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EXHIBIT 1.1
SPLITROCK SERVICES, INC.
261,000 Units Consisting of $261,000,000 Principal Amount of
11 3/4% Senior Notes due 2008 and Warrants
to Purchase 2,642,613 Shares of Common Stock
PURCHASE AGREEMENT
July 21, 1998
CHASE SECURITIES INC.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Splitrock Services, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 261,000 units (the "Units"), each Unit
consisting of $1,000 principal amount of the Company's 11 3/4% Senior Notes due
2008 (the "Notes") and one warrant (a "Warrant") to purchase 10.124954 shares
of common stock, par value $.001 per share ("Common Stock"), of the Company.
The Notes will be issued pursuant to an Indenture to be dated as of July 24,
1998 (the "Indenture") between the Company and the Bank of Montreal Trust
Company, as trustee (the "Trustee") and will be guaranteed on a senior,
unsecured basis by each of the Company's future Restricted Subsidiaries (as
defined in the Indenture) that incurs indebtedness (the "Subsidiary
Guarantors"). The Warrants will be issued pursuant to a warrant agreement (the
"Warrant Agreement") between the Company and the Bank of Montreal Trust
Company, as Warrant Agent (the "Warrant Agent"). The Units, the Notes and the
Warrants are collectively referred to herein as the "Securities". The Company
hereby confirms its agreement with Chase Securities Inc. ("CSI" or the "Initial
Purchaser") concerning the purchase of the Units from the Company by the
Initial Purchaser.
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption therefrom. The Company
has prepared a preliminary offering memorandum dated June 29, 1998 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum
dated the date hereof (the "Offering Memorandum") setting forth information
concerning the Company and the Securities. Copies of the Preliminary Offering
Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchaser pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and
the Offering Memorandum shall be deemed to include all amendments and
supplements thereto, unless otherwise noted. The Company hereby confirms that
it has authorized the use of the Preliminary Offering Memorandum and the
Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchaser in accordance with Section 2.
Holders of the Notes (including the Initial Purchaser and its
direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights
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Agreement, substantially in the form attached hereto as Annex A (the
"Registration Rights Agreement"), pursuant to which the Company will agree to
file with the Securities and Exchange Commission (the "Commission") (i) a
registration statement under the Securities Act (the "Exchange Offer
Registration Statement") registering an issue of senior notes of the Company
(the "Exchange Notes") which are identical in all material respects to the
Notes (except that the Exchange Notes will not contain terms with respect to
transfer restrictions) and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").
Holders of the Warrants will be entitled to the benefit of
certain registration rights under the Warrant Agreement pursuant to which the
Company will agree to file with the Commission (i) a shelf registration
statement (the "Warrant Shelf Registration Statement") under the Securities Act
covering the resale of the Warrants and (ii) a shelf registration statement
under the Securities Act covering the issuance of shares of Common Stock to
Holders of the Warrants upon their exercise.
Pursuant to an escrow and disbursement agreement (the "Escrow
Agreement") the Company will deposit with The Chase Manhattan Bank, as escrow
agent (the "Escrow Agent"), an amount in cash or Temporary Cash Investments
that, together with the interest received thereon, will be sufficient to pay
when due the first four semi-annual interest payments on the Notes.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the Initial Purchaser
on and as of the date hereof and the Closing Date (as defined in Section 3)
that:
(a) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, did not, and on the
Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided that the Company makes no representation or
warranty as to information contained in or omitted from the
Preliminary Offering Memorandum or the Offering Memorandum in reliance
upon and in conformity with written information relating to the
Initial Purchaser furnished to the Company by or on behalf of the
Initial Purchaser specifically for use therein (the "Initial
Purchaser's Information").
(b) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains all of the
information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 2 and its
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the Securities
by the
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Initial Purchaser in the manner contemplated by this Agreement and the
Offering Memorandum, to register the Securities under the Securities
Act or to qualify the Indenture under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged, except
where the failure to so qualify or have such power or authority would
not, singularly or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), results of operations,
business or prospects of the Company (a "Material Adverse Effect").
(e) As of the Closing Date, the Company will have an
authorized capitalization as set forth in the Offering Memorandum
under the heading "Capitalization"; all of the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; the capital stock of the
Company conforms in all material respects to the description thereof
contained in the Offering Memorandum; when the Units are delivered and
paid for pursuant to this Agreement on the Closing Date, the Warrants
will be convertible into shares of Common Stock ("Underlying Shares")
in accordance with their terms; and the Underlying Shares initially
issuable upon conversion of such Warrants have been duly and validly
authorized and reserved for issuance upon such conversion and, when
issued upon such conversion, will be validly issued, fully paid and
nonassessable. The Company does not have any subsidiaries.
(f) The Company has full right, power and authority to
execute and deliver this Agreement, the Indenture, the Registration
Rights Agreement, the Escrow Agreement, the Notes, the Warrants and
the Warrant Agreement (collectively, the "Transaction Documents") and
to perform its obligations hereunder and thereunder; and all corporate
action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
and validly taken.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company.
(h) The Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company
enforceable against the Company in accordance with its terms, except
to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(i) The Indenture has been duly authorized by the Company
and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally
binding agreement of the Company enforceable
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against the Company in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law). On the Closing Date, the Indenture will conform in
all material respects to the requirements of the Trust Indenture Act
and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
(j) The Warrant Agreement has been duly authorized by the
Company and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law).
(k) The Escrow Agreement has been duly authorized by the
Company and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
(l) The Notes have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in
the Indenture and paid for as provided herein, will be duly and
validly issued and outstanding and will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company, in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(m) The Warrants have been duly authorized by the Company
and, when duly executed, authenticated, issued and delivered as
provided in the Warrant Agreement will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations
of the Company, entitled to the benefits of the Warrant Agreement and
enforceable against the Company, in accordance with their terms,
except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(n) Each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum.
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(o) The execution, delivery and performance by the Company of
each of the Transaction Documents, the issuance, authentication, sale
and delivery of the Securities and compliance by the Company with the
terms thereof and the consummation of the transactions contemplated by
the Transaction Documents will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to, any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject, nor will such
actions result in any violation of the provisions of the charter or
by-laws of the Company or any statute or any judgment, order, decree,
rule or regulation of any court or arbitrator or governmental agency
or body having jurisdiction over the Company or any of its properties
or assets; and no consent, approval, authorization or order of, or
filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance by
the Company with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for
such consents, approvals, authorizations, filings, registrations or
qualifications (i) which shall have been obtained or made prior to the
Closing Date and (ii) as may be required to be obtained or made under
the Securities Act and applicable state securities laws as provided in
the Registration Rights Agreement and the Warrant Agreement.
(p) PricewaterhouseCoopers LLP (the successor entity to Price
Waterhouse LLP), are independent certified public accountants with
respect to the Company within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder.
The historical financial statements (including the related notes)
contained in the Offering Memorandum have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods covered thereby and fairly present the
financial position of the entities purported to be covered thereby at
the respective dates indicated and the results of their operations and
their cash flows for the respective periods indicated; and the
historical financial information contained in the Offering Memorandum
under the headings "Summary--Summary Historical and Unaudited Pro
Forma Financial Data", "Capitalization", "Selected Historical and
Unaudited Pro Forma Financial Data", "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Management--Executive Compensation" are derived from the accounting
records of the Company and fairly present the information purported to
be shown thereby. The pro forma financial information contained in
the Offering Memorandum has been prepared on a basis consistent with
the historical financial statements contained in the Offering
Memorandum (except for the pro forma adjustments specified therein),
includes all material adjustments to the historical financial
information to reflect the transactions described in the Offering
Memorandum, gives effect to assumptions made on a reasonable basis and
fairly presents the historical and proposed transactions contemplated
by the Offering Memorandum and the Transaction Documents. The other
historical financial and
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statistical information and data included in the Offering Memorandum
are, in all material respects, fairly presented.
(q) There are no legal or governmental proceedings pending to
which the Company is a party or of which any property or assets of the
Company is the subject which, (A) singularly or in the aggregate, if
determined adversely to the Company, could reasonably be expected to
have a Material Adverse Effect or (B) question the validity or
enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto; and to the best knowledge of the
Company, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(r) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental
agency or body which prevents the issuance of the Securities or
suspends the sale of the Securities in any jurisdiction; no
injunction, restraining order or order of any nature by any federal or
state court of competent jurisdiction has been issued with respect to
the Company which would prevent or suspend the issuance or sale of the
Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding
is pending against or, to the best knowledge of the Company,
threatened against or affecting the Company before any court or
arbitrator or any governmental agency, body or official, domestic or
foreign, which could reasonably be expected to interfere with or
adversely affect the issuance of the Securities or in any manner draw
into question the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto; and the
Company has complied with any and all requests by any securities
authority in any jurisdiction for additional information to be
included in the Preliminary Offering Memorandum and the Offering
Memorandum.
(s) The Company is not (i) in violation of its charter or
by-laws, (ii) in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term,
covenant or condition contained in any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which
any of its property or assets is subject or (iii) in violation in any
material respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its property or assets may be subject.
(t) As of the Closing Date the Trustee will have a valid and
perfected first priority security interest in the Escrow Collateral
for the benefit of the Holders.
(u) The Company possesses all material licenses, certificates,
authorizations and permits issued by, and have made all declarations
and filings with, the appropriate federal, state or foreign regulatory
agencies or bodies which are necessary or desirable for the ownership
of its properties or the conduct of its business as described in the
Offering Memorandum, except where the failure to possess or make the
same would not, singularly or in the aggregate, have a Material
Adverse Effect, and the Company has not received notification of any
revocation or modification of any such license, certificate,
authorization or permit or has any reason to believe that any such
license, certificate, authorization or permit will not be renewed in
the ordinary course.
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(v) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed through
the date hereof and have paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company which has had
(nor does the Company have any knowledge of any tax deficiency which,
if determined adversely to the Company, could reasonably be expected
to have) a Material Adverse Effect.
(w) The Company is not (i) an "investment company" or a
company "controlled by" an investment company within the meaning of
the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the rules and regulations of the Commission
thereunder or (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(x) The Company 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 asset
accountability; (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 to any differences.
(y) The Company has insurance covering its properties,
operations, personnel and businesses, which insurance is in amounts
and insures against such losses and risks as are adequate to protect
the Company and its business. The Company has not received notice
from any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to
continue such insurance.
(z) The Company owns or possesses adequate rights to use all
material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of its
business; and the conduct of its business will not conflict in any
material respect with, and the Company has not received any notice of
any claim of conflict with, any such rights of others.
(aa) The Company has good and marketable title in fee simple
to, or has valid rights to lease or otherwise use, all items of real
and personal property which are material to the business of the
Company, in each case free and clear of all liens, encumbrances,
claims and defects and imperfections of title except such as (i) do
not materially interfere with the use made and proposed to be made of
such property by the Company or (ii) could not reasonably be expected
to have a Material Adverse Effect.
(bb) No labor disturbance by or dispute with the employees of
the Company exists or, to the best knowledge of the Company, is
contemplated or threatened.
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(cc) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
the Company which could reasonably be expected to have a Material
Adverse Effect; each such employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the
Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which the Company would have
any liability; and each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which could reasonably be expected to cause the loss
of such qualification.
(dd) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of
any kind of toxic or other wastes or other hazardous substances by,
due to or caused by the Company (or, to the best knowledge of the
Company, any other entity (including any predecessor) for whose acts
or omissions the Company is or could reasonably be expected to be
liable) upon any of the property now or previously owned or leased by
the Company, or upon any other property, in violation of any statute
or any ordinance, rule, regulation, order, judgment, decree or permit
or which would, under any statute or any ordinance, rule (including
rule of common law), regulation, order, judgment, decree or permit,
give rise to any liability, except for any violation or liability that
could not reasonably be expected to have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse
Effect; and there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company has knowledge,
except for any such disposal, discharge, emission or other release of
any kind which could not reasonably be expected to have, singularly or
in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
(ee) Neither the Company nor, to the best knowledge of the
Company, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated
or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(ff) On and immediately after the Closing Date, the Company
(after giving effect to the issuance of the Securities and to the
other transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date
(i) the
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present fair market value (or present fair saleable value) of the
assets of the Company is not less than the total amount required to
pay the probable liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they
become absolute and matured, (ii) the Company is able to realize upon
its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Securities
as contemplated by this Agreement and the Offering Memorandum, the
Company is not incurring debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (iv) the Company is not
engaged in any business or transaction, and is not about to engage in
any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company is engaged.
In computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that,
in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
(gg) Except for the Warrants and except as otherwise
described in the Offering Memorandum, there are no outstanding
subscriptions, rights, warrants, calls or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in the
Company.
(hh) The Company does not own any "margin securities" as that
term is defined in Regulation U of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), and none of the
proceeds of the sale of the Securities will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security
or for any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation T, U
or X of the Federal Reserve Board.
(ii) The Company is not a party to any contract, agreement or
understanding with any person that would give rise to a valid claim
against the Company or the Initial Purchaser for a brokerage
commission, finder's fee or like payment in connection with the
offering and sale of the Securities.
(jj) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(kk) Neither the Company nor any of its affiliates has,
directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
such term is defined in the Securities Act), which is or will be
integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(ll) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act.
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(mm) There are no securities of the Company registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(nn) The Company has not taken nor will it take, directly or
indirectly, any action prohibited by Regulation M under the Exchange
Act in connection with the offering of the Securities.
(oo) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(pp) The Company does not do business with the government of
Cuba or with any person or affiliate located in Cuba within the
meaning of Florida Statutes Section 517.075.
(qq) The Company is currently evaluating its operations and
systems to determine the risk of computer hardware and software used
by it becoming unable to recognize and properly execute date-sensitive
functions involving certain dates prior to and any dates after
December 31, 1999 (the "year-2000 issue"), and has determined that
such risk will be remedied on a timely basis without material expense
and will not have a Material Adverse Effect; and the Company believes,
after due inquiry of its customers and certain suppliers, that each
customer, supplier and financial service organization used or serviced
by the Company has remedied or will remedy on a timely basis the
year-2000 issue, except to the extent that a failure to remedy by any
such customer, supplier or financial service organization would not
have a Material Adverse Effect.
(rr) Since the date as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (i) there has
been no material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or
business prospects of the Company, whether or not arising in the
ordinary course of business, (ii) the Company has not incurred any
material liability or obligation, direct or contingent, other than in
the ordinary course of business, (iii) the Company has not entered
into any material transaction other than in the ordinary course of
business and (iv) there has not been any change in the capital stock
or long-term debt of the Company, or any dividend or distribution of
any kind declared, paid or made by the Company on any class of its
capital stock.
(ss) Linsang Partners LLC ("Linsang") is (i) an "accredited
investor" within the meaning of Rule 501 under the Securities Act and
(ii) is controlled by, and 99.6% of the equity interests are owned by,
Xxxx X. Xx, the Chairman of the Board of Directors of the Company, in
a tenancy by the entireties with his wife, Xxxxxx Xx.
2. Purchase and Resale of the Securities. (a) On the
basis of the representations, warranties and agreements contained herein, and
subject to the terms and conditions set forth herein, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, 261,000 Units at an aggregate purchase price of
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$252,875,000. The Company shall not be obligated to deliver any of the Units
except upon payment for all of the Units to be purchased as provided herein.
(b) The Initial Purchaser has advised the Company that it
proposes to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. The Initial
Purchaser represents, warrants and agrees that (i) it is purchasing the
Securities pursuant to a private sale exempt from registration under the
Securities Act, (ii) it has not solicited offers for, or offered or sold, and
will not solicit offers for, or offer or sell, the Securities by means of any
form of general solicitation or general advertising within the meaning of Rule
502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) except in the case of the sale to Linsang of 11,000
Units (which will be sold pursuant to another exemption from registration under
the Securities Act), it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of its initial offering, only to persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers"), as defined in Rule 144A under the Securities Act ("Rule
144A"), or if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person
has represented to it that each such account is a Qualified Institutional Buyer
to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A and in each case, in transactions in accordance with Rule
144A.
(c) The Initial Purchaser agrees that, prior to or
simultaneously with the confirmation of sale by the Initial Purchaser to any
purchaser of any of the Securities purchased by the Initial Purchaser from the
Company pursuant hereto, the Initial Purchaser shall furnish to that purchaser
a copy of the Offering Memorandum (and any amendment or supplement thereto that
the Company shall have furnished to the Initial Purchaser prior to the date of
such confirmation of sale). In addition to the foregoing, the Initial
Purchaser acknowledges and agrees that the Company and, for purposes of the
opinions to be delivered to the Initial Purchaser pursuant to Sections 5(d) and
(e), counsel for the Company and for the Initial Purchaser, respectively, may
rely upon the accuracy of the representations and warranties of the Initial
Purchaser and its compliance with its agreements contained in this Section 2,
and the Initial Purchaser hereby consents to such reliance.
(d) The Company acknowledges and agrees that the Initial
Purchaser may sell Securities to any affiliate of the Initial Purchaser and
that any such affiliate may sell Securities purchased by it to the Initial
Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery
of and payment for the Units shall be made at the offices of Cravath, Swaine &
Xxxxx, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchaser and the Company, at 10:00 A.M., New York City time, on
July 24, 1998 or at such other time or date, not later than seven full business
days thereafter, as shall be agreed upon by the Initial Purchaser and the
Company (such date and time of payment and delivery being referred to herein as
the "Closing Date").
(b) On the Closing Date, payment of the purchase price for
the Units shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior
to the Closing Date or by such other means as the parties hereto shall agree
prior to the Closing Date against delivery to the Initial
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Purchaser of the certificates evidencing the Securities. Time shall be of the
essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of the Initial Purchaser
hereunder. Upon delivery, the Securities shall be in global form, registered
in such names and in such denominations as the Initial Purchaser shall have
requested in writing not less than two full business days prior to the Closing
Date. The Company agrees to make one or more global certificates evidencing
the Securities available for inspection by the Initial Purchaser in New York,
New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees
with the Initial Purchaser:
(a) to advise the Initial Purchaser promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchaser promptly of any order
preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its best efforts to prevent the
issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or
suspending any such qualification and, if any such suspension is
issued, to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchaser and counsel
for the Initial Purchaser, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to the Initial
Purchaser and counsel for the Initial Purchaser and not to effect any
such amendment or supplement to which the Initial Purchaser shall
reasonably object by notice to the Company after a reasonable period
to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchaser, any event shall occur or
condition exist as a result of which it is necessary, in the opinion
of counsel for the Initial Purchaser or counsel for the Company, to
amend or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply
with applicable law, to promptly prepare such amendment or supplement
as may be necessary to correct such untrue statement or omission or so
that the Offering Memorandum, as so amended or supplemented, will
comply with applicable law;
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(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and
prospective purchasers of the Securities designated by such holders,
upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act (the foregoing
agreement being for the benefit of the holders from time to time of
the Securities and prospective purchasers of the Securities designated
by such holders);
(f) for so long as the Securities are outstanding, to furnish
to the Initial Purchaser copies of any annual reports, quarterly
reports and current reports filed by the Company with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the Trustee or to
the holders of the Securities pursuant to the Indenture or the
Exchange Act or any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchaser may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may designate and to continue
such qualifications in effect for so long as required for the resale
of the Securities; and to arrange for the determination of the
eligibility for investment of the Securities under the laws of such
jurisdictions as the Initial Purchaser may reasonably request;
provided that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so
qualified or to file a general consent to service of process in any
jurisdiction;
(h) to assist the Initial Purchaser in arranging for the
Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and
settlement through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
(j) except following the effectiveness of (i) Exchange Offer
Registration Statement or the Shelf Registration Statement, as the
case may be, and (ii) the Warrant Shelf Registration Statement, not
to, and to cause its affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease
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to be applicable to the offering and sale of the Securities as
contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement
for, or announce any offer, sale, contract for sale of or other
disposition of any debt or equity securities issued or guaranteed by
the Company (other than the Securities) without the prior written
consent of the Initial Purchaser, which consent shall not be
unreasonably withheld;
(l) during the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchaser, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired by them, except for Securities
purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment company,
unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act, and to not be or become, or be or become owned by, a closed-end
investment company required to be registered, but not registered
thereunder;
(n) in connection with the offering of the Securities, until
the Initial Purchaser shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange
Act) not to, either alone or with one or more other persons, bid for
or purchase, for any account in which it or any of its affiliated
purchasers has a beneficial interest, any Securities, or attempt to
induce any person to purchase any Securities; and not to, and to cause
its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of
raising the price of the Securities;
(o) in connection with the offering of the Securities, to
make its officers, employees, independent accountants and legal
counsel reasonably available upon request by the Initial Purchaser;
(p) to furnish to the Initial Purchaser on the date hereof a
copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its best efforts to satisfy
all conditions precedent on its part to the delivery of the
Securities;
(r) to not take any action prior to the execution and
delivery of the Indenture or the Warrant Agreement which, if taken
after such execution and delivery, would have violated any of the
covenants contained in the Indenture or the Warrant Agreement;
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(s) to not take any action prior to the Closing Date which
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(t) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except
for routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of
which the Initial Purchaser is notified), without the prior written
consent of the Initial Purchaser, unless in the judgment of the
Company and its counsel, and after notification to the Initial
Purchaser, such press release or communication is required by law;
(u) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds";
(v) to do or cause to be done all such acts and things as may
be necessary or proper, or as may be required by the provisions of the
Escrow Agreement, to assure and confirm to the Trustee the security
interest in the Escrow Collateral contemplated by the Escrow Agreement
or any part thereof, as from time to time constituted, so as to render
the Escrow Collateral available for the security and benefit of the
Holders; and to take any and all actions reasonably required to cause
the Escrow Agreement to create and maintain (to the extent possible
under applicable law), as security for the obligations of the Company
under the Indenture, a valid and perfected first priority security
interest in and on all the Escrow Collateral, in favor of the
Trustee, for the benefit of Holders.
5. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of the Company contained herein, to the accuracy of the statements
of the Company and its officers made in any certificates delivered pursuant
hereto, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or
supplements thereto) shall have been printed and copies distributed to
the Initial Purchaser as promptly as practicable on or following the
date of this Agreement or at such other date and time as to which the
Initial Purchaser may agree; and no stop order suspending the sale of
the Securities in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) The Initial Purchaser shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Initial Purchaser, is material or omits to state any fact which, in
the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
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(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of each of the
Transaction Documents and the Offering Memorandum, and all other legal
matters relating to the Transaction Documents and the transactions
contemplated thereby, shall be satisfactory in all material respects
to the Initial Purchaser, and the Company shall have furnished to the
Initial Purchaser all documents and information that it or its counsel
may reasonably request to enable them to pass upon such matters.
(d) Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. shall have furnished to
the Initial Purchaser their written opinion, as counsel to the
Company, addressed to the Initial Purchaser and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchaser, substantially to the effect set forth in Annex B hereto.
(e) The Initial Purchaser shall have received from Cravath,
Swaine & Xxxxx, counsel for the Initial Purchaser, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Initial Purchaser may reasonably require, and the Company shall have
furnished to such counsel such documents and information as they
request for the purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchaser
a letter (the "Initial Letter") of PricewaterhouseCoopers LLP (the
successor entity to Price Waterhouse LLP), addressed to the Initial
Purchaser and dated the date hereof, in form and substance
satisfactory to each of the Initial Purchaser and
PricewaterhouseCoopers LLP.
(g) The Company shall have furnished to the Initial Purchaser
a letter (the "Bring-Down Letter") of PricewaterhouseCoopers LLP (the
successor entity to Price Waterhouse LLP), addressed to the Initial
Purchaser and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company within the
meaning of Rule 101 of the Code of Professional Conduct of the AICPA
and its interpretations and rulings thereunder, (ii) stating, as of
the date of the Bring-Down Letter (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to
the date of the Bring-Down Letter), that the conclusions and findings
of such accountants with respect to the financial information and
other matters covered by the Initial Letter are accurate and (iii)
confirming in all material respects the conclusions and findings set
forth in the Initial Letter.
(h) The Company shall have furnished to the Initial Purchaser
a certificate, dated the Closing Date, of its chief executive officer
and its chief financial officer stating that (A) such officers have
carefully examined the Offering Memorandum, (B) in their opinion, the
Offering Memorandum, as of its date, did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and since the date of the Offering
Memorandum, no event has occurred which should have been set forth in
a supplement or amendment to the Offering Memorandum so that the
Offering Memorandum (as so amended or supplemented) would not include
any untrue statement of a material fact and would not omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in
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the light of the circumstances under which they were made, not
misleading, (C) as of the Closing Date, the representations and
warranties of the Company in this Agreement are true and correct, the
Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder on or prior to the
Closing Date, (D) subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no
material adverse change in the financial position or results of
operations of the Company, or any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the
Company, taken as a whole, (E) they have read the covenants and
conditions (i) in the Indenture relating to the issuance of the Notes
by the Company and the authentication and delivery of the Notes by the
Trustee and (ii) in the Warrant Agreement relating to the issuance of
the Warrants by the Company and the countersignature and delivery of
the Warrants by the Warrant Agent, including in case of each of (i)
and (ii), the related definitions, (F) they are authorized to examine
and have access to the relevant records and accounts of the Company
and are conversant with the corporate proceedings and documents
relating to the authorization and issuance of the Units, Notes, and
Warrants, (G) in their opinion they have made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not the covenants and conditions referred to
in the Indenture and the Warrant Agreement referred to in clause (E)
above have been complied with, and (H) in their opinion all such
covenants and conditions have been complied with.
(i) The Initial Purchaser shall have received a counterpart
of the Registration Rights Agreement which shall have been executed
and delivered by a duly authorized officer of the Company.
(j) The Indenture shall have been duly executed and delivered
by the Company and the Trustee, and the Notes shall have been duly
executed and delivered by the Company and duly authenticated by the
Trustee.
(k) The Warrant Agreement shall have been duly executed and
delivered by the Company and the Warrant Agent, and the Warrants shall
have been duly executed and delivered by the Company and duly
countersigned by the Warrant Agent.
(l) The Escrow Agreement shall have been duly executed and
delivered by the Company and The Chase Manhattan Bank.
(m) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(n) If any event shall have occurred that requires the
Company under Section 4(d) to prepare an amendment or supplement to
the Offering Memorandum, such amendment or supplement shall have been
prepared, the Initial Purchaser shall have been given a reasonable
opportunity to comment thereon, and copies thereof shall have been
delivered to the Initial Purchaser reasonably in advance of the
Closing Date.
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(o) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the judgment of the
Initial Purchaser would materially impair the ability of the Initial
Purchaser to purchase, hold or effect resales of the Securities as
contemplated hereby.
(p) Subsequent to the execution and delivery of this
Agreement or, if earlier, the dates as of which information is given
in the Offering Memorandum (exclusive of any amendment or supplement
thereto), there shall not have been any change in the capital stock or
long-term debt or any change, or any development involving a
prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the
Company taken as a whole, the effect of which, in any such case
described above, is, in the judgment of the Initial Purchaser, so
material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Securities on the terms and
in the manner contemplated by this Agreement and the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(q) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Securities.
(r) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Securities or any of the Company's other debt securities
or preferred stock by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Securities or any of the Company's other debt securities
or preferred stock.
(s) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange, the Chicago Board Options Exchange or the
over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or
market by the Commission, by any such exchange or by any other
regulatory body or governmental authority having jurisdiction, or
trading in any securities of the Company on any exchange or in the
over-the-counter market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared
by federal or New York state authorities or (iii) an outbreak or
escalation of hostilities or a declaration by the United States of a
national emergency or war or (iv) a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv),
is, in the judgment of the Initial Purchaser, so material and adverse
as to make it impracticable or inadvisable to
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proceed with the sale or the delivery of the Securities on the terms
and in the manner contemplated by this Agreement and in the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(t) A valid and perfected first priority security interest in
the Escrow Collateral shall have been created in favor of the Trustee
for the benefit of Holders.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Initial
Purchaser.
6. Termination. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser, in its absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(n), (o), (p), (q) or (r) shall have occurred and be
continuing.
7. Reimbursement of Initial Purchaser's Expenses. If (a)
this Agreement shall have been terminated pursuant to Section 6, (b) the
Company shall fail to tender the Securities for delivery to the Initial
Purchaser for any reason permitted under this Agreement or (c) the Initial
Purchaser shall decline to purchase the Securities for any reason permitted
under this Agreement, the Company shall reimburse the Initial Purchaser for
such out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial Purchaser in
connection with this Agreement and the proposed purchase and resale of the
Securities.
8. Indemnification. (a) The Company shall hold harmless the
Initial Purchaser, its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls
any Initial Purchaser within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 8(a) and Section 9
as the Initial Purchaser), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of the Securities), to which the Initial Purchaser may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) 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 or supplement thereto or in any
information provided by the Company pursuant to Section 4(e) or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
shall reimburse each Initial Purchaser promptly upon demand for any legal or
other expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in
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conformity with any Initial Purchaser's Information; and provided, further,
that with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in this
Section 8(a) shall not inure to the benefit of any such Initial Purchaser to
the extent that the sale to the person asserting any such loss, claim, damage,
liability or action was an initial resale by the Initial Purchaser and any such
loss, claim, damage, liability or action of or with respect to the Initial
Purchaser results from the fact that both (A) to the extent required by
applicable law, a copy of the Offering Memorandum was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities
to such person and (B) the untrue statement in or omission from the Preliminary
Offering Memorandum was corrected in the Offering Memorandum unless, in either
case, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Company with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless
the Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 8(b) and Section 9 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) 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 or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Initial Purchaser's Information, and shall reimburse the Company for any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 8(a) or 8(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that an indemnified party shall
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have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based upon advice of
counsel to the indemnified party) that there may be legal defenses available to
it or other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict
exists (based upon advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 8(a) and 8(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
The obligations of the Company and the Initial Purchaser in
this Section 8 and in Section 9 are in addition to any other liability that the
Company or the Initial Purchaser, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
9. Contribution. If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchaser on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Initial Purchaser on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchaser on the other with respect to such offering shall be
deemed to be in the same proportion as the total
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net proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by or on behalf of the Company, on the one
hand, and the total discounts and commissions received by the Initial Purchaser
with respect to the Securities purchased under this Agreement, on the other,
bear to the total gross proceeds from the sale of the Securities under this
Agreement, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault 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 the Company or information supplied by the Company on the one hand
or to any Initial Purchaser's Information on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Initial Purchaser agree that it would not be just and equitable if
contributions pursuant to this Section 9 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 9 shall be deemed
to include, for purposes of this Section 9, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 9, the Initial Purchaser shall not be required
to contribute any amount in excess of the amount by which the total discounts
and commissions received by the Initial Purchaser with respect to the
Securities purchased by it under this Agreement exceeds the amount of any
damages which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
10. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchaser and the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company and
the Initial Purchaser and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 10, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
11. Expenses. The Company agrees with the Initial Purchaser
to pay (a) the costs incident to the authorization, issuance, sale, preparation
and delivery of the Securities and any taxes payable in that connection; (b)
the costs incident to the preparation, printing and distribution of the
Preliminary Offering Memorandum, the Offering Memorandum and any amendments or
supplements thereto; (c) the costs of reproducing and distributing each of the
Transaction Documents; (d) the costs incident to the preparation, printing and
delivery of the certificates evidencing the Securities, including stamp duties
and transfer taxes, if any, payable upon issuance of the Securities; (e) the
fees and expenses of the Company's counsel and independent accountants; (f) the
fees and expenses of qualifying the Securities under the securities laws of the
several jurisdictions as provided in Section 4(g) and of preparing, printing
and distributing Blue Sky Memoranda (including related fees and expenses of
counsel for the Initial Purchaser); (g) the fees and expenses of the Trustee
and any paying agent (including related fees and expenses of any counsel to
such parties); (h) all expenses
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and application fees incurred in connection with the application for the
inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (i) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 11;
provided, however, that except as provided in this Section 11 and Section 7,
the Initial Purchaser shall pay its own costs and expenses.
12. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Initial Purchaser contained in this Agreement or made by or on behalf of the
Company or the Initial Purchaser pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
termination or cancelation of this Agreement or any investigation made by or on
behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons. The
Company agrees to cause each subsidiary that becomes a Subsidiary Guarantor
under the Indenture to become jointly and severally liable for all of the
Company's obligations under this agreement.
13. Notices, etc.. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent
by mail or telecopy transmission to Chase Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxxx Xxxxx
(telecopier no.: (000) 000-0000); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Vice President and General Counsel
(telecopier no.:(000) 000-0000) with a copy (which shall not
constitute notice to the Company) by mail or telecopy transmission to
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., 000 Xxxxxx, Xxxxx 0000, Xxxxxxx, XX
00000, Attention: Xxxxxx X. Xxxxxx (telecopier no.: (000) 000-0000);
provided that any notice to the Initial Purchaser pursuant to Section 8(c)
shall also be delivered or sent by mail to the Initial Purchaser at its address
set forth on the signature page hereof. Any such statements, requests, notices
or agreements shall take effect at the time of receipt thereof. The Company
shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Initial Purchaser by CSI.
14. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
15. Initial Purchaser's Information. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchaser's Information consists solely of the following information in the
Preliminary Offering Memorandum and the Offering Memorandum: (i) the last
paragraph on the front cover page concerning the terms of the offering by the
Initial Purchaser; (ii) the legend on the inside front cover page concerning
over-allotment and trading activities by the Initial Purchaser; and (iii) the
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statements concerning the Initial Purchaser contained in the third, ninth,
twelfth and thirteenth paragraphs under the heading "Plan of Distribution".
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
18. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon
this instrument will become a binding agreement between the Company and the
Initial Purchaser in accordance with its terms.
Very truly yours,
SPLITROCK SERVICES, INC.,
by /s/
-----------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
by /s/
-----------------------------------
Authorized Signatory
Address for notices pursuant to Section 8(c):
0 Xxxxx Xxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 10081
Attention: Legal Department
