Exhibit 1.1
▇▇▇▇▇▇, INC.
$500,000,000 10 1/2% Senior Discount Notes Due 2007
PURCHASE AGREEMENT
New York, New York
February 26, 1997
Salomon Brothers Inc
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
▇▇▇▇▇▇, Inc., a Delaware corporation (the "Company"), proposes to issue and
sell to you (the "Purchasers") $500,000,000 principal amount of its 10 1/2%
Senior Discount Notes Due 2007 (the "Securities"), to be issued under an
indenture (the "Indenture") to be dated as of March 1, 1997, between the Company
and United States Trust Company of New York, as trustee (the "Trustee").
The sale of the Securities to you will be made without registration of the
Securities under the Securities Act of 1933, as amended (the "Act"), in reliance
upon the exemption from the registration requirements of the Act provided by
Section 4(2) thereof. You have advised the Company that you will make an
offering of the Securities purchased by you hereunder in accordance with Section
4 hereof on the terms set forth in the Final Memorandum (as defined below), as
soon as you deem advisable after this Agreement has been executed and delivered,
solely to persons who you reasonably believe to be (i) "qualified institutional
buyers" as defined in Rule 144A under the Act ("QIBs"), (ii) a limited number of
institutional "accredited investors," as defined in Rule 501(a)(1), (2), (3) and
(7) under the Act, that make certain representations and agreements in the form
of Exhibit A hereto (each, an "Institutional Accredited Investor") and (iii)
persons who are not "U.S. persons," in offers and sales outside the United
States made in reliance on Regulation S under the Act ("Regulation S"), that
make certain representations and agreements in the form of Exhibit B hereto
(each, a "Foreign Purchaser") (such persons specified in clause (i), (ii) and
(iii) being referred to herein as the "Eligible Purchasers").
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum, dated February 13, 1997 (the "Preliminary
Memorandum"), and a final offering memorandum, dated February 26, 1997 (the
"Final Memorandum"). Each of the Preliminary Memorandum and the Final
Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Final Memorandum in connection with the offering
and resale by the Purchasers of the Securities. Any references herein to the
Preliminary Memorandum or the Final Memorandum shall be deemed to include all
exhibits thereto.
1. Representations and Warranties. The Company represents and warrants
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to, and agrees with, the Purchasers as set forth below in this Section 1.
(a) Each of the Preliminary Memorandum and the Final Memorandum as of
its date did not, and the Final Memorandum (as the same may have been
amended or supplemented) as of the Closing Date (as defined below) will
not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that the Company makes no representations or warranties as to the
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information contained in or omitted from the Preliminary Memorandum or the
Final Memorandum (and any amendment or supplement thereof or thereto) in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of either Purchaser specifically for inclusion
in the Preliminary Memorandum or the Final Memorandum (and any amendment or
supplement thereof or thereto).
(b) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Rule 10b-6 (or, if applicable,
Regulation M) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in connection with the offering of the Securities.
(c) The documents filed by the Company under the Exchange Act at the
time they were filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder and do not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein, in light of the circumstances under which they were
made, or necessary to make the statements therein not misleading.
(d) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Act ("Regulation D")) of the Company has
directly, or through any agent (provided that no representation is made as
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to the Purchasers or any person acting on their behalf), (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Act) which is or will be integrated with
the sale of the Securities in a manner that would require the registration
of the Securities under the Act or (ii) engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offering of the Securities.
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(e) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Purchasers in the manner contemplated by
this Agreement to register the Securities under the Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(f) Assuming (i) that the representations and warranties of the
Purchasers in Section 4 are true, and (ii) compliance by the Purchasers
with their covenants set forth in Section 4, it is not necessary in
connection with the initial resale of the Securities by the Purchasers in
the manner contemplated by this Agreement to register the Securities under
the Act.
(g) None of the Company, its affiliates or any person acting on behalf
of the Company or its affiliates has engaged in any directed selling
efforts (as that term is defined in Regulation S) with respect to the
Securities, and the Company and its affiliates and any person acting on its
or their behalf have complied with the offering restrictions requirement of
Regulation S (provided that no representation is made as to the Purchasers
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or any person acting on their behalf).
(h) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Act.
(i) Since the date of the most recent financial statements included in
the Final Memorandum (exclusive of any supplement thereto), there has been
no material adverse change, or any development which could reasonably be
expected to result in a material adverse change, in the condition
(financial or other), earnings, business, prospects or properties of the
Company and its subsidiaries, whether or not arising from transactions in
the ordinary course of business, except as set forth in the Final
Memorandum (exclusive of any supplement thereto); and, since the respective
dates as of which information is given in the Final Memorandum, there has
not been any change in the capital stock (other than grants of options and
issuances of common stock pursuant to existing employee stock option plans,
stock ownership plans or stock purchase plans, repurchases by the Company
of its common stock in the ordinary course of business or conversions of
outstanding convertible securities) or long-term debt (other than changes
as a result of borrowings) in the ordinary course of business not exceeding
$12,000,000, maturities, regularly scheduled payments and payments
contemplated as a result of the application of proceeds of the offering of
the Securities as described in the Final Memorandum, amortization of debt
discount or currency fluctuations) of the Company or any of its
subsidiaries.
(j) Each of (a) the Company and (b) McLeodUSA Telecommunications
Services, Inc., McLeodUSA Network Services, Inc.,
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McLeodUSA Maintenance Services, Inc., McLeodUSA Publishing Company,
McLeodUSA Media Group, Inc., McLeodUSA Diversified, Inc. and ▇▇▇▇▇▇▇, ▇▇▇▇
& Associates, Inc. (individually a "Subsidiary" and collectively the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction in which it
is chartered or organized, with full corporate power and authority to own
its properties and conduct its business as described in the Final
Memorandum, and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction which requires
such qualification, except where the failure to be so qualified could not
reasonably be expected to have a material adverse effect on the Company and
the Subsidiaries. Except for the Subsidiaries, the Company has no
subsidiaries which, considered in the aggregate as a single subsidiary,
would constitute a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X promulgated under the Act.
(k) All the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final Memorandum,
all outstanding shares of capital stock of the Subsidiaries are owned by
the Company either directly or through wholly owned subsidiaries free and
clear of any security interests, claims, liens or encumbrances.
(l) The Company's authorized equity capitalization is as set forth in
the Final Memorandum and the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and nonassessable.
(m) Except as disclosed in the Final Memorandum, there is no pending
or, to the Company's knowledge, threatened action, suit or proceeding
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries which, if
finally determined adversely to the Company or any of its subsidiaries,
would have a material adverse effect on the condition (financial or other),
earnings, business, prospects or properties of the Company and its
subsidiaries; and the statements in the Final Memorandum under the headings
"Risk Factors - Dependence on Regional ▇▇▇▇ Operating Companies; US West
Centrex Action," "Business - Legal Proceedings," "Management - Investor
Agreement," "Management - Compensation Committee Interlocks and Insider
Participation" and "Certain Transactions" fairly summarize the franchises,
contracts or other documents therein described.
(n) This Agreement has been duly authorized, executed and delivered by
the Company.
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(o) The Indenture has been duly authorized, and, when duly executed by
the proper officer of the Company and delivered by the Company (assuming
due execution and delivery thereof by the Trustee), will constitute a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity
or at law).
(p) The registration agreement, to be dated as of the Closing Date,
between the Company and Purchasers (the "'Registration Agreement") has been
duly authorized and when executed by the proper officer of the Company and
delivered by the Company will be duly executed.
(q) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Purchasers pursuant to this Agreement,
will constitute valid and binding obligations of the Company entitled to
the benefits of the Indenture and will be enforceable in accordance with
their terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law) and the Securities
are accurately summarized in all material respects in the Final Memorandum.
(r) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated herein, except for the declaration of
effectiveness of the Exchange Offer Registration Statement and/or the Shelf
Registration Statement (as such terms are defined in the Registration
Agreement) and except such as may be required under all applicable state
securities and blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Purchasers and such
other approvals as have been obtained.
(s) Neither the issue and sale of the Securities, the execution and
performance of the Indenture or the Registration Agreement, the
consummation of any other of the transactions herein or therein
contemplated nor the fulfillment of the terms hereof, in each case by the
Company, will conflict with, result in a breach or violation of, or
constitute a default under the charter or by-laws of the Company or the
terms of any indenture or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or bound or (assuming
compliance with all applicable state securities and blue sky laws and that
the Exchange Offer Registration Statement and/or Shelf Registration
Statement has been
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declared effective) any law, rule or regulation applicable to the Company
or any of the Subsidiaries or any judgement, order or decree applicable to
the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over the Company or any of its subsidiaries.
(t) McGladrey & ▇▇▇▇▇▇, LLP, who are reporting upon the audited
financial statements included in the Final Memorandum, are independent
public accountants within the meaning of the Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder.
(u) The consolidated financial statements included in the Final
Memorandum present fairly the financial position of the Company and its
subsidiaries as of the dates indicated and the consolidated results of the
operations and cash flows of the Company and its subsidiaries for the
periods specified. Such financial statements (except as disclosed in the
notes thereto or otherwise stated therein) have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the entire period involved. The financial statement schedules,
if any, included in the Final Memorandum present fairly the information
stated therein. The selected financial data included in the Final
Memorandum present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated
financial statements included in the Final Memorandum. The pro forma
financial statements and other pro forma financial information, if any,
included in the Final 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, have been
properly compiled on the pro forma bases described therein, and, in the
opinion of the Company, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions or circumstances referred to therein.
(v) Neither the Company nor any of the Subsidiaries is in violation of
its charter or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture or
other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any of the
Subsidiaries is subject, other than defaults (considered in the aggregate)
which could not reasonably be expected to have a material adverse effect on
the condition (financial or other), earnings, business, prospects or
properties of the Company and its subsidiaries.
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(w) The Company and the Subsidiaries possess adequate certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them and are in compliance in all material respects with all
such certificates, authorities and permits. Neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit,
with such exceptions as could not reasonably be expected to, singly or in
the aggregate, have a material adverse effect on the condition (financial
or other), earnings, business, prospects or properties of the Company and
its subsidiaries.
(x) The Company and its subsidiaries have timely filed all United
States federal income tax returns and all other material tax returns which
are required to be filed by them and have paid all taxes due and payable
(other than taxes, the payment of which are being contested in good faith),
and no tax liens have been filed and no claims are being asserted with
respect to any such taxes, which could reasonably be expected to have a
material adverse effect on the condition (financial or other), earnings,
business, prospects or properties of the Company and its subsidiaries. The
provisions for taxes on the books of the Company are adequate in all
material respects for all open years and for its current fiscal period.
(y) The Company and the Subsidiaries (A) are in compliance with all
applicable federal, state, local and foreign and other laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (B) have received all permits, licenses and other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (C) are in compliance with all terms and
conditions of any such permit, license and approval, except, in each case,
where such noncompliance with Environmental Law, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals could not
reasonably be expected, singly or in the aggregate, to have a material
adverse effect on the condition (financial or other), earnings, business,
prospects or properties of the Company and its subsidiaries.
(z) The Company and the Subsidiaries have good and marketable title to
all real property and good and valid title to all personal property owned
by them, in each case free and clear of all liens, encumbrances and
defects, and any real property and buildings held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases, except, in each case, for such exceptions as are set
forth in the Final Memorandum or which could not reasonably be expected to
have a
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material adverse effect on the condition (financial or other), earnings,
business, prospects or properties of the Company and its subsidiaries.
(aa) The Company together with its subsidiaries own and possess all
right, title and interest in and to, or have duly licensed from third
parties a valid, enforceable right to use, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by the Company and its subsidiaries in connection with the
business conducted by them (collectively, "Patent and Proprietary Rights")
and neither the Company nor any of its subsidiaries has received notice of
infringement or misappropriation of or conflict with asserted rights of
others with respect to any Patent and Proprietary Rights, or of any facts
which would render any Patent and Proprietary Rights invalid or inadequate
to protect the interest of the Company or of its subsidiaries therein, and
which infringement, misappropriation or conflict or invalidity or
inadequacy, individually or in the aggregate, could reasonably be expected
to result in a material adverse effect on the condition (financial or
other), earnings, business, prospects or properties of the Company and its
subsidiaries.
(ab) The Company has complied with all provisions of Section 1 of Laws
of Florida, Chapter 92-198 SecuritiesBusiness with Cuba.
2. Purchase and Sale. Subject to the terms and conditions and in
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reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Purchasers, and the Purchasers agree to purchase from the
Company, at a purchase price of 58.05% of the principal amount thereof, plus
amortization of original issue discount, if any, from March 4, 1997, to the
Closing Date, the principal amount of the Securities.
3. Delivery and Payment. Delivery of and payment for the Securities
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shall be made at 10:00 AM, New York City time, on March 4, 1997, or such later
date (not later than March 12, 1997) as the Purchasers designate, which date and
time may be postponed by agreement between the Purchasers and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Purchasers against payment by the Purchasers of the
purchase price thereof to or upon the order of the Company by certified or
official bank check or checks drawn on or by a New York Clearing House bank and
payable in same day funds or by wire transfer of same day funds to an account or
accounts specified by the Company at least one business day prior to the Closing
Date. Delivery of the Securities shall be made at such location as the
Purchasers shall reasonably designate at least one business day in advance of
the Closing Date and payment for the Securities shall be made at the office of
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., 555
▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. Certificates for the Securities
shall be registered in such names and in such denominations as the Purchasers
may request not less than 24 hours in advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Purchasers in New York, New York, not later than
1:00 PM on the business day prior to the Closing Date.
4. Offering of Securities: Restrictions on Transfer. (a) The
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Purchasers acknowledge that they are purchasing the Securities pursuant to
a private sale exemption from registration under the Act, and that the
Securities have not been registered under the Act and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons except pursuant to an exemption from the registration requirements
of the Act. Each Purchaser represents and warrants to and agrees with the
Company that (i) it, its affiliates and any person acting on its or its
affiliates behalf, have not solicited and will not solicit any offer to buy
or offer to sell the Securities by means of any form of general
solicitation or general advertising (within the meaning of Regulation D) or
in any manner involving a public offering within the meaning of Section
4(2) of the Act or, with respect to Securities to be sold in reliance on
Regulation S, by means of any directed selling efforts and (ii) it has
solicited and will solicit offers to buy the Securities only from, and has
offered and will offer, sell or deliver the Securities only to, (A) persons
who it reasonably believes to be QIBs or, if any such person is buying for
one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to it that each
such account is a QIB, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A, (B) persons who it reasonably believes to be
Institutional Accredited Investors, and who provide to it a letter (an
"Accredited Investor Letter") in the form of Exhibit A hereto or (C)
Foreign Purchasers to whom, and under circumstances which, it reasonably
believes offers and sales of Securities may be made without registration of
the Securities under the Act in reliance upon Regulation S thereunder and
who provide to it a letter (a "Regulation S Letter") in the form of Exhibit
B hereto. Each Purchaser agrees, with respect to resales made in reliance
on Rule 144A, other than through the National Association of Securities
Dealers, Inc. PORTAL Market, of any Securities purchased from the Company
hereunder, to deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect that
the resale of such Securities has been made in reliance upon the exemption
from the registration requirements of the Act provided by Rule 144A. Each
Purchaser agrees, with respect to resales made in reliance on Regulation S.
to deliver either with the confirmation of such resale or otherwise prior
to settlement of such resale a notice substantially to the following
effect:
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"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act") and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of the distribution thereof
at any time or (ii) otherwise until 40 days after the later of the
date of commencement of the offering and the latest closing date,
except in either case in accordance with Regulation S under the
Securities Act. Terms used above have the meaning given them by
Regulation S."
(b) The Purchasers represent and warrant that (i) they have not
offered or sold, and will not offer or sell, in the United Kingdom, by
means of any document, any Securities other than to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) they have complied and
will comply with all applicable provisions of the Financial Services ▇▇▇
▇▇▇▇ and the Public Offers of Securities Regulations of 1995 of the United
Kingdom with respect to anything done by them in relation to the Securities
in, from or otherwise involving the United Kingdom and (iii) they have only
issued or passed on, and will only issue or pass on, in the United Kingdom
any document received by them in connection with the issue of the
Securities to a person who is of the kind described in Article 11(3) of the
Financial Services ▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom the document may otherwise lawfully be issued
or passed on.
(c) Each Purchaser represents and warrants that it is a QIB and an
Institutional Accredited Investor and that it will offer the Securities for
resale only upon the terms and conditions set forth in this Agreement and
in the Final Memorandum.
5. Agreements. The Company agrees with the Purchasers that:
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(a) The Company will furnish to the Purchasers, without charge, during
the period mentioned in paragraph (c) below, as many copies of the Final
Memorandum and any supplements and amendments thereof or thereto as the
Purchasers may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering.
(b) The Company will not amend or supplement the Final Memorandum
without prior consent of Salomon Brothers Inc, which consent shall not be
unreasonably withheld.
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(c) If, at any time prior to the completion of the sale of the
Securities by the Purchasers, any event occurs as a result of which the
Final Memorandum as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
or supplement the Final Memorandum to comply with applicable law, the
Company promptly will notify the Purchasers of the same and will prepare
and provide to the Purchasers pursuant to paragraph (a) of this Section 5
an amendment or supplement which will correct such statement or omission or
effect such compliance.
(d) The Company will use its best efforts to qualify the Securities
for sale under the laws of such jurisdictions as the Purchasers may
reasonably designate, will use its best efforts to maintain such
qualifications in effect so long as required for the sale of the Securities
and will arrange for the determination of the legality of the Securities
for purchase by institutional investors under the laws of such
jurisdictions as the Purchasers may reasonably request. The Company will
promptly advise the Purchasers of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. Notwithstanding the foregoing, the
Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to file a general consent
to service of process in any jurisdiction.
(e) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D) of the Company will solicit any offer to buy or offer or
sell the Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D).
(f) None of the Company, its affiliates nor any person acting on
behalf of the Company or its affiliates will engage in any directed selling
efforts with respect to the Securities within the meaning of Regulation S,
and the Company, its affiliates and each such person acting on its or their
behalf will comply with the offering restrictions requirement of Regulation
S.
(g) The Company shall, during any period in the three years after the
Closing Date (or any shorter period provided for in Rule 144(k) under the
Act or any successor provision thereto) in which the Company is not subject
to Section 13 or 15(d) of the Exchange Act, make available, upon request,
to any holder of such Securities in connection with any sale thereof and
any prospective purchaser of Securities from such holder the information
("Rule 144A Information") specified in Rule 144A(d)(4) under the Act.
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(h) The Company will not, and will not permit any of its affiliates
(as defined in Rule 501(b) of Regulation D) to, resell any Securities which
constitute "restricted securities" under Rule 144 that have been acquired
by any of them, otherwise than pursuant to an effective registration
statement under the Act.
(i) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D) will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) the
offering of which security will be integrated with the sale of the
Securities in a manner which would require the registration of the
Securities under the Act.
(j) The Company shall use its best efforts in cooperation with the
Purchasers to permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
(k) The Company will not, for a period of 90 days following the date
and time that this Agreement is executed and delivered by the parties
hereto (the "Execution Time"), without prior written consent of Salomon
Brothers Inc, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any debt securities
issued or guaranteed by the Company (other than the securities offered
pursuant to an Exchange Offer Registration Statement for the Securities).
6. Conditions to the Obligations of the Purchasers. The obligations of
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the Purchasers to purchase the Securities shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time and the Closing Date, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Company shall have furnished to the Purchasers the opinions of
counsel for the Company, dated the Closing Date, substantially in the forms
of Exhibit D and Exhibit E.
(b) The Company shall have furnished to the Purchasers the opinion of
▇▇▇▇▇▇▇ & Berlin, special counsel to the Company on regulatory matters,
dated the Closing Date, to the effect that:
(i) the statements in the Final Memorandum under the headings
"Summary - Business Strategy," "Risk Factors - Wireline Competition,"
"Risk Factors - PCS System Implementation Risks," "Risk Factors-
Relocation of Fixed Microwave Licensees," "Risk Factors - Regulation,"
"Business - Business Strategy," "Business - Market Potential,"
"Business -Expansion of Certain Facilities-based
12
Services," "Business- Wireless Services," "Business - Competition" and
"Business -Regulation" fairly and accurately summarize the laws, case
law, rules, regulations and orders of the Federal Communications
Commission ("FCC") and the comparable state regulatory agencies or
bodies with direct regulatory jurisdiction over telecommunications
matters in the states in which the Company and any of the Subsidiaries
provide intrastate services (the "State Regulatory Agencies") and, to
the best knowledge of such counsel, the statements in the Final
Memorandum under the headings "Risk Factors - Dependence on Regional
▇▇▇▇ Operating Companies; US West Centrex Action," "Risk Factors -
Refusal of US West to Improve its Process of Service Orders,"
"Business-Current Products and Services" and "Business - Legal
Proceedings" fairly and accurately summarize the legal proceedings set
forth therein with respect to the US West Centrex Action (as defined
in the Final Memorandum) and the action against US West
Communications, Inc. concerning the processing of orders;
(ii) the Company and the Subsidiaries possess all material
certificates, authorities and permits required by the FCC and State
Regulatory Agencies for the provision of the telecommunications
services currently provided by the Company and the Subsidiaries,
except where the failure to possess such certificates, authorities or
permits could not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries; and the Company and the
Subsidiaries are in compliance in all material respects with such
certificates, authorities and permits;
(iii) to the best knowledge of such counsel, neither the Company
nor any of the Subsidiaries is subject to any pending or threatened
action, suit or proceeding before the FCC or any State Regulatory
Agency or (with respect to federal or state telecommunications laws)
any court which could reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, except as
disclosed in the Final Memorandum;
(iv) no consent, approval, authorization or order of the FCC or
any State Regulatory Agency is required for the issuance and sale of
the Securities or the consummation of the transactions contemplated
hereby; and
(v) neither the issuance and sale of the Securities nor the
consummation of the transactions contemplated hereby will result in a
breach or violation of any law, rule, regulation, judgment, order or
13
decree of the FCC or any State Regulatory Agency applicable to the
Company or any of the Subsidiaries.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent they deem proper and reasonable, on certificates of public
officials and responsible officers of the Company, including certificates
that define the scope of the telecommunications services provided by the
Company and the Subsidiaries.
(c) The Purchasers shall have received from ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇,
counsel for the Purchasers, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, the
Indenture, the Final Memorandum (together with any amendment or supplement
thereof or thereto) and other related matters as the Purchasers may
reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass
upon such matters.
(d) The Company shall have furnished to the Purchasers a certificate
of the Company, signed by the Chairman of the Board or the President and
the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have
carefully examined the Final Memorandum, any amendment or supplement to the
Final Memorandum and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date; and
(ii) since the date of the most recent financial statements
included in the Final Memorandum (exclusive of any amendment or
supplement thereof or thereto), there has been no material adverse
change in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto).
(e) At the Execution Time and at the Closing Date, McGladrey & ▇▇▇▇▇▇,
LLP shall have furnished to the Purchasers a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Purchasers, confirming that they are
independent accountants within the meaning of the Act and the Rules of
14
Conduct of the American Institute of Certified Public Accountants and
stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules, if any included in the Final Memorandum
and reported on by them, as applicable, comply in form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and the Audit and Compensation
Committee of the Company and the Subsidiaries; and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1996, nothing came
to their attention which caused them to believe that:
(1) any unaudited financial statements included in the Final
Memorandum do not comply in form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; and said unaudited financial
statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with that of the audited financial statements included in the
Final Memorandum; or
(2) with respect to the period subsequent to December 31,
1996, there were any changes, at a specified date not more than
five business days prior to the date of the letter, in the long-
term debt of the Company and its subsidiaries or capital stock of
the Company or decreases in the stockholders' equity of the
Company and its subsidiaries as compared with the amounts shown
on the December 31, 1996 consolidated balance sheet included in
the Final Memorandum, or for the period from January 1, 1997 to
such specified date as compared with the corresponding period in
the preceding year, there were any
15
decreases in revenue or increases in operating loss or net loss
of the Company and its subsidiaries, except in all instances for
changes, decreases or increases set forth in such letter, in
which case the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless said
explanation is not deemed necessary by the Purchasers;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Final Memorandum,
including the information set forth under the captions "Selected
Consolidated Financial Data", "Pro Forma Financial Data" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Final Memorandum, agrees with the
accounting records of the Company and its subsidiaries, excluding
any questions of legal interpretation; and
(iv) on the basis of a reading of the unaudited pro forma
financial statements included in the Final Memorandum (the "pro
forma financial statements"); carrying out certain specified
procedures; inquiries of certain officials of the Company who
have responsibility for financial and accounting matters; and
proving the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the pro forma
financial statements, nothing came to their attention which
caused them to believe that the pro forma financial statements do
not comply in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements.
References to the Final Memorandum in this paragraph (e) include any
amendment or supplement thereof or thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto), there shall not have been (i)
any change or decrease specified in the letter or letters referred to in
paragraph (e)(ii)(2) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of
16
the Company and its subsidiaries the effect of which, in any case referred
to in clause (i) or (ii) above, is, in the judgment of the Purchasers, so
material and adverse as to make it impractical or inadvisable to market the
Securities as contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto).
(g) As of the Closing Date the Securities shall be rated not lower
than B by Standard & Poor's Corporation and B-3 by ▇▇▇▇▇'▇ Investors
Service, Inc. Subsequent to the Execution Time, there shall not have been
any decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(h) Prior to the Closing Date, the Company shall have furnished to
the Purchasers such further information, certificates and documents as the
Purchasers may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchasers and counsel for the Purchasers, this Agreement
and all obligations of the Purchasers hereunder may be canceled at, or at any
time prior to, the Closing Date by the Purchasers. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., Columbia Square, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, counsel for the Company, at 9:00 a.m., on the
Closing Date.
7. Reimbursement of Purchasers' Expenses. If the sale of the Securities
-------------------------------------
provided for herein is not consummated because any condition to the obligations
of the Purchasers set forth in Section 6 hereof is not satisfied, because of any
termination pursuant to Section 9(i) hereof due to suspension of trading in the
Company's class A common stock or because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by either Purchaser, the
Company will reimburse the Purchasers upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by it in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution.
--------------------------------
17
(a) The Company agrees to indemnify and hold harmless the Purchasers,
the directors, officers, employees and agents of either Purchaser and each
person who controls either Purchaser within the meaning of either the Act
or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Memorandum, the Final Memorandum
or any Rule 144A Information provided by the Company to any holder or
prospective purchaser of Securities pursuant to Section 5(g), or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
-------- -------
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Purchasers
specifically for inclusion therein; and provided, further, that the
-------- -------
foregoing indemnity agreement with respect to the Preliminary Memorandum or
the Final Memorandum shall not inure to the benefit of the Purchasers from
whom the person asserting or causing any such losses, claims, damages or
liabilities purchased Securities (or to the benefit of any person
controlling either Purchaser or any directors, officers, employees and
agents of either Purchaser), if a copy of the Final Memorandum (or the
Final Memorandum as amended or supplemented), (if the Company shall have
timely furnished the Purchasers with sufficient copies thereof) was not
sent or given by or on behalf of the Purchasers to such person at or prior
to the written confirmation of the sale of the Securities to such person
and if the Final Memorandum (or the Final Memorandum as amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Purchasers agree to indemnify and hold harmless the Company,
its directors, its officers, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to the Purchasers, but
only with reference to written information relating to the Purchasers
18
furnished to the Company by or on behalf of the Purchasers specifically for
inclusion in the Preliminary Memorandum or the Final Memorandum or in any
amendment thereof or supplement thereto. This indemnity agreement will be
in addition to any liability which the Purchasers may otherwise have. The
Company acknowledges that the statements set forth in the last paragraph of
the cover page and under the heading "Plan of Distribution" (excluding the
fourth paragraph and eighth paragraph immediately following the table
contained under the heading "Plan of Distribution") in the Preliminary
Memorandum and the Final Memorandum constitute the only information
furnished in writing by or on behalf of the Purchasers for inclusion in the
Preliminary Memorandum or the Final Memorandum.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
--------- -------
counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party.
19
An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or
proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchasers agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company and the Purchasers may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company and by
the Purchasers from the offering of the Securities; provided, however, that
-------- -------
in no case shall the Purchasers be responsible for any amount in excess of
the purchase discount or commission applicable to the Securities purchased
by the Purchasers hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Purchasers shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company
and of the Purchasers in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be
equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Purchasers shall be deemed to be
equal to the total purchase discounts and commissions, in each case as set
forth on the cover page of the Final Memorandum. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or the Purchasers. The
Company and the Purchasers agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d),
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls either Purchaser within the
meaning of either the Act or the Exchange Act and each director, officer,
employee and agent of either Purchaser shall have the same rights to
contribution as each Purchaser, and each person who controls the Company
within the meaning of either the Act or the Exchange Act and each officer
and director of the Company shall have
20
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in the
-----------
absolute discretion of the Purchasers, by notice given to the Company prior to
delivery of and payment for the Securities, if prior to such time (i) trading in
the Company's class A common stock shall have been suspended by the Commission
or the Nasdaq National Market or trading in securities generally on the New York
Stock Exchange shall have been suspended or limited or minimum prices shall have
been established on either of such Exchange or Market, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of the Purchasers, impracticable or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereof or thereto).
10. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchasers or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
11. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or sent by facsimile transmission and confirmed to them at Salomon
Brothers Inc., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; or, if sent
to the Company, will be mailed, delivered or sent by facsimile transmission and
confirmed to it at ▇▇▇▇▇▇, Inc., Town Centre, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, attention legal department.
12. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York.
21
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and the Purchasers.
Very truly yours,
▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President,
General Counsel and
Secretary
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By: /s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
22
EXHIBIT A
Form of Investment Letter for
-----------------------------
Institutional Accredited Investors
----------------------------------
▇▇▇▇▇▇, Inc.
Towne Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Salomon Brothers Inc
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
In connection with our proposed purchase of $500,000,000 aggregate
principal amount of the 10 1/2% Notes Due 2007 (the "Notes") of ▇▇▇▇▇▇, Inc., a
Delaware corporation (the "Company''), we confirm that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the ''Securities Act"), and may not be
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should resell, pledge or otherwise transfer such Notes
within three years after the original issuance of the Notes (or such
shorter period provided for in Rule 144(k) under the Act or any successor
provision thereto) or at the proposed date of such transfer or were during
the three months preceding the proposed date of transfer an Affiliate of
the Company, such Notes may be resold, pledged or transferred only (i) to
the Company, (ii) so long as such Notes are eligible for resale pursuant to
Rule 144A under the Securities Act ("Rule 144A"), to a person whom we
reasonably believe is a "qualified institutional buyer" (as defined in Rule
144A) ("QIB") that purchases for its own account or for the account of a
QIB, to whom notice is given that the resale, pledge or transfer is being
made in reliance on Rule 144A (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the certificate
for the Notes), (iii) in an offshore transaction in accordance with
Regulation S under the Securities Act (as indicated by the box checked by
the transferor on the Certificate of Transfer on the reverse of the
certificate for the Notes), or (iv) to an institution
that is an "Accredited Investor" as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the certificate
for the Notes) that is acquiring the Notes for investment purposes and not
for distribution and a Certificate in the form hereof is delivered to the
Company and to the Trustee under the Indenture relating to the Notes by
such Accredited Investor, in each case in accordance with any applicable
securities laws of any state of the United States, and we will notify any
purchaser of the Notes from us of the above resale restrictions, if then
applicable. We further understand that in connection with any transfer of
the Notes by us that the Company and the Trustee may request, and if so
requested we will furnish, such certificates and other information as they
may reasonably require to confirm that any such transfer complies with the
foregoing restrictions.
2. We are an institutional investor and are an "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are acting
are each able to bear the economic risk of our or its investment.
3. We are acquiring the Notes purchased by us for our own account or
for one or more accounts as to each of which we exercise sole investment
discretion.
4. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
--------------------------------------
(Name of Purchaser)
By:
-----------------------------------
Date:
------------------------------
2
EXHIBIT B
Form of Investment Letter for
-----------------------------
Foreign Purchasers
------------------
Salomon Brothers Inc
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
In connection with our proposed purchase of $500,000,000 aggregate
principal amount of the 10 1/2% Notes Due 2007 (the "Notes") of ▇▇▇▇▇▇, Inc., a
Delaware corporation (the "Company"), we confirm that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should resell, pledge or otherwise transfer such Notes
within three years after the original issuance of the Notes (or such
shorter period provided for in Rule 144(k) under the Act or any successor
provision thereto) or at the proposed date of such transfer or were during
the three months preceding the proposed date of transfer an Affiliate of
the Company, such Notes may be resold, pledged or transferred only (i) to
the Company, (ii) so long as such Notes are eligible for resale pursuant to
Rule 144A under the Securities Act ("Rule 144A"), to a person whom we
reasonably believe is a ''qualified institutional buyer" (as defined in
Rule 144A) ("QIB") that purchases for its own account or for the account of
a QIB, to whom notice is given that the resale, pledge or transfer is being
made in reliance on Rule 144A (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the certificate
for the Notes), (iii) in an offshore transaction in accordance with
Regulation S under the Securities Act (as indicated by the box checked by
the transferor on the Certificate of Transfer on the reverse of the
certificate for the Notes), or (iv) to an institution that is an
"Accredited Investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act (as indicated by the box checked by the transferor on
the Certificate of Transfer on the reverse of the certificate for the
Notes) that is acquiring the Notes for investment purposes and not for
distribution and a Certificate in the form hereof is delivered
to the Company and to the Trustee under the Indenture relating to the Notes
by such Accredited Investor, in each case in accordance with any applicable
securities laws of any state of the United States, and we will notify any
purchaser of the Notes from us of the above resale restrictions, if then
applicable. We further understand that in connection with any transfer of
the Notes by us that the Company and the Trustee may request, and if so
requested we will furnish, such certificates and other information as they
may reasonably require to confirm that any such transfer complies with the
foregoing restrictions.
2. We are not a "U.S. Person" as defined in Rule 902 of Regulation S
under the Securities Act and are acquiring (which acquisition is not for
the account or benefit of a U.S. Person) the Notes in an offshore
transaction complying with the provisions of Rule 904 of Regulation S under
the Securities Act.
3. You and the Company are entitled to rely upon this letter and you
and the Company are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
-------------------------------------
(Name of Purchaser)
By:
----------------------------------
Date:
-----------------------------
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EXHIBIT C
NOTICE TO INVESTORS
Offers and Sales by the Initial Purchasers
------------------------------------------
The Notes have not been registered under the Securities Act and may
not be offered or sold in the United States or to, or for the account or benefit
of, U.S. persons except in accordance with an applicable exemption from the
registration requirements thereof. Accordingly, the Notes are being offered and
sold only (i) in the United States to QIBs under Rule 144A and other
Institutional Accredited Investors in a private sale exempt from the
registration requirements of the Securities Act, and (ii) outside the United
States to non-U.S. persons ("foreign purchasers") in reliance upon Regulation S.
Each Institutional Accredited Investor that is a purchaser of Notes from the
Initial Purchasers will be required to sign a certificate in the form of Exhibit
A attached hereto. Each foreign purchaser that is a purchaser of Notes from an
Initial Purchaser (an "Initial Foreign Purchaser") will be required to sign a
certificate in the form provided by the Initial Purchasers. The only Notes that
will be eligible to be deposited with the Depository are Notes held by QIBs or
Institutional Accredited Investors.
Investor Representations and Restrictions on Resale
---------------------------------------------------
Each purchaser of the Notes will be deemed to have represented and
agreed as follows:
(1) The purchaser is acquiring the Notes for its own account or for an
account with respect to which it exercises sole investment discretion, and
that it or such account is a QIB, an Institutional Accredited Investor
acquiring the Notes for investment purposes and not for distribution or a
foreign purchaser outside the United States;
(2) The purchaser acknowledges that the Notes have not been registered
under the Securities Act and may not be resold, pledged or otherwise
transferred except as permitted below;
(3) The purchaser understands and agrees (x) that such Notes are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act, and (y) that (A) if within three years after
the date of original issuance of the Notes (or such shorter period provided
for in Rule 144(k) under the Act or any successor provision thereto) or if
within three months after it ceases to be an affiliate (within the meaning
of Rule 144 under the
Securities Act) of the Company, it decides to resell, pledge or otherwise
transfer such Notes on which the legend set forth below appears, such Notes
may be resold, pledged or transferred only (i) to the Company, (ii) so long
as such Security is eligible for resale pursuant to Rule 144A, to a person
whom the seller reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A (as
indicated by the box checked by the transferor on the Certificate of
Transfer on the reverse of the Note if such Note is not in book-entry
form), (iii) in an offshore transaction in accordance with Regulation S (as
indicated by the box checked by the transferor on the Certificate of
Transfer on the reverse of the Note), but, if such transfer is being
effected by an Initial Foreign Purchaser or any foreign purchaser who has
purchased Notes from an Initial Foreign Purchaser or from any person other
than a QIB or an Institutional Accredited Investor pursuant to this clause
(iii) prior to the expiration of the "40-day restricted period" (within the
meaning of Rule 903(c)(3) of Regulation S), the transferee shall have
certified to the Company and the Trustee for the Notes that such transferee
is a non-U.S. Person (within the meaning of Regulation S) and that such
transferee is acquiring the Notes in an offshore transaction, (iv) to an
Institutional Accredited Investor (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the Note if
such Senior Note is not in book-entry form), who has certified to the
Company and the Trustee for the Notes that such transferee is an
Institutional Accredited Investor and is acquiring the Notes for investment
purposes and not for distribution (provided that no Initial Foreign
Purchaser or any foreign purchaser who has purchased Notes from an Initial
Foreign Purchaser or from any person other than a QIB or an Institutional
Accredited Investor pursuant to clause (iii) shall be permitted to transfer
any Notes so purchased by it to an Institutional Accredited Investor
pursuant to this clause (iv) prior to the expiration of the "40-day
restricted period" (within the meaning of Rule 903(c)(3) of Regulation S)),
(v) pursuant to an exemption from the registration requirements of the
Securities Act provided by Rule 144 (if applicable) under the Securities
Act or (vi) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States, (B) the purchaser will, and each
subsequent holder is required to, notify any purchaser of Notes from it of
the resale restrictions referred to in (A) above, if then applicable, and
(C) with respect to any transfer of Notes by an Institutional Accredited
Investor,
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such holder will deliver to the Company and the Trustee such certificates
and other information as they may reasonably require to confirm that the
transfer by it complies with the foregoing restrictions including, without
limitation, a certificate in the form of Exhibit A hereto;
(4) The purchaser understands that the notification requirement
referred to in (3) above will be satisfied, in the case only of transfers
by physical delivery of certificated Notes other than a global certificate,
by virtue of the fact that the following legend will be placed on the Notes
unless otherwise agreed by the Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY AND
THE INITIAL PURCHASER OF THIS SECURITY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD
ANNIVERSARY (OR SUCH SHORTER PERIOD PROVIDED FOR IN RULE 144(k) UNDER
THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO) OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO
THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED BELOW) PRIOR TO THE
EXPIRATION OF THE "40-DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF
RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON
3
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS
ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION, AND A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY
IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE
(PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN THE INDENTURE MAY NOT
TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE (4) ON OR PRIOR TO THE
EXPIRATION OF THE "40-DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF
RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT)), (5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR
HOLDING THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT
IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
OR (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION
OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (0)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."
(5) The purchaser (i) is able to fend for itself in the transactions
contemplated by this Offering Memorandum; (ii) has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Notes; and (iii)
has the ability to bear the economic risks of its prospective investment
and can afford the complete loss of such investment;
(6) The purchaser has received a copy of this Offering Memorandum
relating to the Offering and acknowledges that it has had access to such
financial and other information, and has been afforded the opportunity to
ask questions of the Company and receive answers thereto, as it deemed
necessary in connection with its decision to purchase the Notes; and
(7) The purchaser understands that the Company and the Initial
Purchasers and others will rely upon the truth and
4
accuracy of the foregoing acknowledgments, representations and agreements
and agrees that if any of the acknowledgments, representations and
warranties deemed to have been made by it by its purchase of the Notes are
no longer accurate, it shall promptly notify the Company and the Initial
Purchasers. If the purchaser is acquiring the Notes as a fiduciary or agent
for one or more investor accounts, it represents that it has sole
investment discretion with respect to each such account and it has full
power to make the foregoing acknowledgments, representations and agreements
on behalf of such account.
5
