EXHIBIT 4.1
Centennial Communications Corp.
40,000 Units, Each Unit Consisting of $1,000
Principal Amount at Maturity of 14% Senior Discount
Notes due 2005 and One Warrant to Purchase
64 Shares of Common Stock
PURCHASE AGREEMENT
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January 12, 1998
New York, New York
Salomon Brothers Inc
Prudential Securities Incorporated
c/o Salomon Brothers Inc
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Centennial Communications Corp., a Delaware corporation (the "Company"),
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proposes, upon the terms and conditions set forth herein, to issue and sell to
Salomon Brothers Inc and Prudential Securities Incorporated, as the initial
purchasers (collectively, the "Initial Purchasers"), 40,000 Units (the "Initial
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Units"), each Unit consisting of $1,000 principal amount at maturity of 14%
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Series A Senior Discount Notes due 2005 (each, an "Initial Series A Note" and
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collectively, the "Initial Series A Notes") of the Company and one Warrant
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(each, an "Initial Warrant" and collectively, the "Initial Warrants") to
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purchase 64 shares (the "Initial Warrant Shares") of common stock, par value
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$0.01 per share, of the Company (the "Common Stock"). The Company also proposes
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to issue and sell to the Initial Purchasers not more than 20,000 additional
Units (the "Additional Units") consisting of $1,000 principal amount at maturity
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of 14% Series A Senior Discount Notes due 2005 (each, an "Additional Series A
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Note" and collectively, the "Additional Series A Notes") of the Company and one
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Warrant (each, an "Additional Warrant" and collectively, the "Additional
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Warrants") to purchase 64 shares (the "Additional Warrant Shares") of Common
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Stock of the Company, if requested by the Initial Purchasers as provided in
Section 3 hereof. The Warrants (as defined below) are to be issued pursuant to
a Warrant Agreement (the "Warrant Agreement"), to be dated as of the Closing
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Date (as defined below), between the Company and State Street Bank and Trust
Company, as warrant agent (the "Warrant Agent"). The Indenture (as defined
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below) will provide that in the event that the Company does not consummate a
Qualified Public Offering (as defined in the Indenture) of its Qualified Capital
Stock (as defined in the Indenture) on or prior to January 1, 2001, the Company
will be obligated to issue warrants (the "Contingent Warrants") to the holders
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of Notes exercisable for 7.5% of the Common Stock of the Company (the
"Contingent Warrant Shares") on a fully diluted basis as of the date of such
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issuance after giving effect to the issuance of such Contingent Warrants;
provided that if the Company consummates a public or private offering or
offerings of its Qualified Capital Stock resulting in aggregate gross proceeds
of at least $25 million, the Company shall have until June 30, 2002 to
consummate a Qualified Public Offering. The Initial Units and the Additional
Units, the Initial Series A Notes and the Additional Series A Notes, the Initial
Warrants, the Additional Warrants and the Contingent Warrants, and the Initial
Warrant Shares, the Additional Warrants Shares and the Contingent Warrant
Shares, are referred to herein as the "Units," the "Series A Notes," the
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"Warrants" and the "Warrant
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Shares," respectively. The Series A Notes are to be issued pursuant to the
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provisions of an indenture (the "Indenture"), to be dated as of the Closing
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Date, between the Company and State Street Bank and Trust Company, as trustee
(the "Trustee"). The Series A Notes and the Series B Notes (as defined below)
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issuable in exchange therefor are collectively referred to herein as the
"Notes." The Notes will be secured, pursuant to a pledge agreement (the "Pledge
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Agreement") between the Company and State Street Bank and Trust Company (in such
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capacity, the "Collateral Agent"), by a first priority security interest in (i)
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100% of the Capital Stock of SMR Direct USA, Inc. ("USA") and all future
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domestic direct Restricted Subsidiaries and (ii) 100% of the Capital Stock
(other than Excluded Stock (as defined in the Indenture)) of each of SMR Direct
Cayman Corp. and Centennial Cayman Corp. (together, the "Cayman Entities") and
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100% of the Capital Stock (other than Excluded Stock) of all future foreign
direct Restricted Subsidiaries of the Company. As used herein, the term
"Securities" shall mean, collectively, the Units, the Notes, the Warrants and
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the Warrant Shares.
Simultaneously with the offering of the Initial Units, the Company is
issuing (the "Convertible Note Offering") $10 million in aggregate principal
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amount of its 9% Convertible Subordinated Notes due 2006 (the "Convertible
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Notes"). The Convertible Notes are to be issued pursuant to the provisions of a
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purchase agreement (the "Convertible Note Purchase Agreement"), dated the date
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hereof, between the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Global Allocation Fund, Inc.
("▇▇▇▇▇▇▇ ▇▇▇▇▇"). The Convertible Notes will be secured pursuant to the Pledge
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Agreement. Holders of the Convertible Notes will have the registration rights
set forth in the Registration Agreement (as defined below), to be dated as of
the Closing Date.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Indenture or in the Offering
Memorandum.
The Company wishes to confirm as follows its agreement with the Initial
Purchasers in connection with the purchase and resale of the Units.
1. Preliminary Offering Memorandum and Offering Memorandum. The Units will
be offered and sold to the Initial Purchasers pursuant to one or more exemptions
from the registration requirements under the Securities Act of 1933, as amended
(the "Securities Act"). The Company has prepared a preliminary offering
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memorandum, dated October 30, 1997 (the "Preliminary Offering Memorandum"), and
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a final offering memorandum, dated January 12, 1998 (the "Offering Memorandum"),
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setting forth information regarding the Company and the Units. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto. The Company hereby
confirms that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Units by the Initial Purchasers. The Company has also prepared a status report,
dated October 24, 1997, (the "Status Report") setting forth information as to
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the status of the Company's pending letters of intent and current auctions.
The Company understands that the Initial Purchasers propose to make offers
and sales (the "Exempt Resales") of the Units purchased by the Initial
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Purchasers hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered to persons whom
the Initial Purchasers reasonably believe to be qualified institutional buyers
("QIBs") as defined in Rule 144A under the Securities Act, as such rule may be
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amended from time to time ("Rule 144A"), in transactions under Rule 144A (each
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such person, an "Eligible Purchaser").
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It is understood and acknowledged that upon original issuance thereof, and
until such time as the same is no longer required under the applicable
requirements of the Securities Act, the Securities (and
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all securities issued in exchange therefor or in substitution thereof) shall
bear the following legend:
"THIS [NOTE/WARRANT/WARRANT SHARE] (OR ITS PREDECESSOR) HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF.
BY ITS ACQUISITION HEREOF OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS ACQUIRING THIS
[NOTE/WARRANT/WARRANT SHARE] IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI") (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(K) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(D) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE
TRANSFER OF THIS [NOTE/WARRANT/WARRANT SHARE], RESELL OR OTHERWISE TRANSFER
THIS [NOTE/WARRANT/WARRANT SHARE] EXCEPT TO (A) THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) TO AN IAI, THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE [TRUSTEE/WARRANT
AGENT/TRANSFER AGENT AND REGISTRAR] A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
[NOTE/WARRANT/WARRANT SHARE] (THE FORM OF WHICH CAN BE OBTAINED FROM THE
[TRUSTEE/WARRANT AGENT/TRANSFER AGENT AND REGISTRAR]) AND, IF SUCH TRANSFER
IS IN RESPECT OF [A PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF
LESS THAN $100,000/WARRANTS/WARRANT SHARES], AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS [NOTE/WARRANT/WARRANT SHARE] OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
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THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
[INDENTURE/WARRANT AGREEMENT] CONTAINS A PROVISION REQUIRING THE
[TRUSTEE/WARRANT AGENT/TRANSFER AGENT AND REGISTRAR] TO REFUSE TO REGISTER
ANY TRANSFER OF THIS [NOTE/WARRANT/WARRANT SHARE] IN VIOLATION OF THE
FOREGOING."
It is also understood and acknowledged that holders (including subsequent
transferees) of the Series A Notes will have the registration rights set forth
in the notes registration rights agreement (the "Notes Registration Rights
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Agreement"), to be dated the Closing Date, in the form of Exhibit A attached
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hereto, for so long as such Series A Notes constitute "Transfer Restricted
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Securities" (as defined in the Notes Registration Rights Agreement). Pursuant
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to the Notes Registration Rights Agreement, the Company will agree to file with
the Securities and Exchange Commission (the "Commission") under the
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circumstances set forth therein, (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") relating to the
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Company's 14% Series B Senior Discount Notes due 2005 (the "Series B Notes") to
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be offered in exchange for the Series A Notes (the "Registered Exchange Offer")
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and (ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement" and,
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together with the Exchange Offer Registration Statement, the "Registration
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Statements") relating to the resale by certain holders of the Series A Notes,
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and to use its best efforts to cause such registration statements to be declared
and remain effective and usable for the periods specified in the Notes
Registration Rights Agreement and to consummate the Registered Exchange Offer.
Holders of the Convertible Notes will have the registration rights set forth in
the Third Amended and Restated Registration Agreement (the "Registration
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Agreement"), to be dated the Closing Date, among the Company, the Initial
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Purchasers and the investors listed thereto. This Agreement, the Indenture, the
Warrant Agreement, the Pledge Agreement, the Notes Registration Rights
Agreement, the Registration Agreement and the Securities are hereinafter
referred to collectively as the "Operative Documents."
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2. Agreements to Sell, Purchase and Resell. (a) The Company hereby agrees,
on the basis of the representations, warranties and agreements of the Initial
Purchasers contained herein and subject to all the terms and conditions set
forth herein, to issue and sell to the Initial Purchasers and, upon the basis of
the representations, warranties and agreements of the Company contained herein
and subject to all the terms and conditions set forth herein, each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company, the
number of Units set forth opposite the name of such Initial Purchaser in
Schedule I hereto at a purchase price of $511.03 per Unit; plus in the case of
Additional Units, if any, any applicable accretion on the Series A Notes from
the date hereof; provided, however, that neither of the Initial Purchasers shall
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have any obligation to take or pay for any Units, Notes or Warrants to the
extent that any person to whom it intends to effect an Exempt Resale fails to or
refuses to purchase on the Closing Date or the Option Closing Date (as defined)
the Units which such person was to purchase pursuant to the terms of such agreed
upon Exempt Resale.
(b) Each of the Initial Purchasers hereby represents and warrants to the
Company that it will offer the Units for sale upon the terms and conditions set
forth in this Agreement and in the Offering Memorandum. Each of the Initial
Purchasers, severally and not jointly, hereby represents and warrants to, and
agrees with, the Company that such Initial Purchaser (i) is either a QIB or an
institutional "accredited investor," as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act (an "Accredited Institution"), in either case, with
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such knowledge and experience in financial and business matters as are necessary
in order to evaluate the merits and risks of an investment in the Units; (ii) is
not acquiring the Units with a view to any distribution thereof that would
violate the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction; (iii) in connection with the Exempt
Resales, will
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solicit offers to buy the Units only from, and will offer to sell the Units only
to, the Eligible Purchasers in accordance with this Agreement and on the terms
contemplated by the Offering Memorandum; (iv) will offer to sell the Units only
to, and will solicit offers to buy the Units only from, persons who in
purchasing such Units will be deemed to have represented and agreed (A) that
they are purchasing the Units for their own accounts or accounts with respect to
which they exercise sole investment discretion and that they or such accounts
are QIBs, (B) that the Securities will not have been registered under the
Securities Act and may be resold, pledged or otherwise transferred only (1)(I)
to a person who the seller reasonably believes is a QIB in a transaction meeting
the requirements of Rule 144A, (II) in a transaction meeting the requirements of
Rule 144 under the Securities Act, (III) outside the United States in a
transaction meeting the requirements of Rule 904 under the Securities Act, (IV)
to an Accredited Institution that prior to such transfer, furnishes to [the
Trustee, Warrant Agent or Transfer Agent and Register], a signed letter
containing representations and agreements relating to the restrictions on
transfer of the [Notes, Warrants or Warrant Shares] (the form of which letter
can be obtained from the [Trustee, Warrant Agent or the Transfer Agent and
Register]) and, if such transfer is in respect of [a principal amount of Notes
at the time of transfer of less than $100,000/Warrants/Warrant Shares], an
opinion of counsel acceptable to the Company that such transfer is in compliance
with the Securities Act or (V) in accordance with another exemption from the
registration requirements of the Act (and based upon an opinion of counsel if
the Company so requests), (2) to the Company or any of its subsidiaries or (3)
pursuant to an effective registration statement and, in each case, in accordance
with any applicable securities laws of any state of the United States or any
other applicable jurisdiction and (C) that the holder will, and each subsequent
holder is required to, notify any purchaser from it of the security evidenced
thereby of the resale restrictions set forth in (B) above, and (v) will not
offer or sell the Units, nor has it offered or sold the Units by, or otherwise
engaged in, any form of general solicitation or general advertising (within the
meaning of Regulation D (as defined below) including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) in connection with the offering of the
Units.
The Initial Purchasers have advised the Company that they will offer the
Units to Eligible Purchasers at a price initially equal to $511.03 per Unit,
with respect to the Initial Units and at a price equal to the Accreted Value of
the Series A Notes on the date of purchase by the Eligible Purchasers with
respect to the Additional Units. Such prices may be changed by the Initial
Purchasers at any time without prior notice to the Company. The Initial
Purchasers will, as promptly as practicable, notify the Company of any changes
in such prices.
Each of the Initial Purchasers understands that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Sections 7(f) and 7(k) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and agreements and each Initial Purchaser hereby consents to
such reliance.
3. Delivery of the Securities and Payment Therefor. Delivery to the Initial
Purchasers of and payment for the Initial Units shall be made at the office of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M., New
York City time, on January 15, 1998 (the "Closing Date").
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On the basis of the representations, warranties and agreements herein
contained, but subject to the conditions set forth herein, the Company agrees to
issue and sell up to 20,000 Additional Units to the Initial Purchasers, and the
Initial Purchasers, severally and not jointly, shall have the right to purchase
up to 20,000 Additional Units, at the purchase price specified in Section 2(a)
hereof. The Initial Purchasers may exercise its right to purchase Additional
Units in whole or in part from time to time by giving written notice thereof to
the Company on or prior to February 13, 1998. Such notice shall specify the
aggregate principal
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amount at maturity of Additional Units to be purchased pursuant to such exercise
and the date for payment and delivery thereof (the "Option Closing Date"). The
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Option Closing Date specified in such notice shall be a business day (a) no
later than February 24, 1998, (b) no later than ten business days after such
notice has been given and (c) no earlier than two business days after such
notice has been given. Delivery to the Initial Purchasers of and payment for the
Additional Units shall be made at the office of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M., on the date specified in the
applicable exercise notice given pursuant to this paragraph. The place of
closing for the Initial Units and the Additional Units, and the Closing Date and
the Option Closing Date, may be varied by agreement between the Initial
Purchasers and the Company.
The Units will be delivered to the Initial Purchasers against payment of
the purchase price therefor in immediately available funds. Payment of the
purchase price for the Initial Units and the Additional Units shall be placed in
an escrow account by the Company and released in accordance with the terms of
the escrow agreement, dated the Closing Date (the "Escrow Agreement") between
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the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, Discover & Co., as escrow agent
(the "Escrow Agent"). The Units will be evidenced by one or more global
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securities in definitive form and will be registered in the name of Cede & Co.
as nominee of The Depository Trust Company ("DTC"). The Units to be delivered to
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the Initial Purchasers shall be made available to the Initial Purchasers in New
York City for inspection and packaging not later than 9:30 A.M., New York City
time, on the business day next preceding the Closing Date or the Option Closing
Date, as applicable.
4. Agreements of the Company. The Company represents to and agrees with
each Initial Purchaser as follows:
(a) The Company will advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any of the Securities for
offering or sale in any jurisdiction designated by the Initial Purchasers
pursuant to Section 4(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory authority
for such purpose and (ii) of the happening of any event during the period
referred to in Section 4(d) below that makes any statement of a material fact
made in the Preliminary Offering Memorandum or the Offering Memorandum untrue or
that requires any additions to or changes in the Preliminary Offering Memorandum
or the Offering Memorandum in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading. The Company
shall use its best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of the Securities under any state
securities or Blue Sky laws and, if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any of the Securities under any state
securities or Blue Sky laws, the Company shall use its best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised. During the period referred to in
Section 4(d) below, the Company shall promptly prepare upon the Initial
Purchasers' reasonable request, any amendment or supplement to the Preliminary
Offering Memorandum or the Offering Memorandum that the Initial Purchasers
believe necessary or advisable in connection with Exempt Resales.
(c) The Company will furnish to the Initial Purchasers, without charge,
such number of copies of the Offering Memorandum as may then be amended or
supplemented as they may reasonably request, on or prior to 12:00 (noon) within
two business days following the date of this Agreement. Prior to
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the execution and delivery of this Agreement, the Company shall have delivered
or will deliver to the Initial Purchasers, without charge, in such quantities as
the Initial Purchasers shall have requested or may hereafter reasonably request,
copies of the Preliminary Offering Memorandum. The Company consents to the use
made by the Initial Purchasers in connection with the Exempt Resales of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
and supplements thereto.
(d) If, after the date hereof during such period as in the opinion of
counsel for the Initial Purchasers an Offering Memorandum is required to be
delivered in connection with Exempt Resales by the Initial Purchasers, any event
shall occur that in the opinion of counsel for the Initial Purchaser should be
set forth in the Offering Memorandum in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary to supplement or amend the Offering Memorandum in order to
comply with any law, statute, rule or regulation the Company will forthwith
prepare an appropriate supplement or amendment thereto of such document, and
will expeditiously furnish to the Initial Purchasers and such other persons as
the Initial Purchasers may designate such number of copies thereof as the
Initial Purchasers may reasonably request.
(e) The Company will cooperate with the Initial Purchasers and with
their counsel in connection with the qualification of the Securities for
offering and sale by the Initial Purchasers and by dealers under the securities
or Blue Sky laws of such jurisdictions as the Initial Purchasers may designate
and will continue such qualification in effect so long as required for Exempt
Resales and will file such consents to service of process or other documents
necessary or appropriate in order to effect such qualification; provided, that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Units, in any jurisdiction where it is not now so
subject.
(f) So long as any of the Securities are outstanding, the Company will
furnish to the Initial Purchasers (i) as soon as available, a copy of each
report of the Company mailed to stockholders generally or filed with any stock
exchange or securities regulatory body and (ii) from time to time, such other
information concerning the Company as the Initial Purchasers may reasonably
request.
(g) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (other than by notice
given by the Initial Purchasers terminating this Agreement pursuant to Section
10 hereof) or if this Agreement shall be terminated by the Initial Purchasers
because of any failure or refusal on the part of the Company to comply with the
terms or fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the Initial Purchasers for all out-of-pocket expenses (including
reasonable fees and expenses of its counsel) reasonably incurred by it in
connection herewith, but without any further obligation on the part of the
Company for loss of profits or otherwise.
(h) The Company will apply the net proceeds from the sale of the Units
to be sold by it hereunder substantially in accordance with the description set
forth in the Offering Memorandum under the caption "Use of Proceeds."
(i) Except as stated in this Agreement and in the Preliminary Offering
Memorandum and the Offering Memorandum, neither the Company nor any Subsidiary
(as defined below) has taken, nor will it take, directly or indirectly, any
action designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Units to facilitate the sale
or resale of the Units. Except as permitted by the Securities Act, the Company
will not distribute any offering material in connection with the Exempt Resales.
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(j) The Company will use its best efforts to permit the Units, the
Series A Notes, the Warrants and the Warrant Shares to be designated Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market
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securities in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL Market
and to permit the Securities to be eligible for clearance and settlement through
DTC.
(k) From and after the later of the Closing Date or the Option Closing
Date, so long as any of the Securities are outstanding and are "restricted
securities" within the meaning of the Rule 144(a)(3) under the Securities Act
and during any period in which the Company is not subject to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
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Company will furnish to holders of the Securities and prospective purchasers of
Securities designated by such holders, upon request of such holders or such
prospective purchasers, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act to permit compliance with Rule 144A in
connection with resale of the Securities.
(l) The Company agrees not to sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Units in a manner
that would require the registration under the Securities Act of the sale to the
Initial Purchasers or the Eligible Purchasers of any of the Securities.
(m) The Company agrees to pay Salomon Brothers Inc, on behalf of the
Initial Purchasers, $350,000 on the Closing Date, by certified check or wire
transfer of immediately available funds, representing fees for advisory services
rendered to the Company in connection with the Convertible Note Offering.
(n) The Company agrees to comply with all the terms and conditions of
the Notes Registration Rights Agreement and all agreements set forth in the
representation letters of the Company to DTC relating to the approval of the
Securities by DTC for "book entry" transfer.
(o) The Company agrees to cause the Registered Exchange Offer, if
available, to be made in the appropriate form, as contemplated by the Notes
Registration Rights Agreement, to permit registration of the Series B Notes to
be offered in exchange for the Series A Notes, and to comply with all applicable
federal and state securities laws in connection with the Registered Exchange
Offer.
(p) The Company agrees that prior to any registration of the Notes
pursuant to the Notes Registration Rights Agreement, or at such earlier time as
may occur, the Indenture shall be qualified under the Trust Indenture Act of
1939, as amended (the "TIA"), and any necessary supplemental indentures will be
entered into in connection therewith.
(q) The Company will not voluntarily claim, and will resist actively
all attempts by third parties on behalf of the Company to claim, the benefit of
any usury laws against holders of the Notes.
(r) The Company will do and perform all things required or necessary to
be done and performed under this Agreement by it prior to the Closing Date or
the Option Closing Date, as the case may be, and to satisfy all conditions
precedent to the Initial Purchasers' obligations hereunder to purchase the
Initial Units or the Additional Units, as the case may be.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum have
been
8
prepared by the Company for use by the Initial Purchasers in connection with the
Exempt Resales. No order or decree preventing the use of the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or supplement
thereto, or any order asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Securities Act has
been issued and no proceeding for that purpose has commenced or is pending or,
to the knowledge of the Company, is contemplated by any governmental authority
or agency.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as
of their respective dates and the Offering Memorandum as of the Closing Date and
the Option Closing Date, if any, did not and any supplement or amendment thereto
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) The transactions described in the Status Report, as of its date,
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Status Report made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly for use
therein.
(d) The Company has full corporate power and authority to execute,
deliver and perform its obligations under the Operative Documents and to
consummate the transactions contemplated by the Operative Documents and to
issue, sell and deliver the Units pursuant to this Agreement.
(e) This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms (assuming
the due authorization, execution and delivery hereof by the Initial Purchasers),
subject to the qualification that the enforceability of the Company's
obligations hereunder (including, without limitation, the provisions contained
in Section 6 hereof) may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles regardless of
whether such principles are enforceable at law or equity.
(f) On or prior to the Closing Date, the Indenture will be duly
authorized by the Company and, on the Closing Date, will have been validly
executed and delivered by the Company. When the Indenture has been validly
executed and delivered by the Company, the Indenture will constitute the valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms (assuming the due authorization, execution and
delivery of the Indenture by the Trustee), subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles regardless of whether such principles are enforceable at
law or equity. No qualification of the Indenture under the TIA is required in
connection with the offer and sale of the Units contemplated hereby or in
connection with the Exempt Resales. On the Closing Date and the Option Closing
Date, if any, the Indenture will conform in all material respects to the
requirements of the TIA and the rules and regulations of the Commission
applicable to an Indenture which is qualified thereunder.
(g) On or prior to the Closing Date, the Units will be duly authorized
by the Company and (i) on the Closing Date, the Initial Series A Notes will have
been validly executed and delivered by the Company and (ii) on the Option
Closing Date, the Additional Units, if any, will have been validly executed and
delivered by the Company. When the Series A Notes have been validly issued,
executed and
9
authenticated in accordance with the terms of the Indenture and upon delivery to
the Initial Purchasers of the Initial Units or the Additional Units, as the case
may be, against payment therefor in accordance with the terms hereof, the Series
A Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms (assuming the due authorization, execution and
delivery of the Indenture by the Trustee), subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles regardless of whether such principles are enforceable at
law or equity. On the Closing Date and the Option Closing Date, if any, the
Series A Notes will conform as to legal matters to the description thereof
contained in the Offering Memorandum.
(h) On or prior to the Closing Date, the Series B Notes will be duly
authorized by the Company and when duly issued and authenticated in accordance
with the terms of the Indenture and the Registered Exchange Offer, the Series B
Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms (assuming the due authorization, execution and
delivery of the Indenture by the Trustee), subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles regardless of whether such principles are enforceable at
law or equity.
(i) On or prior to the Closing Date, the Notes Registration Rights
Agreement will be duly authorized by the Company and, on the Closing Date, will
have been validly executed and delivered by the Company. When the Notes
Registration Rights Agreement has been validly executed and delivered by the
Company, the Notes Registration Rights Agreement will constitute the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms (assuming the due authorization, execution and delivery of the
Notes Registration Rights Agreement by the Initial Purchasers), subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles regardless of whether such principles are
enforceable at law or equity. On the Closing Date and the Option Closing Date,
if any, the Notes Registration Rights Agreement will conform as to legal matters
to the description thereof in the Offering Memorandum.
(j) On or prior to the Closing Date, the Pledge Agreement will be duly
authorized by the Company and, on the Closing Date, will have been validly
executed and delivered by the Company. When the Pledge Agreement has been
validly executed and delivered by the Company, the Pledge Agreement will
constitute the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms (assuming the due authorization,
execution and delivery of the Pledge Agreement by the Collateral Agent), subject
to the qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles regardless of whether such
principles are enforceable at law or equity. The Pledge Agreement will create a
valid and perfected first priority security interest in the Pledged Collateral
(as defined in the Pledge Agreement) in favor of the Collateral Agent, on behalf
of and for the benefit of the holders of the Notes. On the Closing Date and the
Option Closing Date, if any, the Pledge Agreement will conform as to legal
matters to the description thereof in the Offering Memorandum.
(k) On or prior to the Closing Date, the Escrow Agreement will be duly
authorized by the Company and, on the Closing Date, will have been validly
executed and delivered by the Company. When the Escrow Agreement has been
validly executed and delivered by the Company, the Escrow
10
Agreement will constitute the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms (assuming the due
authorization, execution and delivery of the Escrow Agreement by the Escrow
Agent), subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles regardless of
whether such principles are enforceable at law or equity. On the Closing Date
and the Option Closing Date, if any, the Escrow Agreement will conform as to
legal matters to the description thereof in the Offering Memorandum.
(l) On or prior to the Closing Date, the Warrant Agreement will be duly
authorized by the Company and, on the Closing Date, will have been validly
executed and delivered by the Company. When the Warrant Agreement has been
validly executed and delivered, the Warrant Agreement will constitute the valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms (assuming the due authorization, execution and
delivery of the Warrant Agreement by the Warrant Agent), subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles regardless of whether such principles are
enforceable at law or equity. On the Closing Date and the Option Closing Date,
if any, the Warrant Agreement will conform as to legal matters to the
description thereof in the Offering Memorandum.
(m) On or prior to the Closing Date, the Warrants will be duly
authorized by the Company and (i) on the Closing Date, the Initial Warrants will
have been validly executed and delivered by the Company, (ii) on the Option
Closing Date, if any, the Additional Warrants will have been validly executed
and delivered by the Company and (iii) on the date of issuance of the Contingent
Warrants, if any, the Contingent Warrants will have been validly executed and
delivered by the Company. When the Warrants have been validly issued, executed
and countersigned in accordance with the terms of the Warrant Agreement and (A)
upon delivery to the Initial Purchasers of the Initial Warrants or the
Additional Warrants, as the case may be, against payment therefor in accordance
with the terms hereof and (B) upon delivery to the Holders of the Notes of the
Contingent Warrants pursuant to the Indenture, the Warrants will be entitled to
the benefits of the Warrant Agreement and will be valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms
(assuming the due authorization, execution and delivery of the Warrant Agreement
by the Warrant Agent), subject to qualification that the enforceability of the
Company's obligation thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors rights generally and by general equitable principles
regardless of whether such principles are enforceable at law or equity. On the
Closing Date, the Option Closing Date, if any, and the date, if any, of the
issuance of the Contingent Warrants, the Warrants will conform as to legal
matters to the description thereof contained in the Offering Memorandum.
(n) On or prior to the Closing Date, the Company will duly authorize
and reserve for issuance the Warrant Shares to be issued upon the exercise of
the Warrants and, when issued and delivered upon the exercise of the Warrants
against payment of the exercise price as provided in the Warrant Agreement, the
Warrant Shares (i) will have been validly issued and will be fully paid and non
assessable, and the issuance of the Warrant Shares will not be subject to any
preemptive rights which have not been waived prior to the Closing Date and (ii)
will conform as to legal matters to the description thereof in the Offering
Memorandum.
(o) (i) The Initial Warrants, when issued and sold, will represent the
right to acquire upon exercise initially not less than 7.5% of the Common Stock
of the Company on a fully diluted basis as of the Closing Date and (ii) the
Additional Warrants, if all are issued and sold, will represent the right to
11
acquire upon exercise not less than 3.75% of the Common Stock of the Company on
a fully diluted basis as of the Closing Date (fully diluted to be calculated in
each case by giving effect to the maximum number of shares of Common Stock of
the Company deliverable upon exercise, conversion or exchange of all shares of
preferred stock, warrants, stock options and restricted stock outstanding as of
the Closing Date or the Option Closing Date, as applicable, including, without
limitation, the Warrants.
(p) On or prior to the Closing Date, the Registration Agreement will be
duly authorized by the Company and, on the Closing Date, will have been validly
executed and delivered by the Company. When the Registration Agreement has been
validly executed and delivered by the Company, the Registration Agreement will
constitute the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms (assuming the due authorization,
execution and delivery of the Registration Agreement by ▇▇▇▇▇▇▇ ▇▇▇▇▇, the
Initial Purchasers and the investors listed thereto), subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles regardless of whether such principles are
enforceable at law or equity. On the Closing Date and the Option Closing Date,
if any, the Registration Agreement will conform as to legal matters to the
description thereof in the Offering Memorandum.
(q) Simultaneously with the closing of the purchase and sale of the
Units and the Convertible Notes, (i) the aggregate outstanding principal amount
of the Company's 12% Senior Secured Convertible Notes due 2002 (the "Senior
------
Notes") and all accrued and unpaid interest thereon will be converted (the
-----
"Senior Note Conversion") into shares of the Company's Series C Preferred (as
----------------------
defined below) and (ii) the pledge of the shares of Capital Stock of each of the
Cayman Entities securing the Senior Notes will have been released (the "Senior
------
Note Release").
------------
(r) The Convertible Note Purchase Agreement has been duly authorized
and validly executed and delivered by the Company and constitutes the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms (assuming the due authorization, execution and delivery of the
Convertible Note Purchase Agreement by ▇▇▇▇▇▇▇ ▇▇▇▇▇), subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles regardless of whether such principles are
enforceable at law or equity.
(s) On or prior to the Closing Date, the Convertible Notes will be duly
authorized by the Company and on the Closing Date, the Convertible Notes will
have been validly executed and delivered by the Company. When the Convertible
Notes have been validly issued, executed and authenticated in accordance with
the terms of the Convertible Note Purchase Agreement and upon delivery to
▇▇▇▇▇▇▇ ▇▇▇▇▇ of the Convertible Notes against payment therefor in accordance
with the terms of the Convertible Note Purchase Agreement, the Convertible Notes
will be entitled to the benefits of the Convertible Note Purchase Agreement and
will be valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms (assuming the due authorization,
execution and delivery of the Convertible Note Purchase Agreement by ▇▇▇▇▇▇▇
▇▇▇▇▇), subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles regardless of
whether such principles are enforceable at law or equity.
(t) All the shares of capital stock of the Company outstanding prior to
the issuance of the Units have been duly authorized and validly issued and are
fully paid and nonassessable and not subject to any preemptive rights except as
set forth in the Preliminary Offering Memorandum and the Offering Memorandum;
the authorized capital stock of the Company conforms as to legal matters to the
description
12
thereof under the caption "Description of Capital Stock" in the Offering
Memorandum.
(u) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have, individually or in the aggregate, a material
adverse effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect").
-----------------------
(v) The entities listed on Schedule II are the only subsidiaries,
direct or indirect, of the Company (the "Subsidiaries") as of the Closing Date.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing (to the extent such legal principle is applicable) in the jurisdiction
of its incorporation, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum, and is duly registered and qualified to conduct its business and is
in good standing (to the extent such legal principle is applicable) in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify or be in good standing does not have a Material
Adverse Effect. All the outstanding shares of capital stock of, or other
ownership interests in, each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable, and are wholly owned by the
Company, directly or indirectly through one or more of the other Subsidiaries,
free and clear of any lien, adverse claim, security interest, equity or other
encumbrance. Except as set forth in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, options calls, convertible
securities, commitments of sale, liens, security interests or encumbrances
related to or entitling any person (other than the Company or its Subsidiaries)
to purchase or otherwise to acquire any shares of capital stock of, or ownership
interest in, any of the Subsidiaries.
(w) Except as described under the caption "Litigation" in the Offering
Memorandum, there are no legal or governmental proceedings, domestic or foreign,
pending or, to the knowledge of the Company, threatened or contemplated, against
the Company or any of the Subsidiaries or to which the Company or any of the
Subsidiaries or to which any of their respective properties, is subject, that
are not disclosed in the Offering Memorandum and which, if adversely decided,
might result, individually or in the aggregate, in a Material Adverse Effect or
materially affect the issuance of any of the Securities or the consummation of
the transactions contemplated by the Operative Documents. Neither the Company
nor any of the Subsidiaries is involved in any strike, job action or labor
dispute with any group of employees, and, to the Company's knowledge, no such
action or dispute is threatened.
(x) Neither the Company nor any of the Subsidiaries is or, immediately
after giving effect to the transactions contemplated by this Agreement and the
Senior Note Conversion, will be (i) in violation of its certificate or articles
of incorporation or by-laws or other organizational documents, (ii) in violation
of any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any decree of any
court or governmental agency or body having jurisdiction over the Company or any
of the Subsidiaries except as set forth in the Preliminary Offering Memorandum
and the Offering Memorandum and except where any such violation or violations
would not have, individually or in the aggregate, a Material Adverse Effect or
(iii) in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument that is material
to the Company and the Subsidiaries, taken as a whole, to which the Company or
any of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, in each case, which have not been waived or
cured prior to the date of this Closing Date.
13
(y) None of (i) the issuance, offer, sale or delivery of the Units,
(ii) the execution, delivery or performance of this Agreement or the other
Operative Documents, or (iii) the consummation by the Company of the
transactions contemplated hereby or thereby, (1) requires any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official, (2) conflicts or will conflict with or constitutes or will constitute
a breach of, or a default under, the certificate or articles of incorporation or
by-laws, or other organizational documents, of the Company or any of the
Subsidiaries, (3) conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, any agreement, indenture, lease or
other instrument that is material to the Company and the Subsidiaries, taken as
a whole, to which the Company or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound except as set
forth in the Preliminary Offering Memorandum and the Offering Memorandum and
except for such conflicts which will be waived or consented to by the
stockholders of the Company prior to the Closing Date, (4) violates or will
violate any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or any of the Subsidiaries or any of their
respective properties or result in revocation or termination of any Permits (as
defined below) held by the Company or any of the Subsidiaries or (5) will result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries pursuant to the
terms of any agreement or instrument to which any of them is a party or by which
any of them may be bound or to which any of the property or assets of any of
them is subject.
(z) The accountants, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified or shall
certify the financial statements included as part of the Offering Memorandum (or
any amendment or supplement thereto), are independent public accountants under
Rule 101 of the AICPA's Code of Professional Conduct, and its interpretation and
rulings.
(aa) The historical financial statements, together with related
schedules and notes forming part of the Offering Memorandum, present fairly the
consolidated financial position, results of operations and changes in
stockholders' equity and cash flows of the Company and the Subsidiaries on the
basis stated in the Offering Memorandum at the respective dates or for the
respective periods to which they apply; such statements and related notes have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and meet the requirements
of Regulation S-X under the Securities Act for registration statements on Form
S-1; and the other financial and statistical information and data set forth in
the Offering Memorandum is accurately presented and, to the extent such
information and data is derived from the financial books and records of the
Company, is prepared on a basis consistent with such financial statements and
the books and records of the Company.
(bb) Except as disclosed in, or specifically contemplated by, the
Offering Memorandum, subsequent to the date as of which such information is
given in the Offering Memorandum (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in the
capital stock, or material increase in the short-term or long-term debt, of the
Company or any of the Subsidiaries or any material adverse change, or any
development involving or which could reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, properties, prospects, net worth or results of operations of the
Company and the Subsidiaries taken as a whole.
(cc) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Offering Memorandum
as being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except for the liens of ▇.▇. ▇▇▇▇▇▇▇ Company,
14
Boston Financial & Equity Corporation, Maxon America, Inc. and other equipment
suppliers in respect of leased equipment, the liens pursuant to the terms of the
FCC Debt (as described in the Offering Memorandum) and except such as are
described in the Offering Memorandum and all the property described in the
Offering Memorandum as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases, with
only such exceptions as in the aggregate are not materially burdensome and do
not interfere in any material respect with the conduct of the business of the
Company and the Subsidiaries taken as a whole.
(dd) Except as permitted by the Securities Act, neither the Company nor
any of the Subsidiaries have distributed and, prior to the later to occur of the
Closing Date, the Option Closing Date and completion of the distribution of the
Units, will not distribute any offering material in connection with the offering
and sale of the Units other than the Preliminary Offering Memorandum and the
Offering Memorandum.
(ee) Each of the Company and the Subsidiaries have such permits,
licenses, franchises and other approvals or authorizations of governmental or
regulatory authorities ("Permits") as are necessary under applicable law to own
their respective properties and to conduct their respective businesses in the
manner described in the Offering Memorandum, except to the extent that the
failure to have any such Permits would not have, individually or in the
aggregate, a Material Adverse Effect; the Company and each of the Subsidiaries
have fulfilled and performed in, all their respective obligations with respect
to the Permits, and no event has occurred which allows, after notice or lapse of
time would allow, revocation or termination thereof or results in any other
impairment of the rights of the holder of any such Permit, subject in each case
to such qualification as may be set forth in the Offering Memorandum and except
to the extent that any such revocation or termination would not have
individually or in the aggregate, a Material Adverse Effect; and, except as
described in the Offering Memorandum, none of the Permits contains any
restriction that is materially burdensome to the Company or any of the
Subsidiaries.
(ff) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(gg) Neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, except to the
extent that the violation of such law, rule or regulation would not have,
individually or in the aggregate, a Material Adverse Effect.
(hh) Except for the Company's 1996 federal and Colorado state income tax
return, in respect of which an extension has been filed, the Company and each of
the Subsidiaries have filed all tax returns required to be filed, which returns
are true and correct in all material respects, and neither the Company nor any
Subsidiary is in default in the payment of any taxes which were payable pursuant
to said returns or any assessments with respect thereto, except where the
failure to file such returns and make such payments would not have, individually
or in the aggregate, a Material Adverse Effect.
15
(ii) No holder of any security of the Company or any of the Subsidiaries
has any right to request or demand registration of shares of Common Stock or any
other security of the Company or any of the Subsidiaries because of the
consummation of the transactions contemplated by this Agreement, the Notes
Registration Rights Agreement or the Registration Agreement. Except as described
in the Offering Memorandum, there are no outstanding options, warrants or other
rights calling for the issuance of, and there are no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable or exercisable for capital stock of
the Company.
(jj) The Company is not and, after giving effect to the sale of the
Units and the application of the net proceeds to the Company of such sale as
described in the Offering Memorandum under the caption "Use of Proceeds," will
not be an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(kk) When the Units, Series A Notes and Warrants are issued and
delivered pursuant to this Agreement, no Unit, Series A Note or Warrant will be
of the same class (within the meaning of Rule 144A(d)(3) under the Securities
Act) as any security of the Company that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted in a
United States automated interdealer quotation system.
(ll) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D ("Regulation D") under the Securities Act) of the Company has
------------
directly, or through any agent (provided that no representation is made as to
the Initial Purchasers or any person acting on their behalf), (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be integrated with
the offering and sale of the Units in a manner that would require the
registration of the Units, the Series A Notes or the Warrants under the
Securities Act or (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offering
of the Units.
(mm) Assuming (i) that the representations and warranties in Section 2
hereof are true, (ii) the Initial Purchasers comply with the covenants set forth
in Section 2 hereof and (iii) that each person to whom the Initial Purchasers
offer, sell or deliver the Units is a QIB, the purchase and sale of the Units
pursuant hereto (including the Initial Purchasers' proposed offering of the
Units on the terms and in the manner set forth in the Offering Memorandum and
Section 2 hereof) is exempt from the registration requirements of the Securities
Act.
(nn) The execution and delivery of this Agreement and the other
Operative Documents and the sale of the Units to the Initial Purchasers or by
the Initial Purchasers to Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of the Employee Retirement Income
Security Act, as amended, or the rules and regulations promulgated thereunder
("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended,
-----
including the regulations and published interpretations thereunder (the "Code").
----
The representation made by the Company in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the caption entitled "Notice to
Investors."
(oo) The Company and USA are in compliance in all material respects with
all presently applicable provisions of ERISA; no "reportable event" (as defined
in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company or USA would have any liability; neither the Company nor
USA has incurred or expects to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Code; and each "pension plan" for which the Company
would have any liability that is intended to be
16
qualified under Section 401 (a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(pp) None of the Company, USA or, to the knowledge of the Company, any
of its Subsidiaries have violated any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") which could reasonably be expected to have,
------------------
individually or in the aggregate, a Material Adverse Effect.
(qq) There is no alleged liability, or to the knowledge of the Company,
potential liability, (including, without limitation, alleged or potential
liability or investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damages, personal injuries or penalties) of
the Company or any of its Subsidiaries arising out of, based on or resulting
from (i) the presence or release into the environment of any Hazardous Material
(as defined herein) at any location, owned or operated by the Company or any of
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect or (ii) any violation or alleged violation of any Environmental Law. The
term "Hazardous Material" means (A) any "hazardous substance" as defined by the
------------------
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (B) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material waste or substance regulated under or
within the meaning of any other Environmental Law.
(rr) None of the execution, delivery and performance of this Agreement,
the issuance and sale of the Units, the application of the proceeds from the
issuance and sale of the Units and the consummation of the transactions
contemplated thereby as set forth in the Offering Memorandum, will violate
Regulations G, T, U or X promulgated by the Board of Governors of the Federal
Reserve System.
(ss) Each of the Preliminary Offering Memorandum and the Offering
Memorandum as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or Offering Memorandum or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to the Initial Purchasers furnished in writing to the Company by or on
behalf of the Initial Purchasers expressly for use in connection therewith. The
foregoing indemnity agreement shall be in addition to any liability which the
Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Initial Purchasers or any person controlling the Initial Purchasers in respect
of which indemnity may be sought against the Company, the Initial Purchasers or
such controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
--------------------
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Initial Purchasers or any
such controlling person shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall
17
be at the expense of the Initial Purchasers or such controlling person unless
(i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both the Initial Purchasers
or such controlling person and the indemnifying parties and the Initial
Purchasers or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of the Initial Purchasers or such
controlling person). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Initial
Purchasers and controlling persons not having actual or potential differing
interests with the Initial Purchasers or among themselves, which firm shall be
designated in writing by Salomon Brothers Inc, and that all such fees and
expenses shall be reimbursed on a monthly basis as provided in paragraph (a)
hereof. The indemnifying parties shall not be liable for any settlement of any
such action, suit or proceeding effected without their written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying parties agree
to indemnify and hold harmless the Initial Purchasers, to the extent provided in
paragraph (a), and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) The Initial Purchasers, severally and not jointly, agree to
indemnify and hold harmless the Company and its directors and officers, and any
person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
indemnity from the Company to the Initial Purchasers set forth in paragraph (a)
hereof, but only with respect to information relating to the Initial Purchasers
furnished in writing by or on behalf of the Initial Purchasers expressly for use
in the Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors or officers, or any such
controlling person based on the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against the Initial Purchasers pursuant to this
paragraph (c), the Initial Purchasers shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof the Initial Purchasers shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the Initial
Purchasers' expense), and the Company, its directors and officers, and any such
controlling person shall have the rights and duties given to the Initial
Purchasers by paragraph (b) above. The foregoing indemnity agreement shall be in
addition to any liability which the Initial Purchasers may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Units, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Initial Purchasers on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any
18
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Initial Purchasers on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts received
by the Initial Purchasers, in each case, as set forth in the table on the cover
page of the Offering Memorandum. The relative fault of the Company on the one
hand and the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the Initial
Purchasers on the other hand and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined by
a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 6, the Initial
Purchasers shall not be required to contribute any amount in excess of the
amount by which the total price of the Units underwritten by it and distributed
to the public exceeds the amount of any damages which the Initial Purchasers
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Except as set forth in paragraph (b) hereof, losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 6 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred. The indemnity and contribution agreements
contained in this Section 6 and the representations and warranties of the
Company set forth in this Agreement shall remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of the Initial
Purchasers or any person controlling the Initial Purchasers, the Company, their
respective directors or officers or any person controlling the Company, (ii)
acceptance of any Units and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to the Initial Purchasers or any
person controlling the Initial Purchasers, or to the Company, their respective
directors or officers or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 6.
(g) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
7. Conditions of the Initial Purchaser's Obligations. The obligations
of the Initial Purchasers to purchase the Units hereunder are subject to the
satisfaction of each of the following conditions:
(a) At the time of execution of this Agreement and on the Closing Date,
and the Option Closing Date, as to the Additional Units, if any, no order or
decree preventing the use of the Offering Memorandum or any amendment or
supplement thereto, or any order asserting that the transactions
19
contemplated by this Agreement are subject to the registration requirements of
the Securities Act shall have been issued and no proceedings for that purpose
shall have been commenced or shall be pending or, to the knowledge of the
Company, be contemplated. No stop order suspending the sale of the Securities in
any jurisdiction designated by the Initial Purchasers shall have been issued and
no proceedings for that purpose shall have been commenced or shall be pending
or, to the knowledge of the Company, shall be contemplated.
(b) There shall not have been any change in the capital stock of the
Company nor any material increase in the short-term or long-term debt of the
Company from that set forth or contemplated in the Offering Memorandum
(exclusive of any amendment or supplement thereto subsequent to the date of the
Offering Memorandum); (ii) the Company and the Subsidiaries shall not have any
liabilities or obligations, direct or contingent (whether or not in the ordinary
course of business), that are material to the Company and the Subsidiaries,
taken as a whole, other than those reflected in the Offering Memorandum
(exclusive of any amendment or supplement thereto subsequent to the date of the
Offering Memorandum); and (iii) all the representations and warranties of the
Company contained in this Agreement shall be true and correct in all material
respects on and as of the date hereof and on and as of the Closing Date or the
Option Closing Date, as the case may be, as if made on and as of the Closing
Date or the Option Closing Date, as the case may be, and the Initial Purchasers
shall have received a certificate, dated the Closing Date or the Option Closing
Date, as the case may be, and signed by the chief executive officer and the
chief accounting officer of the Company (or such other officers as are
acceptable to the Initial Purchasers), to the effect set forth in this Section
7(b) and in Sections 7(a), 7(c) and 7(c) hereof.
(c) The Company shall not have failed at or prior to the Closing Date or
the Option Closing Date, as the case may be, to have performed or complied with
any of its agreements herein contained and required to be performed or complied
with by it hereunder at or prior to the Closing Date or the Option Closing Date,
as the case may be.
(d) Subsequent to the date as of which information is given in the
Offering Memorandum, except as otherwise stated in the Offering Memorandum
(exclusive of any amendment or supplement thereto subsequent to the date of the
Agreement) there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition (financial or
other), business, properties, net worth, results of operations or prospects of
the Company or the Subsidiaries not contemplated by the Offering Memorandum
(exclusive of any amendment or supplement thereto subsequent to the date of the
Agreement) which in the opinion of the Initial Purchasers, would adversely
affect the market for the Securities or (ii) any event or development relating
to or involving the Company, or any officer or director of the Company which
makes any statement made in the Offering Memorandum (exclusive of any amendment
or supplement thereto subsequent to the date of the Agreement) untrue or which,
in the opinion of the Company and its counsel or the Initial Purchasers and
their counsel, requires the making of any addition to or change in the Offering
Memorandum in order to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, if amending or
supplementing the Offering Memorandum to reflect such event or development
would, in the opinion of the Initial Purchasers, adversely affect the market for
any of the Securities.
(e) The Offering Memorandum shall have been printed and copies thereof
distributed to the Initial Purchasers in such quantities as shall have been
previously specified by them not later than 9:00 a.m. New York City time, on
January 14, 1998, or at such later date and time as the Initial Purchasers may
approve in writing.
(f) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, and addressed to the Initial Purchasers and
20
▇▇▇▇▇▇▇ ▇▇▇▇▇, to the effect that:
(i) Each of the Company and USA is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Offering Memorandum;
(ii) All the outstanding shares of capital stock of USA have been duly
authorized and validly issued, are fully paid and nonassessable, and are wholly
owned by the Company directly, free and clear of any security interest, lien,
adverse claim, equity or other encumbrance;
(iii) All the shares of capital stock of the Company outstanding prior
to the issuance of the Securities have been duly authorized and validly issued
and are fully paid and nonassessable and not subject to any preemptive rights
except as described in the Offering Memorandum, such opinion to be given in
reliance upon the Certificate;
(iv) The Company has full corporate power and authority to execute,
deliver and perform its obligations under the Operative Documents and to
consummate the transactions contemplated by the Operative Documents and to
issue, sell and deliver the Units pursuant to this Agreement;
(v) This Agreement has been duly authorized and validly executed and
delivered by the Company;
(vi) The Indenture has been duly authorized and validly executed and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms (assuming the due
authorization, execution and delivery of the Indenture by the Trustee), subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law); no qualification of
the Indenture under the TIA is required in connection with the offer and sale of
the Series A Notes contemplated hereby or in connection with the Exempt Resales;
the Indenture complies as to form in all material respects with the requirements
of the TIA, and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
(vii) The Units have been duly and validly authorized by the Company;
the Series A Notes have been duly authorized by the Company and, when executed
and authenticated in accordance with the terms of the Indenture and, upon
delivery to the Initial Purchasers against payment therefor in accordance with
the terms hereof, the Series A Notes will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms (assuming the due
authorization, execution and delivery of the Indenture by the Trustee), subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(viii) The Series B Notes have been duly authorized by the Company;
(ix) The Notes Registration Rights Agreement has been duly authorized
and validly executed and delivered by the Company and is a valid and binding
agreement of the Company,
21
enforceable against the Company in accordance with its terms (assuming the due
authorization, execution and delivery of the Notes Registration Rights Agreement
by the Initial Purchasers), subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law);
(x) The Escrow Agreement has been duly authorized and validly executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms (assuming
the due authorization, execution and delivery of the Escrow Agreement by the
Escrow Agent and any other party thereto other than the Company), subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general equitable principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law);
(xi) The Pledge Agreement has been duly authorized and validly executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms (assuming
the due authorization, execution and delivery of the Pledge Agreement by the
Collateral Agent), subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law);
(xii) The Warrant Agreement has been duly authorized and validly
executed and delivered by the Company and is a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
(assuming the due authorization, execution and delivery of the Warrant Agreement
by the Warrant Agent), subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law);
(xiii) The Warrants have been duly authorized by the Company and, when
executed and countersigned in accordance with the terms of the Warrant Agreement
and upon (A) delivery to the Initial Purchasers against payment therefor of the
Initial Warrants in accordance with the terms hereof, (B) delivery to the
applicable purchasers against payment therefor of the Additional Warrants, if
any, in accordance with the terms hereof, delivery to the Holders of the Initial
Series A Notes of the Contingent Warrants in accordance with the terms of the
Warrant Agreement, the Warrants will be entitled to the benefits of the Warrant
Agreement and will be valid and binding obligations of the Company, enforceable
against the Company in accordance with its terms (assuming the due
authorization, execution and delivery of the Warrant Agreement by the Warrant
Agent) subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law);
(xiv) The Warrant Shares to be issued upon the exercise of the Warrants
have been duly authorized and reserved for issuance by the Company and, when
issued and delivered against payment of the exercise price as provided in the
Warrant Agreement, the Warrant Shares will have been validly issued and will be
fully paid and nonassessable and the issuance of the Warrant Shares will not be
subject to any preemptive rights;
22
(xv) The Registration Agreement has been duly authorized and validly
executed and delivered by the Company and is a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
(assuming the due authorization, execution and delivery of the Registration
Agreement by ▇▇▇▇▇▇▇ ▇▇▇▇▇, the Initial Purchasers and the investors listed
thereto), subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law);
(xvi) The Convertible Note Purchase Agreement has been duly authorized
and validly executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms (assuming the due authorization, execution and delivery of the Convertible
Note Purchase Agreement by ▇▇▇▇▇▇▇ ▇▇▇▇▇), subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles regardless of whether such principles are enforceable at
law or equity.
(xvii) The Convertible Notes have been duly authorized by the Company
and, when executed and authenticated in accordance with the terms of the
Convertible Note Purchase Agreement and, upon delivery to ▇▇▇▇▇▇▇ ▇▇▇▇▇ of the
Convertible Notes against payment therefor in accordance with the terms of the
Convertible Note Purchase Agreement, the Convertible Notes will be entitled to
the benefits of the Convertible Note Purchase Agreement and will be valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms (assuming the due authorization, execution and
delivery of the Convertible Note Purchase Agreement by ▇▇▇▇▇▇▇ ▇▇▇▇▇), subject
to the qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles regardless of whether such
principles are enforceable at law or equity.
(xviii) None of (A) the issuance, offer, sale or delivery of the Units,
(B) the execution, delivery or performance of this Agreement or the other
Operative Documents, or (C) the consummation by the Company of the transactions
contemplated hereby or thereby, (1) requires any consent, approval,
authorization or other order of, or registration or filing with, any United
States federal, state or local court, regulatory body, administrative agency or
other governmental body, agency or official (except such as may be required in
connection under the securities or Blue Sky laws of various jurisdictions and
except as may be required under the Communications Act of 1934, as amended by
the Telecommunications Act of 1996 or the rules, regulations and written
policies of the FCC ("U.S. Telecommunications Law") as to which no opinion is
---------------------------
given), (2) conflicts with or constitutes a breach of, or a default under, the
certificate of incorporation or by-laws of the Company or USA, (3) conflicts
with or constitutes a breach of, or a default under, any agreement, indenture,
lease or other instrument, to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, which is identified as material to the Company and the Subsidiaries,
taken as a whole, as set forth in an Officers' Certificate attached as an
exhibit to such opinion (the "Exhibit"), and which has not been waived prior to
-------
the date of such opinion, (4) violates the Delaware General Corporation Law or
any U.S. federal (other than U.S. Telecommunications Law of which such counsel
need not express an opinion) or Colorado statute, law, regulation or filing
applicable to the Company or USA or any of their respective properties, (5) to
our knowledge, violates any judgment, injunction, order or decree applicable to
the Company or USA or any of their respective properties or (6) will result in
the
23
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or USA pursuant to the terms of any agreement or
instrument set forth in the Exhibit;
(xix) To the knowledge of such counsel, there are no material
agreements, contracts, indentures, leases or other instruments, that are not
described in the Offering Memorandum (or any amendment or supplement thereto);
(xx) The statements under the captions "Description of Capital Stock,"
"Description of Units," "Description of Notes," "Description of Warrants,"
"Certain United States Federal Income Tax Consequences" and "Notice to
Investors" in the Offering Memorandum, insofar as such statements constitute a
summary of legal matters or documents, are accurate in all material respects and
present fairly the information set forth therein with respect to such legal
matters and documents;
(xxi) No registration of any of the Securities under the Securities Act
is required for the sale of the Units to the Initial Purchasers as contemplated
in this Agreement or for the Exempt Resales (assuming the accuracy of the
Initial Purchasers' representations in Section 2 hereof and those of the Company
in this Agreement and compliance by them with their respective agreements
contained herein (it being understood that no opinion is being expressed as to
any resale subsequent to the Exempt Resales or any resale of the Securities by
any person other than the Initial Purchasers));
(xxii) The Company is not and, after giving effect to the Offering and
sale of the Units and the application of the net proceeds thereof as described
in the Offering Memorandum, will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xxiii) (A) Neither the Company nor USA is in violation in respect of
its respective certificate of incorporation or by-laws, and (B) neither the
Company nor any of the Subsidiaries is currently in default in the performance
of any obligation, agreement or condition contained in any agreement, indenture,
lease or other instrument set forth in the Exhibit, except as disclosed in the
Offering Memorandum;
(xxiv) Except as described under the caption "Litigation" in the
Offering Memorandum and except as otherwise described in such opinion, to the
knowledge of such counsel based solely on inquiry of local counsel, with respect
to foreign proceedings and with respect to the Subsidiaries other than USA,
there are no legal or governmental proceedings, domestic or foreign, pending
against or affecting the Company or any of the Subsidiaries or to which any of
their respective properties is subject, that are not disclosed in the Offering
Memorandum;
(xxv) To the knowledge of such counsel, no holder of any security of the
Company or any of the Subsidiaries has any right to request or demand
registration of shares of Common Stock or any other security of the Company or
any of the Subsidiaries because of the consummation of the transactions
contemplated by this Agreement, the Warrant Agreement or the Notes Registration
Rights Agreement;
(xxvi) When the Units, Series A Notes and Warrants are issued and
delivered pursuant to this Agreement, no Unit, Series A Note or Warrant will be
of the same class (within the meaning of Rule 144(d)(3) under the Securities
Act) as any security of the Company that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted in a
United States automated interdealer quotation system; and
24
(xxvii) The Pledge Agreement creates a valid security interest in the
Pledged Collateral covered thereby under the Indenture and the Notes to the
extent that Article 9 of the Uniform Commercial Code of the State of New York
(the "Code") is applicable thereto, securing payment of the Obligations (as
defined in the Pledge Agreement). Assuming ownership by the Company of the
Pledged Collateral and that the Collateral Agent has taken the Pledged Stock in
good faith without notice (actual or constructive) of any adverse claim within
the meaning of the Code, the Pledge Agreement, together with the delivery of any
Pledged Collateral represented by certificates to the Collateral Agent in the
State of New York, together with an endorsement in blank, will result in the
creation and perfection of such security interest in the Pledged Collateral to
the extent that Article 9 is applicable, assuming the continuous possession of
such certificates thereafter in the State of New York by the Collateral Agent,
subject to the qualification that (A) in the case of proceeds (as such term is
defined in Section 9-306 of the Code), continuation of perfection of the
Collateral Agent's security interest therein is limited to the extent set forth
in Section 9-306 of the Code and (B) in the case of property that becomes
Pledged Collateral after the date hereof, Section 5522 of the Federal Bankruptcy
Code limits the extent to which property acquired by a debtor after the
commencement of a case under the Federal Bankruptcy Code may be subject to a
security interest arising from a security agreement entered into by the debtor
before the commencement of such case. No filings or recordings are required in
order to perfect the security interest created under the Pledge Agreement.
In addition, such counsel shall also state that such counsel has
participated in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company and the
Initial Purchasers at which the contents of the Offering Memorandum and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
(except as set forth in paragraph (xx) above), and has not made any independent
check or verification thereof, on the basis of the foregoing (relying as to
materiality to the extent such counsel deemed appropriate upon facts provided by
officers and other representatives of the Company), no facts have come to the
attention of such counsel that lead such counsel to believe that the Offering
Memorandum (as amended or supplemented), as of its date or as of the Closing
Date or the Option Date, as the case may be, contained or contains any untrue
statement of material fact or omitted or omits to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no belief or opinion with respect to the financial statements and
schedules and other financial and statistical data included therein).
(g) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion of ▇▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, communications counsel to the Company, dated the Closing Date
or the Option Closing Date, as the case may be, and addressed to the Initial
Purchasers and ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that:
(i) The statements under the caption "Business - Divestiture of the
United States Operations" in the Offering Memorandum, insofar as such statements
constitute a summary of legal matters, proceedings or documents, are accurate in
all material respects and present fairly the information set forth therein with
respect to such legal matters, proceedings and documents;
(ii) The Company holds licenses (the "FCC Licenses") authorizing the use
------------
of 430 900 MHz channels for the provision of SMR services;
(iii) The FCC Licenses have been validly issued and are in full force
and effect; the FCC Licenses expire on August 16, 2006;
25
(iv) Neither the Company nor USA is subject to any proceeding, or to
such counsel's knowledge, any pending or threatened complaint or investigation
by or before the Federal Communications Commission (the "FCC"); and
---
(v) None of (A) issuance, offer, sale or delivery of the Units, (B) the
execution and delivery of this Agreement or the other Operative Documents or (C)
the consummation by the Company of the transactions contemplated hereby or
thereby, (1) requires any consent, approval or authorization of, or filing with
the FCC or (2) violates or will violate the U.S. Telecommunications Law
applicable to the Company and the Subsidiaries.
(h) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion of Estudio ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ Canelo y Asociados, Peruvian counsel to the Company, dated the
Closing Date or the Option Closing Date, as the case may be, and addressed to
the Initial Purchasers and ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that:
(i) Each of CCC Holdings Peru, S.R.L., SMR Direct Peru S.R.L., Pompano
S.R.L., Telecom Supply S.R.L., C-Comunica, S.A. and Transnet del Peru, S.A.
(collectively, the "Peru Corporations") is a corporation or limitada duly
-----------------
incorporated and validly existing under the laws of Peru with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum;
(ii) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Peru Corporations have been duly authorized
and validly issued, are fully paid and nonassessable, and are wholly owned by
the Company indirectly through one or more of the Subsidiaries, free and clear
of any lien, adverse claim, security interest, equity or other encumbrance;
(iii) The statements under the caption "Business - Country-by-Country
Operations - Peru - Regulatory and Legal Overview" in the Offering Memorandum,
insofar as such statements constitute a summary of legal matters, proceedings or
documents, are accurate in all material respects and present fairly the
information set forth therein with respect to such legal matters, proceedings
and documents;
(iv) The Peru Corporations hold licenses (the "Peru Licenses")
authorizing the use of an aggregate of 144 800 MHz channels for the provision of
SMR service;
(v) The Peru Licenses have been validly issued and are in full force and
effect;
(vi) None of the Peru Corporations is subject to any proceeding, or to
the knowledge of such counsel, any pending or threatened complaint or
investigation by or before (A) the Organization for Supervision of Private
Investments in Telecommunications or (B) the Ministry of Transportation,
Communications, Housing and Construction;
(vii) To the knowledge of such counsel, none of the Peru Corporations
is in violation in respect of its respective certificate of incorporation, by-
laws or other organizational documents; and
(viii) None of (A) the issuance, offer, sale or delivery of the Units,
(B) the execution, delivery or performance of this Agreement or the other
Operative Documents, or (C) the consummation by the Company of the transactions
contemplated hereby or thereby, (1) requires any consent, approval,
authorization or other order of, or registration or filing with, any Peruvian
court, regulatory body, administrative agency or other governmental body, agency
or official, (2) conflicts
26
with or constitutes a breach of, or a default under, the estatutos of any of the
Peru Corporations, (3) violates any Peruvian statute, law, regulation or filing
applicable to Peru Corporations or any of their respective properties, (4)
violates any judgement, injunction, order or decree applicable to the Peru
Corporations or any of their respective properties, (5) will result in the
imposition of any lien, charge or encumbrance upon any property or assets of the
Peru Corporations pursuant to the terms of any agreement, or instrument to which
any of them is a party or to which any of them may be bound or to which any of
the property or assets of any of them is subject, except for such creations and
impositions as would not have, individually or in the aggregate, a Material
Adverse Effect or (6) violates the terms of any Peru Licenses;
(i) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion of Estudio ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, Ecuadorian counsel to the Company, dated the Closing Date or the Option
Closing Date, as the case may be, and addressed to the Initial Purchasers and
▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that:
(i) Each of Centennial Ecuador S.A. and Brunacci Compania Ltda.
(collectively, the "Ecuador Corporations") is a corporation or limitada duly
--------------------
incorporated and validly existing under the laws of Ecuador with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum;
(ii) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Ecuador Corporations have been duly
authorized and validly issued, are fully paid and nonassessable, and are wholly
owned by the Company indirectly through one or more of the Subsidiaries, free
and clear of any lien, adverse claim, security interest, equity or other
encumbrance;
(iii) The statements under the caption "Business - Country-by-Country
Operations - Ecuador - Regulatory and Legal Overview" in the Offering
Memorandum, insofar as such statements constitute a summary of legal matters,
proceedings or documents, are accurate in all material respects and present
fairly the information set forth therein with respect to such legal matters,
proceedings and documents;
(iv) The Ecuador Corporations hold licenses (the "Ecuador Licenses")
----------------
authorizing the use of 195 800 MHz channels for the provision of SMR service and
frequency contracts (the "Contracts," and together with the Ecuador Licenses,
---------
the "Ecuador Approvals") relating to 180 of such channels;
-----------------
(v) Each of the Ecuador Licenses and the Contracts have been validly
issued and are in full force and effect;
(vi) None of the Ecuador Corporations is subject to any proceeding, or
to the knowledge of such counsel, any pending or threatened complaint or
investigation by or before (A) the Consejo Nacional de Telecomunicaciones or (B)
the Secretaria Nacional de Telecomunicaciones;
(vii) To the knowledge of such counsel, none of the Ecuador Corporations
is in violation in respect of its respective certificate of incorporation, by-
laws or other organizational documents;
(viii) None of (A) the issuance, offer, sale or delivery of the Units,
(B) the execution, delivery or performance of this Agreement or the other
Operative Documents, or (C) the
27
consummation by the Company of the transactions contemplated hereby or thereby,
(1) requires any consent, approval, authorization or other order of, or
registration or filing with, any Ecuadorian court, regulatory body,
administrative agency or other governmental body, agency or official, (2)
conflicts with or constitutes a breach of, or a default under, the estatutos of
either of the Ecuador Corporations, (3) violates any Ecuadorian statute, law,
regulation or filing applicable to the Ecuador Corporations or any of their
respective properties, (4) violates any judgement, injunction, order or decree
applicable to the Ecuadorian Corporations or any of their respective properties,
(5) will result in the imposition of any lien, charge or encumbrance upon any
property or assets of the Ecuador Corporations pursuant to the terms of any
agreement, or instrument to which any of them is a party or to which any of them
may be bound or to which any of the property or assets of any of them is
subject, except for such creations and impositions as would not have,
individually or in the aggregate, a Material Adverse Effect or (6) violates the
terms of any of the Ecuador Licenses or the Contracts;
(j) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion of ▇▇▇▇▇▇ and ▇▇▇▇▇▇,
Cayman Islands counsel to the Company, dated the Closing Date or the Option
Closing Date, as the case may be, and addressed to the Initial Purchasers and
▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that:
(i) Each of the Cayman Entities is an exempted company duly incorporated
and validly existing as a company limited by shares under the laws of the Cayman
Islands with full corporate power and authority under the laws of the Cayman
Islands to own, lease and operate its properties and to conduct its business in
accordance with its Memorandum and Articles of Association;
(ii) According to the corporate records in our possession, 100 shares in
SMR Direct Cayman Corp. have been issued to the Company and 100 shares in
Centennial Cayman Corp. have been issued to the Company, and such shares
constitute all of the outstanding shares of each company. Such shares have been
duly authorized and validly issued, and, assuming they have been paid for in
full, are fully paid and nonassessable;
(iii) Assuming the point is pleaded, in any proceedings taken in the
Cayman Islands for the enforcement of the provisions of the Pledge Agreement the
choice of the laws of New York as the governing law thereof will be recognized
and enforced;
(iv) Although there is not statutory enforcement in the Cayman Islands
of judgements obtained in courts of New York, the courts of the Cayman Islands
will recognize and enforce a foreign judgement of a court of competent
jurisdiction, based on the principle that a judgement of a competent foreign
court imposes on the judgement debtor an obligation to pay the sum for which
judgement has been given, and provided such judgement is final, conclusive, for
a liquidated sum not in respect of penalties or taxes or a fine or similar
fiscal or revenue obligations, and was not obtained in a manner, and is not of a
kind of enforcement of which is, contrary to natural justice or the public
policy of the Cayman Islands. Proceedings may be stayed by a Cayman Islands
court if concurrent proceeding are being brought elsewhere;
(v) The Pledge Agreement is in proper legal from under the laws of the
Cayman Islands for the enforcement thereof in the courts of the Cayman Islands
(subject to payment of applicable stamp duty in respect thereof);
(vi) State Street Bank and Trust Company would, in principle, have the
right to sue as a plaintiff in the courts of the Cayman Islands in respect of
the Pledge Agreement and would not be
28
subject to any conditions which are not applicable to persons within the
jurisdiction of the Cayman Islands, although, as a person outside the
jurisdiction, State Street Bank and Trust Company may be required to post
security for costs; and
(vii) Assuming that as a matter of New York law and all other relevant
laws (other than the laws of the Cayman Islands) the Pledge Agreement creates a
valid and binding fixed charge over the Pledge Collateral and that no further
steps are required as a matter of New York law or other relevant laws (other
than the laws of the Cayman Islands) to perfect such charge then (subject as
specified below) the courts of the Cayman Islands will recognize such security
interest over the Pledge Collateral. With respect to security over the Pledged
Collateral, the priority among competing equitable interests will, if Cayman
Islands domestic law is applied, be determined according to the time of creation
of the equitable interests and, accordingly, the security over the Pledged
Collateral, to the extent only an equitable interest is created, would rank
behind any pre-existing equitable interest in the Pledged Collateral. Such
security may also rank behind any security interest granted over the Pledged
Collateral in the nature of a legal mortgage and a bona fide purchaser for value
of the Pledged Collateral without notice of the security could obtain good title
to the Pledged Collateral. We would point out, however, that, in the light of
the English decisions in MacMillan Inc. v. Bishopsgate Trust (No. 3) [1996] 1
-------------------------------------------
W.L.R. 387 (which would be persuasive, though technically not binding, in the
courts of the Cayman Islands) it does not necessarily follow that, as a matter
of Cayman Islands conflict of laws rules, priorities of competing interests in
the Pledged Collateral will be determined according to Cayman Islands domestic
rules as the jurisdiction of incorporation of the relevant company since that
case suggests that in certain circumstances the issue of priority may be
determined according to the laws of the jurisdiction where the register of
members of a company is situated or the laws of the jurisdiction where the
relevant share certificates are situated. Save as aforesaid, no filing,
registration or other action is necessary in the Cayman Islands to effect or
perfect the security granted in respect of the Pledged Collateral pursuant to
the Pledge Agreement although notice to the Cayman Entities of the Pledge
Agreement should be given since in certain circumstances notice to the Cayman
Entities could affect priority. We would also note that the holders of an
equitable mortgage or charge over shares in a Cayman Islands company may obtain
temporary protection from the Cayman Islands courts by means of a stop notice
preventing the registration of the transfer of or payment of dividends on the
shares without the company first giving notice to the secured party, thus
enabling the secured party to then apply to the court for an injunction
restraining registration of the transfer of the shares or payment of the
dividend.
(k) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Initial Purchasers, dated the Closing Date or the Option Closing
Date, as the case may be, and addressed to the Initial Purchasers and ▇▇▇▇▇▇▇
▇▇▇▇▇, with respect to the Offering Memorandum and such other related matters as
the Initial Purchasers may reasonably request, and such counsel shall have
received such certificates, documents and information as they may reasonably
request to enable them to pass upon such matters.
(l) The Initial Purchasers shall have received letters addressed to the
Initial Purchasers, and dated the date hereof and the Closing Date or the Option
Closing Date, as the case may be, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, independent
certified public accountants, substantially in the forms heretofore approved by
the Initial Purchasers.
(m) The Initial Purchasers shall have received a certified check or a
wire transfer of immediately available funds, in the amount of $350,000, from
the Company, representing fees for advisory services rendered to the Company in
connection with the Convertible Note Offering.
29
(n) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Securities Act, that (i) it is downgrading its rating assigned
to any class of securities of the Company or (ii) it is reviewing its ratings
assigned to any class of securities of the Company with a view to possible
downgrading, or with negative implications, or direction not determined.
(o) The Company and the Trustee shall have entered into the Indenture
and each of the Initial Purchasers shall have received counterparts, conformed
as executed, thereof.
(p) The Company shall have executed the Notes Registration Rights
Agreement and each of the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.
(q) The Company and the Collateral Agent shall have entered into the
Pledge Agreement and each of the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(r) The Company and the Warrant Agent shall have entered into the
Warrant Agreement and each of the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(s) The Company and the Escrow Agent shall have entered into the Escrow
Agreement and each of the Initial Purchasers shall have received counterparts,
conformed as executed thereof.
(t) The Registration Agreement shall have been executed by the Company
and the investors holding at least 51% of the Company's capital stock listed
thereto and each of the Initial Purchasers shall have received counterparts,
conformed as executed thereof.
(u) The Units, Series A Notes, Warrants and Warrant Shares shall have
been approved for trading on PORTAL.
(v) The Senior Note Conversion and the Senior Note Release shall be
consummated prior to, or simultaneously with, the closing of the offering of
Initial Units and the Convertible Notes on substantially the terms described in
the Offering Memorandum.
(w) The Convertible Note Offering shall be consummated prior to, or
simultaneously with, the closing of the offering of Initial Units on
substantially the terms described in the Offering Memorandum and the Initial
Purchasers shall have received counterparts, conformed as executed of the
Convertible Note Purchase Agreement and the Convertible Notes and such other
documentation as they deem necessary to evidence the consummation thereof.
(x) Each holder of shares of (i) Common Stock, (ii) Series A Preferred
Stock, par value $0.01 per share, of the Company (the "Series A Preferred")
------------------
(iii) Series B Preferred Stock, par value $0.01 per share, of the Company (the
"Series B Preferred"), (iv) Senior Secured Convertible Notes due 2002 (the
------------------
"Existing Notes") of the Company and/or (v) Series C Preferred Stock, par value
--------------
$0.01 per share, of the Company (the "Series C Preferred") shall have waived
------------------
permanently all of their preemptive and similar rights that may be applicable or
relate to (1) the transactions contemplated by this Agreement, (2) the exercise
of the Warrants and (3) the issuance of the Warrant Shares and the Initial
Purchasers shall have received evidence satisfactory to the Initial Purchasers
of the consummation thereof.
(y) The Certificate of Designations with respect to the Series A
Preferred, the Series B
30
Preferred and the Series C Preferred shall have been amended to provide that no
shares of Series A Preferred, Series B Preferred or Series C Preferred will be
required to be redeemed prior to January 1, 2006 and the Company shall deliver
to the Initial Purchasers copies of the amendments to the Certificates of
Designations required under Delaware law to be filed in order to effect such
amendments, in each case, as certified by the Secretary of State of the State of
Delaware. All corporate action (including, without limitation, shareholder
action) necessary in connection with the amendment of the Certificate of
Designations of the Series A Preferred, the Series B Preferred and the Series C
Preferred shall have been taken and the Initial Purchasers shall have received
evidence satisfactory to the Initial Purchasers of the taking thereof.
(z) The Company shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers and counsel for the Initial
Purchasers. Any certificate or document signed by any officer of the Company
and delivered to the Initial Purchasers, or to counsel for the Initial
Purchasers, shall be deemed a representation and warranty by the Company to the
Initial Purchasers as to the statements made therein. Each of the Initial
Purchasers understands that the Company and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Sections 7(f) and 7(k) hereof,
counsel to the Company and counsel to the Initial Purchasers, will rely upon the
accuracy and truth of the foregoing representations and agreements and each
Initial Purchaser hereby consents to such reliance.
8. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction of the
Offering Memorandum (including financial statements thereto), and each amendment
or supplement to any of them, the Status Report, this Agreement and the
Indenture; (ii) the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies of
the Offering Memorandum, the Preliminary Offering Memorandum, the Status Report,
and all amendments or supplements to any of them as may be reasonably requested
for use in connection with the offering and sale of the Units; (iii) the
preparation, printing, authentication, issuance and delivery of certificates for
the Securities, including any stamp taxes in connection with the original
issuance and sale of the Securities; (iv) the printing (or reproduction) and
delivery of this Agreement, the preliminary and supplemental Blue Sky Memoranda
and all other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Units; (v) the application for quotation of
the Units, Series A Notes, Warrants and Warrant Shares on the PORTAL market;
(vi) the qualification of the Units, Series A Notes and Warrants for offer and
sale under the securities or Blue Sky laws of the several states as provided in
Section 4(e) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Initial Purchasers relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such qualification); (vii) the performance by the Company of its
obligations under the Notes Registration Rights Agreement; and (viii) the fees
and expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company. The Company hereby
agrees that it will pay in full on the Closing Date and the Option Closing Date
the fees and expenses referred to in clause (vi) of this Section 8 by delivering
to counsel for the Initial Purchasers on such date a check payable to such
counsel or wire transfer of immediately available funds in the requisite amount.
9. Effective Date of Agreement. This Agreement shall become effective
upon the execution and delivery hereof by all the parties hereto.
31
10. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Company, by notice to the
Company, if prior to the delivery and payment for the Securities, (i) trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market shall have been suspended or materially limited,
(ii) a general moratorium on commercial banking activities in the United States
or New York shall have been declared, or (iii) there shall have occurred any
outbreak or escalation of hostilities or other U.S. or international calamity,
crisis or change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it, in
the judgment of the Initial Purchasers, impracticable or inadvisable to commence
or continue the offering of the Units on the terms set forth on the cover page
of the Offering Memorandum or to enforce contracts for the resale of the Units
by the Initial Purchasers. Notice of such termination may be given to the
Company by telecopy or telephone and shall be subsequently confirmed by letter.
11. Information Furnished by the Initial Purchasers. The statements set
forth in (i) the stabilization legend on the inside front cover and the last
paragraph on the cover page of the Preliminary Offering Memorandum and Offering
Memorandum and (ii) the first, third and fourth sentence of the third paragraph,
and the fourth sentence of the fourth paragraph under the caption entitled "Plan
of Distribution" of the Preliminary Offering Memorandum and the Offering
Memorandum, constitute the only information furnished by or on behalf of the
Initial Purchasers as such information is referred to in Sections 5(b) and 6
hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4, 9 and 10
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Financial Officer, or (ii) if to the Initial Purchasers, to Salomon
Brothers Inc, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Manager,
Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Initial Purchasers and the Company, their respective directors, their respective
officers and the controlling persons referred to in Section 6 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from the Initial Purchasers of any of
the Securities in his status as such purchaser.
13. Applicable Law; Counterparts; Facsimile. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York
and without regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto. This
Agreement may be executed by facsimile.
32
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
Very truly yours,
Centennial Communications Corp
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:Chief Financial
Officer
Confirmed as of the date first
above mentioned.
Salomon Brothers Inc
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Prudential Securities Incorporated
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
33
SCHEDULE I
CENTENNIAL COMMUNICATIONS CORP.
Initial Purchaser Number of Units
----------------- ---------------
Salomon Brothers Inc 28,000
Prudential Securities Incorporated 12,000
------
Total 40,000
======
34
SCHEDULE II
SUBSIDIARIES
SMR Direct USA, Inc.
SMR Direct Cayman Corp.
Centennial Cayman Corp.
CCC Holdings Peru, S.R.L.
Centennial Cayman Corp. Chile, Ltda.
Radioservicios Moviles, S.A.
Centennial Ecuador, S.A.
Centennial Telecomunicacions de Venezuela, S.A.
SMR Direct Peru, S.R.L.
▇▇▇▇▇▇▇, S.R.L.
C-Comunica S.A.
Telecom Supply S.R.L.
Brunacci Compania Ltda.
Transnet del Peru, S.A.
Chilean entity (subject to confidentiality restrictions)
35
EXHIBIT A
NOTES REGISTRATION RIGHTS AGREEMENT
36