NEXTLINK COMMUNICATIONS, INC.
6 1/2% CUMULATIVE CONVERTIBLE PREFERRED STOCK
(Liquidation Preference $50 per Share)
PURCHASE AGREEMENT
New York, New York
March 27, 1998
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
As Representatives of the Initial Purchasers
c/o ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
NEXTLINK Communications, Inc., a corporation organized under the laws of
the State of Washington (the "Company"), proposes to issue and sell to the
parties named in Schedule I hereto (the "Initial Purchasers") an aggregate of
4,000,000 shares and, at the election of the Initial Purchasers, up to an
additional 600,000 such shares of 6 1/2% Cumulative Convertible Preferred Stock
(liquidation preference $50 per share) of the Company. The aggregate of
4,000,000 such shares to be sold by the Company is herein called the "Firm
Securities" and the aggregate of 600,000 additional such shares to be sold by
the Company is herein called the "Optional Securities" (the Firm Securities and
the Optional Securities that the Initial Purchasers elect to purchase pursuant
to Section 2 hereof are collectively called the "Securities"). The Securities
will be convertible in the manner described in the Offering Memorandum (as
defined below) into Class A Common Stock, par value $0.02 per share, of the
Company (the "Class A Common Stock"). If you are the only Initial Purchasers,
all references herein to the Representatives shall be deemed to be to the
Initial Purchasers.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Securities Act of 1933, as amended (the
"Act"), in reliance upon exemptions from the registration requirements of the
Act. You have advised the Company that the Initial Purchasers will offer and
sell the Securities purchased by them hereunder in accordance with Section 3
hereof as soon as you deem advisable.
In connection with the sale of the Securities, the Company will prepare an
offering memorandum, dated the date hereof (the "Execution Date"), including any
and all exhibits thereto and any and all documents incorporated by reference
therein (the "Offering Memorandum") subject to the approval of the Initial
Purchasers, which approval will not be unreasonably withheld or delayed.
References herein to the Offering Memorandum or to any amendment or supplement
thereto shall also mean information incorporated by reference therein.
References herein to the
Offering Memorandum as of the date hereof refer to information contained in the
documents to be incorporated by reference therein. The Offering Memorandum will
set forth certain information concerning the Company and the Securities. The
Company hereby confirms that it has authorized the use of the Offering
Memorandum, and any amendment or supplement thereto, in connection with the
offer and sale of the Securities by the Initial Purchasers. Unless stated to
the contrary, all references herein to the Offering Memorandum are to the
Offering Memorandum at the Execution Time (as defined below) and are not meant
to include any amendment or supplement subsequent to the Execution Time.
The Initial Purchasers and their direct and indirect transferees of the
Securities will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company has agreed,
among other things, to file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
registering the Securities or the Exchange Securities (as defined in the
Registration Rights Agreement) under the Act.
1. Representations and Warranties.
(a) The Company represents and warrants to each of the Initial Purchasers
as set forth below in this Section 1:
(i) Contents of Offering Memorandum. The Offering Memorandum, at
the Closing Date (as defined below), will not (and any amendment or
supplement thereto, at the date thereof and at the Closing Date, 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; provided,
however, that the Company makes no representation or warranty as to the
information contained in or omitted from the Offering Memorandum, or any
amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Initial Purchasers through ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. specifically for inclusion
therein. The documents incorporated by reference in the Offering
Memorandum, when they were filed with the Commission, conformed in all
material respects to the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Offering Memorandum or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Initial Purchaser through ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. expressly for use therein;
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(ii) Independent Accountants. The accountants who certified the
financial statements included in the Offering Memorandum are independent
certified public accountants with respect to the Company and its
subsidiaries within the meaning of Regulation S-X under the Act;
(iii) Financial Statements. The financial statements, together
with the related notes, included or incorporated by reference in the
Offering Memorandum present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, shareholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The selected financial data and the summary financial
information included in the Offering Memorandum present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Offering
Memorandum;
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Offering Memorandum, except
as otherwise stated therein, (1) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise (a "Material Adverse Effect"), whether or not
arising in the ordinary course of business, (2) there have been no
transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one enterprise
and (3) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock other than
scheduled or regular dividends, if any, on outstanding preferred stock of
the Company as previously disclosed to the Initial Purchasers;
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation under the laws of the
State of Washington and has power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect;
(vi) Good Standing of Designated Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) and NEXTLINK Pennsylvania, L.P. and NEXTLINK Ohio, L.L.C.
(each a "Designated Subsidiary" and, collectively, the "Designated
Subsidiaries") has been duly organized and is validly existing and in good
standing, where applicable, as a corporation,
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limited liability company or limited partnership, as the case may be, under
the laws of the jurisdiction of its formation, has power and authority to
own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum and is duly qualified as a foreign
corporation, limited liability company or limited partnership, as the case
may be, to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the failure
so to qualify or to be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Offering Memorandum,
all of the issued and outstanding capital stock or other equity interest of
each Designated Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and 99% thereof is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock or other equity interest of the
Designated Subsidiaries was issued in violation of any preemptive or
similar rights arising by operation of law, or under the constituting or
operative document or agreement of any Designated Subsidiary or under any
agreement to which the Company or any Designated Subsidiary is a party;
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Offering Memorandum as
of the dates indicated therein. The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued
and are fully paid and non-assessable; and none of the outstanding shares
of capital stock of the Company was issued in violation of the preemptive
or other similar rights of any security holder of the Company, as
applicable;
(viii) Authorization of Purchase Agreement and Registration Rights
Agreement. This Agreement has been duly authorized, executed and delivered
by the Company; the Registration Rights Agreement has been duly authorized
by the Company and, when executed and delivered by the Company as of the
Closing Date, will constitute a valid and legally binding agreement of the
Company enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(ix) Authorization and Description of the Securities and Class A
Common Stock. The Securities have been duly and validly authorized and,
when issued and delivered pursuant to this Agreement against payment of the
consideration specified in this Agreement, the Securities will be duly and
validly issued and fully paid and non-assessable convertible preferred
stock of the Company; when so issued and delivered, the Securities will
have the rights set forth in the Certificate of Designation of the Powers,
Preferences and Relative Participating, Optional and Other Special Rights
of 61/2% Convertible Preferred Shares and Qualifications, Limitations and
Restrictions thereof (the "Certificate of Designations"), and the terms of
the Securities will conform to the description thereof contained in the
Offering Memorandum. All shares of Class A Common Stock initially
issuable upon conversion of the Securities have been duly and validly
authorized and reserved for issuance upon such conversion and, when issued
and delivered in accordance with the provisions of the Securities (assuming
issuance and delivery of the Securities pursuant to this Agreement against
payment of the consideration specified therefor), will be duly and validly
issued, fully paid and non-assessable and will conform to the description
thereof contained in the Offering Memorandum, and the holders of
outstanding capital stock of the Company are not entitled to preemptive or
other rights afforded by the Company to
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subscribe for the shares of the Class A Common Stock of the Company
issuable upon conversion of the Convertible Preferred Stock;
(x) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its constituting or operative
document or agreement or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party, or by which any of them may be bound, or to
which any of the property or assets of the Company or any of its
subsidiaries is subject (collectively, "Agreements and Instruments") except
for such defaults that would not result in a Material Adverse Effect; the
execution, delivery and performance of this Agreement, the Registration
Rights Agreement and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in connection with
the transactions contemplated hereby, thereby or in the Offering Memorandum
and the consummation of the transactions contemplated herein, therein and
in the Offering Memorandum (including the issuance and sale of the
Securities by the Company hereunder), the compliance by the Company with
its obligations hereunder and under the Securities and the Registration
Rights Agreement have been duly authorized by all necessary action and do
not and will not, whether with or without the giving of notice or passage
of time or both, conflict with or constitute a breach of, or default or a
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, the Agreements and
Instruments except for such conflicts, breaches or defaults or liens,
charges or encumbrances that, singly or in the aggregate, would not result
in a Material Adverse Effect, nor will such action result in any violation
of the provisions of the constituting or operative document or agreement of
the Company or any of its subsidiaries or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of their
assets or properties. As used herein, a "Repayment Event" means any event
or condition which gives the holder of any material note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require repurchase, redemption or repayment of all or
a portion of such indebtedness by the Company or any of its subsidiaries;
(xi) Possession of Licenses and Permits. Except as set forth in or
contemplated by the Offering Memorandum with respect to systems under
development and the offering of dial tone service, each of the Company and
its Designated Subsidiaries has all material certificates, consents,
exemptions, orders, permits, licenses, authorizations, franchises or other
material approvals (each, an "Authorization") of and from, and has made all
material declarations and filings with, all Federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, necessary or appropriate for the Company and its
Designated Subsidiaries to own, lease, license, use and construct its
properties and assets and to conduct its business in the manner described
in the Offering Memorandum, except to the extent that the failure to obtain
any such Authorizations or make any such declaration or filing would not,
singly or in the aggregate, result in a Material Adverse Effect. Except as
set forth in or contemplated by the Offering Memorandum, all
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such Authorizations are in full force and effect with respect to the
Company and its Designated Subsidiaries; to the best knowledge of the
Company, no event has occurred that permits, or after notice or lapse of
time could permit, the revocation, termination or modification of any such
Authorization; the Company and its Designated Subsidiaries are in
compliance in all material respects with the terms and conditions of all
such Authorizations and with the rules and regulations of the regulatory
authorities and governing bodies having jurisdiction with respect thereto;
and, except as set forth in the Offering Memorandum, the Company has no
knowledge that any person is contesting or intends to contest the granting
of any material Authorization; and neither the execution and delivery of
this Agreement or the Securities, nor the consummation of the transactions
contemplated hereby and thereby nor compliance with the terms, conditions
and provisions hereof and thereof by the Company or any of its Designated
Subsidiaries will cause any suspension, revocation, impairment, forfeiture,
nonrenewal or termination of any Authorization;
(xii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is imminent, and the Company is not aware of any
existing labor disturbance by the employees of any of its or any of its
subsidiaries' principal suppliers, manufacturers, customers or contractors,
which, in either case, would reasonably be expected to result in a Material
Adverse Effect;
(xiii) Absence of proceedings. Except as disclosed in the
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body,
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries
which could reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely affect
the properties or assets of the Company or any of its subsidiaries or the
consummation of this Agreement or the performance by the Company of its
obligations hereunder. The aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary thereof is a party or of
which any of their respective property or assets is the subject which are
not described in the Offering Memorandum, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect;
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and except as otherwise described in the Offering
Memorandum neither the Company nor any of its subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect;
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(xv) Title of Property. The Company and its subsidiaries have good
and marketable title to all real property owned by them and good title to
all other properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the Offering
Memorandum or (b) do not, singly or in the aggregate, materially affect the
value of such property and do not interfere with the use made and proposed
to be made of such property by the Company or any of its subsidiaries; and
all of the leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the Company
or any of its subsidiaries holds properties described in the Offering
Memorandum, are in full force and effect, and neither the Company nor any
of its subsidiaries has any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Company or any of
its subsidiaries under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or any subsidiary
thereof to the continued possession of the leased or subleased premises
under any such lease or sublease;
(xvi) Tax Returns. The Company and its subsidiaries have filed
all federal, state, foreign and, to the extent material, local tax returns
that are required to be filed or have duly requested extensions thereof and
have paid all taxes required to be paid by any of them and any related
assessments, fines or penalties, except for any such tax, assessment, fine
or penalty that is being contested in good faith and by appropriate
proceedings; and adequate charges, accruals and reserves have been provided
for in the financial statements referred to in Section 1(a)(iii) above in
respect of all federal, state, local and foreign taxes for all periods as
to which the tax liability of the Company or any of its subsidiaries has
not been finally determined or remains open to examination by applicable
taxing authorities;
(xvii) Environmental Laws. Except as described in the Offering
Memorandum and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or, to the Company's
knowledge, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) there are no events
or circumstances that would reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by
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any private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or
Environmental Laws;
(xviii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act");
(xix) Certain Disclosures in Offering Memorandum. The statements
set forth in the Offering Memorandum under the caption "Description of
Convertible Preferred Stock," insofar as they purport to constitute a
summary of the terms of the Securities, and under the caption "Plan of
Distribution", and under the caption "Business-Regulatory Overview" in the
Company's Annual Report on Form 10-KSB, filed on March 25, 1998, which is
incorporated therein by reference, insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate and
complete in all material respects; and the statements set forth in the
Offering Memorandum under the caption "Certain United States Federal Income
Tax Consequences", insofar as such statements purport to summarize certain
United States federal income and estate tax consequences of the ownership
and dispensation of the Securities by certain U.S. Holders and non-U.S.
Holders (as such terms are defined in the Offering Memorandum) of the
Securities, provide a fair summary of such consequences under current law;
(xx) Cuba. Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida Statutes;
(xxi) No Manipulation or Stabilization. Neither the Company nor,
to its knowledge, any of its officers, directors or affiliates has taken
and will take, directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities;
(xxii) Other Listed Securities. No securities of the Company or
any subsidiary that are of the same class (within the meaning of Rule 144A
under the Act) as the Securities are listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or quoted in a U.S. automated inter-dealer
quotation system;
(xxiii) No General Solicitation or Directed Selling Efforts.
Neither the Company nor any of its Affiliates (as defined in Rule 501(b) of
Regulation D under the Act ("Regulation D")), nor any person (excluding the
Initial Purchasers as to the actions of which the Company makes no
representation or warranty) acting on its or their behalf has offered or
sold the Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or, with
respect to Securities sold outside the United States to non-U.S. persons
(as defined in Rule 902 under the Act), by means of any directed selling
efforts within the meaning of Rule 902 under the Act and the Company,
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any Affiliate of the Company and any person acting on its or their behalf
has complied with and will implement the "offering restriction" within the
meaning of such Rule 902;
(xxiv) Eligibility of Securities. The Securities satisfy the
eligibility requirements of Rule 144A(d)(3) under the Act;
(xxv) Compliance with Exchange Act. The Company is subject to
and in full compliance with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act;
(xxvi) Other Agents. The Company has not paid or agreed to pay to
any person any compensation for soliciting another to purchase any
securities of the Company (except as contemplated by this Agreement); and
(xxvii) Additional Issuer Information. The information provided by
the Company pursuant to Section 4(f) hereof will not, at the date thereof,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Initial Purchasers or to
counsel for the Initial Purchasers shall be deemed a representation and warranty
by the Company to each Initial Purchaser as to the matters covered thereby.
2. Sale and Delivery to Initial Purchasers.
(a) Securities. Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, (i) the Company agrees to
sell to each Initial Purchaser, severally and not jointly, and each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company, at a
purchase price per Security of $48.50, the number of Firm Securities set
forth opposite their respective names in Schedule A hereto and (ii) in the event
and to the extent that the Initial Purchasers shall exercise the election to
purchase Optional Securities as provided below, the Company agrees to issue and
sell to each of the Initial Purchasers, and each of the Initial Purchasers
agrees, severally and not jointly, to purchase from the Company, at the purchase
price per share set forth in clause (i) of this Section 2(a), that portion of
the number of Optional Securities as to which such election shall have been
exercised (to be adjusted by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. so as to eliminate fractional
shares) determined by multiplying such number of Optional Securities by a
fraction, the numerator of which is the maximum number of Optional Securities
which such Initial Purchaser is entitled to purchase as set forth opposite the
name of such Initial Purchaser in Schedule A hereto and the denominator of which
is the maximum number of Optional Securities that all of the Initial Purchasers
are entitled to purchase hereunder.
The Company hereby grants to the Initial Purchasers the right to purchase
at their election up to 600,000 Optional Securities, at the purchase price per
share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Securities. Any such election to
purchase Optional Securities may be exercised only by written notice from ▇▇▇▇▇
▇▇▇▇▇▇ Inc. to the Company, given within a period of 30 calendar days after the
date of this Agreement, setting
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forth the aggregate number of Optional Securities to be purchased and the date
on which such Optional Securities are to be delivered, as determined by the
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. but in no event earlier than the First Closing Time (as
defined in Section 2(c) hereof) or, unless the Representatives and the Company
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
(b) Terms and Conditions of Sale. Upon the authorization by ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. of the release of the Firm Securities, the several Initial Purchasers
propose to offer the Firm Securities for sale upon the terms and conditions set
forth in the Offering Memorandum.
(c) Closing and Payment. (i) The Securities to be purchased by each
Initial Purchaser hereunder, in definitive form, and in such authorized
denominations and registered in such names as ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. may
request upon at least forty-eight hours' prior notice to the Company shall
be delivered by or on behalf of the Company to the Initial Purchasers,
through the facilities of the Depository Trust Company ("DTC") (unless the
Initial Purchasers shall otherwise instruct) for the account of such
Initial Purchaser, against payment by or on behalf of such Initial
Purchaser of the purchase price therefor by wire transfer or certified or
official bank check or checks, payable to the order of the Company in
immediately available (same day) funds. The Company will cause the
certificates representing the Securities to be made available for checking
and packaging at least twenty-four hours prior to the Closing Time (as
defined below) with respect thereto at the offices of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery
and payment shall be, with respect to the Firm Securities, 10:00 a.m. on
March 31, 1998 (the "Closing Date"), or such other time and date as ▇▇▇▇▇
▇▇▇▇▇▇ Inc. and the Company may agree upon in writing, and, with respect to
the Optional Securities, 10:00 a.m. on the date specified by ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. in the written notice given by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. of the Initial
Purchaser's election to purchase such Optional Securities, or such other
time and date as ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and the Company may agree upon in
writing. Such time and date for delivery of the Firm Securities is herein
called the "First Closing Time", such time and date for delivery of the
Optional Securities, if not the First Closing Time, is herein called the
"Second Closing Time", and each such time and date for delivery is herein
called a "Closing Time".
(ii) The documents to be delivered at each Closing Time by or on
behalf of the parties hereto pursuant to Section 6 hereof, including the
cross receipt for the Securities and any additional documents requested by
the Initial Purchasers pursuant to Section 6(j) hereof, will be delivered
at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "Closing Location"), and the Securities will be delivered at the
Designated Office, all at such Closing Time. A meeting will be held at the
Closing Location at 2:00 p.m. on the New York Business Day next preceding
the Closing Time, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review
by the parties hereto. For the purposes of this Section 2, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
10
3. Offering of Securities. Upon the authorization by you of the release
of the Securities, the Initial Purchasers propose to offer the Securities for
sale upon the terms and conditions set forth in this Agreement and the Offering
Memorandum and each Initial Purchaser hereby represents and warrants to, and
agrees with the Company that:
(a) It will offer and sell the Securities only to: (i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Act in transactions meeting the requirements of
Rule 144A, or (ii) upon the terms and conditions set forth in Annex I to this
Agreement;
(b) It is a QIB; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
4. Covenants. Covenants of the Company. The Company covenants and
agrees with each Initial Purchaser:
(a) Preparation of Offering Memorandum; Notices. To prepare the Offering
Memorandum in a form approved by the Initial Purchasers; to make no amendment or
any supplement to the Offering Memorandum which shall be disapproved by the
Initial Purchasers promptly after reasonable notice thereof; and to furnish the
Initial Purchasers with copies thereof;
(b) Copies of and Amendments to Offering Memorandum and Supplements. To
furnish the Initial Purchasers with copies in such quantities as the Initial
Purchasers may from time to time reasonably request of the Offering Memorandum
and each amendment or supplement thereto signed by an authorized officer of the
Company with the independent accountants' report(s) in the Offering Memorandum,
and any amendment or supplement containing amendments to the financial
statements covered by such report(s), signed by the accountants, and if, at any
time prior to the expiration of nine months after the Execution Date, any event
shall have occurred as a result of which the Offering Memorandum as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Offering
Memorandum is delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement the
Offering Memorandum, to notify the Initial Purchasers and upon the request of
the Initial Purchasers to prepare and furnish without charge to each Initial
Purchaser and to any dealer in securities as many copies as the Initial
Purchasers may from time to time reasonably request of an amended Offering
Memorandum or a supplement to the Offering Memorandum which will correct such
statement or omission or effect such compliance;
(c) Lock-up. During the period beginning from the Execution Date and
continuing to and including the date 90 days after the Closing Date, not to
offer, sell, contract to sell or otherwise dispose of, directly or indirectly,
or announce an offering of, except as provided hereunder any shares of the
capital stock of the Company ("Stock") or any securities convertible into or
exchangeable for Stock (other than (i) grants of options and issuances and sales
of Class A Common Stock issued pursuant to any employee or director stock option
plan, stock ownership plan or stock purchase plan in effect on the date of this
Agreement, (ii) issuances of Class A Common Stock upon
11
the conversion of securities or the exercise of warrants outstanding on the date
of this Agreement, (iii) issuance of Class B Common Stock upon exercise of
options outstanding on the date of this Agreement, (iv) issuance of common stock
pursuant to agreements in effect on the date of this Agreement (which issuances
will not involve the issuance of a material amount of shares of Common Stock) or
(v) issuance of Common Stock in connection with acquisitions; provided that the
recipients of such shares of Common Stock agree in writing with ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. to be bound by the unexpired term of this agreement not to sell) without
the prior written consent of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
(d) Investment Company. Not to be or become, at any time prior to the
expiration of three years after the Closing Date, an open-end investment
company, unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under Section 8 of
the 1940 Act;
(e) Portal. To use its reasonable best efforts to cause the Securities to
be eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.;
(f) Information to holders of Securities. (i) At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, for the
benefit of holders from time to time of Securities, to furnish at its
expense, upon request, to holders of Securities and prospective purchasers
of securities information (the "Additional Issuer Information") satisfying
the requirements of subsection (d)(4)(i) of Rule 144A under the Act;
(ii) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows
of the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the Execution Date), consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail;
(g) Initial Purchasers. During a period of five years from the Execution
Date, to furnish to the Initial Purchasers copies of all reports or other
communications (financial or other) furnished to stockholders of the Company,
and to deliver to the Initial Purchasers (i) as soon they are available, copies
of any reports and financial statements furnished to or filed with the
Commission or any securities exchange on which the Securities or any class of
securities or any class of securities of the Company is listed; and (ii) such
additional information concerning the business and financial condition of the
Company as the Initial Purchasers may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(h) Resales by Company and Affiliates. During the period of two years
after the Closing Date, the Company will not, and will not permit any of its
"affiliates" (as defined in Rule 144 under the Act) to, resell any of the
Securities which constitute "restricted securities" under Rule 144 that have
been reacquired by any of them;
12
(i) Resale Registration. The Company shall file, on or prior to 90 days
after the Closing Date, and use its best efforts to cause to be declared or
become effective under the Act, on or prior to 120 days after the Closing Date,
a shelf registration statement on Form S-3 providing for the registration of the
Securities and the Class A Common Stock issuable upon conversion of the
Securities as described in the Offering Memorandum and provided for in the
Registration Rights Agreement;
(j) Use of Proceeds. To use the net proceeds received by it from the sale
of the Securities pursuant to this Agreement in the manner specified in the
Offering Memorandum under the caption "Use of Proceeds";
(k) Manner of Sale. Neither the Company nor any of its Affiliates nor any
person acting on its or their behalf will offer or sell the Securities by means
of any general solicitation or general advertising within the meaning of Rule
502(c) under the Act or, with respect to Securities sold outside the United
States to non-U.S. persons (as defined in Rule 902 under the Act), by means of
any directed selling efforts within the meaning of Rule 902 under the Act and
the Company, any Affiliate of the Company and any person acting on its or their
behalf will comply with and will implement the "offering restriction" within the
meaning of such Rule 902;
(l) DTC. The Company will cooperate with the Representatives and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company;
(m) Listing. The Company will use its best efforts to list, subject to
notice of issuance, the Class A Common Stock issuable upon conversion of the
Securities on the NASDAQ National Market;
(n) Free Shares. The Company will reserve and keep available at all
times, free of preemptive rights, shares of Class A Common Stock for the purpose
of enabling the Company to satisfy any obligations to issue shares of the common
stock of the Company upon conversion of the Securities.
5. Expenses. The Company covenants and agrees with the Initial
Purchasers that the Company will pay or cause to be paid all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including all costs and expenses
incident to (i) the fees, disbursements and expenses of the Company's counsel
and accountants and all other expenses in connection with the preparation, word
processing, printing or other production of the Offering Memorandum and
amendments and supplements thereto; (ii) the cost of word processing, printing
or reproducing this Agreement, the Agreement Among Underwriters, the Selling
Agreement, the Registration Rights Agreement, the Securities, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all
arrangements relating to the delivery to the Initial Purchasers and dealers of
copies of the foregoing documents; (iv) the costs and charges of any transfer
agent or registrar and of DTC; (v) reasonable expenses in connection with any
meetings with prospective investors in the Securities; (vi) all expenses and
listing fees incurred in connection with the application for quotation of the
Securities on the PORTAL market; and (vii) any
13
fees charged by investment rating agencies for the rating of the Securities. It
is understood, however, that, except as provided in this Section, and Sections
7, 8 and 11 hereof, the Initial Purchasers will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them, and any advertising expenses connected with any
offers they may make.
If this Agreement is terminated by the Initial Purchasers in accordance
with the provisions of Section 6 or Section 10 hereof, the Company shall
reimburse the Initial Purchasers for all of their out of pocket expenses,
including the reasonable fees and disbursements of counsel for the Initial
Purchasers.
6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers, as to the Securities to be delivered at
each Closing Time, are subject to the accuracy of the representations and
warranties on the part of the Company contained herein at the date and time that
this Agreement is executed and delivered by the parties hereto (the "Execution
Time") and at and as of such Closing Time, to the accuracy of the statements of
the Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) Opinion of Counsel for Company. At the Closing Time, the Initial
Purchasers shall have received the favorable opinions, dated as of the Closing
Date, of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Company, of R. ▇▇▇▇▇ ▇▇▇▇▇▇,
Esq., Vice President, General Counsel and Secretary of the Company, and of ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, special Washington counsel to the Company, in form and
substance satisfactory to counsel for the Initial Purchasers, to the effect set
forth in Exhibits ▇-▇, ▇-▇ and A-3 hereto, respectively, and to such further
effect as counsel to the Initial Purchasers may reasonably request;
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Initial Purchasers shall have received the favorable opinion, dated as of the
Closing Date, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, with
respect to the incorporation of the Company, the Securities being delivered at
the Closing Time, the common stock of the Company issuable upon conversion the
Securities, the Offering Memorandum and such other related matters as the
Initial Purchasers may reasonably request. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
law of the State of New York and the federal law of the United States, upon the
opinions of counsel satisfactory to the Initial Purchasers. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials;
(c) Officers' Certificate. At such Closing Time, there shall not have
been, since the Execution Date or since the date of the most recent financial
statements included in the Offering Memorandum (exclusive of any supplement
thereto), any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising from
transactions in the ordinary course of business except as set forth in the
Offering Memorandum (exclusive of any supplement thereto), and the Initial
Purchasers shall have received certificates of the Chairman of the Board, the
President or a Vice President of the Company and of the chief financial or chief
accounting
14
officer of the Company, satisfactory to the Initial Purchasers, to the effect
that, at and as of such Closing Time, (i) they have carefully examined the
Offering Memorandum and any supplements thereto and this Agreement, (ii) there
has been no such material adverse change, (iii) the representations and
warranties of the Company in Section 1 hereof are true and correct in all
material respects on and as of the Closing Time with the same force and effect
as though expressly made at and as of such Closing Time, and (iv) the Company
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to such Closing Time;
(d) Accountant's Comfort Letter. At the First Closing Time, the Initial
Purchasers shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter or letters
dated as of the Closing Date, in form and substance satisfactory to the Initial
Purchasers, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to the Initial Purchasers with
respect to the financial statements and certain financial information contained
in the Offering Memorandum;
(e) Bring-down Comfort Letter. At the Second Closing Time, the Initial
Purchasers shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter, dated as of
the Closing Date, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section 6, except that the
specified date referred to shall be a date not more than three business days
prior to such Closing Date;
(f) No Material Adverse Change in Business. Since the respective dates as
of which information is given in the Offering Memorandum, except as otherwise
stated therein, (1) there has been no Material Adverse Effect, whether or not
arising in the ordinary course of business, (2) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise (3) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock and (4) there has been no change or decrease specified in the
letters referred to in Section 6(d) and 6(e) above, the effect of which, in any
case referred to in clauses (1) through (4) above, is, in the sole judgment of
the Initial Purchasers, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Offering Memorandum (exclusive of any amendment thereof or
supplement thereto);
(g) Maintenance of Rating. On or after the Execution Date, there shall
not have occurred a downgrading in the rating assigned to the Company's debt
securities or preferred stock by any nationally recognized securities rating
agency, and no such securities rating agency shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities or preferred stock;
(h) Offering Memorandum. The Offering Memorandum shall be in form and
substance reasonably satisfactory to the Initial Purchasers. The Company shall
have complied with the provisions of Section 4(c) hereof with respect to the
furnishing of Offering Memoranda on the New York Business Day next succeeding
the Execution Date;
(i) Adequate Disclosure of Litigation. There is no litigation or
governmental or other action, suit, claim, proceeding or investigation before
any court or any public, regulatory or governmental agency or body, pending or,
to the best of the Company's knowledge, threatened
15
against the Company or any of its subsidiaries or any of their respective
officers (in their capacity as officers of the Company or such subsidiaries) or
any of the properties, assets, business or rights of the Company or such
subsidiaries which is of a character required to be disclosed in the Offering
Memorandum which is not disclosed therein;
(j) Additional Documents. At such Closing Time: (i) the Company shall
have furnished to the Initial Purchasers such further information, certificates
and documents as the Initial Purchasers may reasonably request; (ii) counsel for
the Initial Purchasers shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and (iii) all
proceedings taken by the Company in connection with the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance to
the Initial Purchasers and counsel for the Initial Purchasers; and
(k) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Initial Purchasers by notice to the Company
at any time at or prior to such Closing Time, and such termination shall be
without liability of any party to any other party except as provided in
Section 5 and except that Sections 1, 7 and 8 shall survive any such termination
and remain in full force and effect.
7. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees and agents of each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any and all losses, liabilities (joint or
several), claims, damages and expenses whatsoever, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Offering Memorandum (or any amendment or supplement
thereto), or arise out of or are based upon the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Initial Purchaser through the Initial Purchasers specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Indemnification of Company, Directors and Officers. Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, each of
its directors (including any person who, with his or her consent, is named in
the Registration Statement as about to become a
16
director of the Company) and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any and all losses, liabilities (joint or several), claims, damages and
expenses described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to written information furnished to the
Company by such Initial Purchaser through ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. specifically for
inclusion in the documents referred to in the foregoing indemnity. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page regarding delivery of the Securities, the stabilization legend in block
capital letters on the reverse of the cover page and, under the heading "Plan of
Distribution", the paragraph related to stabilization in the Offering Memorandum
constitute the only information furnished in writing by or on behalf of the
several Initial Purchasers for inclusion in such Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party shall
give written notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
17
8. Contribution. If the indemnification provided for in Section 7 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Securities pursuant to this Agreement
(provided that in no case shall any Initial Purchaser (except as may be provided
in any agreement among Initial Purchasers relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Initial Purchaser
hereunder) or (ii) if the allocation provided by clause (i) is unavailable for
any reason, 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 of the Initial Purchasers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, 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 in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
the Initial Purchasers, in each case as set forth in the Offering Memorandum.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such 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 or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8.
Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights
18
to contribution as such Initial Purchaser, and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company. The
Initial Purchasers' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the number of Securities set forth
opposite their respective names in Schedule I hereto and not joint.
9. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement, or in
certificates of officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Initial Purchaser or controlling person, or by or on behalf
of the Company, and shall survive delivery of the Securities to the Initial
Purchasers.
10. Termination of Agreement.
(a) Termination; General. This Agreement shall be subject to termination
in the absolute discretion of the Initial Purchasers, by notice given to the
Company prior to delivery of and payment for the Securities, if at any time
prior to such time (i) trading in the Company's Common Stock shall have been
suspended by the Commission or the NASDAQ or trading in securities generally on
the New York Stock Exchange or the NASDAQ shall have been suspended or limited
or minimum prices shall have been established on such Exchange or NASDAQ, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Initial Purchasers, impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Offering Memorandum (exclusive of any supplement thereto).
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 5 hereof, and provided further that Sections
1, 7 and 8 shall survive such termination and remain in full force and effect.
11. Default by One or More of the Initial Purchasers. If any one or more
of the Initial Purchasers shall fail to purchase and pay for any of the
Securities agreed to be purchased by such Initial Purchaser or Initial
Purchasers hereunder and such failure to purchase shall constitute a default in
the performance of its or their obligations under this Agreement, the remaining
Initial Purchasers shall be obligated severally to take up and pay for (in the
respective proportions which the amount of Securities set forth opposite their
names in Schedule I hereto bears to the aggregate amount of Securities set forth
opposite the names of all the remaining Initial Purchasers) the Securities which
the defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase shall exceed 10% of the aggregate amount of Securities
set forth in Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such nondefaulting Initial Purchasers do not purchase all
of the Securities, this Agreement will terminate without liability to any
nondefaulting Initial Purchaser or the Company. In the event of
19
a default by any Initial Purchaser as set forth in this Section 11, the Closing
Time shall be postponed for such period, not exceeding five Business Days, as
the Initial Purchasers shall determine in order that the required changes in the
Offering Memorandum or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Initial
Purchaser of its liability, if any, to the Company and any nondefaulting Initial
Purchaser for damages occasioned by its default hereunder.
12. Reliance; Notices. In all dealings hereunder, the Initial Purchasers
shall act on behalf of each of the Initial Purchasers, and the parties hereto
shall be entitled to act and rely upon any statement, request, notice or
agreement on behalf of any Initial Purchaser made or given by the Initial
Purchasers jointly or by Salomon Brothers Inc on their behalf.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Initial Purchasers shall be delivered or sent by mail,
telex or facsimile transmission to the Initial Purchasers in care of ▇▇▇▇▇
▇▇▇▇▇▇ Inc. General Counsel (fax no. (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to Salomon
Brothers Inc, Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel; and if to the Company shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Offering Memorandum, Attention: General Counsel; provided, however, that any
notice to an Initial Purchaser pursuant to Section 7(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Initial
Purchaser at its address set forth in its Initial Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by the Initial Purchasers upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. Parties. This Agreement shall inure to the benefit of and be binding
upon the Initial Purchasers, the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Initial
Purchasers, the Company and the controlling persons and officers and directors
referred to in Sections 7 and 8 and their respective heirs, executors,
administrators, successors and assigns any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Initial Purchasers, the Company and said
controlling persons and officers and directors and their respective heirs,
executors, administrators, successors and assigns, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such purchase.
14. Time of the Essence. Time shall be of the essence of this Agreement.
As used herein, the term "business day" shall mean any day when the Commission's
office in Washington, D.C. is open for business.
15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAWS PROVISIONS THEREOF. SPECIFIED TIMES OF DAY REFER TO NEW
YORK CITY TIME.
16. Effect of Headings. The Section and sub-section headings herein are
for convenience only and shall not affect the construction hereof.
20
17. Counterparts. This Agreement may be executed by any one of more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
21
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, and upon the
acceptance hereof by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., on behalf of each of the Initial
Purchasers, this letter and such acceptance hereof shall constitute a binding
agreement between each of the Initial Purchasers and the Company. It is
understood that your acceptance of this letter on behalf of each of the Initial
Purchasers is pursuant to the authority set forth in a form of Agreement among
Initial Purchasers, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly Yours,
NEXTLINK Communications, Inc.
By__________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
By: ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
By____________________________________
Name:
Title:
For themselves and on behalf of the
other Initial Purchasers named in Schedule I hereto.
SCHEDULE A
Number of
Optional Securities
Total Number of to be Purchased if
Firm Securities to Maximum Option
Initial Purchaser be Purchased Exercised
----------------- ------------------ -------------------
▇▇▇▇▇ ▇▇▇▇▇▇ Inc..................... 3,200,000 480,000
▇▇▇▇▇▇▇, Sachs & Co.................. 800,000 120,000
--------- -------
Total .......................... 4,000,000 600,000
--------- -------
--------- -------
ANNEX I
(1) The Securities have not been and will not be registered under the Act
and 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 Act or pursuant to an exemption from the registration requirements of the
Act. The Initial Purchasers represent that they have offered and sold the
Securities, and will offer and sell the Securities (i) as part of their
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance with Rule
903 of Regulation S or Rule 144A under the Act. Accordingly, the Initial
Purchasers agree that neither they nor any persons acting on their behalf has
engaged or will engage in any directed selling efforts with respect to the
Securities, and they have complied and will comply with the offering
restrictions requirement of Regulation S. The Initial Purchasers agree that, at
or prior to confirmation of sale of Securities (other than a sale pursuant to
Rule 144A), they will have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases Securities from
it 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 MAY NOT BE OFFERED AND
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 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING AND THE
CLOSING DATE, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S (OR
RULE 144A IF AVAILABLE) UNDER THE SECURITIES ACT. TERMS USED ABOVE HAVE
THE MEANING GIVEN TO THEM BY REGULATION S."
Terms used in this paragraph have the meanings given to them by Regulation S.
The Initial Purchasers further agree that they have not entered and will
not enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with their affiliates or with the prior
written consent of the Company.
(2) The Initial Purchasers further agree, on behalf of themselves and
their affiliates, that (a) they have not offered or sold and, prior to the date
six months after the date of issue of the Securities, will not offer or sell any
Securities 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 purpose 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 of Securities Regulations 1995, (b) they have complied, and will comply,
with all applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇ of Great
Britain with respect to anything done by them in relation to the Securities in,
from or otherwise involving the United Kingdom and (c) they have only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by them in connection with the issuance of the Securities to a person
who is of a kind described in Article 11(3) of the Financial Services ▇▇▇ ▇▇▇▇
(Investment Advertisements) (Exemptions) Order 1996 of Great Britain or is a
person to whom the document may otherwise lawfully be issued or passed on.
Exhibit A-1
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO SECTION 6(a)
(i) The Company has been duly incorporated and is validly existing as a
corporation under the laws of the State of Washington.
(ii) The Company has power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering Memorandum
and to enter into and perform its obligations under the Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Offering Memorandum as of the dates indicated therein;
except that the par value of the Class A Common Stock and the class B Common
Stock is $.022658473; the shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights of any
security holder of the Company.
(v) Each Designated Subsidiary has been duly formed and is validly
existing as a corporation, limited liability company or limited partnership in
good standing, as applicable, under the laws of the jurisdiction of its
formation, and has power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum; all of the
issued and outstanding shares, membership interests or partnership interests of
each Designated Subsidiary have been duly authorized and validly issued, are
fully paid and non-assessable and, except as otherwise set forth in the Offering
Memorandum in respect of the minority interests described therein, are owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(vi) The Purchase Agreement and the Registration Rights Agreement have been
duly authorized, executed and delivered by the Company, and the Registration
Rights Agreement constitutes a valid and legally binding agreement of the
Company enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles, provided that such counsel need express no
opinion as to the enforceability of provisions with respect to indemnity for
liabilities arising under the Securities Act of 1933, as amended.
(vii) The issuance of the Securities is not subject to any statutory
preemptive or other similar rights of any security holder of the Company or, to
such counsel's knowledge, any other preemptive or other similar rights of any
security holder of the Company.
(viii) The Securities have been duly and validly authorized and
delivered and have been duly and validly issued and are fully paid and
non-assessable and conform in all material respects
A-1-1
to the descriptions thereof in the Offering Memorandum. The shares of Class A
Common Stock of the Company to be issued upon conversion of the Securities have
been duly and validly authorized and reserved for issuance upon such conversion
and, when issued will be duly and validly issued, fully paid and non-assessable
and will conform in all material respects to the descriptions thereof in the
Offering Memorandum, and the holders of outstanding capital stock of the Company
are not entitled to preemptive or other rights afforded by the Company to
subscribe for the shares of the common stock of the Company issuable upon
conversion of the Securities
(ix) The information in the Offering Memorandum under the caption
"Description of Convertible Preferred Stock", to the extent that it constitutes
a summary of the terms of the Securities, and under the caption "Plan of
Distribution", and the information under the caption "Business -- Regulatory
Overview" included in the Company's Annual Report on Form 10-KSB, filed on March
25, 1998, which is incorporated therein by reference, to the extent that it
constitutes matters of law, summaries of legal matters, or legal conclusions,
has been reviewed by us and is correct in all material respects.
(x) The statements set forth in the Offering Memorandum under the caption
"Certain United States Federal Income Tax Consequences", insofar as such
statements purport to summarize certain United States federal income and estate
tax consequences of the ownership and dispensation of the Securities by certain
U.S. Holders and non-U.S. Holders of the Securities, provide a fair summary of
such consequences under current law.
(xi) All descriptions in the Offering Memorandum of contracts and other
documents to which the Company or any of its subsidiaries are a party are
accurate in all material respects; to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments that would be required to be described in the Offering
Memorandum that are not described or referred to in the Offering Memorandum
other than those described or referred to therein and the descriptions thereof
or references thereto are correct in all material respects.
(xii) The documents incorporated by reference in the Offering
Memorandum (other than the financial statements and related schedules therein,
as to which such counsel need express no opinion), when they were filed with the
Commission, complied as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission thereunder;
and they have no reason to believe that any of such documents, when such
documents were so filed, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
documents were so filed, not misleading.
(xiii) To our best knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or other constituting or
operative document or agreement and, to the best of our knowledge, no default by
the Company or any of its subsidiaries exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the Offering
Memorandum.
(xiv) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required
A-1-2
for the performance by the Company of its obligations under the Purchase
Agreement or the Registration Rights Agreement, in connection with the offering,
issuance or sale of the Securities hereunder or thereunder or the consummation
of the actions contemplated by the Purchase Agreement or the Registration Rights
Agreement, except the registration under the Act of the Securities and the
shares of Class A Common Stock to be issued upon conversion of the Securities in
connection with the Shelf Registration.
(xv) The issue and sale of the Securities, the execution, delivery and
performance of the Purchase Agreement, the Securities, the Registration Rights
Agreement and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the transactions
contemplated hereby, thereby or in the Offering Memorandum, and the consummation
of the transactions contemplated herein, therein and in the Offering Memorandum
(including the issuance and sale of the Securities by the Company hereunder),
the compliance by the Company with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action on the part of the
Company and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or default or
a Repayment Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries, pursuant to any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease, or any other agreement or instrument known to
such counsel to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiaries thereof is subject, except for such
conflicts, breaches or defaults or liens, charges or encumbrances that, singly
or in the aggregate, would not result in a Material Adverse Effect, nor will
such action result in any violation of the provisions of the constituting or
operative document or agreement of the Company or any of its subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of their assets
or properties.
(xvi) The Company is not, and upon the issuance and sale of the
Securities and the application of the net proceeds therefrom will not be, an
"investment company" or an entity "controlled" by an "investment company," as
such terms are defined in the ▇▇▇▇ ▇▇▇.
(xvii) Although such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum, except for those referred to in subsection (x) of this opinion, such
counsel has no reason to believe that, as of its date, the Offering Memorandum
or any further amendment or supplement thereto made by the Company prior to each
Closing Time (other than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading or that, as of such Closing Time, the Offering Memorandum or any
further amendment or supplement thereto made by the Company prior to such
Closing Time (other than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contains an untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
A-1-3
In rendering such opinion, such counsel (A) may rely (i) as to matters
involving the application of the laws of the State of Washington, upon the
opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, special Washington counsel to the Company
(which opinion shall be dated and furnished to the Initial Purchasers at the
Closing Time, shall be satisfactory in form and substance to counsel for the
Initial Purchasers and shall expressly state that the Initial Purchasers may
rely on such opinion as if it were addressed to them), provided that ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ shall state in their opinion that they believe that they and
the Initial Purchasers are justified in relying upon such opinion, and (ii) as
to matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials and (B) may state that they express no opinion as to the laws of any
jurisdiction outside the United States. Such opinion shall not state that it is
to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF OPINION OF R. ▇▇▇▇▇ ▇▇▇▇▇▇, ESQ.
TO BE DELIVERED PURSUANT TO SECTION 6(a)
(i) There is not pending or, to the best of my knowledge, threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or any
subsidiary thereof is a party, or to which the property of the Company or any
subsidiary thereof is subject, before or brought by any court or governmental
agency or body, which could reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in the Purchase Agreement, the Registration Rights
Agreement or the Securities or the performance by the Company of its obligations
thereunder or the transactions contemplated by the Offering Memorandum.
(ii) To the best of my knowledge and except as set forth in or contemplated
by the Offering Memorandum with respect to systems under development, (a) each
of the Company and its Designated Subsidiaries has all Authorizations of and
from, and has made all declarations and filings with, all Federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals, which are necessary or appropriate for the Company
and its Designated Subsidiaries to own, lease, license, use and construct its
properties and assets and to conduct its business in the manner described in the
Offering Memorandum, except to the extent that the failure to obtain any such
Authorizations or make any such declaration or filing would not, singly or in
the aggregate, reasonably be expected to result in a Material Adverse Effect,
(b) all such Authorizations are in full force and effect with respect to the
Company and its Designated Subsidiaries, (c) no event has occurred that permits,
or after notice or lapse of time could permit, the revocation, termination or
modification of any such Authorization and (d) the Company and its Designated
Subsidiaries are in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and regulations of the
regulatory authorities and governing bodies having jurisdiction with respect
thereto.
(iii) To the best of my knowledge, neither the execution and delivery
of the Purchase Agreement, the Registration Rights Agreement or the Securities,
nor the consummation by the Company of the transactions contemplated hereby or
thereby will cause any suspension, revocation, impairment, forfeiture,
nonrenewal or termination of any Authorization.
In rendering such opinion, such counsel (A) may rely (i) as to matters
involving the application of the laws of the State of Washington, upon the
opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, special Washington counsel to the Company
(which opinion shall be dated and furnished to the Initial Purchasers at the
Closing Time, shall be satisfactory in form and substance to counsel for the
Initial Purchasers and shall expressly state that the Initial Purchasers may
rely on such opinion as if it were addressed to them), provided that Mr. Easter
shall state in his opinion that he believes that he and the Initial Purchasers
are justified in relying upon such opinion, and (ii) as to matters of fact (but
not as to legal conclusions), to the extent he deems proper, on certificates of
responsible officers of the Company and public officials and (B) may state that
he expresses no opinion as to the laws of any jurisdiction outside the United
States. Such opinion shall not state that it is to be governed or qualified by,
or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF OPINION OF ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
TO BE DELIVERED PURSUANT TO SECTION 6(a)
(i) The Company has been duly incorporated and is validly existing as a
corporation under the laws of the State of Washington.
(ii) Each of the Purchase Agreement and the Registration Rights Agreement
has been duly authorized, executed and delivered by the Company under the laws
of the State of Washington.
(iii) The Securities have been duly and validly authorized and executed
by the Company and delivered and have been duly and validly issued and are fully
paid and non-assessable. The shares of Class A Common Stock of the Company to
be issued upon conversion of the Securities have been duly and validly
authorized and reserved for issuance upon such conversion and, when issued will
be duly and validly issued, fully paid and non-assessable and will conform in
all material respects to the descriptions thereof in the Offering Memorandum and
the holders of outstanding Capital Stock of the Company and are not entitled to
preemptive rights to subscribe for the shares of the Common Stock of the Company
issuable upon conversion of the Securities.
(iv) The issue and sale of the Securities, the execution, delivery and
performance of the Purchase Agreement, the Securities, the Registration Rights
Agreement and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the transactions
contemplated thereby or in the Offering Memorandum, and the consummation of the
transactions contemplated therein and in the Offering Memorandum (including the
issuance and sale of the Securities by the Company under the Purchase Agreement
and the use of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds"), the compliance by the
Company with its obligations under the Purchase Agreement have been duly
authorized by all necessary corporate action on the part of the Company and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with, contravene or constitute a breach of the Company's
Articles of Incorporation or By-Laws.
(v) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency of the State of Washington is necessary or required for the performance
by the Company of its obligations under the Purchase Agreement or the
Registration Rights Agreement in connection with the offering, issuance or sale
of the Securities thereunder or the consummation of the actions contemplated by
the Purchase Agreement or the Registration Rights Agreement.
(vi) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the Purchase
Agreement.
(vii) Each Designated Subsidiary formed under the laws of the State of
Washington has been duly formed and is validly existing as a limited liability
company or limited partnership under the laws of the State of Washington, each
such limited liability company has the power and authority under the Washington
limited liability company act and its limited liability company agreement, and
each such limited partnership has the partnership power and authority, to own,
lease and operate its respective properties and to conduct its respective
business as described in the Offering Memorandum, and all of the issued and
outstanding
A-3-1
membership interests or partnership interests of each such Designated Subsidiary
have been duly authorized and validly issued.
(viii) The authorized capital stock of the Company is as set forth in
the Offering Memorandum, except that the par value of the Class A Common Stock
and the Class B Common Stock is $0.022658473; the shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable.
(ix) To our knowledge, neither the Company nor any of its Designated
Subsidiaries is in violation of, as applicable, its articles of incorporation,
bylaws, limited liability company agreement or partnership agreement.
In rendering such opinion, such counsel (A) may rely as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials and (B)
may state that they express no opinion as to the laws of any jurisdiction other
than the State of Washington. Such opinion shall not state that it is to be
governed or qualified by, or that it is otherwise subject to, any treatise,
written policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
A-3-2