Exhibit 99.1
▇▇▇▇.▇▇▇, INC.
▇▇▇▇.▇▇▇ BUSINESS MESSAGING SERVICES, INC.
THE ALLEGRO GROUP, INC.
10% Senior Convertible Notes due January 8, 2006
and
Class A common stock
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NOTE EXCHANGE AGREEMENT
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Dated February 14, 2001
TABLE OF CONTENTS
Page
1. Authorization of Notes and Shares....................................1
2. Sale And Purchase Of Notes and Exchange Shares.......................1
3. Closing..............................................................2
4. Conditions To Closing................................................3
4.1 Representations and Warranties..............................3
4.2 Performance; No Default.....................................3
4.3 Compliance Certificates.....................................3
4.4 Opinions of Counsel.........................................3
4.5 Purchase Permitted By Applicable Law, etc...................4
4.6 Transaction Agreements......................................4
4.7 Proceedings and Documents...................................4
4.8 NASDAQ Waiver or Stockholder Approval.......................4
5. Representations And Warranties Of The Companies......................4
5.1 Organization; Power and Authority...........................4
5.2 Authorization, etc..........................................5
5.3 Compliance with Laws, Other Instruments, etc................5
5.4 Governmental and Third Party Authorizations, etc............5
5.5 Private Offering by the Company.............................5
5.6 Capitalization..............................................6
6. Representations Of The Purchasers....................................6
6.1 Purchase for Investment; Status of Purchasers;
Restrictions on Securities..................................6
6.2 Source of Funds.............................................6
6.3 Title to Exchange Notes; Due Authorization; No Conflicts....8
7. Information as to Company............................................8
7.1 Financial and Business Information..........................8
7.2 Officer's Certificate......................................11
7.3 Inspection.................................................11
8. Prepayment of the Notes.............................................11
8.1 Optional Prepayments.......................................11
8.2 Allocation of Partial Optional Prepayments.................12
8.3 Maturity; Surrender, etc...................................12
9. Affirmative Covenants...............................................12
9.1 Compliance with Law........................................12
9.2 Insurance..................................................12
9.3 Maintenance of Properties..................................12
9.4 Payment of Taxes...........................................13
9.5 Corporate Existence, etc...................................13
9.6 Stay, Extension And Usury Law..............................13
9.7 Investment Company Act.....................................13
9.8 Reservation of Shares......................................13
10. Negative Covenants..................................................14
10.1 Transactions with Affiliates...............................14
10.2 Merger, Consolidation, etc.................................14
10.3 Liens......................................................15
10.4 Indebtedness...............................................15
11. Events of Default...................................................16
12. Remedies on Default, etc............................................18
12.1 Acceleration...............................................18
12.2 Other Remedies.............................................18
12.3 Rescission.................................................19
12.4 No Waivers or Election of Remedies, Expenses, etc..........19
13. Registration; Exchange; Substitution of Notes.......................19
13.1 Registration of Notes......................................19
13.2 Transfer and Exchange of Notes.............................19
13.3 Replacement of Notes.......................................20
14. Payments On Notes...................................................20
14.1 Place of Payment...........................................20
14.2 Home Office Payment........................................20
15. Conversion..........................................................21
15.1. Conversion Privilege.......................................21
15.2. Conversion Procedure.......................................21
15.3. Fractional Shares..........................................22
15.4. Taxes on Conversion........................................22
15.5. Company to Provide Stock...................................23
15.6. Adjustment of Conversion Price.............................23
15.7. No Adjustment..............................................28
15.8. Other Adjustments..........................................28
15.9. Notice of Adjustment.......................................29
15.10. Notice of Certain Transactions.............................29
15.11. Effect of Reclassifications, Consolidations,
Mergers, Continuances or Sales on Conversion Privilege.....29
15.12. Cancellation of Converted Notes............................30
16. Expenses, etc.......................................................30
16.1 Enforcement Expenses.......................................30
16.2 Survival...................................................30
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17. Survival Of Representations And Warranties; Entire Agreement........30
18. Amendment And Waiver................................................30
18.1 Requirements...............................................30
18.2 Solicitation of Holders of Notes...........................31
18.3 Binding Effect, etc........................................31
18.4 Notes held by Company, etc.................................31
19. Notices.............................................................32
20. Reproduction Of Documents...........................................32
21. Confidential Information............................................32
22. Substitution Of Purchaser...........................................33
23. Miscellaneous.......................................................33
23.1 Successors and Assigns.....................................33
23.2 Payments Due on Non-Business Days..........................34
23.3 Severability...............................................34
23.4 Construction...............................................34
23.5 Counterparts...............................................34
23.6 Governing Law..............................................34
23.7 Submission to Jurisdiction; Service of Process.............34
23.8 Section Titles.............................................35
23.9 Termination................................................35
23.10 Certain Restrictions on Purchasers.........................36
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▇▇▇▇.▇▇▇, INC.
▇▇▇▇.▇▇▇ BUSINESS MESSAGING SERVICES, INC.
THE ALLEGRO GROUP, INC.
10% Senior Convertible Notes due January 8, 2006
February 14, 2001
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("▇▇▇▇.▇▇▇" or the "Company"),
▇▇▇▇.▇▇▇ Business Messaging Services, Inc., a Delaware corporation ("▇▇▇▇.▇▇▇
BMS"), and The Allegro Group, Inc., an Ohio corporation ("Allegro"; ▇▇▇▇.▇▇▇,
▇▇▇▇.▇▇▇ BMS and Allegro being referred to herein collectively as the
"Companies"), agree with you as follows:
1. Authorization of Notes and Shares.(a) The Companies have authorized
the issue and sale of 10% Senior Convertible Notes due January 8, 2,006 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the other Transaction Agreements),
and the Company has authorized the issue and sale of the aggregate number of
shares of Class A common stock, par value $.01 per share, set forth on Schedule
A hereto (the "Exchange Shares"). The Notes shall be substantially in the form
set out in Exhibit 1, with such changes therefrom, if any, as may be approved by
you and the Companies. Certain capitalized terms used in this Agreement are
defined in Schedule C; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
(b) The Company has authorized and has reserved and covenants to
continue to reserve, free of preemptive rights and other similar contractual
rights of stockholders, a sufficient number of authorized but unissued shares of
Class A common stock, par value $.01 per share, or other securities into which
the Notes are convertible in accordance with their terms and a sufficient number
of such shares or securities issuable in payment of interest on the Notes (such
shares or other securities being referred to herein as the "Conversion Shares"
and, together with the Exchange Shares, the "Common Shares") to satisfy the
rights of conversion of and interest payments on the Note.
(c) All of the obligations under this Agreement and the Notes on the
part of the Company, ▇▇▇▇.▇▇▇ BMS or Allegro shall be joint and several
obligations of the Company, ▇▇▇▇.▇▇▇ BMS and Allegro.
2. Sale And Purchase Of Notes and Exchange Shares. (a) Subject to the
terms and conditions of this Agreement, if a Registration Statement registering
the Registerable Securities (as such terms are defined in the Registration
Rights Agreement) has not been declared effective on or before the Closing, the
Companies will issue and sell to you and you will purchase from the Companies,
at the Closing provided for in Section 3, Notes in the principal amount
specified opposite your name in Schedule A in exchange for the assignment,
transfer and conveyance by you to the Company of all of your right, title and
interest in, to and under the principal amount of 7% Convertible Subordinated
Debentures due 2005 of the Company (the "Exchange Notes") held by you specified
opposite your name in Schedule A as being exchanged for such Notes. Upon the
subsequent effectiveness of the Registration Statement, the Company will issue
and sell to you and you will purchase from the Company the number of Exchange
Shares specified opposite your name in Schedule A in exchange for the
assignment, transfer and conveyance by you to the Company of all of your right,
title and interest in, to and under the principal amount of Notes held by you
specified opposite your name in Schedule A as being exchanged for such Exchange
Shares.
(b) Subject to the terms and conditions of this Agreement, if a
Registration Statement registering the Registerable Securities (as such terms
are defined in the Registration Rights Agreement) has been declared effective on
or before the Closing, (i) the Companies will issue and sell to you and you will
purchase from the Companies, at the Closing provided for in Section 3, Notes in
the principal amount specified opposite your name in Schedule B in exchange for
the assignment, transfer and conveyance by you to the Company of all of your
right, title and interest in, to and under the principal amount of 7%
Convertible Subordinated Debentures due 2005 of the Company (the "Exchange
Notes") held by you specified opposite your name in Schedule B as being
exchanged for such Notes and (ii) the Company will issue and sell to you and you
will purchase from the Company, at the Closing provided for in Section 3, the
number of Exchange Shares specified opposite your name in Schedule B in exchange
for the assignment, transfer and conveyance by you to the Company of all of your
right, title and interest in, to and under the principal amount of Exchange
Notes held by you specified opposite your name in Schedule B as being exchanged
for such Exchange Shares.
(c) The Purchasers shall be entitled to receive accrued and unpaid
interest on the Exchange Notes from February 1, 2001 through the Closing Date at
which the Exchange Notes are exchanged payable in the number of shares of
▇▇▇▇.▇▇▇ Class A common stock having an aggregate deemed value equal to such
accrued and unpaid interest based on a deemed value of per share of Class A
common stock of $1.75. If the exchange of Notes for Exchange Shares is
consummated, the Purchasers shall not be entitled to receive any accrued
interest on the Notes so exchanged for Exchange Shares.
(d) The obligations of each Purchaser hereunder and under the Notes,
the Registration Rights Agreement and the Accession Agreements (together with
this Agreement, the "Transaction Agreements") are several and not joint
obligations and none of the Purchasers shall have any obligation under any
Transaction Agreement or any liability to any Person for the performance or
nonperformance by any other Purchaser hereunder or thereunder.
3. Closing. (a) The initial closing of the purchase and sale of the
Notes and the Exchange Shares hereunder shall be held at the offices of the
Company at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 a.m., local time, on such
date as the condition set forth in Section 4.8 or at such other time and place
as shall be mutually agreed upon by the Company and the Purchasers (the date of
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the Initial Closing is hereinafter referred to as the "Initial Closing Date").
Each of the Initial Closing and each subsequent closing at which Notes are
purchased hereunder contemplated by Section 3(c) is herein referred to as a
"Closing" and each of the Initial Closing Date and the date of each subsequent
Closing is herein referred to as a "Closing Date".(b) At the Initial Closing,
the Companies will deliver to you the Notes to be purchased by you in the form
of a single Note (or such greater number of Notes in denominations of at least
$100,000 as you may request) and, if applicable, certificates evidencing the
Exchange Shares, in each case dated the date of the Closing and registered in
your name (or in the name of your nominee), against delivery by you to the
Company or its order of the Exchange Notes. Upon the effectiveness of the
Registration Statement after the Initial Closing, the Company will deliver to
you the certificates evidencing the Exchange Shares registered in your name (or
in the name of your nominee), against delivery by you to the Company or its
order of the Notes to be exchanged for such certificates.
(c) The Companies may issue additional Notes and Exchange Shares after
the Initial Closing Date under this Agreement. Each subsequent purchaser of
Notes and Exchange Shares shall execute and deliver an agreement (an "Accession
Agreement") agreeing to be bound by each of this Agreement and the other
Transaction Agreements to which the Purchasers are party and shall thereby
become a Purchaser hereunder and thereunder. Each such Accession Agreement shall
contain a new Schedule A as of the Closing Date for such Closing.
4. Conditions To Closing. Your obligation to purchase the Notes
to be sold to you at a Closing is subject to the fulfillment to your
satisfaction, prior to or at such Closing, of the following conditions:
4.1 Representations and Warranties. The representations
and warranties of the Companies in this Agreement shall be correct when
made and at the time of such Closing with the same effect as if made on
the Closing Date.
4.2 Performance; No Default. The Companies shall have
performed and complied with all agreements and conditions contained in
the Transaction Agreements required to be performed or complied with by
them prior to or at such Closing and after giving effect to the issue
and sale of the Notes and the Exchange Shares and no Default or Event
of Default shall have occurred and be continuing.
4.3 Compliance Certificates. (a) Officer's Certificate.
The Companies shall have delivered to you an Officer's Certificate,
dated the date of the Closing, certifying that the conditions specified
in Sections 4.1 and 4.2 have been fulfilled.
(b) Secretary's Certificate. The Companies shall have
delivered to you a certificate certifying as to the resolutions
attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and the other
Transaction Agreements and the certificates of incorporation (or other
organizational documents) and bylaws of the Companies.
4.4 Opinions of Counsel. You shall have received opinions
in form of Exhibit 4.4 from counsel for the Companies (and the
Companies hereby instruct their counsel to deliver such opinion to
you).
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4.5 Purchase Permitted By Applicable Law, etc. On the
Closing Date, your purchase of Notes and Exchange Shares shall (i) be
permitted by the laws and regulations of each jurisdiction to which you
are subject, (ii) not violate any applicable law or regulation
(including, without limitation, Regulation U, T or X of the Board of
Governors of the Federal Reserve System) and (iii) not subject you to
any tax, penalty or liability under or pursuant to any applicable law
or regulation, which law or regulation was not in effect on the date
hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so
permitted.
4.6 Transaction Agreements. You shall have received from
the Company duly executed and delivered copies of each of the Notes
and, if applicable at such Closing, certificates representing Exchange
Shares to be purchased by you and the Registration Rights Agreement in
the form of Exhibit 2 (the "Registration Rights Agreement").
4.7 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such
transactions shall be satisfactory to you and your counsel, and you and
your counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may
reasonably request.
4.8 NASDAQ Waiver or Stockholder Approval.
The Company shall have either (i) received a waiver from the NASDAQ
Stock Market from its shareholder approval rules to the extent
applicable in connection with the issuance of the Notes and the
Exchange Shares and complied with any conditions contained in such
waiver in order to consummate the transactions contemplated hereby at
the Closing or (ii) shall have obtained shareholder approval to the
extent required under the rules of the NASDAQ Stock Market of the
issuance of the Notes and the Exchange Shares in accordance with the
terms of this Agreement pursuant to a duly called meeting of
shareholders of the Company.
5. Representations And Warranties Of The Companies. The
Companies, jointly and severally, represent and warrant to you that, except as
disclosed in the SEC Filings or in the Disclosure Schedules attached hereto:
5.1 Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and is duly qualified as
a foreign corporation and is in good standing in each jurisdiction in
which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it
transacts and proposes to transact. Each of the Companies has the
4
corporate power and authority to execute and deliver this Agreement and
the other Transaction Agreements and to perform the provisions hereof
and thereof.
5.2 Authorization, etc. (a) This Agreement and the other
Transaction Agreements have been duly authorized by all necessary
corporate action on the part of each of the Companies, and this
Agreement constitutes, and upon execution and delivery thereof each
other Transaction Agreement will constitute, a legal, valid and binding
obligation of each of the Companies enforceable against each of the
Companies in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) The Common Shares have been duly authorized by all
necessary corporate action on the part of the Company and have been
duly reserved for issuance. When the Exchange Shares are issued, and
when the Common Shares are issued upon conversion of the Notes or in
payment of interest on the Notes in accordance with the terms of the
Notes, such shares will be validly issued and outstanding, fully paid
and nonassessable and the issuance of such shares will not be subject
to preemptive or other similar contractual rights of any other
stockholder of the Company.
5.3 Compliance with Laws, Other Instruments, etc. The
execution, delivery and performance by each of the Companies of the
Transaction Agreements will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any
Lien in respect of any property of the Company or any Subsidiary under,
any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other agreement
or instrument to which the Company or any Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a
breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (iii) violate
or conflict with any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or
any Subsidiary.
5.4 Governmental and Third Party Authorizations, etc. No
consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority or other third party is
required in connection with the execution, delivery or performance by
the Companies of the Transaction Agreements.
5.5 Private Offering by the Company. Neither the
Companies nor anyone acting on their behalf has offered the Notes, the
Exchange Shares 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 and not more than 50 other accredited investors (within the
meaning of Rule 501 of Regulation D promulgated under the Securities
Act), each of which has been offered the Notes and the Exchange Shares
at a private sale for investment. Neither the Companies nor anyone
acting on their behalf has taken, or will take, any action that would
5
subject the issuance or sale of the Notes or the Exchange Shares to the
registration requirements of Section 5 of the Securities Act.
5.6 Capitalization.
As of the date hereof, the authorized capital stock of the Parent
consists of 150,000,000 shares of Parent Common Stock, of which
approximately 51,789,201 shares were issued and outstanding as of
December 31, 2000; 10,000,000 shares of Class B Common Stock, par value
$.01 per share, of which 10,000,000 shares are issued and outstanding
as of the date hereof; and 60,000,000 shares of Preferred Stock, none
of which is issued and outstanding as of the date hereof. The
outstanding shares of capital stock have been duly authorized and
validly issued, and are fully paid and non-assessable.
6. Representations Of The Purchasers.
6.1 Purchase for Investment; Status of Purchasers;
Restrictions on Securities. Each Purchaser represents that it is
purchasing the Notes and the Common Shares for its own account or for
one or more separate accounts maintained by it or for the account of
one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Purchaser's
or their property shall at all times be within your or their control.
Each Purchaser (i) is an "accredited investor" as that term is defined
in Rule 501(a) promulgated under the Securities Act, (ii) is an
investor experienced in the evaluation of businesses similar to
Company, (iii) is able to fend for itself in the transactions
contemplated by this Agreement, (iv) has such knowledge and experience
of financial, business and investment matters as to be capable of
evaluating the merits and risks of this investment, (v) has the ability
to bear the economic risks of this investment, (vi) was not organized
or reorganized for the specific purpose of acquiring the Notes or the
Common Shares and (vii) has been afforded the opportunity to ask
questions of, and to receive answers from, the Company and to obtain
additional information, to the extent the Company has such information
or could have acquired it without unreasonable effort or expense, all
as necessary for such Purchaser to make an informed investment decision
with respect to the Notes and the Common Shares. Each Purchaser
understands that neither the Notes nor the Common Shares have been
registered under the Securities Act, that neither the Notes nor the
Common Shares may be resold unless registered pursuant to the
provisions of the Securities Act or an exemption from registration is
available, and that the Company is not required to register the Notes.
Each Purchaser understands and acknowledges that certificates
representing the Notes and the Common Shares will bear a restrictive
legend in customary form.
6.2 Source of Funds. Each Purchaser represents that at
least one of the following statements is an accurate representation as
to each source of funds (a "Source") to be used by such Purchaser to
pay the purchase price of the Notes and the Exchange Shares to be
purchased by it hereunder:
(a) if such Purchaser is an insurance company, the
Source does not include assets allocated to any separate
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account maintained by such Purchaser in which any employee
benefit plan (or its related trust) has any interest, other
than a separate account that is maintained solely in
connection with your fixed contractual obligations under which
the amounts payable, or credited, to such plan and to any
participant or beneficiary of such plan (including any
annuitant) are not affected in any manner by the investment
performance of the separate account; or
(b) the Source is either (i) an insurance company
pooled separate account, within the meaning of Prohibited
Transaction Exemption ("PTE") ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇),
▇▇ (▇▇) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12, 1991) and, except as you
have disclosed to the Company in writing pursuant to this
paragraph (b), no employee benefit plan or group of plans
maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or "QPAM"
(within the meaning of Part V of the QPAM Exemption), no
employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of
the total client assets managed by such QPAM, the conditions
of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the Company
and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans,
or a separate account or trust fund comprised of one or more
employee benefit plans, each of which has been identified to
the Company in writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any
employee benefit plan, other than a plan exempt from the
coverage of ERISA: or
(g) in the case of a Purchaser that is not an
Institutional Investor, the Source is personal funds.
7
As used in this Section 6.2, the terms "employee benefit
plan", "governmental plan", "party in interest" and "separate account"
shall have the respective meanings assigned to such terms in Section 3
of ERISA.
6.3 Title to Exchange Notes; Due Authorization; No
Conflicts.
(a) Each Purchaser represents that it has good and valid title
and beneficial ownership of all of the Exchange Notes to be exchanged
for Notes and Exchange Shares hereunder, free and clear of all Liens
(other than restrictions on transfer under federal and state securities
laws). Upon the assignment and transfer to the Company at the Closing,
the Company will acquire all of Purchaser's right, title and interest
in, to and under the Exchange Notes to be exchanged by it for Notes and
Exchange Shares hereunder free and and clear of all Liens (other such
restrictions on transfer under federal and state securities laws).
(b) Each Purchaser represents that this Agreement and the
Registration Rights Agreement have been duly authorized by all
necessary corporate action on the part of such Purchaser, and this
Agreement constitutes, and upon execution and delivery thereof the
Registration Rights Agreement will constitute, a legal, valid and
binding obligation of such Purchaser enforceable against it in
accordance with its terms, except as such enforceability may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(c) Each Purchaser represents that the execution, delivery and
performance by it of this Agreement and the Registration and Rights
Agreement will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in
respect of any property of such Purchaser under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to
which such Purchaser is bound or by which it or any of its properties
may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority
applicable to such Purchasesr or (iii) violate or conflict with any
provision of any statute or other rule or regulation of any
Governmental Authority applicable to it.
7. Information as to Company.
7.1 Financial and Business Information. The Companies shall
deliver to each holder of Notes:
(a) Quarterly Statements -- within 60 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other
than the last quarterly fiscal period of each such fiscal year), a copy
of:
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such
quarter, and
8
(ii) consolidated statements of income and cash
flows of the Company and its Subsidiaries,
for the period from the beginning of such
fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Company's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements -- within 105 days after the end
of each fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of ▇▇▇▇.▇▇▇ and
its Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of ▇▇▇▇.▇▇▇
and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which
opinion shall state that such financial statements present fairly, in
all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances, provided that the delivery within the time period
specified above of the Company's Annual Report on Form 10-K for such
fiscal year (together with the Company's annual report to shareholders,
if any, prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor and filed with
the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by the
Company with the Securities and Exchange Commission;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer becoming aware
9
of the existence of any Default or Event of Default or that any Person
has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in
Section 11(e), a written notice specifying the nature and period of
existence thereof and what action the Companies are taking or propose
to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and the
action, if any, that the Companies or an ERISA Affiliate proposes to
take with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA, for
which notice thereof has not been waived; or
(ii) the taking by the PBGC of steps to
institute, or the threatening by the PBGC of
the institution of, proceedings under
section 4042 of ERISA for the termination
of, or the appointment of a trustee to
administer, any Plan, or the receipt by any
of the Companies or any ERISA Affiliate of a
notice from a Multiemployer Plan that such
action has been taken by the PBGC with
respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any
liability by the Companies or any ERISA
Affiliate pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of
the Code relating to employee benefit plans,
or in the imposition of any Lien on any of
the rights, properties or assets of the
Companies or any ERISA Affiliate pursuant to
Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or
Lien, taken together with any other such
liabilities or Liens then existing, could
reasonably be expected to have a Material
Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect; and
(g) Requested Information - subject to appropriate
confidentiality and use restrictions, with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Companies to
perform their obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes.
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7.2 Officer's Certificate. Each set of financial
statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior
Financial Officer setting forth a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists, specifying the nature and period
of existence thereof and what action the Companies shall have taken or
propose to take with respect thereto.
7.3 Inspection. The Companies shall permit the
representatives of each holder of Notes that is an Institutional
Investor, subject to appropriate confidentiality and use restrictions:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Companies' officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Company to visit and inspect any of the offices
or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. Prepayment of the Notes.
8.1 Optional Prepayments.The Companies may, at their
option, upon notice as provided herein, prepay the Notes, in whole or
in part, at any time (i) on or after the third anniversary of the
Closing Date, (ii) if the closing price of the Company's Class A common
stock on the NASDAQ stock market, or other securities market on which
the Company's shares are then traded, is at or above $5.00 per share
(such amount to be appropriately adjusted in the event of a stock
split, stock dividend, stock combination or recapitalization or similar
event having a similar effect) for 30 consecutive trading days or (iii)
the Company desires to effect a merger, consolidation or sale of all or
substantially all of its assets in a manner that is prohibited by
Section 10.2 and the holders of the Notes fail to consent to a waiver
of Section 10.2 to permit such merger, consolidation or sale (each, an
"Optional Prepayment"). The Company shall provide the holders of Notes
not less than fifteen days advance notice of any prepayment in order to
11
permit the holders to convert in lieu of being prepaid. All prepayments
shall be at par and without payment of any premium but shall include
all accrued but unpaid interest through the date of prepayment.
8.2 Allocation of Partial Optional Prepayments. In the
case of each partial Optional Prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof not theretofore
called for prepayment.
8.3 Maturity; Surrender, etc. In the case of each
prepayment of Notes pursuant to this Section 8, the principal amount of
each Note to be prepaid shall mature and become due and payable on the
date fixed for such prepayment, together with interest on such
principal amount accrued to such date, if any. From and after such
date, unless the Companies shall fail to pay such principal amount when
so due and payable, together with the interest, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any Note paid
or prepaid in full shall be surrendered to the Company and cancelled
and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note. The obligation of the Companies
to make any Optional Prepayment shall be conditioned upon the
consummation of the event giving rise to such Optional Prepayment.
9. Affirmative Covenants.
The Companies covenant that so long as any of the Notes are
outstanding:
9.1 Compliance with Law. The Companies will and will
cause each of the Company's Subsidiaries to comply with all laws,
ordinances or governmental rules or regulations to which each of them
is subject and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the
conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in
effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
9.2 Insurance. The Companies will and will cause each of
the Company's Subsidiaries to maintain, with financially sound and
reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of
such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained
with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and
similarly situated.
9.3 Maintenance of Properties. The Companies will and
will cause each of the Company's Subsidiaries to maintain and keep, or
12
cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and
tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the operation
and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded
that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.4 Payment of Taxes. The Companies shall pay, and shall
cause each of the Company's Subsidiaries to pay, prior to delinquency,
all taxes, assessments and governmental levies, except such as are
contested in good faith and by appropriate proceedings and for which
adequate reserves in accordance with GAAP or other appropriate
provisions have been made.
9.5 Corporate Existence, etc. Except as provided in
Section 10.2, the Companies will, and will cause the Company's
Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and
the rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries; provided, however, that the Companies
shall not be required to preserve, or to cause the Company's
Subsidiaries to preserve, any such right, license or franchise, if the
Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the
Company and its Subsidiaries taken as a whole and that the loss thereof
is not adverse in any material respect to the holders of the Notes.
9.6 Stay, Extension And Usury Law. The Companies covenant
(to the extent that they may lawfully do so) that they will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of the Transaction Agreements; and the
Companies (to the extent they may lawfully do so) hereby expressly
waive all benefit or advantage of any such law, and covenants that they
will not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the holders of the Notes, but
will suffer and permit the execution of every such power as though no
such law has been enacted.
9.7 Investment Company Act.
As long as any Notes are outstanding, the Companies will
conduct their businesses and operations so as not to become an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and will take all
steps required in order for them to continue not to be an "investment
company" and not to be required to be registered under the Investment
Company Act, including, if necessary, redeployment of the assets of the
Companies.
9.8 Reservation of Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Class A common stock, solely for the
purpose of issuance in payment of interest on the Notes in shares of
13
Class A common stock as provided in the Notes, a sufficient number of
shares of Class A common stock to permit the payment of interest in
such shares as so provided.
All shares of Class A common stock which may be issued in
payment of interest on the Notes shall be duly authorized, validly
issued, fully paid and nonassessable when so issued.
The Company shall from time to time take all action necessary
so that the Class A common stock which may be issued in payment of
interest on the Notes, immediately upon their issuance (or, if such
Class A common stock is subject to restrictions on transfer under the
Securities Act, upon their resale pursuant to an effective registration
statement or in a transaction pursuant to which the certificate
evidencing such Class A common stock shall no longer bear a restrictive
common stock legend), will be listed on the Nasdaq National Market or
such other interdealer quotation system and market or principal
securities exchanges, if any, on which other shares of Class A common
stock of the Company are then listed or quoted.
10. Negative Covenants.
The Companies covenant that so long as any of the Notes are
outstanding:
10.1 Transactions with Affiliates. The Companies will not
and will not permit any Subsidiary to enter into directly or indirectly
any transaction or group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than
the Company or another Subsidiary), except in the ordinary course and
pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be obtainable in
a comparable arm's-length transaction with a Person not an Affiliate.
10.2 Merger, Consolidation, etc. The Company shall not
consolidate with or merge with any other corporation or convey,
transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by
conveyance, transfer or lease all or substantially all of the
assets of the Company as an entirety, as the case may be,
shall have executed and delivered to each holder of any Notes
its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement,
the other Transaction Agreements and the Notes;
(b) the Notes would have a credit rating from
▇▇▇▇▇'▇ or Standard and Poors immediately thereafter
at least as favorable as immediately theretofore; and
(c) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing.
14
No such conveyance, transfer or lease of all or substantially all of
the assets of the Company shall have the effect of releasing the
Company or any successor corporation that shall theretofore have become
such in the manner prescribed in this Section 10.2 from its liability
under this Agreement, the other Transaction Agreements or the Notes.
10.3 Liens. Without the consent of the holders of at least
70% in principal amount of Notes then outstanding, none of the
Companies shall create, incur, assume or suffer to exist any Lien
(except Permitted Liens) on any asset now owned or hereafter acquired
unless such Lien shall secure the Notes on an equal and ratable or
prior basis.
10.4 Indebtedness. Without the consent of the holders of at
least 70% in principal amount of Notes then outstanding, none of the
Companies shall create, incur, issue, assume, guarantee or otherwise
become liable with respect to (collectively, "incur") any Indebtedness
(including Acquired Debt) that is pari passu with the Notes; provided,
however, that, this covenant shall not apply from and after the date on
which the closing price of the Company's Class A common stock on the
NASDAQ stock market, or other securities market on which the Company's
shares are then traded, has been at or above $2.50 per share (such
amount to be appropriately adjusted in the event of a stock split,
stock dividend, stock combination or recapitalization or similar event
having a similar effect) for 30 consecutive trading days. The foregoing
limitation on the incurrence of Indebtedness will not apply to any of
the following incurrences of Indebtedness:
(i) Indebtedness evidenced by the Notes or
represented by the Transaction Agreements;
(ii) the incurrence by the Companies of up to $100
million aggregate principal amount of Indebtedness (including
the Notes) that is pari passu with the Notes;
(iii) Indebtedness of the Companies that is by its
terms subordinated to the Notes;
(iv) Existing Indebtedness;
(v) Acquired Debt of a Person incurred prior to the
date upon which such Person was acquired by any of the
Companies (excluding Indebtedness incurred by such entity
other than in the ordinary course of its business in
connection with, or in contemplation of, such entity being so
acquired);
(vi) the incurrence of Purchase Money Indebtedness
by the Companies in an amount not to exceed the cost of
construction, acquisition or improvement of assets used in any
business of the Companies;
(vii) Swaps of the Companies covering Indebtedness of
the Companies to the extent the notional principal amount of
such Swap does not exceed the principal amount of the
Indebtedness to which such Swap relates;
(viii) Indebtedness of the Companies incurred in the
ordinary course of business in respect of performance bonds or
letters of credit of the Companies or surety bonds provided by
the Companies;
15
(ix) the incurrence by the Companies of Indebtedness
issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace, substitute or refund in
whole or in part Indebtedness permitted to be incurred under
clauses (i), (ii), (iv), (v), (vi) or (vii) above
("Refinancing Indebtedness"); provided, however, that: (A) the
principal amount of such Refinancing Indebtedness shall not
exceed the principal amount and accrued interest of the
Indebtedness so extended, refinanced, renewed, replaced,
substituted or refunded and any premiums payable and
reasonable fees, expenses, commissions and costs in connection
therewith; and (B) the Refinancing Indebtedness shall have a
final maturity later than, and a Weighted Average Life to
Maturity equal to or greater than, the final maturity and
Weighted Average Life to Maturity, respectively, of the
Indebtedness being extended, refinanced, renewed, replaced or
refunded (a "Permitted Refinancing"); or
(x) Indebtedness under Capital Lease Obligations
of the Companies.
For purposes of determining compliance with this Section 10.4, in the
event that an item of Indebtedness meets the criteria of more than one
of the categories described in clauses (i) through (x) above or is
permitted to be incurred pursuant to the first sentence of this Section
10.4 and also meets the criteria of one or more of the categories
described in clauses (i) through (x) above, the Companies shall, in
their sole discretion, classify such item of Indebtedness in any manner
that complies with this Section 10.4 and may from time to time
reclassify such item of Indebtedness in any manner in which such item
could be incurred at the time of such reclassification. Accrual of
interest and the accretion of accreted value will not be deemed to be
an incurrence of Indebtedness for purposes of this Section 10.4.
11. Events of Default. An "Event of Default" shall exist if
any of the following conditions or events shall occur and be continuing:
(a) the Companies default in the payment of any interest on
any Note, or in any of the payments required pursuant to Section 2.01
of the Registration Rights Agreement upon a failure of the Registration
Statement to become effective on or before 120 days or 240 days, as
applicable, after the Closing Date, when the same becomes due and
payable and the default continues for a period of 30 days; or
(b) the Companies default in the payment of any principal of
or premium, if any, on any Note when the same becomes due and payable,
whether at maturity or upon Mandatory Prepayment or otherwise; or
(c) the Companies breach in any Material respect any
representation or warranty under the any of the Transaction Agreements,
or fail to observe or perform any other covenant or agreement contained
in any of the Transaction Agreements or the Notes required to be
16
performed by any of them, and such breach is not cured or such failure
continues for a period of 60 days after the receipt of written notice
by the Company from at least 25% in aggregate principal amount of the
then outstanding Notes stating that such notice is a "Notice of
Default"; or
(d) a default under any credit agreement, mortgage, indenture
or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by any of the
Companies or any Material Subsidiary (or the payment of which is
Guaranteed by any of the Companies or any of the Company's
Subsidiaries), whether such Indebtedness or Guarantee exists on the
date of this Agreement or is created hereafter, which default (i) is
caused by a failure to pay when due any principal of or interest on
such Indebtedness within the grace period, if any, provided for in such
Indebtedness (which failure continues beyond any applicable grace
period) (a "Payment Default") or (ii) results in the acceleration of
such Indebtedness prior to its express maturity (without such
acceleration being rescinded or annulled) and, in each case, the
principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates
$15,000,000 or more and after written receipt by the Company from any
holder of Notes stating that such notice is a "Notice of Default"; or
(e) a final, non-appealable judgment or final non-appealable
judgments (other than any judgment as to which a reputable insurance
company has accepted full liability) for the payment of money are
entered by a court or courts of competent jurisdiction against any of
the Companies or any Material Subsidiary and remain unstayed, unbonded
or undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
judgments exceeds $5,000,000; or
(f) any of the Companies or any Material Subsidiary pursuant
to or within the meaning of any Bankruptcy Law: (i) commences a
voluntary case or proceeding; or (ii) consents to the entry of an order
for relief against such company or any Material Subsidiary in an
involuntary case or proceeding; or (iii) consents to the appointment of
a Custodian of such company or any Material Subsidiary or for all or
any substantial part of its property; or (iv) makes a general
assignment for the benefit of its creditors; or (v) take corporate or
similar action to effect any of the foregoing; or
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against any of
the Companies or any Material Subsidiary in an involuntary case or
proceeding; or (ii) appoints a Custodian of such company or any
Material Subsidiary or for all or any substantial part of the property
of such company or any Material Subsidiary; or (iii) orders the
liquidation of such company or any Material Subsidiary; and in each
case referred to in this paragraph (h) the order or decree remains
unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal, state or foreign bankruptcy, insolvency or similar
17
law. The term "Custodian" means any custodian, receiver, trustee,
assignee, sequestor, liquidator or similar official under any
Bankruptcy Law.
12. Remedies on Default, etc.
12.1 Acceleration.
(a) If an Event of Default with respect to any of the
Companies described in paragraph (f) or (g) of Section 11 (other than
an Event of Default described in clause (i) of paragraph (f) or
described in clause (v) of paragraph (f) by virtue of the fact that
such clause encompasses clause (i) of paragraph (f)) has occurred, all
the Notes then outstanding shall automatically become immediately due
and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of a majority in principal amount of
the Notes at the time outstanding may at any time at its or their
option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.
(c) Notwithstanding subparagraph (b) above, if any Event of
Default described in paragraph (a) or (b) of Section 11 has occurred
and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the
Notes held by it or them to be immediately due and payable.
(d) Notwithstanding subparagraph (b) above, if any Event of
Default described in paragraph (d) of Section 11 has occurred and is
continuing and the Payment Default giving rise to such Event of Default
is cured or the acceleration giving rise to such Event of Default is
annulled or rescinded within 30 days after receipt of written notice of
such Event of Default by the Company from any holder of Notes stating
that such notice is a "Notice of Default," then such Event of Default
and any declaration under subparagraph (b) above shall be deemed
automatically annulled and rescinded.
Upon any Notes becoming due and payable under this Section
12.1, whether automatically or by declaration, such Notes will
forthwith mature and the entire unpaid principal amount of such Notes,
plus all accrued and unpaid interest thereon, shall all be immediately
due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.
12.2 Other Remedies. If any Default or Event of Default
has occurred and is continuing, and irrespective of whether any Notes
have become or have been declared immediately due and payable under
Section 12.1, the holder of any Note at the time outstanding may
proceed to protect and enforce the rights of such holder by an action
at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note
or other Transaction Agreement, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.
18
12.3 Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1,
the holders of not less than a majority in principal amount of the
Notes then outstanding, by written notice to the Company, may rescind
and annul any such declaration and its consequences if (a) the
Companies have paid all overdue principal of and interest on any Notes
that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and (to the
extent permitted by applicable law) any overdue interest in respect of
the Notes, at the Default Rate, (b) all Events of Default and Defaults,
other than non-payment of amounts that have become due solely by reason
of such declaration, have been cured or have been waived pursuant to
Section 18, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right
consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon
any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the
obligations of the Companies under Section 16, the Companies will pay
to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. Registration; Exchange; Substitution of Notes.
13.1 Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder
of one or more Notes, each transfer thereof and the name and address of
each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof, and
the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of
Notes.
13.2 Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company 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 of such
Note or his attorney duly authorized in writing and accompanied by the
address for notices of each transferee of such Note or part thereof),
the Companies shall execute and deliver, at the Companies' expense
(except as provided below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount
19
equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and
shall be substantially in the form of Exhibit 1. 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. The
Company may require payment of a sum sufficient to cover any stamp tax
or governmental charge imposed in respect of any such transfer of
Notes. Notes shall not be transferred in denominations of less than
$100,000, provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in
a denomination of less than $100,000. Any transferee, by its acceptance
of a Note registered in its name (or the name of its nominee), shall be
deemed to have made the representations set forth in Sections 6.1 and
6.2.
13.3 Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of any Note (which evidence
shall be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction,
of indemnity reasonably satisfactory to it or
(b) in the case of mutilation, upon surrender
and cancellation thereof,
the Companies at their 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.
14. Payments On Notes.
14.1 Place of Payment. Subject to Section 14.2, payments
of principal and interest becoming due and payable on the Notes shall
be made in New York, New York at the principal office of the Company in
such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the
Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.
14.2 Home Office Payment. So long as an initial Purchaser
shall be the holder of any Note, and notwithstanding anything contained
in Section 14.1 or in such Note to the contrary, the Companies will pay
all sums becoming due on such Note for principal and interest by the
method and at the address specified for such purpose below such
Purchaser's name in Schedule A, or by such other method or at such
other address as such Purchaser shall have from time to time specified
to the Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except
that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note,
20
you shall surrender such Note for cancellation upon such request to the
Company at its principal executive office or at the place of payment
most recently designated by the Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by you or your
nominee you will, at your election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been
paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Companies will afford
the benefits of this Section 14.2 to any Institutional Investor that is
the direct or indirect transferee of any Note purchased by you under
this Agreement and that has made the same agreement relating to such
Note as you have made in this Section 14.2.
15. Conversion.
15.1 Conversion Privilege. A holder of any Note may
convert the principal amount thereof (or any portion thereof that is an
integral multiple of $1,000) into fully paid and nonassessable shares
of Class A common stock, par value $.01 per share, of the Company at
any time prior to the close of business on the Business Day immediately
preceding the final maturity date of the Note at the Conversion Price
then in effect, except that, with respect to the principal amount of
any Note that is subject to optional or mandatory prepayment, such
conversion right shall terminate at the close of business on the
Business Day immediately preceding the prepayment date (unless the
Companies shall default in making the prepayment, including interest,
when it becomes due, in which case the conversion right shall terminate
at the close of business on the date on which such default is cured).
The number of shares of Class A common stock issuable upon
conversion of a Note is determined by dividing the principal amount of
the Note converted by the Conversion Price in effect on the Conversion
Date.
"Conversion Price" means ONE DOLLAR AND EIGHTY CENTS in UNITED
STATES DOLLARS (US$1.80), as the same may be adjusted from time to time
as provided in this Section 15.
Provisions of this Agreement that apply to conversion of all
of a Note also apply to conversion of a portion of it. A holder of a
Note is not entitled to any rights of a holder of Class A common stock
until such holder has converted such Note into Class A common stock,
and only to the extent that such Note is deemed to have been converted
into Class A common stock under this Section 15.
15.2. Conversion Procedure. To convert a Note, a holder
must satisfy the requirements in the paragraphs entitled "Conversion
Right" of the Notes. The date on which the holder satisfies all of
those requirements is the conversion date (the "Conversion Date"). As
promptly as practicable on or after the Conversion Date, the Company
shall issue and deliver to the holder a certificate or certificates for
the number of whole shares of Class A common stock issuable upon the
conversion and a check or other payment for any fractional share in an
amount determined pursuant to Section 15.3. The Person in whose name
21
the certificate is registered shall become the stockholder of record on
the Conversion Date and, as of such date, such Person's rights as a
holder of a Note with respect to the converted Note shall cease and
such converted Note shall no longer be deemed outstanding; provided,
however, that, except as otherwise provided in this Section 15.2, no
surrender of a Note on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the Person
entitled to receive the shares of Class A common stock upon such
conversion as the stockholder of record of such shares of Class A
common stock on such date, but such surrender shall be effective to
constitute the Person entitled to receive such shares of Class A common
stock as the stockholder of record thereof for all purposes at the
close of business on the next succeeding day on which such stock
transfer books are open; provided further, however, that such
conversion shall be at the Conversion Price in effect on the date that
such Note shall have been surrendered for conversion, as if the stock
transfer books of the Company had not been closed.
No payment or adjustment will be made for accrued and unpaid
interest on a converted Note or for dividends or distributions on
shares of Class A common stock issued upon conversion of a Note, except
that, if any holder surrenders a Note for conversion after the close of
business on any record date for the payment of an installment of
interest and prior to the opening of business on the next succeeding
interest payment date, then, notwithstanding such conversion, accrued
and unpaid interest payable on such Note on such interest payment date
shall be paid on such interest payment date to the person who was the
holder of such Note (or one or more predecessor Notes) at the close of
business on such record date. Holders of Class A common stock issued
upon conversion will not be entitled to receive any dividends payable
to holders of Class A common stock as of any record time before the
close of business on the Conversion Date.
If a holder converts more than one Note at the same time, the
number of whole shares of Class A common stock issuable upon the
conversion shall be based on the total principal amount of Notes
converted.
Upon surrender of a Note that is converted in part, the
Company shall issue to the holder a new Note equal in principal amount
to the unconverted portion of the Note surrendered.
15.3. Fractional Shares. The Company will not issue
fractional shares of Class A common stock upon conversion of a Note. In
lieu thereof, the Company will pay an amount in cash based upon the
Daily Market Price of the Class A common stock on the Trading Day prior
to the Conversion Date.
15.4. Taxes on Conversion. The issuance of certificates for
shares of Class A common stock upon the conversion of any Note shall be
made without charge to the converting Noteholder for such certificates
or for any tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in
such names as may be directed by, the holder or holders of the
converted Note; provided, however, that in the event that certificates
for shares of Class A common stock are to be issued in a name other
than the name of the holder of the Note converted, such Note, when
22
surrendered for conversion, shall be accompanied by an instrument of
assignment or transfer, in form satisfactory to the Company, duly
executed by the registered holder thereof or his duly authorized
attorney; and provided further, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Note, and the
Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof
shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been
paid or is not applicable.
15.5. Company to Provide Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of
its authorized but unissued Class A common stock, solely for the
purpose of issuance upon conversion of Notes as herein provided, a
sufficient number of shares of Class A common stock to permit the
conversion of all outstanding Notes for shares of Class A common stock.
All shares of Class A common stock which may be issued upon
conversion of the Notes shall be duly authorized, validly issued, fully
paid and nonassessable when so issued. The Company shall take such
action from time to time as shall be necessary so that par value of the
Class A common stock shall at all times be equal to or less than the
Conversion Price then in effect.
The Company shall from time to time take all action necessary
so that the Class A common stock which may be issued upon conversion of
Notes, immediately upon their issuance (or, if such Class A common
stock is subject to restrictions on transfer under the Securities Act,
upon their resale pursuant to an effective registration statement or in
a transaction pursuant to which the certificate evidencing such Class A
common stock shall no longer bear a restrictive common stock legend),
will be listed on the Nasdaq National Market or such other interdealer
quotation system and market or principal securities exchanges, if any,
on which other shares of Class A common stock of the Company are then
listed or quoted.
15.6. Adjustment of Conversion Price. The Conversion
Price shall be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of
Class A common stock to holders of Class A common stock (or any event
treated as such for U.S. Federal income tax purposes), (2) make a
distribution in shares of Class A common stock to holders of Class A
common stock (or any event treated as such for U.S. Federal income tax
purposes), (3) subdivide its outstanding shares of Class A common stock
into a greater number of shares of Class A common stock or (4) combine
its outstanding shares of Class A common stock into a smaller number of
shares of Class A common stock, the Conversion Price in effect
immediately prior to such action shall be adjusted so that the holder
of any Note thereafter surrendered for conversion shall be entitled to
receive the number of shares of Class A common stock which he would
have owned immediately following such action had such Notes been
converted immediately prior thereto. Any adjustment made pursuant to
this subsection (a) shall become effective immediately after the record
date in the case of a dividend or distribution and shall become
23
effective immediately after the effective date in the case of a
subdivision or combination.
(b) In case the Company shall issue rights, options or
warrants to all holders of Class A common stock entitling them to
subscribe for or purchase shares of Class A common stock (or securities
convertible into Class A common stock) at a price per share (or having
a conversion price per share) less than the Current Market Price per
share (as determined pursuant to subsection (f) below) of the Class A
common stock on the record date for determining the holders of the
Class A common stock entitled to receive such rights, options or
warrants, the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to such record date by a fraction of which the
numerator shall be the number of shares of Class A common stock
outstanding as of the close of business on such record date plus the
number of shares of Class A common stock which the aggregate offering
price of the total number of shares of Class A common stock so offered
(to the holders of outstanding Class A common stock) for subscription
or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Current Market Price (as
determined pursuant to subsection (f) below), and of which the
denominator shall be the number of shares of Class A common stock
outstanding on such record date plus the number of additional shares of
Class A common stock so offered for subscription or purchase (or into
which the convertible securities so offered are convertible). Such
adjustments shall become effective immediately after such record date.
For the purposes of this subsection (b), the number of shares of Class
A common stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
such Class A common stock. The Company shall not issue any rights,
options or warrants in respect of shares of Class A common stock held
in the treasury of the Company. In determining whether any rights,
options or warrants entitle the holders to subscribe for or purchase
shares of Class A common stock at less than the Current Market Price,
and in determining the aggregate offering price of such shares of Class
A common stock, there shall be taken into account any consideration
received by the Company for such rights, warrants, or options, the
value of such consideration, if any, other than cash, to be determined
by the Board of Directors.
(c) In case the Company shall distribute to all holders of
Class A common stock shares of capital stock of the Company (other than
Class A common stock), evidences of indebtedness, cash, rights, options
or warrants entitling the holders thereof to subscribe for or purchase
securities (other than rights, options or warrants described in
subsection (b) above) or other assets (including securities of Persons
other than the Company but excluding (i) dividends or distributions
paid exclusively in cash except as described in subsection (d) below,
(ii) dividends and distributions described in subsection (a) above and
(iii) distributions in connection with the consolidation, merger or
transfer of assets covered by Section 15.11), then in each such case
the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as
provided in subsection (f) below) of the Class A common stock on the
24
record date mentioned below less the fair market value on such record
date (as determined by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value and described in
a board resolution) of the portion of the evidences of indebtedness,
shares of capital stock, cash, rights, options, warrants or other
assets so distributed applicable to one share of Class A common stock
(determined on the basis of the number of shares of the Class A common
stock outstanding on the record date), and of which the denominator
shall be such Current Market Price of the Class A common stock. Such
adjustment shall become effective immediately after the record date for
the determination of the holders of Class A common stock entitled to
receive such distribution. Notwithstanding the foregoing, in case the
Company shall distribute rights, options or warrants to subscribe for
additional shares of the Company's capital stock (other than rights,
options or warrants referred to in subsection (b) above) ("Rights") to
all holders of Class A common stock, the Company may, in lieu of making
any adjustment pursuant to the foregoing provisions of this Section
15.6(c), make proper provision so that each holder of a Note who
converts such Note (or any portion thereof) after the record date for
such distribution and prior to the expiration or redemption of the
Rights shall be entitled to receive upon such conversion, in addition
to the shares of Class A common stock issuable upon such conversion
(the "Conversion Shares"), a number of Rights to be determined as
follows: (i) if such conversion occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of
Rights to which a holder of a number of shares of Class A common stock
equal to the number of Conversion Shares is entitled at the time of
such conversion in accordance with the terms and provisions of and
applicable to the Rights; and (ii) if such conversion occurs after the
Distribution Date, the same number of Rights to which a holder of the
number of shares of Class A common stock into which the principal
amount of the Note so converted was convertible immediately prior to
the Distribution Date would have been entitled on the Distribution Date
in accordance with the terms and provisions of and applicable to the
Rights.
(d) In case the Company shall, by dividend or otherwise, at
any time make a distribution to all holders of its Class A common stock
exclusively in cash (including any distributions of cash out of current
or retained earnings of the Company but excluding any cash that is
distributed as part of a distribution requiring a Conversion Price
adjustment pursuant to paragraph (c) of this Section) in an aggregate
amount that, together with the sum of (x) the aggregate amount of any
other distributions made exclusively in cash to all holders of Class A
common stock within the 12 months preceding the date fixed for
determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to paragraph (c) or (e) of this Section or this
paragraph (d) has been made plus (y) the aggregate amount of all Excess
Payments in respect of any tender offers or other negotiated
transactions by the Company or any of its Subsidiaries for Class A
common stock concluded within the 12 months preceding the Distribution
Record Date and in respect of which no Conversion Price adjustment
pursuant to paragraphs (c) or (e) of this Section or this paragraph (d)
has been made, exceeds 12 1/2% of the product of the Current Market
Price per share (determined as provided in paragraph (f) of this
Section) of the Class A common stock on the Distribution Record Date
multiplied by the number of shares of Class A common stock outstanding
25
on the Distribution Record Date (excluding shares held in the treasury
of the Company), the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying such Conversion Price
in effect immediately prior to the effectiveness of the Conversion
Price reduction contemplated by this paragraph (d) by a fraction of
which the numerator shall be the Current Market Price per share
(determined as provided in paragraph (f) of this Section) of the Class
A common stock on the Distribution Record Date less the sum of the
aggregate amount of cash and the aggregate Excess Payments so
distributed, paid or payable within such 12-month period (including,
without limitation, the distribution in respect of which such
adjustment is being made) applicable to one share of Class A common
stock (which shall be determined by dividing the sum of the aggregate
amount of cash and the aggregate Excess Payments so distributed, paid
or payable with respect to outstanding shares of Class A common stock
within such 12 months (including, without limitation, the distribution
in respect of which such adjustment is being made) by the number of
shares of Class A common stock outstanding on the Distribution Record
Date) and the denominator shall be such Current Market Price per share
(determined as provided in paragraph (f) of this Section) of the Class
A common stock on the Distribution Record Date, such reduction to
become effective immediately prior to the opening of business on the
day following the Distribution Record Date.
(e) In case a tender offer or other negotiated transaction
made by the Company or any Subsidiary of the Company for all or any
portion of the Class A common stock shall be consummated, if an Excess
Payment is made in respect of such tender offer or other negotiated
transaction and the aggregate amount of such Excess Payment, together
with the sum of (x) the aggregate amount of any distributions, by
dividend or otherwise, to all holders of the Class A common stock made
in cash (including any distributions of cash out of current or retained
earnings of the Company) within the 12 months preceding the date of
payment of such current negotiated transaction consideration or
expiration of such current tender offer, as the case may be (the
"Purchase Date"), and as to which no adjustment in the Conversion Price
pursuant to paragraph (c) or paragraph (d) of this Section or this
paragraph (e) has been made plus (y) the aggregate amount of all Excess
Payments in respect of any other tender offers or other negotiated
transactions by the Company or any of its Subsidiaries for Class A
common stock concluded within the 12 months preceding the Purchase Date
and in respect of which no adjustment in the Conversion Price pursuant
to paragraph (c) or (d) of this Section or this paragraph (e) has been
made, exceeds 12 1/2% of the product of the Current Market Price per
share (determined as provided in paragraph (f) of this Section) of the
Class A common stock on the Purchase Date multiplied by the number of
shares of Class A common stock outstanding on the Purchase Date
(including any tendered shares but excluding any shares held in the
treasury of the Company), the Conversion Price shall be reduced so that
26
the same shall equal the price determined by multiplying such
Conversion Price in effect immediately prior to the effectiveness of
the Conversion Price reduction contemplated by this paragraph (e) by a
fraction of which the numerator shall be the Current Market Price per
share (determined as provided in paragraph (f) of this Section) of the
Class A common stock on the Purchase Date less the sum of the aggregate
amount of cash and the aggregate Excess Payments so distributed, paid
or payable within such 12 month period (including, without limitation,
the Excess Payment in respect of which such adjustment is being made)
applicable to one share of Class A common stock (which shall be
determined by dividing the sum of the aggregate amount of cash and the
aggregate Excess Payments so distributed, paid or payable with respect
to outstanding shares of Class A common stock within such 12 months
(including, without limitation, the Excess Payment in respect of which
such adjustment is being made) by the number of shares of Class A
common stock outstanding on the Purchase Date) and the denominator
shall be such Current Market Price per share (determined as provided in
paragraph (f) of this Section) of the Class A common stock on the
Purchase Date, such reduction to become effective immediately prior to
the opening of business on the day following the Purchase Date.
(f) The "Current Market Price" per share of Class A common
stock on any date shall be deemed to be the average of the Daily Market
Prices for the shorter of (i) 30 consecutive Business Days ending on
the last full Trading Day on the exchange or market referred to in
determining such Daily Market Prices prior to the time of determination
or (ii) the period commencing on the date next succeeding the first
public announcement of the issuance of such rights or such warrants or
such other distribution or such tender offer or other negotiated
transaction through such last full Trading Day on the exchange or
market referred to in determining such Daily Market Prices prior to the
time of determination.
(g) "Excess Payment" means the excess of (i) the aggregate of
the cash and fair market value (as determined by the Board of
Directors, whose determination shall be conclusive evidence of such
fair market value and described in a board resolution) of other
consideration paid by the Company or any of its Subsidiaries with
respect to the shares acquired in a tender offer or other negotiated
transaction over (ii) the Daily Market Price on the Trading Day
immediately following the completion of the tender offer or other
negotiated transaction multiplied by the number of acquired shares.
(h) The Company reserves the right to make such reductions in
the Conversion Price in addition to those required in the foregoing
provisions as it considers to be advisable in order that any event
treated for United States federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the recipients.
(i) The Company from time to time may decrease the Conversion
Price by any amount for any period of at least 20 days (which decrease
is irrevocable during such period), in which case the Company shall
give at least 15 days' notice of such decrease, if the Board of
Directors has made a determination that such decrease would be in the
best interests of the Company, which determination shall be conclusive;
provided however that in no case shall the Company decrease the
Conversion Price to less than 80% of the Current Market Price.
(j) In any case in which this Section 15.6 shall require that
an adjustment be made immediately following a record date for an event,
the Company may elect to defer, until such event, issuing to the holder
of any Note converted after such record date the shares of Class A
common stock and other capital stock of the Company issuable upon such
27
conversion over and above the shares of Class A common stock and other
capital stock of the Company issuable upon such conversion on the basis
of the Conversion Price prior to adjustment; and, in lieu of the shares
the issuance of which is so deferred, the Company shall issue or cause
its transfer agents to issue due bills or other appropriate evidence of
the right to receive such shares.
(k) From and after the date of issuance of the Exchange Shares
hereunder (whether at or after the Closing Date) and, in the case of
such issuance after the Closing Date, the exchange of Notes for such
Exchange Shares hereunder, if the closing price of the Company's Class
A common stock on NASDAQ or other principal exchange on which such
shares are then admitted for trading shall be less than $1.50 per share
(such amount to be appropriately adjusted in the event of a stock
split, stock dividend, stock combination or recapitalization or similar
event having a similar effect) for at least five consecutive trading
days at any time during the period after the date of execution and
delivery of this Agreement, then the Conversion Price shall be reduced
to $1.50 per share (such amount to be appropriately adjusted in the
event of a stock split, stock dividend, stock combination or
recapitalization or similar event having a similar effect).
15.7. No Adjustment. No adjustment in the Conversion Price
shall be required until cumulative adjustments amount to 1.0% or more
of the Conversion Price as last adjusted; provided, however, that any
adjustments which by reason of this Section 15.7 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 15 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case
may be. No adjustment need be made for rights to purchase Class A
common stock pursuant to a Company plan for reinvestment of dividends
or interest. No adjustment need be made for a change in the par value
or no par value of the Class A common stock.
15.8 Other Adjustments. (a) In the event that, as a result
of an adjustment made pursuant to Section 15.6 above, the holder of any
Note thereafter surrendered for conversion shall become entitled to
receive any shares of capital stock of the Company other than shares of
its Class A common stock, thereafter the Conversion Price of such other
shares so receivable upon conversion of any Notes shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A
common stock contained in this Section 15.
(b) In the event that any shares of Class A common stock
issuable upon exercise of any of the rights, options or warrants
referred to in Section 15.6(b) and Section 15.6(c) hereof are not
delivered prior to the expiration of such rights, options, or warrants,
the Conversion Price shall be readjusted to the Conversion Price which
would otherwise have been in effect had the adjustment made upon the
issuance of such rights, options or warrants been made on the basis of
delivery of only the number of such rights, options and warrants which
were actually exercised.
(c) In any case in which Section 15.6 shall require that an
adjustment be made immediately following a record date for a dividend
or distribution and the dividend or distribution does not occur, the
Conversion Price shall again be adjusted to the Conversion Price that
would then be in effect if such dividend or distribution had not been
declared.
28
15.9. Notice of Adjustment. Whenever the Conversion Price
is adjusted, the Company shall promptly mail to Noteholders a notice of
the adjustment. Such notice shall briefly state the facts requiring the
adjustment and the manner of computing it and shall be signed by a
Senior Financial Officer.
15.10. Notice of Certain Transactions. In the event that:
(a) the Company takes any action which would require an adjustment in
the Conversion Price; (b) the Company takes any action described in
Section 15.11; or (c) there is a dissolution or liquidation of the
Company; the Company shall mail to Noteholders a notice stating the
proposed record or effective date, as the case may be. The Company
shall mail the notice at least 15 days before such date; however,
failure to mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (a), (b) or (c) of
this Section 15.10.
15.11. Effect of Reclassifications, Consolidations, Mergers,
Continuances or Sales on Conversion Privilege. If any of the following
shall occur, namely: (i) any reclassification or change of outstanding
shares of Class A common stock issuable upon conversion of Notes (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which the Company is
a party other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to
no par value, or from no par value to par value or as a result of a
subdivision or combination) in, outstanding shares of Class A common
stock, (iii) any continuance in a new jurisdiction which does not
result in any reclassification of, or change (other than a change in
name, or par value, or from par value to no par value, or from no par
value to par value) in, outstanding shares of Class A common stock, or
(iv) any sale or conveyance of all or substantially all of the property
of the Company (determined on a consolidated basis), then the Company,
or such successor or purchasing corporation, as the case may be, shall,
as a condition precedent to such reclassification, change,
consolidation, merger, continuance, sale or conveyance, execute and
deliver to the Noteholders a written notice providing that the holder
of each Note then outstanding shall have the right to convert such Note
into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification,
change, consolidation, merger, continuance, sale or conveyance by a
holder of the number of shares of Class A common stock deliverable upon
conversion of such Note immediately prior to such reclassification,
change, consolidation, merger, continuance, sale or conveyance. Such
notice shall provide for adjustments of the Conversion Price which
shall be as nearly equivalent as may be practicable to the adjustments
of the Conversion Price provided for in this Section 15. The foregoing,
however, shall not in any way affect the right a holder of a Note may
otherwise have, pursuant to clause (ii) of the last sentence of
subsection (c) of Section 15.6, to receive Rights upon conversion of a
Note. If, in the case of any such reclassification, change,
consolidation, merger, continuance, sale or conveyance, the stock or
other securities and property (including cash) receivable thereupon by
a holder of Class A common stock includes shares of stock or other
securities and property of a corporation or other business entity other
than the successor or purchasing corporation, as the case may be, in
such reclassification, change, consolidation, merger, continuance, sale
29
or conveyance, then such notice shall also be executed by such other
corporation or other business entity and shall contain such additional
provisions to protect the interests of the holders of the Notes as the
Board of Directors of the Company shall reasonably consider necessary
by reason of the foregoing. The provision of this Section 15.11 shall
similarly apply to successive reclassifications, changes,
consolidations, mergers, continuances, sales or conveyances.
15.12. Cancellation of Converted Notes. All Notes delivered
for conversion shall be delivered to the Company to be canceled.
16. Expenses, etc.
16.1 Enforcement Expenses. The Companies will pay all
reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees of one counsel and, if reasonably required, one local
or other counsel in each jurisdiction where so required for all of the
Purchasers) incurred by the holders of the Notes in enforcing or
defending any rights under this Agreement, the Notes or any of the
other Transaction Agreements or in responding to any subpoena or other
legal process or informal investigative demand issued in connection
with this Agreement, the Notes or any of the other Transaction
Agreements, or by reason of being a holder of any Note. The Companies
will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).
16.2 Survival. The obligations of the Companies under this
Section 16 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement,
the Notes or any of the other Transaction Agreements, and the
termination of this Agreement.
17. Survival Of Representations And Warranties; Entire Agreement. All
representations and warranties contained herein and in the other Transaction
Agreements shall survive the execution and delivery of the Transaction
Agreements. All statements contained in any certificate or other instrument
delivered by or on behalf of the Companies pursuant to this Agreement shall be
deemed representations and warranties of the Companies under this Agreement.
Subject to the preceding sentence, the Transaction Agreements embody the entire
agreement and understanding between you, on the one hand, and the Companies, on
the other hand, and supersede all prior agreements and understandings relating
to the subject matter hereof.
18. Amendment And Waiver.
18.1 Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be
waived (either retroactively or prospectively), with (and only with)
the written consent of the Companies and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of Section 1,
2, 3, 4 or 22 hereof, or any defined term (as it is used in such
Section), will be effective as to any one Purchaser unless consented to
in writing by such Purchaser, and (b) no such amendment or waiver may,
30
without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section
12 relating to acceleration or rescission, change the amount or time of
any prepayment or payment of principal of, or reduce the rate or change
the time of payment or method of computation of interest on, the Notes,
(ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or
waiver, or (iii) amend or waive any of Sections 8, 11(a), 11(b), 11(d),
12, 18 or 22 or the paragraph entitled "Interest" in the Notes, or (iv)
modify Section 15 in a manner adverse to the holders of the Notes.
18.2 Solicitation of Holders of Notes.(a) Solicitation.
The Company will provide each holder of the Notes (irrespective of the
amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes. The Company will deliver
executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 18 to each
holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. Neither the Company nor any Affiliate of the
Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any
holder of a Note for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Transaction
Agreements unless such consideration is offered to be paid to all
holders that so consent, waive or agree to amend in the time frame set
forth in solicitation documents relating to such consent, waiver or
agreement.
18.3 Binding Effect, etc. Any amendment or waiver
consented to as provided in this Section 18 applies equally to all
holders of Notes and is binding upon them and upon each future holder
of any Note and upon the Companies without regard to whether such Note
has been marked to indicate such amendment or waiver. No such amendment
or waiver will extend to or affect any obligation, covenant, agreement,
Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the
Companies and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any
rights of any holder of such Note. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
18.4 Notes held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or
consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action
provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of
Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be outstanding.
31
19. Notices. All notices and communications provided for hereunder
shall be in writing and sent (a) by telecopy if the sender on the same day sends
a confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to the Company at ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, to the attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, with a copy to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at the same address, or at such other address as the
Company shall have specified to the holder of each Note in writing.
Notices under this Section 19 will be deemed given only when actually
received.
20. Reproduction Of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents received by you at
the Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to you, may
be reproduced by you by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and you may destroy any original
document so reproduced. The Companies agree and stipulate that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 20 shall not prohibit the
Companies or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
21. Confidential Information. For the purposes of this Section 21,
"Confidential Information" means information delivered to you by or on behalf of
the Company or any Subsidiary in connection with the transactions contemplated
by or otherwise pursuant to this Agreement that is proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified when
received by you as being confidential information of the Company or such
Subsidiary, provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by you or any
person acting on your behalf, (c) otherwise becomes known to you other than
through disclosure by the Company or any Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
32
protect confidential information of third parties delivered to you, provided
that you may deliver or disclose Confidential Information to (i) your directors,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 21, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 21), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 21), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 21 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 21.
22. Substitution Of Purchaser. You shall have the right to substitute
any one of your Affiliates as the purchaser of the Notes that you have agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both you and such Affiliate, shall contain such Affiliate's agreement
to be bound by this Agreement and shall contain a confirmation by such Affiliate
of the accuracy with respect to it of the representations set forth in Section
6. Upon receipt of such notice, wherever the word "you" is used in this
Agreement (other than in this Section 22), such word shall be deemed to refer to
such Affiliate in lieu of you. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter transfers to
you all of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 22), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement.
23. Miscellaneous.
23.1 Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
33
23.2 Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the
interest payable on such next succeeding Business Day.
23.3 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
(to the full extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.
23.4 Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other covenant.
Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such
Person.
23.5 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of
which together shall constitute one instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto.
23.6 Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application
of the laws of a jurisdiction other than such State.
23.7 Submission to Jurisdiction; Service of Process. (a)
The Companies and the Purchasers agree that any action or proceeding
brought by the Holders in connection with this Agreement may be brought
(and any action or proceeding brought by the Companies against the
Holders in connection herewith shall exclusively be brought) in the
courts of the State of New York sitting in the Borough of Manhattan or
of the United States of America for the Southern District of New York
and, by execution and delivery of this Agreement, the Companies and the
Purchasers hereby irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to
the bringing of any such action or proceeding by the Companies or the
Holders in such non-exclusive jurisdictions.
(b) The Companies hereby irrevocably appoint CT Corporation
System (the "Process Agent"), with an office on the date hereof at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, as their agent
to receive on their behalf service of copies of the summons and
complaint and any other process that may be served in any such action
34
or proceeding. The Companies irrevocably consent to the service of
process of any of the aforesaid courts in any such action or proceeding
by the mailing of copies thereof by registered mail, postage prepaid,
to it at its address set forth in this Agreement or to the Process
Agent at its address specified above.
23.8 Section Titles.
The Section titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not part
of this Agreement.Termination.
23.9 Termination.
This Agreement may be terminated as to any Purchaser at any time prior
to the Closing at which such Purchaser will purchase Notes:
(a) by the mutual written consent of the Company and such Purchaser;
(b) by either the Company or any Purchaser as to itself:
(i) if any court or governmental or regulatory agency,
authority or body shall have enacted, promulgated or issued
any statute, rule, regulation, ruling, writ or injunction, or
taken any other action, restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and all
appeals and means of appeal therefrom have been exhausted; or
(ii) if the Closing at which such Purchaser shall purchase
Notes shall not have occurred on or before June 30, 2000;
provided, however, that the right to terminate this Agreement
pursuant to this Section 23.9(b)(ii) shall not be available to
any party whose (or whose affiliate(s)') breach of any
representation or warranty or failure to perform or comply
with any obligation under this Agreement has been the cause
of, or resulted in, the failure of such Closing to occur on or
before such date; or
(e) by the Purchasers, if any of the conditions specified in
Section 4 have not been met or waived prior to such time as such
condition can no longer be satisfied; or
(f) by the Company as to any Purchaser, if any of the representations,
warranties or covenants of such Purchaser have been breached in any
material respect and such breach has not been waived by the Company
prior to such time as such representation, warranty or covenant can no
longer be cured.
In the event of termination of this Agreement as to any one or more
Purchasers, this Agreement shall forthwith become void as to such
Purchaser or Purchasers and there shall be no liability on the part of
the Company or such Purchaser or Purchasers or their respective
officers or directors, except for Section 21, which shall remain in
full force and effect, and except that nothing herein shall relieve any
party from liability for a breach of this Agreement prior to the
termination hereof as to such party.
35
23.10 Certain Restrictions on Purchasers.
Each of the Purchasers hereby agrees (severally and not jointly) that,
from the date hereof until 60 days after the Closing Date, it will not
offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer
for sale, sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, or exercise any discretionary powers to
distribute, any shares of Class A common stock of the Company,
including the Conversion Shares or the Exchange Shares or any
securities exercisable or exchangeable for or convertible into shares
of Class A common stock, or enter into any transaction or series of
transactions having the economic effect thereof. Notwithstanding the
foregoing, the provisions of this letter shall not affect the
undersigneds' ability to settle its existing short position in the
amount of 1,459,500 shares of Class A common stock.
* * * * *
36
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
▇▇▇▇.▇▇▇, INC.
▇▇▇▇.▇▇▇ BUSINESS MESSAGING SERVICES, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
THE ALLEGRO GROUP, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman
37
The foregoing is hereby agreed to as of the date hereof.
FIR TREE VALUE FUND, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: General Partner
FIR TREE INSTITUTIONAL VALUE FUND, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: General Partner
FIR TREE VALUE PARTNERS, LDC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: General Partner
FIR TREE RECOVERY MASTER FUND, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: General Partner
38
SCHEDULE C
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Allegro" is defined in the introductory paragraph of this Agreement.
"Accession Agreement" is defined in Section 3.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merges
with or into or becomes a Subsidiary of such specified Person, or Indebtedness
incurred by such Person in connection with the acquisition of assets, including
Indebtedness incurred in connection with such other Person merging with or into
or becoming a Subsidiary of such specified Person or the acquisition of such
assets, as the case may be.
"Affiliate" means, at any time, and with respect to any Person, any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person. As used in this definition, "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at the time any determination thereof is to be
made shall be the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on a balance sheet in
accordance with GAAP.
"Closing" is defined in Section 3.
"Closing Date" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" is defined in the introductory paragraph of this Agreement.
"Common Shares" is defined in Section 1(b).
"Confidential Information" is defined in Section 21.
"Conversion Shares" is defined in Section 1(b).
"Daily Market Price" means the last reported per share sale price,
regular way on such day, or, if no sale takes place on such day, the average of
the reported closing per share bid and asked prices on such day, regular way, in
either case as reported on the Nasdaq National Market or, if such Class A common
stock is not quoted or admitted to trading on such quotation system, on the
principal national securities exchange or quotation system on which such Class A
common stock may be listed or admitted to trading or quoted, or, if not listed
or admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing per share bid and asked prices of
such Class A common stock on the over-the-counter market on the day in question
as reported by the National Quotation Bureau Incorporated, or similar generally
accepted reporting service, or, if not so available in such manner, as furnished
by any Nasdaq member firm selected from time to time by the Board of Directors
of the Company for that purpose, or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors of the Company.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is two percent (2%) per
annum above the rate of interest stated in the second paragraph of the Notes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is considered a member of the controlled group of any of the
Companies under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Exchange Shares" is defined in Section 1(a).
"Existing Indebtedness" means the Notes and any other Indebtedness of
the Companies in existence on the date of this Agreement until such amounts are
repaid in full.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
2
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business,
or which asserts jurisdiction over any properties of
the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"Indebtedness" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
3
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect
to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks
and other financial institutions (whether or not representing
obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Initial Closing" is defined in Section 3.
"Initial Closing Date" is defined in Section 3.
"Institutional Investor" means (a) any holder of a Note holding more
than 10% of the aggregate principal amount of the Notes then outstanding, (b)
any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form and (c) Federal Partners, L.P. and the accounts for
which The ▇▇▇▇▇ Estates provides management services.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"▇▇▇▇.▇▇▇" is defined in the introductory paragraph of this Agreement.
"▇▇▇▇.▇▇▇ BMS" is defined in the introductory paragraph of this
Agreement.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Subsidiaries taken as a whole.
4
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the
Companies taken as a whole to perform their obligations under any of the
Transaction Agreements, or (c) the validity or enforceability of any of the
Transaction Agreements.
"Material Subsidiary" means any Subsidiary of the Company which at the
date of determination is a "significant subsidiary" as defined in Rule 1-02(w)
of Regulation S-X under the Securities Act and the Exchange Act (as such
Regulation is in effect on the date hereof).
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the respective Companies whose
responsibilities extend to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Liens" means:
(a) Liens securing the Notes;
(b) Liens securing Purchase Money Indebtedness, provided that such
Indebtedness was permitted to be incurred by the terms of this Agreement and
such Liens do not extend to any assets of the Companies other than the assets so
acquired;
(c) Liens on property of a Person existing at the time such Person is
merged into or consolidated with any of the Companies, provided, that such Liens
were not incurred in connection with, or in contemplation of, such merger or
consolidation;
(d) Liens on property existing at the time of acquisition thereof by
any of the Companies; provided that such Liens were not incurred in connection
with, or in contemplation of, such acquisition and do not extend to any assets
of any of the Companies other than the property so acquired;
(e) Liens to secure the performance of statutory obligations, surety or
appeal bonds or performance bonds, or landlords', carriers', warehousemen's,
mechanics', suppliers', materialmen's or other like Liens, in any case incurred
in the ordinary course of business and with respect to amounts for which an
adequate reserve or other appropriate provision, if any, as is required by GAAP
shall have been made therefor;
(f) Liens existing on the date of this Agreement;
5
(g) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor;
(h) Liens incurred in the ordinary course of business of the Companies
(including, without limitation, Liens securing Purchase Money Indebtedness) with
respect to obligations that do not exceed $5 million in principal amount in the
aggregate at any one time outstanding;
(i) Liens securing Indebtedness permitted under clause (ix) of Section
10.4; provided that such Liens shall not extend to assets other than the assets
that secure such Indebtedness being refinanced;
(j) any interest or title of a lessor under any Capital Lease
Obligation;
(k) Liens not provided for in clauses (a) through (j) above securing
Indebtedness incurred in compliance with the terms of this Agreement provided
that the Notes are secured by the assets subject to such Liens on an equal and
ratable basis or on a basis prior to such Liens; provided that to the extent
that such Liens secured Indebtedness that is subordinated to the Notes, such
Liens shall be subordinated to and be later in priority than the Notes on the
same basis; and
(l) extensions, renewals or refundings of any Liens referred to in
clauses (a) through (k) above, provided that any such extension, renewal or
refunding does not extend to any assets or secure any Indebtedness not securing
or secured by the Liens being extended, renewed or refinanced.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Companies or any ERISA Affiliate
or with respect to which the Companies or any ERISA Affiliate may have any
liability.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Purchase Money Indebtedness" means
(a) Indebtedness of the Company incurred (within 180 days of such
purchase) to finance the purchase of any assets (including the purchase of
equity interests of Persons that are not Affiliates of the Company) of the
Company, provided that the amount of Indebtedness thereunder does not exceed
100% of the purchase cost of such assets; or
6
(b) Indebtedness of the Company which refinances indebtedness referred
to in clause (a) of this definition, provided that such refinancing satisfies
the proviso of such clause (a).
"QPAM Exemption" means Prohibited Transaction Class Exemption 8414
issued by the United States Department of Labor.
"Registration Rights Agreement" is defined in Section 4.6.
"Required Holders" means, at any time, the holders of a majority in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the respective Companies with responsibility for the administration
of the relevant portion of this agreement.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if a50%
or more interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Trading Day" shall mean (a) if the applicable security is quoted on
the Nasdaq National Market, a day on which trades may be made thereon, (b) if
the applicable security is listed or admitted for trading on the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business or (c) if the applicable security is
not so listed, admitted for trading or quoted, any day that is a Business Day.
7
"Transaction Agreements" is defined in Section 2.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
8
EXHIBIT 4.4(b)
[FORM OF NOTE]
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE
STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE
SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION AND QUALIFICATION EXCEPT UNDER CERTAIN LIMITED CIRCUMSTANCES AND
SUBJECT TO THE DELIVERY OF AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY
COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.
▇▇▇▇.▇▇▇, INC.
▇▇▇▇.▇▇▇ BUSINESS MESSAGING SERVICES, INC.
THE ALLEGRO GROUP, INC.
10% SENIOR CONVERTIBLE NOTE DUE JANUARY 8, 2006
No. [ ]
----
--------------
$[ ]
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇.▇▇▇, INC., a Delaware
corporation (the "Company" or "▇▇▇▇.▇▇▇"), ▇▇▇▇.▇▇▇ BUSINESS MESSAGING SERVICES,
INC., a Delaware corporation ("▇▇▇▇.▇▇▇ BMS"), and THE ALLEGRO GROUP, INC., an
Ohio corporation ("Allegro"; ▇▇▇▇.▇▇▇, ▇▇▇▇.▇▇▇ BMS and Allegro being referred
to herein collectively as the "Companies"), hereby promises to pay to [ ], or
registered assigns, the principal sum of [ ] DOLLARS ($_______________) on
January 8, 2006. All of the obligations under this Note shall be joint and
several obligations of ▇▇▇▇.▇▇▇, ▇▇▇▇.▇▇▇ BMS and Allegro.
Interest. The Companies shall pay interest (computed on the basis of a
360 day year of twelve 30 day months) on the unpaid principal balance hereof at
the rate of 10% per annum from the date hereof, payable semiannually, on the
15th day of July and January in each year, commencing with the July 15 next
succeeding the date hereof, until the principal hereof shall have become due and
payable, except that, to the extent permitted by law, the Companies shall pay
interest (computed on such basis) on any overdue payment of principal (including
any overdue prepayment) and any overdue payment of interest, payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to 12 %. One half of each
interest payment shall be payable in cash and one half shall be payable (i)
until 18 months after the Initial Closing Date, in shares of ▇▇▇▇.▇▇▇ Class A
common stock having a deemed value equal to the Conversion Price at the time of
payment of such interest or (ii) after 18 months after the Initial Closing Date,
at the option of the Companies either in cash or in shares of ▇▇▇▇.▇▇▇ Class A
common stock having a deemed value equal to the Conversion Price at the time of
payment of such interest. In the event that the shares of ▇▇▇▇.▇▇▇ Class A
common stock are converted into securities, property or cash in connection with
a merger, consolidation, recapitalization or other event having similar effect,
the portion of such interest payment shall instead be made in the appropriate
amount of such securities, property or cash into which such shares have been so
converted.
Payments. Payments of principal of and interest on this Note are to be
made in lawful money of the United States of America at New York, New York or at
such other place as the Companies shall have designated by written notice to the
holder of this Note as provided in the Note Exchange Agreement referred to
below.
Note Exchange Agreement and other Transaction Agreements. This Note is
one of a series of Senior Convertible Notes (herein called the "Notes") issued
pursuant to the Note Exchange Agreement, dated as of February 14, 2001 (as from
time to time amended, the "Note Exchange Agreement"), among the Companies and
the Purchasers named therein and is entitled to the benefits thereof. Each
holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed
to the confidentiality provisions set forth in Section 21 of the Note Exchange
Agreement and (ii) to have made the representations set forth in Section 6 of
the Note Exchange Agreement. This Note is entitled to the benefits of the Note
Exchange Agreement and the Registration Rights Agreements.
Registered Note. This Note is a registered Note and, as provided in the
Note Exchange Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's attorney duly
authorized in writing, a new Note for a like principal amount will be issued to,
and registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Companies may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Companies will not be affected by any notice to
the contrary.
Prepayments. This Note is subject to optional prepayment, in whole or
from time to time in part, at the times and on the terms specified in the Note
Exchange Agreement, but not otherwise.
Conversion Right. The holder of this Note has the right, exercisable at
any time prior to the close of business on the Business Day immediately
preceding the final maturity date of this Note to convert the principal amount
thereof (or any portion thereof that is an integral multiple of $1,000) into
shares of Class A common stock, par value $.01 per share, of ▇▇▇▇.▇▇▇ at the
initial Conversion Price of $1.80 per share, subject to adjustment under certain
circumstances as provided in the Note Exchange Agreement, except that if a Note
becomes subject to optional prepayment, the conversion right will terminate at
the close of business on the Business Day immediately preceding the date fixed
for such prepayment (unless the Companies shall default in making the
prepayment, including interest, when it becomes due, in which case the
conversion right shall terminate at the close of business on the date on which
such default is cured).
To convert a Note, the holder must (1) complete and sign a notice of
election to convert substantially in the form attached hereto (or complete and
2
manually sign a facsimile thereof) and deliver such notice to ▇▇▇▇.▇▇▇, (2)
surrender the Note to ▇▇▇▇.▇▇▇, (3) furnish appropriate endorsements or transfer
documents if required by ▇▇▇▇.▇▇▇ and (4) pay any transfer or similar tax, if
required by ▇▇▇▇.▇▇▇ in accordance with Section 15.4 of the Note Exchange
Agreement. Upon conversion, no adjustment or payment will be made for accrued
and unpaid interest on the Note so converted or for dividends or distributions
on any Class A common stock issued on conversion of the Note, except that, if
any holder of a Note surrenders a Note for conversion after the close of
business on a record date for the payment of interest and prior to the opening
of business on the next interest payment date, then, notwithstanding such
conversion, the interest payable on such interest payment date will be paid on
such interest payment date to the person who was the registered holder of such
Note on such record date.
The number of shares of Class A common stock issuable upon conversion
of a Note is determined by dividing the principal amount of the Note converted
by the Conversion Price in effect on the Conversion Date. No fractional shares
will be issued upon conversion but a cash adjustment will be made for any
fractional interest.
Events of Default. If an Event of Default, as defined in the Note
Exchange Agreement, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price and
with the effect provided in the Note Exchange Agreement.
Description of Transaction Agreements. The above description of certain
provisions of the Note Exchange Agreement and other Transaction Agreements is
qualified by reference to, and is subject in its entirety to, the more complete
description thereof contained in the Note Exchange Agreement and the other
Transaction Agreements.
Capitalized Terms. Capitalized terms used herein that are defined in
the Note Exchange Agreement (as defined above) shall have the respective
meanings ascribed to such terms in the Note Exchange Agreement.
Governing Law. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State
of New York excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State. In the event of any conflict between the provisions of this Note, on the
one hand, and any of the Transaction Agreements, on the other hand, the
provisions of the applicable Transaction Agreement shall control.
▇▇▇▇.▇▇▇, INC.
▇▇▇▇.▇▇▇ BUSINESS
MESSAGING SERVICES, INC.
By___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Excecutive Officer
THE ALLEGRO GROUP, INC.
By___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman
3
ELECTION TO CONVERT
To ▇▇▇▇.▇▇▇, Inc.:
The undersigned owner of this Note hereby irrevocably exercises the option to
convert this Note, or the portion below designated, into Class A common stock of
▇▇▇▇.▇▇▇, Inc. in accordance with the terms of the Note Exchange Agreement
referred to in this Note, and directs that the shares issuable and deliverable
upon conversion, together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a different name
has been indicated below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
The undersigned agrees to be bound by the terms of the Note Exchange Agreement
relating to the Class A common stock issued upon conversion of the Note. If you
want to convert this Note in whole, check the box below. If you want to convert
this Note in part, indicate the portion of this Note to be converted in the
space provided below.
In whole / /
or
Portion of Note to be converted ($1,000 or any integral multiple thereof):
$
--------------
Date:
------------------
Name of Holder:
Signature of Authorized Representative of Holder
-----------------------------------------------
(Sign exactly as your name appears on the other side of this Note)
Medallion Signature Guarantee:
-----------------------------------------
Please print or typewrite your name and address, including zip code, and social
security or other identifying number:
If the Class A common stock is to be issued and delivered to someone other than
you, please print or typewrite the name and address, including zip code, and
social security or other identifying number of that person:
4
