STARTEC GLOBAL COMMUNICATIONS CORPORATION
160,000 UNITS CONSISTING OF
$160,000,000 12% SENIOR NOTES DUE 2008
AND WARRANTS TO PURCHASE 200,226 SHARES OF COMMON STOCK
PURCHASE AGREEMENT
Xxxxxx Brothers Inc., May 18, 1998
As Representative of the Initial
Purchasers named in Schedule I,
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Startec Global Communications Corporation, a Maryland
corporation (the "Company"), proposes to sell to you (the "Representative") and
the other purchasers named in Schedule I hereto (collectively, the "Initial
Purchasers") an aggregate of 160,000 units (the "Units"), each consisting of
$1,000 principal amount of the Company's 12% Senior Notes due 2008 (the "Notes")
and a warrant (all such warrants, in the aggregate, the "Warrants") to purchase
1.25141 shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"). The Notes will be issued pursuant to an Indenture to be dated
as of May 21, 1998 (the "Indenture") between the Company and First Union
National Bank, as trustee (the "Trustee"). The Warrants will be issued pursuant
to a Warrant Agreement to be dated as of May 21, 1998 (the "Warrant Agreement")
between the Company and First Union National Bank, as warrant agent (the
"Warrant Agent"). Capitalized terms used but not defined in this Agreement shall
have the meaning given to such terms in the Indenture.
The Units will be offered and sold without being registered
under the Securities Act of 1933, as amended (the "Securities Act"), in reliance
on exemptions therefrom.
The Initial Purchasers and the Company will enter into a
Registration Rights Agreement, to be dated as of the Closing Date (the
"Registration Rights Agreement") to be substantially in the form attached hereto
as Exhibit A.
The holders of the Notes and their direct and indirect
transferees will be entitled to the benefits of a Collateral Pledge and Security
Agreement, to be dated the Closing Date (the "Pledge Agreement"), from the
Company to the Trustee, whereby the Company will deposit with the Trustee an
amount in cash or U.S. Government Obligations equal to the required payment of
the first six scheduled interest payments on the Notes.
In connection with the offer of the Notes, the Company has
prepared a preliminary offering memorandum (the "Preliminary Memorandum") and in
connection with the sale of the Units will prepare a final offering memorandum
(the "Memorandum" and together with the Preliminary Memorandum, the "Offering
Documents") setting forth or including a description of the terms of the Notes
(and, in the case of the Memorandum, the Units and the Warrants), the terms of
the offering, a description of the Company and any material developments
relating to the Company occurring after the date of the most recent financial
statements included therein.
1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with the Initial Purchasers
that, as of the date hereof:
(a) The Preliminary Memorandum as of its date did
not, and the Memorandum at the date hereof, does not,
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and at the Closing Date (as defined), will not, contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this Section 1(a) do not apply to
statements or omissions in the Offering Documents based upon
information furnished to the Company in writing by or on behalf of the
Initial Purchasers expressly for use therein. No order preventing the
use of any of the Offering Documents, or any amendment or supplement
thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act of 1933 or any state securities or
blue sky laws has been issued.
(b) Assuming (i) that the representations and warranties of
the Initial Purchasers in Sections 3 and 6 hereof are true and correct
and (ii) compliance by the Initial Purchasers with the covenants set
forth in Sections 3 and 6 hereof, it is not required by applicable law
or regulation in connection with the offer, sale and delivery of the
Units to you in the manner contemplated by this Agreement and the
Memorandum to register the Units, Notes or Warrants under the
Securities Act or to qualify the Indenture in respect of the Notes
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(c) The Company, and each of the subsidiaries of the Company
has been duly organized and is validly existing and in good standing
under the laws of their respective jurisdictions of organization, is
duly qualified to do business and is in good standing in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification, except where
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the failure to be so qualified would not reasonably be expected to have
a material adverse effect on the consolidated financial position,
stockholder's equity, results of operations, business or property of
the Company and the subsidiaries of the Company taken as a whole (a
"Material Adverse Effect"), and each has all power and authority
necessary to own or hold its respective properties and to conduct the
business in which it is engaged.
(d) The Company has an authorized capitalization as set forth
in the Memorandum, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform in all material respects to the
description thereof contained in the Memorandum; all of the issued
shares of capital stock of each subsidiary of the Company (the "Equity
Interests") have been duly and validly authorized and issued and are
fully paid and nonassessable and the Equity Interests are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(e) The Warrant Agreement has been duly authorized and, when
duly executed and delivered by the proper officers of the Company
(assuming due execution and delivery by the Warrant Agent) and
delivered by the Company, will constitute a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, except (i) where the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors and other obligees generally, (ii)
where the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and
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principles and to the discretion of the court before which the
proceedings may be brought and (iii) where rights to indemnity and
contribution hereunder may be limited by applicable law and public
policy.
(f) The Warrants have been duly authorized and, when duly
executed, countersigned and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will be (x)
valid and binding obligations of the Company enforceable in accordance
with their terms, except (i) where the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors and other obligees generally and (ii)
where the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be
brought, and (y) entitled to the benefits of the Warrant Agreement. The
shares of Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares") have been duly reserved for issuance by the Company
and, upon the exercise of the Warrants and receipt by the Company of
the exercise price payable upon such exercise, the Warrant Shares will
be duly authorized, validly issued, fully paid and non-assessable and
will not have been issued in violation of preemptive or similar rights.
(g) The Indenture has been duly authorized and, when duly
executed and delivered by the proper officers of the Company (assuming
due execution and delivery by the Trustee) and delivered by the
Company, will constitute a valid and legally binding agreement of the
Company enforceable against the Company in accordance with its terms,
except (i) where the enforceability thereof may be limited by
bankruptcy, insolvency,
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reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to rights of creditors and other
obligees generally, (ii) where the remedy of specific performance and
other forms of equitable relief may be subject to certain equitable
defenses and principles and to the discretion of the court before which
the proceedings may be brought and (iii) for the waiver of rights and
defenses contained in Sections 111 and 514 of the Indenture.
(h) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming due execution and delivery by
the Initial Purchasers, constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, except (i) where the enforceability hereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors and other obligees generally, (ii)
where the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be
brought and (iii) where rights to indemnity and contribution hereunder
may be limited by applicable law and public policy.
(i) The Registration Rights Agreement has been duly authorized
by the Company, and when duly executed and delivered by the Company
(assuming due execution and delivery by the Initial Purchasers), will
constitute a valid and legally binding agreement of the Company
enforceable against the Company in accordance with its terms, except
(i) where the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating
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to rights of creditors and other obligees generally, (ii) where the
remedy of specific performance and other forms of equitable relief may
be subject to certain equitable defenses and principles and to the
discretion of the court before which the proceedings may be brought and
(iii) where rights to indemnity and contribution thereunder may be
limited by applicable law and public policy.
(j) The Pledge Agreement has been duly authorized by the
Company and, when duly executed and delivered by the Company (assuming
due execution and delivery by the Trustee and the Securities
Intermediary, as defined in the Pledge Agreement), will constitute a
valid and legally binding agreement of the Company enforceable against
the Company in accordance with its terms, except (i) where the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to rights of creditors and other
obligees generally, (ii) where the remedy of specific performance and
other forms of equitable relief may be subject to certain equitable
defenses and principles and to the discretion of the court before which
the proceedings may be brought and (iii) where rights to indemnity and
contribution thereunder may be limited by applicable law and public
policy; and upon the Closing Date, the pledge of Collateral (as defined
in the Pledge Agreement) securing the payment of the Obligations (as
defined in the Pledge Agreement) for the benefit of the Trustee and the
holders of the Notes will constitute a first priority perfected
security interest in such Collateral, enforceable against all creditors
of the Company and any persons purporting to purchase any of the
Collateral from the Company.
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(k) The Notes have been duly authorized and, when duly
executed, authenticated and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will be (x)
valid and binding obligations of the Company enforceable in accordance
with their terms, except (i) where the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors and other obligees generally, (ii)
where the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be
brought, and (iii) for the waiver of rights and defenses contained in
Sections 111 and 514 of the Indenture and (y) entitled to the benefits
of the Indenture and the Registration Rights Agreement.
(l) The Exchange Notes have been duly authorized and, when
executed, authenticated and delivered to the holders of Notes who
acquire such Exchange Notes pursuant to the Exchange Offer contemplated
by the Registration Rights Agreement, will be (x) valid and binding
obligations of the Company enforceable in accordance with their terms,
except (i) where the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
rights of creditors and other obligees generally, (ii) where the remedy
of specific performance and other forms of equitable relief may be
subject to certain equitable defenses and principles and to the
discretion of the court before which the proceedings may be brought,
and (iii) for the waiver of rights and defenses contained in Sections
111 and 514 of the Indenture and (y) entitled to the benefits of the
Indenture.
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(m) The execution, delivery and performance by the Company of
this Agreement, the Registration Rights Agreement, the Indenture, the
Pledge Agreement, the Warrant Agreement, the Warrants, the Notes and
the Exchange Notes, and the consummation by the Company of the
transactions contemplated herein (the "Transactions"), (i) will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company or any of the subsidiaries of the Company is a party or by
which the Company or any of the subsidiaries of the Company is bound or
to which any of the properties or assets of the Company or any of the
subsidiaries of the Company is subject, other than those agreements
identified on Schedule 1(m) hereto with respect to which the Company
has obtained or will prior to the Closing obtain waivers or consents to
the extent necessary to permit the consummation of the transactions
contemplated hereby and by the Warrant Agreement and the Registration
Rights Agreement, (ii) will not result in any violation of the
provisions of the charter or by-laws of the Company or any of the
subsidiaries of the Company, (iii) will not result in any violation of
any statute or order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, any of the
subsidiaries of the Company or any of their properties or assets and
(iv) except for such consents, approvals, authorizations, registrations
or qualifications as may be required (x) under applicable state
securities laws in connection with the purchase and sale of the Units,
Notes and Warrants by the Initial Purchasers, or (y) under applicable
federal or state securities laws in connection with the delivery of the
Exchange Notes pursuant to the Exchange Offer, or the registration of
the Notes or Exchange Notes pursuant to any Shelf
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Registration Statement, in each case as contemplated by the
Registration Rights Agreement, or in connection with the Warrant
Registration Statement contemplated by the Warrant Agreement, will not
require any consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body; provided,
however, that the Company shall not be in breach of this representation
where, with respect to clauses (i), (iii) and (iv) of this paragraph,
such conflicts, breaches, violations, defaults or failures to make or
obtain any consent, approval, qualification, authorization or order to
make such filing or registration would not have a Material Adverse
Effect.
(n) None of the Company or any of the subsidiaries of the
Company has sustained, since the date of the latest quarterly financial
statements included in the Memorandum, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and, since
such date, there has not been any change in the capital stock or
long-term debt of the Company or any of the subsidiaries of the Company
except as set forth in the Memorandum, or any Material Adverse Effect,
or any development or circumstances which could reasonably be expected
to result in a Material Adverse Effect.
(o) The financial statements (including the related notes)
included in the Offering Documents present fairly the financial
condition and results of operations of the entities purported to be
shown thereby, at the dates and for the periods indicated, and have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved (except that the unaudited financial statements may be subject
to normal
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year-end adjustments). The other financial and statistical data related
to the Company set forth in the Offering Documents (and any amendment
or supplement thereto) is, in all material respects, accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company. The industry,
customer and statistical data and estimates included in the Memorandum
are based on or derived from sources that the Company believes are
reliable and accurate in all material respects.
(p) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company, whose report is included in the Memorandum
and who have delivered the initial letter referred to in Section 8(g)
hereof, are independent public accountants as required by the
Securities Act and the rules and regulations promulgated thereunder
(the "Rules and Regulations") during the periods covered by the
financial statements on which they reported contained in the
Memorandum.
(q) The Company and each of the subsidiaries of the Company
owns or possesses adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, license
applications and licenses ("Intellectual Property") which are necessary
for the conduct of their respective businesses and has no reason to
believe that the conduct of their respective businesses will conflict
with, and have not received any notice of any claim of conflict with,
any Intellectual Property or related rights of others, except as set
forth in the Memorandum or where (i) the failure to own or possess
adequate rights to use such Intellectual Property or (ii) such
conflicts, if any, would not have a Material Adverse Effect.
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(r) The Company and each of the subsidiaries of the Company
has good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by it, in each
case free and clear of all liens, encumbrances and defects, except such
as are described in the Memorandum or such as do not materially affect
the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and each
of the subsidiaries of the Company, and all real property and buildings
held under lease by the Company and each of the subsidiaries of the
Company are held by it under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the
Company and each of the subsidiaries of the Company.
(s) There are no legal or governmental proceedings pending to
which the Company or any of the subsidiaries of the Company is a party
or of which any property or asset of the Company or any of the
subsidiaries of the Company is the subject which, if determined
adversely to the Company or any of the subsidiaries of the Company,
could reasonably be expected to have a Material Adverse Effect; and to
the best of the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others
that are required to be disclosed in the Memorandum which are not so
disclosed.
(t) No relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company, on the other hand,
which is required to be disclosed in the Memorandum which is not so
disclosed.
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(u) Since the date as of which information is given in the
Memorandum through the date hereof, and except as may otherwise be
disclosed in the Memorandum, the Company has not (i) issued or granted
any securities, other than in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, or in
connection with a dividend reinvestment or stock purchase plan, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course
of business, (iii) entered into any transaction not in the ordinary
course of business or (iv) declared or paid any dividend on capital
stock.
(v) None of the Company or any of the subsidiaries of the
Company (i) is in violation of its charter or by-laws (ii) is in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any time period, covenant or
condition contained in any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a party
or by which it is bound or to which any of its properties or assets is
subject, including, without limitation, operating agreements, except
where it would not reasonably be expected to have a Material Adverse
Effect, or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it or
its properties or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its properties or
assets or to the conduct of its business, except where it
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would not reasonably be expected to have a Material
Adverse Effect.
(w) None of the Company or any of the subsidiaries of the
Company, or, to the best knowledge of the Company, any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or any of the subsidiaries of the Company, has
used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(x) None of the Company or any subsidiary of the Company is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission (the
"Commission") thereunder (the "Investment Company Act").
(y) None of the Company or any of the affiliates of the
Company (each, as defined in Rule 501(b) of Regulation D under the
Securities Act, an "Affiliate") has directly, or through any agent
(other than the Initial Purchasers in connection with this Agreement),
(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 sale of the Units, the
Notes or the Warrants in a manner that would require the registration
under the Securities Act of the Units, the Notes or the Warrants, or
(ii) engaged or will engage in any form of general solicitation or
general
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advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Units, the Notes
and the Warrants, or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
(z) None of the Company, the Affiliates or any person acting
on its or their behalf (other than the Initial Purchasers in connection
with this Agreement) has engaged or will engage in any directed selling
efforts (as that term is defined in Regulation S under the Securities
Act ("Regulation S")) with respect to the Units, the Notes or the
Warrants and each of the Company and its Affiliates and any person
acting on its or their behalf (other than the Initial Purchasers in
connection with this Agreement) has complied and will comply with the
offering restrictions requirement of Regulation S.
(aa) Other than as disclosed in the Offering Documents, no
holder of any security of the Company or any of its subsidiaries will
have, as of the Closing Date, any right to require registration of any
security of the Company or any of its subsidiaries, other than those
agreements identified on Schedule 1(m) hereto with respect to which the
Company has obtained or prior to the Closing will obtain waivers or
consents permitting the consummation of the transactions contemplated
by the Registration Rights Agreement and the Warrant Agreement without
participation of any holders of rights thereto.
(ab) Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is
any dispute threatened, in each case which would have a Material
Adverse Effect.
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(ac) Neither the Company nor any of its subsidiaries has
violated any safety or similar law applicable to its business, nor any
federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable federal or state wages
and hours laws, nor any provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the rules and
regulations promulgated thereunder, except for such instances of
noncompliance that, either singly or in the aggregate would not have a
Material Adverse Effect.
(ad) The Company and each of its subsidiaries is in compliance
with all applicable existing federal, state, local and foreign laws and
regulations (collectively, "ENVIRONMENTAL LAWS") relating to protection
of human health or the environment or imposing liability or standards
of conduct concerning any Hazardous Material (as defined below), except
for such instances of noncompliance that, either singly or in the
aggregate, would not have a Material Adverse Effect. The term
"HAZARDOUS MATERIAL" means (i) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (iii) any petroleum
or petroleum product, (iv) any polychlorinated biphenyl and (v) 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. To the knowledge of the Company, there is
no alleged or potential liability (including, without limitation,
alleged or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) of the Company or any of its
subsidiaries arising out of, based on, or resulting from (A) the
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presence or release into the environment of any Hazardous Material at
any location currently or previously owned by the Company or any of its
subsidiaries or at any location currently or previously used or leased
by the Company or any of its subsidiaries, or (B) any violation or
alleged violation of any Environmental Law, except, in each case,
alleged or potential liabilities that, singly or in the aggregate,
would not have a Material Adverse Effect.
(ae) All income tax returns required to be filed by the
Company or any of its subsidiaries in any jurisdiction have been filed,
and all taxes (including, but not limited to, withholding taxes,
penalties and interest, assessments, fees and other charges due or
claimed to be due from any taxing authority) shown to be due on such
returns have been paid other than those (i) being contested in good
faith and for which adequate reserves have been provided, or (ii)
currently payable without penalty or interest.
(af) Except as, singly or in the aggregate, would not have a
Material Adverse Effect, (i) the Company and its subsidiaries, have (A)
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities (federal, foreign, state or local)
("PERMITS") as are necessary to own, lease and operate their properties
and to conduct their businesses as presently conducted, and (B)
fulfilled and performed all of their material obligations with respect
to the Permits, and (ii) no event has occurred that would allow, or
after notice or lapse of time would allow, revocation or termination of
any Permit or that would result in any other material impairment of the
rights granted to the Company or any of its subsidiaries under any
Permit, and the Company has no reason to believe that any governmental
body or agency
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is considering limiting, suspending or revoking any Permit.
(ag) The Company and its subsidiaries maintain adequate
insurance for their businesses and the value of their properties and
all such insurance is outstanding and in force as of the date hereof.
(ah) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide assurance that: (i)
transactions are executed in accordance with management's general or
specific authorizations; (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; and (iii) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action
is taken with respect thereto.
(ai) When the Units are issued and delivered pursuant to this
Agreement, the Units, Notes and Warrants will not be of the same class
(within the meaning of Rule 144A under the Securities Act) as
securities of the Company that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation system.
(aj) Assuming (i) that the representations and warranties of
the Initial Purchasers in Sections 3 and 6 hereof are true, and (ii)
compliance by the Initial Purchaser with their covenants set forth in
Sections 3 and 6 hereof, the purchase and resale of the Units pursuant
hereto is exempt from the registration requirements of the Securities
Act.
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(ak) The execution and delivery of this Agreement, the
Registration Rights Agreement, the Indenture, the Pledge Agreement and
the Warrant Agreement and the sale of the Units to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code. The
representation made 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 Documents under the section
entitled "Notice to Investors."
(al) The Company understands that the Initial Purchasers and,
for purposes of the opinions to be delivered to the Initial Purchasers
pursuant hereto, counsel to the Company and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and the Company hereby consents to such reliance.
2. Purchase of the Units by the Initial Purchasers. (a) On the
basis of the representations and warranties herein contained, and subject to the
terms and conditions hereinafter set forth, the Company agrees to sell to the
Initial Purchasers and the Initial Purchasers agree, severally and not jointly,
to purchase from the Company, the respective number of Units set forth in
Schedule I hereto opposite their names at a purchase price of $970 per Unit.
(b) The Company shall not be obligated to deliver any of the
Units, except upon payment for all of the Units to be purchased as hereinafter
provided.
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3. Sale and Resale of the Units by the Initial Purchasers. (a)
You have advised the Company that you propose to offer the Units for resale upon
the terms and conditions set forth in this Agreement and in the Memorandum. You
hereby represent and warrant to, and agree with, the Company that you (i) are
purchasing the Units pursuant to a private sale exempt from registration under
the Securities Act, (ii) will not solicit offers for, or offer or sell, the
Units by means of any form of general solicitation or general advertising (as
such terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and (iii) will solicit offers for the Units only from, and will offer, sell
or deliver the Units, as part of their initial offering, only to (A) in the case
of offers inside the United States, persons whom you reasonably believe to be
qualified institutional buyers ("Qualified Institutional Buyers") as defined in
Rule 144A under the Securities Act, as such rule may be amended from time to
time ("Rule 144A") or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to you that each such account is a
Qualified Institutional Buyer, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, in each case, in transactions
under Rule 144A, and (B) in the case of offers outside the United States, to
persons other than U.S. persons (as defined in Regulation S) in accordance with
Rule 903 of Regulation S.
(b) In connection with the transactions described in
subsection (a)(iii)(B) of this Section 3, you have offered and sold the Units,
and will offer and sell the Units, (i) as part of your distribution at any time
and (ii) otherwise until the expiration of the applicable "distribution
compliance period" (as defined in Regulation S) (the "Restricted Period"), only
in accordance with Rule 903 of Regulation S and that you will not engage in
hedging
20
transactions with respect to the equity securities comprising part of the Units
unless conducted in compliance with the Securities Act. Accordingly, the Initial
Purchasers represent and agree that, with respect to the transactions described
in subsection (a)(iii)(B) of this Section 3, neither they, nor any of their
Affiliates, nor any person acting on their behalf has engaged or will engage in
any directed selling efforts with respect to the Units, and that they have
complied and will comply with the offering restrictions of Regulation S. The
Initial Purchasers agree that, at or prior to the confirmation of sale of the
Units pursuant to subsection (a)(iii)(B) of this Section 3, they shall have sent
to each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Units, Notes or Warrants from the Initial
Purchasers during the Restricted Period, a confirmation or notice to
substantially the following effect:
The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and (A) may not be
offered or sold within the United States or to, or for the account or
benefit of U.S. Persons (i) as part of their distribution at any time
or (ii) otherwise until the expiration of the applicable "distribution
compliance period", except pursuant to an effective registration
statement under the Securities Act or pursuant to an available
exemption, including Regulation S or Rule 144A under the Securities
Act, and (B) hedging transactions with respect to the equity securities
constituting part of the Units may not be conducted during the
applicable distribution compliance period except in accordance with the
Securities Act. The terms used above have the meaning given to them by
Regulation S.
21
(c) (i) You have not offered or sold and will not offer or
sell any Units to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers or Securities Regulations 1995 (the "Regulations"); (ii) you have
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by you in relation to the Units
in, from or otherwise involving the United Kingdom; and (iii) you have only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by you in connection with the issuance of the Units to a
person who is of a kind described in Section 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
such document may otherwise lawfully be issued or passed on.
(d) The Initial Purchasers understand that the Company, and
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
hereto, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchasers hereby consent to such reliance.
4. Delivery of and Payment for the Units. (a) Payment of the
purchase price for, and delivery of, the Units shall be made at the offices of
Weil, Gotshal & Xxxxxx LLP, New York, New York or at such other place as shall
be agreed upon by the Company and you, at 9:30 a.m. (New York time), on May 21,
1998 or at such other time or date as you and the Company shall determine (such
date and time of payment and delivery being herein called the "Closing Date").
22
(b) On the Closing Date, payment for the Units shall be made
in immediately available funds by wire transfer to such account as the Company
shall specify prior to the Closing Date or by such means as the parties hereto
shall agree prior to the Closing Date against delivery to you of the
certificates evidencing the Notes and Warrants that collectively comprise the
Units. Upon delivery, the Notes and Warrants shall be in definitive form and
registered in such names and in such denominations as you shall request in
writing not less than two full Business Days prior to the Closing Date. The
certificates evidencing the Notes and Warrants shall be delivered to you on the
Closing Date for the respective accounts of the Initial Purchasers, with any
transfer taxes payable in connection with the transfer of the Units to the
Initial Purchasers duly paid, against payment of the purchase price therefor.
For the purpose of expediting the checking and packaging of certificates
evidencing the Units, the Company agrees to make such certificates available for
inspection not later than 2:00 P.M. on the Business Day prior to the Closing
Date.
5. Further Agreements of the Company. The Company further
agrees:
(a) To furnish to you, without charge, during the period
referred to in paragraph (c) below, as many copies of the Memorandum
and any supplements and amendments thereto as you may reasonably
request.
(b) Prior to making any amendment or supplement to the
Memorandum, the Company shall furnish a copy thereof to the Initial
Purchasers and counsel to the Initial Purchasers and will not effect
any such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to the Company after a reasonable period of
review, which shall not in any
23
case be longer than three Business Days after receipt of such copy.
(c) If, at any time prior to completion of the distribution of
the Units by you to purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel
for you or counsel for the Company, to amend or supplement the
Memorandum in order that the Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or
if it is necessary to amend or supplement the Memorandum to comply with
applicable law, to promptly prepare such amendment or supplement as may
be necessary to correct such untrue statement or omission or so that
the Memorandum, as so amended or supplemented, will comply with
applicable law and to furnish you such number of copies as you may
reasonably request.
(d) So long as the Units, Notes or Warrants are outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act during any period in which it is not subject
to and in compliance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to furnish to
holders of the Units, Notes and Warrants and prospective purchasers of
the Units, Notes and Warrants 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.
(e) For a period of five years following the date of the
Memorandum to furnish to the Initial Purchasers copies of all public
reports and all reports and
24
financial statements furnished by the Company to the principal national
securities exchange upon which securities of the Company may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder.
(f) Promptly from time to time to take such action as the
Initial Purchasers may reasonably request to qualify the Units, Notes
and Warrants for offering and sale under the securities laws of such
jurisdictions as the Initial Purchasers may request and to comply with
such laws so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to complete the
distribution of the Units, Notes and Warrants; provided, however, 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, Notes and Warrants,
in any jurisdiction where it is not now so subject. In each
jurisdiction in which the Units, Notes and Warrants have been so
qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement. The Company will also
supply the Initial Purchasers with such information as is necessary for
the determination of the legality of the Units, Notes and Warrants for
investment under the laws of such jurisdictions as the Initial
Purchasers may reasonably request.
(g) Not to offer, sell, contract to sell or otherwise dispose
of any additional securities of the
25
Company substantially similar to the Units, Notes and Warrants (but not
including the Exchange Notes (as defined in the Registration Rights
Agreement)) or any securities convertible into or exchangeable for or
that represent the right to receive any such similar securities, other
than either the Units, Notes and Warrants to be sold hereunder or
securities issued upon conversion, exchange or exercise of securities
outstanding on the date of this Agreement, without the consent (which
consent shall not be unreasonably withheld) of the Initial Purchasers
during the period beginning from the date of this Agreement and
continuing for 180 days following the Closing Date.
(h) To use its best efforts to permit the Units, Notes and
Warrants to be designated Private Offerings, Resales and Trading
through Automated Linkages Market ("PORTAL") 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 Units, Notes and Warrants to be eligible for clearance
and settlement through The Depository Trust Company ("DTC").
(i) Except following the effectiveness of the Registration
Statement (as defined in the Registration Rights Agreement) and the
Warrant Registration Statement (as defined in the Warrant Agreement),
not to, and will cause its respective Affiliates not to, solicit any
offer to buy or offer to sell the Units, Notes and Warrants by means of
any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(j) Not to, and will cause its respective Affiliates not to,
sell, offer for sale or solicit
26
offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) in a transaction that could be
integrated with the sale of the Units, Notes and Warrants in a manner
that would require the registration under the Securities Act of the
Units, Notes and Warrants.
(k) To use reasonable best efforts to ensure that none of the
Company or any subsidiary of the Company shall become an "investment
company" within the meaning of such term under the Investment Company
Act.
(l) None of the Company, the Affiliates of the Company or any
person acting on its or their behalf (other than the Initial Purchasers
in connection with this Agreement) will engage in any directed selling
efforts (as that term is defined in Regulation S) with respect to the
Units, Notes and Warrants, and each of the Company and the Affiliates
of the Company and each person acting on its or their behalf (other
than the Initial Purchasers in connection with this Agreement) will
comply with the offering restrictions of Regulation S.
(m) The Company shall use its reasonable best efforts to cause
the Warrant Shares to be admitted for quotation in the Nasdaq Stock
Market.
6. Offering of Securities; Restrictions on Transfer. (a) Each
Initial Purchaser, severally and not jointly, represents and warrants that such
Initial Purchaser is a Qualified Institutional Buyer. Each Initial Purchaser,
severally and not jointly, agrees with the Company that (i) it will not solicit
offers for, or offer to sell, the Units, Notes and Warrants by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a
27
public offering within the meaning of Section 4(2) of the Securities Act and
(ii) it will solicit offers for such Units, Notes and Warrants only from, and
will offer such Units, Notes and Warrants only to, persons that it reasonably
believes to be, in the case of offers inside the United States, Qualified
Institutional Buyers and (B) in the case of offers outside the United States,
persons other than U.S. persons ("foreign purchasers," which term shall include
dealers or other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust)) that, in each case, in purchasing such Units, Notes and Warrants are
deemed to have represented and agreed as provided in the Memorandum in the
section entitled "Notice to Investors."
(b) Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees with respect to offers and sales outside the
United States that:
(i) it understands that no action has been or will be
taken in any jurisdiction by the Company that would permit a public
offering of the Units, Notes and Warrants, or possession or
distribution of either the Preliminary Memorandum or the Memorandum or
any other offering or publicity material relating to the Units, Notes
and Warrants, in any country or jurisdiction where action for that
purpose is required;
(ii) such Initial Purchaser will comply with all applicable
laws and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Units, Notes and Warrants or has in its possession or
distributes either the Preliminary Memorandum or the Memorandum or any
such other material, in all cases at its own expense;
(iii) the Units, Notes and Warrants have not been and will
not be registered under the Securities Act and
28
may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with
Regulation S under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act or pursuant to an
effective registration statement under the Securities Act;
(iv) such Initial Purchaser has offered the Units, Notes
and Warrants and will offer and sell the Units, Notes and Warrants (A)
as part of their distribution at any time and (B) otherwise until the
expiration of the applicable "distribution compliance period" (as
defined in Regulation S), only in accordance with Rule 903 of
Regulation S or another exemption from the registration requirements of
the Securities Act or pursuant to an effective registration statement
under the Securities Act. Accordingly, neither such Initial Purchaser,
its Affiliates nor any persons acting on its or their behalf has
engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Units, Notes and Warrants,
and any such Initial Purchaser, its Affiliates and any such persons has
complied and will comply with the requirements of Regulation S,
including the requirement that it will not conduct hedging transactions
with respect to the equity securities constituting part of the Units
during the applicable distribution compliance period except in
compliance with the Securities Act; and
(v) such Initial Purchaser has (A) not offered or sold and
will not offer or sell any Units, Notes and Warrants to persons in the
United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise
in circumstances which
29
have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Regulations; (B) complied and
will comply with all applicable provisions of the Financial Services
Act 1986 with respect to anything done by it in relation to the Units,
Notes and Warrants in, from or otherwise involving the United Kingdom;
and (C) only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the
issuance of the Units, Notes and Warrants to a person who is of a kind
described in Section 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom such document may otherwise lawfully be issued or passed on.
Terms used in this Section 6 have the meanings given to them by Regulation S.
7. Expenses. The Company agrees to pay all expenses incident
to the performance of its obligations under this Agreement, including: (i) the
costs incident to the authorization, issuance, sale and delivery of the Units,
Notes and Warrants and any taxes payable in that connection; (ii) the costs
incident to the preparation of the Offering Documents and any amendments or
supplements thereto; (iii) the fees and disbursements of the Company's counsel
and accountants and the Trustee and Warrant Agent and their counsel; (iv) the
qualification of the Units, Notes and Warrants under securities or Blue Sky
laws, including filing fees and the reasonable fees and disbursements of counsel
for the Initial Purchasers in connection therewith and in connection with the
preparation of any Blue Sky or legal investment memoranda; (v) the printing and
delivery to the Initial Purchasers in quantities as hereinabove stated of copies
of the Memorandum and any amendments or supplements thereto; (vi) the fees and
expenses, if any, incurred in connection with the admission of the Units, Notes
and
30
Warrants for trading in PORTAL or any other appropriate market system; (vii) the
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the Units, Notes and
Warrants; and (viii) all other costs and expenses incident to the performance of
the obligations of the Company hereunder.
8. Conditions to the Initial Purchasers' Obligations. The
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and on the Closing Date, of the representations and warranties of the
Company contained herein, to the performance by the Company of its respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Initial Purchasers shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Memorandum or any amendment or supplement thereto contains any untrue
statement of a fact which, in the opinion of Xxxx, Gotshal & Xxxxxx
LLP, counsel for the Initial Purchasers, is material or omits to state
any fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(b) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the
Registration Rights Agreement, the Pledge Agreement, the Indenture, the
Notes, the Warrant Agreement, the Warrants, the Memorandum and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to counsel
for the Initial Purchasers, and the Company shall have furnished to
such counsel all documents and information
31
that they may reasonably request to enable them to pass upon such
matters.
(c) Xxxxxxxx, Xxxxxxxx Xxxxx & Xxxxx LLP shall have furnished
to the Initial Purchasers its written opinion, as counsel to the
Company, addressed to the Initial Purchasers and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchasers, to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the Initial Purchasers may reasonably
request.
(d) Xxxxxx, Xxxx & Xxxxxx LLP shall have furnished to the
Initial Purchasers its written opinion, as regulatory counsel to the
Company, addressed to the Initial Purchasers and dated the Closing
Date, to the effect set forth in Exhibit C hereto and to such further
effect as counsel to the Initial Purchasers may reasonably request.
(e) You shall have received on the date hereof and the Closing
Date a letter, dated the date hereof and the Closing Date, as the case
may be, in form and substance reasonably satisfactory to you, from
Xxxxxx Xxxxxxxx LLP, independent public accountants, containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information, including the
financial information contained or incorporated by reference in the
Memorandum as identified by you.
(f) The Company shall have furnished to the Initial Purchasers
a certificate, dated the Closing Date, of the President or a Vice
President of the Company and the Treasurer or Chief Financial Officer
stating that:
32
(i) The representations, warranties and agreements
of the Company in Section 1 hereof are true and correct
as of the Closing Date and the Company has complied
with all its agreements contained herein;
(ii) (A) None of the Company or any of the
subsidiaries of the Company has sustained, since the
date of the latest quarterly financial statements
included in the Memorandum, any material loss or
interference with its business from fire, explosion,
flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or
governmental action, order or decree; or (B) since such
date there has not been any change in the capital stock
or long-term debt of the Company or any of the
subsidiaries of the Company, except as set forth in the
Memorandum; or (C) any Material Adverse Effect, or any
development or circumstance which could reasonably be
expected to result in a Material Adverse Effect; and
(iii) They have carefully examined the Offering
Documents and, in their opinion (A) none of the
Offering Documents, as of its date and as of the
Closing Date, included or includes any untrue statement
of a material fact or omitted or omits to state any
material fact necessary to make the statements therein,
in the light of the circumstances under which they were
made, not misleading, and (B) since the date of the
Memorandum, no event has occurred which was required
under the Securities Act to have been set forth in a
supplement or amendment to the Memorandum.
33
(g) (i) None of the Company or any of the subsidiaries of the
Company shall have sustained, since the date of the latest audited
financial statements included in the Memorandum, any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree or (ii) since
such date there shall not have been any change in the capital stock or
long-term debt of the Company or any of the subsidiaries of the Company
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and the
subsidiaries of the Company taken as a whole, otherwise than as set
forth or contemplated in the Memorandum, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable
or inadvisable to proceed with the offering or the delivery of the
Units, Notes and Warrants on the terms and in the manner contemplated
in the Memorandum.
(h) The Initial Purchasers shall have received on the Closing
Date the Registration Rights Agreement executed by the Company.
(i) Each of the Company and the Trustee shall have executed
and delivered the Notes, the Indenture and the Pledge Agreement on or
prior to the Closing Date.
(j) Each of the Company and the Warrant Agent shall have
executed and delivered the Warrants and the Warrant Agreement on or
prior to the Closing Date.
34
(k) The Initial Purchasers shall have received from Xxxx,
Gotshal & Xxxxxx LLP, counsel to the Initial Purchasers, such opinion
or opinions, dated the Closing Date, with respect to such matters as
the Initial Purchasers may reasonably require, and the Company shall
have furnished to such counsel such documents and information as they
may reasonably request for the purpose of enabling them to pass upon
such matters.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
9. Indemnification and Contribution. (a) The Company shall
indemnify and hold harmless each Initial Purchaser, its officers,
directors and agents and each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the Securities Act, from
and against any loss, claim, damage or liability, joint or several, or
any action in respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to purchases and sales of
Units, Notes and Warrants), to which such Initial Purchaser, officer,
director or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in (A) the
Preliminary Memorandum, the Memorandum or in any amendment or
supplement thereto or (B) any blue sky application or other document
prepared or executed by the Company (or based upon any written
information furnished by the Company) specifically for the purpose of
qualifying any or all of the Units, Notes and Warrants under the
securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue
Sky Application"), (ii) the
35
omission or alleged omission to state in the Preliminary Memorandum, the
Memorandum or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any act or failure to act, or any
alleged act or failure to act, by any Initial Purchaser in connection with, or
relating in any manner to, the Units, Notes and Warrants or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable in the case of any matter covered by this clause (iii) to the extent that
it is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted solely from any such act
or failure to act undertaken or omitted to be taken by such Initial Purchaser
through its gross negligence or wilful misconduct), and shall reimburse each
Initial Purchaser and each such officer, director or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by that Initial
Purchaser, officer, director or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred upon written
submission to the Company of documentation evidencing such incurrence; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Memorandum, the Memorandum or in any
such amendment or supplement, or in any Blue Sky Application in reliance upon
and in conformity with the written information concerning such Initial Purchaser
furnished to the Company by or on behalf of any Initial Purchaser specifically
for inclusion therein; provided, further, that the Company shall not be liable
to any Initial
36
Purchaser under the indemnity agreement in this paragraph (a) with respect to
the Preliminary Memorandum to the extent that any such loss, claim, damage or
liability of such Initial Purchaser results from the fact that such Initial
Purchaser sold Units, Notes and Warrants to a person as to whom it is
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Memorandum, or of the Memorandum as
then amended or supplemented, in any case where such delivery is required by the
Act if the Company has previously furnished copies thereof in sufficient
quantity to such Initial Purchaser and the loss, claim, damage or liability of
such Initial Purchaser results from an untrue statement or omission of a
material fact contained in the Preliminary Offering Memorandum which was
identified at such time to such Initial Purchaser and corrected in the
Memorandum or in the Memorandum as then amended or supplemented. The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Initial Purchaser or to any officer, director or
controlling person of that Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its directors and officers, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in (A) the Preliminary Memorandum, the
Memorandum or in any amendment or supplement thereto or (B) any Blue Sky
Application or (ii) the omission or alleged omission to state in the Preliminary
Memorandum, the Memorandum or in any amendment or supplement thereto, or in
37
any Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in the case of
clauses (i) and (ii) only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with the written information concerning such Initial Purchaser
furnished to the Company or the Trustee by or on behalf of that Initial
Purchaser specifically for inclusion therein, and shall reimburse the Company
and any such director, officer or controlling person promptly on demand for any
legal or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Initial Purchaser may otherwise have to the Company or
any such director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent the
indemnifying party has been materially prejudiced by such failure and provided
further that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under Section 9(a) or (b) hereof. If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it
38
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the indemnified party shall have the right to employ separate
counsel to represent jointly the indemnified party and its respective directors,
officers and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the indemnified party
against the indemnifying party under this Section 9 if such indemnified party
shall have been advised in writing that the representation of such indemnified
party and those directors, officers, and controlling persons by the same counsel
would be inappropriate under applicable standards of professional conduct due to
actual differing interests between them, and in that event the fees and expenses
of such separate counsel shall be paid by the indemnifying party. It is
understood that the indemnifying party shall not be liable for the fees and
expenses of more than one separate firm (in addition to local counsel in each
jurisdiction) for all indemnified parties in connection with any proceeding or
related proceedings. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 9(a) and 9(b), shall use its best efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
39
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment in favor of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss of liability by reason of such settlement or judgment in accordance with
this Section 9.
(d) If the indemnification provided for in this Section 9
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 9(a) or 9(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be 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 hand, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the Initial
Purchasers, on the other hand, with respect to such offering shall be deemed to
40
be in the same proportion as the total net proceeds from the offering of the
Units purchased under this Agreement (before deducting expenses) received by the
Company, on the one hand, and the total underwriting commissions and discounts
received by the Initial Purchasers with respect to the Units purchased under
this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the Units under this Agreement, in each case as set forth in the
table on the cover page of the Memorandum. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, on the one hand,
or the Initial Purchasers, on the other hand, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. Each of the Company and the Initial
Purchasers agrees that it would not be just and equitable if contribution
pursuant to this Section 9(d) were to be determined by pro rata allocation (even
if either the Initial Purchasers or the Company, as the case may be, were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 9(d) shall be deemed to include, subject to limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 9(d), no Initial
Purchaser shall be required to indemnify or contribute any amount in excess of
the amount by which the proceeds received by the Initial Purchasers from an
offering of the Units exceeds the amount of any damages which such Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission.
41
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. The remedies provided
for in this Section 9 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity. The Initial Purchasers' obligations to contribute as provided in this
Section 9(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) Each of the Initial Purchasers confirms and the Company
acknowledges that (i) the last paragraph on the cover page, (ii) the
stabilization legend on page (iv) and (iii) the fifth paragraph, the sixth
paragraph, the seventh, the ninth and the first two sentences of the eleventh
paragraph under the caption "Plan of Distribution" constitute the only
information concerning the Initial Purchasers furnished in writing to the
Company by or on behalf of the Initial Purchasers specifically for inclusion in
the Memorandum.
10. Default by Any Initial Purchaser. If, on the Closing Date,
any Initial Purchaser or Initial Purchasers shall fail or refuse to
purchase Units which it or they have agreed to purchase hereunder on
such date and the aggregate number of Units with respect to which such
default occurs is more than one-tenth of the aggregate number of Units
to be purchased on such date and arrangements satisfactory to the
Initial Purchasers and the Company for the purchase of such Units are
not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Initial
Purchaser or of the Company. In any such case, either you, on the one
hand, or the Company, on the other hand, shall have the right to
postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Memorandum or in any
other documents or arrangements that may be
42
effected. If, on the Closing Date, any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Units which it or they have agreed to purchase
hereunder on such date and the aggregate number of Units with respect to which
such default occurs is less than one-tenth of the aggregate number of Units to
be purchased on such date then the Company shall have the right to require each
non-defaulting Initial Purchaser to purchase the number of Units which such
Initial Purchaser agreed to purchase hereunder and, in addition, to require each
non-defaulting Initial Purchaser to purchase its pro rata share (based on the
total number of Units which such Initial Purchaser agreed to purchase hereunder)
of the Units of such defaulting Initial Purchaser or Initial Purchasers. The
term "Initial Purchaser," as used in this Agreement, shall include any person
substituted for a defaulting Initial Purchaser pursuant to this Section 10 with
like effect as if such person had originally been a party to this Agreement,
with respect to the Units. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
11. Termination. The obligations of the Initial Purchasers
hereunder may be terminated by them by notice given to and received by the
Company prior to delivery of and payment for the Units if, prior to that time,
(i) trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market shall have been
suspended or minimum prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking moratorium shall
have been declared by federal or New York State authorities, (iii) the United
States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv)
43
there shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
judgment of the Initial Purchasers, impracticable or inadvisable to proceed with
the offering or delivery of the Units on the terms and in the manner
contemplated in the Memorandum.
12. Reimbursement of Initial Purchaser's Expenses. If the sale
of Units provided for herein is not consummated because (i) any condition to the
obligations of the Initial Purchasers set forth in Section 8 hereof is not
satisfied in any material respect or (ii) of any refusal, inability or failure
on the part of the Company to perform any agreement herein or comply with any
provision hereof in any material respect other than by reason of a default by
the Initial Purchasers, the Company shall reimburse the Initial Purchasers for
the reasonable fees and expenses of its counsel and for such other out-of-pocket
expenses as shall have been incurred by them in connection with this Agreement
and the proposed purchase of the Units, and upon demand the Company shall pay
the full amount thereof to the Initial Purchasers. Notwithstanding the
foregoing, if this Agreement shall be terminated pursuant to Section 10 hereof,
the Company shall not then be under any liability to any Initial Purchaser
except as provided in Sections 7 and 9 hereof.
13. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be
delivered or sent by mail or facsimile transmission to:
44
Xxxxxx Brothers Inc.
Three World Financial Center
New York, New York 10285
Attention: Syndicate Department
(Fax: 000-000-0000); and
Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Registration Department
(Fax: 000-000-0000); and
ING Baring (U.S.) Securities, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Syndicate Department
(Fax: 000-000-0000); and
(b) if to the Company, shall be delivered or sent by mail or
facsimile transmission to the address of the Company set forth in the
Memorandum, Attention: Chief Financial Officer (Fax: 000-000-0000).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
14. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company, and their respective successors. The term "successor" shall not include
a purchaser, in its capacity as such, of the Units, Notes or Warrants from the
Initial Purchasers. This Agreement and the terms and provisions hereof are for
the sole benefit of only those persons, except that (x) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the officers and
directors of the
45
Initial Purchasers and the person or persons, if any, who control the Initial
Purchasers within the meaning of Section 15 of the Securities Act and (y) the
representations, warranties, indemnities and agreements of the Initial
Purchasers contained in this Agreement shall be deemed to be for the benefit of
directors and officers of the Company and any person controlling the Company
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 14, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Company, on the one hand, and the Initial
Purchasers, on the other hand, contained in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Units and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
16. Definition of the Term "Business Day." For purposes of
this Agreement, "Business Day" means any day on which the New York Stock
Exchange, Inc. is open for trading.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
46
19. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
47
If the foregoing correctly sets forth the agreement between
the Company and the Initial Purchasers, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By: ___________________________________
Name:
Title:
Accepted, May 18, 1998
XXXXXX BROTHERS INC.
Acting severally on behalf of itself
and the other Initial Purchasers
named in Schedule I hereto.
By: Xxxxxx Brothers Inc.
By: ___________________________
Name:
Title:
48
SCHEDULE I
Number of Units
Initial Purchaser To Be Purchased
----------------- ---------------
Xxxxxx Brothers Inc............................ 96,000
Xxxxxxx, Xxxxx & Co............................ 48,000
ING Baring (U.S.) Securities, Inc. ............ 16,000
------
Total......... 160,000
=======
EXHIBIT A
[INSERT COPY OF REGISTRATION RIGHTS AGREEMENT]
EXHIBIT B
FORM OF OPINION OF COUNSEL
TO THE COMPANY
TO BE DELIVERED PURSUANT TO SECTION 8(c)
(i) The Company and each of the subsidiaries of the Company have been duly
formed and are validly existing as corporations, in good standing under the laws
of their respective jurisdictions of organization, are duly qualified to do
business and are in good standing as foreign corporations in each jurisdiction
in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification and have all corporate power
and authority necessary to own or hold their respective properties and conduct
the businesses in which they are engaged as described in the Memorandum;
(ii) The Company has an authorized capitalization as set forth
in the Memorandum, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the description thereof
contained in the Memorandum; and all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and issued
and are fully paid, non-assessable and are owned directly or indirectly by the
Company, to such counsel's knowledge after due inquiry, free and clear of all
liens, encumbrances or claims;
(iii) To such counsel's knowledge after due inquiry, there are
no legal or governmental proceedings pending to which the Company or any of the
subsidiaries of
A-1
the Company is a party or of which any property or assets of the Company or any
of the subsidiaries of the Company is the subject which could reasonably be
expected to have a Material Adverse Effect on the Company and the subsidiaries
of the Company, taken as a whole, or on the power or ability of the Company to
perform its obligations under the Purchase Agreement, the Indenture, the Notes,
the Pledge Agreement, the Warrant Agreement, the Warrants or the Registration
Rights Agreement or to consummate the transactions contemplated by the
Memorandum; and, to such counsel's knowledge after due inquiry, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(iv) The Memorandum and any further amendments or supplements
thereto made by the Company prior to the Closing Date (other than the financial
statements, related schedules, notes and auditors' reports thereon and other
financial, accounting and statistical data and information contained therein or
omitted therefrom, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Securities Act and
the Rules and Regulations;
(v) To such counsel's knowledge after due inquiry, there are
no contracts or other documents which are required to be described in the
Memorandum by the Securities Act or by the Rules and Regulations which have not
been described in the Memorandum;
(vi) To such counsel's knowledge after due inquiry, there are
no statutes or regulations (other than those related to telecommunications
regulations, as to which such counsel need express no opinion) that are required
to be described in the Offering Memorandum that are not described as required.
A-2
(vii) The Indenture has been duly authorized and, when duly
executed and delivered by the proper officers of the Company (assuming due
execution and delivery by the Trustee) and delivered by the Company, will
constitute a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except (i) where the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to rights of creditors and other obligees generally, (ii) where
the remedy of specific performance and other forms of equitable relief may be
subject to certain equitable defenses and principles and to the discretion of
the court before which the proceedings may be brought and (iii) for the waiver
of rights and defenses contained in Sections 111 and 514 of the Indenture.
(viii) The Registration Rights Agreement has been duly
authorized by the Company, and when duly executed and delivered by the Company,
will constitute a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except (i) where the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to rights of creditors and other obligees generally, (ii) where
the remedy of specific performance and other forms of equitable relief may be
subject to certain equitable defenses and principles and to the discretion of
the court before which the proceedings may be brought and (iii) where rights to
indemnity and contribution thereunder may be limited by applicable law and
public policy.
(ix) The Pledge Agreement has been duly authorized by the
Company and, when duly executed and delivered by the Company, will constitute a
valid and legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except (i) where
A-3
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors and other obligees
generally, (ii) where the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be brought and
(iii) where rights to indemnity and contribution thereunder may be limited by
applicable law and public policy; and upon the Closing Date, the pledge of
Collateral (as defined in the Pledge Agreement) securing the payment of the
Obligations (as defined in the Pledge Agreement) for the benefit of the Trustee
and the holders of the Notes will constitute a first priority perfected security
interest in such Collateral, enforceable against all creditors of the Company
and any persons purporting to purchase any of the Collateral from the Company;
(x) The Notes have been duly authorized and, when executed,
authenticated and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be (x) valid and binding
obligations of the Company enforceable in accordance with their terms, except
(i) where the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors and other obligees
generally, (ii) where the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and principles and
to the discretion of the court before which the proceedings may be brought, and
(iii) for the waiver of rights and defenses contained in Sections 111 and 514 of
the Indenture and (y) entitled to the benefits of the Indenture and the
Registration Rights Agreement.
A-4
(xi) The Exchange Notes have been duly authorized and, when
executed, authenticated and delivered to the holders of Notes who acquire such
Exchange Notes pursuant to the Exchange Offer contemplated by the Registration
Rights Agreement, will be (x) valid and binding obligations of the Company
enforceable in accordance with their terms, except (i) where the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect relating
to rights of creditors and other obligees generally, (ii) where the remedy of
specific performance and other forms of equitable relief may be subject to
certain equitable defenses and principles and to the discretion of the court
before which the proceedings may be brought, and (iii) for the waiver of rights
and defenses contained in Sections 111 and 514 of the Indenture and (y) entitled
to the benefits of the Indenture.
(xii) The Warrant Agreement has been duly authorized and, when
duly executed and delivered by the proper officers of the Company (assuming due
execution and delivery by the Warrant Agent) and delivered by the Company, will
constitute a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except (i) where the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to rights of creditors and other obligees generally, (ii) where
the remedy of specific performance and other forms of equitable relief may be
subject to certain equitable defenses and principles and to the discretion of
the court before which the proceedings may be brought and (iii) where rights to
indemnity and contribution hereunder may be limited by applicable law and public
policy.
(xiii) The Warrants have been duly authorized and, when
executed, countersigned and delivered to and paid for
A-5
by the Initial Purchasers in accordance with the terms of this Agreement, will
be (x) valid and binding obligations of the Company enforceable in accordance
with their terms, except (i) where the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to rights of creditors
and other obligees generally, and (ii) where the remedy of specific performance
and other forms of equitable relief may be subject to certain equitable defenses
and principles and to the discretion of the court before which the proceedings
may be brought and (y) entitled to the benefits of the Warrant Agreement. The
shares of Common Stock initially issuable upon exercise of the Warrants (the
"Warrant Shares") have been duly reserved for issuance by the Company and, upon
the exercise of the Warrants and receipt by the Company of the exercise payable
upon such exercise, the Warrant Shares will be duly authorized, validly issued,
fully paid and non-assessable and will not have been issued in violation of
preemptive or similar rights.
(xiv) The Purchase Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding agreement of the Company enforceable against the Company in accordance
with its terms, except (i) where the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to rights of creditors
and other obligees generally, (ii) where the remedy of specific performance and
other forms of equitable relief may be subject to certain equitable defenses and
principles and to the discretion of the court before which the proceedings may
be brought and (iii) where rights to indemnity and contribution hereunder may be
limited by applicable law and public policy;
A-6
(xv) The issue and sale of the Units being delivered on the
Closing Date by the Company, the issue and sale of the Exchange Notes, the
compliance by the Company with all of the provisions of the Purchase Agreement,
the Registration Rights Agreement, the Pledge Agreement, the Warrant Agreement
and the Indenture and the consummation of the transactions contemplated hereby
and thereby, will not result in a material breach or violation of any of the
terms or provisions of, or constitute a default under, (i) any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
identified on Schedule B hereto, which schedule includes all such material
agreements and instruments known to such counsel to which the Company or any of
the subsidiaries of the Company is a party or by which the Company or any of the
subsidiaries of the Company is bound or to which any of the property or assets
of the Company or any of the subsidiaries of the Company is subject (the
"Material Agreements"), which breach or default, as the case may be, is
reasonably likely to have a Material Adverse Effect, (ii) nor will such actions
result in any violation of the provisions of (A) the charter, by-laws, limited
liability company agreement, limited partnership agreement or operating
agreement of the Company or any of the subsidiaries of the Company or (B) to
counsel's knowledge, any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body of the United States, the
State of New York, the State of Maryland, or established pursuant to the
Delaware General Corporation Law having jurisdiction over the Company or any of
the subsidiaries of the Company or any of their properties or assets; except for
such consents, approvals, authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Units by the Initial
Purchasers, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of the Purchase
A-7
Agreement by the Company and the consummation by the Company of the transactions
contemplated thereby;
(xvi) To the knowledge of counsel after due inquiry, none of
the Company or any of the subsidiaries of the Company (i) is in violation of its
charter or by-laws (ii) is in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any time period, covenant or
condition contained in any Material Agreement, except where it would not
reasonably be expected to have a Material Adverse Effect, or (iii) is in
violation in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its properties or assets may be
subject or has failed to obtain any material license, permit, certificate,
franchise or other governmental authorization or permit necessary to the
ownership of its properties or assets or to the conduct of its business, except
where it would not reasonably be expected to have a Material Adverse Effect;
(xvii) Except as set forth in the Memorandum, to such
counsel's knowledge after due inquiry, there are no contracts, agreements or
understandings between the Company, on the one hand, and any person, on the
other hand, granting such person the right (other than rights which have been
waived or satisfied) to require the Company to file a registration statement
under the Securities Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such securities
with any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act;
(xviii) None of the Company or any of the subsidiaries of the
Company is required to register as an "investment company" or an entity
"controlled" by an
A-8
investment company, as such terms are defined in the Investment Company Act of
1940, as amended;
(xix) The statements under the captions "Certain Relationships
and Related Transactions," "Description of Units," "Description of Notes,"
"Description of Warrants", "Exchange Offer and Registration Rights" and
"Description of Capital Stock" in the Memorandum, insofar as such statements
constitute a summary of legal matters, documents or proceedings referred to
therein, are correct in all material respects;
(xx) Such counsel is of the opinion that the statements in the
Memorandum under the caption "Certain United States Federal Income Tax
Considerations" are accurate in all material respects and fairly summarize the
matters referred to therein; and
(xxi) Based upon the representations, warranties, and
agreements of the Company in Sections 1(w), 1(x), 5(h), 5(i), 5(j) and 5(l) of
the Purchase Agreement and of the Initial Purchasers in Section 6 of the
Purchase Agreement, it is not necessary in connection with the offer, sale and
delivery of the Units to the Initial Purchasers under the Purchase Agreement or
in connection with the initial resale of such Units by the Initial Purchasers in
accordance with Section 6 of the Purchase Agreement to register the Units, Notes
and Warrants under the Securities Act of 1933, it being understood that no
opinion is expressed as to any subsequent resale of any security.
In rendering such opinion, such counsel may state that their
opinion is limited to matters governed by the federal laws of the United States
of America, the laws of the State of New York and the State of Maryland. Such
counsel shall also have furnished to the Initial Purchasers a written statement,
addressed to the Initial Purchasers and dated such Closing Date, in form and
substance reasonably
A-9
satisfactory to the Initial Purchasers, to the effect that (x) in connection
with the preparation of the Memorandum, such counsel have participated in
conferences with certain officers and directors of the Company, the independent
public accountants of the Company and other representatives of the Company, at
which the contents of the Memorandum and related matters were discussed, and (y)
based on such participation, no facts have come to the attention of such counsel
which lead them to believe that the Memorandum (except for financial statements
and related notes and auditors' reports thereon, the financial statement
schedules and the other financial and accounting data and information included
therein or omitted therefrom, as to which such counsel need make no statement),
as of the date thereof contained, and as of the Closing Date contains, any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or that
the Memorandum (except for financial statements and related notes and auditors'
reports thereon, the financial statement schedules and the other financial and
accounting data and information included therein or omitted therefrom, as to
which such counsel need make no statement) contained as of the date thereof, or
as of the Closing Date contains, any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The foregoing statement may be qualified by a
statement to the effect that such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Memorandum (except to the extent provided in paragraphs (xix) and (xx) above).
A-10
EXHIBIT C
FORM OF OPINION OF
REGULATORY COUNSEL TO THE COMPANY
TO BE DELIVERED PURSUANT TO SECTION 8(d)
The statements under the captions "Government Regulations" in
the Offering Documents, insofar as such statements constitute a summary of legal
matters, documents or proceedings referred to therein are correct in all
material respects.
Such counsel shall have furnished to the Initial Purchases a
written statement, addressed to the Initial Purchasers and dated such Closing
Date, in form and substance satisfactory to the Initial Purchasers, to the
effect that (x) in connection with the preparation of the Offering Documents,
such counsel have participated in conferences with certain officers, directors
and other representatives of the Company, at which the contents of the Offering
Documents and related matters were discussed, and (y) based on such
participation, no facts have come to the attention of such counsel which lead
them to believe that the Offering Documents (except for financial statements and
related notes and auditors' reports thereon and other financial and accounting
data and information included therein or omitted therefrom as to which such
counsel need make no statement), contained as of the date thereof, or as of the
Closing Date contains, any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or that the Offering Documents (except for financial
statements and schedules included therein or omitted therefrom, as to which such
counsel need make no statement) contains any untrue statement of a material fact
or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing statement may be qualified by statement to the effect
that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering Documents
except for the statements made in the Offering Documents under the caption
"Government Regulation."
