AMNEX, INC.
8 1/2% Convertible Subordinated Notes Due 2002
REGISTRATION RIGHTS AGREEMENT
New York, New York
September 29, 1997
HSBC Securities, Inc.
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Amnex, Inc., a New York corporation (the "Company"), proposes to issue and
sell (such issuance and sale, the "Initial Placement") to HSBC Securities, Inc.
(the "Initial Purchaser") in accordance with the Purchase Agreement dated
September 11, 1997 (the "Purchase Agreement") between the Company and the
Initial Purchaser, $15,000,000 aggregate principal amount of its 8 1/2%
Convertible Subordinated Notes Due 2002 (the "Securities") (plus up to an
additional $8,000,000 aggregate principal amount to cover over-allotments of the
Securities, if any). The Securities will be convertible into shares of Common
Stock, par value $0.001 per share (the "Common Stock"), of the Company at the
conversion price set forth in the Final Memorandum (as defined in the Purchase
Agreement). In satisfaction of a condition to your obligations under the
Purchase Agreement, the Company agrees with you, (i) for your benefit and (ii)
for the benefit of the holders from time to time of the Securities or the Common
Stock issuable upon conversion of the Securities (including you) (each of the
foregoing, a "Holder" and together, the "Holders"), as follows:
1. Definitions.
(a) As used in this Agreement, the following capitalized terms shall have
the following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
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"Business Day" means any day that is neither a Saturday or a Sunday nor a
day on which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Damages Accrual Period" has the meaning set forth in Section 2(d) hereof.
"Damages Payment Date" has the meaning set forth in Section 2(d) hereof.
"Deferral Period" shall have the meaning set forth in Section 2(c) hereof.
"Event" has the meaning set forth in Section 2(d) hereof.
"Event Date" has the meaning set forth in Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Securities, dated as of
September 29, 1997, between the Company and Marine Midland Bank, as trustee, as
the same may be amended from time to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Interest Payment Date" shall mean March 25 and September 25 in each year,
commencing March 25, 1998, during which any of the Securities are outstanding in
accordance with the Indenture.
"Liquidated Damages" has the meaning set forth in Section 2(d) hereof.
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of Securities registered under a Shelf Registration Statement
then outstanding; provided that Holders of Common Stock issued upon conversion
of Securities shall be deemed to be
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Holders of the aggregate principal amount of Securities from which such Common
Stock was converted.
"Managing Underwriters" means the Underwriter or Underwriters that shall
administer an Underwritten Offering.
"Notice Holder" has the meaning set forth in Section 2(b) hereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or Common Stock issuable upon
conversion thereof, covered by such Shelf Registration Statement, and all
amendments and supplements to such prospectus, including post-effective
amendments.
"Record Date" has the meaning set forth in Section 2(d).
"Record Holder" has the meaning set forth in Section 2(d).
"Registrable Securities" shall mean the Securities and shares of Common
Stock issued upon conversion thereof, excluding any such securities that, and
any such securities the predecessors of which, were previously sold pursuant to
an effective registration statement of the Company filed under the Act or
pursuant to Rule 144 promulgated under the Act.
"Securities" has the meaning set forth in the preamble hereto.
"Selling Confirmation" has the meaning set forth in Section 2(b)(i).
"Selling Notice" has the meaning set forth in Section 2(b).
"Selling Period" means, with respect to a Notice Holder and a Selling
Notice given by such Notice Holder, a period of 45 calendar days commencing on
the date such Notice Holder receives a Selling Confirmation in respect of the
transactions described in such Selling Notice; provided that the Company may
defer existing Selling Periods in accordance with Section 3(c)(2).
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
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"Shelf Registration Period" has the meaning set forth in Section 2(a)
hereof.
"Shelf Registration Statement" means a registration statement of the
Company pursuant to the provisions of Section 2 hereof (including additional
registration statements filed pursuant to Section 3(d)) that covers some or all
of the Securities and the Common Stock issuable upon conversion thereof, as
applicable, on an appropriate form under Rule 415 promulgated under the Act, or
any similar or successor rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Trustee" means the trustee with respect to the Securities under the
Indenture.
"Underwriter" means any underwriter of Securities or Common Stock issuable
upon conversion thereof in connection with an offering thereof under a Shelf
Registration Statement.
"Underwritten Offering" means an offering in which the Securities or Common
Stock are sold to an Underwriter or with the assistance of an Underwriter for
reoffering to the public.
(b) Capitalized terms used but not defined herein shall have the respective
meanings set forth in the Purchase Agreement.
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2. Shelf Registration; Suspension of Use of Prospectus; Liquidated Damages.
a) The Company shall prepare and file with the Commission, as soon as
practicable but in any event on or prior to the date 90 days following the
Closing Date, a Shelf Registration Statement under the Act on any appropriate
form under Rule 415 promulgated under the Securities Act or any similar or
successor rule or regulation registering the resale from time to time by Holders
thereof of all of the Registrable Securities. The Shelf Registration Statement
shall permit resales of Registrable Securities by Holders in the manner or
manners designated by them (including, without limitation, one or more
Underwritten Offerings by an underwriter reasonably acceptable to the Company)
from time to time, which shall be set forth in such Shelf Registration
Statement. The Company shall use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the Act as soon as
reasonably practicable but in any event on or prior to the date 180 days
following the Closing Date and to keep the Shelf Registration Statement
continuously effective under the Act until the earlier of (i) the second
anniversary of the Closing Date, (ii) the date on which, in the written opinion
of counsel to the Company, the Securities or Common Stock issuable upon
conversion thereof may be sold by non-affiliates of the Company pursuant to
paragraph (k) of Rule 144 (or any similar or successor provision) promulgated by
the Commission and (iii) such date as of which all the Securities or the Common
Stock issuable upon conversion thereof have been sold pursuant to the Shelf
Registration Statement (the period ending at such earlier date, the "Shelf
Registration Period").
b) Each Holder of Registrable Securities agrees that if such Holder wishes
to sell its Registrable Securities pursuant to the Shelf Registration Statement
and the Prospectus, it will do so only in accordance with this Section 2(b).
Each Holder of Registrable Securities agrees to give written notice to the
Company at least three Business Days prior to any intended resale of Registrable
Securities under the Shelf Registration Statement, which notice shall specify
the date on which such Holder intends to begin such distribution and such
information with respect to such Holder and the intended distribution as may be
reasonably required to amend the Shelf Registration Statement or supplement the
Prospectus with respect to such intended distribution (each Holder providing the
notice described in this sentence and with respect to which the related Selling
Period is continuing or has been deferred, a "Notice Holder"; each such notice,
a "Selling Notice"). As soon as practicable after the date a Selling Notice is
received by the Company, and in any event within two Business Days after such
date, the Company shall either:
(i) (A) provide a written notice to the Notice Holder who gave such
Selling Notice instructing and notifying such Notice Holder that the Shelf
Registration Statement and Prospectus may be used during the applicable
Selling Period to effect the
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transactions described in such Selling Notice, that the Company is
then-currently in compliance with Section 3(b) and that the Company
reaffirms the consent granted pursuant to Section 3(f) (each such notice a
"Selling Confirmation") or (B) file a supplement to the Prospectus or a
post-effective amendment to the Shelf Registration Statement as required by
Section 3(b), use its reasonable best efforts to cause any such amendment
to become effective and immediately provide a Selling Confirmation to such
Notice Holder; or
(ii) in the event of the happening of any event of the kind described
in Section 3(c)(2)(i), 3(c)(2)(ii), 3(c)(2)(iii) (y) or 3(c)(2)(iv) hereof,
the Company shall deliver to such Notice Holder the notice required by
Section 3(c)(2) and notify the holders that the consent granted pursuant to
Section 3(f) is suspended until further notice.
(c) Each such Notice Holder may sell all or any Registrable Securities
pursuant to the Shelf Registration Statement and the Prospectus only during the
Selling Period commencing with the earlier of (x) the date on which such Notice
Holder receives a Selling Confirmation and (y) the third Business Day after the
related Selling Notice has been received by the Company; provided that in the
event the Company elects to take the actions permitted by Section 2(b)(ii), the
commencement of the Selling Period shall be deferred until such later date as
the Company delivers a Selling Confirmation. A Notice Holder shall not sell any
Registrable Securities pursuant to the Shelf Registration Statement or the
Prospectus after the expiration of the applicable Selling Period without giving
a new Selling Notice pursuant to Section 2(b) hereof and receiving a new Selling
Confirmation. The period during which the commencement of a Selling Period is
deferred by the Company or during which an existing Selling Period is deferred
by the Company is hereinafter referred to as a "Deferral Period." In the event
that (i) the number of Deferral Periods exceeds one in any three-month period or
three in any twelve-month period or (ii) the number of days in any Deferral
Period exceeds 30 days, the Company shall be liable to pay Liquidated Damages in
accordance with Section 2(d).
In the event the Company elects to take the actions described in Section
2(b)(ii), the Company will, at such time as it is in compliance with Section
3(b) and as use of the Prospectus may be resumed, immediately provide Selling
Confirmations to all Notice Holders.
a) The parties hereto agree that the Holders of the Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with precision, if (i) the Shelf Registration Statement has not
been filed on or prior to the date 90 days following the Closing Date, (ii) the
Shelf Registration Statement has not been declared effective under the
Securities Act on or before the date 180 days following the Closing Date, (iii)
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prior to the end of the Shelf Registration Period, the Commission shall have
issued a stop order suspending the effectiveness of the Shelf Registration
Statement or proceedings have been initiated with respect to the Shelf
Registration Statement under Section 8(d) or 8(e) of the Act, (iv) the aggregate
number of days in any one Deferral Period exceeds 30 days or (v) the number of
Deferral Periods exceeds more than one in any three-month period or three in any
twelve-month period (each of the events of a type described in any of the
foregoing clauses (i) through (v) are individually referred to herein as an
"Event"; and the date 90 days following the Closing Date in the case of clause
(i), the date 180 days following the Closing Date in the case of clause (ii),
the date on which the effectiveness of the Shelf Registration Statement has been
suspended or proceedings with respect to the Shelf Registration Statement under
Section 8(d) or 8(e) of the Act have been commenced in the case of clause (iii),
the date on which the duration of a Deferral Period exceeds the periods
permitted by Section 2(c) hereof in the case of clause (iv), and the date of the
commencement of a Deferral Period that causes the limit on the number of
Deferral Periods under Section 2(c) hereof to be exceeded in the case of clause
(v), are referred to herein as an "Event Date"). Events shall be deemed to
continue until the date of the termination of such Event, which shall be the
following date with respect to the respective types of Events: the date the
Registration Statement is filed in the case of an Event of the type described in
clause (i), the date the Registration Statement is declared effective under the
Act in the case of an Event described in clause (ii), the date that all stop
orders suspending effectiveness of the Shelf Registration Statement have been
removed and the proceedings initiated with respect to the Shelf Registration
Statement under Section 8(d) or 8(e) of the Act have terminated, as the case may
be, in the case of Events of the types described in clause (iii), termination of
the Deferral Period which caused the aggregate number of days in any one
Deferral Period to exceed the number permitted by Section 2(c) to be exceeded in
the case of Events of the type described in clause (iv), and termination of the
Deferral Period the commencement of which caused the number of Deferral Periods
permitted by Section 2(c)(ii) to be exceeded in the case of Events of the type
described in clause (v).
Accordingly, upon the occurrence of any Event and until such time as there
are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages"): (A) to each Holder of
Registrable Securities that is a Notice Holder, accruing at a rate equal to one
quarter of one percent per annum (25 basis points) on (s) where such Registrable
Securities are Securities, the aggregate principal amount of such Securities
held by such Notice Holder and (t) where such Registrable Securities are shares
of Common Stock issued upon conversion of Securities, the aggregate principal
amount of Securities that were converted into such shares and (B) if the Damages
Accrual Period continues for a period in excess of 30 days from the Event Date,
from and after the end of such 30-day period until such time as there are
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no Events which have occurred and are continuing, to each Holder of Registrable
Securities (whether or not a Notice Holder), accruing at a rate equal to
one-quarter of one percent per annum (25 basis points) on (u) where such
Registrable Securities are Securities, the aggregate principal amount of such
Securities held by such Holder and (v) where such Registrable Securities are
shares of Common Stock issued upon conversion of Securities, the aggregate
principal amount of Securities that were converted into such shares.
Notwithstanding the foregoing, no Liquidated Damages shall accrue under clause
(A) of the preceding sentence during any period for which Liquidated Damages
accrue under clause (B) of the preceding sentence or as to any Securities or
shares of Common Stock from and after the earlier of (x) the date such
securities are no longer Registrable Securities, and (y) the expiration of the
Shelf Registration Period. The rate of accrual of the Liquidated Damages with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events.
Liquidated Damages due on any Securities or Common Stock shall be payable
on each Interest Payment Date on the Securities accruing (or if there are no
Securities outstanding, which would have accrued) during the Damages Accrual
Period and on the Interest Payment Date immediately following (or which would
have followed) the termination of such Period (a "Damages Payment Date"). The
Company shall pay the Liquidated Damages due on any Securities by depositing
with the Trustee under the Indenture, in trust, for the benefit of the Holders
of Securities or Common Stock or Notice Holders, as the case may be, entitled
thereto, at least one Business Day prior to the applicable Damages Payment Date,
sums sufficient to pay the Liquidated Damages accrued or accruing since the last
preceding Damages Payment Date to such Damages Payment Date. The Liquidated
Damages shall be paid on each Damages Payment Date to the Holders of record of
the Registrable Securities (the "Record Holders") on the 10th day of March or
10th day of September (each a "Record Date") immediately preceding such Damages
Payment Date by wire transfer of immediately available funds to the accounts
specified by them or by mailing checks to their registered addresses as they
appear in the Securities register or stock transfer books of the Company, if no
such accounts have been specified on or before the applicable Regular Record
Date. The Trustee shall be entitled, on behalf of the Holders of Securities,
Common Stock and Notice Holders, to seek any available remedy for the
enforcement of this Agreement, including for the payment of such Liquidated
Damages. Notwithstanding the foregoing, the parties agree that the sole remedy
payable for a violation of the terms of this Agreement with respect to which
Liquidated Damages are expressly provided shall be such Liquidated Damages.
Nothing shall preclude a Notice Holder or Holder of Registrable Securities from
pursuing or obtaining specific performance or other equitable relief with
respect to any violation of this Agreement for which liquidated damages are not
expressly provided by this Agreement.
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All of the Company's obligations set forth in this Section 2(d) which are
outstanding with respect to any Registrable Securities at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of the Agreement).
The parties hereto agree that the Liquidated Damages provided for in this
Section 2(d) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities (other than the Initial Purchaser)
by reason of the failure of the Shelf Registration Statement to be filed or
declared effective or unavailable (absolutely or as a practical matter) for
effecting resales of Registrable Securities, as the case may be, in accordance
with the provisions hereof.
3. Registration Procedures. In connection with any Shelf Registration
Statement, the following provisions shall apply:
a) The Company shall furnish to you, prior to the filing thereof with the
Commission, a copy of any Shelf Registration Statement, and each amendment
thereof and each amendment or supplement, if any, to the Prospectus included
therein and shall use its reasonable best efforts to reflect in each such
document, when so filed with the Commission, such comments as you reasonably may
propose in a timely manner to allow the Company to comply with the filing date
provisions of Section 2(a).
b) The Company shall ensure that (i) any Shelf Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any amendment
or supplement thereto comply in all material respects with the Act and the
Exchange Act and the respective rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any Shelf
Registration Statement, and any amendment or supplement to such Prospectus, does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that no
representation or agreement is made hereby with respect to information with
respect to you or any Holder required to be included in any Shelf Registration
or Prospectus pursuant to the Act or the rules and regulations thereunder or
provided by you, any Holder, or any Managing Underwriter specifically for
inclusion in any Shelf Registration Statement or Prospectus.
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c) (1) The Company shall advise you and the Holders and, if requested by
you or any such Holder, confirm such advice in writing:
d) when a Shelf Registration Statement and any amendment thereto has
been filed with the Commission and when the Shelf Registration Statement or
any post-effective amendment thereto has become effective; and
e) of any request by the Commission for amendments or supplements to
the Shelf Registration Statement or the Prospectus included therein or for
additional information.
(2) During any Selling Period, during the deferral of any Selling
Period and within two Business Days of receipt by the Company of any
Selling Notice, the Company shall notify you and the Notice Holders and, if
requested by you or any such Notice Holder, confirm such notification in
writing:
a) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of any
proceedings for that purpose;
b) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Securities included in any Shelf
Registration Statement for sale in any jurisdiction or the initiation or
threat of any proceeding for such purpose;
c) of (x) the suspension of the use of the Prospectus pursuant to
Section 2(b) or (y) of the happening of any event that requires the making
of any changes in the Shelf Registration Statement or the Prospectus so
that, as of such date, the statements therein are not misleading and do not
omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in the light of
the circumstances under which they were made) not misleading; and
d) of the determination by the Company, in its reasonable judgment,
that it is advisable to suspend use of the Prospectus for valid business
reasons (not including avoidance of the Company's obligations hereunder)
including, among other things, the acquisition or divestiture of assets,
public filings with the Commission, pending corporate developments and
similar events;
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which notice shall be accompanied by an instruction to defer the use of the
Prospectus until the Company delivers a Selling Confirmation whereupon any
existing Selling Period shall be deferred and shall recommence upon
delivery of the aforementioned Selling Confirmation; provided that such
Selling Period shall be extended by the number of days elapsed in such
period prior to such deferral.
I. The Company shall use its reasonable best efforts to prevent the
issuance, and if issued to obtain the withdrawal of, any order suspending the
effectiveness of any Shelf Registration Statement at the earliest possible time,
and in any event shall within 30 days of any such order amend the Shelf
Registration Statement in a manner reasonably expected to obtain the withdrawal
of such order, or file an additional Shelf Registration Statement covering all
of the Registrable Securities (whereupon references herein to the Shelf
Registration Statement shall be deemed to include reference to such additional
filing).
II. The Company shall furnish to each Holder of Securities or the Common
Stock issued upon conversion thereof included within the coverage of any Shelf
Registration Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment or supplement thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits (including those incorporated by reference).
III. The Company shall, during the Shelf Registration Period, deliver to
each Holder of Securities or the Common Stock issued upon conversion thereof
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
included in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and, except during such periods
as the Company shall have suspended the use of the Prospectus pursuant to
Section 2(b) or 3(c)(2), the Company consents to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Securities or the Common Stock issued upon
conversion thereof covered by the Prospectus or any amendment or supplement
thereto.
IV. Prior to any offering of Securities or the Common Stock issued upon
conversion thereof pursuant to any Shelf Registration Statement, the Company
shall register or qualify or cooperate with the Holders of Securities or the
Common Stock issued upon conversion thereof included therein and their
respective counsel in connection with the registration or qualification of such
Securities or Common Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holders reasonably request in writing and
do any and all other acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the Securities and the Common Stock issued
upon conversion thereof covered by such Shelf Registration Statement; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
V. The Company shall cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Securities or the Common
Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such denominations
and
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registered in such names as Holders may request in connection with sales of
Securities or the Common Stock issued upon conversion thereof pursuant to such
Shelf Registration Statement.
VI. Upon the occurrence of any event contemplated by clause (iii) of
Section (c)(2) above, the Company shall promptly prepare a post-effective
amendment to any Shelf Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered (when and as permitted pursuant to Section 2(c)) to
purchasers of the Securities or the Common Stock issued upon conversion thereof
included therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
VII. The Company shall use its best efforts to comply with all applicable
rules and regulations of the Commission and shall make generally available to
its security holders as soon as practicable after the effective date of the
applicable Shelf Registration Statement an earning statement satisfying the
provisions of Section 11(a) of the Act and Rule 158 promulgated by the
Commission thereunder.
VIII. The Company shall cause the Indenture to be qualified under the Trust
Indenture Act in a timely manner.
IX. The Company may require each Holder of Securities or the Common Stock
issued upon conversion thereof to be sold pursuant to any Shelf Registration
Statement to furnish to the Company such information regarding the Holder and
the distribution of such Securities or Common Stock as may, from time to time,
be required by the Act and the rules and regulations promulgated thereunder, and
the obligations of the Company to any Holder hereunder shall be expressly
conditioned on the compliance of such Holder with such request.
X. The Company shall, if requested, use its reasonable best efforts to
promptly incorporate in a supplement to the Prospectus included in the Shelf
Registration or post-effective amendment to a Shelf Registration Statement (i)
such information as the Majority Holders or, if the Securities or Common Stock
are being sold in an Underwritten Offering, as the Managing Underwriters and the
Majority Holders reasonably agree should be included therein and provide to the
Company in writing for inclusion in the Shelf Registration Statement or
Prospectus, and (ii) such information as a Holder may provide from time to time
to the Company in writing for inclusion in a Prospectus or any Shelf
Registration Statement concerning such Holder and the distribution of such
Holder's Securities and Common Stock and, in either case, shall make all
required filings of such supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such supplement or post-effective
amendment.
XI. The Company shall enter into such reasonable agreements (including
underwriting agreements) and take all other appropriate actions in order to
expedite or facilitate the registration or the disposition of the Securities or
the Common Stock issuable upon conversion thereof, and in connection therewith,
if an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable to the Holders than
those set forth in Section 5 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any, with respect to
all parties to be indemnified pursuant to Section 5 from Holders of Securities
or the Common Stock issuable upon conversion thereof to the Company).
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XII. The Company shall (i) make reasonably available for inspection by the
Holders of Securities or the Common Stock issued upon conversion thereof to be
registered under a Shelf Registration Statement, any Underwriter participating
in any disposition pursuant to such Shelf Registration Statement, and any
attorney, accountant or other agent retained by the Holders or any such
Underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries; (ii) cause the
Company's officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such Underwriter, attorney,
accountant or agent in connection with any such Shelf Registration Statement as
is customary for similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in its sole
discretion, as confidential at the time of delivery of such information (the
"Confidential Information") shall be kept confidential by the Holders or any
such Underwriter, attorney, accountant or agent, unless such information has
become available to the public generally or through a third party without an
accompanying obligation of confidentiality (provided, however, that in the event
that any of such persons is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, or similar
process) to disclose any of the Confidential Information, it is agreed that such
person will provide the Company with prompt notice of such request(s) so that
the Company may seek an appropriate protective order or other appropriate remedy
and/or waive such persons compliance with this provision and in the event that
such protective order or other remedy is not obtained, or that the Company
grants a waiver hereunder, such person may furnish that portion of the
confidential information which it is legally compelled to disclose); (iii) make
such representations and warranties to the Holders of Securities or the Common
Stock issued upon conversion thereof registered thereunder and the Underwriters,
if any, in form, substance and scope as are customarily made by issuers to
Underwriters and covering matters including, but not limited to, those set forth
in the Purchase Agreement; (iv) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions, in form, scope and substance, shall
be reasonably satisfactory to the Managing Underwriters, if any) addressed to
each selling Holder and the Underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders and Underwriters;
(v) obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Shelf Registration
Statement), addressed to each selling Holder of Securities or the Common Stock
issued upon conversion thereof registered thereunder (provided such Holder
furnishes the accountants with such representations as the accountants
customarily require in similar situations) and the Underwriters, if any, in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with primary underwritten offerings; and (vi)
deliver such documents and certificates as may be reasonably requested by the
Majority Holders and the Managing
13
Underwriters, if any, including those to evidence compliance with Section 3(i)
and with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company. The foregoing actions set forth in
clauses (iii), (iv), (v) and (vi) of this Section 3 (o) shall be performed at
(A) the effectiveness of such Shelf Registration Statement and each
post-effective amendment thereto and (B) each closing under any underwriting or
similar agreement as and to the extent required thereunder.
XIII. The Company shall use its reasonable best efforts to take all other
steps necessary to effect the registration, offering and sale of the Registrable
Securities covered by the Shelf Registration Statement contemplated hereby.
4. Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 2
and 3 hereof and shall bear or reimburse the Holders for the reasonable fees and
disbursements of one firm or counsel designated by the Majority Holders to act
as counsel for the Holders in connection therewith. However, the Company shall
not be liable for underwriting discounts or commissions or transfer taxes
payable in connection with any sale of Securities or Common Stock issued on
conversion thereof included in a Shelf Registration Statement.
5. Indemnification and Contribution.
a) (i) In connection with any Shelf Registration Statement, the Company
agrees to indemnify and hold harmless each Holder of Securities or Common Stock
issued upon conversion thereof covered thereby (including the Initial
Purchasers), the directors, officers, employees and agents of each such Holder
and each person who controls any such Holder within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Shelf Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of or is based
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upon (A) any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Holder or any
Initial Purchaser specifically for inclusion therein, (B) use of a Shelf
Registration Statement or the related Prospectus during a period when a stop
order has been issued in respect of such Shelf Registration or any proceedings
for that purpose have been initiated or use of a Prospectus when use of such
Prospectus has been deferred pursuant to Section 2(c); provided, further, in
each case, that the Company has delivered prior notice, and the Holders have
received such prior notice, in accordance with Section 7(c) hereof of such stop
order, initiation of proceedings or deferral or (C) if the Holder fails to
deliver a Prospectus or the then current Prospectus. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(ii) The Company also agrees to indemnify or contribute to Losses, as
provided in Section 5(d), of any Underwriters of Securities or the Common Stock
issued upon conversion thereof registered under a Shelf Registration Statement,
their officers and directors and each person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Initial
Purchaser and the selling Holders provided in this Section 5(a) and shall, if
requested by any Holder, enter into an underwriting agreement reflecting such
agreement, as provided in Section 3(n) hereof.
a. Each Holder of Securities or Common Stock issued upon conversion thereof
covered by a Shelf Registration Statement (including the Initial Purchaser)
severally agrees to indemnify and hold harmless (i) the Company, (ii) each of
its directors, (iii) each of its officers who signs such Shelf Registration
Statement and (iv) each person who controls the Company within the meaning of
either the Act or the Exchange Act to the same extent as the foregoing indemnity
from the Company to each such Holder, but only with reference to written
information relating to such Holder furnished to the Company by or on behalf of
such Holder specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any such Holder may otherwise have.
a) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 5, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The
15
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party;
provided further, that the indemnifying party shall not be responsible for the
fees and expenses of more than one separate counsel (together with appropriate
local counsel) representing all the indemnified parties under paragraph (a)(i),
paragraph (a)(ii) or paragraph (b) above. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
b) In the event that the indemnity provided in Section 5(a) or (b) is
unavailable to or insufficient to hold harmless an indemnified party for any
reason, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, from the Initial Placement and the Shelf Registration Statement which
resulted in such Losses;
16
provided, however, that in no case shall the Initial Purchaser be responsible,
in the aggregate, for any amount in excess of the purchase discount or
commission applicable to such Security, as set forth on the cover page of the
Final Memorandum (unless the Initial Purchaser shall also be an Underwriter, in
which case, such Initial Purchaser shall also be responsible for amounts
pursuant to the remaining of this sentence), nor shall any Underwriter be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities and Common Stock issued upon conversion thereof
purchased by such Underwriter under the Shelf Registration Statement which
resulted in such Losses. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as set forth on
the cover page of the Final Memorandum and (y) the total amount of additional
interest which the Company was not required to pay as a result of registering
the Securities and Common Stock issued upon conversion thereof covered by the
Shelf Registration Statement which resulted in such Losses. Benefits received by
the Initial Purchaser shall be deemed to be equal to the total purchase
discounts and commissions as set forth on the cover page of the Final
Memorandum, and benefits received by any other Holders shall be deemed to be
equal to the value of receiving Securities or the Common Stock issuable upon
conversion thereof registered under the Act. Benefits received by any
Underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Shelf Registration Statement which resulted in such Losses. Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the indemnifying party, on the one
hand, or by the indemnified party, on the other hand. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 5(d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
17
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this Section 5(d).
(e) The provisions of this Section 5 will remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the
Company or any of the officers, directors or controlling persons referred to in
Section 5 hereof, and will survive the sale by a Holder of Securities covered by
a Shelf Registration Statement.
6. Underwritten Offering. The Holders of Registrable Securities covered by
the Shelf Registration Statement who desire to do so may sell such Registrable
Securities in an Underwritten Offering in accordance with the provisions of this
Section 6. In any such Underwritten Offering, the Managing Underwriters that
administer the Underwritten Offering will be selected by, and the underwriting
arrangements with respect thereto will be approved by, the Holders of a majority
of the Registrable Securities to be included in such offering (if both
Securities and Common Stock are to be included in such Underwritten Offering
determined in a manner analogous to that used to calculate Majority Holders with
Holders of Common Stock deemed to represent the aggregate principal amount of
Securities from which such Common Stock was converted); provided, however, that
(i) such Managing Underwriters and underwriting arrangements must be reasonably
satisfactory to the Company and (ii) the Company shall not be obligated to
arrange for more than one Underwritten Offering during the Shelf Registration
Period. No Holder may participate in any such Underwritten Offering contemplated
unless such Holder (a) agrees to sell such Holder's Registrable Securities in
accordance with any approved underwriting arrangements, (b) completes and
executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such approved underwriting arrangements and (c) at least 70% of the
outstanding Registrable Securities are included in such Underwritten Offering.
The Holders participating in any Underwritten Offering shall be responsible for
any expenses customarily borne by selling securityholders, including
underwriting discounts and commissions and fees and expenses of counsel to the
selling securityholders and shall reimburse the Company for the fees and
disbursements of their counsel, their independent public accountants and any
printing expenses incurred in connection with such Underwritten Offering.
Notwithstanding the foregoing or the provisions of Section 3(m) hereof, upon
receipt of a request from the Managing Underwriter or a representative of the
Majority Holders to prepare and file an amendment or supplement to the Shelf
Registration Statement and Prospectus in connection with an Underwritten
Offering, the Company may delay the filing of any such amendment or supplement
for up to 90 days if the Company in good faith has a valid business reason for
such delay.
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7. Miscellaneous.
a) No Inconsistent Agreements. The Company has not, as of the date hereof,
entered into nor shall it, on or after the date hereof, enter into, any
agreement with respect to the Securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders; provided that, with respect to any matter that directly or
indirectly affects the rights of the Initial Purchaser hereunder, the Company
shall obtain the written consent of the Initial Purchaser against which such
amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities are being sold
pursuant to a Shelf Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of Securities being sold rather than registered
under such Shelf Registration Statement.
c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
1. if to you, initially at the address set forth in the Purchase
Agreement;
2. if to any other Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
7(c), which address initially is, with respect to each Holder, the address
of such Holder maintained by the Trustee under the Indenture, with a copy
in like manner to you; and
3. if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly given
when received, if delivered by hand or air courier, and when sent, if sent by
first-class mail, telex or telecopier.
The Initial Purchaser or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
19
a. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties, including,
without the need for an express assignment or any consent by the Company
thereto, subsequent Holders. The Company hereby agrees to extend the benefits of
this Agreement to any Holder and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
a) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
b) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES
THEREOF.
d) Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
e) Securities Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities or the
Common Stock issuable upon conversion thereof is required hereunder, Securities
or the Common Stock issued upon conversion thereof held by the Company or its
Affiliates (other than subsequent Holders of Securities or the Common Stock
issued upon conversion thereof if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
* * *
20
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
AMNEX, INC.
By_____________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
HSBC SECURITIES, INC.
By___________________________
Name:
Title:
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