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EXHIBIT 1.1
EXECUTION COPY
MGC COMMUNICATIONS, INC.
and
MPOWER HOLDING CORPORATION
$250,000,000 of
13% Senior Notes due 2010
Purchase Agreement
March 17, 2000
BEAR, XXXXXXX & CO. INC.
XXXXXXX XXXXX XXXXXX
XXXXXXX, XXXXX & CO.
XXXXXXX XXXXX & CO.
WARBURG DILLON READ LLC
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MGC COMMUNICATIONS, INC.
and
MPOWER HOLDING CORPORATION
$250,000,000 of
13% Senior Notes due 2010
PURCHASE AGREEMENT
March 17,2000
New York, New York
BEAR, XXXXXXX & CO. INC.
XXXXXXX XXXXX XXXXXX INC
XXXXXXX, XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
WARBURG DILLON READ LLC
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies & Gentlemen:
MGC Communications, Inc., a Nevada corporation (the "Company"), and
Mpower Holding Corporation, a Delaware corporation (the "Co-Obligor"), propose
to issue and sell to Bear, Xxxxxxx & Co. Inc., Xxxxxxx Xxxxx Xxxxxx Inc.,
Xxxxxxx, Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and
Warburg Dillon Read LLC (together, the "Initial Purchasers") $250,000,000
aggregate principal amount of 13% Senior Notes due 2010 (the "Senior Notes")
subject to the terms and conditions set forth herein. The Senior Notes will be
issued pursuant to an indenture (the "Indenture"), to be dated the Closing Date
(as defined below), between the Company, the Co-Obligor and HSBC Bank USA as
trustee (the "Trustee"). Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Indenture.
1. Issuance of Securities. The Company and the Co-Obligor propose to,
upon the terms and subject to the conditions set forth herein, issue and sell to
the Initial Purchasers the Senior Notes. Capitalized terms used but not
otherwise defined herein shall have the meanings given to such terms in the
Indenture.
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The proceeds to the Company from the sale to the Initial Purchasers of
the Senior Notes will be used for general corporate purposes, including to fund
working capital, operating losses and capital expenditures.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of 1933
(as amended, the "Act"), the Senior Notes (and all securities issued in exchange
therefor or in substitution thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSORS) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY OR ANY INTEREST OR
PARTICIPATION HEREIN MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES (A) TO OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY
ONLY (1) TO THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT
REASONABLY BELIEVES IS "A QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A (4) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 904 UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 5O1(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT OR (6) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND IN THE
CASE OF A TRANSFER PURSUANT TO CLAUSE (5) OR (6), BASED ON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING
CASES TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
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2. Offering. The Senior Notes will be offered and sold to the Initial
Purchasers pursuant to an exemption from the registration requirements under the
Securities Act of 1933, as amended (the "Act"). The Company and the Co-Obligor
have prepared a preliminary offering memorandum, dated March 10, 2000 (the
"Preliminary Offering Memorandum"), and a final offering memorandum, dated March
17, 2000 (the "Offering Memorandum"), relating to the Company and the Senior
Notes.
The Initial Purchasers have advised the Company and the Co-Obligor that
the Initial Purchasers will make offers (the "Exempt Resales") of the Senior
Notes on the terms set forth in the Offering Memorandum, as amended or
supplemented, solely to persons whom any of the Initial Purchasers reasonably
believe to be "qualified institutional buyers," as defined in Rule 144A under
the Act ("QIBs"), and to non-U.S. persons outside the United States within the
meaning of Regulation S under the Act ("Regulation S Investors"). Such QIBs and
Regulation S Investors shall be referred to herein as the "Eligible Purchasers."
The Initial Purchasers will offer the Senior Notes to such Eligible Purchasers
initially at a purchase price equal to 97.288% of the principal amount thereof
(the "Offering Price"). Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Senior Notes will have
the registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement"), to be dated the Closing Date.
This Agreement, the Senior Notes, the Indenture, and the Registration Rights
Agreement are hereinafter sometimes referred to collectively as the "Operative
Documents."
3. Purchase Sale and Delivery. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to its terms
and conditions, the Company and the Co-Obligor agree to issue and sell to each
Initial Purchaser, and each Initial Purchaser agrees severally and not jointly
to purchase from the Company and the Co-Obligor, that aggregate principal amount
of Senior Notes set forth opposite its name on Schedule I hereto. The purchase
price for the Senior Notes shall be 97.250% of the Offering Price.
(b) Delivery to the Initial Purchasers of, and payment by the Initial
Purchasers for, the Senior Notes shall be made at the offices of Kronish Xxxx
Xxxxxx & Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
such other location as may be mutually acceptable. Such delivery and payment
shall be made at 9:00 A.M. New York time, on March 24, 2000 or at such other
time as shall be agreed upon by the Initial Purchasers, the Company and the
Co-Obligor. The time and date of such delivery and payment are herein called the
"Closing Date."
(c) Senior Notes sold to Regulation S investors will initially be
represented by one or more Senior Notes in global definitive, fully registered
form without interest coupons (each a "Regulation S Global Senior Note")
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), for the accounts of the Euroclear System ("Euroclear") and Cedel Bank,
societe anonymne ("Cedel"), having an aggregate amount corresponding to the
aggregate principal amount of the Senior Notes sold to Regulation S Investors.
Senior Notes sold to QIBs will be represented by one or more Senior Notes in
global definitive, fully registered form without interest
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coupons (each a "Restricted Global Senior Note", and together with the
Regulation S Global Senior Note, the "Global Securities") registered in the name
of Cede & Co., as nominee of DTC, having an aggregate amount corresponding to
the aggregate amount of the Senior Notes sold to QIBs. The Global Securities
shall be delivered by the Company and the Co-Obligor to the Initial Purchasers
(or as the Initial Purchasers direct), against payment by the Initial Purchasers
of the purchase price therefor, by wire transfer of immediately available funds
to an account specified by the Company or as the Company may direct in writing,
provided that the Company shall give at least two business days' prior written
notice to the Initial Purchasers of the information required to effect such wire
transfers. The Global Securities shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m., New York City time, on the
business day immediately preceding the Closing Date.
4. Agreements of the Company and the Co-Obligor. Each of the Company and
the Co-Obligor covenants and agrees with each of the Initial Purchasers as
follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of the Senior Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority and (ii) of the happening of
any event that, in the reasonable opinion of counsel to the Company and the
Co-Obligor, makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires the
making of any additions to or changes in the Preliminary Offering Memorandum or
the Offering Memorandum in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The Company and the
Co-Obligor shall use their best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption of the Senior Notes
under any state securities or Blue Sky laws and, if at any time any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption of the Senior Notes under any state
securities or Blue Sky laws, the Company and the Co-Obligor shall use their best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish the initial Purchasers and those persons identified by the
Initial Purchasers to the Company, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request. The
Company and the Co-Obligor consent to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum or the
Offering Memorandum prior to the Closing Date unless the Initial Purchasers
shall previously have been advised thereof and shall not have reasonably
objected thereto within a reasonable time after being furnished a copy thereof.
The Company and the Co-Obligor shall promptly prepare, upon the Initial
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Purchasers' reasonable request, any amendment or supplement to the Preliminary
Offering Memorandum or the Offering Memorandum that may be necessary or
advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of any Exempt
Resale, any event shall occur as a result of which, in the judgment of the
Company and the Co-Obligor or in the reasonable opinion of either counsel to the
Company or the Co-Obligor or counsel to the Initial Purchasers, it becomes
necessary or advisable to amend or supplement the Preliminary Offering
Memorandum or Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser which is a prospective purchaser, not misleading, or if it is
necessary or advisable to amend or supplement the Preliminary Offering
Memorandum or Offering Memorandum to comply with applicable law, (i) notify the
Initial Purchasers and (ii) forthwith to prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein as so
amended or supplemented will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law.
(e) To cooperate with the Initial Purchasers and counsel to the Initial
Purchasers in connection with the qualification or registration of the Senior
Notes under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may reasonably request and to continue such qualification in effect
so long as required for the Exempt Resales; provided, however neither the
Company nor the Co-Obligor shall be required in connection therewith to register
or qualify as a foreign corporation where it is not now so qualified or to take
any action that would subject it to service of process in suits or taxation, in
each case, other than as to matters and transactions relating to the Preliminary
Offering Memorandum, the Offering Memorandum or Exempt Resales, in any
jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, to pay all
costs, expenses, fees and taxes incident to the performance of the obligations
of the Company and the Co-Obligor hereunder, including in connection with: (i)
the preparation, printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation, financial
statements) and all amendments and supplements thereto required pursuant hereto,
(ii) the preparation (including, without limitation, duplication costs) and
delivery of all preliminary and final Blue Sky memoranda prepared and delivered
in connection herewith and with the Exempt Resales, (iii) the issuance, transfer
and delivery of the Senior Notes to the Initial Purchasers, (iv) the
qualification or registration of the Senior Notes for offer and sale under the
securities or Blue Sky laws of the several states (including, without
limitation, the cost of printing and mailing a preliminary and final Blue Sky
Memorandum and the reasonable fees and disbursements of counsel to the Initial
Purchasers relating thereto), (v) furnishing such copies of the Preliminary
Offering Memorandum and the Offering Memorandum, and all amendments and
supplements thereto, as may be requested for use in connection with Exempt
Resales, (vi) the preparation of certificates for the Senior Notes (including,
without limitation, printing and engraving thereof), (vii) the fees,
disbursements and expenses of the
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Company's and the Co-Obligor's counsel and accountants, (viii) all expenses and
listing fees in connection with the application for quotation of the Senior
Notes in the National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (ix) all fees and expenses (including fees
and expenses of counsel to the Company) of the Company in connection with the
approval of the Senior Notes by DTC for "book-entry" transfer, (x) rating the
Senior Notes by rating agencies, (xi) the reasonable fees and expenses of the
Trustee and its counsel in connection with the Indenture and the Senior Notes,
(xii) the performance by the Company and the Co-Obligor of their other
obligations under this Agreement and the other Operative Documents and (xiii)
"roadshow" travel and other expenses incurred in connection with the marketing
and sale of the Senior Notes (other than out-of-pocket expenses incurred by the
Initial Purchasers for travel, meals and lodgings), provided, however, that the
expenses incurred pursuant to clauses (ii) and (iv) above shall not exceed
$5,000 without the consent of the Company.
(g) To use the proceeds from the sale of the Senior Notes in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Senior Notes.
(i) To do and perform all things required to be done and performed under
this Agreement by it prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the delivery of the Senior Notes.
(j) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Senior Notes in a manner that would require the
registration under the Act of the sale to the Initial Purchasers or the Eligible
Purchasers of the Senior Notes or to take any other action that would result in
the Exempt Resales not being exempt from registration under the Act.
(k) For so long as any of the Senior Notes remain outstanding and during
any period in which the Company or the Co-Obligor is not subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to make available to any QIB or beneficial owner of Senior Notes in
connection with any sale thereof and any prospective purchaser of such Senior
Notes from such QIB or beneficial owner, the information required by Rule
144A(d)(4) under the Act.
(l) In accordance with the terms of the Registration Rights Agreement, to
cause the Exchange Offer, as defined in the Registration Rights Agreement, to be
made in the appropriate form to permit registered Senior Notes to be offered in
exchange for the Senior Notes and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
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(m) To comply with all of its agreements set forth in the Registration
Rights Agreement and all agreements set forth in the representation letters of
the Company to DTC relating to the approval of the Senior Notes by DTC for
"book-entry" transfer.
(n) To use its best efforts to effect the inclusion of the Senior Notes
in PORTAL and to obtain approval of the Senior Notes by DTC for "book-entry"
transfer.
(o) During a period of two years following the Closing Date, to deliver
without charge to each of the Initial Purchasers, (i) promptly upon their
becoming available, copies of all reports or other publicly available
information that the Company and the Co-Obligor shall mail or otherwise make
available to their respective stockholders, (ii) upon request, all reports,
financial statements and proxy or information statements filed by the Company
with the Securities and Exchange Commission (the "Commission") or any national
securities exchange and (iii) promptly upon their becoming available, such other
publicly available information concerning the Company, including without
limitation, press releases.
(p) Prior to the Closing Date, to furnish to each of the Initial
Purchasers, as soon as they have been prepared in the ordinary course by the
Company, copies of any consolidated financial statements or any unaudited
interim financial statements of the Company for any period subsequent to the
periods covered by the financial statements appearing in the Offering
Memorandum.
(q) Neither the Company nor any of its subsidiaries will take, directly
or indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Senior Notes. Except as
permitted by the Act and other than to the Initial Purchasers, neither the
Company nor the Co-Obligor will distribute any Preliminary Offering Memorandum,
Offering Memorandum or other offering material in connection with the offering
and sale of the Senior Notes.
(r) To comply with the agreements in the Indenture, the Registration
Rights Agreement and any other Operative Document.
5. Representations and Warranties. (a) The Company and the Co-Obligor,
jointly and severally, represent and warrant to each of the Initial Purchasers
that:
(i) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared in connection with the Exempt Resales. The Preliminary
Offering Memorandum and the Offering Memorandum do not, and any
supplement or amendment to them will not, contain any untrue statement of
a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations and
warranties contained in this paragraph shall not apply to statements in
or omissions from the Preliminary Offering Memorandum and the Offering
Memorandum (or any supplement or amendment thereto) made in reliance upon
and in conformity with information relating to the
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Initial Purchasers furnished to the Company and the Co-Obligor in writing
by the Initial Purchasers expressly for use therein. Any projections and
other information contained in the Preliminary Offering memorandum and
the Offering Memorandum or provided to the Initial Purchasers or any
Eligible Purchaser have been prepared in good faith and are based upon
assumptions which, in light of the circumstances under which they were
made, are reasonable. No stop order preventing the use of the Preliminary
Offering Memorandum or the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued.
(ii) When the Senior Notes are issued and delivered pursuant to this
Agreement, no Senior Note will be of the same class (within the meaning
of Rule l44A under the Act) as securities of the Company or the
Co-Obligor that are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system.
(iii) The Company and each of the subsidiaries listed on Schedule II,
which are the only subsidiaries of the Company, (A) has been duly
organized, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, (B) has all requisite
corporate power and authority to carry on its business as it is currently
being conducted and as described in the Offering Memorandum and to own,
lease and operate its properties, and (C) is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification except, with respect to
this clause (C), where the failure to be so qualified or in good standing
does not and could not reasonably be expected to (x) individually or in
the aggregate, result in a material adverse effect on the properties,
business, results of operations, condition (financial or otherwise),
affairs or prospects of the Company and its subsidiaries, taken as a
whole, (y) interfere with or adversely affect the issuance of the Senior
Notes pursuant hereto or (z) in any manner draw into question the
validity of this Agreement or any other Operative Document or the
transactions described in the Offering Memorandum under the caption "Use
of Proceeds" (any of the events set forth in clauses (x), (y) or (z), a
"Material Adverse Effect"). All of the issued and outstanding shares of
capital stock of, or other ownership interests in, each subsidiary have
been duly authorized and validly issued, and are fully paid and
non-assessable and were not issued in violation of or subject to any
preemptive or similar rights and are owned by the Company or a
subsidiary of the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or other restriction on
transferability or voting. Except for the capital stock of the
subsidiaries listed on Schedule H, neither the Company nor any of its
subsidiaries owns or holds any interest in any corporation, partnership,
trust or association, joint venture or other entity.
(iv) All of the outstanding shares of capital stock of the Company and
each subsidiary have been duly authorized, validly issued, and are fully
paid and
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nonassessable and were not issued in violation of any preemptive or
similar rights. As of the dates specified in the Offering Memorandum
under the caption "Capitalization," after giving effect to the issuance
of the Senior Notes and the other events described therein, the Company
had an authorized and outstanding consolidated capitalization as set
forth therein.
(v) Except as disclosed in the Offering Memorandum, there are not
currently, and will not be as a result of the Offering, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any capital
stock or other equity interest of the Company or its subsidiaries.
(vi) Each of the Company and the Co-Obligor has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Indenture, the Registration Rights
Agreement and the other Operative Documents and to consummate the
transactions contemplated hereby and thereby, including, without
limitation, the corporate power and authority to issue, sell and deliver
the Senior Notes as provided herein and therein and the power to effect
the Use of Proceeds as described in the Offering Memorandum.
(vii) This Agreement has been duly and validly authorized,
executed and delivered by the Company and the Co-Obligor and is the
legal, valid and binding agreement of the Company and the Co-Obligor,
enforceable against each of them in accordance with its terms, except
insofar as indemnification and contribution provisions may be limited by
applicable law or equitable principles and subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity.
(viii) The Indenture has been duly and validly authorized by the
Company and the Co-Obligor and, when duly executed and delivered by the
Company and the Co-Obligor, will be the legal, valid and binding
obligation of the Company and the Co-Obligor, enforceable against each of
them in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a fair summary of
the terms of the Indenture.
(ix) The Senior Notes have been duly and validly authorized by the
Company and the Co-Obligor, and have been duly and validly authorized for
issuance and sale to the Initial Purchasers by the Company and the
Co-Obligor pursuant to this Agreement and, when issued and authenticated
in accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof and thereof, will be
the legal, valid and binding obligations of the Company and the
Co-Obligor, enforceable against each of them in accordance with their
terms and entitled to the benefits of the Indenture, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization
or similar laws affecting the rights of creditors generally and subject
to general
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principles of equity. The Offering Memorandum contains a fair summary of
the terms of the Senior Notes.
(x) The 13% Series B Senior Notes due 2010 to be offered in
exchange for the Senior Notes (the "Exchange Notes") have been duly and
validly authorized for issuance by the Company and the Co-Obligor and,
when issued and authenticated in accordance with the terms of the
Exchange Offer, as defined in the Registration Rights Agreement, and the
Indenture, will be the legal, valid and binding obligations of the
Company and the Co-Obligor, enforceable against each of them in
accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The
Offering Memorandum contains a fair summary of the terms of the Exchange
Notes.
(xi) The Registration Rights Agreement has been duly and validly
authorized by the Company and the Co-Obligor and, when duly executed and
delivered by the Company and the Co-Obligor, will be the legal, valid and
binding obligation of the Company and the Co-Obligor, enforceable against
each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a fair summary of
the terms of the Registration Rights Agreement.
(xii) None of the Company or any subsidiary is, and, after giving
effect to the Offering, will not be (A) in violation of its respective
charter or bylaws, (B) in default in the performance of any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties is subject, or (C) in violation of any local, state or
Federal law, statute, ordinance, rule, regulation, requirement, judgment
or court decree (including, without limitation, the Communications Act of
1934, as amended by the Telecommunications Act of 1996, and the rules and
regulations of the Federal Communications Commission ("FCC") and
environmental laws, statutes, ordinances, rules, regulations, judgments
or court decrees) applicable to it or any of its assets or properties
(whether owned or leased) other than, in the case of clauses (B) and (C),
any default or violation that could not reasonably be expected to result
in a Material Adverse Effect. There exists no condition that, with
notice, the passage of time or otherwise, would constitute a default
under any such document or instrument other than any default or violation
that could not reasonably be expected to result in a Material Adverse
Effect.
(xiii) None of (A) the execution, delivery or performance by the
Company and the Co-Obligor of this Agreement and the other Operative
Documents, (B) the issuance and sale of the Senior Notes and (C)
consummation by the Company and the subsidiaries of the transactions
described in the Offering Memorandum under the caption "Use of Proceeds"
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violate, conflict with or constitute a breach of any of the terms
or provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or require consent
under, or result in the imposition of a lien or encumbrance on any
properties of the Company or any subsidiary, or an acceleration of any
indebtedness of the Company or any subsidiary pursuant to, (i) the
charter or bylaws of the Company or any subsidiary, (ii) any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any subsidiary is a party or by which
the Company or any subsidiary or any of their respective property is or
may be bound, (iii) any statute, rule or regulation applicable to the
Company or any subsidiary or any of their respective assets or properties
or (iv) any judgment, order or decree of any court or governmental agency
or authority having jurisdiction over the Company or any subsidiary or
any of their respective assets or properties, except in the case of
clauses (ii), (iii) and (iv) for such violations conflicts, breaches,
defaults, consents, impositions of liens or accelerations that (x) would
not singly, or in the aggregate, have a Material Adverse Effect. Other
than as described in the Offering Memorandum, no consent, approval,
authorization or order of, or filing, registration, qualification,
license or permit of or with, (A) any court or governmental agency, body
or administrative agency (including, without limitation, the FCC) or (B)
any other person is required for (1) the execution, delivery and
performance by the Company or the Co-Obligor of this Agreement and the
other Operative Documents, (2) the issuance and sale of the Senior Notes
and (3) the consummation of the transactions contemplated hereby or by
the other Operative Documents, except (x) such as have been obtained and
made (or, in the case of the Registration Rights Agreement, will be
obtained and made) under the Act, the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") and state securities or Blue Sky laws
and regulations or such as may be required by the NASD or (y) where the
failure to obtain any such consent, approval, authorization or order of,
or filing registration, qualification, license or permit would not
reasonably be expected to result in a Material Adverse Effect.
(xiv) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Company or any
subsidiary threatened or contemplated to which the Company or any
subsidiary is a party or to which the business or property of the Company
or any subsidiary is subject, (ii) no statute, rule, regulation or order
that has been enacted, adopted or issued by any governmental agency or
that has been proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state court or
foreign court of competent jurisdiction to which the Company or any
subsidiary is or may be subject or to which the business, assets, or
property of the Company or any subsidiary is or may be subject, that, in
the case of clauses (i), (ii) and (iii) above, (x) would be required to
be disclosed in a registration statement filed with the Commission and
that is not so disclosed, (y) could reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect or
(z) might interfere with, adversely affect or in any manner question the
validity of the issuance and sale of the Senior Notes or any of the other
transactions contemplated by this Agreement and the other Operative
Documents.
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(xv) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Senior Notes or prevents or suspends the use
of the Offering Memorandum; no injunction, restraining order or order of
any nature by a federal or state court of competent jurisdiction has been
issued that prevents the issuance of the Senior Notes, prevents or
suspends the sale of the Senior Notes in any jurisdiction referred to in
Section 4(e) hereof or that could adversely affect the consummation of
the transactions contemplated by this Agreement, the Operative Documents
or the Offering Memorandum; and every request of any securities authority
or agency of any jurisdiction for additional information has been
complied with in all material respects.
(xvi) There is (i) no significant unfair labor practice complaint
pending against the Company or any subsidiary nor, to the best knowledge
of the Company and the Co-Obligor, threatened against any of them, before
the National Labor Relations Board, any state or local labor relations
board or any foreign labor relations board, and no significant grievance
or significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or any
subsidiary or, to the best knowledge of the Company and the Co-Obligor,
threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage pending against the Company or any
subsidiary nor, to the best knowledge of the Company and the Co-Obligor,
threatened against any of them, and (iii) to the best knowledge of the
Company and the Co-Obligor, no union representation question existing
with respect to the employees of the Company or any subsidiary that, in
the case of clauses (i), (ii) or (iii), could reasonably be expected to
result in a Material Adverse Effect. To the best knowledge of the Company
and the Co-Obligor, no collective bargaining organizing activities are
taking place with respect to the Company or any subsidiary. None of the
Company or any subsidiary has violated (A) any federal, state or local
law or foreign law relating to discrimination in hiring, promotion or pay
of employees, (B) any applicable wage or hour laws or (C) any provision
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules and regulations thereunder, which in the case of
clause (A), (B) or (C) above could reasonably be expected to result in a
Material Adverse Effect.
(xvii) No employee pension benefit plan (within the meaning of
Section 3(2) of ERISA, but excluding any "multiemployer plan" within the
meaning of Section 3(37) of ERISA) established or maintained by the
Company or any subsidiary or to which the Company or any subsidiary has
made contributions, which is subject to Part 3 or Subtitle B of Title I
of ERISA, or Section 412 of the Internal Revenue Code of l986 (the
"Code"), had an accumulated funding deficiency (as such term is defined
in Section 302 of ERISA or Section 412 of the Code), whether or not
waived, as of the last day of the most recent plan year of such plan
heretofore ended for which an excise tax is due (or would be due if such
deficiency were not waived). Each of the Company and the subsidiaries has
made all contributions required to be made by it to any "multiemployer
pension plan" (within the meaning of Section 3(37) of ERISA). Neither
the Company nor any subsidiary nor any Related Person
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(as such term is defined below) has incurred, or is expecting to incur,
any withdrawal liability (determined under Section 4201 of ERISA) with
respect to any plan covered by Title IV of ERISA and in respect of which
the Company, any subsidiary or a Related Person is an "employer" as
defined in Section 3(5) of ERISA, and to the best of the Company's
knowledge, there has not been any "reportable event" (within the meaning
of Section 4043 of ERISA and regulations thereunder, other than an event
for which the 30-day notice requirement has been waived), or any other
event or condition which presents a material risk of the termination of
any such plan, including, but not limited to, a termination by action of
the Pension Benefit Guaranty Corporation, which termination would create
a material liability of the Company, any subsidiary or a Related Person
to the Pension Benefit Guaranty Corporation. "Related Person" shall mean
any trade or business (whether or not incorporated) which is under common
control (as defined in Section 414(b) and (c) of the Code) with the
Company within the meaning of Section 4001(b) of ERISA. As of the last
day of the most recent plan year heretofore ended of each employee
benefit plan described in the preceding sentence (other than a
"multiemployer plan"), the present value of all accrued benefits under
each such employee benefit plan (calculated on the basis of the actuarial
assumptions specified in the most recent actuarial valuation for each
such plan) did not exceed the fair market value of the assets of such
plan allocable to such benefit by more than $1,000,000. Neither any
employee pension benefit plan (excluding any "multiemployer plan" within
the meaning of Section 3(37) of ERISA) established or maintained by the
Company or any subsidiary or to which the Company or any subsidiary has
made contributions, nor any trust created thereunder, nor any trustee or
administrator thereof (including the Company), has engaged in any
non-exempt prohibited transaction (as described in Section 406 of ERISA
or in Section 4975 of the Code) that could subject the Company or any
subsidiary either directly or indirectly through an obligation to
indemnify to any material tax or material penalty on prohibited
transactions imposed under said Section 4975 of the Code or under ERISA.
The execution and delivery of this Agreement, the other Operative
Documents and the sale of the Senior Notes to be purchased by Eligible
Purchasers will not involve any prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code. Each employee
benefit plan described in the preceding sentence is in compliance in all
material respects with all applicable provisions of ERISA and the Code,
except for plan amendments required or permitted by such statutes as to
which applicable grace periods for making such amendments have not
expired, and the Company and the subsidiaries has made, accrued or
provided for all contributions heretofore required to be made by the
Company and the subsidiaries and each of the Company and the subsidiaries
has complied in all material respects with the continuation coverage
requirements of Title X of the Consolidated Omnibus Budget Act of 1985,
as amended. Neither the Company nor any subsidiary has any material
"expected post-retirement benefit obligation" (within the meaning of
Financial Accounting Standards Board Statement No. 106). The consummation
of the transactions contemplated by this Agreement (including, without
limitation, the Use of Proceeds) will not result in any material payment
(including, without limitation, severance, golden parachute or otherwise)
becoming due from the Company or any subsidiary to any employee of the
Company or any subsidiary as a consequence of such transaction.
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(xviii) None of the Company or any subsidiary has violated any
environmental, safety or similar law or regulation applicable to it or
its business or property relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), lacks any permit,
license or other approval required of it under applicable Environmental
Laws or is violating any term or condition of such permit license or
approval, except for any such violation or failure to have any such
permit, license or other approval, which could not reasonably be expected
to, either individually or in the aggregate, have a Material Adverse
Effect. No facilities owned or leased by the Company or any subsidiary,
or to the knowledge of the Company, any facilities of any predecessor in
interest of the Company or any subsidiary, is listed or, to the knowledge
of the Company, formally proposed for listing on the National Priorities
List or the Comprehensive Environmental Response, Compensation, and
Liability Information System, both as promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act. ("CERCLA"), or on
any comparable state list, or listed or, to the knowledge of the Company,
formally proposed for listing, on any comparable local list, and neither
the Company nor any subsidiaries has received any written notification of
potential or actual liability, or any written request for information,
pursuant to CERCLA or any comparable state, local or foreign
environmental law.
(xix) Each of the Company and the subsidiaries has (i) good and
marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Offering Memorandum or as would not have a Material Adverse Effect, (ii)
peaceful and undisturbed possession under all material leases to which it
is a party as lessee, (iii) all licenses, certificates, permits,
authorizations, approvals, franchises and other rights from, and has
made all declarations and filings with, all federal, state and local
authorities (including, without limitation, the FCC), all self-regulatory
authorities and all courts and other tribunals (each an "Authorization")
necessary to engage in the business conducted by them in the manner
described in the Offering Memorandum, except as described in the Offering
Memorandum or where the failure to hold such Authorizations would not,
individually or in the aggregate, have a Material Adverse Effect, and no
such Authorization contains a materially burdensome restriction that is
not disclosed in the Offering Memorandum and (iv) no reason to believe
that any governmental body or agency is considering limiting, suspending
or revoking any such Authorization. Except where the failure to be in
full force and effect would not have a Material Adverse Effect, all such
Authorizations are valid and in full force and effect and each of the
Company and the subsidiaries is in compliance in all material respects
with the terms and conditions of all such Authorizations and with the
rules and regulations of the regulatory authorities having jurisdiction
with respect thereto. All material leases to which the Company or any
subsidiary is a party are valid and binding and no default by the Company
or any subsidiary has occurred and is continuing thereunder and, to the
best knowledge of the Company and the subsidiaries no material defaults
by the
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landlord are existing under any such lease that could reasonably be
expected to result in a Material Adverse Effect.
(xx) Each of the Company and the subsidiaries owns, possesses or
has the right to employ all patents, patent rights, licenses (including
all FCC, state, local or other jurisdictional regulatory licenses),
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
software, systems or procedures), trademarks, service marks and trade
names, inventions, computer programs, technical data and information
(collectively, the "Intellectual Property") presently employed by it in
connection with the businesses now operated by it free and clear of and
without violating any right, claimed right, charge, encumbrance, pledge,
security interest, restriction or lien of any kind of any other person
and none of the Company nor any subsidiary has received any notice of
infringement of or conflict with asserted rights of others with respect
to any of the foregoing except as could not reasonably be expected to
have a Material Adverse Effect. The use of the Intellectual Property in
connection with the business and operations of the Company and the
subsidiaries does not infringe on the rights of any person, except as
could not reasonably be expected to have a Material Adverse Effect.
(xxi) None of the Company or any subsidiary, or to the best
knowledge of the Company, any of their respective officers, directors,
partners, employees, agents or affiliates or any other person acting on
behalf of the Company or any subsidiary has directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, official
or employee of any governmental agency (domestic or foreign),
instrumentality of any government (domestic or foreign) or any political
party or candidate for office (domestic or foreign) or other person who
was, is or may be in a position to help or hinder the business of the
Company or any subsidiary (or assist the Company or any subsidiary in
connection with any actual or proposed transaction) which might subject
the Company or any subsidiary, or any other individual or entity to any
material damage or penalty in any civil, criminal or governmental
litigation or proceeding (domestic or foreign) or which could have a
Material Adverse Effect.
(xxii) All material tax returns required to be filed by the
Company and each of the subsidiaries in all jurisdictions have been so
filed. All taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such
entities or that are due and payable have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided or those currently payable without penalty or interest. To the
knowledge of the Company and the Co-Obligor, there are no proposed
additional tax assessments against the Company, any subsidiary or the
assets or property of the Company or any subsidiary which could
reasonably be expected to have a Material Adverse Effect.
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(xxiii) The Company is not required to be registered as an (i) an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act"), or (ii) a "holding
company" or a "subsidiary company" or an "affiliate" of a holding company
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(xxiv) Except as disclosed in the Offering Memorandum, there are
no holders of securities of the Company or any subsidiary who, by reason
of the execution by the Company and the Co-Obligor of this Agreement or
any other Operative Document to which either the Company or the
Co-Obligor is a party or the consummation by the Company and the
Co-Obligor of the transactions contemplated hereby or thereby, have the
right to request or demand that the Company or any subsidiary register
under the Act or analogous foreign laws and regulations securities held
by them.
(xxv) Each of the Company and the subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect thereto.
(xxvi) Each of the Company and the subsidiaries maintains
insurance covering its properties, operations, personnel and businesses.
Such insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and
the subsidiaries and their respective businesses. None of the Company or
any subsidiary has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures will
have to be made in order to continue such insurance. All such insurance
is outstanding and duly in force on the date hereof, subject only to
changes made in the ordinary course of business, consistent with past
practice, which do not, singly or in the aggregate, materially alter the
coverage thereunder or the risks covered thereby.
(xxvii) None of the Company or any of its subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Senior Notes or (ii) since the date of the
Preliminary Offering Memorandum (A) sold, bid for, purchased or paid any
person any compensation for soliciting purchases of, the Senior Notes
or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
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(xxviii) No registration under the Act of the Senior Notes is
required for the sale of the Senior Notes to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming (i) that the
purchasers who buy the Senior Notes in the Exempt Resales are Eligible
Purchasers and (ii) the accuracy of the Initial Purchasers'
representations regarding the absence of general solicitation in
connection with the sale of Senior Notes to the Initial Purchasers and
the Exempt Resales contained herein. No form of general solicitation or
general advertising was used by the Company, the Co-Obligor or any of
their representatives (other than the Initial Purchasers, as to which the
Company and the Co-Obligor make no representation or warranty) in
connection with the offer and sale of any of the Senior Notes in
connection with Exempt Resales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. No securities of the same class as the Senior Notes
have been issued and sold by the Company or the Co-Obligor within the
six-month period immediately prior to the date hereof.
(xxix) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date, contains the information specified in, and meets
the requirements of, Rule 144A(d)(4) under the Act.
(xxx) Subsequent to the respective dates as of which information
is given in the Offering Memorandum and up to the Closing Date, except as
set forth in the Offering Memorandum, (i) none of the Company or any
subsidiary has incurred any liabilities or obligations, direct or
contingent, which are material, individually or in the aggregate, to the
Company and the subsidiaries taken as a whole, nor entered into any
transaction not in the ordinary course of business, (ii) there has not
been, singly or in the aggregate, any change or development which could
reasonably be expected to result in a Material Adverse Effect and (iii)
there has been no dividend or distribution of any kind declared, paid or
made by the Company or any subsidiary on any class of its capital stock.
(xxxi) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Senior Notes, the application of
the proceeds from the issuance and sale of the Senior Notes and the
consummation of the transactions contemplated thereby as set forth in the
Offering Memorandum, will violate Regulations T, U or X promulgated by
the Board of Governors of the Federal Reserve System or analogous foreign
laws and regulations.
(xxxii) To the best knowledge of the Company and the Co-Obligor,
the accountants who have certified or will certify the financial
statements included or to be included as part of the Offering Memorandum
are independent accountants. The historical financial statements of the
Company and its subsidiaries comply as to form in all material respects
with the requirements applicable to registration statements on Form S-1
under the
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Act and present fairly in all material respects the financial position
and results of operations of the Company and its subsidiaries at the
respective dates and for the respective periods indicated. Such financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the
periods presented. The as adjusted balance sheet data and pro forma as
adjusted balance sheet data included in the Offering Memorandum have been
prepared on a basis consistent with such historical statements, except
for the adjustments specified therein, and give effect to assumptions
made on a reasonable basis and present fairly in all material respects
the historical and proposed transactions contemplated by this Agreement,
the other Operative Documents. The other financial and statistical
information and data included in the Offering Memorandum, historical and
as adjusted and pro forma as adjusted, are accurately presented in all
material respects and prepared on a basis consistent with the financial
statements, historical and as adjusted and pro form as adjusted, included
in the Offering Memorandum and the books and records of the Company and
its subsidiaries, as applicable.
(xxxiii) The Company does not intend to, nor does it believe that
it will, incur debts beyond its ability to pay such debts as they mature.
The present fair saleable value of the assets of the Company and the
subsidiaries on a consolidated basis exceeds the amount that will be
required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of the Company and the
subsidiaries on a consolidated basis as they become absolute and matured.
The assets of the Company and the subsidiaries on a consolidated basis do
not constitute unreasonably small capital to carry out the business of
the Company and the subsidiaries, taken as a whole, as conducted or as
proposed to be conducted. Upon the issuance of the Senior Notes, the
present fair saleable value of the assets of the Company and the
subsidiaries on a consolidated basis will exceed the amount that will be
required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of the Company and the
subsidiaries on a consolidated basis as they become absolute and matured.
Upon the issuance of the Senior Notes, the assets of the Company and the
subsidiaries on a consolidated basis will not constitute unreasonably
small capital its businesses as now conducted, including the capital
needs of the Company and the subsidiaries on a consolidated basis, taking
into account the projected capital requirements and capital availability.
(xxxiv) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company or the
Co-Obligor and any other person that would give rise to a valid claim
against the Company, the Co-Obligor or any of the Initial Purchasers for
a brokerage commission, finder's fee or like payment in connection with
the issuance, purchase and sale of the Senior Notes.
(xxxv) The Company and the subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that the
computer hardware and software used by them may be unable to recognize
and properly execute date-sensitive functions involving certain dates
prior to and any dates after December 31, 1999 (the "Year
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2000 Problem"). The Company and the subsidiaries have not experienced any
Year 2000 Problems and the Company is not aware, after due inquiry, of
any Year 2000 Problems at any supplier, vendor, customer or financial
service organization used or serviced by the Company and the
subsidiaries, other than Year 2000 Problems which will not have a
Material Adverse Effect.
(xxxvi) Each certificate signed by any officer of the Company or
the Co-Obligor and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty by
the Company or the Co-Obligor to the Initial Purchasers as to the matters
covered thereby.
Each of the Company and the Co-Obligor acknowledges that each of
the Initial Purchasers and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 8 hereof, counsel to the Company and the
Co-Obligor and counsel to the Initial Purchasers, will rely upon the accuracy
and truth of the foregoing representations and hereby consents to such reliance.
(b) Each of the Initial Purchasers severally and not jointly
represents, warrants and covenants to the Company and the Co-Obligor and agrees
that:
(i) Such Initial Purchaser 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 Senior Notes.
(ii) Such Initial Purchaser (A) is not acquiring the Senior
Notes with a view to any distribution thereof that would violate the Act
or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the
Senior Notes only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and to
Regulation S Investors in an offshore transaction exempt from the
registration requirements of the Act.
(iii) Each of the Initial Purchasers represents and agrees that
the Senior Notes offered and sold in reliance on Regulation S have been
and will be offered and sold only in offshore transactions. In connection
therewith, each of the Initial Purchasers agrees that it has not offered
or sold and will not offer or sell the Notes in the United States or to,
or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Securities
Act (i) as part of its distribution at any time and (ii) otherwise until
40 days after the later of the commencement of the offering of the Notes
pursuant hereto and the Closing Date, other than in accordance with
Regulation S of the Securities Act or another exemption from the
registration requirements of the Securities Act.
(iv) Each of the Initial Purchasers agrees that, at or prior
to confirmation of a sale of Notes by it to any distributor, dealer or
person receiving a selling concession, fee or other
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remuneration during the 40-day distribution compliance period referred to
in Rule 903(c)(3) under the Securities Act, it will send to such
distributor, dealer or person receiving a selling concession, fee or
other remuneration a confirmation or notice to substantially the
following effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered and sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of your
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the Offering and the Closing
Date, except in either case in accordance with Regulation S under
the Securities Act (or Rule 144A or to Accredited Institutions in
transactions that are exempt from the registration requirements
of the Securities Act), and in connection with any subsequent
sale by you of the Notes covered hereby in reliance on Regulation
S during the period referred to above to any distributor, dealer
or person receiving a selling concession, fee or other
remuneration, you must deliver a notice to substantially the
foregoing effect. Terms used above have the meanings assigned to
them in Regulation S."
(v) Each of the Initial Purchasers agrees that the Notes
offered and sold in reliance on Regulation S will be represented upon
issuance by a global security that may not be exchanged for definitive
securities until the expiration of the 40-day distribution compliance
period referred to in Rule 903(c)(3) of the Securities Act and only upon
certification of beneficial ownership of such Notes by non-U.S. persons
or U.S. persons who purchased such Notes in transactions that were exempt
from the registration requirements of the Securities Act.
(vi) No form of general solicitation or general advertising
has been or will be used by either of the Initial Purchasers or any of
their representatives in connection with the offer and sale of any of the
Senior Notes, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(vii) Each of the Initial Purchasers agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the Senior Notes
only from, and will offer to sell the Senior Notes only to, Eligible
Purchasers. The Initial Purchasers further agree (A) that they will offer
to sell the Senior Notes only to, and will solicit offers to buy the
Senior Notes only from (1) QIB's who in purchasing such Senior Notes will
be deemed to have represented and agreed that they are purchasing the
Senior Notes for their own accounts or accounts with respect to which
they exercise sole investment discretion and that they or such accounts
are QIBs and (2) Regulation S Investors in offers and sales that occur
outside the United States to persons other than U.S. persons who in
purchasing such Senior Notes will be deemed to have
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represented that they are acquiring the Senior Notes in an offshore
transaction within the meaning of Regulation S under the Act and (B) that
such Eligible Purchasers acknowledge and agree that such Senior Notes
will not have been registered under the Act and may be resold, pledged or
otherwise transferred only (x)(I) to a person who the seller reasonably
believes is a QIB in a transaction meeting the requirements of Rule 144A,
(II) in a transaction meeting the requirements of Rule 144, (III) outside
the United States to a person that is not a U.S. Person (as defined in
Rule 902 under the Act) in a transaction meeting the requirements of Rule
904 under the Act, (IV) to an institutional "Accredited Investor" (as
defined in Rule 501(a)(l), (2), (3) or (7) of Regulation D under the Act)
that, prior to such transfer, furnishes to the Trustee a signed letter
containing certain representations and agreements relating to the Senior
Notes (the form of such letter can be obtained from the Trustee), or (V)
in accordance with another exemption from the registration requirements
of the Act (in the case of II, III, IV or V, based upon an opinion of
counsel if the Company or Trustee, Registrar or Transfer Agent for the
Senior Notes so requests), (y) to the Company or (z) pursuant to an
effective registration statement under the Act and, in each case, in
accordance with any applicable securities laws of any state of the United
States and (C) that the holder will, and each subsequent holder is
required to, notify any purchaser of the security evidenced thereby of
the resale restrictions set forth in (B) above. Accordingly, each of the
Initial Purchasers agrees that neither it, its affiliates nor any persons
acting on its behalf has engaged or will engage in any directed selling
efforts within the meaning of Rule 902 of Regulation S with respect to
the Senior Notes and it, its affiliates and all persons acting on its or
their behalf have complied and will comply with the offering restrictions
requirements of Regulation S.
(viii) Each of the Initial Purchasers understands that the
Company and the Co-Obligor and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel
to the Company and the Co-Obligor and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations
and hereby consents to such reliance.
Terms used in this Section 5 that have meanings assigned to them in Regulation S
are used herein as so defined.
6. Indemnification.
(a) The Company and the Co-Obligor, jointly and severally, agree to
indemnify and hold harmless (i) each of the Initial Purchasers, (ii) each
person, if any, who controls any Initial Purchaser within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective
officers, directors, partners, employees, representatives and agents of any of
the Initial Purchasers or any controlling person to the fullest extent lawful,
from and against any and all losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them
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may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum or
the Offering Memorandum, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that neither the Company nor the
Co-Obligor will be liable in any such case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company and the Co-Obligor by or on behalf of the
Initial Purchasers expressly for use therein. This indemnity agreement will be
in addition to any liability which the Company and the Co-Obligor may otherwise
have, including, under this Agreement.
(b) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company, the Co-Obligor and each person, if any,
who controls the Company or the Co-Obligor within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against any losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to attorneys'
fees and any and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or threatened, or
any claim whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company and the Co-Obligor by or on behalf of such Initial Purchaser expressly
for use therein, and provided further that the foregoing indemnity with respect
to any untrue statement contained in or omitted from a preliminary offering
memorandum shall not inure to the benefit of any Initial Purchaser (or any
person controlling such Initial Purchaser), from whom the person asserting any
such loss, liability, claim, damage or expense purchased any of the Senior Notes
which are the subject thereof if it is finally judicially determined that such
loss, liability, claim, damage or expense resulted solely from the fact that the
Initial Purchaser sold Senior Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Offering Memorandum, as amended or supplemented, and (x) the Company and the
Co-Obligor shall have previously and timely furnished sufficient copies of the
Offering Memorandum, as so amended or supplemented, to such Initial Purchaser in
accordance with this Agreement and (y) the Offering Memorandum, as so amended or
supplemented, would have corrected such untrue statement or omission of a
material fact; provided,
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however, that in no case shall any Initial Purchaser be liable or responsible
for any amount in excess of the discounts and commissions received by such
Initial Purchaser. This indemnity will be in addition to any liability which
such Initial Purchaser may otherwise have, including under this agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case (and where the Initial Purchasers are the indemnified
parties, Bear, Xxxxxxx & Co. Inc. shall have the right to select such counsel
for the Initial Purchasers), but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless (i) the employment
of such counsel shall have been authorized in writing by the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying party or parties shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above, shall only be liable for the legal expenses of one
counsel (in addition to any local counsel) for all indemnified parties in each
jurisdiction in which any claim or action is brought. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its prior
written consent; provided, however, that such consent was not unreasonably
withheld.
7. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 6 is for any
reason held to be unavailable from the Company and the Co-Obligor or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Co-Obligor, on the one hand, and the Initial Purchasers, on the other hand,
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered
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by the Company or the Co-Obligor, any contribution received by the Company and
the Co-Obligor from persons, other than the Initial Purchasers, who may also be
liable for contribution, including persons who control the Company or the
Co-Obligor within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) to which the Company, the Co-Obligor and any Initial Purchaser may
be subject, in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Co-Obligor, on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Senior Notes or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 6, in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company and the Co-Obligor, on the one hand, and the Initial Purchasers, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Co-Obligor, on the one hand, and the Initial Purchasers, on the other
hand, shall be deemed to be in the same proportion as (x) the total proceeds
from the offering of Senior Notes (net of discounts but before deducting
expenses) received by the Company and the Co-Obligor and (y) the discounts
received by the Initial Purchasers, respectively. The relative fault of the
Company and the Co-Obligor, on the one hand, and the Initial Purchasers, on the
other hand, 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, the Co-Obligor or the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Co-Obligor and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this Section
7, (i) in no case shall either of the Initial Purchasers be required to
contribute any amount in excess of the amount by which the discount applicable
to the Senior Notes purchased by such Initial Purchaser pursuant to this
Agreement exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, (A) each person,
if any, who controls any Initial Purchaser within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act and (B) the respective officers,
directors, partners, employees, representatives and agents of any of the Initial
Purchasers or any controlling person shall have the same rights to contribution
as such Initial Purchaser, and each person, if any, who controls the Company or
the Co-Obligor within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act shall have the same rights to contribution as the Company and
the Co-Obligor, subject in each case to clauses (i) and (ii) of this Section 7.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the failure to so notify such party or parties shall not relieve the
party or parties from whom contribution may be
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sought from any obligation it or they may have under this Section 7 or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its prior written consent; provided, however, that such
written consent was not unreasonably withheld.
The Initial Purchasers' obligations to contribute pursuant to this Section 7 are
several in proportion to the respective principal amount of Senior Notes
purchased by each of the Initial Purchasers hereunder and not joint.
8. Conditions of Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the Senior Notes,
as provided herein, shall be subject to the satisfaction of the following
conditions:
(a) All of the representations and warranties of the Company and the
Co-Obligor contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if made on and
as of the date hereof and the Closing Date, respectively. The Company and the
Co-Obligor shall have performed or complied with all of the agreements herein
contained and required to be performed or complied with by it at or prior to the
Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York City
time, on the day following the date of this Agreement or at such later date and
time as to which the Initial Purchasers may agree, and no stop order suspending
the qualification or exemption from qualification of the Senior Notes in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, prevent the issuance of the Senior Notes;
no action, suit or proceeding shall have been commenced and be pending against
or affecting or, to the best knowledge of the Company and the Co-Obligor,
threatened against, the Company or any subsidiary before any court arbitrator or
any governmental body, agency or official that (1) could reasonably be expected
to result in a Material Adverse Effect or (2) has not been disclosed in the
Offering Memorandum; and no stop order shall have been issued preventing the use
of the Offering Memorandum, or any amendment or supplement thereto, or which
could reasonably be expected to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material adverse change, or any
development that is reasonably likely to result in a material adverse change, in
the capital stock or the long-term debt, or material increase in the short-term
debt, of the Company or the subsidiaries from that set forth in the Offering
Memorandum, (ii) no dividend or distribution of any kind shall have been
declared, paid or made by the Company or any subsidiary on any class of its
capital stock, (iii) neither the Company nor any subsidiary shall have incurred
any liabilities or obligations, direct or contingent, that are material,
individually or in the aggregate, to the Company and the subsidiaries, taken as
a whole, and that are
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required to be disclosed on a balance sheet or notes thereto in
accordance with generally accepted accounting principles and are not
disclosed on the latest balance sheet or notes thereto included in the
Offering Memorandum. Since the date hereof and since the dates as of
which information is given in the Offering Memorandum, there shall not
have occurred any Material Adverse Effect.
(e) The Initial Purchasers shall have received a certificate,
dated the Closing Date, signed on behalf of the Company and the
Co-Obligor by (i) Xxxxx X. Xxxx, President and Chief Executive Officer
and (ii) Xxxxxxx X. Xxxxx, Executive Vice President and Chief Financial
Officer, in form and substance reasonably satisfactory to the Initial
Purchasers, confirming, as of the Closing Date, the matters set forth in
paragraphs (a), (b), (c) and (d) of this Section 8 and that, as of the
Closing Date, the obligations of the Company to be performed hereunder on
or prior thereto have been duly performed in all material respects.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers, of Shearman & Sterling, counsel for the Company and the
Co-Obligor, to the effect set forth in Exhibit A hereto.
(g) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers, of Xxxxx, Funk, Xxxxxxxx, Xxxxxxxx and Xxxxxx, P.C., Nevada
counsel to the Company, to the effect set forth in Exhibit B hereto.
(h) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers, of Xxxx Xxxxxx, general counsel to the Company, to the effect
set forth in Exhibit C hereto.
(i) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers, of Xxxxxx Xxxx & Xxxxxx LLP, special regulatory counsel to
the Company ("Regulatory Counsel"), to the effect set forth in Exhibit D
hereto.
(j) The Initial Purchasers shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory to
the Initial Purchasers, of Kronish Xxxx Xxxxxx & Xxxxxxx LLP, counsel to
the Initial Purchasers, covering such matters as are customarily covered
in such opinions.
(k) At the time this Agreement is executed and at the
Closing Date the Initial Purchasers shall have received from Xxxxxx
Xxxxxxxx, LLP, independent public accountants for the Company, dated as
of the date of this Agreement and as of the Closing Date, customary
comfort letters addressed to the Initial Purchasers and in form and
substance satisfactory to the Initial Purchasers and counsel to the
Initial Purchasers with respect to the financial statements and certain
financial
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information of the Company together with each of its subsidiaries
contained in the Offering Memorandum.
(l) Kronish Xxxx Xxxxxx & Xxxxxxx LLP shall have been
furnished with such documents, in addition to those set forth above, as
they may reasonably require for the purpose of enabling them to review or
pass upon the matters referred to in this Section 8 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions herein
contained.
(m) Prior to the Closing Date, the Company and the Co-Obligor
shall have furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(n) The Company, the Co-Obligor and the Trustee shall have
entered into the Indenture and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(o) The Company, the Co-Obligor and the Initial Purchasers
shall have entered into the Registration Rights Agreement and the Initial
Purchasers shall have received counterparts, conformed as executed,
thereof.
(p) The Notes shall have been approved for trading on PORTAL.
(q) Subsequent to the date this Agreement is executed and
delivered by the parties hereto, there shall not have been any decrease
in the rating of any of the Company's or the Co-Obligor's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or any notice given of
any intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Company and the
Co-Obligor will be in compliance with the provisions hereof only if they
are reasonably satisfactory in form and substance to the Initial
Purchasers. The Company and the Co-Obligor will furnish the Initial
Purchasers with such conformed copies of such opinions, certificates,
letters and other documents as it shall reasonably request.
9. Initial Purchasers' Information. The Company, the
Co-Obligor and the Initial Purchasers severally acknowledge that the
statements with respect to the offering of the Senior Notes set forth in
the fifth, seventh and eighth paragraphs under the caption "Plan of
Distribution" in such Offering Memorandum constitute the only information
furnished in writing by the Initial Purchasers expressly for use in the
Offering Memorandum.
10. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Initial
Purchasers, the Company and the Co-Obligor contained in
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this Agreement, including the agreements contained in Sections 4(f) and
11(d), the indemnity agreements contained in Section 6 and the
contribution agreements contained in Section 7, shall remain operative
and in full force and effect regardless of any investigation made by or
on behalf of the initial Purchasers any controlling person thereof or by
or on behalf of the Company, the Co-Obligor or any controlling person
thereof and shall survive delivery of and payment for the Senior Notes to
and by the Initial Purchasers. The representations contained in Section 5
and the agreements contained in Sections 4(f), 6, 7 and 11(d) shall
survive the termination of this Agreement, including any termination
pursuant to Section 11.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to the
Company from the Initial Purchasers, without liability (other than with
respect to Sections 6 and 7) on the Initial Purchasers' part to the
Company or the Co-Obligor if, on or prior to such date, (i) either of the
Company or the Co-Obligor shall have failed, refused or been unable to
perform in any material respect any agreement on its part to be performed
hereunder, (ii) any other condition to the obligations of the Initial
Purchasers hereunder as provided in Section 8 is not fulfilled when and
as required in any material respect, (iii) in the reasonable judgment of
the Initial Purchasers any material adverse change shall have occurred
since the respective dates as of which information is given in the
Offering Memorandum in the condition (financial or otherwise), business,
properties, assets, liabilities, prospects, net worth, results of
operations or cash flows of the Company and the subsidiaries taken as a
whole, other than as set forth in the Offering Memorandum, or (iv)(A) any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Initial Purchasers will in the
immediate future materially disrupt, the market for the Company's and the
Co-Obligor's securities or for securities in general; or (B) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade or the Nasdaq National Market shall
have been suspended or materially limited, or minimum or maximum prices
for trading shall have been established, or maximum ranges for prices for
securities shall have been required, on such exchange or the Nasdaq
National Market, or by such exchange or other regulatory body or
governmental authority having jurisdiction; or (C) a banking moratorium
shall have been declared by Federal or state authorities, or a moratorium
in foreign exchange trading by major international banks or persons shall
have been declared; or (D) there is an outbreak or escalation of armed
hostilities involving the United States on or after the date hereof, or
if there has been a declaration by the United States of a national
emergency or war, the effect of which shall be, in the Initial
Purchasers' judgment, to make it inadvisable or impracticable to proceed
with the offering or delivery of the Senior Notes on the terms and in the
manner contemplated in the Offering Memorandum; or (E) there shall have
been such a material adverse change in general economic, political or
financial conditions or if the effect of international conditions on the
financial markets in
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the United States shall be such as, in the Initial Purchasers' judgment,
makes it inadvisable or impracticable to proceed with the delivery of the
Senior Notes as contemplated hereby.
(c) If on the Closing Date any one or more of the Initial
Purchasers shall fail or refuse to purchase the Senior Notes which it or
they have agreed to purchase hereunder on such date and the aggregate
principal amount of the Senior Notes which such defaulting Initial
Purchaser or Initial Purchasers, as the case may be, agreed but failed
or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Senior Notes to be purchased on such date by all
Initial Purchasers, each non-defaulting Initial Purchaser shall be
obligated severally, in the proportion which the principal amount of the
Senior Notes set forth opposite its name in Schedule I bears to the
aggregate principal amount of the Senior Notes which all the
non-defaulting Initial Purchasers, as the case may be, have agreed to
purchase, or in such other proportion as Bear, Xxxxxxx & Co. Inc. ("Bear
Xxxxxxx") may specify, to purchase the Senior Notes which such defaulting
Initial Purchaser or Initial Purchasers, as the case may be, agreed but
failed or refused to purchase on such date; provided that in no event
shall the aggregate principal amount of the Senior Notes which any
Initial Purchaser has agreed to purchase pursuant to Section 3 hereof be
increased pursuant to this Section 11 by an amount in excess of one-ninth
of such principal amount of the Senior Notes without the written consent
of such Initial Purchaser. If on the Closing Date any Initial
Purchaser or Initial Purchasers shall fail or refuse to purchase the
Senior Notes and the aggregate principal amount of the Senior Notes with
respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Senior Notes to be purchased by all
Initial Purchasers and arrangements satisfactory to the Initial
Purchasers and the Company for purchase of such the Senior Notes are not
made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Initial Purchaser and
the Company. In any such case which does not result in termination of
this Agreement, either Bear Xxxxxxx or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Offering Memorandum or
any other documents or arrangements may be effected. Any action taken
under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser
under this Agreement.
(d) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, telephonic facsimile, or telegraph,
confirmed in writing by letter.
(e) If this Agreement shall be terminated pursuant to any of
the provisions hereof, or if the sale of the Senior Notes provided for
herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth herein is not satisfied or because of any
refusal, inability or failure on the part of the Company or the
Co-Obligor to perform any agreement herein or comply with any provision
hereof, the Company and the Co-Obligor will, subject to demand by the
Initial Purchasers, reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including the reasonable fees and expenses of
Initial Purchasers' counsel), incurred by the Initial Purchasers in
connection herewith.
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12. Notice. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent
to the Initial Purchasers shall be mailed, delivered, or telexed,
telegraphed or telecopied and confirmed in writing to Bear, Xxxxxxx & Co.
Inc., Xxxxxxx Xxxxx Xxxxxx Inc., Xxxxxxx, Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated and Warburg Dillon Read LLC, c/o
Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Corporate Finance Department, telecopy number: (000) 000-0000;
and if sent to the Company or the Co-Obligor, shall be mailed, delivered
or telexed, telegraphed or telecopied and confirmed in writing to MGC
Communications, Inc., 000 Xxxxx'x Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx
00000, Attention: General Counsel, telecopy number: (000) 000-0000, with
a copy to Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 Attention: Xxxxxx Xxxxxx, Esq., (000) 000-0000.
13. Parties. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the Initial Purchasers, the Company, the
Co-Obligor and the controlling persons and agents referred to in Sections
6 and 7, and their respective successors and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Senior Notes from the
Initial Purchasers.
14. Construction. This Agreement shall be construed in
accordance with the internal laws of the State of New York. TIME IS OF
THE ESSENCE IN THIS AGREEMENT.
15. Captions. The captions included in this Agreement are
included solely for convenience of reference and are not to be considered
a part of this Agreement.
16. Counterparts. This Agreement may be executed in various
counterparts which together shall constitute one and the same instrument.
[Signature page to follow}
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If the foregoing correctly sets forth the understanding among the
Initial Purchasers, the Company and the Co-Obligor, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
Very truly yours,
MGC COMMUNICATIONS, INC.
By: [SIG]
----------------------------
Name:
Title:
MPOWER HOLDING CORPORATION
By: /s/ XXXXXXX X. XXXXX
-------------------------------
Name:
Title: EVP & CEO
Accepted and agreed to as of
the date first above written:
BEAR, XXXXXXX & CO. INC.
By:
----------------------------
Name:
Title:
XXXXXXX XXXXX XXXXXX INC.
By:
----------------------------
Name:
Title:
33
If the foregoing correctly sets forth the understanding among the
Initial Purchasers, the Company and the Co-Obligor, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
Very truly yours,
MGC COMMUNICATIONS, INC.
By:
----------------------------
Name:
Title:
MPOWER HOLDING CORPORATION
By:
-------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
BEAR, XXXXXXX & CO. INC.
By: /s/ XXXX XXXXXXXXX
----------------------------
Name: Xxxx Xxxxxxxxx
Title: Senior Managing Director
XXXXXXX XXXXX XXXXXX INC.
By:
----------------------------
Name:
Title:
34
If the foregoing correctly sets forth the understanding among the
Initial Purchasers, the Company and the Co-Obligor, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
Very truly yours,
MGC COMMUNICATIONS, INC.
By:
----------------------------
Name:
Title:
MPOWER HOLDING CORPORATION
By:
-------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
BEAR, XXXXXXX & CO. INC.
By:
----------------------------
Name:
Title:
XXXXXXX XXXXX XXXXXX INC.
By: /s/ XXX X. MEADOW
----------------------------
Name: Xxx X. Xxxxxx
Title: Vice President
35
XXXXXXX, XXXXX & CO.
By: /s/ [XXXXXXX XXXXX CO.]
-------------------------
Name:
Title:
XXXXXXX LYNCH, XXXXXX, XXXXXX
& XXXXX INCORPORATED
By: [SIG]
-------------------------
Name: [SIG]
Title: Vice President
WARBURG DILLON READ LLC
By: /s/ [XXXXXXX XX]
--------------------------
Name: Xxxxxxx Xx
Title: Executive Director
By: /s/ [X. XXXXXXXXX XXXXXXXX, XX.
-------------------------
Name: X. Xxxxxxxxx Xxxxxxxx, Xx.
Title: Associate Director
36
Schedule I
Amount of
Senior Notes
Initial Purchaser to be Purchased
------------------------ ------------------------
Bear, Xxxxxxx & Co Inc. $ 96,250,000
Xxxxxxx Xxxxx Xxxxxx Inc. 78,750,000
Xxxxxxx, Xxxxx & Co. 25,000,000
Xxxxxxx Lynch, Pierce, Xxxxxx 25,000,000
& Xxxxx Incorporated
Warburg Dillon Read LLC 25,000,000
--------------
Total $ 250,000,000
==============
37
Schedule II
Subsidiaries
MGC LJ. Net, Inc., a Nevada corporation
MGC License Corporation, a Georgia corporation
MGC Lease Corporation, a Nevada corporation
Mpower Holding Corporation, a Delaware corporation
38
EXHIBIT A
Form of Opinion of Shearman & Sterling
1. The Co-Obligor (A) is duly organized and validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and (B) has all requisite corporate power and authority to carry on its business
as it is being conducted and as described in the Offering Memorandum and to own,
lease and operate its properties. All of the issued and outstanding shares of
capital stock of, or other ownership interest in, the Co-Obligor has been duly
authorized and validly issued, are fully paid and non-assesable and were not
issued in violation of or subject to any preemptive or similar rights under the
laws of its jurisdiction of incorporation or known to us, after reasonable
inquiry, and, are owned by the Company of record, and to our knowledge, after
reasonable inquiry, beneficially, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or other restriction on
transferability or voting.
2. The description of all of the authorized, issued and outstanding
preferred stock of the Company set forth in the Offering Memorandum is a fair
and accurate summary of the material provisions of the Certificate of
Designations relating to the preferred stock.
3. When the Senior Notes are issued and delivered pursuant to this
Agreement, no Senior Note will be of the same class within the meaning of Rule
144A under the Act) as securities of the Company or the Co-Obligor that are
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated inter-dealer
quotation system.
4. The Co-Obligor has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Indenture, the Registration Rights Agreement and the other Operative Documents,
and to consummate the transactions contemplated thereby, including, without
limitation, the corporate power and authority to issue, sell and deliver the
Senior Notes as provided therein.
5. This Agreement has been duly and validly authorized, executed and
delivered by the Co-Obligor and, assuming this Agreement has been duly and
validly authorized, executed and delivered by the Company, is the legally valid
and binding agreement of the Company and the Co-Obligor.
6. Each of the Indenture and the Registration Rights Agreement has been
duly and validly authorized, executed and delivered by the Co-Obligor, and
assuming due authorization, execution and delivery by the other parties thereto,
is the legal, valid and binding obligation of the Company and the Co-Obligor,
enforceable against each of them in accordance with its terms, except that such
counsel need express no opinion as to the validity or enforceability of rights
of indemnity or contribution, or both and except as such enforceability may be
limited by bankruptcy, insolvency,
39
fraudulent conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
7. The Senior Notes have been duly and validly authorized for issuance
and sale to the Initial Purchasers by the Co-Obligor pursuant to this Agreement
and, assuming the Senior Notes have been duly and validly authorized for
issuance by the Company, when issued and authenticated in accordance with the
term of the Indenture and delivered against payment therefor in accordance with
the terms of this Agreement and the Indenture, will be the legal, valid and
binding obligations of the Company and the Co-Obligor, enforceable against each
of them in accordance with their terms and entitled to the benefits of the
Indenture, except that such counsel need express no opinion as to the validity
or enforceability of rights of indemnity or contribution, or both, and except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
8. The Exchange Notes have been duly and validly authorized for issuance
by Co-Obligor and, assuming the Exchange Notes have been duly and validly
authorized for issuance by the Company, when issued and authenticated in
accordance with the terms of the Indenture and delivered against payment
therefor in accordance with the terms of this Agreement and the Indenture, will
be the legal, valid and binding obligations of the Company and the Co-Obligor,
enforceable against each of them in accordance with their terms and entitled to
the benefits of the Indenture, except that such counsel need express no opinion
as to the validity or enforceability of rights of indemnity or contribution, or
both, and except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity.
9. The Offering Memorandum contains a fair summary of the terms of each
of the Senior Notes, the Indenture and the Registration Rights Agreement.
10. No registration under the Act of the Senior Notes is required for the
sale of the Senior Notes to the Initial Purchasers as contemplated by this
Agreement or for the Exempt Resales assuming (i) that the Initial Purchasers are
Qualified Institutional Buyers, as defined in Rule 144A under the Act ("QIB"),
(ii) that the purchasers who buy the Senior Notes in the Exempt Resales are
Eligible Purchasers, (iii) the accuracy of the Initial Purchasers'
representations set forth in Section 5(b) of this Agreement, (iv) the accuracy
of the Company's and the Co-Obligor's representations in Sections 5(a)(ii),
(xxvii), (xxviii) (other than with respect to the first sentence) and (xxix) of
this Agreement and (v) with respect to Regulation S Investors, the accuracy of
the representations made by each Regulation S Investor, who in purchasing Senior
Notes will be deemed to have represented that it is acquiring the Senior Notes
in an offshore transaction within the meaning of Regulation S under the Act.
11. The Offering Memorandum, as of its date (except for the financial
statements, including the notes thereto, and other financial and statistical
data included therein or omitted therefrom, as to which no opinion need be
expressed), and each amendment or supplement thereto, as
40
of its date, contains all the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Act.
12. Prior to the effectiveness of the Exchange Registration Statement or
the Shelf Registration Statement, as defined in the Registration Rights
Agreement, the Indenture is not required to be qualified under the Trust
Indenture Act.
13. None of (A) the execution, delivery or performance by the Company and
the Co-Obligor of this Agreement and the other Operative Documents or (B) the
issuance and sale of the Senior Notes violates, conflicts with or constitutes a
breach of any of the terms or provisions of, or a default under (or an event
that with notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien or encumbrance on
any properties of the Company or any Subsidiary, or an acceleration of any or
indebtedness of the Company or any Subsidiary pursuant to, (i) the charter or
bylaws of the Co-Obligor, (ii) any bond, debenture, note, indenture, mortgage,
deed of trust or other agreement or instrument that is governed by New York law
and to which the Company or any Subsidiary is a party or by which any of them or
their property is or may be bound and is listed on Schedule A to this opinion,
or (iii) any New York state, federal or administrative statute, rule or
regulation applicable to the Company or any Subsidiary or any of their assets or
properties, except in the case of clauses (ii) and (iii) for such violations,
conflicts, breaches, defaults, consents, impositions of liens accelerations that
(x) would not, singly or in the aggregate, have a Material Adverse Effect or (y)
are disclosed in the Offering Memorandum. Assuming compliance with applicable
state securities and Blue Sky laws, as to which such counsel need express no
opinion, and except for the filing of a registration statement under the Act and
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, in connection with the Registration Rights Agreement, no consent,
approval authorization or order of, or filing, registration, qualification,
license or permit of or with, any New York state or federal court or
governmental agency, body or administrative agency is required for the execution
delivery and performance by the Company and the Co-Obligor of this Agreement,
the other Operative Documents or the issuance and sale of the Senior Notes,
except (i) such as have been obtained and made or have been disclosed in the
Offering Memorandum and (ii) where the failure to obtain such consents or
waivers would not, singly or in the aggregate, have a Material Adverse Effect.
14. Neither the Company nor the Co-Obligor is required to be registered
as an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
15. None of the execution, delivery and performance of this Agreement,
the issuance and sale of the Senior Notes, the application of the proceeds from
the issuance and sale of the Senior Notes and the consummation of the
transactions contemplated thereby as set forth in the Offering Memorandum, will
violate Regulations T, U or X promulgated by the Board of Governors of the
Federal Reserve System.
16. The statements contained in the Offering Memorandum under the caption
"Certain Federal Income Tax Consequences" are a fair and accurate summary of the
matters discussed herein.
41
Such counsel has participated in conferences with officers and other
representatives of the Company and the Co-Obligor, representatives of the
independent certified public accountants of the Company and the Initial
Purchasers and its representatives at which the contents of the Preliminary
Offering Memorandum and the Offering Memorandum and related matters were
discussed and, although such counsel has not undertaken to investigate or verify
independently, and need not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Preliminary Offering
Memorandum or the Offering Memorandum (except as indicated above), on the basis
of the foregoing, no facts have come to such counsel's attention which led such
counsel to believe that the Preliminary Offering Memorandum or the Offering
Memorandum, as of its date or the Closing Date, contained an untrue statement of
a material fact or omitted to state any fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that such counsel needed not
comment on or as to financial statements and related notes, the financial
statement schedules and other financial and statistical data).
Such counsel are members of the Bar of the State of New York, and such
counsel does not herein express an opinion as to any matters governed by any
laws other than the laws of the State of New York, the general corporate laws of
the State of Delaware and the federal laws of the United States of America.
42
Exhibit B
Form of Opinion of Xxxxx, Xxxx, Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C.
1. Each of the Company and the Company's subsidiaries set forth on the
attached Schedule I (the "Subsidiaries" and each, a "Subsidiary") (A) is duly
organized and validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation and (B) has all requisite corporate power
and authority to carry on its business as it is being conducted and as described
in the Offering Memorandum and to own, lease and operate its properties. All of
the issued and outstanding shares of capital stock of, or other ownership
interests in, each Subsidiary have been duly authorized and validly issued, are
fully paid and non-assessable and were not issued in violation of or subject to
any preemptive or similar rights under the laws of its jurisdiction of
incorporation or known to us, after reasonable inquiry, and are owned by the
Company of record, and to our knowledge, after reasonable inquiry, beneficially,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or other restriction on transferability or voting.
2. All of the outstanding shares of capital stock of the Company have
been duly authorized, validly issued, and are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights under the
Nevada Revised States.
3. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Indenture, the Registration Rights Agreement and the other Operative Documents,
and to consummate the transactions contemplated thereby, including, without
limitation, the corporate power and authority to issue, sell and deliver the
Senior Notes as provided therein.
4. This Agreement has been duly and validly authorized, executed and
delivered by the Company.
5. Each of the Indenture and the Registration Rights Agreement has been
duly and validly authorized, executed and delivered by the Company.
6. The Senior Notes have been duly and validly authorized for issuance
and sale to the Initial Purchasers by the Company pursuant to this Agreement.
7. The Exchange Notes have been duly and validly authorized for issuance
by the Company.
8. None of (A) the execution, delivery or performance by the Company of
this Agreement and the other Operative Documents or (B) the issuance and sale of
the Senior Notes violates, conflicts with or constitutes a breach of any of the
terms or provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or require consent under,
or result in the imposition of a lien or encumbrance on any properties of the
Company or any Subsidiary, or an acceleration of any indebtedness of the
Company or any Subsidiary pursuant to (i) the charter or bylaws of the Company
or any Subsidiary, (ii) any Nevada state, rule or
43
regulation applicable to the Company or any Subsidiary or any of their assets or
properties, except in the case of clause (ii) for such violations, conflicts,
breaches, defaults, consents, impositions of liens or accelerations that (x)
would not, singly or in the aggregate, have a Material Adverse Effect or (y) are
disclosed in the Offering Memorandum. No consent, approval, authorization or
order of, or filing, registration, qualification, license or permit of or with,
any court or governmental agency, body or administrative agency in Nevada is
required for the execution, delivery and performance by the Company of this
Agreement, the other Operative Documents or the issuance and sale of the Senior
Notes, except (i) such as have been obtained and made or have been disclosed in
the Offering Memorandum and (ii) where the failure to obtain such consents or
waivers would not, singly or in the aggregate, have a Material Adverse Effect.
Our opinion herein is limited solely to the laws of the State of Nevada
governing corporations. We do not herein express an opinion as to any matters
governed by any laws other than the laws of the State of Nevada governing
corporations.
44
SCHEDULE I
SUBSIDIARIES
MGC LJ Net, Inc., a Nevada corporation
MGC License Corporation, a Georgia corporation
MGC Lease Corporation, a Nevada corporation
45
Exhibit C
Opinion of Xxxx Xxxxxx
1. To such counsel's knowledge, after reasonable inquiry, there is (i) no
action, suit, investigation or proceeding (other than proceedings with respect
to pending license applications) before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now pending, or
threatened or contemplated to which any of the Company or any Subsidiary is or
may be a party or to which the business or property of the Company or any
Subsidiary is or may be subject, (ii) no statute, rule, regulation or order that
has been enacted, adopted or issued by any governmental agency or that has been
proposed by any governmental body, and (iii) no injunction, restraining order or
order of any nature by a federal or state court of competent jurisdiction to
which the Company or any Subsidiary is or may be subject or to which the
business, assets or property of the Company or any Subsidiary are or may be
subject has been issued, except in the case of clauses (i), (ii) and (iii),
those which (a) would not singly or in the aggregate have a Material Adverse
Effect, (b) which are disclosed in the Offering Memorandum, or (c) might
interfere with, adversely affect or in any manner question the validity of the
issuance and sale of the Senior Notes or any of the other transactions
contemplated by the Operative Documents, and except that such counsel shall not
be required to express any opinion as to the matters addressed in the opinion of
Regulatory Counsel.
2. There are not, to such counsel's knowledge, currently, and will not be
following the Offering, any outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire, or instruments convertible into or
exchangeable for, any capital stock or other equity interest of any Subsidiary.
3. None of (A) the execution, delivery or performance by the Company and
the Co-Obligor of this Agreement and the other Operative Documents or (B) the
issuance and sale of the Senior Notes violates, conflicts with or constitutes a
breach of any of the terms or provisions of, or a default under (or an event
that with notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien or encumbrance on
any properties of the Company or any Subsidiary, or an acceleration of any
indebtedness of the Company or any Subsidiary pursuant to any judgment, order or
decree of any court or governmental agency or authority having jurisdiction over
the Company or any Subsidiary or any of their assets or properties known to such
counsel, except for such violations, conflicts, breaches, defaults, consents,
impositions of liens or accelerations that (x) would not, singly or in the
aggregate, have a Material Adverse Effect or (y) are disclosed in the Offering
Memorandum. To such counsel's knowledge, after reasonable inquiry, no consents
or waivers from any other person are required for the execution, delivery and
performance by the Company or the Co-Obligor of this Agreement, the other
Operative Documents or the issuance and sale of the Senior Notes, other than
such consents and waivers as have bean obtained.
4. Based solely on our review of certificates of good standing from the
office of the secretary of state of the applicable states, each of the Company
and its Subsidiaries is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification,
46
except, where the failure to be so qualified or in good standing would not,
singly or in the aggregate, have a Material Adverse Effect.
5. None of (A) the execution, delivery or performance of the Company and
the Co-Obligor of this Agreement and the other Operative Documents or (B) the
issuance and sale of the Senior Notes violates, conflicts with or constitutes a
breach of any of the terms or provisions of, or a default under (or an event
that with notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien or encumbrance on
any properties of the Company or any Subsidiary, or an acceleration of any
indebtedness of the Company or any Subsidiary pursuant to, any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
property is or may be bound, except for such violations, conflicts, breaches,
defaults, consents, impositions of liens or accelerations that (x) would not,
singly or in the aggregate, have a Material Adverse Effect or (y) are disclosed
in the Offering Memorandum.
47
Exhibit D
Form of Opinion of Regulatory Counsel
1. All of the licenses, permits and authorizations required by the FCC
for the provision of telecommunications services by the Company and its
subsidiaries, as we understand such services to be provided currently based on
the description in the Offering Memorandum, have been issued to and are validly
held by the Company and its subsidiaries. All of the licenses, permits and
authorizations required by the State Telecommunications Agencies for the
provision of telecommunications services by the Company and its subsidiaries, as
we understand such services to be provided currently based on the description in
the Offering Memorandum, have been issued to and, to our knowledge, are validly
held by the Company and its subsidiaries, except where the failure to obtain or
hold such license, permit or authority would not have a Material Adverse Effect.
All such licenses, permits and authorizations are in full force and effect and,
to our knowledge, the Company and its subsidiaries are in compliance in all
material respects with each such license, permit or authorization.
2. Neither the Company nor any of its subsidiaries is the subject of any
proceeding (including a rule making proceeding), pending complaint or
investigation, or, to our knowledge, any threatened complaint or investigation,
before the FCC, or, to our knowledge, of any proceeding (including a rule making
proceeding), pending complaint or investigation, or any threatened complaint or
investigation, before the State Telecommunications Agencies (x) based, in each
case, on any alleged violation of Telecommunications Laws by the Company or any
of its subsidiaries in connection with their provision of or failure to provide
telecommunications services, which is not disclosed in the Offering Memorandum
and, (y) that is likely to result in denial of any pending application of the
Company or of any of its subsidiaries for any license, permit or authorization
granted by the FCC or any State Telecommunications Agencies or (z) except for
proceedings of general applicability or as set forth in the Offering Memorandum,
would be likely to result in the revocation, materially adverse modification or
suspension of any such license, permit or authorization.
3. The statements in the Offering Memorandum under the headings of "Risk
Factors - Changes in laws or regulations could restrict the way we operate our
business and negatively affect our costs and competitive position," "Business -
Legal Proceedings" and "Business - Government Regulation" insofar as such
statements summarize applicable provisions of the Telecommunications Laws or
litigation arising therefrom or related thereto, fairly and accurately summarize
the matters therein described and, to our knowledge, do not omit a material fact
necessary to make the statements contained therein not misleading.
4. The Company and its subsidiaries have the consents, approvals.
authorizations, licenses, certificates, permits, or orders of the FCC or the
State Telecommunications Agencies, if any is required, for the consummation of
the transactions contemplated in the Offering Memorandum except for notification
to or the approval of the
48
Georgia Public Service Commission, the Indiana Utility Regulatory Commission,
the North Carolina Utilities Commission and the Pennsylvania Public Utility
Commission, which have not yet acted on the Company's notification or requests
for approval of these transactions, and except where the failure to obtain the
consents, approvals, authorizations, licenses, certificates, permits or orders
would not have a Material Adverse Effect. Based on our firm's experience in
similar situations involving competitive intrastate interexchange and local
exchange carrier services, we believe that it is unlikely that any of the four
Commissions would take any action against the Company for issuing the Senior
Notes prior to approval which would have a Material Adverse Effect, although
there can be no assurance of this result.
5. Neither the execution and delivery of the Purchase Agreement nor the
sale of the Senior Notes contemplated thereby will conflict with or result in a
violation of any Telecommunications Laws applicable to the Company or its
subsidiaries, except with respect to notifying or obtaining the approval of the
Georgia Public Service Commission, the Indiana Utility Regulatory Commission,
the North Carolina Utilities Commission and the Pennsylvania Public Utility
Commission, or where the conflict with or the violation of any
Telecommunications Laws would not have a Material Adverse Effect. Based on our
firm's experience in similar situations involving competitive intrastate
interexchange and local exchange carrier services, we believe that it is
unlikely that any of the four Commissions would take any action against the
Company for issuing the Senior Notes prior to approval which would have a
Material Adverse Effect, although there can be no assurance of this result.
6. In connection with our representation of the Company and its
subsidiaries, except as disclosed in the Offering Memorandum, we have not become
aware of any Telecommunications Laws that could reasonably be expected to have a
Material Adverse Effect. The foregoing assumes that the Company and its
subsidiaries currently are in substantial compliance with all material
Telecommunications Laws applicable to them except as disclosed in the Offering
Memorandum.
