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EXHIBIT 10.29
EXECUTION COPY
NOTE AND WARRANT PURCHASE AGREEMENT
Dated as of June 21, 1999
by and among
XXXXXXX COMMUNICATIONS CORPORATION,
as the Issuer,
PRIORITY INTERNATIONAL COMMUNICATIONS, INC.,
ATN COMMUNICATIONS, INC., INCOMEX, INC.,
and MCC ACQUISITION CORP.,
as Guarantors,
and
each of the purchasers of securities
listed on Schedule 1 hereto,
as the Purchasers
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TABLE OF CONTENTS
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PAGE
ARTICLE 1. DEFINITIONS....................................................................................1
ARTICLE 2. ISSUANCE AND PURCHASE OF NOTES AND WARRANTS....................................................4
Section 2.1. Authorization of Issuance of the Notes and Warrants...........................4
Section 2.2. Purchase and Sale of Notes and Warrants.......................................4
Section 2.3. Interest on the Notes.........................................................4
Section 2.4. Maturity of Notes; Prepayments................................................4
Section 2.5. Investment Representations and Covenants......................................4
ARTICLE 3. OTHER PROVISIONS RELATING TO THE NOTES.........................................................5
Section 3.1. Making of Payments............................................................5
Section 3.2. Default Rate of Interest......................................................5
Section 3.3. Calculation of Interest.......................................................6
Section 3.4. Usury.........................................................................6
Section 3.5. Ranking of Notes..............................................................6
ARTICLE 4. CONDITIONS PRECEDENT TO PURCHASE OF THE NOTES AND THE WARRANTS.................................6
Section 4.1. Documentation.................................................................6
Section 4.2. Resolutions...................................................................7
Section 4.3. No Injunction, etc............................................................7
Section 4.4 No Defaults...................................................................7
Section 4.5. Representations Accurate......................................................7
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.................................................................8
Section 5.1. Corporate Existence .........................................................8
Section 5.2. Authorization; No Conflict....................................................8
Section 5.3. Approvals.....................................................................8
Section 5.4. Binding Obligations...........................................................8
Section 5.5. Federal Reserve Regulations...................................................9
Section 5.6. Offering of Notes and Warrants................................................9
Section 5.7. Financial Information.........................................................9
Section 5.8. Solvency......................................................................9
Section 5.9. Material Adverse Change.......................................................9
Section 5.10. Absence of Default............................................................9
Section 5.11. Litigation, Legislation, etc.................................................10
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Section 5.12. Government Regulation........................................................10
Section 5.13. Taxes........................................................................10
Section 5.14. ERISA........................................................................10
Section 5.15. Labor Controversies..........................................................10
Section 5.16. Ownership and Condition of Properties........................................10
Section 5.17. Intellectual Property........................................................11
Section 5.18. Accuracy of Information......................................................11
Section 5.19. Certain Indebtedness.........................................................11
Section 5.20. No Burdensome Agreements.....................................................11
Section 5.21. Consents.....................................................................11
Section 5.22. Subsidiaries.................................................................11
Section 5.23. Trade Relations..............................................................11
Section 5.24. Capitalization of Issuer.....................................................12
ARTICLE 6. COVENANTS.....................................................................................12
Section 6.1. Preservation of Corporate Existence..........................................12
Section 6.2. Compliance with Laws.........................................................12
Section 6.3. Records and Accounts.........................................................12
Section 6.4. Maintenance of Properties....................................................12
Section 6.5. Use of Proceeds..............................................................13
Section 6.6. Employee Plans...............................................................13
Section 6.7. Subordination of Insider Indebtedness; Agreement to
Grant Liens..................................................................13
Section 6.8. Indebtedness.................................................................13
Section 6.9. Liens........................................................................14
Section 6.10. Restricted Payments, etc.....................................................15
Section 6.11. Consolidation, Merger, Subsidiaries, etc.....................................15
Section 6.12. Asset Dispositions, etc......................................................15
Section 6.13. Transactions with Affiliates.................................................15
Section 6.14. Inconsistent Agreements......................................................15
ARTICLE 7. GUARANTY......................................................................................15
Section 7.1. The Guaranty.................................................................15
Section 7.2. Demand by the Holders........................................................16
Section 7.3. Enforcement of Guaranty......................................................17
Section 7.4. Waivers......................................................................17
Section 7.5. Benefits of Guaranty.........................................................17
Section 7.6. Modification of Notes, etc...................................................17
Section 7.7. Reinstatement................................................................18
Section 7.8. Waiver of Subrogation, etc...................................................19
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Section 7.9 Contribution Rights..........................................................19
Section 7.10. Election of Remedies, Etc....................................................19
Section 7.11. Continuing Guaranty..........................................................20
Section 7.12. Limitation on Guaranty Obligations...........................................20
ARTICLE 8. EVENTS OF DEFAULT.............................................................................21
Section 8.1. Events of Default............................................................21
Section 8.2. Remedies on Default..........................................................21
ARTICLE 9 REGISTRATION; EXCHANGE; SUBSTITUTION
OF NOTES AND WARRANT CERTIFICATES.............................................................22
Section 9.1. Registration of Notes and Warrant Certificates...............................22
Section 9.2. Transfer and Exchange of Notes and Warrant Certificates......................22
Section 9.3. Replacement of Notes and Warrant Certificates................................23
ARTICLE 10. MISCELLANEOUS.................................................................................23
Section 10.1. Notices......................................................................23
Section 10.2. No Waiver....................................................................24
Section 10.3. Amendments, Etc..............................................................24
Section 10.4. Successors and Assigns.......................................................24
Section 10.5. Governing Law................................................................24
Section 10.6. Survival of Representations and Warranties...................................24
Section 10.7. Severability.................................................................25
Section 10.8. Counterparts.................................................................25
Section 10.9. Entire Agreement.............................................................25
Section 10.10. Cost and Expenses............................................................25
Section 10.11. Consent to Jurisdiction......................................................25
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Schedules and Exhibits
Schedule 1 Purchasers
Exhibit A - Form of Note
Exhibit B - Form of Warrant Certificate
Exhibit C - Form of Registration Rights Agreement
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NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT dated as of June 21, 1999 by
and among XXXXXXX COMMUNICATIONS CORPORATION, an Iowa corporation, as issuer of
the Notes and the Warrants (the "Issuer"), PRIORITY INTERNATIONAL
COMMUNICATIONS, INC., a Texas corporation, ATN COMMUNICATIONS, INC., a Delaware
Corporation, INCOMEX, INC., a California corporation, and MCC ACQUISITION CORP.,
an Iowa corporation, as guarantors (the "Guarantors"), and each of the Persons
listed on Schedule 1 hereto (each a "Purchaser" and, collectively, the
"Purchasers").
WHEREAS, the Issuer desires to issue and each of the Purchasers desires
to purchase the Notes and the Warrants described herein on the terms and
conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual premises,
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1.
DEFINITIONS
In addition to the other terms defined herein, the following terms used
herein shall have the meanings herein specified (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls or is controlled by or under common control with such
Person. A Person shall be deemed to be "controlled by" any other Person if such
other Person possesses, directly or indirectly, power (a) to vote 5% or more of
the securities having ordinary voting power for the election of directors of
such Person or (b) to direct or cause the direction of the management or
policies of such Person whether by contract or otherwise.
"Agreement" shall mean this Note and Warrant Purchase Agreement, as the
same may be amended or otherwise modified from time to time in accordance with
the terms hereof.
"Applicable Law" shall mean all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental authorities and
regulatory bodies and all orders and decrees of all courts, tribunals and
arbitrators.
"Business Day" shall mean any day on which commercial banks located in
New York, New York are required or permitted by law to be open for the purpose
of conducting a commercial banking business.
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"Closing Date" shall mean June 21, 1999 or such later date on which
the conditions set forth in Article 4 hereof are satisfied.
"Common Stock" shall mean the Common Stock of the Issuer, no par value
per share, 40,000,000 shares of which are authorized pursuant to the articles of
incorporation of the Issuer, and of which 10,329,867 shares are outstanding as
of the Closing Date.
"Default" shall mean any event that, with notice or lapse of time or
both, would constitute an Event of Default.
"Dollar" and the sign "$" shall mean the lawful money of the United
States of America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulation thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" shall mean any of the events specified in
Section 8.1 hereof.
"Exercise Price" shall mean $3.50 per share of Common Stock, as
adjusted from time to time in accordance with the terms of the Warrant
Certificates.
"Financing Transaction" shall mean (a) the closing and initial funding
of the contemplated $25,000,000 credit facility arranged by Paribas, or (b) any
other financing transaction or series of related financing transactions (i)
consummated by the Issuer or any of its Subsidiaries after the date hereof, and
(ii) consisting of the issuance of equity or debt securities of the Issuer or
any of its Subsidiaries or the incurrence by the Issuer or any of its
Subsidiaries of indebtedness for borrowed money (other than (A) borrowings under
lines of credit existing as of the date hereof in the ordinary course of
business up to the maximum principal amount that may be incurred under such
lines of credit as of the date hereof, (B) up to $3,000,000 to be raised by
Issuer through a sale of a new series of preferred stock in conjunction with the
financing described in clause (a) of this definition, or (C) any issuances of
common stock or preferred stock to current holders of the Issuer's debt in
exchange therefor).
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States.
"Issuer" has the meaning set forth in the preamble to this Agreement,
and shall include the Issuer's successors and assigns.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the properties, operations, business or financial condition of the Issuer and
its Subsidiaries, taken as a whole, (b) the Issuer's ability to pay the Notes in
accordance with the terms thereof, or (c) the Issuer's or any Guarantor's
ability to perform its obligations under the Transaction Documents.
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"Maturity Date" shall mean July 21, 1999.
"Note" shall mean a Fixed Rate Senior Note due July 21, 1999, issued by
the Issuer pursuant to Section 2.1 hereof in substantially the form of Exhibit A
hereto, maturing on the Maturity Date, or such earlier date as provided herein,
and bearing interest as set forth in this Agreement, and each promissory note
delivered in substitution, extension or exchange for any such Note pursuant to
the provisions of this Agreement.
"Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, trust, unincorporated association or other
entity, or a government or any political subdivision or agency thereof.
"Purchaser" has the meaning set forth in the preamble to this
Agreement, and shall include the successors and registered assigns of any
Purchaser permitted under this Agreement and the other Transaction Documents.
"Registration Rights Agreement" shall mean the registration rights
agreement among the Issuer and the Purchasers, in the form of Exhibit C hereto,
as the same may be amended or otherwise modified from time to time.
"Requisite Holders" shall mean the Requisite Purchasers and the holders
of Warrant Certificates for the purchase of more than fifty percent (50%) of all
shares of Common Stock issuable upon exercise of all Warrant Certificates.
"Requisite Purchasers" shall mean Purchasers who individually or
collectively hold more than fifty percent (50%) of the outstanding principal
amount of the Notes.
"Stock" means capital stock of the Issuer, whether common or preferred
and whether voting or nonvoting.
"Transaction Documents" shall mean, collectively, this Agreement, the
Notes, the Warrant Certificates and the Registration Rights Agreement, in each
case either as originally executed or as the same may be amended or otherwise
modified from time to time.
"Warrant Certificate" shall mean a stock purchase warrant issued and
delivered by the Issuer on the Closing Date pursuant to Article 2 hereof, in
each case in substantially the form of Exhibit B hereto, and each stock purchase
warrant issued and delivered in substitution or exchange for any Warrant
Certificate.
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ARTICLE 2.
ISSUANCE AND PURCHASE OF THE NOTES AND WARRANTS
Section 1.1. Authorization of Issuance of the Notes and Warrants. The
Issuer has duly authorized the issuance and sale, on the terms and subject to
the conditions set forth herein, of one or more Notes in the aggregate principal
amount of up to $2,000,000, to be dated as of the Closing Date. The Issuer has
duly authorized the issuance and sale, on the terms and subject to the
conditions set forth herein, of Warrant Certificates evidencing warrants for the
purchase of 250,000 shares of the Common Stock of the Issuer (subject to
adjustment as provided therein).
Section 1.2. Purchase and Sale of Notes and Warrants. The Issuer hereby
agrees to sell to the Purchasers and, subject to the terms and conditions set
forth herein and in reliance upon the representations and warranties of the
Issuer contained herein, Purchasers hereby agree to purchase from the Issuer the
Notes and the Warrant Certificates described in Section 2.1 hereof for an
aggregate purchase price of $2,000,000. The purchase price paid by each
Purchaser for the Note and Warrant Certificate issued to such Purchaser on the
Closing Date shall be equal to the principal amount of such Note issued to such
Purchaser. The Issuer shall pay when due any and all state and federal issue
taxes which may be payable in respect of the issuance of the Warrant
Certificates or the issuance of any shares of Common Stock of the Issuer upon
exercise of the Warrant Certificates.
Section 1.3. Interest on the Notes. Interest on the Notes shall accrue
at a rate per annum equal to twelve percent (12.00%), subject to the provisions
of Article 3 hereof. Interest shall be payable (i) upon any prepayment of the
Note to the date of prepayment on the amount prepaid, or (ii) at maturity of the
Note, whether on the Maturity Date, by acceleration or otherwise.
Section 1.4. Maturity of the Notes; Prepayments.
(a) The outstanding principal amount of the Notes, together with
accrued and unpaid interest thereon, shall become due and payable on the
Maturity Date.
(b) Upon the occurrence of a Financing Event, the outstanding
principal amount of all Notes shall be due and payable in an amount equal to the
lesser of (i) the outstanding principal amount of the Notes and (ii) the
aggregate gross cash proceeds from such Financing Event.
(c) The Issuer may prepay the Notes in whole or in part at any
time, provided that (i) the Issuer provides at least one (1) days' prior written
notice to the Purchasers of such proposed prepayment, and (ii) such prepayment
is accompanied by all accrued and unpaid interest on the amount prepaid to the
date of prepayment.
Section 1.5. Investment Representations and Covenants. Each Purchaser
represents and warrants that it is purchasing the Note and Warrant Certificate
to be issued to such Purchaser on the Closing Date for its own account, for
investment purposes and not with a view to the distribution
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thereof. Each Purchaser agrees that it will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the
Notes or Warrant Certificates (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of the Notes or Warrant Certificates) except
in compliance with all applicable securities laws, and in any event without (i)
an effective registration statement under the Securities Act of 1933, as
amended, and all applicable state securities laws, or (ii) an opinion of
counsel, which counsel shall be reasonably satisfactory to the Issuer and its
counsel, that registration is not required under the Securities Act of 1933, as
amended, or any applicable state securities laws (the Issuer hereby acknowledges
that King & Spalding is acceptable counsel). In addition, the transfer of any
shares of Common Stock issued after the Closing Date shall be restricted in the
same manner and to the same extent as the Notes and the Warrant Certificates
issued on the Closing Date, and the certificates representing such shares of
Common Stock shall bear substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR
(II) DELIVERY OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
ISSUER THAT REGISTRATION UNDER SUCH ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.
The Purchasers and the Issuer agree to execute such other documents and
instruments as counsel for the Purchasers and counsel for the Issuer reasonably
deem necessary to effect the compliance of the issuance of the Notes and the
Warrant Certificates, and any shares of Common Stock issued after the Closing
Date, with all applicable federal and state securities laws.
ARTICLE 3.
OTHER PROVISIONS RELATING TO THE NOTES
Section 1.6. Making of Payments. Except as otherwise expressly provided
in this Agreement, the Issuer shall make each payment of principal of and
interest on the Notes not later than 2:00 p.m. (New York, New York time) on the
day when due in Dollars by wire transfer of immediately available funds in
accordance with the written instructions of the Purchasers. All payments
received after that hour shall be deemed to have been received by the Purchaser
on the next following Business Day.
Section 1.7. Default Rate of Interest. If the Issuer shall fail to pay
on the due date therefor, whether on the Maturity Date, by acceleration or
otherwise, any principal owing under the Notes,
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then, in lieu of the interest rate otherwise applicable, interest shall accrue
on such unpaid principal from the due date to but excluding the date on which
such principal is paid in full (i) for the period commencing on the due date and
ending thirty (30) days thereafter, at a rate per annum equal to fourteen
percent (14%), (ii) for the period commencing on the thirty-first (31st) day
following the due date and ending sixty (60) days thereafter, at a rate per
annum equal to sixteen percent (16%), and (iii) for the period commencing on the
sixty-first (61st) day following the due date to but excluding the date on which
such principal is paid in full, at a rate per annum equal to eighteen percent
(18%) (interest accruing pursuant to this Section 3.2, the "Default Rate").
Interest calculated at the Default Rate shall be due and payable upon demand by
the Purchasers.
Section 1.8. Calculation of Interest. Interest payable on the Notes
shall be calculated on the basis of a year of 360 days consisting of twelve
30-day months. If the date for any payment of principal is extended (whether by
operation of this Agreement, any provision of law or otherwise), interest shall
be payable for such extended time at the rates provided herein. Whenever any
payment hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be due on the next succeeding Business Day.
Section 1.9. Usury. In no event shall the amount of interest due or
payable on any Note, when aggregated with all amounts payable by the Issuer
under any of the Transaction Documents that are deemed or construed to be
interest, exceed the maximum rate of interest allowed by Applicable Law and, in
the event any such payment is made by the Issuer or received by a Purchaser,
then such excess sum shall be credited as a payment of principal. It is the
express intent of the parties hereto that the Issuer not pay, and the Purchasers
not receive, directly or indirectly, in any manner whatsoever, interest in
excess of that which may be lawfully paid by the Issuer under Applicable Law.
Section 1.10. Ranking of Notes. The Notes shall constitute senior
unsecured obligations of the Issuer ranking pari passu will all other senior
unsecured indebtedness of the Issuer and senior to all subordinated indebtedness
of the Issuer.
ARTICLE 4.
CONDITIONS PRECEDENT TO PURCHASE OF THE
NOTES AND THE WARRANTS
The obligations of the Purchasers under this Agreement are subject to
the satisfaction of each of the following conditions on the Closing Date:
Section 1.11. Documentation. Each Purchaser shall have received, on or
prior to the Closing Date, the following:
(1) a duly executed counterpart of this Agreement;
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(2) a Note in the principal amount equal to the amount set
forth opposite the name of such Purchaser on Schedule 1 hereto;
(3) a duly executed Warrant Certificate evidencing warrants to
purchase the number of shares of Common Stock set forth opposite the
name of such Purchaser on Schedule 1 hereto;
(4) a duly executed Registration Rights Agreement; and
(5) an opinion of counsel in form and substance reasonable
satisfactory to the Purchasers and their counsel and covering such
matters as the Purchasers shall reasonably request.
Section 1.12. Resolutions, etc. The Purchasers shall have received:
(1) a certificate, dated the Closing Date, of the Secretary or
an assistant secretary of each of the Issuer and the Guarantors as to
(i) resolutions of its board of directors, then in full force and
effect authorizing the execution, delivery and performance of
Transaction Documents, and (ii) the incumbency and signatures of those
of its officers authorized to act with respect to the Transaction
Documents to which it is party;
(2) certified copies of the certificate or articles of
incorporation and bylaws of each of the Issuer and the Guarantors;
(3) a so-called "good standing" certificate with respect to
each of the Issuer and the Guarantors from the appropriate governmental
authority governmental authority or regulatory body of the state of its
incorporation;
(4) evidence of qualification of each of the Issuer and the
Guarantors to do business in each other jurisdiction in which the
failure to so qualify could result in a Material Adverse Effect; and
(5) such other documents (certified if requested) as the
Purchasers may request with respect to this Agreement, the Notes, any
other Transaction Document and the transactions contemplated hereby and
thereby.
Section 1.13. No Injunction, etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental authority or regulatory or legislative body to
enjoin, restrain or prohibit, or to obtain substantial damages in respect of,
this Agreement or the consummation of the transactions contemplated hereby.
Section 1.14. No Default, Etc. No Default or Event of Default shall
exist.
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Section 1.15. Representations Accurate. All representations and
warranties made by the Issuer and the Guarantors herein or in any other
Transaction Document shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on and
as of the Closing Date other than any such representation or warranty made as of
a specified date which shall be true and correct in all material respects as of
such specified date.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
Each of the Issuer and the Guarantors hereby represents and warrants to
the Purchasers that the following statements are true and correct:
Section 1.16. Corporate Existence. Each of the Issuer and the
Guarantors is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has all requisite
corporate power and authority to conduct its business and to own its properties.
Each of the Issuer and the Guarantors has all requisite corporate power and
authority to execute and deliver and to perform all of its obligations under the
Transaction Documents. Each of the Issuer and the Guarantors is duly qualified
and in good standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its activities or the character of the
properties it owns or leases makes such qualification necessary and where the
failure to be so qualified could have a Material Adverse Effect.
Section 1.17. Authorization; No Conflict. The execution, delivery and
performance by the Issuer and the Guarantors of the Transaction Documents are
within their respective corporate powers, have been duly authorized by all
necessary corporate action, and do not violate any provision of any Applicable
Law, the articles of incorporation or bylaws of the Issuer and the Guarantors or
any material agreement, indenture or instrument to which the Issuer is a party
or by which the Issuer, any Guarantor, or any of their respective properties is
bound.
Section 1.18. Approvals. No consent, authorization or approval of, and
no notice to or filing with, any governmental authority or regulatory body is
required in connection with the execution, delivery, performance, validity or
enforcement of any Transaction Document which has not been obtained or made as
of the date hereof.
Section 1.19. Binding Obligations. This Agreement constitutes a legal,
valid and binding obligation of the Issuer and the Guarantors, enforceable
against the Issuer and the Guarantors in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law). Each of the other Transaction Documents
constitutes a legal, valid and binding obligation of the Issuer, enforceable
against the Issuer in accordance with its terms, except as such enforceability
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may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
Section 1.20. Federal Reserve Regulations. None of the proceeds of the
Notes and Warrant Certificates will be used, directly or indirectly, for the
purpose of purchasing or carrying any "margin security" or "margin stock" or for
the purpose of reducing or retiring any debt that originally was incurred to
purchase or carry a "margin security" or "margin stock" or for any other purpose
that might constitute this transaction a "purpose credit" within the meaning of
the regulations of the Board of Governors of the Federal Reserve System.
Section 1.21. Offering of Notes and Warrants. Neither the Issuer nor,
to the best knowledge of the Issuer, anyone acting on its behalf has offered the
Notes, the Warrant Certificates or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than the Purchasers.
Neither the Issuer nor, to the best knowledge of the Issuer, anyone acting on
its behalf, has taken or will take any action which would subject the issuance
or sale of the Notes and the Warrant Certificates to Section 5 of the Securities
Act of 1933, as amended from time to time, or the registration or qualification
provisions of the blue sky laws of any state.
Section 1.22. Financial Information. All balance sheets, all statements
of operations, stockholders' equity and cash flows, and all other financial
information of the Issuer and its Subsidiaries which have been furnished by or
on behalf of the Issuer and its Subsidiaries to the Purchasers for the purposes
of or in connection with this Agreement or any transaction contemplated hereby,
have been prepared in accordance with GAAP consistently applied throughout the
periods involved and present fairly in all material respects the matters
reflected therein subject, in the case of unaudited statements, to changes
resulting from normal year-end audit adjustments and to the absence of
footnotes. As of the date hereof, neither the Issuer nor any of its Subsidiaries
has material contingent liabilities or material liabilities for taxes, long-term
leases or unusual forward or long-term commitments which are not reflected in
said financial statements.
Section 1.23. Solvency. After giving effect to the issuance of the
Notes and to the consummation of the other transactions contemplated by this
Agreement and the other Transaction Documents to occur on the Closing Date, each
of the Issuer and the Guarantors is solvent.
Section 1.24. Material Adverse Change. Since December 31, 1998, there
has been no material adverse change in the condition (financial or otherwise),
operations, performance, business, properties or prospects of the Issuer and its
Subsidiaries, taken as a whole.
Section 1.25. Absence of Default. Except as disclosed in the Issuer's
most recent annual report filed on Form 10KSB or the Issuer's most recent
quarterly report filed on Form 10QSB in each case with the Securities and
Exchange Commission, neither the Issuer nor any of its Subsidiaries is in
default in the payment of (or in the performance of any obligation applicable
to) any material
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indebtedness, or is in default under any regulation of any governmental
authority governmental authority or regulatory body or court decree or order, or
in default under any requirement of law which could result in a Material Adverse
Effect.
Section 1.26. Litigation, Legislation, etc. Except as disclosed in the
Issuer's most recent annual report filed on Form 10KSB or the Issuer's most
recent quarterly report filed on Form 10QSB in each case with the Securities and
Exchange Commission, there is no pending or, to the knowledge of the Issuer,
threatened litigation, arbitration or governmental investigation, proceeding or
inquiry which, if adversely determined, could result in a Material Adverse
Effect; and none of the proceedings set forth in said Form 10KSB or Form 10QSB
seeks to amend, modify or enjoin the transactions contemplated hereby or is
likely to be adversely determined. There is no legislation, governmental
regulation or judicial decision known to the Issuer that could result in a
Material Adverse Effect.
Section 1.27. Government Regulation. Neither the Issuer nor any of its
subsidiaries is an "investment company" within the meaning of the Investment
Holding Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended, or subject to
regulation under the Federal Power Act, the Interstate Commerce Act or any other
federal or state law limiting the Issuers' ability to issue the Notes or of any
Guarantor to otherwise incur its obligations under this Agreement or to execute,
deliver or perform the Transaction Documents to which it is party.
Section 5.1. Taxes. Each of the Issuer and its present or past
Subsidiaries has filed all tax returns and reports required by law to have been
filed by it and has paid all taxes and charges thereby shown to be owing, except
any such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books, except where the failure to file any
such tax return or report or to pay any such taxes or charges could not result
in a Material Adverse Effect.
Section 1.28. ERISA. The Issuer and its Subsidiaries (i) are not party
to any employee benefit plan subject to part 3 of Title I of ERISA and (ii) are
in compliance in all material respects with ERISA. The consummation of the
transactions provided for in this Agreement and compliance by the Issuer and the
Guarantors with the provisions of the Transaction Documents will not involve any
prohibited transaction within the meaning of ERISA.
Section 5.2. Labor Controversies. There are no labor controversies
pending or, to the best knowledge of the Issuer, threatened, relating to the
Issuer or any of its Subsidiaries.
Section 5.3. Ownership and Condition of Properties. Each of the Issuer
and its Subsidiaries has good title to all of its material properties and assets
of any nature whatsoever, free and clear of all liens except as permitted
pursuant to Section 6.9. All of the assets and properties owned by, leased to or
used by the Issuer or any of its Subsidiaries material to the conduct of their
business are in adequate operating condition and repair, ordinary wear and tear
excepted, and are free and clear
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of known defects except for defects which do not substantially interfere with
the use thereof in the conduct of normal operations.
Section 5.4. Intellectual Property. Each of the Issuer and its
Subsidiaries owns or uses pursuant to valid licenses all intellectual property,
and has obtained assignments of all licenses and other rights, as the Issuer
considers necessary for or as are otherwise material to the conduct of the
business of the Issuer and its Subsidiaries as now conducted without,
individually or in the aggregate, any infringement upon rights of other Persons
which could result in a Material Adverse Effect.
Section 1.29. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Issuer or any
of its Subsidiaries to any Purchaser for purposes of or in connection with this
Agreement or any transaction contemplated hereby is true and accurate in every
material respect on the date as of which such information is dated or certified
and as of the date of execution and delivery of this Agreement and such
information is not incomplete by omitting to state any material fact necessary
to make such information not misleading. Neither this Agreement nor any document
or statement furnished to any of the Purchasers by or on behalf of the Issuer or
any of its Subsidiaries contain any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements contained
herein or therein not materially misleading.
Section 1.30. Certain Indebtedness. Except as disclosed in the Issuer's
most recent annual report filed on Form 10KSB or the Issuer's most recent
quarterly report filed on Form 10QSB in each case with the Securities and
Exchange Commission and on Schedule 5.19 hereto, as of the Closing Date the
Issuer and its Subsidiaries do not have any obligations in respect of
indebtedness which (a) is for borrowed money (other than drawings under lines of
credit in the ordinary course of business and in an aggregate amount outstanding
not exceeding the maximum committed amounts of such lines of credit as of May
31, 1999 and disclosed on Schedule 5.19 hereto), or (b) is not incurred in the
ordinary course of the business of Issuer or any of its Subsidiaries in a manner
and to the extent consistent with past practice, or (c) is material to the
financial condition, operations, businesses, properties or prospects of the
Issuer or any of its Subsidiaries.
Section 1.31. No Burdensome Agreements. Neither the Issuer nor any of
its Subsidiaries is a party to or has assumed any indenture, loan or credit
agreement or any lease or other agreement or instrument, or is subject to any
charter or other corporate restriction, in any case that could result in a
Material Adverse Effect.
Section 1.32. Consents. The Issuer and its Subsidiaries have all
material permits and governmental consents and approvals necessary under all
requirements of law in connection with the transactions contemplated hereby and
in connection with the ongoing business and operations of the Issuer and its
Subsidiaries, except for permits, consents and approvals the failure to so have
could not result in a Material Adverse Effect.
Section 1.33. Subsidiaries. The Issuer has no Subsidiaries other than
the Guarantors.
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Section 5.5. Trade Relations. There exists no actual or, to the best of
the Issuer's knowledge, threatened termination, cancellation or limitation of,
or any modification or change in, the business relationship of the Issuer or any
of its Subsidiaries with any of its customers or group of customers, except for
such terminations, cancellations, limitations, modifications or changes which
could not result in a Material Adverse Effect.
Section 1.34. Capitalization of Issuer. The authorized capital stock of
the Issuer consists of 40,000,000 shares of Common Stock, no par value,
10,329,867 shares of which are issued and outstanding as of the date hereof, and
50,000 shares of the Issuer's 8% Series A Convertible Preferred Stock, $100
stated value per share, 18,920 shares of which are issued and outstanding as of
the date hereof. All outstanding shares of capital stock of the Issuer are duly
authorized, validly issued, fully paid and nonassessable, and were not issued in
violation of any preemptive rights. Except for (x) warrants to purchase
5,929,198 shares of the Issuer's Common Stock, (y) options to purchase 1,617,558
shares of Common Stock, and (z) the Issuer's 8% Series A Convertible Preferred
Stock which are convertible into 1,681,799 shares of the Issuer's Common Stock,
no issued, no authorized but unissued and no treasury shares of capital stock of
the Issuer are subject to any preemptive right, option, warrant, right of
conversion or purchase or similar right issued or granted by the Issuer or, to
the knowledge of the Issuer, by any of its shareholders. There are no agreements
or understandings with respect to the voting, sale or transfer of any shares of
capital stock of the Issuer to which the Issuer or any of its Subsidiaries is a
party.
ARTICLE 6.
COVENANTS
So long as the Notes shall remain outstanding each of the Issuer and
the Guarantors shall comply with each of the following:
Section 1.35. Preservation of Corporate Existence. The Issuer will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to (a) preserve and maintain its corporate existence and all material
rights and franchises and (b) qualify and remain qualified to conduct business
in each jurisdiction where the nature of its business or the ownership or lease
of its property requires such qualification and where failure to be so qualified
could have a Material Adverse Effect.
Section 1.36. Compliance with Laws. The Issuer will, and will cause
each of its Subsidiaries to, comply with all Applicable Laws, noncompliance with
which could have a Material Adverse Effect.
Section 1.37. Records and Accounts. The Issuer will, and will cause
each of its Subsidiaries to, keep true records and books of account in which
entries will be made in accordance with GAAP.
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Section 1.38. Maintenance of Properties. The Issuer will, and will
cause each of its Subsidiaries to, cause all of its properties used or useful in
the conduct of its business to be maintained and kept in good condition, repair
and working order and cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Issuer may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
Section 1.39. Use of Proceeds. The Issuer will use proceeds from the
sale of the Notes and the Warrant Certificates for general corporate purposes,
and the Issuer shall not use any part of such proceeds to purchase or carry, or
to reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulations T, U or X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any such margin stock.
Section 1.40. Employee Plans. The Issuer will, and will cause each of
its Subsidiaries to, at all times comply in all material respects with the
provisions of ERISA and the Internal Revenue Code which are applicable to any
employee benefit plans to which it is a party.
Section 1.41. Subordination of Insider Indebtedness; Agreement to Grant
Liens. If the Issuer shall fail for any reason to pay the entire outstanding
principal amount of the Notes, together with accrued and unpaid interest
thereon, on the Maturity Date, the Issuer will not later than thirty (30) days
following the Maturity Date (i) cause all Affiliates, officers, directors and
key employees holding indebtedness of the Issuer or any of its Subsidiaries to
subordinate such indebtedness to the prior payment in full in cash of the Notes
on terms and conditions satisfactory to the Required Purchasers, and (ii) grant
to the Purchasers liens on all real and personal property of the Issuer and its
Subsidiaries (other than any such property that is the subject of an agreement
prohibiting the granting of any such lien) as security for the obligations of
the Issuer and the Guarantors under the Notes and the other Transaction
Documents.
Section 1.42. Indebtedness. The Issuer will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any indebtedness for borrowed money
or evidenced by a note, bond, debenture or similar instrument, other than (i)
indebtedness evidenced by the Notes, (ii) indebtedness for borrowed money or
evidenced by a note, bond, debenture or similar instrument of the Issuer or any
of its Subsidiaries outstanding on the Closing Date or drawn under lines of
credit in the ordinary course of business and in an aggregate amount outstanding
not exceeding the maximum committed amounts of such lines of credit as of May
31, 1999 and disclosed in the Issuer's most recent annual report filed on Form
10KSB or the Issuer's most recent quarterly report filed on Form 10QSB with the
Securities and Exchange Commission or on Schedule 5.19 hereto, (iii)
indebtedness of the Issuer or any of its Subsidiaries owing to the Issuer or any
of the Guarantors and incurred in the ordinary course of business, and (iv)
indebtedness incurred by the Issuer after the date hereof the proceeds of which
are
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used immediately upon incurrence to repay, on a dollar-for-dollar basis, the
outstanding principal of and accrued and unpaid interest on the Notes.
Section 1.43. Liens. The Issuer will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(1) liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable with
penalty or being contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(2) liens of carriers, warehousemen, mechanics, and
materialmen incurred in the ordinary course of business for sums not
overdue or being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been set aside on its books;
(3) liens (other than liens arising under ERISA or Section
412(n) of the Internal Revenue Code) incurred in the ordinary course of
business in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to
secure performance of tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds;
(4) judgment liens with respect to judgments to the extent
such judgments do not constitute an Event of Default;
(5) liens which arise by operation of law under Article 2
of the Uniform Commercial Code in favor of unpaid sellers of goods, or
liens in items or any accompanying documents or proceeds of either
arising by operation of law under Article 4 of the Uniform Commercial
Code in favor of a collecting bank;
(6) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and other
restrictions, charges or encumbrances (whether or not recorded)
affecting the use of property, which do not materially detract from the
value of such property or impair the use thereof;
(7) leases and subleases granted to others in the ordinary
course of business not interfering in any material respect with any
business of the Issuer or any of its Subsidiaries;
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(8) rights of set-off of a customary nature or bankers'
liens with respect to amounts on deposit, whether arising by operation
of law or by contract, in connection with arrangements entered into
with banks in the ordinary course of business; and
(9) liens existing on the Closing Date.
Section 1.44. Restricted Payments, etc. Except for dividends payable in
Common Stock on the Issuer's Series A Preferred Stock, the Issuer will not, and
will not permit any of its Subsidiaries to, declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class of
its Stock or on any warrants, options or other rights in respect of any class of
its Stock. The Issuer will not, and will not permit any of its Subsidiaries to,
apply any of its funds, property or assets to the purchase, redemption, sinking
fund or other retirement of any shares of any class of Stock of the Issuer or
any of its Subsidiaries, or make any deposit for any of the foregoing.
Section 1.45. Consolidation, Merger, Subsidiaries, etc. The Issuer will
not, and will not permit any of its Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any Person, or purchase or otherwise
acquire all or substantially all of the assets of any Person (or of any
operating division or unit thereof), except that any Subsidiary may liquidate or
dissolve voluntarily into, and may merge with and into, the Issuer (so long as
the Issuer is the surviving corporation). The Issuer will not, and will not
permit any of its Subsidiaries to, create any Subsidiary or transfer any assets
to any Subsidiary other than a Subsidiary that is or becomes a party to this
Agreement as a Guarantor immediately upon creation or immediately before such
transfer of assets, as the case may be.
Section 1.46. Asset Dispositions, etc. The Issuer will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease or otherwise
dispose of, or grant options, warrants or other rights with respect to, any of
its assets (including accounts receivable and Stock of Subsidiaries) to any
Person, unless such disposition is made in the ordinary course of business and
consists of inventories or such disposition constitutes a disposition of
obsolete or retired assets not used in the business of the Issuer and its
Subsidiaries.
Section 1.47. Transactions with Affiliates. The Issuer will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any transaction, arrangement or contract with any of its
Affiliates which is on terms which are less favorable than are obtainable from
any Person which is not one of its Affiliates.
Section 1.48. Inconsistent Agreements. The Issuer will not, and will
not permit any of its Subsidiaries to, enter into any material agreement
containing any provision which would be violated or breached in any material
respect by any Note or by the performance by the Issuer or any Guarantor under
any Transaction Document.
ARTICLE 7.
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GUARANTY
Section 1.49. The Guaranty. Each of the Guarantors hereby absolutely,
unconditionally and irrevocably guarantees to the Holders, and their successors,
endorsees, transferees and assigns, the prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of (a) the Notes,
including (i) all principal of and interest (including any interest which
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency or reorganization of the Issuer, whether or not
such interest constitutes an allowable claim) on any Note issued pursuant to
this Agreement and (ii) all other amounts payable and all obligations to be
performed by the Issuer under this Agreement or any other Transaction Document
and (b) any renewals or extensions of any of the foregoing (collectively, the
"Guaranteed Obligations"). Each of the Guarantors agrees that this is a guaranty
of payment and performance and not of collection, and that its obligations
hereunder shall be primary, absolute and unconditional, irrespective of, and
unaffected by:
(1) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, the Notes, this Agreement or any
other Transaction Document or any other agreement, document or
instrument to which the Issuer is or may become a party;
(2) the absence of any action to enforce the Notes, this
Agreement or any other Transaction Document or the waiver or consent by
the Holders with respect to any of the provisions of any Transaction
Document; or
(3) any other action or circumstance which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor (other than payment in full);
it being agreed by each of the Guarantors that its obligations hereunder shall
not be discharged until the payment and performance, in full, of the Guaranteed
Obligations. Each of the Guarantors shall be regarded, and shall be in the same
position, as principal debtor with respect to the Guaranteed Obligations. Each
of the Guarantors expressly waives all rights it may now or in the future have
under any statute, or at common law, or at law or in equity, or otherwise, to
compel any Holder to proceed in respect of the Guaranteed Obligations against
the Issuer or any other Person before proceeding against, or as a condition to
proceeding against, the Guarantors. Each of the Guarantors further expressly
waives and agrees not to assert or take advantage of any defense based upon the
failure of any Holder to commence an action in respect of the Guaranteed
Obligations against the Issuer or any other Person. Each of the Guarantors
agrees that any notice or directive given at any time to any Holder which is
inconsistent with the waivers in the preceding two sentences shall be null and
void and may be ignored by such Holder, and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to the obligations of the
Guarantors under this Article 7 for the reason that such pleading or
introduction would be at variance with the written terms hereof. The foregoing
waivers are of the essence of the transaction contemplated by the Transaction
Documents
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and, but for this provisions of this Article 7 and such waivers, the Purchasers
and each subsequent Holder would decline to purchase the Notes.
Section 7.6. Demand by the Holders. In addition to the terms of the
guaranty set forth in Section 7.1, and in no manner imposing any limitation on
such terms, if the outstanding principal amount of the Guaranteed Obligations
shall become due and payable, whether on the Maturity Date, by acceleration or
otherwise, then the Guarantors shall pay to the Holders of the Guaranteed
Obligations the entire outstanding Guaranteed Obligations due and owing to such
Holders. Payment by the Guarantors shall be credited and applied upon the
Guaranteed Obligations and shall be made in immediately available funds to an
account designated by each Holder or at the address set forth herein for the
giving of notice to each Holder or at any other address that may be specified in
writing from time to time by such Holder.
Section 1.50. Enforcement of Guaranty. In no event shall any Holder
have any obligation (although each is entitled, at its option) to proceed
against the Issuer or any other Person or any real or personal property pledged
to secure the Guaranteed Obligations before proceeding against the Guarantors,
and any Holder may proceed, prior or subsequent to, or simultaneously with, the
enforcement of any Holder's rights hereunder, to exercise any right or remedy
which it may have against the Issuer or any such other Person or against any
property, real or personal, as a result of any lien it may have as security for
all or any portion of the Guaranteed Obligations.
Section 1.51. Waivers. In addition to the waivers contained in Section
7.1, each of the Guarantors waives, and agrees that it shall not at any time
insist upon, plead or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, marshaling of assets or
redemption laws, or exemption, whether now or at any time hereafter in force,
which may delay, prevent or otherwise affect the performance by it of its
obligations under, or the enforcement by the Holders of, the provisions of this
Article 7. Each of the Guarantors further hereby waives diligence, presentment
and demand (whether for non-payment or protest or of acceptance, maturity,
extension of time, change in nature or form of the Guaranteed Obligations,
acceptance of security, release of security, composition or agreement arrived at
as to the amount of, or the terms of, the Guaranteed Obligations, notice of
adverse change in the Issuer's or any other Guarantor's financial condition or
any other fact which might materially increase the risk to the Guarantors) with
respect to any of the Guaranteed Obligations and all other demands whatsoever
and, to the extent permitted by Applicable Law, waives the benefit of all
provisions of law which are or might be in conflict with the terms of this
Article 7. Each of the Guarantors represents, warrants and agrees that its
obligations under this Article 7 are not and shall not be subject to any
counterclaims, offsets or defenses of any kind, whether now existing or arising
in the future, against the Holders, the Issuer, the other Guarantors or any
other guarantor of the Guaranteed Obligations.
Section 1.52. Benefits of Guaranty. The provisions of this Article 7
are for the benefit of the Holders and their respective successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as among the
Issuer and the Holders, the obligations of the Issuer under the Notes and the
Transaction Documents. In the event all or any part of the Guaranteed
Obligations are
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transferred, endorsed or assigned by any Holder to any Person, any reference to
the "Holder" herein shall be deemed to refer equally to such Person.
Section 7.7. Modification of Notes, etc. If the Holders shall at any
time or from time to time, with or without the consent of, or notice to, the
Guarantors:
(1) change or extend the manner, place or terms of payment of,
or renew or alter all or any portion of, the Guaranteed Obligations;
(2) take any action under or in respect of the Transaction
Documents in the exercise of any remedy, power or privilege contained
therein or available to it at law, equity or otherwise, or waive or
refrain from exercising any such remedies, powers or privileges;
(3) amend or modify, in any manner whatsoever, the Transaction
Documents;
(4) extend or waive the time for any of the Guarantors, the
Issuer or other Person's performance of, or compliance with, any term,
covenant or agreement on its part to be performed or observed under the
Transaction Documents, or waive such performance or compliance or
consent to a failure of, or departure from, such performance or
compliance;
(5) take and hold security or collateral for the payment of
the Guaranteed Obligations or sell, exchange, release, dispose of, or
otherwise deal with, any property pledged, mortgaged or conveyed, or in
which the Holders may have been granted a lien, to secure any
indebtedness of the Issuer, any other Guarantor or any other guarantor
of any of the Guaranteed Obligations, to the Holders;
(6) release anyone who may be liable in any manner for the
payment of any amounts owed by the Issuer, any other Guarantor or any
other guarantor of any of the Guaranteed Obligations, to any Holder;
(7) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of
any Issuer, any other Guarantor or any other guarantor of any of the
Guaranteed Obligations, are subordinated to the claims of any Holder;
or
(8) apply any sums by whomever paid or however realized to any
amounts owing by the Issuer, any other Guarantor or any other guarantor
of the Guaranteed Obligations, to any Holder in such manner as any
Holder shall determine in its discretion;
then neither any Holder shall incur any liability to the Guarantors as a result
thereof, and no such action shall impair or release the obligations of the
Guarantors under this Article 7.
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Section 7.8. Reinstatement. The provisions of this Article 7 shall
remain in full force and effect and continue to be effective in the event any
petition is filed by or against any Guarantor or the Issuer for liquidation or
reorganization, in the event any Guarantor or the Issuer becomes insolvent or
makes an assignment for the benefit of creditors or in the event a receiver or
trustee is appointed for all or any significant part of the assets of any the
Guarantor or the Issuer, and shall continue to be effective or be reinstated, as
the case may be, if at any time payment and performance of the Guaranteed
Obligations or any part thereof is, pursuant to Applicable Law, rescinded or
reduced in amount, or must otherwise be restored or returned by any Holder,
whether as a "voidable preference", "fraudulent conveyance" or otherwise, all as
though such payment or performance had not been made. In the event that any
payment of the Guaranteed Obligations, or any part thereof, is rescinded,
reduced, restored or returned, the Guaranteed Obligations or part thereof so
rescinded, restored or returned shall be reinstated, and the Guaranteed
Obligations shall be deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
Section 7.9. Waiver of Subrogation, etc. Upon the making by any
Guarantor of any payment hereunder in respect of the Guaranteed Obligations,
such Guarantor shall be subrogated to the rights of the Holders against the
Issuer with respect to such payment; provided that such Guarantor shall not
enforce any right to receive any payment by way of subrogation, reimbursement,
contribution or setoff resulting from such payment until all of the Guaranteed
Obligations have been paid in full and this Agreement has been terminated. If
any amount shall be paid to the Guarantors on account of such subrogation,
reimbursement, contribution or setoff rights, such amount shall be held in trust
for the benefit of the Holders and shall forthwith be paid to the Holders to be
credited and applied upon the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Notes and this Agreement. The
preceding subordination is intended by the Guarantors and the Holders to be for
the benefit of the Issuer and its assets.
Section 1.53. Contribution Rights. In the event any Guarantor (a
"Funding Guarantor") shall make any payment under this Article 7 or shall suffer
any loss as a result of any realization upon any of its assets pursuant to any
Transaction Document, each other Guarantor (each, a "Contributing Guarantor")
shall contribute to such Funding Guarantor an amount equal to such Contributing
Guarantor's "Pro Rata Share" of such payment made, or loss suffered, by such
Funding Guarantor. For the purposes hereof, each Contributing Guarantor's Pro
Rata Share with respect to any such payment or loss by a Funding Guarantor shall
be determined as of the date on which such payment or loss was made or suffered
by reference to the ratio of (i) such Contributing Guarantor's maximum
obligation hereunder as provided in Section 7.12 hereof (such Guarantor's
"Maximum Obligation") as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder) to (ii) the
aggregate Maximum Obligations of all Guarantors (including such Funding
Guarantor) as of such date (without giving effect to any right to receive, or
obligation to make, any contribution hereunder). Nothing in this Section 7.9
shall affect each Guarantor's several liability for the entire amount of the
Guaranteed Obligations (up to such Guarantor's Maximum Obligation). Each
Guarantor covenants and agrees that its right to receive any contribution
hereunder from a Contributing Guarantor shall be subordinate and junior in right
of payment to all the Guaranteed Obligations and all of such Contributing
Guarantor's obligations in respect thereof.
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Section 1.54. Election of Remedies, Etc. Any election of remedies which
results in the denial or impairment of the right of any Holder to seek a
deficiency judgment against the Issuer shall not impair the Guarantors'
obligations to pay the full amount of the Guaranteed Obligations. In the event
any Holder shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Transaction Documents, such Holder may bid all or less
than the amount of the Guaranteed Obligations and the amount of such bid need
not be paid by such Holder but shall be credited against the Guaranteed
Obligations. The amount of the successful bid at any such sale, whether any
Holder or any other party is the successful bidder, shall be conclusively deemed
to be the fair market value of the collateral and the difference between such
bid amount and the remaining balance of the Guaranteed Obligations shall be
conclusively deemed to be the amount of the Guaranteed Obligations guaranteed
under the provisions of this Article 7, notwithstanding that any present or
future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which any Holder might otherwise be entitled
but for such bidding at any such sale.
Section 1.55. Continuing Guaranty. Each of the Guarantors agrees that
the provisions of this Article 7 are a continuing guaranty and shall remain in
full force and effect until the payment and performance in full of the
Guaranteed Obligations.
Section 1.56. Limitation on Guaranty Obligations. Anything in this
Article 7 to the contrary notwithstanding, it is the intent of the Guarantors
and Purchasers that each Guarantor's maximum obligations hereunder (the "Maximum
Guaranty Liability") shall not be in excess of:
(i) in a case or proceeding commenced by or against such Guarantor
under the Bankruptcy Code of 1978, U.S.C. ss. 101 et seq., as
amended (the "Bankruptcy Code"), the maximum amount which
would not otherwise cause the obligations of such Guarantor
under this Article 7 to be avoidable or unenforceable against
such Guarantor under (A) Section 548 of the Bankruptcy Code or
(B) any state fraudulent transfer or fraudulent conveyance act
or statute applied in such case or proceeding by virtue of
Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against such Guarantor
under any law, statute or regulation other than the Bankruptcy
Code relating to dissolution, liquidation, conservatorship,
bankruptcy, moratorium, readjustment of debt, compromise,
rearrangement, receivership, insolvency, reorganization or
similar debtor relief from time to time in effect affecting
the rights of creditors generally (collectively, "Other Debtor
Relief Laws") the maximum amount which would not otherwise
cause the obligations of the Guarantor under this Article 7 to
be avoidable or unenforceable against the Guarantor under such
Other Debtor Relief Laws, including, without limitation, any
state fraudulent transfer or fraudulent conveyance act or
statute applied in any such case or proceeding.
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To the end set forth in this Section 7.12, but only to the extent that the
obligations of a Guarantor under Article 7 would otherwise be subject to
avoidance under any provision of substantive law relating to the avoidance or
unenforceability of obligations of the such Guarantor under this Article 7 (any
such provision, an "Avoidance Provision"), if such Guarantor is not deemed to
have received valuable consideration, fair value or reasonably equivalent value
for such obligations, or if the obligations of such Guarantor under this Article
7 would render such Guarantor insolvent, or leave such Guarantor with an
unreasonably small capital to conduct its business, or cause such Guarantor to
have incurred debts (or to have intended to have incurred debts) beyond its
ability to pay such debts as they mature, in each case as of the time any of the
obligations of such Guarantor are deemed to have been incurred under such
Avoidance Provision, then the obligations of such Guarantor hereunder shall be
reduced to that amount which, after giving effect thereto, would not cause the
obligations of such Guarantor under this Article 7, as so reduced, to be subject
to avoidance under such Avoidance Provision. This Section 7.12 is intended
solely to preserve the rights of the Purchasers to the maximum extent that would
not cause the obligations of the Guarantors under this Article 7 to be subject
to avoidance under any Avoidance Provision, and neither the Guarantors nor any
other person or entity shall have any right or claim under this Section 7.12 as
against any Purchaser that would not otherwise be available under an Avoidance
Provision.
ARTICLE 8.
EVENTS OF DEFAULT
Section 1.57. Events of Default. Each of the following shall constitute
an Event of Default:
(a) failure of the Issuer to pay when due any principal of or
interest on any of the Notes; or
(b) failure of the Issuer or any Guarantor (i) to perform or
observe any covenant or provision set forth in Article 6 hereof, or
(ii) to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Transaction Document which
remains unremedied for 30 days after written notice thereof to the
Issuer by any Purchaser; or
(c) any representation or warranty made by the Issuer or any
Guarantor herein or in any other Transaction Document is false or
misleading in any material respect on the date as of which made; or
(d) failure of the Issuer or any Guarantor to pay its debts
generally as they come due, or the filing by the Issuer or any
Guarantor of a petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law; or
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(e) the filing of an involuntary petition under any bankruptcy
statute against the Issuer or any Guarantor, or the appointment of a
custodian, receiver, trustee, assignee for the benefit of creditors (or
other similar official) to take possession, custody, or control of the
properties of the Issuer or any Guarantor, unless such petition or
appointment is set aside or withdrawn or ceases to be in effect within
sixty (60) days from the date of said filing or appointment, or an
order for relief shall be entered in any such involuntary petition.
Section 1.58. Remedies on Default. (a) Upon the occurrence and during
the continuation of an Event of Default (other than an Event of Default
described in clause (d) or (e) of Section 8.1 hereof), the Requisite Purchasers
may declare all amounts payable by the Issuer under the Notes to be forthwith
due and payable and the same shall thereupon become immediately due and payable
without demand, presentment, protest or further notice of any kind, all of which
are hereby expressly waived.
(b) Upon the occurrence of any Event of Default set forth in
clause (d) or (e) of Section 8.1 hereof, without any notice to the Issuer or any
other act by the Requisite Purchasers, all amounts payable by the Issuer under
the Notes shall be immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Issuer.
(c) No remedy herein conferred or reserved is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under the Transaction Documents or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon any
Default or Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right or power may be exercised
from time to time and as often as may be deemed expedient. In order to exercise
any remedy reserved to the Purchasers in the Transaction Documents, it shall not
be necessary to give any notice, other than such notice as may be expressly
required.
ARTICLE 9.
REGISTRATION; EXCHANGE;
SUBSTITUTION OF NOTES AND WARRANT CERTIFICATES
Section 9.1. Registration of Notes and Warrant Certificates. The Issuer
shall keep at its principal executive office a register for the registration of
transfers of Notes and Warrant Certificates. The name and address of each
Purchaser, each transfer thereof and the name and address of each transferee of
one or more Notes or Warrant Certificates shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note or Warrant Certificate shall be registered shall be deemed and treated
as the owner and holder thereof for all purposes hereof, and the Issuer shall
not be affected by any notice or knowledge to the contrary. The
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Issuer shall give to any Purchaser, promptly upon request therefor, a complete
and correct copy of the names and addresses of all Purchasers.
Section 9.2. Transfer and Exchange of Notes and Warrant Certificates.
Subject to the provisions of Section 2.6 and Section 4 of the Warrant
Certificates, upon surrender of any Note or Warrant Certificate at the principal
executive office of the Issuer for registration of transfer or exchange (and in
the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder or its attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or Warrant Certificate, or part
thereof), the Issuer shall execute and deliver, at its expense, one or more (as
requested by the registered holder thereof) new Notes or Warrant Certificates,
as applicable, in exchange therefor. Any such replacement Notes shall be in an
aggregate principal amount of the surrendered Note and any such replacement
Warrant Certificates shall be for the purchase of an aggregate amount of shares
of Common Stock equal to the amount of shares issuable upon exercise of the
surrendered Warrant Certificate. Each such new Note shall be payable to and each
such new Warrant Certificate shall be issued in the name of such Person or
Persons as such registered holder shall request and shall be substantially in
the form of Exhibit A and Exhibit B, respectively. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. Notes shall not be transferred in denominations of
less than $100,000. Transfers hereunder shall be made by the Issuer to the
extent permitted by Applicable Law.
Section 9.3. Replacement of Notes and Warrant Certificates. Upon
receipt by the Issuer of notice from any Purchaser of the loss, theft,
destruction or mutilation of any Note held by such Purchaser and (a) in the case
of loss, theft or destruction, of security reasonably satisfactory to the
Issuer, or (b) in the case of mutilation, upon surrender and cancellation
thereof, the Issuer, at its own expense, shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon. Upon receipt by the Issuer of notice from any Purchaser
of the loss, theft, destruction or mutilation of any Warrant Certificate held by
such Purchaser and (a) in the case of loss, theft or destruction, of security
reasonably satisfactory to the Issuer, or (b) in the case of mutilation, upon
surrender and cancellation thereof, the Issuer, at its own expense, shall
execute and deliver, in lieu thereof, a new Warrant Certificate.
ARTICLE 10.
MISCELLANEOUS
Section 1.59. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopier) and shall be
effective (a) if given by mail, when
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deposited in the United States mail, first-class postage prepaid, or (b) if
given by telecopier, when so telecopied. Notices hereunder shall be mailed or
telecopied as follows:
If to the Issuer:
Xxxxxxx Communications Corporation
0000 00xx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxx 00000
Attn: Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Purchasers:
at the respective addresses of the Purchasers
set forth on Schedule 1 hereto.
Section 1.60. No Waiver. No delay or failure on the part of the
Purchasers in the exercise of any right, power or privilege granted under any
Transaction Document or available at law or in equity, shall impair any such
right, power or privilege or be construed as a waiver of any Event of Default or
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege. No waiver shall be valid against any Purchaser unless made in writing
and signed by the Requisite Purchasers, and then only to the extent expressly
specified therein.
Section 1.61. Amendments, Etc. Any provision of any Transaction
Document may be amended or waived, if such amendment or waiver is in writing and
is signed by the Issuer and the Requisite Purchasers; provided that, without the
approval in writing of each Purchaser affected thereby, no amendment or waiver
may be effective:
(a) to amend or modify the principal of any Note held by such
Purchaser, or the amount of principal payments required, or the rate of
interest payable, on such Note;
(b) to postpone any date fixed for any payment of principal
of, or interest on, any Note or to extend the term of such Note;
(c) to amend or modify the definition of "Requisite
Purchasers", or the provisions of this Section 10.3 hereof;
Any amendment or modification effected in accordance with this Section 10.3
hereof shall apply equally to, and shall be binding upon, all Purchasers.
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Section 1.62. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, that the Issuer may not assign or
otherwise transfer any of its rights or obligations under this Agreement or the
Notes to any Person without the prior written consent of the Requisite
Purchasers.
Section 1.63. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF IOWA (WITHOUT REGARD TO
THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS).
Section 1.64. Survival of Representations and Warranties. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement.
Section 1.65. Severability. If any part of any provision contained in
this Agreement shall be invalid or unenforceable under applicable law, said part
shall be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts of said provision or the remaining provisions.
Section 1.66. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which, taken together, shall constitute one and the same instrument.
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Section 1.67. Entire Agreement. This Agreement, the Notes, the Warrant
Certificates and the other Transaction Documents, together with any exhibits and
schedules attached hereto and thereto, constitute the entire understanding of
the parties with respect to the subject matter hereof and thereof, and any other
prior or contemporaneous agreements, whether written or oral, with respect
hereto or thereto are expressly superseded hereby.
Section 10.10. Costs and Expenses. The Issuer agrees to pay all
reasonable out-of-pocket expenses of the Purchasers (including reasonable fees
and expenses of counsel to the Purchasers) in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other Transaction
Documents. The Issuer also agrees to pay and hold the Purchasers harmless from
any stamp, documentary, intangibles, transfer or similar taxes or charges, and
all recording or filing fees with respect to any of the Transaction Documents or
any payments to be made thereunder, and to reimburse the Purchasers upon demand
for all reasonable out-of-pocket expenses (including reasonable attorneys fees
and expenses) incurred by the Purchasers in enforcing any of the Transaction
Documents or in connection with any restructuring or "work-out" of any of the
obligations of the Issuer or the Guarantors under the Transaction Documents.
Section 10.11. Consent to Jurisdiction. EACH PARTY TO THIS AGREEMENT
HEREBY IRREVOCABLY SUBMITS TO JURISDICTION OF ANY NEW YORK STATE OR FEDERAL
COURT SITTING IN NEW YORK COUNTY (BOROUGH OF MANHATTAN), NEW YORK, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES TO THIS AGREEMENT AGREES THAT
SUCH CONSENT TO JURISDICTION SHALL NOT PRECLUDE THE BRINGING OF ANY ACTION OR
PROCEEDING IN ANY OTHER JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF ANY INCONVENIENT FORUM (FORUM NONCONVEINENS) TO THE MAINTENANCE OF ANY ACTION
OR PROCEEDING IN ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK COUNTY
(BOROUGH OF MANHATTAN), NEW YORK, ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT.
[Signatures on Following Pages]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized officers all as of the day and year first above
written.
ISSUER:
XXXXXXX COMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
GUARANTORS:
PRIORITY INTERNATIONAL COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman
ATN COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman
INCOMEX, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman
MCC ACQUISITION CORP.
[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
33
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
PURCHASERS:
NEW VALLEY CORPORATION
By:
-------------------------------------
Name:
Title:
[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
34
Schedule 1
Principal Amount of Note and
Name and Address Number of Shares Issuable Upon
of Purchaser: Exercise of Warrant Certificate Purchased
New Valley Corporation Note Amount: $2,000,000
c/o Xxxxxxxx Xxxxxxxx Warrants: 250,000 shares (subject
Ladenburg, Xxxxxxxx & Co. to adjustment)
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
35
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED
UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER REGISTRATION UNDER SUCH ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
XXXXXXX COMMUNICATIONS CORPORATION
FIXED RATE SENIOR NOTE DUE JULY 21, 1999
$ June , 1999 No.
------------- --- ----
Xxxxxxx Communications Corporation, an Iowa corporation (the "Issuer"),
for value received, promises and agrees to pay to the order of
______________________, or its registered assigns permitted pursuant to the
terms of the Note and Warrant Purchase Agreement described below (the "Holder"),
at such place as the Holder has designated under Schedule 1 to the Note
Agreement referenced below (or such other place as the Holder may designate from
time to time as provided in said Note and Warrant Purchase Agreement) the
principal sum of ______________ AND 00/100 DOLLARS ($____________), in lawful
money of the United States of America and in immediately available funds, and to
pay interest on the unpaid principal amount hereof at such office, in like money
and funds, for the period commencing on the date of this Note, until paid in
full, at a fixed rate of twelve percent (12.0%) per annum. Notwithstanding the
immediately preceding sentence, if the Issuer shall fail to pay on the due date
therefor, whether on the Maturity Date, by acceleration or otherwise, any
principal owing under this Note, then, in lieu of the interest rate otherwise
applicable, interest shall accrue on such unpaid principal from the due date to
but excluding the date on which such principal is paid in full (i) for the
period commencing on the due date and ending thirty (30) days thereafter, at a
rate per annum equal to fourteen percent (14%), (ii) for the period commencing
on the thirty-first (31st) day following the due date and ending sixty (60) days
thereafter, at a rate per annum equal to sixteen percent (16%), and (iii) for
the period commencing on the sixty-first (61st) day following the due date to
but excluding the date on which such principal is paid in full, at a rate per
annum equal to eighteen percent (18%), but in no event, however, to exceed the
maximum rate permitted by Applicable Law (interest accruing pursuant to this
sentence, the "Default Rate").
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Interest on this Note shall be payable (i) upon any prepayment of this
Note to the date of prepayment on the amount prepaid, and (ii) at maturity of
this Note, whether on the Maturity Date, by acceleration or otherwise; provided,
however, that interest calculated at the Default Rate shall be due and payable
upon demand by the Holder.
Upon the occurrence of a Financing Event, the outstanding principal
amount of this Note shall be due and payable to the extent provided under
Section 2.5 of the Note Agreement referenced herein.
The Issuer may prepay this Note in whole or in part at any time,
provided that (i) the Issuer provides at least one (1) days' prior written
notice to the Holder of such proposed prepayment, and (ii) such prepayment is
accompanied by all accrued and unpaid interest on the amount prepaid to the date
of prepayment.
This Note is issued pursuant to that certain Note and Warrant Purchase
Agreement dated as of June 21, 1999, by and among the Issuer, its Subsidiaries
as guarantors, and the Purchasers named therein (such Note and Warrant Purchase
Agreement, together with all amendments or modifications thereto, the "Note
Agreement"). Capitalized terms used but not otherwise defined in this Note shall
have the respective meanings given them in the Note Agreement. The Note
Agreement additionally provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayment hereof. Reference
is made to the Note Agreement for all pertinent purposes.
Except for notices which are specifically required by the Note
Agreement, the Issuer and any and all co-makers, endorsers, guarantors and
sureties severally waive notice (including but not limited to notice of intent
to accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability, and consent that the
time of payment hereof may be extended and re-extended from time to time without
notice to any of them.
This Note is a registered Note and, subject to compliance with the
terms of the Note Agreement, is transferable on the Note Register of the Issuer
designated in the Note Agreement upon notice to the Issuer accompanied by a
written instrument of transfer reasonably satisfactory to the Issuer duly
executed by, or on behalf of, the registered payee hereof and such other
information required by the Note Agreement. Subject to the provisions of the
Note Agreement, the Issuer may treat the person whose name appears in the Note
Register as the owner hereof for the purpose of receiving payment as herein
provided.
This Note is an unsecured senior obligation of the Issuer, ranking pari
passu with all other senior unsecured obligations of the Issuer, and is entitled
to the benefits afforded by the Note Agreement and the other Transaction
Documents.
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THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF IOWA (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF).
XXXXXXX COMMUNICATIONS CORPORATION
By:
Name:
Title:
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EXHIBIT B
THIS STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT
BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (II) IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER,
REGISTRATION UNDER SUCH ACT OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant is issued as of this 21th day of June 1999
by XXXXXXX COMMUNICATIONS CORPORATION, an Iowa corporation (the "Issuer"), to
__________________________, (the "Purchaser"; the Purchaser or any registered
assignee or transferee hereof, a "Holder").
AGREEMENT:
1. Issuance of Warrants; Term.
(a) For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Issuer hereby grants to Holder
the right to purchase ________ shares of the Issuer's Common Stock, no par value
per share (the "Common Stock").
(b) The shares of Common Stock issuable upon exercise of this
Warrant Certificate are hereinafter referred to as the "Warrant Shares." This
Warrant Certificate shall be exercisable at any time and from time to time prior
to June 21, 2009.
2. Exercise Price. The exercise price per Warrant Share for which
all or any of the Warrant Shares may be purchased pursuant to the terms of this
Warrant Certificate shall be $3.50, and shall be subject to adjustment from time
to time in accordance with Section 5 (as the same may be so adjusted from time
to time, the "Exercise Price").
3. Exercise. (a) This Warrant Certificate may be exercised by the
Holder as to all or any increment or increments of one thousand (1000) Warrant
Shares (or the balance of the Warrant
B-1
39
Shares if less than such number), upon delivery of written notice of intent to
exercise to the Issuer at the following address: Xxxxxxx Communications
Corporation, 0000 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, Xxxx 00000, Attention: Chief
Financial Officer (or such other address as the Issuer shall designate in a
written notice to the Holder), together with this Warrant Certificate and
payment to the Issuer of the aggregate Exercise Price of the Warrant Shares so
purchased. The Exercise Price shall be payable by certified or bank check, by
wire transfer of immediately available funds, or as otherwise specified by the
Issuer. Upon exercise of this Warrant Certificate as aforesaid, the Issuer shall
as promptly as practicable execute and deliver to the Holder a certificate or
certificates for the total number of whole Warrant Shares for which this Warrant
Certificate is being exercised in such names and denominations as are requested
by such Holder. If this Warrant Certificate shall be exercised with respect to
less than all of the Warrant Shares, the Holder shall be entitled to receive a
new Warrant Certificate covering the number of Warrant Shares in respect of
which this Warrant Certificate shall not have been exercised, which new Warrant
Certificate shall in all other respects be identical to this Warrant
Certificate. The Issuer covenants and agrees that it will pay when due any and
all state and federal issue taxes which may be payable in respect of the
issuance of this Warrant Certificate or the issuance of any Warrant Shares upon
exercise of this Warrant Certificate.
(b) Cashless Exercise. In lieu of exercising this Warrant Certificate
pursuant to Section 3(a) above, the Holder shall have the right (the "Conversion
Right") to require the Issuer to convert any then existing rights to purchase
Common Stock pursuant to this Warrant Certificate, in whole or in part and at
any time or times into Warrant Shares, upon delivery of written notice of intent
to convert to the Issuer at its address in Section 3(a) or such other address as
the Issuer shall designate in a written notice to the Holder, together with this
Warrant Certificate. Upon exercise of the Conversion Right, the Issuer shall
deliver to the Holder (without payment by the Holder of any Exercise Price) that
number of Warrant Shares which is equal to the quotient obtained by dividing (x)
the value of the number of Warrant Shares with respect to which the Conversion
Right is being exercised (determined by subtracting the aggregate Exercise Price
for the Warrant Shares with respect to which the Conversion Right is being
exercised from a number equal to the product of (i) the Fair Market Value per
Share of Common Stock (as determined in accordance with subsection (b) of
Section 9 hereof) as at such time, multiplied by (ii) the number of Warrant
Shares with respect to which the Conversion Right is being exercised), by (y)
such Fair Market Value per Share. Any references in this Warrant Certificate to
the "exercise" of this Warrant Certificate, and the use of the term exercise
herein, shall be deemed to include (without limitation) any exercise of the
Conversion Right.
4. Covenants and Conditions. The above provisions are subject to the
following:
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4.1. Neither this Warrant Certificate nor the Warrant Shares have
been registered under the Securities Act of 1933, as amended ("Securities Act")
or any state securities laws ("Blue Sky Laws"). This Warrant Certificate has
been acquired for investment purposes and not with a view to distribution or
resale and may not be pledged, hypothecated, sold, made subject to a security
interest, or otherwise transferred without (i) an effective registration
statement under the Securities Act and such applicable Blue Sky Laws, or (ii) an
opinion of counsel, which counsel shall be reasonably satisfactory to the
Issuer, that registration is not required under the Securities Act or under any
applicable Blue Sky Laws (the Issuer hereby acknowledges that King & Spalding is
acceptable counsel). Transfer of Warrant Shares issued upon the exercise of this
Warrant Certificate shall be restricted in the same manner and to the same
extent as the Warrant Certificate and the certificates representing such Warrant
Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO, OR (II) IN THE OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE ISSUER, REGISTRATION UNDER SUCH ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER.
The Holder and the Issuer agree to execute such other documents and instruments
as counsel for the Issuer reasonably deems necessary to effect the compliance of
the issuance of this Warrant Certificate and any shares of Common Stock issued
upon exercise hereof with applicable federal and state securities laws.
4.2. The Issuer covenants and agrees that all Warrant Shares which
may be issued upon exercise of this Warrant Certificate will, upon issuance and
payment therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Issuer shall at all
times reserve and keep available for issuance upon the exercise of this Warrant
Certificate such number of authorized but unissued shares of Common Stock as
will be sufficient to permit the exercise in full of this Warrant Certificate.
5. Adjustment of Exercise Price and Number of Shares Issuable. The
Exercise Price and the number of Warrant Shares (or other securities or
property) issuable upon exercise of this Warrant Certificate shall be subject to
adjustment from time to time upon the occurrence of any of the events enumerated
in this Section 5.
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(a) Common Stock Reorganization. If the Issuer shall subdivide its
outstanding shares of common stock (or any class thereof) into a greater number
of shares or consolidate its outstanding shares of common stock (or any class
thereof) into a smaller number of shares (any such event being called a "Common
Stock Reorganization"), then (a) the Exercise Price shall be adjusted, effective
immediately after the effective date of such Common Stock Reorganization, to a
price determined by multiplying the Exercise Price in effect immediately prior
to such effective date by a fraction, the numerator of which shall be the number
of shares of common stock outstanding on such effective date before giving
effect to such Common Stock Reorganization and the denominator of which shall be
the number of shares of common stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant Certificate shall be adjusted,
effective at such time, to a number determined by multiplying the number of
shares of Common Stock subject to purchase immediately before such Common Stock
Reorganization by a fraction, the numerator of which shall be the number of
shares of common stock outstanding after giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
common stock outstanding immediately before such Common Stock Reorganization.
(b) Common Stock Distribution. If the Issuer shall issue, sell or
otherwise distribute any shares of common stock, other than pursuant to a Common
Stock Reorganization (which is governed by subsection (a) hereof) (any such
event, including any event described in subsections (c) and (d) below, being
herein called a "Common Stock Distribution"), for a consideration per share less
than the Fair Market Value per Share of Common Stock on the date of such
issuance, sale or distribution, then, effective upon such Common Stock
Distribution, the Exercise Price shall be reduced, to the price determined by
dividing (A) an amount equal to the sum of (1) the number of shares of common
stock outstanding immediately prior to such Common Stock Distribution
(calculated on a fully-diluted basis) multiplied by the Exercise Price
immediately prior to such Common Stock Distribution, plus (2) the consideration,
if any, received by the Issuer upon such Common Stock Distribution by (B) the
total number of shares of common stock outstanding immediately after such Common
Stock Distribution. If any Common Stock Distribution shall require an adjustment
to the Exercise Price pursuant to the foregoing provisions of this subsection
(b), including by operation of subsection (c) or (d) below, then, effective at
the time such adjustment is made, the number of shares of Common Stock subject
to purchase upon exercise of this Warrant Certificate shall be increased to a
number determined by multiplying the number of shares of Common Stock subject to
purchase immediately before such Common Stock Distribution by a fraction, the
numerator of which shall be the number of shares of common stock outstanding
immediately after giving effect to such Common Stock Distribution and the
denominator of which shall be the sum of the number of shares outstanding
immediately before giving effect to such Common Stock Distribution (both
calculated on a fully-diluted basis) plus the number of shares of common stock
which the aggregate consideration received by the Issuer with respect to such
Common Stock Distribution would purchase at a price equal to the Exercise Price
immediately prior to such Common Stock Distribution.
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(c) Option Securities. If the Issuer shall issue, sell, distribute
or otherwise grant in any manner any rights to subscribe for or to purchase, or
any warrants or options for the purchase of, common stock or any stock or
securities convertible into or exchangeable for common stock (such rights,
warrants or options being herein called "Option Securities" and such convertible
or exchangeable stock or securities being herein called "Convertible
Securities"), whether or not such Option Securities or the rights to convert or
exchange any such Convertible Securities in respect of such Option Securities
are immediately exercisable, and the price per share for which common stock is
issuable upon the exercise of such Option Securities or upon conversion or
exchange of such Convertible Securities in respect of such Option Securities
(determined by dividing (i) the aggregate amount, if any, received or receivable
by the Issuer as consideration for the granting of such Option Securities, plus
the minimum aggregate amount of additional consideration payable to the Issuer
upon the exercise of all such Option Securities, plus, in the case of Option
Securities to acquire Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issuance or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of common stock issuable upon the exercise of
such Option Securities or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Option Securities)
shall be less than the Fair Market Value per Share of Common Stock immediately
prior to such issuance, sale, distribution or grant, then, for purposes of
subsection (b) above, the total maximum number of shares of common stock
issuable upon the exercise of such Option Securities or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Option Securities shall be deemed to have been issued
as of the date of granting of such Option Securities and thereafter shall be
deemed to be outstanding and the Issuer shall be deemed to have received as
consideration therefor such price per share, determined as provided above.
Except as otherwise provided in subsection (e) below, no additional adjustment
of the Exercise Price shall be made upon the actual exercise of such Option
Securities or upon conversion or exchange of such Convertible Securities.
(d) Convertible Securities. If the Issuer shall issue, sell or
otherwise distribute any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which common stock is issuable upon such conversion or exchange
(determined by dividing (i) the aggregate amount received or receivable by the
Issuer as consideration for the issuance, sale or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Issuer upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of common stock issuable
upon the conversion or exchange of all such Convertible Securities) shall be
less than the Fair Market Value per Share of Common Stock immediately prior to
the date of such issuance, sale or distribution, then, for purposes of
subsection (b) above, the total maximum number of shares of common stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to have been issued as of the date of the issuance, sale or distribution
of such Convertible Securities and thereafter shall be deemed to be outstanding
and the Issuer shall be deemed to have received as consideration therefor such
price per share, determined as provided above. Except as otherwise provided in
subsection (e) below, no additional adjustment of the Exercise Price shall be
made upon the actual conversion or exchange of such Convertible Securities.
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(e) Special Adjustments. If (i) the purchase price provided for in
any Option Securities referred to in subsection (c) above or the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subsection (c) or (d) above or the rate at
which any Convertible Securities referred to in subsection (c) or (d) above are
convertible into or exchangeable for common stock shall change at any time, or
(ii) any of such Option Securities or Convertible Securities shall have
terminated, lapsed or expired prior to exercise, exchange or conversion, the
Exercise Price then in effect shall forthwith be readjusted (effective only with
respect to any exercise of this Warrant Certificate after such readjustment) to
the Exercise Price which would then be in effect had the adjustment made upon
the issuance, sale, distribution or grant of such Option Securities or
Convertible Securities been made based upon such changed purchase price,
additional consideration or conversion rate, as the case may be (in the case of
any event referred to in clause (i) of this subsection (e)) or had such
adjustment not been made (in the case of any event referred to in clause (ii) of
this subsection (e)).
(f) Dividends Payable in Common Stock, Option Securities or
Convertible Securities. If the Issuer shall pay a dividend or make any other
distribution upon any capital stock of the Issuer payable in common stock,
Option Securities or Convertible Securities, then, for purposes of subsection
(b), (c) and (d) above, such common stock, Option Securities or Convertible
Securities shall be deemed to have been issued or sold without consideration.
(g) Consideration Received. If any shares of common stock, Option
Securities or Convertible Securities shall be issued, sold or distributed for
cash, the consideration received therefor shall be deemed to be the amount
received by the Issuer therefor. If any shares of common stock, Option
Securities or Convertible Securities shall be issued, sold or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by Issuer shall be deemed to be the fair market value of such
consideration as determined by the Issuer's board of directors in its good faith
discretion . If any shares of common stock, Option Securities or Convertible
Securities shall be issued in connection with any merger in which Issuer is the
surviving corporation, the amount of consideration therefor shall be deemed to
be the fair market value of such portion of the assets and business of the
non-surviving corporation as shall be attributable to such common stock, Option
Securities or Convertible Securities, as the case may be, as determined by the
Issuer's board of directors in its good faith discretion. If any Option
Securities shall be issued in connection with the issuance and sale of other
securities of the Issuer, together comprising one integral transaction in which
no specific consideration is allocated to such Option Securities by the parties
thereto, such allocation will be made for purposes of this Warrant Certificate
by the Issuer's board of directors in its good faith discretion.
(h) Capital Reorganizations. If there shall be any consolidation,
merger or amalgamation of the Issuer with another entity or any acquisition of
common stock of the Issuer by means of a share exchange (other than a
consolidation, merger or share exchange in which the Issuer is the continuing
corporation and which does not result in any reorganization, recapitalization or
reclassification of, or change in, outstanding shares of common stock), or any
sale or conveyance of
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the property of the Issuer as an entirety or substantially as an entirety, or
any reorganization or recapitalization of the Issuer (any such event being
called a "Capital Reorganization"), then, effective upon such Capital
Reorganization, the holder of this Warrant Certificate shall no longer have the
right to purchase Common Stock, but shall have instead the right to purchase,
upon exercise of this Warrant Certificate, the kind and amount of shares of
stock and other securities and property (including cash) which the holder would
have owned or have been entitled to receive pursuant to such Capital
Reorganization if this Warrant Certificate had been exercised immediately prior
to such Capital Reorganization.
(i) Special Adjustment if Notes not Repaid Prior to September 21,
1999. If the outstanding principal amount of the Notes, together with all
accrued and unpaid interest thereon, has not been repaid in full on or prior to
September 21, 1999, the aggregate amount of Warrant Shares issuable upon
exercise of this Warrant pursuant to Section 3(a) shall be increased to equal
the product of (x) the number of shares issuable upon exercise of this Warrant
Certificate pursuant to Section 3(a) hereof immediately prior to such date,
multiplied by (y) two (2); such that absent any other adjustments required under
this Section 5 prior to such date the aggregate number of Warrant Shares
issuable pursuant to Section 3(a) hereof would be increased on such date to
500,000 shares of Common Stock. In the event the provisions of this Section 5(i)
shall apply, no adjustment shall be made in the Exercise Price as a result of
any such increase.
(j) Adjustment Rules. Any adjustments pursuant to this Section 5
shall be made successively whenever an event referred to herein shall occur,
except that, notwithstanding any other provision of this Section 5, no
adjustment shall be made to the number of shares of Common Stock to be delivered
to the holder of this Warrant Certificate (or to the Exercise Price) if such
adjustment represents less than 1% of the number of shares previously required
to be so delivered, but any lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to 1% or more of
the number of shares to be so delivered. No adjustment shall be made pursuant to
this Section 5 in respect of the issuance from time to time of shares of common
stock upon the exercise of any of the Warrant Certificates issued pursuant to
the Note Agreement or upon the exercise or conversion of any other Option
Securities or Convertible Securities issued or outstanding on the date hereof.
6. Transfer of Warrant Certificate. Subject to the provisions of
Section 4 hereof, this Warrant Certificate may be transferred, in whole or in
part, by presentation of the Warrant Certificate to the Issuer with written
instructions for such transfer. Upon such presentation for transfer, the Issuer
shall promptly execute and deliver a new Warrant Certificate or Warrant
Certificates in the form hereof in the name of the assignee or assignees and in
the denominations specified in such instructions.
7. Warrant Holder Not Shareholder. Except as otherwise provided herein,
this Warrant Certificate does not confer upon the Holder, as such, any right
whatsoever as a shareholder of the Issuer.
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8. Note and Warrant Purchase Agreement. This Warrant Certificate is
issued pursuant to that certain Note and Warrant Purchase Agreement dated as of
June 21, 1999, by and among the Issuer and the Purchasers named therein (such
Note and Warrant Purchase Agreement, together with all amendments and
modifications thereto, the "Note Agreement"). Capitalized terms used but not
otherwise defined in this Warrant Certificate shall have the respective meanings
given them in the Note Agreement. Reference is made to the Note Agreement for
all pertinent purposes, and this Warrant Certificate shall be entitled to all of
the benefits afforded to the Warrant Certificates and the holders thereof by the
Note Agreement and the other Transaction Documents.
9. Determination of Fair Market Value per Share.
(a) Subject to the provisions of subsection (b) of this Section 9, each
determination of Fair Market Value per Share shall be made in good faith by the
board of directors of the Issuer. Upon each such determination of Fair Market
Value per Share, the Issuer shall promptly give notice thereof to the Holder
setting forth in reasonable detail the calculation of such Fair Market Value per
Share (the "Issuer Determination").
(b) If the Holders shall disagree with the Issuer Determination and
shall give notice thereof to the Issuer given within thirty (30) days after the
Issuer's notice of the Issuer Determination, then the Fair Market Value per
Share shall be an amount equal to the average of the Quoted Prices for Common
Stock of the Issuer for the thirty (30) consecutive trading days commencing
forty-five (45) trading days before the date of determination. The "Quoted
Price" of Common Stock for each day means the last reported sales price of
Common Stock on such day as reported by NASDAQ or, if Common Stock is listed on
a national securities exchange, the last reported sales price of Common Stock on
such exchange (which shall be for consolidated trading if applicable to such
exchange) on such day, or if not so reported or listed, the average of the last
reported bid and asked prices of Common Stock on such day, in each case as
appropriately adjusted for any stock splits or reverse stock splits occurring
after the Closing Date.
10. Fractional Interests. The Issuer shall not be required to issue
fractional Warrant Shares on the exercise of this Warrant Certificate. If any
fraction of the Warrant Shares would be issuable on the exercise of this Warrant
Certificate (or specified portion thereof), the Issuer shall pay an amount in
cash equal to the Fair Market Value per Share on the day immediately preceding
the date this Warrant Certificate is presented for exercise, multiplied by such
fraction.
11. Governing law. THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
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XXXXXXX COMMUNICATIONS CORPORATION,
an Iowa corporation
By:
--------------------------------
Name:
Title:
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of June 21, 1999 by and
among XXXXXXX COMMUNICATIONS CORPORATION, an Iowa corporation, and each of the
Persons listed on Schedule 1 hereto (each a "Purchaser" and, collectively, the
"Purchasers").
WHEREAS, the Issuer and the Purchasers have entered into a Note and
Warrant Purchase Agreement, dated as of even date herewith, among the Issuer,
its Subsidiaries as guarantors, and the Purchasers (as the same may be amended,
supplemented or otherwise modified from time to time, the "Note Agreement";
capitalized terms used herein and not otherwise defined shall have the meanings
given such terms in the Note Agreement);
WHEREAS, pursuant to the Note Agreement and on the terms and subject to
the conditions set forth therein, the Issuer has agreed to issue and the
Purchasers have agreed to purchase $2,000,000 in aggregate principal amount of
the Issuer's Fixed Rate Senior Notes due July 21, 1999 (together with each
promissory note issued and delivered substitution, extension or exchange
therefor, the "Notes") and warrant certificates (together with each warrant
certificate issued and delivered in substitution or exchange therefor, the
"Warrant Certificates") evidencing the right to purchase an aggregate 250,000
shares of the Issuer's Common Stock, no par value per share (the "Common
Stock"), subject to adjustment from time to time in accordance with the terms of
the Warrant Certificates;
WHEREAS, it is a condition to the obligations of the Purchasers to
purchase the Notes and the Warrant Certificates that the Issuer and the
Purchasers execute and deliver this Agreement, and the Issuer and the Purchasers
desire to satisfy such condition;
NOW, THEREFORE, for and in consideration of the mutual premises,
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
47
Section 1. Definitions. In addition to the other terms defined herein,
the following terms used herein shall have the meanings herein specified (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Agreement" means this Registration Rights Agreement, as the same may
be amended or otherwise modified from time to time in accordance with the terms
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended or
otherwise modified from time to time.
"Holder" means any holder from time to time of any Warrant Securities.
"Prospectus" means each prospectus included as part of any Registration
Statement, as amended or supplemented, including each preliminary prospectus and
all material incorporated by reference in such prospectus.
"Registration Statement" means any registration statement of the Issuer
which covers Warrant Securities pursuant to the provisions of this Agreement,
including the Prospectus and all amendments, including post-effective
amendments, and supplements to such registration statement and Prospectus and
all exhibits and all material incorporated by reference in such registration
statement.
"Securities Act" means the Securities Act of 1933, as amended or
otherwise modified from time to time.
"Shelf Registration Statement" means the Registration Statement of the
Issuer which covers all Warrant Securities to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act.
"Warrant Securities" means, collectively, the Warrant Certificates and
Warrant Shares.
"Warrant Shares" means the securities which a Holder may acquire upon
exercise or conversion of a Warrant Certificate, together with any other
securities which such Holder may acquire on account of any such Warrant Shares,
whether upon the making or paying of any dividend or other distribution on
Common Stock, upon any split-up of such Common Stock, upon a recapitalization,
merger, consolidation, share exchange, reorganization or other transaction or
series of related transactions in which shares of Common Stock are changed into
or exchanged for securities of another corporation, upon exercise of any
preemptive right (or the exercise or conversion of any security which such
Holder may acquire in connection with the exercise of any preemptive right) with
respect to any such Common Stock or otherwise.
Section 2. Shelf Registration. Promptly after the date hereof and in
any event on or before July 21, 1999, the Issuer shall cause to be filed the
Shelf Registration Statement providing for the sale
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by the Holders of all of the Warrant Securities in accordance with terms hereof,
and the Issuer will use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Securities and Exchange Commission
(the "SEC") on or before August 21, 1999. The Issuer agrees to use its best
efforts to keep the Shelf Registration Statement with respect to the Warrant
Securities continuously effective so long as any Holder holds Warrant Securities
until such time as each Holder has received an opinion of counsel to the Issuer
(which opinion and counsel shall be satisfactory to the Holders) to the effect
that each such Holder is permitted under Rule 144 to the dispose of all of its
Warrant Securities without such registration. The Issuer further agrees to amend
the Shelf Registration Statement if and as required by the rules, regulations or
instructions applicable to the registration form used by the Issuer for such
Shelf Registration Statement or by the Securities Act or any rules and
regulations thereunder; provided, however, that the Issuer shall not be deemed
to have used its best efforts to keep the Shelf Registration Statement effective
if it voluntarily takes any action that would result in selling Holders not
being able to sell Warrant Securities covered thereby, unless such action is
permitted by this Agreement or required under applicable law or the Issuer has
filed a post-effective amendment to the Shelf Registration Statement and the SEC
has not declared it effective. The registration pursuant to this Section 2 shall
be effected by the filing of a Shelf Registration Statement on Form S-1 or Form
S-3 (provided that if Form S-3 is used, the Prospectus shall contain the
information that would have been required to be included therein had Form S-1
been used) or on Form SB-2; provided, however, that if the intended method of
disposition by the Holders is to be an underwritten offering, the Issuer shall
use such form of Registration Statement as is acceptable to the underwriters.
Section 3. Piggyback Registration. If at any time or from time to time
the Issuer shall propose to file on its behalf or on behalf of any of its
security holders a registration statement under the Securities Act on Form X-0,
X-0 or S-3 (or on any other Form for the general registration of securities)
with respect to any class of equity securities (or any class of securities
convertible into or exchangeable or exercisable for such equity securities) the
Issuer shall:
a. promptly give written notice to each Holder at least
thirty (30) days before the anticipated filing date, indicating the
proposed offering price and describing the plan of distribution;
b. include in such registration (and any related
qualification under blue sky or other state securities laws or other
compliance) for the sale by the Holders and, at the request of any
Holder, in any underwriting involved therein, all the Warrant
Securities specified by any Holder or Holders (the "Specified
Warrant Securities") in a written request (the "Registration
Request") made within twenty (20) days after receipt of such written
notice from the Issuer, specifying the number or amount of Specified
Warrant Securities; and
c. use its best efforts to cause the underwriter(s) of such
proposed underwritten offering to permit the Specified Warrant
Securities to be included in the Registration
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Statement for such offering on the same terms and conditions as any
similar securities of the Issuer included therein.
If the registration of which the Issuer gives notice is for a registered public
offering involving an underwriting, the Issuer shall so advise the Holders. In
such event, the right of any Holder to include Specified Warrant Securities in
such registration pursuant to this Section 3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Specified Warrant Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. If the
underwriter(s) of such offering advise(s) the Holders of Specified Warrant
Securities in writing that marketing considerations require a limitation on the
securities to be included in any Registration Statement filed under this Section
3 to a certain number of shares in excess of those to be sold by the Issuer (the
"Available Securities"), then the Issuer shall in such case be obligated to such
Holders only with respect to the Holders' pro rata share of such number of
Available Securities based upon the percentage that the Specified Warrant
Securities represent of the aggregate number of shares of Common Stock
represented by all outstanding securities of the Issuer that have been requested
to be included in such registration and are required to be so included (without
giving effect to any similar limitation) pursuant to binding agreements with the
Issuer. The limitation on the number of Specified Warrant Securities will be
imposed pro rata (based upon the ratio of the number of shares of Specified
Warrant Securities which the underwriter(s) propose to include at the
anticipated offering price to the number of Specified Warrant Securities owned
by each Holder) among all Holders of Specified Warrant Securities.
Section 4. Registration Procedures. In connection with the obligations
of the Issuer with respect to the Shelf Registration Statement contemplated by
Section 2, and if and when the Issuer shall be required by the provisions of
Section 3 to effect the registration of Warrant Securities under the Securities
Act, the Issuer will use its best efforts to effect such registration to permit
the sale of such Warrant Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto it will, as expeditiously
as possible:
(i) before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, furnish to the Holders and
the underwriter(s), if any, copies of all such documents proposed to
be filed, which documents will be made available, on a timely basis,
for review by such Holders and underwriters; and, with respect to
any Registration Statement filed pursuant to the provisions of
Section 2, the Issuer will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to
which the Holders or the underwriter(s), if any, shall reasonably
object;
(ii) prepare and file with the SEC (A) the Shelf Registration
Statement within the time period set forth in Section 2, and (B)
such amendments and post-effective amendments to any Registration
Statement, and such supplements to the Prospectus, as may be
reasonably requested by any Holder or the underwriter(s), if any, or
as may be
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required by the Securities Act, the Exchange Act or by the rules,
regulations or instructions applicable to the registration Form
utilized by the Issuer or as may otherwise be necessary to keep such
Registration Statement effective for the applicable period; and
cause the Prospectus as so supplemented to be filed pursuant to Rule
424 (or any successor rule) under the Securities Act; and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration
Statement or Prospectus;
(iii) promptly notify the selling Holders and the
underwriter(s), if any, of: (A) the filing of the Prospectus, any
Prospectus supplement and of the effectiveness of the Registration
Statement and any post-effective amendment; (B) any request by the
SEC for amendments or supplements to the Registration Statement or
the Prospectus or for additional information; (C) the issuance by
the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose; (D) the Issuer's becoming aware at any time that the
representations and warranties of the Issuer contemplated by
paragraph (xii)(A) below have ceased to be true and correct; (E) the
receipt by the Issuer of any notification with respect to the
suspension of the qualification of the Warrant Securities for sale
in any jurisdiction or the initiation, to Issuer's knowledge, or
threat of any proceeding for such purpose; and (F) the existence of
any fact which, to the knowledge of the Issuer, results in the
Registration Statement, the Prospectus or any document incorporated
therein by reference containing an untrue statement of material fact
or omitting to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(iv) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement
or any qualification referred to in paragraph (iii)(E) at the
earliest possible moment;
(v) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such
information as the underwriter(s) or the Holders reasonably request
to have included therein relating to the plan of distribution with
respect to such Warrant Securities, and make all required filings of
such Prospectus supplement or post-effective amendment to the
Registration Statement as soon as notified of the matters to be
incorporated therein;
(vi) furnish to each selling Holder and each underwriter, if
any, without charge, at least one signed copy of the Registration
Statement and any post-effective amendment thereto, including all
documents incorporated therein by reference;
(vii) deliver to each selling Holder and the underwriter(s),
if any, without charge, as many copies of the Registration
Statement, each Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto (in each case including all
exhibits
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and documents incorporated by reference in such Registration
Statement or Prospectus) as such Persons may reasonably request;
(viii) use its best efforts to register or qualify such
Warrant Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any selling Holder or
underwriter(s) reasonably request(s) and do any and all other acts
or things reasonably necessary to enable the disposition in such
jurisdictions of the Warrant Securities covered by the Registration
Statement;
(ix) if any fact contemplated by paragraph (iii)(D) or
(iii)(F) above shall exist, promptly notify each Holder and prepare
and furnish to such Holders a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers
of the Warrant Securities, neither the Registration Statement nor
the Prospectus will contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(x) use its best efforts to cause all Warrant Securities
covered by the Registration Statement to be listed on each
securities exchange on which securities of the same class are then
listed or admitted for trading in any inter-dealer quotation system
on which securities of the same class are then traded;
(xi) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Warrant
Securities covered by the Registration Statement, and provide the
applicable transfer agent with printed certificates for such Warrant
Securities in a form eligible for deposit with Depository Trust
Issuer and in such denominations and registered in such names as the
Holders or the underwriters, if any, may request at least two
Business Days prior to any sale;
(xii) enter into agreements (including underwriting
agreements) and take all other reasonable actions in order to
expedite or facilitate the disposition of such Warrant Securities
and in such connection, except as otherwise provided, whether or not
an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(A) make such representations and warranties to the
Holders selling such Warrant Securities and, in connection
with any underwritten offering, to the underwriters, in form,
substance and scope as are customarily made by issuers to
underwriters in similar underwritten offerings;
(B) obtain opinions of counsel to the Issuer and
updates thereof addressed to each selling Holder and the
underwriters, if any, covering the matters customarily
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covered in opinions requested in similar offerings and such
other matters as may be reasonably requested by such Holders
and underwriters, if any, which counsel and opinions shall be
reasonably satisfactory (in form, scope and substance) to the
underwriters, if any, and such Holders;
(C) in connection with any underwritten offering, use
its best efforts to obtain so-called "cold comfort" letters
and updates thereof from the Issuer's independent certified
public accountants addressed to the selling Holders and the
underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold
comfort" letters to underwriters in connection with similar
underwritten offerings;
(D) if an underwriting agreement is entered into,
cause the same to set forth in full the indemnification and
contribution provisions and procedures of Section 6 (or such
other substantially similar provisions and procedures as the
underwriters shall reasonably request) with respect to all
parties to be indemnified pursuant to Section 6; and
(E) deliver such documents and certificates as may
reasonably be requested by the Holders, or the
underwriter(s), if any, to evidence compliance with this
paragraph (xii) and with any customary conditions contained
in the underwriting agreement or other agreement entered into
by the Issuer;
the foregoing to be done upon each closing under any underwriting or
similar agreement as and to the extent required thereunder and from
time to time as may reasonably be requested by any selling Holder in
connection with the disposition of Warrant Securities pursuant to
such Registration Statement, all in a manner consistent with
customary industry practice;
(xiii) upon execution and delivery of such confidentiality
agreements as the Issuer may reasonably request, provide to the
Holders, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant
retained by such Holders or underwriter, reasonable access to all
financial and other records, pertinent corporate documents and
properties of the Issuer, and cause the Issuer's officers, directors
and employees to supply all information reasonably requested by any
such Holder, underwriter, attorney or accountant in connection with
the registration for purposes of satisfying any diligence
obligations such Persons may have, at such time or times as the
Person requesting such information shall reasonably determine;
(xiv) otherwise use its best efforts to comply with the
Securities Act, the Exchange Act, all applicable rules and
regulations of the SEC and all applicable state blue sky and other
securities laws, rules and regulations, and make generally available
to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities
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Act, as soon as practicable, but in no event later than ninety (90)
days after the end of the 12 calendar month period commencing after
the effective date of the Registration Statement;
(xv) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. (the
"NASD") and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter"
that is required to be retained in accordance with the rules and
regulations of the NASD); and
(xvi) prior to the filing of any document which is being
prepared for incorporation by reference into the Registration
Statement or the Prospectus, upon receipt of such confidentiality
agreements as the Issuer may reasonably request, provide copies of
such document to counsel to the selling Holders, and to the
underwriter(s), if any, and make the Issuer's representatives
available for discussion of such document.
Section 5. Registration Expenses. All expenses incident to the
Issuer's performance of or compliance with its obligations under this Agreement
(excluding underwriting discounts, selling commissions and brokerage fees) will
be paid by the Issuer, regardless of whether Warrant Securities are sold
pursuant to any Registration Statement, including, without limitation, all
registration, filing and listing fees, fees and expenses of compliance with
securities or blue sky laws, printing, messenger, telephone and delivery
expenses, fees and disbursements of counsel for the Issuer and counsel for the
selling Holders of the Warrant Securities, fees and disbursements of all
independent certified public accountants of the Issuer (including, without
limitation, in connection with any special audit or "cold comfort" letters), and
fees and expenses associated with any NASD filing required to be made in
connection with the Registration Statement, including, if applicable, the fees
and expenses of any "qualified independent underwriter" (and its counsel) that
is required to be retained in accordance with the rules and regulations of the
NASD. The Issuer will, in any event, pay its internal expenses, the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange on which
securities of the same class are then listed or the qualification for trading of
the securities to be registered in each inter-dealer quotation system in which
securities of the same class are then traded. Notwithstanding the foregoing
provisions of this Section 5, in connection with each Registration Statement
required hereunder, the Issuer will reimburse the Holders pursuant to such
Registration Statement for the reasonable fees and disbursements of not more
than one counsel chosen by the Holders of the Warrant Securities being sold.
Section 6. Indemnification.
(a) Indemnification by the Issuer. In the event of the
registration of any Warrant Securities under the Securities Act pursuant to the
provisions hereof, the Issuer will indemnify and hold harmless each and every
seller of Warrant Securities, its directors, officers, employees and agents,
each underwriter, broker and dealer, if any, who participates in the offering or
sale of such
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Warrant Securities, and each other Person, if any, who controls such seller or
any such underwriter, broker or dealer within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act (each hereinafter
sometimes referred to as an "Indemnified Person") from and against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Indemnified Person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained or
incorporated by reference in any Registration Statement or Prospectus or any
amendment or supplement thereto, or any document incorporated by reference
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such Indemnified
Person for any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Issuer will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made or incorporated by reference in
the Registration Statement or Prospectus or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Issuer by such Indemnified Person stated to be specifically for use in
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Person
and shall survive the transfer of such Warrant Securities.
(b) Contribution. If the indemnification provided for in this
Section 6 is unavailable to a party that would have been an Indemnified Person
under this Section 6 in respect of any losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to herein, then each party
that would have been an Indemnifying Person thereunder shall, in lieu of
indemnifying such Indemnified Person, contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person on the one
hand and the Indemnified Person on the other in connection with the statement or
omission which resulted in such losses, claims, damages, liabilities or expenses
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission of a material fact relates to information
supplied by the Indemnifying Person or the Indemnified Person and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with the investigation or defense of any
action or claim. The Issuer and each Holder agrees that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 6.
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Section 7. Exchange Act Registration; Rule 144 Reporting. The Issuer
covenants and agrees that until such time as the Holders no longer hold any
Warrant Securities it will:
(a) if required by law, maintain an effective registration
statement (containing such information and documents as the SEC shall specify)
with respect to the Common Stock of the Issuer under Section 12(g) of the
Exchange Act;
(b) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times (even if the Issuer subsequently ceases to be
subject to such reporting requirements);
(c) use its best efforts to file with the SEC in a timely
manner all reports and documents required of the Issuer under the Securities Act
and the Exchange Act; and
(d) furnish to any Holder promptly upon request (i) a written
statement by the Issuer as to its compliance with the reporting requirements of
Rule 144, (ii) a copy of the most recent annual or quarterly report of the
Issuer, and (iii) such other reports and documents of the Issuer and other
information in the possession of or reasonably attainable by the Issuer as such
Holder may reasonably request in availing itself of any Rule or Regulation of
the SEC allowing such Holder to sell any Warrant Securities without
registration.
The Issuer represents and warrants that such registration statement or any
information, document or report filed with the SEC in connection therewith or
any information so made public shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading. The
Issuer agrees to indemnify and hold harmless (or to the extent the same is not
enforceable, make contribution to) the Holders, their partners, officers,
directors, employees and agents, each broker, dealer or underwriter (within the
meaning of the Securities Act) acting for any Holder in connection with any
offering or sale of Warrant Securities by such Holder or any Person controlling
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) such Holder and any such broker, dealer or underwriter from
and against any and all losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arising out of or resulting from any breach of the
foregoing representation or warranty, all on terms and conditions comparable to
those set forth in Section 6.
Section 8. Limitation on Registration Rights of Others. The Issuer
covenants and agrees that, so long as any Holder holds any Warrant Securities,
in respect of which any registration rights provided for in Section 2 or Section
3 remain in effect, the Issuer will not, directly or indirectly, grant to any
Person or agree to or otherwise become obligated in respect of (x) any
registration rights of securities of the Issuer upon the demand of any Person
without the prior written consent of the Holders, or (y) rights of registration
in the nature or substantially in the nature of those set forth in Section 2 or
Section 3, unless in the case of both clauses (x) and (y) such rights are pari
passu with to the rights of registration of the Holders pursuant to Section 2
and Section 3 on terms reasonably satisfactory to the Holders.
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Section 9. Mergers, etc. References hereunder to "Warrant
Securities" shall be deemed to include any securities which Holders are entitled
to receive in exchange for Warrant Securities pursuant to any merger,
consolidation or reorganization or recapitalization, or by any other means. If,
and as often as, there are any changes in the Warrant Securities by way of stock
split, stock dividend, combination or classification, or through merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustments shall be made in the provisions hereof as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Warrant Securities as so changed.
Section 10. Notices, etc. All notices, consents, approvals,
agreements and other communications provided hereunder shall be in writing or by
telex or telecopy and shall be sufficiently given to the Purchasers, the Holders
and the Issuer if addressed or delivered to them in accordance with Section 10.1
of the Note Agreement:
Section 11. Further Agreements. Each of the parties hereto agrees to
execute all such further instruments and documents and to take all such further
action as the other parties may reasonably require in order to effectuate the
terms and purposes of this Agreement.
Section 12. Waivers and Amendments. This Agreement may not be
amended nor shall any waiver, change, modification, consent or discharge be
effected except by an instrument in writing executed by or on behalf of the
party or parties against whom enforcement of any amendment, waiver, change,
modification, consent or discharge is sought; provided, however, that any
amendment requested or waiver sought from the Holders of any provision of this
Agreement which affects the Holders generally, and any action required to be
taken by the Holders as a group pursuant to this Agreement, shall be given or
taken by the Holders of a majority in interest of the Warrant Securities, and
any such waiver or action so given or taken shall be binding on all Holders. No
failure or delay by any party in exercising any right or remedy hereunder shall
operate as a waiver thereof, and a waiver of a particular right or remedy on one
occasion shall not be deemed a waiver of any other right or remedy or a waiver
of the same right or remedy on any subsequent occasion.
Section 13. Assignment; Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, successors and permitted
assigns, including, without limitation, any Holders from time to time of the
Warrant Securities. Nothing herein shall be construed as requiring the Holders
of Warrant Certificates to exercise their warrants for, or convert their Warrant
Certificates into, Warrant Shares prior to exercising the rights conferred upon
such Holders under this Agreement. Anything in this Agreement to the contrary
notwithstanding, the term "Holders" as used in this Agreement shall be deemed to
include the registered holders from time to time of the Warrant Securities.
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Section 14. Severability. If any provision of this Agreement shall
be held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because any provision
conflicts with any constitution, statute, rule or public policy, or for any
other reason, such circumstance shall not have the effect of rendering the
provision or provisions in question, invalid, inoperative or unenforceable in
any other jurisdiction or in any other case or circumstance or of rendering any
other provision or provisions herein contained invalid, inoperative or
unenforceable to the extent that such other provisions are not themselves
actually in conflict with such constitution, statute, rule or public policy, but
this Agreement shall be reformed and construed in any such jurisdiction or case
as if such invalid, inoperative or unenforceable provision had never been
contained herein and such provision reformed so that it would be valid,
operative and enforceable to the maximum extent permitted in such jurisdiction
or in such case.
Section 15. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
Section 16. Section Headings. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 18. Termination. This Agreement shall terminate when all
Warrant Certificates have expired unexercised in accordance with their terms. In
addition, the rights of any Holder under Sections 2 and Section 3 of this
Agreement shall terminate as to any Warrant Securities when such Warrant
Securities have been effectively registered under the Securities Act and sold
pursuant to a Registration Statement covering such Warrant Securities. The
indemnification and contribution provisions of Section 6 and shall survive any
termination of this Agreement.
Section 19. Expenses. The Issuer shall be obligated to pay to the
Holders, on demand, all reasonable costs and expenses (including, without
limitation, court costs and attorneys' fees and expenses and interest to the
extent permitted by applicable law on overdue amounts) paid or incurred in
collecting any sums due from, or enforcing any other obligations of, the Issuer.
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Section 20. Specific Performance. The Issuer recognizes that the rights
of the Holders under this Agreement are unique and, accordingly, the Holders
shall, in addition to such other remedies as may be available to any of them at
law or in equity, have the right to enforce their rights hereunder by actions
for injunctive relief and specific performance to the extent permitted by law.
The Issuer agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate. This Agreement is not
intended to limit or abridge any rights of the Holders which may exist apart
from this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized officers all as of the day and year first above
written.
ISSUER:
XXXXXXX COMMUNICATIONS CORPORATION
By:
-------------------------------------
Name:
Title:
PURCHASERS:
NEW VALLEY CORPORATION
By:
-------------------------------------
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
