A-3
<PAGE>
EXHIBIT B
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY APPLICABLE LAW OR REGULATION OF ANY STATE AND IS NOT
TRANSFERABLE EXCEPT UPON THE CONDITIONS SPECIFIED IN SECTION 7(A) OF THIS
WARRANT.
WESTOWER CORPORATION
WARRANT
Issue Date: ______ __, 1998
Void After: April 30, 2007
THIS WARRANT HAS BEEN ISSUED PURSUANT TO THE PURCHASE AGREEMENT DATED AS OF MAY
11, 1998 (THE "PURCHASE AGREEMENT") BETWEEN THE COMPANY AND BET ASSOCIATES,
L.P., AND THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF (THE "WARRANT SHARES") SHALL BE SUBJECT TO, AND ENTITLED TO THE BENEFITS
OF, THE PURCHASE AGREEMENT.
THIS CERTIFIES that, for value received, ___________ (the "Holder"), is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
subscribe for and purchase from Westower Corporation, a Washington corporation
(the "Company"), at the Exercise Price per share determined as provided herein,
up to ________ fully paid and nonassessable shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock").
1. Definitions.
-----------
As used herein the following terms, unless the context otherwise
requires, shall have for all purposes hereof the following meanings:
"Appraised Value" means, in respect of any share of Common Stock on
any date herein specified, the value attributable to such share of Common Stock
if all of the assets of the Company and its subsidiaries were sold for the
appraised value thereof as of the last day of a fiscal month to end within 60
days prior to such date specified, and thereafter liquidated in accordance with
the terms of the Company's Articles of Incorporation as determined in good faith
by the Board of Directors of the Company.
"Business Day" means any day that is not (i) a Saturday or Sunday or
(ii) a day on which banks are required or permitted to be closed in the State of
Washington.
<PAGE>
"Current Market Price" means, in respect of the Common Stock on any
date herein specified, the average of the daily closing prices for the thirty
(30) consecutive trading days commencing forty five (45) trading days before
such date. The closing price for each day shall be the last reported sale price
regular way or, in case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in either case on the principal
national securities exchange or the Nasdaq National Market on which the
Company's Common Stock is listed or admitted to trading, or if the Company's
Common Stock is not listed or admitted to trading on any national securities
exchange or the Nasdaq National Market, the average of the highest reported bid
and lowest reported asked prices as furnished by the National Association of
Securities Dealers Inc. Automated Quotation System, or comparable system. If the
closing price cannot be so determined, then the Current Market Price shall be
determined (x) by the written agreement of the Company and the Holder, or (y) in
the event that no such agreement is reached within twenty (20) days after the
event giving rise to the need to determine the Current Market Price, by the
agreement of two arbitrators, one of whom shall be selected by the Company and
the other of whom shall be selected by the Holder.
2. Exercise Period. The purchase rights represented by this Warrant are
---------------
exercisable by the Holder, in whole or in part, at any time from time to time
during the Exercise Period, which shall commence at _____ __, 1998 (the "Issue
Date") and shall end at 5:00 p.m. Seattle, Washington time on April 30, 2007.
3. Exercise Price. The price per share at which this Warrant may be exercised
--------------
(the "Exercise Price") shall be $23.00.
4. Exercise of Warrant. During the Exercise Period, this Warrant may be
-------------------
exercised, in whole or in part and from time to time, by the surrender of this
Warrant and the Notice of Exercise annexed hereto duly executed at the principal
office of the Company (or such other office or agency of the Company as it may
designate) and upon payment of the Exercise Price of the shares thereby
purchased (the aggregate of the Exercise Price for all shares to be exercised
being referred to herein as the "Purchase Price"). Payment of the Purchase
Price may be made (i) by check or bank draft payable to the order of the
Company, (ii) by wire transfer to the account of the Company, or (iii) by
delivery of this Warrant with instructions that the Company retain as payment of
the Purchase Price such number of Warrant Shares as shall be determined under
the next sentence (a "receive that number of Warrant Shares determined by
multiplying the number of Warrant Shares for which the Cashless Exercise is made
by a fraction, the numerator of which shall be the difference between the then
Current Market Price per Warrant Share and the Exercise Price, and the
denominator of which shall be the then Current Market Price per share of Common
Stock. The remaining Warrant Shares for which the Cashless Exercise has been
made shall be deemed to have been paid to the Company as the Purchase Price.
Upon exercise, the Holder shall be entitled to receive, promptly after payment
in full, one or more certificates, issued in the Holder's name or in such name
or names as the Holder may direct, subject to the limitations on transfer
contained herein, for the number of shares of Common Stock so purchased. The
shares
B-2
<PAGE>
so purchased shall be deemed to be issued as of the close of business on the
date on which this Warrant shall have been exercised.
5. Representations and Warranties.
------------------------------
The Company represents and warrants to the Holder as follows:
(a) Corporate Action. The Company has all requisite corporate power
----------------
and authority, and has taken all necessary corporate action, to execute and
deliver this Warrant, and to authorize and reserve for issuance, and to issue
and deliver upon payment of the Purchase Price, the Warrant Shares.
(b) No Violation. Neither the execution nor delivery of this Warrant,
------------
nor the consummation of the actions herein contemplated, nor compliance with the
terms and provisions hereof will conflict with, or result in a breach of, or
constitute a default or an event permitting acceleration under, any of the
terms, provisions or conditions of the Articles of Incorporation or Bylaws of
the Company or any indenture, mortgage, deed of trust, note, bank loan, credit
agreement, franchise, license, lease, permit, judgment, decree, order, statute,
rule or regulation or any other agreement, understanding or instrument to which
the Company is a party or by which it is bound.
6. Antidilution Adjustments.
------------------------
6.1 Adjustment of Exercise Price. The Exercise Price shall be subject to
----------------------------
adjustment, from time to time, as follows:
(a) Adjustments for Stock Dividends, Recapitalizations, Etc. In case
--------------------------------------------------------
the Company shall, after the Closing Date, (i) pay a stock dividend or make
a distribution (on or in respect of its Common Stock) in shares of its
Common Stock, (ii) subdivide the outstanding shares of its Common Stock,
(iii) combine the outstanding shares of its Common Stock into a smaller
number of shares, or (iv) issue by reclassification of shares of its Common
Stock, any shares of capital stock of the Company, then, in any such case,
the current Exercise Price in effect immediately prior to such action shall
be adjusted to a price such that if the Holder was to exercise this Warrant
in full immediately after such action, such Holder would be entitled to
receive the number of shares of capital stock of the Company which Holder
would have owned immediately following such action had such Warrant been
exercised immediately prior thereto (with any record date requirement being
deemed to have been satisfied), and, in any such case, such Exercise Price
shall thereafter be subject to further adjustments under this Section 6.
An adjustment made pursuant to this subsection (a) shall become effective
retroactively immediately after the record date in the case of a dividend
or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification.
B-3
<PAGE>
(b) Adjustments for Certain Other Distributions. In case the Company
-------------------------------------------
shall, after the Closing Date, fix a record date for the making of a
distribution to holders of its Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of (i) assets, (ii) evidences of
indebtedness or other securities (except for its Common Stock) of the
Company or of any entity other than the Company, or (iii) subscription
rights, options or warrants to purchase any of the foregoing assets or
securities, whether or not such rights, options or warrants are immediately
exercisable (all such distributions referred to in clauses (i), (ii) and
(iii) being hereinafter collectively referred to as "Distributions on
----------------
Common Stock"), then the current Exercise Price in effect prior to such
------------
action shall be adjusted to subtract therefrom the fair value of such
assets, evidences of indebtedness or subscription rights, options or
warrants so distributed allocable to one share of common stock, as
determined in good faith by the Company's Board of Directors.
(c) Adjustments for Issuances of Additional Stock. Subject to the
---------------------------------------------
exceptions referred to in Section 6.1(e) hereof, in case the Company shall
at any time or from time to time after the Closing Date issue (in a
transaction to which Section 6.1(a) or 6.1(b) is not applicable) any
additional shares of the Company's Common Stock ("Additional Common
-----------------
Stock"), for a consideration per share either (i) less than the then
Current Market Price per share of the Company's Common Stock immediately
prior to the issuance of such Additional Common Stock, or (ii) without
consideration, then (in the case of either clause (i) or (ii)), and
thereafter successively upon each such issuance, the current Exercise Price
shall forthwith be reduced to the price determined by multiplying such
current Exercise Price by a fraction, of which (1) the numerator shall be
(i) the number of shares of the Company's Common Stock outstanding
immediately prior to such issuance (on a fully diluted basis) plus (ii) the
number of shares of the Company's Common Stock which the aggregate amount
of consideration received by the Company upon issuance of the Additional
Common Stock would purchase at the then Current Market Price per share of
the Company's Common Stock, and (2) the denominator shall be (i) the number
of shares of the Company's Common Stock outstanding plus (ii) the number of
shares of Additional Common Stock; provided, however, that such adjustment
-------- -------
shall be made only if such adjustment results in a current Exercise Price
less than the current Exercise Price in effect immediately prior to the
issuance of such Additional Common Stock.
(d) Certain Rules in Applying the Adjustment for Additional Stock
-------------------------------------------------------------
Issuances. For purposes of any adjustment as provided in Section 6.1(c)
---------
hereof, the following provisions shall also be applicable:
(1) Cash Consideration. In case of the issuance of Additional
------------------
Common Stock for cash, the consideration received by the Company
therefor shall be deemed to be the net cash proceeds received by the
Company for such Additional Common Stock after deducting any
commissions or other expenses paid or
B-4
<PAGE>
incurred by the Company for any underwriting of, or otherwise in
connection with the issuance of, such Additional Common Stock.
(2) Non-Cash Consideration. In case of the issuance of Additional
----------------------
Common Stock for a consideration other than cash, or a consideration a
part of which shall be other than cash, the amount of the
consideration other than cash so received or to be received by the
Company shall be deemed to be the value of such consideration at the
time of its receipt by the Company as determined in good faith by the
Board of Directors of the Company, except that where the non-cash
consideration consists of the cancellation, surrender or exchange of
outstanding obligations of the Company (or where such obligations are
otherwise converted into shares of the Company's Common Stock), the
value of the non-cash consideration shall be deemed to be the
principal amount of the obligations canceled, surrendered, satisfied,
exchanged or converted. If the Company receives consideration, part
or all of which consists of publicly traded securities (i.e., in lieu
----
of cash), the value of such non-cash consideration shall be the
aggregate market value of such securities (based on the latest
reported sale price regular way) as of the close of the day
immediately preceding the date of their receipt by the Company.
(3) Options, Warrants, Convertibles, Etc. In case of the
-------------------------------------
issuance, whether by distribution or sale to holders of its Common
Stock or to others, by the Company of (i) any security (other than the
Notes) that is convertible into Common Stock or (ii) any rights,
options or warrants to purchase the Company's Common Stock (other than
this Warrant and except as stated in Section 6.1(e) hereof), if
inclusion thereof in calculating adjustments under this Section 6.1
would result in a current Exercise Price lower than if excluded, the
Company shall be deemed to have issued, for the consideration
described below, the number of shares of the Company's Common Stock
into which such convertible security may be converted when first
convertible, or the number of shares of the Company's Common Stock
deliverable upon the exercise of such rights, options or warrants when
first exercisable, as the case may be (and such shares shall be deemed
to be Additional Common Stock for purposes of Section 6.1(c) hereof).
The consideration deemed to be received by the Company at the time of
the issuance of such convertible securities or such rights, options or
warrants shall be the consideration so received determined as provided
in Section 6.1(d)(1) and (2) hereof after deducting any commissions or
other expenses paid or incurred by the Company for any underwriting
of, or otherwise in connection with, the issuance of such convertible
securities or rights, options or warrants, plus (x) any consideration
or adjustment payment to be received by the Company in connection with
such conversion or, as applicable, (y) the aggregate price at which
shares of the Company's Common Stock are to be delivered upon the
exercise of such rights, options or warrants when first exercisable
(or, if no price is specified and
B-5
<PAGE>
such shares are to be delivered at an option price related to the
market value of the subject Common Stock, an aggregate option price
bearing the same relation to the market value of the subject Common
Stock at the time such rights, options or warrants were granted). If,
subsequently, (1) such number of shares into which such convertible
security is convertible, or which are deliverable upon the exercise of
such rights, options or warrants, is increased or (2) the conversion
or exercise price of such convertible security, rights, options or
warrants is decreased, then the calculations under the preceding two
sentences (and any resulting adjustment to the current Exercise Price
under Section 6.1(c) hereof) with respect to such convertible
security, rights, options or warrants, as the case may be, shall be
recalculated as of the time of such issuance but giving effect to such
changes (but any such recalculation shall not result in the current
Exercise Price being higher than that which would be calculated
without regard to such issuance). On the expiration or termination of
such rights, options or warrants, or rights to convert, the Exercise
Price hereunder shall be readjusted (up or down as the case may be) to
such current Exercise Price as would have been obtained had the
adjustments made with respect to the issuance of such rights, options,
warrants or convertible securities been made upon the basis of the
delivery of only the number of shares of the Company's Common Stock
actually delivered upon the exercise of such rights, options or
warrants or upon the conversion of any such securities and at the
actual exercise or Exercise Prices (but any such recalculation shall
not result in the current Exercise Price being higher than that which
would be calculated without regard to such issuance).
(4) Number of Shares Outstanding. The number of shares of the
----------------------------
Company's Common Stock as at the time outstanding shall exclude all
shares of the Company's Common Stock then owned or held by or for the
account of the Company but shall include the aggregate number of
shares of the Company's Common Stock at the time deliverable in
respect of the convertible securities, rights, options and warrants
referred to in Section 6.1(d)(3) and 6.1(e) hereof; provided that to
--------
the extent that such rights, options, warrants or conversion
privileges are not exercised, such shares of the Company's Common
Stock shall be deemed to be outstanding only until the expiration
dates of the rights, warrants, options or conversion privileges or the
prior cancellation thereof.
(e) Exclusions from the Adjustment for Additional Stock Issuances. No
-------------------------------------------------------------
adjustment of the current Exercise Price under Section 6.1(c) hereof shall
be made as a result of or in connection with:
(1) the issuance of Shares upon conversion of the Notes or
exercise of the Warrants or the issuance of the Notes and the
Warrants;
B-6
<PAGE>
(2) the issuance of the Company's Common Stock to officers,
employees, directors and consultants of the Company or any Subsidiary,
or the grant to or exercise by any such persons of options to purchase
Common Stock of the Company, all (x) as part of incentive compensation
for such persons and (y) pursuant to the Company's stock option plans
described on the Disclosure Schedule to the Purchase Agreement or
other incentive plans, in each case adopted by the Company's Board of
Directors, with approval by a majority of the Company's independent
directors and approval by the Company's shareholders; or
(3) the issuance of the Company's Common Stock upon exercise of
the warrants to purchase Common Stock described on the Disclosure
Schedule to the Purchase Agreement.
(f) Accountant's Certification. Whenever the current Exercise Price
--------------------------
is adjusted as provided in this Section 6.1, the Company will promptly
obtain a certificate of a firm of independent public accountants of
recognized national standing selected by the Board of Directors of the
Company (who may be the regular auditors of the Company) setting forth the
current Exercise Price as so adjusted, the computation of such adjustment
and a brief statement of the facts accounting for such adjustment, and will
mail to the Holder a copy of such certificate from such firm of independent
public accountants.
(g) Antidilution Adjustments under Other Securities. Without limiting
-----------------------------------------------
any other rights available hereunder to the Holder, if there is an
antidilution adjustment (x) under any security which is convertible into
Common Stock of the Company whether issued prior to or after the date
hereof (except for the Notes and the Warrants) or (y) under any right,
option or warrant to purchase Common Stock of the Company whether issued
prior to or after the date hereof which (in the case of clause (x) or (y))
results in a reduction in the exercise or purchase price with respect to
such security, right, option or warrant or results in an increase in the
number of shares obtainable under such security, right, option or warrant,
then an adjustment shall be made under this Section 6.1(g) to the current
Exercise Price hereunder. Any such adjustment under this Section 6.1(g)
shall be whichever of the following results in a lower current Exercise
Price: (A) a reduction in the current Exercise Price equal to the
percentage reduction in such exercise or purchase price with respect to
such security, right, option or warrant or (B) a reduction in the current
Exercise Price which will result in the same percentage increase in the
number of Warrant Shares available under this Warrant as the percentage
increase in the number of shares available under such security, right,
option or warrant. Any such adjustment under this Section 6.1(g) shall
only be made if it would result in a lower current Exercise Price than that
which would be determined pursuant to any other antidilution adjustment
otherwise required under this Warrant as a result of the event or
circumstance which triggered the adjustment to the security, right, option
or warrant described in clause (x) or (y) above (and if any such adjustment
is so made under this Section 6.1(g), then such
B-7
<PAGE>
other antidilution adjustment otherwise required under this Section 6 shall
not be made as a result of such event or circumstance).
(h) Other Adjustments. In case any event shall occur as to which any
-----------------
of the provisions of this Section 6.1 are not strictly applicable but the
failure to make any adjustment would not fairly protect the exercise rights
represented by this Warrant in accordance with the essential intent and
principles of this Section 6.1, then, in each such case, the Company shall
appoint a firm of independent public accountants of recognized national
standing selected by the Board of Directors of the Company (who may be the
regular auditors of the Company), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 6.1, necessary to preserve, without
dilution, the exercise rights represented by this Warrant. Upon receipt of
such opinion, the Company will promptly mail copies thereof to the Holder
and shall make the adjustments described therein.
(i) Meaning of "Issuance". References in this Warrant to "issuances"
---------------------
of stock by the Company include issuances by the Company of previously
unissued shares and issuances or other transfers by the Company of treasury
stock.
6.2 Company's Consolidation or Merger. If the Company shall at any time
---------------------------------
consolidate with or merge with or into another Person, or the Company shall
sell, transfer or lease all or substantially all of its assets, or the Company
shall change its Common Stock into property or other securities, then, in any
such case, the Holder shall thereupon (and thereafter) be entitled to receive,
upon the exercise of such Warrant, in whole or in part, the securities or other
property to which (and upon the same terms and with the same rights as) the
Holder would have been entitled if such exercise had occurred immediately prior
to such consolidation or merger, such sale of assets or such change (with any
record date requirement being deemed to have been satisfied), and such
conversion rights shall thereafter continue to be subject to further adjustments
under Section 6.1 hereof. The Company shall take such steps in connection with
such consolidation or merger, such sale of assets or such change as may be
necessary to assure such Holder that the provisions of this Warrant and the
Purchase Agreement (including, without limitation, Section 17 of the Purchase
Agreement) shall thereafter be applicable in relation to any securities or
property thereafter deliverable upon the exercise of the Warrant, including, but
not limited to, obtaining a written obligation to supply such securities or
property upon such exercise and to be so bound by the Warrant.
6.3 Notice to Holders.
-----------------
In case at any time
(i) the Company shall take any action which would require an
adjustment in the current Exercise Price pursuant to Section 6.1; or
B-8
<PAGE>
(ii) there shall be any reorganization, reclassification or
change of the Company's Common Stock (other than a change in par value
or from par value to no par value or from no par value to par value),
or any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required, or any
sale, transfer or lease of all or substantially all of the assets of
the Company; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
then, in any one or more of such cases, the Company shall give written notice to
the Holder, not less than twenty (20) days before any record date or other date
set for definitive action, of the date on which such action, distribution,
reorganization, reclassification, change, sale, transfer, lease, consolidation,
merger, dissolution, liquidation or winding-up shall take place, as the case may
be. Such notice shall also set forth such facts as shall indicate the effect of
any such action (to the extent such effect may be known at the date of such
notice) on the current Exercise Price and the kind and amount of the shares and
other securities and property deliverable upon exercise of the Warrant. Such
notice shall also specify any date as of which the holders of the Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon any such reorganization, reclassification,
change, sale, transfer, lease, consolidation, merger, dissolution, liquidation
or winding-up, as the case may be.
7. Transfer.
--------
(a) Exercise or Transfer Without Registration. The Holder agrees not
-----------------------------------------
to transfer this Warrant except in accordance with Section 16 of the Purchase
Agreement.
(b) Registration Rights. The Holder is entitled to the benefits of
-------------------
Section 17 of the Purchase Agreement with respect to registration of the Warrant
Shares under the Securities Act.
8. Further Covenants of the Company.
--------------------------------
(a) Reservation of Stock. The Company shall at all times reserve and
--------------------
keep available, solely for issuance and delivery upon the exercise of this
Warrant, that number of Warrant Shares from time to time issuable upon the
exercise of this Warrant.
(b) No Liens. All Warrant Shares that are issued upon the exercise of
--------
rights represented by this Warrant shall be fully paid, nonassessable, and free
from all taxes, liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously with such issue).
B-9
<PAGE>
(c) Fractional Shares. No fractional shares of Common Stock are to be
-----------------
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fraction of a share which would otherwise be
issuable in an amount equal to the same fraction of the highest market price per
share of Common Stock on the day of exercise, as determined by the Company.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
-------------------------------------------------
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new warrant of like tenor and dated as of the date of such
cancellation in lieu of this Warrant.
10. Remedies. The Company stipulates that the remedies at law of the holder of
--------
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
adequate and may be enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof or otherwise.
11. Miscellaneous. All notices, certificates and other communications from or
-------------
at the request of the Company to the Holder shall be mailed by first class,
registered or certified mail, postage prepaid, to such address as may have been
furnished to the Company in writing by the Holder. This Agreement and any of the
terms hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Washington. The headings in this Agreement are for reference only and shall
not limit or otherwise affect any of the terms hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by its duly authorized officer and to be dated as of the
issue date set forth on the first page of this Warrant.
WESTOWER CORPORATION
By:_________________________________
Name:
Title:
Attest:
________________________________
Secretary
B-10
<PAGE>
NOTICE OF EXERCISE OF WARRANT
-----------------------------
TO: WESTOWER CORPORATION
[_] Pursuant to the terms of the attached Warrant, the undersigned hereby
elects to purchase ______ shares of Common Stock of Westower Corporation (the
"Company"), and tenders herewith payment of the Exercise Price of such shares in
full.
[_] Pursuant to the terms of the attached Warrant, the undersigned hereby
elects to make a Cashless Exercise as provided for in Section 4 of such Warrant
with respect to _______ Warrant Shares.
(Check and complete the appropriate paragraph)
Please issue a certificate or certificates representing said shares of
Common Stock, in the name of the undersigned or in such other name(s) as is/are
specified immediately below or, if necessary, on an attachment hereto:
NAME ADDRESS
---- -------
DATE:____________________ HOLDER:_____________________________
<PAGE>
EXHIBIT C
DISCLOSURE SCHEDULE
<PAGE>
EXHIBIT D
MATTERS TO BE COVERED IN OPINION OF
COUNSEL TO THE COMPANY
1. The Company is a corporation duly incorporated and validly existing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and corporate authority to own its properties and operate its
business as presently conducted.
2. The authorized capital stock of the Company consists of 15,000,000
shares of Common Stock. All of the outstanding shares of the capital stock of
the Company have been validly authorized and issued and are fully paid and non-
assessable. To the best of such counsel's knowledge, there are no outstanding
options, warrants, rights, convertible securities or other agreements under
which the Company may become obligated to issue, sell or transfer shares of its
capital stock or other securities, other than as disclosed on the Disclosure
Schedule.
3. The execution, delivery and performance by the Company of the Purchase
Agreement (including the issuance of the Notes, the Warrants and the Shares as
contemplated by the Purchase Agreement) have been duly authorized by all
necessary corporate actions required on behalf of the Company. The Purchase
Agreement, the Notes and the Warrants have been duly executed and delivered by
the Company and constitute a legal, valid and binding obligations of the
Company, subject to any applicable bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium or other laws affecting the enforcement of
creditors' rights generally.
4. The execution, delivery and performance by each Co-obligor Subsidiary
organized under the laws of the State of Washington of its joinder has been duly
authorized by all necessary corporate action by such Co-obligor Subsidiary.
5. None of the execution, delivery or performance by the Company of the
Purchase Agreement (including without limitation the issuance of the Notes, the
Warrants and the Shares as contemplated by the Purchase Agreement) violates or
conflicts with or will violate or conflict with any provision of (A) the
articles of incorporation or bylaws of the Company, (B) any law, rule or
regulation, (C) any order, judgment, writ, injunction or decree known to such
counsel applicable to the Company or any of its properties (or to which the
Company or its properties may be bound), or (D) any agreement, indenture or
other instrument known to such counsel.
6. When issued upon conversion or exercise in accordance with the terms
of the Notes or Warrants, respectively, the Shares will be validly issued, fully
paid and non-assessable.
7. There are no taxes or other governmental charges payable by the
Company or the Purchaser in connection with the execution, delivery and
performance by the Company of the
<PAGE>
Purchase Agreement (including without limitation the issuance of the Notes, the
Warrants and the Shares under the Purchase Agreement).
8. Based in part on representations of the Purchaser in the Purchase
Agreement, the offer, sale, purchase, issuance and delivery of the Notes and
Warrants pursuant to the Purchase Documents constitute exempted transactions
under the Securities Act of 1933, as amended (the "Act"), and neither the
registration of the Notes and Warrants under the Act nor the qualification of an
indenture with respect to the Notes under the Trust Indenture Act of 1939, as
amended, is required in connection with any such offer, sale, purchase, issue or
delivery of the Notes and Warrants. In addition, assuming the holder of a Note
or Warrant is, at the time of conversion or exercise, as the case may be, the
Purchaser or a Person that acquired the Note or Warrant in accordance with the
terms and conditions of Section 16 of the Purchase Agreement, the issuance and
delivery of Shares upon the conversion of a Note or exercise of the Warrant by
such holder will likewise constitute an exempted transaction under the Act.
9. The offer, sale, purchase, issuance and delivery of the Notes pursuant
to the Purchase Documents do not violate Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
D-2
<PAGE>
EXHIBIT E
JOINDER FOR CO-OBLIGOR SUBSIDIARIES
The terms and provisions of the Purchase Agreement dated May 11, 1998 (the
"Purchase Agreement") regarding $15,000,000 aggregate principal amount of 7%
Convertible Senior Subordinated Notes due April 30, 2007 of Westower Corporation
are hereby accepted and agreed to, and the undersigned, as a wholly-owned
subsidiary of Westower Corporation, hereby agrees to be a Co-obligor Subsidiary
under Section 21.10 of the Purchase Agreement with the effect set forth therein.
[WHOLLY-OWNED SUBSIDIARY]
By:_________________________________
Name:
Title:
