Exhibit 1
NEXTLINK COMMUNICATIONS MERGER, INC.
(a Washington corporation)
Units consisting of Senior Exchangeable Redeemable
Preferred Stock and Contingent Warrants
PURCHASE AGREEMENT
January 21, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
TORONTO DOMINION SECURITIES (USA) INC.
as Representatives of the several Initial Purchasers
c/o Merrill ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
NEXTLINK Communications, L.L.C., a limited liability company formed under
the laws of the State of Washington (the "Company"), and NEXTLINK Communications
Merger, Inc., a corporation organized under the laws of the State of Washington
(the "Issuer"), confirm their agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and Toronto Dominion
Securities (USA) Inc. (collectively, the "Initial Purchasers", which term shall
also include any initial purchaser substituted as hereinafter provided in
Section 11 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Toronto Dominion Securities (USA)
Inc. are acting as representatives (in such capacity, the "Representatives")
with respect to the issue and sale by the Issuer and the purchase by the Initial
Purchasers, acting severally and not jointly, of the respective number of units
set forth in Schedule A. Each Unit consists of (i) one share of the Company's
14% Senior Exchangeable Redeemable Preferred Stock (the "Preferred Securities"),
(ii) a Contingent Warrant (the "Warrants"), which represent in the aggregate the
right to acquire 5% of each outstanding class of capital stock of the Company
that ranks junior to the Preferred Securities (the "Junior Shares") on a fully
diluted basis as of the time the Warrants become exercisable. The Preferred
Securities are exchangeable at the option of the Issuer into 14% Senior
Subordinated Notes due 2009 (the "Notes") to be issued by the Issuer.
The Company and the Issuer have executed an Agreement and Plan of Merger
pursuant to which the Company will be merged with and into the Issuer, with the
Issuer as the surviving corporation (the "Merger"). Unless the context otherwise
requires, with respect to periods after consummation of the Merger references
herein to either the Company or the Issuer shall be deemed to refer to the
Issuer after the Merger.
The Company and the Issuer understand that the Initial Purchasers propose
to make an offering of the Securities on the terms and in the manner set forth
herein and agrees that the Initial Purchasers may resell, subject to the
conditions set forth herein, all or a portion of the Securities to purchasers
("Subsequent Purchasers") at any time after the date of this Agreement. The
Securities are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities,
investors that acquire Securities may only resell or otherwise offer such
Securities if such Securities are hereafter registered under the 1933 Act or if
an exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") of the rules and
regulations promulgated under the 1933 Act by the Securities and Exchange
Commission (the "Commission")).
The Company and the Issuer have prepared and delivered to each Initial
Purchaser copies of a preliminary offering memorandum dated January 9, 1997 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to each
Initial Purchaser, on the date hereof or the next succeeding day, copies of a
final offering memorandum dated January 21, 1997 (the "Final Offering
Memorandum"), each for use by such Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Securities. "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary Offering
Memorandum or the Final Offering Memorandum, or any amendment or supplement to
either such document), including any annexes or exhibits thereto, which has been
prepared and delivered by the Company and the Issuer to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities.
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and the Issuer. Each of
the Company and the Issuer, jointly and severally, represents and warrants to
each Initial Purchaser as of the date hereof and as of the Closing Time referred
to in Section 2(b) hereof, and agrees with each Initial Purchaser as follows:
(i) Similar Offerings. It has not, directly or indirectly, solicited
any offer to buy or offered to sell, and will not, directly or indirectly,
solicit any offer to buy or offer to sell, in the United States or to any
United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would require
the Securities to be registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does not, and at
the Closing Time will not, include an untrue statement of a material fact
or omit to state a material fact in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement
shall not apply to statements in or omissions from the Offering Memorandum
made in reliance upon and
-2-
in conformity with information furnished to the Company and the Issuer in
writing by any Initial Purchaser through the Representatives expressly for
use in the Offering Memorandum.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules 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 1933 Act.
(iv) Financial Statements. The financial statements, together with
the related schedules and notes, included 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,
stockholders' 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 supporting schedules, if any, included in the Offering Memorandum
present fairly in accordance with GAAP the information required to be
stated therein. 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. The pro forma financial statements of the Company and its
subsidiaries and the related notes thereto included in the Offering
Memorandum present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein.
(v) No Material Adverse Change in Business. (A) 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 or the Issuer, as the case may be (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
or the Issuer on any class of its capital stock; and (B) since the date of
its incorporation, the Issuer has not entered into any transactions, and
is not party to any agreement, except those related to the consummation of
the Merger.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a limited liability company 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 limited
liability company 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
-3-
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vii) Good Standing of the Issuer. The Issuer 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 Issuer 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.
(viii) Good Standing of Designated Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Designated Subsidiary" and, collectively, the
"Designated Subsidiaries") has been duly organized and is validly existing
as a limited liability company or limited partnership, as the case may be,
in good standing 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 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 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 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. The subsidiaries of the
Company other than Designated Subsidiaries, considered in the aggregate as
a single subsidiary, do not constitute a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X.
(ix) Capitalization. The authorized, issued and outstanding capital
stock of each of the Company and the Issuer is as set forth in the
Offering Memorandum. The shares of issued and outstanding capital stock of
each of the Company and the Issuer have been duly authorized and validly
issued and are fully paid and non-assessable; none of the outstanding
shares of capital stock of the Company or the Issuer was issued in
violation of the preemptive or other similar rights of any securityholder
of the Company, as applicable.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by each of the Company and the Issuer.
(xi) Authorization and Description of Preferred Securities. The
Preferred Securities have been duly authorized for issuance and sale to
the Initial Purchasers pursuant to this Agreement and, when issued and
delivered by the Issuer pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-
-4-
assessable; the Preferred Securities conform to the statements relating
thereto contained in the Offering Memorandum and such description conforms
to the rights set forth in the instruments defining the same; no holder of
the Preferred Securities will be subject to personal liability by reason
of being such a holder; and the issuance of the Preferred Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Issuer.
(xii) Authorization of the Warrant Agreement. The Warrant Agreement,
to be dated as of January 31, 1997 (the "Warrant Agreement"), between the
Issuer and __________, as Warrant Agent (the "Warrant Agent"), has been
duly authorized by the Issuer and, at the Closing Time, will have been
duly executed and delivered by the Issuer and will constitute a valid and
binding agreement of the Issuer, enforceable against the Issuer in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(xiii) Authorization of the Warrants. The Warrants have been duly
authorized for issuance and sale to the Initial Purchasers pursuant to
this Agreement and, at the Closing Time, will have been duly executed by
the Issuer and, when issued and delivered against payment of the
consideration specified herein and duly authorized by the Warrant Agent as
provided in the Warrant Agreement, will constitute valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Warrant Agreement.
(xiv) Authorization and Reservation of Junior Shares. The Junior
Shares initially issuable upon exercise of the Warrants have been duly and
validly authorized and reserved for issuance and, when issued and
delivered in accordance with the provisions of the Warrant Agreement, will
be duly and validly issued, fully paid and non-assessable. The Junior
Shares conform to all statements relating thereto contained in the
Offering Memorandum and such description conforms to the rights set forth
in the instruments defining the same.
(xv) Authorization of the Indenture. The Indenture (as hereinafter
defined in Section 1(a)(xvi) hereof) has been duly authorized by the
Issuer and, when executed at a time contemporaneous with the issuance of
the Notes, will have been duly executed and delivered by the Issuer and
will constitute a valid and binding agreement of the Issuer, enforceable
against it in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
other similar laws relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xvi) Authorization of the Notes. The Notes have been duly
authorized by the Issuer and, when issued and delivered upon exchange for
the Preferred Securities in accordance
-5-
with the terms of the Preferred Securities, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Issuer entitled to the benefits provided by the
Indenture (the "Indenture") between the Issuer and United States Trust
Company of New York as Trustee (the "Trustee"), under which they are to be
issued, enforceable against the Issuer in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xvii) Description of the Warrants and the Warrant Agreement. The
Warrants and the Warrant Agreement will conform in all material respects
to the respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms previously
delivered to the Initial Purchasers.
(xviii) Description of the Notes and the Indenture. The Notes and
the Indenture will conform in all material respects to the respective
statements relating thereto contained in the Offering Memorandum and will
be in substantially the respective forms previously delivered to the
Initial Purchasers.
(xix) Absence of Defaults and Conflicts. None of the Company, any of
its subsidiaries or the Issuer is in violation of its constituting or
operative document or agreement or in default in the performance or
observance of any 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 the Issuer, as the case
may be, or by which or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries or the
Issuer, as the case may be, is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; the issue and sale of the Securities, the execution,
delivery and performance of this Agreement, the Warrant Agreement, the
Indenture, the Preferred Registration Rights Agreement (as hereinafter
defined in Section 1(a)(xx) hereof), the Warrant Registration Rights
Agreement (as hereinafter defined in Section 1(a)(xxi) hereof), the
Preferred Securities, the Warrants and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company or
the Issuer, as applicable, in connection with the transactions
contemplated hereby or thereby or in the Offering Memorandum and the
exchange of the Preferred Securities for the Notes and the consummation of
the transactions contemplated herein, therein and in the Offering
Memorandum (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds" and the exchange
of the Preferred Securities for the Notes), the consummation of the Merger
and compliance by the Company and, the Issuer with its obligations
hereunder and thereunder 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 or the
Issuer, as the case may be, 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
-6-
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 the Issuer, as the case may be,
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 the Issuer, as the case may be, or any of their assets or properties.
As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require to
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries or the Issuer, as
the case may be.
(xx) Authorization of the Preferred Registration Rights Agreement.
The Preferred Securities Exchange and Registration Rights Agreement
between the Issuer and the Initial Purchasers to be dated as of January
31, 1997 (the "Preferred Registration Rights Agreement") has been duly
authorized by the Issuer and, when executed and delivered by the Issuer,
will constitute a valid and legally binding agreement of the Issuer
enforceable against it in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law); and the Preferred Registration Rights Agreement will
conform in all material respects to the description thereof in the
Offering Memorandum;
(xxi) Authorization of the Warrant Registration Rights Agreement.
The Warrant Registration Rights Agreement between the Issuer and the
Initial Purchasers to be dated as of January 31, 1997 (the "Warrant
Registration Rights Agreement") has been duly authorized and, when
executed and delivered by the Issuer, will constitute a valid and legally
binding agreement of the Issuer enforceable against the Issuer in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law); and the
Warrant Registration Rights Agreement will conform in all material
respects to the description thereof in the Offering Memorandum.
(xxii) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any of its subsidiaries or the Issuer exists or, to the
knowledge of the Company and the Issuer, is imminent, and neither the
Company nor the Issuer is aware of any existing or imminent labor
disturbance by the employees of any of its or any of its subsidiaries'
principal suppliers, manufacturers, customers or contractors, which, in
either case, may reasonably be expected to result in a Material Adverse
Effect.
(xxiii) 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 and the Issuer,
threatened, against or affecting the Company, or any subsidiary thereof or
the Issuer, as the case may be, which might reasonably be expected to
result in a Material
-7-
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 Issuer, as the case may be, or the consummation of
this Agreement or the performance by the Company or the Issuer of its
obligations hereunder. The aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary thereof or the Issuer,
as the case may be, 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.
(xxiv) 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 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.
(xxv) Absence of Further Requirements. 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 for the performance by the Company or, the Issuer
of its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the actions
contemplated by this Agreement, the Warrant Agreement, the Indenture, the
Preferred Registration Rights Agreement or the Warrant Registration Rights
Agreement except for the filing of certain registration statements with
the Commission pursuant to the 1933 Act and the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the "1939
Act"), as contemplated by the Preferred Registration Rights Agreement and
the Warrant Registration Rights Agreement.
(xxvi) 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 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 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 such
Authorizations are in full force and effect with respect to the Company
and its 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
-8-
such Authorization; the Company and its 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, the Warrant Agreement, the Indenture, the Preferred
Registration Rights Agreement, the Warrant Registration Rights Agreement,
the Preferred Securities or the Warrants, nor the consummation of the
transactions contemplated hereby or thereby or of the Merger nor
compliance with the terms, conditions and provisions thereof by the
Company or Capital will cause any suspension, revocation, impairment,
forfeiture, nonrenewal or termination of any Authorization.
(xxvii) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and
its subsidiaries 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.
(xxviii) 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)(iv)
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.
(xxix) 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
-9-
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 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 might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by 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.
(xxx) Investment Company Act. The Issuer 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").
(xxxi) Rule 144A Eligibility. The Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same
class as securities listed on a national securities exchange registered
under Section 6 of the 1934 Act, or quoted in a U.S. automated interdealer
quotation system.
(xxxii) No General Solicitation. None of the Company, its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), the Issuer or any person acting on its or any of their
behalf (other than the Initial Purchasers, as to whom the Company and the
Issuer make no representation) has engaged or will engage, in connection
with the offering of the Securities, in any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the 1933
Act.
(xxxiii) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers and to each Subsequent Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture
under the 1939 Act.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries or the Issuer delivered to the
Representatives or to counsel for the Initial Purchasers shall be deemed a
representation and warranty by the Company or the Issuer to each Initial
Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Issuer
agrees to sell to each Initial Purchaser, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Issuer,
-10-
at the price per Unit set forth in Schedule B, the number of Units set forth in
Schedule A opposite the name of such Initial Purchaser, plus any additional
number of Units which such Initial Purchaser may become obligated to purchase
pursuant to the provisions of Section 11 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
shall be agreed upon by the Initial Purchasers, the Company and the Issuer, at
10:00 A.M. on the eighth business day after the date hereof (unless postponed in
accordance with the provisions of Section 11), or such other time not later than
ten business days after such date as shall be agreed upon by the
Representatives, the Company and the Issuer (such time and date of payment and
delivery being herein called the "Closing Time").
Payment shall be made to the Issuer by wire transfer of immediately
available funds to a bank account designated by the Issuer, against delivery to
the Representatives for the respective accounts of the Initial Purchasers of
certificates for the Securities to be purchased by them. It is understood that
each Initial Purchaser has authorized ▇▇▇▇▇▇▇ ▇▇▇▇▇, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not
as representative of the Initial Purchasers, may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Initial Purchaser whose funds have not been received by the Closing Time, but
such payment shall not relieve such Initial Purchaser from its obligations
hereunder. Unless otherwise requested by ▇▇▇▇▇▇▇ ▇▇▇▇▇, which request shall be
made in writing at least one full business day before the Closing Time, the
certificates representing the Securities shall be registered in the name of Cede
& Co. pursuant to the DTC Agreement and shall be made available for examination
by the Initial Purchasers in The City of New York not later than 10:00 A.M. on
the last business day prior to the Closing Time.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a "qualified institutional buyer" within the meaning of Rule 144A under the 1933
Act (a "Qualified Institutional Buyer") or an "accredited investor" within the
meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor").
SECTION 3. Covenants of the Company and the Issuer. Each of the Company
and the Issuer covenants with each Initial Purchaser as follows:
(a) Offering Memorandum. The Company and the Issuer, as promptly as
possible, will furnish to each Initial Purchaser, without charge, such number of
copies of the Preliminary Offering Memorandum, the Final Offering Memorandum and
any amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company and the Issuer will
as promptly as reasonably practicable notify each Initial Purchaser, and confirm
such notice in writing, of (x) any filing made by it of information relating to
the offering of the Securities with any securities exchange or any other
regulatory body in the United States or any other jurisdiction, and (y) prior to
the completion of the placement of the Securities by the Initial Purchasers as
evidenced by a notice in writing from the Initial Purchasers to the Company and
the Issuer, any material changes in or affecting the earnings, business affairs
or business prospects of the Company and its subsidiaries or the Issuer which
(i) make any statement in the Offering Memorandum false or misleading or (ii)
are not disclosed in the Offering
-11-
Memorandum. In such event or if during such time any event shall occur as a
result of which it is necessary, in the reasonable opinion of the Company and
the Issuer, their counsel, the Initial Purchasers or counsel for the Initial
Purchasers, to amend or supplement the Final Offering Memorandum in order that
the Final Offering Memorandum not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances then existing, the
Company and the Issuer will forthwith amend or supplement the Final Offering
Memorandum by preparing and furnishing to each Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Final Offering Memorandum
(in form and substance satisfactory in the reasonable opinion of counsel for the
Initial Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company and the
Issuer will advise each Initial Purchaser promptly of any proposal to amend or
supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the consent of
the Initial Purchasers, nor the Initial Purchaser's delivery of any such
amendment or supplement, shall constitute a waiver of any of the conditions set
forth in Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company and the
Issuer will use their best efforts, in cooperation with the Initial Purchasers,
to qualify the Securities for offering and sale under the applicable securities
laws of such jurisdictions as the Representatives may designate and will
maintain such qualifications in effect as long as required for the sale of the
Securities; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) Use of Proceeds. The Issuer will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(f) Restriction on Sale of Securities. During a period of 45 days from the
date of the Offering Memorandum, neither the Company nor the Issuer will,
without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly,
issue, sell, offer or agree to sell, grant any option for the sale of, or
otherwise dispose of, any other preferred securities or debt securities of the
Company or the Issuer or securities of the Company or the Issuer that are
convertible into, or exchangeable for, the Preferred Securities or such other
preferred securities or debt securities.
(g) Reservation of Junior Shares. To reserve and keep available at all
times, free of preemptive rights, a sufficient number of Junior Shares for the
purpose of enabling the Issuer to satisfy any obligations to issue the Junior
Shares upon exercise of the Warrants.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company and the Issuer will pay all expenses incident to
the performance of their obligations under this Agreement, including (i) the
preparation, printing and any filing of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document incorporated
therein by reference) and of each amendment or supplement thereto, (ii) the
preparation,
-12-
printing and delivery to the Initial Purchasers of this Agreement, any Agreement
among Initial Purchasers, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Initial Purchasers, certificates for Junior Shares upon
exercise of Warrants and certificates for the Notes, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Initial Purchasers' and any
charges of DTC in connection therewith; (iv) the fees and disbursements of the
Company's and the Issuer's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith
and in connection with the preparation of the Blue Sky Survey, any supplement
thereto and any Legal Investment Survey, (vi) the fees and expenses of any
transfer agent or registrar for the Preferred Securities and the Junior Shares,
(vii) the fees and expenses of the Warrant Agent and the Trustee, including the
fees and disbursements of counsel for the Warrant Agent and the Trustee, as the
case may be, in connection with the Warrant Agreement and the Warrants or
Indenture and the Notes, as the case may be, (viii) any fees payable in
connection with the rating of the Securities and (ix) any fees payable in
connection with the designation of the Units, Preferred Securities and Warrants
for trading in PORTAL.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
10(a)(i) 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.
SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations
of the several Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company and the Issuer contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
subsidiaries or the Issuer delivered pursuant to the provisions hereof, to the
performance by each of the Company and the Issuer of its covenants and other
obligations hereunder, and to the following further 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
Time, of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Company and the Issuer, and
of R. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Vice President, General Counsel and Secretary of the
Issuer, in form and substance satisfactory to counsel for the Initial
Purchasers, to the effect set forth in Exhibits A-1 and A-2 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 Time, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, with
respect to the incorporation of the Issuer, the validity of the Securities, the
Warrant Agreement, the Indenture, the Preferred Registration Rights Agreement,
the Warrant Registration Rights Agreement, the Offering Memorandum and such
other related matters. 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.
-13-
(c) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Offering Memorandum, 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 or
the Issuer, whether or not arising in the ordinary course of business, and the
Initial Purchasers shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company and of the President or a Vice President of the Issuer, dated as
of the Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1 hereof are
true and correct with the same force and effect as though expressly made at and
as of the Closing Time, and (iii) the Company or the Issuer, as the case may be,
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Initial Purchasers shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a
letter dated such date, in form and substance satisfactory to the Initial
Purchasers containing statements and information of the type ordinarily included
in accountants' "comfort letters" to Initial Purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial Purchasers
shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to the
Closing Time.
(f) Maintenance of Rating. Since the date of this Agreement, there shall
not have occurred a downgrading in the rating assigned to the Securities, if
any, or any of the Company's debt securities 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 the Securities or any of the Company's debt
securities.
(g) Registration Rights Agreements. The Preferred Registration Rights
Agreement shall have been duly authorized, executed and delivered by the Issuer
and the Warrant Registration Rights Agreement shall have been duly authorized,
executed and delivered by the Issuer.
(h) Additional Documents. At the Closing Time, 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 all proceedings taken by the Issuer and the
Company in connection with the issuance and sale of the Securities as herein
contemplated and the consummation of the Merger shall be satisfactory in form
and substance to the Representatives and counsel for the Initial Purchasers.
(i) 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 Representatives by notice to the Company and
the Issuer at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 7 and 8 shall survive any such termination
and remain in full force and effect.
-14-
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers, the Company
and the Issuer hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited Investors or
Qualified Institutional Buyers. Offers and sales of the Securities will be
made only by the Initial Purchasers or Affiliates thereof qualified to do
so in the jurisdictions in which such offers or sales are made. Each such
offer or sale shall only be made (A) to persons whom such Initial
Purchaser or its Affiliates reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act) or
(B) to a limited number of other institutional accredited investors (as
such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D)
that such Initial Purchaser or its Affiliates reasonably believes to be
and, with respect to sales and deliveries, that are Accredited Investors
("Institutional Accredited Investors").
(ii) No General Solicitation. The Securities will be offered by
approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or general advertising (within the meaning of Rule
502(c) under the ▇▇▇▇ ▇▇▇) will be used in the United States in connection
with the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such purchaser
pursuant to clause (a) above, each third party shall, in the judgment of
the applicable Initial Purchaser, be an Institutional Accredited Investor
or a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except as described in the Offering
Memorandum under "Notice to Investors".
(v) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the certificate of designations of rights
and preferences relating to the Preferred Securities (the "Certificate of
Designations"), the Warrant Agreement and the Indenture, including the
legends required thereby, shall apply to the Preferred Securities, the
Warrants, the Junior Shares and the Notes, as the case may be, except as
otherwise agreed by the Company and the Initial Purchasers. Following the
sale of the Securities by the Initial Purchasers to Subsequent Purchasers
pursuant to the terms hereof, the Initial Purchasers shall not be liable
or responsible to the Company or the Issuer for any losses, damages or
liabilities suffered or incurred by the Company or the Issuer, including
any losses, damages or liabilities under the 1933 Act, arising from or
relating to any resale or transfer of any Security, Preferred Security,
Warrant, Junior Share or Note.
-15-
(b) Covenants of the Company and the Issuer. Each of the Company and the
Issuer covenants with each Initial Purchaser as follows:
(i) Due Diligence. In connection with the original distribution of
the Securities, each of the Company and the Issuer agrees that, prior to
any offer or resale of the Securities by the Initial Purchasers, the
Initial Purchasers and counsel for the Initial Purchasers shall have the
right to make reasonable inquiries into the business of the Company and
its subsidiaries or the Issuer, as applicable. The Company also agrees to
provide answers to each prospective Subsequent Purchaser of Securities who
so requests concerning the Company and its subsidiaries (to the extent
that such information is available or can be acquired and made available
to prospective Subsequent Purchasers without unreasonable effort or
expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the
Securities, as provided in the Offering Memorandum.
(ii) Integration. It will not and will cause its Affiliates not to
make any offer or sale of securities of the Company or the Issuer of any
class if, as a result of the doctrine of "integration" referred to in Rule
502 under the 1933 Act, such offer or sale would render invalid (for the
purpose of (i) the sale of the Securities by the Issuer to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to
Subsequent Purchasers or (iii) the resale of the Securities by such
Subsequent Purchasers to others) the exemption from the registration
requirements of the 1933 Act provided by Section 4(2) thereof or by Rule
144A thereunder or otherwise.
(iii) Rule 144A Information. In order to render the Securities
eligible for resale pursuant to Rule 144A under the 1933 Act, while any of
the Preferred Securities, Warrants, Junior Shares issuable upon exercise
of Warrants or Notes remain outstanding and constitute "restricted
securities" (as such term is defined under Rule 144(a)(3) under the 1933
Act (or any successor thereto)), it will make available, upon request, to
any holder of Preferred Securities, Warrants, Junior Shares issuable upon
exercise of Warrants or Notes or prospective purchasers of Preferred
Securities, Warrants, Junior Shares issuable upon exercise of Warrants or
Notes the information specified in Rule 144A(d)(4), unless the Issuer
furnishes information to the Commission pursuant to Section 13 or 15(d) of
the 1934 Act (such information, whether made available to holders or
prospective purchasers or furnished to the Commission, is herein referred
to as "Additional Information").
(iv) Restriction on Repurchases. Until the expiration of three years
after the original issuance of the Securities, it will not, and will cause
its Affiliates not to, purchase or agree to purchase or otherwise acquire
any Preferred Securities, Warrants, Junior Shares issuable upon exercise
of Warrants or Notes which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the 1933 Act), whether as beneficial
owner or otherwise (except as agent acting as a securities broker on
behalf of and for the account of customers in the ordinary course of
business in unsolicited broker's transactions) unless, immediately upon
any such purchase, the Company, the Issuer or any Affiliate shall submit
such Preferred Securities, Warrants, Junior Shares issuable upon exercise
of Warrants or Notes for cancellation.
-16-
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchasers. Each of the Company and the
Issuer, jointly and severally, agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of
the Company and the Issuer; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company and the
Issuer by any Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Offering Memorandum (or any amendment thereto).
(b) Indemnification of Company, Directors and Officers. Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, the
Issuer and each person, if any, who controls the Company or the Issuer within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Offering Memorandum in reliance upon and in conformity
with written information furnished to the Company and the Issuer by such Initial
Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party shall
give 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 shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially
-17-
prejudiced as a result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. 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.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 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
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Issuer on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Issuer 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 and the Issuer 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 Issuer and the total
-18-
underwriting discount received by the Initial Purchasers, bear to the aggregate
initial offering price of the Securities.
The relative fault of the Company and the Issuer 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, the Issuer 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. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
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 the
public were offered to the public 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.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) 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 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each person, if any, who controls the Company or the Issuer
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company and the Issuer. 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 A hereto and not joint.
SECTION 9. Presentations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or the Issuer 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 or the Issuer, and shall survive
delivery of the Securities to the Initial Purchasers.
-19-
SECTION 10. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Issuer, at any time at or prior to
the Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Offering Memorandum, 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 in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or limited by the Commission, or if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the NASDAQ National Market
System has been suspended or limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(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 4 hereof, and provided further that Sections 1, 7
and 8 shall survive such termination and remain in full force and effect.
SECTION 11. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other Initial Purchasers, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Issuer shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangements.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any form of telecommunication. Notices to the Initial Purchasers
shall be directed to the Representatives at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III; notices to the
Company or the Issuer shall be directed to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of General Counsel.
-20-
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Company and the Issuer 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 Issuer and their respective
successors and the controlling persons and officers and directors referred to in
Sections 7 and 8 and their heirs and legal representatives, 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 the Issuer and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, 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.
SECTION 14. Provision in case of Special Mandatory Redemption. In the
event that the Merger is not consummated on or prior to February 28, 1997 and
the Preferred Securities are subject to the special mandatory redemption
provision relating thereto, (i) the Initial Purchasers shall, within two
business days after the written request of the Issuer and the Company, refund to
the Issuer an amount equal to the aggregate underwriting discount referred to in
Schedule B hereto and (ii) the Company shall reimburse the Initial Purchasers
for all of their out-of-pocket expenses incurred in connection with the offering
of the Units, including the reasonable fees and disbursements of counsel for the
Initial Purchasers.
SECTION 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 16. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
-21-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Initial Purchasers, the Company and the Issuer in accordance with its
terms.
Very truly Yours,
NEXTLINK COMMUNICATIONS, L.L.C.
By NEXTLINK, INC.:
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
NEXTLINK COMMUNICATIONS MERGER, INC.
By /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Title: Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written;
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
TORONTO DOMINION SECURITIES (USA) INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Authorized Signatory
For themselves and as Representatives of the other Initial Purchasers named in
Schedule A hereto.
-22-
SCHEDULE A
Number of
Name of Initial Purchaser Units
------------------------- ---------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated...................................... 4,275,000
Toronto Dominion Securities (USA) Inc................... 1,425,000
---------
Total 5,700,000
=========
Sch A - 1
SCHEDULE B
NEXTLINK COMMUNICATIONS MERGER, INC.
5,700,000 Units Consisting of Exchangeable
Preferred Shares and Contingent Warrants
1. The initial public offering price per Unit shall be $50.
2. The purchase price to be paid by the Initial Purchasers for the Units
shall be $48.25 per Unit, resulting in an underwriting discount of $1.75 per
Unit.
3. The dividend rate on the Preferred Securities shall be 14% per annum.
Sch B - 1
Exhibit A-1
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Company has been duly formed and is validly existing as a limited
liability company in good standing 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 limited liability company
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; 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 securityholder of the Company.
(v) Each Designated Subsidiary has been duly formed and is validly
existing as a limited liability company or limited partnership in good standing
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; all of the issued and outstanding membership
interests or partnership interests of each Designated Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, except as
otherwise set forth in the Offering Memorandum in respect of the minority
interests described therein, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(vi) The Issuer has been duly incorporated and is validly existing as a
corporation under the laws of the State of Washington.
(vii) The Issuer 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 obligation under the Purchase
Agreement.
(viii) The Issuer 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.
(ix) The authorized, issued and outstanding capital stock of the Issuer is
as set forth in the Offering Memorandum; the shares of issued and outstanding
capital stock of the Issuer have been duly authorized and validly issued and are
fully paid and non-assessable.
A-1-1
(x) The Purchase Agreement has been duly authorized, executed and
delivered by each of the Company and the Issuer.
(xi) The Preferred Securities have been duly authorized and validly issued
and are fully paid and non-assessable; no holder of Preferred Securities is or
will be subject to personal liability by reason of being such a holder; the
Preferred Securities conform to the provisions of the Certificate of
Designations; the relative rights, preferences, interests and powers of the
Preferred Securities are as set forth in the Certificate of Designations; and
all such provisions are valid under the laws of the State of Washington.
(xii) The Junior Shares issuable upon exercise of the Warrants have been
duly authorized and reserved for issuance upon such exercise by all necessary
action; such shares, when issued upon such exercise, will be validly issued and
will be fully paid and non-assessable and no holder of such Junior Shares is or
will be subject to personal liability by reason of being such a holder.
(xiii) Neither the issuance of the Preferred Securities nor the issuance
of Junior Shares issuable upon exercise of the Warrants is subject to the
preemptive or other similar rights of any securityholder of the Issuer.
(xiv) The Warrant Agreement has been duly and validly authorized, executed
and delivered by the Issuer and (assuming the due authorization, execution and
delivery thereof by the Warrant Agent) constitutes a valid and binding agreement
of the Issuer, enforceable against the Issuer in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally, or by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(xv) The Warrants have been duly authorized, executed, issued and
delivered, and constitute valid and binding obligations of the Issuer,
enforceable against the Issuer in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), and are
entitled to the benefits of the Warrant Agreement.
(xvi) The Indenture has been duly authorized by the Issuer and, when
executed and delivered by the Issuer (assuming the due authorization, execution
and delivery thereof by the Trustee), will constitute a valid and binding
agreement of the Issuer, enforceable against it in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally, or by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(xvii) The Notes have been duly authorized by the Issuer and, when
executed by the Issuer and authenticated by the Trustee in the manner provided
in the Indenture (and delivered in exchange for Preferred Securities), will
constitute valid and binding obligations of the Issuer, enforceable against it
in accordance with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency,
A-1-2
reorganization, moratorium (including, without limitation, all laws relating to
fraudulent transfers), or other similar laws relating to or affecting
enforcement of creditor's rights generally, or by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law), and will be entitled to the benefits of the Indenture.
(xviii) The Preferred Registration Rights Agreement has been duly
authorized, executed and delivered by the Issuer and (assuming due
authorization, execution and delivery by the Initial Purchasers, constitutes a
valid and legally binding agreement of the Issuer, enforceable against it in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xix) The Warrant Registration Rights Agreement has been duly authorized,
executed and delivered by the Issuer and (assuming due authorization, execution
and delivery by the Initial Purchasers) constitutes a valid and legally binding
agreement of the Issuer, enforceable against the Issuer in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xx) Each of the Preferred Securities, the Warrants, the Warrant
Agreement, the Indenture, the Preferred Registration Rights Agreement and the
Warrant Registration Rights Agreement conform in all material respects to the
description thereof contained in the Offering Memorandum.
(xxi) The information in the Offering Memorandum under
"Business--Regulatory Overview" and "Certain Federal Income Tax Considerations",
to the extent that it constitutes matters of law, summaries of legal matters, or
legal conclusions, has been reviewed by them and is correct in all material
respects.
(xxii) 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.
(xxiii) Neither the Company, nor any of its subsidiaries, nor the Issuer
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, any of its subsidiaries or the Issuer 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.
(xxiv) 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 for the performance by the Company
or the Issuer of its obligations under the Purchase Agreement, in connection
A-1-3
with the offering, issuance or sale of the Securities hereunder or the
consummation of the actions contemplated by the Purchase Agreement, the Warrant
Agreement, the Indenture, the Preferred Registration Rights Agreement or the
Warrant Registration Rights Agreement other than such as may be required under
state securities or blue sky laws and the filing of certain registration
statements with the Commission pursuant to the 1933 Act and the qualification of
the Indenture under the 1939 Act as contemplated by the Preferred Registration
Rights Agreement and the Warrant Registration Rights Agreement.
(xxv) It is not necessary in connection with the offer, sale and delivery
of the Securities to the Initial Purchasers and to each Subsequent Purchaser in
the manner contemplated by the Purchase Agreement and the Offering Memorandum to
register the Securities under the 1933 Act or to qualify the Indenture under the
Trust Indenture Act.
(xxvi) The issue and sale of the Securities, the execution, delivery and
performance of the Purchase Agreement, the Warrant Agreement, the Indenture, the
Preferred Registration Rights Agreement, the Warrant Registration Rights
Agreement, the Preferred Securities, the Warrants and any other agreement or
instrument entered into or issued or to be entered into or issued by the Company
or the Issuer in connection with the transactions contemplated thereby or in the
Offering Memorandum and the exchange of the Preferred Securities for the Notes
and the consummation of the transactions contemplated therein and in the
Offering Memorandum (including the issuance and sale of the Securities and the
use of the proceeds from the sale of the Securities as described in the Offering
Memorandum under the caption "Use of Proceeds" and the exchange of the Preferred
Securities for the Notes), the consummation or the Merger and compliance by the
Company and the Issuer with its respective obligations thereunder 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 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 or the Issuer, as the case may
be, 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 or the Issuer, as the
case may be, 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 or the
Issuer, as the case may be, 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 the Issuer, as the case
may be, 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 the
Issuer, as the case may be, or any of their assets or properties.
(xxvii) The Issuer is not, and upon the issuance and sale of the Units 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 1940 Act.
Nothing has come to our attention that would lead us to believe that the
Offering Memorandum (except for financial statements and schedules and other
financial data included or incorporated by reference therein as to which we make
no statement), 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
A-1-4
not misleading or that the Offering Memorandum or any amendment or supplement
thereto (except for financial statements and schedules and other financial data
included or incorporated by reference therein, as to which such counsel need
make no statement), at the time the Offering Memorandum was issued, at the time
any such amended or supplemented Offering Memorandum was issued or at the
Closing Time, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of the laws of the State of Washington, upon the
opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, special Washington counsel to the Company and
the Issuer (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 (B), 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, the Issuer and
public officials. 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. ▇▇▇▇▇ ▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(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 or the Issuer is a party, or to which the property of the
Company or any subsidiary or the Issuer thereof is subject, before or brought by
any court or governmental agency or body, which might 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 or the
performance by the Company or the Issuer 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 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 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 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 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 Warrant Agreement, the Indenture, the Preferred
Registration Rights Agreement, the Warrant Registration Rights Agreement, the
Preferred Securities or the Warrants, nor the consummation by the Company and
the Issuer of the transactions contemplated hereby or thereby or of the Merger
nor compliance with the terms, conditions and provisions thereof by the Company
or the Issuer will cause any suspension, revocation, impairment, forfeiture,
nonrenewal or termination of any Authorization.
(iv) The information in the Offering Memorandum under the caption
"Business -- Regulatory Overview", to the extent that it constitutes matters of
law, summaries of legal matters or legal conclusions, has been reviewed by me
and is correct in all material respects.
A-2-1