EXECUTION COPY
▇▇▇▇▇ MEDIA COMPANY, LLC. and
▇▇▇▇▇ MEDIA MANAGEMENT, INC.
105,000 Units
Consisting of 12% SENIOR NOTES DUE 2007
and
APPRECIATION NOTES DUE 2007
PURCHASE AGREEMENT
December 22, 1997
▇▇▇▇▇ MEDIA COMPANY, LLC and
▇▇▇▇▇ MEDIA MANAGEMENT, INC.
105,000 Units Representing
$105,000,000 Principal Amount of
12% Senior Notes Due 2007
and $3,000,000 of Appreciation Notes Due 2007
PURCHASE AGREEMENT
December 22, 1997
Natwest Capital Markets Limited
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇ Media Company, LLC, a Virginia limited liability company
("BMC"), and ▇▇▇▇▇ Media Management, Inc., a Virginia corporation
(collectively with BMC, the "Company"), and the subsidiary guarantors listed
in Schedule 2 attached hereto (the "Guarantors") each hereby confirms its
agreement with you (the "Initial Purchaser"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, (i) the Company proposes to issue and sell to the Initial
Purchaser 105,000 Units (the "Units") representing $105,000,000 aggregate
principal amount of its 12% Senior Notes due 2007 (collectively, where
context permits, with the Senior Guarantees defined below, the "Notes") and
Appreciation Notes due 2007 (the "Appreciation Notes"). The Units, the Notes
and the Appreciation Notes are referred to herein collectively as the
"Securities". The Units are to be issued under a Unit Agreement (as defined
below). The Notes will be guaranteed (the "Senior Guarantees") by each of
the Guarantors on a senior basis. The Appreciation Notes will be guaranteed
(the "Appreciation Note Guarantee" and collectively with the Senior
Guarantees, the "Guarantees") by each of the Guarantors on a subordinated
basis. The Notes are to be issued under an indenture (the "Indenture") to be
dated as of the Closing Date (as defined in Section 3 below), by and among
the Company, the Guarantors and The United States Trust Company of New
York, as trustee (the "Trustee"). The Appreciation Notes are to be issued
under an indenture (the "Appreciation Notes Indenture") to be dated as of the
Closing Date by and among the Company, the Guarantors and United States Trust
Company of New York, as trustee (the "Appreciation Notes Trustee").
The Units will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Act"), in
reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared
a preliminary offering memorandum dated December 3, 1997 (the "Preliminary
Memorandum") and will prepare a final offering memorandum dated December 22,
1997 (the "Final Memorandum"; the Preliminary Memorandum and the Final
Memorandum each herein being referred to as the "Memorandum") relating to the
Securities.
The Company, the Guarantors and the Initial Purchaser will enter
into a Registration Rights Agreement in substantially the form attached as
Exhibit A hereto (the "Registration Rights Agreement") prior to or
concurrently with the issuance of the Notes. Pursuant to the Registration
Rights Agreement, under the circumstances and the terms set forth therein,
the Company and the Guarantors will agree to file with the Securities and
Exchange Commission (the "Commission"): (i) a registration statement on
Form S-4 (the "Exchange Offer Registration Statement") relating to a
registered Exchange Offer (as defined in the Registration Rights Agreement)
for the Notes under the Act to offer to the holders of the Notes the
opportunity to exchange their Notes for an issue of notes substantially
identical to the Notes (except that such notes will not contain restrictions
on transfer that would be registered under the Act (the "Exchange Notes"); or
(ii) alternatively, in the event that applicable interpretations of the
Commission do not permit the Company and the Guarantors to effect the
Exchange Offer or do not permit any holder (who is otherwise able to make the
representations set forth in the Registration Rights Agreement and acquire
the Exchange Notes) of the Notes to participate in the Exchange Offer, a
shelf registration statement (the "Shelf Registration Statement") to cover
resales of Notes by such holders who satisfy certain conditions relating to
and including the provision of information in connection with the Shelf
Registration Statement.
The Company, the Guarantors and the Initial Purchaser will enter
into an Appreciation Notes Registration Rights Agreement in substantially the
form attached as Exhibit B hereto (the "Appreciation Notes Registration
Rights Agreement") prior to or concurrently with the issuance of the
Appreciation Notes. Pursuant to the Appreciation Notes Registration Rights
Agreement, under the circumstances and the terms set forth
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therein, the Company and the Guarantors will agree to file with the
Commission: (i) a registration statement on Form S-4 (the "Appreciation
Notes Exchange Offer Registration Statement") relating to a registered
Appreciation Notes Exchange Offer (as defined in the Appreciation Notes
Registration Rights Agreement) for the Appreciation Notes under the Act to
offer to the holders of the Appreciation Notes the opportunity to exchange
their Appreciation Notes for an issue of notes substantially identical to the
Appreciation Notes (except that such notes will not contain restrictions on
transfer) that would be registered under the Act (the "Appreciation Exchange
Notes"); or (ii) alternatively, in the event that applicable interpretations
of the Commission do not permit the Company and the Guarantors to effect the
Appreciation Notes Exchange Offer or do not permit any holder (who is
otherwise able to make the representations set forth in the Appreciation
Notes Registration Rights Agreement and acquire the Appreciation Exchange
Notes) of the Appreciation Notes to participate in the Appreciation Notes
Exchange Offer, a shelf registration statement (the "Appreciation Notes Shelf
Registration Statement") to cover resales of Appreciation Notes by such
holders who satisfy certain conditions relating to and including the
provision of information in connection with the Appreciation Notes Shelf
Registration Statement.
The Company and the Guarantors will enter into a unit agreement
(the "Unit Agreement") dated as of the Closing Date, with United States Trust
Company of New York, as unit agent (the "Unit Agent").
2. Representations and Warranties. The Company and each
Guarantor represents and warrants to, and agrees, jointly and severally with
the Initial Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof nor
the Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date (as
defined in Section 3 below) contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties set
forth in this Section 2(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchaser furnished to the Company in writing by the Initial Purchaser
expressly for use in the Preliminary Memorandum, the Final Memorandum or any
amendment or supplement thereto. The Final Memorandum conforms in all
material respects to the requirements of the Act and the rules and
regulations promulgated thereunder, as if it were a prospectus filed as part
of a registration statement on Form S-3 relating to the Notes (except that
such a prospectus would include the following information specified
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in items of Regulation S-K under the Act: (i) the pricing table specified in
Item 501; (ii) the statements regarding availability of additional
information specified in Item 502; and (iii) disclosure of the Commission's
position on indemnification specified in Item 510).
(b) As of the Closing Date, the Company will have the pro-forma
capitalization set forth in the Final Memorandum; the Guarantors constitute
all of the subsidiaries of the Company; the Company, directly or indirectly
will own one hundred percent of the issued and outstanding stock, partnership
or membership interests (or other equity securities) of each Guarantor
(except that for the Guarantors listed on Schedule 3 hereto the Company will
directly or indirectly own at least 98% of the membership interests in such
Guarantors and the remaining membership interest in each of such Guarantors
will be indirectly owned by ▇▇▇▇ ▇. ▇▇▇▇▇), and such capital stock shall be
free and clear of all liens, charges, encumbrances or restrictions other than
(x) liens in favor of AMRESCO Funding Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit
Partners, securing the obligations of the Company and the Guarantors under
the Amended and Restated Credit Agreement dated September 30, 1997 (the
"Credit Agreement") and (y) the liens on the capital stock of CMB II, Inc.,
▇▇ ▇▇, Inc., St. ▇▇▇▇ Newspapers, Inc. and NCR II, Inc. securing obligations
the principal amount of which does not exceed $4,900,000 in the aggregate.
All of the outstanding shares of capital stock (or other equity securities)
of the Company or any Guarantors have been, and as of the Closing Date will
be, duly authorized and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights; there are
no (i) options, warrants or other rights to purchase from the Company or any
Guarantor, (ii) agreements or other obligations of the Company or any
Guarantor to issue or (iii) other rights to convert any obligation into, or
exchange any securities for, shares of capital stock of or ownership
interests in the Company or any Guarantor outstanding. The entities listed on
Schedule 2 hereto are the only subsidiaries, direct or indirect of the
Company. Except as disclosed on Schedule 2 or as disclosed in the Final
Memorandum, the Company does not own, directly or indirectly, any capital
stock or any other equity or long-term debt securities or have any equity
interest in any firm, partnership, joint venture, limited liability company
or other entity.
(c) Each of the Company and each Guarantor has been duly
incorporated or organized, is validly existing and is in good standing as a
corporation, limited liability company or limited partnership under the laws
of its jurisdiction of incorporation or formation, with all requisite
corporate, company or partnership power and authority to own its properties
and conduct its business as now conducted and as described in the Final
Memorandum; each of the Company and each Guarantor is duly qualified to do
business as a foreign corporation, limited liability company or limited
partnership in good standing in all other jurisdictions where the ownership
or leasing of
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its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the general affairs, business,
condition (financial or otherwise), prospects or results of operations of the
Company and the Guarantors, taken as a whole (any such event, a "Material
Adverse Effect").
(d) The Company and each Guarantor has all requisite corporate,
company or partnership power, as the case may be, and authority to execute,
deliver and perform its obligations under the Notes and the Appreciation
Notes, including, in the case of the Guarantors, the Guarantees. The Notes
and the Appreciation Notes have been duly and validly authorized by the
Company and each of the Guarantors and, when executed by the Company and each
of the Guarantors, authenticated by the Trustee and the Appreciation Notes
Trustee, respectively, in accordance with the provisions of the Indenture and
the Appreciation Notes Indenture, respectively, and delivered to and paid for
by the Initial Purchaser, in accordance with the terms of this Agreement,
will have been duly executed, issued and delivered and will constitute valid
and legally binding obligations of the Company and each of the Guarantors,
entitled to the benefits of the Indenture and the Appreciation Notes
Indenture, respectively, and enforceable against the Company and each
Guarantor in accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought.
(e) The Company has all requisite corporate, company or
partnership power, as the case may be, and authority to execute, deliver and
perform their obligations under the Units. The Units have been duly and
validly authorized by the Company (as of the Closing Date) and, when executed
by the Company, authenticated by the Unit Agent in accordance with the
provisions of the Unit Agreement and delivered to and paid for by the Initial
Purchaser in accordance with the terms of the Unit Agreement, will have been
duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(f) The Company and each of the Guarantors has all requisite
corporate, company or partnership power and authority to execute, deliver and
perform its obligations under the Exchange Notes and the Private Exchange
Notes (as defined in the
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Registration Rights Agreement). The Exchange Notes and the Private Exchange
Notes have been duly and validly authorized by the Company and each of the
Guarantors and, when the Exchange Notes and the Private Exchange Notes have
been duly executed and delivered by the Company and each of the Guarantors
and authenticated by the Trustee in accordance with the terms of the
Indenture, will constitute valid and legally binding obligations of the
Company, and each of the Guarantors, entitled to the benefits of the
Indenture, and enforceable against the Company and each of the Guarantors in
accordance with their terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of equity and the
discretion of any court before which any proceeding therefore may be brought.
(g) The Company and each of the Guarantors has all requisite
corporate, company or partnership power and authority to execute, deliver and
perform its obligations under the Indenture. The Indenture meets the
requirements for qualification under the Trust Indenture Act of 1939, as
amended (the "TIA"). The Indenture has been duly and validly authorized by
the Company and each of the Guarantors and, when executed and delivered by
the Company and each of the Guarantors (assuming the due authorization,
execution and delivery of the Indenture by the Trustee), will constitute a
valid and legally binding agreement of the Company and each of the
Guarantors, enforceable against the Company and each of the Guarantors in
accordance with its terms, except that the enforcement thereof may be subject
to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and or other similar laws now or hereafter in effect, relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(h) The Company and each of the Guarantors has all requisite
corporate, company or partnership power and authority to execute, deliver and
perform its obligations under the Registration Rights Agreement. The
Registration Rights Agreement has been duly and validly authorized by the
Company and each of the Guarantors and, when executed and delivered by the
Company and each of the Guarantors, will constitute a valid and legally
binding agreement of the Company and each of the Guarantors enforceable
against the Company and each of the Guarantors in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other
similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought, (iii) the
indemnification provisions contained therein may be unenforceable as contrary
to public policy, and (iv) the provisions for liquidated
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damages contained therein may be unenforceable if they were deemed to
constitute a penalty.
(i) The Company and each of the Guarantors has all requisite
corporate, company or partnership power and authority to execute, deliver and
perform its obligations under the Appreciation Exchange Notes and the Private
Appreciation Exchange Notes (as defined in the Appreciation Notes
Registration Rights Agreement). The Appreciation Exchange Notes and the
Private Appreciation Exchange Notes have been duly and validly authorized (as
of the Closing Date) by the Company and each of the Guarantors and, when the
Appreciation Exchange Notes and the Private Appreciation Exchange Notes have
been duly executed and delivered by the Company and each of the Guarantors
and authenticated by the Appreciation Notes Trustee in accordance with the
terms of the Appreciation Notes Indenture, will constitute valid and legally
binding obligations of the Company, and each of the Guarantors, entitled to
the benefits of the Appreciation Notes Indenture, and enforceable against the
Company and each of the Guarantors in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally, (ii) general
principles of equity and the discretion of any court before which any
proceeding therefore may be brought.
(j) The Company and each of the Guarantors has all requisite
corporate, company or partnership power and authority to execute, deliver and
perform its obligations under the Appreciation Notes Indenture. The
Appreciation Notes Indenture meets the requirements for qualification under
the Trust Indenture Act of 1939, as amended (the "TIA"). The Appreciation
Notes Indenture has been duly and validly authorized (as of the Closing Date)
by the Company and each of the Guarantors and, when executed and delivered by
the Company and each of the Guarantors (assuming the due authorization,
execution and delivery of the Appreciation Notes Indenture by the
Appreciation Notes Trustee), will constitute a valid and legally binding
agreement of the Company and each of the Guarantors, enforceable against the
Company and each of the Guarantors in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and or other similar laws
now or hereafter in effect, relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(k) The Company and each of the Guarantors has all requisite
corporate, company or partnership power and authority to execute, deliver and
perform its obligations under the Appreciation Notes Registration Rights
Agreement. The Appreciation Notes Registration Rights Agreement has been
duly and validly authorized
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by (as of the Closing Date) the Company and each of the Guarantors and, when
executed and delivered by the Company and each of the Guarantors, will
constitute a valid and legally binding agreement of the Company and each of
the Guarantors enforceable against the Company and each of the Guarantors in
accordance with its terms, except that the enforcement thereof may be subject
to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought,
(iii) the indemnification provisions contained therein may be unenforceable
as contrary to public policy, and (iv) the provisions for liquidated damages
contained therein may be unenforceable if they were deemed to constitute a
penalty.
(l) The Company and each of the Guarantors has all requisite
corporate, company or partnership power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
authorized and has been duly executed and delivered by the Company and each
of the Guarantors and (assuming the due authorization, execution and delivery
of this Agreement by the Initial Purchaser) constitutes a valid legally
binding agreement of the Company and each of the Guarantors, enforceable
against the Company and each of the Guarantors in accordance with its terms,
except that the enforcement hereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other
similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought, and (iii) the
indemnification provisions contained in Section 9 hereof may be unenforceable
as contrary to public policy.
(m) Each of the Guarantors has all requisite corporate, company or
partnership, power and authority to execute, deliver and perform its
obligations under the Guarantees executed by it. Each Guarantee has been
duly and validly authorized by each Guarantor and when executed and delivered
by the Guarantors, will constitute a valid and legally binding agreement of
the Guarantors, enforceable against the Guarantors in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
(n) The Company and the Guarantors have all requisite corporate,
partnership or company power, as the case may be, and authority (as of the
Closing Date
8
as to the Company) to execute, deliver and perform their obligations under
the Unit Agreement.
(o) No additional consent, approval, authorization or order of any
court or governmental agency or body, or third party is required for the
performance of this Agreement, the Registration Rights Agreement, the
Indenture, the Appreciation Notes Indenture, the Guarantees, the Unit
Agreement and the Appreciation Notes Registrations Rights Agreement by the
Company or any of the Guarantors or the consummation by the Company or any of
the Guarantors of the transactions contemplated hereby and thereby that are
to be completed on or before the Closing Date, except such as have been
obtained or disclosed in the Final Memorandum and such as may be required
under state securities or "Blue Sky" laws in connection with the purchase and
resale of the Notes and the Appreciation Notes by the Initial Purchaser.
None of the Company or any of the Guarantors is (i) in violation of its
certificate of incorporation or bylaws or operating agreement or partnership
agreement (or similar organizational document), (ii) in breach or violation
of any statute, judgment, decree, order, rule or regulation applicable to any
of them or any of their respective properties or assets, or (iii) in breach
of or in default under (nor has any event occurred which, with notice or
passage of time or both, would constitute a default under) or in violation of
any of the terms or provisions of any indenture, mortgage, deed of trust,
loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which any of them
is a party or to which any of them or their respective properties or assets
is subject (collectively, "Contracts") except such violations, breaches or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect.
(p) The execution, delivery and performance by the Company and the
Guarantors, as applicable, of this Agreement, the Indenture, the Appreciation
Notes Indenture, the Registration Rights Agreement, the Unit Agreement and
the Appreciation Notes Registration Rights Agreement and the consummation by
the Company and the Guarantors of the transactions contemplated hereby and
thereby, and the fulfillment of the terms hereof and thereof, and the
retention by BMC of NatWest Capital Markets Limited ("NatWest") pursuant to
those certain letter agreements (including the engagement and indemnity
letter agreements) dated as of September 18, 1997 (collectively, the "NatWest
Engagement Letter") and NatWest's acting as contemplated hereby and thereby,
will not conflict with or constitute or result in a breach of or a default
under (or an event which with notice or passage of time or both would
constitute a default under) or violation of any of (i) the terms or
provisions of any Contract except such conflicts, breaches, defaults or
violations, that would not, individually or in the aggregate, have a Material
Adverse Effect, (ii) the certificate of incorporation or by-laws or operating
agreement or partnership agreement (or similar organizational document)
9
of the Company or any of the Guarantors or (iii) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of the
Guarantors or any of their respective properties or assets except such
conflicts, breaches, defaults or violations that would not, individually or
in the aggregate, have a Material Adverse Effect.
(q) The audited consolidated financial statements of the radio and
newspaper businesses of ▇▇▇▇ ▇. ▇▇▇▇▇ included in the Preliminary Memorandum
and the Final Memorandum present fairly in all material respects the
financial position, results of operations and cash flows of such entities at
the dates and for the periods to which they relate and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, except as otherwise stated therein. The summary and
selected financial and statistical data in the Preliminary Memorandum and the
Final Memorandum present fairly in all material respects the information
shown therein and have been prepared and compiled on a basis consistent with
the audited financial statements included therein, except as otherwise stated
therein. Ernst & Young LLP is an independent public accounting firm within
the meaning of the Act and the rules and regulations promulgated thereunder.
(r) The Company and the Guarantors collectively comprise all of
the radio and newspaper businesses of ▇▇▇▇ ▇. ▇▇▇▇▇ included in the financial
statements of the radio and newspaper businesses of ▇▇▇▇ ▇. ▇▇▇▇▇ set forth
in the Memorandum.
(s) Except as noted in the Memorandum, the pro forma financial
information included in the Preliminary Memorandum and the Final Memorandum
will (i) comply as to form in all material respects with the applicable
requirements of Regulation S-X promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), (ii) have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements, and (iii) have been properly computed on the
bases described therein. The assumptions used in the preparation of the pro
forma financial data and other pro forma financial information included in
the Preliminary Memorandum and the Final Memorandum are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(t) Except as set forth in the Memorandum, there is not pending
or, to the knowledge of the Company or any Guarantor, threatened any action,
suit, proceeding, inquiry or investigation to which the Company or any of the
Guarantors is a party, or to which the property or assets of the Company or
any of the Guarantors are subject, before or brought by any court, arbitrator
or governmental agency or body which, if determined adversely to the Company
or any of the Guarantors would, individually or in the aggregate, have a
Material Adverse Effect or which seeks to
10
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Notes, the Units or the Appreciation Notes to be sold
hereunder or the consummation of the other transactions described in the
Preliminary Memorandum and the Final Memorandum.
(u) Each of the Company and the Guarantors owns or possesses
adequate licenses or other rights to use all material patents, trademarks,
service marks, trade names, copyrights and know-how necessary to conduct the
businesses now or proposed to be operated by it as described in the
Preliminary Memorandum and the Final Memorandum, and none of the Company or
the Guarantors has received any notice of infringement of or conflict with
(or knows of any such infringement of or conflict with) asserted rights of
others with respect to any patents, trademarks, service marks, trade names,
copyrights or know-how which, if such assertion of infringement or conflict
were sustained, would, individually or in the aggregate, have a Material
Adverse Effect.
(v) Each of the Company and the Guarantors possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
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, presently required or necessary to own or
lease, as the case may be, and to operate its respective properties and to
carry on its respective businesses as now or proposed to be conducted as set
forth in the Preliminary Memorandum and the Final Memorandum (collectively,
the "Permits"), except where the failure to obtain such Permits would not,
individually or in the aggregate, have a Material Adverse Effect; each of the
Company and the Guarantors has fulfilled and performed all of its obligations
with respect to such Permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any
such Permit except where such revocation, termination or impairment would
not, individually or in the aggregate, have a Material Adverse Effect; and
none of the Company or the Guarantors has received any notice of any
proceeding relating to revocation or modification of any such Permit, except
as described in the Final Memorandum and except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(w) Since the date of the most recent financial statements
appearing in the Final Memorandum, except as described in the Memorandum, (i)
none of the Company or the Guarantors has incurred any liabilities or
obligations, direct or contingent, or entered into or agreed to enter into
any transactions or Contracts (written or oral) not in the ordinary course of
business which liabilities, obligations, transactions or Contracts could,
individually or in the aggregate, be material to the general affairs,
11
management, business, condition (financial or otherwise), prospects or
results of operations of the Company and the Guarantors, taken as a whole (a
"Material Change"), (ii) other than as described in the Memorandum none of
the Company or the Guarantors has purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock and (iii) other than as described in the
Memorandum, there shall not have been any change in the capital stock or
long-term indebtedness of the Company or the Guarantors which could,
individually or in the aggregate, constitute a Material Change.
(x) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or operations
of the Company and the Guarantors, either individually or taken as a whole,
from that set forth in the Preliminary Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement).
(y) Each of the Company and the Guarantors has filed all necessary
federal, state, local and foreign income and franchise tax returns, and has
paid all taxes shown as due thereon; and, other than tax deficiencies which
the Company or any Guarantor is contesting in good faith, and for which the
Company or such Guarantor has provided adequate reserves, there is no tax
deficiency that has been asserted against the Company or any of the
Guarantors.
(z) The statistical and ratings market-related data and regulatory
information included in the Memorandum are based on or derived from sources
which are believed to be reliable and accurate.
(aa) None of the Company, the Guarantors or any agent acting on
their behalf has taken or will take any action that might cause this
Agreement or the sale of the Notes or Appreciation Notes to violate
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System, in each case as in effect, or as the same may hereafter be in effect,
on the Closing Date.
(bb) Each of the Company and the Guarantors has good and marketable
title to all real property and good title to all personal property described
in the Preliminary Memorandum and the Final Memorandum as being owned by it
and good and marketable title to any leasehold estate in the real and
personal property described in the Preliminary Memorandum and the Final
Memorandum as being leased by it free and clear of all recorded liens,
charges, encumbrances or restrictions, except as disclosed in the Preliminary
Memorandum and the Final Memorandum or in the Exhibits to the Credit
Agreement and except for the liens in favor of ▇▇▇▇▇▇▇
12
Funding Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P. pursuant to the
Credit Agreement (it being understood that the indebtedness secured by the
Credit Agreement will be fully satisfied from the proceeds of the Notes and
that such liens will be discharged as promptly as practicable following the
Closing), or to the extent the failure to have such title or the existence of
such liens, charges, encumbrances or restrictions would not, individually or
in the aggregate, have a Material Adverse Effect. All Contracts to which the
Company or any of the Guarantors is a party or by which any of them is bound
are valid and enforceable against the Company or such Guarantor, and are
valid and enforceable against the other party or parties thereto and are in
full force and effect with only such exceptions as would not, individually or
in the aggregate, have a Material Adverse Effect.
(cc) There are no legal or governmental proceedings involving or
affecting the Company or any Guarantor or any of their respective properties
or assets which would be required to be described in a prospectus pursuant to
the Act that are not described in the Preliminary Memorandum and the Final
Memorandum, nor are there any material contracts or other documents which
would be required to be described in a prospectus pursuant to the Act that
are not described in the Preliminary Memorandum and the Final Memorandum.
(dd) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect (A) each of the Company
and the Guarantors is in compliance with and not subject to liability under
applicable Environmental Laws (as defined below), (B) each of the Company and
the Guarantors has made all filings and provided all notices required under
any applicable Environmental Law, and has and is in compliance with all
Permits required under any applicable Environmental Laws and each of them is
in full force and effect, (C) there is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter or request for information pending or, to
the knowledge of the Company or any of the Guarantors, threatened against the
Company or any of the Guarantors under any Environmental Law, (D) no lien,
charge, encumbrance or restriction has been recorded under any Environmental
Law with respect to any assets, facility or property owned, operated, leased
or controlled by the Company or any of the Guarantors, (E) none of the
Company or the Guarantors has received notice that it has been identified as
a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or
any comparable state law, (F) no property or facility of the Company or any
of the Guarantors is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to
13
CERCLA, or on any comparable list maintained by any state or local
governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable foreign and federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (i) emissions, discharges,
releases or threatened releases of hazardous materials, into the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata), (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of hazardous materials, and (iii) underground and above ground
storage tanks, and related piping, and emissions, discharges, releases or
threatened releases therefrom.
(ee) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or any of the Guarantors which is pending
or, to the knowledge of the Company or any of the Guarantors, threatened.
(ii) Each of the Company and the Guarantors carries insurance in
such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties. Neither the Company nor any of the
Guarantors has received notice from any insurer or agent of such insurer that
capital improvements or other expenditures are required or necessary to be
made in order to continue such insurance.
(ff) None of the Company or the Guarantors has any material
liability for any prohibited transaction (within the meaning of Section
4975(c) of the Code or Part 4 of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (or an accumulated funding
deficiency within the meaning of Section 412 of the Code or Section 302 of
ERISA) or any complete or partial withdrawal liability (within the meaning of
Section 4201 of ERISA) with respect to any pension, profit sharing or other
plan which is subject to ERISA, to which the Company or any of the Guarantors
makes or ever has made a contribution and in which any employee of the
Company or of any Guarantor is or has ever been a participant. With respect
to such plans, the Company and each Guarantor is in compliance in all
material respects with all applicable provisions of ERISA.
(ii) Each of the Company and the Guarantors (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded as
necessary to permit
14
preparation of its financial statements and to maintain accountability for
its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets
is compared with existing assets at reasonable intervals.
(gg) None of the Company or the Guarantors is or immediately after
the sale of the Notes and the application of the proceeds from such sale as
described in the Final Memorandum under "Use of Proceeds" will be, an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(hh) The Notes, the Exchange Notes, the Indenture, the Registration
Rights Agreement, the Units, the Unit Agreement, the Appreciation Notes, the
Exchange Appreciation Notes, the Appreciation Notes Indenture and the
Appreciation Notes Registration Rights Agreement, will conform in all
material respects to the descriptions thereof in the Final Memorandum.
(ii) No holder of securities of the Company or any of the
Guarantors will be entitled to have such securities registered under the
registration statements required to be filed by the Company pursuant to the
Registration Rights Agreement or the Appreciation Notes Registration Rights
Agreement other than as expressly permitted thereby.
(jj) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of each of the Company and the Guarantors (each on a
consolidated basis) will exceed the sum of its stated liabilities and
identified contingent liabilities; none of the Company or the Guarantors
(each on a consolidated basis) is, nor will any of the Company or the
Guarantors (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, (a) left with unreasonably small
capital with which to carry on its business as it is currently or proposed to
be conducted, (b) unable to pay its debts (contingent or otherwise) as they
mature or otherwise become due or (c) otherwise insolvent.
(kk) None of the Company, the Guarantors or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has
directly, or through any agent, (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 could be integrated with the sale of the Securities in a
manner that would require the registration
15
under the Act of the Notes or the Appreciation Notes or (ii) engaged in any
form of general solicitation or general advertising (as those terms are used
in Regulation D under the Act) in connection with the offering of the
Securities or in any manner involving a public offering within the meaning of
Section 4(2) of the Act. Neither the Company nor any Guarantor has
distributed and will not distribute any offering material in connection with
the offering of the Securities other than the Final Memorandum and any
Preliminary Memorandum. No securities of the same duration, interest rate
and ranking as the Notes have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.
(ll) Assuming the accuracy of the representations and warranties of
the Initial Purchaser in Section 8 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial Purchaser
in the manner contemplated by this Agreement to register any of the
Securities under the Act or to qualify the Indenture under the TIA except as
required by the Registration Rights Agreement.
(mm) No securities of the Company or any Guarantor are of the same
class (within the meaning of Rule 144A as promulgated under the Act ("Rule
144A")) as any of the Securities and listed on a national securities exchange
registered under Section 6 of the Exchange Act, or quoted in a U.S. automated
inter-dealer quotation system.
(nn) None of the Company or the Guarantors has taken, nor will any
of them take, directly or indirectly, any action designed to, or that might
be reasonably expected to, cause or result in stabilization or manipulation
of the price of the Securities.
(oo) None of the Company or the Guarantors, or any person acting on
any of their behalf (other than the Initial Purchaser or any Affiliate of the
Initial Purchaser) has engaged in any directed selling efforts (as that term
is defined in Regulation S under the Act ("Regulation S")) with respect to
the Securities; the Company and its respective Affiliates and any person
acting on any of their behalf (other than the Initial Purchaser or any
Affiliate of the Initial Purchaser) have complied with the offering
restrictions requirement of Regulation S.
(pp) Each of the Preliminary Memorandum and the Final Memorandum,
as of its respective date, contains all of the information that, if requested
by a prospective purchaser of the Securities, would be required to be
provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the
Act.
16
(qq) The Notes and the Appreciation Notes satisfy the eligibility
requirements of Rule 144A(d)(3) under the Act.
(rr) Neither the Company nor any of the Guarantors nor, to the
Company's knowledge, any officer or director purporting to act on behalf of the
Company or any of the Guarantors has at any time: (i) made any contributions to
any candidate for political office, or failed to disclose fully any such
contributions, in violation of law, (ii) made any payment of funds to, or
received or retained any funds from, any state, federal or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or allowed by applicable law, (iii)
violated or is in violation of the Foreign Corrupt Practices Act of 1977, (iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment or (v) engaged in any transactions, maintained any bank account or used
any corporate funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records of the
Company and the Guarantors.
(ss) Except as disclosed in the Memorandum, there are no material
outstanding loans or dividends or distributions or advances or material
guarantees of indebtedness by the Company or any of its Guarantors to or for the
benefit of any of the officers or directors of the Company or any of the
Guarantors or any of the members of the families of any of them.
(tt) Neither the Company nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Florida Statutes Section 517.075.
(uu) None of the Company or the Guarantors has engaged or retained
any person, other than NatWest as the Initial Purchaser (and Standard Capital),
to act as a financial advisor, underwriter or placement agent in connection with
the issuance of the Securities and, except for the fees and expenses payable in
connection with the issuance of the Securities as described in the Final
Memorandum, no person has the right to receive a material amount of financial
advisory, underwriting, placement, finder's or similar fees in connection with,
or as a result of, the issuance of the Securities and the purchase of the
Securities by the Initial Purchaser or the consummation of the other
transactions contemplated hereby.
Any certificate signed by any officer of the Company or any Guarantor
and delivered to the Initial Purchaser or to counsel for the Initial Purchaser
shall be deemed a joint and several representation and warranty by the Company
and each of the Guarantors to the Initial Purchaser as to the matters covered
thereby.
17
3. Purchase, Sale and Delivery of the Securities. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company the number of Units set forth opposite its name on
Schedule 1 hereto at a price of $882.0 per Unit. One or more certificates in
definitive form for the Units that the Initial Purchaser has agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as the Initial Purchaser requests upon notice to the Company at least
36 hours prior to the Closing Date, shall be delivered by or on behalf of the
Company to the Initial Purchaser, against payment by or on behalf of the Initial
Purchaser of the purchase price therefor by wire transfer of same day funds to
such account or accounts as the Company shall specify prior to the Closing Date,
or by such means as the parties hereto shall agree prior to the Closing Date.
Such delivery of and payment for the Units shall be made at the offices of White
& Case, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M., New York
time, on December __, 1997, or at such other place, time or date as the Initial
Purchaser, on the one hand, and the Company, on the other hand, may agree upon,
such time and date of delivery against payment being herein referred to as the
"Closing Date." The Company will make such certificate or certificates for the
Units available for inspection and packaging by the Initial Purchaser at such
place as designated by the Initial Purchaser at least 24 hours prior to the
Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes
to make an offering of the Units, in accordance with Section 8 hereof, at the
price and upon the terms set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into and as in the judgment of the
Initial Purchaser is advisable.
5. Covenants of the Company and the Guarantors. Each of the Company
and the Guarantors, jointly and severally covenants and agrees with the Initial
Purchaser that:
(a) The Company and the Guarantors will not amend or supplement the
Final Memorandum or any amendment or supplement thereto unless the Initial
Purchaser shall previously have been advised and furnished a copy of such
amendment or supplement for a reasonable period of time prior to the proposed
amendment or supplement and as to which the Initial Purchaser shall have
consented, such consent not to be unreasonably withheld. The Company and the
Guarantors will promptly, upon the reasonable request of the Initial Purchaser
or counsel for the Initial Purchaser, make any amendments or supplements to the
Preliminary Memorandum or the Final Memorandum that may be necessary or
advisable in connection with the resale of the Notes or the Appreciation Notes
by the Initial Purchaser.
18
(b) The Company and the Guarantors will cooperate with the Initial
Purchaser in arranging for any necessary qualification of the Securities for
offering and sale under the securities or "Blue Sky" laws of such jurisdictions
as the Initial Purchaser may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the Securities
by the Initial Purchaser; provided, however, that in connection therewith, none
of the Company or any Guarantor shall be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a nominal dollar amount
in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the earlier of (i) completion of the
initial resale by the Initial Purchaser of the Securities or (ii) two years from
the date hereof any event occurs or information becomes known as a result of
which the Final Memorandum as then amended or supplemented would, in the
judgment of the Company or any Guarantor or in the reasonable opinion of counsel
to the Initial Purchaser include any untrue statement of a material fact, or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the Final
Memorandum to comply with applicable law, the Company and the Guarantors will
promptly notify the Initial Purchaser thereof and will prepare, at the expense
of the Company and the Guarantors, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such compliance.
(d) The Company and the Guarantors will, without charge, provide to
the Initial Purchaser and to counsel for the Initial Purchaser as many copies of
the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchaser may reasonably request.
(e) The Company and the Guarantors will apply the net proceeds from
the sale of the Notes or the Appreciation Notes as set forth under "Use of
Proceeds" in the Final Memorandum.
(f) The Company and the Guarantors will furnish to the Initial
Purchaser copies of all reports and other communications (financial or
otherwise) furnished by the Company to the Trustee, the holders of the Notes,
the Unit Agent, holders of the Units, the Appreciation Notes Trustee and the
holders of Appreciation Notes and, as soon as available, copies of any reports
or financial statements furnished to or filed by the Company or any Guarantors
with the Commission or any national securities exchange on which any class of
securities of the Company may be listed.
19
(g) Prior to the Closing Date, the Company will furnish to the Initial
Purchaser, as soon as they have been prepared, a copy of any unaudited interim
financial statements of the Company and the Guarantors for any period subsequent
to the period covered by the most recent financial statements appearing in the
Final Memorandum.
(h) None of the Company or the Guarantors or any of their Affiliates
will sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) which could be integrated with
the sale of the Notes or the Appreciation Notes in a manner which would require
the registration under the Act of the Securities.
(i) None of the Company or the Guarantors will engage in any form of
"general solicitation" or "general advertising" (as those terms are used in
Regulation D under the Act) in connection with the offering of the Units or in
any manner involving a public offering of the Units within the meaning of
Section 4(2) of the Act.
(j) None of the Company, the Guarantors or their Affiliates nor any
person acting on its or their behalf will engage, in any directed selling
efforts (as that term is defined in Regulation S under the Act) with respect to
the Units, and will comply, and will have its Affiliates and each person acting
on its or their behalf (other than the Initial Purchaser and its Affiliates)
comply, with the offering restrictions requirements of Regulation S under the
Act.
(k) For so long as any of the Securities remain outstanding, the
Company and the Guarantors will make available, upon request, to any seller of
such Securities the information specified in Rule 144A(d)(4) under the Act,
unless the Company and the Guarantors are then subject to Section 13 or 15(d) of
the Exchange Act or the Securities may be resold pursuant to Rule 144(k) under
the Act.
(l) For a period of 180 days from the date of the Final Memorandum,
neither the Company nor any Guarantor will offer for sale, sell, contract to
sell or otherwise dispose of, directly or indirectly, or file a registration
statement for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by the Company or any of
the Guarantors (other than the Notes or the Exchange Notes or the Private
Exchange Notes or the Appreciation Notes or the Appreciation Exchange Notes)
without the prior written consent of the Initial Purchaser.
(m) During the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchaser,
neither the Company nor any Guarantor will, or permit any of their affiliates
(as defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired
20
by them, except for Securities purchased by the Company or any Guarantor or
any of their affiliates and resold in a transaction registered under the
Securities Act.
(n) In connection with the offering of the Securities, until the
Initial Purchaser shall have notified the Company of the completion of the
resale of the Notes and the Appreciation Notes, the Company and the Guarantors
will not, and will cause their affiliated purchasers (as defined under the
Exchange Act) not to, either alone or with one or more other persons (i), bid
for or purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Securities, or attempt to induce any person to
purchase any Securities and (ii) make bids or purchase for the purpose of
creating actual, or apparent, active trading in or of raising the price of the
Securities.
(o) The Company and the Guarantors will not take any action prior to
the execution and delivery of the Indenture which, if taken after such execution
and delivery, would have violated any of the covenants contained in the
Indenture;
(p) The Company and the Guarantors will not take any action prior to
the Closing Date which would require the Final Memorandum to be amended or
supplemented pursuant to Section 5(c).
(q) Prior to the Closing Date, the Company and the Guarantors will not
issue any press release or other communication directly or indirectly or hold
any press conference with respect to the Company or the Guarantors, its
condition, financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the Company and of
which the Initial Purchaser is notified), without the prior written consent of
the Initial Purchaser, unless in the judgment of the Company and its counsel,
after notification to the Initial Purchaser, such press release or communication
is required by law.
(r) The Company will use its best efforts to (i) permit the Units,
Notes and Appreciation Notes to be designated PORTAL securities in accordance
with the rules and regulations adopted by the NASD relating to trading in the
Private Offerings, Resales and Trading through Automated Linkages market (the
"Portal Market") and (ii) permit the Units, Notes and Appreciation Notes to be
eligible for clearance and settlement through the Depository Trust Company.
(s) The Company shall, immediately upon receipt of the proceeds from
the Offering, pay, or cause to be paid, all outstanding indebtedness, including
all indebtedness of the Guarantors, owed to AMRESCO Funding Corporation and
21
▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., including indebtedness under the Credit
Agreement and upon such payment the Company shall then cause the lien securing
such indebtedness to be released.
(t) The Company shall use its best efforts to perform the
transactions contemplated by the Offering Memorandum.
6. Expenses. The Company and the Guarantors agree, jointly and
severally, to pay all costs and expenses incident to the performance of their
obligations under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing, word
processing or other production of documents with respect to the transactions
contemplated hereby, including any costs of printing the Preliminary Memorandum
and the Final Memorandum and any amendment or supplement thereto, and any "Blue
Sky" memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchaser of copies of the foregoing documents, (iii) the fees and disbursements
of counsel, accountants and any other experts or advisors retained by the
Company, (iv) preparation (including printing), issuance and delivery to the
Initial Purchaser of the Notes, (v) the qualification of the Securities under
state securities and "Blue Sky" laws, including filing fees and fees and
disbursements of counsel for the Initial Purchaser relating thereto, (vi) the
Company's expenses in connection with any meetings with prospective investors in
the Securities, (vii) fees and expenses of the Trustee including fees and
expenses of its counsel, (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Securities on the PORTAL
Market, (ix) any fees charged by investment rating agencies for the rating of
the Securities and (x) reasonable out-of-pocket expenses of the Initial
Purchaser (including without limitation, road show expenses and the fees and
disbursements of legal counsel retained by the Initial Purchaser) incurred by
the Initial Purchaser or any of their affiliates in connection with, or arising
out of, the offering and sale of the Securities (but not more than $75,000). If
the sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Initial Purchaser set forth in Section 7
hereof is not satisfied, because this Agreement is terminated or because of any
failure, refusal or inability on the part of the Company or any Guarantor to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder (other than solely by reason of a default by the Initial
Purchaser of its obligations hereunder after all conditions hereunder have been
satisfied in accordance herewith), the Company agrees to promptly reimburse the
Initial Purchaser upon demand for all out-of-pocket expenses (including the
reasonable fees, disbursements and charges of White & Case, counsel for the
Initial Purchaser) that shall have been incurred by the Initial Purchaser in
connection with the proposed purchase and sale of the Securities.
22
7. Conditions of the Initial Purchaser's Obligations. The obligation
of the Initial Purchaser to purchase and pay for the Securities shall, in its
sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, in form and
substance satisfactory to counsel for the Initial Purchaser, substantially to
the effect that:
(i) Each of the Company and the Guarantors is duly
incorporated or formed, as the case may be, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation or
formation and has all requisite corporate or partnership power and authority
to own, lease and operate its properties and to conduct its business as
described in the Final Memorandum. Each of the Company and the Guarantors is
duly qualified as a foreign corporation, limited liability company or limited
partnership and is in good standing in the jurisdictions set forth below such
Guarantor's name on Schedule A attached to such opinion, except such
jurisdictions in which the failure to be so qualified would not be reasonably
expected to have a Material Adverse Effect.
(ii) The Company has the authorized and issued capital stock (or
other equity securities) set forth in the Final Memorandum. To the knowledge of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, the Guarantors constitute all the subsidiaries of the
Company and the Company, directly or indirectly, will own one hundred percent of
the issued and outstanding stock, partnership, or membership interests (or other
equity securities) of each of the Guarantors (except that for the Guarantors
listed on Schedule 3 hereto the Company will directly or indirectly own at least
98% of the membership interests in such Guarantors and the remaining membership
interest in each of such Guarantors will be indirectly owned by ▇▇▇▇ ▇. ▇▇▇▇▇),
free and clear of all security interests perfected, or otherwise, and free and
clear of all other liens, encumbrances, equities and claims or restrictions on
transferability or voting in each case other than liens securing the obligations
of the Company and the Guarantors under the Credit Agreement and obligations
secured by pledge of the capital stock of CMB II, Inc., ▇▇ ▇▇, Inc., St. ▇▇▇▇▇
Newspapers, Inc. and NCR, II, Inc. All of the outstanding shares of capital
stock, partnership or membership interests (or other equity securities) of the
Company and the Guarantors have been duly authorized and validly issued, are
fully paid and nonassessable and were not issued in violation of any preemptive
or similar rights;
(iii) Except as set forth in the Final Memorandum, to the
knowledge of such counsel (A) no options, warrants or other rights to purchase
from the Company
23
or any Guarantor shares of capital stock or ownership interests in the
Company or any Guarantor are outstanding and, (B) no agreements or other
obligations of the Company or any Guarantor to issue, or other rights to
cause the Company or any Guarantor to convert, any obligation into, or
exchange any securities for, shares of capital stock or ownership interests
in the Company or any Guarantor are outstanding.
(iv) The Company and each Guarantor has all requisite corporate,
company or partnership power and authority to execute, deliver and perform its
respective obligations under this Agreement, the Indenture, the Notes, the
Registration Rights Agreement, the Exchange Notes and the Private Exchange
Notes, the Unit Agreement, the Appreciation Notes Indenture, the Appreciation
Notes, the Appreciation Notes Registration Rights Agreement, the Appreciation
Exchange Notes and the Private Appreciation Exchange Notes, and the Indenture
and Appreciation Notes Indenture have been duly and validly authorized by the
Company and each Guarantor.
(v) The Global Note, the Global Appreciation Note and each other
Note and Appreciation Note have been duly and validly authorized by the Company
and authorized and duly executed and delivered by the Company and each
Guarantor.
(vi) The Exchange Notes, the Private Exchange Notes, the
Appreciation Exchange Notes and the Private Appreciation Exchange Notes have
been duly and validly authorized by the Company and each Guarantor.
(vii) The Unit Agreement has been duly and validly authorized
by the Company.
(viii) The Units have been duly and validly authorized by the
Company.
(ix) The Company and each Guarantor has all requisite corporate,
company or partnership power and authority to execute, deliver and perform its
obligations under each of the Registration Rights Agreement and the Appreciation
Notes Registration Rights Agreement and each of the Registration Rights
Agreement and the Appreciation Notes Registration Rights Agreement has been duly
and validly authorized by the Company and each Guarantor.
(x) The Company and each Guarantor has all requisite corporate,
company or partnership power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby; this Agreement and the consummation by the Company and each Guarantor of
24
the transactions contemplated hereby have been duly and validly authorized,
executed and delivered by the Company and each Guarantor.
(xi) Each of the Guarantors has all requisite corporate, company
or partnership power and authority to execute, deliver and perform its
obligations under its respective Guarantee. Each Guarantee issued by a
Guarantor has been duly and validly authorized, executed and delivered by the
applicable Guarantor.
(xii) Except as disclosed in the Memorandum, no legal or
governmental proceedings are pending or, to the knowledge of such counsel,
threatened to which any of the Company or the Guarantors is a party or to which
the property or assets of the Company or the Guarantors is subject before or
brought by any court, arbitrator or governmental agency or body which, if
determined adversely to the Company or the Guarantors, would result,
individually or in the aggregate, in a Material Adverse Effect, or which seeks
to restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Securities to be sold hereunder or the consummation of
the other transactions described in the Final Memorandum.
(xiii) None of the Company or any Guarantor is (i) in
violation of its certificate of incorporation or bylaws or operating agreement
or partnership agreement (or similar organizational document) or (ii) to the
knowledge of such counsel, in breach or violation of any judgment, decree or
order of any court, arbitrator or governmental body, agency or authority
applicable to any of them or any of their respective properties or assets.
(xiv) The execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement, the Unit Agreement, the
Appreciation Notes Indenture and the Appreciation Notes Registration Rights
Agreement and the Guarantees and the closing of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and sale of the
Securities to the Initial Purchaser) will not conflict with or constitute or
result in a breach or a default under (or an event which with notice or passage
of time or both would constitute a default under) or violation of any of (i) the
terms or provisions of any Contract known to such counsel, (ii) the certificate
of incorporation or bylaws or operating agreement or partnership agreement (or
similar organizational document) of the Company or any Guarantor, or (iii)
(assuming compliance with all applicable state securities or "Blue Sky" laws any
statute, judgment, decree, order, rule or regulation of the Commonwealth of
Virginia or of the federal government of the United States (other than the
Communications Act or FCC Rules (as defined in Section 7(c)(i) hereof) and
securities laws as to each of which such counsel need not express any opinion)
which, in such counsel's experience, is normally applicable both to general
business corporations or limited liability companies or
25
limited partnerships which are not engaged in regulated business activities
and to transactions of the type contemplated by the Final Memorandum.
(xv) To the knowledge of such counsel, the Company and each of
the Guarantors possess all Permits presently required or necessary, under the
laws of the Commonwealth of Virginia and the federal laws of the United States
(except for securities laws, the Communications Act and the FCC Rules) to own or
lease, as the case may be, and to operate its respective properties and to carry
on its respective businesses as now or proposed to be conducted as described in
the Preliminary Memorandum and the Final Memorandum, except where the failure to
obtain such Permits would not, individually or in the aggregate, have a Material
Adverse Effect; each of the Company and the Guarantors has fulfilled and
performed all of its obligations with respect to such Permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the holder of any such Permit except where such revocation, termination or
impairment would not, individually or in the aggregate, have a Material Adverse
Effect; and none of the Company or the Guarantors has received any notice of any
proceeding relating to revocation or modification of any such Permit, except as
described in the Final Memorandum and except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(xvi) Lien searches performed with respect to the Company and the
Guarantors in connection with the Credit Agreement and as described in Exhibits
to the Credit Agreement, disclose that as of September 30, 1997 the real and
personal property of the Company described in the Memorandum were free and clear
of all recorded liens, charges, encumbrances or restrictions, except as therein
described and as described in the Memorandum or to the extent that the failure
to have such title or the existence of such liens, charges, encumbrances or
restrictions would not, individually or in the aggregate, have a Material
Adverse Effect.
At the time the foregoing opinion is delivered, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
shall additionally state that it has participated in conferences with officers
and other representatives of the Company and the Guarantors, representatives of
the independent public accountants for the Company, representatives of the
Initial Purchaser and counsel for the Initial Purchaser, at which conferences
the contents of the Final Memorandum and related matters were discussed, and,
although it has not independently verified and is not passing upon and assumes
no responsibility for the accuracy, completeness or fairness of the statements
contained in the Final Memorandum, no facts have come to its attention which
lead it to believe that the Final Memorandum, on the date thereof or at the
Closing Date, contained an untrue statement of a material fact or omitted to
state a
26
material fact required to be stated therein or necessary to make the
statements contained therein, in the light of the circumstances under which
they were made, not misleading, it being understood that such firm expresses
no opinion with respect to any of the financial statements (actual, summary,
selected or pro-forma) outlined therein or the related notes thereto and the
other financial, statistical and accounting data included in the Final
Memorandum or any information therein concerning or furnished in writing by
the Initial Purchaser for inclusion therein. In rendering such opinion,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall have received and may rely upon such certificates
and other documents and information as it may reasonably request to pass on
such matters. The opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ described in this Section
shall be rendered to the Initial Purchaser at the request of the Company and
shall so state therein. If requested by the Trustee, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
shall allow the Trustee to rely on its opinion and shall expressly so state.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchaser shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, in form and
substance satisfactory to counsel for the Initial Purchaser, substantially to
the effect that:
(i) Except as set forth in the Final Memorandum, to the
knowledge of such counsel (A) no options, warrants or other rights to purchase
from the Company or any Guarantor shares of capital stock or ownership interests
in the Company or any Guarantor are outstanding, (B) no agreements or other
obligations of the Company or any Guarantor to issue, or other rights to cause
the Company or any Guarantor to convert, any obligation into, or exchange any
securities for, shares of capital stock or ownership interests in the Company or
any Guarantor are outstanding and (C) no holder of securities of or equity
interests in the Company or any Guarantor is entitled to have such securities
registered under a registration statement filed by the Company and the
Guarantors pursuant to the Registration Rights Agreement.
(ii) The Indenture is in sufficient form for qualification under
the TIA; the Indenture when duly executed and delivered by the Company and each
Guarantor (assuming the due authorization, execution and delivery thereof by the
Company, each Guarantor and the Trustee), will constitute the valid and legally
binding agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor in accordance with its terms, except that the
enforcement thereof may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance,
27
moratorium and other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(iii) The Appreciation Notes Indenture is in sufficient form
for qualification under the TIA; the Appreciation Notes Indenture when duly
executed and delivered by the Company and each Guarantor (assuming the due
authorization, execution and delivery thereof by the Company, each Guarantor and
the Appreciation Notes Trustee), will constitute the valid and legally binding
agreement of the Company and each Guarantor, enforceable against the Company and
each Guarantor in accordance with its terms, except that the enforcement thereof
may be subject to (A) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity and
the discretion of the court before which any proceeding therefor may be brought.
(iv) The Global Note (as such term is defined in the Indenture)
and each other Note to be delivered on the Closing Date are in the form
contemplated by the Indenture. The Global Note and each such other Note when
duly executed and delivered by the Company and when paid for by the Initial
Purchaser in accordance with the terms of this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Company, each
Guarantor and the Trustee and due authentication and delivery of the Notes by
the Trustee in accordance with the Indenture), will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the Indenture,
and enforceable against the Company in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(v) The Global Appreciation Note (as such term is defined in the
Appreciation Notes Indenture) and each other Appreciation Note to be delivered
on the Closing Date are in form contemplated by the Appreciation Notes
Indenture. The Global Appreciation Note and each such other Appreciation Note
when duly executed and delivered by the Company and when paid for by the Initial
Purchaser in accordance with the terms of this Agreement (assuming the due
authorization, execution and delivery of the Appreciation Notes Indenture by the
Company, each Guarantor and the Appreciation Notes Trustee and due
authentication and delivery of the Appreciation Notes by the Trustee in
accordance with the Appreciation Notes Indenture), will constitute valid and
legally binding obligations of the Company enforceable against the
28
Company and each Guarantor in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought. With respect to the applicability of the
limitations on rates of interest imposed by sections 190.40 and 190.42 of the
Penal Law, and the availability of the exemption therefrom provided by
section 5-501(6) of the General Obligations Law, such opinion may be a
reasoned opinion.
(vi) The Exchange Notes when duly executed and delivered by the
Company (assuming the due authorization, execution and delivery of the Indenture
by the Trustee, the Company and each Guarantor and due authentication and
delivery of the Exchange Notes by the Trustee in accordance with the Indenture),
will constitute the valid and legally binding obligations of the Company and
each Guarantor, entitled to the benefits of the Indenture, and enforceable
against the Company and each Guarantor in accordance with their terms, except
that the enforcement thereof may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws now or
hereafter in effect relating to creditors' rights generally and (B) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(vii) The Appreciation Exchange Notes when duly executed and
delivered (assuming the due authorization, execution and delivery of the
Appreciation Notes Indenture by the Appreciation Notes Trustee, the Company and
each Guarantor and due authentication and delivery of the Appreciation Exchange
Notes by the Appreciation Notes Trustee in accordance with the Appreciation
Notes Indenture), will constitute the valid and legally binding obligations of
the Company and each Guarantor, entitled to the benefits of the Appreciation
Notes Indenture, and enforceable against the Company and each Guarantor in
accordance with their terms, except that the enforcement thereof may be subject
to (A) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
and other similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought. With respect to the
applicability of the limitations on rates of interest imposed by sections 190.40
and 190.42 of the Penal Law, and the availability of the exemption therefrom
provided by section 5-501(6) of the General Obligations Law, such opinion may be
a reasoned opinion.
(viii) The Registration Rights Agreement (assuming due
authorization, execution and delivery thereof by the Company, each Guarantor and
the Initial
29
Purchaser) will constitute the valid and legally binding agreement of the
Company and each Guarantor, enforceable against the Company and each
Guarantor in accordance with its terms, except that (A) the enforcement
thereof may be subject to (1) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other similar laws now or hereafter in
effect relating to creditors' rights generally and (2) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought; (B) the indemnification provisions contained therein may be
unenforceable as contrary to public policy; and (C) the provisions for
liquidated damages contained therein may be unenforceable if they were deemed
to constitute a penalty.
(ix) The Appreciation Notes Registration Rights Agreement
(assuming due authorization, execution and delivery thereof by the Company, each
Guarantor and the Initial Purchaser), will constitute the valid and legally
binding agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor in accordance with its terms, except that (A) the
enforcement thereof may be subject to (1) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws now or
hereafter in effect relating to creditors' rights generally and (2) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought; (B) the indemnification provisions contained therein
may be unenforceable as contrary to public policy; and (C) the provisions for
liquidated damages contained therein may be unenforceable if they were deemed to
constitute a penalty.
(x) This Agreement (assuming its due authorization, execution
and delivery by the Company, each Guarantor and the Initial Purchaser)
constitutes a valid and legally binding agreement of the Company, and each
Guarantor, enforceable against the Company, and each Guarantor in accordance
with its terms, except that (A) the enforcement thereof may be subject to (1)
bankruptcy insolvency, reorganization fraudulent conveyance, moratorium and
other similar laws now or hereafter in effect relating to creditors rights
generally and (2) general principles of equity and the discretion of the court
before which any proceeding therefor may be bought; and (B) the indemnification
provisions contained in Section 9 of this Agreement may be unenforceable as
contrary to public policy.
(xi) Assuming that each Guarantee issued by a Guarantor has been
duly and validly authorized, executed and delivered by the applicable Guarantor,
such Guarantee will constitute a valid and legally binding agreement of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether the
30
issue of enforceability is considered in a proceeding in equity or at law)
and the discretion of the court before which any proceeding therefor me be
brought.
(xii) The Unit Agreement (assuming due authorization,
execution and delivery thereof by the Company and the Unit Agent) constitutes
the valid and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be subject to (1) bankruptcy, insolvency, reorganization fraudulent conveyance,
moratorium and other similar laws now or hereafter in effect relating to
creditors rights generally and (2) general principles of equity and the
discretion of the court before which any proceeding therefor may be bought.
(xiii) The Units (assuming due authorization by the Company),
when issued and delivered by the Company against payment therefor by the Initial
Purchaser in accordance with the terms of this Agreement will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except that the enforcement hereof may be subject
to (i) bankruptcy, insolvency, reorganization or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(xiv) The Indenture, the Notes (when issued, authorized and
delivered), the Exchange Notes (when issued, authorized and delivered), the
Registration Rights Agreement, the Unit Agreement, the Appreciation Notes
Indenture, the Appreciation Notes (when issued, authorized and delivered), and
the Appreciation Notes Exchange Notes (when issued, authorized and delivered),
the Appreciation Notes Registration Rights Agreement conform in all material
respects to the descriptions thereof contained in the Final Memorandum and the
statements in the Final Memorandum under "Description of Notes"; and "Exchange
Offer and Registration Rights", "Description of Units", "Description of
Appreciation Notes"; and "Appreciation Notes Exchange Offer and Registration
Rights" and "Descriptions of Membership Interests" insofar as they describe the
provisions of the documents and instruments therein described, constitute fair
summaries thereof in all material respects.
(xv) No consent, approval, authorization or order of any United
States federal or New York State governmental authority is required for the
issuance and sale by the Company of the Securities to the Initial Purchaser or
the other transactions contemplated under the Indenture, the Registration Rights
Agreement, the Guarantees, the Unit Agreement, the Appreciation Notes Indenture,
the Appreciation Notes Registration Rights Agreement and this Agreement, except
such as are disclosed in the Final Memorandum (or as may be required under Blue
Sky laws or as may be required
31
by the FCC, as to which such counsel need express no opinion), and those
which have previously been obtained.
(xvi) The execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement, the Unit Agreement, the
Appreciation Notes Indenture, the Appreciation Notes Registration Rights
Agreement and the Guarantees and the consummation of the transactions
contemplated hereby and thereby (including, without limitation, the issuance and
sale of the Notes and Appreciation Notes to the Initial Purchaser) will not
(assuming compliance with all applicable state securities or "Blue Sky" laws and
assuming the accuracy of the representations and warranties of the Initial
Purchaser in Section 8 hereof) violate (A) any United States federal or New York
State statute, law, rule or regulation (other than the Communications Act or FCC
Rules as to which such counsel need not express any opinion) or (B) any
judgment, decree or order known to us and specifically binding on the Company or
any Guarantor.
(xvii) None of the Company or the Guarantors is, or
immediately after the sale of the Securities to be sold hereunder and the
application of the proceeds from such sale (as described in the Final Memorandum
under the caption "Use of Proceeds") will be, an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(xviii) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Act.
(xix) No registration under the Act of the Notes is required
in connection with the sale of the Notes to the Initial Purchaser as
contemplated by this Agreement and the Final Memorandum or in connection with
the initial resale of the Notes by the Initial Purchaser in accordance with
Section 8 of this Agreement, and prior to the commencement of the Exchange Offer
or the effectiveness of the Shelf Registration Statement (as defined in the
Registration Rights Agreement), the Indenture is not required to be qualified
under the TIA, in each case assuming (A) that the purchasers who buy such Notes
in the initial resale thereof are qualified institutional buyers ("QIBs") as
defined in Rule 144A promulgated under the Act ("Rule 144A") or institutions
that are accredited investors as defined in Rule 501(a) (1), (2), (3) or (7)
promulgated under the Act ("Accredited Investors"), (B) the accuracy of the
Initial Purchaser's representations in Section 8 hereof and those of the Company
and the Guarantors contained in this Agreement and (C) the due performance by
the Initial Purchaser of the agreements set forth in Section 8 hereof.
(xx) No registration under the Act of the Appreciation Notes is
required in connection with the sale of the Appreciation Notes to the Initial
Purchaser as
32
contemplated by this Agreement and the Final Memorandum or in connection with
the initial resale of the Appreciation Notes by the Initial Purchaser in
accordance with Section 8 of this Agreement, and prior to the commencement of
the Appreciation Notes Exchange Offer or the effectiveness of the Shelf
Registration Statement (as defined in the Appreciation Notes Registration
Rights Agreement), the Appreciation Notes Indenture is not required to be
qualified under the TIA, in each case assuming (A) that the purchasers who
buy such Appreciation Notes in the initial resale thereof are qualified
institutional buyers ("QIBs") as defined in Rule 144A promulgated under the
Act ("Rule 144A") or institutions that are accredited investors as defined in
Rule 501(a) (1), (2), (3) or (7) promulgated under the Act ("Accredited
Investors"), (B) the accuracy of the Initial Purchaser's representations in
Section 8 hereof and those of the Company and the Guarantors contained in
this Agreement and (C) the due performance by the Initial Purchaser of the
agreements set forth in Section 8 hereof.
(xxi) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or delivery of
the Notes or Appreciation Notes will violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
In rendering such opinion, such counsel may rely (A) as to matters
involving the Commonwealth of Virginia, upon ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, (B) as to
matters involving the application of laws of any jurisdiction other than the
Commonwealth of Virginia, the State of New York or the United States or the
General Corporation Law of the State of Delaware, to the extent they deem proper
and specified in such opinion, upon the opinion of other counsel who are
satisfactory to counsel for the Initial Purchaser and (C) as to matters of fact
on certificates of officers of the Company and public officials.
At the time the foregoing opinion is delivered, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ shall additionally state that it has participated in conferences with
officers and other representatives of the Company and the Guarantors,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchaser and counsel for the Initial Purchaser,
at which conferences the contents of the Final Memorandum and related matters
were discussed, and, although it has not independently verified and is not
passing upon and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the Final Memorandum, no facts have come
to its attention which lead it to believe that the Final Memorandum, on the date
thereof or at the Closing Date, 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 contained therein, in the light of the circumstances
under which they were made, not misleading, it being understood that such firm
need
33
express no view with respect to the financial statements (actual, summary,
selected or pro-formas) contained therein or the related notes thereto and
the other financial, statistical and accounting data included in the Final
Memorandum or any information therein concerning or furnished by the Initial
Purchaser.
The opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ described in this Section
shall be rendered to the Initial Purchaser at the request of the Company and
shall so state therein. If requested by the Trustee or the Company, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall allow the Trustee or the Company to rely on its opinion
and shall expressly so state.
References to the Final Memorandum in this subsection (b) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(c) On the Closing Date, the Initial Purchaser shall have received an
opinion, dated the Closing Date, of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C., counsel
for the Company. The opinion of such counsel shall be rendered to the Initial
Purchaser at the request of the Company and shall so state therein. The opinion
shall be in form and substance satisfactory to counsel for the Initial
Purchaser, substantially to the effect that:
(i) Those statements in the Memorandum that describe provisions
of the Communications Act of 1934, as amended (the "Communications Act"), and
the rules, regulations and published orders, policies and decisions of the FCC
("FCC Rules") are accurate descriptions in all material respects.
(ii) The execution, delivery and performance of the obligations
by the Company and the Guarantors under the Indenture, the Registration Rights
Agreement, the Notes, the Appreciation Notes Indenture, the Appreciation Notes
Registration Agreement, the Appreciation Notes and this Agreement are not and
will not be contrary to the Communications Act, or to the terms of any radio
license, will not result in any violation of the FCC Rules or, will not cause
any forfeiture or impairment of any FCC license of any of the radio stations,
and will not require any consent, approval or authorization of the FCC, except
that the prior approval of the FCC is required for the pro forma reorganization
of the intermediate entities between ▇▇▇▇ ▇. ▇▇▇▇▇, as the controlling
shareholder/member, and the licensees of stations WIOV-AM and WIOV-FM (Reading
Radio, Inc.), WOMI-AM and WBKR-FM (Tri-State Broadcasting, Inc.), KLIK-AM and
KTXY-FM (Central Missouri Broadcasting, Inc.), KATI-FM (CMB II, Inc.), KUAD-FM
(Northern Colorado Radio, Inc.), WEBC-AM and KKCB-FM (Northland Broadcasting,
LLC), and KLDJ-FM (▇▇ ▇▇, Inc.) which FCC consents to the pro forma transfer of
control were granted by the FCC on December 19, 1997.
34
(iii) The Company and each of the Guarantors validly hold all
FCC licenses or authorizations necessary for the operation of the radio stations
in the manner in which they are described as being conducted in the Memorandum
("FCC Licenses"); the FCC Licenses are valid in accordance with their terms and
are not subject to any conditions or requirements not generally imposed by the
FCC upon the holders of such licenses.
(iv) All applicable administrative and judicial appeal, review
and reconsideration periods relating to the grant of the FCC Licenses have
expired without such counsel being served with any timely filing or petition
requesting reconsideration, review or appeal of such actions, and without the
FCC having instituted review or reconsideration of the grant of any of the FCC
Licenses on its own motion.
(v) To our knowledge, the Company and each of the Guarantors
filed with the FCC all material reports, documents, instruments, information and
applications required to be filed pursuant to the Communications Law. No notice
has been issued by the FCC which could permit, or after notice or lapse of time
or both could permit, revocation or termination of any of the FCC Licenses prior
to the expiration dates thereof or which could result in any other material
impairment of any of the Company's and each of the Guarantors' rights
thereunder.
(vi) To our knowledge, there is not outstanding or pending any
notice of violation, notice of apparent liability, order to show cause, material
complaint or investigation by or before the FCC, except for the pending Petition
To Deny the renewal application for station KUAD-FM filed by the Rainbow-PUSH
Condition alleging violation of the FCC equal employment opportunity rules and
factual misrepresentations, and the pending Petition To Deny and informal
objection to the assignment applications involving stations KLIK-AM, KTXY-FM and
KATI-FM alleging undue media concentration in the Jefferson City, Missouri
market if the proposed buyers are permitted to acquire these stations, and order
of forfeiture in the amount of $3,000.00 against station KUAD-FM for violation
of the sponsorship identification provisions of the FCC Rules. We have no
knowledge of facts at this time, subject to the Company's and the Guarantors'
continued regulatory compliance and the favorable resolution of the Petition To
Deny the KUAD-FM renewal application, that would lead us to believe that the FCC
Licenses will not be renewed in the ordinary course.
(vii) Subject to obtaining the prior consent of the FCC to
the pro forma transfer of control applications as noted in paragraph (ii) above,
the acquisitions and the proposed acquisitions described in the Memorandum,
under the section "Transactions", are in compliance with the Communications Law.
35
(viii) To our knowledge, the Company and each of the
Guarantors possess all FCC Licenses presently required or necessary under the
Communications Act and the FCC Rules to operate its respective properties and to
carry on its respective businesses as now or proposed to be conducted as
described in the Preliminary Memorandum and except where the failure to obtain
such FCC Licenses would not, individually or in the aggregate, have a Material
Adverse Effect; to our knowledge, no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any such
FCC License except where such revocation termination or impairment would not,
individually or in the aggregate, have a Material Adverse Effect.
(d) On the Closing Date, the Initial Purchaser shall have received
the opinion, in form and substance satisfactory to the Initial Purchaser, dated
as of the Closing Date and addressed to the Initial Purchaser, of White & Case,
counsel for the Initial Purchaser, with respect to certain legal matters
relating to this Agreement and such other related matters as the Initial
Purchaser may reasonably require. In rendering such opinion, White & Case shall
have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(e) The Initial Purchaser shall have received from each of ▇▇▇▇▇ &
Young LLP a comfort letter dated the date hereof and the Closing Date,
substantially in the form attached as Exhibit B hereto.
(f) On the Closing Date, the Initial Purchaser shall have received
the following agreements, duly authorized, executed and (except for the
Indenture, to which the Initial Purchaser is not a party) delivered by each of
the parties thereto, in form and substance satisfactory to counsel for the
Initial Purchaser, and containing such terms and conditions that are usual and
customary in transactions similar to those contemplated hereby and thereby,
dated the Closing Date, and each such agreement shall be in full force and
effect according to its terms:
(i) the Indenture;
(ii) the Registration Rights Agreement;
(iii) the Guarantees;
(iv) the Unit Agreement;
36
(v) the Appreciation Notes Indenture; and
(vi) the Appreciation Notes Registration Rights Agreement.
(g) On the Closing Date, the Initial Purchaser shall have received
evidence that all obligations of the Company and the Guarantors with respect to
the Credit Agreement, shall have been terminated and the total commitment under
the Credit Agreement shall have been terminated, all loans thereunder shall have
been repaid in full, together with interest thereon and all other amounts owing
pursuant to the Credit Agreement shall have been repaid in full and the Credit
Agreement shall have been terminated and be of no further force or effect. The
Initial Purchaser shall have received copies of all original documents
(including a pay-off letter) giving effect to the matters contemplated by this
subparagraph (g) in form, scope and substance reasonably satisfactory to counsel
to the Initial Purchaser.
(h) On the Closing Date, the Initial Purchaser shall have received
executed copies of the following agreements or notes, duly authorized and
executed by each of the parties thereto, in form and substance satisfactory to
counsel for the Initial Purchaser, and containing such terms and conditions that
are usual and customary in transactions similar to those contemplated hereby and
thereby, dated the Closing Date, and each such agreement shall be in full force
and effect according to its terms:
(i) the Managed Affiliate Management Agreements (as defined in
the Memorandum); and
(ii) the Managed Affiliate Notes (as defined in the Memorandum),
executed by each of TSB III, LLC and TSB IV, LLC in favor of Tri-State
Broadcasting, Inc.
(i) The Initial Purchaser shall have received good standing
certificates for the Company and each of the Guarantors from their respective
states of incorporation or formation, as the case may be, and from each of the
respective jurisdictions where each of them is qualified to do business as a
foreign corporation, limited liability company or limited partnership.
(j) The representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date; the statements of the Company's or any Guarantor's officers made
pursuant to any certificate delivered in accordance with the provisions hereof
shall be true and correct on and as of the date made and on and as of the
Closing Date; the Company and the Guarantors shall
37
have performed all covenants and agreements and satisfied all conditions on
their part to be performed or satisfied hereunder at or prior to the Closing
Date; and, except as described in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof), subsequent to the
date of the most recent financial statements in such Final Memorandum, there
shall have been no event or development that, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(k) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(l) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(m) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of any
rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the judgment of the Initial Purchaser would materially impair the
ability of the Initial Purchaser to purchase, hold or effect resales of the
Securities as contemplated hereby.
(n) There shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations, of the Company and the Guarantors, taken
as a whole, from that set forth in the Final Memorandum that constitutes a
Material Adverse Effect and that makes it, in the Initial Purchaser's judgment,
impracticable to market the Notes or the Appreciation Notes on the terms and in
the manner contemplated in the Final Memorandum.
(o) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto after the
date hereof), the conduct of the business and operations of the Company and the
Guarantors shall not have been interfered with by strike, fire, flood,
hurricane, accident or other calamity (whether or not insured) or by any court
or governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company and the Guarantors shall not have
sustained any loss or damage (whether or not insured) as a result of any such
occurrence, except any such calamity, action, order, decree, loss or damage
which would not, individually or in the aggregate, have a Material Adverse
Effect.
38
(p) No securities of the Company or any Guarantor shall have been
downgraded or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(q) The Initial Purchaser shall have received certificates of the
Company and each Guarantor, dated the Closing Date, signed by their respective
Chairman of the Board, President or any Senior Vice President and the Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Company and such
Guarantor contained in this Agreement are true and correct as of the date hereof
and as of the Closing Date, and the Company and each Guarantor has performed all
covenants and agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since the date of
the most recent financial statements in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof), no event or events have
occurred, no information has become known nor does any condition exist that,
individually or in the aggregate, would have a Material Adverse Effect;
(iii) The sale of the Securities hereunder has not been enjoined
(temporarily or permanently);
(iv) Contemporaneously with the sale of the Units to the Initial
Purchaser on the Closing Date, the Company shall have caused to be paid or paid
all indebtedness owed to AMRESCO Funding Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit
Partners, L.P. under the Credit Agreement; and
(v) such other information as the Initial Purchaser may reasonably
request.
(r) The Initial Purchaser shall have received a certificate from the
corporate secretary of the Company, dated the Closing Date, attaching certified
copies of (i) all resolutions of the Board of Directors or board of managers of
the Company, as the case may be, authorizing the transactions contemplated by
this Agreement, including, without limitation, approving the offering of the
Units, the entering into this Agreement, the Indenture, the Registration Rights
Agreement, the Unit Agreement, the Appreciation Notes Indenture, the
Appreciation Notes Registration Rights Agreement and the Managed Affiliate
Management Agreements (as defined in the Memorandum), (ii) the certificate of
incorporation and by-laws of the Company, or the operating
39
agreement or the partnership agreement, as the case may be, and (iii)
certifying the names and true signatures of those officers of the Company
executing any documents contemplated by this Agreement.
(s) Prior to the Closing Date, the FCC consents referred to in
paragraph (ii) of Section 7(c) hereof shall be obtained.
On or before the Closing Date, the Initial Purchaser and counsel for
the Initial Purchaser shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Guarantors as they
shall have heretofore reasonably requested from the Company and the Guarantors.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and counsel for the Initial Purchaser. The Company and the
Guarantors shall furnish to the Initial Purchaser such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchaser shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. The Initial
Purchaser agrees with the Company that (i) it has not and will not solicit
offers for, or offer or sell, the Securities by any form of general solicitation
or general advertising (as those terms are used in Regulation D under the Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Act; (ii) it has not engaged in any "directed selling efforts" (as such
term is defined in Rule 902 of Regulation S under the Act) with respect to
Securities offered in reliance on Regulation S and (iii) it has and will solicit
offers for the Securities only from, and will offer the Securities only to (A)
in the case of offers inside the United States, (x) persons whom the Initial
Purchaser 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 the Initial Purchaser that
each such account is a QIB, in each case 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 or (y) a limited number of other institutional
investors reasonably believed by the Initial Purchaser to be Accredited
Investors that, prior to their purchase of the Securities, deliver to the
Initial Purchaser a letter containing the representations and agreements set
forth in Exhibit A to the Final Memorandum and (B) in the case of offers outside
the United States, to or for the account or benefit of persons other than U.S.
persons ("foreign purchasers," which term shall include dealers or other
professional fiduciaries in the United States acting on
40
a discretionary basis for foreign beneficial owners (other than an estate or
trust)); provided, however, that, in the case of this clause (B), (x) in
purchasing such Securities such persons are deemed to have represented and
agreed as provided under the caption "Transfer Restrictions" contained in the
Final Memorandum and (y) no sales shall be made pursuant to this clause (B)
to any person unless, at the time that the order to purchase the Securities
was placed, such person was outside the United States or the Initial
Purchaser and any person acting on its behalf reasonably believed, at the
time such order was placed, that such person was outside the United States.
For the purposes of this Section 8 the term "United States" shall have the
meaning ascribed thereto in Rule 902 of Regulation S under the Act.
The Initial Purchaser represents and warrants that it is a QIB, with
such knowledge and experience in financial and business matters as are necessary
in order to evaluate the merits and risks of an investment in the Units. The
Initial Purchaser agrees to comply with the applicable provisions of Rule 144A
and Regulation S under the Act. In connection with sales of the Units outside
the United States, the Initial Purchaser agrees that it will not offer, sell or
deliver the Units to, or for the account or benefit of, U.S. Persons (i) as part
of its distribution at any time or (ii) otherwise prior to 40 days after the
offering of the Units and it will send to any dealer to whom they sell Units
during such period a confirmation or other notice setting forth the restrictions
on offers and sales of the Units within the Unites States or to, or for the
account or benefit of, U.S. Persons. The Initial Purchaser hereby acknowledges
that the Company and the Guarantors and, for purposes of the opinions to be
delivered to the Initial Purchaser pursuant to Section 7(b) hereof, counsel to
the Company, will rely upon the accuracy and truth of the representations
contained in this Section 8 and the Initial Purchaser hereby consents to such
reliance.
9. Indemnification and Contribution. (a) The Company and the
Guarantors jointly and severally agree to indemnify and hold harmless the
Initial Purchaser and its respective affiliates, directors, officers, agents,
representatives general partners and employees of the Initial Purchaser or its
affiliates, and each other person, if any, who controls the Initial Purchaser or
its affiliates within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the full extent lawful against any losses, claims, damages,
expenses or liabilities (or actions in respect thereof, including, without,
limitation, shareholder derivative actions and arbitration proceedings) to which
the Initial Purchaser or such other person may become subject under the Act, the
Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or any
41
application or other document, or any amendment or supplement thereto, executed
by the Company, or any Guarantor or based upon written information furnished by
or on behalf of the Company, or any Guarantor filed in any jurisdiction in order
to qualify the Securities under the securities or "Blue Sky" laws thereof or
filed with any securities association or securities exchange (each an
"Application");
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact required
to be stated therein or necessary to make the statements therein not misleading;
or
(iii) any breach of any of the representations and warranties of
the Company and the Guarantors set forth in this Agreement, the Registration
Rights Agreement, the Unit Agreement, the Appreciation Notes Registration Rights
Agreement and the Guarantees, and will reimburse, as incurred, the Initial
Purchaser and each such other person for any legal or other expenses incurred by
the Initial Purchaser or such other person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, the Company
and the Guarantors 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 untrue
statement or alleged untrue statement or omission or alleged omission (A) made
in any Memorandum or any amendment or supplement thereto or any Application in
reliance upon and in conformity with written information concerning the Initial
Purchaser furnished to the Company by the Initial Purchaser specifically for use
therein or (B) which results from the fact that a copy of the Final Memorandum
was not sent or given to such person, and if the untrue statement or omission or
alleged untrue statement or omission that was contained in the Preliminary
Memorandum has been corrected in the Final Memorandum and delivered to the
Initial Purchaser on a timely basis to permit such delivery or sending. This
indemnity agreement will be in addition to any liabilities or obligations that
the Company and the Guarantors may otherwise have to the indemnified parties,
including without limitation the indemnification obligations of the Company
pursuant to the NatWest Engagement Letter. The Company and the Guarantors shall
not be liable under this Section 9 for any settlement of any claim or action
effected without their prior written consent, which shall not be unreasonably
withheld.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company and the Guarantors, their directors, their officers and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company or the Guarantors or any such director, officer
or controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or
42
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in any Memorandum or any amendment or supplement thereto or any
Application, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Memorandum or any amendment or
supplement thereto or any Application, or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
concerning the Initial Purchaser, furnished to the Company or the Guarantors
by the Initial Purchaser specifically for use therein; and subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses incurred by the Company, or any such
director, officer or controlling person in connection with investigating or
defending against or appearing as a third party witness in connection with
any such loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability that the Initial
Purchaser may otherwise have to the indemnified parties. The Initial
Purchaser shall not be liable under this Section 9 for any settlement of any
claim or action effected without its prior written consent, which shall not
be unreasonably withheld. The Company and the Guarantors shall not, without
the prior written consent of the Initial Purchaser, effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
Initial Purchaser is or could have been a party, or indemnity could have been
sought hereunder by the Initial Purchaser, unless such settlement (A)
includes an unconditional written release of the Initial Purchaser, in form
and substance reasonably satisfactory to the Initial Purchaser, from all
liability on claims that are the subject matter of such proceeding and (B)
does not include any statement as to an admission of fault, culpability or
failure to act by or on behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent 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 paragraphs (a) and (b) above. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the
43
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after receipt by the indemnifying party of notice of
the institution of such action, then, in each such case, the indemnifying
party shall not have the right to direct the defense of such action on behalf
of such indemnified party or parties and such indemnified party or parties
shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed
to defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be
liable for the expenses of more than one separate counsel (in addition to
local counsel) in any one action or separate but substantially similar
actions in the same jurisdiction arising out of the same general allegations
or circumstances, designated by the Initial Purchaser in the case of
paragraph (a) of this Section 9 or either the Company or any of the
Guarantors in the case of paragraph (b) of this Section 9, representing the
indemnified parties under such paragraph (a) or paragraph (b), as the case
may be, who are parties to such action or actions) or (ii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not
be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the prior written consent of the
indemnifying party (which consent shall not be unreasonably withheld), unless
such indemnified party waived in writing its rights under this Section 9, in
which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to an indemnified
party in respect of any losses, claims, damages or liabilities (or actions in
respect thereof), each indemnifying party, in order to provide for just and
equitable contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect (i)
the relative benefits received by the indemnifying party or parties on the one
hand and the
44
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault
of the indemnifying party or parties on the one hand and the indemnified
party on the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received
by the Company and the Guarantors on the one hand and the Initial Purchaser
on the other shall be deemed to be in the same proportion as the total
proceeds from the offering (net of commissions and before deducting expenses)
received by the Company and the Guarantors bear to the total discounts and
commissions received by the Initial Purchaser. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company and the Guarantors on the one hand, or the Initial Purchaser on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission or alleged
statement or omission, and any other equitable considerations appropriate in
the circumstances. The Company, the Guarantors and the Initial Purchaser
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations
referred to in the first sentence of this paragraph (d). Notwithstanding any
other provision of this paragraph (d), the Initial Purchaser shall not be
obligated to make contributions hereunder that in the aggregate exceed the
total discounts, commissions and other compensation received by the Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
the Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and 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 paragraph (d), each person, if any,
who controls the Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchaser, and each director of the Company, each
officer of the Company and each person, if any, who controls the Company or
the Guarantors within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, shall have the same rights to contribution as the Company.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, the
Guarantors, their respective officers and the Initial Purchaser set forth in
this Agreement or made by or on behalf of them pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company, the Guarantors, any of their respective officers or
directors, the Initial Purchaser or any other person
45
referred to in Section 9 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6, 9 and 15 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Company given prior
to the Closing Date in the event that the Company, or any Guarantor shall
have failed, refused or been unable to perform all obligations and satisfy
all conditions on their respective part to be performed or satisfied
hereunder at or prior thereto or, if at or prior to the Closing any of the
following shall have occurred:
(i) either the Company, or any Guarantor shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding, which
loss or interference has had, has or could be reasonably likely to have a
Material Adverse Effect, or there shall have been, in the sole judgment
of the Initial Purchaser, any event or development that, individually or
in the aggregate, has or could be reasonably likely to have a Material
Adverse Effect (including without limitation a change in control of the
Company or the Guarantors), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(ii) there shall have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and the
Guarantors taken as a whole, from that set forth in the Final Memorandum
that is material and adverse and that makes it, in the Initial
Purchaser's judgment, impracticable to market the Securities on the terms
and in the manner contemplated in the Final Memorandum;
(iii) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York
Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers, Inc. or the setting of minimum prices for trading
on such exchange or market shall have occurred or trading of any
securities of the Company or the Guarantors shall have been suspended on
any exchange or in any over-the-counter market;
(iv) a banking moratorium shall have been declared by New
York or United States authorities;
46
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States, (C) any material change in the financial
markets of the United States or (D) any other national or international
calamity or emergency which, in the case of (A), (B), (C) or (D) above
and in the sole judgment of the Initial Purchaser, makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Final Memorandum;
(vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs that
has a material adverse effect on the financial markets in the United
States, and would, in the sole judgment of the Initial Purchaser, make it
impracticable or inadvisable to market the Securities;
(vii) the proposal, enactment, publication, decree, or other
promulgation of any federal or state statute, regulation, rule or order
of any court or other governmental authority which, in the sole judgment
of the Initial Purchaser, would have a Material Adverse Effect;
(viii) any securities of the Company shall have been downgraded
or placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization; or
(ix) it shall have become impractical, in the sole judgment
of the Initial Purchaser, for the Company to consummate the offering of
the Units, on the terms described in the Final Memorandum.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Sections 6 and 10 hereof.
12. Information Supplied by the Initial Purchaser. The statements
set forth in the "stabilization legend" on the inside front cover page of each
Memorandum and the fifth through ninth paragraphs under the heading "Plan of
Distribution" in each Memorandum (to the extent any such statements relate to
the Initial Purchaser) constitute as of the date hereof the only information
furnished by the Initial Purchaser to the Company for the purposes of Sections
2(a), 7(a), 7(b) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
if sent to the Initial Purchaser, shall be mailed or delivered to (i) NatWest
Capital Markets Limited, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇; with a copy to White & Case, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
47
▇▇▇▇▇▇▇, Esq.; if sent to the Company, shall be mailed or delivered to the
Company at ▇▇▇▇▇ Media Company, LLC, ▇▇▇ ▇.▇. Fifth Street, Suite 3-B, P.O.
Box 3353, Evansville, Indiana 47732, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, with a copy
to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; and one business day
after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser, the Company, the Guarantors and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company and the Guarantors contained in Section 9 of this
Agreement shall also be for the benefit of any person or persons who control the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Initial Purchaser contained in
Section 9 of this Agreement shall also be for the benefit of the directors of
the Company and officers and any person or persons who control the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Units from the Initial Purchaser will be deemed a successor
because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
48
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among the
Company, the Guarantors and the Initial Purchaser.
Very truly yours,
▇▇▇▇▇ MEDIA COMPANY, LLC, a
Virginia Limited Liability Company
By: ▇▇▇▇▇ MEDIA MANAGEMENT,
INC., a Virginia Corporation, its Manager
By_________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title:President
▇▇▇▇▇ MEDIA MANAGEMENT, INC., a
Virginia Corporation
By____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
BMC HOLDINGS, LLC, a Virginia
Limited Liability Company
BY: ▇▇▇▇▇ MEDIA COMPANY, LLC, its
Manager
BY: ▇▇▇▇▇ MEDIA MANAGEMENT, INC.,
its Manager
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
READING RADIO, INC., a Virginia
Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
TRI-STATE BROADCASTING, INC., a
Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
NORTHERN COLORADO RADIO,
INC., a Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
NCR II, INC., a Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CENTRAL MISSOURI
BROADCASTING, INC., a Virginia
Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CMB II, INC.
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
NORTHLAND BROADCASTING, LLC,
a Virginia Limited Liability Company
By: NORTHLAND HOLDINGS, LLC,
a Virginia Limited Liability
Company, its Manager
By: BMC HOLDINGS, LLC,
a Virginia Limited Liability
Company, its Manager
By: ▇▇▇▇▇ MEDIA COMPANY, LLC
a Virginia Limited Liability
Company, its Manager
By: ▇▇▇▇▇ MEDIA MANAGEMENT,
INC., a Virginia Corporation its
Manager
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇ ▇▇, INC., a Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CENTRAL MICHIGAN NEWSPAPERS,
INC., a Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CADILLAC NEWSPAPERS, INC., a
Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CMN ASSOCIATED PUBLICATIONS,
INC. a Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CENTRAL MICHIGAN DISTRIBUTION
CO., L.P.
By: CENTRAL MICHIGAN
DISTRIBUTION CO., INC. its General
Partner
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CENTRAL MICHIGAN DISTRIBUTION
CO., INC.,
a Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
GLADWIN NEWSPAPERS, INC., a
Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
GRAPH ADS PRINTING, INC., a
Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
MIDLAND BUYER'S GUIDE, INC., a
Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
ST. ▇▇▇▇▇ NEWSPAPERS, INC., a
Virginia Corporation
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
HURON P.S. LLC, a Virginia Limited
Liability Company
By: HURON HOLDINGS, LLC, a
Virginia Limited Liability
Company, its Manager
By: BMC HOLDINGS, LLC, a Virginia
Limited Liability Company, its
Manager
By: ▇▇▇▇▇ MEDIA COMPANY, LLC, its
Manager
By: ▇▇▇▇▇ MEDIA MANAGEMENT,
INC., a Virginia Corporation,
its Manager
By:____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
HURON NEWSPAPERS, LLC, a Virginia
Limited Liability Company
HURON HOLDINGS, LLC, a Virginia
Limited Liability Company
By: BMC HOLDINGS, LLC, a Virginia
Limited Liability Company, its
Manager
By: ▇▇▇▇▇ MEDIA COMPANY, LLC,
a Virginia Limited Liability
Company, its Manager
By: ▇▇▇▇▇ MEDIA MANAGEMENT,
INC., a Virginia Corporation, its
Manager
By:____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
NORTHERN COLORADO HOLDINGS,
LLC
By: BMC HOLDINGS, LLC, a
Virginia Limited Liability
Company, its Manager
By: ▇▇▇▇▇ MEDIA COMPANY, LLC,
a Virginia Limited Liability
Company, its Manager
By: ▇▇▇▇▇ MEDIA MANAGEMENT, INC.
a Virginia Corporation, its Manager
By:___________________________
▇▇▇▇ ▇. ▇▇▇▇▇, President
NCR III, LLC, a Virginia Limited Liability
Company
By: NCH II, LLC, a Virginia Limited
Liability Company, its Manager
By: BMC Holdings, LLC, a Virginia
Limited Liability Company, its
Manager
By: ▇▇▇▇▇ Media Company, LLC,
a Virginia Limited Liability Company,
its Manager
By: ▇▇▇▇▇ Media Management, Inc., a
Virginia Limited Liability Company
By:_____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
NCH II, LLC, a Virginia Limited Liability
Company
By: BMC Holdings, LLC, a Virginia
Limited Liability Company, its
Manager
By: ▇▇▇▇▇ MEDIA COMPANY, LLC, a
Virginia Limited Liability Company,
its Manager
By: ▇▇▇▇▇ MEDIA MANAGEMENT,
INC., a Virginia Corporation,
its Manager
By:______________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
NORTHLAND HOLDINGS, LLC, a Virginia
Limited Liability Company
By: BMC Holdings, LLC, a Virginia
Limited Liability Company, its
Manager
By: ▇▇▇▇▇ MEDIA COMPANY, LLC, a
Virginia Limited Liability Company,
its Manager
By: ▇▇▇▇▇ MEDIA MANAGEMENT,
INC., a Virginia Corporation,
its Manager
By:_____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
CMN HOLDING, INC., a Virginia Corporation
By:___________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇▇▇ RADIO INC., a Virginia Corporation
By:_____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇▇▇ NEWSPAPERS, INC., a Virginia
Corporation
By:____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
NATWEST CAPITAL MARKETS LIMITED
By:_____________________________
Name:
Title:
SCHEDULE 1
Principal
Amount of
Initial Purchaser Notes
------------------ ------
NatWest Capital Markets Limited....... $105,000,000
Number
of
Units
-----
NatWest Capital Markets Limited....... 105,000
SCHEDULE 2
GUARANTORS
Name
1. Holdings
2. Reading Radio, Inc.
3. Tri-State Broadcasting, Inc.
4. Northern Colorado Radio, Inc.
5. NCR II, Inc.
6. Central Missouri Broadcasting, Inc.
7. CMB II, Inc.
8. Northland Broadcasting, LLC
9. ▇▇ ▇▇, Inc.
10. Central Michigan Newspapers, Inc.
11. Cadillac Newspapers, Inc.
12. CMN Associated Publications, Inc.
13. Central Michigan Distribution Co., L.P.
14. Central Michigan Distribution Co., Inc.
15. Gladwin Newspapers, Inc.
16. Graph Ads Printing, Inc.
17. Midland Buyer's Guide, Inc.
18. St. ▇▇▇▇▇ Newspapers, Inc.
19. Huron P.S., LLC
20. Huron Newspapers, LLC
21. Huron Holdings, LLC
22. Northern Colorado Holdings, LLC
23. NCR III, LLC
24. NCH II, LLC
25. Northland Holdings, LLC
26. CMN Holdings, Inc.
27. ▇▇▇▇▇ Radio Inc.
28. ▇▇▇▇▇ Newspapers, Inc.
SCHEDULE 3
Northland Broadcasting, LLC
Huron P.S., LLC
Huron Newspapers, LLC
Huron Holdings, LLC
Northern Colorado Holdings, LLC
NCR III, LLC
NCH II, LLC
Northland Holdings, LLC